EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LIBERTY BROADBAND INTERACTIVE
TELEVISION, INC.,
WINK INTERACTIVE, INC.,
WALNUT MERGER CORP.,
WINK COMMUNICATIONS, INC.
AND WITH RESPECT TO SECTION 6.11 HEREOF ONLY,
LIBERTY MEDIA CORPORATION
DATED AS OF JUNE 23, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND CONSTRUCTION............................................................................1
1.1 Certain Definitions......................................................................................1
1.2 Additional Definitions...................................................................................7
1.3 Terms Generally..........................................................................................8
ARTICLE II THE MERGER AND RELATED MATTERS.........................................................................9
2.1 The Merger...............................................................................................9
2.2 Closing.................................................................................................10
2.3 Conversion of Securities................................................................................10
2.4 Exchange of Shares......................................................................................12
2.5 Dissenting Shares.......................................................................................13
ARTICLE III CERTAIN ACTIONS......................................................................................13
3.1 Stockholder Meeting.....................................................................................13
3.2 Proxy Statement.........................................................................................14
3.3 State Takeover Statutes.................................................................................15
3.4 Reasonable Best Efforts.................................................................................15
3.5 Employee Matters........................................................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................16
4.1 Organization and Qualification..........................................................................16
4.2 Authorization and Validity of Agreement.................................................................17
4.3 Capitalization..........................................................................................17
4.4 Reports and Financial Statements........................................................................19
4.5 No Approvals or Notices Required; No Conflict with Instruments..........................................19
4.6 Subsidiaries and Affiliates; Investment Securities......................................................21
4.7 Absence of Certain Changes or Events....................................................................22
4.8 Proxy Statement.........................................................................................22
4.9 Legal Proceedings.......................................................................................23
4.10 Licenses; Compliance with Regulatory Requirements.....................................................23
4.11 Brokers or Finders....................................................................................24
4.12 Tax Matters...........................................................................................24
4.13 Employee Matters......................................................................................26
4.14 Fairness Opinion......................................................................................29
4.15 Recommendation of the Company Board...................................................................29
4.16 Vote Required.........................................................................................29
4.17 Patents, Trademarks and Other Rights..................................................................29
4.18 Certain Agreements, Affiliate Transactions and Insurance..............................................33
4.19 No Investment Company.................................................................................36
4.20 Takeover Statutes.....................................................................................36
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES...................................................36
5.1 Organization and Qualification..........................................................................36
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5.2 Authorization and Validity of Agreement.................................................................37
5.3 No Approvals or Notices Required; No Conflict with Instruments..........................................37
5.4 Proxy Statement.........................................................................................38
5.5 Brokers or Finders......................................................................................38
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS...................................................................38
6.1 Access to Information Concerning Properties and Records.................................................38
6.2 Confidentiality.........................................................................................39
6.3 Public Announcements....................................................................................40
6.4 Conduct of the Company's Business Pending the Effective Time............................................40
6.5 No Solicitation.........................................................................................43
6.6 Expenses................................................................................................46
6.7 Actions by Merger Sub...................................................................................46
6.8 Defense of Litigation...................................................................................46
6.9 Indemnification of Directors and Officers...............................................................46
6.10 License Agreement.....................................................................................47
6.11 Liberty Undertaking...................................................................................48
ARTICLE VII CONDITIONS PRECEDENT.................................................................................48
7.1 Conditions Precedent to the Obligations of the Parent Parties, Merger Sub and the Company...............48
7.2 Conditions Precedent to the Obligations of the Parent Parties and Merger Sub............................48
7.3 Conditions Precedent to the Obligations of the Company..................................................50
ARTICLE VIII TERMINATION.........................................................................................51
8.1 Termination by Mutual Consent...........................................................................51
8.2 Termination by Either the Parent Parties or the Company.................................................51
8.3 Termination by the Company..............................................................................51
8.4 Termination by the Parent Parties.......................................................................52
8.5 Effect of Termination and Abandonment...................................................................52
ARTICLE IX MISCELLANEOUS.........................................................................................54
9.1 No Waiver or Survival of Representations, Warranties, Covenants and Agreements..........................54
9.2 Notices.................................................................................................54
9.3 Entire Agreement........................................................................................55
9.4 Assignment; Binding Effect; Benefit.....................................................................55
9.5 Amendment...............................................................................................55
9.6 Extension; Waiver.......................................................................................56
9.7 Headings................................................................................................56
9.8 Counterparts............................................................................................56
9.9 Governing Law and Venue; Waiver of Jury Trial...........................................................56
9.10 Joint Participation in Drafting this Agreement........................................................57
9.11 Severability..........................................................................................57
9.12 Enforcement...........................................................................................57
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EXHIBITS
Exhibit 2.1(a) Form of Certificate of Merger
Exhibit 6.10 Terms of License
SCHEDULES
Schedule 5.3 - Certain Filings
Schedule 6.4 - Certain Actions
Schedule 6.10 - License
Company Disclosure Letter
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of this
23rd day of June, 2002, by and among Liberty Broadband Interactive Television,
Inc., a
Delaware corporation ("Parent"), Wink Interactive, Inc., a
Delaware
corporation and a wholly owned subsidiary of Parent ("WII", and together with
Parent, the "Parent Parties"), Walnut Merger Corp., a
Delaware corporation
("Merger Sub"), Wink Communications, Inc., a
Delaware corporation (the
"Company") and, for purposes of Section 6.11 only, Liberty Media Corporation, a
Delaware Corporation ("Liberty").
