Agreement and Plan of Merger among Chordiant Software, Inc., OnDemand Acquisition Corp., and OnDemand, Inc.
This agreement outlines the merger of OnDemand Acquisition Corp., a subsidiary of Chordiant Software, Inc., with OnDemand, Inc. Upon completion, OnDemand, Inc. will become a wholly-owned subsidiary of Chordiant. The agreement specifies the cash consideration to be paid to OnDemand's stockholders, subject to certain adjustments and an escrow for indemnification. The merger is governed by Delaware law, and the directors and officers of the surviving company will be chosen by Chordiant. The agreement also addresses the treatment of stock options and appraisal rights for dissenting shareholders.
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger
("Agreement") is made and entered into as of March 28, 2002, by and among Chordiant Software, Inc., a Delaware corporation ("Parent"), OnDemand Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), OnDemand, Inc., a Delaware corporation (the "Company") and the individuals or entities identified in Exhibit B (individually, the "Designated Stockholder" and collectively, the "Designated Stockholders"). Certain capitalized terms used in this Agreement are defined in Exhibit A.Recital
Parent, Merger Sub and the Company intend to effect a merger of Merger Sub into the Company (the "Merger") in accordance with this Agreement and the Delaware General Corporation Law ("DGCL"). Upon consummation of the Merger, Merger Sub will cease to exist, and the Company will become a wholly-owned subsidiary of Parent.Agreement
In consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties to this Agreement, intending to be legally bound, agree as follows:
- Description of Transaction
- Merger of Merger Sub into the Company.
Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and into the Company, and the separate existence of Merger Sub shall cease. The Company will continue as the surviving corporation in the Merger (the "Surviving Corporation"). - Effect of the Merger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL.
- Closing; Effective Time.
- The consummation of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Cooley Godward llp, Five Palo Alto Square, Palo Alto, California 94306 at 10:00 a.m. on April 1, 2002, or at such other time and date as mutually agreed upon by the parties (the "Scheduled Closing Time"). (The date on which the Closing actually takes place is referred to in this Agreement as the "Closing Date.") Contemporaneously with or as promptly as practicable after the Closing, a properly executed certificate of merger conforming to the requirements of the DGCL (the "Certificate of Merger") is being filed with the Secretary of State of the State of Delaware. The Merger shall take effect at the time the Certificate of Merger is filed with the Secretary of State of the State of Delaware (the "Effective Time"). The day on which the Effective Time shall occur shall be referred to as the "Effective Date."
- At the Effective Time, Parent shall make the cash payments pursuant to Section 1.5(a) to the Stockholders' Agent, or its designee, which shall be distributed by the Stockholders' Agent to the stockholders of the Company (individually, the "Stockholder" and collectively, the "Stockholders") who are entitled to receive a distribution in accordance with Exhibit 1.3(b); provided, however, that notwithstanding anything to the contrary contained in this Agreement, ten percent (10%) of the sum of (i) the Consideration Amount (as defined in Section 1.5(e)(iii)) and (ii) the Company's Net Cash (as defined in Section 1.5(e)(ii)) (the "Indemnification Escrow Amount") otherwise payable, pursuant to Section 1.5(a), to each of the stockholders shall be withheld from the proceeds of the Stockholders, pro rata, and deposited by Parent in escrow (rather than paid to such Stockholders) ("Indemnification Escrow Account") pursuant to the Indemnification Escrow Agreement (the "Indemnification Escrow Agreement").
- Certificate of Incorporation and Bylaws; Directors and Officers .
- The Certificate of Incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to conform to Exhibit 1.4.
- The Bylaws of the Surviving Corporation shall be amended and restated as of the Effective Time in a form acceptable to Parent.
- The directors and officers of the Surviving Corporation immediately after the Effective Time shall be those Persons designated by Parent in its sole discretion.
- Conversion of Shares.
- Subject to Section 1.7, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any Stockholder of the Company, the Cash Consideration (as defined in Section 1.5(c)), less the Indemnification Escrow Amount, shall be paid to the Stockholders' Agent for subsequent distribution as follows:
- to each share of Preferred Stock Series D, par value $0.001 ("Series D"), Preferred Stock Series C, par value $0.001 ("Series C"), Preferred Stock Series B, par value $0.001 ("Series B") and Preferred Stock Series A, par value $0.001 ("Series A"; all of the preferred series of stock collectively, the "Preferred Stock") of the Company outstanding immediately prior to the Effective Time, in pari passu, an amount equal to the corresponding purchase price of such Preferred Stock, as set forth in Exhibit 1.3(b), then;
- if any balance of the Cash Consideration remains, to each share of outstanding common stock, par value $0.001 ("Common Stock") and each share of the series of the Preferred Stock on an as converted basis (both Preferred Stock and Common Stock, collectively "Capital Stock"), as set forth in Exhibit 1.3(b), until each series of the Preferred Stock receives an amount equal to three times (3x) their corresponding purchase price, and thereafter;
- if any balance of the Cash Consideration remains, to each share of Common Stock equally until the Cash Consideration is completely distributed, in accordance with Exhibit 1.3(b).
- [Intentionally left blank.]
- The total cash consideration is Net Cash as of February 22, 2002 (as adjusted pursuant to Section 1.5(d)), plus Six Million Five Hundred Fifty Thousand Dollars ($6,550,000) (the "Cash Consideration").
- The Cash Consideration paid by Parent shall be reduced by (A) an amount equal to the Net Cash Reduction (as defined in Section 1.5(e)(i)) if the Company's Net Cash is less than Six Million Four Hundred Thousand Dollars ($6,400,000) as of the Effective Time and (B) an amount equal to the Consideration Adjustment (as defined in Section 1.5(e)(iii)) if the Closing Price (as defined in Section 1.5(e)(iv)) is less than the Parent's Threshold Price (as defined in Section 1.5(e)(v)).
- For the purposes of this Agreement:
- The "Net Cash Reduction" shall be the difference between the Net Cash as of February 22, 2002 and the Net Cash as of the Effective Date.
- The Company's "Net Cash," in the case of February 22, 2002, shall be the amount identified on Exhibit 1.5(e)(ii) and, in the case of the Effective Date, the amount calculated in the same manner and using the same principles that the Net Cash for February 22, 2002 was calculated; provided, however, a credit of $49,126 shall be credited to the Company's cash position and included in the calculation of Net Cash on the Effective Date (as detailed in Exhibit 1.5(e)(ii)).
- The "Consideration Adjustment" shall equal the product obtained by multiplying $6,550,000 (the "Consideration Amount") by the fraction of which the numerator is the difference between the Parent's Threshold Price and the Closing Price and the denominator is the Parent's Threshold Price.
- The "Closing Price" shall mean the average closing sale price in dollars of one share of Parent's common stock as reported on the Nasdaq National Market for the five most recent trading days leading up to the day before the Closing Date.
- "Parent's Threshold Price" is $4.50 per share of common stock.
(a) Subject to Section 1.7(b) and notwithstanding any provision of this Agreement to the contrary, Dissenting Shares (as hereinafter defined) shall not be converted into or represent a right to receive the Cash Consideration, but the holder thereof shall be entitled to only such rights as are granted by the DGCL or the California General Corporation Law (the "CGCL"), if applicable.
