Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IVILLAGE INC.,
XXXXXX ACQUISITION CORP.,
AND
XXXXXXXXXX.XXX, INC.
DATED AS OF FEBRUARY 11, 2002
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TABLE OF CONTENTS
Page
ARTICLE I THE EXCHANGE OFFER ....................................... 2
Section 1.1 The Offer .............................................. 2
Section 1.2 Company Action ......................................... 5
ARTICLE II THE MERGER ............................................... 7
Section 2.1 The Merger ............................................. 7
Section 2.2 Closing ................................................ 7
Section 2.3 Effective Time ......................................... 8
Section 2.4 Conversion of Common Shares ............................ 8
Section 2.5 Organizational Documents ............................... 8
Section 2.6 Directors and Officers of the Surviving Corporation .... 9
Section 2.7 Company Stock Options .................................. 9
Section 2.8 Company Stock Rights ................................... 9
ARTICLE III PAYMENT FOR SECURITIES; EXCHANGE OF CERTIFICATES;
ADDITIONAL MERGER ACTIONS ................................ 9
Section 3.1 Exchange Agent ......................................... 9
Section 3.2 Exchange Procedures .................................... 10
Section 3.3 Tax Characterization ................................... 11
Section 3.4 No Further Ownership Rights ............................ 11
Section 3.5 Termination of Exchange Fund ........................... 11
Section 3.6 No Liability ........................................... 11
Section 3.7 Lost, Stolen or Destroyed Certificates ................. 12
Section 3.8 Withholding of Tax ..................................... 12
Section 3.9 Appraisal Rights ....................................... 12
Section 3.10 Stockholders' Meeting .................................. 12
Section 3.11 Merger Without Meeting of Stockholders ................. 14
Section 3.12 Rule 16b-3 ............................................. 14
Section 3.13 Additional Actions ..................................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............ 14
Section 4.1 Organization and Standing .............................. 14
Section 4.2 Authority for Agreement ................................ 15
Section 4.3 Capitalization ......................................... 15
Section 4.4 Company Subsidiaries ................................... 16
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TABLE OF CONTENTS
(continued)
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Section 4.5 No Conflict ............................................ 16
Section 4.6 Required Filings and Consents .......................... 16
Section 4.7 Compliance ............................................. 16
Section 4.8 Litigation ............................................. 17
Section 4.9 Company Reports; Financial Statements .................. 17
Section 4.10 Absence of Certain Changes or Events ................... 17
Section 4.11 Taxes .................................................. 18
Section 4.12 Title to Personal Property ............................. 19
Section 4.13 Real Property .......................................... 19
Section 4.14 Environmental Compliance and Disclosure ................ 20
Section 4.15 Officers and Employees ................................. 20
Section 4.16 Employee Benefit Plans ................................. 20
Section 4.17 Labor Relations ........................................ 23
Section 4.18 Contracts and Commitments .............................. 24
Section 4.19 Information Supplied ................................... 24
Section 4.20 Intellectual Property .................................. 25
Section 4.21 Consumer Protection Laws; Privacy Policy ............... 27
Section 4.22 Insurance Policies ..................................... 28
Section 4.23 Transactions with Affiliates ........................... 28
Section 4.24 No Existing Discussions ................................ 28
Section 4.25 Antitakeover Laws ...................................... 28
Section 4.26 Company Rights Agreement ............................... 29
Section 4.27 Brokers ................................................ 29
Section 4.28 Vote Required .......................................... 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB .. 29
Section 5.1 Organization and Standing .............................. 29
Section 5.2 Authority for Agreement ................................ 30
Section 5.3 Capitalization ......................................... 30
Section 5.4 No Conflict ............................................ 31
Section 5.5 Required Filings and Consents .......................... 31
Section 5.6 Compliance ............................................. 31
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TABLE OF CONTENTS
(continued)
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Section 5.7 Litigation ............................................. 31
Section 5.8 Parent Reports; Parent Financial Statements ............ 31
Section 5.9 Absence of Certain Changes or Events ................... 32
Section 5.10 Taxes .................................................. 32
Section 5.11 Information Supplied ................................... 33
Section 5.12 Intellectual Property .................................. 33
Section 5.13 Brokers ................................................ 34
Section 5.14 Reservation of Shares; Cash ............................ 34
ARTICLE VI COVENANTS ................................................ 34
Section 6.1 Conduct of the Business Pending the Merger ............. 34
Section 6.2 Access to Information; Confidentiality ................. 35
Section 6.3 Reasonable Efforts; Notification ....................... 36
Section 6.4 No Solicitation of Transactions ........................ 37
Section 6.5 Public Announcements ................................... 39
Section 6.6 Nasdaq Listing ......................................... 39
Section 6.7 Company Affiliates ..................................... 39
Section 6.8 Director Resignations .................................. 40
Section 6.9 Stockholder Litigation ................................. 40
Section 6.10 Employee Arrangements .................................. 40
Section 6.11 Advertiser Visits ...................................... 40
Section 6.12 Directors' and Officers' Indemnification and Insurance . 40
Section 6.13 Delisting .............................................. 41
Section 6.14 Taxes .................................................. 41
Section 6.15 Standstill ............................................. 41
Section 6.16 Non-Solicitation ....................................... 41
ARTICLE VII CONDITIONS PRECEDENT ..................................... 41
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger ............................................. 41
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER ........................ 42
Section 8.1 Termination ............................................ 42
Section 8.2 Expenses ............................................... 44
Section 8.3 Effect of Termination .................................. 45
Section 8.4 Amendment .............................................. 45
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TABLE OF CONTENTS
(continued)
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Section 8.5 Extension; Waiver ...................................... 45
ARTICLE IX GENERAL PROVISIONS ....................................... 46
Section 9.1 Nonsurvival of Representations and Warranties .......... 46
Section 9.2 Notices ................................................ 46
Section 9.3 Interpretation ......................................... 47
Section 9.4 Counterparts ........................................... 47
Section 9.5 Entire Agreement; No Third-Party Beneficiaries ......... 47
Section 9.6 Governing Law .......................................... 47
Section 9.7 Assignment ............................................. 47
Section 9.8 Enforcement ............................................ 47
Section 9.9 Annex I; Annex II; Exhibits; Disclosure Letters ........ 48
Section 9.10 Jurisdiction; Venue .................................... 48
Section 9.11 Waiver of Trial by Jury ................................ 48
ARTICLE X CERTAIN DEFINITIONS ...................................... 49
ANNEXES, EXHIBITS AND SCHEDULES
Annex I - Index of Defined Terms
Annex II - Conditions to the Offer
Annex III - Calculation of Net Cash
Exhibit A - Form of Affiliates Letter
-IV-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (together with all annexes, letters,
schedules and exhibits hereto, this "Agreement"), dated as of February 11, 2002,
by and among IVILLAGE INC., a Delaware corporation ("Parent"), XXXXXX
ACQUISITION CORP., a Delaware corporation and wholly owned subsidiary of Parent
("Merger Sub"), and XXXXXXXXXX.XXX, INC., a Delaware corporation (the
"Company").
RECITALS
A. It is proposed that Parent, through Merger Sub, will acquire all of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company (the "Company Common Shares"), including the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of June 28, 2001, between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the "Company Rights Agreement").
B. It is proposed that Parent will cause Merger Sub to make an exchange
offer (as such may be amended from time to time as permitted by this Agreement,
the "Offer") in compliance with Section 14(d)(1) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder to acquire each issued and outstanding Company Common
Share in exchange for cash and shares of Parent common stock, par value $.01 per
share (the "Parent Common Stock"), all upon the terms and subject to the
conditions of this Agreement, including Annex I hereto.
C. If Merger Sub acquires Company Common Shares tendered pursuant to the
Offer, it is proposed that Merger Sub shall merge (the "Merger") with and into
the Company with the Company surviving in accordance with the Delaware General
Corporation Law (the "DGCL"), pursuant to which each outstanding Company Common
Share shall be converted into the right to receive cash and shares of Parent
Common Stock, all upon the terms and subject to the conditions of this
Agreement.
D. The Board of Directors of the Company (the "Company Board of
Directors") has received the written opinion (the "Fairness Opinion") of Xxxxx &
Company Incorporated (the "Independent Advisor") that, based on, and subject to
the various assumptions and qualifications set forth in the Fairness Opinion, as
of the date of the Fairness Opinion, the consideration to be received by the
holders of Company Common Shares (the "Company Stockholders") pursuant to this
Agreement is fair from a financial point of view to such holders.
E. The Company Board of Directors has unanimously (i) determined that this
Agreement, the Offer, the Merger and the other transactions contemplated hereby,
taken together, are at a price and on terms that are fair to, advisable and in
the best interests of the Company and the Company Stockholders, (ii) voted to
(A) approve this Agreement and the transactions contemplated hereby, including
the Merger, and (B) recommend acceptance and approval by the Company
Stockholders of this Agreement, the Offer, the Merger and the other transactions
contemplated hereby and that such Company Stockholders tender their Company
Common Shares in the Offer, (iii) taken all action necessary and advisable to
render the Company Rights Agreement inapplicable to the Offer and the Merger,
without any payment to the holders of the Rights, and (iv) taken all actions
necessary and advisable to render inapplicable to the Offer and the Merger the
provisions of any "moratorium," "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover laws and regulations
of any state or other jurisdiction, including the provisions of Section 203 of
the DGCL (collectively, "Antitakeover Laws").
F. The Boards of Directors of Parent and Merger Sub, and the sole
stockholder of Merger Sub, have each voted to approve this Agreement, the Offer,
the Merger and the other transactions contemplated hereby.
G. Simultaneously with the execution and delivery of this Agreement,
certain Company Stockholders have entered into a Stockholders Agreement (the
"Stockholders Agreement"), dated as of the date hereof, with Parent and Merger
Sub, pursuant to which, among other things, such holders have granted to Parent
an option to purchase their Company Common Shares in certain circumstances,
agreed to tender their shares into the Offer and agreed to vote their shares in
favor of the Merger, this Agreement and the other transactions contemplated
hereby and thereby.
H. Certain capitalized terms used in this Agreement are defined in Article
X, and Annex I includes an index of all capitalized terms used in this
Agreement.
AGREEMENT
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
THE EXCHANGE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VIII and subject to the conditions set forth in Annex I
(including that none of the events or conditions set forth therein (the
"Exchange Offer Conditions") shall have occurred and be existing and not waived
by Parent), Merger Sub shall, and Parent shall cause Merger Sub to, commence
(within the meaning of Rule 14d-2 under the Exchange Act) the Offer to purchase
all of the issued and outstanding Company Common Shares (including any and all
Rights) as promptly as reasonably practicable, but in no event more than twenty
(20) Business Days following the first public announcement by Parent and the
Company of the execution of this Agreement, and shall take the actions specified
in Section 1.1(c). Each Company Common Share accepted by Merger Sub pursuant to
the Offer shall be exchanged for the right to receive from Parent (i) a fraction
of a share of Parent Common Stock (the "Stock Portion") determined by dividing
(y) the quotient obtained by dividing $3.5 million by the Base Price, by (z) the
Fully Diluted Common Share Number, with cash paid in lieu of fractional shares,
as provided below and (ii) an amount in cash (the "Cash Portion"), determined by
dividing (y) the quotient obtained by dividing the Company's Net Cash as
reflected on the Reference Balance Sheet, by (z) the Fully Diluted Common Share
Number, rounded to the nearest whole cent, with .5 rounded up. The Stock Portion
and the Cash Portion, or such greater aggregate amount per share paid by Merger
Sub in the Offer, are referred to herein as the "Offer Price." No certificate or
scrip representing fractional shares of Parent Common Stock shall be issued
pursuant to the Offer. All fractional shares of Parent Common Stock that a
Company
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Stockholder would otherwise be entitled to receive as a result of the Offer
shall be aggregated, and if a fractional share results from such aggregation,
such holder shall be entitled to receive, in lieu thereof, an amount in cash
determined by multiplying (i) the Base Price by (ii) the fraction of a share of
Parent Common Stock to which such holder would otherwise have been entitled. The
obligation of Merger Sub to accept for payment and pay for any Company Common
Shares tendered pursuant to the Offer shall be subject only to the satisfaction
of the Exchange Offer Conditions, this Agreement and applicable Laws. The
Company agrees that any Company Common Shares held by the Company will not be
tendered pursuant to the Offer.
(b) Parent and Merger Sub expressly reserve the right from time to
time, without the consent of the Company, to waive any Exchange Offer Condition,
irrevocably increase the Offer Price or make any other changes to the terms and
conditions of the Offer; provided, however, that without the prior written
consent of the Company, Merger Sub shall not, and Parent shall cause Merger Sub
not to, (i) decrease the Offer Price or change the form of consideration payable
in the Offer, (ii) decrease the number of Company Common Shares sought in the
Offer, (iii) modify or amend the Exchange Offer Conditions or impose conditions
to the Offer in addition to the Exchange Offer Conditions in any manner adverse
to the Company Stockholders, (iv) waive the Minimum Condition or (v) except as
provided in Section 1.1(d), extend the Offer if all of the Exchange Offer
Conditions are satisfied. Upon the terms and subject to the satisfaction or
waiver of the conditions of the Offer and this Agreement (including the Exchange
Offer Conditions), Merger Sub shall, and Parent shall cause Merger Sub to,
accept for payment and pay for all Company Common Shares validly tendered and
not withdrawn prior to the expiration of the Offer as promptly as possible after
expiration of the Offer, unless terminated in accordance with its terms. Parent
shall provide or cause to be provided to Merger Sub on a timely basis shares of
Parent Common Stock and funds sufficient to accept for payment and pay for any
and all Company Common Shares that Merger Sub becomes obligated to accept for
payment and pay for pursuant to the Offer.
(c) As soon as practicable after the date of this Agreement, Parent
shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments and supplements thereto, the "Form S-4") to
register the offer and sale of the shares of Parent Common Stock pursuant to the
Offer. The Offer shall be made by means of a preliminary prospectus included in
the Form S-4 and containing the information required by Rule 14d-4(b) under the
Exchange Act (the "Preliminary Prospectus"), subject only to the Exchange Offer
Conditions. As soon as reasonably practicable on the date the Offer is
commenced, Merger Sub shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "Schedule
TO") with respect to the Offer that will comply in all material respects with
the provisions of all applicable federal securities laws, and will contain
(including as exhibits) or incorporate by reference the Preliminary Prospectus,
forms of the related letter of transmittal and any other documents required to
be filed in connection with the Offer (which documents, together with any
supplements or amendments thereto, are referred to collectively herein as the
"Offer Documents"), which shall be mailed to the Company Stockholders. Merger
Sub agrees promptly to correct the Form S-4, the Schedule TO and the Offer
Documents if and to the extent that they shall have become false or misleading
in any material respect (and the Company, with respect to information supplied
by it specifically for use in the Form S-4, the Schedule TO or the Offer
Documents, shall promptly notify Merger Sub and its counsel of any required
corrections of such information and shall reasonably cooperate with Merger Sub
with respect to correcting such
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information) and to supplement the Form S-4, the Schedule TO or the Offer
Documents to include any information that shall become necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (and the Company shall supplement the information provided
by it specifically for use in the Form S-4, the Schedule TO or the Offer
Documents to include any information that shall have become necessary or
appropriate to make the statements therein that are based on such provided
information, in light of the circumstances under which they were made, not
misleading), and to take all steps necessary to cause the Form S-4 and the
Schedule TO, as so corrected or supplemented, to be filed with the SEC and the
Offer Documents, as so corrected or supplemented, to be disseminated to Company
Stockholders, in each case to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Form S-4, the Schedule TO and the Offer
Documents before they are filed with the SEC and before they are distributed to
Company Stockholders. Merger Sub shall provide the Company and its counsel
copies of any written comments and telephone notification of any oral comments
that Merger Sub or its counsel receive from the SEC or its staff with respect to
the Schedule TO or the Offer Documents promptly after receipt of such comments.
Merger Sub shall use its commercially reasonable efforts to respond to such
comments promptly.
(d) So long as this Agreement has not been terminated in accordance
with the terms hereof, and subject to the terms and conditions hereof (including
the Exchange Offer Conditions), the Offer shall expire at midnight, Eastern
Standard Time, on the date that is twenty (20) Business Days after the date on
which the Offer is commenced; provided, however, that without the consent of the
Company, Merger Sub may (i) from time to time, extend the Offer, if at the
scheduled expiration date of the Offer any of the Exchange Offer Conditions
shall not have been satisfied or waived, until such time as such Exchange Offer
Conditions are satisfied or waived, (ii) from time to time, extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer, (iii) from time to time,
extend the Offer for not more than a total of thirty (30) Business Days if there
shall not have been delivered to Parent and Merger Sub an At Home Bankruptcy
Decision or (iv) from time to time extend the Offer for any reason for not more
than a total of thirty (30) Business Days beyond the latest expiration date that
would otherwise be permitted by clause (i) or (ii) above. So long as this
Agreement is in effect, the Offer has been commenced, the Exchange Offer
Conditions have not been satisfied or waived, none of the events or conditions
set forth in Annex II (a) through (m) have occurred and is existing at the time
of any scheduled expiration date of the Offer and the failure of the Exchange
Offer Conditions to be satisfied is not the result of a breach by the Company of
its obligations hereunder, then, provided that such Exchange Offer Conditions
are reasonably capable of being satisfied and subject to Merger Sub's right of
termination under this Agreement, Merger Sub shall cause the Offer not to
expire; provided, however, that Merger Sub shall not be required to extend the
Offer beyond June 30, 2002. Merger Sub may, in addition, provide a "subsequent
offer period" (as contemplated by Rule 14d-11 under the Exchange Act) of not
less than three (3) Business Days following its acceptance for payment of
Company Common Shares in the Offer.
(e) The parties understand and agree that the Offer Price has been
calculated based on, among other things, the accuracy of the representation and
warranty set forth in Section 4.3 and that, in the event the number of
outstanding Company Common Shares, Company Stock Options or Company Stock Rights
exceeds the amounts specifically set forth in Section 4.3 (including as a result
of any stock split, reverse stock split, stock dividend, including any dividend
or
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distribution of securities convertible into stock or stock equivalents of the
Company, recapitalization, or other like change occurring after the date of this
Agreement, but excluding any Company Common Shares issued pursuant to the
Company Stock Plans, in accordance with, and subject to, Section 6.1(b)(iv)),
the Offer Price shall be appropriately adjusted. The provisions of this Section
1.1(e) shall not, however, affect the representations and warranties set forth
in Section 4.3.
