Exhibit 99(D)(1)
---------------------------------------
AGREEMENT AND PLAN OF MERGER
among
FLIPSIDE, INC.
FLIPSIDE ACQUISITION CORPORATION
and
UPROAR INC.
Dated as of February 5, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1 THE OFFER.....................................................................2
1.1 THE OFFER...........................................................2
1.2 ACTIONS BY PURCHASER AND MERGER SUB.................................3
1.3 ACTIONS BY THE COMPANY..............................................4
1.4 DIRECTORS...........................................................6
ARTICLE 2 THE MERGER....................................................................7
2.1 THE MERGER..........................................................7
2.2 THE CLOSING.........................................................7
2.3 EFFECTIVE TIME......................................................7
2.4 EFFECTS OF THE MERGER...............................................7
ARTICLE 3 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION..........8
3.1 CERTIFICATE OF INCORPORATION........................................8
3.2 BYLAWS..............................................................8
ARTICLE 4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION...........................8
4.1 DIRECTORS...........................................................8
4.2 OFFICERS............................................................8
ARTICLE 5 EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB AND THE COMPANY..............8
5.1 MERGER SUB STOCK....................................................8
5.2 COMPANY SECURITIES..................................................8
5.3 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMMON STOCK.......10
5.4 MERGER WITHOUT MEETING OF STOCKHOLDERS.............................12
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................12
6.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY......................12
6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS...................13
6.3 COMPLIANCE WITH LAWS...............................................13
6.4 CAPITALIZATION.....................................................14
6.5 SUBSIDIARIES.......................................................14
6.6 NO VIOLATION.......................................................14
6.7 COMPANY REPORTS; OFFER DOCUMENTS...................................15
6.8 ABSENCE OF CERTAIN CHANGES.........................................17
6.9 TAXES..............................................................17
6.10 EMPLOYEE BENEFIT PLANS.............................................18
6.11 BROKERS............................................................20
6.12 LICENSES AND PERMITS...............................................20
6.13 ENVIRONMENTAL MATTERS..............................................20
6.14 TITLE TO ASSETS....................................................21
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6.15 LEASED PROPERTIES..................................................21
6.16 LABOR AND EMPLOYMENT MATTERS.......................................22
6.17 INTELLECTUAL PROPERTY..............................................22
6.18 MATERIAL AGREEMENTS................................................23
6.19 NO UNDISCLOSED LIABILITIES.........................................24
6.20 LITIGATION.........................................................24
6.21 INSURANCE..........................................................24
6.22 AFFILIATE TRANSACTIONS.............................................24
6.23 OPINION OF FINANCIAL ADVISOR.......................................24
6.24 VOTE REQUIRED......................................................24
6.25 DGCL SECTION 203; STATE TAKEOVER STATUTES..........................25
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB...................25
7.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY......................25
7.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS...................25
7.3 OFFER DOCUMENTS....................................................26
7.4 NO VIOLATION.......................................................26
7.5 FINANCING..........................................................27
7.6 PURCHASER-OWNED SHARES OF COMMON STOCK.............................27
7.7 INTERIM OPERATIONS OF MERGER SUB...................................27
7.8 LITIGATION.........................................................27
ARTICLE 8 COVENANTS....................................................................27
8.1 INTERIM OPERATIONS.................................................27
8.2 COMPANY STOCKHOLDER APPROVAL; PROXY STATEMENT......................31
8.3 FILINGS; OTHER ACTION..............................................32
8.4 PUBLICITY..........................................................33
8.5 FURTHER ACTION.....................................................33
8.6 INSURANCE; INDEMNITY...............................................33
8.7 EMPLOYEE BENEFIT PLANS.............................................34
8.8 ACCESS TO INFORMATION..............................................35
8.9 NO SOLICITATION....................................................35
8.10 OPTION TO ACQUIRE ADDITIONAL SHARES................................37
ARTICLE 9 CONDITIONS...................................................................37
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.........37
ARTICLE 10 TERMINATION; AMENDMENT; WAIVER..............................................38
10.1 TERMINATION........................................................38
10.2 EFFECT OF TERMINATION..............................................40
10.3 AMENDMENT..........................................................41
10.4 EXTENSION; WAIVER..................................................41
ARTICLE 11 GENERAL PROVISIONS..........................................................42
11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES......................42
11.2 NOTICES............................................................42
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11.3 ASSIGNMENT; BINDING EFFECT.........................................42
11.4 ENTIRE AGREEMENT...................................................43
11.5 FEES AND EXPENSES..................................................43
11.6 GOVERNING LAW......................................................43
11.7 HEADINGS...........................................................43
11.8 INTERPRETATION.....................................................43
11.9 SEVERABILITY.......................................................44
11.10 ENFORCEMENT OF AGREEMENT...........................................44
11.11 COUNTERPARTS.......................................................44
11.12 OBLIGATION OF PURCHASER............................................44
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as
of February 5, 2001, is made and entered into among Flipside, Inc., a Delaware
corporation ("PURCHASER"), Flipside Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Purchaser ("MERGER SUB"), and
Uproar Inc., a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the boards of directors of Purchaser, Merger Sub and
the Company each have determined that it would be advisable and is in the best
interests of their respective companies and stockholders for Purchaser to
acquire the Company on the terms and subject to the conditions set forth herein;
and
WHEREAS, to effectuate the acquisition, Purchaser and the
Company each desire that Purchaser cause Merger Sub to commence a cash tender
offer to purchase all, and in any event not less than a majority on a Fully
Diluted Basis (as defined below), of the outstanding shares of common stock, par
value $0.01 per share (the "COMMON STOCK"), of the Company on the terms and
subject to the conditions set forth in this Agreement, including EXHIBIT A
hereto; and
WHEREAS, concurrently with the execution hereof and as a
condition and inducement to each of Merger Sub's and Purchaser's willingness to
enter into this Agreement, Merger Sub and Purchaser are entering into Tender and
Stockholder Support Agreements (the "TENDER AGREEMENTS") with certain
stockholders of the Company (each a "SIGNIFICANT STOCKHOLDER") under which each
Significant Stockholder is, among other things, agreeing to tender all of such
Significant Stockholder's shares of Common Stock in the Offer upon the terms and
conditions set forth therein; and
WHEREAS, upon consummation of the tender offer, and as soon as
may be permitted thereafter, Merger Sub shall be merged with and into the
Company in accordance with this Agreement and the relevant provisions of the
DGCL (as defined below) and the surviving corporation in the merger shall be the
Company; and
WHEREAS, the board of directors of the Company (the "BOARD OF
DIRECTORS" or the "BOARD") has approved this Agreement and the transactions
contemplated hereby, including the tender offer and the merger, and has resolved
to recommend (subject to the limitations contained herein) that the Company's
stockholders accept the tender offer and tender their shares of Common Stock
pursuant thereto; and
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE OFFER
1.1 THE OFFER.
(a) Subject to the provisions of this Agreement and this Agreement not
having been terminated in accordance with ARTICLE 10 hereof, as promptly as
practicable but in any event within ten business days after the date hereof,
Merger Sub shall commence, within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations promulgated thereunder, an offer to purchase (the "OFFER") all, and
in any event not less than a majority on a fully diluted basis (assuming the
exercise of all Options (as defined in Section 5.2(d)) that are then exercisable
and any other rights to acquire shares of Common Stock on the date of purchase
(a "FULLY DILUTED BASIS"), of the outstanding shares of Common Stock at a price
of $3.00 per share of Common Stock, net to the seller in cash, without interest
(such price or any higher price paid pursuant to the Offer, the "OFFER
CONSIDERATION"). Notwithstanding the foregoing, if between the date of this
Agreement and the closing of the Offer the outstanding shares of Common Stock
shall have been changed into a different number of shares or a different class
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Offer
Consideration shall be correspondingly adjusted on a per-share basis to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares. The obligation of Purchaser and Merger Sub to
commence the Offer and accept for payment, and pay for, any shares of Common
Stock tendered pursuant to the Offer shall be subject to the conditions set
forth in EXHIBIT A hereto and to the terms and conditions of this Agreement.
Subject to the provisions of this Agreement, the Offer shall expire 20 business
days after the date of its commencement, unless this Agreement is terminated in
accordance with ARTICLE 10, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination.
(b) Purchaser and Merger Sub expressly reserve the right, in their sole
discretion, to modify the terms of the Offer and to waive any condition of
the Offer, except that, without the prior written consent of the Company,
Merger Sub shall not (and Purchaser shall cause Merger Sub not to) (i) waive
the Minimum Condition (as defined in EXHIBIT A), (ii) reduce the number of
shares of Common Stock subject to the Offer, (iii) reduce the price per share
of Common Stock to be paid pursuant to the Offer, (iv) except as set forth
below, extend the Offer, (v) change the form of consideration payable in the
Offer, (vi) except as set forth herein, amend or modify any term or condition
of the Offer (including the conditions set forth on EXHIBIT A) in any manner
adverse to the holders of Common Stock or (vii) impose additional conditions
to the Offer other than such conditions required by applicable law. So long
as this Agreement is in effect and the conditions to the Offer set forth in
EXHIBIT A have not been satisfied or waived, Merger Sub may, without the
consent of the Company, extend the expiration date of the Offer for one or
more periods of up to ten additional business days each (but in no event
shall Merger Sub be permitted to extend the expiration date of the Offer
beyond the sixtieth business day after the date of this Agreement (the
"OUTSIDE DATE")). So long as this Agreement is in effect and the conditions
to the Offer have been satisfied or waived and shall not apply to any
extension, Merger Sub may, without the consent of the Company, provide for
one or more subsequent offering periods in accordance with Rule 14d-11 under
the Exchange Act, if (i) the number of shares of Common
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Stock that have been validly tendered and not withdrawn represent less than
90% of the issued and outstanding shares of the Common Stock on a Fully
Diluted Basis and (ii) Merger Sub shall accept and promptly pay for all
shares of Common Stock validly tendered and not withdrawn; PROVIDED, HOWEVER,
that no such subsequent offering periods shall exceed, in the aggregate,
twenty business days. Notwithstanding the foregoing, Merger Sub may, without
the consent of the Company, extend the Offer (beyond the Outside Date, if
necessary) (i) for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer and (ii) for one or more
periods of up to ten additional business days due to the failure to satisfy
the condition to the Offer relating to the expiration or termination of the
waiting period under the HSR Act (as defined below). It is agreed that the
conditions set forth in EXHIBIT A are for the sole benefit of Merger Sub and
Purchaser and may be asserted by Merger Sub or Purchaser, or may be waived in
whole or in part by Merger Sub or Purchaser, in their sole discretion. The
failure by Merger Sub or Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time.
Subject to the terms and conditions of the Offer and this Agreement and to
the provisions of Rule 14d-11 under the Exchange Act, Merger Sub shall accept
for payment and pay for, in accordance with the terms of the Offer, all
shares of Common Stock validly tendered and not withdrawn pursuant to the
Offer as soon as practicable after the expiration of the Offer.
(c) Purchaser shall provide or cause to be provided to Merger Sub on a
timely basis the funds necessary to purchase any shares of Common Stock that
Merger Sub becomes obligated to purchase pursuant to the Offer and shall be
liable on a direct and primary basis for the performance by Merger Sub or the
Surviving Corporation (as defined in SECTION 2.1), as the case may be, of its
obligations under this Agreement with respect to the payment of the Offer
Consideration, the Option Consideration (as defined in SECTION 5.2(D)) and
the Merger Consideration (as defined in SECTION 5.2(B)). Merger Sub may, at
any time, transfer or assign to one or more corporations directly or
indirectly wholly-owned by Purchaser the right to purchase all or any portion
of the shares tendered pursuant to the Offer, provided that any such transfer
or assignment shall not prejudice the rights of tendering stockholders to
receive payment for shares of Common Stock properly tendered and accepted for
payment.
1.2 ACTIONS BY PURCHASER AND MERGER SUB. As soon as reasonably
practicable following execution of this Agreement, but in no event later than
ten business days from the date hereof, Purchaser and Merger Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the
Offer, which shall contain (including as an exhibit) or incorporate by
reference an offer to purchase and a related letter of transmittal and any
other ancillary documents pursuant to which the Offer shall be made (such
Tender Offer Statement on Schedule TO and the documents therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Offer Documents prior
to the filing thereof with the SEC. The Company shall promptly supply to
Purchaser and Merger Sub in writing, for inclusion in the Offer Documents,
all information concerning the Company or any of its affiliates required by
law, rule or regulation to be included in the Offer Documents. The Offer
Documents shall comply as to form in all material respects with the
requirements of the Exchange Act, and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, the
Offer Documents shall not contain any untrue
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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
the light of the circumstances under which they were made, not misleading,
except that no representation is made by Purchaser or Merger Sub with respect
to information supplied in writing by the Company for inclusion in the Offer
Documents. Each of Purchaser, Merger Sub and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if and
to the extent such information shall have become false or misleading in any
material respect, and each of Purchaser, Merger Sub and the Company further
agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of
shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws. Purchaser and Merger Sub agree to provide
the Company and its counsel with any comments Purchaser, Merger Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.
