EXHIBIT 1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
SEAT PAGINE GIALLE S.P.A.,
SOGERIM, SOCIETE ANONYME,
NICKEL ACQUISITION CORP.
and
NETCREATIONS, INC.
Dated as of December 22, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms........................................2
ARTICLE II
THE MERGER
SECTION 2.01 The Merger...................................................8
SECTION 2.02 Closing......................................................8
SECTION 2.03 Effective Time...............................................9
SECTION 2.04 Effect of the Merger.........................................9
SECTION 2.05 Certificate of Incorporation; Bylaws;
Directors and Officers of Surviving
Corporation..................................................9
ARTICLE III
EFFECT OF MERGER ON CAPITAL STOCK OF
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICA
SECTION 3.01 Effect on Capital Stock.....................................10
SECTION 3.02 Exchange of Shares Other than Treasury Shares...............11
SECTION 3.03 Stock Transfer Books........................................15
SECTION 3.04 Options to Purchase Company Common Stock....................15
SECTION 3.05 Employee Stock Purchase Plan................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
SECTION 4.01 Organization and Qualification;
Subsidiaries................................................17
SECTION 4.02 Certificate of Incorporation and Bylaws.....................17
SECTION 4.03 Capitalization..............................................18
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SECTION 4.04 Authority Relative to This Agreement........................19
SECTION 4.05 No Conflict; Required Filings and Consents..................20
SECTION 4.06 Permits; Compliance with Laws...............................20
SECTION 4.07 SEC Filings; Financial Statements...........................21
SECTION 4.08 Absence of Certain Changes or Events........................22
SECTION 4.09 Employee Benefit Plans; Labor Matters.......................24
SECTION 4.10 [Intentionally Omitted].....................................28
SECTION 4.11 Contracts...................................................28
SECTION 4.12 Litigation..................................................30
SECTION 4.13 Environmental Matters.......................................30
SECTION 4.14 Intellectual Property.......................................31
SECTION 4.15 Taxes.......................................................36
SECTION 4.16 Insurance...................................................39
SECTION 4.17 Properties..................................................39
SECTION 4.18 [Intentionally Omitted].....................................40
SECTION 4.19 Opinion of Financial Advisor................................40
SECTION 4.20 Brokers.....................................................40
SECTION 4.21 Certain Business Practices..................................40
SECTION 4.22 Section 912 of New York Law Not
Applicable..................................................41
SECTION 4.23 Business Activity Restriction...............................41
SECTION 4.24 Privacy.....................................................42
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01 Organization and Qualification;
Subsidiaries................................................42
SECTION 5.02 Authority Relative to this Agreement........................43
SECTION 5.03 No Conflict; Required Filings and
Consents....................................................44
SECTION 5.04 Financing...................................................44
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending
the Closing................................................45
SECTION 6.02 Notices of Certain Events..................................48
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SECTION 6.03 Access to Information; Confidentiality.....................49
SECTION 6.04 No Solicitation of Transactions............................49
SECTION 6.05 [Intentionally Omitted]....................................52
SECTION 6.06 Control of Operations......................................52
SECTION 6.07 Further Action; Consents; Filings..........................52
SECTION 6.08 Additional Reports.........................................53
SECTION 6.09 Tax Information............................................54
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Proxy Statement............................................54
SECTION 7.02 Company Shareholders' Meeting..............................56
SECTION 7.03 Directors' and Officers' Indemnification
and Insurance..............................................57
SECTION 7.04 Public Announcements.......................................59
SECTION 7.05 Employee Benefit Matters...................................59
SECTION 7.06 Shareholder Agreement Legend...............................60
SECTION 7.07 Guaranty of Performance....................................60
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each
Party to Consummate the Merger.............................60
SECTION 8.02 Conditions to the Obligations of Company...................61
SECTION 8.03 Conditions to the Obligations of Parent
and Lux Sub................................................62
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination................................................63
SECTION 9.02 Effect of Termination......................................67
SECTION 9.03 Amendment..................................................67
SECTION 9.04 Waiver.....................................................67
SECTION 9.05 Termination Fee; Expenses..................................68
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and
Warranties.................................................69
SECTION 10.02 Notices....................................................70
SECTION 10.03 Severability...............................................71
SECTION 10.04 Assignment; Binding Effect; Benefit........................71
SECTION 10.05 Incorporation of Exhibits..................................72
SECTION 10.06 Governing Law..............................................72
SECTION 10.07 Waiver of Jury Trial.......................................72
SECTION 10.08 Headings; Interpretation...................................72
SECTION 10.09 Counterparts...............................................73
SECTION 10.10 Entire Agreement...........................................73
SECTION 10.11 Enforcement................................................73
ANNEXES
ANNEX A Form of Shareholders' Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 22, 2000 (as
amended, supplemented or otherwise modified from time to time, this
"Agreement"), among SEAT PAGINE GIALLE S.P.A. ("Parent"), a limited company
organized under the laws of the Republic of Italy and a majority owned
subsidiary of Telecom Italia S.p.A., a limited company organized under the laws
of the Republic of Italy, SOGERIM, SOCIETE ANONYME ("Lux Sub"), a Luxembourg
corporation and a wholly owned subsidiary of Telecom Italia S.p.A., NICKEL
ACQUISITION CORP., a New York corporation and a direct wholly owned subsidiary
of Lux Sub ("Merger Sub"), and NETCREATIONS, INC., a New York corporation
("Company"):
W I T N E S S E T H:
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WHEREAS, the respective boards of directors of Parent, Lux Sub and
Company have each determined that it is advisable and in the best interests of
their respective companies and shareholders 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; and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain shareholders of
Company have entered into a shareholders' agreement (the "Shareholders'
Agreement") in the form attached hereto as Annex A.
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.
"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.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"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 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, assets, liabilities, financial condition or
results of operations of Company, 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
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materially disproportionate manner) or (ii)(A) any litigation or loss of current
or prospective customers, employees or revenues as to which Company furnishes
reasonable evidence that it occurred primarily from the announcement of Company
entering into this Agreement or (B) any claim or litigation as a result of the
determination by the Company's board of directors that the proposal for the
Merger is a "Superior Proposal" within the meaning of the Company's prior merger
agreement with DoubleClick, Inc. ("DoubleClick"), dated as of October 2, 2000
(the "DoubleClick Merger Agreement") or alleging breach of the DoubleClick
Merger Agreement or arising as a result of the termination of the DoubleClick
Merger Agreement or the entry by the Company into this Merger Agreement or (C)
the payment by the Company of any termination fees or expenses pursuant to the
DoubleClick Merger Agreement; provided, however, that in no event shall (x) a
decrease in the trading price of Company Common Stock or litigation relating
thereto, (y) any matter publicly disclosed in a Company Report (as defined in
Section 4.07) or otherwise, in any case prior to the date hereof, or (z) the
termination of any agreement listed on Schedule I to the Company Disclosure
Schedule, be considered a Company Material Adverse Effect.
"Company Stock Plan" shall mean Company's 1999 Employee Stock Option
Plan, as amended.
"Company Stock Purchase Plan" shall mean Company's 2000 Employee Stock
Purchase Plan.
"Company Shareholders' Meeting" shall mean the special meeting of
Company shareholders to consider approval of this Agreement and the Merger.
