EXHIBIT 10.56
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ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of ____ __, 2007 (this "Escrow
Agreement"), is by and among Bridgeline Software, Inc., a Delaware corporation
("Buyer"); Objectware, Inc., a Georgia corporation ("Seller"); Xxxx X. Xxxx (the
"Shareholder"), and Xxxxxx Xxxxxx Xxxxxxx LLP (the "Escrow Agent"). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Agreement (as defined below).
WHEREAS, Buyer, Seller and the Shareholder are each party to an
Agreement and Plan of Merger dated December 7, 2006 as amended pursuant to that
certain First Amendment to Agreement and Plan of Merger dated as of March 29,
2007 (collectively, the "Agreement"), with respect to the merger of Seller with
and into Buyer, and capitalized terms used herein and not otherwise defined
shall have the meaning ascribed thereto in the Agreement;
WHEREAS, pursuant to the Agreement, (i) Buyer has agreed to place in
escrow the Closing Deliverables required to be delivered by Buyer to Seller
and/or the Shareholder at the Closing (collectively, the "Buyer Closing
Deliverables"), (ii) Seller and the Shareholder have agreed to place in escrow
the Closing Deliverables required to be delivered by Seller and/or the
Shareholder to Buyer at the Closing (collectively, the "Seller Parties Closing
Deliverables" and together with the Buyer Closing Deliverables, the "Escrowed
Documents"), (iii) Buyer, Seller and the Shareholder have agreed to place the
cash portion of the Initial Merger Consideration (the "Escrowed Amount") in
escrow and (iv) Buyer, Seller and the Shareholder have agreed to place the stock
certificate representing the Bridgeline Stock in the form of a single
certificate registered in the name of "Xxxx X. Xxxx" (the "Escrowed Stock" and
together with the Escrowed Documents and Escrowed Amount, the "Escrow Property")
in escrow, all such Escrow Property to be held by the Escrow Agent upon the
terms and conditions set forth in this Escrow Agreement; and
WHEREAS, the Escrow Agent has agreed to hold and/or release the
Escrowed Documents, Escrowed Amount and Escrowed Stock pursuant to the terms
hereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. Appointment of the Escrow Agent. Buyer, Seller and the Shareholder
hereby appoint and designate the Escrow Agent as escrow agent for the purposes
set forth herein, and the Escrow Agent hereby accepts such appointment and
designation, subject to the terms and conditions contained herein.
2. Delivery of Escrow Property.
(a) Escrowed Documents. Simultaneously with the execution of this
Escrow Agreement, (i) Buyer has delivered or caused to be delivered to the
Escrow Agent, the Buyer Closing Deliverables and (ii) each of Seller and the
Shareholder have delivered or caused to be delivered to the Escrow Agent, the
Seller Parties Closing Deliverables, to be held by the Escrow
Agent pursuant to the terms and conditions of this Escrow Agreement. The Escrow
Agent hereby acknowledges receipt of the Escrowed Documents and agrees to hold
and release the Escrowed Documents in accordance with the terms and conditions
contained herein.
(b) Deposit of Escrowed Amount; Escrowed Stock.
(i) Delivery. Not later than five (5) business days after the
Registration Statement has been declared effective by the SEC and trading has
commenced and within one (1) hour of receipt by Buyer of net proceeds of the IPO
in an aggregate amount at least equal to $10,000,000, Buyer shall (i) initiate a
wire transfer of the Escrowed Amount to the Escrow Agent and (ii) deliver by
overnight mail the Escrowed Stock to the Escrow Agent, each to be held by the
Escrow Agent pursuant to the terms and conditions of the Escrow Agreement.
Buyer's legal counsel, Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C., shall notify the
Escrow Agent of the effectiveness of the Registration Statement promptly upon
Buyer's receipt of notice thereof from the SEC, and Escrow Agent shall be
permitted to rely upon such notification for actions taken by it pursuant to
Section 3(a) of this Agreement.