WHEREAS, the parties are entering into this Agreement to provide for
the terms and conditions upon which the Company will be acquired by WII by means
of a merger of Merger Sub, a newly formed, direct wholly owned Subsidiary of
WII, with and into the Company (the "Merger"); and
WHEREAS, pursuant and subject to the terms and conditions of this
Agreement, in the Merger, all of the issued and outstanding shares of the Common
Stock, par value $0.001 per share, of the Company ("Company Common Stock"), will
be converted into the right to receive $3.00 per share, payable in cash.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings unless the context otherwise requires:
An "Affiliate" of any Person shall mean any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person. A Person shall be deemed to "control," be "controlled by" or
be "under common control with" any other Person if such other Person possesses,
directly or indirectly, power to direct or cause the direction of the management
or policies of such Person whether through the ownership of voting securities or
partnership interests, by contract or otherwise. Notwithstanding the foregoing,
for purposes of this Agreement, neither the Company nor any of its Affiliates
shall be deemed to be an Affiliate of Liberty or any of its Affiliates, and
neither Liberty nor any of its Affiliates shall be deemed to be an Affiliate of
the Company or any of its other Affiliates.
"Agreement" shall mean this Agreement and Plan of Merger, including all
Exhibits and Schedules hereto.
"Alternative Proposal" shall mean (A) any written or firm oral proposal
(whether or not delivered to the Company's stockholders generally), other than
as contemplated by this Agreement or otherwise proposed by the Parent Parties or
their Affiliates, regarding (i) a merger, consolidation, tender offer, share
exchange or other business combination or similar transaction involving the
Company or any of its Subsidiaries, (ii) the issuance by the Company or any of
its
Subsidiaries of any equity interest in or any voting securities of the
Company or such Subsidiary which constitutes 10% or more of the total of such
equity interests or voting securities of the Company or such Subsidiary, (iii)
the acquisition in any manner, directly or indirectly, of 10% or more of the
assets of the Company and any of its Subsidiaries, (iv) the acquisition by any
Person of beneficial ownership or a right to acquire beneficial ownership of, or
the formation of any "group" (as defined under Section 13(d) of the Exchange Act
and the rules and regulations thereunder) which beneficially owns, or has the
right to acquire beneficial ownership of, 15% or more (or, in the case of an
arbitrage or similar investor with no intention of acquiring a controlling
interest in the Company, 20% or more) of the then outstanding shares of capital
stock of the Company, (v) any transaction involving the Company the effect of
which would be reasonably likely to prohibit, restrict or delay the consummation
of the Merger or any of the other transactions contemplated by this Agreement,
or (vi) an Intellectual Property Transaction; or (B) the occurrence of any of
the transactions described in clauses (i)-(vi) of (A) above or any public
announcement of a proposal, plan or intention to do, any of the foregoing, or
any agreement to engage in any of the foregoing.
"Change of Control" shall mean any (i) change in the direct or indirect
record or beneficial ownership of any of the equity securities of the Company or
any of its Subsidiaries, (ii) merger, consolidation, statutory share exchange or
other similar transaction involving the Company or any of its Subsidiaries or
(iii) change in the composition of the board of directors or other governing
body of the Company or any of its Subsidiaries.
