1
EXHIBIT 2.1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR
CONFIDENTIAL TREATMENT
================================================================================
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
April 11, 2000
by and among
iManage, Inc.,
NetRight Technologies, Inc.
and
THOUGHTSTAR, INC.
================================================================================
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TABLE OF CONTENTS PAGE
----
1. Merger ....................................................... 1
1.1 The Merger ............................................ 1
1.2 Closing Date; Effective Time of the Merger ............ 1
1.3 Effect of the Merger .................................. 2
1.4 Articles of Incorporation; Bylaws ..................... 2
1.5 Directors and Officers ................................ 2
1.6 Actions at the Closing ................................ 2
1.7 Tax Consequences ...................................... 3
2. Effect on Capital Stock ...................................... 3
2.1 Capital Stock of Sub. ................................. 3
2.2 Cancellation of THOUGHTSTAR Common Stock .............. 3
2.3 Conversion of THOUGHTSTAR Common Stock ................ 4
2.4 Adjustment of Exchange Ratio .......................... 5
2.5 Fractional Shares ..................................... 5
2.6 Exchange of Certificates .............................. 5
2.7 THOUGHTSTAR Stock Plan ................................ 6
2.8 THOUGHTSTAR Warrants .................................. 8
3. Representations and Warranties of THOUGHTSTAR ................ 8
3.1 Existence; Good Standing .............................. 9
3.2 Power, Authorization and Validity ..................... 9
3.3 Capitalization ........................................ 9
3.4 No Violation .......................................... 10
3.5 Litigation ............................................ 11
3.6 Financial Statements; Indebtedness .................... 11
3.7 Taxes ................................................. 11
3.8 No Breach or Default .................................. 13
3.9 Absence of Certain Changes ............................ 13
3.10 Agreements and Commitments ............................ 14
3.11 Intellectual Property ................................. 16
3.12 Transactions with Affiliates .......................... 17
3.13 Compliance with Laws; Governmental Authorizations ..... 17
3.14 Employees and Contractors ............................. 18
3.15 Full Disclosure ....................................... 21
3.16 No Reliance on Representations Regarding Forecasts .... 21
3.17 Books and Records ..................................... 21
3.18 Insurance ............................................. 21
3.19 Customers ............................................. 21
3.20 Accounts Receivable ................................... 21
3.21 Title to Properties ................................... 22
3.22 Condition of Personal Property ........................ 22
3.23 Environmental Matters ................................. 22
3.24 Minute Books .......................................... 23
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TABLE OF CONTENTS PAGE
(Continued) ----
3.25 Complete Copies of All Materials....................... 23
3.26 No Brokers, Transaction Expenses....................... 23
3.27 Disclaimer............................................. 23
4. Representations and Warranties of iManage and Sub............. 24
4.1 Existence; Good Standing............................... 24
4.2 Power, Authorization and Validity of iManage and Sub... 24
4.3 Capitalization......................................... 25
4.4 No Violation........................................... 25
4.5 SEC Documents; iManage Financial Statements............ 25
4.6 Full Disclosure........................................ 26
4.7 Investment............................................. 26
4.8 No Brokers............................................. 26
4.9 Valid Issuance......................................... 26
4.10 Litigation............................................. 26
4.11 No Material Adverse Change............................. 27
5. Covenants of THOUGHTSTAR...................................... 27
5.1 Interim Operations..................................... 27
5.2 Breach of Representations and Warranties............... 29
5.3 Consents............................................... 30
5.4 Reasonable Efforts..................................... 30
5.5 Tax Returns............................................ 30
5.6 Access to Information.................................. 30
5.7 Delivery of Audited Financial Statements............... 30
5.8 Termination of 401(k) Plan............................. 30
5.9 Termination of Severance Plans......................... 30
6. Covenants of iManage.......................................... 31
6.1 Breach of Representations and Warranties............... 31
6.2 Consents............................................... 31
6.3 Reasonable Efforts..................................... 31
6.4 Access to Information.................................. 31
6.5 Loan to THOUGHTSTAR.................................... 31
6.6 Registration Rights Agreement.......................... 32
7. Additional Agreements......................................... 32
7.1 Legal Conditions to the Merger......................... 32
7.2 Employee Stock Options................................. 33
7.3 THOUGHTSTAR Employee Benefits.......................... 33
7.4 Expenses............................................... 33
7.5 Additional Agreements.................................. 33
7.6 Public Announcements................................... 34
7.7 Confidentiality........................................ 34
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TABLE OF CONTENTS PAGE
(Continued) ----
7.8 NASD and SEC Filings ...................................................... 35
7.9 Tax-Free Reorganization ................................................... 35
7.10 Indemnification ........................................................... 35
7.11 Notification of Certain Matters ........................................... 36
7.12 ▇▇▇▇▇ Lease, American Express Obligations ................................. 36
7.13 Shareholder Representative ................................................ 36
7.14 [****]..................................................................... 36
8. Conditions Precedent ................................................................. 37
8.1 Conditions to Each Party's Obligation to Effect the Merger ................ 37
8.2 Conditions of Obligations of iManage and Sub. ............................. 37
8.3 Conditions of Obligations of THOUGHTSTAR .................................. 39
9. Termination, Amendment and Waiver .................................................... 40
9.1 Termination ............................................................... 40
9.2 Effect of Termination ..................................................... 41
9.3 Amendment ................................................................. 41
9.4 Extension; Waiver ......................................................... 41
10. Survival of Representations and Warranties; Indemnification; Liability ................ 41
10.1 Survival of Representations and Warranties ................................ 41
10.2 Indemnification by and Liability of the THOUGHTSTAR Shareholders .......... 41
10.3 Limitations and Expiration ................................................ 42
10.4 Indemnification Procedures ................................................ 43
10.5 Expenses .................................................................. 43
11. Further Acts .......................................................................... 43
12. Miscellaneous ......................................................................... 44
12.1 Assignment ................................................................ 44
12.2 Governing Law ............................................................. 44
12.3 Notices ................................................................... 44
12.4 Expenses .................................................................. 45
12.5 Attorneys' Fees ........................................................... 45
12.6 Dispute Resolution ........................................................ 45
12.7 Successors and Assigns .................................................... 45
12.8 Counterparts .............................................................. 45
12.9 Captions and Headings ..................................................... 45
12.10 Entire Agreement .......................................................... 45
12.11 Waivers ................................................................... 45
12.12 Severability .............................................................. 46
12.13 Immediately Prior to the Effective Time of the Merger ..................... 46
****CERTAIN INFORMATION ON THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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TABLE OF CONTENTS
(continued)
EXHIBITS
A Form of Agreement of Merger
B Form of Employment Agreements
C Form of Consulting Agreements
D Form of Continuing Key Employee Option Agreements
E Form of Promissory Note
F Form of Registration Rights Agreement
G Form of Letters of Representation and Agreement
H Legal Opinion
DISCLOSURE SCHEDULES
1.6 Shareholders of THOUGHTSTAR
2.7 Optionholders of THOUGHTSTAR
2.8 Warrantholders of THOUGHTSTAR
3.2 Other Consents, Waivers, Authorizations, Filings, Approvals and Registrations
3.4 No Violation
3.5 Litigation
3.6 Financial Statements
3.7 Taxes
3.8 No Breach or Defaults
3.9 Absence of Certain Changes
3.10 Agreements and Commitments
3.11(a) Intellectual Property
3.11(c) Employee and Others
3.12 Transactions with Affiliates
3.13 Compliance with Laws; Governmental Authorizations
3.14(a) Employees and Contractors of THOUGHTSTAR
3.14(e) Employee Benefit Plans
3.14(g) Employee Benefit Plan Failures
3.17 Books and Records
3.18 Insurance
3.20 Accounts Receivable
3.21 Title to Properties
3.22 Condition of Personal Property
3.26 Transfer Expenses
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("AGREEMENT") is made and
entered into as of April 11, 2000 by and among, iManage, Inc., a Delaware
corporation ("IMANAGE"), NetRight Technologies, Inc., a Delaware corporation and
wholly-owned subsidiary of iManage ("SUB"), and THOUGHTSTAR, INC., a Delaware
corporation ("THOUGHTSTAR").
RECITALS
A. The Boards of Directors of each of iManage, Sub and THOUGHTSTAR
believe it is in the best interests of each company and their respective
shareholders that THOUGHTSTAR and Sub merge into a single company through the
merger of THOUGHTSTAR with and into Sub (the "MERGER").
B. Pursuant to such Merger, among other things, all of the issued and
outstanding shares of THOUGHTSTAR Common Stock (the "THOUGHTSTAR COMMON STOCK"),
shall be converted into shares of iManage Common Stock ("IMANAGE COMMON STOCK")
and the right to receive the Merger Consideration (as defined in Section 2.3),
and certain options to purchase THOUGHTSTAR Common Stock shall be assumed by
iManage in the manner and on the terms set forth herein.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, agreements,
warranties and provisions contained herein, the parties agree as follows:
1. Merger.
1.1 The Merger. At the Effective Time of the Merger (as defined
in Section 1.2), subject to and upon the terms and conditions of this Agreement
and a Certificate of Merger in the form attached hereto as Exhibit A (the
"MERGER AGREEMENT") between THOUGHTSTAR and Sub, THOUGHTSTAR shall be acquired
by iManage through a merger of THOUGHTSTAR with and into Sub in accordance with
the applicable provisions of the corporate laws of the State of Delaware. The
Merger Agreement provides, among other things, the mode of effecting the Merger
and the manner and basis of converting each issued and outstanding share of
THOUGHTSTAR Common Stock. The Merger Agreement shall be executed by THOUGHTSTAR,
iManage and Sub concurrently with the execution of this Agreement.
1.2 Closing Date; Effective Time of the Merger. Unless this
Agreement shall have been terminated pursuant to Section 9 hereof, the closing
of the Merger (the "CLOSING") shall be held at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, on May 5, 2000 at 10:00 a.m. California Time, or at such
other time and place as agreed in writing by the parties hereto. The date of
Closing is referred to herein as the "CLOSING DATE." Upon delivery of all
closing deliverables and satisfaction or waiver of each of the conditions set
forth in Article 8, the parties shall cause the Merger to be consummated by
causing the Merger Agreement to be filed with the Secretary of State of the
State of Delaware in accordance with Delaware law. The Merger shall become
effective as of the date that such filing is completed in accordance with
applicable statutory requirements (the "EFFECTIVE TIME OF THE MERGER").
1.3 Effect of the Merger. At the Effective Time of the Merger,
the effect of the Merger shall be as provided pursuant to the terms and
conditions of this Agreement, the Merger Agreement and the applicable provisions
of Delaware law. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time of the Merger, (i) THOUGHTSTAR shall be merged
with and into Sub, (ii) the separate corporate existence of THOUGHTSTAR shall
cease and (iii) the Merger shall have all the effects provided by Delaware law,
this Agreement and the Merger Agreement. Sub shall be the surviving corporation
in the Merger (and after the Merger is sometimes referred to herein as the
"SURVIVING CORPORATION") and the separate corporate existence of Sub, with all
its purposes, objects, rights, privileges, powers, immunities and franchises,
shall continue unaffected and unimpaired by the Merger.
1.4 Articles of Incorporation; Bylaws.
(a) The Articles of Incorporation of Sub in effect
immediately prior to the Effective Time of the Merger shall be the Articles of
Incorporation of the Surviving Corporation unless and until amended as provided
by law and by such Articles of Incorporation.
(b) The Bylaws of Sub in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the Surviving Corporation
unless and until amended or repealed as provided by applicable law, the Articles
of Incorporation of the Surviving Corporation and such Bylaws.
1.5 Directors and Officers. The sole director of the Surviving
Corporation shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and the officers of Sub immediately prior
to the Effective Time of the Merger shall be the officers of the Surviving
Corporation, in each case until their successors shall have been elected and
qualified or until otherwise provided by law.
1.6 Actions at the Closing. At the Closing, Sub, THOUGHTSTAR and
iManage shall take such reasonable actions and execute and deliver such
agreements and other instruments and documents as necessary or appropriate to
effect the transactions contemplated by this Agreement in accordance with its
terms, including without limitation the following:
(a) The shareholders of THOUGHTSTAR (the "THOUGHTSTAR
SHAREHOLDERS"), all of whom are listed on Schedule 1.6 of the Disclosure
Schedules, will deliver to iManage certificates representing all issued and
outstanding shares of the THOUGHTSTAR Common Stock, duly endorsed for transfer
to iManage (or, subject to Section 2.6(a), affidavits of lost certificates), and
THOUGHTSTAR and the THOUGHTSTAR Shareholders shall execute
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and deliver all other documents required herein, including without limitation
(for the THOUGHTSTAR Shareholders) a Registration Rights Agreement as provided
in Section 6.6 (the "REGISTRATION RIGHTS AGREEMENT");
(b) On the Closing Date prior to the Effective Time of
the Merger THOUGHTSTAR shall deliver iManage an updated Schedule 1.6 hereto
current as of the time immediately prior to the Effective Time of the Merger;
(c) iManage will execute and deliver to the THOUGHTSTAR
Shareholders the Registration Rights Agreement and all other documents required
by iManage and Sub; and
(d) iManage will execute and deliver Employment
Agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ Call, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇ (each a "CONTINUING KEY EMPLOYEE" and, collectively, the "CONTINUING KEY
EMPLOYEES") in substantially the forms attached hereto as Exhibit B (the
"EMPLOYMENT AGREEMENTS") and will execute and deliver a Consulting Agreement and
a Non-Compete and Non-Solicitation Agreement in substantially the forms attached
hereto as Exhibit C (collectively, the "CONSULTING AGREEMENTS");
(the Merger Agreement, Registration Rights Agreement, Employment Agreements and
Consulting Agreements sometimes collectively referred to as the "ANCILLARY
AGREEMENTS").
1.7 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a tax-free reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended, and that this
Agreement shall constitute a "plan of reorganization" within the meaning of the
regulations thereunder.
2. Effect on Capital Stock. As of the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of iManage, Sub,
THOUGHTSTAR or the holder of any shares of THOUGHTSTAR Common Stock:
2.1 Capital Stock of Sub. All issued and outstanding shares of
capital stock of Sub shall continue to be issued and shall be converted into
1,000 shares of Common Stock of the Surviving Corporation. Each stock
certificate of Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the Surviving Corporation.
2.2 Cancellation of THOUGHTSTAR Common Stock. All shares of
THOUGHTSTAR Common Stock that are owned directly or indirectly by THOUGHTSTAR
and any shares of THOUGHTSTAR Common Stock that are owned by iManage, Sub or any
other Subsidiary of iManage shall be canceled, and no stock of iManage or other
consideration shall be delivered in exchange therefor. In this Agreement, a
"SUBSIDIARY" of a corporation or other entity means a corporation or other
entity, the voting securities of which are sufficient to elect at least a
majority of the Board of Directors or other managers of such corporation or
other entity and which are owned or otherwise controlled directly or indirectly
by such parent corporation or other entity.