"Competing Transaction" shall mean any of the following involving
Company (other than the Merger):
(i) any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction;
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(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets (including, without limitation,
any equity securities of subsidiaries) of Company and its subsidiaries,
taken as a whole, in a single transaction or series of related transactions
(excluding for this purpose the providing of opt-in e-mail addresses to
direct marketers and brokers by Company in the ordinary course of
business);
(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;
(iv) any person having acquired beneficial ownership or the right to
acquire beneficial ownership of, or any "group" (as such terms are 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; and
(v) 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 December 20, 2000, 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.
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"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.
"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 Proxy
Statement, the solicitation of shareholder 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.
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"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.
"Knowledge of Company" shall mean that any officer of Company is
actually aware of a fact or other matter, or should have been aware of a fact or
other matter based upon due inquiry and investigation.
"Knowledge of Parent" shall mean that any executive officer of Parent
is actually aware of a fact or other matter, or should have been aware of a fact
or other matter based upon due inquiry and investigation.
"Law" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree or other requirement
or rule of law of the United States or any other jurisdiction, and any similar
act or law.
"NNM" shall mean The Nasdaq National Market.
"New York Law" shall mean the New York Business Corporation Law.
"Parent Material Adverse Effect" shall mean any change in or effect on
the business of Parent or Lux Sub and their respective subsidiaries that would
prevent, or is reasonably likely to prevent, Parent or Lux Sub from performing
their respective obligations under this Agreement or the consummation of the
transactions contemplated hereby.
"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.
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"SEC" shall mean the United States Securities and Exchange Commission.
"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, and 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.
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"Tax Authority" shall mean any domestic, foreign, Federal, national,
state, county or municipal or other local government body (including any
subdivision, agency or commission thereof), or any quasi-governmental body, in
each case, exercising regulatory authority in respect of Taxes.
"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.
"U.S. GAAP" shall mean generally accepted accounting principles as
applied in the United States.
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 New York Law, 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 in the Merger as a
wholly owned subsidiary of Lux Sub (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 Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless another date, time or place is agreed to by Parent and Company.
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SECTION 2.03 Effective Time
Immediately upon 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 New York in such form as required by, and
executed in accordance with the relevant provisions of, New York Law (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 New York Law. 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:
(a) the certificate of incorporation of Merger Sub as of the Effective
Time shall constitute the certificate of incorporation of the Surviving
Corporation until thereafter amended;
(b) subject to the requirements of Section 7.03(a) hereof, the bylaws
of Merger Sub, as in effect immediately prior to the Effective Time, shall
be adopted as the bylaws of the Surviving Corporation until thereafter
amended;
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(c) 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
(d) 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
EFFECT OF MERGER ON CAPITAL STOCK OF CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01 Effect on Capital Stock
At the Effective time, by virtue of the Merger, and without any action
on the part of Parent, Lux Sub, Merger Sub, Company or the holders of any of the
following securities:
(a) each share of common stock, $.01 par value per share, 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 the right to receive $7.00 in
cash (the "Merger Consideration"); and all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any
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rights with respect thereto, except the right to receive the Merger
Consideration, without interest;
(b) each share of Company Common Stock held in the treasury of Company
immediately prior to the Effective Time shall be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor,
and each share of Company Common Stock owned by any subsidiary of either Company
or Parent (other than Merger Sub) shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation;
(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; and
(d) from and after the Effective Time, each outstanding certificate
theretofore representing shares of Merger Sub common stock shall be deemed for
all purposes to evidence ownership of and to represent the number of shares of
Surviving Corporation common stock into which such shares of Merger Sub common
stock shall have been converted.
SECTION 3.02 Exchange of Shares Other than Treasury Shares
(a) Paying Agent. Prior to the Effective Time, Lux Sub shall select a
bank or trust company reasonably satisfactory to Company to act as paying agent
(the "Paying Agent") for the payment of the Merger Consideration upon surrender
of Company Certificates (as defined in Section 3.02(c)).
(b) Lux Sub to Provide Cash. Lux Sub shall take all steps necessary to
provide to the Paying Agent immediately following the Effective Time all the
cash necessary to pay for the shares of Company Common Stock converted into the
right to receive the Merger Consideration pursuant to Section 3.01(a) (such
cash, including any
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interest earned thereon, being hereinafter referred to as the "Exchange Fund").
(c) Exchange Procedures. The Paying Agent shall mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time represented outstanding shares of Company Common Stock ("Company
Certificates"), whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 3.01(a), 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 and Lux Sub 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 Paying Agent, and shall be in such form and have
such other provisions as Parent or Lux Sub may reasonably specify); and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for the Merger Consideration. Upon surrender of a Company Certificate
for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Lux Sub, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may be reasonably required by
the Paying Agent, the holder of such Company Certificate shall be entitled to
receive in exchange therefor the amount of cash into which the shares of Company
Common Stock theretofore represented by such Company Certificate shall have been
converted pursuant to Section 3.01(a), and the Company Certificate so
surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Section 3.02(c), each Company Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender
the amount of cash, without interest, into which the shares of Company Common
Stock theretofore represented by such Company Certificate shall have been
converted pursuant to Section 3.01(a). No interest will be paid or will accrue
on the cash payable upon the surrender of any Company Certificate.
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(d) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid upon surrender of Company Certificates in accordance with the
terms of this Article III shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock theretofore
represented by such Company Certificates. If, after the Effective Time, any
Company Certificate is presented to the Surviving Corporation or the Paying
Agent for any reason, it shall be canceled and exchanged as provided in this
Article III (subject, in the case of any Company Certificate presented to the
Paying Agent, to the provisions of Section 3.02(f)).
(e) Transfer of Ownership. In the event of a transfer of ownership of
Company Common Stock that is not registered in the transfer records of Company,
payment of the Merger Consideration may be made to a person other than the
person in whose name the Company Certificate surrendered in accordance with this
Article III is registered, if such Company Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Company Certificate
so surrendered, or establish to the satisfaction of Lux Sub or any agent
designated by it that such tax has been paid or is not applicable.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to holders of Company Certificates pursuant to this
Article III for six months after the Effective Time shall promptly be paid 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 with
respect to any Merger Consideration that may be payable upon due surrender of
the Company Certificates held by them.
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(g) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Paying Agent, the Surviving Corporation or any party
hereto shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Company Certificate shall not have been
surrendered prior to the thirty-first day of December in the fifth calendar year
after the Effective Time (or immediately prior to such earlier date on which the
Merger Consideration in respect of such Company Certificate would otherwise
escheat to or become the property of any Governmental Entity), the payment in
respect of such Company Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(h) Lost, Stolen or Destroyed Company Certificates. In the event any
Company Certificates shall have been lost, stolen or destroyed, the Paying Agent
shall deliver in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, the Merger Consideration payable in respect thereto pursuant to this
Article III; provided, however, that Parent may, in its discretion and as a
condition precedent to the delivery thereof, require the owner of such lost,
stolen or destroyed Company Certificates to indemnify Parent and Lux Sub against
any claim that may be made against Parent, Lux Sub, the Surviving Corporation or
the Paying Agent with respect to the Company Certificates alleged to have been
lost, stolen or destroyed.
(i) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Lux Sub, on a daily basis. If
for any reason (including investment losses), the Exchange Fund is inadequate to
pay the amounts to which holders of Company Certificates shall be entitled under
this Section 3.02, Parent, Lux Sub and the Surviving Corporation shall
nevertheless be liable for the payment thereof. The Exchange Fund shall not be
used except as provided in this Agreement. Any interest and other income
resulting from
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such investments shall be the property of, and shall be paid to, Lux Sub.
