Execution Copy
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AGREEMENT AND PLAN OF MERGER
by and among
Hotel Reservations Network, Inc. ("Parent"),
Wonsub, Inc. ("Sub"),
and
XxxxxxXxx.xxx Inc. ("Company")
dated as of January 3, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1 THE OFFER; APPROVALS OF THE BOARD OF DIRECTORS AND
STOCKHOLDERS..................................................................2
1.1. The Offer..........................................................2
1.2. Offer Documents....................................................4
1.3. Company Actions....................................................4
1.4. Directors..........................................................6
1.5. Sub Stockholder Approval...........................................7
1.6. Funding............................................................7
ARTICLE 2 THE MERGER..........................................................7
2.1. The Merger.........................................................7
2.2. Closing............................................................7
2.3. Effective Time of the Merger.......................................8
2.4. Effects of the Merger..............................................8
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES........................8
3.1. Effect on Capital Stock............................................8
3.2. Conversion of Shares...............................................9
3.3. Payment for Shares.................................................9
3.4. Stock Transfer Books..............................................11
3.5. Stock Option Plans................................................11
3.6. Dissenting Shares.................................................12
3.7. Stockholder Agreements............................................12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.....................................12
4.1. Representations and Warranties of the Company.....................12
4.2. Representations and Warranties of Parent and Sub..................26
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS..........................28
5.1. Affirmative Covenants of the Company..............................28
5.2. Negative Covenants of the Company.................................28
ARTICLE 6 ADDITIONAL AGREEMENTS..............................................30
6.1. Access to Information.............................................30
6.2. No Solicitation...................................................31
6.3. Fees and Expenses.................................................33
6.4. Brokers or Finders................................................33
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6.5. Indemnification; Directors' and Officers' Insurance...............33
6.6. Reasonable Efforts................................................35
6.7. Publicity.........................................................35
6.8. Withholding Rights................................................35
6.9. HSR and Other Governmental Approvals..............................35
6.10. Notification of Certain Matters...................................36
6.11. Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting............36
6.12. Stock Option......................................................37
6.13. Other Actions.....................................................38
6.14. Appraisal Rights..................................................38
ARTICLE 7 CONDITIONS PRECEDENT...............................................38
7.1. Conditions to Each Party's Obligation to Effect the Merger........38
ARTICLE 8 TERMINATION AND AMENDMENT..........................................39
8.1. Termination.......................................................39
8.2. Effect of Termination.............................................42
8.3. Amendment.........................................................42
8.4. Extension; Waiver.................................................42
ARTICLE 9 GENERAL PROVISIONS.................................................42
9.1. Nonsurvival of Covenants and Agreements...........................42
9.2. Confidentiality Agreement.........................................42
9.3. Notices...........................................................42
9.4. Interpretation....................................................43
9.5. Counterparts......................................................44
9.6. Entire Agreement; No Third Party Beneficiaries....................44
9.7. Governing Law.....................................................44
9.8. Assignment........................................................44
9.9. Director and Officer Liability....................................44
9.10. Specific Performance..............................................45
9.11. Effectiveness.....................................................45
Schedules
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Schedule 4.1(b) -- Capital Structure
Schedule 4.1(c) -- Authority; No Violations; Consents and Approvals
Schedule 4.1(d) -- Disclosure Documents
Schedule 4.1(f) -- No Default
Schedule 4.1(h) -- Litigation
Schedule 4.1(i) -- Taxes
Schedule 4.1(j) -- Employment Agreements
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Schedule 4.1(k)(i) -- Employee Benefit Plans
Schedule 4.1(k)(ii) -- Welfare Benefit Plans
Schedule 4.1(k)(viii) -- Additional Rights Under Employee Benefit Plans
Schedule 4.1(k)(ix) -- 280G Payments
Schedule 4.1(l) -- Absence of Certain Changes or Events
Schedule 4.1(m) -- Undisclosed Material Liabilities
Schedule 4.1(p) -- Labor Matters
Schedule 4.1(q) -- Intellectual Property
Schedule 4.1(t) -- Related Party Transactions
Schedule 4.1(u) -- Certain Business Practices and Regulations, Potential
Conflicts of Interest
Schedule 5.2 -- Negative Covenants of the Company
Schedule 5.2(k) -- Capital Expenditures
Exhibits
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Exhibit A -- Form of Stockholder Agreement
Exhibit B -- Conditions to the Offer
Exhibit C -- Promissory Note
iii
INDEX OF DEFINED TERMS
Term Section
---- -------
Acquisition Proposal.........................................................6.2
Agreement...............................................................Preamble
Antitrust Division........................................................6.9(a)
Applicable Common Share Amount...........................................6.12(a)
Board Percentage..........................................................1.4(a)
By-laws...................................................................2.4(d)
Certificate of Incorporation..............................................2.4(c)
Certificate of Merger........................................................2.3
Certificates..............................................................3.3(b)
Claim.....................................................................6.5(b)
Closing......................................................................2.2
Closing Date.................................................................2.2
Code..................................................................4.1(i)(xi)
Company.................................................................Preamble
Company Common Stock....................................................Recitals
Company Debt...........................................................4.1(b)(i)
Company Intellectual Property..........................................4.1(q)(i)
Company Litigation........................................................4.1(h)
Company Order.............................................................4.1(h)
Company Permits...........................................................4.1(g)
Company SEC Documents.....................................................4.1(d)
Common Share Option......................................................6.12(a)
Company Stockholder Approval.........................................4.1(c)(iii)
Confidential IP Information...........................................4.1(q)(vi)
Confidentiality Agreement.................................................6.1(c)
Constituent Corporations.....................................................2.1
Continuing Director.......................................................1.4(a)
D&O Insurance.............................................................6.5(c)
DGCL.........................................................................1.3
Dissenting Shares............................................................3.6
Effective Time...............................................................2.3
Employee Benefit Plans.................................................4.1(k)(i)
Environmental Laws.....................................................4.1(r)(i)
ERISA..................................................................4.1(k)(i)
ERISA Affiliate........................................................4.1(k)(i)
Exchange Act..............................................................1.1(a)
Financial Advisor............................................................1.3
FTC.......................................................................6.9(a)
Funding Date.............................................................6.11(a)
Gains and Transfer Taxes.............................................4.1(c)(iii)
GAAP......................................................................4.1(d)
Governmental Entity..................................................4.1(c)(iii)
HSR Act..............................................................4.1(c)(iii)
Indemnified Parties.......................................................6.5(b)
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Injunction................................................................7.1(c)
Intangible Rights......................................................4.1(q)(i)
IRS...................................................................4.1(i)(ix)
Laws..................................................................4.1(c)(ii)
Licensed Software....................................................4.1(q)(iii)
Liens.................................................................4.1(c)(ii)
Material Adverse Effect...................................................4.1(a)
Maximum Premium...........................................................6.5(c)
Meeting Date..............................................................4.1(e)
Merger..................................................................Recitals
Merger Consideration......................................................3.2(a)
Minimum Condition.....................................................1.1(b)(ii)
Notice Date..............................................................6.12(b)
Offer...................................................................Recitals
Offer Consideration.......................................................1.1(a)
Offer Documents..............................................................1.2
Offer Termination Date............................................1.1(b)(iii)(B)
on a fully-diluted basis..............................................1.1(b)(ii)
Option Consideration......................................................3.5(a)
Optioned Common Shares...................................................6.12(a)
Options...................................................................3.5(a)
Owned Software........................................................4.1(q)(ii)
Parent..................................................................Preamble
Paying Agent..............................................................3.3(a)
Payment Fund..............................................................3.3(a)
Per Common Share Price...................................................6.12(a)
Permitted Encumbrances.................................................4.1(q)(i)
Promissory Note...........................................................6.3(b)
Proxy Statement......................................................4.1(c)(iii)
Representative...............................................................6.2
Violation.............................................................4.1(c)(ii)
Schedule 14D-9...............................................................1.3
Schedule TO..................................................................1.2
SEC...............................................................1.1(b)(iii)(A)
Securities Act............................................................4.1(d)
Shares..................................................................Recitals
Stock Option Plan.........................................................3.5(a)
Stockholder Agreements..................................................Recitals
Sub.....................................................................Preamble
Subsidiary................................................................3.1(b)
Surviving Corporation........................................................2.1
Tax...................................................................4.1(i)(xi)
Tax Return............................................................4.1(i)(xi)
Taxes.................................................................4.1(i)(xi)
Transaction Documents........................................................1.3
Vested Option.............................................................3.5(a)
Violation.............................................................4.1(c)(ii)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 3, 2001 (this
"Agreement"), is made and entered into by and among Hotel Reservations Network,
Inc., a Delaware corporation ("Parent"), Wonsub, Inc., a Delaware corporation
and a wholly owned Subsidiary (as defined in Section 3.1(b)) of Parent ("Sub"),
and XxxxxxXxx.xxx Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Sub and the Company have
unanimously approved this Agreement pursuant to which Parent will acquire the
Company by means of the Offer (as defined below) and the merger (the "Merger")
of Sub with and into the Company, upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, to effectuate the Merger, Parent and the Company each desire that
Sub commence a cash tender offer to purchase (the "Offer") all of the
outstanding shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") upon the terms and subject to the conditions set forth
in this Agreement and the Offer Documents (as defined in Section 1.2), and the
Board of Directors of the Company has approved the Offer and agreed, subject to
the terms and conditions hereof, to recommend to the stockholders of the Company
that they accept the Offer and tender their Shares pursuant thereto (shares of
Company Common Stock are herein sometimes referred to as the "Shares");
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, the Company and each of Xxxxxxx X. Xxxxxx, Xxxxx
Xxxxxxxxxx, Xxxx Xxxxxxx, Xxxxxx XxXxxxxx, Xxxxx XxXxxxxx, Xxxxx Xxxxxxxx,
Xxxxxxxxxxx Xxxxx, Xxxxxxx Xxxxxx, H. Xxxx Xxxxxx and Xxxxxxxxxxx Xxxx enter
into Stockholder Agreements substantially in the form of Exhibit A hereto (the
"Stockholder Agreements") and, in order to induce Parent and Sub to enter into
this Agreement, such persons are executing and delivering concurrently herewith
the Stockholder Agreements; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the
consummation thereof;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE OFFER; APPROVALS OF THE BOARD OF DIRECTORS
AND STOCKHOLDERS
1.1. The Offer
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(a) Provided that this Agreement shall not have been terminated in
accordance with Article 8 and that none of the events set forth in Exhibit B
hereto shall have occurred and be continuing, as promptly as practicable (but in
any event not later than ten business days after the public announcement of the
execution and delivery of this Agreement), Sub shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) the Offer for all outstanding Shares at a cash price of $4.16
per Share, net to the holder in cash (the "Offer Consideration"). The obligation
of Parent and Sub to commence the Offer, consummate the Offer, accept for
payment and pay for Shares tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit B hereto.
(b) Parent and Sub expressly reserve the right to amend or modify the terms
of the Offer at any time prior to acceptance of Shares for payment pursuant to
the Offer, except that, without the prior written consent of the Company (which
consent may be withheld in the Company's sole discretion), Sub shall not (and
Parent shall cause Sub not to):
(i) decrease the Offer Consideration, change the form of the Offer
Consideration or decrease the number of Shares sought pursuant to the
Offer,
(ii) amend or waive the condition that there shall be validly tendered
and not withdrawn prior to the time the Offer expires a number of Shares
which, together with the shares of Company Common Stock then owned by
Parent and Sub, constitutes a majority of the Shares outstanding on a
fully-diluted basis on the date of purchase (the "Minimum Condition") ("on
a fully-diluted basis" meaning, as of any date, the number of Shares
outstanding, together with the shares of Company Common Stock, if any,
which the Company may be required to issue, now or in the future,
including, without limitation, shares of Company Common Stock issuable
pursuant to options (including, without limitation, the Options (as defined
in Section 3.5)), warrants or other rights), or
(iii) extend the expiration date of the Offer, which shall initially
be not less than 20 business days (as defined in Rule 14d-1 under the
Exchange Act) after the date the Offer is commenced; provided, however,
that Sub may extend the expiration date of the Offer:
(A) as required by any rule, regulation or interpretation of the
United States Securities and Exchange Commission (the "SEC");
(B) in the event that any condition to the Offer is not satisfied
as of the scheduled expiration date thereof, for such periods for up
to five (5) business days at a time (or such longer period as shall be
approved by the Company) as Sub may reasonably deem necessary, but,
except as provided in clause (C) below, in no event may the Offer be
extended to a date later than the date (the "Offer Termination Date")
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that is 90 days from the date of this Agreement (provided that, in the
event that any condition to the Offer is not satisfied as of the
scheduled expiration date thereof, Sub shall extend the expiration
date of the Offer at the request of the Company for up to five (5)
business days at a time (or such longer period as shall be mutually
agreed) until the earlier of the acceptance for payment of any Shares
pursuant to the Offer or 60 calendar days after the commencement of
the Offer; provided that such extension shall not be required if in
the reasonable judgment of Sub, any such condition is incapable of
being satisfied prior to the expiration of such 60 calendar day
period);
(C) notwithstanding the foregoing, beyond the Offer Termination
Date (1) in connection with an increase in the consideration to be
paid pursuant to the Offer so as to comply with the applicable rules
and regulations of the SEC, and (2) for up to a period not to exceed
the period which ends on the 15th business day after the date that
either (w) the Company shall have publicly announced the receipt of an
Acquisition Proposal (as defined in Section 6.2) in the event such
announcement is made less than ten business days prior to the Offer
Termination Date, (x) the Company publicly announces its reaffirmation
of its approval or recommendation of the Offer following the public
announcement of the receipt of any Acquisition Proposal in the event
that such reaffirmation or announcement is made less than ten business
days prior to the Offer Termination Date, (y) the Board of Directors
of the Company shall have withdrawn or adversely modified, or taken a
public position materially inconsistent with, its approval or
recommendation of the Offer, the Merger or this Agreement at any time
within ten business days prior to the Offer Termination Date or (z)
any notice is given by the Company in accordance with clause (ii) of
Section 8.1(h) if such notice is made less than 15 business days prior
to the Offer Termination Date;
(iv) amend the terms of the Offer in any manner that is adverse to the
holders of Shares; or
(v) impose any condition to the Offer in addition to those set forth
in Exhibit B.