1.3 ACTIONS BY THE COMPANY.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors at a meeting duly called
and held has duly adopted resolutions (i) approving this Agreement, the Offer
and the Merger (as defined in SECTION 2.1), determining that the Merger is
advisable and that the terms of the Offer and Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's stockholders accept the Offer and tender all of their shares of
Common Stock to Merger Sub and approve this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, (ii) taking all
action necessary to render Section 203 of the Delaware General Corporation
Law, as amended (the "DGCL"), inapplicable to the Offer, the Merger, this
Agreement, the Tender Agreements and any of the transactions contemplated
hereby and thereby and (iii) electing, to the extent permitted by law, not to
be subject to any "moratorium," "control share acquisition," "business
combination," "fair price" or other form of corporate anti-takeover laws and
regulations of any jurisdiction that may purport to be applicable to this
Agreement or the Tender Agreements. The Company further represents and
warrants that the Board of Directors has received the oral opinion (which
opinion will be confirmed by delivery of a written opinion) of Xxxxxxx Xxxxx
Xxxxxx Inc. (the "FINANCIAL ADVISOR") to the effect that, as of the date of
this Agreement, the consideration to be received in the Offer and the Merger
by the holders of shares of Common Stock (other than Purchaser and its
affiliates) is fair, from a financial point of view, to such holders (the
"FAIRNESS OPINION"). Subject to the last sentence of this SECTION 1.3(a), the
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board of Directors described in the first sentence of
this SECTION 1.3(a). The Company hereby represents and warrants that it has
been authorized by the Financial Advisor to permit the inclusion in its
entirety of the Fairness Opinion (and, subject to prior review and consent by
the Financial Advisor, references thereto) in the Offer to Purchase, the
Schedule 14D-9 (as defined in SECTION 1.3(b)) and the Proxy Statement (as
defined in SECTION 8.2(b)), if applicable. The Company has been advised by
each of its directors and executive officers who owns shares of Common Stock
that such person intends to tender all shares of Common Stock owned by such
person pursuant to the Offer. The Board of Directors shall not withdraw,
modify or amend its recommendations described above in a manner adverse to
Purchaser (or announce publicly its intention to do so), except that the
Board shall be permitted to withdraw, amend or modify its recommendation (or
publicly announce its intention to do so)
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of this Agreement or the Merger in a manner adverse to Purchaser or approve
or recommend or enter into an agreement with respect to a Superior Proposal
(as defined in SECTION 8.9) in accordance and full compliance with the terms
of SECTION 8.9 and SECTION 10.1(h).
(b) The Company shall file with the SEC, concurrently with the filing of
the Offer Documents with the SEC, a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended or
supplemented from time to time, the "SCHEDULE 14D-9") containing the
recommendations described in the first sentence of SECTION 1.3(a) (subject to
the last sentence of SECTION 1.3(a)) and shall mail the Schedule 14D-9 to the
stockholders of the Company. To the extent practicable, the Company shall
cooperate with Purchaser in mailing or otherwise disseminating the Schedule
14D-9 with the appropriate Offer Documents to the Company's stockholders.
Purchaser and its counsel shall be given a reasonable opportunity to review
and comment upon the Schedule 14D-9 prior to the filing thereof with the SEC.
The Schedule 14D-9 shall comply as to form in all material respects with the
requirements of the Exchange Act and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company
with respect to information supplied by Purchaser or Merger Sub for inclusion
in the Schedule 14D-9. Each of the Company, Purchaser and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent such information shall have become false or
misleading in any material respect, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to the holders of shares of Common Stock,
in each case as and to the extent required by applicable federal securities
laws. The Company agrees to provide Purchaser and Merger Sub and their
counsel in writing with any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments.
(c) To the extent required by applicable federal securities law, each
party hereto shall file all written communications, that are made public or
otherwise supplied to third parties, with the SEC on or prior to the date the
communication is first used. All such communications shall comply as to form
and content, including bearing the appropriate legends, in all material
respects with the applicable provisions of the federal securities laws. Each
party agrees that, prior to any such filing or use of written communications,
such party will provide the other party and their counsel the reasonable
opportunity to review and comment on such communications and filings.
(d) In connection with the Offer, the Company shall cause its transfer
agent to furnish promptly to Merger Sub mailing labels containing the names
and addresses of the record holders of Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, and to
furnish copies of other information in the Company's possession or control
regarding the non-objecting beneficial owners of Common Stock, and shall
furnish to Merger Sub such information and assistance (including updated
lists of stockholders, security position listings and computer files) as
Merger Sub may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Offer and the Merger, Purchaser and Merger Sub
and each of their affiliates and
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associates shall hold in confidence the information contained in any of such
labels, lists and files, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement is terminated, shall
promptly deliver to the Company all copies of such information then in their
possession or under their control.
1.4 DIRECTORS.
(a) Upon the acceptance for payment of, and payment by Merger Sub in
accordance with the Offer for, at least a majority of the issued and
outstanding shares of Common Stock on a Fully Diluted Basis pursuant to the
Offer, Purchaser shall be entitled to designate such number of directors on
the Board, rounded up to the next whole number, as will give Purchaser
representation on the Board of Directors equal to the product of (i) the
number of authorized directors on the Board of Directors (giving effect to
the directors elected pursuant to this SECTION 1.4) and (ii) the percentage
that the number of shares of Common Stock purchased by Merger Sub or
Purchaser or any affiliate thereof bears to the aggregate number of shares of
Common Stock outstanding (the "PERCENTAGE"), and the Company shall, upon the
election and request by Purchaser, secure the resignations of such number of
directors as is necessary to enable Purchaser's designees to be elected to
the Board of Directors and shall cause Purchaser's designees to be so
elected. At the request of Purchaser, the Company will cause such individuals
designated by Purchaser to constitute the same Percentage of (i) each
committee of the Board, (ii) the board of directors of each Subsidiary (as
defined in SECTION 11.8) of the Company and (iii) the committees of each such
board of directors. The Company's obligations to seek to appoint designees to
the Board of Directors and the committees thereof shall be subject to Section
14(f) of the Exchange Act. The Company shall promptly take all appropriate
action necessary to effect any such election and shall, subject to the next
succeeding sentence, include in the Schedule 14D-9 the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
Purchaser will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, directors and
affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding the
foregoing, the parties hereto shall use their respective reasonable efforts
to ensure that at least two of the members of the Board of Directors shall at
all times prior to the Effective Time be Continuing Directors (as defined in
SECTION 1.4(b)).
(b) After the time that Purchaser's designees constitute at least a
majority of the Board of Directors and until the Effective Time (as defined
in SECTION 2.3), any (i) amendment or termination of this Agreement by or on
behalf of the Company, (ii) exercise or waiver of any of the Company's rights
or remedies hereunder, or (iii) extension of time for the performance or
waiver of any of the obligations or other acts of Purchaser or Merger Sub
hereunder, shall require the approval of at least a majority of the
then-serving directors, if any, who are not designees of Purchaser (the
"CONTINUING DIRECTORS"), except to the extent that applicable law requires
that such action be acted upon by the full Board of Directors, in which case
such action will require the concurrence of both a majority of the Board of
Directors and a majority of the Continuing Directors.
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ARTICLE 2
THE MERGER
2.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged with and into the Company in
accordance with this Agreement and the applicable provisions of the DGCL, and
the separate corporate existence of Merger Sub shall thereupon cease (the
"MERGER"). The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "SURVIVING CORPORATION").
2.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "CLOSING") shall take place at the offices of Xxxxxx
& Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m.,
local time, as soon as practicable following the satisfaction (or waiver if
permissible) of the conditions set forth in ARTICLE 9. The date on which the
Closing occurs is hereinafter referred to as the "CLOSING DATE."
2.3 EFFECTIVE TIME. If all the conditions to the Merger set forth in ARTICLE
9 shall have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated as provided in ARTICLE 10, the parties hereto
shall cause a certificate of merger meeting the requirements of Section 251 of
the DGCL and any other appropriate documents to be properly executed and filed
in accordance with such Section 251 on the Closing Date (or on such other date
as Purchaser and the Company may agree). The Merger shall become effective at
the time of filing of the certificate of merger with the Secretary of State of
the State of Delaware in accordance with the DGCL or at such later time that the
parties hereto shall have agreed upon and designated in such filing as the
effective time of the Merger (the "EFFECTIVE TIME").
2.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all property of the
Company and Merger Sub shall vest in the Surviving Corporation, and all
liabilities and obligations of the Company and Merger Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE 3
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1 CERTIFICATE OF INCORPORATION. At the Effective Time, the certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation, until
duly amended in accordance with applicable law and the terms thereof.
3.2 BYLAWS. At the Effective Time, the bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation, until duly amended in accordance with applicable law, the terms
thereof and the Surviving Corporation's certificate of incorporation, except
that the name shall be changed to "Uproar Inc."
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ARTICLE 4
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1 DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's certificate of
incorporation and bylaws.
4.2 OFFICERS. The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation as of the Effective Time
and until their successors are duly appointed or elected in accordance with
applicable law and the Surviving Corporation's certificate of incorporation and
bylaws.
ARTICLE 5
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1 MERGER SUB STOCK. At the Effective Time, each share of common stock, par
value $0.01 per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
5.2 COMPANY SECURITIES.
(a) Each share of Common Stock issued and outstanding immediately prior to
the Effective Time that is owned by the Company or any Subsidiary of the Company
or by Purchaser, Merger Sub or any other Subsidiary of Purchaser shall
automatically be canceled and retired and shall cease to exist, and no cash or
other consideration shall be delivered or deliverable in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares of Common Stock to be canceled and
retired in accordance with SECTION 5.2(a) and any Dissenting Common Stock (as
defined in SECTION 5.2(c)) shall be converted into the right to receive the
Offer Consideration, payable in cash to the holder thereof, without any
interest thereon (the "MERGER CONSIDERATION"), in accordance with SECTION
5.3. As of the Effective Time, all such shares of Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist and each holder of a Certificate (as defined below)
which immediately prior to the Effective Time represented any such shares of
Common Stock shall cease to have any rights with respect thereto, except the
right to receive, upon surrender of such Certificates as provided in Section
5.3, the Merger Consideration. Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding shares of
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration shall be correspondingly adjusted on a per-share
basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
8
(c) Notwithstanding any provision of this Agreement to the contrary, if
required by the DGCL but only to the extent required thereby, shares of Common
Stock that are issued and outstanding immediately prior to the Effective Time
and that are held by holders of such shares of Common Stock who have properly
exercised appraisal rights with respect thereto in accordance with Section 262
of the DGCL (the "DISSENTING COMMON STOCK") will not be exchangeable for the
right to receive the Merger Consideration, and holders of such shares of
Dissenting Common Stock will be entitled to receive payment of the appraised
value of such shares of Common Stock in accordance with the provisions of such
Section 262 unless and until such holders fail to perfect or effectively
withdraw or lose their rights to appraisal and payment under the DGCL. If, after
the Effective Time, any such holder fails to perfect or effectively withdraws or
loses such right, such shares of Common Stock will thereupon be treated as if
they had been converted into and become exchangeable for, at the Effective Time,
the right to receive the Merger Consideration, without any interest thereon. The
Company will promptly give Purchaser notice of any demands received by the
Company for appraisals of shares of Common Stock. The Company shall not, except
with the prior written consent of Purchaser, make any payment with respect to
any demands for appraisal or settle any such demands.
(d) Subject to SECTION 5.3, at the Effective Time, each holder of a
then-outstanding option to purchase shares of Common Stock under any plan,
program or arrangement of the Company or its Subsidiaries (collectively, the
"STOCK OPTION PLANS") (true and correct copies of which have been provided to
Purchaser by the Company), whether or not such options are then exercisable
(individually, an "OPTION" and collectively, the "OPTIONS"), shall, in
settlement thereof, receive for each share of Common Stock issuable upon
exercise of such Option the right to receive an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as
the "OPTION CONSIDERATION"). Payment for Options shall be made by the Company,
subject to the terms and conditions of this Agreement, as soon as practicable
after consummation of the Merger. At the Effective Time, each Option shall be
deemed canceled and the holder thereof shall have no further rights with respect
thereto. In addition, any such Options which are not exercisable at the
Effective Time shall be deemed canceled and each holder thereof shall have no
further rights with respect thereto. The surrender of an Option to the Company
in exchange for the Option Consideration shall be deemed a release of any and
all rights the holder had or may have had in respect of such Option. All amounts
payable pursuant to this SECTION 5.2(d) shall be subject to any required
withholding of taxes and shall be paid without interest.
(e) The Surviving Corporation's obligation to make the cash payment
described in SECTION 5.2(d): (i) shall be subject to obtaining from optionees
any necessary consents to the cancellation of the applicable Options, and
agreements from such optionees releasing any and all rights such optionees
may have in respect of the applicable Options; and (ii) shall not require any
action that violates any of the Stock Option Plans. Except as otherwise may
be agreed to by the parties, the Company shall take all necessary action
prior to the consummation of the Offer to assure that (x) the Stock Option
Plans shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time and (y) at and
after the Effective Time no participant in the Stock Option Plans or other
plans, programs or arrangements shall have any right thereunder to acquire
9
any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and that all such plans will be terminated.
5.3 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMMON STOCK.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial bank
or trust company, which shall be reasonably satisfactory to the Company, to act
as paying agent hereunder (the "PAYING AGENT") for payment of the Merger
Consideration upon surrender of a certificate or certificates (each, a
"CERTIFICATE") representing shares of Common Stock. Prior to or concurrently
with the Effective Time, Purchaser shall cause Merger Sub or the Surviving
Corporation, as the case may be, to provide the Paying Agent with cash in an
amount necessary to pay for all the shares of Common Stock pursuant to SECTION
5.2(b). Such amounts shall hereinafter be referred to as the "EXCHANGE FUND."