(b) If any holder of shares of Capital Stock of the Company who demands appraisal of such holder's shares of Capital Stock under the DGCL or the CGCL effectively withdraws or loses (through failure to perfect or otherwise) his, her or its right to appraisal, then as of the Effective Time or the occurrence of such event, whichever later occurs, such holder's shares of Company Capital Stock shall automatically be converted into and represent only the right to receive the amount of Cash Consideration as set forth in Exhibit 1.3(b), without interest, upon surrender of a valid certificate previously representing any of such shares of Capital Stock of the Company.
"Dissenting Shares" shall mean any shares of Company Capital Stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing, and who has demanded appraisal for such shares of Company Capital Stock in accordance with Section 262 of the DGCL, or, if Section 2115 of the CGCL applies to the Company, has taken such steps as are required under Chapter 13 of the CGCL to demand dissenters' rights thereunder for such shares.
The Company and the Designated Stockholders, jointly and severally, represent and warrant, to and for the benefit of the Indemnitees, the following representations and warranties. In connection with the representations and warranties of the Designated Stockholders, each representation and warranty by them shall be qualified only to such Designated Stockholder's Knowledge except for the representations and warranties contained in Sections 2.3, 2.4, 2.5, 2.6 and 2.14 which shall not be so qualified. When documents or other materials are represented as being "delivered," it shall mean that such documents or other materials have been either delivered or made available to the Parent for its review.
- Due Organization; No Subsidiaries; Etc.
- The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all necessary corporate power and authority: (i) to conduct its business in the manner in which its business is currently being conducted and in the manner in which its business is proposed to be conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all Contracts by which it is bound. The Company is not, and has not been, required to be qualified, authorized, registered or licensed to do business as a foreign corporation in any jurisdiction.
- The Company has not conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name "OnDemand"
- Part 2.1(c) of the Disclosure Schedule accurately sets forth (i) the names of the members of the Company's board of directors, and (ii) the names and titles of the Company's officers. The Company's board of directors has never established any committees.
- The Company has no subsidiaries, and has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect interest of any nature in, any other Entity.
- The Company has delivered to Parent the following financial statements and notes (collectively, the "Company Financial Statements"): (i) the audited balance sheets of the Company as of September 30, 1999, September 30, 2000 and September 30, 2001 and the related audited statement of income, statement of stockholders' equity and statement of cash flows of the Company for the years then ended, together with the notes thereto (the "Audited Financial Statements"); and (ii) the unaudited balance sheet of the Company as of February 28, 2002 (the "Unaudited Interim Balance Sheet"), and the related unaudited statement of income of the Company for the five months then ended.
- The Company Financial Statements are accurate and complete in all respects and present fairly the financial position of the Company as of the respective dates thereof and the results of operations and cash flows of the Company for the periods covered thereby. The Company Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered (except that the financial statements referred to in Section 2.4(a)(ii) do not contain footnotes and are subject to normal and recurring year-end audit adjustments, which will not, individually or in the aggregate, be material in magnitude).
- Part 2.4(c) of the Disclosure Schedule sets forth an accurate and complete list of all non-ordinary course indebtedness of the Company outstanding immediately prior to the execution of this Agreement, including all indebtedness outstanding under any convertible promissory notes of the Company.
- Part 2.4(d) of the Disclosure Schedule provides an accurate and complete breakdown and aging of all accounts receivable, notes receivable and other receivables of the Company as of February 28, 2002. Except as set forth in Part 2.4(d) of the Disclosure Schedule, all existing accounts receivable of the Company (including those accounts receivable reflected on the Unaudited Interim Balance Sheet that have not yet been collected and those accounts receivable that have arisen since February 28, 2002 and have not yet been collected) (i) represent valid obligations of customers of the Company arising from bona fide transactions entered into in the ordinary course of business, and (ii) are current and will be collected in full, without any counterclaim or set off, when due, net of an allowance for doubtful accounts not to exceed $10,000 in the aggregate.
- Part 2.4(e) of the Disclosure Schedule (i) identifies the revenues received from each customer of the Company and from each other Person from whom the Company generated revenues in the fiscal year ended September 30, 2001, and (ii) identifies the revenues received from each customer of the Company and from each other Person from whom the Company generated revenues through February 28, 2002. The Company has not received any written or oral notice indicating that any customer or other Person identified in Part 2.4(e) of the Disclosure Schedule intends or expects to cease dealing with the Company or to effect a material reduction in the volume of business transacted by such Person with the Company below historical levels.
(b)
Part 2.5(b) of the Disclosure Schedule provides an accurate and complete breakdown and aging of (i) all accounts payable of the Company as of February 28, 2002, and (ii) all notes payable of the Company and all indebtedness of the Company for borrowed money.- there has not been any Material Adverse Effect on the Company, and no event has occurred that will, or could reasonably be expected to, have a Material Adverse Effect on the Company;
- there has not been any loss, damage or destruction to, or any interruption in the use of, any of the Company's assets (whether or not covered by insurance) in an amount exceeding $10,000, individually or in the aggregate;
- the Company has not declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of Capital Stock, and has not repurchased, redeemed or otherwise reacquired any shares of Capital Stock or other securities;
- the Company has not sold, issued, granted, delivered or authorized the issuance, grant, delivery or sale of (i) any Capital Stock or other security, (ii) any option, call, warrant or right to acquire, or otherwise relating to, any Capital Stock or any other security, or (iii) any instrument convertible into or exchangeable for any Capital Stock or other security;
- the Company has not made any capital expenditure which, when added to all other capital expenditures made by the Company since February 28, 2002, exceeds $10,000 in the aggregate;
- the Company has not amended or prematurely terminated, or waived any material right or remedy under, any Company Contract in an amount exceeding $10,000, individually or in the aggregate;
- the Company has not (i) acquired, leased or licensed any right or other asset from any other Person (other than immaterial rights or other immaterial assets acquired, leased or licensed by the Company from other Persons in the ordinary course of business and consistent with the Company's past practices), (ii) sold or otherwise disposed of, or leased or licensed, any right or other asset to any other Person (other than immaterial rights or other immaterial assets disposed of or leased or licensed by the Company to other Persons in the ordinary course of business and consistent with the Company's past practices), or (iii) waived or relinquished any right (other than immaterial rights waived or relinquished by the Company in the ordinary course of business and consistent with the Company's past practices);
- the Company has not written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other receivable;
- the Company has not made any pledge of any of its assets or otherwise permitted any of its assets to become subject to any Encumbrance, except for pledges of immaterial assets made in the ordinary course of business and consistent with the Company's past practices;
- the Company has not (i) lent money to any Person, or (ii) incurred or guaranteed any indebtedness for borrowed money in an amount exceeding $10,000, individually or in the aggregate;
- the Company has not (i) established, adopted or amended any Plan (as defined in Section 2.15(c)), (ii) made any bonus, profit-sharing or similar payment to, or materially increased the amount of wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees, or (iii) accelerated the vesting under, any provision of any Plan or agreement related thereto;
- the Company has not changed any of its methods of accounting or accounting practices in any respect;
- the Company has not made any Tax election;
- the Company has not commenced or settled any Legal Proceeding;
- the Company has not entered into any material transaction or taken any other material action outside the ordinary course of business or inconsistent with its past practices;
- the Company has not assigned or otherwise transferred ownership of any Proprietary Assets to any other Person; and
- the Company has not agreed or committed to take any of the actions referred to in clauses "(c)" through "(p)" above.