(ii) Dividends, Voting and Rights of Ownership. Except for
tax-free dividends paid in stock declared with respect to shares of Bridgeline
Common Stock included in the Escrowed Stock pursuant to Section 305(a) of the
Internal Revenue Code of 1986, as amended (the "Code") ("Additional Escrowed
Stock"), there will be distributed promptly to the Shareholder any cash
dividends or dividends payable in securities or other distributions of any kind
made in respect of the Escrowed Stock. The Shareholder will have voting rights
with respect to the Escrowed Stock so long as such Escrowed Stock is held in
escrow, and Buyer will take all reasonable steps necessary to allow the exercise
of such rights. While the Escrowed Stock remains in the Escrow Agent's
possession pursuant to this Escrow Agreement and the Agreement, the Shareholder
will retain and will be able to exercise all other incidents of ownership of
said Escrowed Stock which are not inconsistent with the terms and conditions of
this Escrow Agreement and the Agreement.
3. Release of Escrowed Documents. The Escrow Agent hereby agrees to
hold the Escrowed Documents in escrow, until the occurrence of the following
events:
(a) Upon receipt by the Escrow Agent of the Escrowed Amount and
Escrowed Stock, the Escrow Agent shall (i) release to Buyer the Seller Parties
Closing Deliverables and (ii) release to Seller and/or the Shareholder, as the
case may be, the Buyer Closing Deliverables.
(b) If the Registration Statement resulting in net proceeds to the
Buyer of at least $10,000,000 is not declared effective by the SEC on or before
the ninth business day following the Closing Date, the Escrow Agent shall (i)
release to Buyer the Buyer Closing Deliverables and (ii) release to Seller
and/or the Shareholder, as the case may be, the Seller Parties Closing
Deliverables. Buyer's legal counsel, Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.,
shall notify the Escrow Agent promptly on the ninth business day following the
Closing Date if the Registration Statement resulting in net proceeds to the
Buyer of at least $10,000,000 has not been declared effective by the SEC by such
date, and Escrow Agent shall be permitted to rely on such notification for all
actions taken by it pursuant to this Section 3(b).
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4. Release of Escrowed Funds and Escrowed Stock. The Escrow Agent
hereby agrees to hold the Escrowed Funds and Escrowed Stock in escrow, until the
occurrence of the following event:
(a) Upon release by the Escrow Agent of the Escrowed Documents in
accordance with Section 3(a) of this Escrow Agreement, the Escrow Agent shall
release the Escrowed Amount and Escrowed Stock to the Shareholder.
5. Termination of Agreement. When the Escrow Property has been released
and distributed pursuant to the provisions of this Escrow Agreement, this Escrow
Agreement, except for the provisions of Paragraphs 6(b) and 6(f) hereof, shall
terminate, and be of no further force or effect.
6. Escrow Agent.
(a) Duties and Responsibilities. (i) The duties and responsibilities of
the Escrow Agent hereunder shall be limited to those expressly set forth in this
Escrow Agreement, and the Escrow Agent shall not be bound in any way by any
other contract or agreement between the parties hereto, whether or not the
Escrow Agent has knowledge of any such contract or agreement or of the terms or
conditions thereof. In the event that the Escrow Agent shall be uncertain as to
any duties or responsibilities hereunder or shall receive instructions from any
of the parties hereto with respect to the Escrow Property which in the Escrow
Agent's belief are in conflict with any of the provisions of this Escrow
Agreement, the Escrow Agent shall be entitled to refrain from taking any action
until it shall be directed to do so in writing by both parties hereto or by
order of a court of competent jurisdiction in proceedings which the Escrow Agent
or any other party hereto shall be entitled to commence. The Escrow Agent may
act upon the advice of its counsel in taking or refraining from taking any
action hereunder and may act upon any instrument or other writing believed in
good faith to be genuine and to be signed and presented by the proper person or
persons.
