EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
DOUBLECLICK INC.,
NJ MERGER CORPORATION
and
NETGRAVITY, INC.
Dated as of July 12, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.........................................................2
SECTION 1.01 Certain Defined Terms...................................2
ARTICLE II THE MERGER.........................................................6
SECTION 2.01 The Merger..............................................6
SECTION 2.02 Closing.................................................6
SECTION 2.03 Effective Time..........................................6
SECTION 2.04 Effect of the Merger....................................6
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors
and Officers of Surviving Corporation...............6
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES................7
SECTION 3.01 Conversion of Shares....................................7
SECTION 3.02 Exchange of Shares Other than Treasury Shares...........8
SECTION 3.03 Stock Transfer Books...................................10
SECTION 3.04 No Fractional Share Certificates.......................10
SECTION 3.05 Options to Purchase Company Common Stock...............10
SECTION 3.06 Unvested Stock.........................................11
SECTION 3.07 Certain Adjustments....................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY.........................12
SECTION 4.01 Organization and Qualification; Subsidiaries...........13
SECTION 4.02 Certificate of Incorporation and Bylaws................13
SECTION 4.03 Capitalization.........................................13
SECTION 4.04 Authority Relative to This Agreement...................14
SECTION 4.05 No Conflict; Required Filings and Consents.............15
SECTION 4.06 Permits; Compliance with Laws..........................15
SECTION 4.07 SEC Filings; Financial Statements......................16
SECTION 4.08 Absence of Certain Changes or Events...................16
SECTION 4.09 Employee Benefit Plans; Labor Matters..................17
SECTION 4.10 Pooling; Certain Tax Matters...........................20
SECTION 4.11 Contracts..............................................20
SECTION 4.12 Litigation.............................................20
SECTION 4.13 Environmental Matters..................................21
SECTION 4.14 Intellectual Property..................................21
SECTION 4.15 Taxes..................................................23
SECTION 4.16 Insurance..............................................24
SECTION 4.17 Properties.............................................24
SECTION 4.18 Affiliates.............................................25
PAGE
SECTION 4.19 Opinion of Financial Advisor...........................25
SECTION 4.20 Brokers................................................25
SECTION 4.21 Certain Business Practices.............................25
SECTION 4.22 Section 203 of the DGCL Not Applicable.................26
SECTION 4.23 Business Activity Restriction..........................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT...........................26
SECTION 5.01 Organization and Qualification; Subsidiaries...........26
SECTION 5.02 Certificate of Incorporation and Bylaws................27
SECTION 5.03 Capitalization.........................................27
SECTION 5.04 Authority Relative to this Agreement...................28
SECTION 5.05 No Conflict; Required Filings and Consents.............28
SECTION 5.06 SEC Filings; Financial Statements......................29
SECTION 5.07 Pooling; Certain Tax Matters...........................29
SECTION 5.08 Opinion of Financial Advisor...........................30
SECTION 5.09 Brokers................................................30
SECTION 5.10 Affiliates.............................................30
ARTICLE VI COVENANTS.........................................................30
SECTION 6.01 Conduct of Business by Company Pending the Closing.....30
SECTION 6.02 Notices of Certain Events..............................33
SECTION 6.03 Access to Information; Confidentiality.................33
SECTION 6.04 No Solicitation of Transactions........................34
SECTION 6.05 Tax-Free Transaction; Pooling..........................35
SECTION 6.06 Control of Operations..................................35
SECTION 6.07 Further Action; Consents; Filings......................35
SECTION 6.08 Additional Reports.....................................36
SECTION 6.09 Tax Information........................................36
ARTICLE VII ADDITIONAL AGREEMENTS............................................36
SECTION 7.01 Registration Statement; Proxy Statement................36
SECTION 7.02 Stockholders'Meeting...................................38
SECTION 7.03 Affiliates.............................................39
SECTION 7.04 Directors'and Officers'Indemnification and Insurance...39
SECTION 7.05 No Shelf Registration..................................40
SECTION 7.06 Public Announcements...................................40
SECTION 7.07 NNM Listing............................................41
SECTION 7.08 Blue Sky...............................................41
SECTION 7.09 Employee Benefit Matters...............................41
PAGE
ARTICLE VIII CONDITIONS TO THE MERGER.........................................41
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger...................................41
SECTION 8.02 Conditions to the Obligations of Company................42
SECTION 8.03 Conditions to the Obligations of Parent.................43
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..................................44
SECTION 9.01 Termination.............................................44
SECTION 9.02 Effect of Termination...................................46
SECTION 9.03 Amendment...............................................46
SECTION 9.04 Waiver..................................................46
SECTION 9.05 Termination Fee; Expenses...............................46
ARTICLE X GENERAL PROVISIONS..................................................47
SECTION 10.01 Non-Survival of Representations and Warranties..........47
SECTION 10.02 Notices.................................................47
SECTION 10.03 Severability............................................48
SECTION 10.04 Assignment; Binding Effect; Benefit.....................49
SECTION 10.05 Incorporation of Exhibits...............................49
SECTION 10.06 Governing Law...........................................49
SECTION 10.07 Waiver of Jury Trial....................................49
SECTION 10.08 Headings; Interpretation................................50
SECTION 10.09 Counterparts............................................50
SECTION 10.10 Entire Agreement........................................50
ANNEXES
ANNEX A Form of Stockholder Agreement
ANNEX B Form of Company Affiliate Agreement
ANNEX C Form of Parent Affiliate Agreement
ANNEX D Form of Employment Agreement
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as
of July 12, 1999 (as amended, supplemented or otherwise modified from time to
time, this "AGREEMENT"), among DOUBLECLICK INC., a Delaware corporation
("PARENT"), NETGRAVITY, INC., a Delaware corporation ("COMPANY"), and NJ
MERGER CORPORATION, a Delaware corporation and a direct wholly owned
subsidiary of Parent ("MERGER SUB"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have
determined that it is advisable and in the best interests of their respective
companies and stockholders to enter into a business combination by means of
the merger of Merger Sub with and into Company (the "MERGER") and have
approved and adopted this Agreement;
WHEREAS, concurrently with the execution of this Agreement
and as an inducement to Parent to enter into this Agreement, certain
stockholders of Company have entered into a stockholder agreement (each, a
"STOCKHOLDER AGREEMENT") in the form attached hereto as Annex A;
WHEREAS, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), Parent will acquire all of the common stock
of Company through the merger of Merger Sub with and into Company;
WHEREAS, for financial reporting purposes, it is intended
that the Merger be accounted for as a "pooling of interests" under United
States generally accepted accounting principles ("U. S. GAAP") and the
accounting standards of the United States Securities and Exchange Commission
(the "SEC"); and
WHEREAS, for United States Federal income tax purposes, it
is intended that the Merger shall qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (together
with the rules and regulations promulgated thereunder, the "CODE"), and that
this Agreement shall be, and hereby is, adopted as a plan of reorganization
for purposes of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS
Unless the context otherwise requires, the following terms, when used
in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the
terms defined):
"AFFILIATE" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect
on the business of Company and the Company Subsidiaries that, individually or
in the aggregate (taking into account all other such changes or effects), is,
or is reasonably likely to be, materially adverse to the business,
liabilities, financial condition or results of operations of Company and the
Company Subsidiaries, taken as a whole, except to the extent any such change
or effect results from or is attributable to (i) changes in general economic
conditions or changes affecting the industry generally in which Company
operates (provided that such changes do not affect Company in a materially
disproportionate manner), (ii) any litigation or loss of current or
prospective customers, employees or revenues that Company successfully bears
the burden of proving arose from Company entering into this Agreement or
(iii) any matter described in Section 1.01 of the Company Disclosure
Schedule; PROVIDED, HOWEVER, that in no event shall a decrease in the trading
price of Company Common Stock or litigation relating thereto be considered a
Company Material Adverse Effect.
"COMPANY STOCK PLANS" shall mean Company's 1995 Stock Option Plan,
1998 Stock Plan, Company Stock Purchase Plan and 1998 Director Option Plan.
"COMPANY STOCK PURCHASE PLAN" shall mean Company's 1998 Employee
Stock Purchase Plan.
"COMPETING TRANSACTION" shall mean any of the following involving
Company (other than the Merger):
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(i) any merger, consolidation, share exchange, business
combination or other similar transaction (other than, for the purpose
of Section 9.05(b)(ii)(B) and 9.05(c), such a transaction in which
Company acquires another Person and the shares of Company Common
Stock issued to the equityholders of such other Person constitute
less than 50% of the capital stock of the successor company in such
transaction);
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 20% or more of the assets (excluding, for the
purpose of Section 9.05(b)(ii)(B) and 9.05(c), cash or cash
equivalents) of Company and its subsidiaries, taken as a whole, in a
single transaction or series of related transactions;
(iii) any tender offer or exchange offer for 20% or more
of the outstanding voting securities of Company or the filing of a
registration statement under the Securities Act in connection
therewith; or
(iv) any person having acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such
term is defined under Section 13(d) of the Exchange Act) having been
formed that beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding voting securities of
Company;
(v) other than for the purpose of Section 9.05(b)(ii)(B)
and 9.05(c), any solicitation in opposition to the approval of this
Agreement by the stockholders of Company; or
(vi) other than for the purpose of Section 9.05(b)(ii)(B)
and 9.05(c), any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement,
dated as of July 6, 1999 between Parent and Company.
"$" shall mean United States Dollars.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material, as in effect
as of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or
issued pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all
out-of-pocket expenses (including, without limitation, all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a
party hereto and its affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and
the consummation of the Merger, the preparation, printing, filing and mailing
of the Registration Statement and the Proxy Statement, the solicitation of
stockholder approvals, the filing of HSR Act notice, if any, and all other
matters related to the transactions contemplated hereby and the closing of
the Merger.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or substance defined or regulated as toxic or hazardous or
as a pollutant or contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, together with the rules and regulations promulgated
thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement
or rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect
on the business of Parent and the Parent Subsidiaries that, individually or
in the aggregate (taking into account all other such changes or effects), is,
or is reasonably likely to be, materially adverse to the business,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent any such change
or effect results from or is attributable to (i) changes in general economic
conditions or changes affecting the industry generally in which Parent
operates (provided that such changes do not affect Parent in a materially
disproportionate manner) or (ii) any litigation or loss of current or
prospective
5
customers, employees or revenues that Parent successfully bears the burden of
proving arose from Parent entering into this Agreement; PROVIDED, HOWEVER,
that in no event shall a decrease in the trading price of Parent Common Stock
or litigation relating thereto be considered a Parent Material Adverse Effect.
"PARENT STOCK PLANS" shall mean Parent's 1997 Stock Incentive Plan
and 1996 Stock Option Plan.
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or
government or political subdivision, agency or instrumentality of a
government.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited
liability partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary of such
person) owns, directly or indirectly, a majority of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other charges
in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges; (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, combined, consolidated or unitary group for any
Taxable period; and (iii) any liability for the payment of amounts of the
type described in (i) or (ii) as a result of being a transferee of, or a
successor in interest to, any person or as a result of an express or implied
obligation to indemnify any person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax
reports or return and information report or return) required to be filed with
respect to any Taxes.
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ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time (as defined
in Section 2.03), Merger Sub shall be merged with and into Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation of the Merger
as a wholly owned subsidiary of Parent (the "SURVIVING CORPORATION").
SECTION 2.02 CLOSING
Unless this Agreement shall have been terminated and the Merger
herein contemplated shall have been abandoned pursuant to Section 9.01 and
subject to the satisfaction or waiver of the conditions set forth in Article
VIII, the consummation of the Merger shall take place as promptly as
practicable (and in any event within three business days) after satisfaction
or waiver of the conditions set forth in Article VIII, at a closing (the
"CLOSING") to be held at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
Xxxxx Street Tower, One Market, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 unless
another date, time or place is agreed to by Parent and Company.
SECTION 2.03 EFFECTIVE TIME
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing a certificate of merger (the "CERTIFICATE
OF MERGER") with the Secretary of State of the State of Delaware in such form
as required by, and executed in accordance with the relevant provisions of,
the DGCL (the date and time of such filing, or such later date and time as
may be set forth therein, being the "EFFECTIVE TIME").