"Change of Control Covenant" shall mean any covenant, agreement or
other provision pursuant to which the occurrence or existence of a Change of
Control would result in a violation or breach of, constitute (with or without
due notice or lapse of time or both) or permit any Person to declare a default
or event of default under, give rise to any right of termination, cancellation,
amendment, acceleration, repurchase, prepayment or repayment or to increased
payments under, give rise to or accelerate any material obligation (including
any obligation to, or to offer to, repurchase, prepay, repay or make increased
payments) or result in the loss or modification of any material right or benefit
under, or result in any Restriction or give any Person the right to obtain any
Restriction on any capital stock or other securities or ownership interests
pursuant to, or result in any Lien or give any Person the right to obtain any
Lien on any material asset pursuant to, any Contract to which the Company or any
of its Subsidiaries is or becomes a party or to which the Company or any of its
Subsidiaries or any of their respective assets are or become subject or bound.
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement.
"Closing Date" shall mean the date on which the Closing occurs pursuant
to Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission and the
staff of the Securities and Exchange Commission.
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"Company Disclosure Letter" shall mean the disclosure letter, dated as
of the date of this Agreement, delivered by the Company to the Parent Parties.
"Company Material Adverse Effect" shall mean a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole or, following the Merger,
on the Surviving Entity and its Subsidiaries taken as a whole, on Liberty and
its Subsidiaries taken as a whole, or on Parent and its Subsidiaries (including
WII but excluding the Surviving Entity and its Subsidiaries) taken as a whole,
or a material adverse effect on the ability of the Company to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement.
"Company Stock Plans" shall mean the following: (i) the Walnut 1999
Director Option Plan, (ii) the Walnut 1999 Employee Stock Purchase Plan, (iii)
the Walnut 1999 Stock Plan, and (iv) the Walnut 1994 Stock Plan.
"Contract" shall mean any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract, instrument,
employee benefit plan or practice, or other agreement, obligation, commitment,
arrangement or concession of any nature whatsoever, oral or written.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") shall have the meaning given to such term in Rule
405 under the Securities Act.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Effective Time" shall mean the time when the Merger of Merger Sub with
and into the Company becomes effective under applicable law as provided in
Section 2.1(a).
"Equity Affiliate" of any Person shall mean any other Person in which
the first Person directly or indirectly through a Subsidiary owns an investment
accounted for by the equity method.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder.
"GAAP" shall mean generally accepted accounting principles as accepted
by the accounting profession in the United States as in effect from time to
time.
"Governmental Entity" shall mean any court, arbitrator, administrative
or other governmental department, agency, commission, authority or
instrumentality, domestic or foreign.
"Xxxx-Xxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, and the rules and regulations thereunder.
"Indebtedness" shall mean, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person (excluding intercompany accounts between the
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Company and any wholly owned Subsidiary of the Company or between wholly owned
Subsidiaries of the Company) (A) for borrowed money, (B) evidenced by notes,
bonds, debentures or other similar instruments (whether or not negotiable), (C)
for reimbursement of amounts drawn under letters of credit, bankers' acceptances
or similar facilities issued for the account of such Person, (D) issued or
assumed as the deferred purchase price of property or services (excluding
contingent payment obligations and accounts payable) or (E) relating to a
capitalized lease obligation and all debt attributable to sale/leaseback
transactions of such Person; and (ii) every liability of others of the kind
described in the preceding clause (i) that such Person has guaranteed or which
is otherwise its legal liability.