- Part 2.10(a)(i) of the Disclosure Schedule sets forth, with respect to each Proprietary Asset owned by the Company and registered with any Governmental Body or for which an application has been filed with any Governmental Body: (i) a brief description of such Proprietary Asset, and (ii) the names of the jurisdictions covered by the applicable registration or application. Part 2.10(a)(ii) of the Disclosure Schedule identifies and provides a brief description of each Proprietary Asset owned by the Company that is not listed in Part 2.10(a)(i) of the Disclosure Schedule and that is material to the business of the Company. Part 2.10(a)(iii) of the Disclosure Schedule identifies and provides a brief description of, and identifies any ongoing royalty or payment obligations with respect to, each Proprietary Asset that is licensed or otherwise made available to the Company by any Person (except for any Proprietary Asset that is licensed to the Company under any third party software license generally available to the public or any Proprietary Asset purchased or leased for less than $10,000), and identifies the Contract under which such Proprietary Asset is being licensed or otherwise made available to the Company. The Company has good and valid title to all of the Company Proprietary Assets identified or required to be identified in Parts 2.10(a)(i) and 2.10(a)(ii) of the Disclosure Schedule, free and clear of all Encumbrances, except for any lien for current taxes not yet due and payable. The Company has a valid right to use, license and otherwise exploit all Proprietary Assets identified in Part 2.10(a)(iii) of the Disclosure Schedule to the extent necessary to conduct the Company's business. Except as set forth in Part 2.10(a)(iv) of the Disclosure Schedule, the Company has not developed jointly with any other Person any Company Proprietary Asset with respect to which such other Person has any rights. Except as set forth in Part 2.10(a)(v) of the Disclosure Schedule, there is no Company Contract (with the exception of end user license agreements in the form previously delivered by the Company to Parent) pursuant to which any Person has any right (whether or not currently exercisable) to use, license or otherwise exploit any Company Proprietary Asset.
- The Company has taken all commercially reasonable measures and precautions to protect and maintain the confidentiality, secrecy and value of all Company Proprietary Assets (except Company Proprietary Assets whose value would be unimpaired by disclosure). Without limiting the generality of the foregoing, except as set forth in Part 2.10(b) of the Disclosure Schedule, (i) each current or former employee of the Company who is or was involved in, or who has contributed to, the creation or development of any material Company Proprietary Asset has executed and delivered to the Company an agreement (containing no exceptions to or exclusions from the scope of its coverage) that is substantially identical to the form of Executive Employment, Confidentiality and Invention Assignment Agreement or Non-Executive Employment, Confidentiality and Invention Assignment Agreement previously delivered by the Company to Parent, and (ii) each current and former consultant and independent contractor to the Company who is or was involved in, or who has contributed to, the creation or development of any material Company Proprietary Asset has executed and delivered to the Company an agreement (containing no exceptions to or exclusions from the scope of its coverage) that is substantially identical to the form of Executive Employment, Confidentiality and Invention Assignment Agreement or Non-Executive Employment, Confidentiality and Invention Assignment Agreement previously delivered to Parent. No current or former employee, officer, director, Stockholder, consultant or independent contractor has any right, claim or interest in or with respect to any material Company Proprietary Asset.
- To the Company's Knowledge, all patents, trademarks, service marks and copyrights held by the Company are valid, enforceable and subsisting. All maintenance, annuity and other fees payable with respect to any Company Proprietary Assets have been fully paid and all filings required to have been made with respect to any Company Proprietary Assets have been properly made, in each case in a timely manner. The Company has never infringed, misappropriated, or made unlawful or unauthorized use of any Proprietary Asset owned by any other Person. The Company has not assumed any liability of another Person (including North Systems, Inc. and Womerra, Inc.) for infringement, misappropriation, or unlawful or unauthorized use of any Proprietary Asset not owned by the Company. None of the products or Proprietary Assets that are being or have been designed, created, developed, assembled, manufactured or sold by the Company is infringing, misappropriating or making any unlawful or unauthorized use of any Proprietary Asset owned or used by any other Person, and none of such products or Proprietary Assets have infringed, misappropriated or made any unlawful or unauthorized use of any Proprietary Asset owned or used by any other Person. Except as set forth in Part 2.10(c) of the Disclosure Schedule, the Company has never received any written or oral notice of any actual, alleged, possible or potential infringement, misappropriation or unlawful or unauthorized use of, any Proprietary Asset owned or used by any other Person. To the Knowledge of the Company, no other Person is infringing, misappropriating or making any unlawful or unauthorized use of, and no Proprietary Asset owned or used by any other Person infringes with, any material Company Proprietary Asset.
- The Company Proprietary Assets constitute all the Proprietary Assets reasonably necessary to enable the Company to conduct its business in the manner in which such business has been and is being conducted. Except as set forth in Part 2.10(d) of the Disclosure Schedule, the Company has not (i) licensed any of the Company Proprietary Assets to any Person on an exclusive basis, or (ii) entered into any covenant not to compete or Contract limiting or purporting to limit the ability of the Company to exploit fully any material Company Proprietary Assets or to transact business in any market or geographical area or with any Person.
- Except as set forth in Part 2.10(e)(i) of the Disclosure Schedule, the Company has not disclosed or delivered to any Person, or permitted the disclosure or delivery to any escrow agent or other Person, of any Company Source Code. No event has occurred, and, to the Company's Knowledge, no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the disclosure or delivery to any Person of any Company Source Code or the release from any escrow of any other Company Proprietary Asset. Part 2.10(e)(ii) of the Disclosure Schedule identifies each Contract pursuant to which the Company has deposited or is required to deposit with an escrowholder or any other Person any Company Source Code, and further describes whether the execution of this Agreement or the consummation of any of the transactions contemplated hereby could reasonably be expected to result in the release or disclosure of any Company Source Code or the release from any escrow of any other Company Proprietary Asset.
- Except with respect to demonstration or trial copies, no product, system, program or software module designed or developed and sold, licensed or otherwise made available by the Company to any Person contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other software routines or hardware components designed to permit unauthorized access or to disable or erase software, hardware or data without the consent of the user.
- any Company Contract relating to the employment or engagement of, or the performance of services by, any employee, consultant or independent contractor;
(ii)
any Company Contract pursuant to which the Company is or may become obligated to make any severance, termination or similar payment to any current or former employee or director of the Company;(iii)
any Company Contract relating to the acquisition, transfer, use, development, sharing or license of any technology or any Proprietary Asset; - any Company Contract imposing any restriction on the Company's right or ability (A) to compete with any other Person, (B) to acquire any product or other asset or any services from any other Person, to sell any product or other asset to or perform any services for any other Person or to transact business or deal in any other manner with any other Person, (C) to solicit, hire or retain any Person as an employee, consultant or independent contractor, or (D) to develop or distribute any technology;
- any Company Contract creating or involving any agency relationship, distribution arrangement or franchise relationship;
- any Company Contract relating to the acquisition, issuance or transfer of any securities;
- any Company Contract creating or relating to any partnership or joint venture or any sharing of revenues, profits, losses, costs or liabilities;
(viii)
any Company Contract pursuant to which the Company is obligated to sell or license any products or pursuant to which the Company is obligated to provide any consulting, maintenance or other services for or to any Person; - any Company Contract with any Related Party;
- any Company Contract to which any Governmental Body is a party or under which any Governmental Body has any rights or obligations, or involving or directly or indirectly benefiting any Governmental Body; and
- any Company Contract relating to the confidentiality or privacy of data or information received by the Company from other Persons, including any customer contract containing any confidentiality or other similar provisions (other than nondisclosure agreements entered into by the Company with one other Person in the ordinary course of business).