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2.3 Conversion of THOUGHTSTAR Common Stock. Each issued and
outstanding share of THOUGHTSTAR Common Stock as of the Closing Date (other than
shares to be canceled pursuant to Section 2.2 hereof) shall be converted,
without any action on the part of the holders thereof, into the right to receive
the following (the "MERGER CONSIDERATION"):
(a) an amount of cash, without interest thereon; equal
to (the "PRO RATA CASH AMOUNT"):
(i) four million five hundred thousand dollars
($4,500,000) less (x) the amount of any Transaction Expenses (as defined in
Section 7.4) for which iManage has been provided with invoices that have been
approved for payment by ▇▇▇▇▇ ▇▇▇▇▇▇, as the representative of the THOUGHTSTAR
Shareholders prior to the Effective Time of the Merger, and (y) the amount
required for the repayment referred to in Section 8.2 (l), divided by
(ii) the aggregate of (x) the number of shares
of THOUGHTSTAR Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger and (y) the number of shares of THOUGHTSTAR Common
Stock issuable upon exercise or conversion of all THOUGHTSTAR Options (as
defined in Section 2.7(a) below), warrants and other securities exercisable for
or convertible into shares of THOUGHTSTAR Common Stock outstanding immediately
prior to the Merger in the case of both (x) and (y), after giving effect to the
actions contemplated by Sections 2.7(b) and 2.8(b) to the extent actually taken
(the "CASH CONSIDERATION"), and
(b) the right to receive a number shares of iManage
Common Stock (such number hereinafter referred to as the "EXCHANGE RATIO")
calculated as follows:
(i) the numerator shall equal fourteen million
dollars ($14,000,000) divided by the average closing price per share for shares
of iManage Common Stock during the ten (10) consecutive trading days ending two
(2) trading days prior to the Closing Date as reported by NASDAQ; provided,
however, that if such price is at or below thirteen dollars ($13.00) per share,
such price shall be deemed to be thirteen dollars ($13.00) per share and if such
price is at or above thirty-three dollars ($33.00) per share, such price shall
be deemed to be thirty-three dollars ($33.00) per share (the "AVERAGE PRICE PER
SHARE"), and
(ii) the denominator shall equal the aggregate
of (x) the number of shares of THOUGHTSTAR Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger and (y) the number of
shares of THOUGHTSTAR Common Stock issuable upon exercise or conversion of all
THOUGHTSTAR Options, warrants or other securities exercisable for or convertible
into shares of THOUGHTSTAR Common Stock outstanding immediately prior to the
Merger in the case of both (x) and (y), after giving effect to the actions
contemplated by Sections 2.7(b) and 2.8(b) to the extent actually taken.
(c) Notwithstanding the foregoing, each THOUGHTSTAR
Shareholder, other than ▇▇▇▇▇ ▇▇▇▇▇▇, shall have the right to elect (each person
making such an election being an "ELECTING SHAREHOLDER") to receive one dollar
($1.00) in cash in respect of each share of THOUGHTSTAR Common Stock held by
such Electing Shareholder in lieu of the Pro Rata Cash Amount. In order to be an
Electing Shareholder, a person must deliver a written
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notice to iManage that is received by iManage not later than three business days
prior to the Effective Time of the Merger. In the event that an Electing
Shareholder makes such an election, in addition to one dollar ($1.00) per share
in cash, such Electing Shareholder shall receive, in respect of each share of
THOUGHTSTAR Common Stock held by such Electing Shareholder, a number of shares
of iManage Common Stock equal to (x) the number of shares of iManage Common
Stock that such Electing Shareholder would have received in respect of such
share of THOUGHTSTAR Common Stock had it not made the election pursuant to this
Section 2.3(c), less (y) a number of shares of iManage Common Stock (or fraction
of a share) equal to the quotient of one dollar ($1.00) less the Pro Rata Cash
Amount divided by the Average Price Per Share.
(d) In the event one or more THOUGHTSTAR Shareholders
becomes an Electing Shareholder, the amount of Cash Consideration otherwise to
be received by ▇▇▇▇▇ ▇▇▇▇▇▇ on the Merger shall be decreased by an amount equal
to the product of (x) one dollar ($1.00) less the Pro Rata Cash Amount and (y)
the aggregate number of shares of THOUGHTSTAR Common Stock owned by the
THOUGHTSTAR Shareholders collectively immediately prior to the Merger (the
"▇▇▇▇▇▇ ADJUSTMENT"), and the number of shares of iManage Common Stock otherwise
to be received by him shall increase, by a number equal to the quotient of the
▇▇▇▇▇▇ Adjustment divided by the Average Price Per Share. Each THOUGHTSTAR
Shareholder other than ▇▇▇▇▇ ▇▇▇▇▇▇ who is not an Electing Shareholder shall
receive the amount of Cash Consideration or number of shares of iManage Common
Stock that such THOUGHTSTAR Shareholder is entitled to receive pursuant to
Sections 2.3(a) and (b), respectively, regardless of the number of THOUGHTSTAR
Shareholders who become Electing Shareholders.
2.4 Adjustment of Exchange Ratio. If, between the date that is
two (2) trading days prior to the Closing Date and the Effective Time of the
Merger, the outstanding shares of iManage Common Stock or THOUGHTSTAR Common
Stock shall have been changed into a different number of shares or a different
class by reason of any reclassification, reorganization, recapitalization, stock
split, reverse split, stock dividend, combination, exchange of shares or other
readjustment, the Exchange Ratio shall be correspondingly adjusted.
2.5 Fractional Shares. No fractional shares of iManage Common
Stock will be issued, but in lieu thereof, each holder of shares of THOUGHTSTAR
Common Stock who would otherwise be entitled to a fraction of a share of iManage
Common Stock (after aggregating all fractional shares of iManage Common Stock to
be received by such holder) shall be entitled to receive from iManage an amount
of cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the Average Price Per Share.
2.6 Exchange of Certificates.
(a) THOUGHTSTAR Certificates Delivered at the Closing.
At the Closing, the THOUGHTSTAR Shareholders shall deliver the certificates
representing their shares of THOUGHTSTAR Common Stock (or affidavits of lost
certificates) to be exchanged for the shares of iManage Common Stock in the
Merger. In the event that any THOUGHTSTAR Shareholder delivers an affidavit of
lost certificates of such Shareholder's THOUGHTSTAR Common Stock, such
Shareholder shall simultaneously deliver to iManage such security or
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indemnity as may be required by iManage to save iManage harmless, in order to be
entitled to receive Merger Consideration in respect of the THOUGHTSTAR Common
Stock evidenced by the lost certificate.
(b) iManage to Provide Common Stock. Within ten (10)
days following the Closing, iManage shall deliver to the THOUGHTSTAR
Shareholders the certificates representing the shares of iManage Common Stock
issuable, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 2.5 hereof, and, on the later of (x) the Closing and
(y) two business days after the date on which ▇▇▇▇▇ ▇▇▇▇▇▇ advises iManage that
iManage has been presented with all invoices for Transaction Expenses pursuant
to Section 2.3(a)(i), iManage shall deliver to the THOUGHTSTAR shareholders
checks (or wire transfers) representing cash payable in respect of shares of
THOUGHTSTAR Common Stock pursuant to Section 2 of this Agreement and the Merger
Agreement in exchange for the shares of THOUGHTSTAR Common Stock surrendered
pursuant to Section 2.6(a).
(c) Distributions With Respect to Unexchanged Shares. No
dividends or other distribution on the iManage Common Stock shall be paid to the
holder of any unsurrendered certificate until the holder of record of such
certificate shall surrender such certificate (or affidavit of lost certificate)
subject to the effect, if any, of applicable escheat and other laws. Following
surrender of any such certificate (or affidavit), there shall be delivered to
the person entitled thereto, without interest, the amount of dividends or other
distributions theretofore paid with respect to the iManage Common Stock so
withheld as of any date subsequent to the Effective Time of the Merger and prior
to such date of delivery.
(d) No Further Ownership Rights in THOUGHTSTAR Common
Stock. All shares of iManage Common Stock issued upon the surrender for exchange
of shares of THOUGHTSTAR Common Stock in accordance with the terms hereof
(including any cash paid in respect of fractional shares thereof) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of THOUGHTSTAR Common Stock. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of THOUGHTSTAR Common Stock that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 2.
2.7 THOUGHTSTAR Stock Plan.
(a) Schedule 2.7 of the Disclosure Schedules lists as of
the date of this Agreement, all holders of outstanding options to purchase
THOUGHTSTAR Common Stock (the "THOUGHTSTAR OPTIONS") issued and outstanding
under the THOUGHTSTAR, Inc. Amended 1998 Stock Option Plan, including the number
of shares of THOUGHTSTAR Common Stock subject to each such option, the exercise
or vesting schedule, the exercise price per share and the term of each such
option. On the Closing Date, THOUGHTSTAR shall deliver to iManage an updated
Schedule 2.7 hereto current as of the time immediately prior to the Effective
Time of the Merger.
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(b) THOUGHTSTAR shall use its best efforts to insure
that (i) immediately prior to the Effective Time of the Merger all THOUGHTSTAR
Options whether vested or unvested (except for options which would remain
unvested immediately after the consummation of the Merger that are held by
Continuing Key Employees (the "CONTINUING KEY EMPLOYEE OPTIONS")) shall be
exercised (with any unvested THOUGHTSTAR Options other than Continuing Key
Employee Options becoming immediately and fully vested) and (ii) at the
Effective Time of the Merger each share of THOUGHTSTAR Common Stock issuable on
such exercise shall be converted, without any action on the part of the holders
thereof, into the right to receive the Merger Consideration and the Exchange
Ratio issuable for shares of THOUGHTSTAR Common Stock by reason of the Merger.
(c) At the Effective Time of the Merger, the Continuing
Key Employee Options, shall be assumed by iManage in accordance with this
Section 2.7. Each Continuing Key Employee Option so assumed by iManage under
this Agreement shall continue to have, and be subject to, the same terms and
conditions as were applicable to such Continuing Key Employee Option and/or as
provided in the THOUGHTSTAR 1998 Amended Stock Option Plan (the "THOUGHTSTAR
STOCK OPTION PLAN") governing such Continuing Key Employee Option as in effect
on February 29, 2000, except that:
(i) such Continuing Key Employee Option will be
exercisable for that number of whole shares of iManage Common Stock equal to (x)
the product of the number of shares of THOUGHTSTAR Common Stock that were
issuable upon exercise of such Continuing Key Employee Option immediately prior
to the Effective Time of the Merger and the Exchange Ratio, plus (y) a number of
shares equal to the quotient determined by dividing (1) the product of the
number of shares of THOUGHTSTAR Common Stock that were issuable upon exercise of
such Continuing Key Employee Options and the Cash Consideration by (2) the
Average Price Per Share and rounded down to the nearest whole number of shares
of iManage Common Stock,
(ii) the per share exercise price for the shares
of iManage Common Stock issuable upon exercise of such assumed Continuing Key
Employee Option will be equal to the quotient determined by dividing the
aggregate exercise price of the THOUGHTSTAR Common Stock for which such
Continuing Key Employee Option was exercisable immediately prior to the
Effective Time of the Merger by the number of shares of iManage Common Stock
issuable on the exercise of such Option, rounded up to the nearest whole cent,
and
(iii) except as set forth in the Continuing
Employee Option Agreement, such Continuing Key Employee Option shall not be
vested at the Effective Time of the Merger, but rather shall vest as follows: on
the sixth-month anniversary of the Closing Date, twenty-five percent (25%) of
each holder's Continuing Key Employee Options will vest, provided the holder is
an employee of iManage or any of its affiliates, including Sub (iManage and such
affiliates being hereinafter the "IMANAGE OPTION GROUP"), on such date, and
thereafter one-eighteenth (1/18th) of each holder's remaining Continuing Key
Employee Options shall vest per month, beginning on the seventh-month
anniversary of the Closing Date, provided in each case that the holder has
provided continuous service to the iManage Option Group during such
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period and is an employee of a member of the iManage Option Group on the
applicable vesting date.
(d) Each Continuing Key Employee shall have executed and
delivered to iManage an agreement in substantially the form attached hereto as
Exhibit D (an "CONTINUING KEY EMPLOYEE OPTION AGREEMENT") in which such
Continuing Key Employee agrees that on the Merger the terms of such employee's
THOUGHTSTAR Options shall be as described in this Section 2.7. As soon as
practicable after the Effective Time of the Merger, iManage will issue to each
person who, immediately prior to the Effective Time of the Merger was a holder
of one or more options that became a Continuing Key Employee Option, a written
document evidencing the foregoing assumption of such holder's Continuing Key
Employee Options by iManage. iManage shall file a Form S-8 Registration
Statement in accordance with Section 7.2 to register the shares issuable upon
exercise of the Continuing Key Employee Options.
2.8 THOUGHTSTAR Warrants.
(a) Schedule 2.8 of the Disclosure Schedules lists as of
the date of this Agreement, all holders of outstanding warrants to purchase
THOUGHTSTAR Common Stock ("THOUGHTSTAR WARRANTS"), including the number of
shares of THOUGHTSTAR Common Stock subject to each such warrant , the exercise
price per share and the term of each warrant. On the Closing Date, THOUGHTSTAR
shall deliver to iManage an updated Schedule 2.8 hereto current as of the time
immediately prior to the Effective Time of the Merger.
(b) THOUGHTSTAR shall use its best efforts to insure
that (i) immediately prior to the Effective Time of the Merger all outstanding
THOUGHTSTAR Warrants shall be exercised and (ii) at the Effective Time of the
Merger each share of THOUGHTSTAR Common Stock issuable on such exercise shall be
converted, without any action on the part of the holders thereof, into the right
to receive the Merger Consideration and the Exchange Ratio issuable for shares
of THOUGHTSTAR Common Stock by reason of the Merger.
3. Representations and Warranties of THOUGHTSTAR. When used in this
Section 3, the term "MATERIAL ADVERSE EFFECT" means any change or effect that is
or is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition or results of operations of
THOUGHTSTAR and its Subsidiaries, if any, taken as a whole.
When used in this Agreement to qualify any representation or warranty with
respect to THOUGHTSTAR, the terms "knowledge" or "known to" or similar terms
refer to the actual knowledge or conscious awareness of certain specific facts
or circumstances related to such representation or warranty of the persons in
the applicable knowledge group, after such inquiry, investigation and due
diligence on the part of such persons as is commercially reasonable under the
circumstances. The applicable knowledge group is: ▇▇▇▇▇▇ Call, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
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Except as described or disclosed in the disclosure schedules (the "DISCLOSURE
SCHEDULES") delivered to iManage and Sub and dated the date hereof, THOUGHTSTAR
represents and warrants to iManage and Sub as follows.
3.1 Existence; Good Standing. THOUGHTSTAR is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. THOUGHTSTAR is qualified to do business as a foreign corporation
and is in good standing under the laws of the State of Utah. THOUGHTSTAR does
not own or lease real or personal property, maintain offices or have any
employees, contractors or consultants in any jurisdiction outside of the State
of Utah. THOUGHTSTAR neither has any Subsidiaries nor owns voting securities of
any corporation, partnership or other entity. THOUGHTSTAR has all requisite
corporate power and authority to own its properties and carry on its business as
now conducted. THOUGHTSTAR has delivered a true and complete copy of its
Certificate of Incorporation and Bylaws (or similar governing instruments), each
as amended to date, to iManage or its counsel.