Section 1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company Board of Directors, at a meeting duly
called and held on February 11, 2002, unanimously (i) determined that this
Agreement, the Offer, the Merger and the other transactions contemplated hereby,
taken together, are at a price and on terms fair to, advisable and in the best
interests of the Company and the Company Stockholders; (ii) voted to (A) approve
this Agreement and the transactions contemplated hereby, including the Merger,
and (B) recommend acceptance and approval by the Company Stockholders of this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and by the Transaction Documents and that such holders tender their Company
Common Shares in the Offer; (iii) took all other action necessary and advisable
to render the Company Rights Agreement inapplicable to the Transaction
Documents, the Offer and the Merger, without any payment to the holders of the
Rights; and (iv) took all actions necessary and advisable to render inapplicable
to each of the transactions contemplated by the Transaction Documents the
provisions of any Antitakeover Laws. Subject to Section 6.4(c), the Company
consents to the inclusion of such recommendations and approvals in the Offer
Documents. The Company shall not withdraw, modify or fail to reaffirm such
recommendations and approvals in any manner inconsistent with Section 6.4(c).
The Company hereby represents and warrants that the Independent Advisor has
delivered to the Company Board of Directors its written Fairness Opinion that,
subject to the various assumptions and qualifications set forth therein, as of
the date of the Fairness Opinion, the consideration to be received by the
Company Stockholders pursuant to this Agreement, the Offer and the Merger is
fair from a financial point of view to such holders (other than Parent and its
affiliates). The Company has been authorized by the Independent Advisor to
permit, subject to the prior review and consent of the Independent Advisor and
its counsel (such consent not to be unreasonably withheld), the inclusion of the
Fairness Opinion in the Offer Documents, the Schedule 14D-9 (as defined below)
and the Proxy Statement. The Company represents and warrants that it has been
advised by each of its directors and executive officers that they intend to
tender all Company Common Shares beneficially owned by them to Merger Sub
pursuant to the Offer.
(b) The Company hereby agrees to file with the SEC, concurrently
with the filing by Parent and Merger Sub of the Schedule TO with respect to the
Offer, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(together with any and all amendments, supplements and exhibits thereto, the
"Schedule 14D-9") that will (i) comply in all material respects with the
provisions of all applicable federal securities laws, (ii) reflect the
recommendations and actions of the Company Board of Directors referred to in
Section 1.2(a) and (iii) include the Fairness Opinion, in each case subject to
Section 6.4(c). The Company agrees to include such Schedule 14D-9 in the mailing
of the Offer Documents by Merger Sub to the Company Stockholders promptly after
the commencement of the Offer. The Company agrees promptly to correct the
Schedule 14D-9 if and to the extent that it shall become false or misleading in
any material respect (and Parent and Merger Sub, with respect to information
supplied by them specifically for use in the Schedule 14D-9, shall promptly
notify the Company and its counsel of any
5
required corrections of such information and cooperate with the Company with
respect to correcting such information) and to supplement the information
contained in the Schedule 14D-9 to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (and Parent and Merger Sub shall
supplement the information provided by them specifically for use in the Schedule
14D-9 to include any information that shall become necessary in order to make
the statements therein that are based on such provided information, in light of
the circumstances under which they were made, not misleading), and the Company
shall take all steps necessary to cause the Schedule 14D-9, as so corrected or
supplemented, to be filed with the SEC and disseminated to the Company
Stockholders, to the extent required by applicable federal securities laws.
Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 before it is filed with the SEC or disseminated to
the Company Stockholders. The Company shall provide Parent and its counsel
copies of any written comments and telephone notification of any oral comments
that the Company or its counsel receive from the SEC or its staff with respect
to the Schedule 14D-9 promptly after receipt of such comments. The Company shall
use its commercially reasonable efforts to respond to such comments promptly,
and shall provide Parent and its counsel copies of any written responses and
telephonic notification of any verbal responses by the Company or its counsel to
the SEC or its staff.
(c) In connection with the Offer, the Company shall promptly, or
cause its transfer agent to promptly, following execution of this Agreement
furnish Merger Sub with mailing labels containing the names and addressees of
all record Company Stockholders, a non-objecting beneficial owners list and
security position listings of Company Common Shares held in stock depositories,
each as of a recent date, and shall promptly furnish Merger Sub with such
additional information, including updated lists of stockholders, mailing labels
and security position listings, and such other information and assistance as
Merger Sub or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial Company Stockholders. Subject to the
requirements of applicable Law, and except for such steps as are appropriate to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent, Merger Sub and their Affiliates, agents and advisors shall
hold in confidence, and use only in connection with the Offer and the Merger,
the information contained in any such labels, listings and files, and, if this
Agreement shall be terminated, will promptly deliver to the Company all copies
of such information then in their possession.
(d) Promptly following the acceptance for payment and payment for
Company Common Shares by Merger Sub pursuant to the Offer, and from time to time
thereafter, Merger Sub shall be entitled to designate up to such number of
directors, rounded up to the nearest whole number, on the Company Board of
Directors as will give Merger Sub, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Company Board of Directors equal to the
product of the number of directors on the Company Board of Directors (giving
effect to any increase in the number of directors pursuant to this Section
1.2(d)) multiplied by a fraction the numerator of which shall be the number of
Company Common Shares beneficially owned by the Parent Parties and the
denominator of which shall be the total number of Company Common Shares
outstanding at such time. At such time, the Company shall also cause, if
requested by Merger Sub, each committee of the Company Board of Directors to
include individuals designated by Merger Sub constituting up to the same
percentage of each such committee as Merger Sub designees constitute on the
Company Board of Directors. The Company shall, upon request by Merger Sub,
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promptly take all actions necessary to cause Merger Sub's designees to be
elected to the Company Board of Directors in accordance with the terms of this
Section 1.2(d), including by increasing the size of the Company Board of
Directors and/or, at the Company's election, securing the resignations of such
number of directors as is necessary to enable the designees of Merger Sub to be
elected to the Company Board of Directors in accordance with the terms of this
Section 1.2(d). In the event that designees of Merger Sub are elected to the
Company Board of Directors, until the Effective Time, those continuing members
of the Company Board of Directors who are neither officers of the Company nor
designees, Affiliates or Associates of Merger Sub shall be deemed the
"Independent Directors" for purposes of the provisions of this Agreement.
Subject to applicable Law, the Company shall promptly take all action in a
commercially reasonable manner necessary pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its
obligations under this Section 1.2(d) and shall include in the Schedule 14D-9
mailed to the Company Stockholders promptly after the commencement of the Offer
(or an amendment thereto or an information statement pursuant to such Rule 14f-1
if Merger Sub has not theretofore designated directors or timely provided the
requisite information) such information with respect to the Company and its
officers and directors as is required under Section 14(f) and such Rule 14f-1 in
order to fulfill its obligations under this Section 1.2(d). Merger Sub will
promptly supply the Company and be solely responsible for any information with
respect to itself and its nominees, officers, directors and Affiliates required
by Section 14(f) and such Rule 14f-1. Notwithstanding anything in this Agreement
to the contrary, following the time directors designated by Merger Sub are
elected to the Company Board of Directors and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of obligations of Merger Sub hereunder, (iv) take any other
action by the Company in connection with this Agreement required to be taken by
the Company Board of Directors or (v) take any action taken by the Company in
connection with the transactions contemplated by this Agreement, and such
affirmative majority vote shall be sufficient to take any such action.
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company in accordance with the DGCL and the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the Surviving
Corporation.
(b) The Merger shall have the effects set forth in the DGCL.
Accordingly, from and after the Effective Time, the Surviving Corporation shall
have all the properties, rights, privileges, purposes and powers and debts,
duties and Liabilities of the Company.
Section 2.2 Closing. The Closing will take place at 10:00 a.m., Eastern
Standard Time, as promptly as practicable but in no event later than the second
Business Day after the satisfaction or waiver of the conditions (other than
those conditions that by their nature are to be satisfied at Closing, but
subject to the fulfillment or waiver of those conditions) set forth in Article
VII (the
7
"Closing Date"), at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, unless another date or place is agreed to in writing
by the parties.
Section 2.3 Effective Time. On the Closing Date, the Company and Merger
Sub shall file the Certificate of Merger or other appropriate documents, in
accordance with, and shall make all other filings or recordings and take all
such other action required with respect to the Merger under, the DGCL. The
Merger shall become effective at the Effective Time.
Section 2.4 Conversion of Common Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Each Company Common Share issued and outstanding immediately
prior to the Effective Time (including Company Common Shares issued upon
exercise of Company Stock Rights, but excluding Company Common Shares canceled
pursuant to Section 2.4(b) or as to which appraisal rights have been perfected
under the DGCL) shall be canceled and shall by virtue of the Merger and without
any action on the part of the holder thereof be converted automatically into the
right to receive (i) a fraction of a share of Parent Common Stock in the amount
of the Stock Portion and (ii) cash in the amount of the Cash Portion (the
"Merger Consideration"). All such Company Common Shares, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a Certificate representing such
Company Common Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration into which such Company
Common Shares have been converted, cash in lieu of fractional shares as provided
in Section 3.2(e) and any dividends or other distributions payable pursuant to
Section 3.2(d).
(b) Each Company Common Share issued and outstanding immediately
prior to the Effective Time that is owned by Parent or Merger Sub and each
Company Common Share that is owned by the Company as treasury stock or otherwise
shall be canceled and retired and cease to exist and no payment or distribution
shall be made with respect thereto.
(c) Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
If after the date hereof and prior to the Effective Time, subject to Section
1.1(e), Parent shall have declared a stock split (including a reverse split) of
Parent Common Stock or a dividend payable in Parent Common Stock or effected any
recapitalization or reclassification of its common stock or any other similar
transaction, then the Base Price shall be appropriately adjusted to reflect such
stock split, dividend, recapitalization, reclassification or similar
transaction.
Section 2.5 Organizational Documents.
(a) The Certificate of Merger shall provide that the Company
Certificate of Incorporation, as amended and restated as set forth in such
Certificate of Merger, shall become the
8
Certificate of Incorporation of the Surviving Corporation, until the same shall
thereafter be altered, amended or repealed in accordance with applicable law or
such Certificate of Incorporation.
(b) The Certificate of Merger shall provide that the Company Bylaws
as in effect immediately prior to the Effective Time shall become the Bylaws of
the Surviving Corporation, until the same shall thereafter be altered, amended
or repealed in accordance with applicable law, the Certificate of Incorporation
of the Surviving Corporation or such Bylaws.
Section 2.6 Directors and Officers of the Surviving Corporation. The
Certificate of Merger shall provide that from and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable Law, (a) the directors of Merger Sub at the Effective Time shall
become the directors of the Surviving Corporation and (b) the officers of Merger
Sub at the Effective Time shall become the officers of the Surviving Corporation
Section 2.7 Company Stock Options. All outstanding Company Stock Options
(other than any option issued under the Employee Stock Purchase Plan) shall
become fully vested and exercisable as of the consummation of the Offer, and all
holders of Company Stock Options shall have the opportunity to exercise their
outstanding Company Stock Options immediately after the consummation of the
Offer. Any Company Stock Options that have not been exercised by the fifth
business day following the consummation of the Offer shall be terminated
immediately after the fifth business day following the consummation of the Offer
and prior to the Effective Time; provided, however, that with respect to any
Company Stock Options for which the Offer Price exceeds the applicable per share
exercise price, the Company shall promptly pay to the holders of such Company
Stock Options an amount, in the form described below, with respect to each such
Company Stock Option, equal to the product of (a) the amount by which the Offer
Price exceeds the applicable per share exercise price, multiplied by (b) the
number of shares subject to the Company Stock Option at the time of such
termination. The foregoing amount shall be paid in the form of whole Company
Common Shares, valued at the Offer Price, with the value of fractional Company
Common Shares paid in cash. Such amount shall be subject to applicable tax
withholding; provided, however, that option holders may elect to have Company
Common Shares withheld to satisfy such tax withholding. All Company Common
Shares received pursuant to this Section 2.7 shall be converted into the Merger
Consideration, as described in Section 2.4, upon the Merger, and included in the
Fully Diluted Common Share Number.
Section 2.8 Company Stock Rights. At the Effective Time, each Company
Warrant and each other Company Stock Right, if not exercised prior thereto,
shall be terminated by virtue of the Merger without any action on the part of
the holder thereof.
ARTICLE III
PAYMENT FOR SECURITIES; EXCHANGE OF CERTIFICATES; ADDITIONAL
MERGER ACTIONS
Section 3.1 Exchange Agent. After the Effective Time, Parent shall deposit
or cause to be deposited with the Exchange Agent on a timely basis, if and when
needed for the benefit of the Company Stockholders and for payment in accordance
with this Article III through the Exchange Agent, shares of Parent Common Stock
in an amount sufficient to pay the Stock Portion of the
9
Merger Consideration and cash in an amount sufficient to pay the Cash Portion of
the Merger Consideration (such cash and shares of Parent Common Stock being
hereinafter referred to as the "Exchange Fund"), payable pursuant to Section 2.4
in exchange for outstanding Company Common Shares. Any income from investment of
the Exchange Fund will be payable solely to Parent.
Section 3.2 Exchange Procedures.
(a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates
which, immediately prior to the Effective Time, represented outstanding Company
Common Shares subsequently converted into the right to receive the Merger
Consideration, as set forth in Section 2.4: (A) a letter of transmittal (a
"Letter of Transmittal") which (i) shall specify that delivery shall be effected
and risk of loss and title to the Certificates shall pass only upon delivery of
the Certificates to the Exchange Agent (or an affidavit of loss in lieu thereof,
together with any bond or indemnity agreement, as contemplated by Section 3.7)
and (ii) shall be in such form and have such other provisions as the Surviving
Corporation may reasonably specify; and (B) instructions for use in effecting
the surrender of the Certificates in exchange for the applicable Merger
Consideration.
(b) Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with a Letter of Transmittal, duly executed, and any other
documents reasonably required by the Exchange Agent or the Surviving
Corporation, (A) the holder of such Certificate shall be entitled to receive in
exchange therefor a check and a certificate or certificates representing the
applicable amount of cash and shares of Parent Common Stock which such holder
has the right to receive pursuant to Section 2.4 and (B) the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each such
Certificate shall represent the right to receive the aggregate Merger
Consideration relating thereto.
(c) In the event of a transfer of ownership of Company Common Shares
which is not registered in the transfer records of the Company, the appropriate
amount of the Merger Consideration may be paid to a transferee if the
Certificate representing such Company Common Shares is presented to the Exchange
Agent properly endorsed or accompanied by appropriate stock powers and otherwise
in proper form for transfer and accompanied by all documents reasonably required
by the Exchange Agent to evidence and effect such transfer and to evidence that
any applicable Taxes have been paid. Until surrendered as contemplated by this
Section 3.2, each such Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
appropriate amount of the applicable Merger Consideration.
(d) No dividends or other distributions that are declared or made
after the Effective Time with respect to Parent Common Stock payable to holders
of record thereof after the Effective Time shall be paid to a Company
Stockholder entitled to receive certificates representing Parent Common Stock
until such Company Stockholder has properly surrendered such Company
Stockholder's Certificates. Upon such surrender, there shall be paid to the
Company Stockholder in whose name the certificates representing such Parent
Common Stock shall be issued any dividends which shall have become payable with
respect to such Parent Common Stock between the Effective Time and the time of
such surrender, without interest. After such surrender, there shall also be paid
to the Company Stockholder in whose name the certificates representing such
Parent Common Stock shall be issued any dividend on such Parent Common Stock
that shall have a record date subsequent to the Effective Time and prior to such
surrender and a payment date after such
10
surrender; provided, however, that such dividend payments shall be made on such
payment dates. In no event shall the Company Stockholder entitled to receive
such dividends be entitled to receive interest on such dividends.
(e) No certificate or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights as a stockholder of Parent. All fractional shares of Parent
Common Stock that a Company Stockholder would otherwise be entitled to receive
as a result of the Merger shall be aggregated and if a fractional share results
from such aggregation, such holder shall be entitled to receive, in lieu
thereof, an amount in cash determined by multiplying (i) the Base Price by (ii)
the fraction of a share of Parent Common Stock to which such holder would
otherwise have been entitled. Parent shall timely make available to the Exchange
Agent any cash necessary to make payments in lieu of fractional shares as
aforesaid. No such cash in lieu of fractional shares of Parent Common Stock
shall be paid to any Company Stockholder until Certificates are surrendered and
exchanged in accordance with this Section 3.2.
Section 3.3 Tax Characterization. The Merger is intended not to qualify as
a reorganization within the meaning of Section 368(a) of the Code. The parties
hereto agree to report the Merger consistent with such treatment.
Section 3.4 No Further Ownership Rights. All Merger Consideration paid
upon the surrender for exchange of the Certificates representing Company Common
Shares in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Company Common Shares and,
after the Effective Time, there shall be no further registration of transfers on
the transfer books of the Surviving Corporation of the Company Common Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article III.
Section 3.5 Termination of Exchange Fund. Any portion of the Exchange Fund
(including any interest and other income received with respect thereto) that
remains undistributed to the former Company Stockholders on the date 180 days
after the Effective Time shall be delivered to the Surviving Corporation upon
demand, and any former holder of Company Common Shares who has not theretofore
received any applicable Merger Consideration to which such Company Stockholder
is entitled under this Article III shall thereafter look only to the Surviving
Corporation for payment of claims with respect thereto and only as a general
creditor thereof.
Section 3.6 No Liability. None of Parent, the Surviving Corporation or
Merger Sub shall be liable to any holder of Company Common Shares for any part
of the Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. Any amounts remaining
unclaimed by holders of any such shares one (1) year after the Effective Time or
at such earlier date as is immediately prior to the time at which such amounts
would otherwise escheat to, or become property of, any Governmental Entity
shall, to the extent permitted by applicable Law or Order, become the property
of the Surviving Corporation free and clear of any claims or interest of any
such holders or their successors, assigns or personal representatives previously
entitled thereto.
11
Section 3.7 Lost, Stolen or Destroyed Certificates. If any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent or the Surviving Corporation, the posting
by such Person of a bond in such reasonable amount as Parent or the Surviving
Corporation may direct, or the execution and delivery by such Person of an
indemnity agreement in such form as Parent or the Surviving Corporation may
direct, in each case as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed Certificate the appropriate amount of the Merger
Consideration.
Section 3.8 Withholding of Tax. Parent, the Surviving Corporation, any
Affiliate thereof or the Exchange Agent shall be entitled to deduct and withhold
from the Merger Consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Shares such amount as Parent, the Surviving
Corporation, any Affiliate thereof or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the Code or any
provision of [state, local or] foreign Tax Law. To the extent that amounts are
so withheld by the Surviving Corporation or the Exchange Agent, such withheld
amounts shall be (a) paid over to the applicable Governmental Entity in
accordance with applicable Law or Order and (b) treated for all purposes of this
Agreement as having been paid to the former holder of a Certificate in respect
of which such deduction and withholding was made by the Surviving Corporation or
the Exchange Agent.