SECTION 2.04 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, except as
otherwise provided herein, all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in Company as the Surviving
Corporation, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts, liabilities and duties of Company as the Surviving
Corporation.
SECTION 2.05 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND
OFFICERS OF SURVIVING CORPORATION
Unless otherwise agreed by Parent and Company before the Effective
Time, at the Effective Time:
7
(a) the Certificate of Incorporation and the Bylaws of Merger
Sub in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation and the Bylaws of the Surviving Corporation,
until thereafter amended as provided by Law and such Certificate of
Incorporation or Bylaws; PROVIDED, HOWEVER, that Article I of the Certificate
of Incorporation of the Surviving Corporation shall be amended to read as
follows: "The name of the corporation is NetGravity, Inc.";
(b) the officers of Merger Sub immediately prior to the
Effective Time shall serve in their respective offices of the Surviving
Corporation from and after the Effective Time, in each case until their
successors are elected or appointed and qualified or until their resignation
or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall serve as the directors of the Surviving Corporation from
and after the Effective Time, in each case until their successors are elected
or appointed and qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 CONVERSION OF SHARES
At the Effective time, by virtue of the Merger, and without any
action on the part of Parent, Merger Sub, Company or the holders of any of
the following securities:
(a) each share of Common Stock, $.001 par value, of Company ("COMPANY
COMMON STOCK") issued and outstanding immediately before the Effective Time
(excluding those held in the treasury of Company and those owned by any
wholly owned subsidiary of Company) and all rights in respect thereof, shall,
forthwith cease to exist and be converted into and become exchangeable for
.28 shares (the "EXCHANGE RATIO") of common stock, $.001 par value, of Parent
("PARENT COMMON STOCK");
(b) each share of Company Common Stock held in the treasury of
Company or owned by any wholly owned subsidiary of Company immediately prior
to the Effective Time shall be canceled and retired and no shares of stock or
other securities of Parent, the Surviving Corporation or any other
corporation shall be issuable, and no payment of other consideration shall be
made, with respect thereto; and
(c) each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
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SECTION 3.02 EXCHANGE OF SHARES OTHER THAN TREASURY SHARES
(a) EXCHANGE AGENT. As of the Effective Time, Parent shall enter into
an agreement with a bank or trust company to act as exchange agent for the
Merger (the "EXCHANGE AGENT") as may be designated by Parent and shall be
reasonably acceptable to Company.
(b) PARENT TO PROVIDE COMMON STOCK AND CASH. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holder of Company Common Stock: (i) Certificates of Parent
Common Stock ("PARENT CERTIFICATES") representing the number of whole shares
of Parent Common Stock issuable pursuant to Section 3.01(a) in exchange for
shares of Company Common Stock outstanding immediately prior to the Effective
Time; and (ii) sufficient funds to permit payment in lieu of fractional
shares pursuant to Section 3.04.
(c) EXCHANGE PROCEDURES. The Exchange Agent shall mail to each holder
of record of certificates of Company Common Stock ("COMPANY CERTIFICATES"),
whose shares were converted into the right to receive shares of Parent Common
Stock (and cash in lieu of fractional shares) pursuant to Section 3.04)
promptly after the Effective Time (and in any event no later than three
business days after the later to occur of the Effective Time and receipt by
Parent of a complete list from Company of the names and addresses of its
holders of record): (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon receipt of the Company Certificates by the
Exchange Agent, and shall be in such form and have such other provisions as
Parent may reasonably specify); and (ii) instructions for use in effecting
the surrender of the Company Certificates in exchange for Parent Certificates
(and cash in lieu of fractional shares). Upon surrender of a Company
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may be reasonably required by the Exchange Agent, the holder of such Company
Certificate shall be entitled to receive in exchange therefor a Parent
Certificate representing the number of whole shares of Parent Common Stock
that such holder has the right to receive pursuant to this Article III and
payment of cash in lieu of fractional shares which such holder has the right
to receive pursuant to Section 3.04, and the Company Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each
outstanding Company Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes other than the payment of
dividends and distributions, to evidence the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section
3.04. Notwithstanding any other provision of this Agreement, no interest will
be paid or will accrue on any cash payable to holders of Company Certificates
pursuant to the provisions of this Article III.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Parent Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Company Certificate with respect to the shares of
9
Parent Common Stock represented thereby until the holder of record of such
Company Certificate shall surrender such Company Certificate. Subject to the
effect of applicable escheat or similar laws, following surrender of any such
Company Certificate, there shall be paid to the record holder of the Parent
Certificates issued in exchange therefor, without interest, at the time of
such surrender, the amount of any such dividends or other distributions with
a record date after the Effective Time theretofore payable (but for the
provisions of this Section 3.02(d)) with respect to such shares of Parent
Common Stock.
(e) TRANSFER OF OWNERSHIP. If any Parent Certificate is to be issued
in a name other than that in which the Company Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the Company Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer
or other taxes required by reason of the issuance of a Parent Certificate for
shares of Parent Common Stock in any name other than that of the registered
holder of the Company Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been
paid or is not payable.
(f) TERMINATION OF EXCHANGE AGENT FUNDING. Any portion of funds
(including any interest earned thereon) or Parent Certificates held by the
Exchange Agent which have not been delivered to holders of Company
Certificates pursuant to this Article III within six months after the
Effective Time shall promptly be paid or delivered, as appropriate, to
Parent, and thereafter holders of Company Certificates who have not
theretofore complied with the exchange procedures outlined in and
contemplated by this Section 3.02 shall thereafter look only to Parent
(subject to abandoned property, escheat and similar laws) only as general
creditors thereof for their claim for shares of Parent Common Stock, any cash
in lieu of fractional shares of Parent Common Stock and any dividends or
distributions (with a record date after the Effective Time) with respect to
Parent Common Stock to which they are entitled.
(g) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any person in respect of any shares of Parent
Common Stock or cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) LOST, STOLEN OR DESTROYED COMPANY CERTIFICATES. In the event any
Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, a Parent Certificate representing such shares of Parent Common Stock
(and cash in lieu of fractional shares) as may be required pursuant to this
Article III; PROVIDED, HOWEVER, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Company Certificates to indemnify Parent against any
claim that may be made against Parent, the Surviving Corporation or the
Exchange Agent with respect to the Company Certificates alleged to have been
lost, stolen or destroyed.
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SECTION 3.03 STOCK TRANSFER BOOKS
At the Effective Time, the stock transfer books of Company shall each
be closed, and there shall be no further registration of transfers of shares
of Company Common Stock thereafter on the records of any such stock transfer
books. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the stock transfer records of Company at the
Effective Time, a certificate or certificates representing the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been converted shall be issued to the transferee together with a
cash payment in lieu of fractional shares, if any, in accordance with Section
3.04 hereof, and a cash payment in the amount of dividends, if any, in
accordance with Section 3.02(d) hereof, if the certificate or certificates
representing such shares of Company Common Stock is or are surrendered as
provided in Section 3.02(c) hereof, accompanied by all documents required to
evidence and effect such transfer and by evidence of payment of any
applicable stock transfer tax.
SECTION 3.04 NO FRACTIONAL SHARE CERTIFICATES
No scrip or fractional share Parent Certificate shall be issued upon
the surrender for exchange of Company Certificates, and an outstanding
fractional share interest shall not entitle the owner thereof to vote, to
receive dividends or to any rights of a stockholder of Parent or of Surviving
Corporation with respect to such fractional share interest. As promptly as
practicable following the Effective Time, Parent shall deposit with the
Exchange Agent an amount in cash sufficient for the Exchange Agent to pay
each holder of Company Common Stock an amount in cash equal to the product
obtained by multiplying (i) the fractional share interest to which such
holder would otherwise be entitled (after taking into account all shares of
Company Common Stock held at the Effective Time by such holder) by (ii) the
closing price for a share of Parent Common Stock on the Nasdaq National
Market (the "NNM") on the first business day immediately following the
Effective Time. As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Company Common Stock with respect
to any fractional share interests, the Exchange Agent shall make available
such amounts, net of any required withholding Taxes, to such holders of
Company Common Stock, subject to and in accordance with the terms of Section
3.02 hereof.
SECTION 3.05 OPTIONS TO PURCHASE COMPANY COMMON STOCK
At the Effective Time, each option or warrant granted by Company to
purchase shares of Company Common Stock ("COMPANY STOCK OPTIONS"), which is
outstanding and unexercised immediately prior to the Effective Time, and the
Company Stock Plans shall be assumed by Parent, and the Company Stock Options
shall be converted into an option or warrant, as the case may be, to purchase
shares of Parent Common Stock in such number and at such exercise price as
provided below and otherwise having the same terms and conditions as in
effect immediately prior to the Effective Time (except to the extent that
such terms, conditions and restrictions may be altered in accordance with
their terms as a result of the Merger contemplated hereby and except that all
references in each such Company Stock Option to Company shall be deemed to
refer to Parent):
11
(a) the number of shares of Parent Common Stock to be subject to
the new option or warrant, as the case may be, shall be equal to the product
of (x) the number of shares of Company Common Stock subject to the original
Company Stock Option immediately prior to the Effective Time and (y) the
Exchange Ratio;
(b) the exercise price per share of Parent Common Stock under
the new option or warrant shall be equal to (x) the exercise price per share
of Company Common Stock in effect under the original Company Stock Option
immediately prior to the Effective Time divided by (y) the Exchange Ratio; and
(c) in effecting such assumption and conversion, the aggregate
number of shares of Parent Common Stock to be subject to each assumed Company
Stock Option will be rounded down, if necessary, to the next whole share and
the aggregate exercise price shall be rounded up, if necessary, to the next
whole cent while preserving the aggregate intrinsic value.
The adjustments provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of
the Code so as to retain their character as incentive stock options. The
assumption of the outstanding Company Stock Options in the Merger and their
conversion into options for Parent Common Stock will not result in any
accelerated vesting of those options or the shares purchasable thereunder
other than as contemplated in currently existing agreements to which Company
is a party, copies of which agreements have been provided to Parent, and the
vesting schedule in effect for each Company Stock Option immediately prior to
the Effective Time shall remain in full force after the assumption thereof by
Parent.
SECTION 3.06 UNVESTED STOCK
At the Effective Time, any unvested shares of Company Common Stock
awarded to employees, directors or consultants pursuant to any of the
Company's plans or arrangements and outstanding immediately prior to the
Effective Time shall be converted into unvested shares of Parent Common Stock
in accordance with the Exchange Ratio and shall remain subject to the same
terms, restrictions and vesting schedule as in effect immediately prior to
the Effective Time, except to the extent by their terms such unvested shares
of Company Common Stock vest at the Effective Time and copies of the relevant
agreements governing such vesting have been provided to Parent. All
outstanding rights which Company may hold immediately prior to the Effective
Time to repurchase unvested shares of Company Common Stock shall be assigned
to the Parent in the Merger and shall thereafter be exercisable by Parent
upon the same terms and conditions in effect immediately prior to the
Effective Time, except that the shares purchasable pursuant to such rights
and the purchase price payable per share shall be adjusted to reflect the
Exchange Ratio.
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SECTION 3.07 EMPLOYEE STOCK PURCHASE PLAN
At the Effective Time, the Company Stock Purchase Plan and each
outstanding purchase right under the Company Stock Purchase Plan shall be
assumed by Parent. Within five business days of the date hereof, Company
shall deliver a schedule that sets forth a true and complete list as of the
date hereof of all holders of outstanding purchase rights under the Company
Stock Purchase Plan, including the payroll deduction amount elected by each
holder and the price per share of Company Common Stock at the start of the
current purchase periods. On the Closing Date, Company shall deliver to
Parent an updated version of such schedule, current as of such date. Each
such purchase right so assumed by Parent under this Agreement shall continue
to have, and be subject to, the terms and conditions set forth in the Company
Stock Purchase Plan and the documents governing the outstanding purchase
rights under the Company Stock Purchase Plan immediately prior to the
Effective Time, except that the purchase price of shares of Parent Common
Stock and the number of shares of Parent Common Stock to be issued upon the
exercise of each such purchase right shall be adjusted in accordance with the
Exchange Ratio (with the number of shares rounded down to the nearest whole
share and the purchase price rounded up to the nearest whole cent). The
assumed outstanding purchase rights under the Company Stock Purchase Plan
shall be exercised at such times following the Effective Time as set forth in
the Company Stock Purchase Plan, and each participant shall, accordingly, be
issued shares of Parent Common Stock at such times. The Company Stock
Purchase Plan, and all outstanding purchase rights thereunder, shall
terminate with the exercise of the last assumed purchase right, and no
additional purchase rights shall be granted under the Company Stock Purchase
Plan following the Effective Time.