(j) Withholding Rights. Lux Sub, Parent and the Paying Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
to any holder of Company Common Stock pursuant to this Agreement such amounts as
may be required to be deducted and withheld with respect to the making of such
payment under the Code or under any provision of state, local or foreign tax
law. In the event Lux Sub, Parent or the Paying Agent shall be required to
deduct or withhold any taxes under the federal or local laws of Italy or
Luxembourg ("Foreign Taxes") from the Merger Consideration otherwise payable to
any holder of Company Common Stock, the relevant amount of Merger Consideration
payable to such holder shall be increased by the amount necessary to make the
actual amount received by such holder after such Foreign Taxes are withheld
equal to the amount that would have been received had no such withholding for
Foreign Taxes been required.
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, the Merger Consideration into which such shares of Company Common Stock
shall have been converted shall be paid to the transferee 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.
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SECTION 3.04 Options to Purchase Company Common Stock
(a) At the Effective Time (and without any action by the Board of
Directors of the Company or any committee administering the Company Stock Plan),
the Company Stock Plan and each option granted by Company to purchase shares of
Company Common Stock pursuant to the Company Stock Plan ("Company Stock
Options") which is outstanding and unexercised immediately prior to the
Effective Time, shall be canceled with the holder thereof becoming entitled to
receive a cash payment from the Surviving Corporation at the Effective Time of
an amount equal to (i) the excess, if any, of (x) the Merger Consideration over
(y) the exercise price per share of Company Common Stock subject to such Company
Stock Option, multiplied by (ii) the number of shares of Company Common Stock
for which such Company Stock Option shall not theretofore have been exercised
(the "Option Consideration") (irrespective of whether and to the extent to which
any or all such Company Stock Options are exercisable or will be exercisable at
the Effective Time).
(b) All amounts payable pursuant to this Section 3.04 shall be subject
to any required withholding of Taxes and shall be paid without interest. Company
shall obtain all consents of the holders of Company Stock Options as shall be
necessary to effectuate the actions contemplated by this Section 3.04.
Notwithstanding anything to the contrary contained in this Agreement, payment of
the Option Consideration in respect of any Company Stock Option shall, at
Parent's request, be withheld until all necessary consents with respect to such
Company Stock Option have been obtained.
(c) The Company Stock Plan shall terminate as of the Effective Time,
and the provisions in any other Company Benefit Plan (as defined in Section
4.09(a)) providing for the issuance, transfer or grant of any capital stock of
Company or any interest in respect of any capital stock of Company shall be
deleted effective as of the Effective Time, and the Company shall ensure
that following the Effective Time no holder of a Company Stock Option or
any participant
17
in the Company Stock Plan or any other Company Benefit Plan
shall have any right thereunder to acquire any capital stock of the
Surviving Corporation.
SECTION 3.05 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
terminate, and all accumulated funds shall be distributed to participants as
though such participants had elected to withdraw therefrom.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, Lux Sub and Merger
Sub, subject to the exceptions specifically disclosed in writing in the Company
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article IV or to otherwise be reasonably
apparent to relate to representations hereof not specifically referenced, that:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Company has been duly organized and is validly existing and in
good standing (to the extent applicable) under the laws of the State of New York
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 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
18
Company Material Adverse Effect. The name of Company under which it was formed
was NetCreations Inc.
(b) Company does not own an equity interest in any corporation,
partnership, joint venture arrangement or other business entity and has no
subsidiaries.
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, no par value
("Company Preferred Stock"). As of the date hereof, (i) 15,534,000 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) 2,961,000 shares of Company Common Stock
are reserved for future issuance pursuant to Company Stock Options, (iv)
1,000,000 shares of Company Common Stock are reserved for issuance under the
Company Stock Purchase Plan and (v) 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, the number of shares of
Company Common Stock for which each Company Stock Option is exercisable, the
exercise price of each Company Stock Option and the vesting schedule 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 the
Company Stock Plan or the Company Stock Purchase Plan as set forth in the second
sentence above, there are not issued, reserved for issuance or outstanding (A)
any shares of
19
capital stock or other voting securities of Company or (B) any options,
warrants, convertible or exchangeable securities 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 obligating Company to issue or sell any shares of capital stock of,
or other equity or voting interests in, Company. 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 to
repurchase, redeem or otherwise acquire any shares of Company Common Stock.
There are no material outstanding contractual obligations of Company to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any entity or 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 two-thirds (2/3) of the outstanding shares of
Company Common Stock entitled to vote with respect thereto at the Company
Shareholders' Meeting (the "Company Shareholder Approval"), and the filing and
recordation of the Certificate of Merger as required by New York Law). 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
20
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).
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, (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 by which any material property
or asset of Company 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 pursuant to, any material 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
rules and regulations of the NNM, state takeover laws, the premerger
notification requirements of the HSR Act, and the filing and
21
recordation of the Certificate of Merger as required by New York Law.
SECTION 4.06 Permits; Compliance with Laws
Company is 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 to own, lease and operate its
properties or to produce, store, distribute and market its products or otherwise
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 Company
Permits has been suspended or cancelled nor is any such suspension or
cancellation pending or, to the Knowledge of Company, threatened. Company is not
in conflict in any material respect with, or in material default or violation
of, (i) any Law applicable to Company or by which any property or asset of
Company 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 that could reasonably be expected to result
in the suspension or cancellation of any other Company Permit. Since January 17,
1996, Company has not received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws.
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 and the NNM since November
12, 1999 (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
22
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.
(b) Each of the 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 financial position of Company as at the respective dates thereof
and its results of operations, shareholders' equity and cash flows 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
balance sheet of Company as reported in the Company Reports, including the notes
thereto, Company has no 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,
1999.