Section 3.9 Appraisal Rights. Notwithstanding Section 2.4, Company Common
Shares outstanding immediately prior to the Effective Time and held by a Company
Stockholder who has demanded appraisal for such Company Common Shares in
accordance with the DGCL shall not be converted into a right to receive from
Parent the Merger Consideration, unless such Company Stockholder fails to
perfect or withdraws or otherwise loses such Company Stockholder's right to
appraisal. If after the Effective Time such Company Stockholder fails to perfect
or withdraws or loses such Company Stockholder's right to appraisal, such
Company Common Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive from Parent the Merger Consideration. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Company Common Shares, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
Section 3.10 Stockholders' Meeting. If the Company is required by
applicable Law or Order to hold a meeting of Company Stockholders to consummate
the Merger and provided that this Agreement shall not have been terminated, the
parties covenant and agree as set forth in this Section 3.10.
(a) Parent and the Company shall, as promptly as practicable and in
any event no later than six Business Days following the acceptance for payment
and payment for Company Common Shares by Merger Sub pursuant to the Offer,
prepare and file with the SEC the Post-Effective Amendment and use all
commercially reasonable efforts to: (1) obtain and furnish the information
required to be included by the SEC in the Proxy Statement and Post-Effective
Amendment, (2) to respond promptly to any comments made by the SEC with respect
to the Proxy
12
Statement or Post-Effective Amendment and (3) to have the Post-Effective
Amendment declared effective by the SEC as promptly as practicable after filing.
(b) The Company, acting through the Company Board of Directors,
shall, in accordance with the Company Certificate of Incorporation, the Company
Bylaws and any applicable Law or Order:
(i) subject to the terms of this Agreement, include in the
Proxy Statement (A) the recommendation of the Company Board of Directors that
the Company Stockholders vote in favor of approval of the Merger and this
Agreement and (B) the Fairness Opinion;
(ii) duly call and give notice of the Company Stockholders
Meeting and cause the Proxy Statement to be mailed to the Company Stockholders
as promptly as practicable and in any event no later than three Business Days
after the date on which the Post-Effective Amendment is declared effective by
the SEC;
(iii) convene and hold the Company Stockholders Meeting as
promptly as practicable and in any event no later than twenty (20) calendar days
following the date of the meeting notice contemplated by clause (iii) above (or
the next succeeding Business Day if such date is not a Business Day);
(iv) use commercially reasonable efforts, subject to the terms
of this Agreement, to obtain the necessary approvals of the Merger and this
Agreement by the Company Stockholders; and
(v) file the Certificate of Merger no later than the date on
which such approval by the Company Stockholders is obtained.
(c) Parent and Merger Sub agree promptly to correct the
Post-Effective Amendment if and to the extent it shall have become false or
misleading in any material respect (and the Company, with respect to information
supplied by it specifically for use in the Post-Effective Amendment or the Proxy
Statement, shall promptly notify Parent and its counsel of any required
corrections of such information and shall reasonably cooperate with Parent with
respect to correcting such information) and to supplement the Post-Effective
Amendment to include any information that shall become necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (and the Company shall supplement the information provided
by it specifically for use in the Post-Effective Amendment or the Proxy
Statement to include any information that shall have become necessary or
appropriate to make the statements therein that are based on such provided
information, in light of the circumstances under which they were made, not
misleading), and to take all steps necessary to cause the Post-Effective
Amendment, as so corrected or supplemented, to be filed with the SEC (and the
Company shall cause the Proxy Statement, as so corrected or supplemented, to be
disseminated to Company Stockholders), in each case to the extent required by
applicable federal securities laws. Each party and its counsel shall be given a
reasonable opportunity to review and comment on the Post-Effective Amendment and
the Proxy Statement before they are filed with the SEC and before they are
distributed to Company Stockholders. Each party shall provide the other party
and its counsel copies of any written comments and telephone notification of any
oral comments that it or its
13
counsel receives from the SEC or its staff with respect to the Post-Effective
Amendment or the Proxy Statement promptly after receipt of such comments.
(d) The Parent Parties shall vote, or cause to be voted at the
Company Stockholders Meeting, as the case may be, all of the Company Common
Shares purchased in the Offer or otherwise acquired or owned by them in favor of
the approval of the Merger and this Agreement.
Section 3.11 Merger Without Meeting of Stockholders. Notwithstanding
Section 3.10, if the Parent Parties shall acquire or otherwise own, in the
aggregate, at least 90.0% of the then outstanding Company Common Shares,
pursuant to the Offer or otherwise, the parties hereto shall take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after acceptance of and payment for the Company Common Shares by
Merger Sub pursuant to the Offer without a meeting of Company Stockholders, in
accordance with Section 253 of the DGCL.
Section 3.12 Rule 16b-3. The Company's Board of Directors shall, at or
prior to the Effective Time, adopt resolutions specifically approving, for
purposes of Rule 16b-3 under the Exchange Act, the Offer, the Merger, the
Transaction Documents and the transactions contemplated thereby and any other
dispositions of Company equity securities (including derivative securities) or
acquisitions of Parent equity securities (including derivative securities) in
connection with this Agreement and the other Transaction Documents by each
individual who is a director or officer of the Company.
Section 3.13 Additional Actions. If, at any time after the Effective Time,
Parent shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other documents, actions or things are necessary or desirable
to vest, perfect or confirm of record or otherwise in Merger Sub its right,
title or interest in, to or under any of the rights, properties or assets of
Parent, Merger Sub or the Company, or otherwise to carry out this Agreement, the
officers of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Parent, Merger Sub or the Company, all
such deeds, bills of sale, assignments, assurances and other documents and to
take and do, in the name and on behalf of Parent, Merger Sub or the Company, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in Merger Sub or otherwise to carry out this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter delivered by the
Company to Parent prior to the execution of this Agreement, the Company
represents and warrants to each of the other parties hereto as follows:
Section 4.1 Organization and Standing. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware, (b) has full corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and assets and
to conduct its business as presently conducted and (c) is duly qualified
14
or licensed to do business as a foreign corporation and is in good standing
(with respect to jurisdictions that recognize such concept) in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not, individually or in
the aggregate, have a Company Material Adverse Effect. The Company has furnished
or made available to Parent true and complete copies of the Company Certificate
of Incorporation and the Company Bylaws, each as amended to date. Such Company
Certificate of Incorporation and Company Bylaws are in full force and effect,
and the Company is not in violation of any provision therein.
Section 4.2 Authority for Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action (including the
approval of the Company Board of Directors) and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Merger or the other transactions contemplated herein (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
Company Required Vote, if necessary, and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and the Merger Sub, constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited against
the Company by (a) bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (b) the exercise by courts of equity
powers.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 Company Common Shares and 1,000,000 shares of preferred
stock. As of the date hereof, (a) 14,484,976 Company Common Shares, all of which
are validly issued, fully paid and nonassessable and free of preemptive rights,
are issued and outstanding, (b) Company Common Shares are held in the treasury
of the Company, (c) 1,985,033 Company Stock Options are outstanding pursuant to
the Company Stock Plans, each such option entitling the holder thereof to
purchase one Company Common Share, and 1,651,227 Company Common Shares are
authorized and reserved for future issuance pursuant to the exercise of such
Company Stock Options, (d) 13,345 Company Warrants are outstanding, each such
Company Warrant entitling the holder thereof to purchase one Company Common
Share, and 13,345 Company Common Shares are authorized and reserved for future
issuance pursuant to the exercise of such Company Warrants and (e) no shares of
preferred stock are issued and outstanding. All Company Warrants will be
terminated as a result of the Merger in accordance with the terms thereof if not
exercised prior to the Effective Time. Schedule 4.3 of the Company Disclosure
Letter sets forth a true and complete list of the Company Stock Options
outstanding as of the date of this Agreement with the exercise prices and
periods of exercisability. Except as set forth above, as of the date of this
Agreement, there are no Company Stock Rights. All shares of capital stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any
15
Company Common Shares or to pay any dividend or make any other distribution in
respect thereof or to provide financing to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Person. As of the date
hereof, except for the Stockholders Agreements, there are no voting trusts or
other agreements or understandings to which the Company is a party with respect
to the voting of stock of the Company.
Section 4.4 Company Subsidiaries. The Company presently has no
Subsidiaries and has not had any Subsidiaries since inception. The Company does
not, and has not since inception, owned, directly or indirectly, any ownership,
equity or voting interest in any corporation, partnership, joint venture or
other entity, nor does the Company have any agreement or commitment to purchase
any such interest.
Section 4.5 No Conflict. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Merger (subject to the approval and adoption of this
Agreement by the Company Required Vote, if required) and the other transactions
contemplated by this Agreement will not, (a) conflict with or violate the
Company Certificate of Incorporation or Company Bylaws, (b) subject to Section
4.6, conflict with or violate any Law applicable to the Company or by which any
material property or asset of the Company is bound or affected, or (c) result in
a breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, give to others any right of
termination, amendment, acceleration or cancellation of, result in triggering
any payment or other obligations, or result in the creation of a lien or other
encumbrance on any material property or asset of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any material property or asset of the Company is bound
or affected, except in the case of clauses (b) and (c) above for any such
conflicts, violations, breaches, defaults or other occurrences which could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 4.6 Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, or registration or qualification with, any
Governmental Entity, except (a) for applicable requirements, if any, of the
Securities Act, the Exchange Act, or state securities laws or "blue sky" laws,
and filing and recordation of appropriate merger documents as required by the
DGCL, or (b) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings, notifications, registrations or qualifications
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
Section 4.7 Compliance. Except as disclosed in the Company Reports filed
by the Company with the SEC prior to the date of this Agreement, the business of
the Company is not being conducted in violation of any Law or Order, except for
violations which have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to the Company
is pending or, to the Knowledge of the Company threatened, in each case other
than those the outcome of which have not had, and could not reasonably be
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect.
16
Section 4.8 Litigation. There is no claim, suit, action, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against or
affecting the Company which, either individually or in the aggregate, has had,
or could be reasonably expected to have, a Company Material Adverse Effect, nor
is there any Order outstanding against the Company which, either individually or
in the aggregate, has had, or could be reasonably expected to have, a Company
Material Adverse Effect.
Section 4.9 Company Reports; Financial Statements.
(a) The Company has filed all Company Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, as
applicable, each as in effect on the date so filed. None of the Company Reports
(including any financial statements or schedules included or incorporated by
reference therein) contained when filed any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated or
incorporated by reference therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(b) The Company has delivered (including via the SEC's XXXXX system,
as applicable) to Parent all of the Company Financial Statements. All of the
Company Financial Statements, including the Reference Balance Sheet, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Company at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(c) There are no Liabilities of the Company of any kind whatsoever,
whether or not accrued and whether or not contingent or absolute, that are
material to the Company, other than (i) Liabilities disclosed or provided for in
the Reference Balance Sheet, (ii) Liabilities incurred on behalf of the Company
under this Agreement and the contemplated Offer and Merger and (iii) Liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Reference Balance Sheet, none of which has had or could
reasonably be expected to have, either individually or in the aggregate, a
Company Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent
a complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC as exhibits to the Company
Reports pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.10 Absence of Certain Changes or Events. Except as disclosed in
the Company Reports, since September 30, 2001, the Company has conducted its
business only in the ordinary course or as disclosed in any Company Reports, and
there has not been (a) any Company Material Adverse Effect, (b) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock, (c) any
split, combination or reclassification of any of the Company's capital stock or
any substitution for shares
17
of the Company's capital stock, except for issuances of Company Common Shares
upon the exercise of Company Stock Options awarded prior to the date hereof in
accordance with the Company Stock Plans, (d) any granting by the Company to any
current or former director, executive officer or other key employee of the
Company of any increase in compensation, bonus or other benefits, except for
normal increases in the ordinary course of business or as was required under any
employment agreements in effect as of the date of the most recent audited
financial statements included in the Company Reports filed and publicly
available prior to the date of this Agreement which have been disclosed to
Parent in the manner described in Section 4.15, (e) any granting by the Company
to any such current or former director, executive officer or key employee of any
increase in severance or termination pay, (f) any entry by the Company into, or
any amendment of, any employment, deferred compensation, consulting, severance,
termination or indemnification agreement with any such current or former
director, executive officer or key employee, (g) except insofar as may have been
disclosed in the Company Reports or required by a change in GAAP, any change in
accounting methods, principles or practices by the Company, materially affecting
its assets, Liabilities or business or (h) except insofar as may have been
disclosed in the Company Reports, any tax election that, individually or in the
aggregate, could reasonably be expected to have a Company Material Adverse
Effect.
Section 4.11 Taxes.
(a) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all material respects.
All Taxes owed by the Company (whether or not shown on any Tax Return) have been
paid. The Company currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made in writing by
an authority in a jurisdiction where the Company does not file Tax Returns that
it is or may be subject to taxation in that jurisdiction. There are no security
interests or other liens on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax, other than
liens for Taxes not yet due and payable.
(b) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, except where
any failure to pay such Taxes would not have a Company Material Adverse Effect.
(c) There is no dispute or claim concerning any Tax Liability of the
Company either (i) claimed or raised by any Governmental Entity in writing or
(ii) as to which any of the directors, officers and employees responsible for
Tax matters of the Company has Knowledge based upon personal contact with any
agent of such Governmental Entity. Schedule 4.11 of the Company Disclosure
Letter lists all Tax Returns filed with respect to the Company that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. The Company has delivered to Parent correct and complete copies of all
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company since January 1, 1998.
(d) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) The Company has not filed a consent under Section 341(f) of the
Code concerning collapsible corporations. The Company is not a party to any Tax
allocation or sharing
18
agreement. The Company (i) has not been a member of an affiliated group filing a
consolidated federal income Tax Return and (ii) has no liability for the Taxes
of any other Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferee or successor, by
contract, or otherwise.
(f) The unpaid Taxes of the Company did not, as of the date of the
Reference Balance Sheet, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Reference Balance Sheet
(disregarding any notes thereto). The Company has not incurred a Tax Liability
from the date of the Reference Balance Sheet other than a Tax Liability in the
ordinary course of business.
Section 4.12 Title to Personal Property. The Company has good and
marketable title to, or a valid leasehold interest in, all of its tangible
personal properties and assets reflected in the 10-K or acquired after December
31, 2000 (other than assets disposed of since December 31, 2000 in the ordinary
course of business consistent with past practice), in each case free and clear
of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever, except for such as which
secure indebtedness and which are properly reflected in the 10-K and for
mortgages, liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever which can be removed for a cost less than
$25,000. The tangible personal property and assets of the Company are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, and are usable in the regular and ordinary course of
business, except as, individually or in the aggregate, would not have a Company
Material Adverse Effect. The Company either owns, or has valid leasehold
interests in, all tangible personal properties and assets used by it in the
conduct of its business, except where the absence of such ownership or leasehold
interest could not individually or in the aggregate have a Company Material
Adverse Effect. The Company has no legal obligation, absolute or contingent, to
any other Person to sell or otherwise dispose of any of its tangible personal
properties or assets with an individual value of $50,000 or an aggregate value
in excess of $100,000.
Section 4.13 Real Property. The Company has good and marketable title to,
or a valid leasehold interest in, all of its real properties reflected in the
10-K or acquired after December 31, 2000, in each case free and clear of all
title defects, mortgages, liens, encumbrances and restrictions, except for (a)
liens, encumbrances or restrictions which secure indebtedness and which are
properly reflected in the 10-K; (b) liens for Taxes accrued but not yet payable;
(c) liens arising as a matter of law in the ordinary course of business with
respect to obligations incurred after December 31, 2000, provided that the
obligations secured by such liens are not delinquent; and (d) such other title
defects, liens, encumbrances and restrictions, if any, as individually or in the
aggregate are not reasonably likely to have a Company Material Adverse Effect.
Schedule 4.13 to the Company Disclosure Letter sets forth a true, correct and
complete list of all real property owned by the Company at any time during the
past five years and a true and correct list of all real property leased by the
Company, identifying with respect to each lease of such real property the date
of, the parties to, and any amendments, modifications, extensions or other
supplements to such lease. The Company has not sent or received any written
notice of any material default under any of the leases of real property to which
it is party. The Company has not breached and is not in default in any material
respect under any covenant, agreement, term or condition of or contained in any
lease of real property to which it is a party and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default or breach.
19
Section 4.14 Environmental Compliance and Disclosure.
(a) The Company possesses, and is in compliance in all material
respects with, all permits, licenses and government authorizations and has filed
all notices that are required under Environmental Laws applicable to the
Company, and the Company is in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those laws or contained in any Law,
regulation, code, plan, order, decree, judgment, notice, permit or demand letter
issued, entered, promulgated or approved thereunder, except where the failure to
so comply, individually or in the aggregate, could not reasonably be expected to
have a Company Material Adverse Effect.
(b) The Company has not received written notice of actual or
threatened liability under CERCLA or any similar state or local statute or
ordinance from any Governmental Entity or any third party.
(c) The Company has not entered into or agreed to, nor does it
contemplate entering into, any Order, and the Company is not subject to any
Order relating to compliance with any applicable Environmental Laws.
(d) Neither the Company nor any Subsidiary has received written
notice that it is subject to any Liability incurred or imposed or based upon any
provision of any Environmental Law and arising out of any act or omission of the
Company, or any of its employees, agents or representatives.
Section 4.15 Officers and Employees. Schedule 4.15 to the Company
Disclosure Letter contains a true and complete list of all of the (a) executive
officers of the Company and (b) all other key employees of the Company with
annual compensation in excess of $75,000, in each case specifying by individual,
their position, annual salary and other amounts paid and benefits provided to
such individual. The Company is not a party to or bound by any
Employee/Consulting Agreement and no severance or other payment will become due
as a result of the transactions contemplated by this Agreement. The Company has
provided to Parent true, correct and complete copies of each such
Employee/Consulting Agreement. The Company has provided Parent with true,
correct and complete forms of any arbitration agreements or confidentiality
agreements between the Company and an officer, employee, former employee,
consultant or independent contractor of the Company, and made available copies
of each such agreement. The Company has not made any verbal commitments to any
such officers, employees, former employees, consultants or independent
contractors with respect to compensation, promotion, retention, termination,
severance or similar matters in connection with the transactions contemplated by
this Agreement or otherwise. All officers and employees of the Company are
active on the date hereof.
Section 4.16 Employee Benefit Plans.
(a) Schedule 4.16 to the Company Disclosure Letter contains a true
and complete list of each Company Benefit Plan sponsored, maintained,
contributed to or required to be contributed to by the Company within the last
three (3) calendar years. Each Company Benefit Plan currently in effect is
identified as a "current plan" on the Company Disclosure Letter and any special
tax status enjoyed by such plan is noted on the Company Disclosure Letter. There
are no oral Company Benefit Plans.
20
(b) With respect to each Company Benefit Plan identified on the
Company Disclosure Letter, the Company has heretofore delivered or made
available to Parent true and complete copies of (i) the plan documents and any
amendments thereto (or, if the plan is not written, a written description
thereof), (ii) any related trust or other funding vehicle, (iii) annual reports
required to be filed with any Governmental Entity with respect to such plan,
actuarial reports, funding and financial information returns and statements for
the past three years, (iv) all contracts with any parties providing services or
insurance to such plan, (v) all material internal memoranda regarding such
plans, (vi) copies of material correspondence with all Governmental Entities,
plan summaries or summary plan descriptions, summary annual reports, booklets
and personnel manuals and any other reports or summaries required under
Applicable Benefit Laws, (vii) the most recent determination letter received
from the Internal Revenue Service with respect to each such plan intended to
qualify under Section 401 of the Code, if applicable, and (viii) such other
documentation with respect to any Company Benefit Plan as is reasonably
requested by Parent.
