EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of June 1, 2001
Among
UNITED NEWVENTURES, INC.
UNV ACQUISITION CORP.
and
XXXXXXXX.XXX, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................... 1
SECTION 1.01 Definitions............................................................................ 1
ARTICLE II THE OFFER AND THE MERGER.................................................................. 9
SECTION 2.01 The Offer.............................................................................. 9
SECTION 2.02 Company Actions........................................................................ 11
SECTION 2.03 Board of Directors; Section 14(f)...................................................... 12
SECTION 2.04 The Merger............................................................................. 12
SECTION 2.05 Closing................................................................................ 13
SECTION 2.06 Effective Time......................................................................... 13
SECTION 2.07 Certificate of Incorporation and By-laws............................................... 13
SECTION 2.08 Directors.............................................................................. 13
SECTION 2.09 Officers............................................................................... 13
ARTICLE III EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES.............................................................................. 14
SECTION 3.01 Effect on Capital Stock................................................................ 14
SECTION 3.02 Exchange of Certificates............................................................... 15
SECTION 3.03 Adjustments............................................................................ 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 17
SECTION 4.01 Organization, Standing and Power....................................................... 17
SECTION 4.02 Company Subsidiaries; Equity Interests................................................. 17
SECTION 4.03 Capital Structure...................................................................... 18
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action................................. 19
SECTION 4.05 No Conflicts; Consents................................................................. 20
SECTION 4.06 SEC Documents; Financial Statements; Undisclosed Liabilities........................... 20
SECTION 4.07 Information Supplied................................................................... 21
SECTION 4.08 Absence of Certain Changes or Events................................................... 21
SECTION 4.09 Taxes.................................................................................. 22
SECTION 4.10 Benefit Plans; ERISA Compliance; Excess Parachute Payments............................. 23
SECTION 4.11 Litigation............................................................................. 24
SECTION 4.12 Compliance with Applicable Laws........................................................ 25
SECTION 4.13 Contracts; Debt Instruments............................................................ 25
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SECTION 4.14 Company Rights Agreement............................................................. 26
SECTION 4.15 Intellectual Property................................................................ 27
SECTION 4.16 Takeover Laws........................................................................ 30
SECTION 4.17 Affiliate Transactions............................................................... 30
SECTION 4.18 Real Property........................................................................ 30
SECTION 4.19 Insurance............................................................................ 31
SECTION 4.20 Compensation......................................................................... 31
SECTION 4.21 Privacy.............................................................................. 32
SECTION 4.22 Receivables.......................................................................... 32
SECTION 4.23 Copies of Certain Documents.......................................................... 32
SECTION 4.24 Underlying Documents................................................................. 32
SECTION 4.25 Brokers; Fees and Expenses........................................................... 32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................ 33
SECTION 5.01 Organization, Standing and Power..................................................... 33
SECTION 5.02 Sub.................................................................................. 33
SECTION 5.03 Financing............................................................................ 33
SECTION 5.04 Ownership of Company Common Stock.................................................... 33
SECTION 5.05 Authorization; Validity of Agreement; Necessary Action............................... 33
SECTION 5.06 No Conflicts; Consents............................................................... 34
SECTION 5.07 Information Supplied................................................................. 34
SECTION 5.08 Brokers.............................................................................. 34
SECTION 5.09 Litigation........................................................................... 35
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS............................................... 35
SECTION 6.01 Conduct of Business.................................................................. 35
SECTION 6.02 No Solicitation...................................................................... 38
ARTICLE VII ADDITIONAL AGREEMENTS................................................................... 40
SECTION 7.01 Preparation of Proxy Statement; Stockholders Meeting................................. 40
SECTION 7.02 Access to Information; Confidentiality............................................... 41
SECTION 7.03 Commercially Reasonable Efforts; Notification........................................ 42
SECTION 7.04 Company Employee Stock Options and Company Warrants.................................. 43
SECTION 7.05 Employee Stock Purchase Plan......................................................... 44
SECTION 7.06 Indemnification; D&O Insurance....................................................... 44
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SECTION 7.07 Public Announcements.................................................................. 45
SECTION 7.08 Transfer Taxes........................................................................ 45
SECTION 7.09 Potential Litigation.................................................................. 45
SECTION 7.10 Other Actions by the Company and Parent............................................... 45
ARTICLE VIII CONDITIONS PRECEDENT..................................................................... 46
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger............................ 46
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER........................................................ 46
SECTION 9.01 Termination........................................................................... 46
SECTION 9.02 Effect of Termination; Fees and Expenses.............................................. 48
SECTION 9.03 Amendment............................................................................. 49
SECTION 9.04 Extension; Waiver..................................................................... 49
SECTION 9.05 Procedure for Termination, Amendment, Extension or Waiver............................. 49
ARTICLE X GENERAL PROVISIONS....................................................................... 50
SECTION 10.01 Nonsurvival of Representations and Warranties......................................... 50
SECTION 10.02 Notices............................................................................... 50
SECTION 10.03 Interpretation........................................................................ 51
SECTION 10.04 Severability.......................................................................... 51
SECTION 10.05 Counterparts.......................................................................... 51
SECTION 10.06 Entire Agreement; No Third-Party Beneficiaries........................................ 51
SECTION 10.07 Governing Law......................................................................... 52
SECTION 10.08 Assignment............................................................................ 52
SECTION 10.09 Enforcement........................................................................... 52
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of June 1, 2001 (the
"Agreement"), among United NewVentures, Inc., a Delaware corporation ("Parent"),
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UNV Acquisition Corp., a Delaware corporation ("Sub") and a wholly owned
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subsidiary of Parent, and XxXxxxxx.xxx, Inc., a Delaware corporation (the
"Company").
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WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the issued and outstanding
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shares of Company Common Stock (as defined herein) for U.S. $2.60 per share of
Company Common Stock (the "Offer Price"), net to the Seller in cash, upon the
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terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company
have approved the merger (the "Merger") of Sub into the Company on the terms and
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subject to the conditions set forth in this Agreement, whereby each issued share
of Company Common Stock not owned directly or indirectly by Parent or the
Company, will be converted into the right to receive an amount in cash equal to
the Offer Price; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent and the Principal Company Stockholders (as defined herein) are
entering into Stock Option and Tender Agreements (as defined herein).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and conditions set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definitions. (a) As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, for any Person, another Person that directly or
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indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Alternative Acquisition" has the meaning set forth in Section 6.02(a).
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"Alternative Acquisition Proposal" has the meaning set forth in Section
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6.02(a).
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"Applicable Law" means any statute, law (including common law), ordinance,
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rule or regulation applicable to the Company or any Company Subsidiary or their
respective properties or assets.
"Applicable Tax Law" means any Applicable Law relating to Taxes, including,
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without limitation, regulations and other official pronouncements of any
Governmental Entity or political subdivision of such jurisdiction charged with
interpreting such Applicable Law.
"Certificate" or "Certificates" mean the certificate or certificates that
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immediately prior to the Effective Time represented outstanding shares of
Company Common Stock.
"Certificate of Merger" means a certificate of merger, or other appropriate
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documents, to be filed with the Secretary of State of the State of Delaware to
effect the Merger.
"Closing" means the closing of the Merger.
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"Closing Date" means the date on which the Closing occurs.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the heading hereof.
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"Company 1999 Stock Plan" means the XxXxxxxx.xxx, Inc. 1999 Stock Plan, as
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amended and restated effective as of May 18, 2000, as further amended by the
Company Board on April 26, 2001 and May 23, 2001.
"Company Board" means the Board of Directors of the Company.
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"Company By-laws" means the by-laws of the Company, as amended to the date
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of this Agreement.
"Company Capital Stock" has the meaning set forth in Section 4.03.
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"Company Charter" means the certificate of incorporation of the Company, as
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amended to the date of this Agreement.
"Company Common Stock" means the common stock, $.001 par value per share,
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of the Company, together with the associated Company Rights.
"Company Disclosure Letter" means the letter, dated as of the date of this
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Agreement, delivered by the Company to Parent and Sub, which shall describe an
exception to, or otherwise qualify or respond to, the representations and
warranties of the Company specifically identified in each section of the letter
and, to the extent a disclosure by the Company is sufficient to reasonably
inform Parent and Sub of information required to be disclosed in another section
of the letter, such disclosure shall be deemed, for purposes of this Agreement,
to have been made with respect to such other section of the disclosure letter.
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"Company Employee Stock Option" means any option to purchase Company
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Common Stock granted under any Company Option Plan.
"Company Intellectual Property Rights" means Intellectual Property
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Rights that are owned by, or exclusively licensed to, the Company and the
Company Subsidiaries.
"Company Investment" has the meaning set forth in Section 4.02(b).
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"Company Leased Real Property" has the meaning set forth in Section
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4.18(a).
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"Company Material Adverse Effect" means (a) a material adverse effect
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on the business, assets, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole (except where any change,
event, effect or development results from (i) changes affecting the U.S. economy
generally, (ii) changes affecting the member-driven Internet marketing services
industry in which the Company operates as a whole, and (iii) the announcement of
the existence and terms of this Agreement; provided, with respect to clauses
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(a)(i) and (a)(ii) above, that such change, event, effect or development shall
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include a decline in the Company's stock price, increasing operating losses or
the failure to meet revenue earnings estimates to the extent such change, event,
effect or development does not affect the Company to a greater extent than other
participants in the member-driven Internet marketing services industry in the
U.S. in which the Company operates generally), or (b) a material adverse effect
on the ability of the Company to perform its obligations under the Transaction
Agreements to which it is a party or on the ability of the Company to consummate
the Offer, the Merger and the other Transactions.
"Company Option Plans" means the Company's 1999 Stock Plan, the
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Company's 1996 Stock Plan, the Company's 1999 Supplemental Stock Plan, the
Cybergold 1996 Stock Plan and the Cybergold 1999 Omnibus Equity Incentive Plan,
adopted May 18, 1999.
"Company Plans" has the meaning set forth in Section 4.10(a).
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"Company Preferred Stock" has the meaning set forth in Section 4.03.
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"Company Products" has the meaning set forth in Section 4.15(b).
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"Company Rights" means the preferred share purchase rights issued
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pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Preferred Stock Rights Agreement,
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dated as of December 13, 2000, as the same may be amended from time to time,
between the Company and Xxxxx Fargo Shareholder Services, as Rights Agent.
"Company SAR" means any stock appreciation right linked to the price of
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Company Common Stock and granted under any Company Option Plan.
"Company SEC Documents" means all reports, schedules, forms, statements
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and other documents filed or required to be filed by the Company with the SEC
since December 31, 1999.
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"Company Stockholder Approval" has the meaning set forth in Section
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4.04(c).
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"Company Stockholders Meeting" means a meeting of the Company's
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stockholders for the purpose of seeking Company Stockholder Approval.
"Company Subsidiaries" means all the Subsidiaries of the Company.
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"Company Warrants" means warrants to purchase Company Common Stock.
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"Confidentiality Agreement" means the confidentiality agreement, dated
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April 4, 2001, between the Company and Parent.
"Consent" means any consent, approval, license, Permit, Order or
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authorization.
"Contract" means any Permit, indenture, note, bond, mortgage,
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agreement, concession, franchise, instrument, undertaking, commitment,
understanding or other arrangement (whether written or oral).
"DGCL" means the Delaware General Corporation Law, as amended from time
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to time.
"D&O Insurance" means directors' and officers' insurance.
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"Dissenters' Shares" means shares of Company Common Stock that are
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outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to and properly demands payment of the fair value of such
shares pursuant to, and who complies in all respects with, Section 262 of the
DGCL.
"Effective Time" has the meaning set forth in Section 2.06.
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"ERISA" means the Employment Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means, with respect to any Person, any corporation,
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trade or business which, together with such Person, is a member of a controlled
group of corporations or a group of trades or businesses under common control
within the meaning of section 414 of the Code.
"ESPP" has the meaning set forth in Section 7.05.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Fund" has the meaning set forth in Section 3.02(a).
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"Filed Company SEC Documents" means all Company SEC Documents that were
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filed and publicly available prior to the date of this Agreement.
"Financial Statements" means the consolidated financial statements of
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the Company and its Subsidiaries included in each of the Company's Annual Report
on Form 10-K for the fiscal years ended December 31, 1998, December 31, 1999 and
December 31, 2000, the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001 and any consolidated
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financial statements of the Company filed with the SEC after the date hereof,
including in each case the footnotes thereto.
"Fully Diluted Shares" has the meaning set forth in Exhibit A.
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"GAAP" as to any Person means generally accepted United States
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accounting principles, applied on a basis consistent with the basis on which the
most recent audited financial statements of such Person were prepared prior to
the date of this Agreement.
"Governmental Entity" means any:
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(i) federal, state, local, municipal or foreign government;
(ii) governmental or quasi-governmental authority of any nature
(including, without limitation, any governmental agency, branch,
department, official, instrumentality or entity and any court or
other tribunal);
(iii) multi-national organization or body; or
(iv) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976, as amended.
"Indebtedness" means, without duplication, (i) all obligations for
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borrowed money, or with respect to deposits or advances of any kind, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations under conditional sale or other title retention agreements
relating to purchased property, (iv) all obligations issued or assumed as the
deferred purchase price of property or services (excluding obligations to
creditors for raw materials, inventory, services and supplies incurred in the
ordinary and usual course of business), (v) all capitalized lease obligations,
(vi) all obligations under interest rate or currency hedging transactions
(valued at the termination value thereof), (vii) all letters of credit and
(viii) all guarantees and arrangements having the economic effect of a guarantee
of any indebtedness of any other Person (other than a Company Subsidiary).
"Indemnified Party" has the meaning set forth in Section 7.06(a).
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"Intellectual Property Rights" means any or all of the following and
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all worldwide common law and statutory rights in, arising out of, or associated
with: (i) patents and applications therefore and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof (collectively referred to as "Patents"); (ii) inventions (whether
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patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (iii) copyrights,
copyrights registrations and applications therefore, and all other rights
corresponding thereto throughout the world; (iv) domain names, uniform resource
locators and other names and locators associated with the Internet; (v)
industrial designs and any registrations and applications therefore; (vi) trade
names,
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logos, common law trademarks and service marks, trademark and service xxxx
registrations and applications therefore; (vii) all databases and data
collections and all rights therein; (viii) all moral and economic rights of
authors and inventors, however denominated, (ix) any similar or equivalent
rights to any of the foregoing (as applicable), and (x) software (in source code
and object code form) in all phases of development and all programming, user,
system and other documentation relating to the same.
"IRS" means the Internal Revenue Service.
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"Liens" means pledges, liens, charges, mortgages, encumbrances and
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security interests of any kind or nature whatsoever.