SECTION 3.08 CERTAIN ADJUSTMENTS
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any
dividend payable in stock or other securities shall be declared thereon with
a record date within such period, or the number of shares of Company Common
Stock on a fully diluted basis is in excess of that specified in Section 4.03
and disclosed in Section 4.03 of the Company Disclosure Schedule (regardless
of whether such excess is a result of an additional issuance of capital stock
or a correction to such Sections), then the Exchange Ratio established
pursuant to the provisions of Section 3.01 shall be adjusted accordingly to
provide to Parent the same economic effect as contemplated by this Agreement
prior to such reclassification, recapitalization, split-up, combination,
exchange, dividend or increase.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the Company Disclosure
Schedule, all such exceptions to be
13
referenced to a specific representation set forth in this Article IV or to
otherwise be clearly applicable to representations hereof not specifically
referenced, that:
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Company and each directly and indirectly owned subsidiary of
Company (the "COMPANY SUBSIDIARIES") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of
the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted.
Company and each Company Subsidiary is duly qualified or licensed to do
business, and is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated
by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in
good standing that could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Company
Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Company Subsidiary and the percentage of each Company
Subsidiary's outstanding capital stock or other equity interests owned by
Company or another Company Subsidiary and (ii) an indication of whether each
Company Subsidiary is a "Significant Subsidiary" as defined in Regulation S-X
under the Exchange Act. Except as set forth in Section 4.01 of the Company
Disclosure Schedule, neither Company nor any Company Subsidiary owns an
equity interest in any partnership or joint venture arrangement or other
business entity.
SECTION 4.02 CERTIFICATE OF INCORPORATION AND BYLAWS
The copies of Company's certificate of incorporation and bylaws
previously provided to Parent by Company are true, complete and correct
copies thereof. Such certificate of incorporation and bylaws are in full
force and effect. Company is not in violation of any of the provisions of its
certificate of incorporation or bylaws.
SECTION 4.03 CAPITALIZATION
The authorized capital stock of Company consists of 50,000,000 shares
of Company Common Stock and 5,000,000 shares of preferred stock ("COMPANY
PREFERRED STOCK"). As of the date hereof, (i) 17,822,448 shares of Company
Common Stock are issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no shares of Company Common Stock are held
in the treasury of Company, (iii) no shares of Company Common Stock are held
by Company Subsidiaries, (iv) 4,586,903 shares of Company Common Stock are
reserved for future issuance pursuant to Company Stock Options, of which
3,489,904 shares of Company Common Stock are reserved for future issuance
pursuant to unvested, outstanding and vested, outstanding, unexercised
Company Stock Options (excluding the Company Stock Purchase Plan), (v)
665,224 shares of Company Common Stock are reserved for
14
issuance under the Company Stock Purchase Plan and (vi) no shares of Company
Preferred Stock are outstanding. The name of each holder of a company Stock
Option as of the date hereof, the grant date of each Company Stock Option,
and the number of shares of Company Common Stock for which each Company Stock
Option is exercisable and the exercise price of each Company Stock Option are
set forth in Section 4.03 of the Company Disclosure Schedule. Except for
shares of Company Common Stock issuable pursuant to Company Stock Plans,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Company is a party or by which Company
is bound relating to the issued or unissued capital stock of Company or any
Company Subsidiary or obligating Company or any Company Subsidiary to issue
or sell any shares of capital stock of, or other equity interests in, Company
or any Company Subsidiary. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance prior to the Effective Time on the terms
and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of any Company Subsidiary. Each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. There
are no material outstanding contractual obligations of Company or any Company
Subsidiary to provide funds to, or make any material investment (in the form
of a loan, capital contribution or otherwise) in, any Company Subsidiary or
any other person.
SECTION 4.04 AUTHORITY RELATIVE TO THIS AGREEMENT
Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Company and the consummation by Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote with respect thereto at the
Company Stockholders' Meeting (as defined in Section 7.01), and the filing
and recordation of the Certificate of Merger as required by the DGCL). This
Agreement has been duly executed and delivered by Company and, assuming the
due authorization, execution and delivery by the other parties hereto,
constitutes legal, valid and binding obligations of Company, enforceable
against Company in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors' rights generally and
to the effect of general principles of equity which may limit the
availability of remedies (whether in a proceeding at law or in equity).
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SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Company do not,
and the performance by Company of its obligations hereunder and the
consummation of the Merger will not, (i) conflict with or violate any
provision of the certificate of incorporation or bylaws of Company or any
equivalent organizational documents of any Company Subsidiary, (ii) assuming
that all filings and notifications described in Section 4.05(b) have been
made, conflict with or violate any Law applicable to Company or any Company
Subsidiary or by which any property or asset of Company or any Company
Subsidiary is bound or affected or (iii) result in any material breach of or
constitute a material default (or an event which with the giving of notice or
lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any material property or asset of Company or any Company Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by Company do not,
and the performance by Company of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by Company with or notification by
Company to, any Governmental Entity, except pursuant to applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the
rules and regulations of the NNM, state takeover laws, the premerger
notification requirements of the HSR Act, and the filing and recordation of
the Certificate of Merger as required by the DGCL.
SECTION 4.06 PERMITS; COMPLIANCE WITH LAWS
Company and the Company Subsidiaries are in possession of all
material franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, easements, variances, exceptions,
consents, certificates, identification and registration numbers, approvals
and orders of any Governmental Entity necessary for Company or any Company
Subsidiary to carry on its business as it is now being conducted
(collectively, the "COMPANY PERMITS"), and, as of the date of this Agreement,
none of the material Company Permits has been suspended or cancelled nor is
any such suspension or cancellation pending or, to the knowledge of Company,
threatened. Except with respect to Environmental Permits that are addressed
in Section 4.13 hereof, neither Company nor any Company Subsidiary is in
conflict in any material respect with, or in material default or violation
of, (i) any Law applicable to Company or any Company Subsidiary or by which
any property or asset of Company or any Company Subsidiary is bound or
affected or (ii) any Company Permits. Section 4.06 of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of
Company, threatened against Company or any Company Subsidiary that could
reasonably be expected to result in the suspension or cancellation of any
other Company Permit. Since March 1, 1996, neither Company nor any Company
Subsidiary has received from any Governmental Entity any written notification
with respect to possible conflicts, defaults or violations of Laws.
16
SECTION 4.07 SEC FILINGS; FINANCIAL STATEMENTS
(a) Company has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC since June 11, 1998
(collectively, together with any such forms, reports, statements and
documents Company may file subsequent to the date hereof until the Closing,
the "COMPANY REPORTS") and (B) with any other Governmental Entities. Each
Company Report (i) was prepared in all material respects in accordance with
the requirements of the Securities Act, the Exchange Act or the rules and
regulations of the NNM, as the case may be, and (ii) did not at the time it
was filed (or, in the case of registration statements filed under the
Securities Act, at the time of effectiveness) 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 made therein, in the
light of the circumstances under which they were made, not misleading. Each
material form, report, statement and document referred to in clause (B) of
this paragraph was prepared in all material respects in accordance with the
requirements of applicable Law. No Company Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or required to file any
form, report or other document with the SEC, the NNM, any other stock
exchange or any other comparable Governmental Entity.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company Reports was prepared in
accordance with U.S. GAAP (except as may be permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly,
in all material respects, the consolidated financial position of Company and
the consolidated Company Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted
therein (subject, in the case of unaudited statements, to normal and
recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as
reported in the Company Reports, including the notes thereto, none of Company
or any Company Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required
to be reflected on a balance sheet or in notes thereto prepared in accordance
with U.S. GAAP, except for immaterial liabilities or obligations incurred in
the ordinary course of business consistent with past practice since December
31, 1998.
SECTION 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since December 31, 1998, Company and the Company Subsidiaries have
conducted their businesses in all material respects only in the ordinary
course consistent with past practice and, since such date, there has not been
(i) any Company Material Adverse Effect, (ii) any event that could reasonably
be expected to prevent or materially delay the performance of Company's
obligations pursuant to this Agreement and the consummation of the Merger by
Company, (iii) any material change by Company in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of
any dividend or distribution in respect of the shares of Company Common Stock
or any redemption, purchase or other acquisition of
17
any of Company's securities, (v) except for changes in the ordinary course of
business consistent with past practice that only affect non-officer employees
of the Company, any increase in the compensation or benefits or establishment
of any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards or
restricted stock awards), stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become payable to any
employees, officers, consultants or directors of Company or any Company
Subsidiary, (vi) any issuance or sale of any stock, notes, bonds or other
securities other than pursuant to offerings registered under the Securities
Act or pursuant to the exercise of outstanding securities, or entering into
any agreement with respect thereto, (vii) any amendment to the Company's
certificate of incorporation or bylaws, (viii) other than in the ordinary
course of business consistent with past practice, any (x) purchase, sale,
assignment or transfer of any material assets, (y) mortgage, pledge or
existence of any lien, encumbrance or charge on any material assets or
properties, tangible or intangible, except for liens for Taxes not yet
delinquent and such other liens, encumbrances or charges which do not,
individually or in the aggregate, have a Company Material Adverse Effect, or
(z) waiver of any rights of material value or cancellation or any material
debts or claims, (ix) any incurrence of any material liability (absolute or
contingent), except for current liabilities and obligations incurred in the
ordinary course of business consistent with past practice, (x) any incurrence
of any damage, destruction or similar loss, whether or not covered by
insurance, materially affecting the business or properties of Company or any
Company Subsidiary, or (xi) any entering into any transaction of a material
nature other than in the ordinary course of business, consistent with past
practice.
SECTION 4.09 EMPLOYEE BENEFIT PLANS; LABOR MATTERS
(a) The Company Disclosure Schedule lists each employee benefit fund,
plan, program, arrangement and contract (including, without limitation, any
"pension" plan, fund or program, as defined in Section 3(2) of ERISA, and any
"employee benefit plan," as defined in Section 3(3) of ERISA and any plan,
program, arrangement or contract providing for severance; medical, dental or
vision benefits; life insurance or death benefits; disability benefits, sick
pay or other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits), whether written or not
("BENEFIT PLANS"), maintained, sponsored or contributed to or required to be
contributed to by Company or any Company Subsidiary (the "COMPANY BENEFIT
PLANS"). With respect to each Company Benefit Plan, Company has delivered or
made available to Parent a true, complete and correct copy of (i) such
Company Benefit Plan (of, if not written, a written summary of its material
terms) and the most recent summary plan description, if any, related to such
Company Benefit Plan, (ii) each trust agreement or other funding arrangement,
if any, relating to such Company Benefit Plan, (iii) the most recent annual
report (Form 5500), if any, filed with the IRS with respect to such Company
Benefit Plan (and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Company Benefit Plan), (iv) the
most recent actuarial report or financial statement, if any, relating to such
Company Benefit Plan and (v) the most recent determination, notification,
advisory or opinion letter, issued by the IRS with respect to such Company
Benefit Plan and any pending request for such a determination letter. Neither
Company nor any Company Subsidiary nor, to the
18
knowledge of Company, any other person or entity, has any express or implied
commitment, whether legally enforceable or not, to modify, change or
terminate any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable laws, including
ERISA and the Code, and all material contributions required to be made under
the terms of any of the Company Benefit Plans as of the date of this
Agreement have been timely made or, if not yet due, have been properly
reflected on the most recent consolidated balance sheet filed or incorporated
by reference in the Company Reports prior to the date of this Agreement. With
respect to the Company Benefit Plans, no event has occurred and, to the
knowledge of Company, there exists no condition or set of circumstances in
connection with which Company or any Company Subsidiary could be subject to
any material liability (other than for routine benefit liabilities) under the
terms of, or with respect to, such Company Benefit Plans, ERISA, the Code or
any other applicable Law.