(b) Promptly after the Effective Time, Purchaser shall cause the Paying
Agent to mail to each holder of record of shares of Common Stock (i) a letter of
transmittal that shall specify that delivery shall be effected, and risk of loss
and title to Certificates shall pass, only upon delivery of the Certificates to
the Paying Agent, which letter shall be in such form and have such other
provisions as Purchaser may reasonably specify and (ii) instructions for
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably be required by
the Paying Agent, the holder of such Certificate shall promptly receive in
exchange therefor the amount of cash into which shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to SECTION 5.2, and the shares represented by the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or will accrue on the cash
payable upon surrender of any Certificate. In the event of a transfer of
ownership of Common Stock that is not registered in the transfer records of the
Company, payment may be made with respect to such Common Stock to such a
transferee if the Certificate representing such shares of Common Stock is
presented to the Paying Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) As of the Effective Time, all shares of Common Stock (other than
shares of Common Stock to be canceled and retired in accordance with SECTION
5.2(a) and any shares of Dissenting Common Stock) issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and
shall automatically be canceled and retired and shall cease to exist, and
each holder of any such shares shall cease to have any rights with respect
thereto or arising therefrom (including, without limitation, the right to
vote), except the right to receive the Merger Consideration, without
interest, upon surrender of the Certificate representing such shares in
accordance with SECTION 5.3(b), and until so surrendered, the Certificate
representing such shares shall represent for all purposes only the right to
receive the Merger Consideration, without interest. The Merger Consideration
paid upon the surrender for exchange of Certificates in accordance with the
terms of this SECTION 5.3 shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Common Stock
theretofore represented by such Certificates.
10
(d) At or after the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this ARTICLE 5.
(e) The Paying Agent shall invest the Exchange Fund, as directed by
Purchaser, in (i) direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated the highest quality by either Xxxxx'x Investors Services,
Inc. or Standard & Poor's Corporation or (iv) certificates of deposit, bank
repurchase agreements or bankers' acceptances of commercial banks with capital
exceeding $500 million. Any net earnings with respect to the Exchange Fund shall
be the property of and paid over to Purchaser as and when requested by
Purchaser; PROVIDED, HOWEVER, that any such investment or any such payment of
earnings may not delay the receipt by holders of Certificates of any Merger
Consideration.
(f) Any portion of the Exchange Fund (including the proceeds of any interest
and other income received by the Paying Agent in respect of all such funds) that
remains unclaimed by the former stockholders of the Company one year after the
Effective Time shall be delivered to the Surviving Corporation. Any holders of
Certificates who have not theretofore complied with this ARTICLE 5 shall
thereafter look only to the Surviving Corporation for payment of any Merger
Consideration that may be payable in respect of each share of Common Stock such
stockholder holds as determined pursuant to this Agreement, without any interest
thereon.
(g) None of Purchaser, the Company, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of shares of
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h) If any Certificate is lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
(i) Except as otherwise provided herein or in the letter of transmittal
referred to in SECTION 5.3(b), Purchaser shall pay all charges and expenses
(but excluding income, withholding and any stock transfer taxes), including
those of the Paying Agent, in connection with the exchange of the Merger
Consideration for Certificates.
(j) Purchaser shall be entitled to deduct and withhold, or cause to be
deducted or withheld, from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock or Options such amounts as are
required to be deducted and withheld with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
provision of applicable state, local or foreign tax law. To the
11
extent that amounts are so deducted and withheld, such deducted and withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to such holders in respect of which such deduction and withholding was
made.
5.4 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the foregoing,
if Merger Sub, together with any other direct or indirect subsidiary of
Purchaser, shall own at least 90% of the outstanding shares of Common Stock upon
consummation of the Offer, the parties hereto shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable, and in any event within ten business days, after the expiration of
the Offer without a meeting of stockholders of the Company, in accordance with
Section 253 of the DGCL.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections of the
disclosure schedules, dated the date hereof, delivered by the Company to
Purchaser (the "COMPANY DISCLOSURE SCHEDULES"), or as specifically contemplated
by this Agreement, the Company hereby represents and warrants to Purchaser and
Merger Sub as follows:
6.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the Company
and its Subsidiaries is (a) duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and (b) is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States or the laws
of any foreign jurisdiction, if applicable, in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so
qualified or to be in good standing would not reasonably be expected to (i)
materially adversely affect the assets, liabilities, business, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole or (ii) materially adversely affect or delay
the ability of the Company on the one hand, or Merger Sub and Purchaser on
the other, to consummate the transactions contemplated by this Agreement
(either of the foregoing clauses (i) or (ii) being a "MATERIAL ADVERSE
EFFECT"; PROVIDED, HOWEVER, that the following are deemed not to constitute a
Material Adverse Effect: (w) decline in the revenues, website traffic,
pricing of advertising and market share of the Company due to reasons beyond
the Company's control, (x) conditions affecting the U.S. economy, as a whole,
(y) conditions affecting the internet game or software industries, as a whole
and (z) actions and events permitted under this Agreement). Each of the
Company and its Subsidiaries has all requisite corporate power and authority
to own, operate and lease its properties and assets and carry on its business
as now conducted except where the failure to have such power and authority
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company has heretofore made available to
Purchaser true and correct copies of the certificate of incorporation and
bylaws or other governing instruments of the Company and each of its
Subsidiaries as currently in effect.
6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all other agreements and documents contemplated hereby or executed in
connection herewith to which it
12
is a party (the "ANCILLARY DOCUMENTS") and subject, if required under
applicable law with respect to the consummation of the Merger, to the
approval of holders of the Common Stock, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement and the Ancillary Documents or to consummate the transactions
contemplated hereby and thereby (other than the adoption of this Agreement by
the holders of the Common Stock if required by applicable law). This
Agreement has been, and any Ancillary Document at the time of execution will
have been, duly and validly executed and delivered by the Company, and
(assuming this Agreement and such Ancillary Documents each constitute a valid
and binding obligation of Purchaser and Merger Sub) this Agreement
constitutes, and each such Ancillary Document at the time of execution will
constitute, the valid and binding obligations of the Company, enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting the rights of creditors and to general
principles of equity.
6.3 COMPLIANCE WITH LAWS. Neither the Company nor any of its Subsidiaries is
or has been in violation of any foreign, federal, state or local law, statute,
ordinance, rule, regulation, order, judgment, ruling or decree of any foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority or any court, arbitration, board or tribunal
("GOVERNMENTAL ENTITY") applicable to the Company or any of its Subsidiaries or
any of their respective properties or assets, except for violations that would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. As of the date hereof, to the Company's knowledge, no
investigation or claim by any Governmental Entity with respect to the Company or
any of its Subsidiaries is pending or, to the knowledge of the Company,
threatened.
6.4 CAPITALIZATION. The authorized capital stock of the Company consists
of 112,000,000 shares of Common Stock and 48,000,000 shares of preferred
stock. As of February 2, 2001, 46,112,442 shares of Common Stock were issued
and outstanding, (b) no shares of preferred stock were issued and
outstanding, (c) Options to purchase an aggregate of 9,820,733 shares of
Common Stock were outstanding, (d) no shares of Common Stock were held by the
Company in its treasury and (e) no shares of Common Stock were held by the
Company's Subsidiaries. The Company has no outstanding bonds, debentures,
notes or other obligations entitling the holders thereof to vote (or that are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. Since January 31, 2001, the
Company (i) has not issued any shares of Common Stock other than upon the
exercise of Options, (ii) has granted no Options to purchase shares of Common
Stock under the Stock Option Plans and (iii) has not split, combined,
converted or reclassified any of its shares of capital stock. All issued and
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of any adverse claims, taxes, preemptive rights,
liens, security interests or other encumbrances, and issued in compliance
with applicable federal, state and foreign security laws. Except as set forth
in this SECTION 6.4, there are no other shares of capital stock or voting
securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments that obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or
13
equity interests in, the Company or any of its Subsidiaries. There are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company and there are no performance awards outstanding under the Stock
Option Plans or any other outstanding stock-related awards. There are no
voting trusts or other agreements or understandings to which the Company or
any of its Subsidiaries or, to the knowledge of the Company, any of the
Company's directors or executive officers is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries.
6.5 SUBSIDIARIES. (a) The Company owns directly, or indirectly through a
Subsidiary, all the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect directors or
others performing similar functions with respect to such Subsidiary) of each of
the Company's Subsidiaries, and (b) each of the outstanding shares of capital
stock (or other ownership interests having by their terms ordinary voting power
to elect directors or others performing similar functions with respect to such
Subsidiary) of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is owned directly or indirectly by the
Company free and clear of all liens, pledges, security interests, claims,
restrictions, preemptive rights or other encumbrances ("ENCUMBRANCES").
6.6 NO VIOLATION. Neither the execution and delivery by the Company of
this Agreement or any of the Ancillary Documents nor the consummation by the
Company of the transactions contemplated hereby or thereby will: (a) violate,
conflict with or result in a breach of any provisions of the certificate of
incorporation or bylaws of the Company; (b) violate, conflict with, result in
a breach of any provision of, constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default) under, result in
the termination or give rise to a right of termination of, accelerate the
performance required by or benefit obtainable under, result in the triggering
of any payment, penalty or other obligations pursuant to, result in the
creation of any Encumbrance upon any of the properties owned or used by the
Company or its Subsidiaries under, or result in there being declared void,
voidable, or without further binding effect, any of the terms, conditions or
provisions of any loan or credit agreement, note, bond, mortgage, indenture,
lease, license, contract or other obligation (financial or otherwise) (each,
a "CONTRACT" and, collectively, "CONTRACTS") to which the Company or any of
its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their respective properties is bound, except for any
such breach, default or right with respect to which requisite waivers or
consents have been, or prior to the Effective Time will be, obtained, or any
of the foregoing matters that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (c) require any
consent, approval or authorization of, license, permit or waiver by, or
declaration, filing or registration (collectively, "CONSENTS") with, any
Governmental Entity, including any such Consent under the laws of any foreign
jurisdiction, other than (i) the filings provided for in SECTION 2.3 and the
filings required under the Exchange Act and the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and state securities or "Blue Sky" laws and
the rules and regulations promulgated thereunder, and (ii) the filing
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and any other applicable law governing antitrust or
competition matters, and any Consents required or permitted to be obtained
pursuant to the laws of any foreign jurisdiction relating to antitrust
matters or competition ("FOREIGN ANTITRUST LAWS") (collectively, "OTHER
ANTITRUST FILINGS AND CONSENTS", together with the other filings described in
clauses (i) and (ii) above, "REGULATORY FILINGS"), except for those Consents
the failure of which to obtain or make
14
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (d) violate any laws applicable to the Company or
any of its Subsidiaries, except for violations that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect; or (e) subject the Company or (by reason of the Company's
participation therein) the Offer or the Merger to any "moratorium," "control
share acquisition," "business combination," "fair price" or other form of
corporate anti-takeover laws and regulations.
6.7 COMPANY REPORTS; OFFER DOCUMENTS.
(a) The Company has previously made available to Purchaser and Merger Sub
true and complete copies of all reports, schedules, forms, registration
statements and other documents required to be filed by it with the SEC prior to
the date hereof (collectively, including all exhibits thereto, the "COMPANY
REPORTS"). The Company has complied in all material respects with its SEC filing
obligations under the Exchange Act and the Securities Act. Except as disclosed
in a subsequent Company Report, there has not occurred any event or circumstance
that, but for the passage of time, would be required to be disclosed in a
Company Report. Each Company Report was prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as applicable, and did
not, as of the date of effectiveness in the case of a registration statement,
the date of mailing in the case of a proxy statement and the date of filing in
the case of other Company Reports, except as set forth in or amended by a
subsequent Company Report, 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 the light of the circumstances under which they were
made, not misleading. Except as set forth in or amended by a subsequent Company
Report, the financial statements and related schedules and notes thereto of the
Company contained in the Company Reports (or incorporated therein by reference)
and the unaudited financial statements as most recently reviewed by the
Company's auditors, including the notes thereto, for the fiscal year ended
December 31, 2000, (true and correct copies of which have been provided to
Purchaser) (the "FINANCIAL STATEMENTS")were prepared in accordance with
generally accepted accounting principles (except in the case of interim
unaudited financial statements) applied on a consistent basis except as noted
therein, and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended, subject in the case of unaudited financial statements to
normal year-end audit adjustments, and, except as set forth in or amended by a
subsequent Company Report, such financial statements complied as to form as of
their respective dates in all material respects with applicable rules and
regulations of the SEC.
(b) None of the Schedule 14D-9, any information statement filed by the
Company in connection with the Offer pursuant to Rule 14f-1 under the Exchange
Act (the "INFORMATION STATEMENT"), any schedule required to be filed by the
Company with the SEC or any amendment or supplement thereto, at the respective
times such documents are filed with the SEC and first published, sent or given
to the Company's stockholders, will contain any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9 or
15
Information Statement or any amendment or supplement to such information
supplied by Purchaser or Merger Sub. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents will, at the date of filing with the SEC, 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
the light of the circumstances under which they were made, not misleading.
If, at any time prior to the Effective Time, the Company shall obtain
knowledge of any facts with respect to itself, any of its officers or
directors or any of its Subsidiaries that would require the supplement or
amendment to any of the foregoing documents in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to comply with applicable laws, such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company, and in the event Purchaser shall advise the
Company as to its obtaining knowledge of any facts that would make it
necessary to supplement or amend any of the foregoing documents, the Company
shall promptly amend or supplement such document, and such amendment or
supplement shall be promptly filed with the SEC, and as required by law
disseminated to the stockholders of the Company.