"Material Contracts" means Contracts that are material to the business,
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properties, assets, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole and those which are set forth in
Section 4.13(a) of the Company Disclosure Letter.
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"Material Intellectual Property Rights" means all Intellectual Property
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Rights that are material to the business, properties, assets, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole.
"Maximum Premium" has the meaning set forth in Section 7.06(b).
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"Merger" has the meaning set forth in the recitals hereto.
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"Merger Consideration" means the U.S. dollar cash amount equal to the
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price per share of Company Common Stock paid pursuant to the Offer.
"Minimum Tender Condition" has the meaning set forth in Exhibit A.
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"Offer" has the meaning set forth in the recitals hereto.
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"Offer Documents" has the meaning set forth in Section 2.01(b).
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"Offer Price" has the meaning set forth in the recitals hereto.
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"Order" means with respect to any Person, any award, decision,
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injunction, judgment, stipulation, order, ruling, subpoena, writ, decree,
consent decree, or verdict entered, issued, made, or rendered by any
Governmental Entity affecting such Person or any of its properties.
"ordinary and usual course of business" means an action taken by a
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Person that is consistent with the past practices of such Person and is taken in
the ordinary course of normal day-to-day operations of such Person.
"Outside Date" has the meaning set forth in Section 9.01(b)(i).
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"Parent" has the meaning set forth in the heading hereof.
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"Parent Board" has the meaning set forth in Section 5.05.
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"Parent Disclosure Letter" means the letter, dated as of the date of
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this Agreement, delivered by Parent to the Company.
"Parent Material Adverse Effect" means a material adverse effect on the
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ability of Parent or Sub to perform its obligations under the Transaction
Documents to which it is a party or on the ability of Parent or Sub to
consummate the Offer, the Merger and the other Transactions.
"Paying Agent" means the bank or trust company selected by Parent prior
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to the Effective Time to act as paying agent for the payment of the Merger
Consideration.
"Permit" means all necessary licenses, franchises, permits, consents,
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approvals, Orders, certificates, authorizations, declarations and filings
required by all Governmental Entities for the conduct of the business and
operations of the Company and each Company Subsidiary as now conducted.
"Permitted Liens" means (i) statutory Liens of carriers, warehousemen,
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mechanics, repairmen, workmen and materialmen incurred in the ordinary and usual
course of business for amounts not yet overdue or being contested in good faith,
(ii) Liens for Taxes not yet due and payable or being contested in good faith in
appropriate proceedings during which collection or enforcement is stayed and
(iii) Liens that, in the aggregate, do not and will not materially interfere
with the ability of the Company and the Company Subsidiaries to conduct business
as currently conducted.
"Person" means any individual, firm, corporation (including any
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non-profit corporation), general or limited partnership, limited liability
company, trust, joint venture, estate, association, organization, labor union,
or other entity or Governmental Entity.
"Principal Company Stockholders" means those stockholders of the
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Company identified in Part A of the Parent Disclosure Letter.
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"Proceedings" means any action, arbitration, audit, hearing,
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proceeding, investigation, litigation or suit (whether civil, criminal,
administrative or investigative) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Entity or arbitrator.
"Proxy Statement" means a proxy or information statement of the Company
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relating to the approval of this Agreement and the Merger by the Company's
stockholders.
"Receivables" has the meaning set forth in Section 4.22.
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"Redemption Agreement" means the Redemption Agreement, dated as of the
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date hereof, between the Company and United Air Lines, Inc., a Delaware
corporation.
"Registered Intellectual Property Rights" means all of the registered
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Intellectual Property Rights owned by, or filed in the name of, the Company or
any of the Company Subsidiaries.
"Rights Plan Amendment" has the meaning set forth in Section 4.14.
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"Schedule 14D-9" means the Solicitation/Recommendation Statement on
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Schedule 14D-9 with respect to the Offer, as amended from time to time.
"Schedule TO" means the Tender Offer Statement on Schedule TO with
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respect to the Offer, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Stock Option and Tender Agreements" means the agreements entered into
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by Parent and the Principal Company Stockholders pursuant to which each of the
Principal Company Stockholders has agreed to take specified actions in
furtherance of the Offer and the Merger.
"Stock Transfer Taxes" means any state, local, foreign or provincial
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Tax that is attributable to the transfer of Company Common Stock pursuant to
this Agreement.
"Sub" has the meaning set forth in the heading hereof.
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"Sub Board" has the meaning set forth in Section 5.05.
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"Subsidiary" means, with respect to any Person, any corporation,
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association, general or limited partnership, limited liability company, trust,
joint venture, organization or other entity of which more than 50% of the total
voting power of shares of capital stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Superior Company Proposal" has the meaning set forth in Section
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6.02(e).
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"Surviving Corporation" has the meaning set forth in Section 2.04.
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"Takeover Statute" has the meaning set forth in Section 4.16.
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"Tax" or "Taxes" means: (i) any income, corporation, gross income,
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gross receipts, franchise, profits, gains, capital stock, capital duty,
withholding, social security (or similar), employment, unemployment, disability,
real property, personal property, wealth, welfare, stamp, excise, license,
severance, environmental (including taxes under Section 59A of the Code),
customs duties, occupation, sales, use, transfer, registration, value added,
payroll, premium, property, or windfall profits tax, estimated, ad valorem or
excise tax, alternative or add-on minimum tax or other tax of any kind
whatsoever (whether or not measured in whole or in part by net income and
including any fee, assessment or other charge in the nature of or in lieu of any
tax) imposed by any Tax Authority, including any interest, penalty, or addition
thereto, whether disputed or not; and (ii) any liability for the payment of any
amount of the type described in clause (i) as a result of the Company or any
Company Subsidiary being a successor to or transferee of any other corporation
at any time on or prior to the Closing Date, and any interest, penalties,
additions to tax (whether imposed by law, contractual agreement or otherwise)
and any
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liability in respect of any tax as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group.
"Tax Authority" means, with respect to any Tax, the Governmental Entity
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or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Taxes for such entity or subdivision,
including any Governmental Entity that imposes, or is charged with collecting,
social security or similar charges or premiums.
"Tax Period" means, with respect to any Tax, the period for which the
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Tax is reported as provided under any Applicable Tax Law.
"Tax Return" means all Federal, state, local, provincial and foreign
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tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended tax return relating to Taxes.
"Termination Fee" has the meaning set forth in Section 9.02(b).
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"Transactions" means, collectively, the Offer, the Merger and the other
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transactions contemplated by the Transaction Agreements.
"Transaction Agreements" means this Agreement, the Stock Option and
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Tender Agreements and the Redemption Agreement.
"Transfer Taxes" means any state, local, foreign or provincial Tax that
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is attributable to the transfer of the beneficial ownership of the Company's or
the Company's Subsidiaries' real or personal property.
"Valid Consents" has the meaning set forth in Section 4.15(i).
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"Virus" has the meaning set forth in Section 4.15(k).
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"Voting Company Debt" means any bonds, debentures, notes or other
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indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote.
ARTICLE II
The Offer and the Merger
SECTION 2.01 The Offer.
(a) (i) As promptly as practicable but in no event later than ten
business days after the date of this Agreement, Sub shall, and Parent shall
cause Sub to, commence the Offer within the meaning of the applicable rules and
regulations of the SEC. The initial expiration date of the Offer shall be the
twentieth business day from and after the date the Offer is commenced. The
obligation of Sub to, and of Parent to cause Sub to, accept for payment, and pay
for, any shares of Company Common Stock tendered pursuant to the Offer shall be
subject to the conditions set forth in Exhibit A (any of which may be waived by
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Sub in its sole discretion) and to the other
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conditions in this Agreement. Sub expressly reserves the right to modify the
terms of the Offer, except that, without the prior written consent of the
Company (such consent to be authorized by the Company Board), Sub shall not (A)
reduce the number of shares of Company Common Stock subject to the Offer, (B)
reduce the consideration per share of Company Common Stock to be paid pursuant
to the Offer below the Offer Price, (C) modify or add to the conditions set
forth in Exhibit A in any manner adverse to the holders of Company Common Stock,
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(D) except as provided in Section 2.01 (ii), extend the Offer or (E) change the
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form of consideration payable in the Offer.
(ii) Notwithstanding the restriction in Section 2.01(a)(i)(D), Sub
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may, without the consent of the Company, extend the Offer: (A) if at the
scheduled expiration date of the Offer any of the conditions to Sub's obligation
to purchase shares of Company Common Stock are not satisfied or waived, until
such time as such conditions are satisfied or waived; (B) for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer; and (C) in order to provide sufficient
time to respond to any matter hereafter arising and required to be disclosed to
Parent pursuant to Section 6.01(c)(ii) and which causes Parent or Sub to amend
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the Offer Documents; provided that any extension pursuant to this clause (C)
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shall not exceed 20 business days. In addition, Sub may extend the Offer after
the acceptance of shares of Company Common Stock thereunder for a further period
of time by means of a subsequent offering period under Rule 14d-11 promulgated
under the Exchange Act of not more than 20 business days to meet the objective
(which is not a condition to the Offer) that there be validly tendered, in
accordance with the terms of the Offer, prior to the expiration date of the
Offer (as so extended) and not withdrawn a number of shares of Company Common
Stock, together with shares of Company Common Stock then owned by Parent and
Sub, which represents at least 90% of the Fully Diluted Shares.
(iii) On The Terms And Subject To The Conditions Of The Offer And
This Agreement, Sub Shall Pay For All Shares Of Company Common Stock Validly
Tendered And Not Withdrawn Pursuant To The Offer As Soon As Practicable After
The Expiration Of The Offer And, With Respect To Any Extension Of The Offer, As
Soon As Practicable After Shares Of Company Common Stock Are Validly Tendered.
Sub May, At Any Time, Transfer Or Assign To One Or More Subsidiaries Of Parent
The Right To Purchase All Or Any Portion Of The Shares Of Company Common Stock
Tendered Pursuant To The Offer, But Any Such Transfer Or Assignment Shall Not
Relieve Sub Or Parent Of Their Respective Obligations Under The Offer Or
Prejudice The Rights Of Tendering Stockholders To Receive Payment For Shares Of
Company Common Stock Validly Tendered And Accepted For Payment.
(b) On The Date Of Commencement Of The Offer, Parent And Sub Shall File
With The Sec A Tender Offer Statement On Schedule To With Respect To The Offer,
Which Shall Contain An Offer To Purchase And A Related Letter Of Transmittal And
Summary Advertisement (Such Schedule To And The Documents Included Therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). The Offer Documents will comply as
---------------
to form in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations promulgated thereunder. Parent shall deliver
copies of the proposed forms of the Offer Documents to the Company within a
reasonable time prior to the commencement of the Offer for review and comment by
the Company and its counsel. Each of Parent, Sub and the Company shall promptly
correct any information provided by it for use in
10
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents, as so amended or supplemented, to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 2.02 Company Actions.
(a) The Company hereby approves of and consents to each of the
Transactions and has provided Parent with a signed copy of the written opinion
of Xxxxxxxxx Xxxxxxxx, Inc. that the Offer Price to be received in the Offer and
the Merger Consideration to be received pursuant to the Merger is fair, from a
financial point of view, to the holders of Company Common Stock. The Company has
been authorized by Xxxxxxxxx Xxxxxxxx, Inc. to include such fairness opinion (or
a reference thereto with the consent of Xxxxxxxxx Xxxxxxxx, Inc.) in the
Schedule 14D-9 referred to below and the Proxy Statement.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC the Schedule 14D-9 containing the recommendations
described in Section 4.04(b) and shall mail the Schedule 14D-9 to the holders of
---------------
Company Common Stock. The Schedule 14D-9 will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall deliver copies of the
proposed form of the Schedule 14D-9 to Parent within a reasonable time prior to
the filing thereof with the SEC for review and comment by Parent and its
counsel. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings, computer files
and all other information in the Company's possession or control regarding the
beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including, without limitation, updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of Applicable Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Transactions, Parent and Sub shall hold in confidence the
information contained in any such labels, listings and files, shall use such
information only in
11
connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall deliver to the Company or destroy all copies of such
information then in their possession.
SECTION 2.03 Board of Directors; Section 14(f).
(a) If requested by Parent, promptly after the acceptance for payment of
the shares of Company Common Stock to be purchased pursuant to the Offer, Sub
shall be entitled to designate such number of directors on the Company Board
(and on each committee of the Company Board and on each board of directors of
each Company Subsidiary designated by Parent) as will give Sub representation on
the Company Board (or such committee or Company Subsidiary board of directors)
equal to at least that number of directors, rounded up to the next whole number,
which is the product of (a) the total number of directors on the Company Board
(or such committee or Company Subsidiary board of directors) giving effect to
the directors appointed or elected pursuant to this sentence multiplied by (b)
the percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Sub plus the number of shares of Company
Common Stock otherwise owned by Sub or any other subsidiary of Parent bears to
(ii) the number of shares of Company Common Stock then outstanding, and the
Company shall, at such time, cause Sub's designees to be so appointed or
elected. The Company shall take all actions necessary to cause the persons
designated by Parent to be directors on the Company Board (or a committee of the
Company Board or the board of directors of a Company Subsidiary designated by
Parent) pursuant to the preceding sentence to be so appointed or elected
(whether, at the request of Parent, by means of increasing the size of the
Company Board (or such committee or Company Subsidiary board of directors) or
seeking the resignation of directors and causing Parent's designees to be
appointed or elected).
(b) The Company's obligation to appoint designees of Parent and/or Sub to
the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule l4f-1 in order to fulfill its
obligations under this Section 2.03, and shall include in the Schedule 14D-9
------------
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1. Parent and Sub will supply to
the Company any information with respect to any of them and their nominees,
officers, directors and Affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's and/or Sub's
designees pursuant to this Section 2.03 and prior to the Effective Time, any
------------
amendment or termination of this Agreement, extension for the performance or
waiver of the obligations or other acts of Parent or Sub or waiver of the
Company's rights hereunder, will require the concurrence of a majority of the
members of the Company Board who are members of the Company Board on the date of
this Agreement.
SECTION 2.04 The Merger. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time. At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"). At the election of
---------------------
Parent, any direct or indirect Subsidiary or other Affiliate of Parent may be
12
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
SECTION 2.05 Closing. The Closing shall take place at the offices of Xxxxx,
Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m.
on the second business day following the satisfaction (or, to the extent
permitted by Applicable Law, waiver by all parties) of the conditions set forth
in Article VIII (or, to the extent permitted by law, waived by the parties
------------
entitled to the benefits thereof), or at such other place, time and date as
shall be agreed in writing between Parent and the Company.