23
SECTION 4.08 Absence of Certain Changes or Events
Since December 31, 1999, Company has conducted its business 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 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, (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
creation 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, individually or
in the aggregate, have not had, and cannot reasonably be expected to lead to, 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
24
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 (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 (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 (or, 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
25
determination letter. Neither Company nor, to the 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 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 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 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, under 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)(5) 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 Benefit Plan
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 the Knowledge of Company no fact or event has occurred that could
adversely affect the qualified status of any such Company Benefit Plan or the
exempt status of any such trust; (ii) to the Knowledge of Company 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
26
administrative exemption) with respect to any Company Plan that could result
in liability to Company and (iii) each Company Benefit Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without material liability (other than (A) liability for ordinary
administrative expenses typically incurred in a termination event or (B)
liability for the accrued benefits as of the date of such termination 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 Company nor
any other trade or business (whether or not incorporated) that is under "common
control" with Company (within the meaning of ERISA Section 4001) or with respect
to which Company 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 or any Company ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to Company of
incurring or being subject (whether primarily, jointly or secondarily) to a
material liability thereunder. None of the assets of Company 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 delivered to Parent true, complete and correct copies
of (i) all employment agreements
27
with officers and all consulting agreements of Company providing for annual
compensation in excess of $100,000 (ii) all severance plans, agreements,
programs and policies of Company with or relating to its employees, directors or
consultants, and (iii) all plans, programs, agreements and other arrangements of
Company with or relating to its employees, directors or consultants which
contain "change of control" provisions. No payment or benefit which may be
required to be made by Company 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 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) Company is not a party to, and has no obligations under or with
respect to, any collective bargaining or other labor union contract applicable
to persons employed by Company and no collective bargaining agreement is being
negotiated by Company or any person or entity that may obligate the Company
thereunder. As of the date of this Agreement, there is no labor dispute, strike
or work stoppage against Company pending or, to the Knowledge of Company,
threatened which may interfere with the business activities of Company. As of
the date of this Agreement, to the Knowledge of Company, none of Company or any
of its representatives or employees has committed any unfair labor practice in
connection with the operation of the business of Company, and there is no charge
or complaint against Company 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-
28
employment benefits to any person: medical, disability or life insurance
benefits. To the Knowledge of Company, 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 [Intentionally Omitted]
SECTION 4.11 Contracts
Except for the contracts and agreements described in Section 4.11 of
the Company Disclosure Schedule (collectively, the "Listed Contracts"), Company
is not a party to any of the following:
(a) any list owners agreement, purchase agreement or xxxx of sale
relating to the purchase of e-mail user lists, customer marketing agreement (or
similar agreement with brokers) or agreement with non-standard payment terms, in
each case, which ranks in Company's 25 largest customer or supplier
relationships, as measured by dollar value, for each of these categories of
agreements;
(b) any continuing contract for the purchase of materials, supplies,
equipment or services involving in the case of any such contact more than
$100,000 over the life of the contract;
(c) any contract that expires more than one year after the date of
this Agreement or any contract that may be renewed at the option of any person
other than the Company so as to expire more than one year after the date of this
Agreement;
(d) any trust indenture, mortgage, promissory note, loan agreement or
other contract for the borrowing of
29
money, any currency exchange, commodities or other hedging arrangement or any
leasing transaction of the type required to be capitalized in accordance with
U.S. GAAP in excess of $100,000;
(e) any contract for capital expenditures in excess of $100,000 in the
aggregate;
(f) any contract limiting the freedom of Company to engage in any line
of business or to compete with any other corporation, partnership, limited
liability company, trust, individual or other entity, or any confidentiality,
secrecy or non-disclosure contract or any contract that may be terminable as a
result of Parent's status as a competitor of any party to such contract;
(g) any contract pursuant to which Company is a lessor of any
machinery, equipment, motor vehicles, office furniture, fixtures or other
personal property, pursuant to which payments in excess of $100,000 remain
outstanding;
(h) any contract with an Affiliate;
(i) any agreement of guarantee, support, indemnification, assumption
or endorsement of, or any similar commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness
of any other person other than customary customer agreements made in the
ordinary course of business; or
(j) any employment contract, arrangement or policy (including without
limitation any collective bargaining contract or union agreement) which may not
be immediately terminated without penalty (or any augmentation or acceleration
of benefits).
Company has performed all of the obligations required to be performed
by it and is entitled to all benefits under, and is not alleged to be in default
in respect of any Listed Contract. Each of the Listed Contracts is valid and
binding and in full force and effect,
30
and there exists no default or event of default or event, occurrence, condition
or act, with respect to Company, or to the Knowledge of Company, with respect to
any other contracting party, which, with the giving of notice, the lapse of the
time or the happening of any other event or conditions, would become a default
or event of default under any Listed Contract. True, correct and complete copies
of all Listed Contracts have been delivered to Parent.
SECTION 4.12 Litigation
There is no suit, claim, action, proceeding or investigation pending
or, to the Knowledge of Company, threatened against Company 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 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. Company is
not subject to any outstanding order, writ, injunction or decree which 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.
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 is in compliance
with all applicable Environmental Laws and all Company Permits required by
Environmental Laws; (ii) all past noncompliance of Company with Environmental
Laws or Environmental Permits has been resolved without any pending, ongoing or
future
31
obligation, cost or liability; and (iii) Company has not 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 in violation of any
Environmental Law.
SECTION 4.14 Intellectual Property
(a) All patents (including, without limitation, all U.S. and foreign
patents, patent applications, patent disclosures, and all divisions,
continuations, continuations-in-part, reissues, re-examinations and extensions
thereof), design rights, trademarks, trade names and service marks (whether or
not registered), trade dress, Internet domain names, copyrights (whether or not
registered) 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, statistical
models, supplier lists, e-mail lists, inventions, sui generis database rights,
databases, data ("Technical Documentation"), 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,
marketed or used 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(b) of the Company Disclosure Schedule contains a true
and complete list of Company's patents, patent applications, registered
trademarks, trademark applications, common law trademarks, trade names,
registered service marks, service xxxx applications, common law service marks,
material Internet domain names, Internet domain name applications, copyright
registrations and 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 Company Intellectual Property, and includes details of all due
dates for further filings, maintenance, payments or other actions falling due in
respect of Company Intellectual Property within twelve (12) months of the
Closing Date. All of Company's patents, patent applications, registered
trademarks, trademark
33
applications, registered service marks and service xxxx registrations, and
registered copyrights remain in good standing with all fees and filings due as
of the Closing Date having been duly made and the due dates specified in the
Company Disclosure Schedule are accurate and complete in all material respects.
(c) Section 4.14(c) of the Company Disclosure Schedule contains a true
and complete list of the registrations that Company has obtained anywhere in the
world in relation to the processing of data. Company has made all such
registrations which it is required to have made and is in good standing with
respect to such registrations with all fees due as of the Effective Time having
been duly made. Company has received Valid Consents (as defined below) from all
persons who have provided personal information which are sufficient to give
Company (i) the right to use such personal information for the purposes of
conducting Company's current activities, and Company's future activities to the
extent such future activities are already planned, and (ii) the right to assign
the personal information and the applicable consents to Parent or its
Affiliates. For the purposes of this Section 4.14(c), "Valid Consents" shall
mean consents obtained (i) for persons aged 13 and over, using Company's double
opt-in method by which the persons providing personal information to Company
have both (a) indicated their consent by checking a box which signifies his or
her desire to have his or her personal information registered with the site and
used by Company, and (b) thereafter responded to a confirmatory e-mail message
to signify his or her desire to have his or her personal information registered
with the site and used by Company and (ii) for persons under the age of 13, in
accordance with the Children's Online Privacy Protection Act of 1998. Company
has not used any personal information without or beyond the scope of a Valid
Consent. Company has placed all personal information relating to persons who
have signified that they do not grant or later revoke a Valid Consent in an
unsubscribed archive file where such data is stored but not used by Company.
Company has not collected and maintains no personal information about
34
persons outside the United States in violation of any local, state or Federal
law.
(d) 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 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.
(e) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale, use 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, mask work or other proprietary or
personal right of any person or, to the actual knowledge of Company, the patent
of any person anywhere in the world. 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, use
or sale by Company infringes or will infringe on any intellectual property or
other proprietary or personal right of any person have been
35
asserted or, to the Knowledge of Company, are threatened by any person, nor are
there, to the Knowledge of Company, 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 the Knowledge
of Company, 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.
(f) 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 in the form set forth in Section 4.14(f) of
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 Federal 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 of
Company as assignee that have conveyed to Company effective and exclusive
ownership of all tangible and intangible property thereby arising.
(g) 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 relating to
Company Intellectual Property 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.
(h) Section 4.14(h) of the Company Disclosure Schedule contains a true
and complete list of all of Company's software programs (the "Company Software
Programs"). Except with respect to software or technology
36
licensed by Company (to which Company holds appropriate and valid licenses),
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.
(i) 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(f), and (iii) have not been disclosed to any third party, except
those third parties set forth in Section 4.14(i) of the Company Disclosure
Schedule who have executed nondisclosure agreements with Company.
(j) Company has taken all reasonable steps, in accordance with normal
industry practice, to preserve and maintain complete notes and records relating
to Company Intellectual Property necessary or appropriate to cause the same to
be readily understood, identified and available.
(k) 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.
(l) The Company Intellectual Property is free and clear of any and all
mortgages, pledges, liens, security interests, conditional sale agreements,
charges or encumbrances of any kind.