(c) Notwithstanding the foregoing, without the consent of the Company, Sub
may (and Parent may cause Sub to) make available a subsequent offering period
(within the meaning of Rule 14d-11 under the Exchange Act) by extending the
Offer on one occasion for up to 20 business days if on the expiration date, the
Shares validly tendered and not withdrawn pursuant to the Offer equal less than
ninety percent (90%) of the outstanding shares on a fully diluted basis
notwithstanding that all the conditions to the Offer have been satisfied. If Sub
makes available (or Parent causes Sub to make available) such a subsequent
offering period, Sub shall irrevocably waive satisfaction of any of the
conditions to the Offer (other than in the case of paragraph 3 of Exhibit B
hereto (i) the occurrence of any injunction, proceeding, action, suit or
litigation by any Governmental Entity seeking to make illegal or prohibit the
consummation of the Offer or (ii) the promulgation, enactment or enforcement of
any Law that makes illegal or prohibits the consummation of the Offer) that
subsequently may not be satisfied during any such subsequent offering period.
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Except as set forth above, Sub may waive any other condition to the
Offer in its sole discretion. Assuming the prior satisfaction or waiver of the
conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration date
thereof. The Company will not tender into the Offer any Shares beneficially
owned by it.
1.2. Offer Documents. On the date of commencement of the Offer, Parent and
Sub shall file or cause to be filed with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule TO") with respect to the Offer. The Schedule
TO shall contain or shall incorporate by reference the offer to purchase,
related letter of transmittal and other ancillary Offer documents and
instruments pursuant to which the Offer will be made (such Schedule TO and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). The Offer
Documents (a) shall contain (or shall be amended in a timely manner to contain)
all information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law and (b) shall conform in all material respects with the requirements of the
Exchange Act and any other applicable law. Notwithstanding the foregoing, no
agreement or representation hereby is made or shall be made by Parent or Sub
with respect to information supplied by the Company expressly for inclusion in,
or with respect to Company information derived from the Company's public SEC
filings that is included or incorporated by reference in, the Offer Documents.
Each of Parent, Sub and the Company shall promptly correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect, and Parent and Sub
shall take all lawful action necessary to cause the Offer Documents as so
corrected to be filed promptly with the SEC and to be disseminated to holders of
Company Common Stock, in each case as and to the extent required by applicable
law. In conducting the Offer, Parent and Sub shall comply in all material
respects with the Exchange Act and any other applicable law. The Company and its
counsel shall be given reasonable opportunity to review and comment on the Offer
Documents and any amendments or supplements thereto (and shall provide any
comments thereon as soon as practicable) prior to either the filing thereof with
the SEC or dissemination to the stockholders of the Company, as the case may be.
Parent and Sub shall provide the Company and its counsel any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after receipt of such comments. To the extent
practicable, the Company and its counsel shall also be given reasonable
opportunity to review and comment on correspondence with the SEC concerning the
Offer Documents prior to the delivery thereof to the SEC.
1.3. Company Actions. The Company hereby represents that (a) its Board of
Directors (at a meeting duly called and held) has unanimously (i) determined
that this Agreement and the Stockholder Agreements (collectively, the
"Transaction Documents") and the transactions contemplated hereby or thereby,
including the Offer and the Merger provided for by this Agreement, are fair to
and in the best interests of the Company and the holders of Company Common
4
Stock, (ii) approved the execution, delivery and performance of the Transaction
Documents by the Company and the consummation of the transactions contemplated
thereby, including the Offer and the Merger provided for by this Agreement, such
approval constituting approval of the foregoing for purposes of Section 203 of
the Delaware General Corporation Law, as amended (the "DGCL"), thereby making
the proscription contained in Section 203(a) of the DGCL inapplicable to such
transactions, and (iii) resolved, subject to Section 6.2 hereof, to recommend
(A) acceptance of the Offer and (B) adoption of this Agreement by the holders of
Company Common Stock, if such adoption is required by law; and (b) Xxxx Xxxxx
Xxxx Xxxxxx, Incorporated (the "Financial Advisor"), has delivered to the Board
of Directors of the Company its opinion that, as of the date of such opinion and
based upon and subject to the matters set forth therein, the Offer Consideration
to be received by the holders of Company Common Stock in the Offer and the
Merger Consideration (as defined in Section 3.2) to be received by the holders
of the Company Common Stock in the Merger are fair, from a financial point of
view, to such holders. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation referred to in this Section 1.3. Subject to
Section 6.2 hereof, the Company hereby agrees to file with the SEC, concurrently
with the commencement of the Offer or as promptly thereafter as practicable, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act
and to cause the Schedule 14D-9 to be mailed to the stockholders of the Company
promptly after commencement of the Offer and at the same time the Offer
Documents are first mailed to the stockholders of the Company. The Schedule
14D-9 shall comply in all material respects with the Exchange Act and any other
applicable law and shall contain (or shall be amended in a timely manner to
contain) all information that is required to be included therein in accordance
with the Exchange Act and the rules and regulations promulgated thereunder and
any other applicable law. Notwithstanding the foregoing, no agreement or
representation hereby is made or shall be made by the Company with respect to
information provided by Parent, Sub or their affiliates. Each of the Company,
Parent and Sub shall promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company shall take all lawful action
necessary to cause the Schedule 14D-9 as so corrected to be promptly filed with
the SEC and disseminated to the holders of Company Common Stock, in each case as
and to the extent required by applicable law. Parent, Sub and their counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 and
any amendments thereto (and shall provide any comments thereon as soon as
practicable) prior to the filing thereof with the SEC. The Company will provide
Parent and Sub and their counsel any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments. To the extent practicable, Parent, Sub and their
counsel shall also be given reasonable opportunity to review and comment on
correspondence with the SEC concerning the Schedule 14D-9 prior to the delivery
thereof to the SEC. In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Sub with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its transfer
agent to furnish, Sub with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Sub or
5
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of Company Common Stock. Subject to the requirements of
applicable law and stock exchange rules, and except for such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent, Sub and their affiliates shall
hold in confidence the information contained in such labels and lists, shall use
such information only in connection with the Offer and the Merger provided for
by this Agreement, and, if this Agreement is terminated for any reason, shall
deliver promptly to the Company all copies of such information then in their
possession or control. In connection with the Offer, the Company will furnish
Parent with such information (which will be treated and held in confidence by
Parent) and assistance as Parent or its officers, employees, accountants,
counsel and other representatives may reasonably request in connection with the
preparation of the Offer and communicating the Offer to the record and
beneficial holders of shares of Company Common Stock.
1.4. Directors.
---------
(a) Upon the purchase by Sub pursuant to the Offer of such number of
Shares which represents a majority of the outstanding shares of Company Common
Stock (on a fully diluted basis), and from time to time thereafter, the parties
hereto agree to cause to be elected to the Board of Directors of the Company
such number of directors designated by Sub, rounded up to the next whole number
(but in no event more than two less than the total number of directors on the
Board of Directors of the Company, as such number may be increased as provided
herein), as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
the product of (i) the number of directors on the Board of Directors of the
Company (giving effect to any increase in the number of directors pursuant to
this Section 1.4) and (ii) the percentage (the "Board Percentage") that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding and the Company shall, upon request by Sub and subject to applicable
law, promptly satisfy the Board Percentage by (A) increasing the size of the
Board of Directors of the Company or (B) using its reasonable efforts to secure
the resignations of such number of directors as is necessary to enable Sub's
designees to be elected to the Board of Directors of the Company and shall cause
Sub's designees promptly to be so elected, provided that no such action shall be
taken which would result in there being, prior to the consummation of the
Merger, less than two directors of the Company who are Continuing Directors (as
defined below), except to the extent that all Continuing Directors have
resigned. At such times, if requested by Sub, the Company will use its best
efforts to cause each committee of the Board of Directors of the Company to
include persons designated by Sub constituting the Board Percentage of such
committee. The Company shall promptly amend, or cause to be amended, its
by-laws, if necessary, to increase the size of the Board of Directors of the
Company if such increase is required to satisfy the Board Percentage pursuant to
this Section l.4. At the request of Sub, the Company shall take, at the
Company's expense, any lawful action necessary to effect any such election,
including, without limitation, mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder (provided that Sub has provided the information described in the
following sentence), unless such information has previously been provided to the
Company's stockholders in the Schedule 14D-9. Sub 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) of the Exchange
Act and Rule 14f-1 thereunder. The term "Continuing Director" shall mean (1)
6
each member of the Board of Directors immediately prior to the acceptance for
payment of Shares tendered pursuant to the Offer or (2) any director elected or
appointed to fill any vacancy or newly created directorship after the date
hereof who is (x) recommended or elected, as the case may be, by a majority of
the Continuing Directors then on the Board of Directors and (y) not affiliated
with, and not a designee or nominee of, Parent or Sub.
(b) Following the election or appointment of Sub's designees pursuant
to this Section 1.4 and prior to the Effective Time (as defined in Section 2.3)
of the Merger, the approval of a majority of the Continuing Directors shall be
required to authorize any termination of this Agreement by the Company, any
consent or agreement by the Company to such termination, any amendment of this
Agreement requiring action of the Board of Directors of the Company, any
extension of time for the performance of any of the obligations or other acts of
Parent or Sub under this Agreement, any waiver of compliance with any of the
agreements or conditions under this Agreement for the benefit of the Company or
the holders of Company Common Stock, and any action to seek to enforce any
obligation of Parent or Sub under this Agreement. In connection therewith, the
Continuing Directors shall be authorized, on behalf of and at the expense of the
Company, to retain financial and legal advisors.
1.5. Sub Stockholder Approval. Parent, in its capacity as the sole
stockholder of Sub, by its execution hereof, approves and adopts this Agreement
and the transactions contemplated hereby.
1.6. Funding. Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to purchase any Shares that Sub becomes
obligated to purchase pursuant to the Offer.
ARTICLE 2
THE MERGER
2.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Sub shall be merged with and
into the Company at the Effective Time (as defined in Section 2.3). At the
Effective Time, the separate corporate existence of Sub shall cease, and the
Company shall continue as the surviving corporation and a direct wholly owned
Subsidiary of Parent (Sub and the Company are sometimes hereinafter referred to
as the "Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue under the name "XxxxxxXxx.xxx Inc."
2.2. Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1, and subject to the satisfaction or waiver of the conditions set forth in
Article 7, the closing of the Merger (the "Closing") shall take place at 9:00
a.m., Central Standard Time, as promptly as practical (but in no event later
than the second business day) after satisfaction and/or waiver of all of the
conditions set forth in Section 7.1 (the "Closing Date"), at the offices of
Xxxxxx & Xxxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, unless another
date, time or place is agreed to in writing by the parties hereto.
7
2.3. Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, as provided in the DGCL, as soon as practicable
after the Closing. The Merger shall become effective upon such filing or at such
time thereafter as is provided in the Certificate of Merger as the Company and
Sub shall agree (the "Effective Time").
2.4. Effects of the Merger.
(a) The Merger shall have the effects as set forth in the applicable
provisions of the DGCL.
(b) The directors and officers of Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The certificate of incorporation of Sub shall be the certificate
of incorporation (the "Certificate of Incorporation") of the Surviving
Corporation until thereafter amended as provided by applicable law.
(d) The by-laws of Sub shall be the by-laws (the "By-laws") of the
Surviving Corporation until thereafter amended as provided by applicable law,
the Certificate of Incorporation or the By-laws.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES
3.1. Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Company Common Stock
and all other shares of capital stock of the Company that are owned, directly or
indirectly, by the Company, or by Parent or Sub or any other wholly owned
Subsidiary of Parent shall be canceled and retired and shall cease to exist, and
no consideration shall be delivered or deliverable in exchange therefor. As used
in this Agreement, the word "Subsidiary," with respect to any party, means any
8
corporation, partnership, joint venture or other organization, whether
incorporated or unincorporated, of which: (i) such party or any other Subsidiary
of such party is a general partner; (ii) voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party and any one or
more of its Subsidiaries; or (iii) at least 50% of the equity, other securities
or other interests is, directly or indirectly, owned or controlled by such party
or by any one or more of its Subsidiaries, or by such party and any one or more
of its Subsidiaries.
3.2. Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of Sub, the Company or the holders of the
Company Common Stock:
(a) Subject to the other provisions of this Section 3.2, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (excluding shares of Company Common Stock canceled pursuant to Section
3.1(b) and Dissenting Shares (as defined in Section 3.6)) shall be converted
into the right to receive an amount in cash equal to the Offer Consideration, or
such higher price, if any, as is paid in the Offer (the "Merger Consideration"),
payable to the holder thereof in cash, without any interest thereon, less any
required withholding taxes, upon surrender and exchange of the Certificate (as
defined in Section 3.3) representing such share of Company Common Stock pursuant
to the terms hereof.
(b) All such shares of Company Common Stock, when converted as
provided in Section 3.2(a), no longer shall be outstanding and shall
automatically be canceled and shall cease to exist, and each Certificate (as
defined below) previously evidencing such shares of Company Common Stock shall
thereafter represent only the right to receive the Merger Consideration. The
holders of Certificates previously evidencing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares except as otherwise provided herein or by law
and, upon the surrender of Certificates in accordance with the provisions of
Section 3.3, shall only have the right to receive for such shares the Merger
Consideration, less any required withholding taxes, without any interest
thereon. Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time the outstanding shares of Company 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 to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
with the aggregate Merger Consideration payable to each stockholder in such case
being rounded to the nearest xxxxx.