(c) The Company has maintained all employee data necessary to
administer each Company Benefit Plan, including data required to be maintained
under Sections 107 and 209 of ERISA, and such data are materially true and
correct and are maintained in a usable form.
(d) No Company Benefit Plan or ERISA Affiliate Plan is or was
subject to Title IV of ERISA or Section 412 of the Code, nor is any Company
Benefit Plan or ERISA Affiliate Plan a "multiemployer pension plan," as defined
in Section 3(37) of ERISA, or subject to Section 302 of ERISA. None of the
Company, an ERISA Affiliate or a predecessor in interest of any of them has or
has had an obligation to make contributions or reimburse another employer,
either directly or indirectly, including through indemnification or otherwise,
for making contributions to a plan that is or was subject to Title IV of ERISA.
The Company has not incurred, and no facts exist which reasonably could be
expected to result in, Liability to the Company as a result of a termination,
withdrawal or funding waiver with respect to any ERISA Affiliate Plan or Company
Benefit Plan that is subject to Title IV of ERISA.
(e) Each Company Benefit Plan has been established, registered,
qualified, invested, operated and administered in all respects in accordance
with its terms, in compliance with all Applicable Benefit Laws and in accordance
with all understandings, written or oral, between the Company and its current or
former employees, directors, officers, consultants, independent contractors,
contingent workers or leased employees, as applicable, except for such instances
of noncompliance as would not have a Company Material Adverse Effect. The
Company has not incurred, and the Company has no Knowledge of any facts that
exist which reasonably could be expected to result in, any Liability to the
Company with respect to any Company Benefit Plan or any ERISA Affiliate Plan,
including any Liability, tax, penalty or fee under ERISA, the Code or any
Applicable Benefit Law (other than to pay premiums, contributions or benefits in
the ordinary course).
(f) All obligations regarding each Company Benefit Plan have been
satisfied, and there are no outstanding defaults or violations by any party to
any Company Benefit Plan, except where the failure to so satisfy or where any
default or violation would not have a Company Material Adverse Effect. There are
no Taxes, penalties or fees owing under any Company Benefit Plan that would have
a Company Material Adverse Effect.
21
(g) The Company has no Knowledge of any facts or circumstances that
exist that are likely to adversely affect the tax-exempt status of a Company
Benefit Plan that is intended to be tax-exempt. Further, each Company Benefit
Plan intended to be "qualified" within the meaning of Section 401(a) of the Code
and each trust maintained thereunder that is intended to be exempt from taxation
under Section 501(a) of the Code has received a favorable determination or other
letter indicating that it is so qualified or exempt, as the case may be.
(h) The assets of each Company Benefit Plan are reported in good
faith at their fair market value on the financial statements of each such plan.
(i) Other than those Company Benefit Plans listed in the Company
Disclosure Letter and as specifically described therein, no Company Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for current or former employees, directors, officers,
consultants, independent contractors, contingent workers or leased employees (or
any of their dependents, spouses or beneficiaries) of the Company or any
predecessor in interest of such Company for periods extending beyond their
retirement or other termination of service, other than continuation coverage
mandated by any Applicable Benefit Law and only to the extent required under
such law.
(j) All contributions or premiums required to be made by the Company
under the terms of each Company Benefit Plan or by Applicable Benefit Laws have
been made in a timely fashion in accordance with Applicable Benefit Laws and the
terms of the Company Benefit Plan, except for failures that would not have a
Company Material Adverse Effect. Contributions or premiums will be paid by the
Company for the period up to the Effective Time in the ordinary course of
business. Each Company Benefit Plan is fully funded or fully insured on both an
ongoing and termination or wind-up basis, pursuant to the actuarial assumptions
set forth in the Company Disclosure Letter.
(k) No insurance policy or any other contract or agreement affecting
any Company Benefit Plan requires or permits a retroactive increase in premiums
or payments due thereunder. The level of insurance reserves under each insured
Company Benefit Plan is reasonable and sufficient to provide for all incurred
but unreported claims.
(l) There have been no improper withdrawals, applications or
transfers of assets from any Company Benefit Plan or the trusts or other funding
media relating thereto which would have a Company Material Adverse Effect, and
neither the Company nor any of its agents has been in breach of any material
fiduciary obligation with respect to the administration of any Company Benefit
Plan or the trusts or other funding media relating thereto, except for failures
that would not have a Company Material Adverse Effect.
(m) The Company has the right under the terms of each Company
Benefit Plan and under Applicable Benefit Law to amend, revise, merge or
terminate such plan (or its participation in such plan) or transfer the assets
of such plan to another arrangement, plan or fund at any time exclusively by
action of the Company, and no additional contributions would be required to
properly effect such termination.
(n) The execution, delivery and performance of, and consummation of
the transactions contemplated by, this Agreement will not (i) entitle any
current or former employee,
22
director, officer, consultant, independent contractor, contingent worker or
leased employee (or any of their dependents, spouses or beneficiaries) of the
Company to severance pay, unemployment compensation or any other payment except
as provided in this Agreement, (ii) accelerate the time of payment or vesting
(except for outstanding stock options) or (iii) increase the amount of
compensation due any such individual.
(o) The Company has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could obligate the Company to make any payments that will not be
deductible for federal income tax purposes by reason of Section 280G of the Code
or make (or be deemed to make) any payments that may subject the recipient to
excise tax pursuant to Section 4999 of the Code.
(p) There are no pending or, to the Company's Knowledge, threatened
or anticipated claims, investigations, examinations, audits or other proceedings
or actions by, against, involving or on behalf of any Company Benefit Plan by
any current or former employee, director, officer, consultant, independent
contractor, contingent worker or leased employee (or any of their dependents,
spouses or beneficiaries) of the Company or any predecessor in interest covered
under such Company Benefit Plan, by any Governmental Entities or otherwise
involving any such Company Benefit Plan (other than routine claims for
benefits).
(q) All individuals who are or were performing consulting or other
services for the Company are or were at all times correctly classified as either
"independent contractors" or "employees," as the case may be, except for any
classifications that would not have a Company Material Adverse Effect.
Section 4.17 Labor Relations.
(a) The employees of the Company have not been, and currently are
not, represented by a labor organization or group which was either certified or
voluntarily recognized by any labor relations board, including the NLRB, or
certified or voluntarily recognized by any other Governmental Entity.
(b) No claim, complaint, charge or investigation for unpaid wages,
bonuses, commissions, employment withholding taxes, penalties, overtime or other
compensation, benefits, child labor or record-keeping violations has been filed
or is pending or, to the Knowledge of the Company, is threatened under the FLSA,
the Xxxxx-Xxxxx Act, the Xxxxx-Xxxxxx Act or the Service Contract Act, or any
other federal, state, local, provincial or foreign law, regulation or ordinance.
(c) No discrimination, illegal harassment and/or retaliation claim,
complaint, charge or investigation has been filed or is pending or, to the
Knowledge of the Company, is threatened against the Company or any Subsidiary
under the 1964 Civil Rights Acts, the Equal Pay Act, the ADEA, the ADA, the
FMLA, the FLSA, ERISA or any other federal law or comparable state fair
employment practices act or foreign law, including any provincial law regulating
discrimination in the workplace.
(d) The Company has not taken any action that would constitute a
"mass layoff," "mass termination" or "plant closing" within the meaning of WARN
or otherwise trigger
23
notice requirements or liability under any federal, local, state or foreign
plant closing notice or collective dismissal law.
(e) No wrongful discharge, retaliation, libel, slander or other
claim, complaint, charge or investigation that arises out of the employment
relationship between the Company and its respective employees has been filed or
is pending or, to the Knowledge of the Company, is threatened against the
Company under any applicable law.
(f) The Company has maintained and currently maintains adequate
insurance as required by applicable law with respect to workers' compensation
claims and unemployment benefits claims.
(g) The Company is in compliance with all applicable Laws and Orders
governing or concerning conditions of employment, employment discrimination and
harassment, wages, hours or occupational safety and health, including the Labor
Laws, except where the failure to so comply , individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect; and
(h) The Company has provided Parent with a copy of the Company's
policy for providing leaves of absence under the FMLA, and the Company
Disclosure Letter identifies (i) each employee who is eligible to request FMLA
leave and the amount of FMLA leave utilized by each such employee during the
current leave year; (ii) each employee who will be on FMLA leave at the
Effective Time and his or her job title and description, salary and benefits;
(iii) each employee who has requested FMLA leave to begin after the Effective
Time; (iv) a description of the leave requested; and (v) a copy of all notices
provided to such employee regarding that leave.
Section 4.18 Contracts and Commitments. Except as disclosed in the Company
Reports, the Company is not a party to, is not bound or affected by, and
receives no benefits under any (a) servicing agreements providing for aggregate
payments in any calendar year in excess of $100,000; (b) contracts of
employment; (c) agreements or arrangements for the purchase or sale of any
assets (other than in the ordinary course of business); (d) contracts or
agreements containing covenants limiting the freedom of the Company to engage in
any line of business or to compete with any entity; (e) any joint venture,
partnership or similar agreement; (f) exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract, or any other
interest-rate or foreign currency protection contract; (g) agreement providing
for aggregate payments to any director, officer or consultant of the Company in
any calendar year in excess of $100,000; (h) material agreement, indenture or
other instrument relating to the borrowing of money by the Company, the
guarantee by the Company of any such obligation (other than trade payables and
instruments relating to transactions entered into in the ordinary course of
business), or the sale, securitization or servicing of loans or loan portfolios
of the Company; or (i) other contract or agreement, or amendment thereto, that
would be required to be filed as an exhibit to an Annual Report on Form 10-K
filed by the Company with the SEC as of the date of this Agreement. The Company
is not in breach or default under any such contracts, agreements, instruments or
arrangements, which default or breach has had or could reasonably be expected to
have, either individually or in the aggregate, a Company Material Adverse
Effect, and there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a default.
Section 4.19 Information Supplied.
24
(a) The Schedule 14D-9 and the Proxy Statement to be filed by the
Company pursuant to this Agreement will comply in all material respects with the
applicable requirements of the Exchange Act and will not, at the time the
Schedule 14D-9 or the definitive Proxy Statement is filed with the SEC, as the
case may be, and mailed to the Company Stockholders, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
regarding the Company to be provided to Parent and Merger Sub for inclusion in
the Form S-4, the Post-Effective Amendment and the Schedule TO will not, at the
time such information is provided, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 4.19,
no representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Schedule 14D-9, the Proxy Statement,
the Form S-4, the Post-Effective Amendment or the Schedule TO based on
information supplied by Parent for inclusion or incorporation by reference
therein.
Section 4.20 Intellectual Property.
(a) Schedule 4.20(a) to the Company Disclosure Letter sets forth a
true and correct list of all Intellectual Property owned by the Company that is
the subject of registration, issuance or an application for registration and the
jurisdictions in which each is registered, issued or applied for and any such
registration, filing and issuance remains in full force and effect as of the
date of this Agreement. The Company is listed in the records of the appropriate
United States, state, or foreign registry as the sole current owner of record
for each application, issuance and registration and has the exclusive right to
file, prosecute and maintain all applications and registrations with respect to
the Intellectual Property that is listed on such Schedule 4.20(a).
(b) The Company has good and marketable title to or possess the
necessary licenses or other valid rights to use all Intellectual Property (not
just the Intellectual Property listed on Schedule 4.20(a) to the Company
Disclosure Letter) free and clear of all liens, and has paid all maintenance
fees, renewals or expenses, if any, related to such Intellectual Property,
except where the failure to do so would not individually or in the aggregate
have a Company Material Adverse Effect. To the Knowledge of the Company, neither
the use of such Intellectual Property nor the conduct of the Company in
accordance with its businesses as presently conducted or contemplated to be
conducted, misappropriates, infringes upon or conflicts with any patent,
copyright, trade name, trade secret, trademark or other intellectual property
rights of any third party, except where such conduct would not individually or
in the aggregate have a Company Material Adverse Effect. No third party has
filed a claim against, or threatened to file a claim against, or has provided a
notice to, the Company alleging that it has violated, infringed on or otherwise
improperly used the intellectual property rights of such party (other than
claims or notices which, individually or in the aggregate, would not have a
Company Material Adverse Effect). To the Knowledge of the Company, the Company
has not violated or infringed any patent, trademark, trade name, service xxxx,
service name, copyright, trade secret or other intellectual property held by
others. The Company does not believe that any other entity has violated,
infringed on or otherwise improperly used any of the Intellectual Property owned
by the Company and the Company has not filed a claim against, or threatened to
file a claim against, and has not provided a notice to, any third party alleging
25
any such violation, infringement or improper use of the Intellectual Property
owned by the Company (other than claims or notices which, individually or in the
aggregate, would not have a Company Material Adverse Effect).
(c) Schedule 4.20(c) to the Company Disclosure Letter sets forth a
true and complete list of: (i) all Company Proprietary Software material to the
operation of the business of the Company as presently conducted; (ii) all
Company Licensed Software or Intellectual Property licensed by the Company
material to the operation of the business of the Company as presently conducted;
and (iii) all technical and restricted materials relating to the acquisition,
design, development, use or maintenance of computer code program documentation
and materials used by the Company material to the operation of the business of
the Company as presently conducted.
(d) Subject to any licenses and other agreements identified on
Schedule 4.20(d) to the Company Disclosure Letter, the Company has all right,
title and interest in and to all intellectual property rights in the Company
Proprietary Software, except where the failure to have such right, title and
interest would not individually or in the aggregate have a Company Material
Adverse Effect. The Company has developed the Company Proprietary Software
through its own efforts, as described in such Schedule 4.20(d), and for its own
account, or has obtained all rights thereto, and the Company Proprietary
Software is free and clear of all liens, except for any lien or other right that
would not individually or in the aggregate have a Company Material Adverse
Effect. The use of the Company Licensed Software and the use of the Company
Proprietary Software does not breach any terms of any license or other contract
between the Company and any third party in a manner that would have a Company
Material Adverse Effect. The Company is in compliance in all material respects
with the terms and conditions of all license agreements in favor of the Company
relating to the Company Licensed Software material to the operation of the
business of the Company as presently conducted.
(e) To the Knowledge of the Company, the Company Proprietary
Software does not infringe any patent, copyright or trade secret or any other
intellectual property right of any third party in such a manner that would have
a Company Material Adverse Effect. The source code for the Company Proprietary
Software has been maintained in confidence, and has not been disclosed to any
persons or entities outside the Company, all such disclosures being made
pursuant to appropriate confidentiality provisions, except for any failure that
would not individually or in the aggregate have a Company Material Adverse
Effect.
(f) The Company Proprietary Software was (i) developed by the
employees of the Company working within the scope of their employment at the
time of such development; (ii) developed by agents, consultants, contractors or
others who have executed appropriate instruments of assignment or instruments of
obligation to assign in favor of the Company as assignee that have conveyed or
obligate such agents, consultants and contractors to convey to the Company
ownership of all of its intellectual property rights in the Company Proprietary
Software; or (iii) acquired by the Company in connection with acquisitions in
which the Company obtained appropriate representations, warranties and
indemnities from the transferring party relating to the title to such Company
Proprietary Software. The Company has not received written notice from any third
party claiming any right, title or interest in the Company Proprietary Software.
26
(g) Neither the Company nor any Subsidiary has granted rights or
licenses in Company Software or any other Intellectual Property owned by the
Company or any Subsidiary to any third party.
(h) The licenses and agreements set forth on such Schedules 4.20(c),
4.20(d) and 4.20(g) to the Company Disclosure Letter are valid and binding
obligations of the Company, enforceable in accordance with their terms, and to
the Knowledge of the Company, there exists no event or condition which will
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default by any party under any such licenses or
agreements, except any lack of enforceability or default that would not
individually or in the aggregate have a Company Material Adverse Effect.
(i) The Company takes reasonable measures to protect the
confidentiality of its trade secrets, including requiring its employees and
other parties having access thereto to execute written non-disclosure
agreements. To the Knowledge of the Company, no trade secret of the Company has
been disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclosure agreement. To the Knowledge of the Company, no
party to any non-disclosure agreement relating to its trade secrets is in breach
or default thereof.
(j) To the Knowledge of the Company, no current or former partner,
director, officer, or employee of the Company or any Subsidiary (or any of their
respective predecessors in interest) will, after giving effect to the
transactions contemplated herein, directly own or retain any rights to use any
of the Intellectual Property owned or used by the Company.
Section 4.21 Consumer Protection Laws; Privacy Policy.
(a) The Privacy Statement and Terms and Conditions are posted at all
times on the Company's web site. The Company maintains a link to the Privacy
Statement from its homepage and makes an effort to include a link from any page
on which personal information is collected from visitors to its web site and
users of its products and services. The Privacy Statement includes the
following: (i) notice to users about the Company's web site's information
collection policies and practices prior to disclosing their personal information
and (ii) a description of how users' personal information will be used,
including any uses beyond those for which the information was provided.
(b) The Company has commercially reasonable technological and
procedural measures in place to protect data collected from visitors and users
against loss, theft, unauthorized access or disclosure. The Company does not
knowingly collect information from or target children under the age of 13. The
Company does not sell, rent or otherwise make available to third parties any
personally identifiable data submitted by users in violation of the Privacy
Statement or applicable Law.
(c) The Privacy Statement is accurate in all material respects and
consistent in all material respects with the Terms and Conditions. The Company
and its employees have (i) complied at all times with the then current privacy
policy issued by the Company and all applicable U.S. privacy laws regarding the
disclosure and use of data, (ii) not violated the Privacy Statement or the Terms
and Conditions and (iii) taken all appropriate and reasonable steps to protect
and maintain the confidential nature of the information provided to the Company
by visitors and users.
27
The Company is not party to any agreement or subject to any other obligation
that, following the Effective Time, would prevent Parent and the Parent Parties
from using the information covered by the Privacy Statement in a manner
consistent with (y) applicable privacy laws and industry standards regarding the
disclosure and use of data and (z) the Privacy Statement in effect at the time
the information was collected. No claims or controversies have arisen regarding
the Privacy Statement, the Terms and Conditions or the implementation of any of
the foregoing.
(d) All Promotional Activities conducted by the Company, whether
conducted on behalf of the Company or on behalf of the customers and clients of
the Company, have been and are being conducted in compliance with all Consumer
Protection Laws, except where the failure to so conduct such activities would
not be reasonably likely to have a Company Material Adverse Effect.