(Contracts in the respective categories described in clauses "(i)" through "(xi)" above are referred to in this Agreement as "Material Contracts.")
(e)
Part 2.11(e) of the Disclosure Schedule identifies and provides an accurate and complete description of each proposed Contract as to which any bid, offer, written proposal, term sheet or similar document has been submitted or received by the Company.- Part 2.15(a) of the Disclosure Schedule contains a list of all Company Employees, and correctly reflects their salaries, any other compensation payable to them (including compensation payable pursuant to bonus, deferred compensation or commission arrangements), their dates of employment and their positions. The Company is not, and has never been, a party to any collective bargaining contract or other Contract with a labor union involving any of its current or former employees.
- There is no Company Employee who is not fully available to perform work because of disability or other leave. The employment of each of the Company Employees is terminable by the Company at will. The Company has delivered to Parent accurate and complete copies of all employee manuals and handbooks, disclosure materials, policy statements and other materials relating to the employment of the Company Employees.
- Part 2.15(c) of the Disclosure Schedule identifies each employment, salary, bonus, deferred compensation, incentive compensation, stock purchase, stock option, equity compensation, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension, retirement, welfare, fringe benefit or other employee benefits plan, program or agreement, whether written or unwritten and whether funded or unfunded (individually referred to as a "Plan" and collectively referred to as the "Plans") sponsored, maintained, contributed to or required to be contributed to by the Company for the benefit of any current or former employee, consultant or director of the Company or with respect to which the Company has or may have, either as of the date hereof or in the future, any liability or obligation.
- Except as set forth in Part 2.15(d) of the Disclosure Schedule, the Company does not maintain, sponsor or contribute to, and the Company has not at any time in the past maintained, sponsored or contributed to, any employee pension benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not excluded from coverage under specific Titles or Subtitles of ERISA) for the benefit of employees or former employees of the Company (a "Pension Plan").
- The Company does not maintain, sponsor or contribute to any employee welfare benefit plan (as defined in Section 3(1) of ERISA, whether or not excluded from coverage under specific Titles or Subtitles of ERISA) for the benefit of employees or former employees of the Company (a "Welfare Plan") except for those Welfare Plans described in Part 2.15(e) of the Disclosure Schedule, none of which is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
- With respect to each Plan, the Company has delivered to Parent: (i) an accurate and complete copy of such Plan (including all amendments thereto); (ii) an accurate and complete copy of the three most recent annual reports (if required under ERISA) with respect to such Plan for 2001; (iii) an accurate and complete copy of (A) the most recent summary plan description, together with each summary of material modifications (if required under ERISA) with respect to such Plan, and (B) each material employee communication relating to such Plan; (iv) if such Plan is funded through a trust or any third party funding vehicle, an accurate and complete copy of the trust or other funding agreement (including all amendments thereto) and accurate and complete copies of the most recent financial statements thereof; (v) accurate and complete copies of all Contracts relating to such Plan, including service provider agreements, insurance contracts, minimum premium contracts, stop-loss agreements, investment management agreements, subscription and participation agreements and recordkeeping agreements; and (vi) an accurate and complete copy of the most recent determination, advisory and/or opinion letter, as applicable, received from the Internal Revenue Service with respect to such Plan (if such Plan is intended to be qualified under Section 401(a) of the Code).
- The Company is not and has never been required to be treated as a single employer with any other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. The Company has never been a member of an "affiliated service group" within the meaning of Section 414(m) of the Code. The Company has never made a complete or partial withdrawal from a "multiemployer plan" (as defined in Section 3(37) of ERISA) resulting in "withdrawal liability" (as defined in Section 4201 of ERISA), without regard to subsequent reduction or waiver of such liability under either Section 4207 or 4208 of ERISA. The Company has never maintained, established, sponsored, participated in or contributed to any multiple employer plan, as described in Section 413(c) of the Code.
- The Company does not have any plan or commitment to create any additional arrangement that could constitute a Plan, Welfare Plan or Pension Plan, or to modify or change any existing Plan, Welfare Plan or Pension Plan (other than to comply with applicable law).
- No Welfare Plan provides death, medical or health benefits (whether or not insured) with respect to any current or former employee of the Company after any such employee's termination of service (other than (i) benefit coverage mandated by applicable law, including coverage provided pursuant to Section 4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on the Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are borne by current or former employees of the Company (or their beneficiaries)).
- With respect to each of the Welfare Plans constituting a group health plan within the meaning of Section 4980B(g)(2) of the Code, the provisions of Section 4980B of the Code ("COBRA") have been complied with in all material respects.
- Each of the Plans has been operated and administered in all material respects in accordance with applicable Legal Requirements, including ERISA and the Code.
- Each of the Plans intended to be qualified under Section 401(a) of the Code has received a favorable determination, advisory and/or opinion letter, as applicable, from the Internal Revenue Service, and neither the Company nor any of the Designated Stockholders is aware of any reason why any such determination letter should be revoked.
- Except as set forth in Part 2.15(m) of the Disclosure Schedule, neither the execution, delivery or performance of this Agreement, nor the consummation of the Merger or any of the other transactions contemplated by this Agreement, will (either alone or upon the occurrence of any additional or subsequent events) result in any bonus payment, golden parachute payment or severance payment to any current or former employee or director of the Company (whether or not under any Plan), or materially increase the benefits payable under any Plan, or result in any acceleration of the time of payment or vesting of any such benefits.
- The Company is in compliance in all material respects with all applicable Legal Requirements and Contracts relating to employment, employment practices, employee compensation, wages, bonuses and terms and conditions of employment.
- The Company has good labor relations, and, except as set forth in Part 2.15(o) of the Disclosure Schedule, neither the Company nor any of the Designated Stockholders has any Knowledge of any facts indicating that (i) the consummation of the Merger or any of the other transactions contemplated by this Agreement will have a material adverse effect on the Company's labor relations, or (ii) any of the Company's employees intends to terminate his or her employment with the Company. To the Knowledge of the Company, no employee of the Company is a party to or is bound by any confidentiality agreement, noncompetition agreement or other Contract (with any Person) that may have an adverse effect on (A) the performance by such employee of any of his duties or responsibilities as an employee of the Company, or (B) the business or operations of the Company.
- Each product, system, program, Proprietary Asset or other asset designed, developed, manufactured, assembled, sold, installed, repaired, licensed or otherwise made available by the Company to any Person and still under warranty conformed and complied in all respects with the terms and requirements of any applicable warranty or other Contract and with all applicable Legal Requirements.
- All installation services, design services, development services, programming services, repair services, maintenance services, support services, training services, upgrade services and other services that have been performed by the Company were performed properly and in all material respects with the terms and requirements of all applicable warranties and other Contracts and with all applicable Legal Requirements.
- Except as set forth in Part 2.17(c) of the Disclosure Schedule, to the Knowledge of the Company, no customer or other Person has ever asserted or threatened to assert any claim against the Company (i) under or based upon any warranty provided by or on behalf of the Company, or (ii) under or based upon any other warranty relating to any product, system, program, Proprietary Asset or other asset designed, developed, manufactured, assembled, sold, installed, repaired, licensed or otherwise made available by the Company or any services performed by the Company. To the Knowledge of the Company, no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) directly or indirectly give rise to or serve as a basis for the assertion of any such claim.