3.2 Power, Authorization and Validity. THOUGHTSTAR has all
requisite power and authority to enter into this Agreement and the Ancillary
Agreements to which it is or is to be a party and, subject to the approval of
THOUGHTSTAR Shareholders, to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is or is to be a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
approved and authorized by all necessary action (corporate or other) on the part
of THOUGHTSTAR. This Agreement and the Ancillary Agreements to which it is or is
to be a party have been or will be duly executed and delivered by THOUGHTSTAR
and, subject to such approval by the THOUGHTSTAR Shareholders, constitute valid
and binding obligations of THOUGHTSTAR, enforceable in accordance with their
respective terms subject to the effect, if any, of applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality (a "GOVERNMENTAL ENTITY"), is
required by or with respect to THOUGHTSTAR in connection with the execution and
delivery of this Agreement or any Ancillary Agreement to which it is or is to be
a party or the consummation of the transactions contemplated hereby or thereby
except for (i) the filing of the Merger Agreement with the Secretary of State of
Delaware, (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and (iii) such other consents, waivers,
authorizations, filings, approvals and registrations which are set forth on
Schedule 3.2 of the Disclosure Schedules.
3.3 Capitalization.
(a) The authorized capital stock of THOUGHTSTAR consists
of thirty million (30,000,000) shares of Common Stock, $0.000001 par value, of
which nine million four hundred twenty-eight thousand six hundred (9,428,600)
are issued and outstanding and five million (5,000,000) shares of Preferred
Stock. All issued and outstanding shares of Common Stock of THOUGHTSTAR have
been duly authorized and validly issued, are fully paid and nonassessable and
are not subject to preemptive rights or rights of first refusal created by
statute,
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the Certificate of Incorporation or Bylaws of THOUGHTSTAR or any agreement to
which THOUGHTSTAR is a party or by which THOUGHTSTAR is bound. All outstanding
shares of Common Stock of THOUGHTSTAR have been issued in compliance with all
federal, state and foreign securities laws.
(b) As of the date of this Agreement, 1,648,000 shares
of THOUGHTSTAR Common Stock were reserved for issuance upon the exercise of the
THOUGHTSTAR Options under the THOUGHTSTAR Stock Option Plan and 984,400 shares
were reserved for issuance upon the exercise of THOUGHTSTAR Warrants.
THOUGHTSTAR has provided iManage with a list of all outstanding THOUGHTSTAR
Options, including all THOUGHTSTAR Options held by the Continuing Key Employees
and the vesting schedules, and exercise prices and terms for such options and
all outstanding THOUGHTSTAR Warrants.
(c) Except for the shares and THOUGHTSTAR Options and
THOUGHTSTAR Warrants listed above, there are no options, warrants, calls,
conversion rights, convertible debentures, commitments or agreements of any kind
that obligate THOUGHTSTAR to issue, deliver or sell, or cause to be issued
delivered or sold, additional shares of capital stock of THOUGHTSTAR or that
obligate THOUGHTSTAR to grant, extend or enter into any such option, warrant,
call, conversion right, commitment or agreement.
3.4 No Violation. The execution, delivery and performance of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not conflict with
or result in a violation of the Certificate of Incorporation or Bylaws (or
similar instruments) of THOUGHTSTAR, or conflict with, or (with or without
notice or lapse of time, or both) result in a termination, breach, impairment or
violation of, give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under, or constitute a default or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the assets or properties of THOUGHTSTAR under, (i) any material instrument,
indenture, lease, mortgage or other agreement or contract to which THOUGHTSTAR
is a party or by which THOUGHTSTAR or any of its assets or properties may be
subject or (ii) any federal, state, local or foreign judgment, writ, decree,
order, ordinance, statute, rule or regulation applicable to THOUGHTSTAR or its
assets or properties.
The execution, delivery and performance of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict with, or (with or without notice
or lapse of time, or both) result in a termination, breach, impairment or
violation of, give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under, or constitute a default or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the assets or properties of ▇▇▇▇▇ ▇▇▇▇▇▇ under, the terms or conditions of
the Lease Agreement dated December 1, 1997 by and between Centennial Plaza
Square, L.L.C. and ▇▇▇▇▇ ▇▇▇▇▇▇ covering the office premises at ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ (the "SANDY LEASE").
Except as set forth on Schedule 3.4 of the Disclosure Schedules,
the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements will not require the consent of any third person with
respect to the rights, licenses, franchises, leases or agreements of
THOUGHTSTAR, or ▇▇▇▇▇ ▇▇▇▇▇▇ under the ▇▇▇▇▇ Lease,
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and will not have a Material Adverse Effect upon any such rights, licenses,
franchises, leases or agreements.
3.5 Litigation. There are no suits, actions or legal,
administrative, arbitration or other proceedings or governmental investigations
or any other claims, pending or threatened in writing against THOUGHTSTAR, any
of its assets or properties or any of THOUGHTSTAR's officers or directors
related to their service as such. No reasonable basis for a suit, action,
proceeding, investigation or claim exists due to the actions or omissions of
THOUGHTSTAR or, to the knowledge of THOUGHTSTAR, due to the actions or omissions
of third parties, and there are no orders, judgments, injunctions or decrees of
any Governmental Entity with respect to which THOUGHTSTAR has been named or is a
party which apply, in whole or in part, to the business of THOUGHTSTAR, any of
its properties or any of THOUGHTSTAR's officers or directors, which could
reasonably be expected to have a Material Adverse Effect. There have been no and
are currently no suits, actions or proceedings initiated by THOUGHTSTAR;
provided that there is possible action that could be initiated by THOUGHTSTAR as
set forth in Schedule 3.5 of the Disclosure Schedules.
3.6 Financial Statements; Indebtedness. Attached as Schedule 3.6
of the Disclosure Schedules are true and complete copies of THOUGHTSTAR's
unaudited financial statements for the period from inception February 5, 1997 to
March 31, 2000 (the "FINANCIAL STATEMENTS"; and March 31, 2000 is hereinafter
referred to as the "DATE OF THE FINANCIAL STATEMENTS"). The Financial Statements
fairly present in all material respects the financial condition of THOUGHTSTAR
at the respective dates therein indicated and the results of operations for the
respective periods therein specified. THOUGHTSTAR has no debt, liability or
obligation of any nature, whether absolute, contingent or otherwise, and whether
due or to become due, that is not disclosed in the Financial Statements and
which exceeds individually or in the aggregate $10,000, except for those that
may have been incurred (x) after the Date of the Financial Statements in the
ordinary course of its business, and consistent with past practice, and (y)
under contracts, leases and instruments disclosed in the Disclosure Schedules or
entered into in the ordinary course of business and not required to be disclosed
in the Disclosure Schedules.
3.7 Taxes.
(a) Definitions. For purposes of this Agreement, the
following definitions shall apply:
(i) The term "TAXES" shall mean all taxes,
however denominated, including any interest, penalties or other additions to tax
that may become payable in respect thereof, (A) imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including but not
limited to, federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
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are required to be paid, withheld or collected, (B) any liability for the
payment of amounts referred to in (A) as a result of being a member of any
affiliated, consolidated, combined or unitary group, or (C) any liability for
amounts referred to in (A) or (B) as a result of any obligations to indemnify
another person.
(ii) The term "RETURNS" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
(iii) The term "CODE" shall have the meaning set
out in Recital C hereof.
(b) Returns; Taxes Paid. THOUGHTSTAR has duly and timely
filed or caused to be filed (after giving effect to any extensions validly
obtained) all Returns required to be filed. THOUGHTSTAR has withheld and paid
over all Taxes required to have been withheld and paid over, and complied with
all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other third
party. There are no liens on any of the assets of THOUGHTSTAR with respect to
Taxes, other than liens for Taxes not yet due and payable. THOUGHTSTAR has not
been at any time a member of any partnership or joint venture for a period for
which the statue of limitations for any Tax potentially applicable as a result
of such membership has not expired.
(c) Tax Reserves. The amount of THOUGHTSTAR's liability
for unpaid Taxes (whether actual or contingent) for all periods through the date
hereof and the Closing Date does not and will not, in the aggregate, exceed the
amount of the current liability accruals for Taxes (excluding reserves for
deferred Taxes) solely with respect to THOUGHTSTAR reflected on the Financial
Statements (other than for taxes which have accrued after the date of such
Financial Statements). No material liability for Taxes has been incurred since
the date hereof (or will be incurred prior to Closing) other than in the
ordinary course of business.
(d) Tax Filings. THOUGHTSTAR has never been a member of
an affiliated group of corporations filing consolidated returns or a unitary
group of corporations filing combined returns. THOUGHTSTAR is not (nor has it
ever been) a party to any tax sharing agreement. THOUGHTSTAR does not do
business in or derive income from any state other than states for which Returns
have been duly filed and furnished to iManage.
(e) Tax Deficiencies; Audits; Statutes of Limitations.
THOUGHTSTAR has never been audited by a government or taxing authority, nor is
any such audit in process, or pending or threatened in a writing delivered to
THOUGHTSTAR, its agents, employees or contractors. Except as set forth in
Schedule 3.7 of the Disclosure Schedules, no deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of THOUGHTSTAR, and THOUGHTSTAR has not
received any notice (either in writing or verbally, formally or informally) and
does not expect to receive notice that it has not filed a Return or paid Taxes
required to be filed or paid.
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THOUGHTSTAR is neither a party to any action or proceeding for assessment or
collection of Taxes, nor has such event been asserted or threatened (either in
writing or verbally, formally or informally) against THOUGHTSTAR or any of its
assets. No waiver or extension of any statute of limitations is in effect with
respect to Taxes or Returns of THOUGHTSTAR. THOUGHTSTAR has disclosed on its
state income and franchise tax returns all positions taken therein that could
give rise to a substantial understatement penalty within the meaning of Code
Section 6662 or comparable provisions of applicable state tax laws.
(f) Tax Elections and Special Tax Status. THOUGHTSTAR is
not, nor has it been, a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. THOUGHTSTAR is not a
"consenting corporation" under Section 341(f) of the Code. THOUGHTSTAR has not
entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense to
THOUGHTSTAR pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. THOUGHTSTAR is
not required to make any payments that will not be fully deductible under Code
Section 162(m). THOUGHTSTAR has not agreed to, nor is it required to make any
adjustment under Code Section 481(a) by reason of, a change in accounting
method. THOUGHTSTAR is not, nor has it been, a "reporting corporation" subject
to the information reporting and record maintenance requirements of Section
6038A and the regulations thereunder.
(g) Qualification of Reorganization. Neither THOUGHTSTAR
nor any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Code Section 368(a).
3.8 No Breach or Default. THOUGHTSTAR has not, in any material
respect, breached or received any claim or threat that it has breached, any of
the terms or conditions of any agreement, contract or commitment. There has been
no breach or any claim or threat of breach of any of the terms or conditions of
the ▇▇▇▇▇ Lease. Each such agreement, contract or commitment of THOUGHTSTAR and
▇▇▇▇▇ ▇▇▇▇▇▇, as the case may be, is in full force and effect and is a legal,
binding and enforceable obligation for or against THOUGHTSTAR or ▇▇▇▇▇ ▇▇▇▇▇▇,
as the case may be, and, except as set forth in Schedule 3.8 of the Disclosure
Schedules and except for defaults fully remedied or resolved, is not subject to
any material default thereunder of which THOUGHTSTAR has knowledge by any party
obligated to THOUGHTSTAR or ▇▇▇▇▇ ▇▇▇▇▇▇, as the case may be, pursuant thereto.
To THOUGHTSTAR's knowledge, the parties to such agreements, contracts or
commitments will fulfill their respective obligations under such agreements,
contracts or commitments and are not threatened with insolvency.
3.9 Absence of Certain Changes. Since the Date of the Financial
Statements, except as disclosed on Schedule 3.9 of the Disclosure Schedules,
there has not been any, with respect to THOUGHTSTAR:
(a) amendment or change in the Certificate of
Incorporation or Bylaws of THOUGHTSTAR that has not otherwise been disclosed to
iManage;
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(b) capital expenditure by THOUGHTSTAR exceeding
$10,000, individually or in the aggregate;
(c) destruction, damage to, or loss of any assets of
THOUGHTSTAR (whether or not covered by insurance), either individually or in the
aggregate exceeding $10,000;
(d) change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by THOUGHTSTAR;
(e) write-up or write-down by THOUGHTSTAR of any of its
assets that would have a Material Adverse Effect;
(f) declaration, setting aside or payment of a dividend
or other distribution with respect to the shares of capital stock of
THOUGHTSTAR, or any direct or indirect redemption, purchase or other acquisition
by THOUGHTSTAR of any of its shares of capital stock, or, except as contemplated
hereby, any such other change in the equity structure of THOUGHTSTAR;
(g) increase in the salary or other compensation payable
or to become payable by THOUGHTSTAR to any of its officers, directors, employees
or contractors or the declaration, payment or commitment or any obligation of
any kind for the payment by THOUGHTSTAR of a material bonus or other additional
salary or compensation to any such person other than those payable in accordance
with existing compensation arrangements or agreements;
(h) waiver or release of any right or claim of
THOUGHTSTAR, including any write-off or other compromise of any account
receivable of THOUGHTSTAR, in excess of $10,000, individually or in the
aggregate;
(i) Material Adverse Effect;
(j) transaction, contract or commitment which provides
for a period of performance by THOUGHTSTAR which extends beyond twelve months
from the date hereof or involves payment or receipt after the date hereof of
amounts in excess of $10,000 outside the ordinary course of business, except
this Agreement and the transactions contemplated hereby; or
(k) negotiation or agreement by THOUGHTSTAR to do any of
the things described in the preceding clauses (a) through (j), other than
negotiations with iManage regarding the transactions contemplated by this
Agreement.