Section 4.22 Insurance Policies. The Company maintains insurance with
reputable insurers for the business and assets of the Company against all risks
normally insured against, and in amounts normally carried by, corporations of
similar size engaged in similar lines of business. Schedule 4.22 to the Company
Disclosure Letter sets forth a correct and complete list of all policies of
insurance carried by the Company with respect to its businesses or assets. All
insurance policies and bonds with respect to the business and assets of the
Company are in full force and effect and will be maintained by the Company in
full force and effect as they apply to any matter, action or event relating to
the Company occurring through the Effective Time, and the Company has not
reached or exceeded its policy limits for any insurance policies in effect at
any time during the past five years.
Section 4.23 Transactions with Affiliates. Except for compensation and
benefits received in the ordinary course of business as an employee or director
of the Company, no director, officer or other Affiliate or Associate of the
Company or any entity in which, to the Knowledge of the Company, any such
director, officer or other Affiliate or Associate owns any beneficial interest
(other than a beneficial interest in a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 5% of the stock of which is beneficially owned by any such Persons) is
currently a party to or has any interest in (a) any partnership, joint venture,
contract, arrangement or understanding with, or relating to, the business or
operations of the Company in which the amount involved exceeds $25,000 per
annum; (b) any loan, arrangement, understanding, agreement or contract for or
relating to indebtedness of the Company or (c) any property (real, personal or
mixed), tangible, or intangible, used or currently intended to be used in, the
business or operations of the Company.
Section 4.24 No Existing Discussions. As of the date of this Agreement,
the Company is not engaged, directly or indirectly, in any negotiation,
discussion or exchange of information with any other party with respect to or in
contemplation of a Competing Transaction.
Section 4.25 Antitakeover Laws. As of the date of this Agreement, each of
the Company and the Company Board of Directors has taken all action required to
be taken by it to exempt this Agreement and the Stockholders Agreements and the
transactions contemplated hereby and thereby from, and this Agreement and the
Stockholders Agreements, and the transactions contemplated hereby and thereby
are exempt from the requirements of, any Antitakeover Laws.
28
Section 4.26 Company Rights Agreement. The Company has taken all requisite
action under the Company Rights Agreement to cause the provisions of the Company
Rights Agreement not to be applicable to this Agreement, the Stockholders
Agreements, the Offer, the Merger or the other transactions contemplated hereby
and to provide for the expiration of the Rights upon the consummation of the
Offer.
Section 4.27 Brokers. No broker, finder or investment banker (other than
the Independent Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Offer, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Schedule 4.27 to the Company Disclosure Letter
includes a complete and correct copy of all agreements between the Company and
the Independent Advisor pursuant to which the Independent Advisor would be
entitled to any payment relating to this Agreement, the Offer, the Merger or the
other transactions contemplated by this Agreement.
Section 4.28 Vote Required. The Company Required Vote, if required, is the
only vote or approval of the holders of any class or series of capital stock of
the Company necessary to approve the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Except as disclosed in the Parent Disclosure Letter delivered by Parent to
the Company prior to the execution of this Agreement, Parent and Merger Sub
represent and warrant to the Company as follows:
Section 5.1 Organization and Standing.
(a) Parent (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, (ii) has full
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation and is in good
standing (with respect to jurisdictions that recognize such concept) in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Parent Material Adverse Effect. Parent
has furnished or made available to the Company true and complete copies of its
Certificate of Incorporation and Bylaws, each as amended to date. Such
Certificate of Incorporation and Bylaws are in full force and effect, and Parent
is not in violation of any provision therein.
(b) Merger Sub (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware, (ii) has full
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation and is in good
standing (with respect to jurisdictions that recognize such concept) in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed would not,
individually or
29
in the aggregate, have a Parent Material Adverse Effect. Merger Sub has
furnished or made available to the Company a true and complete copy of its
Certificate of Incorporation, as amended to date. Such Certificate of
Incorporation is in full force and effect, and the Merger Sub is not in
violation of any provision therein. Merger Sub was formed for the purpose of
effecting the Merger and the other transactions contemplated hereby, and has not
undertaken any business or other activities other than in connection with
entering into this Agreement, pursuing the Merger and engaging in the other
transactions contemplated hereby.
Section 5.2 Authority for Agreement. Such Person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Offer, the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by such Person of this Agreement, and the consummation by each such
Person of the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate or company action and no
other corporate or company proceedings on the part of such Person are necessary
to authorize this Agreement or to consummate the Offer, the Merger or the other
transactions contemplated by this Agreement (other than the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly executed and delivered by such Person and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of such Persons enforceable against such Person
in accordance with its terms, except as enforcement thereof may be limited
against such Person by (a) bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (b) the exercise by courts of equity
powers.
Section 5.3 Capitalization. The authorized capital stock of Parent
consists of 200,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share. As of the date hereof, (a) 52,664,978
shares of Parent Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and free of preemptive rights, (b)
1,203,446 shares of Parent Common Stock are held in the treasury of Parent, (c)
9,625,247 Parent Stock Options are outstanding pursuant to Parent's stock plans
(excluding Parent Stock Options issued pursuant to the Family Point Inc. Stock
Option Plan), each such option entitling the holder thereof to purchase one
share of Parent Common Stock, and 1,104,022 shares of Parent Common Stock are
authorized and reserved for future issuance pursuant to the exercise of such
Parent Stock Options, (d) warrants to purchase 2,450,908 shares of Parent Common
Stock are outstanding and 2,450,908 shares of Parent Common Stock are authorized
and reserved for future issuance pursuant to the exercise of such warrants, (e)
721,242 shares of Parent Common Stock are reserved for issuance to shareholders
of Xxxxx.xxx in connection with the Company's acquisition of Xxxxx.xxx upon
surrender of certificates formerly representing shares of Xxxxx.xxx capital
stock and (f) no shares of preferred stock of Parent are issued and outstanding.
Except as set forth above, there are no Parent Stock Rights. All shares of
capital stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. As of the
date of this Agreement, there are no outstanding contractual obligations of
Parent to repurchase, redeem or otherwise acquire any shares of capital stock of
Parent or to pay any dividend or make any other distribution in respect thereof
or to provide financing to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Person in excess of $1,000,000 in any
single calendar
30
year. As of the date hereof, there are no voting trusts or other agreements or
understandings to which Parent is a party with respect to the voting of stock of
Parent.
Section 5.4 No Conflict. The execution and delivery of this Agreement by
such Person do not, and the performance of this Agreement by such Person and the
consummation of the Offer, the Merger and the other transactions contemplated by
this Agreement will not, (a) conflict with or violate such Person's Certificate
of Incorporation or Bylaws, (b) subject to Section 5.5, conflict with or violate
any Law applicable to such Person or by which any material property or asset of
such Person is bound or affected, or (iii) result in a breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, give to others any right of termination, amendment, acceleration
or cancellation of, result in triggering any payment or other obligations, or
result in the creation of a lien or other encumbrance on any material property
or asset of such Person pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which such Person is a party or by which such Person or any
material property or asset of any of it is bound or affected, except in the case
of clauses (b) and (c) above for any such conflicts, violations, breaches,
defaults or other occurrences which could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.5 Required Filings and Consents. The execution and delivery of
this Agreement by such Person do not, and the performance of this Agreement by
such Person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (a) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL and (b) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate, have a
Parent Material Adverse Effect.
Section 5.6 Compliance. Except as disclosed in the Parent Reports filed by
Parent with the SEC prior to the date of this Agreement, as of the date of this
Agreement the businesses of Parent and its Subsidiaries are not being conducted
in violation of any law, ordinance, regulation, judgment, order, decree, writ,
injunction, license or permit of any Governmental Entity, except for violations
which have not had, and could not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. No investigation or
review by any Governmental Entity with respect to Parent or any of its
Subsidiaries is pending or, to the Knowledge of Parent, threatened, in each case
other than those the outcome of which have not had, and could not reasonably be
expected to have, either individually or in the aggregate, a Parent Material
Adverse Effect.
Section 5.7 Litigation. Except as set forth in Parent Reports, there is no
claim, suit, action, proceeding or investigation pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any of its Subsidiaries which,
either individually or in the aggregate, has had, or could be reasonably
expected to have, a Parent Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its Subsidiaries, either individually or in
the aggregate, which has had, or could reasonably be expected to have, a Parent
Material Adverse Effect.
Section 5.8 Parent Reports; Parent Financial Statements.
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(a) Parent has filed all Parent Reports, each of which has complied
in all material respects with the applicable requirements of the Securities Act,
and the rules and regulations promulgated thereunder, or the Exchange Act, and
the rules and regulations promulgated thereunder, each as in effect on the date
so filed. None of the Parent Reports (including any financial statements or
schedules included or incorporated by reference therein) contained when filed
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated or incorporated by reference therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) All of the Parent Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of Parent and its
Subsidiaries at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(c) There are no Liabilities of Parent or any of its Subsidiaries of
any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to Parent and its Subsidiaries, taken as a whole,
other than (i) Liabilities disclosed or provided for in the consolidated balance
sheet of Parent and its Subsidiaries at September 30, 2001, including the notes
thereto, (ii) Liabilities disclosed in the Parent Reports, (iii) Liabilities
incurred on behalf of Parent under this Agreement and the contemplated Offer and
Merger and (iv) Liabilities incurred in the ordinary course of business
consistent with past practice since September 30, 2001, none of which are,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect.
(d) Parent has heretofore furnished or made available to the Company
a complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments which
previously had been filed by Parent with the SEC as exhibits to the Parent
Reports pursuant to the Securities Act, and the rules and regulations
promulgated thereunder, or the Exchange Act, and the rules and regulations
promulgated thereunder.
(e) Parent has not entered into any agreement that would be required
to be filed as an exhibit to Parent's Annual Report on Form 10-K for the year
ended December 31, 2001 that has not previously been filed as an exhibit to any
Parent Report.
Section 5.9 Absence of Certain Changes or Events. Except as set forth in
the Parent Reports and except for the transactions contemplated by this
Agreement, since September 30, 2001, Parent and its Subsidiaries have conducted
their business only in the ordinary course and there has not been (a) any change
or event having, or that could reasonably be expected to have a Parent Material
Adverse Effect, (b) any split, combination or reclassification of any of
Parent's outstanding capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Parent's outstanding capital stock, (c) except as may have been
required by a change in GAAP, any change in accounting methods, principles or
practices by Parent or any Subsidiary materially affecting its assets,
Liabilities or business, or (d) any tax election that individually or in the
aggregate could reasonably be expected to have a Parent Material Adverse Effect.
32
Section 5.10 Taxes.
(a) Each of Parent and its Subsidiaries has filed all Tax Returns
that it was required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by any of Parent and its Subsidiaries
(whether or not shown on any Tax Return) have been paid. None of Parent and its
Subsidiaries currently is the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made in writing by an authority
in a jurisdiction where Parent or any subsidiary does not file Tax Returns that
it is or may be subject to taxation in that jurisdiction. There are no security
interests or other liens on any of the assets of any of Parent and its
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax, other than liens for Taxes not yet due and payable.
(b) Each of Parent and its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, except where any failure to pay would not have a Parent Material
Adverse Effect.
Section 5.11 Information Supplied.
(a) The Form S-4 and, if applicable, the Post-Effective Amendment,
(i) complies and will comply in all material respects with the applicable
requirements of the Securities Act and (ii) does not and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Schedule TO complies and will comply in all material respects with the
applicable requirements of the Exchange Act and does not and will not contain
any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The information regarding Parent and Merger Sub to be provided by
Parent to the Company for inclusion in the Schedule 14D-9 and the Proxy
Statement will not, at the time such information is so provided, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 5.11,
no representation or warranty is made by Parent with respect to statements made
or incorporated by reference in the Form S-4 or the Schedule TO based on
information supplied by the Company for inclusion or incorporation by reference
therein.
Section 5.12 Intellectual Property.
(a) Schedule 5.12 to the Parent Disclosure Letter sets forth a true
and correct list of all Intellectual Property (other than domain names) owned by
Parent or its Subsidiaries that is the subject of registration, issuance or an
application for registration, and the jurisdictions where each is registered,
issued or applied for.
(b) Parent and its Subsidiaries have good and marketable title to or
possess adequate licenses or other valid rights to use all Intellectual Property
material to the operation of
33
Parent's business free and clear of all liens and have paid all maintenance
fees, renewals or expenses, if any, related to such Intellectual Property,
except where the failure to do so would not individually or in the aggregate
have a Parent Material Adverse Effect. To the Knowledge of Parent, neither the
use of such Intellectual Property nor the conduct of Parent and its
Subsidiaries, in accordance with their businesses as presently conducted,
misappropriates, infringes upon or conflicts with any patent, copyright, trade
name, trade secret, trademark or other intellectual property rights of any third
party, except where such conduct would not individually or in the aggregate have
a Parent Material Adverse Effect. No third party has filed a claim against, or
threatened to file a claim against, or has provided a notice to, Parent or any
of its Subsidiaries alleging that either Parent or any of its Subsidiaries has
violated, infringed on or otherwise improperly used the intellectual property
rights of such third party in a manner material to the operation of Parent's
business and, to the Knowledge of Parent, neither Parent nor any of its
Subsidiaries has violated or infringed any patent, trademark, trade name,
service xxxx, service name, copyright, trade secret or other intellectual
property held by others in a manner material to the operation of Parent's
business. Parent does not believe that any other entity has violated, infringed
on or otherwise improperly used any of the Intellectual Property owned by Parent
or any of its Subsidiaries in a manner material to the operation of Parent's
business, and Parent and its Subsidiaries have not filed a claim against, or
threatened to file a claim against, and have not provided a notice to, any third
party alleging any such violation, infringement or improper use of the
Intellectual Property owned by Parent or any of its Subsidiaries.
(c) Parent and each of its Subsidiaries take reasonable measures to
protect the confidentiality of its trade secrets, including requiring its
employees and other parties having access thereto to execute written
non-disclosure agreements.
(d) To the Knowledge of Parent, no current or former partner,
director, officer, or employee of Parent or any of its Subsidiaries (or any of
their respective predecessors in interest) will, after giving effect to the
transactions contemplated herein, directly own or retain any rights to use any
of the Intellectual Property owned or used by Parent or any of its Subsidiaries.
Section 5.13 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with this
Agreement, the Offer, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
Section 5.14 Reservation of Shares; Cash. Parent (a) has reserved for
issuance such number of shares of Parent Common Stock as required for the Stock
Portion and (b) has available sufficient cash as required for payment of the
Cash Portion.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, unless Parent shall otherwise agree in writing
(and except as expressly contemplated, permitted or required by this Agreement),
(i) the business of the Company shall be conducted only in, and the Company
shall not take any action except in, the ordinary course of
34
business and in a manner consistent with prior practice, (ii) the Company shall
use all commercially reasonable efforts to preserve substantially intact its
business organizations, to keep available the services of its current officers
and employees and to preserve the current relationships of the Company with
customers, suppliers and other Persons with which the Company has significant
business relations, and (iii) the Company will comply in all material respects
with all applicable Laws wherever its business is conducted, including the
timely filing of all reports, forms or other documents with the SEC required
pursuant to the Securities Act or the Exchange Act.
(b) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, the Company shall not (except as expressly
contemplated, permitted or required by this Agreement and except as set forth on
Schedule 6.1 to the Company Disclosure Letter) (i) declare or pay any dividends
on or make other distributions (whether in cash, stock or property) in respect
of any of its capital stock; (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; (iii) repurchase or otherwise acquire any shares of its capital
stock; (iv) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any Company Stock
Rights, other than the issuance of Company Common Shares upon the exercise of
Company Stock Options outstanding as of the date of this Agreement; (v) take any
action that would make the Company's representations and warranties set forth in
Article IV not true and correct in all material respects; (vi) take any action
that would, or could reasonably be expected to, result in any of the conditions
set forth in Article VII not being satisfied; (vii) amend the Company
Certificate of Incorporation (including any certificate of designations attached
thereto) or Company Bylaws or other equivalent organizational documents; (viii)
incur any indebtedness for borrowed money or guaranty any such indebtedness of
another Person, other than (A) borrowings under existing lines of credit (or
under any refinancing of such existing lines) or (B) indebtedness owing to, or
guaranties of indebtedness owing to, the Company; (ix) make any loans or
advances to any other Person other than loans or advances less than $75,000 made
in the ordinary course of business consistent with past practice; (x) merge or
consolidate with any other entity in any transaction, or sell any business or
assets in a single transaction or series of transactions in which the aggregate
consideration is $100,000 or greater; (xi) change its accounting policies,
except as required by GAAP; (xii) make any change in employment terms for any of
its directors or officers; (xiii) alter, amend or create any obligations with
respect to compensation, severance, benefits, change of control payments or any
other payments to employees, directors or Affiliates of the Company, other than
with respect to alterations or amendments made with respect to non-officers and
non-directors in the ordinary course of business consistent with past practice
or as expressly contemplated by this Agreement; (xiv) make any change to the
Company Benefit Plans; (xv) sell, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any material properties or assets,
other than in the ordinary course of business consistent with past practice;
(xvi) make any material Tax election not consistent with past practice or settle
or compromise any material federal, state, local or foreign income Tax
Liability; or (xvii) commit or agree to take any of the actions described in
this Section 6.1(b).
Section 6.2 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall,
and shall cause the Representatives of the Company to, afford the
Representatives of Parent and Merger Sub reasonable access during normal
business hours to the officers, employees, agents, properties, offices and other
facilities, books and records of the Company, and shall furnish Parent and
Merger
35
Sub with all financial, operating and other data and information as Parent or
Merger Sub, through its Representatives, may reasonably request.
(b) From the date hereof to the Effective Time, Parent shall, and
shall cause the Representatives of Parent to, afford the Representatives of the
Company reasonable access during normal business hours to the officers,
employees, agents, properties, offices and other facilities, books and records
of Parent and its Subsidiaries, and shall furnish the Company with all
financial, operating and other data and information as the Company, through its
Representatives, may reasonably request.
(c) No investigation pursuant to this Section 6.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 6.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of Parent, Merger Sub and the Company agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to fulfill all conditions
applicable to such party pursuant to this Agreement and to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by the Transaction Documents, including (i)
the obtaining of all necessary, proper or advisable actions or non-actions,
waivers, consents, qualifications and approvals from Governmental Entities and
the making of all necessary, proper or advisable registrations, filings and
notices and the taking of all reasonable steps as may be necessary to obtain an
approval, waiver or exemption from any Governmental Entity; (ii) the obtaining
of all necessary, proper or advisable consents, qualifications, approvals,
waivers or exemptions from non-governmental third parties; and (iii) the
execution and delivery of any additional documents or instruments necessary,
proper or advisable to consummate the transactions contemplated by, and to fully
carry out the purposes of, the Transaction Documents. In addition, each of
Parent, Merger Sub and the Company agrees to use its commercially reasonable
efforts to defend any lawsuits or other legal proceedings, whether judicial or
administrative, challenging the Offer, the Merger, this Agreement or the
transactions contemplated by the Transaction Documents, including seeking to
have any Order adversely affecting the ability of the parties to consummate the
transactions contemplated by the Transaction Documents entered by any court or
other Governmental Entity vacated or reversed.