6.8 ABSENCE OF CERTAIN CHANGES. During the period from December 31, 2000,
to and including the date of this Agreement, the Company and its Subsidiaries
have conducted their business in the ordinary course of such business
consistent with past practices, and there have not been (a) any events or
states of fact that has or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; (b) any declaration, setting
aside or payment of any dividend or other distribution with respect to its
capital stock; (c) any repurchase, redemption or any other acquisition by the
Company or its Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or its
Subsidiaries; (d) any material change in accounting principles, practices or
methods; (e) any entry into any employment agreement with, or any increase in
the rate or terms (including, without limitation, any acceleration of the
right to receive payment) of compensation payable or to become payable by the
Company or any of its Subsidiaries to, their respective directors, officers
or employees, except for regularly scheduled employee raises in the ordinary
course of business consistent with the Company's past practices or raises
that, in the case of executive officers, have been approved by the
compensation committee of the Board of Directors prior to the date hereof in
the ordinary course of business consistent with the committee's past
practices; (f) any increase in the rate or terms (including, without
limitation, any acceleration of the right to receive payment) of any bonus,
insurance, pension or other employee benefit plan or arrangement covering any
such directors, officers or employees, except, in the case of employees,
increases occurring in the ordinary course of business consistent with the
Company's past practices; (g) any revaluation by the Company or any of its
Subsidiaries of any material amount of their assets, taken as a whole,
including, without limitation, write-downs of inventory or write-offs of
accounts receivable other than in the ordinary course of business consistent
with past practices; (h) any material adverse change in the business
relationship with any material customer, distributor or supplier of the
Company or its Subsidiaries; or (i) any action of the type described in
SECTIONS 8.1(a) or 8.1(b) that had such action been taken after the date of
this Agreement would be in violation of any such Section.
6.9 TAXES. The Company and each of its Subsidiaries have timely filed and
will have timely filed on or prior to the Effective Time all income and other
material Tax Returns (as
16
hereinafter defined) required to be filed by any of them. All such Tax
Returns are true, correct and complete in all material respects. All material
Taxes (as hereinafter defined) of the Company and its Subsidiaries have been
paid or will have been paid on or before the Effective Time, or adequate
reserves (in conformity with generally accepted accounting principles applied
on a consistent basis and consistent with such entity's past custom and
practice) have been established therefor, except for those Taxes being
contested in good faith and for which adequate reserves have been established
in the Financial Statements in accordance with generally accepted accounting
principles applied on a consistent basis and consistent with such entity's
past custom and practice. No deficiencies for Taxes of the Company or any of
its Subsidiaries have been claimed, proposed or assessed in writing by any
taxing or other governmental authority that are not being contested in good
faith by the Company or a Subsidiary and for which adequate reserves have not
been established in the Financial Statements in accordance with generally
accepted accounting principles applied on a consistent basis and consistent
with past practice. The Company has not received written notice of any
pending audits, investigations or claims for or relating to any liability in
respect of Taxes of the Company or its Subsidiaries. No such audit,
investigation or claim of which the Company has received notice is currently
ongoing, and there are no ongoing negotiations with any taxing or
governmental authority with respect to Taxes of the Company and its
Subsidiaries. No extension of a statute of limitations relating to Taxes is
in effect with respect to the Company or any of its Subsidiaries. The Company
and each Subsidiary have withheld and paid over to the relevant taxing
authority all material Taxes required to have been withheld and paid in
connection with payments to employees, independent contractors, creditors,
stockholders or other third parties. The Company and its Subsidiaries are not
parties to or bound by any tax sharing, tax indemnity or tax allocation
agreement or other similar arrangement with any other person or entity. There
are no liens for Taxes (other than for Taxes not yet due) upon the assets of
the Company or any of its Subsidiaries. The Company and its Subsidiaries have
never been members of an affiliated group of corporations within the meaning
of Section 1504 of the Code, with the exception of the common group for which
the Company is the common parent, nor has the Company or any of its
Subsidiaries, or any predecessor or affiliate of any of them, become liable
(whether by contract, as transferee or successor, by law or otherwise) for
the Taxes of any other person or entity under Treasury Regulation Section
1.1502-6 or any similar provision of state, local or foreign law. The Company
and its Subsidiaries have not been "United States real property holding
corporations" within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. For
purposes of this Agreement, (i) "TAX" (and, with correlative meaning,
"TAXES") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty or other additions to Tax, imposed by any Governmental Entity and
(ii) "TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
6.10 EMPLOYEE BENEFIT PLANS.
(a) All material employee benefit plans (including without limitation all
"employee benefit plans" as defined in Section 3(3) of ERISA) which cover or
have covered employees,
17
former employees or directors of the Company or any of its ERISA Affiliates
(as hereinafter defined) or any person treated by the Company or an ERISA
Affiliate as an independent contractor for tax purposes ("INDEPENDENT
CONTRACTOR") and all other plans, policies, arrangements and agreements
providing material compensation, severance or other benefits to any current
or former employee, director or Independent Contractor of the Company or any
of its Subsidiaries (the "COMPANY BENEFIT PLANS") are listed on Schedule 6.10
attached hereto, and copies of all such Company Benefit Plans and all Benefit
Plan Related Documents (as hereinafter defined) have previously been made
available to Purchaser for review. To the extent applicable, the Company
Benefit Plans comply in all material respects with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Code and any other applicable law. None of any Company Benefit Plan, or any
officer, employee, former employee or director of the Company, any Subsidiary
or any ERISA Affiliate, or the Company or any of its Subsidiaries or ERISA
Affiliates has incurred any material liability or penalty under Section 4975
of the Code or Section 502(i) of ERISA or has engaged in any transaction that
is reasonably likely to result in any such liability or penalty.
(b) Neither the Company nor any ERISA Affiliate has ever (i) maintained any
Company Benefit Plan which has been subject to Title IV of ERISA, (ii) been
required to contribute to, or otherwise incurred any liability in connection
with, any "multiemployer plan" as defined in Section 4001(a)(3) or Section 3(37)
of ERISA, (iii) except to the extent reflected in the Financial Statements,
provided health care or any other non-pension benefits to any employees after
their employment is terminated (other than as required by Part 6 of Subtitle B
of Title I of ERISA), or (iv) maintained any Company Benefit Plan or other
contract that individually or collectively provides for the payment by the
Company or any of its Subsidiaries of any amount that is or could be an "excess
parachute payment" pursuant to Section 280G of the Code or that is not or would
not be deductible under Section 162(a)(1) of the Code or Section 404 of the
Code.
(c) Neither the execution and delivery of this Agreement or the Ancillary
Documents by the Company nor the consummation of the transactions
contemplated hereby or any related transactions will result in the
acceleration or creation of any rights of any person to benefits under any
Company Benefit Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or vesting
of any benefits under any pension plan or the acceleration or creation of any
rights under any severance, parachute or change in control agreement).
(d) There is no action, order, writ, injunction, judgment or decree
outstanding or claim (other than routine claims for benefits), suit, litigation,
proceeding, arbitral action, governmental audit or, to the knowledge of the
Company, investigation relating to or seeking benefits under any Company Benefit
Plan that is pending, threatened or anticipated against the Company, any of its
Subsidiaries, any ERISA Affiliate or any Company Benefit Plan. Neither the
Company, any of its Subsidiaries nor any ERISA Affiliate has any announced plan
or legally binding commitment to create any additional employee benefit plans or
agreements of the Company or any ERISA Affiliate or to amend or modify any
existing Company Benefit Plan.
(e) No event has occurred in connection with which the Company, any of its
Subsidiaries, any ERISA Affiliate or any Company Benefit Plan, directly or
indirectly, could be
18
subject to any material liability (i) under any statute, regulation or
governmental order relating to any Company Benefit Plan or (ii) pursuant to
any obligation of the Company or any ERISA Affiliate to indemnify any person
against liability incurred under any such statute, regulation or order as
they relate to the Company Benefit Plans.
(f) For purposes of this Agreement, "ERISA Affiliate" means any business or
entity that is a member of the same "controlled group of corporations," under
"common control" or an "affiliated service group" with an entity within the
meanings of Sections 414(b), (c) or (m) of the Code, or required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections. For
purposes of this Agreement, "BENEFIT PLAN RELATED DOCUMENTS" means (i) each
Company Benefit Plan (and, if applicable, related trust agreements) which covers
or has covered current or former employees, directors or Independent Contractors
of the Company or any ERISA Affiliate and all amendments thereto, all material
written interpretations or descriptions thereof which have been distributed to
employees of the Company or its ERISA Affiliates and all annuity contracts or
other funding instruments with respect to a Company Benefit Plan, (ii) the most
recent determination or opinion letter issued by the Internal Revenue Service as
to qualification under Section 401(a) of the Code, or analogous ruling, if any,
required under foreign law for each applicable Company Benefit Plan, and (iii)
for the three most recent plan years, Annual Reports on Form 5500 Series (or
analogous periodic report, if any, required under foreign law) required to be
filed with any governmental agency for each applicable Company Benefit Plan.
6.11 BROKERS. The Company has not entered into any contract, arrangement or
understanding with any person or firm that may result in the obligation of
Purchaser or Merger Sub or the Company to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained the Financial Advisor, the
arrangements with which have been disclosed in writing to Purchaser prior to the
date hereof.
6.12 LICENSES AND PERMITS. The Company and its Subsidiaries have all
necessary licenses, permits, certificates, approvals and authorizations
(collectively, "PERMITS") required to lawfully conduct their respective
businesses as presently conducted, except for those Permits the lack of which
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and no Permit is subject to any outstanding order,
decree, judgment or stipulation that would be likely to affect such Permit,
where the effect of the foregoing would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
6.13 ENVIRONMENTAL MATTERS. Except for any matters that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect, (a) the Company and each of its Subsidiaries has been and are now in
compliance with all Environmental Laws in effect on the date hereof; (b) the
Company and each of its Subsidiaries have obtained, and are in full compliance
with, all material Permits required by applicable laws for the use, storage,
treatment, transportation, release, emission and disposal of raw materials,
byproducts, wastes and other substances used or produced by or otherwise
relating to the operations of any of them; (c) to the Company's knowledge, there
is not now and has not been
19
any Hazardous Substance used, generated, treated, stored, transported,
disposed of, released, handled or otherwise existing on, under, about, or
emanating from, or to, any property owned, leased or operated by the Company
or any of its Subsidiaries which could impose liability or responsibility on
the Company or any of its Subsidiaries; (d) neither the Company nor any of
its Subsidiaries has received any written notice from any Governmental Entity
or third party of alleged actual or potential responsibility for, or any
inquiry or investigation regarding, any release or threatened release of
Hazardous Substances or alleged violation of, or non-compliance with, any
Environmental Law, nor are the Company and its Subsidiaries aware of any
information which might form the basis of any such notice; and (e) to the
knowledge of the Company, there is no site to which the Company or any of its
Subsidiaries have transported or arranged for the transport of Hazardous
Substances that is the subject of any environmental action. As used in this
Agreement, the term "ENVIRONMENTAL LAWS" means foreign, federal, state or
local laws, statutes, ordinances, regulations, rules, judgments, court
orders, permits and licenses that are applicable to the Company and in effect
on the date of this Agreement and (i) regulate or relate to the protection or
clean up of the environment; the use, treatment, storage, transportation,
handling, disposal or release of Hazardous Substances, the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants
or other natural resources; or the health and safety of persons or property,
including without limitation protection of the health and safety of
employees; or (ii) impose liability or responsibility with respect to any of
the foregoing. As used in this Agreement, the term "HAZARDOUS SUBSTANCES"
means any pollutant, chemical, substance and any toxic, infectious,
carcinogenic, reactive, corrosive, ignitable or flammable chemical, or
chemical compound, or hazardous substance, material or waste, whether solid,
liquid or gas, that is subject to regulation, control or remediation under
any Environmental Laws.
6.14 TITLE TO ASSETS.
(a) Except as set forth in the Company's audited balance sheet (including
any related notes thereto) for the fiscal year ended December 31, 2000
included in the Financial Statements (the "2000 BALANCE SHEET"), the Company
and each of its Subsidiaries have good and marketable title to all of their
real and personal properties and assets reflected on the 2000 Balance Sheet
or acquired after December 31, 2000 (other than assets disposed of since
December 31, 2000 in the ordinary course of business consistent with past
practice), in each case free and clear of all title defects and Encumbrances,
except for (i) Encumbrances that secure indebtedness that is properly
reflected in the 2000 Balance Sheet or in any subsequently filed Company
Report; (ii) liens for Taxes accrued but not yet payable; (iii) liens arising
as a matter of law in the ordinary course of business with respect to
obligations incurred after December 31, 2000, provided that the obligations
secured by such liens are not delinquent; and (iv) such title defects or
Encumbrances, if any, as individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Company and
each of its Subsidiaries either own, or have valid leasehold interests in,
all properties and assets used by them in the conduct of their business
except where the absence of such ownership or leasehold interest would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries owns any real
property.
(b) Neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any person to sell or otherwise dispose
(except in the ordinary course of
20
business consistent with past practice) of any of its assets with an
individual value of $50,000 or an aggregate value in excess of $500,000.