37
(m) Company does not owe any royalties or other payments to third
parties in respect of Company Intellectual Property. All royalties or other
payments set forth in Section 4.14(m) of the Company Disclosure Schedule that
have accrued or will accrue prior to the Effective Time have been or will be
paid.
(n) Company uses commercially reasonable efforts to regularly scan the
Company Software Programs and, to, the extent applicable, the other Company
Intellectual Property, with "best-in-class" virus detection software. To the
Knowledge of Company, the Company Software Programs and other Company
Intellectual Property contain no "viruses." For the purposes of this Agreement,
"virus" means any computer code intentionally designed to disrupt, disable or
harm in any manner the operation of any software or hardware. To the Knowledge
of Company, none of the foregoing contains any worm, bomb, backdoor, clock,
timer, or other disabling device code, design or routine which causes the
software to be erased, inoperable, or otherwise incapable of being used, either
automatically or upon command by any party.
(o) Company has implemented all reasonable steps which are known in
the information systems industry in the physical and electronic protection of
its information assets from unauthorized disclosure, use or modification.
Section 4.14(o) of the Company Disclosure Schedule sets forth (i) each breach of
security of which Company is aware, (ii) its known or anticipated consequences,
and (iii) the steps Company has taken to remedy such breach.
SECTION 4.15 Taxes
(a) Company and any consolidated, combined, unitary or aggregate group
for Tax purposes of which Company is or has been a member, have properly
completed and timely filed all Tax Returns required to be filed by them and have
paid all Taxes due with respect to the taxable periods covered by such Tax
Returns and all other material Taxes. Such Tax Returns are complete and correct.
Company has provided adequate accruals in accordance with U.S. GAAP in
38
its latest financial statements included in the Company Reports for any Taxes
payable by Company and its subsidiaries for all taxable periods and portions
thereof through the date of such financial statements, whether or not shown as
being due on any Tax Returns. Other than Taxes incurred in the ordinary course
of business, Company has 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 is being asserted against Company other than liens
for Taxes not yet due and payable, (ii) no audit of any Tax Return of Company
being conducted by a Tax Authority, (iii) no extension of the statute of
limitations on the assessment of any Taxes that has been granted to Company and
is currently in effect, (iv) no deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing by
Company and (v) no agreement, contract or arrangement to which Company 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.
(c) There has been no change in ownership of Company that has caused
the utilization of any losses of Company to be limited pursuant to Section 382
of the Code, and any loss carryovers reflected on the latest financial
statements included in the Company Reports are properly computed and reflected.
(d) Company has 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.
(e) Company has not filed and will not file any consent to have the
provisions of paragraph 341(f)(2) of the
39
Code (or comparable provisions of any state Tax laws) apply to Company.
(f) Company is not a party to any Tax sharing or Tax allocation
agreement nor does Company have any liability or potential liability to another
party under any such agreement.
(g) Company has not 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.
(h) Company has not ever been a member of a consolidated, combined or
unitary group of which Company was not the ultimate parent corporation.
(i) Company has in its possession receipts for any Taxes paid to
foreign Tax authorities. Company has not ever been a "personal holding company"
within the meaning of Section 542 of the Code or a "United States real property
holding corporation" within the meaning of Section 897 of the Code.
(j) Neither Company nor any of its subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(k) Company and its subsidiaries have complied with all applicable
statutes, laws, ordinances, rules and regulations relating to the payment and
withholding of taxes and have, within the time and the manner prescribed by law,
withheld from and paid over to the proper governmental
40
authorities all amounts required to be so withheld and paid over under
applicable laws.
SECTION 4.16 Insurance
Company is presently insured, and since its inception 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, in Company's reasonable estimation, 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, 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 has complied in all material respects with the
terms of such policies.
SECTION 4.17 Properties
Company has good and marketable title, free and clear of all material
mortgages, liens, pledges, charges or other encumbrances to all its material
tangible properties and assets, whether tangible or intangible, real, personal
or mixed, reflected in the Company's financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, as being owned by Company 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, and (iii) liens
arising in the ordinary course of business after the date of such financial
statements. 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 are held under valid instruments enforceable in
accordance with their respective terms,
41
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 equipment in
regular use which is material to the operation of Company has been reasonably
maintained and is in serviceable condition, reasonable wear and tear excepted.
SECTION 4.18 [Intentionally Omitted]
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 Merger Consideration 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
and Friedman, Billings, Xxxxxx & Co., Inc., the fees and expenses of each of
which will be paid by Company) 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 directors, officers, agents or employees of
Company (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 the Foreign Corrupt Practices Act
42
of 1977, as amended, or (iii) made any other unlawful payment.
SECTION 4.22 Section 912 of New York Law Not Applicable
The Board of Directors of Company, at a meeting duly called and held,
duly adopted resolutions (i) unanimously approving the Merger, this Agreement
and the Shareholders' Agreement, (ii) determining that the terms of the Merger
are fair to, and in the best interests of, Company and its shareholders, (iii)
recommending that Company's shareholders adopt this Agreement and (iv) adopting
this Agreement. Such resolutions and approval constitutes approval of the
Merger, this Agreement and the Shareholders' Agreement and the transactions
contemplated by this Agreement and the Shareholders' Agreement by the Board of
Directors of Company under Section 912 of New York Law and represents all the
action necessary to ensure that the restrictions contained in such Section 912
do not apply to any of Parent, Lux Sub or Merger Sub in connection with the
Merger, this Agreement and the Shareholders' Agreement and the transactions
contemplated by this Agreement and the Shareholders' Agreement. To the Knowledge
of Company, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement, the Shareholders'
Agreement or the transactions contemplated by this Agreement and the
Shareholders' Agreement.
SECTION 4.23 Business Activity Restriction
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which 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,
43
in any geographic area, during any period of time or in any segment of the
market or line of business.
SECTION 4.24 Privacy
Company is, and has always been, in compliance with its then-current
privacy policy, including those posted on Company's Web site(s). Company has
conducted its business and maintained its data at all times in accordance with
(i) the standards promulgated by the Online Privacy Alliance, (ii) the standards
promulgated by the Direct Marketing Association, and (iii) all applicable
Federal, state and other laws, including, but not limited to, those relating to
the use of information collected from or about consumers. Company is, and has
always been, in compliance with its customers' privacy policies, when required
to do so by contract.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Lux Sub hereby represent and warrant to Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries
Parent, Lux Sub and Merger Sub have each been duly organized and each
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. Each of Parent, Lux Sub and Merger
Sub 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
44
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 Parent Material Adverse Effect. The name of Merger Sub under which
it was formed was Nickel Acquisition Corp.
SECTION 5.02 Authority Relative to this Agreement
Each of Parent, Lux Sub 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, Lux Sub and
Merger Sub and the consummation by Parent, Lux Sub 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, Lux Sub or Merger Sub are necessary to authorize this Agreement or to
consummate such transactions (other than the consent of Lux Sub as sole
shareholder of Merger Sub and the filing and recordation of the Certificate of
Merger as required by New York Law). This Agreement has been duly executed and
delivered by each of Parent, Lux Sub and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitutes a legal, valid and
binding obligation of each of Parent, Lux Sub 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).