(b) The Company shall give prompt notice to Parent, and Parent and
Merger Sub shall give prompt notice to the Company, if (i) any representation or
warranty made by it contained in this Agreement becomes untrue or inaccurate in
any material respect or (ii) it fails to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) The Company shall use all reasonable efforts to encourage its
employees to accept any offers of employment extended by Parent or any of its
Affiliates.
36
(d) The Company shall (i) take all actions necessary to ensure that
no Antitakeover Law is applicable or becomes operative with respect to the
Offer, the Merger, the Transaction Documents or any other transactions
contemplated by thereby and (ii) if any Antitakeover Law is applicable or
becomes operative with respect to the Offer, the Merger, the Transaction
Documents or any other transaction contemplated by this Agreement, take all
actions necessary to ensure that the Offer, the Merger and any other
transactions contemplated by the Transaction Documents may be consummated as
promptly as practicable on the terms contemplated thereby and otherwise to
minimize the effect of such Laws on the Offer, the Merger and the other
transactions contemplated by the Transaction Documents.
Section 6.4 No Solicitation of Transactions.
(a) The Company shall, and shall cause its Affiliates,
Representatives and any other agents to immediately cease any discussions,
negotiations or communications with any party or parties with respect to any
Competing Transaction. The Company also agrees promptly following public
announcement of this Agreement to request each Person that has executed a
confidentiality agreement in the past year in connection with its consideration
of acquiring (whether by merger, acquisition, stock sale, asset sale or
otherwise) the Company and was supplied with currently confidential information,
if any, to return all confidential information heretofore furnished to such
Person by or on behalf of the Company.
(b) The Company shall not, nor shall it authorize or permit any
Affiliate or Representative of the Company to, (i) solicit, initiate,
intentionally encourage, participate in or otherwise facilitate, directly or
indirectly, any inquiries relating to, or the submission of, any Competing
Transaction or (ii) directly or indirectly, solicit, initiate, intentionally
encourage, participate in or otherwise facilitate any discussions or
negotiations regarding, or furnish to any Third Party any information or data
with respect to or provide access to the properties, offices, books, records,
officers, directors or employees of, or take any other action to knowingly,
directly or indirectly, solicit, initiate, intentionally encourage, participate
in or otherwise facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction. Notwithstanding
the foregoing sentence, if the Company receives a proposal or offer for a
Superior Competing Transaction, then, prior to acceptance by Merger Sub for
payment and payment by Merger Sub for Company Common Shares pursuant to the
Offer, the Company Board of Directors and any of its advisors shall be permitted
to contact such Third Party and its advisors solely for the purpose of
clarifying the proposal and any material contingencies and the capability of
consummation, and the Company may, subject to a good-faith determination by a
majority of the members of the Company Board of Directors (in consultation with
outside counsel) that the failure to take such action would result in a breach
of the fiduciary duties of the Company Board of Directors to the Company
Stockholders under applicable Law or Order, and further subject to the Company
providing prior written notice to Parent of its decision to take such action and
compliance by the Company with Section 6.4(d), furnish information with respect
to the Company to, and participate in discussions and negotiations directly or
through its Representatives with, such Third Party, subject to a confidentiality
agreement not materially less favorable to the Company than the Confidentiality
Agreement and which contains a one (1) year prohibition against such Third Party
soliciting the employment of any employee of the Company.
(c) Neither the Company Board of Directors nor any committee thereof
shall (i) withdraw or modify, propose or resolve to withdraw or modify, in a
manner adverse to Parent or
37
Merger Sub, the approval and recommendation by the Company Board of Directors of
the Offer, the Merger, this Agreement, the Transaction Documents, the
transactions contemplated hereby and thereby and the actions taken in connection
herewith and therewith, (ii) approve or recommend, or propose or resolve to
approve or recommend, any Competing Transaction, (iii) approve or recommend, or
propose or resolve to approve or recommend, or execute or enter into, any
Acquisition Agreement, (iv) approve or recommend, or propose or resolve to
approve or recommend, or execute or enter into, any agreement (written or oral)
requiring it to abandon, terminate or fail to consummate the Offer, the Merger,
this Agreement, any Transaction Document or the transactions contemplated hereby
or thereby, (v) take any action to (A) redeem the Rights, (B) waive or amend any
provision of the Company Rights Agreement or (C) take any action with respect
to, or make any determination under, the Company Rights Agreement, in any such
case to permit or facilitate the consummation of a Competing Transaction, (vi)
take any action necessary to render the provisions of any Antitakeover Law
inapplicable to any Competing Transaction, or (vii) propose or agree to do any
of the foregoing constituting or related to, or which is intended to or would
reasonably be expected to lead to, any Competing Transaction. Notwithstanding
the foregoing, at any time prior to acceptance by Merger Sub for payment and
payment by Merger Sub for Company Common Shares pursuant to the Offer, in
response to a Superior Competing Transaction which was not solicited, initiated,
intentionally encouraged, participated in or otherwise facilitated by the
Company in breach of Section 6.4(b), the Company Board of Directors may, if it
determines in good faith (after consultation with outside counsel) that the
failure to do so would result in a breach of the fiduciary duties of the Company
Board of Directors to the Company Stockholders under applicable Law or Order,
modify, or propose or resolve to modify, in a manner adverse to Parent or Merger
Sub, the approvals and recommendations of the Company Board of Directors of the
Offer, the Merger, the transactions contemplated thereby or by the Transaction
Documents, but only (y) at a time that is after the tenth (10th) Business Day
following Parent's receipt of written notice advising Parent that the Company
Board of Directors is prepared to take such action (during which period the
Company shall negotiate in good faith with Parent concerning any New Parent
Proposal), specifying therein all of the terms and conditions of such Superior
Competing Transaction, and identifying the Person or group making such Superior
Competing Transaction and (z) if, after the end of such ten (10) Business Day
period, the Company Board of Directors determines in good faith (after
consultation with the Independent Advisor and outside counsel) that such
proposed transaction continues to be a Superior Competing Transaction, after
taking into account any New Parent Proposal. The Company shall not during the
term of this Agreement release any Third Party from, or agree to amend or waive
any provision of any confidentiality agreement, and the Company shall take all
reasonable efforts to enforce, to the fullest extent permitted by applicable
Laws, each confidentiality agreement entered into pursuant to this Section 6.4
and any other confidentiality agreement to which the Company is or becomes a
party.
(d) In addition to the obligations set forth in Sections 6.4(a), (b)
and (c), the Company shall advise Parent orally and, if requested by Parent, in
writing of (i) any Competing Transaction or any offer, proposal or inquiry with
respect to or which could reasonably be expected to lead to any Competing
Transaction received by any officer or director of the Company or, to the
Knowledge of the Company, other Representative of the Company, (ii) the terms
and conditions of such Competing Transaction (including a copy of any written
proposal) and (iii) the identity of the Person or group making the offer,
proposal or inquiry for any such Competing Transaction immediately (but in any
event within twenty-four (24) hours) following receipt by the Company or any
officer or director of the Company or, to the Knowledge of the Company, any
other
38
Representative of the Company of such Competing Transaction offer, proposal or
inquiry. The Company shall have no obligation to update Parent unless and until
(y) such offer, proposal or inquiry is withdrawn or (z) the Company Board of
Directors determines that such Competing Transaction is a Superior Competing
Transaction, at which point the Company will follow the procedures set forth in
Section 6.4(c). The Company agrees to notify Parent immediately if the Company
Board of Directors determines that a Competing Transaction is not a Superior
Competing Transaction.
(e) Nothing contained in this Section 6.4 or any other provision
hereof shall prohibit the Company or the Company Board of Directors from taking
and disclosing to the Company Stockholders pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act a position with respect to a tender or
exchange offer by a Third Party which is consistent with its obligations
hereunder; provided, however, that neither the Company nor the Company Board of
Directors may either (i) except as provided by this Section 6.4, modify, or
propose publicly to modify, in a manner adverse to Parent and Merger Sub, the
approvals or recommendations of the Company Board of Directors of the Offer, the
Merger or this Agreement or (ii) approve or recommend a Competing Transaction,
or propose publicly to approve or recommend a Competing Transaction.
(f) Nothing in this Section 6.4 shall (i) permit the Company to
terminate this Agreement (except as expressly provided in Article VIII) or (ii)
affect any other obligations of the Company under this Agreement.
Section 6.5 Public Announcements. The Company and Parent shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any of the transactions
contemplated by the Transaction Documents and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which consent shall not be unreasonably withheld or delayed; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by Law or
Order or the applicable rules of Nasdaq or any listing agreement if it has used
its commercially reasonable efforts to consult with the other party and to
obtain such party's consent but has been unable to do so prior to the time such
press release or public statement is so required to be issued or made. In this
regard, the parties shall make a joint public announcement of the transactions
contemplated by the Transaction Documents no later than (a) the close of trading
on Nasdaq on the day that this Agreement is signed, if such signing occurs
during regular business hours on a Business Day, or (b) the opening of trading
on Nasdaq on the Business Day following the date on which this Agreement is
signed, if such signing does not occur during a Business Day.
Section 6.6 Nasdaq Listing. Parent will use commercially reasonable
efforts to cause to be approved for listing on Nasdaq, subject to official
notice of issuance, a sufficient number of shares of Parent Common Stock to be
issued in the Offer and the Merger and pursuant to the Company Stock Options.
Section 6.7 Company Affiliates. The Company shall deliver to Parent a
letter identifying all Persons who are, at the time the Merger is submitted to a
vote of the Company Stockholders, Affiliates of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its commercially reasonable
efforts to cause each Person who is identified as a possible Affiliate
39
in such letter to deliver to Parent on or prior to the Effective Time an
Affiliate Letter. Parent shall be entitled to place legends on any certificates
of Parent Common Stock issued to such possible Affiliates to restrict transfer
of such shares.
Section 6.8 Director Resignations. The Company shall cause to be delivered
to Parent resignations of all the directors of the Company (other than those
designated by Parent) to be effective upon the consummation of the Merger.
Section 6.9 Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or any of its directors relating to the
transactions contemplated by the Transaction Documents or the Merger; and no
such settlement shall be agreed to without Parent's consent, which consent will
not be unreasonably withheld.
Section 6.10 Employee Arrangements.
(a) The Company shall (i) take all appropriate corporate action to
cease, effective at the Effective Time, all benefit accruals under and
terminate, effective prior to the Effective Time, any 401(k) plans and (ii) take
all appropriate corporate action to terminate, effective prior to the Effective
Time, the Employee Stock Purchase Plan and return unused contributions to
participants.
(b) The Company shall provide to Parent as promptly as practicable
after the date hereof (and in any event within two (2) days hereof) a true and
complete list of all of the (i) officers, (ii) employees (whether full-time,
part-time or otherwise) and (iii) consultants or independent contractors of the
Company, in each case specifying, by individual, their position, annual salary,
hourly wages, consulting or other independent contractor fees, date of birth,
date of hire, social security number, work location, length of service and hours
of service, together with an appropriate notation next to the name of any
officer or other employee on such list who is subject to any written employment
agreement or any other written term sheet or other document describing the terms
and/or conditions of employment of such employee or of the rendering of services
by such consultant or independent contractor.
(c) Parent and the Company shall take such action as is necessary,
including action under the relevant Company Stock Plan, to effect the provisions
of Section 2.7.
(d) Parent and the Company agree to make all bonus payments and
severance payments described in Schedule 6.10(d) to the Company Disclosure
Letter, provided, however, that such payments, inclusive of all payroll,
withholding and similar Taxes (both employee's and employer's portion), shall
not in the aggregate exceed the amount reserved for accrued bonuses and accrued
severance taken into account in determining Net Cash, as set forth on Annex III.
Section 6.11 Advertiser Visits. Between the date hereof and the Effective
Time, and subject to prior notice and such reasonable limitations as the Company
shall deem reasonable and necessary, the Company shall permit Parent to discuss
and meet, and shall cooperate in such discussions and meetings, with any
customers and clients of the Company that Parent so requests. A senior executive
of the Company, reasonably satisfactory to Parent, shall accompany Parent's
representative to such meetings and shall participate with Parent's
representative in any such discussions. Furthermore, the Company shall cooperate
with Parent in the preparation of a presentation to such customers and clients
with respect to the transactions contemplated hereby.
Section 6.12 Directors' and Officers' Indemnification and Insurance.
Parent shall cause the Surviving Corporation to, subject to limitations created
by applicable Law and public policy, indemnify and hold harmless all past and
present directors of the Company to the same extent such
40
Persons are indemnified as of the date of this Agreement by the Company pursuant
to the Company Certificate of Incorporation and Company Bylaws for acts or
commissions occurring prior to the Effective Time. Parent or Merger Sub shall
purchase prior to the Effective Time a directors' and officers' liability
insurance policy for the benefit of the Company's directors and officers with
respect to claims arising from facts or event that occurred prior to the
Effective Time, which policy shall have a term of six years following the
Effective Time, shall have substantially the same terms (including policy
limitations and deductibles) as set forth on the insurance quote attached to
Schedule 6.12 to the Company Disclosure Letter and shall be reasonably
acceptable to the Company (provided that the estimated premium for such six-year
policy shall be taken into account in determining Net Cash, as set forth on
Annex III). Parent hereby guarantees that the Surviving Corporation will perform
its obligations set forth in this Section 6.12 and agrees to be fully liable for
all such obligations.
Section 6.13 Delisting. Parent, Merger Sub and the Company agree to
cooperate with each other in taking, or causing to be taken, all actions
necessary to delist the Company Common Shares from any national securities
exchange or the over-the-counter market and to terminate registration under the
Exchange Act, provided that such delisting and termination shall not be
effective until after the Effective Time.
Section 6.14 Taxes. Parent, Merger Sub and the Company agree to cooperate
with each other in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any Tax which become
payable by the Company in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time.
Section 6.15 Standstill. In the event this Agreement is terminated
pursuant to Section 8.1(a), Section 8.1(c), Section 8.1(h) or Section 8.1(i),
for a period from the date of such termination until the earlier of (i) nine (9)
months from the date hereof and (ii) the date of any Parent Change of Control,
neither Parent nor any of its Subsidiaries shall, without the prior written
consent of the Company Board of Directors, (y) acquire or offer or agree to
acquire, by purchase or otherwise, any securities (or direct or indirect rights
or options to acquire any securities) of the Company or (z) solicit proxies or
consents to vote or become a participant in any "election contest" with respect
to the Company (as such terms are used in Rule 14a-1 and Rule 14a-11 of
Regulation 14A under the Exchange Act).
Section 6.16 Non-Solicitation. In the event this Agreement is terminated
pursuant to Section 8.1(a), Section 8.1(c), Section 8.1(h) or Section 8.1(i),
for a period from the date of such termination until the earlier of (i) three
(3) months from the date of such termination and (ii) the date of any Parent
Change of Control, Parent shall not without the Company's prior written consent,
directly solicit the employment of any officer or senior manager of the Company
who first became known to Parent during its evaluation of a possible transaction
with the Company; provided, however, that this Section 6.16 shall not prohibit
or prevent Parent from general advertising or other broad non-targeted forms of
solicitation or from hiring any officer or senior manager employed by the
Company who initiates contact with Parent in the absence of targeted
solicitation.
41
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of the Company and Merger Sub to effect the Merger on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) if required by the DGCL, this Agreement and the Merger shall
have been approved by the Company Stockholders in accordance with the DGCL, the
Company Certificate of Incorporation, the Company Bylaws and any other
applicable Laws or Orders (including the proper filing and dissemination of the
Proxy Statement or any information statement, if required);
(b) (i) no Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Law or Order (which Order or other action
the parties hereto shall use their commercially reasonable efforts to vacate or
lift) which prohibits, enjoins, restrains or precludes under applicable Law or
Order either the consummation of the Merger or the ownership or operations of
the Company by Parent or Merger Sub and (ii) there shall be no pending or
threatened suit, action, investigation or proceeding by any Governmental Entity
or any third party seeking to prohibit, enjoin, restrain or preclude either the
consummation of the Merger or the ownership or operations of the Company by
Parent or Merger Sub; and
(c) Merger Sub shall have accepted for payment and paid for,
pursuant to the terms and conditions of the Offer, all Company Common Shares
duly tendered pursuant to the Offer and not withdrawn, and the Minimum Condition
shall have been satisfied; provided, however, that Merger Sub shall not be
entitled to rely on this condition if it shall have failed to accept for payment
and pay for Company Common Shares pursuant to the Offer in breach of its
obligations under this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Offer,
the Merger and the adoption, execution and delivery of the other transactions
contemplated by the Transaction Documents may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of the Merger, this Agreement
or any of the other transactions contemplated by this Agreement or any other
Transaction Document by the Company Stockholders):
(a) by the mutual written consent of the Company, Parent and Merger
Sub;
(b) by the Company or Parent, if any Governmental Entity shall have
issued an Order or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Company
Common Shares pursuant to the Offer, or taken a similar action with respect to
either of the Merger or the transactions contemplated hereby or by any other
Transaction Document, and such Order, decree or ruling or other action shall
have become final and nonappealable; provided, however, that the party seeking
to terminate this
42
Agreement pursuant to this clause (b) shall have used all commercially
reasonable efforts to remove such order, decree, ruling, judgment or to reverse
such action;
(c) by the Company, if (i) Merger Sub shall have failed to commence
the Offer within the twenty (20) Business Day period specified in Section 1.1(a)
(except if such failure is due to one or more unsatisfied Exchange Offer
Conditions) or (ii) if Merger Sub terminates or withdraws the Offer without
accepting for payment and promptly paying for all Company Common Shares validly
tendered for payment and not withdrawn thereunder (except if any of the Exchange
Offer Conditions have not then been satisfied);
(d) by the Company, prior to the consummation of the Offer, if it
determines to accept a proposal or offer for a Superior Competing Transaction;
provided, however, that this Agreement may not be so terminated unless (i) the
Company Board of Directors shall have complied with the procedures set forth in
Sections 6.4(c) and (d) and (ii) all of the payments required by Section 8.2
have been made in full to Parent;
(e) by Parent, prior to consummation of the Offer, if (i) the
Company Board of Directors shall have withdrawn or adversely modified its
approvals or recommendations of the Offer, the Merger, or the transactions
contemplated thereby or by the Transaction Documents (it being understood,
however, that for all purposes of this Agreement, the fact that the Company has
supplied any Person with information regarding the Company or has entered into
discussions or negotiations with such Person as permitted by, or without
violating, this Agreement, or the disclosure of such facts, shall not be deemed
in and of itself a withdrawal or modification of such approvals or
recommendations), (ii) the Company Board of Directors has failed to reaffirm its
approvals and recommendations of the Offer, the Merger, this Agreement or such
transactions within five (5) Business Days after Parent has requested in writing
that it do so, (iii) the Company Board of Directors shall have (A) recommended
to the Company Stockholders that they approve or accept a Competing Transaction
rather than the transactions contemplated by the Transaction Documents or (B)
determined to accept a proposal or offer for a Superior Competing Transaction,
(iv) the Company shall have breached any of its obligations under Sections
6.4(b), (c) or (d) or (v) any Third Party shall have commenced a tender or
exchange offer or other transaction constituting or potentially constituting a
Competing Transaction;
(f) by Parent or the Company, (i) if the Offer terminates or expires
on account of the failure of any Exchange Offer Condition without Parent and
Merger Sub having purchased any Company Common Shares thereunder (provided that
the right to terminate this Agreement pursuant to this Section 8.1(f)(i) shall
not be available to any party whose (or whose Subsidiary's) failure to fulfill
any obligation under this Agreement has been the proximate cause of, or resulted
in the failure of any such condition) or (ii) if on or before June 30, 2002, the
Offer has not been consummated (provided that the right to terminate this
Agreement pursuant to this Section 8.1(f)(ii) shall not be available to any
party whose (or whose Subsidiary's) failure to fulfill any obligation under this
Agreement has been the proximate cause of or resulted in the failure of the
Offer to be consummated on or prior to such date);
(g) by Parent, if any of the following events shall occur and be
continuing or conditions exist: (i) any of the representations and warranties of
the Company contained in this Agreement shall not be true and correct in all
material respects as of the date of determination or the date hereof (except to
the extent that any such representation or warranty, by its terms, is expressly
43
limited to a specific date, in which case Parent's right to terminate pursuant
to this clause (i) shall be triggered if such representation or warranty shall
not be true and correct as of such date); or (ii) the Company shall have failed
to perform each of its agreements contained in this Agreement required to be
performed at or prior to the date of determination (any such event or condition,
a "Terminating Company Breach"); provided, however, that if such Terminating
Company Breach is capable of being cured by the Company within ten (10) Business
Days after the occurrence of the Terminating Company Breach and prior to the
Effective Time through the exercise of its commercially reasonable efforts and
is so cured within such period, so long as the Company continues to exercise
such commercially reasonable efforts, Parent may not terminate this Agreement
under this Section 8.1(g);
(h) by the Company, if any of the following events shall occur and
be continuing or conditions exist: (i) any of the representations and warranties
of Parent and Merger Sub contained in this Agreement shall not be true and
correct in all material respects as of the date of determination or the date
hereof (except to the extent that any such representation or warranty, by its
terms, is expressly limited to a specific date, in which case the Company's
right to terminate pursuant to this clause (i) shall be triggered if such
representation or warranty shall not be true and correct as of such date),
except where the failure to be so true and correct would not reasonably be
expected to prevent or materially delay the consummation of the Offer, the
Merger or any other transaction contemplated hereby; or (ii) Parent and Merger
Sub shall have failed to perform each of their agreements contained in this
Agreement required to be performed at or prior to the date of determination (any
such event or condition, a "Terminating Parent Breach"); provided, however, that
such Terminating Parent Breach must be reasonably likely to materially adversely
affect the consummation of the Offer and the Merger and, if such Terminating
Parent Breach is capable of being cured by Parent prior to the Effective Time
through the exercise of its commercially reasonable efforts, so long as Parent
continues to exercise such commercially reasonable efforts, the Company may not
terminate this Agreement under this Section 8.1(h);
(i) by Parent prior to the consummation of the Offer if the Base
Price is less than $1.30; or
(j) by the Company prior to the consummation of the Offer if the
Base Price is greater than $3.90.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling or controlled by any such party or any of their respective officers,
directors or directors, whether prior to or after the execution of this
Agreement.