3.3. Payment for Shares.
------------------
(a) Paying Agent. Prior to the Effective Time, Parent shall appoint a
United States bank or trust company reasonably acceptable to the Company to act
as paying agent (the "Paying Agent") for the payment of funds in amounts and at
times necessary for the payment of the Merger Consideration, and immediately
following the Effective Time Parent shall contribute the funds in amounts and at
times necessary for the payment of the Merger Consideration to the Surviving
9
Corporation and shall cause the Surviving Corporation to deposit funds in
amounts and at times necessary for the payment of the Merger Consideration so
contributed with the Paying Agent in a separate fund (the "Payment Fund")
established for the benefit of the holders of Certificates, for payment in
accordance with this Article 3, through the Paying Agent, and such contribution
by Parent and payment by the Surviving Corporation shall be in immediately
available funds in amounts necessary to make the payments pursuant to Section
3.2 and this Section 3.3. The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund.
If for any reason the Payment Fund is inadequate to pay the amounts to
which holders of shares of Company Common Stock shall be entitled under this
Section 3.3, Parent shall take all steps necessary to enable or cause the
Surviving Corporation promptly to deposit in trust additional cash with the
Paying Agent sufficient to make all payments required under this Agreement, and
Parent and the Surviving Corporation shall in any event be liable for payment
thereof. The Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall instruct the Paying Agent to
mail to each holder of record of a certificate or certificates which,
immediately prior to the Effective Time, evidenced outstanding shares of Company
Common Stock (the "Certificates") (i) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent, and shall be in such form and have such other provisions as the
Surviving Corporation reasonably may specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, or an
"agent's message" in the case of a book entry transfer, and such other customary
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in respect thereof cash in an amount
equal to the product of (A) the number of shares of Company Common Stock
formerly represented by such Certificate and (B) the Merger Consideration, less
any required withholding taxes, and the Certificate so surrendered shall
forthwith be canceled. No interest shall be paid or accrued on the Merger
Consideration payable upon the surrender of any Certificate. If any holder of a
Certificate shall be unable to surrender such holder's Certificates because such
Certificates have been lost, mutilated or destroyed, such holder may deliver in
lieu thereof an affidavit and indemnity bond in form and substance and with
surety reasonably satisfactory to the Surviving Corporation. If payment is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.3(b), each
Certificate converted into the right to receive cash pursuant to Section 3.2(a)
hereof shall be deemed at any time after the Effective Time to represent for all
purposes only the right to receive the Merger Consideration.
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(c) Termination of Payment Fund; Interest. Any portion of the Payment
Fund which remains undistributed to the holders of Company Common Stock for 180
days after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of Company Common Stock who have not theretofore
complied with this Article 3 and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to the Surviving Corporation for payment of the Merger Consideration to
which they are entitled. All interest accrued in respect of the Payment Fund
shall inure to the benefit of and be paid to the Surviving Corporation.
(d) No Liability. None of Parent, the Company or the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
3.4. Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Paying Agent or Parent for any reason, except notation thereon that a
stockholder has elected to exercise his rights to appraisal pursuant to the
DGCL, shall be converted into the right to receive cash pursuant to Section
3.2(a) hereof.
3.5. Stock Option Plans.
------------------
(a) Cancellation of Options. At the Effective Time, each then
outstanding option (the "Options") to purchase or acquire shares of Company
Common Stock, whether or not issued under the Company's 2000 Omnibus Stock
Incentive Plan (the "Stock Option Plan"), and whether or not then exercisable or
vested, shall be canceled and as to any such Options which are according to
their terms vested and exercisable as of the Effective Time ("Vested Option"),
the cancellation of such Vested Options shall represent the right to receive the
following consideration in settlement thereof: for each share of Company Common
Stock subject to such Vested Option 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 Vested Option to the
extent such difference is a positive number (such amount in cash as described
above being hereinafter referred to as the "Option Consideration"); provided,
however, that with respect to any person subject to Section 16(a) of the
Exchange Act, any such Option Consideration shall not be payable until the first
date payment can be made without liability to such person under Section 16(b) of
the Exchange Act, but shall be paid as soon as practicable thereafter.
(b) Termination of Rights. The surrender of a Vested 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 Vested
Option. Prior to the expiration of the Offer, the Company shall use its best
efforts to take all action necessary (including causing the Board of Directors
of the Company (or any committees thereof) to take such actions as are allowed
by the Stock Option Plan or any option agreements) to ensure that, following the
Effective Time, no Option holder shall have any right thereunder to acquire
equity securities of the Company, the Surviving Corporation or any Subsidiary
thereof. All Options other than Vested Options expire at the Effective Time
according to the terms of such option agreements or the Stock Option Plan.
11
3.6. Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who properly shall have demanded appraisal for such shares in accordance with
Section 262 of the DGCL (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders instead shall be entitled to receive payment of the appraised value
of such shares of Company Common Stock held by them in accordance with the
provisions of such Section 262 of the DGCL, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or otherwise lost their rights to appraisal of such shares of
Company Common Stock under such Section 262 of the DGCL shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, less any
required withholding taxes, the Merger Consideration upon surrender in the
manner provided in Section 3.3 of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Company Common
Stock.
3.7. Stockholder Agreements. Notwithstanding any provision contained herein
to the contrary, the provisions of Sections 1.1, 3.2 and 3.5 (including, without
limitation, provisions related to the Offer Consideration, the Merger
Consideration and Option Consideration payable to holders of Shares and Options,
respectively) insofar as they relate to amounts payable to the holder that is
party to the Stockholder Agreements, shall be subject to Section 4 of the
Stockholder Agreements in the form attached as Exhibit A.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of the Company. The Company represents
and warrants to Parent and Sub as follows (such representations and warranties
being deemed to be made on a continuous basis until the Effective Time):
(a) Organization, Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
is duly qualified to do business as a foreign corporation and in good standing
to conduct business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not have a Material Adverse Effect (as defined below). The
Company has heretofore made available to Parent complete and correct copies of
the certificate of incorporation and by-laws of the Company. As used in this
Agreement, a "Material Adverse Effect" shall mean any result, occurrence, fact,
change, event or effect, whether or not foreseeable or known as of the date of
this Agreement or covered by insurance (other than a change or effect arising as
a result of this Agreement, the transactions contemplated hereby, or the
12
identity of Parent or Sub), that, individually or in the aggregate with any such
other results, occurrences, facts, changes, events or effects, is or, in
Parent's reasonable judgment, could be expected to (a) be (whether or not such
result, occurrence, fact, change, event or effect has, during the period or at
the time in question, manifested itself in the Company's historical financial
statements) materially adverse to the historical or near-term or long-term
projected (i) business, (ii) operations, licenses, permits, rights or
privileges, (iii) assets, (iv) liabilities, (v) financial condition, (vi)
results of operations or (vii) capitalization, in each case, of the Company, (b)
materially impair the ability of the Company to perform its obligations under
any of the Transaction Documents or (c) prevent the consummation of any of the
transactions contemplated thereby. The Company has no Subsidiaries, and has
never had any Subsidiaries that were material to its business.
(b) Capital Structure.
(i) The Company. The authorized capital stock of the Company
consists of 50,000,000 shares of common stock, par value $0.01 per
share, and 25,000,000 shares of preferred stock, par value $.01 per
share. As of the date of this Agreement, 10,873,159 shares of Company
Common Stock are issued, all of which are outstanding. There are no
shares of preferred stock outstanding. Except as set forth on Schedule
4.1(b), no bonds, debentures, notes or other instruments or evidence
of indebtedness of the Company ("Company Debt") are issued or
outstanding. Except as set forth on Schedule 4.1(b), (A) there are no
outstanding securities convertible into, or exchangeable or
exercisable for, shares of capital stock or other securities of the
Company and (B) there are no calls, rights (including, without
limitation, preemptive rights), commitments or agreements (including,
without limitation, employment, termination and similar agreements) to
which the Company is a party or by which it is bound, in any case
obligating the Company to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed
or acquired, any securities of the Company, including, without
limitation, shares of capital stock, or obligating the Company to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. Set forth on Schedule 4.1(b) is a list of all
of the Options outstanding on the date hereof and the number of shares
of Company Common Stock and exercise prices relating thereto. No
Shares are held by the Company. All outstanding Shares are validly
issued, fully paid and nonassessable and are not subject to, and have
not been issued in violation of, preemptive or other similar rights.
(ii) Voting of Shares. Except as set forth in the Transaction
Documents or as set forth on Schedule 4.1(b), there are not as of the
date hereof and there will not be at the Effective Time any
stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound
relating to the voting of any shares of the capital stock of the
Company which will limit in any way the solicitation of proxies by or
on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to this Agreement.
13
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and authority
to enter into the Transaction Documents and, subject to, if required
by applicable law with respect to the consummation of the Merger, the
Company Stockholder Approval (as defined in Section 4.1(c)(iii)), to
consummate the transactions contemplated by the Transaction Documents.
The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the
Company, subject, if required by applicable law with respect to the
consummation of the Merger, to the Company Stockholder Approval. The
Transaction Documents have been duly executed and delivered by the
Company and, subject, if required by applicable law with respect to
the consummation of the Merger, to the Company Stockholder Approval,
and assuming that each of the Transaction Documents to which Parent or
Sub is a party constitutes the valid and binding agreement of Parent
or Sub, constitute valid and binding obligations of the Company
enforceable in accordance with their respective terms and conditions
except that the enforcement thereof may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) Except as set forth on Schedule 4.1(c), the execution and
delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby by the Company will not (A) conflict
with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration (including pursuant to any
put right) of any material obligation or the loss of a material
benefit under, or the creation of a mortgage, pledge, lien, claim,
charge, security interest, restriction, tenancy, other possessory
interest, conditional sales obligation or other encumbrance of any
kind (collectively, "Liens"), or right of first refusal with respect
to any asset or property (any such conflict, violation, default, right
of termination, cancellation or acceleration, loss, creation or right
of first refusal, a "Violation"), pursuant to any provision of the
certificate of incorporation or by-laws of the Company or (B) except
as to which requisite waivers or consents have been obtained, assuming
the consents, approvals, authorizations or permits and filings or
notifications referred to in paragraph (iii) of this Section 4.1(c)
are duly and timely obtained or made, and assuming, if required by
applicable law with respect to the consummation of the Merger, the
Company Stockholder Approval has been obtained, result in any
Violation of (1) any loan or credit agreement, note, mortgage, deed of
trust, indenture, lease, employee benefit plan, Company Permit (as
defined in Section 4.1(g)), or any other agreement, obligation,
instrument, concession, franchise or license or (2) any judgment,
order, decree, statute, law, ordinance, rule, regulation, writ or
injunction (collectively, "Laws") applicable to the Company or its
properties or assets, except in the case of clauses (1) and (2) for
any Violations that, individually or in the aggregate, would not have
a Material Adverse Effect. The Board of Directors of the Company has
taken all actions necessary under the DGCL, including approving the
transactions contemplated by the Transaction Documents, to ensure that
the restrictions on Business Combinations (as defined in Section 203
of the DGCL) do not, and will not, apply to the transactions
contemplated hereby if consummated in accordance with the terms
hereof.
14
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from
any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company in connection
with the execution and delivery of any of the Transaction Documents by
the Company or the consummation by the Company of the transactions
contemplated thereby, except for (A) the filing of a pre-merger
notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the expiration or termination of the applicable
waiting period thereunder; (B) the filing with the SEC of (1) if
required by applicable law with respect to consummation of the Merger,
a proxy statement or information statement in definitive form for
distribution to the stockholders of the Company in advance of the
meeting, if any, of the holders of Company Common Stock to adopt this
Agreement in accordance with Regulation 14A or Regulation l4C
promulgated under the Exchange Act (such proxy statement or
information statement as amended or supplemented from time to time
being hereinafter referred to as the "Proxy Statement"), (2) the
Schedule 14D-9 in connection with the Offer, and (3) such reports
under and such other compliance with the Exchange Act and the rules
and regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Company does business; (D) such filings and
approvals as may be required by any applicable state takeover,
securities or "blue sky" laws; (E) such filings in connection with any
state or local tax which is attributable to the beneficial ownership
of the Company's real property, if any (collectively, the "Gains and
Transfer Taxes"); (F) such other filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by this
Agreement; (G) if required by applicable law with respect to
consummation of the Merger, the adoption of this Agreement by the
holders of a majority of the outstanding Shares ("Company Stockholder
Approval"); and (H) such other consents, approvals, orders,
authorizations, registrations, declarations, filings, notices or
permits the failure of which to be obtained or made would not have a
Material Adverse Effect.
(d) Disclosure Documents. Set forth on Schedule 4.1(d) is a list of each
report, schedule, registration statement and definitive proxy statement filed by
the Company with the SEC since January 1, 1998, and prior to the date of this
Agreement (the "Company SEC Documents"), which are all the documents (other than
preliminary material) that the Company was required to file with the SEC since
such date, true and complete copies of which the Company has made available to
Parent. As of their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933 (the
"Securities Act"), the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
15
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents complied as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Rule 10-01 of Regulation
S-X of the SEC) and fairly present, in accordance with applicable requirements
of GAAP (subject, in the case of the unaudited statements, to year-end audit
adjustments, as permitted by Rule 10-01, and any other adjustments described
therein), the financial position of the Company as of their respective dates and
the results of operations and the cash flows of the Company for the periods
presented therein. The unaudited financial statements of the Company for the
two-month period ended November 30, 2000 (copies of which have been provided to
Parent) were prepared in accordance with GAAP (except that there is no
comparable period data included) applied on a consistent basis during the period
involved (except as may be indicated in the notes thereto) and fairly present,
in accordance with applicable requirements of GAAP (subject to year-end audit
adjustments, as would be permitted by Rule 10-01, and any other adjustments
described therein), the financial position of the Company as of November 30,
2000, and the results of operations of the Company for the period presented
therein.