6.15 LEASED PROPERTIES. Except as would not reasonably be expected to have a
Material Adverse Effect: the Company has received no notice of any intention by
any lessor under a lease to which the Company or any of its Subsidiaries is a
party (a "LEASE") to cancel or terminate the same (nor has the Company canceled
or terminated any Lease), nor has the Company vacated all or any portion of such
leased properties; neither the Company nor any of its Subsidiaries is in default
under any Lease; except as set forth in SCHEDULE 6.15 attached hereto (i) no
Lease has been modified, altered or amended in any respect, except as previously
provided to Purchaser, (ii) no lessor has the right to cancel or terminate its
Lease and (iii) the Company has no interest in any real property other than the
leasehold possessory interest set forth in such Lease; and each of the Leases is
valid and subsisting and in full force and effect in accordance with its terms
and constitutes the legal, valid, binding and enforceable obligation of the
lessee thereunder, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting the rights of creditors and to general principles of equity.
6.16 LABOR AND EMPLOYMENT MATTERS. Neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining agreement or
other Contract or understanding with a labor union or labor organization. Except
for such matters that would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, there is no (a) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries relating to their business, (b) to the
knowledge of the Company, activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries or (c) lockout, strike, slowdown, work stoppage or, to the
knowledge of the Company, threat thereof by or with respect to such employees.
6.17 INTELLECTUAL PROPERTY.
(a) SCHEDULE 6.17 of the Company Disclosure Schedules sets forth a true and
complete list and description of (i) all United States and foreign patents,
patent applications, trademarks, trademark registrations and applications, trade
names, service marks, registered copyrights and applications therefor and trade
secrets owned by the Company and its Subsidiaries (the "INTELLECTUAL PROPERTY
RIGHTS") and (ii) all United States and foreign patents, patents applications,
trademarks, trademark registrations and applications, trade names, service
marks, registered copyrights and applications therefor and trade secrets
licensed to the Company or any of its Subsidiaries (the "LICENSED RIGHTS").
(b) To the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy) would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect:
(i) (A) the Intellectual Property Rights are free and clear of any
Encumbrances, are not subject to any license (royalty bearing or royalty
free) and are not subject to any other arrangement requiring any payment to
any person or the obligation to
21
grant rights to any person in exchange; (B) to the knowledge of the
Company, the Licensed Rights are free and clear of any Encumbrances,
royalties or other obligations; and (C) the Intellectual Property Rights
and the Licensed Rights are all the material intellectual property
rights necessary to the conduct of the business of each of the Company
and its Subsidiaries as presently conducted.
(ii) The validity of the Intellectual Property Rights and title
thereto, and, to the knowledge of the Company, the validity of the Licensed
Rights, (A) have not been challenged in any prior litigation; (B) are not
being challenged in any pending litigation; and (C), to the knowledge of
the Company, are not the subject or subjects of any threatened or proposed
litigation and is not involved in any interference, reissue, challenge,
reexamination, invalidation, opposition proceeding or cancellation.
(iii) The business of the Company and its Subsidiaries, as presently
conducted, does not conflict with and, to the Company's knowledge, has not
been alleged to conflict with any patents, trademarks, trade names, service
marks, copyrights or other intellectual property rights of others.
(iv) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of any of the Intellectual Property Rights
or any of the Licensed Rights.
(v) The Company does not know of any unauthorized use by others of any
of the Intellectual Property Rights or the Licensed Rights material to the
business of the Company and its Subsidiaries as presently conducted.
(c) Each of the Company and its Subsidiaries owns, or possesses valid
license rights to, all computer software programs that are material to the
conduct of the business of the Company and its Subsidiaries, except to the
extent that the failure thereof would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
infringement suits, actions or proceedings pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary with respect to
any software owned or licensed by the Company or any Subsidiary.
6.18 MATERIAL AGREEMENTS. Except as listed in the exhibit index to the
Company's Registration Statement on Form S-1, declared effective on March 16,
2000 or any subsequently filed Company Report and except for agreements made for
the purpose of completing the transactions contemplated by this Agreement,
neither the Company nor any of its Subsidiaries is a party to, or bound by, any
Material Agreement of any kind to be performed in whole or in part after the
Effective Time. The term "MATERIAL AGREEMENT" shall mean any agreement to which
the Company or any of its Subsidiaries is a party and (i) is outside of the
ordinary course of business of the Company or its Subsidiaries, (ii) a customer
of the Company or one of its Subsidiaries is a party and either (1) involves the
payment or receipt by the Company or any of its Subsidiaries, subsequent to the
date of this Agreement, of more than $250,000 or (2) is not terminable without
penalty by the Company or such Subsidiary party thereto on fewer than 365 days'
notice or (iii) except for customer contracts, either (A) involves the payment
or receipt by the Company or any of its Subsidiaries, subsequent to the date of
this Agreement, of more than $200,000 or (B) is not
22
terminable without penalty by the Company or such Subsidiary party thereto on
fewer than 180 days' notice. Except for any such breaches or defaults that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, neither the Company nor any of its Subsidiaries is
in breach or default under, and there are no facts which with notice or the
passage of time would cause the Company to be in breach or default under, or
give rise to any right of termination, amendment, cancellation or
acceleration of other parties under, whether as a result of the consummation
of the transactions contemplated hereby or otherwise, any Material Agreement.
6.19 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Financial
Statements or Company Reports filed and publicly available prior to the date of
this Agreement and except for liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 2000, the Company and
its Subsidiaries do not have any indebtedness or liabilities of any kind
(whether accrued, absolute, contingent or otherwise) (a) required by GAAP to be
reflected on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes, exhibits or schedules thereto or (b) which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
6.20 LITIGATION. Except as described in the Company Reports, there is no
action, suit or proceeding, claim, arbitration or investigation pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as disclosed in the Company
Reports, there is no judgment, order, injunction or decree of any Governmental
Entity outstanding against the Company or any of its Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
6.21 INSURANCE. SCHEDULE 6.21 lists all of the Company's insurance
policies relating to the assets, business, operations, employees, officers or
directors of the Company and its Subsidiaries. Such insurance policies are in
full force and effect. There are no material claims by the Company or any
Subsidiary pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriter of such policies or in
respect of which such underwriters have reserved their rights.
6.22 AFFILIATE TRANSACTIONS. Except as disclosed with reasonable specificity
in the Company Reports filed prior to the date of this Agreement, there are no
material contracts, commitments, agreements, arrangements or other transactions
between the Company or any of its Subsidiaries, on the one hand, and any (i)
present or former officer or director of the Company or any of its Subsidiaries
or any of their immediate family members (including their spouses), (ii) record
or beneficial owner of five percent or more of the voting securities of the
Company or (iii) affiliate of any such officer, director, family member or
beneficial owner, on the other hand.
6.23 OPINION OF FINANCIAL ADVISOR. The Board of Directors has received the
Fairness Opinion. A complete and correct originally executed copy of the
Fairness Opinion will be delivered by the Company to Purchaser for informational
purposes only. The Company has been authorized by the Financial Advisor to
permit the inclusion of the Fairness Opinion (and, subject to prior review and
consent by the Financial Advisor, references thereto) in the Offer to Purchase
and in the Schedule 14D-9 and the Proxy Statement, if applicable.
23
6.24 VOTE REQUIRED. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any class
or series of the capital stock of the Company which may be necessary to approve
this Agreement and the transactions contemplated hereby.
6.25 DGCL SECTION 203; STATE TAKEOVER STATUTES. On or prior to the date
hereof, the Board of Directors has approved this Agreement, the Tender
Agreements, the Offer, the Merger and the other transactions contemplated hereby
and such approval is sufficient to render inapplicable to this Agreement, the
Tender Agreements, the Offer, the Merger and any of such other transactions
contemplated hereby, the restrictions on "business combinations" set forth in
Section 203 of the DGCL. No other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger, this Agreement
or any of the transactions contemplated by this Agreement or the Tender
Agreements and no provision of the Company's organizational documents or the
organizational documents of any of the Company's Subsidiaries would, directly or
indirectly, restrict or impair the ability of Purchaser or Merger Sub and its
affiliates and associates to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of capital stock of the Company and its
Subsidiaries that may be acquired or controlled by Purchaser or Merger Sub and
its affiliates and associates.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the corresponding sections of the
disclosure schedules, dated the date hereof, delivered by Purchaser and
Merger Sub to the Company (the "PURCHASER DISCLOSURE SCHEDULES"), Purchaser
and Merger Sub hereby represent and warrant to the Company as follows:
7.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Purchaser and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted, except where the
failure to have such power and authority would not materially adversely
affect or delay the ability of Purchaser or Merger Sub to consummate the
transactions contemplated by this Agreement.
7.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Purchaser and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Documents and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation by Purchaser and
Merger Sub of the transactions contemplated hereby and thereby have been duly
and validly authorized by the respective boards of directors of Purchaser and
Merger Sub and by Purchaser as the sole stockholder of Merger Sub and no other
corporate proceedings on the part of Purchaser or Merger Sub are necessary to
authorize this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and any
Ancillary Documents at the time of execution will have been, duly and validly
executed and delivered by Purchaser and Merger Sub, and (assuming this Agreement
and such Ancillary Documents each constitutes a valid and binding obligation of
the Company) this Agreement constitutes, and such Ancillary Agreements at the
time of
24
execution will constitute, the valid and binding obligations of each of
Purchaser and Merger Sub, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting the rights of creditors and to general principles of equity.
7.3 OFFER DOCUMENTS. None of the Offer Documents, any schedule required
to be filed by Purchaser or Merger Sub with the SEC or any amendment or
supplement thereto will contain, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, any untrue statement of a material fact or will omit to state
any 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 are made, not misleading, except that no representation is made by
Purchaser or Merger Sub with respect to information supplied by the Company
for inclusion in the Offer Documents, any schedule required to be filed with
the SEC or any amendment or supplement thereto. None of the information
supplied by Purchaser or Merger Sub for inclusion or incorporation by
reference in the Schedule 14D-9 will, at the date of filing with the SEC,
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 the light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time either
Purchaser or Merger Sub shall obtain knowledge of any facts with respect to
itself, any of its officers or directors or any of its Subsidiaries that
would require the supplement or amendment to any of the foregoing documents
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or to comply with applicable
laws, such amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the stockholders of the Company, and in
the event the Company shall advise Purchaser or Merger Sub as to its
obtaining knowledge of any facts that would make it necessary to supplement
or amend any of the foregoing documents, Purchaser or Merger Sub shall
promptly amend or supplement such document, and such amendment or supplement
shall be promptly filed with the SEC, and as required by law disseminated to
the stockholders of the Company.
7.4 NO VIOLATION. Neither the execution and delivery by Purchaser and Merger
Sub of this Agreement or any of the Ancillary Documents nor the consummation by
them of the transactions contemplated hereby or thereby will: (a) violate,
conflict with or result in a breach of any provisions of the certificate of
incorporation or bylaws of Purchaser or Merger Sub; (b) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default) under, result
in the termination or give rise to a right of termination of, accelerate the
performance required by or benefit obtainable under, result in the triggering of
any payment, penalty or other obligations pursuant to, result in the creation of
any Encumbrance upon any of the properties owned or used by Purchaser or Merger
Sub or any of their respective Subsidiaries under, or result in there being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any Contract to which Purchaser or Merger Sub or any
of their respective Subsidiaries is a party, or by which Purchaser or Merger Sub
or any of their respective Subsidiaries or any of their respective properties is
bound, except for any such breach, default or right with respect to which
requisite waivers or consents have been, or prior to the Effective Time will be,
obtained, or any of the foregoing matters that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; (c)
require any Consents of any Governmental Entity,
25
including any such Consent under the laws of any foreign jurisdiction, other
than Regulatory Filings, except for those Consents the failure of which to
obtain or make would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; (d) violate any laws applicable to
Purchaser or Merger Sub or any of their respective Subsidiaries, except for
violations that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; or (e) subject Purchaser or Merger
Sub or (by reason of Purchaser's or Merger Sub's participation therein) the
Offer or the Merger to any "moratorium," "control share acquisition,"
"business combination," "fair price" or other form of corporate anti-takeover
laws and regulations.
7.5 FINANCING. At the expiration of the Offer and at the Effective Time (so
long as all applicable conditions have been satisfied), Purchaser and/or Merger
Sub will have available all the funds necessary to purchase all the shares of
the Common Stock pursuant to the Offer and the Merger and to pay all fees and
expenses payable by the Purchaser or Merger Sub related to the transactions
contemplated by this Agreement. Purchaser has delivered to the Company true and
correct copies of that certain firm commitment letter addressed to Purchaser
from Vivendi Universal, S.A. ("VIVENDI"), dated as of February 5, 2001, as well
as evidence satisfactory to the Company that Purchaser has sufficient net cash
which, when added to the amounts to be obtained under such commitment letter,
will constitute sufficient funds to make all of the payments referred to in the
previous sentence. Purchaser has been advised by Vivendi that Vivendi knows of
no fact or circumstance that is reasonably likely to result in any of the
conditions to funding in such firm commitment letter not being satisfied, and
Purchaser and Merger Sub know of no such fact or circumstance. Purchaser and
Merger Sub covenant and agree that, upon the Company's request, Purchaser and
Merger Sub shall provide the Company with information regarding the status of
such financing.
7.6 PURCHASER-OWNED SHARES OF COMMON STOCK. As of the date of this
Agreement, neither Purchaser, Merger Sub nor their respective Subsidiaries own
any shares of Common Stock.
7.7 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
7.8 LITIGATION. There is no action, suit or proceeding, claim, arbitration
or investigation pending or, to the knowledge of Purchaser or Merger Sub,
threatened against Purchaser or any subsidiary thereof (including Merger Sub)
that would materially adversely affect or delay the ability of Purchaser or
Merger Sub to consummate the transactions contemplated by this Agreement.