3.10 Agreements and Commitments. THOUGHTSTAR is not a party to
any oral or written agreement, obligation or commitment of a type which is
described below, except as disclosed on Schedule 3.10 of the Disclosure
Schedules:
(a) any contract, commitment, letter contract,
quotation, purchase order, bid or proposal providing for payments by or to
THOUGHTSTAR in an amount in excess of $10,000 per year;
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(b) any license agreement as licensor or licensee (other
than forms of standard non-exclusive software licenses granted to end-user
customers in the ordinary course of business and consistent with past practice);
(c) any agreement by THOUGHTSTAR to encumber, transfer,
grant rights to use or sell rights in or with respect to any Intellectual
Property (as defined in Section 3.11 hereof), except for non-exclusive software
licenses granted to end-user customers in the ordinary course of business,
consistent with past practice, the form of which has been provided to iManage or
its counsel and any Commercial Software. "COMMERCIAL SOFTWARE" shall mean
packaged commercially available software programs generally available to the
trade which have been licensed to THOUGHTSTAR pursuant to end-user agreements
and which are used in THOUGHTSTAR's business, the form of which has been
provided to iManage or its counsel;
(d) any agreement for the sale or lease of real or
personal property involving more than $10,000 per year;
(e) any dealer, distributor, sales representative,
original equipment manufacturer, value added remarketer or other agreement for
the reasonably anticipated distribution of more than $10,000 of THOUGHTSTAR's
products during the term of such agreement;
(f) any joint venture contract or arrangement or any
other agreement that involves a sharing of profits with other persons;
(g) any contract for goods or services involving more
than $10,000 per year;
(h) any agreement or other document relating to
noncompetition covenants by THOUGHTSTAR, the THOUGHTSTAR Shareholders, or
THOUGHTSTAR's employees or contractors;
(i) any instrument evidencing indebtedness for borrowed
money by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade indebtedness and
advances to employees and contractors incurred in the ordinary course of
business, consistent with past practice;
(j) any collective bargaining agreement;
(k) any agreements that contain any unpaid severance
liabilities or obligations;
(l) any bonus, deferred compensation, incentive
compensation, pension, profit-sharing or retirement plans, or any other employee
benefit plans or arrangements;
(m) any employment or consulting agreement, contract or
commitment with an employee, contractor or individual consultant or salesperson
or consulting or sales or
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distribution agreement, contract or commitment with a firm or other organization
not terminable by THOUGHTSTAR on thirty (30) days' notice without liability;
(n) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
(o) any fidelity or surety bond or completion bond;
(p) any agreement of indemnification or guaranty,
including, without limitation, agreements with officers, directors, consultants,
advisors and suppliers;
(q) any agreement, contract or commitment relating to
the disposition or acquisition of assets not in the ordinary course of business
or any ownership interest in any corporation, partnership, joint venture or
other business enterprise;
(r) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit; or
(s) any other agreement, contract or commitment that
involves amounts in excess of $10,000 or is not cancelable without penalty
within 30 days.
3.11 Intellectual Property.
(a) THOUGHTSTAR owns, or is licensed or otherwise
possesses legally enforceable rights to use all copyrights and any applications
therefor, technology, know-how and tangible and intangible proprietary
information or material, and to the best of THOUGHTSTAR's knowledge owns, or is
licensed or otherwise possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, that are used or currently proposed to
be used in the business of THOUGHTSTAR as currently conducted or as currently
proposed to be conducted that are material to such business or where the failure
to have such right would result or would reasonably be expected to result in a
Material Adverse Effect (the "INTELLECTUAL PROPERTY"). Schedule 3.11(a) of the
Disclosure Schedules sets forth a true and complete list of all patents and
patent applications, registered and unregistered trademarks and service marks,
registered copyrights, trade names and service marks and any applications
therefor, included in the Intellectual Property owned by THOUGHTSTAR, and
specifies the jurisdictions in which each such Intellectual Property has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners.
(b) THOUGHTSTAR is not in violation of, and the
execution and delivery of this Agreement by THOUGHTSTAR will not impair
THOUGHTSTAR's rights (or alter the rights or obligations of any third person
that is a party to any agreement, license or sublicense with THOUGHTSTAR) under
or violate, any license, sublicense or other agreement where such violation or
impairment would materially or adversely affect iManage's ability to use
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the rights granted THOUGHTSTAR. No claims with respect to the Intellectual
Property, any trade secret of THOUGHTSTAR or any patents, trademarks,
tradenames, service marks, copyrights or any applications therefor, technology,
know-how, trade secrets or tangible or intangible proprietary information or
material of any third party ("THIRD PARTY INTELLECTUAL PROPERTY RIGHTS") (to the
extent arising out of any use, reproduction, distribution of or manufacture, use
or sale under such Third Party Intellectual Property Rights by or through
THOUGHTSTAR), have been asserted or are, to the knowledge of THOUGHTSTAR,
threatened by any person or entity against THOUGHTSTAR, nor does THOUGHTSTAR
know of any valid grounds for any claims (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or licensed by
THOUGHTSTAR infringes on or misappropriates any patent, trademark, trade name,
service ▇▇▇▇, copyright or trade secret; (ii) against the use by THOUGHTSTAR of
any patents, trademarks, trade names, service marks, copyrights, technology or
trade secret used in THOUGHTSTAR's business as currently conducted or as
currently proposed to be conducted; (iii) challenging the ownership, validity,
enforceability or effectiveness of any Intellectual Property or any trade secret
of THOUGHTSTAR; or (iv) challenging THOUGHTSTAR's license or legally enforceable
right to use any Third Party Intellectual Property Rights.
(c) THOUGHTSTAR has no knowledge of any unauthorized
use, infringement or misappropriation of any Intellectual Property owned by
THOUGHTSTAR by any third party, including any employee, contractor, former
employee or former contractor of THOUGHTSTAR. Schedule 3.11(c) of the Disclosure
Schedules sets forth a true and complete list of all employees, contractors,
former employees and former contractors who have been involved in the
development of all patents, registered and unregistered trademarks and service
marks, registered copyrights, trade names and service marks and any applications
therefor, included in the Intellectual Property.
(d) THOUGHTSTAR has no knowledge that any Intellectual
Property, trade secret of THOUGHTSTAR or Third Party Intellectual Property Right
is subject to any outstanding order, judgment, decree, stipulation or agreement
restricting in any manner the licensing thereof by THOUGHTSTAR. THOUGHTSTAR has
not entered into any agreement to indemnify any other person against any charge
of infringement of any Intellectual Property, any trade secret of THOUGHTSTAR or
any Third Party Intellectual Property Right other than in the ordinary course of
business.
3.12 Transactions with Affiliates. Except as disclosed on
Schedule 3.12 of the Disclosure Schedules, no current director or officer of
THOUGHTSTAR or a member of his or her immediate family has or has had, directly
or indirectly, (i) an interest in any entity which furnished or sold, or
furnishes or sells, services or products which THOUGHTSTAR furnishes or sells,
or proposes to furnish or sell, or (ii) any interest in any entity which
purchases from or sells or furnishes to THOUGHTSTAR, any goods or services, or
(iii) a beneficial interest in any contract or agreement listed or identified or
required to be listed or identified in the Disclosure Schedules (under any
section or subsection thereof); provided, that ownership of no more than five
percent (5%) of the outstanding voting stock of a publicly traded corporation
shall not be deemed an "interest in any entity" for purposes of this Section
3.12.
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3.13 Compliance with Laws; Governmental Authorizations. Except
as disclosed on Section 3.13 of the Disclosure Schedules, THOUGHTSTAR has
complied, and will be on the Closing Date in full compliance, in all material
respects with all applicable, laws, ordinances, regulations and rules, and all
orders, writs, injunctions, awards, judgments and decrees, known to be
applicable to THOUGHTSTAR or to the assets, properties and business of
THOUGHTSTAR. THOUGHTSTAR has made all material filings with third parties,
including government agencies and authorities, that are necessary in connection
with its present business. Section 3.13 of the Disclosure Schedules sets forth a
true and complete list of each material federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization issued to
THOUGHTSTAR (i) pursuant to which THOUGHTSTAR currently operates or holds any
interest in any of its properties or (ii) which is required for the operation of
its business or the holding of any such interest (herein collectively referred
to as "THOUGHTSTAR AUTHORIZATIONS"). The THOUGHTSTAR Authorizations are in full
force and effect and constitute all authorizations required to permit
THOUGHTSTAR to operate or conduct its business or hold any interest in its
properties.
3.14 Employees and Contractors.
(a) Schedule 3.14(a) of the Disclosure Schedules sets
forth a true and complete list of all current employees and contractors of
THOUGHTSTAR, including current date of hire, position, accrued vacation, wage or
salary and bonus status. In addition, THOUGHTSTAR has provided to iManage or its
legal counsel true and complete copies of all written, and to THOUGHTSTAR's
knowledge a description of the terms of all oral, employment contracts,
development contracts and consulting contracts of THOUGHTSTAR. All such
contracts are valid and are in full force and effect in all material respects,
and neither THOUGHTSTAR, nor any other party, is in breach or default of any
such contract. THOUGHTSTAR has no written or oral agreement or commitment to pay
any person anything of value upon or in connection with the termination of such
person's employment or engagement by THOUGHTSTAR.
(b) All past and present directors, officers, employees,
contractors and consultants of THOUGHTSTAR who have had and who have access to
the Intellectual Property or other proprietary information of THOUGHTSTAR, have
executed and delivered to THOUGHTSTAR agreements regarding the confidentiality
and non-disclosure of such Intellectual Property and proprietary information and
the assignment of all intellectual property rights to THOUGHTSTAR. THOUGHTSTAR
has provided to iManage or its legal counsel true and complete copies of the
form of all such agreements. With respect to THOUGHTSTAR, and to the knowledge
of THOUGHTSTAR, with respect to the other party, all such agreements are valid
and remain in full force and effect, and neither THOUGHTSTAR, nor to the
knowledge of THOUGHTSTAR, any other party is in breach or default of any such
agreement.
(c) THOUGHTSTAR has no knowledge of any employee or
contractor of THOUGHTSTAR (other than ▇▇▇▇▇ ▇▇▇▇▇▇) who intends to leave
THOUGHTSTAR's employ in less than one year and, to the knowledge of THOUGHTSTAR,
all such employees and contractors are capable of freely contracting with
iManage for full time employment upon consummation of the transactions
contemplated by this Agreement.
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(d) To the knowledge of THOUGHTSTAR, no employee or
contractor of THOUGHTSTAR is in material violation of any contract or agreement,
or any restrictive covenant, relating to the right of any such employee or
contractor to be employed by THOUGHTSTAR or with respect to security clearance,
trade secrets or proprietary information of others, and the employment of any
employee or contractor of THOUGHTSTAR does not subject THOUGHTSTAR to any
liability to any third party.
(e) Set forth on Schedule 3.14(e) of the Disclosure
Schedules is a true and complete list of all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
THOUGHTSTAR or any trade or business (whether or not incorporated) which is a
member or which is under common control with THOUGHTSTAR (an "ERISA AFFILIATE")
within the meaning of Section 414 of the Code, or any Subsidiary of THOUGHTSTAR
(together, the "EMPLOYEE PLANS"), and a copy of each Employee Plan has been
provided to iManage.
(f) None of the Employee Plans provides, or reflects or
represents any liability to provide, retiree life insurance, retiree health or
other retiree employee welfare benefits to any person for any reason, except as
may be required by COBRA or other applicable statute, and neither THOUGHTSTAR
nor any ERISA Affiliate has ever represented, promised or contracted (whether in
oral or written form) to any THOUGHTSTAR employee (either individually or to
THOUGHTSTAR employees as a group) or any other person that such employee(s) or
other person would be provided with retiree life insurance, retiree health or
other retiree employee welfare benefit, except to the extent required by
statute.
(g) Except as set forth on Schedule 3.14(g) of the
Disclosure Schedules, and to the knowledge of THOUGHTSTAR, all Employee Plans
are in compliance in all material respects with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations, including but
not limited to applicable provisions of ERISA and the Code, COBRA, the Health
Insurance Portability and Accountability Act of 1996, and the Family Medical
Leave Act of 1993, all as amended (including all applicable requirements for
notification to participants or beneficiaries or the Department of Labor,
Internal Revenue Service (the "IRS") or Secretary of the Treasury), and
THOUGHTSTAR has performed all obligations required to be performed by it under,
is not in default under or violation of, and the THOUGHTSTAR Shareholders have
no knowledge of any default or violation by any other party to, any of the
Employee Plans.
(h) Each Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code either has received a favorable determination letter with respect to
each such Employee Plan from the IRS, has pending before the IRS an application
for such determination letter for each such Employee Plan or still has a
remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such a determination letter and to make any
amendments necessary to obtain a favorable determination.
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(i) THOUGHTSTAR does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
pension plan which is subject to Title IV of ERISA or Section 412 of the Code.
Neither THOUGHTSTAR nor any ERISA Affiliate is a party to, has made or is
required to make any contribution to, or otherwise incurred any obligation or
liability (including contingent liability) under, any "multiemployer plan" as
defined in Section 3(37) of ERISA. Neither THOUGHTSTAR nor any ERISA Affiliate
has any actual or potential withdrawal liability (including contingent
liability) for any complete or partial withdrawal from any multi-employer plan.
(j) Nothing in any Employee Plan precludes or interferes
with iManage's ability to cause Sub to terminate (or consolidate, at iManage's
option) any Employee Plan after the Closing.
(k) Except as set forth on Schedule 3.14(g) of the
Disclosure Schedules, none of the following now exists or has existed with
respect to any Employee Plan:
(i) Any act or omission by THOUGHTSTAR
constituting a violation of Section 402, 403, 404 or 405 of ERISA;
(ii) Any act or omission by THOUGHTSTAR which
constitutes a violation of Sections 406 and 407 of ERISA and is not exempted by
Section 408 of ERISA or which constitutes a violation of Section 4975(c) of the
Code and is not exempted by Section 4975(d) of the Code;
(iii) Any act or omission by THOUGHTSTAR
constituting a violation of Section 503, 510 or 511 of ERISA;
(iv) Any act or omission by THOUGHTSTAR which
could give rise to liability under Section 502 of ERISA or under Sections 4972
or 4975 through 4980 of the Code;
(v) Any failure to file any Forms 5500 in a
timely manner; or
(vi) Any audits, inquiries or proceedings, or
threats of such, by the Department of Labor or the IRS.
(l) Except as set forth on Schedule 3.14(g) of the
Disclosure Schedules, and to the knowledge of THOUGHTSTAR, each Employee Plan
has been maintained in substantial compliance with its terms, and all
contributions, premiums or other payments due from THOUGHTSTAR to (or under) any
such Employee Plan have been fully paid or adequately provided for on the
Financial Statements. All accruals thereon (including, where appropriate)
proportional accruals for partial periods) have been made in accordance with
generally accepted accounting principles consistently applied on a reasonable
basis. There has been no amendment, written interpretation or announcement
(whether or not written) by THOUGHTSTAR with respect to, or change in employee
participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such plans or arrangements, individually
or in the aggregate, above the level of expense incurred with respect thereto
for the period from inception to the Date of the Financial Statements.
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(m) THOUGHTSTAR has made available to iManage or its
counsel true and complete copies of documents relating to each Employee Plan,
including (without limitation) plan documents, plan amendments, insurance
policies or contracts, individual participant agreements, employee booklets,
administrative service agreements, summary plan descriptions, compliance and
nondiscrimination tests, Form 5500 reports, standard COBRA forms and notices,
all registration statements and prospectuses, and any material employee
communication relating to any Employee Plan.
3.15 Full Disclosure. None of the representations or warranties
made by THOUGHTSTAR (as modified by the information set forth in the Disclosure
Schedules), nor any statement made in any Schedule or certificate furnished by
THOUGHTSTAR to iManage pursuant to this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements or facts contained herein and therein, in light of the
circumstances under which such statements were made, not misleading.
3.16 No Reliance on Representations Regarding Forecasts. In the
negotiation and consideration of the transaction contemplated by this Agreement,
THOUGHTSTAR has not relied upon any information or documents concerning iManage
and its business condition except (i) information and documents that are
publicly available, and (ii) representations and warranties made by iManage in
this Agreement.
3.17 Books and Records. Schedule 3.17 of the Disclosure
Schedules sets forth a true and complete list and description of all banks or
other financial institutions (including brokerage firms and money market mutual
funds) in which THOUGHTSTAR keeps accounts, deposits, or cash balances or safety
deposit boxes, including addresses, account and identification numbers, and the
names of all persons who have the authority to draw on such deposits, accounts
or balances or who have access to such boxes.