(e) Information Supplied. None of the information supplied or to be
supplied by the Company in writing specifically for inclusion or incorporation
by reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common Stock,
and at any time they are amended or supplemented, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement, if any, will contain, on the date it is first mailed to the holders
of the Company Common Stock or at the date of the related stockholders' meeting
(the "Meeting Date"), any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the expiration or termination of the
Offer, the acceptance for payment of Shares pursuant to the Offer or the Meeting
Date (if applicable), any event with respect to the Company, or with respect to
information supplied by the Company specifically for inclusion in the Offer
Documents or the Proxy Statement, as applicable, shall occur which is required
to be described in an amendment of, or supplement to, such document, such event
shall be so described by the Company and furnished to Parent. All documents that
the Company is responsible for filing with the SEC in connection with the
transactions contemplated herein, insofar as it relates to the Company or other
information supplied by the Company specifically for inclusion therein, will
comply as to form, in all material respects, with the provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder, and
each such document required to be filed with any Governmental Entity other than
the SEC will comply in all material respects with the provisions of applicable
law as to the information required to be contained therein. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to the
information supplied or to be supplied by Parent or Sub for inclusion in the
Offer Documents or the Proxy Statement.
16
(f) No Default. Except (i) as may result from the execution and delivery of
the Transaction Documents and the consummation of the transactions contemplated
thereby (which is subject to Section 4.1(c)(ii)) or (ii) as set forth on
Schedule 4.1(f), no Violation exists (and no event has occurred which, with
notice or the lapse of time or both, would constitute a Violation) of any term,
condition or provision of (A) the certificate of incorporation or by-laws of the
Company, (B) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
to which the Company is now a party or by which the Company or any of its
properties or assets is bound or (C) any Law applicable to the Company, except
in the case of (B) and (C) for Violations which, in the aggregate, would not
have a Material Adverse Effect.
(g) Compliance with Applicable Laws. The Company holds all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities necessary for the lawful conduct of its business (the
"Company Permits") and is in compliance with the terms thereof, except where the
failure to hold any such Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the Company
is pending or, to the knowledge of the Company, has been threatened which would
have a Material Adverse Effect.
(h) Litigation. Except as set forth on Schedule 4.1(h), there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company ("Company Litigation") the loss of which would have a
Material Adverse Effect, nor is there any material judgment, decree, unfunded
settlement, conciliation agreement, letter of deficiency, award, temporary
restraining order, injunction, rule or order of any Governmental Entity or
arbitrator outstanding or, to the knowledge of the Company, pending or
threatened, against the Company ("Company Order") that would have a Material
Adverse Effect. In addition, except as expressly set forth on Schedule 4.1(h) as
having such effect, none of the claims and judgments pending or, to the
knowledge of the Company, threatened pursuant to all Company Litigation and
Company Orders, would, individually or in the aggregate, have a Material Adverse
Effect.
(i) Taxes. Except as set forth on Schedule 4.1(i) hereto:
(i) All material Tax Returns required to be filed by or with respect
to the Company, and any affiliated, consolidated, combined, unitary or
similar group of which the Company is or was a member, have been duly and
timely filed (taking into account all valid extensions of filing dates),
and all such Tax Returns are true, correct and complete in all material
respects. The Company, and any affiliated, consolidated, combined, unitary
or similar group of which the Company is or was a member, has duly and
timely paid (or there has been paid on its behalf) all material Taxes that
are due, except for Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in the
Company's unaudited financial statements for the quarter ended September
30, 2000, in accordance with GAAP. With respect to any period for which
Taxes are not yet due with respect to the Company, and any affiliated,
consolidated, combined, unitary or similar group of which the Company is or
was a member, the Company has made due and sufficient current accruals for
such Taxes in accordance with GAAP in the most recent financial statements
contained in the Company SEC Documents. The Company has withheld and paid
17
all material Taxes required by all applicable laws to be withheld or paid
in connection with any amounts paid or owing to any employee, creditor,
independent contractor, stockholder or other third party.
(ii) Correct and complete copies of all federal, state, local and
foreign income Tax Returns filed by the Company since December 31, 1998,
have been delivered to Parent.
(iii) There are no outstanding agreements, waivers, or arrangements
extending the statutory period of limitation applicable to any claim for,
or the period for the collection or assessment of, material Taxes due from
or with respect to the Company or any affiliated, consolidated, combined,
unitary or similar group of which the Company is or was a member, for any
taxable period. No audit or other proceeding by any court, governmental or
regulatory authority, or similar person is pending in regard to any
material Taxes due from or with respect to the Company or any material Tax
Return filed by or with respect to the Company, or any affiliated,
consolidated, combined, unitary or similar group of which the Company is or
was a member, other than normal and routine audits by nonfederal
governmental authorities. All material deficiencies of Taxes assessed by
any applicable taxing authority have been paid, fully settled or adequately
provided for in the financial statements contained in the Company SEC
Documents. No taxing authority has asserted or threatened to assert any
deficiency or assessment, or proposed (formally or informally) any
adjustment, for any Taxes against the Company, and the officers and
directors (and employees responsible for Tax matters) of the Company do not
know of any audit or investigation by any taxing authority with respect to
any Tax liability of the Company.
(iv) No consent to the application of Section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with respect to
the Company or any of its assets. The Company has not agreed to make any
material adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method,
and there is no application pending with any taxing authority requesting
permission for any changes in any accounting method of the Company which
will or would reasonably cause the Company to include any material
adjustment in taxable income for any taxable period (or portion thereof)
ending after the date of consummation of the Offer.
(v) The Company is not a party to, is not bound by, nor has it any
obligation under, any Tax sharing agreement, Tax allocation agreement or
similar contract, agreement or arrangement. The Company is not subject to
any joint venture, partnership or other arrangement or contract which is
treated as a partnership for federal income Tax purposes.
(vi) Except as set forth on Schedule 4.1(i), the Company has made no
payments, is not obligated to make any payments nor is it a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G or Section 162(m)
of the Code.
18
(vii) The Company is not, nor has it has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii).
(viii) There are no requests for rulings from any taxing authority for
information with respect to Taxes of the Company and, to the knowledge of
the Company, no material reassessments (for property or ad valorem Tax
purposes) of any assets or any property owned or leased by the Company have
been proposed.
(ix) The Company has not executed or entered into with the Internal
Revenue Service ("IRS"), or any taxing authority, a closing agreement
pursuant to Section 7121 of the Code or any similar provision of state,
local, foreign or other income tax law, which will require any increase in
taxable income or alternative minimum taxable income, or any reduction in
tax credits for, the Company for any taxable period ending after the
Closing Date.
(x) None of the property of the Company is subject to a safe-harbor
lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954
as in effect after the Economic Recovery Tax Act of 1981 and before the Tax
Reform Act of 1986) or is "tax-exempt use property" (within the meaning of
Section 168(h) of the Code) or "tax-exempt bond financed property" (within
the meaning of Section 168(g)(5) of the Code).
(xi) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended. The term "Tax" (and, with correlative meaning, "Taxes") shall mean
(A) any net income, alternative or add-on minimum, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding on amounts paid by the Company, payroll,
employment, excise, production, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest and/or any penalty, addition to tax or
additional amount imposed by any taxing authority, (B) any liability of the
Company for the payment of any amounts of the type described in (A) as a
result of being a member of an affiliated or consolidated group or
arrangement whereby liability of the Company for the payment of such
amounts was determined or taken into account with reference to the
liability of any other person for any period, and (C) any liability of the
Company with respect to the payment of any amounts of the type described in
(A) or (B) as a result of any express or implied obligation to indemnify
any other Person. The term "Tax Return" shall mean all returns,
declarations, reports, estimates, information returns and statements
required to be filed by or with respect to the Company in respect of any
Taxes, including, without limitation, (x) any consolidated federal income
Tax return in which the Company is included and (y) any state, local or
foreign income Tax returns filed on a consolidated, combined or unitary
basis (for purposes of determining tax liability) in which the Company is
included.
19
(xii) There are no excess loss accounts or deferred intercompany
transactions between the Company within the meaning of Treas.
Reg.ss.ss.1.1502-19 or 1.1502-13, respectively.
(j) Employment Agreements. Schedule 4.1(j) contains a complete list of each
management, employment, consulting or other agreement, contract or commitment,
whether oral or in writing, to which the Company is a party that provides for
(i) the employment of any person or providing for retention of management,
executive or consulting services, or (ii) the payment or accrual of any
compensation or severance upon (A) a change in control of the Company or (B) any
termination of such management, employment, consulting or other relationship.
All compensation earned pursuant to the foregoing, including deferred
compensation, has been fully and accurately accrued for and reflected in the
financial statements included in the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 2000.
(k) Pension and Benefit Plans; ERISA.
--------------------------------
(i) Except as disclosed on Schedule 4.1(k)(i), neither the Company nor
any corporation, trade, business or entity under common control with the
Company within the meaning of section 414(b), (c) or (m) of the Code or
section 4001 of ERISA ("ERISA Affiliate") maintains or contributes to, nor
have they maintained or contributed to, any "employee pension benefit
plans" as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), "welfare benefit plans" as
defined in Section 3(l) of ERISA, or stock bonus, stock option, restricted
stock, stock appreciation right, stock purchase, bonus, incentive, deferred
compensation, severance, or vacation plans, or any other employee benefit
plan, program, policy or arrangement for the benefit of any current or
former directors, officers, current or former employees or independent
contractors of the Company or any of its ERISA Affiliates pursuant to which
it or they may be obligated to make payments or otherwise have any
liability (collectively, the "Employee Benefit Plans").
(ii) Except as disclosed on Schedule 4.1(k)(ii), none of the "welfare
benefit plans" as defined in Section 3(1) of ERISA maintained by the
Company provide for continuing benefits or coverage for any participant or
any beneficiary of a participant following termination of employment,
except as may be required under sections 601 through 608 of ERISA and
section 4980B of the Code, and any such welfare benefit plan may be
unilaterally amended or terminated in its entirety without liability except
as to benefits accrued thereunder prior to such amendment or termination.
(iii) Neither the Company nor any of its ERISA Affiliates maintain or
contribute to, nor have they ever maintained or contributed to, (i) any
pension plan subject to Title IV of ERISA or Section 412 of the Code or 302
of ERISA, (ii) any "multiemployer plan" as defined in Section 3.(37) of
ERISA, or (iii) any trust intended to be exempt from federal income taxes
within the meaning of section 501(c)(9) of the Code.
(iv) With respect to all Employee Benefit Plans disclosed on Schedule
4.1(k)(i), Parent has been furnished true, correct and complete copies of
related documents, including plan documents, trust agreements, insurance or
20
group annuity contracts and each other funding or financing arrangement
relating to any Employee Benefit Plan, as well as all amendments thereto.
In addition, Parent has been furnished the most recent report on Form 5500
and the summary plan description for each Employee Benefit Plan which is
required to file or distribute those items. For each Employee Benefit Plan
that is a "top hat" plan exempt from Form 5500 filings, a copy of the
requisite "top hat filing" described in Labor Regulation section
2520.104-23 has been furnished to Parent. With respect to any Employee
Benefit Plan that is intended to be qualified under section 401(a) of the
Code, a copy of the most recent favorable determination letter has been
furnished to Parent, along with a copy of any outstanding determination
letter applications for such Employee Benefit Plans. A schedule of employer
expenses with respect to each Employee Benefit Plan has been furnished to
Parent along with any administration agreement associated with any Employee
Benefit Plan.
(v) To the knowledge of the Company, each Employee Benefit Plan has
been administered in all material respects in accordance with its terms and
the terms of any contracts relating to the Employee Benefit Plan and the
Company, its ERISA Affiliates and all the Employee Benefit Plans are in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable laws. To the knowledge of the
Company, there are no suits, proceedings or claims pending or threatened
involving any Employee Benefit Plan (other than routine claims for
benefits) that would reasonably be expected to have a Material Adverse
Effect on the Company. All contributions required to be made to the
Employee Benefit Plans pursuant to their terms and provisions and the
requirements of ERISA and the Code have been made in accordance with those
terms and requirements, and in a timely manner.
(vi) As to any Employee Benefit Plan intended to be qualified under
section 401 of the Code, there has been no termination or partial
termination of the Employee Benefit Plan within the meaning of Section
411(d)(3) of the Code.
(vii) To the knowledge of the Company, there is no matter pending
(other than routine qualification determination filings) with respect to
any of the Employee Benefit Plans before the Internal Revenue Service, the
Department of Labor, or any other administrative agency or governmental
entity.
(viii) Except as disclosed on Schedule 4.1(k)(viii), the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not (A) require the Company to make a larger
contribution to, or pay greater benefits under, any Employee Benefit Plan
than it otherwise would or (B) create or give rise to any additional vested
rights or service credits under any Employee Benefit Plan.
(ix) Neither the Company nor any ERISA Affiliate is party to any
agreement, nor has it established any policy or practice, requiring it to
make a payment or provide any other form of compensation or benefit to any
person performing services for the Company or any ERISA Affiliate upon
termination of such services that would not be payable or provided in the
absence of the consummation of the transactions contemplated by the
21
Transaction Documents. In addition, except as disclosed on Schedule
4.1(k)(ix), in connection with the consummation of the transactions
contemplated by the Transaction Documents, no payments have or will be made
which, in the aggregate, would result in imposition of the sanctions
imposed upon golden parachute payments under sections 280G and 4999 of the
Code.
(l) Absence of Certain Changes or Events. Since September 30, 2000, except
as disclosed in Schedule 4.1(l), (i) the Company has conducted its business, in
all material respects, only in the ordinary course and in a manner consistent
with past practice (except in connection with the negotiation and execution and
delivery of this Agreement and the other Transaction Documents), and (ii) no
event has occurred that would have been prohibited by the terms of Section 5.2
had the terms of such Section been in effect as of and at all times since
September 30, 2000, and there has not been any event or events (whether or not
covered by insurance), individually or in the aggregate, having, or that would
be reasonably expected to have, a Material Adverse Effect.