SECTION 2.06 Effective Time. At the Closing, Parent and the Company will
cause the Certificate of Merger to be executed and filed with the Secretary of
State of the State of Delaware as provided in Section 251 or 253 of the DGCL.
The Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Secretary of State of the State of Delaware or such
other time as shall be agreed upon by the parties and set forth in the
Certificate of Merger in accordance with the DGCL (the "Effective Time"). From
--------------
and after the Effective Time, the Merger shall have all the effects provided by
Section 259 of the DGCL, including without limitation, the effect that the
Surviving Corporation shall possess all of the assets, rights, privileges,
powers and franchises and shall be subject to all of the liabilities,
restrictions, disabilities and duties of the Company and Sub, all as provided
under the DGCL.
SECTION 2.07 Certificate of Incorporation and By-laws.
(a) The Company Charter, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by Applicable Law;
provided, however, that such Company Charter shall be amended to become
-------- -------
identical to the Certificate of Incorporation of Sub as in effect immediately
prior to the Effective Time except that Article I thereof shall be amended to
change the name of the Surviving Corporation to the name of the Company.
(b) The by-laws of Sub as in effect immediately prior to the Effective
Time shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by Applicable Law.
SECTION 2.08 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
SECTION 2.09 Officers. The officers of the Company shall, from and after
the Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
13
ARTICLE III
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company, the Company Subsidiaries,
Parent or Sub shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock, Company Employee Stock Options and
Company Warrants.
(i) Subject to Sections 3.01(b), and 3.01(d), each issued and
---------------- -------
outstanding share of Company Common Stock shall be converted into the
Merger Consideration.
(ii) As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section
-------
3.02, without interest.
----
(iii) Company Employee Stock Options and Company Warrants shall be
treated as set forth in Section 7.04.
------------
(d) Dissenters' Rights. Notwithstanding anything in this Agreement to the
contrary, Dissenters' Shares shall not be converted into Merger Consideration as
provided in Section 3.01(c), but rather the holders of Dissenters' Shares shall
---------------
be entitled to payment of the fair value of such Dissenters' Shares in
accordance with Section 262 of the DGCL; provided, however, that if any such
-------- -------
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of fair value under Section 262 of the DGCL, then the
right of such holder to be paid the fair value of such holder's Dissenters'
Shares shall cease and such Dissenters' Shares shall be treated as if they had
been converted as of the Effective Time into Merger Consideration as provided in
Section 3.01(c). The Company shall provide prompt notice to Parent of any
---------------
demands received by the Company for appraisal of any shares of Company Common
Stock, attempted withdrawals of any such demands and any other documents
received in connection with any assertion of rights to payment of fair value
under Section 262 of the DGCL, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
14
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 3.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a bank
or trust company reasonably acceptable to the Company to act as the Paying Agent
for the payment of the Merger Consideration upon surrender of Certificates
representing Company Common Stock. The Surviving Corporation shall provide to
the Paying Agent on a timely basis, as and when needed after the Effective Time,
cash necessary to pay for the shares of Company Common Stock converted into the
right to receive the Merger Consideration pursuant to Section 3.01(c) (such cash
---------------
being hereinafter referred to as the "Exchange Fund").
-------------
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate or Certificates, (i) a letter of transmittal (which 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 Paying Agent and shall
be in a form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
-------
3.01(c), and the Certificate so surrendered shall forthwith be canceled. In the
-------
event of a transfer of ownership of Company Common Stock which is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall (A) pay any transfer or
other Taxes required by reason of the payment to a Person other than the
registered holder of such Certificate, or (B) establish to the satisfaction of
the Surviving Corporation that such Tax has been paid or is otherwise not
applicable. Until surrendered as contemplated by this Section 3.02, each
------------
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01(c). No
---------------
interest shall be paid or shall accrue on any Merger Consideration payable upon
the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article III upon
-----------
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates formerly representing shares of Company Common Stock are presented
to the Surviving
15
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
-----------
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock six months after
the Effective Time shall be delivered to the Surviving Corporation, and any
holder of Company Common Stock who has not theretofore complied with this
Article III shall thereafter look only to the Surviving Corporation for payment
-----------
of its claim for Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Applicable Law. If any
Certificate has not been surrendered prior to the date that is five years after
the Effective Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(g) Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Company Common Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of applicable state, local or foreign tax law. To
the extent that amounts are so withheld and paid over to the appropriate Tax
Authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock, sold such consideration
for an amount of cash equal to the fair market value of such consideration at
the time of such deemed sale and paid such cash proceeds to the appropriate Tax
Authority.
(h) 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, the Paying
Agent shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with Section 3.01 hereof, provided that the Person to whom the Merger
------------
Consideration is paid shall, as a condition precedent to the payment thereof,
indemnify the Surviving Corporation in a manner satisfactory to it (including,
without limitation, the posting by such Person of such bond and security as the
Surviving Corporation may reasonably request) against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
16
SECTION 3.03 Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
Company Capital Stock (other than by virtue of the issuance of Company Common
Stock under the ESPP in accordance with this Agreement, upon the exercise of
Company Employee Stock Options or Company Warrants outstanding on the date of
this Agreement and in accordance with their present terms) shall occur that is
not otherwise consented to by Parent in writing, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or stock dividend thereon, in any of these cases with a
record date during such period, the cash payable pursuant to the Offer, the
Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted.
ARTICLE IV
Representations and Warranties of the Company
Except as otherwise disclosed in the Company Disclosure Letter, the Company
represents and warrants to Parent and Sub, as follows:
SECTION 4.01 Organization, Standing and Power. The Company and each of the
Company Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has full power
and authority and possesses all Permits necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its business as
presently conducted, other than such Permits the lack of which, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Company Material Adverse Effect. The Company and each Company Subsidiary is duly
qualified to do business in each jurisdiction where the nature of its business
or its ownership of its properties make such qualification necessary or
beneficial, except in such jurisdictions where the failure to be so qualified,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. True and complete copies of
the Company Charter, the Company By-laws and the charter documents, by-laws,
organizational documents and partnership, limited liability company and joint
venture agreements (and in each case all amendments thereto) of each of the
Company Subsidiaries as in effect immediately prior to the date hereof have been
delivered to Parent. Neither the Company nor any of the Company Subsidiaries is
in violation of any term of its respective certificate of incorporation or by-
laws (or other organizational documents).
SECTION 4.02 Company Subsidiaries; Equity Interests.
(a) The Company owns directly or indirectly each of the outstanding shares
of capital stock or a 100% ownership interest, as applicable, of each of the
Company Subsidiaries free and clear of all Liens. Each of the outstanding shares
of capital stock of each of the Company Subsidiaries having corporate form is
duly authorized, validly issued, fully paid and nonassessable. The following
information for each Company Subsidiary is set forth in Section 4.02 of the
------------
Company Disclosure Letter: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; and (iii) the
name of each stockholder or owner and the number of issued and outstanding
shares of capital stock or share capital held by it or the type and amount of
any ownership interest.
17
(b) Except for its interests in the Company Subsidiaries, neither the
Company nor any Company Subsidiary (i) owns, has any right to, or, except as set
forth in Section 4.02 of the Company Disclosure Letter, is, or during the last
90 days has been involved in any material negotiations to, acquire, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any Person, except through barter
transactions entered into in the ordinary and usual course of business and where
the amount of the transaction is less than $100,000 or (ii) has the ability to
control (whether through the ownership of voting securities or otherwise) any
other Person (any of such interests under clause (i) or (ii) other than a
---------- ----
Company Subsidiary, a "Company Investment"). No Company Investment is,
------------------
individually or when taken together with all other Company Investments, material
to the business of the Company and the Company Subsidiaries taken as a whole.
SECTION 4.03 Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock, 10,000,000 shares of
preferred stock and 100,000 shares of Series A Participating Preferred Stock,
$0.001 par value per share ("Company Preferred Stock" and collectively with the
-----------------------
Company Common Stock, "Company Capital Stock"). As of the date hereof, (i)
---------------------
40,757,079 shares of Company Common Stock and no shares of Company Preferred
Stock were issued and outstanding, (ii) 241,000 shares of Company Common Stock
and no shares of Company Preferred Stock were held by the Company in its
treasury, (iii) 8,642,444 shares of Company Common Stock were subject to
outstanding Company Employee Stock Options and the weighted average exercise
price of such options was $1.3285 per share, and (iv) 161,408 shares of Company
Common Stock were subject to outstanding Company Warrants and the weighted
average exercise price of such warrants was $2.06 per share and 182,451 shares
of Company Common Stock reserved for issuance pursuant to the ESPP. Section 4.03
------------
of the Company Disclosure Letter sets forth a full list of all outstanding
Company Employee Stock Options and Company Warrants, including the name of the
Person to whom such options (or warrants) have been granted, the number of
shares subject to each option (or warrant), the per share exercise price for
each option (or warrant), the vesting schedule for each option (or warrant) and
whether such option (or warrant) automatically terminate in the event of a
change in control of the Company. Except as set forth above, and except for the
ESPP, as of the date hereof, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding. All
outstanding shares of Company Capital Stock are, and all such shares that may be
issued prior to the Effective Time will be when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Company Charter, the Company By-laws or any Contract to which the Company is a
party or otherwise bound. Except as set forth above, there are no Voting Company
Debts, Company Warrants or Company SARs issued or outstanding and the only
rights outstanding under any Company Option Plan are Company Employee Stock
Options. Except as set forth above or pursuant to the Company Rights Agreement,
as of the date of this Agreement, there are no options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (A) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other
18
equity interest in, the Company or of any Company Subsidiary or any Voting
Company Debt, (B) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (C) that give any Person the
right to receive any economic benefit or right similar to or derived from the
economic benefits and rights occurring to holders of Company Capital Stock.
There are not any (1) outstanding contractual obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary, or (2) voting trusts or
other agreements or understandings to which the Company or any of the Company
Subsidiaries is a party with respect to the voting or transfer of capital stock
of the Company or any of the Company Subsidiaries.
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action.
(a) The Company has full corporate power and authority to execute and
deliver each Transaction Agreement to which it is a party and each agreement,
document and instrument to be executed and delivered by or on behalf of it
pursuant to, or in connection with or as contemplated by the Transaction
Agreements and to consummate the Transactions. The execution, delivery and
performance by the Company of each Transaction Agreement to which it is a party
and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company, and
except for the Company Stockholder Approval in the case of the Merger, no other
corporate action on the part of the Company is necessary to authorize the
consummation of the Transactions. The Transaction Agreements to which the
Company is a party have been duly executed and delivered by the Company and
constitute (assuming the due authorization, execution and delivery by Parent and
Sub), valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to general principles of equity.
(b) The Company Board, at a meeting duly called and held prior to
execution of any of the Transaction Agreements, duly and unanimously adopted
resolutions (i) approving and declaring advisable this Agreement and the other
Transaction Agreements, the Merger and the other Transactions, (ii) determining
that the terms of the Offer, the Merger and the other Transactions are fair to
and in the best interests of the Company and its stockholders, (iii)
recommending that the holders of Company Common Stock accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer, (iv)
recommending that the Company's stockholders approve and adopt this Agreement
and (v) adopting this Agreement and the other Transaction Agreements. Such
resolutions are sufficient to render inapplicable to Parent and Sub, to this
Agreement and the other Transaction Agreements to which the Company is a party,
and to the Offer, the Merger and the other Transactions the provisions of
Section 203 of the DGCL. The Company has been advised by each of its directors,
executive officers, affiliates or Subsidiaries that each such Person intends to
tender all shares of Company Common Stock owned by such Person pursuant to the
Offer, except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval and adoption of
19
this Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the "Company Stockholder Approval"). No vote or approval of any
----------------------------
holder of Company Capital Stock is necessary to approve any Transaction
Agreement other than this Agreement or to consummate the Offer or any
Transaction other than the Merger.
SECTION 4.05 No Conflicts; Consents. Except as set forth in Section 4.05 of
------------
the Company Disclosure Letter, the execution and delivery by the Company of each
Transaction Agreement to which it is a party do not, and the consummation of the
Offer, the Merger and the other Transactions and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
a loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien (other than Permitted Liens) upon any of the properties or assets of
the Company or any Company Subsidiary under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any Contract to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in the following sentence, any provision of any Order or Applicable Law
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the cases of clause (ii) or (iii) above,
----------- -----
any such items that, individually or in the aggregate, have not had and could
not reasonably be expected to have a Company Material Adverse Effect. No Consent
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to the Company or any Company
Subsidiary in connection with the execution, delivery and performance of any
Transaction Agreement to which it is a party or the consummation of the
Transactions, other than (A) compliance with and filings under the HSR Act, (B)
the filing with the SEC of (1) the Schedule 14D-9, (2) a Proxy Statement, if
such approval is required by Applicable Law, and (3) such reports under Section
13 of the Exchange Act as may be required in connection with this Agreement and
the other Transaction Agreements, the Offer, the Merger and the other
Transactions, (C) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business, (D) such filings as may be required in connection with the Taxes
described in Section 7.08, and (E) such other items as are set forth in Section
------------ -------
4.05 of the Company Disclosure Letter.
----
SECTION 4.06 SEC Documents; Financial Statements; Undisclosed Liabilities.
(a) The Company has timely filed with the SEC all Company SEC Documents.
As of its respective date, each Company SEC Document, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the requirements of the Securities Act and Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and did not 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. Except to the
extent that information contained in any Company SEC Document has been revised
or superseded by a later filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material
20
fact or omits 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) The Financial Statements comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(c) The Company and the Company Subsidiaries have no material liabilities
or obligations of any nature, whether accrued, absolute, contingent or
otherwise, and whether or not required to be disclosed on a balance sheet
prepared in accordance with GAAP, except liabilities (i) stated or adequately
reserved against in the Financial Statements of the Company included in the
Filed Company SEC Documents or disclosed in Section 4.06(c) of the Company
---------------
Disclosure Letter, or (ii) incurred in the ordinary and usual course of business
since March 31, 2001, or (iii) provided for in footnotes to the Financial
Statements.
SECTION 4.07 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents or the Schedule 14D-9 will, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) the Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
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 are made, not
misleading. The Schedule 14D-9 and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 4.08 Absence of Certain Changes or Events. Except as disclosed in
the Filed Company SEC Documents or in Section 4.08 of the Company Disclosure
------------
Letter, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, the Company
has conducted its business only in the ordinary and usual course of business,
and during such period none of the Company or any Company Subsidiary has:
(i) experienced or been affected by any event, change, effect or
development that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect; or
21
(ii) taken any action that would not be permitted to be taken after
the date hereof under Section 6.01.
------------
SECTION 4.09 Taxes.