ARTICLE 8
COVENANTS
8.1 INTERIM OPERATIONS.
(a) From and after the date of this Agreement until the time Purchaser's
designees constitute a majority of the Board in accordance with Section 1.4
hereof, unless Purchaser has
26
consented in writing thereto, the Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its operations according to its usual, regular
and ordinary course of business consistent with past practice; (ii) use its
reasonable best efforts to preserve intact their business organizations,
maintain in effect all existing material qualifications, licenses, permits,
approvals and other authorizations referred to in SECTIONS 6.1 and 6.12, keep
available the services of their officers and key employees and maintain
satisfactory relationships with those persons having business relationships
with them; (iii) promptly upon the discovery thereof notify Purchaser of the
existence of any breach of any representation or warranty contained herein or
the occurrence of any event that would cause any representation or warranty
contained herein no longer to be true and correct (or, in the case of any
representation or warranty that makes no reference to Material Adverse
Effect, to no longer be true and correct in any material respect); (iv)
promptly deliver to Purchaser true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement; and (v) maintain its books of account and records in its usual,
regular and ordinary manner, consistent with its past practices.
(b) Except as disclosed in Schedule 8.1 of the Company Disclosure Schedules,
from and after the date of this Agreement until the time Purchaser's designees
constitute a majority of the Board in accordance with Section 1.4 hereof, unless
Purchaser has consented in writing thereto, the Company shall not, and shall not
permit any of its Subsidiaries to:
(i) amend its certificate of incorporation or bylaws or comparable
governing instruments;
(ii) issue, sell, pledge or register for issuance or sale any shares
of capital stock or other ownership interest in the Company (other than
issuances of Common Stock in respect of any exercise of Options
outstanding on the date hereof or in connection with the acquisitions of
xxxx.xxx, Inc. and Xxxxxxxxxxxxxxxxxx.xxx, Inc.) or any of the
Subsidiaries, or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares of capital stock, or
ownership interest, or convertible or exchangeable securities or
accelerate any right to convert or exchange or acquire any securities of
the Company or any of its Subsidiaries for any such shares or ownership
interest;
(iii) effect any stock split or conversion of any of its capital stock
or otherwise change its capitalization as it exists on the date hereof,
other than as set forth in this Agreement;
(iv) directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of its Subsidiaries,
other than as set forth in this Agreement;
(v) declare or pay any dividends on or make other distributions in
respect of any of its capital stock;
(vi) sell, lease or otherwise dispose of any of its assets or
properties (including capital stock of any of its Subsidiaries), mortgage,
pledge or impose a lien or other
27
encumbrance on any of its material assets or property (including capital
stock of any of its Subsidiaries), except in the ordinary course of
business;
(vii) acquire by merger, purchase or any other manner, any business or
entity or otherwise acquire any assets that are material to the Company and
its Subsidiaries taken as a whole, except for purchases of inventory,
supplies or capital expenditures in the ordinary course of business
consistent with past practice;
(viii) incur or assume any long-term or short-term debt, except for
working capital purposes in the ordinary course of business under the
Company's existing credit facilities and capital expenditures made in
accordance with the Company's previously adopted capital budget, copies of
which have been provided to Purchaser;
(ix) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly owned Subsidiaries of the Company;
(x) make or forgive any loans, advances or capital contributions to,
or investments in, any other person;
(xi) enter into any new employment, severance, consulting or salary
continuation agreements with any newly hired employees other than in the
ordinary course of business or enter into any of the foregoing with any
existing officers, directors or employees or grant any increases in
compensation or benefits to any officers, directors or employees except for
regularly scheduled employee raises in the ordinary course of business
consistent with the Company's past practices or raises that, in the case of
executive officers, have been approved by the compensation committee of the
Board of Directors prior to the date hereof in the ordinary course of
business consistent with the committee's past practices;
(xii) adopt or amend in any material respect (including any increase
in the payment to or benefits under) or terminate any employee benefit plan
or arrangement;
(xiii) make any material changes in the type or amount of their
insurance coverage or permit any material insurance policy naming the
Company or any Subsidiary as a beneficiary or a loss payee to be canceled
or terminated;
(xiv) except as may be required by law or generally accepted
accounting principles, change any material accounting principles or
practices used by the Company or its Subsidiaries;
(xv) take any action to cause the Common Stock to cease to be traded
on the Nasdaq National Market prior to the completion of the Offer or the
Merger;
(xvi) enter into any agreement providing for aggregate payments by the
Company in excess of $100,000, PROVIDED, HOWEVER, that no consent shall be
required with respect to any agreement for the purchase of media
advertising providing for aggregate payments by the Company of less than
$250,000;
28
(xvii) make any change to the pricing structure of its advertising
inventory, except in the ordinary course of business, consistent with past
practice;
(xviii) enter into, terminate, fail to renew, or accelerate any
license, distributorship, dealer, sales representative, joint venture,
credit or other agreement if such action could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;
(xix) fail to operate, maintain, repair or otherwise preserve its
material assets and properties consistent with past practice;
(xx) fail to comply with all applicable filing, payment and
withholding obligations under all applicable federal, state, local or
foreign laws relating to Taxes except where such failure to comply could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(xxi) make any material tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xxii) pay, discharge, settle or satisfy any claims, liabilities or
objections (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of the
foregoing in the ordinary course of business consistent with past
practice, or, if not in the ordinary course of business, the payment,
discharge or satisfaction of the foregoing that, individually and in the
aggregate, does not exceed $250,000; or
(xxiii) agree in writing or otherwise to take any of the foregoing
actions.
(c) LIQUIDATION OR DISSOLUTION. The Company shall not adopt a plan of
complete or partial dissolution or adopt resolutions providing for the complete
or partial liquidation, dissolution, consolidation, merger, restructuring or
recapitalization of the Company.
(d) REPRESENTATIONS; WARRANTIES AND CONDITIONS. The Company shall not, and
shall not permit its Subsidiaries to, take any action that does, or could
reasonably be expected to, result in (i) any of the representations or
warranties of the Company set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger not being satisfied.
8.2 COMPANY STOCKHOLDER APPROVAL; PROXY STATEMENT.
(a) If approval or action in respect of the Merger by the stockholders of
the Company is required by applicable law, the Company, through its Board of
Directors, shall (i) call a meeting of its stockholders (the "STOCKHOLDER
MEETING") for the purpose of voting upon the Merger, (ii) hold the Stockholder
Meeting as soon as practicable following the purchase of shares of Common Stock
pursuant to the Offer and (iii) unless the Board of Directors approves,
recommends or enters into an agreement with respect to a Superior Proposal in
accordance with SECTION 8.9(b), recommend to its stockholders the approval of
this Agreement and the
29
transactions contemplated hereby, including the Merger. The record date for
the Stockholder Meeting shall be a date subsequent to the date Purchaser or
Merger Sub becomes a record holder of Common Stock purchased pursuant to the
Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement (such proxy statement, and any amendments or
supplements thereto, the "PROXY STATEMENT") or, if applicable, an Information
Statement with the SEC with respect to the Stockholder Meeting and will use
reasonable efforts to respond to any comments of the SEC or its staff and to
cause the Proxy Statement to be cleared by the SEC. The Proxy Statement shall
include the recommendation of the Board of Directors that the stockholders of
the Company vote in favor of approving the agreement of merger (in accordance
with Section 251 of the DGCL) contained in this Agreement and the
determination of the Board of Directors that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
fair to, and in the best interests of, the stockholders of the Company. The
Company will notify Purchaser of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Purchaser with copies of all correspondence between the Company or any
of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. The Company
shall give Purchaser and its counsel the reasonable opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give
Purchaser and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company and Purchaser agrees to use
its best efforts, after consultation with the other parties hereto, to
respond promptly to all such comments of and requests by the SEC. As promptly
as practicable after the Proxy Statement has been cleared by the SEC, the
Company shall mail the Proxy Statement to the stockholders of the Company. If
at any time prior to the approval of this Agreement by the Company's
stockholders there shall occur any event that is required to be set forth in
an amendment or supplement to the Proxy Statement under applicable law, the
Company will prepare and mail to its stockholders such an amendment or
supplement.
(c) The Company represents and warrants that any required Proxy Statement
will comply as to form in all material respects with the Exchange Act and, at
the respective times filed with the SEC and distributed to stockholders of the
Company, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that the Company makes no
representation or warranty as to any information included in the Proxy Statement
that was provided by Purchaser or Merger Sub. Purchaser represents and warrants
that none of the information supplied by Purchaser or Merger Sub for inclusion
in the Proxy Statement will, at the respective times filed with the SEC and
distributed to stockholders of the Company, and at the time of the Stockholder
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 the light of the circumstances under which they were
made, not misleading.
30
(d) Subject to clause (iii) of SECTION 8.2(a), the Company shall use its
reasonable efforts to obtain the necessary approvals by its stockholders of the
Merger, this Agreement and the transactions contemplated hereby.
(e) Purchaser agrees to cause all shares of Common Stock purchased by Merger
Sub pursuant to the Offer and all other shares of Common Stock owned by
Purchaser, Merger Sub or any other subsidiary or affiliate of Purchaser to be
voted in favor of the approval of the Merger.
8.3 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Company, Purchaser and Merger Sub shall: (a) as promptly as
practicable but in no event later than ten business days after the date
hereof, make their respective filings and thereafter make any other required
submissions under the HSR Act with respect to the Offer and, if applicable,
the Merger, and request early termination of the waiting period under the HSR
Act; (b) cooperate and consult with one another in, (i) determining which
Regulatory Filings are required or, in the case of Other Antitrust Filings
and Consents, permitted to be made prior to the Effective Time with, and
which Consents are required or, in the case of Other Antitrust Filings and
Consents, permitted to be obtained prior to the Effective Time from
Governmental Entities or other third parties in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, and determining which Consents are required to transfer
to the Surviving Corporation any Permits or registrations held on behalf of
the Company or any of its Subsidiaries by or in the name of distributors,
brokers or sales agents; (ii) promptly preparing all Regulatory Filings and
all other filings, submissions and presentations required or prudent to
obtain all Consents, including by providing to the other parties drafts of
such material reasonably in advance of the anticipated filing or submission
dates; (iii) promptly making all such Regulatory Filings and promptly seeking
all such Consents; (iv) defending against any lawsuit or proceeding, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated hereby; and (c) use their reasonable
best efforts to take, or cause to be taken, all other action and do, or cause
to be done, all other things necessary, proper or appropriate to consummate
and make effective the transactions contemplated by this Agreement (including
without limitation those actions described in the foregoing (ii) through
(iv)). Each of Purchaser and the Company shall use its reasonable best
efforts to contest any proceeding seeking a preliminary injunction or other
legal impediment to, and to resolve any objections as may be asserted by any
Governmental Entity with respect to, the Offer or the Merger under the HSR
Act or Foreign Antitrust Laws. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Purchaser and the Surviving
Corporation shall take all such necessary action.
8.4 PUBLICITY. The initial press release relating to this Agreement shall
be a joint press release and thereafter the Company and Purchaser shall
consult with each other before issuing any press release or otherwise making
public statements with respect to the transactions contemplated hereby and in
making any filings with any Governmental Entity or with The Nasdaq National
Market with respect thereto.
8.5 FURTHER ACTION. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute
such documents as may be reasonably required to effect
31
the Merger, including the execution of any deeds, bills of sale, assignments,
assurances and all such other acts and things necessary, desirable or proper
to carry out the purposes of this Agreement.
8.6 INSURANCE; INDEMNITY.
(a) For five years from the Effective Time, the Surviving Corporation shall
maintain in effect the Company's and its Subsidiaries' current directors' and
officers' liability insurance policies or replacement policies providing at
least equal coverage (the "Policies") covering those persons who are currently
covered by the Policies with respect to actions or omissions occurring prior to
the Effective Time; PROVIDED, HOWEVER, that in no event shall the Surviving
Corporation be required to expend in any one year an amount in excess of 150% of
the annual premiums currently paid by the Company and its Subsidiaries for such
insurance coverage, and, PROVIDED FURTHER, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain policies with the greatest coverage available for a cost not
exceeding such amount.
(b) The Surviving Corporation shall keep in effect in its bylaws
provisions for a period of not less than six years from the Effective Time
(or, in the case of matters occurring prior to the Effective Time that have
not been resolved prior to the sixth anniversary of the Effective Time, until
such matters are finally resolved) that provide for exculpation of director
and officer liability and indemnification (and advancement of expenses
related thereto) of the past and present officers and directors of the
Company and its Subsidiaries to the fullest extent permitted by the DGCL,
which provisions shall not be amended except as required by applicable law or
except to make changes permitted by law that would enhance the rights of past
or present officers and directors to indemnification or advancement of
expenses.
(c) From and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless, to the fullest extent permitted under applicable
law, each person who is, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer, director or similar person of
the Company or any Subsidiary, against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement (collectively, "LOSSES") in connection with any
claims, actions, suits, proceedings, arbitrations, investigations or audits
(collectively, "LITIGATION") arising before or after the Effective Time out of
or pertaining to acts or omissions, or alleged acts or omissions, by them in
their capacities as such, which acts or omissions occurred prior to the
Effective Time. Without limiting the foregoing, the Surviving Corporation shall
periodically advance expenses as incurred with respect to the foregoing to the
fullest extent permitted under applicable law provided that the person to whom
the expenses are advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to indemnification.