(m) No Undisclosed Material Liabilities. Except as set forth on Schedule
4.1(m), there are no liabilities of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that are
material to the Company, other than (i) liabilities reflected on the Company's
financial statements (together with the related notes thereto) filed with the
Company's quarterly report on Form 10-Q for the quarter ended September 30, 2000
(as filed with the SEC), (ii) liabilities under this Agreement or for
professional fees and expenses in connection with the transactions contemplated
hereby and (iii) liabilities that have occurred in the ordinary course of
business since September 30, 2000.
(n) Opinion of Financial Advisor. The Company has received the opinion of
the Financial Advisor to the effect that, as of the date thereof, the Offer
Consideration to be received by the holders of Company Common Stock in the Offer
and the Merger Consideration to be received by the holders of Company Common
Stock in the Merger are fair from a financial point of view to such holders, and
such opinion has not been withdrawn or modified. True and complete copies of all
agreements and understandings between the Company or any of its affiliates and
the Financial Advisor relating to the transactions contemplated by this
Agreement have been provided by the Company to Parent.
(o) Vote Required. Subject to the applicability of Section 253 of the DGCL,
the affirmative vote or written consent of the holders of a majority of the
outstanding shares of Company Common Stock is the only vote or consent of the
holders of any class or series of the Company's capital stock necessary (under
applicable law or otherwise) to adopt this Agreement.
(p) Labor Matters.
-------------
(i) Neither the Company nor any ERISA Affiliate is, or has ever been,
subject to the terms of or bound by any collective bargaining or other
labor union agreement. The Company has never had an employee strike, work
stoppage, slowdown, lockout or labor union organizing activity nor, to the
best of Company's knowledge, has it been subject to any threatened employee
strikes, work stoppages, slowdowns or lockouts, or labor union organizing
activity. Within the preceding three years, there have been no organizing
22
activities involving the Company, representation or certification
proceedings, or petitions seeking a representation proceeding or unfair
labor practice charges, pending or, to the knowledge of the Company,
threatened to be brought or filed with the National Labor Relations Board
or any other labor relations tribunal or authority.
(ii) To the best knowledge of the Company, the Company is in
compliance in all material respects with all laws, regulations and orders
relating to employment and labor, including but not limited to all such
laws, regulations and orders relating to wages and hours, collective
bargaining, equal employment opportunity, affirmative action,
discrimination, civil rights, employee benefits, plant closing and mass
layoff, immigration, medical and family leave, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax.
(iii) As of the date hereof, there is no proceeding, claim, suit,
action or governmental investigation pending or, to the best knowledge of
the Company, threatened, with respect to which any current or former
director, officer, employee or agent of the Company is entitled, or has
asserted he is entitled, to claim indemnification from the Company pursuant
to the certificate of incorporation or by-laws of the Company, as provided
in any indemnification agreement to which the Company is a party or
pursuant to applicable law, that has a Material Adverse Effect.
(q) Intellectual Property.
---------------------
(i) Except as set forth on Schedule 4.1(q), the Company owns or has a
right to use all intellectual property currently used by the Company,
including, without limitation, each trademark, trade name, domain name,
patent, service xxxx, brand xxxx, brand name, database, industrial design,
trade secret, technology, software, customer lists and copyright required,
owned or used in connection with the operation of its businesses, including
any registrations thereof and pending applications therefor, and each
license or other contract relating thereto that is material to the conduct
of its business (collectively, the "Company Intellectual Property"), free
and clear of any and all Liens, other than Permitted Encumbrances (as
defined below), except where the failure to own or have a right to use such
property or such Lien, claim or encumbrance would not have a Material
Adverse Effect. All material Company Intellectual Property and a listing of
all names under which the Company has operated are set forth on Schedule
4.1(q). Except as set forth on Schedule 4.1(q), the use of the Company
Intellectual Property by the Company does not conflict with, infringe upon,
violate or interfere with or constitute an appropriation of any right,
title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, domain name, patent,
service xxxx, brand xxxx, brand name, database, industrial design, trade
secrets, technology, software, customer lists, copyright or any pending
application therefor of any other person (collectively, "Intangible
Rights"), and the Company does not have knowledge of any claims thereof.
Except as set forth on Schedule 4.1(q), the use of all Company Intellectual
Property will not be adversely affected by the transactions contemplated in
this Agreement. As used herein the term "Permitted Encumbrances" includes,
only to the extent that they do not impair in any material respect the
business activities of the Company as currently conducted, (i) Liens for
23
Taxes, assessments or governmental charges or levies not yet due or
delinquent and being diligently contested in good faith, (ii) statutory
Liens of carriers, warehousemen, mechanics, materialmen and the like
arising in the ordinary course of business and for obligations not yet due
and payable, (iii) easements, restrictive covenants, rights of way and
other similar imperfections of title, and (iv) zoning, building and other
similar restrictions.
(ii) Schedule 4.1(q) also lists all software owned by the Company that
is currently licensed to third parties by the Company (the "Owned
Software"). Except as disclosed on Schedule 4.1(q), (i) the Company has
sole title to the Owned Software, free of all claims including claims or
rights of employees, independent contractors, agents, consultants or other
parties involved in the development, creation, marketing, maintenance,
enhancement or licensing of such software; (ii) the Owned Software does not
contain any Licensed Software (as hereinafter defined) or any other
software (other than third party operating systems), or derivatives of any
of the foregoing; and (iii) the Company has the right to use, market,
distribute, sublicense, modify and copy the Owned Software, free and clear
of any limitations or encumbrances (including any obligations to pay
royalties). Schedule 4.1(q) also lists all the licensees of the Owned
Software. The Company is not infringing any Intangible Rights of any other
person with respect to the Owned Software, and, to the best knowledge of
the Company, no other person is infringing any Intangible Rights of the
Company with respect to the Owned Software.
(iii) Schedule 4.1(q) lists all material software for which the
Company is a licensee, lessee or otherwise has obtained from a third party
the right to use, market, distribute, sublicense or otherwise transfer the
right to use such software (the "Licensed Software"). The Company has made
use of all copies of the Licensed Software in its possession as permitted
by the respective license agreements in all material respects. Except as
disclosed on Schedule 4.1(q), the Company has complied with all material
provisions of the license, lease or other similar agreement pursuant to
which they have rights to use the Licensed Software, except where
non-compliance would not have a Material Adverse Effect.
(iv) The transactions contemplated hereby will not cause a breach of,
default under or otherwise trigger a right to terminate the license
agreement by which the Company licenses any Licensed Software or Owned
Software or impair the Company's ability to use the Licensed Software or
license the Owned Software in the same manner as such software is currently
used or licensed in the business of the Company, except where such breach,
default or right would not have a Material Adverse Effect.
(v) The Company and, to the best knowledge of the Company, the other
parties to any contract under which the Company is the licensor, lessor or
has otherwise granted the rights to use any Owned Software are in
compliance therewith and are not in breach of their obligations with
respect thereto, except where non-compliance or breach would not have a
Material Adverse Effect.
(vi) The Company has taken all reasonable and practicable steps to
protect and preserve the confidentiality of all Company Intellectual
Property not subject to copyright or patent rights ("Confidential IP
24
Information"). Use by the Company of Confidential IP Information not owned
by the Company has been and is pursuant to the terms of a written agreement
between the Company and the owner of such Confidential IP Information, or
is otherwise lawful.
(vii) To the best knowledge of the Company, there are no viruses in
the Owned Software and there are no defects in the Owned Software that
would prevent such software from performing in all material respects the
tasks and functions that it was intended to perform except those that can
be cured or otherwise corrected without a Material Adverse Effect.
(r) Environmental Matters.
---------------------
(i) The operations of the Company have at all times, to the Company's
knowledge, been conducted, and as of the Closing Date will be, in
compliance with all federal, state, and local laws, rules, regulations,
ordinances, and orders of any governmental entity relating to pollution or
the protection of human health, the environment, or natural resources
("Environmental Laws").
(ii) The Company does not, to its knowledge, have any contingent
liability in connection with, and is not, to its knowledge, subject to any
outstanding contracts with any other person respecting, the release, spill,
discharge, emission, migration, or disposal into the indoor or outdoor
environment of any hazardous substance, hazardous waste, pollutant or
contaminant, petroleum or petroleum product, or any other material
regulated, prohibited, or limited under any Environmental Law.
(s) Board Recommendation. As of the date hereof, the Board of Directors of
the Company, at a meeting duly called and held, has by the unanimous vote of
those directors present (i) determined that the Transaction Documents and the
transactions contemplated thereby, including the Offer and the Merger provided
for by this Agreement, taken together, are fair to and in the best interests of
the stockholders of the Company and has approved the same and (ii) resolved to
recommend, subject to Section 6.2 hereof, the Offer and that the holders of the
shares of Company Common Stock adopt this Agreement, if such adoption is
required by applicable law, and tender their shares of Company Common Stock
pursuant to the Offer.
(t) Related Party Transactions. Except as set forth on Schedule 4.1(t) and
except for the Transaction Documents, or any Employee Benefit Plans or as
otherwise disclosed hereunder, no director, officer, "affiliate" or "associate"
(as such terms are defined in Rule 12b-2 under the Exchange Act) of the Company
(i) has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or (ii) is otherwise a party to any contract,
arrangement or understanding with the Company.
(u) Certain Business Practices and Regulations; Potential Conflicts of
Interest.
(i) Neither the Company nor any directors, officers, agents or
employees of either, in their capacity as directors, officers, agents or
employees of or on behalf of the Company, has (A) used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity or (B) made any unlawful payment to foreign
25
or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
(ii) Except as set forth on Schedule 4.1(u), none of the officers or
directors of the Company, or any entity controlled by any of the foregoing,
(A) owns, directly or indirectly, any significant interest in, or is a
director, officer, employee, consultant or agent of, any person which is a
competitor, lessor, lessee or customer of, or supplier of goods or services
to, the Company, (B) owns, directly or indirectly, in whole or in part, any
real property, leasehold interests or other property with a fair market
value of at least $25,000 in the aggregate the use of which is necessary
for the activities of the Company, (C) has any cause of action or other
suit, action or claim whatsoever against, or owes any amount to the
Company, other than claims in the ordinary course of business, or (D) has
sold to, or purchased from, the Company any assets or property for
aggregate consideration in excess of $60,000 since July 27, 1999, or, to
the Company's knowledge, has sold to, or purchased from, the Company any
assets or property for aggregate consideration in excess of $60,000 during
the period from January 1, 1996 through July 27, 1999.
4.2. Representations and Warranties of Parent and Sub. Parent and Sub each
represent and warrant to the Company (such representations and warranties being
deemed to be made on a continuous basis until the Effective Time) as follows:
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified to do business as a foreign
corporation and in good standing to conduct business in each jurisdiction in
which the business it is conducting, or the operation, ownership or leasing of
its properties, makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not materially impair the
ability of Parent or Sub to consummate the transactions contemplated by this
Agreement. All of the issued and outstanding capital stock of Sub is owned
directly by Parent free and clear of any Lien, other than Permitted
Encumbrances. Parent and Sub have heretofore made available to the Company
complete and correct copies of their respective certificates of incorporation
and by-laws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power and
authority to enter into each of the Transaction Documents to which it is a
party and to consummate the transactions contemplated thereby. The
execution and delivery of each of the Transaction Documents to which Parent
or Sub is a party and the consummation of the transactions contemplated
thereby have been respectively duly authorized by all necessary corporate
action on the part of Parent and Sub. Each of the Transaction Documents to
which Parent or Sub is a party have been respectively duly executed and
delivered by each of Parent and Sub and, assuming that such constitute the
valid and binding agreements of the other parties thereto, respectively
constitute valid and binding obligations of Parent and Sub enforceable in
26
accordance with their terms and conditions except that the enforcement
hereof or thereof may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The execution and delivery of each of the Transaction Documents
to which Parent or Sub is a party and the consummation of the transactions
contemplated thereby by each of Parent and Sub will not (A) result in any
Violation pursuant to any provision of the respective certificates of
incorporation or by-laws of Parent or Sub or (B) except as to which
requisite waivers or consents have been obtained and assuming the consents,
approvals, authorizations or permits and filings or notifications referred
to in paragraph (iii) of this Section 4.2(b) are duly and timely obtained
or made and, if required, the Company Stockholder Approval has been
obtained, result in any Violation of (1) any loan or credit agreement,
note, mortgage, indenture, lease, or other agreement, obligation,
instrument, concession, franchise or license or (2) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or
Sub or their respective properties or assets, except in the case of clauses
(1) and (2), for any Violations that, individually or in the aggregate,
would not prevent the consummation of any of the transactions contemplated
hereby or thereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to either of Parent or
Sub in connection with their respective execution and delivery of each of
the Transaction Documents to which it is a party or the consummation by
each of Parent and Sub of the transactions contemplated thereby, except
for: (A) filings under the HSR Act; (B) the filing with the SEC of (1) the
Schedule TO in connection with the commencement and consummation of the
Offer and (2) such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder as may be required in
connection with this Agreement and the transactions contemplated hereby;
(C) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware; (D) such filings and approvals as may be required by
any applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; and (F) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval necessitated by the Merger or the transactions
contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is
filed with the SEC, and at any time it is amended or supplemented, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, and (ii) the Proxy
Statement, if any, will contain, on the date it is first mailed to the holders
of Company Common Stock or at the Meeting Date, any untrue statement of a
material fact or omit to state any material fact required to be stated therein
27
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the expiration or termination of the Offer, the acceptance for payment of Shares
pursuant to the Offer or the Meeting Date (if applicable), any event with
respect to Parent or Sub, or with respect to information supplied by Parent or
Sub specifically for inclusion in the Offer Documents or the Proxy Statement, as
applicable, shall occur which is required to be described in an amendment of, or
supplement to, such document, such event shall be so described by Parent and Sub
and provided to the Company. All documents that Parent or Sub is responsible for
filing with the SEC in connection with the transactions contemplated herein will
comply as to form, in all material respects, with the provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder, and
each such document required to be filed with any Governmental Entity other than
the SEC will comply in all material respects with the provisions of applicable
law as to the information required to be contained therein. Notwithstanding the
foregoing, Parent and Sub make no representation or warranty with respect to the
information supplied or to be supplied by the Company for inclusion in the Offer
Documents or the Proxy Statement.