3.18 Insurance. Schedule 3.18 of the Disclosure Schedules sets
forth a true and complete list of all insurance policies covering the assets,
business, equipment, properties, operations, employees, contractors, officers
and directors of THOUGHTSTAR and all claims, including claims existing but not
yet made, under any such insurance policy since the date of THOUGHTSTAR's
inception. There is no claim by THOUGHTSTAR pending under any of such policies
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies. All premiums payable under all such policies and bonds have
been paid and THOUGHTSTAR is otherwise in compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). THOUGHTSTAR has no knowledge of any threatened termination
of, or material premium increase with respect to, any of such policies.
3.19 Customers. To the knowledge of THOUGHTSTAR, no material
customer of THOUGHTSTAR has indicated that such customer intends or has under
consideration a proposal to cease doing business with or to materially alter the
amount of business done with THOUGHTSTAR in the normal course of business or as
a result of the transaction contemplated herein.
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3.20 Accounts Receivable. Schedule 3.20 of the Disclosure
Schedules sets forth a complete list of the accounts and notes receivable of
THOUGHTSTAR as of the Date of the Financial Statements. All receivables of
THOUGHTSTAR arose in the ordinary course of business at the aggregate amounts
thereof, and are carried at values determined in accordance with GAAP
consistently applied. To the knowledge of THOUGHTSTAR, none of the receivables
of THOUGHTSTAR is subject to any claim of offset, recoupment, set-off or
counterclaim and there are no facts or circumstances (whether asserted or
unasserted) that would give rise to any such claim (except as may be reflected
in reserves therefor in the Financial Statements). No receivables are contingent
upon the performance by THOUGHTSTAR of any obligation or contract. No person has
any lien, charge, pledge, security interest or other encumbrance on any of such
receivables and no agreement for deduction or discount has been made with
respect to any of such receivables.
3.21 Title to Properties.
(a) Schedule 3.21 of the Disclosure Schedules sets forth
a true and complete list of all real property owned or leased by THOUGHTSTAR and
by ▇▇▇▇▇ ▇▇▇▇▇▇ for use by THOUGHTSTAR, and, in the case of leased real
property, the name of the lessor, the aggregate monthly rental or other fee
payable under any such lease and any cancellation provisions set forth in such
lease. All such leases are in full force and effect and THOUGHTSTAR or ▇▇▇▇▇
▇▇▇▇▇▇, as the case may be, has not breached, or received any claim or threat
that it has breached, any of the terms or conditions of any such lease.
(b) THOUGHTSTAR, and in the case of the ▇▇▇▇▇ Lease,
▇▇▇▇▇ ▇▇▇▇▇▇, has good and marketable title to or in the case of leased
properties and assets, valid leasehold interests in, all of its assets free and
clear of all liens, charges or encumbrances. All leases of real or personal
property to which THOUGHTSTAR, and in the case of the ▇▇▇▇▇ Lease, ▇▇▇▇▇ ▇▇▇▇▇▇,
is a party are fully effective and afford THOUGHTSTAR peaceful and undisturbed
possession of the subject matter of the lease.
3.22 Condition of Personal Property. Schedule 3.22 of the
Disclosure Schedules sets forth a true and complete list of all of THOUGHTSTAR's
tangible personal property, equipment and fixtures used in its business. All
such property, equipment and fixtures are in good condition, reasonable wear and
tear excluded, or in reasonably repairable condition, are valued at their
historical cost less applicable depreciation.
3.23 Environmental Matters.
(a) No underground storage tanks and no amount of any
substance that has been designated by any state or federal Governmental Entity
or by applicable state law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to such laws, but excluding office and
janitorial supplies properly and safely maintained (a "HAZARDOUS MATERIAL"), is
present, as a result of the actions of
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THOUGHTSTAR, or, to the knowledge of THOUGHTSTAR, as of result of any actions
of any third party or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that
THOUGHTSTAR has at any time owned, operated, occupied or leased.
(b) At no time prior to the Closing Date has THOUGHTSTAR
transported, stored, used, manufactured, disposed of, released or exposed its
employees, contractors or others to Hazardous Materials in violation of any law
in effect on or before the Closing Date, nor has THOUGHTSTAR disposed of,
transported, sold or manufactured any product containing a Hazardous Material
(collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule,
regulation, treaty or statute promulgated by any state or federal Governmental
Entity to prohibit, regulate or control Hazardous Materials or any Hazardous
Materials Activities.
(c) THOUGHTSTAR currently holds all environmental
approvals, permits, licenses, clearances and consents (the "ENVIRONMENTAL
PERMITS") necessary for the conduct of THOUGHTSTAR's Hazardous Material
Activities and other business activities of THOUGHTSTAR that are material to
such activities or where the failure to have such Environmental Permits would
result or reasonably be expected to result in a Material Adverse Effect.
(d) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending or, to the knowledge
of THOUGHTSTAR, threatened, concerning or relating to THOUGHTSTAR, any
Environmental Permit or any Hazardous Materials Activity of THOUGHTSTAR.
THOUGHTSTAR is not aware of any fact or circumstance that could involve
THOUGHTSTAR in any environmental litigation or impose upon THOUGHTSTAR any
environmental liability that would have a Material Adverse Effect.
3.24 Minute Books. The minute books of THOUGHTSTAR made
available to counsel for iManage contain true and complete minutes of all
meetings of directors (and any committee thereof) and shareholders or actions by
written consent since the time of incorporation of THOUGHTSTAR.
3.25 Complete Copies of All Materials. THOUGHTSTAR has delivered
or made available true and complete copies of each document (or summaries of
same that are true and complete in all material respects) referenced or required
to be referenced in this Agreement.
3.26 No Brokers, Transaction Expenses. Neither THOUGHTSTAR nor
either of the THOUGHTSTAR Shareholders is obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with the
transactions contemplated by this Agreement except for D.A. Davidson. Schedule
3.26 of the Disclosure Schedules sets forth the names, addresses and telephone
numbers of each person to which THOUGHTSTAR has any liability for Transaction
Expenses (as defined in Section 7.4(b)).
3.27 Disclaimer. No promises or representations have been or are
made by THOUGHTSTAR or any of the THOUGHTSTAR Shareholders except as expressly
set forth in
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this Agreement, whether regarding THOUGHTSTAR's conduct of the business prior to
the Closing, the operations of the business prior to the Closing, any
projections or forecasts of the business or THOUGHTSTAR, or otherwise and
iManage and Sub (and any shareholders thereof), in entering into this Agreement,
have not relied on any representations or promises except as set forth in this
Agreement. Except with respect to the warranties and representations
specifically set forth in this Agreement, THOUGHTSTAR and THOUGHTSTAR
Shareholders make no warranty, express or implied, whether of merchantability,
suitability or fitness for a particular purpose, or quality as to any of the
THOUGHTSTAR's assets, or any part thereof, or as to the condition or workmanship
thereof, or the absence of any defects therein, whether latent or patent, it
being understood that, except as provided in this Agreement, THOUGHTSTAR's
assets are to be conveyed hereunder "AS IS" on the date hereof and in their
present condition, subject to reasonable use, wear and tear between the date
hereof and the Closing Date, and iManage and Sub shall rely upon their own
examination thereof.
4. Representations and Warranties of iManage and Sub. iManage and Sub
hereby represent and warrant to THOUGHTSTAR as follows:
4.1 Existence; Good Standing. iManage is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware. Each other Subsidiary of iManage is a
corporation duly incorporated (or a company duly established) and in good
standing under the laws of its respective jurisdiction of organization. Each of
iManage and Sub is duly qualified to do business as a foreign corporation and is
in good standing under the laws of any jurisdiction in which the character of
the properties owned or leased by iManage or Sub therein or in which the
transaction of its business makes such qualification necessary, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not have a Material Adverse Effect (as such term is defined at the
beginning of Section 3, except that it shall refer to iManage, Sub and iManage's
other Subsidiaries rather than THOUGHTSTAR) on iManage. Each of iManage and Sub
has all requisite corporate power and authority to own its properties and carry
on its business as now conducted.
4.2 Power, Authorization and Validity of iManage and Sub. Each
of iManage and Sub has all requisite legal and corporate power and authority to
enter into and perform its obligations under this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly approved and authorized by all necessary
corporate action on behalf of iManage and Sub. This Agreement and the Ancillary
Agreements have been or will be duly executed and delivered by iManage and Sub
and constitute valid and binding obligations of iManage and Sub, enforceable in
accordance with their terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and other laws affecting creditors' rights generally
from time to time in effect and to general equitable principles. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to iManage in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement or the consummation of the transactions contemplated hereby or thereby
except for (i) the filing of the Merger Agreement
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with the Secretary of State of Delaware and (ii) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws or otherwise.
4.3 Capitalization.
(a) The authorized capital stock of iManage consists of
one hundred million (100,000,000) shares of Common Stock, $0.001 par value, of
which 21,955,705 are issued and outstanding and two million (2,000,000) shares
of Preferred Stock. All issued and outstanding shares of Common Stock of iManage
have been duly authorized and validly issued, are fully paid and nonassessable
and are not subject to preemptive rights or rights of first refusal created by
statute, the Certificate of Incorporation or Bylaws of iManage or any agreement
to which iManage is a party or by which iManage is bound. All outstanding shares
of Common Stock of iManage have been issued in compliance with all federal,
state and foreign securities laws.
(b) As of the date of this Agreement, six million
(6,000,000) shares of iManage Common Stock were reserved for issuance upon the
exercise of the iManage options under the iManage Stock Option Plan and five
hundred thousand (500,000) shares of iManage Common Stock were reserved for
issuance under the iManage employee stock purchase plan.
(c) Except for the shares and iManage options listed
above, there are no options, warrants, calls, conversion rights, convertible
debentures, commitments or agreements of any kind that obligate iManage to
issue, deliver or sell, or cause to be issued delivered or sold, additional
shares of capital stock of iManage or that obligate iManage to grant, extend or
enter into any such option, warrant, call, conversion right, commitment or
agreement.
4.4 No Violation. The execution, delivery and performance of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not conflict with
or result in a violation of the Certificate of Incorporation or Bylaws (or
similar instruments) of iManage or Sub, or conflict with, or (with or without
notice or lapse of time, or both) result in a termination, breach, impairment or
violation of, give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under, or constitute a default or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the assets or properties of iManage or Sub under, (i) any instrument,
indenture, lease, mortgage or other agreement or contract to which iManage or
Sub is a party or by which iManage or Sub or any of their assets or properties
may be subject or (ii) any federal, state, local or foreign judgment, writ,
decree, order, ordinance, statute, rule or regulation applicable to iManage or
Sub or their assets or properties. Except as set forth on Schedule 3.4, the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements will not require the consent of any third person, except
such consent as has been obtained, with respect to the rights, licenses,
franchises, leases or agreements of iManage or Sub, and will not have a Material
Adverse Effect upon any such rights, licenses, franchises, leases or agreements.
4.5 SEC Documents; iManage Financial Statements. iManage has
furnished or made available to THOUGHTSTAR complete copies of all reports or
registration statements
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filed by it with the SEC under the Securities Exchange Act of 1934 (the
"EXCHANGE ACT") for all periods subsequent to August 31, 1999, all in the form
so filed (all of the foregoing being collectively referred to as the "SEC
DOCUMENTS"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed documents
with the SEC. The financial statements of iManage, including the notes thereto,
included in the SEC Documents (the "IMANAGE FINANCIAL STATEMENTS") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
consistently applied (except as may be indicated in the notes thereto) and
present fairly the consolidated financial position of iManage at the dates
thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit adjustments and
the inclusion of footnotes). There has been no change in iManage accounting
policies except as described in the notes to the iManage Financial Statements.
iManage expects to be eligible to register securities on a Form S-3
Registration Statement on or about November 18, 2000.
4.6 Full Disclosure. No representation or warranty by iManage or
Sub in this Agreement contains any untrue statement of any material fact or
omits to state any material fact necessary to make the statements or facts
contained therein in light of the circumstances under which such statements were
made, not misleading.
4.7 Investment. iManage is acquiring the THOUGHTSTAR Common
Stock for its own account for investment, and not with a view to, or for resale
in connection with, the distribution thereof in violation of federal or state
securities laws and with no present intention of distributing or reselling any
part thereof.
4.8 No Brokers. Neither iManage nor Sub is obligated for the
payment of fees or expenses of any investment banker, broker or finder in
connection with the origin, negotiating or execution of this Agreement or in
connection with the transactions contemplated by this Agreement.
4.9 Valid Issuance. The iManage Common Stock will, when issued
in accordance with the provisions of this Agreement, be validly issued fully
paid, nonassessable and issued in compliance with all applicable federal,
California and Utah securities laws binding on iManage.
4.10 Litigation. There is no action, suit, proceeding, claim,
arbitration or, to iManage's knowledge, investigation, pending, or as to which
iManage has received any notice of assertion against iManage which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated by this Agreement or the Ancillary Agreements.
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4.11 No Material Adverse Change. Since the date of the balance
sheet included in iManage's annual report on Form 10-K, for the year ended
December 31, 1999, there has been no Material Adverse Change in the business,
assets (including intangible assets), financial condition or results of
operations of iManage and its Subsidiaries, taken as a whole. References in this
Section 4.11 and elsewhere in this Agreement to Material Adverse Change with
respect to iManage shall mean any material adverse change in the business,
assets (including intangible assets), financial condition or results of
operations of iManage and its Subsidiaries, taken as a whole; provided none of
the following shall be deemed, either alone or in combination, to constitute
such a Material Adverse Change (i) a change in the market price or trading
volume of the iManage Common Stock, (ii) general industry or economic conditions
affecting the U.S. or world economy as a whole, (iii) conditions affecting the
software or business to business ecommerce industries, so long as such
conditions do not affect iManage in a disproportionate manner as compared to
companies of a similar size, or (iv) any disruption of customer, supplier or
employee relationships resulting from the announcement of this Agreement or the
consummation of the Merger or the transactions contemplated hereby.
4.12 NASD and SEC Filings. iManage has filed all reports or
registration statements with the SEC required under the Securities Exchange Act
of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"). The iManage Common Stock is eligible for trading
on the Nasdaq National Market and iManage is in compliance with all applicable
rules, regulations and other quantitative and qualitative listing criterion of
the Nasdaq Stock Market to permit the continued eligibility of the Common Stock
for trading on the Nasdaq National Market. iManage has not received any notice
of a proceeding or investigation which could result in the delisting of the
iManage Common Stock from NASDAQ, nor does it have any reason to believe that it
might receive such notice or inquiry.