(c) Company on behalf of itself and each Company ERISA Affiliate (as
defined below) hereby represents that: (i) each Company Benefit Plan which is
intended to qualify under Section 401(a), Section 401(k), Section 401(m) or
Section 4975(e)(6) of the Code has received a favorable determination,
notification, advisory or opinion letter from the IRS as to its qualified
status, and each trust established in connection with any Company which is
intended to be exempt from federal income taxation under Section 501(a) of
the Code has received a determination letter from the IRS that it is so
exempt, and to Company's knowledge no fact or event has occurred that is
reasonably likely to adversely affect the qualified status of any such
Company Benefit Plan or the exempt status of any such trust; (ii) to
Company's knowledge there has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code and other than a
transaction that is exempt under a statutory or administrative exemption)
with respect to any Company Plan that could result in liability to the
Company or a Company Subsidiary and (iii) each Company Benefit Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability (other than (A) liability for
ordinary administrative expenses typically incurred in a termination event or
(B) if the Company Benefit Plan is pension benefit plan subject to Part 2 of
Title I of ERISA, liability for the accrued benefits as of the date of such
termination (if and to the extent required by ERISA) to the extent that
either there are sufficient assets set aside in a trust or insurance contract
to satisfy such liability or such liability is reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge
of Company is threatened, against or with respect to any such Company Benefit
Plan, including any audit or inquiry by the IRS or United States Department
of Labor (other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title IV
of Part 3 of Title I of ERISA or Section 412 of the Code and neither the
Company, any Company Subsidiary nor any other trade or business (whether or
not incorporated) that is under "common control" with Company or a Company
Subsidiary (within the meaning of ERISA Section 4001) or with respect to
which
19
Company or any Company Subsidiary could otherwise incur liability under Title
IV of ERISA (a "COMPANY ERISA AFFILIATE") has sponsored or contributed to or
been required to contribute to a multiemployer pension plan or other pension
plan subject to Title IV of ERISA. No material liability under Title IV of
ERISA has been incurred by Company, any Company Subsidiary or any Company
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to Company or any Company Subsidiary of
incurring or being subject (whether primarily, jointly or secondarily) to a
material liability thereunder. None of the assets of Company or any Company
Subsidiary is, or may reasonably be expected to become, the subject of any
lien arising under ERISA or Section 412(n) of the Code.
(e) Company has made available to Parent copies of (i) all employment
agreements with officers and all consulting agreements of Company and each
Company Subsidiary providing for annual compensation in excess of $100,000,
(ii) all severance plans, agreements, programs and policies of Company and
each Company Subsidiary with or relating to their respective employees,
directors or consultants, and (iii) all plans, programs, agreements and other
arrangements of Company and each Company Subsidiary with or relating to their
respective employees, directors or consultants which contain "change of
control" provisions. No payment or benefit which may be required to be made
by Company or any Company Subsidiary or which otherwise may be required to be
made under the terms of any Company Benefit Plan or other arrangement will
constitute a parachute payment under Code Section 280(G)(1), and the
consummation of the transactions contemplated by this Agreement will not,
alone or in conjunction with any other possible event (including termination
of employment), (i) entitle any current or former employee or other service
provider of Company or any Company Subsidiary to severance benefits or any
other payment, compensation or benefit (including forgiveness of
indebtedness), except as expressly provided by this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider.
(f) Neither Company nor any Company Subsidiary is a party to, or has
any obligations under or with respect to, any collective bargaining or other
labor union contract applicable to persons employed by Company or any Company
Subsidiary and no collective bargaining agreement is being negotiated by
Company or any Company Subsidiary or any person or entity that may obligate
the Company or any Company Subsidiary thereunder. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against Company
or any Company Subsidiary pending or, to the knowledge of Company, threatened
which may materially interfere with the respective business activities of
Company or any Company Subsidiary. As of the date of this Agreement, to the
knowledge of Company, none of Company, any Company Subsidiary, or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of
Company or any Company Subsidiary, and there is no charge or complaint
against Company or any Company Subsidiary by the National Labor Relations
Board or any comparable Governmental Entity pending or threatened in writing.
(g) Except as required by Law, no Company Benefit Plan provides any
of the following retiree or post-employment benefits to any person: medical,
disability or life insurance
20
benefits. To Company's knowledge, Company and the Company ERISA Affiliates
are in compliance in all material respects with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and the
regulations (including proposed regulations) thereunder and (ii) the
applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations (including the
proposed regulations) thereunder.
SECTION 4.10 POOLING; CERTAIN TAX MATTERS
Neither Company nor, to the knowledge of Company, any of its
affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement) that could be expected to prevent (a) the
Merger from being treated for accounting purposes as a "pooling of interests"
in accordance with U.S. GAAP and the accounting standards of the SEC or (b)
the Merger from constituting a "reorganization" under Section 368 of the
Code. Company is not aware of any agreement or plan to which Company or any
of its affiliates is a party or other circumstances relating to Company or
any of its affiliates that could reasonably be expected to prevent the Merger
from being so treated as a "pooling of interests" or from so qualifying as a
reorganization under Section 368 of the Code.
SECTION 4.11 CONTRACTS
Section 4.11 of the Company Disclosure Schedule sets forth a list of
each contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Company and
Company Subsidiaries, taken as a whole (each, a "MATERIAL CONTRACT"). Neither
Company nor any Company Subsidiary is in material violation of or in material
default under (nor does there exist any condition which with the passage of
time or the giving of notice could reasonably be expected to cause such a
material violation of or material default under) any Material Contract. Each
Material Contract is in full force and effect and is a legal, valid and
binding obligation of Company or a Company Subsidiary and, to the knowledge
of Company, each of the other parties thereto, enforceable in accordance with
its terms.
SECTION 4.12 LITIGATION
There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of Company, threatened against Company or any Company
Subsidiary that could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect or materially interfere with
Company's ability to consummate the transactions contemplated hereby, and, to
the knowledge of Company, there are no existing facts or circumstances that
could reasonably be expected to result in such a suit, claim, action,
proceeding or investigation. Company is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Company and Company Subsidiaries
in respect of such suits, claims, actions, proceedings and investigations,
except in any case as could not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. Neither Company nor
any Company Subsidiary is subject to any outstanding order, writ, injunction
or decree which could reasonably
21
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect or materially interfere with Company's ability to consummate
the transactions contemplated hereby.
SECTION 4.13 ENVIRONMENTAL MATTERS
Except as could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, (i) Company and the
Company Subsidiaries are in compliance with all applicable Environmental Laws
and all Environmental Permits; (ii) all past noncompliance of Company or any
Company Subsidiary with Environmental Laws or Environmental Permits has been
resolved without any pending, ongoing or future obligation, cost or
liability; and (iii) neither Company nor any Company Subsidiary has released
a Hazardous Material at, or transported a Hazardous Material to or from, any
real property currently or formerly owned, leased or occupied by Company or
any Company Subsidiary, in violation of any Environmental Law.
SECTION 4.14 INTELLECTUAL PROPERTY
(a) All patents, trademarks, trade names, service marks, trade dress,
Internet domain names, copyrights and any renewal rights therefor,
technology, supplier lists, trade secrets, know-how, computer software
programs or applications in both source and object code form, technical
documentation of such software programs ("TECHNICAL DOCUMENTATION"),
databases, data, registrations and applications for any of the foregoing and
all other tangible or intangible proprietary information or materials that
are or have been used (including without limitation in the development of)
Company's business and/or in any product, technology or process (i) currently
being or formerly manufactured, published or marketed by Company or (ii)
previously or currently under development for possible future manufacturing,
publication, marketing or other use by Company are hereinafter referred to as
the "COMPANY INTELLECTUAL PROPERTY."
(b) Section 4.14 of the Company Disclosure Schedule contains a true
and complete list of Company's patents, patent applications, trademarks,
trademark applications, trade names, service marks, service xxxx
applications, Internet domain names, Internet domain name applications and
other filings and formal actions made or taken pursuant to Federal, state,
local and foreign laws by Company to protect its interests in the Company
Intellectual Property.
(c) The Company Intellectual Property consists solely of items and
rights which are: (i) owned by Company; (ii) in the public domain; or (iii)
rightfully used by Company pursuant to a valid license (the "COMPANY LICENSED
INTELLECTUAL PROPERTY"), the parties and date of each such license agreement
(each, a "LICENSE AGREEMENT") being set forth on Section 4.14(c) of the
Company Disclosure Schedule. Company has all rights in Company Intellectual
Property necessary to carry out Company's current activities (and had all
rights necessary to carry out its former activities at the time such
activities were being conducted), including without limitation, to the extent
required to carry out such activities, rights to make, use, reproduce,
modify, adopt, create derivative works based on, translate, distribute
(directly and indirectly), transmit, display
22
and perform publicly, license, rent and lease and, other than with respect to
the Company Licensed Intellectual Property, assign and sell, the Company
Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company
Intellectual Property, product, service, work, technology or process as now
used or offered or proposed for use, licensing or sale by Company does not
infringe on any copyright, trade secret, trademark, service xxxx, trade name,
trade dress, firm name, Internet domain name, logo, trade dress, mask work or
other proprietary or personal right of any person or, to the knowledge of
Company, the patent of any person. Notwithstanding the foregoing, with
respect to Company Licensed Intellectual Property that (i) has a license fee
of less than $1,000 per copy used in Company's products and (ii) (x) is used
on a stand alone basis or (y) causes Company Intellectual Property to be
subject to a claim (for reasons other than that the combination of such
Company Licensed Intellectual Property with other Company Intellectual
Property is infringing), Company relies on the representations and warranties
of non-infringement contained in the agreements pursuant to which Company is
authorized to use such Company Licensed Intellectual Property. No claims (i)
challenging the validity, effectiveness or, other than with respect to the
Company Licensed Intellectual Property, ownership by Company of any of the
Company Intellectual Property, or (ii) to the effect that the use,
distribution, licensing, sublicensing, sale or any other exercise of rights
in any product, service, work, technology or process as now used or offered
or proposed for use, licensing, sublicensing or sale by Company infringes or
will infringe on any intellectual property or other proprietary or personal
right of any person have been asserted or, to the knowledge of Company, are
threatened by any person, nor are there, to Company's knowledge, any valid
grounds for any bona fide claim of any such kind. All registered, granted or
issued patents, trademarks, Internet domain names and copyrights held by
Company are subsisting and, to Company's knowledge, enforceable. To the
knowledge of Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third
party, employee or former employee.
(e) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the Company Intellectual Property on behalf of Company, have
executed nondisclosure agreements substantially in the form set forth on
Appendix C to the Company Disclosure Schedule and either (i) have been a
party to a "work-for-hire" arrangement or agreements with Company in
accordance with applicable national and state law that has accorded Company
full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising, or (ii) have executed appropriate
instruments of assignment in favor or Company as assignee that have conveyed
to Company effective and exclusive ownership of all tangible and intangible
property thereby arising.
(f) Company is not, nor as a result of the execution or delivery of
this Agreement, or performance of Company's obligations hereunder, will
Company be, in violation of any license, sublicense, agreement or instrument
to which Company is a party or otherwise bound, nor will execution or
delivery of this Agreement, or performance of Company's obligations
hereunder, cause the diminution, termination or forfeiture of any Company
Intellectual Property.
23
(g) Section 4.14(g) of the Company Disclosure Schedule contains a
true and complete list of all of Company's software programs commercialized
by Company (the "COMPANY SOFTWARE PROGRAMS"). Except with respect to software
or technology licensed by Company, Company owns full and unencumbered right
and good, valid and marketable title to such Company Software Programs free
and clear of all mortgages, pledges, liens, security interests, conditional
sales agreements, encumbrances or charges of any kind other than licenses
granted in the ordinary course of business.