45
SECTION 5.03 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by Parent, Lux Sub
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 (or
any equivalent organizational document) of Parent, Lux Sub or Merger Sub, (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, Lux Sub or Merger Sub or by which any property or asset of Parent,
Lux Sub or Merger Sub 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 Parent, Lux Sub or Merger Sub
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, Lux Sub
and Merger Sub does not, and the performance by Parent, Lux Sub and Merger Sub
of their respective obligations hereunder and the consummation of the Merger
will not, require any consent, approval, authorization or permit of, or filing
by Parent, Lux Sub or Merger Sub with or notification by Parent, Lux Sub or
Merger Sub to, any Governmental Entity, except pursuant to the premerger
notification requirements of the HSR Act, if any, and the filing and recordation
of the Certificate of Merger as required by New York Law.
46
SECTION 5.04 Financing
At the Effective Time, Lux Sub will have available sufficient cash in
immediately available funds necessary for the acquisition of all shares of
Company Common Stock pursuant to the Merger.
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, except as contemplated by this Agreement, unless Parent shall
otherwise agree in writing, (x) the business of Company shall be conducted only
in, and Company shall not take any action except in, the ordinary course of
business consistent with past practice and (y) Company shall use its best
efforts to keep available the services of such of the current officers,
significant employees and consultants of Company and to preserve the current
relationships of Company with such of the corporate partners, customers,
suppliers and other persons with which Company has significant business
relations in order to preserve substantially intact its business organization.
By way of amplification and not limitation, Company shall not, between the date
of this Agreement and the Effective Time, except as contemplated by this
Agreement, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of Parent:
(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 of any class, or securities convertible into or exchangeable or
exercisable for any
47
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,
other than the issuance of shares of Company Common Stock pursuant to the
exercise of stock options therefor outstanding as of the date of this Agreement
or pursuant to the Company Stock Purchase Plan or (ii) any material property or
assets of Company except sales of inventory in the ordinary course of business
consistent with past practice and the providing of opt-in e-mail addresses to
direct marketers and brokers by Company in the ordinary course of business;
(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; (ii) incur any indebtedness for borrowed money (other than in de
minimis 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; (iii) terminate, cancel or request any material change in, or agree to
any material change in, any Company Listed Contract or License Agreement; (iv)
make or authorize any capital expenditure, other than capital expenditures in
the ordinary course of business consistent with past practice that have been
described in the Company Disclosure Schedule and that are not, in the aggregate,
in excess of $250,000 for Company; 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;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of
48
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;
(f) amend or change the period (or permit any acceleration, amendment
or change) of exercisability of options granted under the Company Stock Plan or
authorize cash payments in exchange for any Company Stock Options granted under
the Company Stock Plan;
(g) amend the terms of, repurchase, redeem or otherwise acquire any of
its securities or propose to do any of the foregoing;
(h) increase the compensation payable or to become payable to its
directors, officers, consultants or employees, 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
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, 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 and
any of Company's directors, officers, consultants or employees;
(i) 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 reflected or reserved against on
the balance sheet of
49
Company dated as of June 30, 2000 included in Company's quarterly report on Form
10-Q for the period then ended;
(j) except as required by any Governmental Entity, 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;
(k) make any Tax election or settle or compromise any 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 or prevent Company from performing or
cause Company not to perform its covenants hereunder in any maternal respect or
result in any of the conditions to the Merger set forth herein not being
satisfied or prevent Company from performing or cause Company not to perform its
covenants hereunder.
SECTION 6.02 Notices of Certain Events
(a) 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; and (iii) any change that could reasonably be expected to delay
or impede the ability of either Parent or Lux Sub, on the one hand, or Company,
on the other, to perform their respective obligations pursuant to this Agreement
and to effect the consummation of the Merger.
(b) In addition, Company shall give Parent prompt notice of (i) any
actions, suits, claims, investigations or proceedings commenced or, to the
Knowledge of Company, threatened against, relating to or involving or otherwise
affecting Company, or that relate to the consummation of the
50
Merger; (ii) 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 Listed
Contract; and (iii) any change that could reasonably be expected to have a
Company Material Adverse Effect.
(c) In addition, Parent shall give Company prompt notice of any
actions, suits, claims, investigations or proceedings commenced or, to the
Knowledge of Parent, threatened, in each case that relate to the consummation of
the Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) From the date of this Agreement to the Effective Time, Company
shall (i) provide to Parent (and its officers, directors, employees,
accountants, financial advisors, consultants, legal counsel, agents and other
representatives (collectively, "Representatives")) access at reasonable times
upon prior notice to Company's officers, employees, agents, properties, offices
and other facilities and to the books and records thereof, and (ii) furnish
promptly such information concerning its business, properties, contracts,
assets, liabilities and personnel as Parent 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) Parent shall comply with, and shall cause its Representatives to
comply with, all of its obligations under the Confidentiality Agreement with
respect to any nonpublic information disclosed pursuant to this Section 6.03 or
otherwise.
SECTION 6.04 No Solicitation of Transactions
(a) 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 knowingly encourage
51
(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 shareholders) 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 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, (ii) referring any third party to this Section 6.04 or making
a copy of this Section 6.04 available to any third party solely in response to
an unsolicited inquiry; (iii) prior to receipt of the Company Shareholder
Approval, 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 proposal regarding a Competing
Transaction that (i) Company's Board of Directors shall have concluded in good
faith, based upon the advice of independent outside counsel of nationally
recognized reputation (who may be the Company's regularly engaged independent
legal counsel), that such action is necessary to prevent Company's Board of
Directors from violating its fiduciary duties to the Company or its shareholders
under applicable law, (ii) with respect to which Company's Board of Directors
shall have determined, based upon the advice of Company's independent financial
advisors of nationally recognized reputation (who may be the Company's regularly
engaged independent financial advisors), in the proper exercise of its fiduciary
duties to the Company and its shareholders 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, based on the advice of the Company's independent financial advisors of
52
nationally recognized reputation (who may be the Company's regularly engaged
independent financial advisors), that such Competing Transaction is more
favorable to the shareholders of Company from a financial point of view than the
Merger and that such Competing Transaction is more favorable to the shareholders
of Company than the Merger taking into account all the respective terms and
conditions of the Competing Transaction and the Merger (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, 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, as promptly as reasonably practicable, of any
modifications to the terms thereof. Company shall not submit any Competing
Transaction to the vote of its shareholders. Prior to accepting a Superior
Proposal, Company shall provide Parent with 24 hours' written notice of such
intention. Notwithstanding the foregoing, nothing contained in this Section 6.04
shall prevent the Board of Directors of Company from withdrawing or modifying
its recommendation of this Agreement, provided that the Company has complied
with this Section 6.04, following the receipt of a proposal that constitutes, or
may reasonably be expected to lead to, a Superior Proposal if the Board of
Directors of the Company, after consultation with independent outside counsel of
nationally recognized reputation (who may be the Company's regularly engaged
independent legal counsel) determines in good faith that such action is
necessary for the directors of Company to comply with their fiduciary duties to
the Company or its shareholders under applicable law.
(b) Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Competing
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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.
SECTION 6.05 [Intentionally Omitted]
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Parent or Lux Sub,
directly or indirectly, the right to control or direct the operations of Company
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, Lux Sub or Company 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
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
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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, Parent and Lux Sub will 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.
SECTION 6.08 Additional Reports
Company shall each furnish to Parent copies of any reports of the type
referred to in Section 4.07, which it files with the SEC on or after the date
hereof, and Company covenants and warrants 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 as of the dates thereof and the results of operations
and changes in financial position or other information included 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).