(a) All Tax Returns required to be filed or sent through the date hereof
and which have not otherwise been validly extended, by or with respect to the
Company and the Company Subsidiaries, have been filed or sent and all Taxes
required to be paid through the date hereof by the Company and the Company
Subsidiaries, whether disputed or not and whether or not shown on any Tax
Return, have been paid, except Taxes which have not yet accrued or otherwise
become due, for which adequate provision has been made in the pertinent
financial statements referred to in Section 4.06 hereof. All such Tax Returns
------------
were correct and complete in all material respects. The provisions for Taxes on
the Financial Statements and on the latest balance sheet included in the Company
SEC Documents are sufficient as of their respective dates for the payment of all
accrued and unpaid Taxes of any nature of the Company and the Company
Subsidiaries, whether or not assessed or disputed. All Taxes and other
assessments and levies which the Company or any of the Company Subsidiaries is
required to withhold or collect have been withheld and collected and have been
paid over to the proper Governmental Entities in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party. There is no pending dispute or claim concerning any Tax liability
of the Company or any of the Company Subsidiaries either (A) claimed or raised
by any Tax Authority or (B) as to which the Company has knowledge based upon
personal contact with any agent of or other Person acting on behalf of or for
such Tax Authority. Except as provided in Section 4.09 of the Company Disclosure
------------
Letter, neither the Company nor any of the Company Subsidiaries has received
notice of any audit of any Tax Return filed by such Person. Except as provided
in Section 4.09 of the Company Disclosure Letter, neither the Company nor any of
------------
the Company Subsidiaries has received notice of any claim made by any authority
in a jurisdiction where the Company or such Company Subsidiary does not file Tax
Returns that the Company or such Company Subsidiary is or may be subject to
taxation by that jurisdiction. There are no Liens recorded or asserted on any of
the assets or properties of the Company or any of the Company Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) The Company has made available to Parent correct and complete copies
of all Tax Returns, examination reports, statements of deficiencies assessed
against or agreed to by the Company or any of the Company Subsidiaries and all
other communications relating thereto since December 31, 1998.
(c) Except as set forth in Section 4.09 of the Company Disclosure Letter,
------------
neither the Company nor any of the Company Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, nor has any such waiver or agreement
been requested by the IRS or any other Tax Authority; and neither the Company
nor any of the Company Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return.
(d) Except as set forth in Section 4.09 of the Company Disclosure Letter:
------------
(i) neither the Company nor any of the Company Subsidiaries has filed a consent
under Section 341(f) of
22
the Code concerning collapsible corporations or agreed to have Section 341(f)(2)
of the Code apply; (ii) neither the Company nor any of the Company Subsidiaries
has made any payments, is obligated to make any payments, or is party to any
agreement that under any circumstances could obligate it to make any payments
that will not be deductible under Section 280G or Section 162(m) of the Code;
(iii) neither the Company nor any of the Company Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code; (iv) neither the Company nor any of the Company Subsidiaries is a
party to any Tax allocation or sharing agreement; (v) neither the Company nor
any of the Company Subsidiaries (A) has been a member of an affiliated group
filing a consolidated federal income Tax return (other than such a group of
which the Company is the common parent) or (B) will be required to pay the Taxes
of any other Person under Treasury Regulation ss.1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, agreement or otherwise; and (vi) neither the Company nor any of the
Company Subsidiaries is or will be required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company or a Company Subsidiary (nor does the
Company have any knowledge that the Internal Revenue Service has proposed any
such adjustment or change of accounting method). There are no requests for
rulings or determinations in respect of any Tax or Tax matter pending between
the Company or any of the Company Subsidiaries and any Tax Authority.
SECTION 4.10 Benefit Plans; ERISA Compliance; Excess Parachute Payments.
(a) Section 4.10 of the Company Disclosure Letter contains a true and
------------
complete list of each "employee benefit plan" (within the meaning of Section
3(3) of ERISA), stock purchase, stock option, severance, employment, change-in-
control, fringe benefit, collective bargaining, unemployment compensation,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including, without limitation, any funding mechanism therefor now in
effect or required in the future as a result of any Transaction, including the
Offer or the Merger or otherwise), whether formal or informal, oral or written,
legally binding or not, under which any employee or former employee of the
Company or the Company Subsidiaries or any of their respective ERISA Affiliates
has any present or future right to benefits or under which the Company or the
Company Subsidiaries or any of their respective ERISA Affiliates has any present
or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans."
-------------
(b) With respect to each Company Plan, the Company has delivered to Parent
a current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent IRS
determination or opinion letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company, the Company Subsidiaries or any of their ERISA
Affiliates concerning the extent or nature of the benefits provided under a
Company Plan; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information.
23
(c) (i) Each Company Plan has been established and complies and has been
administered in form and operation in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations; (ii) each Company Plan which is intended
to be qualified within the meaning of Code Section 401(a) is so qualified and
has received a favorable determination letter or, in the case of a prototype
plan, opinion letter from the IRS as to its qualification under Section 401(a)
of the Code and the tax-exempt status of any trust which forms a part of such
plan under Section 501(a) of the Code, which favorable determination letter or,
in the case of a prototype plan, opinion letter covers all amendments to the
plan for which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired, and nothing has
occurred, whether by action or failure to act, that could reasonably be expected
to cause the loss of such qualification; (iii) no event has occurred and no
condition exists that would subject the Company or the Company Subsidiaries or
any of their respective ERISA Affiliates, to any tax, fine, Lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (iv) for each Company Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; (v) no "prohibited transaction"
(as such term is defined in ERISA Section 406 and Code Section 4975) has
occurred with respect to any Company Plan; (vi) no Company Plan provides retiree
welfare benefits (and none of the Company or any Company Subsidiaries has any
obligations to provide any retiree welfare benefits) except, in either case, to
the extent required by Section 4980B of the Code; and (vii) all awards, grants
or bonuses made pursuant to any Company Plan have been, or will be, fully
deductible to the Company or the Company Subsidiaries notwithstanding the
provisions of Section 162(m) of the Code and the regulations promulgated
thereunder.
(d) With respect to any Company Plan (or the assets thereof), (i) no
actions, suits or claims (other than routine claims for benefits in the ordinary
and usual course of business) are pending or threatened in writing, (ii) no
facts or circumstances exist that could give rise to any such actions, suits or
claims and (iii) none of the assets of any Company Plan are invested in employer
securities or employer real property.
(e) Except as set forth in Section 4.10 of the Company Disclosure Letter,
------------
no Company Plan exists that could result in the payment to any present or former
employee of the Company or the Company Subsidiaries or any of their respective
ERISA Affiliates of any money or other property or accelerate or provide any
other rights or benefits to any present or former employee of the Company or any
Company Subsidiary or any of their respective ERISA Affiliates as a result of
the Transactions, including the Offer and the Merger. None of the payments
contemplated by the Company Plans would, individually or in the aggregate,
constitute excess parachute payments (as defined in Section 280G of the Code
(without regard to subsection (b)(4) thereof)).
(f) None of the Company Plans is subject to Title IV of ERISA and none of
the Company Plans is a multiemployer plan (as defined in Section 3(37) of
ERISA).
SECTION 4.11 Litigation. Except as set forth in Section 4.11 of the Company
------------
Disclosure Letter, there are (i) no continuing Orders, to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets are bound or to
24
which any of their respective directors, officers, employees or agents, in such
capacities, is a party or by which any of their respective properties or assets
are bound, and (ii) no Proceedings pending and for which service of process has
been made against the Company or any Company Subsidiary or against any of their
respective directors, officers, employees or agents, in such capacities or, to
the knowledge of the Company, threatened or pending against the Company or any
Company Subsidiary, or against any of their respective directors, officers,
employees or agents, at law or in equity, or before or by any Governmental
Entity. There are no Proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary which may call into
question the validity or hinder the enforceability or performance of this
Agreement or any of the Transaction Agreements, and, to the knowledge of the
Company, there has occurred no event, and there does not exist any condition or
state of facts, on the basis of which any such claim may be asserted.
SECTION 4.12 Compliance with Applicable Laws.
(a) The business of the Company and each Company Subsidiary has been and
is being conducted in compliance in all material respects with all Applicable
Laws and Orders, including, without limitation, ERISA, all Applicable Laws and
Orders relating to antitrust or trade regulation, employment practices and
procedures and the health and safety of employees. Except as set forth in
Section 4.12(a) of the Company Disclosure Letter, none of the Company or the
---------------
Company Subsidiaries has, since December 31, 1997, been subject to any Order
with respect to any of the foregoing or received any notice, demand letter,
inquiry or formal complaint or claim with respect to any of the foregoing or the
enforcement of any of the foregoing, nor has the Company or any Company
Subsidiary been the subject of any criminal Proceedings or convicted of any
felony or misdemeanor.
(b) The Company and the Company Subsidiaries employ the number of full-
time and part-time employees as are indicated in Section 4.12(b) of the Company
---------------
Disclosure Letter. Except as set forth in Section 4.12(b) of the Company
---------------
Disclosure Letter: (i) none of the Company or any of the Company Subsidiaries is
delinquent in payments to any of its employees for any wages, salaries,
commissions, fees, bonuses or other direct compensation for any services
performed for it to the date hereof or amounts required to be reimbursed to such
employees; (ii) there are no charges of employment discrimination, retaliation,
or unfair labor practices or strikes, slowdowns, stoppages of work, or any other
concerted interference with normal operations existing, pending or, to the
knowledge of the Company, threatened against or involving the Company or any of
the Company Subsidiaries; and (iii) there are no claims or charges relating to
or alleging violations of any Applicable Laws and Orders, including, without
limitation, ERISA, all Applicable Laws and Orders relating to antitrust or trade
regulation, employment practices and procedures and the health and safety of
employees, existing, pending or, to the knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries nor, to the knowledge of
the Company, has there occurred any event nor does there exist any condition on
the basis of which any such claim is reasonably likely to be asserted.
SECTION 4.13 Contracts; Debt Instruments.
(a) Except as disclosed in Section 4.13(a) or 4.15(h) of the Company
--------------- -------
Disclosure Letter, there are no Material Contracts relating to the business of
the Company. Neither the
25
Company nor any of the Company Subsidiaries is in violation of or in default
under (nor does there exist any condition which with the passage of time or the
giving of notice or both would cause such a violation of or default under) any
Material Contract to which it is a party or by which it or any of its properties
or assets is bound, except for violations or defaults that have not and could
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect. Each Material Contract is in full force and
effect, and is a legal, valid and binding obligation of the Company or a Company
Subsidiary and, to the knowledge of the Company, each of the other parties
thereto, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity (regardless of whether considered in a
proceeding in equity or at law). No condition exists or event has occurred which
(whether with or without notice or lapse of time or both) would constitute a
default by the Company or a Company Subsidiary or, to the knowledge of the
Company, any other party thereto under any Material Contract or result (other
than due to consummation of the Offer or the Merger) in a right of termination
of any Material Contract.
(b) Set forth in Section 4.13(b) of the Company Disclosure Letter is (i) a
---------------
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any Indebtedness of the
Company or the Company Subsidiaries in an aggregate principal amount in excess
of $150,000 is outstanding or may be incurred, and (ii) the respective principal
amounts currently outstanding thereunder.
(c) Except as disclosed in Section 4.13(c) of the Company Disclosure
---------------
Letter, neither the Company nor any of the Company Subsidiaries has entered into
any Contract and there is no commitment, judgment, injunction, Order or decree
to which the Company or any Company Subsidiary is a party or subject to that has
or could reasonably be expected to have the effect of prohibiting or impairing
the conduct of business by the Company or any Company Subsidiary or any Contract
that may be terminable as a result of Parent's status as a competitor of any
party to such Contract or arrangement. Except as disclosed in Section 4.13(c) of
---------------
the Company Disclosure Letter, the Company and the Company Subsidiaries have not
entered into any Contract under which the Company or any Company Subsidiary is
restricted from selling, licensing or otherwise distributing any of their
respective technology or products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
SECTION 4.14 Company Rights Agreement. The Company has taken all necessary
action, including, without limitation, amending the Company Rights Agreement
with respect to all of the outstanding Company Rights, (a) to render the Company
Rights Agreement inapplicable to this Agreement, the Offer, the Merger and the
other Transactions (including the execution of the Stock Option and Tender
Agreements), (b) to ensure that in connection with the Merger, the Offer and the
Transactions that (i) Parent and Sub, or either of them, are not deemed to be an
Acquiring Person (as defined in the Company Rights Agreement) pursuant to the
Company Rights Agreement and (ii) no "Share Acquisition Date," "Section
11(a)(ii) Trigger Date" or "Section 13 Event" (as such terms are defined in the
Company Rights Agreement) occurs by reason of the execution and delivery of this
Agreement or the consummation of the Offer, the Merger or other Transactions
(including the execution of the Stock Option and Tender Agreements) and (c) so
that the Company will have no obligations under the Company Rights or
26
the Company Rights Agreement in connection with the Offer, the Merger or the
Transactions and the holders of Company Common Stock and the associated Company
Rights will have no rights under the Company Rights or the Company Rights
Agreement in connection with the Offer, the Merger or the Transactions
(including the execution of the Stock Option and Tender Agreements) (the "Rights
Plan Amendment"). The Company Rights Agreement, as so amended, has not been
further amended or modified. Copies of all such amendments to the Company Rights
Agreement have been and will be provided to Parent and its counsel for their
approval prior to the adoption of any such amendments.
SECTION 4.15 Intellectual Property.
(a) Section 4.15(a) of the Company Disclosure Letter is a complete and
---------------
accurate list of all Registered Intellectual Property Rights and specifies,
where applicable, the jurisdictions in which each such item of Registered
Intellectual Property Rights has been issued or registered.
(b) Section 4.15(b) of the Company Disclosure Letter is a complete and
---------------
accurate list (by name and version number) of all current products or service
offerings of the Company or any of the Company Subsidiaries. Such list set forth
in Section 4.15(b) of the Company Disclosure Letter, together with any products
---------------
or service offerings of the Company or any Company Subsidiary that have been
distributed or provided in the two year period preceding the date hereof or
which are intended to be distributed in the future or are under development are
referred to herein as the "Company Products".
----------------
(c) The Company and the Company Subsidiaries own, or are validly licensed
or otherwise have the enforceable right to use, all Material Intellectual
Property Rights that are currently used in the conduct of the business of the
Company and the Company Subsidiaries. The Company has sole and exclusive rights
(and is not contractually obligated to pay any compensation to any third party
in respect thereof) to the use of all the Material Intellectual Property Rights
or the material covered thereby in connection with the services or products in
respect of which the Material Intellectual Property Rights are being used.