(h) The source code and system documentation relating to the Company
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by Company only to employees who have a "need to
know" the contents thereof in connection with the performance of their duties
to Company and who have executed the nondisclosure agreements referred to in
Section 4.14, and (iii) have not been disclosed to any third party except
pursuant to nondisclosure agreements or in the ordinary course of business
with respect to APIs and similar code disclosures to enhance marketability of
Company Software Programs.
(i) The Company Software Programs (i) have been designed to ensure
year 2000 compatibility, which includes, but is not limited to, date data
century recognition, and calculations that accommodate same century and
multi-century formulas and date values; (ii) operate and will operate in
accordance with their specifications prior to, during and after the calendar
year 2000 AD; and (iii) shall not end abnormally or provide invalid or
incorrect results as a result of date data, specifically including date data
which represents or references different centuries or more than one century.
SECTION 4.15 TAXES
(a) Company and each of Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been a member, have properly completed and
timely filed all material Tax Returns required to be filed by them and have
paid all Taxes shown thereon to be due. Company has provided adequate
accruals in accordance with generally accepted accounting principles in its
latest financial statements included in the Company Reports for any Taxes
that have not been paid, whether or not shown as being due on any Tax
Returns. Other than Taxes incurred in the ordinary course of business,
Company and the Company Subsidiaries have no material liability for unpaid
Taxes accruing after the date of the Company's latest financial statements
included in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien against
the property of Company or any Company Subsidiary or is being asserted
against Company or any Company Subsidiary other than liens for Taxes not yet
due and payable, (ii) no audit of any Tax Return of Company or any Company
Subsidiary being conducted by a Tax Authority; (iii) no extension of the
statute of limitations on the assessment of any Taxes granted by Company or
any Company Subsidiary and currently in effect, and (iv) no agreement,
contract or arrangement to which Company or any Company Subsidiary is a party
that may result in the payment of any amount that would not be deductible by
reason of Section 280G or Section 404 of the Code.
24
(c) Company and the Company Subsidiaries have not been and will not
be required by reason of the Merger to include any material adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to Section
481 or 263A of the Code or any comparable provision under state or foreign
Tax laws as a result of transactions, events or accounting methods employed
prior to the Merger.
(d) Neither Company nor any Company Subsidiary has filed or will file
any consent to have the provisions of paragraph 341(f)(2) of the Code (or
comparable provisions of any state Tax laws) apply to Company or any Company
Subsidiary.
(e) Neither Company nor any Company Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Company or any Company
Subsidiary have any liability or potential liability to another party under
any such agreement.
(f) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
(g) Neither Company nor any Company Subsidiary has ever been a member
of a consolidated, combined or unitary group of which Company was not the
ultimate parent corporation.
(h) Company and each Company Subsidiary has in its possession
receipts for any Taxes paid to foreign Tax authorities. Neither Company nor
any Company Subsidiary has ever been a "personal holding company" within the
meaning of Section 542 of the Code or a "United Sates real property holding
corporation" within the meaning of Section 897 of the Code.
SECTION 4.16 INSURANCE
Company and each Company Subsidiary is presently insured, and during
each of the past three calendar years has been insured, against such risks as
companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. The policies of fire, theft,
liability and other insurance maintained with respect to the assets or
businesses of Company and Company Subsidiaries provide adequate coverage
against loss. Company has heretofore furnished to Parent a complete and
correct list as of the date hereof of all insurance policies maintained by
Company or the Company Subsidiaries, and has made available to Parent
complete and correct copies of all such policies, together with all riders
and amendments thereto. All such policies are in full force and effect and
all premiums due thereon have been paid to the date hereof. Company and the
Company Subsidiaries have complied in all material respects with the terms of
such policies.
SECTION 4.17 PROPERTIES
Company and the Company Subsidiaries have good and marketable title,
free and clear of all material mortgages, liens, pledges, charges or other
encumbrances to all their material tangible properties and assets, real,
personal or mixed, reflected in the Company's consolidated
25
financial statements contained in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, as being owned by Company and
the Company Subsidiaries as of the date thereof, other than (i) any
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such financial statements, (ii)
liens disclosed in the notes to such financial statements, (iii) liens
arising in the ordinary course of business after the date of such financial
statements and (iv) liens that are not material in amount or do not
materially affect the value or operations of Company and the Company
Subsidiaries. All buildings, and all fixtures, equipment and other property
and assets that are material to its business on a consolidated basis, held
under leases or sub-leases by Company or any Company Subsidiary are held
under valid instruments enforceable in accordance with their respective
terms, subject to applicable laws of bankruptcy, insolvency or similar laws
relating to creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Substantially all of
Company's and the Company Subsidiaries' equipment in regular use which is
material to the operation of Company or the Company Subsidiaries, has been
reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
SECTION 4.18 AFFILIATES
Section 4.18 of the Company Disclosure Schedule sets forth the names
of each person who is, in Company's reasonable judgment, an affiliate (as
such term is used in Rule 145 under the Securities Act or under applicable
SEC accounting releases with respect to pooling of interests accounting
treatment) of Company.
SECTION 4.19 OPINION OF FINANCIAL ADVISOR
BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("XXXXXXXXX XXXXXXXX") has
delivered to the board of directors of Company its written opinion to the
effect that, as of the date hereof, the Exchange Ratio is fair to the holders
of shares of Company Common Stock from a financial point of view.
SECTION 4.20 BROKERS
No broker, finder or investment banker (other than Xxxxxxxxx
Xxxxxxxx) is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger based upon arrangements made by or on behalf of
Company. Company has heretofore made available to Parent true, complete and
correct copies of all agreements between Company and Xxxxxxxxx Xxxxxxxx
pursuant to which such firm would be entitled to any payment relating to the
Merger.
SECTION 4.21 CERTAIN BUSINESS PRACTICES
Neither Company nor any Company Subsidiary nor any directors,
officers, agents or employees of Company or any Company Subsidiary (in their
capacities as such) has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of
26
the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any
other unlawful payment.
SECTION 4.22 SECTION 203 OF THE DGCL NOT APPLICABLE
The Board of Directors of Company has approved the Merger, this
Agreement and the Stockholder Agreements, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the Stockholder
Agreements and the transactions contemplated by this Agreement and the
Stockholder Agreements the provisions of Section 203 of the DGCL. To
Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement, the
Stockholders Agreements or the transactions contemplated by this Agreement
and the Stockholders Agreements.
SECTION 4.23 BUSINESS ACTIVITY RESTRICTION
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Company or any subsidiary of
Company 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
Company in any material respect. Company has not entered into any agreement
under which Company is restricted in any material respect from selling,
licensing or otherwise distributing any of its 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company, subject to the
exceptions specifically disclosed in the Parent Disclosure Schedule, all such
exceptions to be referenced to a specific representation set forth in this
Article V or to otherwise be clearly applicable to representations hereof not
specifically referenced, that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Parent and each directly and indirectly owned subsidiary of
Parent (the "PARENT SUBSIDIARIES") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of
the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted. Parent, and each Parent
Subsidiary is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed
27
and in good standing that could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Parent
Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Parent Subsidiary and the percentage of each Parent
Subsidiary's outstanding capital stock or other equity interests owned by
Parent or another Parent Subsidiary and (ii) an indication of whether each
Parent Subsidiary is a "Significant Subsidiary" as defined in Regulation S-X
under the Exchange Act. Neither Parent nor any Parent Subsidiary owns an
equity interest in any partnership or joint venture arrangement or other
business entity that is material to the business, assets, liabilities,
financial condition or results of operations of Parent and the Parent
Subsidiaries, taken as a whole.
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS
The copies of each of Parent's and Merger Subs' certificate of
incorporation and bylaws previously provided to Company by Parent are true,
complete and correct copies thereof. Such certificates of incorporation and
bylaws are in full force and effect.
SECTION 5.03 CAPITALIZATION
The authorized capital stock of Parent consists of 400,000,000 shares
of Parent Common Stock and 5,000,000 shares of preferred stock. As of the
date hereof (i) 39,763,603 shares of Parent Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) no shares of Parent Common Stock are held in the treasury of the
Company, (iii) no shares of Parent Common Stock are held by the Parent
Subsidiaries, (iv) 5,495,205 shares of Parent Common Stock are reserved for
future issuance pursuant to outstanding options and warrants to purchase
Parent Common Stock ("PARENT STOCK OPTION"), of which 4,195,377 and 1,299,828
shares of Parent Common Stock are reserved for future issuance pursuant to
unvested, outstanding and vested, outstanding, unexercised Parent Stock
Options, respectively, and (v) no shares of Parent preferred stock are issued
and outstanding. Except for the shares of Parent Common Stock issuable
pursuant to the Parent Stock Plans, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
Parent is a party or by which Parent is bound relating to the issued or
unissued capital stock of Parent or any Parent Subsidiary or obligating
Parent or any Parent Subsidiary to issue or sell any shares of capital stock
of, or other equity interests in, Parent or any Parent Subsidiary. All shares
of Parent Common Stock subject to issuance as aforesaid, upon issuance prior
to the Effective Time on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or any capital
stock of any Parent Subsidiary. Each outstanding share of capital stock of
each Parent Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Parent or another Parent
Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
Parent's or such other
28
Parent Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever. There are no material outstanding contractual obligations
of Parent or any Parent Subsidiary to provide funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary or any other person.
SECTION 5.04 AUTHORITY RELATIVE TO THIS AGREEMENT
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by each of Parent and Merger Sub and
the consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by each of
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by Company, constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub enforceable against Parent and Merger Sub in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the effect
of general principles of equity which may limit the availability of remedies
(whether in a proceeding at law or in equity).
SECTION 5.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the certificate of incorporation or
bylaws of Parent or any equivalent organizational documents of any Parent
Subsidiary, (ii) assuming that all consents, approvals, authorizations and
permits described in Section 5.05(b) have been obtained and all filings and
notifications described in Section 5.05(b) have been made, conflict with or
violate any Law applicable to Parent or any other Parent Subsidiary or by
which any property or asset of Parent or any Parent Subsidiary is bound or
affected or (iii) result in any breach of or constitute a default (or an
event which with the giving of notice or lapse of time or both could
reasonably be expected to become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of
Parent or any Parent Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, require
any consent, approval, authorization or permit of, or filing by Parent with
or notification by Parent to, any Governmental Entity, except pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules and
29
regulations of the NNM, state takeover laws, the premerger notification
requirements of the HSR Act, if any, and the filing and recordation of the
Certificate of Merger as required by the DGCL.
SECTION 5.06 SEC FILINGS; FINANCIAL STATEMENTS
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC since March 1, 1998
(collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Closing,
the "PARENT REPORTS") and (B) with any other Governmental Entities. Each
Parent Report (i) was prepared in all material respects in accordance with
the requirements of the Securities Act, the Exchange Act or the NNM, as the
case may be, and (ii) did not at the time it was filed (or, in the case of
registration statements filed under the Security Act, at the time of
effectiveness) 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 made therein, in the light of the circumstances under
which they were made, not misleading. Each material form, report, statement
and document referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law. No
Parent Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the NNM, any other stock exchange or any other comparable Governmental
Entity.
(b) Except as is provided in the Parent Reports, each of the
consolidated financial statements (including, in each case, any notes
thereto) contained in the Parent Reports was prepared in accordance with U.S.
GAAP applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each presented fairly, in all
material respects, the consolidated financial position of Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof and for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring
immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and the Parent Subsidiaries as reported
in the Parent Reports, including the notes thereto, none of Parent or any
Parent Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for liabilities or obligations incurred in the ordinary
course of business consistent with past practice since December 31, 1998 that
have not had and could not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
SECTION 5.07 POOLING; CERTAIN TAX MATTERS
Neither Parent nor, to the knowledge of Parent, any of its affiliates
has taken or agreed to take any action (other than actions contemplated by
this Agreement) that could reasonably be expected to prevent (a) the Merger
from being treated for accounting purposes as a "pooling of interests" in
accordance with U.S. GAAP and the accounting standards of the SEC or
30
(b) the Merger from constituting a "reorganization" under Section 368 of the
Code. Parent is not aware of any agreement, plan or other circumstance that
could reasonably be expected to prevent the Merger from being so treated as a
"pooling of interests" or from so qualifying as a reorganization under
Section 368 of the Code.