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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 in each taxing jurisdiction, (ii) a
list of all closed years with respect to each such type of Tax Return filed in
each jurisdiction, (iii) a list of any deferred intercompany gain with respect
to transactions to which Company has been a party and (iv) a list of the
acquisition date, original cost, accumulated depreciation, adjusted tax basis
and methods of depreciation for all depreciable and amortizable assets of the
Company. 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 Tax Returns and other
records and workpapers relating to Taxes.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Proxy Statement
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and Company shall file with the SEC a
proxy statement with respect to the Merger relating to the special meeting of
Company's shareholders to be held to consider approval and adoption of this
Agreement and the Merger (the "Company Shareholders' Meeting") (together with
any amendments thereto, the "Proxy Statement"). No filing of, or amendment or
supplement to, the Proxy Statement will be made by Company without providing
Parent with the opportunity to review and comment thereon. Company shall use its
best efforts to respond as promptly as practicable to any comments of the SEC
with respect to the Proxy Statement. Copies of the Proxy Statement shall be
provided to the NNM in accordance with its rules. Parent, Lux Sub or Company, as
the case may be, shall furnish all information
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concerning Parent, Lux Sub or Company as any other party may reasonably request
in connection with the preparation of the Proxy Statement. Company shall notify
Parent promptly of the receipt of any comments from the SEC on the Proxy
Statement and of any requests by the SEC for any amendments or supplements
thereto or for additional information and shall promptly provide Parent copies
of all correspondence between Company or any of its representatives or advisors
and the SEC with respect to the Proxy Statement. Company shall use its best
efforts to cause the Proxy Statement to be mailed to Company's shareholders as
promptly as practicable after filing thereof with the SEC. Each of the parties
hereto shall cause the Proxy Statement to comply as to form and substance as to
matters relating to, and supplied for inclusion therein by, such party in all
material respects with the applicable requirements of (i) the Exchange Act and
(ii) the rules and regulations of the NNM.
(b) The Proxy Statement shall include (i) information with respect to
Company and its shareholders, the approval and adoption of the Merger and the
recommendation of the Board of Directors of Company to Company's shareholders
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 in
compliance with Section 6.04 of this Agreement, and (ii) the opinion of
Xxxxxxxxx Xxxxxxxx referred to in Section 4.19.
(c) None of the information supplied by Company for inclusion or
incorporation by reference in the Proxy Statement will, at the time it is filed
with the SEC or any other regulatory agency, at the date it is or any amendments
or supplements thereto are mailed to shareholders of Company or at the time of
the Company Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to receipt of
the Company Shareholder Approval, any event or circumstance relating to Company,
or
57
its officers, directors or shareholders, should occur or be discovered by
Company that should be set forth in an amendment or a supplement to the Proxy
Statement, Company shall promptly prepare and mail to its shareholders such an
amendment or supplement. Company shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects. 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 Exchange Act.
(d) None of the information supplied by Parent or Lux Sub for
inclusion in the Proxy Statement will, at the time it is filed with the SEC or
any other regulatory agency, at the date it is or any amendments or supplements
thereto are mailed to shareholders of Company or at the time of Company
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. If, at any time prior to receipt of the Company
Shareholder Approval, any event or circumstance relating to Parent, Lux Sub or
Merger Sub, or their respective officers or directors, should occur or be
discovered by Parent or Lux Sub that should be set forth in an amendment or a
supplement to the Proxy Statement, Parent or Lux Sub, as the case may be, shall
promptly inform Company.
SECTION 7.02 Company Shareholders' Meeting
Subject to the provisions of Section 9.01 herein, Company shall call
and hold the Company Shareholders' 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 Shareholders' Meeting as soon as practicable after
the date on which the Proxy Statement is mailed to Company's shareholders.
Unless Company's Board of Directors has withdrawn its recommendation of this
Agreement and the
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Merger in compliance with Section 6.04, Company shall use all reasonable efforts
to solicit from its shareholders proxies in favor of the approval and adoption
of this Agreement and the Merger pursuant to the Proxy Statement and shall take
all other action necessary or advisable to secure the Company Shareholder
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 shareholders required by applicable Law and Company's certificate of
incorporation and bylaws to effect the Merger. Subject to the right of Company
to terminate this Agreement set forth in Section 9.01 hereof, Company shall call
and hold the Company Shareholders' Meeting for the purpose of voting upon the
approval and adoption 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 shareholders
reject it.
SECTION 7.03 Directors' and Officers' Indemnification and Insurance
(a) Parent, Lux Sub and 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 (collectively, the "Indemnified
Parties") as provided in Company's present certificate of incorporation, by-laws
or contractual arrangement 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 and Lux Sub agree to cause the Surviving Corporation to comply with its
obligations thereunder and
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hereby guarantee the indemnification obligations referred to in this Section
7.03.
(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 7.03 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 7.03 as a condition to such merger,
consolidation or transfer becoming effective.
(c) The provisions of this Section 7.03 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 and
Lux Sub shall use their respective best efforts to maintain in effect the
directors' and officers' liability insurance policies maintained by Company;
provided, however, that in no event shall Parent or Lux Sub be required to
expend in any one year in excess of 150% of the annual premium currently paid by
Company for such coverage and provided further, that if the premium for such
coverage exceeds such amount, Parent or Lux Sub shall purchase a policy with the
greatest coverage available for such 150% of the annual premium.
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SECTION 7.04 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 to consult with the other party before issuing any such
release or making any such public statement.
SECTION 7.05 Employee Benefit Matters
(a) For all purposes (including, without limitation, eligibility,
vesting, and benefit accrual) under the employee benefit plans of Parent and its
subsidiaries or Affiliates providing benefits to former Company employees after
the Effective Time, each such employee shall be credited with his or her years
of service with Company before the Effective Time, to the same extent as such
employee was entitled, before the Effective Time, to credit for such service
under any similar Company Benefit Plan, except for purposes of benefit accrual
under defined benefit pension plans, if any. Following the Effective Time,
Parent shall, or shall cause its subsidiaries or Affiliates to, waive any
pre-existing condition limitation under any welfare benefit plan maintained by
Parent or any of its subsidiaries or Affiliates in which such employees and
their eligible dependents participate (except to the extent that such
pre-existing condition limitation would have been applicable under the
comparable Company welfare benefit plans immediately prior to the Effective
Time).
(b) Parent and Lux Sub shall consider in their sole discretion
instituting a Company profit sharing plan, annual bonus plan or other incentive
program for Company employees.
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SECTION 7.06 Shareholder Agreement Legend
As soon as practicable after the date of this Agreement, Company shall
inscribe upon any certificate representing Shares (as such term is defined in
the Shareholders' Agreement) the following legend: "THE SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE, OF NETCREATIONS, INC. REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A SHAREHOLDERS' AGREEMENT AND AN IRREVOCABLE PROXY CREATED
THEREBY DATED AS OF DECEMBER 22, 2000, AND THE TRANSFER AND VOTING THEREOF ARE
SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF NETCREATIONS, INC. FROM THE SECRETARY OF
NETCREATIONS, INC."; and Company will return such each such certificate
containing such inscription to the shareholders of Company who are parties to
the Shareholders' Agreement within three Business Days following Company's
receipt thereof.
SECTION 7.07 Guaranty of Performance
Parent shall take all necessary steps to ensure that Lux Sub and
Merger Sub take any and all actions required to be taken by them pursuant to
this Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate
the Merger
The respective 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 by joint action of the parties hereto:
(a) this Agreement and the Merger shall have been duly approved
by the requisite vote of shareholders of Company in accordance with
New York Law;
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(b) 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;
(c) 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
(d) 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 obligation of Company to consummate the Merger is 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 and Lux
Sub contained in this Agreement shall be true, complete and correct
both (i) when made and (ii) on and as of the Effective Time as if made
at and as of the Effective Time (except for 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), except
in the case of each of clauses (i) and (ii) for such failures to be
true, complete and correct (without giving effect to any qualification
or standard relating to materiality or a Parent Material Adverse
Effect contained in
63
any such representations and warranties) which, individually or in the
aggregate, would not have a Parent Material Adverse Effect, and
Company shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of each of Parent and Lux Sub to
such effect; and
(b) Each of Parent and Lux Sub shall have performed or complied
in all material respects with all covenants required by this Agreement
to be performed or complied with by it an or prior to the Effective
Time and Company shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Parent and Lux Sub to
that effect.