(ii) The Escrow Agent shall not be responsible for the
genuineness of any signature or document presented to it pursuant to this Escrow
Agreement and may rely conclusively upon and shall be protected in acting upon
any list, advice, judicial order or decree, certificate, notice, request,
consent, statement, instruction or other instrument believed by it in good faith
to be genuine or to be signed or presented by the proper person hereunder, or
duly authorized by such person or properly made. The Escrow Agent shall not be
responsible for any of the agreements contained herein except the performance of
its duties as expressly set forth herein. The duties and obligations of the
Escrow Agent hereunder shall be governed solely by the provisions of this Escrow
Agreement and the Escrow Agent shall have no duties other than the duties
expressly imposed herein and shall not be required to take any action other than
in accordance with the terms hereof. The Escrow Agent shall not be bound by any
notice of, or demand with respect to, any waiver, modification, amendment,
termination, cancellation, rescission or restatement of this Escrow Agreement,
unless in writing and signed by Buyer, Seller and the Shareholder, and, if the
duties of the Escrow Agent are affected thereby, unless Escrow Agent shall have
given its prior written consent thereto.
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(b) Liability. The Escrow Agent shall not be liable to anyone for any
damage, loss or expense incurred as a result of any act or omission of the
Escrow Agent, unless such damage, loss or expense is caused by the Escrow
Agent's willful default or gross negligence. Accordingly, and without limiting
the foregoing, the Escrow Agent shall not incur any such liability with respect
to (i) any action taken or omitted under this Escrow Agreement, or (ii) any
action taken or omitted in reliance upon any instrument, including any written
notice or instruction provided for herein, not only as to its due execution by
an authorized person and as to the validity and effectiveness of such
instrument, but also as to the truth and accuracy of any information contained
therein. Should any issue arise with respect to the delivery or ownership of the
Escrow Property, the Escrow Agent shall have no liability to any party hereto
for retaining dominion and control over the Escrow Property until such issue is
resolved by (i) mutual agreement of the parties; or (ii) final order, decree or
judgment by a court of competent jurisdiction. In no event shall the Escrow
Agent be under any duty whatsoever to institute or defend such proceeding.
(c) Disputes. In the event of a dispute between any of the parties
hereto sufficient in the discretion of the Escrow Agent to justify its
initiation of legal proceedings, or in the event that Escrow Agent is joined as
a party to a lawsuit by virtue of the fact that it is holding the Escrow
Property, the Escrow Agent may, at its option, either (i) tender the Escrow
Property into the registry or custody of the court of competent jurisdiction
before which such lawsuit is pending, and thereupon be discharged from all
further duties and liabilities under this Escrow Agreement with respect to the
Escrow Property so tendered or (ii) deliver the Escrow Property in accordance
with the court's orders or ultimate disposition of such lawsuit. Any legal
action initiated by the Escrow Agent may be brought in any court as the Escrow
Agent shall determine to have jurisdiction with respect to such matter. Buyer,
Seller and the Shareholder hereby jointly and severally indemnify and hold the
Escrow Agent harmless from and against any damage, losses or expense suffered or
incurred by the Escrow Agent in connection with the exercise by the Escrow Agent
of the options authorized in this paragraph, including but not limited to,
reasonable attorneys' fees and costs and court costs at all trial and appellate
levels.
(d) Attachment. In the event all or any part of the Escrow Property
shall be attached, garnished or levied upon pursuant to any court order, or the
delivery thereof shall be stayed or enjoined by a court order, or any other
order, judgment or decree shall be made or entered by any court affecting the
Escrow Property or any part hereof or any act of the Escrow Agent, the Escrow
Agent is authorized to obey and comply with all writs, orders, judgments or
decrees so entered or issued by any such court, without the necessity of
inquiring whether such court has jurisdiction; and if the Escrow Agent obeys or
complies with any such writ, order, or decree, the Escrow Agent shall not be
liable to any of the parties hereto or any other person by reason of such
compliance.