SECTION 5.08 OPINION OF FINANCIAL ADVISOR
Xxxxxxx, Xxxxx & Co. ("XXXXXXX SACHS") has delivered to the board of
directors of Parent its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to Parent.
SECTION 5.09 BROKERS
No broker, finder or investment banker (other than Xxxxxxx Xxxxx) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent.
Parent has heretofore made available to Company true, complete and correct
copies of all agreements between Parent and Xxxxxxx Sachs pursuant to which
such firm would be entitled to any payment relating to the Merger.
SECTION 5.10 AFFILIATES
Section 5.10 of the Parent Disclosure Schedule sets forth the names
of each person who is, in Parent's reasonable judgment, an affiliate of
Parent.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS BY COMPANY PENDING THE CLOSING
Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, (x) the
respective businesses of Company and the Company Subsidiaries shall be
conducted only in, and Company and the Company Subsidiaries shall not take
any action except in, the ordinary course of business consistent with past
practice and (y) Company shall use all reasonable efforts to keep available
the services of such of the current officers, significant employees and
consultants of Company and the Company Subsidiaries and to preserve the
current relationships of Company and the Company Subsidiaries with such of
the corporate partners, customers, suppliers and other persons with which
Company or any Company Subsidiary has significant business relations in order
to preserve substantially intact its business organization. By way of
amplification and not limitation, neither Company nor any Company Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following without the prior
written consent of Parent:
31
(a) amend or otherwise change its certificate of incorporation or
bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee or encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license or encumbrance of, (i) any shares of capital
stock of Company or any Company Subsidiary of any class, or securities
convertible into or exchangeable or exercisable for any shares of such
capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Company or any
Company Subsidiary, other than (x) the issuance of shares of Company Common
Stock pursuant to the exercise of warrants or stock options therefor
outstanding as of the date of this Agreement or (y) the issuance in the
ordinary course of business consistent with past practice of up to an
additional 500,000 shares of Company Common Stock under Company's Stock Plans
pursuant to new grants of options or share purchase rights or (ii) any
property or assets of Company or any Company Subsidiary except sales of
inventory in the ordinary course of business consistent with past practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any
division thereof (other than in connection with the formation of foreign
subsidiaries and the capitalization thereof with no more than $500,000); (ii)
incur any indebtedness for borrowed money (other than in de minimus amounts)
or issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person for
borrowed money or make any loans or advances material to the business,
assets, liabilities, financial condition or results of operations of Company
and the Company Subsidiaries, taken as a whole; (iii) terminate, cancel or
request any material change in, or agree to any material change in, any
Company Material Contract or other material License Agreement (other than as
described in Section 6.01(c)(iii) of the Company Disclosure Schedule); (iv)
make or authorize any capital expenditure, other than capital expenditures in
the ordinary course of business that have been described in the Disclosure
Schedule and that are not, in the aggregate, in excess of $4,000,000 for
Company and the Company Subsidiaries taken as a whole; or (v) enter into or
amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock, except that any Company Subsidiary may pay
dividends or make other distributions to Company or any other Company
Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination of
the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
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(f) amend or change the period (or permit any acceleration, amendment
or change) of exercisability of options granted under the Company Stock Plans
or authorize cash payments in exchange for any Company Stock Options granted
under any of such plans, except pursuant to existing arrangements disclosed
to Parent prior to the date hereof;
(g) amend the terms of, repurchase, redeem or otherwise acquire, or
permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any
of its securities or any securities of any Company Subsidiary or propose to
do any of the foregoing;
(h) other than pursuant to existing agreements of Company previously
provided to Parent, increase the compensation payable or to become payable to
its directors, officers, consultants or employees (other than any such
increases for non-officers that are made in the ordinary course of business
consistent with past practice), grant any rights to severance or termination
pay to, or enter into any employment or severance agreement which provides
benefits upon a change in control of Company that would be triggered by the
Merger with, any director, officer, consultant or other employee of Company
or any Company Subsidiary who is not currently entitled to such benefits from
the Merger, establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer, consultant or employee of Company or
any Company Subsidiary (except as allowed under Section 6.01(b)), except to
the extent required by applicable Law or the terms of a collective bargaining
agreement, or enter into or amend any contract, agreement, commitment or
arrangement between Company or any Company Subsidiary and any of Company's
directors, officers, consultants or employees (except as allowed under
Section 6.01(b));
(i) except as permitted under Section 6.01(c), 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 course of business and consistent with past
practice of liabilities (A) reflected or reserved against on the consolidated
balance sheet of Company and the consolidated the Company Subsidiaries dated
as of March 31, 1999 included in Company's quarterly report on Form 10-Q for
the period then ended (the "COMPANY BALANCE SHEET") and only to the extent of
such reserves or (B) that are both immaterial in amount and incurred in the
ordinary course of business consistent with past practice after the date of
the Company Balance Sheet;
(j) make any change with respect to Company's accounting policies,
principles, methods or procedures, including, without limitation, revenue
recognition policies, other than as required by U.S. GAAP;
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(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of Company
contained in this Agreement untrue or incorrect in any material respect or
result in any of the conditions to the Merger set forth herein not being
satisfied, except as specifically permitted hereunder.
SECTION 6.02 NOTICES OF CERTAIN EVENTS
Each of Parent and Company shall give prompt notice to the other of
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger;
(ii) any notice or other communication from any Governmental Entity in
connection with the Merger; (iii) any actions, suits, claims, investigations
or proceedings commenced or, to its knowledge, threatened against, relating
to or involving or otherwise affecting Parent or the Parent Subsidiaries or
Company or the Company Subsidiaries, respectively, or that relate to the
consummation of the Merger; (iv) the occurrence of a default or event that,
with the giving of notice or lapse of time or both, will become a default
under any material contract of Parent or Company Material Contract,
respectively; and (v) any change that could reasonably be expected to have a
Parent Material Adverse Effect or a Company Material Adverse Effect,
respectively, or to delay or impede the ability of either Parent or Company,
respectively, to perform their respective obligations pursuant to this
Agreement and to effect the consummation of the Merger.
SECTION 6.03 ACCESS TO INFORMATION; CONFIDENTIALITY
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Parent or Company or any of the
Parent Subsidiaries or the Company Subsidiaries is a party or pursuant to
applicable Law or the regulations or requirements of any stock exchange or
other regulatory organization with whose rules a party hereto is required to
comply, from the date of this Agreement to the Effective Time, Parent and
Company shall (and shall cause the Parent Subsidiaries and Company
Subsidiaries, respectively, to) (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and
other representatives (collectively, "REPRESENTATIVES")) access at reasonable
times upon prior notice to its and its subsidiaries' officers, employees,
agents, properties, offices and other facilities and to the books and records
thereof, and (ii) furnish promptly such information concerning its and its
subsidiaries' business, properties, contracts, assets, liabilities and
personnel as the other party or its Representatives may reasonably request.
No investigation conducted pursuant to this Section 6.03 shall affect or be
deemed to modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement with respect to the
information disclosed pursuant to this Section 6.03.
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SECTION 6.04 NO SOLICITATION OF TRANSACTIONS
Until this Agreement has been terminated as provided herein, Company
shall not, directly or indirectly, and shall cause its Representatives not
to, directly or indirectly, solicit, initiate or encourage (including by way
of furnishing nonpublic information), any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to
its stockholders) that constitutes, or may reasonably be expected to lead to,
any Competing Transaction, or enter into or maintain or continue discussions
or negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of Company's Representatives or subsidiaries, or any
Representative retained by Company's subsidiaries, to take any such action;
PROVIDED, HOWEVER, that nothing contained in this Agreement, including this
Section 6.04, shall prohibit the Company or the board of directors of Company
(i) from complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange
Act with regard to a tender or exchange offer not made in violation of this
Section 6.04 or (ii) prior to receipt of the approval by the stockholders of
Company of this Agreement and the Merger from providing information (subject
to a confidentiality agreement at least as restrictive as the Confidentiality
Agreement) in connection with, and negotiating, another unsolicited, bona
fide written proposal regarding a Competing Transaction that (i) Company's
board of directors shall have concluded in good faith, in part on the basis
of advice of independent outside counsel of nationally recognized reputation,
that such action is necessary to prevent Company's board of directors from
violating its fiduciary duties to Company's stockholders under applicable
law, (ii) if any cash consideration is involved, shall not be subject to any
financing contingency, and with respect to which Company's board of directors
shall have determined (based in part upon the advice of Company's independent
financial advisors of nationally recognized reputation) that the acquiring
party is reasonably capable of consummating such Competing Transaction on the
terms proposed, and (iii) Company's board of directors reasonably believes in
good faith that such Competing Transaction provides greater value to the
stockholders of Company than the Merger (based in part upon the written
opinion of Company's independent financial advisors of nationally recognized
reputation that such Competing Transaction is superior from a financial point
of view) (any such Competing Transaction being referred to herein as a
"SUPERIOR PROPOSAL"). Any violation of the restrictions set forth in this
Section 6.04 by any Representative of Company or any of its Subsidiaries,
whether or not such Person is purporting to act on behalf of Company or
otherwise, shall be deemed to be a breach of this Section 6.04 by Company.
Company shall notify Parent promptly if any proposal or offer, or any inquiry
or contact with any person with respect thereto, regarding a Competing
Transaction is made, such notice to include the identity of the person making
such proposal, offer, inquiry or contact, and the terms of such Competing
Transaction, and shall keep Parent apprised, on a current basis, of the
status of such Competing Transaction and of any modifications to the terms
thereof. Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore
with respect to a Competing Transaction. Company shall not release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party.
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SECTION 6.05 TAX-FREE TRANSACTION; POOLING
From and after the date of this Agreement, each party hereto shall
use all reasonable efforts to cause the Merger to qualify, and shall not
knowingly take any actions or cause any actions to be taken which could
reasonably be expected to prevent the Merger from (a) qualifying as a
"reorganization" under Section 368(a) of the Code or (b) being treated for
financial accounting purposes as a "pooling of interests" in accordance with
U.S. GAAP and the accounting standards of the SEC.
SECTION 6.06 CONTROL OF OPERATIONS
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to the Effective
Time, Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its operations.
SECTION 6.07 FURTHER ACTION; CONSENTS; FILINGS
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Parent or Company or any of
their respective subsidiaries in connection with the authorization, execution
and delivery of this Agreement and the consummation of the Merger and (iii)
make all necessary filings, and thereafter make any other required or
appropriate submissions, with respect to this Agreement and the Merger
required under (A) the rules and regulations of the NNM, (B) the Securities
Act, the Exchange Act and any other applicable Federal or state securities
Laws, (C) the HSR Act, if any, and (D) any other applicable Law. The parties
hereto shall cooperate and consult with each other in connection with the
making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and
none of the parties shall file any such document if any of the other parties
shall have reasonably objected to the filing of such document. No party shall
consent to any voluntary extension of any statutory deadline or waiting
period or to any voluntary delay of the consummation of the Merger at the
behest of any Governmental Entity without the consent and agreement of the
other parties hereto, which consent shall not be unreasonably withheld or
delayed.
(b) Each of Company and Parent will give (or will cause their
respective subsidiaries to give) any notices to third persons, and use, and
cause their respective subsidiaries to use, reasonable efforts to obtain any
consents from third persons necessary, proper or advisable (as determined in
good faith by Parent with respect to such notices or consents to be delivered
or obtained by Company) to consummate the transactions contemplated by this
Agreement.