- contravene, conflict with or result in a violation of (i) any of the provisions of the Company's certificate of incorporation or bylaws, or (ii) any resolution adopted by the Company's Stockholders or the Company's board of directors;
- contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated by this Agreement or to exercise any remedy or obtain any relief under, any Legal Requirement or any order, writ, injunction, judgment or decree to which the Company, or any of the assets owned or used by the Company, is subject;
- contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise could cause a Material Adverse Effect on the Company;
- contravene, conflict with or result in a material violation, breach, or result in a default under, any provision of any Company Contract, or give any Person the right to (i) declare a default or exercise any remedy under any Company Contract, (ii) accelerate the maturity or performance of any Company Contract, or (iii) cancel, terminate or modify any Company Contract; or
- result in the imposition or creation of any lien or other Encumbrance upon or with respect to any asset owned or used by the Company (except for minor liens that will not, in any case or in the aggregate, materially detract from the value of the assets subject thereto or materially impair the operations of the Company) that would cause a Material Adverse Effect on the Company.
Except as set forth in Part 2.21 of the Disclosure Schedule, the Company is not and will not be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with (x) the execution, delivery or performance of this Agreement or any other agreement, document or instrument referred to in or contemplated by this Agreement, or (y) the consummation of the Merger or any of the other transactions contemplated by this Agreement or contemplated by any other agreement, document or instrument referred to in or contemplated by this Agreement.
Parent and Merger Sub represent and warrant to the Company and the Designated Stockholders as follows:
- Due Organization. Parent and Merger Sub are corporations duly organized, validly existing and in good standing under the laws of the State of Delaware.
- Authority. Parent and Merger Sub have the absolute and unrestricted right, power and authority to enter into and to perform their obligations under the Agreement and under each other agreement, document or instrument referred to in or contemplated by this Agreement to which they are or may become a party, and the execution, delivery and performance by Parent and Merger Sub of each such agreement to which Parent or Merger Sub are or may become a party have been duly authorized by all necessary action on the part of Parent and Merger Sub.
- Binding Nature of Agreements. This Agreement and each other agreement, document and instrument referred to in or contemplated by this Agreement to which Parent or Merger Sub is a party constitutes the legal, valid and binding obligations of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with their terms, subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.
- the Company shall conduct its business and operations in the ordinary course and in substantially the same manner as such business and operations have been conducted prior to the date of this Agreement;
- the Company shall use commercially reasonable efforts to preserve intact its current business organization, keep available the services of its current officers and employees and maintain its relations and good will with all suppliers, customers, landlords, creditors, employees and other Persons having business relationships with the Company;
- the Company shall keep in full force all insurance policies identified in Part 2.18 of the Disclosure Schedule;
- the Company shall cause its officers to report regularly (but in no event less frequently than weekly) to Parent concerning the status of the Company's business;
- the Company shall not declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of Capital Stock, and shall not repurchase, redeem or otherwise reacquire any shares of Capital Stock or other securities (except that the Company may repurchase Company Common Stock from former employees pursuant to the terms of existing restricted stock purchase agreements);
- the Company shall not sell, issue or authorize the issuance of (i) any Capital Stock or other security, (ii) any option or right to acquire any Capital Stock or other security, or (iii) any instrument convertible into or exchangeable for any Capital Stock or other security (except that the Company shall be permitted (x) to grant stock options to employees in accordance with its past practices, (y) to issue Company Common Stock to employees upon the purchase, conversion or exercise of outstanding options, warrants, convertible securities, purchase rights or similar rights to acquire Company Common Stock (the "Company Options"), and (z) to issue shares of Company Common Stock upon the conversion of shares of Preferred Stock);
- the Company shall not amend or waive any of its rights under, or permit the acceleration (if within the Company's sole control and discretion) of vesting under, (i) any provision of its Stock Option Plan, (ii) any provision of any agreement evidencing any outstanding Company Option, or (iii) any provision of any restricted stock purchase agreement;
- neither the Company nor any of the Designated Stockholders shall amend or permit the adoption of any amendment to the Company's certificate of incorporation or bylaws, or effect or permit the Company to become a party to any Acquisition Transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction (except that the Company may issue shares of Company Common Stock upon the conversion of shares of Preferred Stock);
- the Company shall not form any subsidiary or acquire any equity interest or other interest in any other Entity;
- the Company shall not make any capital expenditure, except for capital expenditures that, when added to all other capital expenditures made on behalf of the Company during the Pre-Closing Period, do not exceed $10,000 per month;
- the Company shall not (i) enter into, or permit any of the assets owned or used by it to become bound by, any Contract that is or would constitute a Material Contract, or (ii) amend or prematurely terminate, or waive any material right or remedy under, any such Contract;
- the Company shall not (i) acquire, lease or license any right or other asset from any other Person, (ii) sell or otherwise dispose of, or lease or license, any right or other asset to any other Person, or (iii) waive or relinquish any right, except for assets acquired, leased, licensed or disposed of by the Company pursuant to Contracts that are not Material Contracts;
- the Company shall not (i) lend money to any Person (except that the Company may make routine travel advances to employees in the ordinary course of business and may, consistent with its past practices, allow employees to acquire Company Common Stock in exchange for promissory notes upon exercise of Company Options), or (ii) incur or guarantee any indebtedness for borrowed money;
- the Company shall not (i) establish, adopt or amend any employee benefit plan, (ii) pay any bonus or make any profit-sharing payment, cash incentive payment or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees, or (iii) hire any new employee;
- the Company shall not change any of its methods of accounting or accounting practices in any material respect;
- the Company shall not make any Tax election;
- the Company shall not commence or settle any material Legal Proceeding; and
- the Company shall not agree or commit to take any of the actions described in clauses "(e)" through "(q)" above.
- During the Pre-Closing Period, the Company shall promptly notify Parent in writing of:
- the discovery by the Company of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes an inaccuracy in or breach of any representation or warranty made by the Company or any of the Designated Stockholders in this Agreement;
- any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute an inaccuracy in, or breach of, any representation or warranty made by the Company or any of the Designated Stockholders in this Agreement if (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement;
- any breach of any covenant or obligation of the Company or any of the Designated Stockholders; and
- any event, condition, fact or circumstance that would make the timely satisfaction of any of the conditions set forth in Section 6 or Section 7 impossible or unlikely.
- If any event, condition, fact or circumstance that is required to be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure Schedule, or if any such event, condition, fact or circumstance would require such a change assuming the Disclosure Schedule was dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstance, then the Company shall promptly deliver to Parent an update to the Disclosure Schedule specifying such change. No such update shall be deemed to supplement or amend the Disclosure Schedule for the purpose of (i) determining the accuracy of any of the representations and warranties made by the Company or any of the Designated Stockholders in this Agreement, or (ii) determining whether any of the conditions set forth in Section 6 have been satisfied.
- solicit or encourage the initiation of any inquiry, proposal or offer from any Person (other than Parent) relating to a possible Acquisition Transaction;
- participate or engage in any discussions or negotiations or enter into any agreement with, or provide any non-public information regarding the Company or its business or operations to, any Person (other than Parent or Company's Stockholders or agents) relating to or in connection with a possible Acquisition Transaction;
- consider, entertain or accept any proposal or offer from any Person (other than Parent) relating to a possible Acquisition Transaction; or
- permit any Company Representative to take any of the actions referred to in clauses "(a)" through "(c)" above.
The Company shall promptly notify Parent in writing of any material inquiry, proposal or offer relating to a possible Acquisition Transaction that is received by the Company or any of the Designated Stockholders during the Pre-Closing Period.