(d) Financing. As of the date hereof and at the expiration of the Offer and
at the Effective Time, Parent and Sub will have available all of the funds
necessary to purchase all of the Shares pursuant to the Offer and the Merger and
to pay all fees and expenses payable by Parent or Sub related to the
transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Affirmative Covenants of the Company. During the period from the date
of this Agreement and continuing until the designees of Sub have been appointed
to the Board of Directors of the Company pursuant to Section 1.4, except as
expressly contemplated or permitted by the Transaction Documents or to the
extent that Parent shall otherwise consent in writing, (i) the Company shall
carry on its business in the usual, regular and ordinary course consistent with
past practice, and (ii) the Company shall, to the extent consistent therewith,
use all reasonable efforts to preserve intact its present business organization
and goodwill and retain the services of its current officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with it. Parent acknowledges that the announcement of this Agreement
may impair the Company's business or employee relationships, and these effects
shall not constitute a breach of this covenant.
5.2. Negative Covenants of the Company. During the period from the date of
this Agreement and continuing until the earlier of the designees of Sub having
been appointed to the Board of Directors of the Company pursuant to Section 1.4
and termination of this Agreement pursuant to Section 8.1 hereof, except as set
forth in Schedule 5.2, as expressly contemplated by the Transaction Documents or
to the extent that Parent shall otherwise consent in writing:
(a) the Company shall not (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock, or set aside funds
therefor, (ii) split, combine or reclassify any of its capital stock, or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for, shares of its capital stock; or (iii) repurchase or
28
otherwise acquire any shares of its capital stock, except as required by the
terms of its securities outstanding or any Employee Benefit Plan in effect on
the date hereof, or set aside funds therefor;
(b) the Company shall not (i) grant any options, warrants or other
rights to purchase shares of capital stock, (ii) amend the terms of or reprice
any Option outstanding on the date of this Agreement or amend the terms of the
Stock Option Plan, or (iii) except for Shares issuable pursuant to Options
outstanding on the date of this Agreement, issue, deliver or sell, or authorize
or propose to issue, deliver or sell, any shares of its capital stock, any
Company Debt, or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, or Company Debt;
(c) the Company shall not amend or propose to amend its certificate of
incorporation or by-laws;
(d) the Company shall not (i) merge or consolidate with, or acquire
any equity interest in (including, without limitation, through the creation of
any Subsidiary of the Company), any corporation, partnership, association or
other business organization, or enter into an agreement with respect thereto,
(ii) acquire or agree to acquire any material assets, except for capital
expenditures otherwise permitted by Section 5.2(k), or (iii) make any loan or
advance to, or otherwise make any investment in, any person;
(e) the Company shall not sell, lease, encumber or otherwise dispose
of, or agree to sell, lease (whether such lease is an operating or capital
lease), encumber or otherwise dispose of, any of its material assets;
(f) the Company shall not authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or dissolution;
(g) the Company shall not, except as may be required by Law or
pursuant to any of the its Employee Benefit Plans existing on the date of this
Agreement, (i) grant any increases in the compensation (including, without
limitation, salary, bonus and other benefits) of any of its directors, officers,
management employees or key employees; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit to any director, officer,
management employee or key employee, whether past or present; (iii) enter into
any new, or materially amend any existing, employment or severance or
termination agreement with any person; (iv) except as may be required to comply
with applicable Law, become obligated under any new Employee Benefit Plan, which
was not in existence on the date hereof, or amend any such plan or agreement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder; (v) grant any general increase in
compensation (including, without limitation, salary, bonus and other benefits)
to employees, except for increases occurring in the ordinary course of business
consistent with past practice, or (vi) extend any loans or advances to any of
its directors, officers, management employees or key employees, except for
ordinary course of business advances for business related expenses;
(h) the Company shall not (i) assume or incur any indebtedness for
borrowed money, (ii) guarantee any such indebtedness, (iii) issue or sell any
debt securities or warrants or rights to acquire any debt securities, (iv)
29
guarantee any debt obligations of any other person, (v) enter into any lease
(whether such lease is an operating or capital lease), (vi) create any Lien
(other than Permitted Encumbrances) on the property of the Company, or (vii)
enter into any "keep well" or other agreement or arrangement to maintain the
financial condition of any other person;
(i) the Company shall not (A) enter into any contracts involving
aggregate annual payments in excess of $50,000 or (B) modify, rescind,
terminate, waive, release or otherwise amend in any material respect any of the
terms or provisions of any material contract;
(j) the Company shall not, other than as required by the SEC, Law or
GAAP, make any changes with respect to accounting policies, procedures or
practices;
(k) the Company shall not, other than as set forth on Schedule 5.2(k),
incur capital expenditures in excess of (i) $25,000 individually and (ii)
$100,000 in the aggregate;
(l) the Company shall not engage in or permit any transaction or act
which, if it had been engaged in or permitted prior to the date of this
Agreement, would have rendered untrue in any material respect any of the
representations and warranties of the Company contained in this Agreement;
(m) the Company shall not deposit or otherwise invest any cash on hand
into accounts, securities or other instruments having a maturity of more than 30
days or that will impose payment or penalty upon liquidation within 30 days of
such deposit or investment;
(n) the Company shall not transfer or license to any person or entity
or otherwise extend, amend or modify in any material respect any rights to any
material Company Intellectual Property, other than non-exclusive licenses in the
ordinary course of business and consistent with past practice; and
(o) the Company shall not agree to or make any commitment to, whether
orally or in writing, take any actions prohibited by this Agreement.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1. Access to Information.
---------------------
(a) Upon reasonable notice, the Company shall afford access to the
officers, employees, accountants, counsel and other representatives of Parent
and Sub (including financing sources and their employees, accountants, counsel
and other representatives), during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records. If Parent and Sub require environmental site assessments of any parcels
of real property owned or leased by the Company, the Company shall allow such
assessments to be performed.
30
(b) During the period prior to the Effective Time, the Company shall
promptly furnish to Parent and Sub (i) a copy of each report, schedule,
registration statement and other document in advance of filing it with the SEC,
and shall provide Parent and Sub a reasonable opportunity to review and comment
upon such document, during such period, (ii) a copy of each document received by
it from the SEC, during such period, and (iii) all other information concerning
its business, properties and personnel as Parent and Sub may reasonably request.
(c) Subject to Section 9.2, that certain Confidentiality Agreement
dated December 20, 2000, by and between the Company and Parent (the
"Confidentiality Agreement") shall apply with respect to information furnished
pursuant to this Section 6.1.
6.2. No Solicitation. From and after the date hereof until the termination
of this Agreement, the Company will not, and will cause its Representatives (as
defined below) not to, directly or indirectly, (i) initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), (ii) enter into any agreement contemplating or participate
in any discussions or negotiations regarding any Acquisition Proposal, or
furnish to any third party any information with respect to its business,
properties or assets in connection with any Acquisition Proposal, (iii) maintain
or continue discussions or negotiations with any person or entity in furtherance
of such inquiries or for the purpose of obtaining an Acquisition Proposal, (iv)
agree to or endorse any Acquisition Proposal, (v) withdraw, modify or not make
the recommendations of the Company's Board of Directors referred to in Section
1.3, or (vi) release any third party from any standstill, confidentiality or
similar agreement, or waive or amend any provision thereof, to which it is a
party. It is agreed that any violation of the restrictions set forth in the
preceding sentence by any Representative of the Company or any of its
Subsidiaries shall be deemed to be a breach of this Section 6.2 by the Company.
The Company shall notify Parent orally (within one business day) and in writing
(as promptly as practicable) of all of the relevant details relating to, and all
material aspects of (including the identity of the person or entity making such
inquiry or proposal), all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal as promptly as
practicable. Notwithstanding the foregoing, prior to the acceptance of Shares
for payment pursuant to the Offer and provided that the Company has complied
with the terms of this Section 6.2, nothing contained in this Section 6.2 shall
prohibit the Board of Directors of the Company from:
(i) following the receipt of an unsolicited written bona fide
Acquisition Proposal from any person or entity,
(A) furnishing information to, or entering into discussions or
negotiations with, the person or entity that makes such Acquisition
Proposal, or
(B) withdrawing, modifying or not making its recommendations
referred to in Section 1.3 if, and only to the extent that, (1) in the
case of either clause (A) or (B) above, the Board of Directors of the
31
Company, after consultation with its legal counsel (who may be the
Company's regularly engaged legal counsel), determines in good faith
that the failure to take such action would result in a breach by the
Company's Board of Directors of its fiduciary obligations under
applicable law and (2) the Company (w) in the case of either clause
(A) or (B) above, provides reasonable prior notice to Parent to the
effect that it is taking such action, which notice shall (to the
extent consistent with the fiduciary duties of the Board of Directors
to stockholders under applicable law) include the identity of the
person or entity engaging in such discussions or negotiations,
requesting such information or making such Acquisition Proposal, and
the material terms and conditions of any Acquisition Proposal, (x) in
the case of clause (A) above, receives from such person or entity
making such Acquisition Proposal an executed confidentiality agreement
having terms no more favorable to such person or entity than those
terms included in the Confidentiality Agreement in existence between
the Company and Parent and its affiliates, (y) in the case of clause
(A) above, the Company furnishes to Parent all such nonpublic
information delivered to such person or entity concurrently with the
delivery of such information to such person or entity, and (z) in the
case of clause (A) above, the Company shall, to the extent consistent
with the fiduciary duties of the Board of Directors to stockholders
under applicable law, promptly and continuously advise Parent as to
all of the relevant details relating to, and all material aspects of,
any such discussions or negotiations; or
(ii) taking and disclosing to the stockholders of the Company a
position contemplated by Rule 14e-2 under the Exchange Act if, after the
receipt of an unsolicited written bona fide Acquisition Proposal, the Board
of Directors of the Company, after consultation with its legal counsel (who
may be the Company's regularly engaged legal counsel), determines in good
faith that the failure to take such action would result in a breach by the
Company's Board of Directors of its fiduciary obligations under applicable
law.
Except for the confidentiality agreement referred to in clause (i) above
and the agreement relating to an Acquisition Proposal entered into
contemporaneously with terminating this Agreement as contemplated in Section
8.1(h), nothing in this Section 6.2 shall permit the Company to enter into any
agreement with respect to any Acquisition Proposal during the term of this
Agreement. The Company shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Company or any
Representatives with respect to any Acquisition Proposal existing on the date
hereof and shall seek to have returned to the Company any confidential
information that has been provided in any such solicitation, initiation,
encouragement, activity, discussion or negotiation.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
agreement, offer or proposal (other than the transactions among the Company,
Parent and Sub contemplated hereunder) involving the Company for: (A) any
merger, consolidation, share exchange, recapitalization, reorganization,
business combination, or other similar transaction; (B) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 10% or more of the
assets of the Company in a single transaction or series of transactions; or (C)
any tender offer or exchange offer for all or any portion of the outstanding
shares of capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith.
32
For purposes of this Agreement, "Representative" of a person shall mean
that person's employees, officers, directors, representatives (including,
without limitation, any investment banker, attorney or accountant), agents or
affiliates.
6.3. Fees and Expenses.
-----------------
(a) Except as otherwise provided in this Section 6.3 and except with
respect to claims for damages incurred as a result of a material breach of this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense.
(b) In the event of the termination of this Agreement under Section
8.1(g) or Section 8.1(h), then the Company shall deliver to Parent or Parent's
designee, contemporaneously with the termination of this Agreement, a promissory
note in the form of Exhibit C attached hereto (the "Promissory Note") in the
principal amount of $2,750,000.
(c) Any amounts due under this Section 6.3 that are not paid when due
shall bear interest at the prime rate of interest as announced from time to time
by Chase Manhattan Bank, N.A. plus 1% from the date due through and including
the date paid.
(d) The fee and other amounts payable pursuant to this Section 6.3
shall be paid by the Company without reservation of rights or protests and the
Company, upon making such payment, shall be deemed to have released and waived
any and all rights that it may have to recover such amounts.
6.4. Brokers or Finders
------------------
(a) The Company represents that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except the Financial Advisor,
whose fees and expenses will be paid by the Company in accordance with the
Company's agreements with such firm (copies of which have been delivered by the
Company to Parent prior to the date of this Agreement).
(b) Each of Parent and Sub represents, as to itself that no agent,
broker, investment banker, financial advisor or other firm or person engaged by
any of them is or will be entitled to receive from the Company any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.
6.5. Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) Until six years from the Effective Time, unless otherwise required
by Law, the Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to the
elimination of liability of directors and the indemnification of (and
advancement of expenses to) directors, officers, employees and agents than as
are set forth in the certificate of incorporation and by-laws of the Company, as
in effect on the date hereof.
33
(b) As of the Effective Time and for a period of not less than six
years thereafter, Parent and the Surviving Corporation shall, jointly and
severally, indemnify, defend and hold harmless 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, employee or agent of the Company
(collectively, the "Indemnified Parties") against all losses, reasonable
expenses (including reasonable attorneys' fees), claims, damages, liabilities or
amounts that are paid in settlement of, or otherwise in connection with, any
threatened or actual claim, action, suit, proceeding or investigation (a
"Claim"), based in whole or in part on or arising in whole or in part out of the
fact that the Indemnified Party is or was a director, officer, employee or agent
of the Company and pertaining to any matter existing or arising out of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, any Claim arising out of this Agreement or any of the transactions
contemplated hereby), whether asserted or claimed prior to, at or after the
Effective Time, in each case to the fullest extent permitted under Delaware law,
and shall pay any expenses, as incurred, in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the fullest extent
permitted under Delaware law. Without limiting the foregoing, in the event any
such Claim is brought against any of the Indemnified Parties, (i) such
Indemnified Parties may retain counsel (including local counsel) satisfactory to
them and which shall be reasonably satisfactory to Parent and the Surviving
Corporation and the Surviving Corporation shall pay, jointly and severally, all
reasonable fees and expenses of such counsel for such Indemnified Parties; and
(ii) the Surviving Corporation shall use all reasonable efforts to assist in the
defense of any such Claim, provided that the Surviving Corporation shall not be
liable for any settlement effected without its written consent, which consent,
however, shall not be unreasonably withheld. Notwithstanding the foregoing,
nothing contained in this Section 6.5 shall be deemed to grant any right to any
Indemnified Party which is not permitted to be granted to an officer, director,
employee or agent of the Company under Delaware law, assuming for such purposes
that the Company's certificate of incorporation and by-laws provide for the
maximum indemnification permitted by law.