Section 8.2 Expenses.
(a) Except as otherwise specified in this Section 8.2 or agreed in
writing by the parties, all out-of-pocket costs and expenses incurred in
connection with the Transaction Documents, the Offer, the Merger and the other
transactions contemplated hereby shall be paid by the party incurring such cost
or expense; provided, however, that all costs and expenses incurred in
connection with the filing, printing and mailing of the Form S-4, the
Post-Effective Amendment, the Preliminary Prospectus, the Schedule TO, the
Schedule 14D-9 and the Proxy Statement (including the SEC filing fees) shall be
borne equally by Parent and the Company.
44
(b) If this Agreement is terminated pursuant to (i) Section 8.1(f)
(as a result of the failure to achieve the Minimum Condition) or Section 8.1(g)
(as a result of a Terminating Company Breach) and (A) as of the date of such
termination, there has been or there is a proposal by a Third Party to
consummate, or a Third Party shall have publicly announced, following the first
public announcement of this Agreement, a plan or proposal with respect to, a
Competing Transaction or (B) prior to January 31, 2003, the Company enters into
an Acquisition Agreement with respect to a Competing Transaction (or resolves or
announces an intention to do so) or (ii) Section 8.1(d) or (e), then, the
Company shall pay to Parent an amount equal to the Termination Fee. Unless
otherwise required pursuant to the terms hereof, payment of any of such amounts
shall be made, as directed by Parent, by prompt wire transfer of immediately
available funds, but in no event later than one (1) Business Day after the
amount is due as provided herein.
(c) If this Agreement is terminated pursuant to (i) Section 8.1(c)
or (ii) Section 8.1(h), then Parent shall pay to the Company an amount equal to
the Termination Fee. Unless otherwise required pursuant to the terms hereof,
payment of any such amounts shall be made, as directed by the Company, by prompt
wire transfer of immediately available funds, but in no event later than one (1)
Business Day after the amount is due as provided herein.
(d) In the event that the Company shall fail to pay any amount
required to be paid by Section 8.2(b) or Parent shall fail to pay any amount
required to be paid by Section 8.2(c), on the date such amount is due pursuant
to such section, then interest shall be paid on such unpaid amount, commencing
on the date that such amount was due, at a rate equal to 6.0% per annum.
(e) In the event that either party is required to file suit to seek
all or a portion of the amounts payable under this Section 8.2, and such party
prevails in such litigation, such party shall be entitled to all expenses,
including attorneys' fees and expenses, which it has incurred in enforcing its
rights under this Section 8.2.
Section 8.3 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent and Merger Sub or the Company, other than
Section 6.12, Section 8.1, Section 8.2 and this Section 8.3 and except to the
extent that such termination results from a breach by a party of any of its
covenants or agreements set forth in this Agreement.
Section 8.4 Amendment. This Agreement may be amended by the parties in
writing by action of their Board of Directors or Boards of Directors, as the
case may be, at any time before or after the approval of the Company
Stockholders is obtained and prior to the filing of the Certificate of Merger
with the Delaware Secretary of State with respect to the Merger; provided,
however, that, after the approval of the Company Stockholders is obtained, no
such amendment, modification or supplement shall alter the amount or change the
form of the Merger Consideration to be delivered to the Company Stockholders or
alter or change any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the Company Stockholders.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
each of the Company, Parent and Merger Sub may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to
45
this Agreement or (c) subject to the provisions of Section 8.4, waive compliance
with any of the agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing (and made orally if so
required pursuant to any section of this Agreement) and shall be deemed given if
delivered personally, sent by overnight courier (providing proof of delivery and
confirmation of transmission by telephonic notice to the applicable contact
person) to the parties or sent by fax (providing proof of transmission and
confirmation of transmission by telephonic notice to the applicable contact
person) at the following addresses or fax numbers (or at such other address or
fax number for a party as shall be specified by like notice):
(a) if to Parent, to
iVillage Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
Old Federal Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Company, to
Xxxxxxxxxx.xxx, Inc.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
46
Attn: Chairman and Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Section 9.3 Interpretation. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereby" refer to this Agreement.
Section 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreement constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement, and there are no
other or additional agreements between Parent and Merger Sub or any of their
respective affiliates, on the one hand, and any Company Stockholders or their
respective affiliates, on the other hand, relating to, arising from or otherwise
entered into in connection with this Agreement and the transactions contemplated
hereby. Except for the provisions of Section 6.10, this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies.
Section 9.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of Law or otherwise by any of the parties without
the prior written consent of the other parties, except that Parent and Merger
Sub may transfer to their Affiliates without the consent of the Company;
provided, however, that Parent continues to be liable for the performance of all
of the obligations and payments to be made by the Parent Parties and such
assignees hereunder if and only to the extent that such assignees do not perform
such obligations. Subject to the preceding sentence, this
47
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.8 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States,
this being in addition to any other remedy to which they are entitled at Law or
in equity.
Section 9.9 Annex I; Annex II; Exhibits; Disclosure Letters. Annex I,
Annex II, all exhibits and schedules referred to herein, the Company Disclosure
Letter and the Parent Disclosure Letter (and all exhibits or attachments
thereto) are intended to be and hereby are specifically made a part of this
Agreement.
Section 9.10 Jurisdiction; Venue. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS
OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK SOLELY IN
RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND IN RESPECT OF
THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT,
AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR
ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT, THAT IT IS NOT SUBJECT THERETO OR
THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE
IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS
AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE
PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A NEW YORK STATE OR FEDERAL
COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER
THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE
THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING IN THE MANNER PROVIDED IN SECTION 9.2 OR IN SUCH OTHER MANNER AS MAY
BE PERMITTED BY APPLICABLE LAWS, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
Section 9.11 Waiver of Trial by Jury. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF
48
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN THIS SECTION 9.11.
ARTICLE X
CERTAIN DEFINITIONS
"Acquisition Agreement" shall mean any letter of intent, agreement in
principle, merger agreement, stock purchase agreement, asset purchase agreement,
acquisition agreement, option agreement or similar agreement relating to a
Competing Transaction.
"ADA" shall mean the Americans with Disabilities Act.
"ADEA" shall mean the Age Discrimination in Employment Act.
"Affiliate" of any Person shall mean another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"Affiliate Letter" shall mean a letter in the form of Exhibit A delivered
by each Person identified pursuant to Section 6.7 as an Affiliate of the Company
for purposes of Rule 145 under the Securities Act.
"Applicable Benefit Laws" shall mean ERISA, the Code and all other
applicable laws, regulations, orders or other legislative, administrative or
judicial promulgations, including those of jurisdictions outside the United
States of America.
"Associate" of any Person shall have the meaning assigned thereto by Rule
12b-2 under the Exchange Act.
"At Home Bankruptcy Decision" shall mean a Final Order determining the
ownership of the At Home Shares or otherwise determining the matters in the
Bankruptcy Case, whether as the result of the declaratory judgment adversary
proceeding initiated by Xxx Xxxx that currently is pending in the Bankruptcy
Court or of a settlement agreement approved by the Bankruptcy Court.
"Bankruptcy Case" shall mean Case No. 01-32495-TEC pending in the
Bankruptcy Court.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for the
Northern District of California.
"Base Price" shall mean the average of the closing sale prices of Parent
Common Stock on Nasdaq for each of the five (5) trading days immediately
preceding the second trading day prior to the expiration of the Offer, including
any extension thereof.
49
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in New York, New York are authorized or obligated
by Law or executive order to be closed.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time.
"Certificate" shall mean each certificate representing one or more Company
Common Shares.
"Certificate of Merger" shall mean the certificate of merger with respect
to the Merger, containing the provisions required by, and executed in accordance
with, the DGCL.
"Closing" shall mean the closing of the Merger, as contemplated by Section
2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Benefit Plan" shall mean each Employee Benefit Plan sponsored or
maintained, or required to be sponsored or maintained, at any time by the
Company or to which the Company makes or has made, or has or has had an
obligation to make, contributions at any time.
"Company Bylaws" shall mean the Amended and Restated Bylaws of the Company
dated January 26, 2000.
"Company Certificate of Incorporation" shall mean the Company's
Certificate of Incorporation, as amended by Certificates of Amendment to
Certificate of Incorporation dated February 23, 1998, January 12, 1999 and June
11, 1999.
"Company Disclosure Letter" shall mean the Company Disclosure Schedule
delivered by the Company to Parent concurrently with the execution of this
Agreement. The Company Disclosure Letter shall include references to each
provision of this Agreement to which information contained in the Company
Disclosure Letter is intended to apply.
"Company Financial Statements" shall mean all of the financial statements
included in the Company Reports, an unaudited statement of operations for the
period ended February 7, 2002 and the Reference Balance Sheet.
"Company Knowledge Person" shall mean the persons set forth on Schedule
10.1(a) to the Company Disclosure Letter.
"Company Licensed Software" shall mean all software (other than Company
Proprietary Software) used by the Company.
"Company Material Adverse Effect" shall mean, with respect to the Company,
any change, event or effect that shall have occurred or been threatened that,
when taken together with all other adverse changes, events or effects that have
occurred or been threatened, is or is reasonably likely to (i) be materially
adverse to the business, prospects, operations, properties, condition (financial
or otherwise), assets or Liabilities of the Company, other than changes caused
by changes in the economy generally or changes generally affecting companies
conducting businesses like the business
50
conducted by the Company or (ii) prevent or materially delay the performance by
the Company of any of its obligations under this Agreement or the consummation
of the Offer, the Merger or the other transactions contemplated by the
Transaction Documents.
"Company Proprietary Software" shall mean all software owned by the
Company.
"Company Reports" shall mean all forms, reports, statements, information
and other documents required to be filed by the Company with the SEC since June
14, 1999.
"Company Required Vote" shall mean the affirmative vote of the holders of
shares representing a majority of the Company Common Shares entitled to vote on
the approval and adoption of this Agreement and the Merger, if such vote is
required by applicable Law or Order to consummate the Merger.
"Company Software" shall mean the Company Licensed Software together with
the Company Proprietary Software.
"Company Stock Option" shall mean each outstanding option to purchase
Company Common Shares.
"Company Stock Plan" shall mean any stock option plan or restricted stock
plan of the Company, whether established or assumed by the Company in connection
with an acquisition, including the Netstakes, Inc. Stock Option Plan, the
Xxxxxxxxxx.xxx, Inc. 1999 Equity Compensation Plan, as amended and the Employee
Stock Purchase Plan.
"Company Stock Rights" shall mean any options, warrants, convertible
securities, subscriptions, stock appreciation rights, phantom stock plans or
stock equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by the Company
relating to the issued or unissued capital stock of the Company or obligating
the Company to issue or sell any shares of capital stock of, or options,
warrants, convertible securities, subscriptions or other equity interests in,
the Company.
"Company Stockholders Meeting" shall mean a meeting of the Company
Stockholders to be called to consider the Merger, if such vote is required by
applicable Law or Order to consummate the Merger.
"Company Warrant" shall mean each outstanding warrant to purchase Company
Common Shares.
"Competing Transaction" shall mean any proposal or offer, whether in
writing or otherwise, from any Third Party to acquire beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of all or more than 15% of the
assets of the Company, or 15% or more of any class of equity securities of the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of stock, sale of assets, tender offer, exchange offer or similar
transaction or series of related transactions, which is structured to permit
such Third Party to acquire beneficial ownership of more than 15% of the assets
of the Company, or 15% or more of any class of equity securities in the Company.
51
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between the Company and Parent dated December 4, 2001.
"Consumer Protection Laws" shall mean all trade practices, direct
marketing, home and telephone solicitation, sweepstakes, prize, gift, gaming,
anti-lottery, anti-fraud and consumer credit and protection Laws.
"Effective Time" is the time the Certificate of Merger is duly filed with
the Secretary of State of the state of Delaware, or at such other time as the
parties hereto agree shall be specified in such Certificate of Merger.
"Employee/Consulting Agreements" shall mean any contracts, consulting
agreements, termination or severance agreements, change of control agreements or
any other agreements respecting the terms and conditions of employment or of an
independent contractor relationship in respect to any officer, employee, former
employee, consultant or independent contractor.
"Employee Benefit Plan" shall mean, with respect to any Person, each plan,
fund, program, agreement, arrangement or scheme, including, but not limited to,
each plan, fund, program, agreement, arrangement or scheme maintained or
required to be maintained, in each case that is at any time sponsored or
maintained or required to be sponsored or maintained by such Person or to which
such Person makes or has made, or has or has had an obligation to make,
contributions providing for employee benefits or for the remuneration, direct or
indirect, of the current or former employees, directors, officers, consultants,
independent contractors, contingent workers or leased employees of such Person
or the dependents of any of them (whether written or oral), including each
deferred compensation, bonus, incentive compensation, pension, retirement, stock
purchase, stock option and other equity compensation plan, "welfare" plan
(within the meaning of Section 3(1) of ERISA, determined without regard to
whether such plan is subject to ERISA); each "pension" plan (within the meaning
of Section 3(2) of ERISA, determined without regard to whether such plan is
subject to ERISA); each severance plan or agreement, health, vacation, summer
hours, supplemental unemployment benefit, hospitalization insurance, medical,
dental, legal and each other employee benefit plan, fund, program, agreement or
arrangement.
"Employee Stock Purchase Plan" shall mean the [Xxxxxx].com, Inc. Employee
Stock Purchase Plan.
"Environmental Laws" shall mean local, state and federal laws and
regulations relating to protection of the environment, pollution control, health
and safety, product registration and Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any Person (whether incorporated or
unincorporated) that together with the Company would be deemed a "single
employer" within the meaning of Section 414 of the Code.
"ERISA Affiliate Plan" shall mean each Employee Benefit Plan sponsored or
maintained or required to be sponsored or maintained at any time by an ERISA
Affiliate or to which such ERISA Affiliate makes or has made, or has or has had
an obligation to make, contributions at any time.
52
"Exchange Agent" shall mean a commercial bank or trust company designated
by Parent and reasonably acceptable to the Company.
"Final Order" shall mean an order or judgment in the Bankruptcy Case or in
any adversary proceeding within the Bankruptcy Case, as entered on the docket of
the Bankruptcy Court, the operation or effect of which has not been stayed,
reversed or amended and as to which order or judgment (or any revision,
modification or amendment thereof) the time to appeal or seek review has or
rehearing has expired and as to which no appeal or petition for review or
rehearing was filed, or, if filed, remains pending.
"FLSA" shall mean the Fair Labor Standards Act.
"FMLA" shall mean the Family and Medical Leave Act.
"Fully Diluted Common Share Number" shall mean the total number of Company
Common Shares outstanding on the date of this Agreement on a fully diluted
basis, as set forth in Section 4.3 which calculation assumes (i) the exercise on
a net exercise basis, as contemplated by Section 2.7, of all outstanding rights,
warrants or options, whether vested or unvested, to acquire Company Common
Shares, regardless of restrictions on exercise or conversion and (ii) the
conversion of all outstanding securities and notes convertible at any time into
Company Common Shares that do not terminate at or prior to the Effective Time.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Entity" shall mean any United States federal, state or local
or any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign.
"Hazardous Materials" shall mean any waste, pollutant, hazardous
substance, toxic, ignitable, reactive or corrosive substance, hazardous waste,
special waste, industrial substance, by-product, process intermediate product or
waste, petroleum or petroleum-derived substance or waste, chemical liquids or
solids, liquid or gaseous products, or any constituent of any such substance or
waste, the use, handling or disposal of which by the Company is in any way
governed by or subject to any applicable Law, rule or regulation of any
Governmental Entity.