The obligations of Parent and Merger Sub to effect the Merger and otherwise consummate the transactions contemplated by this Agreement are subject to the satisfaction, at or prior to the Closing, of each of the following conditions:
- Accuracy of Representations . Each of the representations and warranties made by the Company and the Designated Stockholders in this Agreement, the Disclosure Schedule, the Indemnification Escrow Agreement and the Voting Agreement shall have been accurate in all material respects as of the date of this Agreement, and shall be accurate in all material respects as of the Scheduled Closing Time as if made at the Scheduled Closing Time (except where such representations and warranties are qualified by materiality, such representations and warranties so qualified shall be accurate in all respects as of date of this Agreement and the Scheduled Closing Time, respectively).
- Performance of Covenants . All of the covenants and obligations that the Company and the Designated Stockholders are required to comply with or to perform at or prior to the Closing shall have been complied with and performed in all respects.
- Stockholder Approval . The principal terms of the Merger shall have been duly approved by the affirmative vote of the requisite number of shares of Company Common Stock entitled to vote with respect thereto, and two-thirds (2/3) of the shares of Preferred Stock entitled to vote with respect thereto.
- Consents . All Consents required to be obtained in connection with the Merger and the other transactions contemplated by this Agreement shall have been obtained and shall be in full force and effect.
- Agreements and Documents. Parent and the Company shall have received the following agreements and documents, each of which shall be in full force and effect:
- fully executed offer letters from not less than four of the Company employees identified on Exhibit 5.6;
confidential invention and assignment agreements, reasonably satisfactory in form and content to Parent, executed by all employees of the Company and by all consultants and independent contractors to the Company to the extent that these employees, consultants and independent contractors have not already signed such agreements or such agreements signed by these employees, consultants and independent contractors are not effective;
a certificate delivered by the Company to Parent pursuant to which the Company represents and warrants to Parent that attached to such certificate are resolutions duly adopted by the unanimous consent of the Board of Directors and the requisite number of Stockholders of the Company adopting this Agreement and authorizing and approving the transactions contemplated by this Agreement;
- a legal opinion of Pillsbury Winthrop LLP, dated as of the Closing Date, substantially in the form of Exhibit 6.5(f);
the statement referred to in Section 5.7(a), executed by the Company substantially in the form of Exhibit 6.5(g);
- a certificate executed by the Designated Stockholders and containing the representation and warranty of each Designated Stockholder that each of the applicable representations and warranties set forth in Section 2 is accurate in all respects as of the Closing Date as if made on the Closing Date and that the conditions set forth in Sections 6.1, 6.2, 6.3 and 6.4 have been duly satisfied;
a written resignation of all directors of the Company, effective as of the Effective Time;
Disbursement Agreement substantially in the form of Exhibit 6.5(j), requiring any Stockholder receiving Cash Consideration pursuant to this Agreement to surrender such Stockholder's Company stock certificate(s) in exchange for such disbursement, providing for the disbursement of the fees and expenses identified in Section 5.9 and Schedule 5.9, and providing an acknowledgement by the Stockholder tendering such stock certificate(s) and receiving such disbursement that he, she or it is bound by this Agreement including, without limitation, the requirement contained in Section 1.3(b) relating to the Indemnification Escrow Amount; and
- all Common Stock certificates of Stockholders shall be cancelled.
- FIRPTA Compliance. The Company shall have filed with the Internal Revenue Service the notification referred to in Section 5.7(b).
- No Restraints. No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Merger shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any Legal Requirement enacted or deemed applicable to the Merger that makes consummation of the Merger illegal.
- No Legal Proceedings. No Person shall have commenced or threatened to commence any Legal Proceeding challenging or seeking the recovery of a material amount of damages in connection with the Merger or seeking to prohibit or limit the exercise by Parent of any material right pertaining to its ownership of stock of the Surviving Corporation.
- Employees. No more than two of the individuals identified on Exhibit 5.6 shall have ceased to be employed by, or expressed an intention to terminate their employment with, the Company.
- Termination of Employee Plans. The Company shall have provided Parent with evidence, reasonably satisfactory to Parent, as to the termination of the benefit plans referred to in Section 5.8.
- No Material Adverse Change. During the period between the date of this Agreement and April 1, 2002, or such longer period if any condition set forth in Section 6 has not been satisfied, there shall have been no material adverse change or decline in value in the business, properties, condition (financial or otherwise), results of operations, or prospects of the Company (or in any aspect or portion thereof) since the date of this Agreement.
- Net Cash Determination. Parent and the Company shall have mutually determined the Company's Net Cash based on the Company's financial records for the month ended March 31, 2002 (the "Net Cash Determination"). The Net Cash Determination shall be calculated in the same manner and using the same principles used in calculating Exhibit 1.5(e)(ii).
Indemnification Escrow Agreement substantially in the form of Exhibit 6.5(a), executed by Parent, the Escrow Agent identified in Exhibit B, the Designated Stockholders and the Stockholders' Agent (the "Indemnification Escrow Agreement");
Voting Agreement substantially in the form of Exhibit 6.5(b), executed by the requisite number of Stockholders;
The obligations of the Company to effect the Merger and otherwise consummate the transactions contemplated by this Agreement are subject to the satisfaction, at or prior to the Closing, of the following conditions:
- Accuracy of Representations . Each of the representations and warranties made by Parent and Merger Sub in this Agreement shall have been accurate in all material respects as of the date of this Agreement (without giving effect to any materiality or similar qualifications contained in such representations and warranties), and shall be accurate in all material respects as of the Scheduled Closing Time as if made at the Scheduled Closing Time (without giving effect to any materiality or similar qualifications contained in such representations and warranties).
- Performance of Covenants . All of the covenants and obligations that Parent and Merger Sub are required to comply with or to perform at or prior to the Closing shall have been complied with and performed in all respects.
- Net Cash Determination. Parent and the Company shall have mutually determined the Company's Net Cash Determination.
- Termination Events.
- by Parent if Parent reasonably determines that the timely satisfaction of any condition set forth in Section 6 has become impossible (other than as a result of any failure on the part of Parent or Merger Sub to comply with or perform any covenant or obligation of Parent or Merger Sub set forth in this Agreement);
- by the Company if the Company reasonably determines that the timely satisfaction of any condition set forth in Section 7 has become impossible (other than as a result of any failure on the part of the Company or any of the Designated Stockholders to comply with or perform any covenant or obligation set forth in this Agreement or in any other agreement or instrument delivered to Parent); or
- by the mutual consent of Parent and the Company.
- Survival of Representations, Etc.
- Stockholders' Agent.
- The Stockholders hereby irrevocably nominate, constitute and appoint Canaan Equity Partners II, LLC, a Delaware limited liability company ("Canaan Partners"), as the agent and true and lawful attorney-in-fact of the Stockholders (the "Stockholders' Agent"), with full power of substitution, to act in the name, place and stead of the Stockholders for purposes of executing any documents and taking any actions that the Stockholders' Agent may, in his sole discretion, determine to be necessary, desirable or appropriate in connection with any claim for indemnification, compensation or reimbursement under Section 9 or under the Indemnification Escrow Agreement. Canaan Partners hereby accepts his appointment as Stockholders' Agent.