(e) Legal Action. The Escrow Agent shall have no duty to incur any
out-of-pocket expenses or to take any legal action in connection with this
Escrow Agreement or towards its enforcement, or to appear in, prosecute or
defend any action or legal proceeding that would result in or might require it
to incur any cost, expense, loss, or liability, unless and until it shall
receive confirmation and at its option, security, with respect to
indemnification in accordance with Paragraph 6(f) of this Escrow Agreement.
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(f) Indemnification. Without determining or limiting any rights as
between or among Buyer, Seller and the Shareholder, which rights shall exist
outside this Escrow Agreement and not be prejudiced hereby, Buyer, Seller and
the Shareholder jointly and severally hereby agree to indemnify and hold
harmless the Escrow Agent from and against any and all cost, loss, damage,
disbursement, liability, and expense, including reasonable attorneys' fees and
costs, which may be imposed upon or incurred by the Escrow Agent hereunder, or
in connection with the performance of its duties hereunder, including any
litigation arising out of this Escrow Agreement, or involving the subject matter
hereof, except only costs, losses, claims, damages, disbursements, liabilities
and expenses arising out of the Escrow Agent's acts or omissions for which the
Escrow Agent is adjudged willfully malfeasant or grossly negligent by a final
decree, order or judgment of a court of competent jurisdiction from which no
appeal is taken within the applicable appeals period.
(g) Resignation. The Escrow Agent, or the Escrow Agent's successor
hereinafter appointed, may at any time resign by giving notice in writing to
Buyer, Seller and the Shareholder, and shall be discharged of all further duties
hereunder upon the appointment of a successor escrow agent which shall be
appointed by agreement of each of Buyer, Seller and the Shareholder; provided,
however, that such resigning Escrow Agent shall remain entitled to
indemnification hereunder pursuant to Paragraph 6(f) hereof. If Buyer, Seller
and the Shareholder are unable to agree on a successor escrow agent, either of
such parties may petition a court of competent jurisdiction to appoint one. From
the date upon which the Escrow Agent sends notice of any resignation until the
acceptance by a successor escrow agent appointed as provided herein, the Escrow
Agent's sole obligation hereunder shall be to hold the Escrow Property delivered
to it in accordance with this Agreement. Any such successor escrow agent shall
deliver to Buyer, Seller and the Shareholder a written certificate accepting
such appointment hereunder, and thereupon it shall succeed to all the rights and
duties of the Escrow Agent hereunder and shall be entitled to receive the
benefit of the provisions set forth herein.
(h) Law Firm Escrow Agent. Buyer, Seller and the Shareholder each
acknowledge and agree that nothing contained herein shall be deemed to prevent
any law firm serving as the Escrow Agent, or as a successor escrow agent, from
acting as counsel for Buyer, Seller or the Shareholder, or any of their
respective stockholders, or any of their respective affiliates, or any other
party in any matter, including resolution of disputes and claims subject to,
arising under or related to the Agreement or this Escrow Agreement, or acting as
an escrow agent on behalf of others.
(i) Accounting. The Escrow Agent will provide to each of Buyer, Seller
and the Shareholder a written accounting of the investments held in escrow
hereunder and all transactions relating to this Escrow Agreement, including any
distributions of the Escrowed Amount, within twenty (20) business days following
written request of any such Party.
7. Escrow Agent Fees and Expenses.
(a) Compensation and Expenses. The Escrow Agent shall be entitled to
reimbursement for its out of pocket costs and expenses and payment of any
amounts to which the Escrow Agent is entitled under the indemnification
provisions contained herein. The costs and expenses of the Escrow Agent,
including reasonable attorneys' fees and costs, shall be borne
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jointly and severally by Buyer, Seller and the Shareholder, any amounts owed by
Buyer, Seller and the Shareholder to the Escrow Agent, may be deducted by the
Escrow Agent from the Escrowed Amount before final distribution thereof.
(b) Reporting. The Shareholder will provide the Escrow Agent with any
IRS Forms W-9 for taxpayer identification number certifications, or Forms W-8
for non-resident alien certifications, as may be appropriate at or prior to the
Closing Date.