(d) If, after the Effective Time, Purchaser 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 all or substantially
all of its properties or assets to any person, then, in each such case, proper
provisions shall be made so that successors and assigns of Purchaser or the
Surviving Corporation, as the case may be, shall assume such entity's
obligations set forth in this
32
SECTION 8.6. The provisions of this SECTION 8.6 are intended for the benefit
of and shall be enforceable by each person who is now or has been at any time
prior to the date of this Agreement, or who becomes prior to the Effective
Time, an officer, director or similar person of the Company or any of its
Subsidiaries.
(e) If any Litigation described in SECTION 8.6(c) (each, an "ACTION") arises
or occurs, the Surviving Corporation shall control the defense of such Action
with counsel selected by the Surviving Corporation, provided that the party
seeking indemnification pursuant to SECTION 8.6(c) (each, an "INDEMNIFIED
PARTY"), shall be permitted to participate in the defense of such Action through
counsel selected by the Indemnified Party, at the Indemnified Party's expense.
Notwithstanding the foregoing, if there is any actual or potential conflict
between the Surviving Corporation and any Indemnified Party or there are
additional defenses available to any Indemnified Party, such Indemnified Party
shall be permitted to participate in the defense of such Action with counsel
selected by the Indemnified Party, at the Surviving Corporation's expense;
PROVIDED, HOWEVER, that the Surviving Corporation shall not be obligated to pay
the fees and expenses of more than one counsel for any Indemnified Party in any
single Action. The Surviving Corporation shall not be liable for any settlement
effected without its written consent, which consent shall not unreasonably be
withheld.
8.7 EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time, the Surviving Corporation and its
respective Subsidiaries will honor, in accordance with their terms, all existing
employment, change in control and severance agreements between the Company or
any of its Subsidiaries and any current or former officer, director, consultant
or employee of the Company or any of its Subsidiaries ("COVERED EMPLOYEES") to
the extent in effect on, and disclosed to Purchaser prior to, the date hereof
and all benefits or other amounts earned or accrued to the extent vested or that
become vested in the ordinary course through the Effective Time under all
employee benefit plans of the Company and any of its Subsidiaries, in each case
to the extent in effect on the date hereof.
(b) To the extent that Covered Employees are included in any benefit plan of
Purchaser or its subsidiaries, Purchaser agrees that the Covered Employees shall
receive credit under such plan for service prior to the Effective Time with the
Company and its Subsidiaries to the same extent such service was counted under
similar Company Benefit Plans for purposes of eligibility, vesting and
eligibility for retirement (but not for benefit accrual). Purchaser's medical
benefit plans for the Covered Employees ("PURCHASERS MEDICAL PLANS") shall not
contain any "pre-existing conditions" exclusions or limitations or "actively at
work" requirements which would cause any of the Covered Employees or their
dependents to be excluded from Purchaser's Medical Plans immediately after the
Effective Time if such exclusions, limitations or requirements did not exclude
the Covered Employees or their dependents from the Company's similar medical
benefit plans. In determining any deductible and maximum out-of-pocket
limitations under Purchaser's Medical Plans, Purchaser shall give effect to
claims incurred and amounts paid by, and amounts reimbursed to, the Covered
Employees with respect to similar plans maintained by the Company for the
benefit of the Covered Employees immediately prior to the Effective Time (other
than any flexible spending accounts).
33
(c) As soon as practicable after the date of this Agreement, the Company
will review the administration of the Company Benefit Plans and will use its
reasonable best efforts to maintain, to the extent applicable, the qualified
status of the Company Benefit Plans under Section 401(a) of the Code.
8.8 ACCESS TO INFORMATION. The Company shall, and shall cause each of its
Subsidiaries to, afford to Purchaser and to the officers, employees,
accountants, counsel, financial advisors and other representatives of Purchaser,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause its respective Subsidiaries to, furnish promptly to Purchaser
(a) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Purchaser may reasonably request, in each case to
the extent permitted by law.
8.9 NO SOLICITATION.
(a) The Company shall not, and shall not authorize, permit or cause any of
its Subsidiaries or any of the officers and directors of it or its Subsidiaries
to, and shall not authorize, permit or direct its and its Subsidiaries'
employees, agents and representatives (including the Financial Advisor or any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, directly or indirectly, (i) initiate, solicit, or otherwise
encourage any inquiries or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, tender offer, consolidation or similar
transaction involving, or any purchase of, 10% or more of the assets or any
equity securities of the Company or any of its Subsidiaries (any such proposal
or offer being hereinafter referred to as, an "ACQUISITION PROPOSAL") or (ii)
initiate or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person or entity
(other than Purchaser, Merger Sub and their respective representatives) relating
to an Acquisition Proposal, whether made before or after the date of this
Agreement, or otherwise facilitate any effort or attempt (other than by
Purchaser or Merger Sub) to make or implement or consummate an Acquisition
Proposal.
(b) Notwithstanding clause (a) above, nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (i) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal
or (ii): (x) providing information in response to a request therefor by a person
or entity who has made an unsolicited bona fide written Acquisition Proposal if
the Board of Directors receives from the person or entity so requesting such
information an executed confidentiality agreement on terms substantially
equivalent to (but in no event less favorable to the Company than) those
contained in the letter agreement dated December 20, 2000 between an affiliate
of Purchaser and the Company (the "CONFIDENTIALITY AGREEMENT"); (y) engaging in
any negotiations or discussions with any person or entity who has made an
unsolicited bona fide written Acquisition Proposal; or (z) recommending such an
Acquisition Proposal to the stockholders of the Company, if, and only to the
extent that, (i) in each such case referred to in clause (x), (y) or (z) above,
the Board of Directors of the Company determines in good faith (after
consultation with the Company's outside legal counsel and its financial advisor)
that such action is necessary in order for its
34
members to comply with their fiduciary duties under applicable law and (ii)
in each case referred to in clause (x), (y) or (z) above, the Board of
Directors of the Company determines in good faith (after consultation with
the Company's outside legal counsel and its financial advisor) that (A) if
accepted, such Acquisition Proposal is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the
proposal and the person or entity making the proposal, and would provide for
a higher per share value to the stockholders of the Company, and (B) such
Acquisition Proposal is fully financed (or, based on a good faith
determination of the Board of Directors of the Company, is readily
financeable) (any such Acquisition Proposal meeting the foregoing conditions
being referred to herein as a "SUPERIOR PROPOSAL"). The Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence of SECTION 8.9(a) of the obligations undertaken in this
paragraph and in the Confidentiality Agreement. The Company also shall
promptly request each person or entity that has heretofore executed a
confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return all confidential information heretofore
furnished to such person or entity by or on behalf of it or any of its
Subsidiaries.
(c) The Company shall notify Purchaser immediately if any Acquisition
Proposal or inquiries regarding a potential Acquisition Proposal are received
by, any information with respect to an Acquisition Proposal or a potential
Acquisition Proposal is requested from, or any discussions or negotiations
with respect to an Acquisition Proposal or a potential Acquisition Proposal
are sought to be initiated or continued with, it or any of its
representatives indicating, in connection with such notice, the name of the
person or entity involved and the material terms and conditions of any such
Acquisition Proposal, and thereafter shall keep Purchaser informed, on a
current basis, of the status and terms of any such inquiries or Acquisition
Proposals and the status of any such negotiations or discussions (which, in
all cases, shall be permissible only in compliance with the provisions of
Section 8.9(b) above).
8.10 OPTION TO ACQUIRE ADDITIONAL SHARES.
(a) The Company hereby grants to Merger Sub an irrevocable option (the
"PURCHASER OPTION") to purchase up to that number of newly issued shares of
Company Common Stock (the "PURCHASER OPTION SHARES") equal to the number of
shares of Common Stock that, when added to the number of shares of Common Stock
owned by Purchaser, Merger Sub and their affiliates immediately following
consummation of the Offer, shall constitute one share more than 90% of the
shares of Common Stock then outstanding on a Fully Diluted Basis (after giving
effect to the issuance of the Purchaser Option Shares) for a consideration per
Purchaser Option Share equal to the Offer Consideration.
(b) Such Purchaser Option shall be exercisable only after the purchase of
and payment for shares of Common Stock pursuant to the Offer by Purchaser or
Merger Sub as a result of which Purchaser, Merger Sub and their affiliates own
beneficially at least 80% of the outstanding shares of Common Stock. Such
Purchaser Option shall not be exercisable if the number of shares of Common
Stock subject thereto exceeds the number of authorized shares of Common Stock
available for issuance.
35
(c) In the event Merger Sub wishes to exercise the Purchaser Option,
Purchaser shall give the Company one-day prior written notice specifying the
number of shares of Company Common Stock that are or will be owned by
Purchaser, Merger Sub and their affiliates immediately following consummation
of the Offer and specifying a place and a time (which may be concurrent with
the consummation of the Offer) for the closing of such purchase. The Company
shall, as soon as practicable following receipt of such notice, deliver
written notice to Purchaser specifying the number of Purchaser Option Shares.
At the closing of the purchase of the Purchaser Option Shares, the portion of
the purchase price owing upon exercise of such Purchaser Option which equals
the product of (x) the number of shares of Common Stock purchased pursuant to
such Purchaser Option, multiplied by (y) the Offer Consideration, shall be
paid to the Company in cash by wire transfer or cashier's check.
ARTICLE 9
CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) Merger Sub shall have accepted for payment and paid for all shares of
Common Stock validly tendered in the Offer and not withdrawn; PROVIDED, HOWEVER,
that neither Purchaser nor Merger Sub may invoke this condition if Merger Sub
(or its assignee) shall have failed in violation of the terms of this Agreement
or the Offer to purchase shares so tendered and not withdrawn.
(b) This Agreement shall have been adopted by the affirmative vote of the
holders of the requisite number of shares of capital stock of the Company if
such vote is required pursuant to Company's certificate of incorporation, the
DGCL or other applicable law; PROVIDED, HOWEVER, that neither Purchaser nor
Merger Sub may invoke this condition if either of them or any of their
respective affiliates shall have failed to vote the shares of Common Stock held
by it in favor of this Agreement and the Company may not invoke this condition
if the Company shall have failed to fulfill its obligations under SECTION 8.2.
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing, restraining or restricting the consummation
of the Merger shall be in effect; PROVIDED, HOWEVER, that the party invoking
this condition shall use its best efforts to have any such order, injunction or
restraint vacated.
(d) All necessary waiting periods under the HSR Act that are applicable to
the Merger shall have expired or been earlier terminated, and all other
necessary approvals from any other Governmental Entity that are applicable to
the Merger shall have been obtained.
36
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Company and Purchaser; or
(b) by the Company, if (i) Purchaser or Merger Sub shall have failed to
commence the Offer within ten business days after the date of this Agreement,
(ii) Purchaser or Merger Sub (or Merger Sub's assignee) shall have failed to
comply with its payment obligations under this Agreement with respect to any
shares of Common Stock accepted for payment pursuant to the Offer, or (iii)
any change to the Offer is made in contravention of the provisions of ARTICLE
1; or
(c) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before the
date which is six months from the date of this Agreement (provided that the
right to terminate this Agreement pursuant to this clause (i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement or whose breach of any representation or warranty in this
Agreement has been the cause of or resulted in the failure of the Effective
Time to occur on or before such date);
(ii) if, upon a vote at the Stockholder Meeting, or any adjournment
thereof, the adoption of this Agreement by the stockholders of the Company
required by the DGCL shall not have been obtained (provided that the right
to terminate this Agreement pursuant to this clause (ii) shall not be
available to Purchaser if Purchaser, Merger Sub or any of their affiliates
shall have failed to vote the shares of Common Stock held by them in favor
of adoption of this Agreement, and shall not be available to the Company,
if the Company shall have failed to fulfill its obligations under SECTION
8.2);
(iii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or prohibited or if
any court of competent jurisdiction or other Governmental Entity shall have
issued an order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and
such order, judgment, decree, ruling or other action shall have become
final and non-appealable; or
(iv) if the Offer terminates or expires without Merger Sub having
purchased any shares of Common Stock thereunder as a result of the failure
of any condition specified in EXHIBIT A (provided that the right to
terminate this Agreement pursuant to this clause (iv) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of any such
condition); or
(d) by Purchaser, prior to the consummation of the Offer, if (i) the
Board of Directors of the Company withdraws, amends or modifies its approval
of this Agreement and the
37
transactions contemplated hereby, or its recommendation that the holders of
the shares of Common Stock accept the Offer and tender all of their shares of
Common Stock to Merger Sub and approve this Agreement and the transactions
contemplated hereby (or, in each case, publicly announces its intention to do
so) in a manner adverse to Purchaser or Merger Sub or (ii) the Company
approves, recommends or enters into an agreement with respect to, or
consummates, an Acquisition Proposal; or
(e) by Purchaser, if any of the conditions set forth in EXHIBIT A shall have
become forever incapable of fulfillment and shall not have been waived by
Purchaser; or
(f) by Purchaser, if the Company shall breach any of its representations,
warranties or obligations hereunder and such breach shall not have been cured or
waived and the Company shall not have provided reasonable assurance that such
breach will be cured at least two business days prior to the consummation of the
Offer and such breach shall not have been cured by such time, but only if such
breach, individually or together with all other such breaches, would constitute
failure of a condition contained in EXHIBIT A as of the date of such
termination; or
(g) by Purchaser, prior to the consummation of the Offer, if any of the
Tender Agreements shall not be in full force and effect or any Significant
Stockholders shall have breached in any material respect any representation,
warranty or covenant contained in such Significant Stockholder's Tender
Agreement.