- The Stockholders hereby grant to the Stockholders' Agent full authority to execute, deliver, acknowledge, certify and file on behalf of the Stockholders (in the name of any or all of the Stockholders or otherwise) any and all documents that the Stockholders' Agent may, in his sole discretion, determine to be necessary, desirable or appropriate, in such forms and containing such provisions as the Stockholders' Agent may, in his sole discretion, determine to be appropriate, in performing his duties as contemplated by Section 9.1(a). Notwithstanding anything to the contrary contained in this Agreement or in any other agreement executed in connection with the transactions contemplated hereby: (i) Parent and the Company shall be entitled to deal exclusively with the Stockholders' Agent on all matters relating to any claim for indemnification, compensation or reimbursement under Section 9 or under the Indemnification Escrow Agreement; and (ii) each Indemnitee shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Stockholder by the Stockholders' Agent, and on any other action taken or purported to be taken on behalf of any Stockholder by the Stockholders' Agent, as fully binding upon such Stockholder.
- The Stockholders recognize and intend that the power of attorney granted in Section 10.1(a): (i) is coupled with an interest and is irrevocable; (ii) may be delegated by the Stockholders' Agent; and (iii) shall survive the death or incapacity of each of the Stockholders.
- If the Stockholders' Agent shall die, become disabled or otherwise be unable to fulfill his responsibilities hereunder, the Stockholders shall (by majority vote), within ten days after such death or disability, appoint a successor to the Stockholders' Agent and immediately thereafter notify Parent of the identity of such successor. Any such successor shall succeed the Stockholders' Agent as Stockholders' Agent hereunder. If for any reason there is no Stockholders' Agent at any time, all references herein to the Stockholders' Agent shall be deemed to refer to the Stockholders.
- By adopting this Agreement and approving the Merger, all of the Stockholders of the Company irrevocably nominate, constitute and appoint Canaan Partners as Stockholders' Agent for purposes of distributing the cash payments to such Stockholders in accordance with Section 1.3(b).
(f)
The Stockholders' Agent shall distribute the cash payments to the Stockholders of the Company as contemplated by Section 1.3(b). - All expenses incurred by the Stockholders' Agent, including fees of any disbursing agent, in connection with the performance of his duties as Stockholders' Agent shall be borne and paid exclusively by the Stockholders.
- The Stockholders acknowledge that the Stockholders' Agent shall not be liable for any act done or omitted hereunder as the Stockholders' Agent while acting in good faith and in the exercise of reasonable judgment. The Stockholders shall indemnify the Stockholders' Agent and hold the Stockholders' Agent harmless against any loss, liability or expense incurred without negligence or bad faith on the part of the Stockholders' Agent and arising out of or in connection with the acceptance or administration of the Stockholders' Agent's duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Stockholders' Agent.
if to Parent:
Chordiant Software, Inc.
20400 Stevens Creek Boulevard
Suite 400
Cupertino, CA 95014
Attention: General Counsel
Chief Financial Officer
Facsimile: (408) 517-0270
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Nancy Wojtas
Facsimile: (650) 849-7400
if to the Company
(prior to the Closing Date):OnDemand, Inc.
1085 East Meadow Circle
Palo Alto, CA 94303
Attention: David Straus
Facsimile: (650) 463-6701
if to the Stockholders' Agent:
Canaan Partners
2884 Sand Hill Road, Suite 115
Menlo Park, CA 94025
Attention: Eric Young
Facsimile: (650) 854-8127
if to the Designated Stockholders:
To the addresses or facsimile telephone numbers set forth beneath the Designated Stockholders name on the signature page.
- expressly and irrevocably consents and submits to the jurisdiction of each state and federal court located in the County of Santa Clara, State of California (and each appellate court located in the County of Santa Clara, State of California) in connection with any such Legal Proceeding;
- agrees that each state and federal court located in the County of Santa Clara, State of California shall be deemed to be a convenient forum; and
- agrees not to assert (by way of motion, as a defense or otherwise), in any such Legal Proceeding commenced in any state or federal court located in the County of Santa Clara, State of California, any claim that such party is not subject personally to the jurisdiction of such court, that such Legal Proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court.
The parties hereto have caused this Agreement to be executed and delivered as of March 28, 2002.
Chordiant Software, Inc.
/s/ Donald J. Morrison
Name: Donald J. Morrison
Title: Executive Vice President
OnDemand Acquisition Corp.
/s/ Donald J. Morrison
Name: Donald J. Morrison
Title: Executive Vice President
OnDemand, Inc.
/s/ David M. Straus
Name: David M. Straus
Title: President
Designated Stockholders
/s/ Eric A. Young
Name: Eric A. Young
Address: Canaan Equity Partners II, LLC
2884 Sand Hill Road, Suite 115
Menlo Park, CA 94025
/s/ Robert Verratti
Name: Robert Verratti
TL Ventures V Management, L.P. by
TL Ventures LLC, its General Partner
Address: The Annex Building
3110 South Main Street
Santa Monica, CA 90405
Stockholders' Agent
/s/ Eric A. Young
Name: Eric A. Young
Title: Member/Manager
Canaan Equity Partners II, LLC
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction.
"Acquisition Transaction" shall mean any transaction involving:Agreement.
"Agreement" shall mean the Agreement and Plan of Merger to which this Exhibit A is attached (including the Disclosure Schedule), as it may be amended from time to time.Breach. There shall be deemed to be a "Breach" of a representation, warranty, covenant, obligation or other provision if there is or has been any inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation or other provision. The term "Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim or circumstance.
Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
Company Contract.
"Company Contract" shall mean any Contract: (a) to which the Company is a party; (b) by which the Company or any of its assets is or may become bound or under which the Company has, or may become subject to, any obligation; or (c) under which the Company has or may acquire any right or interest.Company Employee. "Company Employee" shall mean any Person who is employed by the Company on the date of this Agreement.
Company Proprietary Asset.
"Company Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to the Company or otherwise used by the Company.Company Source Code. "Company Source Code" shall mean any source code, or any portion, aspect or segment of any source code, relating to any Company Proprietary Asset.
Consent.
"Consent" shall mean any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization).Contract.
"Contract" shall mean any written, oral or other agreement, contract, subcontract, lease, understanding, instrument, note, warranty, insurance policy, benefit plan, or legally binding commitment or undertaking of any nature.Damages.
"Damages" shall include any loss, damage, injury, decline in value, lost opportunity, Liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost (including costs of investigation) or expense of any nature.Disclosure Schedule.
"Disclosure Schedule" shall mean the schedule (dated as of the date of the Agreement) delivered to Parent on behalf of the Company and the Designated Stockholders.Encumbrance.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).Entity.
"Entity" shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.Environmental Law. "Environmental Law" shall mean any federal, state, local or foreign Legal Requirement relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern.
Governmental Authorization.
"Governmental Authorization" shall mean any: (a) permit, license, certificate, franchise, permission, clearance, registration, qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement; or (b) right under any Contract with any Governmental Body.Governmental Body.
"Governmental Body" shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, unit, body or Entity and any court or other tribunal).Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent; (b) Parent's current and future affiliates (including the Surviving Corporation); (c) the respective Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above; provided, however, that the Designated Stockholders shall not be deemed to be "Indemnitees."
Knowledge.
An individual shall be deemed to have "Knowledge" of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the truth or existence of such fact or other matter. Notwithstanding the foregoing, a Designated Stockholder shall be deemed to have "Knowledge" of a particular fact or other matter if such Designated Stockholder is actually aware of such fact or other matter. The Company shall be deemed to have "Knowledge" of a particular fact or other matter if any director, officer or employee of the Company has Knowledge of such fact or other matter.Legal Proceeding.
"Legal Proceeding" shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Body or any arbitrator or arbitration panel.Legal Requirement.