Without limiting the foregoing: (i) the Company owns or has a license to use all
trade names, logos, common law and statutory trademarks and service marks used
in connection with the operation or conduct of the business of the Company and
the Company Subsidiaries, including the sale, distribution or provision of any
Company Products by the Company or the Company Subsidiaries and (ii) the Company
owns or has a license to use all copyrighted works that are Company Products and
used in connection with the operation or conduct of the business of the Company
and the Company Subsidiaries, including the sale, distribution or provision of
any Company Products by the Company or the Company Subsidiaries.
(d) No claims with respect to any Intellectual Property Rights owned or
used by the Company and the Company Subsidiaries have been asserted or are
threatened in writing by any Person, and to the knowledge of the Company there
is no basis for any Person to make any claim, (i) to the effect that the sale,
licensing or use of any of the Company Products as now manufactured, sold or
licensed or used or proposed for manufacture, use, sale or licensing by the
Company or any of the Company Subsidiaries infringes on any Intellectual
Property Rights of another Person, (ii) against the use by the Company or any of
the Company Subsidiaries of any Intellectual Property Rights of another Person,
(iii) challenging the ownership by the Company
27
or any of the Company Subsidiaries or the validity of any of Intellectual
Property Rights owned or used by the Company or any of the Company Subsidiaries,
or (iv) to the effect that the Company or any Company Subsidiary is engaged in
any unfair competition or trade practices under any jurisdiction, except claims
which have not had and could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. To the Company's knowledge,
there is no material unauthorized use, infringement or misappropriation of any
of the Intellectual Property Rights owned or used by the Company and the Company
Subsidiaries by any third party, including, without limitation, any employee or
former employee of the Company or any of the Company Subsidiaries, which has had
or could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No Intellectual Property Rights owned or used
by the Company and the Company Subsidiaries or Company Product is subject to any
Proceeding or outstanding Order restricting in any manner the use, licensing or
transfer thereof by the Company or any of the Company Subsidiaries or which may
affect the validity, enforceability or use of such Intellectual Property Rights,
except to the extent any such restriction has not had and could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(e) To the Company's knowledge and except as set forth in Section 4.15(e)
---------------
of the Company Disclosure Letter, each material item of Registered Intellectual
Property Rights is valid and subsisting, all necessary registration, maintenance
and renewal fees currently due in connection with such Registered Intellectual
Property Rights have been made and all necessary documents, recordations and
certificates in connection with such Registered Intellectual Property Rights
have been filed with the relevant patent, copyright, trademark or other
Governmental Entity, as the case may be, for the purposes of maintaining such
Registered Intellectual Property Rights in the ordinary and usual course of the
Company's or any Company Subsidiary's business.
(f) Except as set forth in Section 4.15(f) of the Company Disclosure
---------------
Letter, neither the Company nor any Company Subsidiary has knowingly permitted
the Company's rights in any Material Intellectual Property Rights to lapse or
enter the public domain.
(g) Section 4.15(g) of the Company Disclosure Letter lists all Material
---------------
Contracts to which the Company or any Company Subsidiary is a party: (i) with
respect to Company Intellectual Property Rights licensed or transferred to any
third party (other than end-user licenses in the ordinary and usual course of
business); or (ii) pursuant to which a third party has licensed or transferred
any Material Intellectual Property Rights to the Company or any Company
Subsidiary (other than end-user licenses in the ordinary and usual course of
business). Except as set forth in Section 4.15(g) of the Company Disclosure
---------------
Letter, all Material Contracts relating to either (i) the Company Intellectual
Property Rights or (ii) Intellectual Property Rights of a third party licensed
to the Company or any Company Subsidiary, are in full force and effect. Except
as set forth in Section 4.15(g) of the Company Disclosure Letter, the
---------------
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to a loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Lien (other than Permitted Liens) upon
any of the properties or assets of the Company or any Company
28
Subsidiary under such Material Contracts. To the Company's knowledge, it and
each of its Subsidiaries is in compliance with, and has not materially breached
any term of any such Material Contracts and, to the knowledge of Company, all
other parties to such Material Contracts are in compliance with, and have not
materially breached any term of, such Material Contracts. Except with respect to
the nontransferable Contracts listed in Section 4.15(g) of the Company
---------------
Disclosure Letter, following the Closing Date, the Surviving Corporation will be
permitted to exercise all of the Company's rights under such Contracts to the
same extent the Company and the Company Subsidiaries would have been able to had
the Transactions not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments that the Company
would otherwise be required to pay. Neither this Agreement nor the Transactions,
including the assignment to Parent or Sub by operation of law or otherwise of
any Contracts to which any Company Subsidiary is a party, will result in (i)
either Parent's or the Sub's granting to any third party any right to or with
respect to any Material Intellectual Property Rights owned by, or licensed to,
either of them, (ii) either Parent or Sub being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses, or (iii) either Parent or Sub being obligated to pay any
royalties or other material amounts to any third party in excess of those
otherwise payable by the Company or any of its Subsidiaries.
(h) The Company and each of its Subsidiaries have taken reasonable steps
under the relevant circumstances to protect their respective rights in the
confidential information and trade secrets that they wish to protect or any
trade secrets or confidential information of third parties provided to the
Company or any of the Company Subsidiaries.
(i) The Company and each Company Subsidiary have received Valid Consents
(as defined below) from all Persons who have provided personal information,
which are sufficient to give the Company or any Company Subsidiary the right to
use such personal information for the purposes of conducting the Company's or
any Company Subsidiary's current activities, and the Company's or any Company
Subsidiary's future activities to the extent such future activities are already
planned. For the purposes of this Section 4.15(i), "Valid Consents" shall mean
--------------- --------------
consents obtained from persons aged 18 and over, using only the Company's "True-
Opt-In" or double opt-in method by which the persons providing personal
information to the Company or any Company Subsidiary have both (a) indicated
their consent by checking a box which signifies his or her desire to have his or
her personal information registered with the site and used by the Company or any
Company Subsidiary, and (b) thereafter responded to a confirmatory e-mail
message to signify his or her desire to have his or her personal information
registered with the site and used by the Company or any Company Subsidiary. To
the knowledge of the Company and each Company Subsidiary, the Company and its
Subsidiaries have not used any personal information without or beyond the scope
of a Valid Consent. The Company and each Company Subsidiary have placed all
personal information relating to Persons who have signified that they do not
grant or later revoke a Valid Consent in an unsubscribed archive file where such
data is stored but not used by the Company or any Company Subsidiary. The
Company and each Company Subsidiary have not collected and do not maintain any
personal information about persons outside the United States in violation of any
Applicable Law.
(j) Except as disclosed in Section 4.15(j) of the Company Disclosure
---------------
Letter, all personnel, including, without limitation, employees, agents,
consultants and contractors, who
29
have contributed to or participated in any material respect in the conception
and development of the Company's Intellectual Property have executed
nondisclosure agreements in the form set forth in Section 4.15(j) of the Company
---------------
Disclosure Letter and either (i) have been a party to a "work-for-hire"
arrangement or agreements with the Company or a Company Subsidiary in accordance
with Applicable Law that has accorded the Company or any Company Subsidiary
full, effective, exclusive and original ownership of all tangible and intangible
property thereby arising, or (ii) have executed appropriate instruments of
assignment in favor of the Company or any Company Subsidiary as assignee that
have conveyed to the Company or any Company Subsidiary effective and exclusive
ownership of all tangible and intangible property thereby arising.
(k) The Company and the Company Subsidiaries use commercially reasonable
efforts to regularly scan its software programs and the Material Intellectual
Property with "best-in-class" virus detection software. As of the date hereof,
to the Company's knowledge, the Company's software programs and other Material
Intellectual Property Rights of the Company contain no Viruses. For the purposes
of this Agreement, "Virus" means any computer code intentionally designed to
-----
disrupt, disable or harm in any manner the operation of any software or
hardware. None of the foregoing contains any worm, bomb, backdoor, clock, timer
or other disabling device code, design or routine which causes the software to
be erased, inoperable or otherwise incapable of being used, either automatically
or upon command by any party.
SECTION 4.16 Takeover Laws. The Company's Board of Directors has taken all
action necessary to ensure that Section 203 of the DGCL will not impose any
additional procedural, voting, approval, fairness or other restrictions on the
timely consummation of the Transactions or restrict, impair or delay the ability
of Parent to engage in any transaction with the Company or to vote or otherwise
exercise all rights as a stockholder of the Company. No other "fair price,"
"moratorium," "control share acquisition" or other anti-takeover statute or
regulation of any Governmental Entity (together with Section 203 of the DGCL,
each individually referred to as a "Takeover Statute") is applicable to the
----------------
Company or the Transactions.
SECTION 4.17 Affiliate Transactions. There are no loans, leases or other
Contracts between the Company or any of the Company Subsidiaries and any present
or former stockholder, director or officer thereof or any member of such
officer's, director's or stockholder's family, or any Person controlled by such
officer, director or stockholder or his or her family, including, without
limitation, any transaction that would be disclosable pursuant to Item 404 of
SEC Regulation S-K. No director or officer of the Company or any of the Company
Subsidiaries nor any of their respective spouses or family members, owns
directly or indirectly on an individual or joint basis any interest in, or
serves as an officer or director or in another similar capacity of, any supplier
or other independent contractor of the Company or any of the Company
Subsidiaries, or any Person that has a Contract with the Company or any of the
Company Subsidiaries.
SECTION 4.18 Real Property. (a) Neither the Company nor any Company
Subsidiary owns any real property. The Company and each Company Subsidiary has
valid leasehold interests in all real properties used or occupied by them,
except for such as are no longer used or useful in the conduct of its businesses
or as have been disposed of in the ordinary and usual course of business and
except for encumbrances or impediments that, in the aggregate, do not
30
and will not materially interfere with its ability to conduct its business as
currently conducted. Neither the Company nor any Company Subsidiary has an
option to purchase any real property. All of the real property leased by the
Company and each of the Company Subsidiaries is identified in Section 4.18(a) of
---------------
the Company Disclosure Letter (herein referred to as the "Company Leased Real
-------------------
Property").
--------
(b) Status of Leases. All leases of the Company Leased Real Property are
identified in Section 4.18(b) of the Company Disclosure Letter, and true and
---------------
complete copies thereof have been delivered to Parent. Each of said leases has
been duly authorized and executed by the Company or the Company Subsidiary party
thereto, is in full force and effect and constitutes the legal, valid and
binding obligation of the Company or the Company Subsidiary party thereto, and
is enforceable in accordance with its respective terms. The Company or the
Company Subsidiary party thereto has not received notice of any default under
any of said leases, nor has any event occurred which, with notice or the passage
of time, or both, would give rise to such a default. To the knowledge of the
Company, the other party to each of said leases is not in default under any of
said leases and there is no event which, with notice or the passage of time, or
both, would give rise to such a default.
(c) Condition of Real Property. Except as set forth in Section 4.18(c) of
---------------
the Company Disclosure Letter, all premises constituting a part of the Company
Leased Real Property are in good operating condition and repair, have been well
maintained and there are no material defects in the physical condition of any
land, buildings or improvements constituting part of the Company Leased Real
Property.
SECTION 4.19 Insurance. No notice of cancellation or termination has been
received by the Company or any Company Subsidiary with respect to any insurance
policy. The Company and each Company Subsidiary carry insurance in amounts and
types of coverage which are adequate and customary in the industry and against
risks and losses which are usually insured against by Persons holding or
operating similar properties and similar businesses. No claims have been
asserted by the Company or any Company Subsidiary under any of the insurance
policies of the Company or any Company Subsidiary or relating to their
properties, assets or operations. Each such insurance policy shall continue to
be in full force and effect following consummation of the Transactions.
SECTION 4.20 Compensation. Section 4.20 of the Company Disclosure Letter
------------
constitutes a full and complete list of each director, officer or employee of
the Company or any Company Subsidiary whose total compensation from the Company
or the Company Subsidiaries on an annualized basis exceeds $100,000 specifying
their names and job designations, the total compensation paid or payable, the
basis of such compensation, whether fixed or commission or a combination
thereof, and their current rate of pay. Except as otherwise disclosed in Section
-------
4.20 of the Company Disclosure Letter, since December 31, 2000 there has been no
----
material change in compensation, by means of wages, salaries, bonuses,
gratuities or otherwise, to any such director, officer or employee of the
Company or any Company Subsidiary or any change in compensation, either material
in amount or other than in the ordinary and usual course of business, to any
other director, officer or employee of the Company or any Company Subsidiary.
31
SECTION 4.21 Privacy. The Company and each Company Subsidiary uses, and since
December 31, 1999 has always used, commercially reasonable efforts to comply
with its then-current privacy policy, including, without limitation, those
posted on Company's and each Company Subsidiary's web site(s). The Company and
each Company Subsidiary has conducted their respective businesses and used
commercially reasonable efforts to maintain its data at all times in accordance
with (i) the standards promulgated by the Online Privacy Alliance, (ii) the
standards promulgated by the Direct Marketing Association, and (iii) all
Applicable Laws, including, without limitation, those relating to the use of
information collected from or about consumers. The Company and each Company
Subsidiary are, and have always been, in compliance with their respective
customers' privacy policies, when required to do so by Contract.
SECTION 4.22 Receivables. Except for Receivables (as defined below) that are
reserved for and properly reflected on the Financial Statements, all receivables
of the Company and the Company Subsidiaries that are reflected on the most
recently filed Company SEC Documents as of the Closing Date (collectively, the
"Receivables") represent or will represent valid obligations arising from
-----------
transactions actually made or services actually performed in the ordinary and
usual course of business. Subject to such reserves and offsets for offsetting
current liability balances for the same customer, each of the Receivables either
has been collected in full, or will be collected in full, without any discount,
within 90 days after the day at which it first becomes due and payable in full.
There is no contest, claim or right of set-off, other than returns in the
ordinary and usual course of business, under any Contract with any obligor of
any Receivables relating to the amount or validity of such Receivables.
SECTION 4.23 Copies of Certain Documents. The Company has previously made
available to the Parent true and complete copies of: (i) all Contracts entered
into by the Company or any Company Subsidiary, if any, providing for any
acquisition or disposition of any businesses or products of any Person or the
Company or any Company Subsidiary; and (ii) a complete list of all investments
of the Company and the Company Subsidiaries, if any, in marketable or other
securities (whether debt or equity) for investments made in the twelve months
prior to the date hereof.
SECTION 4.24 Underlying Documents. All documents listed or described in the
Company Disclosure Letter referred to in this Agreement have previously been
furnished or made available to Parent or its representatives.
SECTION 4.25 Brokers; Fees and Expenses.