5. Covenants of THOUGHTSTAR.
5.1 Interim Operations.
(a) During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time of the Merger (the "INTERIM PERIOD"), except as set forth in the
Disclosure Schedules, and unless iManage has consented in advance in writing
thereto, THOUGHTSTAR:
(i) Shall conduct its operations according to
its usual, regular and ordinary course in substantially the same manner as
heretofore conducted; provided that in so conducting its operations THOUGHTSTAR
shall consult with iManage (through Shams Rashid, Vice President Business
Development or other person designated by iManage) no less than weekly as to
such operations and shall not take action or allocate resources in a manner
objected to by iManage;
(ii) To the extent consistent with its business,
shall use commercially reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of its officers,
employees and contractors and maintain satisfactory relationships with those
persons having business relationships with it;
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(iii) Shall promptly notify iManage of any
Material Adverse Effect, any material litigation or material governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the material breach of any representation or
warranty contained herein;
(iv) Shall not (A), except as contemplated by
Sections 2.7(b) and 2.8(b), issue any shares of its capital stock, effect any
stock split or otherwise change its capitalization as it existed on the date
hereof; (B) grant, confer or award any option, warrant, conversion right or
other right not existing on the date hereof to acquire any shares of its capital
stock; (C) increase any compensation, make payment of cash bonuses to, or enter
into or amend any employment agreement with any of its present or future
officers, directors, employees or contractors except for normal increases
consistent with past practice; (D) grant any severance or termination package to
any employee, contractor or consultant; or (E) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase plan) or,
except as contemplated by Section 5.8, amend any existing employee benefit plan
in any material respect;
(v) Shall not enter into any agreement or
transaction, or agree to enter into any agreement or transaction, including,
without limitation, any transaction involving a merger, consolidation, joint
venture, license agreement partial or complete liquidation or dissolution,
reorganization, recapitalization, restructuring or a purchase, sale, lease or
other disposition of a material portion of assets or capital stock;
(vi) With the exception of licenses entered into
in the ordinary course of business, shall not, without prior notice to iManage,
transfer to any person or entity any rights to the Intellectual Property Rights;
(vii) Shall not violate in any material respect,
amend, or otherwise change the terms of any of the contracts set forth in the
Disclosure Schedules;
(viii) Shall not commence a lawsuit other than
for: (A) the routine collection of bills (other than against customers or
vendors of iManage and its Subsidiaries of which iManage or its counsel have
received notice); (B) injunctive relief on the grounds that THOUGHTSTAR has
suffered immediate and irreparable harm not compensable in money damages
provided THOUGHTSTAR has obtained the prior written consent of iManage, such
consent not to be unreasonably withheld; or (C) breach of this Agreement;
(ix) Shall not take any other action which could
reasonably be expected to cause a major customer or supplier or key employee or
contractor to terminate its relationship with THOUGHTSTAR;
(b) Dividends; Changes in THOUGHTSTAR Common Stock.
During the Interim Period, THOUGHTSTAR shall not and shall not propose (i) to
declare or pay any dividends on or make any other distributions (whether in
cash, stock or property) in respect to any of its capital stock, (ii) to 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 THOUGHTSTAR; or (iii) to repurchase or otherwise
acquire, directly or indirectly, any shares of its capital stock.
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(c) Governing Documents. During the Interim Period,
THOUGHTSTAR shall not amend its Certificate of Incorporation or Bylaws.
(d) Exclusivity; Acquisition Proposals.
(i) During the Interim Period, THOUGHTSTAR shall
not, directly or indirectly through any officer, director, employee,
representative or agent of THOUGHTSTAR or otherwise, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, share
exchange, business combination, sale of all or substantially all assets, sale of
shares of capital stock or similar transactions involving THOUGHTSTAR other than
the transactions contemplated by this Agreement (any of the foregoing inquiries
or proposals being referred to in this Agreement as an "ACQUISITION PROPOSAL"),
(ii) engage or participate in negotiations or discussions concerning, or provide
any non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to, enter into, accept, approve or recommend any
Acquisition Proposal. THOUGHTSTAR represents and warrants that it has the legal
right to terminate any pending discussions or negotiations relating to an
Acquisition Proposal without payment of any fee or other penalty.
(ii) During the Interim Period, THOUGHTSTAR
shall notify iManage immediately (and no later than twenty-four (24) hours)
after receipt by THOUGHTSTAR (or its advisors) of any Acquisition Proposal or
any request for nonpublic information in connection with an Acquisition Proposal
or for access to the properties, books or records of THOUGHTSTAR by any person
or entity that informs THOUGHTSTAR that it is considering making, or has made,
an Acquisition Proposal. Such notice shall be made orally and in writing and
shall indicate in reasonable detail the identity of the offeror and the terms
and conditions of such proposal, inquiry or contact.
(e) No Acquisitions. During the Interim Period,
THOUGHTSTAR 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
acquire any assets, except in the ordinary course of business consistent with
prior practice.
(f) No Dispositions. During the Interim Period,
THOUGHTSTAR shall not sell, lease, license or otherwise dispose of any of its
assets, except in the ordinary course of business consistent with prior
practice.
(g) Indebtedness. During the Interim Period, THOUGHTSTAR
shall not incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of THOUGHTSTAR or guarantee
any debt securities of others, in each case other than, with prior written
notice to iManage, in the ordinary course of business consistent with prior
practice and other than the Loan (as defined in Section 6.5 below).
5.2 Breach of Representations and Warranties. During the Interim
Period, THOUGHTSTAR shall not take any action that would breach or cause to be
inaccurate any of
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the representations and warranties set forth in Section 3. Promptly after
becoming aware of the occurrence of or the pending or threatened occurrence of
any event that could cause or constitute such a breach or inaccuracy,
THOUGHTSTAR shall give detailed notice thereof to iManage and THOUGHTSTAR shall
use its commercially reasonable efforts to prevent or remedy such breach or
inaccuracy promptly.
5.3 Consents. After execution of this Agreement, THOUGHTSTAR
shall promptly apply for or otherwise seek, and use all reasonable efforts to
obtain, all consents and approvals required for the constitution of the Merger
including the unanimous written consent of the THOUGHTSTAR Shareholders to the
Merger contemplated by this Agreement.
5.4 Reasonable Efforts. THOUGHTSTAR shall use all reasonable
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement.
5.5 Tax Returns. THOUGHTSTAR shall timely file or cause to be
filed all tax returns, reports and information statements required to be filed
by it.
5.6 Access to Information. During the Interim Period,
THOUGHTSTAR shall afford iManage and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time of the Merger to (a) all of its books,
contracts, commitments and records, and (b) all other information concerning the
business, properties and personnel of THOUGHTSTAR as iManage may reasonably
request. No information or knowledge obtained in any investigation pursuant to
this Section 5.6 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of iManage to
consummate the Merger.
5.7 Delivery of Audited Financial Statements. THOUGHTSTAR shall
have prepared and shall cause to be delivered to iManage within 20 days from the
date of this Agreement, such audited financial statements of THOUGHTSTAR as
iManage will be required to file with the SEC in a report on Form 8-K following
the Effective Time of the Merger.
5.8 Termination of 401(k) Plan. THOUGHTSTAR and its ERISA
Affiliates each agrees to terminate, if applicable, its 401(k) plan immediately
prior to Closing, unless iManage, in its sole and absolute discretion, agrees to
sponsor and maintain such plan(s) by providing THOUGHTSTAR with written notice
of such election at least three (3) days before the Effective Time. Unless
iManage provides such notice to THOUGHTSTAR, iManage shall receive from
THOUGHTSTAR evidence that THOUGHTSTAR's and each ERISA Affiliate's (as
applicable) 401(k) plan has been terminated pursuant to resolutions of each such
entity's Board of Directors (the form and substance of which resolutions shall
be subject to review and approval of iManage), effective as of the day
immediately preceding the Closing.
5.9 Termination of Severance Plans. THOUGHTSTAR and its ERISA
Affiliates, as applicable, each agrees to terminate any and all group severance,
separation or salary continuation plans, programs or arrangements that are
covered under ERISA immediately prior to Closing. iManage shall receive from
THOUGHTSTAR evidence that such plan(s) have been terminated pursuant to
resolution of each such entity's Board of Directors (the form and
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substance of which resolutions shall be subject to review and approval of
iManage), effective as of the day immediately preceding the Closing.
6. Covenants of iManage. During the Interim Period, iManage agrees
(except to the extent that THOUGHTSTAR shall otherwise consent in writing) that:
6.1 Breach of Representations and Warranties. iManage shall not
take any action that would breach or cause to be inaccurate any of the
representations and warranties set forth in Section 4. 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, iManage shall give
detailed notice thereof to THOUGHTSTAR and shall use its commercially reasonable
efforts to prevent or promptly remedy such breach or inaccuracy.
6.2 Consents. After execution of this Agreement, iManage shall
promptly apply for or otherwise seek, and use its reasonable efforts to obtain,
all consents and approvals required or that THOUGHTSTAR may reasonably request
for the consummation of the Merger. Notwithstanding the foregoing, in no event
shall iManage or any of its affiliates have any obligation to divest, or agree
to divest, any assets as a condition to obtaining any consent or approval
necessary to consummate the Merger.
6.3 Reasonable Efforts. iManage shall use its reasonable efforts
to effectuate the transactions contemplated hereby and to fulfill and cause to
be fulfilled the conditions to Closing under this Agreement.
6.4 Access to Information. iManage shall respond to questions
concerning information and financial statements contained in the SEC Documents
and senior management of iManage shall, upon request, make a presentation to
THOUGHTSTAR's Board of Directors and the THOUGHTSTAR Shareholders as to the
business, condition and financial prospects of iManage; provided that
information concerning iManage shall be limited to inquiry concerning
information that has otherwise been publicly disclosed. iManage shall furnish
all THOUGHTSTAR Shareholders with such information as is required to be
furnished under Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, at the time or times
and in the manner required by Regulation D. No information or knowledge obtained
through such questions or presentations pursuant to this Section 6.4 shall
affect or be deemed to modify any representation or warranty contained herein or
in the conditions to the obligations of THOUGHTSTAR to consummate the Merger.
6.5 Loan to THOUGHTSTAR. iManage shall loan up to four hundred
thousand dollars ($400,000) to THOUGHTSTAR (including the loan of one hundred
fifty thousand dollars ($150,000) loaned by iManage to THOUGHTSTAR on March 23,
2000), as needed from time to time for working capital of THOUGHTSTAR (the
"LOAN"); provided that on and after the date of this Agreement such amounts may
only be expended with the prior approval of iManage, which shall not be
unreasonably withheld. No amounts shall be advanced on the Loan on and after the
date, if any, that this Agreement terminates pursuant to Section 9.1 or after
any breach of or default under this Agreement by THOUGHTSTAR. Any monies so
loaned by iManage shall be due and payable, together with accrued but unpaid
interest, on the earlier of (x) day that is sixty (60) days following the
termination of this Agreement pursuant to
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Section 9.1, and (y) the date, if any, on which THOUGHTSTAR commits a breach of
or default under this Agreement. Interest shall accrue on such Loan at the rate
of Prime and one-quarter percent (0.25%) per annum, based on a 360 day year.
("PRIME" shall mean the variable rate of interest, per annum, most recently
announced by Silicon Valley Bank as its "prime rate," whether or not such
announced rate is the lowest rate available from such Bank.) The principal of,
and accrued interest on the Loan is the "LOAN INDEBTEDNESS." The Loan shall be
evidenced by a promissory note in the form attached as Exhibit E hereto. At the
Effective Time of the Merger, the Loan Indebtedness shall be cancelled and all
amounts due and owing the Loan shall be forgiven.
In the event that the Closing has not occurred by May 5, 2000 for
reasons related to iManage's failure to satisfy the conditions to the
obligations of THOUGHTSTAR to effect the Merger or for reasons related to
THOUGHTSTAR's failure to satisfy the conditions to the obligations of iManage to
effect the Merger (other than failures by THOUGHTSTAR to satisfy the conditions
set forth in Sections 5.7 and 8.2(a), (b) (to the extent within the control of
THOUGHTSTAR), (c), (d), (e), (f), (g) (to the extent within the control of
THOUGHTSTAR), (h), (k), (n) (except for the exercise of the Utah Technology
Finance Corporation warrant) or (o)) and 8.5(g), and THOUGHTSTAR has
insufficient funds to conduct its operations in the manner described in Article
5, then iManage shall make such additional loans to THOUGHTSTAR as iManage and
THOUGHTSTAR reasonably mutually agree are required to enable THOUGHTSTAR to so
conduct its operations. Any such additional loan shall be evidence by a
promissory note in substantially the form of Exhibit E hereto and shall be
subject to the terms and conditions set forth in this Section 6.5 and in the
form of promissory note attached as Exhibit E hereto with respect to the Loan.
6.6 Registration Rights Agreement. During the Interim Period
iManage will use its reasonable efforts to seek the consent of existing holders
of rights for the registration under the Securities Act of 1933, as amended, of
shares of Common Stock of iManage held by them to an amendment and restatement
of the existing registration rights agreement between iManage and such existing
holders in the form of an Amended and Restated Registration Rights Agreement
attached as Exhibit F. In the event such consent cannot be obtained, iManage
shall seek the consent of such existing holders to an amendment and restatement
of such agreement that would contain the provisions contained in section 1.5 of
the form of agreement attached as Exhibit F, except that such section would not
include the provisions of section 1.5 (c)(iv) and would not permit other holders
of iManage securities to have their securities registered pursuant to Section
1.5. Such an amendment and restatement being referred to herein as the
"REGISTRATION RIGHTS AGREEMENT".
7. Additional Agreements. In addition to the foregoing, iManage and
THOUGHTSTAR each agree to take the following actions after the execution of this
Agreement:
7.1 Legal Conditions to the Merger. Each of the parties shall
take all reasonable actions necessary to comply promptly with all legal
requirements that may be imposed on such parties with respect to the Merger and
will promptly cooperate with and furnish information to such other parties in
connection with any such requirements imposed upon such other parties in
connection with the Merger. Each of the parties shall take all reasonable
actions to obtain (and to cooperate with such other parties in obtaining) any
consent, authorization, order
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or approval of, or any exemption by, any Governmental Entity, or other third
party, required to be obtained or made by the parties in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement or
the Merger Agreement.
7.2 Employee Stock Options. iManage will file a Form S-8
Registration Statement covering the shares of iManage Common Stock issuable upon
the exercise of Continuing Key Employee Options within 150 days following the
Closing Date and will use its reasonable efforts to cause such shares to be
registered under the Securities Act and to maintain such registration in effect
until the exercise or termination of all of the Continuing Key Employee Options.
7.3 THOUGHTSTAR Employee Benefits. iManage shall take such
actions as it deems appropriate to make available as promptly as is reasonably
practicable to THOUGHTSTAR employees and contractors such benefits (including
vacation, medical, dental, life and disability insurance, and participation in
other company-wide plans) as are generally made available to employees of
iManage, or benefits that taken as a whole are reasonably equivalent thereto,
provided that this Section 7.3 shall not obligate iManage to maintain or
continue any specific benefits in effect for any period of time, it being the
intent of the parties solely to provide that the benefits to employees and
contractors of THOUGHTSTAR be reasonably equivalent to the benefits to iManage
employees and contractors as in effect from time to time. For purposes of
determining the benefits to which THOUGHTSTAR employees and contractors are
entitled to receive pursuant to the preceding sentence, THOUGHTSTAR employees
and contractors shall be deemed to have worked for iManage for the same period
as they have been employed by, or have been providing independent contractor
services to, THOUGHTSTAR.