"Intellectual Property" shall mean all domestic or foreign rights in,
to and concerning: (i) inventions and discoveries (whether patented, patentable
or unpatentable and whether or not reduced to practice), including ideas,
research and techniques, technical designs, and specifications (written or
otherwise), improvements, modifications, adaptations, and derivations thereto,
and patents, patent applications, inventor's certificates, and patent
disclosures, together with divisions, continuations, continuations-in-part,
revisions, reissuances and reexaminations thereof; (ii) trademarks, service
marks, brand names, certification marks, collective marks, d/b/a's, trade dress,
logos, symbols, trade names, assumed names, fictitious names, corporate names
and other indications or indicia of origin, including translations, adaptations,
derivations, modifications, combinations and renewals thereof; (iii) published
and unpublished works of authorship, whether copyrightable or not (including
databases and other compilations of data or information), copyrights therein and
thereto, moral rights, and rights equivalent thereto, including but not limited
to, the rights of attribution, assignation and integrity; (iv) trade secrets,
confidentiality and confidential and proprietary information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, schematics, designs,
discoveries, drawings, prototypes, specifications, customer and supplier lists,
pricing and cost information, and business and marketing methods plans and
proposals), collectively, "Trade Secrets"; (v) computer software, including
programs, applications, source and object codes, data bases, data, models,
algorithms, flowcharts, tables and documentation related to the foregoing; (vi)
other similar tangible or intangible intellectual property or proprietary
rights, information and technology and copies and tangible embodiments thereof
(in whatever form or medium); (vii) all applications to register, registrations,
restorations, reversions and renewals or extensions of the foregoing; (viii)
internet domain names; and (ix) all the goodwill associated with each of the
foregoing and symbolized thereby; and (x) all other intellectual property or
proprietary rights and claims or causes of action arising out of or related to
any infringement, misappropriation or other violation of any of the foregoing,
including rights to recover for past, present and future violations thereof.
"Intellectual Property Transaction" shall mean the grant of (i) a
license, cross-license or grant-back to any Person engaged in the interactive
television business (including any hardware, software or middleware provider) of
any material Intellectual Property of the Company or any of its Subsidiaries,
(ii) an assignment, an exclusive license, cross-license or grant-back of any of
the Intellectual Property of the Company or any of its Subsidiaries or (iii) a
covenant not-to-xxx, covenant not-to-assert, release of claims or similar
release to any Person regarding any Intellectual Property of the Company or any
of its Subsidiaries.
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"Legal Proceeding" shall mean any private or governmental action, suit,
complaint, arbitration, legal or administrative proceeding or investigation.
"Lien" shall mean any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest,
assignment, deposit arrangement, encumbrance, restriction, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Major Customer" shall mean those Persons listed on Section 1.1 of the
Company Disclosure Letter and any Affiliate of any such Person.
"Material Adverse Effect" on any Person shall mean any circumstance,
change or effect that is or could reasonably be expected to be materially
adverse to the business, assets, liabilities, obligations, financial condition
or results of operations of such Person, other than any circumstance, change or
effect resulting from or relating to (i) changes in general economic conditions,
(ii) changes generally affecting the industry in which such Person operates so
long as such changes do not affect such Person in a disproportionate manner, or
(iii) the resignation or termination of any employees of the Company at any time
following the public announcement of the execution of this Agreement.
"Merger" shall have the meaning specified in the preamble hereto.
"Offer to Exchange" shall mean the Company's "Offer to Exchange Certain
Outstanding Options for New Options" dated December 28, 2001.
"Parent Disclosure Schedule" shall mean the disclosure schedule, dated
as of the date of this Agreement, delivered by the Parent Parties to the
Company.
"Permitted Encumbrances" shall mean the following Liens with respect to
the properties and assets of the Company: (i) Liens for taxes, assessments or
other governmental charges or levies not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on the Company's books; (ii) Liens of carriers, warehousemen,
mechanics, materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on the Company's books; (iii) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure performance of
tenders, statutory obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure obligations
on surety or appeal bonds; (iv) purchase money security interests or Liens on
property acquired or held by the Company in the ordinary course of business to
secure the purchase price of such property or to secure Indebtedness incurred
solely for the purpose of financing the acquisition of such property; and (v)
easements, restrictions and other defects of title which are not, in the
aggregate, material
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and which do not, individually or in the aggregate, materially and adversely
affect the Company's use or occupancy of the property affected thereby.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, or joint
venture or a government, agency, political subdivision, or instrumentality
thereof.
"Restriction", with respect to any capital stock or other security,
shall mean any voting or other trust or agreement, option, warrant, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other Contract, or
any law, rule, regulation, order, judgment or decree which, conditionally or
unconditionally: (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to purchase or sell or otherwise acquire,
dispose of or issue, or otherwise results in or, whether upon the occurrence of
any event or with notice or lapse of time or both or otherwise, may result in,
any Person acquiring, (A) any of such capital stock or other security; (B) any
of the proceeds of, or any distributions paid or which are or may become payable
with respect to, any of such capital stock or other security; or (C) any
interest in such capital stock or other security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien affecting such capital stock or other
security, proceeds or distributions.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Significant Stockholder" shall mean any Person known to the Company to
be the beneficial owner of 5% or more of the outstanding shares of Company
Common Stock.