(a) No broker, investment banker, financial advisor or other Person, other
than Xxxxxxxxx Xxxxxxxx, Inc., the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger and or any
other Transaction based upon arrangements made by or on behalf of the Company.
The amount of the fees of the Company's counsel, accountants and financial
advisors which are payable in connection with the Transactions and the estimated
amount of all other fees and expenses incurred and to be incurred by the Company
in connection with the Offer, the Merger and the other Transactions are set
forth and itemized in Section 4.25 of the Company Disclosure Letter. The Company
------------
has furnished to Parent a true and
32
complete copy of all Contracts between the Company and Xxxxxxxxx Xxxxxxxx, Inc.
relating to the Offer, the Merger and the other Transactions.
ARTICLE V
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and warrant to the Company
as follows:
SECTION 5.01 Organization, Standing and Power.
(a) Each of Parent and Sub is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has all
requisite corporate power and authority to conduct its businesses as presently
conducted, other than such Permits the lack of which, individually or in the
aggregate, has not had and could not reasonably be expected to have a Parent
Material Adverse Effect.
SECTION 5.02 Sub. Sub is a wholly owned Subsidiary of Parent and, since the
date of its incorporation, has not carried on any business or conducted any
operations other than the execution of the Transaction Agreements to which it is
a party, the performance of its obligations hereunder and thereunder and matters
ancillary thereto.
SECTION 5.03 Financing. Parent has or has available to it, and will make
available to Sub, all funds necessary to consummate all the Transactions and pay
the related fees and expenses of Parent and Sub.
SECTION 5.04 Ownership of Company Common Stock. Except for the transactions
contemplated by the Stock Option and Tender Agreements, as of the date of this
Agreement, neither Parent nor Sub beneficially owns any Company Common Stock.
SECTION 5.05 Authorization; Validity of Agreement; Necessary Action. Each
of Parent and Sub has full corporate power and authority to execute and deliver
each Transaction Agreement to which it is a party and each agreement, document
and instrument to be executed and delivered by or on behalf of Parent and/or
Sub, as the case may be, pursuant to or in connection with the Transaction
Agreements and to consummate the Transactions. The Board of Directors of Sub
(the "Sub Board") has adopted a resolution approving this Agreement. The
---------
execution, delivery and performance by Parent and Sub of this Agreement and the
Transaction Agreements to which either is a party and the consummation of the
Transactions have been duly authorized by the Board of Directors of Parent (the
"Parent Board") and the Sub Board and by Parent as the sole stockholder of Sub
------------
and, except as set forth in the Section 5.05 of the Parent Disclosure Letter, no
------------
other corporate action on the part of Parent or Sub or any other Person is
necessary to authorize the execution and delivery by Parent and Sub of this
Agreement, any Transaction Agreement or the consummation of the Transactions.
This Agreement, assuming due and valid authorization, execution and delivery
thereof by the Company, constitutes, and when executed and delivered by the
Parent and/or Sub, as the case may be, each other Transaction Agreement will
constitute, legal, valid and binding obligations of each of Parent and Sub, as
the case may be, enforceable against each of them in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium
33
or other similar laws affecting the enforcement of creditors' rights generally
and subject to general principles of equity.
SECTION 5.06 No Conflicts; Consents. The execution and delivery by each of
Parent and Sub of each Transaction Agreement to which it is a party, do not, and
the consummation of the Offer, the Merger and the other Transactions and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under any provision of (i) the charter or organizational documents of
Parent or Sub, (ii) any material Contract to which Parent or Sub is a party or
by which any of their respective properties or assets is bound or (iii) subject
to the filings and other matters referred to in the following sentence, any
Order or Applicable Law applicable to Parent or Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
------------ -----
any such items that, individually or in the aggregate, have not had and could
not reasonably be expected to have a Parent Material Adverse Effect. No Consent
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Parent or Sub in
connection with the execution, delivery and performance of any Transaction
Agreement to which Parent or Sub is a party or the consummation of the
Transactions, other than (A) compliance with and filings under the HSR Act, (B)
the filing with the SEC of (x) the Offer Documents and (y) such reports under
Sections 13 and 16 of the Exchange Act as may be required in connection with
this Agreement and the other Transaction Agreements, the Offer, the Merger and
the other Transactions, (C) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (D) such filings as may be required
in connection with the taxes described in Section 7.08 and (E) such other items
------------
as are set forth in Section 5.06 of the Parent Disclosure Letter.
------------
SECTION 5.07 Information Supplied. None of the information supplied or to
be supplied in writing by Parent or Sub for inclusion or incorporation by
reference in (i) Offer Documents or the Schedule 14D-9 will, at the time such
document is filed with the SEC, at any time it is amended or supplemented or at
the time it is first published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, or (ii)
the Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, 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 are made, not misleading. The Offer
Documents will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 5.08 Brokers. Neither Parent nor Sub has entered into any contract,
agreement, arrangement or understanding with any Person which may result in the
obligation of Parent or Sub to pay any finder's fees, brokerage or agent's
commission or other like payments in connection with the negotiations leading to
the Transaction Agreements or consummation of the Transactions. Parent is not
aware of any claim for payment of any finder's fees, brokerage or
34
agent's commissions or other like payments against Parent or Sub in connection
with the negotiations leading to the Transaction Agreements or consummation of
the Transactions.
SECTION 5.09 Litigation. As of the date of this Agreement, there are no
Proceedings pending or, to the knowledge of Parent, threatened against Parent or
Sub which may call into question the validity or hinder the enforceability or
performance of this Agreement or any of the Transaction Agreements.
ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01 Conduct of Business.
(a) Conduct of Business by the Company. Except for matters (i) expressly
permitted by the Transaction Agreements, (ii) specifically identified in Section
-------
6.01 of the Company Disclosure Letter, or (iii) taken with Parent's prior
----
written consent, from the date of this Agreement to the Effective Time the
Company shall, and shall cause each Company Subsidiary to, conduct its
operations in the ordinary and usual course of business and use its commercially
reasonable efforts to preserve intact its current business organization, assets
and properties and keep available the services of its present officers and
employees and maintain its existing relationships with customers, suppliers,
vendors, licensors, licensees, distributors and agents and others having
business dealings with them. In addition, and without limiting the generality of
the foregoing, except for matters expressly permitted by this Agreement, from
the date of this Agreement to the Effective Time, the Company shall not, and
shall not permit any Company Subsidiary to, do any of the following without the
prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (C)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities
or (D) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization of the
Company or any of the Company Subsidiaries;
(ii) authorize for issuance, issue, deliver, sell or grant (A) any
shares of its capital stock, (B) any Voting Company Debt or other voting
securities, (C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, voting securities
or convertible or exchangeable securities or (D) any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock-based
performance units, other than the issuance of Company Common Stock under
the ESPP in accordance with this Agreement or upon the exercise of Company
Employee Stock
35
Options or Company Warrants outstanding on the date of this Agreement and
in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or
by any other manner, any business or any Person or division thereof or (B)
any assets outside the ordinary and usual course of business;
(v) (A) grant to any present or former employee, officer or
director of the Company or any Company Subsidiary any increase in
compensation or fringe benefits, except for increases in salary for current
non-officer employees in the ordinary and usual course of business, (B)
grant to any present or former employee, officer or director of the Company
or any Company Subsidiary any increase in severance or termination pay, (C)
other than entering into employment agreements with employees of the
Company approved in advance by Parent in the ordinary and usual course of
business, enter into or amend any employment, consulting, indemnification,
severance or termination agreement with any such present or former
employee, officer or director, (D) establish, adopt, enter into or amend in
any material respect any Company Plan, (E) except as permitted or required
under Section 7.04 or Section 7.05, take any action to accelerate any
------------ ------------
rights or benefits, or make any material determinations not in the ordinary
and usual course of business, under any Company Plan, (F) loan or advance
money or other property to any present or former employees, officers or
directors of the Company or (G) except as permitted or required under
Section 7.04 or Section 7.05, grant any new, or amend any existing, Company
------------ ------------
Employee Stock Option or enter into any agreement under which any Company
Employee Stock Option would be required to be issued;
(vi) make any change in accounting methods, principles or practices
affecting the reported consolidated assets, liabilities or results of
operations of the Company, except insofar as may have been required by a
change in GAAP;
(vii) sell, lease, license or otherwise dispose of or permit to
become subject to any Lien, other than a Permitted Lien, any properties or
assets, tangible or intangible;
(viii) (A) incur any Indebtedness or guarantee any Indebtedness of
another Person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any Company
Subsidiary, guarantee any debt securities of another Person, enter into any
"keep well," support or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary and usual course of business, or (B) make any
loans, advances or capital contributions to, or investments in, any other
Person, other than to or in the Company or any direct or indirect wholly
owned subsidiary of the Company or to customers of the Company or a Company
Subsidiary in the ordinary and usual course of business;
36
(ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $150,000 or, in the
aggregate, are in excess of $500,000;
(x) make any Tax election or settle or compromise any Tax
liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
and usual course of business or in accordance with their terms, of liabilities
reflected or reserved against in the most recent consolidated financial
statements of the Company included in the Filed SEC Documents or incurred in the
ordinary and usual course of business, (B) cancel any material Indebtedness
(individually or in the aggregate) or waive any claims or rights of substantial
value or (C) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
Company Subsidiary is a party;
(xii) (A) amend any Material Contract or Contract providing for
payments or otherwise involving amounts in excess of $150,000 or, except in
the ordinary and usual course of business, enter into any Material
Contract, (B) waive, release or assign any material right or claim, or (C)
license any Material Intellectual Property Right to or from any third
party;
(xiii) initiate, compromise or settle any Proceeding;
(xiv) close any facility or office; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit any Company
Subsi diary to, take any action that would, or that could reasonably be expected
to, result in (i) any of the representations and warranties of the Company set
forth in any Transaction Agreement becoming untrue or (ii) any condition to the
Offer set forth in Exhibit A or any condition to the Merger set forth in Article
--------- -------
VIII not being satisfied.
----
(c) Advice of Changes.
(i) The Company shall promptly advise Parent orally and in writing
of any change or event having, or which, insofar as can reasonably be
foreseen, would have, a Company Material Adverse Effect.
(ii) After the date hereof, the Company shall have the continuing
obligation promptly to inform Parent in writing, and shall use its
reasonable best efforts to prevent, or promptly remedy (i) any matter
hereafter arising or discovered which would have been required to be
set forth or described in the Company Disclosure Letter or would have
been required to be taken as an exception to any representation or
warranty of the Company in order for the representations and warranties
of the Company to be true and correct at and as of the times such
representations and warranties are required to be true and correct in
accordance with this Agreement or (ii) the failure by it to comply with
or
37
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; provided,
--------
however, that no such notification supplied to Parent shall be deemed to
-------
amend or supplement the Company Disclosure Letter or to correct or cure any
breach of any representations, warranties, covenants, agreements or
conditions of the Company made under any Transaction Agreement.
SECTION 6.02 No Solicitation.
(a) From the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, the Company and the Company
Subsidiaries shall not (and the Company will not permit any of its or any of its
Company Subsidiaries' officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its Subsidiaries to), directly or indirectly, (i) solicit, encourage,
engage in discussions or negotiate with any Person (whether such discussions or
negotiations are initiated by the Company or otherwise) or take any other action
intended or designed to facilitate any inquiry or effort of any Person (other
than Parent) relating to any possible acquisition of the Company (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of its capital stock or assets (with any such efforts by any
such Person, including a firm proposal to make such an acquisition, to be
referred to as an "Alternative Acquisition"), (ii) provide information with
-----------------------
respect to the Company to any Person, other than Parent, relating to a possible
Alternative Acquisition by any Person, other than Parent, (iii) enter into an
agreement with any Person, other than Parent, providing for a possible
Alternative Acquisition, or (iv) make or authorize any statement, recommendation
or solicitation in support of any possible Alternative Acquisition by any
Person, other than by Parent. Notwithstanding the foregoing, prior to the
acceptance for payment of Company Common Stock pursuant to, and subject to the
conditions of, the Offer, the Company Board (or any committee thereof) may, to
the extent required by the fiduciary obligations of the Company Board under
Delaware law, as determined in good faith by the Company Board (or any committee
thereof), in response to a proposal for an Alternative Acquisition ("Alternative
-----------
Acquisition Proposal") that the Company Board (or any committee thereof)
--------------------
determines, in good faith after consultation with independent counsel and an
independent financial advisor, is or is reasonably likely to result in a
Superior Company Proposal (as defined in Section 6.02(e)), that was not
----------------
solicited by the Company and that did not otherwise result from a breach of this
Section 6.02(a) and subject to providing prior written notice of its decision to
---------------
take such action to Parent, (x) furnish information with respect to the Company
to the Person making such Alternative Acquisition Proposal and its
representatives pursuant to a confidentiality agreement with terms not
materially more favorable to the Person making the Alternative Acquisition
Proposal than those applicable to Parent under the Confidentiality Agreement and
(y) participate in discussions and negotiations with such Person and its
representatives to the extent required by the fiduciary duties of the Company
Board regarding such Alternative Acquisition Proposal. The Company shall, and
shall cause its representatives to, cease immediately all discussions and
negotiations that may have occurred prior to the date of this Agreement
regarding any proposal that constitutes, or may reasonably be expected to lead
to, an Alternative Acquisition Proposal. For purposes of this Section 6.02 and
-------------
Section 9.02(b)(ii), the term "Person" shall include any "group" as defined in
-------------------
Section 13(a)(3) of the Exchange Act. Without limiting the foregoing, it is
----------------
understood that any violation of the restrictions set forth in this Section 6.02
------------
by any director,
38
officer or employee of the Company or any of its subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative of the
Company or any Company Subsidiary shall be deemed to be a breach of this Section
-------
6.02 by the Company.
----
(b) Neither the Company Board nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Sub, the approval or recommendation by the Company Board or any such committee
of this Agreement, the Offer or the Merger, (ii) approve or cause or permit the
Company to enter into any letter of intent, agreement in principle, definitive
agreement or similar agreement constituting or relating to, or which is intended
to or is reasonably likely to lead to any Alternative Acquisition Proposal,
(iii) approve or recommend, or propose to approve or recommend, any Alternative
Acquisition Proposal or (iv) agree or resolve to take actions set forth in
clauses (i), (ii) or (iii) of this sentence. Notwithstanding the foregoing, if,
----------- ---- -----
during the period prior to the acceptance for payment of the Company Common
Stock pursuant to the Offer, the Company Board receives a Superior Company
Proposal and the Company Board determines, in good faith after consultation with
independent counsel, that it is necessary to do so in order to comply with its
fiduciary obligations under Delaware law, the Company Board may, during such
period, in response to a Superior Company Proposal that was unsolicited and did
not otherwise result from a breach of Section 6.02(a), withdraw or modify its
---------------
approval or recommendation of the Offer, the Merger and this Agreement and, in
connection therewith, approve or recommend such Superior Company Proposal.