8. Relief.
In the event litigation is maintained by a party to this Escrow
Agreement against any other party to enforce this Escrow Agreement or to seek
any remedy for breach, then the prevailing party in such litigation shall be
entitled to recover from the non-prevailing party reasonable attorneys' fees and
costs of suit.
9. Miscellaneous.
(a) All notices, requests, demands or other communications which are
required or may be given pursuant to the terms of this Escrow Agreement will be
in writing and will be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
if to Buyer, to:
Bridgeline Software, Inc.
00 Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
if to Seller, to:
Objectware, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
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with a copy to:
Xxxxxx Xxxxxx Xxxxxxx LLP
000 00xx XX, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
if to the Shareholder, to:
Xxxx X. Xxxx
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx LLP
000 00xx XX, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
if to the Escrow Agent, to:
Xxxxxx Xxxxxx Xxxxxxx LLP
000 00xx XX, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 9(a).
(b) Entire Agreement. This Escrow Agreement embodies the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings between or among the parties relating to the subject matter
hereof. No statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in this Escrow Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Escrow Agreement.
(c) Amendments, Waivers and Consents. Except as otherwise expressly
provided herein, the terms and provisions of this Escrow Agreement may be
modified or amended only by written agreement executed by all parties hereto.
The terms and provisions of this Escrow Agreement may be waived, or consent for
the departure therefrom granted, only by a written document signed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent with respect to
any other terms or provisions of this Escrow Agreement, whether or not similar.
Each such waiver or consent shall be effective only in the specific instance and
for the purpose for which it was given, and shall not constitute a continuing
waiver or consent.
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(d) Assignment. The rights and obligations under this Escrow Agreement
may not be assigned by any of the parties hereto without the prior written
consent of the other parties.
(e) Benefit, Binding Effect; Third Party Beneficiaries. All statements,
representations, warranties, covenants and agreements in this Escrow Agreement
shall be binding on the parties hereto and shall inure to the benefit of the
respective successors and permitted assigns of each party hereto. Nothing in
this Escrow Agreement shall be construed to create any rights or obligations
except among the parties hereto, and no person or entity shall be regarded as a
third-party beneficiary of this Escrow Agreement.
(f) Governing Law. This Escrow Agreement and the rights and obligations
of the parties hereunder shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the conflict of law
principles thereof.
(g) Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Escrow Agreement shall be unenforceable or invalid in any respect, then such
provision shall be deemed limited to the extent that such court deems it valid
or enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, partially or wholly
unenforceable, the remaining provisions of this Escrow Agreement shall
nevertheless remain in full force and effect.
(h) Expenses. Except for the fees and expenses of the Escrow Agent
which shall be paid as provided in Section 7, each of the parties hereto shall
pay its own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Escrow
Agreement and the transactions contemplated hereby, whether or not the
transactions contemplated in this Escrow Agreement or in the Agreement are
consummated.
(i) Headings and Captions. The headings and captions contained in this
Escrow Agreement are for convenience only and shall not affect the meaning or
interpretation of this Escrow Agreement or of any of its terms or provisions.
(j) Interpretation. The parties hereto acknowledge and agree that they
have participated jointly in the negotiation and drafting of this Escrow
Agreement, have each been represented by counsel in such negotiation and
drafting, and that in the event an ambiguity or question of intent or
interpretation arises, this Escrow Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Escrow Agreement.
(k) Counterparts. This Escrow Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS.]
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SIGNATURE PAGE TO ESCROW AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BUYER:
BRIDGELINE SOFTWARE, INC.
By:
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
SELLER:
OBJECTWARE, INC.
By___________________________________
Name: Xxxx X. Xxxx
Title: President and Chief Executive Officer
SHAREHOLDER:
______________________________________
Xxxx X. Xxxx
ESCROW AGENT:
XXXXXX XXXXXX XXXXXXX LLP
By:
Name:
Title:
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