7.4 Expenses.
(a) iManage shall pay its own costs, fees and expenses
incurred in connection with the Merger, including all actions taken in
connection therewith, including all legal and accounting costs, fees and
expenses, whether or not the Merger is consummated.
(b) If the Merger is consummated, except to the extent
set forth herein, neither iManage, Sub nor THOUGHTSTAR shall have any liability
for any legal, accounting or investment banking costs, fees or expenses incurred
by THOUGHTSTAR or its shareholders in connection with the Merger (including the
cost of preparing the audited financials of THOUGHTSTAR required by Section 5.7)
or any actions taken in connection therewith, and all such costs, fees and
expenses being "TRANSACTION EXPENSES". The Transaction Expenses shall be the
responsibility of the shareholders of THOUGHTSTAR (without limitation and
regardless of any provision of Article 10).
(c) If the Merger is not consummated, THOUGHTSTAR and/or
its shareholders shall pay all of their own costs, fees and expenses incurred in
connection with the Merger and all actions taken in connection therewith,
including all legal and accounting costs, fees and expenses.
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7.5 Additional Agreements. In case at any time after the
Effective Time of the Merger any further action is reasonable and 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 either iManage or THOUGHTSTAR, the proper officers
and directors of each corporation which is a party to this Agreement shall take
all such reasonable and necessary action.
7.6 Public Announcements. iManage and THOUGHTSTAR shall
cooperate with each other in releasing information concerning this Agreement and
the transactions contemplated herein. Where practicable each of the parties
shall furnish to the other drafts of all releases prior to publication. Nothing
contained herein shall prevent either party at any time from furnishing any
information to any governmental agency or prevent iManage from issuing any
release when it believes it is legally required to do so.
7.7 Confidentiality. Each party hereto shall treat, and shall
cause its accountants, counsel and other representatives to treat, as
confidential all confidential documents and information concerning the other
party and its Subsidiaries furnished by the other party to such party in
connection with the transactions contemplated by this Agreement, except to the
extent that such information or documents (i) at the time of its disclosure to
the receiving party by or on behalf of the disclosing party is already known or
available to the receiving party or its Subsidiaries, provided that the
receiving party or its Subsidiaries are not subject to similar restrictions of
confidentiality as set forth herein with a third party with respect to such
information; (ii) is or becomes known or available to the public other than as a
result of an unauthorized disclosure by the receiving party or its directors,
officers, employees, contractors, agents, representatives or advisors; (iii)
becomes known or available to the receiving party or its Subsidiaries without
similar restrictions of confidentiality as set forth herein from a source other
than the disclosing party, provided that such source is not known by the
receiving party, after reasonable inquiry, to be bound by a confidentiality
agreement with, or without obligation of secrecy to, the disclosing party which
would prohibit such disclosures to the receiving party by such other party; (iv)
is independently generated by the receiving party or its Subsidiaries and not
derived from confidential information; or (v) is required to be disclosed by the
receiving party or its Subsidiaries by law, regulation, court order or other
legal process, using the same standard of care to protect such confidential
documents or information as is used by the receiving party to protect its own
confidential data or information. Subject to the foregoing, each party hereto
will not release or disclose such information or documents to any person other
than its representatives in connection with this Agreement. In the event that
any party or any of its representatives is requested or required to disclose any
of the confidential information referred to above, such party will provide the
other party with prompt notice of any such request or requirement so that the
other party may seek a protective order or waive such party's compliance with
this Section 7.7. If, failing the entry of a protective order or the receipt of
a waiver hereunder, such party is, in the opinion of its counsel (which may be
internal counsel), compelled to disclose such confidential documents or
information, such party may, subject to prior notification thereof, disclose
that portion of such confidential documents or information which its counsel
advises that such party is compelled to disclose. In any event, any party hereto
will not oppose action by, and such party will cooperate with, the other party
to obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such confidential information. In the
event of the termination of this Agreement, each party, and shall
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cause its representatives to, deliver to the other party the originals of all
documents obtained by such party or on behalf of such party from the other party
in connection with this Agreement, whether so obtained before or after the
execution hereof, and such party shall, and shall cause its representatives to,
destroy all copies thereof; provided, that counsel to each party shall be
entitled to keep one copy of each such document for use in the event of
litigation or arbitration. The obligations contained in this Section 7.7 shall
terminate four years after the date hereof.
7.8 NASD and SEC Filings. iManage shall use reasonable efforts
to remain in compliance with the reporting obligations of all applicable
governmental acts, rules and regulations of any Governmental Entity, including
without limitation the Exchange Act and to remain listed on The Nasdaq National
Market or other comparable exchange, to the extent necessary to permit iManage
Common Stock to be traded under Rule 144. In addition, iManage shall file all
appropriate documents and otherwise shall use reasonable efforts to cause the
shares of iManage Common Stock issuable on the Merger to be listed on the Nasdaq
National Market.
7.9 Tax-Free Reorganization. iManage shall treat the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and shall
comply with all reporting requirements related thereto. iManage and THOUGHTSTAR
shall not take any action not otherwise contemplated by this Agreement and the
exhibits hereto that would reasonably be expected to cause the Merger to fail to
qualify as a reorganization.
7.10 Indemnification.
(a) From and after the Effective Time of the Merger,
iManage shall indemnify, defend and hold harmless the present and former
officers, directors and employees of THOUGHTSTAR (collectively, the "INDEMNIFIED
PARTIES") against all losses, expenses, claims, judgments, damages, liabilities
or amounts that are paid in settlement of, with the approval of iManage (which
approval shall not be unreasonably withheld), or otherwise in connection with,
any claim, action, suit, judgment, proceeding or investigation (a "CLAIM"),
based in whole or in part on the fact that such person is or was such a
director, officer or employee and arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), in each case to the fullest extent
permitted under Delaware Law (and shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Delaware Law).
(b) Without limiting the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or after
the Effective Time) after the Effective Time (i) the Indemnified Parties may
retain their regularly engaged independent legal counsel as of the date of this
Agreement, or other independent legal counsel satisfactory to them provided that
such other counsel shall be reasonably acceptable to iManage, (ii) iManage shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) iManage will use its
reasonable efforts to assist in the vigorous defense of any such matter,
provided that iManage shall not be liable for any settlement of any Claim
effected without its written consent, which consent shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 7.10, promptly upon learning of any such Claim, shall notify iManage
(although the failure so to notify
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iManage shall not relieve iManage from any liability which iManage may have
under this Section 7.10, except to the extent such failure prejudices iManage).
The Indemnified Parties as a group may retain one law firm (in addition to local
counsel) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as reasonably determined by
counsel to such Indemnified Parties) a conflict on any significant issue between
the position of any two or more of such Indemnified Parties, in which event, an
additional counsel may be retained by such Indemnified Parties.
This Section 7.10 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on iManage, iManage's obligations
pursuant to this Section 7.10 and its and their successors and permitted
assigns.
7.11 Notification of Certain Matters. During the Interim Period,
THOUGHTSTAR shall give prompt written notice to iManage and Sub, and iManage and
Sub shall give prompt written notice to THOUGHTSTAR, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by THOUGHTSTAR, iManage or Sub, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
7.12 ▇▇▇▇▇ Lease, American Express Obligations. From and after
the Effective Time, iManage shall (i) use commercially reasonable efforts to
cause ▇▇▇▇▇ ▇▇▇▇▇▇ to be released from any and all obligations pursuant to the
▇▇▇▇▇ Lease, including without limitation, by providing the landlord pursuant to
such lease with an unconditional guaranty from iManage on commercially
reasonable terms; provided that nothing in this clause 7.12 (i) shall relieve
▇▇▇▇▇ ▇▇▇▇▇▇ or THOUGHTSTAR from their obligations to cause the ▇▇▇▇▇ Lease to
be assigned to Sub at the Effective Time, (ii) indemnify and hold ▇▇▇▇▇ ▇▇▇▇▇▇
harmless from any liability pursuant to or in connection with the ▇▇▇▇▇ Lease
and (iii) reimburse ▇▇▇▇▇▇ for any expenditures by or on behalf of THOUGHTSTAR
made using Carter's American Express Card in the 90 day period preceding the
Closing Date to the extent such expenditures were included in the financial
statements delivered to iManage pursuant to Section 5.7 plus any additional
expenditures during such 90 day period in an amount of up to $10,000; provided
that prior to the Closing Date ▇▇▇▇▇ ▇▇▇▇▇▇ had not been reimbursed therefor by
or on behalf of THOUGHTSTAR. This Section 7.12 is intended to be for the benefit
of, and shall be enforceable by, ▇▇▇▇▇ ▇▇▇▇▇▇, his heirs and personal
representatives, and shall be binding on iManage and its successors and
permitted assigns.
7.13 Shareholder Representative. iManage shall indemnify ▇▇▇▇▇
▇▇▇▇▇▇ for any and all claims brought by THOUGHTSTAR Shareholders against ▇▇▇▇▇
▇▇▇▇▇▇ in respect of actions taken or omitted to be taken by him as contemplated
by Section 2.3(a)(i)(B) and as the Shareholder Representative under the Escrow
Agreement as contemplated by Article 10. This Section 7.13 is intended to be for
the benefit of, and shall be enforceable by, ▇▇▇▇▇ ▇▇▇▇▇▇, his heirs and
personal representatives, and shall be binding on iManage and its successors and
permitted assigns.
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7.14 [****]
7.15 Notification of Certain Matters. THOUGHTSTAR shall give
prompt written notice to iManage and Sub, and iManage and Sub shall give prompt
written notice to THOUGHTSTAR, of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would cause any representation
or warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure by THOUGHTSTAR, iManage or Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder. No such disclosure shall be taken into account in determining
whether the conditions to any parties' obligations to consummate the
transactions contemplated by this Agreement have been satisfied, but such
disclosure shall be deemed to supplement, modify and/or amend the Disclosure
Schedules to this Agreement prior to the Effective Time of the Merger as of the
date hereof solely for purposes of determining whether any party is liable for
any indemnification pursuant to Article 10.
8. Conditions Precedent.
8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing of the following conditions:
(a) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing or
prohibiting the consummation of the Merger shall have been issued by any Federal
or state court of competent jurisdiction and remain in effect, and no litigation
seeking the issuance of such an order or injunction, or seeking the imposition
against THOUGHTSTAR, the Surviving Corporation or iManage of substantial damages
if the Merger is consummated, shall be pending that, in the good faith judgment
of THOUGHTSTAR's or iManage's Board of Directors (acting upon the written
opinion of their respective outside counsel) has a reasonable probability of
resulting in such order, injunction or damages. In the event any such order or
injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(b) Statutes. No legal or regulatory action shall have
been taken, and no statute, rule, regulation or order shall have been enacted,
promulgated or issued applicable to the Merger by any Governmental Entity that
would (i) make the consummation of the Merger illegal, (ii) prohibit iManage's
or THOUGHTSTAR's ownership or operation of any portion of the business or assets
of THOUGHTSTAR or iManage and its Subsidiaries, or compel iManage, Sub or
THOUGHTSTAR to dispose of or hold separate any portion of the business or assets
of THOUGHTSTAR or iManage and its Subsidiaries, as a result of the Merger, or
(iii) render
****CERTAIN INFORMATION ON THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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iManage, Sub or THOUGHTSTAR unable to constitute the Merger, except for any
waiting period provisions.
8.2 Conditions of Obligations of iManage and Sub. The
obligations of iManage and Sub to effect the Merger are subject to the
satisfaction of the following conditions, unless waived by iManage and Sub:
(a) Shareholder Approval. This Agreement and each of the
Ancillary Agreements shall have been approved and adopted by the THOUGHTSTAR
Shareholders.
(b) Representations and Warranties. The representations
and warranties of THOUGHTSTAR set forth in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
which are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects) as
of the date of this Agreement, and as of the Closing Date, as though made on and
as of such date, except as otherwise contemplated by this Agreement, and iManage
shall have received a certificate signed by the president of THOUGHTSTAR to such
effect on the Closing Date.
(c) Registration Rights Agreement. The THOUGHTSTAR
Shareholders shall have executed and delivered a registration rights agreement
having the terms described in Section 6.6.
(d) Letters of Representation and Agreement. iManage
shall have received a Letter of Representation and Agreement from each
THOUGHTSTAR Shareholder regarding the shareholder's intent as to the shares of
iManage Common Stock to be received on the Merger and other matters in the
applicable form attached as Exhibit G hereto.
(e) Non-Solicitation and Non-Compete Agreements. iManage
shall have received Consulting Agreements executed by ▇▇▇▇▇ ▇▇▇▇▇▇ in the forms
attached as Exhibit C hereto.
(f) Employment Agreements. The Continuing Key Employees
shall have executed their respective Employment Agreements. THOUGHTSTAR shall
not be a party to any oral or written agreement, obligation or commitment with
any employee, contractor or individual consultant or salesperson or consulting
or sales or distribution agreement, contract or commitment with a firm or other
organization that, as of the time immediately prior to the Effective Time of the
Merger, is not terminable by THOUGHTSTAR on thirty (30) days' notice without
liability.
(g) Performance of Obligations of THOUGHTSTAR.
THOUGHTSTAR shall have performed in all material respects all obligations and
covenants required to be performed by it under this Agreement and the Merger
Agreement prior to the Closing Date, and iManage shall have received a
certificate signed by the President of THOUGHTSTAR to such effect.
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(h) Opinion of THOUGHTSTAR's Counsel. iManage shall have
received an opinion dated the Closing Date of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
counsel to THOUGHTSTAR, as to the matters set forth in Exhibit H.
(i) Material Adverse Change. There shall not have
occurred any Material Adverse Change in the business condition, results of
operations or prospects of THOUGHTSTAR between the date of this Agreement and
the Closing Date. Without limitation to the foregoing, the audited financial
statements delivered by THOUGHTSTAR pursuant to Section 5.7 of this Agreement,
shall not be materially adversely different from the unaudited financial
statements previously delivered by THOUGHTSTAR to iManage, and no adverse
changes in the balance sheet of THOUGHTSTAR (including but not limited to cash
distributions or material decreases in net assets), except as would occur in the
ordinary course of business, shall have occurred between March 31, 2000 and the
Closing Date.
(j) Third-Party Approvals. All consents or approvals
required from third parties relating to contracts, licenses, leases and other
instruments material to the business condition of THOUGHTSTAR shall have been
obtained, including the assignment of all material contracts and other
agreements of THOUGHTSTAR or, in the case of the ▇▇▇▇▇ Lease, ▇▇▇▇▇ ▇▇▇▇▇▇, to
Sub, effective at the Effective Time of the Merger.
(k) Dissenters Rights. No shares of outstanding
THOUGHTSTAR Common Stock shall be held by persons entitled to elect dissenters'
rights as to such shares.
(l) Repayment of Debt. All indebtedness for borrowed
money of THOUGHTSTAR (including any current portion thereof) other than the Loan
Indebtedness shall have been repaid at the Effective Time of the Merger,
together with any interest, premium, if any, and fees thereon.
(m) Opinion as to Tax Matters. iManage shall have
received an opinion dated as of the Closing Date of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
LLP, counsel to iManage, to the effect that the Merger will be treated as a
"reorganization" within the meaning of Code Section 368(a). The parties to this
Agreement agree to make such reasonable representations as are requested by such
counsel for the purpose of rendering such opinion.