(h) by the Company, if the Company approves and enters into an agreement
providing for the Company to engage in a transaction pursuant to a Superior
Proposal; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this SECTION 10.1(h) shall not be available unless (i) the Company has
complied with all provisions of SECTION 8.9, including the notice provisions
therein, (ii) the Company has delivered to Purchaser a written notice of the
Company's intent to enter into an agreement to effect a transaction pursuant to
a Superior Proposal, (iii) five business days have elapsed following delivery to
Purchaser of such written notice by the Company, (iv) during such five business
day period the Company has reasonably cooperated with Purchaser, including
informing Purchaser of the terms and conditions of the Acquisition Proposal and
identifying the person making the Acquisition Proposal, with the intent of
enabling Purchaser to agree to a modification of the terms and conditions of
this Agreement so the transactions contemplated hereby may be effected, and (v)
at the end of such five business day period the Board of Directors continues
reasonably to believe that the Acquisition Proposal constitutes a Superior
Proposal; PROVIDED FURTHER, HOWEVER, that no termination shall be effective
pursuant to this SECTION 10.1(h) unless concurrently with such termination, a
Break-Up Fee is paid in full by the Company in accordance with SECTION 10.2; or
(i) by the Company, if Purchaser or Merger Sub shall materially breach any
of its representations, warranties or obligations hereunder and such breach
shall not have been cured or waived or Purchaser and Merger Sub shall not have
provided reasonable assurance that such breach will be cured at least two
business days prior to the consummation of the Offer, but only if such breach,
individually or together with all other such breaches, is reasonably likely to
materially and adversely affect Purchaser's or Merger Sub's ability to
consummate the Offer or the Merger.
38
10.2 EFFECT OF TERMINATION.
(a) If this Agreement is terminated and the Merger is abandoned pursuant to
SECTION 10.1, this Agreement, except for the provisions of SECTIONS 1.3(d), 8.4,
10.2 and ARTICLE 11, shall terminate, without any liability (except as set forth
below) on the part of any party or its affiliates, directors, officers or
stockholders. Notwithstanding the foregoing, nothing herein shall relieve any
party from liability for any intentional breach of this Agreement.
(b) The Company shall pay Purchaser the Break-Up Fee in the event that this
Agreement is terminated by Purchaser pursuant to SECTION 10.1(d) or by the
Company pursuant to SECTION 10.1(h).
(c) If all of the following events have occurred:
(i) an Acquisition Proposal is commenced, publicly disclosed, publicly
proposed or otherwise communicated to the Company at any time on or after
the date of this Agreement and prior to the consummation of the Offer and
either Purchaser or the Company terminates this Agreement pursuant to
SECTION 10.1(c)(i) or SECTION 10.1(c)(iv) or Purchaser terminates this
Agreement pursuant to SECTIONS 10.1(e), (f) OR (g); and
(ii) thereafter, within 9 months of the date of termination of this
Agreement, the Company enters into a definitive agreement with respect to,
or consummates, any Acquisition Proposal,
then, the Company shall pay to Purchaser an amount equal to the Break-Up Fee
concurrently with the execution of the relevant definitive agreement.
(d) If this Agreement is terminated by Purchaser pursuant to Section
10.1(f), the Company shall reimburse Purchaser up to a maximum of $1,000,000 for
all expenses incurred by Purchaser in connection with the negotiation,
execution, delivery and performance of this Agreement by Purchaser and Merger
Sub.
(e) If this Agreement is terminated by the Company pursuant to Section
10.1(i), Purchaser shall reimburse the Company up to a maximum of $1,000,000 for
all expenses incurred by the Company in connection with the negotiation,
execution, delivery and performance of this Agreement by the Company.
(f) The "BREAK-UP FEE" shall be $5,650,000, PROVIDED that, such amount will
be reduced by any amounts paid by the Company to Purchaser pursuant to SECTION
10.2(d) above. In the event that the Break-Up Fee shall be payable under this
Agreement, the Company shall pay the Break-Up Fee to Purchaser by wire transfer
of immediately available funds to an account designated by Purchaser in
accordance with the applicable provision of this Agreement, and in any event by
no later than the next business day following termination of this Agreement.
10.3 AMENDMENT. To the extent permitted by applicable law, this Agreement
may be amended by action taken by or on behalf of the boards of directors of
the Company and Purchaser at any time before or after approval of this
Agreement by the stockholders of the Company but, after any such stockholder
approval, no amendment shall be made that decreases
39
the Merger Consideration or that adversely affects the rights of the
Company's stockholders hereunder without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed
on behalf of all of the parties.
10.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken by or on behalf of the boards of directors of the
Company (subject to SECTION 1.4) and Purchaser, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein by any other applicable party or
in any document, certificate or writing delivered pursuant hereto by any other
applicable party or (c) waive compliance with any of the agreements or
conditions contained herein except, after adoption of this Agreement by the
stockholders of the Company, for any waiver that has the effect of decreasing
the Merger Consideration or that adversely affects the rights of the Company's
stockholders hereunder without approval of such stockholders. Any agreement on
the part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. No delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
the parties hereto may otherwise have at law or in equity. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE 11
GENERAL PROVISIONS
11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
11.2 NOTICES. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission (with a confirmatory copy sent
by overnight courier), by courier service (with proof of service), hand delivery
or certified or registered mail (return receipt requested and first-class
postage prepaid), addressed as follows:
40
If to Purchaser or Merger Sub: If to the Company:
c/o Havas Interactive, Inc. 000 Xxxx 00xx Xxxxxx
00000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, Esq. Attention: Xxxxxxx X. Xxxx
Senior Vice President and
General Counsel
With a copy to: With a copy to:
Xxxxxx & Xxxxxxx Xxxxxxx Xxxx Slate
633 West Fifth Street, Suite 0000 Xxxxxxx & Xxxx XXX
Xxx Xxxxxxx, Xxxxxxxxxx 00000 4 Times Square
Facsimile: (000) 000-0000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq. Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3 ASSIGNMENT; BINDING EFFECT. 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; PROVIDED, HOWEVER, that either Purchaser
or Merger Sub (or both) may assign its rights hereunder (including, without
limitation, the right to make the Offer or to purchase shares of Common Stock in
the Offer) to a wholly owned Subsidiary of Purchaser or Merger Sub but nothing
shall relieve the assignor from its obligations hereunder. 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 assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of SECTIONS 8.6 and 8.7, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.4 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedules, the
Purchaser Disclosure Schedules, the Exhibit hereto, the Ancillary Documents and
any other documents delivered by the parties in connection herewith 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.
41
11.5 FEES AND EXPENSES. Whether or not the Offer or Merger is consummated,
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses.
11.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the jurisdiction of the
federal and state courts located in Los Angeles, California, or New York, New
York, any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in such courts and agrees not to plead or claim in
any such court that such litigation brought therein has been brought in an
inconvenient forum.
11.7 HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
11.8 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, (a) the words "Subsidiary," "affiliate"
and "associate" shall have the meanings ascribed thereto in Rule 12b-2 under the
Exchange Act, (b) "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or permitted
to close and (c) "knowledge" means the actual knowledge of any executive officer
of the Company or its Subsidiaries (except the executive officers of the
Company's Subsidiaries in Hungary, Germany, Sweden and the United Kingdom) or
Purchaser, as the case may be.
11.9 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.10 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was 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 hereof in any federal or state court
located in Los Angeles, California, or New York, New York, this being in
addition to any other remedy to which they are entitled at law or in equity. The
prevailing party in any judicial action shall be
42
entitled to receive from the other party reimbursement for the prevailing
party's reasonable attorneys' fees and disbursements, and court costs.
11.11 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
11.12 OBLIGATION OF PURCHASER. Whenever this Agreement requires Merger Sub to
take any action, such requirement shall be deemed to include an undertaking on
the part of Purchaser to cause Merger Sub to take such action.
[signature page follows]
43
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
PURCHASER:
FLIPSIDE, INC.
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
Title: Chairman
MERGER SUB:
FLIPSIDE ACQUISITION CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Secretary
S-1
COMPANY:
UPROAR INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman and Chief
Executive Officer
S-2
EXHIBIT A
CONDITIONS OF THE OFFER
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to them in the Agreement and Plan of Merger,
dated as of February 5, 2001 (the "MERGER AGREEMENT"), among Purchaser, Merger
Sub and the Company.
Notwithstanding any other term of the Merger Agreement, Merger
Sub shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such shares of Common Stock
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer 27,966,590 shares of Common Stock (collectively, the
"MINIMUM CONDITION") and (ii) any waiting period under the HSR Act and any
non-United States laws regulating competition, antitrust, investment or exchange
controls applicable to the purchase of shares of Common Stock pursuant to the
Offer shall have expired or been terminated. Furthermore, notwithstanding any
other term of the Offer or the Merger Agreement, Merger Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of the Merger
Agreement and prior to the expiration of the Offer any of the following
conditions exist or shall occur and remain in effect:
(a) any United States or state Governmental Entity shall have
enacted, issued, promulgated, enforced, instituted or entered any
statute, rule, regulation, executive order, decree, injunction, action,
application or claim or other order that is in effect or pending (a
"Claim"), (i) challenging or prohibiting the acquisition by Purchaser
or Merger Sub of the shares of Common Stock pursuant to the Merger
Agreement, including the Offer or the Merger, (ii) restraining or
prohibiting the making or consummation of the Merger Agreement,
including the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement, (iii) seeking
to obtain from Purchaser or Merger Sub any damages that arise out of
the transactions contemplated by this Agreement and could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect if such damages were assessed against the Company, (iv)
restraining or prohibiting, or limiting in any material respect, the
ownership or operation by Purchaser or Merger Sub of any material
portion of the business or assets of the Company and its Subsidiaries
taken as a whole, (v) seeking to compel Purchaser or Merger Sub to
dispose of or forfeit material incidents of control of all or any
material portion of the business or assets of the Company or any of its
Subsidiaries, (vi) imposing limitations on the ability of Purchaser,
Merger Sub or any other Subsidiary of Purchaser effectively to exercise
full rights of ownership of the shares of Common Stock, including,
without limitation, the right to vote any shares of Common Stock
acquired or owned by Purchaser or Merger Sub on all matters properly
presented to the Company's stockholders, or (vii) seeking to require
divestiture by Merger Sub or Purchaser of any shares of Common Stock;
PROVIDED, HOWEVER, that in order to invoke this condition, the
Purchaser and Merger Sub shall have used commercially reasonable
efforts to prevent such Claim or ameliorate the effects thereof; and
PROVIDED FURTHER, that,
A-1
if the Claim is a temporary restraining order or preliminary
injunction of a court of competent jurisdiction, the Purchaser may
not, by virtue of this condition alone, amend or terminate the Offer
prior to the expiration of the initial period of the Offer, but may
only, prior to such date extend the Offer and thereby postpone
acceptance for payment or purchase of shares of Common Stock; or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, promulgated, entered, enforced or deemed
applicable to the Offer, the Merger or the Merger Agreement, or any
other action shall have been taken by any government, Governmental
Entity or court, domestic or foreign, other than the routine
application to the Offer or the Merger of waiting periods under the HSR
Act or any non-United States laws regulating competition, antitrust,
investment or exchange controls, that has, or has a substantial
likelihood of resulting in, any of the consequences referred to in
paragraph (a) above; or
(c)(i) the representations and warranties made by the Company
in the Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of that date (other
than representations and warranties made as of a specified date, in
which case such representations and warranties shall be true and
correct in all material respects on and as of such specified date)
except for any breach or breaches that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect or (ii) the Company shall have breached or failed to comply in
any material respect with any of its obligations, covenants or
agreements under the Merger Agreement (other than those obligations,
covenants or agreements under SECTION 5.2(e), with respect to which the
Company shall have performed in all respects) and, with respect to any
such failure that can be remedied, the failure is not remedied within
10 business days after Purchaser has furnished the Company with written
notice of such failure; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, any other national securities exchange or the Nasdaq
National Market which materially and adversely affects the extension of
credit in the United States, (ii) the declaration of a banking
moratorium or any mandatory suspension of payments in respect of banks
in the United States which materially and adversely affects the
extension of credit in the United States, (iii) a change in general
financial bank or capital market conditions which materially and
adversely affects the ability of financial institutions in the United
States to extend credit or syndicate loans, or (iv) in the case of any
of the foregoing existing on the date of the Agreement, a material
acceleration or worsening thereof; or
(e) the Company's Board of Directors shall have withdrawn or
modified in a manner adverse to Purchaser or Merger Sub (including
by amendment of the Schedule 14D-9) its approval of the Merger
Agreement and the transactions contemplated thereby, or its
recommendation that the holders of the shares of Common Stock accept
the Offer and tender all of their shares of Common Stock to Merger
Sub and approve the Merger Agreement and the transactions
contemplated thereby, including the Offer and the
A-2
Merger, or shall have approved or recommended any Acquisition
Proposal or Superior Proposal; or
(f) the Company shall not have terminated the accrual of
benefits and amended the Aetna 401(k) Plan to preclude any
contributions to such plan in respect of periods following the
expiration of the Offer.
(g) the Merger Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Purchaser
and Merger Sub and may be asserted by Purchaser and Merger Sub regardless of the
circumstances (including any action or inaction by Purchaser) giving rise to any
such condition and, except for the Minimum Condition, may be waived by Purchaser
or Merger Sub, in whole or in part, at any time and from time to time, in the
sole discretion of Purchaser. The failure by Purchaser or Merger Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer expire or be terminated without the purchase
of Common Stock thereunder, all tendered shares of Common Stock not theretofore
accepted for payment shall forthwith be returned by the Paying Agent to the
tendering stockholders.
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