(c) Parent will cause to be maintained for a period of not less than
six years from the Effective Time the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides coverage for
events occurring prior to the Effective Time ("D&O Insurance") for all persons
who are directors and officers of the Company on the date of this Agreement and
for all former directors and officers of the Company, so long as the annual
premium therefor would not be in excess of 125% of the last annual premium
therefor paid prior to the date of this Agreement (the "Maximum Premium");
provided, however, that Parent may, in lieu of maintaining such existing D&O
Insurance as provided above, cause coverage to be provided under any policy
maintained for the benefit of Parent or any of its affiliates, so long as the
terms thereof are no less advantageous to the intended beneficiaries thereof
than the existing D&O Insurance. If the existing D&O Insurance expires, is
terminated or canceled during such six-year period, Parent will use all
reasonable efforts to cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium, on terms and conditions no less advantageous to
the covered persons than the existing D&O Insurance. The Company represents to
Parent that the Maximum Premium is $78,489.
34
6.6. Reasonable Efforts.
------------------
(a) Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable, under applicable Laws or otherwise, to consummate and make
effective the transactions contemplated by the Transaction Documents, subject,
if applicable, to the Company Stockholder Approval, including cooperating fully
with the other party. The Company will use all reasonable efforts to obtain any
consent from third parties necessary to allow the Company to continue operating
its business as presently conducted as a result of the consummation of the
transactions contemplated hereby (including, without limitation, those consents
set forth on Schedule 4.1(c)).
(b) In case at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either of the Constituent Corporations,
the parties to this Agreement shall direct their respective officers and
directors to take all such necessary action.
6.7. Publicity.. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to the Offer or
the Merger and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be required
by applicable Law (or stock exchange rules), in which case the party proposing
to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement.
6.8. Withholding Rights. Parent and Sub, as applicable, shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement or the Offer to any holder of shares of Company Common Stock or
Options such amounts as Parent or Sub, as applicable, is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or Sub, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock or Options in respect of which such deduction and
withholding was made by Parent or Sub.
6.9. HSR and Other Governmental Approvals.
------------------------------------
(a) Each party hereto shall file or cause to be filed with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") any notification required to be filed by
their respective "ultimate parent" companies under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
in the Transaction Documents. Such parties will use all reasonable efforts to
make such filings promptly and to respond on a timely basis to any requests for
additional information made by either of such agencies. Each of Parent and the
Company shall pay one-half of the filing fees in connection with any such
required filings. Each of the parties hereto agrees to furnish the others with
copies of all correspondence, filings and communications (and memoranda setting
forth the substance thereof) between it and its affiliates and their respective
35
representatives, on the one hand, and the FTC, the Antitrust Division or any
other Governmental Entity or members of their respective staffs, on the other
hand, with respect to the Offer, the Merger or any of the Transaction Documents
or the transactions contemplated thereby, other than personal financial
information filed therewith.
(b) Each party hereto shall cooperate and use its reasonable efforts
to promptly prepare and file all necessary documentation to effect all necessary
applications, notices, petitions, filings and other documents, and use all
reasonable efforts to obtain (and will cooperate with each other in obtaining)
any consent, acquiescence, authorization, order or approval of, or any exemption
or nonopposition by, any Governmental Entity required to be obtained or made by
Parent or the Company or any of their respective affiliates in connection with
the Offer and the Merger or the taking of any other action contemplated by the
Transaction Documents; provided, however, that Parent, Sub and their respective
affiliates shall not be required to divest of any assets in connection
therewith.
(c) Each party hereto agrees to furnish the others with such necessary
information and reasonable assistance as such other parties and their respective
affiliates may reasonably request in connection with their preparation of
necessary filings, registrations or submissions of information to any
Governmental Entities, including without limitation any filings necessary under
the provisions of the HSR Act.
(d) Without limiting the foregoing, the Company and its Board of
Directors shall (i) take all action necessary or otherwise reasonably requested
by Parent to exempt the Offer and the Merger from the provisions of any
applicable takeover, business combination, control share acquisition or similar
statute and (ii) if any state takeover statute or similar statute or regulation
becomes applicable to the Offer, the Merger or any of the Transaction Documents
or the transactions contemplated thereby, take all action necessary to ensure
that the Offer, the Merger and the other transactions contemplated by any of the
Transaction Documents may be consummated as promptly as practicable on the terms
contemplated by the Transaction Documents and otherwise to minimize the effect
of such statute or regulation on the Offer, the Merger and the other
transactions contemplated by any of the Transaction Documents.
6.10. Notification of Certain Matters. Each party shall give prompt written
notice to the other of (a) the occurrence, or failure to occur, of any event of
which it becomes aware that has caused or that would be likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing Date and
(b) the failure of such party to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.11. Preparation of the Proxy Statement; Company Stockholders Meeting;
Merger without a Company Stockholders Meeting.
(a) The Company and Parent will, as soon as practicable following the
acceptance for payment of and payment for shares of the Company Common Stock by
Sub in the Offer (the date on which such acceptance and payment shall occur
shall be referred to herein as the "Funding Date"), prepare and file the Proxy
Statement in preliminary form with the SEC. The Company will use all reasonable
efforts to respond to all SEC comments with respect to the Proxy Statement and
to cause the Proxy Statement to be mailed to the Company's stockholders at the
earliest practicable date.
36
(b) If adoption of this Agreement is required by applicable law, the
Company will, as soon as practicable following the acceptance for payment of and
payment for shares of the Company Common Stock by Sub in the Offer, duly call,
give notice of, convene and hold a meeting of the Company's stockholders for the
purpose of adopting this Agreement or, in lieu of such meeting, Parent and Sub,
as soon as practicable following the Funding Date, shall cause this Agreement to
be adopted by written consent of stockholders. At such stockholders meeting (or
in connection with any consent in lieu thereof), Parent shall cause all of the
shares of Company Common Stock then owned by Parent or Sub to be voted in favor,
or consented to, the adoption of this Agreement.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event
that Parent and Sub shall acquire in the aggregate at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after the expiration of the Offer, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
6.12. Stock Option.
------------
(a) Grant of Common Share Option. The Company hereby grants to Sub an
irrevocable option (the "Common Share Option") to purchase for a per share price
equal to the per share Merger Consideration (the "Per Common Share Price") in
cash a number of shares of Company Common Stock (the "Optioned Common Shares")
equal to the Applicable Common Share Amount. The "Applicable Common Share
Amount" shall be the lesser of (i) the number of shares of Company Common Stock
which, when added to the number of shares of Company Common Stock owned by Sub
immediately prior to the exercise of the Common Share Option, would result in
Sub owning immediately after the exercise of the Common Share Option 90% of the
then outstanding shares of Company Common Stock and (ii) the number of shares of
Company Common Stock represented by (x) the total authorized number of shares of
Company Common Stock under the Company's certificate of incorporation less (y)
the sum of the number of shares of Company Common Stock outstanding plus the
number of shares of Company Common Stock reserved for issuance, subscribed for
or otherwise committed for issuance. Sub may exercise the Common Share Option
only if (a) the Funding Date shall have occurred, (b) upon such exercise, it
(together with Parent) shall own at least 90% of the then outstanding shares of
Company Common Stock and (c) such exercise would not violate applicable law. The
Common Share Option shall expire if not exercised prior to the earlier of the
Effective Time and 12:00 midnight, Eastern time, on the date 15 business days
after the Funding Date.
(b) Exercise of Common Share Option. Provided that the conditions to
exercise of the Common Share Option set forth in Section 6.12(a) are satisfied,
Sub may exercise the Common Share Option only in whole at any time prior to the
expiration of such option. In the event that Sub wishes to exercise the Common
Share Option, Sub shall give written notice (the date of such notice being
herein called the "Notice Date") to the Company specifying the number of
Optioned Common Shares it will purchase pursuant to such exercise and a place
and date (not later than ten business days from the Notice Date) for the closing
of such purchase.
37
(c) Payment of Purchase Price and Delivery of Certificates for
Optioned Shares. At any closing of the Common Share Option, (i) Sub will make
payment to the Company of the full purchase price for the Optioned Common Shares
in New York Clearing House funds by certified or official bank check payable to
the order of the Company, in an amount equal to the product of the Per Common
Share Price multiplied by the number of Optioned Common Shares being purchased
at such closing and (ii) the Company will deliver to Sub a duly executed
certificate or certificates representing the number of Optioned Common Shares so
purchased, registered in the name of Sub or its nominee in the denomination
designated by Sub in its notice of exercise.
(d) Securities Act. Sub represents that any Optioned Common Shares
purchased by Sub will be acquired for investment only and not with a view to any
public distribution thereof and Sub will not offer to sell or otherwise dispose
of any Optioned Common Shares so acquired by it in violation of the registration
requirements of the Securities Act.
(e) Adjustment upon Changes in Capitalization. In the event of any
change in the number of outstanding Company Common Shares by reason of any stock
dividend, stock split, recapitalization, combination, exchange of shares,
merger, consolidation, reorganization or the like or any other change in the
corporate or capital structure of the Company that would have the effect of
diluting Sub's rights under the Common Share Option, the number of Optioned
Common Shares and the Per Common Shares Price shall be adjusted appropriately so
as to restore Sub to its rights hereunder with respect to the Common Share
Option; provided, however, that nothing in this Section 6.12 shall be construed
as permitting the Company to take any action or enter into any transaction
otherwise prohibited by this Agreement.
6.13. Other Actions. Except as expressly permitted by the terms of this
Agreement, the Company will not knowingly or intentionally take or agree or
commit to take any action that is reasonably likely to result in any of the
Company's representations or warranties hereunder being untrue in any material
respect.
6.14. Appraisal Rights. The Company shall not settle or compromise any
claim for appraisal rights in respect of the Merger without the prior consent of
Parent, which consent shall not be unreasonably withheld.
ARTICLE 7
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
the affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote thereon if such vote is required by applicable law; provided
that the Parent and Sub shall vote all shares of Company Common Stock purchased
pursuant to the Offer or the Stockholder Agreements in favor of the adoption of
this Agreement.
38
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired, and no restrictive order or other requirements shall have been placed
on the Company, Parent, Sub or the Surviving Corporation in connection
therewith.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all reasonable
efforts to have any such Injunction vacated.
(d) Statutes. No Law shall have been enacted, promulgated or otherwise
issued by any Governmental Entity which prohibits the consummation of the
Merger.
(e) Payment for Shares. Sub shall have accepted for payment and paid
for the Shares tendered in the Offer; provided that this condition shall be
deemed to have been satisfied if Sub, in violation of the terms and conditions
of the Offer, fails to accept for payment and pay for Shares tendered pursuant
to the Offer.