(c) The Company promptly, and in any event within 24 hours, shall advise
Parent orally and in writing of any Alternative Acquisition Proposal or any
inquiry with respect to or that could lead to any Alternative Acquisition
Proposal, the identity of the Person making any such Alternative Acquisition
Proposal or inquiry and the material terms of any such Alternative Acquisition
Proposal or inquiry. The Company shall (i) keep Parent reasonably informed of
the status, including any change to the details, of any such Alternative
Acquisition Proposal or inquiry and (ii) provide to Parent as soon as
practicable after receipt or delivery thereof with copies of all material
correspondence and other written material sent or provided to the Company from
any third party in connection with any Alternative Acquisition Proposal or sent
or provided by the Company to any third party in connection with any Alternative
Acquisition Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the Company from
------------
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board after consultation with independent counsel, failure so to
disclose could be inconsistent with its obligations under Applicable Law.
Notwithstanding the foregoing, except as set forth in Section 6.02(b), in no
---------------
event shall the Company Board or any committee thereof withdraw or modify, or
propose to withdraw or modify its position with respect to this Agreement, the
Offer or the Merger or adopt, approve or recommend, or propose to adopt, approve
or recommend any Alternative Acquisition Proposal.
(e) For purposes of this Agreement, "Superior Company Proposal" means any
-------------------------
proposal made by a third party to acquire all or substantially all the equity
securities or assets of the Company, or other transaction for the acquisition of
all or substantially all the equity securities or assets of the Company through
a tender or exchange offer, a merger, a
39
consolidation, a liquidation or dissolution, a recapitalization, a sale or a
joint venture, (i) that is not subject to a financing contingency, (ii) that is
on terms which the Company Board determines in its good faith judgment (after
consultation with an independent financial adviser, with only customary
qualifications, and independent legal counsel) to be superior for the holders of
the Company Common Stock, from a financial point of view, to the Offer and the
Merger, taking into account all the terms and conditions of such proposal and
this Agreement (including any proposal made by Parent to amend the terms of this
Agreement, the Offer and the Merger) taking into account the likelihood of
consummation in light of all financial, regulatory, legal and other aspects of
such proposal (including, without limitation, any antitrust or competition law
approvals or non-objections).
(f) The Company and the Company Board shall not (i) redeem the Company
Rights under the Company Rights Agreement, or (ii) waive or amend any provision
of the Company Rights Agreement, in any such case to permit or facilitate the
consummation of any Alternative Acquisition Proposal, unless this Agreement has
been terminated in accordance with its terms.
ARTICLE VII
Additional Agreements
SECTION 7.01 Preparation of Proxy Statement; Stockholders Meeting.
(a) If the approval of this Agreement by the Company's stockholders is
required by Applicable Law, the Company shall, as soon as practicable following
the expiration of the Offer, prepare in accordance with the rules and
regulations of the SEC and file with the SEC the Proxy Statement in preliminary
form, and each of the Company and Parent shall use its reasonable best efforts
to respond as promptly as practicable to any comments of the SEC with respect
thereto. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and shall supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement. If at any time prior to receipt
of Company Stockholder Approval there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
The Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) If the approval of this Agreement by the Company's stockholders is
required by Applicable Law, the Company shall, as soon as practicable following
the expiration of the Offer, duly call, give notice of, convene and hold the
Company Stockholders Meeting for the purpose of seeking Company Stockholder
Approval. The Company shall, through the Company Board, recommend to its
stockholders that they approve this Agreement and the Merger, except to the
extent that the Company Board shall have withdrawn or modified its approval or
recommendation of this Agreement, the Offer or the Merger as permitted by
Section 6.02(b). Notwithstanding the foregoing, if Sub or any other Subsidiary
---------------
of Parent shall acquire at least
40
90% of the outstanding shares of Company Common Stock, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a stockholders meeting in accordance with Section 253 of the DGCL.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by Sub
or any other Subsidiary of Parent to be voted in favor of the approval of this
Agreement and the Merger.
SECTION 7.02 Access to Information; Confidentiality.
(a) The Company shall, and shall cause each of the Company Subsidiaries
to, afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisers and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, Contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of the Company
Subsidiaries to, furnish promptly to Parent (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request. Without limiting the generality of the foregoing, the
Company shall, within two business days of request therefor, provide to Parent
the information described in Rule 14a-7(a)(2)(ii) under the Exchange Act and any
information to which a holder of Company Common Stock would be entitled under
Section 220 of the DGCL (assuming such holder met the requirements of such
section). All information exchanged pursuant to this Section 7.02 shall be
------------
subject to the Confidentiality Agreement and the Confidentiality Agreement shall
remain in full force and effect in accordance with its terms.
(b) Except as otherwise provided in the Confidentiality Agreement, prior
to the Effective Time and after any termination of this Agreement, each party
hereto will hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of Applicable Law, all confidential documents
and information concerning other parties hereto furnished to it or its
Affiliates in connection with the Transactions, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by such party, (ii) in the public domain through no fault of such party or
(iii) later lawfully acquired by such party from sources other than other
parties to this Agreement; provided that each party may disclose such
--------
information to its Parent and the Company shall be responsible for a breach of
this Section 7.02(b) by any of their respective officers, directors, employees,
accountants, counsel, consultants, representatives, advisors and agents.
officers, directors, employees, accountants, counsel, consultants,
representatives, advisors and agents in connection with the Transactions so long
as such party informs such Persons of the confidential nature of such
information and directs them to treat it confidentially. Each party shall
satisfy its obligation to hold any such information in confidence if it
exercises the same care with respect to such information as it would take to
preserve the confidentiality of its own similar information. If this Agreement
is terminated, each party will, and will use its best efforts to cause its
officers, directors, employees, accountants, counsel, consultants,
representatives, advisors and agents to, destroy or deliver to the other party,
upon request, all documents and other materials, and all copies thereof, that it
or its Affiliates obtained, or that were obtained on their behalf, from the
other party in connection with this Agreement and that are subject to such
confidence. Each of
41
Parent and the Company shall be responsible for a breach of this Section 7.02(b)
---------------
by any of their respective officers, directors, employees, accountants, counsel,
consultants, representatives, advisors and agents.
SECTION 7.03 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use their respective 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 consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all
reasonable steps as may be necessary to obtain any necessary approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity,
including, without limitation, under the HSR Act, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or any other Transaction Agreement or the
consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements. In connection with and without limiting
the foregoing, the Company and the Company Board shall (A) take all commercially
reasonable action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to any Transaction or this
Agreement or any other Transaction Agreement, and (B) if any state takeover
statute or similar statute or regulation becomes applicable to this Agreement or
any other Transaction Agreement, take all commercially reasonable action
necessary to ensure that the Offer, the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger and the other Transactions.
(b) Notwithstanding anything to the contrary in this Agreement, (i) the
Company shall not, without Parent's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters,
including, without limitation, covenants affecting business operating practices
(or allow its Subsidiaries to commit to any divestitures, licenses, hold
separate arrangements or similar matters), and the Company shall commit to, and
shall use its reasonable best efforts to effect (and shall cause its
Subsidiaries to commit to and use their reasonable best efforts to effect), any
such divestitures, licenses, hold separate arrangements or similar matters as
Parent shall request, but solely if such divestitures, licenses, hold separate
arrangements or similar matters are contingent on consummation of the Offer and
(ii) neither Parent nor any of its Subsidiaries shall be required to agree (with
respect to (A) Parent or its Subsidiaries or (B) the Company or its
Subsidiaries) to any divestitures, licenses, hold separate arrangements or
similar matters, including, without limitation, covenants affecting business
operating practices.
42
(c) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated by the
Transaction Agreements, including promptly furnishing the other with copies of
notice or other communications received by Parent or the Company, as the case
may be, or any of its Subsidiaries, from any Governmental Entity with respect to
Transactions.
SECTION 7.04 Company Employee Stock Options and Company Warrants.
(a) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Company
Option Plans) shall adopt, or shall cause to be adopted, such resolutions or
take, or cause to be taken, all such other actions as are required to adjust the
terms of all outstanding Company Employee Stock Options heretofore granted under
any Company Option Plan or otherwise, to provide that each Company Employee
Stock Option outstanding immediately prior to the Effective Time, to the extent
then vested and exercisable in accordance with its terms, shall be canceled as
of the Effective Time in exchange for a cash payment by the Company to be made
on the date following the Effective Time (or as soon as practicable thereafter)
of an amount equal to (i) the excess, if any, of (A) the price per share of
Company Common Stock to be paid pursuant to the Offer over (B) the exercise
price per share of Company Common Stock subject to such Company Employee Stock
Option, multiplied by (ii) the number of shares of Company Common Stock for
which such Company Employee Stock Option shall not theretofore have been
exercised. Any Company Employee Stock Option for which the calculation in the
preceding sentence results in an amount equal to zero or a negative amount shall
be canceled as of the Effective Time in exchange for a cash payment equal to
zero.
(b) As soon as practicable after the date of this Agreement, the Company
Board (or, if appropriate, the committee administering the Company 1999 Stock
Plan) shall adopt, or shall cause to be adopted, such resolutions or take, or
cause to be taken, all such other actions as are required to adjust the terms of
all outstanding Company Employee Stock Options heretofore granted under the
Company 1999 Stock Plan to provide that such options which are held by
individuals who are employed by the Company as of the Effective Time will become
fully vested as of the Effective Time to the extent that such Company Employee
Stock Options would have become vested in accordance with the provisions of
Section 12(c) of the Company 1999 Stock Plan had the optionholder's employment
with the Company been Constructively Terminated (as defined in the Company 1999
Stock Plan) as of the Effective Time. Any Company Employee Stock Options which
become vested pursuant to this paragraph (b) shall be canceled as of the
-------------
Effective Time in exchange for a cash payment by the Company in accordance with
the provisions of paragraph (a).
-------------
(c) Prior to the Effective Time, the Company Board (or, if appropriate,
any committee administering the Company Option Plans) shall take all actions as
are required to cause each Company Employee Stock Options which are not vested
as of the Effective Time to be cancelled as of the Effective Time.
(d) All amounts payable pursuant to this Section 7.04 shall be subject to
------------
any required withholding of Taxes and shall be paid without interest. The
Company shall use its reasonable best efforts to obtain all consents of the
holders of the Company Employee Stock Options as
43
shall be necessary to effectuate the foregoing. Notwithstanding anything to the
contrary contained in this Agreement, payment shall, at Parent's request, be
withheld in respect of any Company Employee Stock Option until all necessary
consents are obtained.
(e) The Company Board shall adopt, or shall cause to be adopted, such
resolutions or take such other actions as are required so that the Company
Option Plans shall terminate as of the Effective Time, and the provisions in any
other Company Plan providing for the issuance, transfer or grant of any capital
stock of the Company or any interest in respect of any capital stock of the
Company shall be deleted as of the Effective Time, and to ensure that following
the Effective Time no holder of a Company Employee Stock Option or any
participant in any Company Option Plan or other Company Plan shall have any
right thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
(f) The Company shall as soon as practicable but in no event later than
the date the Offer is commenced, provide to each holder of Company Warrants in a
form reasonably acceptable to Parent the notice contemplated by Section 8 of
each such holders' respective warrant agreement. All Company Warrants not
exercised prior to the Effective Time shall be terminated without consideration.
SECTION 7.05 Employee Stock Purchase Plan. The Company Board (or any
committee thereof) shall take such action as may be necessary or desirable in
the reasonable judgment of Parent under the Company's 1999 Employee Stock
Purchase Plan, as the same may be amended (the "ESPP"), to cause the ESPP to be
----
terminated effective with the Exercise Date occurring on June 30, 2001 pursuant
to Section 20 of the ESPP.
SECTION 7.06 Indemnification; D&O Insurance.
(a) Parent and Sub agree that all rights to indemnification for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors, officers or employees of the Company and the
Company Subsidiaries (each, an "Indemnified Party") as provided in their
-----------------
respective certificates of incorporation or by-laws or in any indemnification
agreement between the Company and any Indemnified Party as in effect immediately
prior to the date of this Agreement shall survive the Merger and shall continue
in full force and effect in accordance with their terms for a period of not less
than six years from the Effective Time.
(b) Parent shall cause to be maintained for a period of six years from the
Effective Time the Company's current D&O Insurance policy to the extent that it
provides coverage for events occurring prior to the Effective Time for all
persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium therefor would not be in excess of 200%
of the last annual premium paid prior to the date of this Agreement (such
amount, the "Maximum Premium"). Upon request by Parent, the Company shall use
---------------
its reasonable best efforts to extend coverage under the Company's D&O Insurance
by obtaining a six-year "tail" policy (provided that the lump sum payment to
purchase such coverage does not exceed three times the Maximum Premium) and such
"tail" policy shall satisfy Parent's obligations under this Section 7.06(b).
---------------
Parent's obligations under this Section 7.06(b) shall also be satisfied if
---------------
Parent's D&O Insurance provides (or is amended to provide) substantially similar
44
coverage for events occurring prior to the Effective Time for persons who are
directors and officers of the Company on the date of this Agreement. If the
Company's existing D&O Insurance expires, is terminated or canceled during such
six-year period or a "tail" policy cannot be purchased on the terms set forth
above and Parent cannot or determines not to satisfy its obligations under this
Section 7.06(b) pursuant to the preceding sentence, Parent shall use reasonable
---------------
best efforts to cause to be obtained as much D&O Insurance as can be obtained
for the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than the existing
D&O Insurance. The Company represents to Parent that the last annual premium
paid prior to the date of this Agreement is not greater than $639,045.
(c) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any Person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Surviving
Corporation assume the obligations set forth in this Section 7.06.
------------
(d) The provisions of this Section 7.06 are intended to be for the benefit
------------
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
SECTION 7.07 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the Offer, the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
Applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 7.08 Transfer Taxes. Either Sub or the Surviving Corporation
shall pay all Transfer Taxes, if any, and any penalties or interest with respect
to the Transfer Taxes, payable in connection with the consummation of the Offer
or the Merger, and all Stock Transfer Taxes, if any, and any penalties or
interest with respect to any such Stock Transfer Taxes. The Company acknowledges
that the amount of the Transfer Taxes payable with respect to any shares of
Company Common Stock may be withheld by Sub from the amount to be paid pursuant
to the Offer and the Merger with respect to such shares, unless the date on
which the beneficial owner of such shares acquired beneficial ownership thereof
is certified to Sub.