SECTION 8.03 Conditions to the Obligations of Parent and Lux Sub
The respective obligations of Parent and Lux Sub to consummate the
Merger is 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 both
(i) when made and (ii) on and as of the Effective Time as if made at
and as of the Effective Time (except for 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), except
in the case of each of clauses (i) and (ii) for such failures to be
true, complete and correct (without giving effect to any qualification
or standard relating to materiality or a Company Material Adverse
Effect contained in any such representations and warranties) which,
individually or in the aggregate, would not have 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;
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(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) There shall have been no Company Material Adverse Effect
since the date of this Agreement;
(d) Company shall have received from each of the parties set
forth on Section 8.03(d) of the Company Disclosure Schedule (each such
party, an "Assigning Party"), a valid and effective assignment, in
form reasonably acceptable to Parent, of all intellectual property
rights in all work created by such Assigning Party on behalf of
Company; and
(e) Each of the employees listed on Schedule 8.03(e) of the
Company Disclosure Schedule hereto shall have terminated their
respective employment agreements with Company and shall have agreed to
the terms of employment set forth in their respective offer letters
from Parent, and no employee listed an Schedule I shall have
terminated, or given notice of termination of, such employee's
employment with Company.
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:
65
(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 April 30, 2001; 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
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
shareholders 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 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
shareholders (including by taking no position, or indicating its
inability to take a position, with respect to the acceptance by its
shareholders 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 or (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
66
request from Parent for such action, (v) the Board of Directors of
Company shall have determined that a Competing Transaction was a
Superior Proposal and to take any of the actions allowed by clause
(iii) of Section 6.04 (and shall not have, prior to Parent's
termination of this Agreement pursuant to this Section 9.01(d)(v), (x)
reconfirmed its approval and recommendation of this Agreement and the
Merger and (y) recommended against acceptance of such Superior
Proposal by its shareholders), or (vi) the Board of Directors of
Company resolves to take any of the actions described above;
(e) by Parent or Company, if the Company Shareholder Approval
shall not have been obtained at the Company Shareholders' Meeting duly
convened therefor or at any adjournment or postponement thereof;
(f) by Parent, if Company shall have breached or failed to
perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 8.03(a) or (b) and (ii) is
incapable of being or has not been cured by Company within 30 calendar
days after Parent has given written notice to Company of such breach
or failure to perform;
(g) by Company, if Parent or Lux Sub shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 8.02(a) or (b) and (ii) is
incapable of being or has not been cured by Parent within 30 calendar
days after Company has given
67
written notice to Parent of such breach or failure to perform; or
(h) by Company, if (i) the Board of Directors of Company
authorizes Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and Company notifies
Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement (or description
of all material terms and conditions thereof) to such notice, (ii)
Parent does not make, within three Business days of receipt of
Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer that the Board of
Directors of Company determines, in good faith after consultation with
its financial advisors, is at least as favorable to the shareholders
of Company as the Superior Proposal, it being understood that Company
shall not enter into any such binding agreement during such three-day
period and (iii) Company prior to such termination pursuant to this
clause (h) pays to Parent in immediately available funds the fees
required to be paid pursuant to Section 9.05(b), provided, that
Company shall not be permitted to terminate this Agreement pursuant to
this Section 9.01(h) if such Superior Proposal is attributable to a
violation by Company of its obligations under Section 6.04 or if such
Superior Proposal otherwise resulted from a breach of any of Company's
obligations under this Agreement.
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.
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SECTION 9.02 Effect of Termination
In the event of termination of this Agreement pursuant to Section
9.01, this Agreement shall forthwith become void and have no effect, without any
liability or obligation under this Agreement on the part of any party hereto or
any of its Affiliates or any of its or their officers or directors, other than
the provisions of Section 4.20, Section 6.03(b), this Section 9.02, Section 9.05
and Article X, which provisions shall survive such termination; 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 Agreement, 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
try 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 shareholders 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 any other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
69
valid only 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 Proxy Statement and all SEC and other regulatory filing
fees incurred in connection with 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), (ii) Parent shall terminate this Agreement pursuant
to Section 9.01(f), (iii) Company shall terminate this Agreement pursuant to
Section 9.01(h) or (iv) 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
Company Shareholder Approval and, in the case of this clause (iv), (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 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 (x) clauses (i) or (ii), promptly
after such termination, (y) in the case of clause (iii) prior to such
termination or (z) in the case of clause (iv), immediately before the execution
and delivery of such agreement or such consummation, as applicable, Company
shall pay to Parent (the "Termination Fee") a sum equal to all of Parent's
Expenses (payable promptly upon receipt of a written statement thereof from
Parent) and an additional amount equal to $6,500,000. In the event of
termination of this Agreement by Company pursuant to Section 9.01(g), Parent
shall pay to Company an amount equal to all of Company's
70
Expenses (payable promptly upon receipt of a written statement thereof from
Company).
(c) Parent and Company agree that the agreements contained in Section
9.05(b) above are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement or the Shareholders Agreements. Accordingly, if Company fails to pay
to Parent any amounts due under Section 9.05(b), Company shall pay the fees 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.
(d) In the event that the Company properly terminates this Agreement
pursuant to 9.01(g), in addition to any other claims for damages or expenses the
Company may commence against Parent or one of its Affiliates, Parent shall be
specifically obligated to reimburse Company for the termination fee due from
Company to DoubleClick, not to exceed $8.6 million, if such termination fee has
not already been paid by Parent or one of its Affiliates.
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.
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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):
(a) if to Company:
NetCreations, Inc.
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopier: 000 000 0000
with a copy to:
Piper, Marbury, Xxxxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopier: 000 000 0000
(b) if to Parent, Lux Sub or Merger Sub:
SEAT Pagine Gialle S.p.A.
Xxx Xxxxxxx Xxxxx 00
00000 Xxxxx, Xxxxx
Attention: Xx. Xxxxx Xxxxxx
Telecopier: 011 39 011 435 2882
72
with a copy to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopier: 212 474 3700
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.
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 7.03, 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.
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SECTION 10.05 Incorporation of Exhibits
The Company Disclosure Schedule and all Annexes 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 NEW YORK OTHER THAN CONFLICT OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF NEW
YORK.
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.
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.
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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 Annexes, the Schedules 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.
SECTION 10.11 Enforcement
Each of the parties hereto agrees that irreparable damage would occur
and that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of New York or in
any New York state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any
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such court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a Federal court sitting in the State of New York or a New York state
court.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed as of the date first written
above by their respective officers thereunto duly authorized.
SEAT PAGINE GIALLE S.P.A.
by
/s/ Xxxxxxx Pelliccioli
------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: CEO
SOGERIM, SOCIETE ANONYME
by
/s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Administrateur
by
/s/ Fabio Morvilli
------------------------------
Name: Fabio Morvilli
Title: President
NICKEL ACQUISITION CORP.
by
/s/ Xxxxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: President
NETCREATIONS, INC.
by
/s/ Xxxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: CEO