"Subsidiary," when used with respect to any Person, shall mean any
corporation or other organization, whether incorporated or unincorporated, of
which such Person or any other Subsidiary of such Person is a general partner or
at least 50% of the securities or other interests having by their terms ordinary
voting power to elect at least 50% of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person, by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
"Surviving Entity" shall mean the Company as the surviving entity in
the Merger as provided in Section 2.1(a).
"Tax" or "Taxes" shall mean (i) any and all federal, state, local and
foreign taxes and other assessments, governmental charges, duties, fees, levies,
impositions and liabilities in the nature of a tax, including taxes based upon
or measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes and (ii) all interest, penalties and
additions imposed with respect to such amounts in clause (i).
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"Tax Return" shall mean a report, return or other information required
to be supplied to or filed with a Governmental Entity with respect to any Tax
including an information return, claim for refund, amended Tax return or
declaration of estimated Tax.
"Treasury Regulations" shall mean the regulations promulgated under the
Code in effect on the date hereof and the corresponding sections of any
regulations subsequently issued that amend or supersede such regulations.
"Wholly Owned Subsidiary" shall mean, as to any Person, a Subsidiary of
such person 100% of the equity and voting interest in which is owned, directly
or indirectly, by such Person.
1.2 ADDITIONAL DEFINITIONS. The following additional terms have the
meaning ascribed thereto in the Section indicated below next to such term:
Defined Term Section
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Agreement Preamble
CERCLA 4.10(b)
Certificates 2.4(b)
Certificate of Merger 2.1(a)
Claim 6.9(a)
Company Preamble
Company Board 3.1
Company Bylaws 3.1
Company Charter 3.1
Company Common Stock Preamble
Company Customers 4.18(a)(vii)
Company Investment 4.6(a)
Company Investment Agreements 4.6(a)
Company Material Adverse Effect 4.1
Company Plans 4.13(a)
Company Preferred Stock 4.3(a)
Company SEC Reports 4.4
Company Stock Option 2.3(b)
Confidential Information 6.2
Contract Consent 4.5(c)
Contract Notice 4.5(c)
Controlled Group 4.13(a)
Convertible Securities 4.3(c)
Deferred Intercompany Transactions 4.12(o)
Disclosing Party 6.2
Dissenting Shares 2.5
Employee Benefit Plan 3.5
Environmental Laws 4.10(b)
ERISA 3.5
ERISA Affiliate 4.13(a)
ESPP 2.3(b)
ESPP Options 4.3(a)
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Defined Term Section
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Exchange Agent 2.4(a)
Exchange Agent Agreement 2.4(a)
Fairness Opinion 4.14
Governmental Consent 4.5(b)
Governmental Filing 4.5(b)
Indemnified Liabilities 6.9(a)
Indemnified Parties 6.9(a)
Injunction 3.4
Intercompany Transactions 4.12(o)
Investment Security 4.6(e)
Liberty Preamble
Liberty Plans 3.5
Licenses 4.10(a)
Material Contract 4.18(a)
Merger Preamble
Merger Consideration 2.3(a)(i)
Merger Proposal 3.1
Merger Sub Preamble
MFN Beneficiary 6.4(d)
Parachute Gross-Up Payment 4.13(l)
Parent Preamble
Parent Material Adverse Effect 5.1
Parent Parties Preamble
PBGC 4.13(e)
Permits 4.10(a)
Proxy Statement 3.2(a)
Reasonable Actions 4.17(c)(i)(x)
Receiving Party 6.2
Representatives 6.2
Section 262 2.5
Special Meeting 3.1
Specified Contracts 6.4(d)
Superior Proposal 6.5
Termination Date 8.2
Termination Fee 8.5(b)
Violation 4.5(d)
Voting Debt 4.3(b)
Warrants 4.3(a)
WII Preamble
1.3 TERMS GENERALLY. The definitions set forth or referenced in
Sections 1.1 and 1.2 shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed
8
by the phrase "without limitation". The words "herein", "hereof" and "hereunder"
and words of similar import refer to this Agreement (including the Exhibits and
Schedules) in its entirety and not to any part hereof unless the context shall
otherwise require. As used herein, the term "to the Company's knowledge," or any
similar term relating to the knowledge of the Company means the actual
knowledge, after reasonable inquiry, of the Chief Executive Officer, each
Executive Vice President, each Senior Vice President and the General Counsel of
the Company. The standard of "reasonableness," when determining whether the
Parent Parties "unreasonably" withheld or delayed their consent to the taking of
certain action by the Company under Sections 6.4(d) and (h), shall take into
account the Parent Parties future plans for the business of the Company and the
internal policies of Liberty and the Parent Parties. All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Unless the context shall otherwise require,
any references to any agreement or other instrument or statute or regulation are
to it as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any successor provisions). Any reference in this
Agreement to a "day" or number of "days" (without the explicit qualification of
"business") shall be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by a
particular calendar day, and such calendar day is not a business day, then such
action or notice shall be deferred until, or may be taken or given on, the next
business day. References to the term "business day" shall mean any day that is
not a Saturday, Sunday or day on which banks in New York, New York are
authorized or required by law to close.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1 THE MERGER.