"Legal Requirement" shall mean any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body.Liability. "Liability" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with generally accepted accounting principles and regardless of whether such debt, obligation, duty or liability is immediately due and payable.
Material Adverse Effect.
A violation or other matter will be deemed to have a "Material Adverse Effect" on the Company if such violation or other matter (considered together with all other matters that would constitute exceptions to the representations and warranties set forth in the Agreement but for the presence of "Material Adverse Effect" or other materiality qualifications, or any similar qualifications, in such representations and warranties) would have a material adverse effect on the Company's business, condition, assets, liabilities, operations, financial performance or prospects.Materials of Environmental Concern. "Materials of Environmental Concern" shall include chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products and any other substance that is now or in the future regulated by any Environmental Law or that is otherwise a danger to health, reproduction or the environment.
Person.
"Person" shall mean any individual, Entity or Governmental Body.Proprietary Asset
. "Proprietary Asset" shall mean any: (a) patent, patent application, trademark (whether registered or unregistered), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, copyright (whether registered or unregistered), copyright application, maskwork, maskwork application, trade secret, know-how, customer list, franchise, system, computer software, source code, computer program, invention, design, blueprint, engineering drawing, proprietary product, technology, proprietary right or other intellectual property right or intangible asset; or (b) right to use or exploit any of the foregoing.Related Party. "Related Party" shall mean (i) each of the Designated Stockholders; (ii) each individual who is, or who has at any time been an officer or director of the Company; (iii) each individual who is, or who at any time has been a member of the immediate family of any of the individuals referred to in clauses "(i)" and "(ii)" above; and (iv) any trust or other Entity (other than the Company) in which any one of the individuals referred to in clauses "(i)", "(ii)" and "(iii)" above holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a material voting, proprietary or equity interest.
Representatives.
"Representatives" shall mean officers, directors, employees, agents, attorneys, accountants, advisors, affiliates and representatives.SEC.
"SEC" shall mean the United States Securities and Exchange Commission.Tax.
"Tax" shall mean any tax (including any income tax, franchise tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), imposed, assessed or collected by or under the authority of any Governmental Body.Tax Return.
"Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.
Treasury Regulations.
"Treasury Regulations" shall mean the United States Income Tax Regulations promulgated under the Code.AGREEMENT AND PLAN OF MERGER
among:
Chordiant Software, Inc.
a Delaware corporation;
OnDemand Acquisition Corp.
a Delaware corporation;
OnDemand, Inc.
,a Delaware corporation;
and
The Designated Stockholders
___________________________
Dated as of March 28, 2002
___________________________
TABLE OF CONTENTS
Page
Section 1. Description of Transaction 1
1.1 Merger of Merger Sub into the Company 1
1.2 Effect of the Merger 1
1.3 Closing; Effective Time 1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers 2
1.5 Conversion of Shares 2
1.6 Options 3
1.7 Appraisal Rights. 3
Section 2. Representations and Warranties of the Company and the Designated Stockholders 4
2.1 Due Organization; No Subsidiaries; Etc. 4
2.2 Certificate of Incorporation and Bylaws; Records 5
2.3 Capitalization, Etc. 5
2.4 Financial Statements and Related Information 6
2.5 Liabilities 7
2.6 Absence of Changes 7
2.7 Title to Assets 9
2.8 Bank Accounts 9
2.9 Equipment; Leasehold 9
2.10 Proprietary Assets 9
2.11 Contracts 12
2.12 Compliance with Legal Requirements 13
2.13 Governmental Authorizations 13
2.14 Tax Matters 14
2.15 Employee and Labor Matters; Benefit Plans 15
2.16 Environmental Matters 18
2.17 Sale of Products; Performance of Services 18
2.18 Insurance 19
2.19 Legal Proceedings; Orders 19
2.20 Authority; Binding Nature of Agreement 20
2.21 Non-Contravention; Consents 20
2.22 No Broker or Other Fees 21
2.23 Full Disclosure 21
Section 3. Representations and Warranties of Parent and Merger Sub 21
3.1 Due Organization 21
3.2 Authority 21
3.3 Binding Nature of Agreements. 21
Section 4. Certain Covenants of the Company and the Designated Stockholders 22
4.1 Access and Investigation 22
4.2 Operation of the Company's Business 22
4.3 Notification; Updates to Disclosure Schedule 24
4.4 No Negotiation 24
Section 5. Additional Covenants of the Parties 25
5.1 Filings and Consents 25
5.2 Company Stockholders' Meeting 25
5.3 Public Announcements 25
5.4 Best Efforts 26
5.5 Non-Solicitation 26
5.6 Employment 26
5.7 FIRPTA Matters 26
5.8 Termination of Employee Plans 26
5.9 Payment of Certain Commissions, Fees and Payments 26
5.10 Omnicell Consent 26
Section 6. Conditions Precedent to Obligations of Parent and Merger Sub 26
6.1 Accuracy of Representations 26
6.2 Performance of Covenants 27
6.3 Stockholder Approval 27
6.4 Consents 27
6.5 Agreements and Documents 27
6.6 FIRPTA Compliance 28
6.7 No Restraints 28
6.8 No Legal Proceedings 28
6.9 Employees 28
6.10 Termination of Employee Plans 28
6.11 No Material Adverse Change 28
6.12 Net Cash Determination 29
Section 7. Conditions Precedent to Obligations of the Company 29
7.1 Accuracy of Representations 29
7.2 Performance of Covenants 29
7.3 Net Cash Determination 29
Section 8. Termination 29
8.1 Termination Events 29
8.2 Termination Procedures 30
8.3 Effect of Termination 30
Section 9. Indemnification, Etc. 30
9.1 Survival of Representations, Etc. 30
9.2 Indemnification by the Stockholders 31
9.3 Deductible 31
9.4 Cap on Liability; Exclusive Remedy 32
9.5 No Contribution 32
9.6 Defense of Third Party Claims 32
9.7 Exercise of Remedies by Indemnitees Other Than Parent 33
Section 10. Miscellaneous Provisions 33
10.1 Stockholders' Agent 33
10.2 Further Assurances 34
10.3 Fees and Expenses 34
10.4 Attorneys' Fees 35
10.5 Disclosure Schedule 35
10.6 Notices 35
10.7 Confidentiality 36
10.8 Time of the Essence 36
10.9 Headings 36
10.10 Counterparts 36
10.11 Governing Law; Venue 36
10.12 Successors and Assigns 37
10.13 Remedies Cumulative; Specific Performance 37
10.14 Waiver 37
10.15 Amendments 38
10.16 Severability 38
10.17 Parties in Interest 38
10.18 Entire Agreement 38
10.19 Construction 38
EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - List of Designated Stockholders and Escrow Agent
Exhibit 1.3(b) - Liquidation Preference Distribution Spreadsheet
Exhibit 1.4 - Form of Amended and Restated Certificate of Incorporation of Surviving Corporation
Exhibit 1.5(e)(ii) - Net Cash Calculation Spreadsheet
Exhibit 5.6 - List of Company Employees Executing Parent Employment Materials
Exhibit 6.5(a) - Form of Indemnification Escrow Agreement
Exhibit 6.5(b) - Form of Voting Agreement
Exhibit 6.5(f) - Form of legal opinion of Pillsbury Winthrop LLP
Exhibit 6.5(g) - Form of FIRPTA Statement
Exhibit 6.5(j) - Form of Disbursement Agreement
SCHEDULES
Schedule 5.9 - Schedule of Certain Commissions, Fees and Payments