"Intellectual Property" shall mean all copyrights, trade names,
trademarks, service marks, patents, universal resource locators, or URLs,
Internet domain names (and all applications or registrations therefor), trade
secrets, know-how, member lists for a Person's network of web sites, marketing
plans, advertising and sponsorship strategy, content on such Person's network of
web sites, Internet tools, proprietary processes, technology, rights of
publicity and privacy relating to the use of the names, likenesses, voices and
signatures, and which are used by such Person and its Subsidiaries or as to
which such Person or any of its Subsidiaries claim an ownership interest or as
to which such Person or any of its Subsidiaries is a licensee or licensor.
"Knowledge," or any similar expression, shall mean (i) with respect to the
Company, (A) the actual knowledge of any Company Knowledge Person and (B) such
facts or other matters as any prudent person could be expected to discover in
the course of conducting a reasonable investigation
53
concerning the existence of such fact or other matters; and (ii) with respect to
Parent (or any of its Subsidiaries), (A) the actual knowledge of any Parent
Knowledge Person and (B) such facts or other matters as any prudent person could
be expected to discover in the course of conducting a reasonable investigation
concerning the existence of such fact or other matters.
"Labor Laws" shall mean ERISA, the Immigration Reform and Control Act of
1986, the National Labor Relations Act, the Civil Rights Acts of 1866 and 1964,
the Equal Pay Act, ADEA, ADA, FMLA, WARN, the Occupational Safety and Health
Act, the Xxxxx-Xxxxx Act, the Xxxxx-Xxxxx Act, the Service Contract Act,
Executive Order 11246, FLSA and the Rehabilitation Act of 1973, and all
regulations under such acts.
"Law" shall mean any federal, state, local or foreign statute, law,
regulation, requirement, interpretation, permit, license, approval,
authorization, rule, ordinance, code, policy or rule of common law of any
Governmental Entity, including any judicial or administrative interpretation
thereof.
"Liabilities" means any and all debts, liabilities and obligations of any
nature whatsoever, whether accrued or fixed, absolute or contingent, mature or
unmatured or determined or determinable, including those arising under any Law,
those arising under any contract, agreement, commitment, instrument, permit,
license, franchise or undertaking and those arising as a result of any act or
omission.
"Minimum Condition" shall have the meaning set forth in Annex II.
"Nasdaq" shall mean The Nasdaq National Market System, a.k.a. the Nasdaq
Stock Market.
"Net Cash" shall mean $9,807,617, which number has been calculated as set
forth on Annex III. The balance sheet figures referred to on Annex III have been
derived from the Reference Balance Sheet.
"New Parent Proposal" shall mean any amendment of the terms of the Offer
or the Merger by Parent or Merger Sub or any proposal by Parent or Merger Sub to
amend the terms of this Agreement, the Offer or the Merger.
"NLRB" shall mean the United States National Labor Relations Board.
"Order" shall mean any writ, judgment, injunction, consent, order, decree,
stipulation, award or executive order of or by any Governmental Entity.
"Parent Change of Control" shall mean (i) a merger, consolidation,
reorganization or other similar transaction which results in Parent's
stockholders immediately prior to such transaction not holding at least fifty
percent (50%) of the voting power of the surviving, continuing or purchasing
entity or (ii) a sale of all or substantially all of the assets of Parent to
another Person.
"Parent Disclosure Letter" shall mean the Parent Disclosure Letter
delivered by Parent to the Company concurrently with the execution of this
Agreement. The Parent Disclosure Letter shall include references to each
provision of this Agreement to which information contained in the Parent
Disclosure Letter is intended to apply.
54
"Parent Financial Statements" shall mean all of the financial statements
included in the Parent Reports.
"Parent Knowledge Person" shall mean Persons set forth on Schedule 10.1(b)
to the Parent Disclosure Letter.
"Parent Material Adverse Effect" shall mean, with respect to Parent, any
change, event or effect that shall have occurred or been threatened that, when
taken together with all other adverse changes, events or effects that have
occurred or been threatened, is or is reasonably likely to (i) be materially
adverse to the business, prospects, operations, properties, condition (financial
or otherwise), assets or Liabilities of Parent and the Parent Subsidiaries taken
as a whole, other than changes caused by changes in the economy generally or
changes generally affecting companies conducting businesses like the business
conducted by Parent or (ii) prevent or materially delay the performance by
Parent of any of its obligations under this Agreement or the consummation of the
Offer, the Merger or the other transactions contemplated by the Transaction
Documents.
"Parent Parties" shall mean Parent, Merger Sub and any other Subsidiary of
Parent.
"Parent Reports" shall mean all forms, reports, statements and all other
documents required to be filed by Parent with the SEC since March 19, 1999.
"Parent Stock Option" shall mean each outstanding option to purchase
shares of Parent Common Stock.
"Parent Stock Rights" shall mean any options, warrants, convertible
securities, subscriptions, stock appreciation rights, phantom stock plans or
stock equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by Parent
relating to the issued or unissued capital stock of Parent or obligating Parent
to issue or sell any shares of capital stock of, or options, warrants,
convertible securities, subscriptions or other equity interests in, Parent.
"Person" shall mean any individual, corporation, partnership (general or
limited), limited liability company, limited liability partnership, trust, joint
venture, joint-stock company, syndicate, association, entity, unincorporated
organization or government, or any political subdivision, agency or
instrumentality thereof.
"Post-Effective Amendment" shall mean a post-effective amendment to the
Form S-4, if necessary, for the offer and sale of the Parent Common Stock
pursuant to the Merger and in which the Proxy Statement will be included as a
prospectus.
"Privacy Statement" shall mean the Company's privacy policies published on
its web site regarding the collection, use and distribution of personal
information from visitors to its web site and consumers of its products and
services.
"Promotional Activities" shall mean all contests, sweepstakes, direct
marketing and email marketing campaigns and other marketing and promotional
activities of the Company.
55
"Proxy Statement" shall mean a definitive proxy statement or information
statement, including any amendment or supplement thereto, relating to the Merger
and this Agreement to be mailed to the Company Stockholders in connection with
the Company Stockholders Meeting.
"Reference Balance Sheet" shall mean a balance sheet as of February 7,
2001, prepared by the Company and delivered to Parent prior to the date hereof.
"Representatives" shall mean officers, directors, employees, auditors,
attorneys, financial advisors (including the Independent Advisor), lenders and
other agents.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any Person shall mean any corporation, partnership,
limited liability company, joint venture or other legal entity of which such
Person (either directly or through or together with another Subsidiary of such
Person) owns more than 50% of the voting stock or value of such corporation,
partnership, limited liability company, joint venture or other legal entity.
"Superior Competing Transaction" shall mean a bona fide, written proposal
or offer for a Competing Transaction by a Third Party, which the Company Board
of Directors determines in good faith (after consulting the Independent Advisor
and independent legal counsel) (i) would result in such Third Party owning,
directly or indirectly, all or substantially all of the Company Common Shares
then outstanding (or of the Surviving Corporation in a merger) or all or
substantially all of the assets of the Company, (ii) is on terms which are more
favorable from a financial point of view to the Company Stockholders than the
Offer, the Merger and the other transactions contemplated by this Agreement, and
the Company receives written advice from the Independent Advisor to that effect,
(iii) is not subject to any material contingency, including any contingency
relating to financing, due diligence or the receipt of government consents or
approvals, (iv) is reasonably capable of being consummated, (v) does not contain
a "right of first offer" or "right of first refusal" with respect to any
proposal that Parent or Merger Sub may make and (vi) was not solicited,
encouraged or facilitated by the Company in breach of Section 6.4(b).
"Surviving Corporation" shall mean the corporation surviving the Merger.
"Tax" (and, with correlative meaning, "Taxes") shall mean any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty or addition thereto, whether
disputed or not, imposed by any Governmental Entity.
"Tax Return" shall mean any return, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including any information return, claim for refund, amended return or
declaration of estimated Tax.
"10-K" shall mean the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.
56
"Termination Fee" shall mean $250,000.
"Terms and Conditions" shall mean the terms and conditions published on
the Company's web site that govern the use of the Company's products and
services.
"Third Party" means any Person or group (as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Merger Sub or any Affiliates thereof.
"Transaction Documents" means this Agreement, the Stockholder Agreements
and all other agreements, instruments and documents to be executed by the
Company in connection with the transactions contemplated by such agreements.
"WARN" shall mean the United States Worker Adjustment and Retraining
Notification Act.
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
IVILLAGE INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President -
Operations & Business
Affairs
XXXXXX ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
XXXXXXXXXX.XXX, INC.
By:/s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
58
ANNEX I
Index of Defined Terms
Defined Term Location
------------ --------
Acquisition Agreement............................ Article X
ADA.............................................. Article X
ADEA............................................. Article X
Affiliate........................................ Article X
Affiliate Letter................................. Article X
Agreement........................................ Preamble
Antitakeover Laws................................ Recitals
Applicable Benefit Laws.......................... Article X
Associate........................................ Article X
At Home Bankruptcy Decision...................... Article X
Bankruptcy Case.................................. Article X
Bankruptcy Court................................. Article X
Base Price....................................... Article X
Business Day..................................... Article X
Cash Portion..................................... Section 1.1(a)
CERCLA........................................... Article X
Certificate...................................... Article X
Certificate of Merger............................ Article X
Closing.......................................... Article X
Closing Date..................................... Section 2.2
Code............................................. Article X
Company.......................................... Preamble
Company Benefit Plan............................. Article X
Company Board of Directors....................... Recitals
Company Bylaws................................... Article X
Company Certificate of Incorporation............. Article X
Company Common Shares............................ Recitals
Company Disclosure Letter........................ Article X
Company Financial Statements..................... Article X
Defined Term Location
------------ --------
Company Knowledge Person......................... Article X
Company Licensed Software........................ Article X
Company Material Adverse Effect.................. Article X
Company Proprietary Software..................... Article X
Company Reports.................................. Article X
Company Required Vote............................ Article X
Company Rights Agreement......................... Recitals
Company Software................................. Article X
Company Stock Option............................. Article X
Company Stock Plan............................... Article X
Company Stock Rights............................. Article X
Company Stockholders............................. Recitals
Company Stockholders Meeting..................... Article X
Company Warrant.................................. Article X
Competing Transaction............................ Article X
Confidentiality Agreement........................ Article X
Consumer Protection Laws......................... Article X
DGCL............................................. Recitals
Effective Time................................... Article X
Employee/Consulting Agreements................... Article X
Employee Benefit Plan............................ Article X
Employee Stock Purchase Plan..................... Article X
Environmental Laws............................... Article X
ERISA............................................ Article X
ERISA Affiliate.................................. Article X
ERISA Affiliate Plan............................. Article X
Exchange Act..................................... Recitals
Exchange Agent .................................. Article X
Exchange Fund.................................... Section 3.1
Exchange Offer Conditions........................ Section 1.1(a)
Fairness Opinion................................. Recitals
Final Decision................................... Article X
FLSA............................................. Article X
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Defined Term Location
------------ --------
FMLA............................................. Article X
Form S-4......................................... Section 1.1(c)
Fully Diluted Common Share Number................ Article X
GAAP............................................. Article X
Governmental Entity.............................. Article X
Hazardous Materials.............................. Article X
Independent Advisor.............................. Recitals
Independent Directors............................ Section 1.2(d)
Intellectual Property............................ Article X
Knowledge........................................ Article X
Labor Laws....................................... Article X
Law.............................................. Article X
Letter of Transmittal............................ Section 3.2(a)
Liabilities...................................... Article X
Merger........................................... Recitals
Merger Consideration............................. Section 2.4(a)
Merger Sub....................................... Preamble
Minimum Condition................................ Article X
Nasdaq........................................... Article X
Net Cash......................................... Article X
New Parent Proposal.............................. Article X
NLRB............................................. Article X
Offer............................................ Recitals
Offer Documents.................................. Section 1.1(c)
Offer Price...................................... Section 1.1(a)
Order............................................ Article X
Parent........................................... Preamble
Parent Change of Control......................... Article X
Parent Common Stock.............................. Recitals
Parent Disclosure Letter......................... Article X
Parent Financial Statements...................... Article X
Parent Knowledge Person.......................... Article X
Parent Material Adverse Effect................... Article X
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Defined Term Location
------------ --------
Parent Parties................................... Article X
Parent Reports................................... Article X
Parent Stock Option.............................. Article X
Parent Stock Rights.............................. Article X
Person........................................... Article X
Post-Effective Amendment......................... Article X
Preliminary Prospectus........................... Section 1.1(c)
Privacy Statement................................ Article X
Promotional Activities Article X
Proxy Statement.................................. Article X
Reference Balance Sheet.......................... Article X
Representatives.................................. Article X
Rights........................................... Recitals
Schedule 14D-9................................... Section 1.1(b)
Schedule TO...................................... Section 1.1(c)
SEC.............................................. Article X
Securities Act................................... Article X
Stock Portion.................................... Section 1.1(a)
Stockholders Agreement........................... Recitals
Subsidiary....................................... Article X
Superior Competing Transaction................... Article X
Surviving Corporation............................ Article X
Tax.............................................. Article X
Tax Return....................................... Article X
10-K............................................. Article X
Terminating Company Breach....................... Section 8.1(g)
Terminating Parent Breach........................ Section 8.1(h)
Termination Fee.................................. Article X
Terms and Conditions............................. Article X
Third Party...................................... Article X
Transaction Documents............................ Article X
WARN............................................. Article X
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ANNEX II
Exchange Offer Conditions.
Notwithstanding any other provision of the Offer, neither Parent nor
Merger Sub shall be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the obligation of Merger Sub to pay for or return
tendered Company Common Shares after termination or withdrawal of the Offer),
pay for, and (subject to any such rules or regulations) may delay the acceptance
for payment of any tendered Company Common Shares and (except as provided in the
Merger Agreement) amend or terminate the Offer as to any tendered Company Common
Shares if (i) there shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer Company Common Shares representing a majority of
the outstanding Company Common Shares on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities (the "Minimum
Condition"), (ii) any consent identified in Schedule 4.6 to the Company
Disclosure Letter shall not have been obtained prior to the expiration of the
Offer, (iii) the Form S-4 shall not have become effective under the Securities
Act or shall be the subject of any stop order or proceedings seeking a stop
order, (iv) the shares of Parent Common Stock shall not have been authorized for
listing on Nasdaq, subject to official notice of issuance after Parent has used
commercially reasonable efforts to do so, or (v) at any time after the date of
the Merger Agreement and prior to the time of acceptance for payment of any such
Company Common Shares, any of the following events shall occur and be continuing
or any of the following conditions exist:
(a) there shall have been any action taken, or any Law, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition which (i) prohibits, restrains, limits or makes illegal
the acceptance for payment, payment for or purchase of Company Common Shares or
the consummation of the Offer, the Merger or the other transactions contemplated
thereby or by the Transaction Documents, (ii) renders Merger Sub unable to
accept for payment, pay for or purchase some or all of the Company Common Shares
tendered and not withdrawn pursuant to the Offer, (iii) imposes material
limitations on the ability of Merger Sub to effectively exercise full rights of
ownership of the Company Common Shares to be acquired in the Offer, including
the right to vote such Company Common Shares, or the assets and business of the
Company; or
(b) there shall be pending any suit, action or proceeding by any
Governmental Entity or any third party challenging the acquisition by Parent or
Merger Sub of any Company Common Shares, seeking to restrain or prohibit
consummation of the Offer or the Merger, or seeking to place limitations on the
ownership of Company Common Shares or the assets and business of the Company by
Parent or Merger Sub; or
(c) the Merger Agreement shall have been terminated in accordance with its
terms; or
(d) since the date of the Merger Agreement there shall have occurred any
event, change, effect or development that, individually or in the aggregate with
any other event, change, effect or development since the date of the Merger
Agreement, has had or will have a Company Material Adverse Effect; or
(e) any representation or warranty of the Company contained in the Merger
Agreement shall not be true and correct in all material respects, in each case
as of the date of determination or on the date such representation or warranty
was made (except to the extent that any such representation or warranty, by its
terms, is expressly limited to a specific date, in which case such
representation or warranty shall not be true and correct as of such date); or
(f) the Company shall have breached or failed to perform any of its
covenants and agreements contained in the Merger Agreement required to be
performed at or prior to the date of determination; or
(g) the Company Board of Directors (or any committee thereof) (i) shall
have withdrawn or modified in a manner adverse to Merger Sub (including by
amendment of the Schedule 14D-9) any of its approvals or recommendations set
forth in Section 1.2(a), including as to the Offer, the Merger or this
Agreement, (ii) failed to reaffirm any of such approvals or recommendations
within five (5) Business Days after Parent has requested in writing that it do
so, (iii) recommended or approved any Competing Transaction or Superior
Competing Transaction, or (iv) shall have publicly proposed or resolved to do
any of the foregoing; or
(h) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an Acquisition Agreement with a third party; or
(i) any Third Party shall have become the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of at least 15% of the outstanding Company
Common Shares or shall have acquired, directly or indirectly, at least 15% of
the assets of the Company; or
(j) the Rights shall have become exercisable; or
(k) Parent shall have failed to receive an officer's certificate executed
by the Company's Chief Executive Officer and Chief Financial Officer on behalf
of the Company, dated the date of consummation of the Offer, to the effect that
none of the events or conditions set forth in paragraphs (d), (e), (f), (g) and
(h) above have occurred; or
(l) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on Nasdaq or any national securities
exchange or in the over-the-counter market, (ii) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any material
limitation (whether or not mandatory) on the extension of credit by lending
institutions in the United States, (iii) the commencement of a war, material
armed hostilities or other material international or national calamity directly
or indirectly involving the United States that has a significant adverse effect
on the functioning of the financial markets in the United States or (iv) in the
case of any of the foregoing existing at the time of execution of the Agreement,
a material acceleration or worsening thereof; provided, however, that this
condition in and of itself shall not be a ground for termination and shall only
have the effect of delaying the consummation of the Offer during the effective
period of such declaration or suspension or other event; or
(m) either of Xxxxxx Xxxxx, the Chairman and Chief Executive Officer of
the Company, or Xxxxxx Xxxxxxx, the President of the Company, shall have failed
to execute and deliver to Parent and the Company a written consulting or
employment agreement reasonably satisfactory to Parent, agreeing either (i) to
provide transitional consulting services to Parent and the Surviving
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Corporation or (ii) to be employed by Parent or the Surviving Corporation, in
either case for a term of three months or more after the Effective time.
The foregoing conditions are for the sole benefit of Merger Sub and may
(subject to the terms of the Merger Agreement) be asserted or waived by Merger
Sub, in whole or in part, at any time and from time to time, in the sole
discretion of Merger Sub, as the case may be. The failure by Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
The capitalized terms used in this Annex II shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex II is
annexed.
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