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SECTION 6.08 ADDITIONAL REPORTS
Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 4.07 and 5.06, which it files
with the SEC on or after the date hereof, and Company and Parent, as the case
may be, covenant and warrant that as of the respective dates thereof, such
reports will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any unaudited consolidated interim financial statements
included in such reports (including any related notes and schedules) will
fairly present in all material respects the financial position of Company and
its consolidated subsidiaries or Parent and its consolidated subsidiaries, as
the case may be, as of the dates thereof and the results of operations and
changes in financial position or other information including therein for the
periods or as of the date then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with past practice and U.S.
GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto).
SECTION 6.09 TAX INFORMATION
Company shall provide the following information to Parent not later
than two weeks after the date of this Agreement: (i) a complete list of the
types of Tax Returns being filed by Company and each Company Subsidiary in
each taxing jurisdiction, (ii) a list of all closed years with respect to
each such type of Tax Return filed in each jurisdiction, and (iii) a list of
any deferred intercompany gain with respect to transactions to which Company
or any Company Subsidiary has been a party. Company shall provide Parent and
its accountants, counsel and other representatives reasonable access, during
normal business hours during the period prior to the Effective Time, to all
of Company's and Company Subsidiaries' Tax Returns and other records and
workpapers relating to Taxes.
SECTION 6.10 CONDUCT OF BUSINESS BY PARENT.
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms
or the Effective Time, Parent shall not knowingly take any action a principal
purpose of which is, and the reasonably likely result of which would be, a
material delay in or interference with the consummation of the Merger.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 REGISTRATION STATEMENT; PROXY STATEMENT
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and shall file with the SEC a
document or documents that will constitute (i) the prospectus forming part of
the registration statement on Form S-4 of Parent (together with all
amendments thereto, the "REGISTRATION STATEMENT"), in connection with the
registration under the Securities Act of Parent Common Stock to be issued to
Company's stockholders pursuant to the Merger and (ii) the proxy statement
with respect to the Merger relating to the special meeting of Company's
stockholders to be held to consider approval of this Agreement and the Merger
(the "COMPANY STOCKHOLDERS' MEETING") (together with any amendments thereto,
the "PROXY STATEMENT"). Copies of the Proxy Statement shall be provided to
the NNM in accordance with its rules. Each of the parties hereto shall use
all reasonable efforts to cause the Registration Statement to become
effective as promptly as practicable after the date hereof, and, prior to the
effective date of the Registration Statement, the parties hereto shall take
all action required under any applicable Laws in connection with the issuance
of shares of Parent Common Stock pursuant to the Merger. Parent or Company,
as the case may be, shall furnish all information concerning Parent or
Company as the other party may reasonably request in connection with such
actions and the preparation of the Registration Statement and the Proxy
Statement. As promptly as practicable after the effective date of the
Registration Statement, the Proxy Statement shall be mailed to the
stockholders of Company. Each of the parties hereto shall cause the Proxy
Statement to comply as to form and substance as to such party in all material
respects with the applicable requirements of (i) the Exchange Act, (ii) the
Securities Act, (iii) the rules and regulations of the NNM.
(b) The Proxy Statement shall include (i) the approval of the Merger
and the recommendation of the board of directors of Company to Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger, subject to the right of the board of directors of Company to withdraw
its recommendation and recommend a Superior Proposal in compliance with
Section 6.04 of this Agreement, and (ii) the opinion of Xxxxxxxxx Xxxxxxxx
referred to in Section 4.19. The board of directors of Company shall submit
this Agreement to Company's stockholders whether or not at any time
subsequent to the date hereof such board determines that it can no longer
make such recommendation; PROVIDED, HOWEVER, that, in the case of such
withdrawal of such board's recommendation, Company may delay or adjourn the
meeting at which this Agreement is submitted to such stockholders by as many
as ten business days in order to give such stockholders a reasonable
opportunity to consider such withdrawal of recommendation.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement shall be made without the approval of Parent and
Company, which approval shall not be unreasonably withheld or delayed;
PROVIDED, HOWEVER, that the consent of Parent shall not be required to amend
or supplement the Proxy Statement to reflect the withdrawal of the
recommendation of Company's board of directors that Company's stockholders
vote in favor of the approval of this Agreement and/or the recommendation
that Company's stockholders approve of a Superior Proposal. Each of the
parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the
issuance of any stop order, of the suspension of the qualification of the
Parent Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or of any request by the SEC for amendment of the
Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
38
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy
Statement shall, at the respective times filed with the SEC or other
regulatory agency and, in addition, (A) in the case of the Proxy Statement,
at the date it or any amendments or supplements thereto are mailed to
stockholders of Company, at the time of the Company Stockholders' Meeting and
at the Effective Time and (B) in the case of the Registration Statement, when
it becomes effective under the Securities Act and at the Effective Time,
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. If at any time prior to the Effective Time any event or
circumstance relating to Company or any Company Subsidiary, or their
respective officers or directors, should be discovered by Company that should
be set forth in an amendment or a supplement to the Registration Statement or
the Proxy Statement, Company shall promptly inform Parent. All documents that
Company is responsible for filing with the SEC in connection with the Merger
will comply as to form in all material respects with the applicable
requirements of the rules and regulations of the Securities Act and the
Exchange Act.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy
Statement shall, at the respective times filed with the SEC or other
regulatory agency and, in addition, (A) in the case of the Proxy Statement,
at the date it or any amendments or supplements thereto are mailed to
stockholders of Company, at the time of Company Stockholders' meeting and at
the Effective Time and (B) in the case of the Registration Statement, when it
becomes effective under the Securities Act and at the Effective Time, 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. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Parent Subsidiary, or their respective
officers or directors, should be discovered by Parent that should be set
forth in an amendment or a supplement to the Registration Statement or the
Proxy Statement, Parent shall promptly inform Company. All documents that
Parent is responsible for filing with the SEC in connection with the Merger
will comply as to form in all material respects with the applicable
requirements of the rules and regulations of the Securities Act and the
Exchange Act.
SECTION 7.02 STOCKHOLDERS' MEETING
Company shall call and hold the Company Stockholders' Meeting as
promptly as practicable after the date hereof for the purpose of voting upon
the approval of this Agreement and the Merger pursuant to the Proxy
Statement, and Company shall use all reasonable efforts to hold the Company
Stockholders' Meeting as soon as practicable after the date on which the
Registration Statement becomes effective, subject to Company's right to delay
or adjourn such meeting as provided in Section 7.01(c). Unless Company's
board of directors has withdrawn its recommendation of this Agreement and the
Merger in compliance with Section 6.04, Company shall use all reasonable
efforts to solicit from its stockholders proxies in favor of the approval of
this Agreement and the Merger pursuant to the Proxy Statement and shall take
all other action necessary or advisable to secure the vote or consent of
stockholders required by the DGCL or
39
applicable other stock exchange requirements to obtain such approval. Company
shall take all other action necessary or, in the reasonable opinion of
Parent, advisable to promptly and expeditiously secure any vote or consent of
stockholders required by applicable Law and Company's certificate of
incorporation and bylaws to effect the Merger. Company shall call and hold
the Company Stockholders' Meeting for the purpose of voting upon the approval
of this Agreement and the Merger whether or not Company's board of directors
at any time subsequent to the date hereof determines that this Agreement is
no longer advisable or recommends that Company's stockholders reject it.
SECTION 7.03 AFFILIATES
(a) Company will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex B hereto from (i) each person
identified in Section 4.18 of the Company Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any
person who, to the knowledge of Company, may be deemed to have become an
affiliate of Company after the date of this Agreement and prior to the
Effective Time as soon as practicable after attaining such status. The
foregoing notwithstanding, Parent shall be entitled to place legends as
specified in the Affiliate Agreement on the certificates evidencing any of
the Parent Common Stock to be received by (i) any affiliate of Company or
(ii) any person Parent reasonably identifies (by written notice to Company)
as being a person who may be deemed an "affiliate" within the meaning of Rule
145 promulgated under the Securities Act, and to issue appropriate stop
transfer instructions to the transfer agent for such Parent Common Stock,
consistent with the terms of the Affiliate Agreement, regardless of whether
such person has executed an Affiliate Agreement and regardless of whether
such person's name appears on Section 4.18 of the Company Disclosure Schedule.
(b) Parent will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex C hereto from (i) each person
identified in Section 5.10 of the Parent Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any
person who, to the knowledge of Parent, may be deemed to have become an
affiliate of Parent after the date of this Agreement and prior to the
Effective Time as soon as practicable after attaining such status.
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SECTION 7.04 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
(a) Parent and the Merger Sub agree that all rights to
indemnification, advancement of expenses, exculpation, limitation of
liability and any and all similar rights now existing in favor of each
present and former director, officer, employee and agent of Company and each
Company Subsidiary (collectively, the "Indemnified Parties") as provided in
the Company's present charter, by-laws or contractual arrangements in effect
on the date hereof, shall survive the Merger and shall continue in full force
and effect for a period of six years from the Effective Time, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at any time prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification shall be required by law, and Parent agrees to cause
the Surviving Corporation to comply with its obligations thereunder;
provided, however, that in the event any claim or claims are asserted or made
within such six-year period, all rights to indemnification in respect to any
such claim or claims shall continue until the disposition of any and all such
claims.
(b) In the event the Company or the Surviving Corporation or any of
their respective 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 a material amount of
its properties and assets to any person in a single transaction or a series
of transactions, then, and in each such case, Parent will either guaranty the
indemnification obligations referred to in this Section 7.04 or will make or
cause to be made proper provision so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, assume the
indemnification obligations described herein for the benefit of the
Indemnified Parties and have substantially equal financial ability as the
Company (immediately prior to the Effective Time) to satisfy the obligations
of the parties pursuant to this Section 7.04 as a condition to such merger,
consolidation or transfer becoming effective.
(c) The provisions of this Section 7.04 are (i) intended to be for
the benefit of, and will be enforceable by, each of the Indemnified Parties
and (ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
(d) For a period of three years after the Effective Time, Parent
shall use its best efforts to maintain in effect the directors' and officers'
liability insurance policies maintained by Company; PROVIDED, HOWEVER, that
in no event shall Parent be required to expend in any one year in excess of
150% of the annual premium currently paid by Company for such coverage, which
Company hereby represents is $250,000, and provided further, that if the
premium for such coverage exceeds such amount, Parent shall purchase a policy
with the greatest coverage available for such 150% of the annual premium.
SECTION 7.05 NO SHELF REGISTRATION
Parent shall not be required to amend or maintain the effectiveness
of the Registration Statement for the purpose of permitting resale of the
shares of Parent Common Stock received pursuant hereto by the persons who may
be deemed to be "affiliates" of Company within the meaning of Rule 145
promulgated under the Securities Act.
SECTION 7.06 PUBLIC ANNOUNCEMENTS
The initial press release concerning the Merger shall be a joint
press release and, thereafter, Parent and Company shall consult with each
other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and shall not issue
any such press release or make any such public statement without the prior
written approval of the other, except to the extent required by applicable
Law or the requirements of the rules and regulations of the NNM, in which
case the issuing party shall use all reasonable efforts
41
to consult with the other party before issuing any such release or making any
such public statement.
SECTION 7.07 NNM LISTING
Prior to the Effective Time, Parent shall file with the NNM a
Notification Form for Listing of Additional Shares with respect to the Parent
Common Stock issued or issuable in connection with the Merger and shall use
all reasonable efforts to obtain approval from NNM of the listing of such
Parent Common Stock as of the Effective Time, subject to official notice of
issuance.
SECTION 7.08 BLUE SKY
Parent shall use all reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under Blue Sky
Laws to permit the distribution of the shares of Parent Common Stock to be
issued in accordance with the provisions of this Agreement.
SECTION 7.09 EMPLOYEE BENEFIT MATTERS
Unless Parent consents otherwise in writing, Company shall take all
action necessary to terminate, or cause to terminate, before the Effective
Time, any Company Benefit Plan that is a 401(k) plan or other defined
contribution retirement plan.
SECTION 7.10 REGISTRATION STATEMENT ON FORM S-8.