SECTION 7.09 Potential Litigation. The Company shall give Parent the
opportunity to participate fully in the conduct of the defense or the settlement
of any litigation against the Company and its directors relating to any
Transaction. No settlement of any such litigation shall be agreed to without
Parent's prior written consent.
SECTION 7.10 Other Actions by the Company and Parent. If requested by
Parent prior to the Effective Time, the Company Board shall take all necessary
action to terminate or redeem all of the outstanding Company Rights and to
terminate the Company Rights Agreement, effective immediately prior to the
Effective Time.
45
ARTICLE VIII
Conditions Precedent
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. If required by Applicable Law, the Company shall
have obtained Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof) applicable
to any of the Transactions under the HSR Act shall have been terminated or shall
have expired and any consents, approvals and filings under any foreign antitrust
law, the absence of which would prohibit the consummation of Merger, shall have
been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing or
imposing any conditions or limitations on the consummation of any of the
Transactions shall be in effect; provided, however, that each of the parties
-------- -------
shall have used its reasonable best efforts to prevent the entry of any such
injunction or other Order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Acceptance of Shares. Sub shall have accepted shares of Company Common
Stock for payment pursuant to the Offer.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after Company Stockholder
Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before September 30, 2001
(the "Outside Date"), unless the failure to consummate the Merger is the
------------
result of a breach of this Agreement by the party seeking to terminate this
Agreement; provided, however, that this Agreement may not be terminated
-------- -------
pursuant to this clause (i) if Sub has accepted shares of Company Common
Stock for payment pursuant to the Offer;
(ii) if any Governmental Entity issues an Order or takes any other
action permanently enjoining, restraining or otherwise prohibiting the
Merger and such Order or other action shall have become final and
nonappealable;
46
(iii) (A) Sub shall have failed to commence the Offer within ten
business days following the date of this Agreement or (B) the Offer shall
have terminated or expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the Offer;
provided, however, that the right to terminate this Agreement pursuant to
-------- -------
this clause (iii) shall not be available to any party whose failure to
------------
fulfill any of its obligations under this Agreement or the failure of whose
representations and warranties to be true results in the failure of any
such condition; or
(iv) if, upon a vote at a duly held stockholders meeting to obtain
Company Stockholder Approval, Company Stockholder Approval is not obtained.
(c) by Parent, if the Company breaches or fails to perform in any material
respect any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Exhibit A, and (ii) cannot be or
---------
has not been cured within 30 days after the giving of written notice to the
Company of such breach (provided that Parent is not then in material breach of
any representation, warranty or covenant contained in this Agreement); provided,
--------
however, that this Agreement may not be terminated pursuant to this clause (c)
------- ----------
if Sub has accepted shares of Company Common Stock for payment pursuant to the
Offer;
(d) by Parent:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent its approval or recommendation of
the Offer, the Merger or this Agreement or fails to recommend to the
Company's stockholders that they accept the Offer or give Company
Stockholder Approval, or the Company Board or any committee thereof
resolves to take any of the foregoing actions; or
(ii) if the Company Board fails to reaffirm publicly and
unconditionally its recommendation to the Company's stockholders that they
accept the Offer and give Company Stockholder Approval within 10 business
days of Parent's written request to do so (which request may be made at any
time following public disclosure of an Alternative Acquisition Proposal),
which public reaffirmation must also include the unconditional rejection of
such Alternative Acquisition Proposal;
(e) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer if, prior to the consummation of the
Offer, the Company Board shall have finally determined to approve, endorse or
recommend an Alternative Acquisition Proposal that constitutes a Superior
Company Proposal; provided, however, that the Company may not terminate this
-------- -------
Agreement pursuant to this Section 9.01(e) unless (i) the Company has complied
--------------
with all of its obligations under Section 6.02 in accordance with the terms
------------
thereof, (ii) at least five business days prior to terminating this Agreement
pursuant to this Section 9.01(e) the Company has provided Parent with written
---------------
notice advising Parent that the Company Board has received a Superior Company
Proposal that it intends to accept, specifying the material terms and conditions
of such Superior Company Proposal, and identifying the Person making such
Superior Company Proposal, (iii) the Company has caused its financial and legal
advisors to negotiate in good faith with Parent with respect to any attempt or
proposal by Parent to make
47
such adjustments in the financial terms of this Agreement that are equal or
superior to the financial terms of such Superior Company Proposal and the
Company and Parent have not agreed upon any such adjustment, and (iv) the
Company has paid to (or concurrently pays to) Parent the Termination Fee in
accordance with this Section 9.01(e) and Section 9.02.; or
--------------- --------------
(f) by the Company, if Parent or Sub breaches or fails to perform in any
material respect any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Article VIII and (ii) cannot be
------------
cured or has not been cured within 30 days after the giving of written notice to
Parent of such breach (provided that Company is not then in material breach of
any representation, warranty or covenant contained in this Agreement); provided,
--------
however, that this Agreement may not be terminated pursuant to this clause (f)
------- ----------
if Sub has accepted shares of Company Common Stock pursuant to the Offer.
SECTION 9.02 Effect of Termination; Fees and Expenses.
(a) In the event of termination of this Agreement by either the Company or
Parent as provided in Section 9.01, this Agreement shall forthwith become void
------------
and have no effect, without any liability or obligation on the part of Parent,
Sub or the Company, other than the last sentence of Section 7.02(a), this
---------------
Section 9.02 and Article X and except to the extent that such termination
------------ ---------
results from the breach by a party of any representation, warranty or covenant
set forth in this Agreement.
(b) The Company shall pay to Parent a fee in an amount equal to $4,500,000
(the "Termination Fee") if:
---------------
(i) Parent terminates this Agreement pursuant to Section 9.01(c) or
---------------
Section 9.01(d) or the Company terminates this Agreement pursuant to
---------------
Section 9.01(e); or
---------------
(ii) (A) after the date of this Agreement, any Person shall have made,
or proposed, communicated or disclosed in a manner which is or otherwise
becomes public prior to or during the pendency of the Offer (which shall
include being known by stockholders of the Company) an intention to make
an Alternative Acquisition Proposal, and such proposal shall not have been
withdrawn at least five business days prior to the scheduled expiration
date of the Offer;
(B) this Agreement is terminated pursuant to Sections 9.01(b)(i)
-------------------
or (b)(iii)(B); and
-----------
(C) within 12 months of such termination the Company enters into
a letter of intent or agreement in principle for an Alternative
Acquisition Proposal or a definitive agreement to consummate an
Alternative Acquisition Proposal, or the transactions contemplated by
an Alternative Acquisition Proposal are consummated.
(c) Parent shall pay to the Company the Termination Fee if the
Company terminates this Agreement pursuant to Section 9.01(f).
---------------
48
Except for any fee due because of a termination of this Agreement pursuant to
Section 9.01(c) (but not including a breach of Section 6.02) or Section 9.01(f),
--------------- ------------- ---------------
which shall be paid no later than one business day after the date of
termination, any fee due under this Section 9.02 shall be paid by wire transfer
------------
of same-day funds on the date of termination of this Agreement (except that in
the case of a payment pursuant to clause (ii) above such payment shall be made
-----------
on the date of execution of such letter of intent, agreement in principle or
definitive agreement or, if earlier, consummation of such transaction).
(d) Except as provided below, all fees and expenses incurred in connection
with the Merger and the other Transactions shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated; provided,
--------
however, that Parent and the Company shall share equally the filing fees in
-------
connection with the HSR Act and the filing fees in connection with the Offer
Documents.
(e) If the Company or Parent shall become obligated to pay the Termination
Fee pursuant to Section 9.02 (it being understood that such obligation shall
------------
arise only if this Agreement is validly terminated pursuant to Section 9.01),
-------------
such Termination Fee shall constitute the exclusive remedy for any breach by the
Company or Parent of any of their respective representations, warranties or
covenants contained in this Agreement.
SECTION 9.03 Amendment. This Agreement may be amended by the parties at
any time before or after receipt of Company Stockholder Approval; provided,
--------
however, that after receipt of Company Stockholder Approval, there shall be made
-------
no amendment that by law requires further approval by such stockholders without
the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 9.04 Extension; Waiver. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (iii) subject to the proviso of
Section 9.03, waive compliance with any of the agreements or conditions
------------
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 such rights.
SECTION 9.05 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 9.01, an amendment of this
------------
Agreement pursuant to Section 9.03 or an extension or waiver pursuant to Section
------------ -------
9.04 shall, in order to be effective, be in writing and require in the case of
----
Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
49
ARTICLE X
General Provisions
SECTION 10.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement contained in
-------------
any Transaction Agreement which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
United New Ventures
0000 Xxxx Xxxxxxxxx Xxxx
X.X. Xxx 00000
Xxx Xxxxx Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
50
(b) if to the Company, to
XxXxxxxx.xxx, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
SECTION 10.03 Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to 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".
SECTION 10.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 10.05 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. Delivery of an executed
counterpart of this Agreement by facsimile shall be effective to the fullest
extent permitted by applicable law.
SECTION 10.06 Entire Agreement; No Third-Party Beneficiaries. The
Transaction Agreements, the Company Disclosure Letter, the Parent Disclosure
Letter and all exhibits and schedules hereto and the Confidentiality Agreement,
taken together, (i) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among
51
the parties with respect to the Transactions and (ii) from and after the
Effective Time, Section 3.01(c)(i), Section 7.04, Section 7.05 and Section
------------------ ------------ ------------ -------
9.02(c) are not intended to confer upon any Person other than the parties hereto
-------
any rights or remedies.
SECTION 10.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, 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 Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 10.09 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of any Transaction 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 any Transaction Agreement and
to enforce specifically the terms and provisions of each Transaction Agreement
in the courts of the State of Delaware and of the United States of America
located in Wilmington, Delaware, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of the courts
of the State of Delaware and of the United States of America located in
Wilmington, Delaware in the event any dispute arises out of any Transaction
Agreement or any Transaction, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that it will not bring any action relating to any
Transaction Agreement or any Transaction in any court other than the courts of
the State of Delaware and of the United States of America located in Wilmington,
Delaware and (d) waives any right to trial by jury with respect to any action
related to or arising out of any Transaction Agreement or any Transaction.
52
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
UNITED NEWVENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
UNV ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx
Title: CEO
53
EXHIBIT A
Conditions of the Offer
Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Agreement and Plan of Merger (the "Agreement") of
---------
which this Exhibit A is a part. Notwithstanding any other term of the Offer or
this Agreement, Sub shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-l(c) under
the Exchange Act (relating to Sub's obligation to pay for or return tendered
shares of Company Common Stock promptly after the termination or withdrawal of
the Offer), to pay for any shares of Company Common Stock tendered pursuant to
the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer that number of shares of Company Common
Stock which would represent at least a majority of the Fully Diluted Shares (the
"Minimum Tender Condition") and (ii) the waiting period (and any extension
------------------------
thereof) applicable to the purchase of shares of Company Common Stock pursuant
to the Offer under the HSR Act shall have been terminated or shall have expired
and any consents, approvals and filings under any foreign antitrust law, the
absence of which would prohibit the purchase of all shares of Company Common
Stock tendered pursuant to the Offer, shall have been obtained or made prior to
the acceptance of shares of Company Common Stock pursuant to the Offer. The term
"Fully Diluted Shares" means all outstanding securities entitled generally to
--------------------
vote in the election of directors of the Company on a fully diluted basis, after
giving effect to the exercise, conversion or termination of all options,
warrants, rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, with the
consent of the Company or if, at any time on or after the date of this Agreement
and before the expiration of the Offer, any of the following conditions exists:
(a) there shall be threatened in writing, instituted or pending any
suit, action or proceeding by any Governmental Entity, (i) challenging the
acquisition by Parent or Sub of any Company Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or any other Transaction, or seeking to obtain from the Company, Parent or
Sub any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries, as a result of the
Offer, the Merger or any of the other Transactions, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any shares of Company Common Stock, including
the right to vote the Company Common Stock purchased by it on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company and the
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Company Subsidiaries, or (v) which otherwise is reasonably likely to have a
Parent Material Adverse Effect or a Company Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, Order or injunction shall be threatened, proposed, enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, or any consent or approval withheld with respect to
the Offer, the Merger or any of the other Transactions, by any Governmental
Entity that is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in paragraph (a) above;
(c) except as disclosed in the Filed Company SEC Documents or the
Company Disclosure Letter, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents there
shall have occurred any change, event, effect or development that,
individually or in the aggregate, has had or could reasonably be expected
to have, a Company Material Adverse Effect;
(d) the Company Board or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent its approval or recommendation of
the Offer and this Agreement or the Company Board or any committee thereof
shall have resolved to take any of the foregoing actions;
(e) the representations and warranties of Company contained in this
Agreement shall not have been true and correct in all respects as of the
date of this Agreement and on and as of the date of the expiration of the
Offer with the same force and effect as if made on or as of such date
(except for those representations and warranties that address matters only
as of a particular date, which representations and warranties shall have
been true and correct as of such particular date), except (A) for such
failures to be true and correct as would not, individually or in the
aggregate, have or could reasonably be expected to have a Company Material
Adverse Effect; provided, however, that such Company Material
-------- -------
Adverse Effect qualifier shall be inapplicable with respect to the
representations and warranties contained in Sections 4.03, 4.04, 4.05(i),
------------- ---- ----
4.06, 4.14, 4.15, 4.16 and 4.25, each of which individually shall have been
---- ---- ---- ---- ----
true and correct in all material respects as of the date of this Agreement
and shall be true and correct in all material respects on and as of the
date of the expiration of the Offer and (B) for changes contemplated by
this Agreement (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (x) all "Company Material
Adverse Effect" and materiality qualifications and other qualifications
based on the word "material" or similar phrases contained in such
representations and warranties shall be disregarded, and (y) any update of
or modification to the Company Disclosure Letter made or purported to have
been made after the date of this Agreement shall be disregarded).
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(g) this Agreement shall have been terminated in accordance with its
terms;
A-2
(h) any of the Stock Option and Tender Agreements shall not be in
full force and effect or any of the Principal Company Stockholders shall
have failed to perform in any material respect any obligation or to comply
in any material respect with any agreement or covenant to be performed or
complied with by them under any such agreement; or
(i) the Rights Plan Amendment shall not be in full force and effect;
which, in the reasonable judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including,
without limitation, any action or inaction by Parent or any of its Affiliates),
makes it inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
may be asserted by Sub or Parent regardless of the circumstances giving rise to
such condition or may be waived by Sub and Parent in whole or in part at any
time and from time to time in their sole discretion prior to the expiration of
the Offer. The failure by Parent, Sub or any other Affiliate of Parent at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time prior to the expiration of the Offer.
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