ARTICLE 8
TERMINATION AND AMENDMENT
8.1. Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
adoption of this Agreement by the stockholders of the Company or by Parent:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if any permanent injunction or
other order of a court or other competent authority preventing the consummation
of the Offer or Merger shall have become final and non-appealable;
(c) by Parent prior to the acceptance of Shares for payment pursuant
to the Offer, so long as neither Parent nor Sub is then in material breach of
its obligations hereunder, if (i) there has been a breach of any representation
or warranty (when made on or at the time of termination as if made on such date
of termination, except to the extent it relates to a particular date) on the
part of the Company (provided that any representation or warranty of the Company
contained herein that is subject to a "materiality," "Material Adverse Effect"
or similar qualification shall not be so qualified for purposes of determining
the existence of any breach thereof on the part of the Company), and which
breach has not been cured within ten business days following receipt by the
Company written of notice of such breach and is existing at the time of the
termination of this Agreement, except for such breaches that could not,
individually or in the aggregate with any other breaches on the part of the
Company, have a Material Adverse Effect or (ii) there has been a breach of any
representation or warranty (when made on or at the time of termination as if
made on such date of termination, except to the extent it relates to a
particular date) contained in Section 4.1(b) on the part of the Company;
39
(d) by Parent prior to the acceptance of Shares for payment pursuant
to the Offer, so long as neither Parent nor Sub is then in material breach of
its obligations hereunder, if there has been a breach of Section 5.2(b) or
Section 6.2 or a material breach of any other covenant or agreement on the part
of the Company set forth in this Agreement (provided that any covenant or
agreement of the Company contained herein the performance of which is subject to
a "materiality," "Material Adverse Effect" or similar qualification shall not be
so qualified for purposes of determining the existence of any nonperformance
thereof on the part of the Company), and which breach (other than a breach of
any covenant or agreement set forth in Section 5.2(b) or Section 6.2) has not
been cured within ten business days following receipt by the Company of written
notice of such breach and is existing at the time of the termination of this
Agreement;
(e) by the Company prior to the acceptance of Shares for payment
pursuant to the Offer, so long as the Company is not then in material breach of
its obligations hereunder, if there has been a breach of any representation or
warranty (when made on or at the time of termination as if made on such date of
termination, except to the extent it relates to a particular date) on the part
of Parent or Sub (provided that any representation or warranty of Parent or Sub
contained herein that is subject to a "materiality" or similar qualification
shall not be so qualified for purposes of determining the existence of any
breach thereof on the part of Parent or Sub), and which breach has not been
cured within ten business days following receipt by Parent or Sub of written
notice of such breach and is existing at the time of the termination of this
Agreement, except for such breaches that, individually or in the aggregate with
any other breaches on the part of Parent or Sub, would not materially and
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby;
(f) by the Company prior to the acceptance of Shares for payment
pursuant to the Offer, so long as the Company is not then in material breach of
its obligations hereunder, if there has been a material breach of any covenant
or agreement on the part of Parent or Sub set forth in this Agreement (provided
that any covenant or agreement of Parent or Sub contained herein the performance
of which is subject to a "materiality" or similar qualification shall not be so
qualified for purposes of determining the existence of any nonperformance
thereof on the part of Parent or Sub), and which breach has not been cured
within ten business days following receipt by Parent or Sub of written notice of
such breach and is existing at the time of the termination of this Agreement;
(g) by Parent prior to the acceptance of Shares for payment pursuant
to the Offer if (i) the Board of Directors of the Company (whether or not under
circumstances permitted by this Agreement) shall have failed to make the
recommendation contemplated by Section 1.3 in the Offer Documents and the Proxy
Statement or shall have withdrawn or modified, in any manner which is adverse to
Parent, its recommendation or approval of the Offer, the Merger or this
Agreement and the transactions contemplated hereby, or shall have resolved to do
so, (ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company any Acquisition Proposal, or shall have resolved to
do so, (iii) a tender offer or exchange offer for 50% or more of the outstanding
shares of capital stock of the Company is commenced (other than by the Sub or
40
its affiliates) and the Board of Directors of the Company fails to recommend,
within the time period required by Rule 14e-2 of the Exchange Act, against the
stockholders of the Company tendering their shares into such tender offer or
exchange offer, or (iv) an Acquisition Proposal has been publicly announced by
the Company and the Company shall fail to publicly reaffirm its approval or
recommendation of the Offer, the Merger and this Agreement on or before the
tenth business day following the date on which such Acquisition Proposal shall
have been announced; provided that Parent may condition the effectiveness of
such termination pursuant to this Section 8.1(g) upon receipt by Parent or its
designee of the Promissory Note pursuant to Section 6.3;
(h) by the Company prior to the acceptance of Shares for payment
pursuant to the Offer, following the receipt of an unsolicited written bona fide
Acquisition Proposal from any person or entity and contemporaneously with
entering into a definitive agreement relating to such Acquisition Proposal,
provided that the Company may not effect such termination pursuant to this
Section 8.1(h) unless and until (i) the Board of Directors of the Company has in
good faith determined that (y) such person or entity has, or is reasonably
likely to have, the necessary funds or shall have obtained, or is reasonably
likely to obtain, customary commitments to provide the funds to consummate such
Acquisition Proposal and (z) such Acquisition Proposal is more favorable to the
Company and its stockholders than the transactions contemplated by this
Agreement, (ii) Parent receives at least five days prior written notice (which
notice shall include the identity of the person or entity making the relevant
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal and the material terms and conditions of any agreements or arrangements
to be entered into in connection with such Acquisition Proposal with any party
to any of the Stockholder Agreements with respect to his then existing
agreements and arrangements with the Company, to the extent known to the
Company) from the Company of its intention to effect such termination pursuant
to this Section 8.1(h), and (iii) if during such five-day period Parent shall
have revised the terms and conditions of the Offer or the Merger, the Board of
Directors of the Company, after receiving advice from the Company's financial
and legal advisors, shall have determined in good faith that the terms and
conditions of the Acquisition Proposal giving rise to this termination right are
superior to those of the Offer and the Merger as so revised; and provided
further that the Company may not effect such termination pursuant to this
Section 8.1(h) unless the Company has contemporaneously with such termination
tendered payment to Parent or Parent's designee of the amounts that are due
Parent or Parent's designee under Section 6.3;
(i) by Parent, if the Offer terminates, is withdrawn, abandoned or
expires by reason of the failure to satisfy any condition set forth in Exhibit B
hereto; provided, however, that Parent may not so terminate if the termination,
withdrawal, abandonment or expiration of the Offer arises from a breach of this
Agreement by Parent or Sub;
(j) by the Company, if the Offer shall have expired (without having
been extended in accordance herewith) or shall have been withdrawn, abandoned or
terminated by Sub without any shares of Company Common Stock being purchased by
Sub thereunder; or
(k) by the Company, if the Funding Date does not occur when required
under the Exchange Act (but which in no event shall be more than four business
days following the acceptance by Sub of Shares tendered pursuant to the Offer).
41
8.2. Effect of Termination. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation hereunder on
the part of Parent, Sub or the Company or their respective affiliates, officers,
directors or stockholders, except (a) Section 6.1(c), Section 6.3, Section 8.2
and Article 9 shall survive such termination, and (b) no such termination shall
relieve any party from liability for a breach of any term or provision hereof.
8.3. Amendment. Subject to the provisions of Section 1.4(b), this Agreement
may be amended, modified or supplemented, before or after the Company
Stockholder Approval, only by written agreement of Parent, Sub and the Company
at any time prior to the Effective Time with respect to any of the terms
contained herein; provided, however, that, after the Company Stockholder
Approval, no term or condition contained in this Agreement shall be amended or
modified in any manner that by law requires further approval by the stockholders
of the Company without so obtaining such further stockholder approval.
8.4. Extension; Waiver. Subject to Section 1.4(b), at any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, 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 or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
ARTICLE 9
GENERAL PROVISIONS
9.1. Nonsurvival of Covenants and Agreements. None of the representations,
warranties, covenants and agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, except
for the covenants and agreements contained in Article 3, Section 6.3, Section
6.5, Section 6.8 and any other covenant or agreement that contemplates
performance after the Effective Time.
9.2. Confidentiality Agreement. The Confidentiality Agreement shall survive
the execution and delivery of this Agreement or any termination of this
Agreement, and the provisions of the Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder; provided,
however, that the terms and provisions of the Confidentiality Agreement are
hereby waived, amended or modified to the extent necessary to permit the
consummation of the transactions contemplated by the Transaction Documents. Upon
the Funding Date, the terms and provisions of the Confidentiality Agreement
shall terminate in full.
9.3. Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed to
be given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder:
42
(a) if to Parent or Sub, to:
Hotel Reservations Network, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxxx, Lidji & Werbner
Renaissance Tower, Suite 4400
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
and
Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(b) if to the Company, to:
XxxxxxXxx.xxx Inc.
000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Shook, Hardy & Bacon, LLP
0000 Xxxxx Xxxx., 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
9.4. Interpretation. When a reference is made in this Agreement to Articles
or Sections, such reference shall be to an Article or Section of this Agreement
unless otherwise indicated. The table of contents, list of defined terms and
43
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
9.5. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.6. Entire Agreement; No Third Party Beneficiaries. This Agreement
(together with the Confidentiality Agreement (as amended by Section 9.2), the
other Transaction Documents, and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any other right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than Section 6.5, which is intended to be for the benefit of the persons
covered thereby and may be enforced by such persons; it being understood and
agreed that if any such person shall institute and prevail in any proceeding
against Parent, Sub or the Surviving Corporation in respect of a breach by
Parent, Sub or the Surviving Corporation of its covenants and agreement
contained in Section 6.5, Parent, Sub and the Surviving Corporation shall,
jointly and severally, pay the reasonable expenses of such person (including
reasonable attorney's fees) incurred in connection with such proceedings to the
fullest extent authorized by applicable law.
9.7. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.8. Assignment. 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, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder (a) to any newly-formed direct
wholly-owned Subsidiary of Parent or Sub or (b) in the form of a collateral
assignment to any institutional lender who provides funds to Parent or its
affiliates for the consummation of the transactions contemplated hereby. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
9.9. Director and Officer Liability. The directors, officers, and
stockholders of Parent and its affiliates shall not have any personal liability
or obligation arising under the Transaction Documents (including any claims that
the Company may assert) other than as an assignee of a Transaction Document.
Except to the extent that a person is a party signatory thereto, the directors,
officers, and stockholders of the Company and its affiliates shall not have any
personal liability or obligation arising under the Transaction Documents
(including any claims that Parent or Sub may assert) other than as an assignee
of a Transaction Document.
44
9.10. Specific Performance. The parties recognize that in the event the
Company should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Parent and Sub shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement. In
the event of any action to enforce this Agreement specifically, the Company
hereby waives the defense that there is an adequate remedy at law.
9.11. Effectiveness. This Agreement shall not become effective until such
time as this Agreement and all other Transaction Documents (or counterparts
thereof) have been executed and delivered by each of the parties thereto;
provided, however, that Parent, in its sole discretion, may waive the condition
that it receive executed Stockholder Agreements from individual Stockholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed by their respective officers thereunto duly authorized on
the date first written above.
HOTEL RESERVATIONS NETWORK,
INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
President
WONSUB, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
President
XXXXXXXXX.XXX INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
EXHIBIT A
Form of Stockholder Agreement
[To be provided]
A-1
EXHIBIT B
Conditions to the Offer
The capitalized terms used in this Exhibit B shall have the respective
meanings ascribed thereto in the Agreement and Plan of Merger, to which this
Exhibit B is attached, by and among Hotel Reservations Network, Inc., Wonsub,
Inc. and XxxxxxXxx.xxx Inc.
Conditions
Notwithstanding any other provision of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and may postpone the
acceptance for payment or, subject to the restriction referred to above, the
payment for any Shares tendered, and, to the extent permitted by the Agreement,
may amend or terminate the Offer, if:
1. the Minimum Condition has not been satisfied;
2. any applicable waiting periods under the HSR Act shall not have expired
or been terminated prior to the expiration of the Offer; or
3. at any time on or after the date of the Agreement and before acceptance
for payment of, or payment for, such Shares pursuant to the Offer any of the
following events shall have occurred and be continuing:
(a) there shall be pending as of the expiration of the Offer or at any
time thereafter, any Injunction, proceeding, action, suit or litigation by any
Governmental Entity that seeks to (i) challenge the acquisition by Parent, Sub
or any of their respective affiliates of Shares pursuant to the Offer, (ii)
restrain, prohibit or delay the making or consummation of the Offer or the
Merger, (iii) make the purchase of or payment for some or all of the Shares
pursuant to the Offer or the Merger illegal, (iv) impose material limitations on
the ability of Parent, Sub, the Company or any of their respective affiliates to
acquire or hold, or to require Parent, Sub, the Company or any of their
respective affiliates to dispose of or hold separate, any material portion of
their assets or business, (v) impose material limitations on the ability of
Parent, Sub, the Company or any of their respective affiliates to continue to
conduct, own or operate, as heretofore conducted, owned or operated, all or any
material portion of their businesses or assets, (vi) impose or result in
material limitations on the ability of Parent, Sub or any of their respective
affiliates to exercise full rights of ownership of the Shares purchased by them,
including, without limitation, the right to vote the Shares purchased by them on
any or all matters properly presented to the stockholders of the Company, or
(vii) prohibit or restrict in a material manner the financing of any of the
transactions contemplated by the Transaction Documents;
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable, any Law (other than the application of the waiting period
provision of the HSR Act), or there shall have been issued any Injunction that
results in any of the consequences referred to in subsection (a) above;
B-1
(c) there shall have occurred any event or events (whether or not
covered by insurance) that, individually or in the aggregate, have had, or would
be reasonably expected to have, a Material Adverse Effect;
(d) there shall have occurred and be continuing (i) any general
suspension of trading in, or general limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States for a period in excess of 48 hours, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) the commencement of a war, armed hostilities or other
international or national calamity involving the United States having a
significant adverse effect on the functioning of the financial markets in the
United States, (iv) any material limitations (whether or not mandatory) imposed
by any Governmental Entity on the nature or extension of credit or further
extension of credit by banks or other lending institutions, or (v) in the case
of clauses (iii) and (iv) of this paragraph (d), if existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(e) any of the representations and warranties of the Company contained
in the Agreement shall not be true and correct in all respects (provided that
any representation or warranty of the Company contained in the Agreement that is
subject to a "materiality," "Material Adverse Effect" or similar qualification
shall not be so qualified for purposes of determining the existence of any
breach thereof on the part of the Company) as of the date of the Agreement and
(except to the extent that such representations and warranties speak as of an
earlier date) as of the date of the acceptance of Shares for payment pursuant to
the Offer as though made on and as of such date, except for such breaches that,
individually or in the aggregate with any other breaches on the part of the
Company, could not (A) have a Material Adverse Effect or (B) materially and
adversely affect the ability of the parties to the Agreement to consummate the
transactions contemplated thereby;
(f) the Company shall have not performed in all material respects
(provided that any obligation the performance of which is subject to
materiality, Material Adverse Effect or similar qualification shall not be so
qualified for purposes of determining the existence of any nonperformance
thereof) all obligations required to be performed by it under the Agreement at
or prior to the acceptance of Shares for payment pursuant to the Offer;
(g) the Agreement shall have been terminated in accordance with its
terms;
(h) (i) the Board of Directors of the Company shall have failed to
make or shall have withdrawn or modified or changed (including by amendment of
the Schedule 14D-9) in a manner adverse to Sub its recommendation of the Offer,
the Agreement or the Merger, or shall have approved or recommended any
Acquisition Proposal or any other acquisition of the shares of Company Common
Stock other than the Offer and the Merger, or (ii) any person or other entity or
group shall have entered into a definitive agreement or an agreement in
principle with the Company with respect to any Acquisition Proposal;
B-2
(i) the Company shall have failed to comply with its obligations under
Section 1.4(a) of the Agreement;
(j) each of the representations and warranties contained in the
Stockholder Agreements of the stockholders who are parties thereto shall not be
true and correct in all material respects as of the date of the acceptance of
Shares for payment pursuant to the Offer as though made on and as of such date;
or
(k) any of the stockholders who are parties to the Stockholder
Agreements shall have not performed in all material respects, or shall have
otherwise materially breached or given notice of any intention to materially
breach, any obligations required to be performed by such stockholders under the
Stockholder Agreements at or prior to the acceptance of Shares for payment
pursuant to the Offer.
The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates, but except for a breach by Sub or any of its affiliates of the
Agreement) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time.
B-3