On the date of the Effective Time or as soon thereafter as is
practicable, Parent shall file a registration statement on Form S-8 covering
the issuance of Parent Common Stock issuable under the Company Stock Plans.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
42
(b) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of Company in
accordance with the DGCL;
(c) no court of competent jurisdiction shall have issued
or entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in
effect and has the effect of making the Merger illegal or otherwise
prohibiting its consummation;
(d) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act or any
other applicable competition, merger control or similar Law shall
have expired or been terminated; and
(e) all consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been
obtained from all Governmental Entities, except where the failure to
obtain any such consent, approval or authorization could not
reasonably be expected to result in a Parent Material Adverse Effect
or a Company Material Adverse Effect.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF COMPANY
The obligations of Company to consummate the Merger, or to permit the
consummation of the Merger are subject to the satisfaction or, if permitted
by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent
contained in this Agreement shall be true, complete and correct in
all respects (ignoring for this purpose all materiality or Material
Adverse Effect qualifications in such representations and warranties)
both when made and on and as of the Effective Time as if made at and
as of the Effective Time (other than (i) representations and
warranties which address matters only as of a certain date which
shall have been true, complete and correct as of such certain date,
and (ii) failures to be true, complete and correct that do not, in
the aggregate, constitute a Parent Material Adverse Effect), and
Company shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Parent to such effect;
(b) Parent shall have performed or complied in all
material respects with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time
and Company shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Parent to that effect;
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, legal counsel to
Company, shall have issued its opinion, such opinion dated on the
date of the Closing, addressed to Company, and reasonably
satisfactory to it, based upon customary representations of Company
and Parent and customary assumptions, to the effect that the Merger
will constitute a "reorganization" within the meaning of Section
368(a) of the Code, which opinion shall not have been withdrawn or
modified in any material respect; PROVIDED,
43
HOWEVER, that if such firm does not render such opinion, this
condition shall nonetheless be deemed satisfied if such opinion,
dated as of the date of the Closing, is rendered to Company by
Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to Parent; and
(d) There shall have been no Parent Material Adverse
Effect since the date of this Agreement.
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF PARENT
The obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company
contained in this Agreement shall be true, complete and correct in
all respects (ignoring for this purpose all materiality or Material
Adverse Effect qualifications in such representations and warranties)
both when made and on and as of the Effective Time as if made at and
as of the Effective Time (other than (i) representations and
warranties which address matters only as of a certain date which
shall have been true, complete and correct as of such certain date,
and (ii) failures to be true, complete and correct that do not, in
the aggregate, constitute a Company Material Adverse Effect), and
Parent shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Company to such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time
and Parent shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Company to that effect;
(c) Xxxxxxx, Phleger & Xxxxxxxx LLP, special counsel to
Parent, shall have issued its opinion, such opinion dated on the date
of the Closing, addressed to Parent, and reasonably satisfactory to
it, based upon customary representations of Company and Parent and
customary assumptions, to the effect that the Merger will constitute
a "reorganization" within the meaning of Section 368(a) of the Code,
which opinion shall not have been withdrawn or modified in any
material respect; PROVIDED, HOWEVER, that if such firm does not
render such opinion, this condition shall nonetheless be deemed
satisfied if such opinion, dated as of the date of Closing, is
rendered to Parent by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, legal counsel
to Company;
(d) Parent shall have been advised in writing by
PricewaterhouseCoopers LLP as of the date upon which the Effective
Time is to occur, in a form and in substance reasonably acceptable to
Parent, that the Merger can properly be accounted for as a "pooling
of interests" business combination in accordance with U.S. GAAP and
the accounting standards of the SEC; Company shall have been advised
in writing by KPMG LLP as of the date upon which the Effective Time
is to occur that such firm concurs with the management of the Company
that there is no reason why the Merger cannot be
44
treated for financial accounting purposes as a "pooling of interests"
business combination in accordance with U.S. GAAP and the accounting
standards of the SEC;
(e) There shall have been no Company Material Adverse Effect
since the date of this Agreement;
(f) All consents of third parties required pursuant to the
terms of any Material Contract as a result of the Merger shall have
been obtained; and
(g) At least five of the employees of Company set forth on
Schedule 8.03(g) shall have either (i) entered into employment,
proprietary invention and non-competition agreements substantially in
the form of Annex D or (ii) if so permitted as provided on Schedule
8.03(g), allowed Parent to assume their respective employment
agreement as in effect on the date hereof and entered into a
non-competition and proprietary invention agreement with Parent in
substantially the form included in Annex D.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite adoption
and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards
of directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall
not have occurred on or before January 31, 2000; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose material breach of this
Agreement shall have caused, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by either Parent or Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the Merger
shall have been entered by any court of competent jurisdiction and
shall have become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this Agreement
or the Merger in a manner adverse to Parent or its stockholders, (ii)
the board of directors of Company shall have recommended to the
stockholders of Company a Competing Transaction, (iii) the Company
fails to comply in all material respects with Section 6.04 or Section
7.02, (iv) a
45
Competing Transaction shall have been announced or otherwise publicly
known and the board of directors of Company shall have (A) failed to
recommend against acceptance of such by its stockholders (including
by taking no position, or indicating its inability to take a
position, with respect to the acceptance by its stockholders of a
Competing Transaction involving a tender offer or exchange offer)
within 5 business days of delivery of a written request from Parent
for such action, (B) failed to reconfirm its approval and
recommendation of this Agreement and the transactions contemplated
hereby within 5 business days of delivery of a written request from
Parent for such action or (C) determined that such Competing
Transaction was a Superior Proposal and to take any of the actions
allowed by clause (ii) of Section 6.04 (and shall not have, prior to
Parent's termination of this Agreement pursuant to this Section
9.01(d)(iv)(C), (x) reconfirmed its approval and recommendation of
this Agreement and (y) recommended against acceptance of such
Superior Proposal by its stockholders), or (v) the board of directors
of Company resolves to take any of the actions described above;
(e) by Parent or Company, if this Agreement and the Merger
shall fail to receive the requisite votes for approval at the Company
Stockholders' Meeting or any adjournment or postponement thereof;
(f) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have
become untrue, incomplete or incorrect, in either case such that the
conditions set forth in Section 8.03 would not be satisfied (a
"TERMINATING COMPANY BREACH"); PROVIDED, HOWEVER, that if such
Terminating Company Breach is curable by Company through the exercise
of its reasonable efforts within 20 days and for so long as Company
continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 9.01(f); and PROVIDED,
FURTHER that the preceding proviso shall not in any event be deemed
to extend any date set forth in paragraph (b) of this Section 9.01; or
(g) by Company, upon breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have
become untrue, incomplete or incorrect, in either case such that the
conditions set forth in Section 8.02 would not be satisfied (a
"TERMINATING PARENT BREACH"); PROVIDED, HOWEVER, that if such
Terminating Parent Breach is curable by Parent through the exercise
of its reasonable efforts within 20 days and for so long as Parent
continues to exercise such reasonable efforts, Company may not
terminate this Agreement under this Section 9.01(g); and PROVIDED,
FURTHER that the preceding proviso shall not in any event be deemed
to extend any date set forth in paragraph (b) of this Section 9.01.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.01 will remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
46
SECTION 9.02 EFFECT OF TERMINATION
Except as provided in Section 9.05, in the event of termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith
become void, there shall be no liability under this Agreement on the part of
any party hereto or any of its affiliates or any of its or their officers or
directors, and all rights and obligations of each party hereto shall cease;
PROVIDED, HOWEVER, that nothing herein shall relieve any party hereto from
liability for the willful or intentional breach of any of its representations
and warranties or the willful or intentional breach of any of its covenants
or agreements set forth in this Agreement. No termination of this Agreement
shall affect the obligation of the parties contained in the Confidentiality
Agreements, which shall survive termination of this Agreement and remain in
full force and effect in accordance with their terms.
SECTION 9.03 AMENDMENT
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective boards of directors at any time prior to
the Effective Time; PROVIDED, HOWEVER, that, after the approval of this
Agreement by the stockholders of Company, no amendment may be made that
changes the amount or type of consideration into which Company common stock
will be converted pursuant to this Agreement. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 9.04 WAIVER
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance by the other party with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 9.05 TERMINATION FEE; EXPENSES
(a) Except as set forth in this Section 9.05, all Expenses incurred
in connection with this Agreement and the Merger shall be paid by the party
incurring such Expenses, whether or not the Merger is consummated, except
that Parent and Company each shall pay one-half of all Expenses (other than
attorneys' and accountants' fees and expenses) incurred solely for printing,
filing and mailing the Registration Statement and the Proxy Statement and all
SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement and any fees required to be
paid under the HSR Act.
(b) In the event that (i) Parent shall terminate this Agreement
pursuant to Section 9.01(d) or (ii) this Agreement shall be terminated
pursuant to Section 9.01(b) or pursuant to Section 9.01(e) as a result of the
failure to obtain the requisite approval of the Company stockholders and (A)
at or prior to such termination, there shall exist or have been publicly
proposed a Competing Transaction with respect to Company and (B) within 12
months after such
47
termination, Company shall enter into a definitive agreement with respect to
any Competing Transaction or any Competing Transaction involving Company
shall be consummated, then, in the case of (i), promptly after such
termination, or in the case of (ii), immediately before the execution and
delivery of such agreement or such consummation, Company shall pay to Parent
an amount equal to $30 million (the "TERMINATION FEE").
(c) In the event that Parent shall terminate this Agreement pursuant
to Section 9.01(f), then Company shall promptly reimburse Parent for Parent's
Expenses, and if, within twelve months of such termination of this Agreement,
Company shall enter into a definitive agreement with respect to any Competing
Transaction or any Competing Transaction involving Company shall be
consummated, then, immediately before the execution and delivery of such
agreement or such consummation, Company shall pay to Parent an amount in cash
equal to the Termination Fee less the amount of any Expenses of Parent
previously reimbursed by Company pursuant to this Section 9.05(c).
(d) Parent and Company agree that the agreements contained in Section
9.05(b) and 9.05(c) above are an integral part of the transaction
contemplated by this Agreement and constitute liquidated damages and not a
penalty. Accordingly, if Company fails to pay to Parent any amounts due under
Section 9.05(b) or 9.05(c), Company shall pay the cash and expenses
(including legal fees and expenses) in connection with any action, including
the filing of any lawsuit of other legal action, taken to collect payment,
together with interest on such amounts at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. This Section 10.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 10.02 NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or
facsimile, by registered or certified mail (postage prepaid, return receipt
requested) or by a nationally recognized courier service to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.02):
48
(a) if to Company:
NetGravity, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
(b) if to Parent or Merger Sub:
DoubleClick Inc.
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxx, General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
SECTION 10.03 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of 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 Merger 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 a mutually acceptable manner to the fullest extent
permitted by applicable Law in order that the Merger may be consummated as
originally contemplated to the fullest extent possible.
49
SECTION 10.04 ASSIGNMENT; BINDING EFFECT; BENEFIT
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of Law or otherwise) without the prior written consent of the
other parties hereto. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, other than Section 7.04, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
SECTION 10.05 INCORPORATION OF EXHIBITS
The Parent Disclosure Schedule, the Company Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part of this Agreement for all purposes as if fully set
forth herein.
SECTION 10.06 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE OTHER THAN CONFLICT OF
LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT
OF DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER
ALL DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY.
THE PARTIES HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS. EACH OF THE PARTIES HERETO WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM
THAT (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH
COURTS, (II) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL
PROCESS ISSUED BY SUCH COURTS OR (III) ANY LITIGATION COMMENCED IN SUCH
COURTS IS BROUGHT IN AN INCONVENIENT FORUM.
SECTION 10.07 WAIVER OF JURY TRIAL
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT
CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
50
SECTION 10.08 HEADINGS; INTERPRETATION
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
SECTION 10.09 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed and delivered
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 10.10 ENTIRE AGREEMENT
This Agreement (including the Exhibits, the Parent Disclosure
Schedule and the Company Disclosure Schedule) and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
DOUBLECLICK INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief Operating Officer
NETGRAVITY, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
NJ MERGER CORPORATION
By: /s/ Xxxxx X. Xxxx
--------------------
Name: Xxxxx X. Xxxx
Title: President