(n) Options and Warrants. All THOUGHTSTAR Options
(except for Continuing Key Employee Options) and all outstanding THOUGHTSTAR
Warrants shall have been exercised prior to the Closing. The Continuing Key
Employees shall have entered into their respective Continuing Key Employee
Option Agreements.
(o) Transaction Expenses. Prior to the Effective Time of
the Merger, iManage shall have been provided with invoices that have been
approved for payment by ▇▇▇▇▇ ▇▇▇▇▇▇ covering all Transaction Expenses and shall
have received a certificate signed by an officer of THOUGHTSTAR dated the
Closing Date to such effect.
8.3 Conditions of Obligations of THOUGHTSTAR. The obligation of
THOUGHTSTAR to effect the Merger is subject to the satisfaction of the following
conditions unless waived by THOUGHTSTAR:
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(a) Representations and Warranties. The representations
and warranties of iManage and Sub set forth in this Agreement and the Merger
Agreement shall be true and correct in all material respects (except for such
representations and warranties which are qualified by their terms by a reference
to materiality, which representations and warranties as so qualified shall be
true in all respects) as of the date of this Agreement and as of the Closing
Date as though made on and as of such date, except as otherwise contemplated by
this Agreement, and THOUGHTSTAR shall have received a certificate signed by the
chief executive officer or chief financial officer of iManage to such effect on
the Closing Date.
(b) Registration Rights Agreement. iManage shall have
executed and delivered a registration rights agreement having the terms
described in Section 6.6.
(c) Consulting Agreement. iManage shall have executed
and delivered the Consulting Agreements to ▇▇▇▇▇ ▇▇▇▇▇▇ in the forms attached as
Exhibit C hereto.
(d) Employment Agreements. iManage shall have executed
and delivered the Employment Agreements with the Continuing Key Employees.
(e) Performance of Obligations of iManage and Sub.
iManage and Sub shall have performed in all material respects all obligations
and covenants required to be performed by them under this Agreement prior to the
Closing Date, and THOUGHTSTAR shall have received a certificate signed by the
chief executive officer or chief financial officer of iManage to such effect.
(f) Material Adverse Change. There shall not have
occurred any Material Adverse Change in the business, assets (including
intangible assets), financial condition or results of operations of iManage and
its Subsidiaries taken as a whole, between the date of this Agreement and the
Closing Date.
(g) Opinion as to Tax Matters. THOUGHTSTAR shall have
received an opinion dated as of the Closing Date of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, counsel to THOUGHTSTAR to the effect that the Merger will be treated
as a "reorganization" within the meaning of Code Section 368(a). The parties to
this Agreement agree to make such representations as are requested by such
counsel for the purpose of rendering such opinion.
9. Termination, Amendment and Waiver.
9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the THOUGHTSTAR Shareholders:
(a) by mutual written consent of the Chief Executive
Officers of iManage and THOUGHTSTAR;
(b) by either iManage or THOUGHTSTAR if such party is
not in breach of its obligations under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of the other party set forth in this Agreement and
such breach of a representation, warranty, covenant or
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agreement has not been promptly cured within five business days after written
notice thereof (provided that no cure period shall be required for a breach
which by its nature cannot be cured); or
(c) by either iManage or THOUGHTSTAR if (i) the Merger
shall not have been consummated before July 15, 2000 (provided that the right to
terminate this Agreement under this Section 9.1(c) shall not be available to any
party whose willful failure to fulfill any obligation hereunder has been the
cause of, or resulted in, the failure of the Effective Time of the Merger to
occur on or before such date); (ii) there shall be a final nonappealable order
of a Federal or state court of competent jurisdiction in effect preventing or
prohibiting the consummation of the Merger; or (iii) there shall be any statute,
rule, regulation or order enacted, promulgated or issued applicable to the
Merger by any Governmental Entity that would make consummation of the Merger
illegal.
If action is taken to terminate this Agreement pursuant to this Section 9.1, it
shall be sufficient for such action to be authorized by the Board of Directors
of the party taking such action.
9.2 Effect of Termination. In the event of termination of this
Agreement by either THOUGHTSTAR or iManage as provided in Section 9.1, this
Agreement and the Merger Agreement shall immediately become void and there shall
be no liability or obligation on the part of iManage, Sub or THOUGHTSTAR or
their respective officers, directors, shareholders, employees, contractors,
agents or other representatives, except as set forth in Sections 6.5, 7.4, 7.7,
9 and 12 of this Agreement which shall remain in full force and effect and
survive any termination of this Agreement, and except to the extent that such
termination results from the willful breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
9.3 Amendment. This Agreement may be amended by iManage, Sub and
THOUGHTSTAR or their respective successors or assigns, by action taken by their
respective Board of Directors, at any time before or after approval of matters
presented in connection with the Merger by the THOUGHTSTAR Shareholders but
after any such shareholder approval, no amendment shall be made which by law
requires the further approval of shareholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of iManage, Sub and THOUGHTSTAR or their respective
successors or assigns.
9.4 Extension; Waiver. At any time prior to the Effective Time
of the Merger, iManage or THOUGHTSTAR, by action taken by its Board of Directors
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties 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 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.
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10. Survival of Representations and Warranties; Indemnification;
Liability.
10.1 Survival of Representations and Warranties. All of the
representations and warranties made by THOUGHTSTAR, iManage and Sub in this
Agreement or in any instrument delivered pursuant to this Agreement (as modified
by the Disclosure Schedules of THOUGHTSTAR) shall, subject to Section 9, survive
the Merger and continue until 5:00 p.m., California time, on the date which is
twelve months following the Closing Date (the "EXPIRATION DATE").
10.2 Indemnification by and Liability of the THOUGHTSTAR
Shareholders. The THOUGHTSTAR Shareholders agree, severally, to indemnify,
defend and hold harmless iManage, Sub and their respective officers, directors
and shareholders (the "INDEMNIFIED PARTIES") against all claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys', accountants' and expert witness' and the costs and expenses of
enforcing this indemnification (hereafter individually a "LOSS" and collectively
"Losses"), including without limitation, Losses resulting from the defense,
settlement or compromise of a claim or demand or assessment incurred by such
Indemnified Parties as a result of or with respect to a breach or inaccuracy of
the representations or warranties of THOUGHTSTAR set forth in this Agreement or
in the Disclosure Schedules, exhibits or other documents delivered pursuant
hereto by THOUGHTSTAR or any failure by THOUGHTSTAR to perform or comply with
any covenant contained herein or in any schedules, exhibits or other documents
delivered pursuant hereto.
Subject to Sections 10.3(e) and 10.5, from and after the Effective Time
of the Merger, the remedies provided for in this Section 10 shall be the sole
and exclusive remedies available to iManage or Sub against the THOUGHTSTAR
Shareholders (or their respective successors and assigns) in the event of a
breach by THOUGHTSTAR of any representation, warranty, covenant or agreement set
forth in this Agreement.
10.3 Limitations and Expiration. Notwithstanding the above,
subject to Section 10.5.
(a) there shall be no liability for indemnification for
any Losses under this Section 10 unless and until the aggregate amount of all
Losses exceeds $50,000 (at which point the Indemnified Parties shall be entitled
to be indemnified up to the total of all Losses, including the initial $50,000),
(b) there shall be no liability for indemnification
under this Section 10 for any Losses or Escrow Transaction Expenses which, in
the aggregate, exceed the value of ten percent (10%) of the aggregate value of
the total Merger Consideration ("ESCROW AMOUNT"), except as provided in Section
10.3(c) below,
(c) an amount equal to the Escrow Amount shall be
withheld from the Merger Consideration paid by iManage to the THOUGHTSTAR
Shareholders (with the number of shares withheld from each THOUGHTSTAR
Shareholder being proportional to the number of shares of THOUGHTSTAR Common
Stock owned by each such THOUGHTSTAR Shareholder immediately prior to the
Effective Time of the Merger) and shall be held in escrow to the
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Expiration Date in a fund to be established and managed pursuant to an Escrow
Agreement (the "ESCROW AGREEMENT") in which ▇▇▇▇▇ ▇▇▇▇▇▇ is appointed the
Shareholder Representative (the "ESCROW FUND"), and the Escrow Fund shall be
iManage's sole and exclusive remedy for any Losses,
(d) all claims for Losses paid to the Indemnified
Parties shall be paid only from the Escrow Fund and any moneys remaining in the
Escrow Fund at the Expiration Date shall be transferred to the THOUGHTSTAR
Shareholders in proportion to their interests therein,
(e) nothing in this Agreement shall limit, in any manner
(whether by time, amount, procedure or otherwise), any remedy at law or in
equity to which iManage may be entitled as a result of actual fraud by any
THOUGHTSTAR Shareholder, and
(f) the indemnification obligations under this Section
10 shall terminate on the later of (i) the Expiration Date, and (ii) the final
resolution of any and all claims under this Agreement pending as of the
Expiration Date.
10.4 Indemnification Procedures. Upon obtaining knowledge of the
institution of any action, proceeding, or other event which could give rise to a
claim of indemnity pursuant to this Section 10, iManage shall promptly give
written notice to the Shareholder Representative appointed pursuant to the
Escrow Agreement. The notice shall describe the facts or alleged facts and the
potential Loss or range of Loss if the Loss can be estimated. Except to the
extent set forth below in this Section 10.4, if such claim or demand relates to
a claim or demand asserted by a third party, iManage shall have the right, at
the expense of the THOUGHTSTAR Shareholders, to employ counsel to defend such
claim or demand and the THOUGHTSTAR Shareholders shall have the obligation to
assist in the defense of any such claim or demand; provided that the THOUGHTSTAR
Shareholders shall have no obligation to incur any expense in connection with
such assistance, but any expense borne by iManage in obtaining such assistance
shall be a Loss under this Article 10; provided further that any such settlement
shall be subject to the approval of the Shareholder Representative, which
approval will not be unreasonably withheld or delayed.
iManage will keep the Shareholder Representative reasonably
informed as to the status of any claim or demand asserted by a third party and
shall allow the Shareholder Representative to participate in any proceeding with
respect to such a claim, but at the expense of the Shareholder Representative or
the THOUGHTSTAR Shareholders; provided that iManage shall remain in control in
any such proceeding.
10.5 Expenses. Notwithstanding the terms and provisions of
Section 10.3 above, any and all costs, fees and expenses to be borne by the
shareholders of THOUGHTSTAR pursuant to Section 7.4 above, shall be paid by such
shareholders without regard to the provisions of Section 10.3 above; none of the
limitations of such Section 10.3 shall apply with respect to such costs, fees or
expenses; and the payment of such costs, fees and expenses shall not reduce the
Escrow Amount. iManage may, at its election, apply monies in the Escrow Fund to
all or any portion of any Loss suffered by it by reason of a breach of or
default under Section 7.4, but iManage shall not be required to do so and may
seek recovery for any such Loss
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from any other source, including any asset of any THOUGHTSTAR Shareholder
outside of the Escrow Fund.
11. Further Acts. If, at any time after the Closing, any further action
is necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full right, title and possession to all assets,
properties, rights, privileges, approvals, immunities, powers and franchises of
THOUGHTSTAR and Sub, the parties hereto, and the officers and directors thereof
(as applicable), are fully authorized in the name of their respective
corporations or otherwise to take, and they agree to take, all such necessary
action.
12. Miscellaneous.
12.1 Assignment. The rights hereunder shall not be assignable
and the duties and obligations hereunder shall not be delegable by any party
without the prior written consent of the parties. Nothing contained in or
implied from this Agreement is intended to confer any rights or remedies upon
any person or entity, other than the parties hereto and their successors in
interest and permitted assignees, unless expressly stated herein to the
contrary.
12.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto agrees that process may be served upon
them in any manner authorized by the laws of the State of California for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
12.3 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, couriered via overnight courier, or, if
mailed, when mailed by United States certified or registered mail, prepaid, or
sent via facsimile to the parties or their assignees at the following addresses
(or at such other address as shall be given in writing by any party to the
other):
iManage or Sub: iManage, Inc.
Suite 400
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Victoria W-Y ▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
THOUGHTSTAR: THOUGHTSTAR, INC.
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
12.4 Expenses. Except as set forth in Section 7.4, all expenses
incurred by either party in connection with the execution and performance of
this Agreement shall be the obligation of and shall be paid by such party.
12.5 Attorneys' Fees. In any litigation or arbitration relating
to this Agreement, including litigation or arbitration with respect to any
instrument, document or agreement made under or in connection with this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorneys' fees.
12.6 Dispute Resolution. The parties will negotiate in good
faith to resolve any dispute between them regarding the Agreement. If such
negotiations do not resolve the dispute to the satisfaction of both parties,
then an officer of iManage and ▇▇▇▇▇ ▇▇▇▇▇▇ shall meet in person and alone
(except for one other assistant allowed for each party) and shall attempt in
good faith to resolve the dispute within twenty (20) days of a request for such
meeting. This meeting shall be a required prerequisite before either party may
seek judicial or governmental resolution of the dispute. In the event no
agreement can be reached on such dispute within thirty (30) days after the
meeting of the senior executives between the two parties, either party may
institute legal action.
12.7 Successors and Assigns. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of the parties, their respective heirs, personal
representatives, and permitted successors and assigns.
12.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.9 Captions and Headings. Captions and headings used herein
are for convenience only and are not a part of this Agreement and shall not be
used in construing it.
12.10 Entire Agreement. This Agreement, together with the
exhibits and schedules to this Agreement and the other documents contemplated
hereby, constitute the final written expression of the agreement among the
parties, and is a complete and exclusive statement of those terms, subject to
any amendments prepared and executed in accordance with Section 12.11 hereof. It
supersedes all prior understandings and negotiations concerning the matters
specified herein and therein. Any representations, promises, warranties or
statements made by any party that differ in any way from the terms of this
written Agreement and the exhibits and schedules to this Agreement and other
documents contemplated hereby, shall be given no force or effect. The parties
specifically represent, each to the others, that there are no
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additional or supplemental agreements between them related in any way to the
matters contained in this Agreement unless specifically included or referred to
in this Agreement.
12.11 Waivers. Any party hereto may by written notice to the
other parties, (i) extend the time for the performance of any of the obligations
or other actions of the other parties under this Agreement; (ii) waive any
inaccuracies in the representations or warranties of the other parties contained
in this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with any of the conditions or covenants of the other parties
contained in this Agreement; or (iv) waive performance of any of the obligations
of the other parties under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision hereunder
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision hereunder.
12.12 Severability. If one or more provisions of this Agreement
are held to be illegal, void or unenforceable by a court of competent
jurisdiction under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
12.13 Immediately Prior to the Effective Time of the Merger.
Except for the purposes of Sections 2.7 and 2.8 the term "immediately prior to
the Effective Time of the Merger" shall be deemed to give effect to the
transactions contemplated by Sections 2.7(b) and 2.8(b) to the extent such
actions are actually taken.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement and
Plan of Reorganization as of the date first above written.
iMANAGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
NETRIGHT TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
THOUGHTSTAR, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
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