(a) Merger; Effective Time. At the Effective Time and subject
to and upon the terms and conditions of this Agreement, Merger Sub shall, and
the Parent Parties shall cause Merger Sub to, merge with and into the Company in
accordance with the provisions of the DGCL, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the Surviving Entity.
The Effective Time shall occur upon the filing with the Secretary of State of
the State of
Delaware of a Certificate of Merger (the "Certificate of Merger")
substantially in the form of Exhibit 2.1(a) and executed in accordance with the
applicable provisions of the DGCL, or at such later time as may be agreed to by
the Parent Parties and the Company and specified in the Certificate of Merger.
Provided that this Agreement has not been terminated pursuant to Article VIII,
the parties will cause the Certificate of Merger to be filed as soon as
practicable after the Closing.
(b) Effects of the Merger. The Merger shall have the effect
set forth in Sections 259 and 261 of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Entity. If, at any time after the Effective Time, the Surviving Entity
considers or is advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or
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desirable to vest, perfect or confirm (of record or otherwise) in the Surviving
Entity its right, title or interest in, to or under any of the rights,
properties, or assets of either the Company or Merger Sub, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of the
Surviving Entity will be authorized to execute and deliver, in the name and on
behalf of each of the Company and Merger Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Company and Merger Sub, all such other actions and things as the Board of
Directors of the Surviving Entity may determine to be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Entity or otherwise to carry
out the intent and purposes of this Agreement.
(c) Certificate of Incorporation and Bylaws of Surviving
Entity. At the Effective Time, the Company Charter shall be amended pursuant to
the Certificate of Merger to be identical to the Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time, except that
Article FIRST thereof shall read as follows: "The name of the Corporation (which
is hereinafter called the "Corporation") is Wink Communications, Inc." Such
Company Charter as so amended shall be the Certificate of Incorporation of the
Surviving Entity until thereafter duly amended or restated in accordance with
the terms thereof and the DGCL. At the Effective Time, the Company Bylaws shall
be amended to be identical to the bylaws of Merger Sub in effect immediately
prior to the Effective Time and, in such amended form, shall be the Bylaws of
the Surviving Entity until thereafter duly amended or restated in accordance
with the terms thereof, the terms of the Certificate of Incorporation of the
Surviving Entity and the DGCL.
(d) Directors and Officers of Surviving Entity. At the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Entity and all such directors will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Entity, or as otherwise provided by
applicable law. At the Effective Time, the officers of Merger Sub immediately
prior to the Effective Time shall be the officers of the Surviving Entity and
all such officers will hold office until their respective successors are duly
appointed and qualify in the manner provided in the Bylaws of the Surviving
Entity, or as otherwise provided by applicable law.
2.2 CLOSING. The Closing shall take place (i) at 10:00 a.m. (New York
time) at the offices of Xxxxx Xxxxx L.L.P., 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, on the first business day following the date on which the last of
the conditions set forth in Article VII (other than the filing of the
Certificate of Merger and other than any such conditions which by their terms
are not capable of being satisfied until the Closing Date) is satisfied or, if
permissible, waived, provided that such date shall not be earlier than August 1,
2002, or (ii) on such other date and at such other time or place as is mutually
agreed by Parent and the Company.
2.3 CONVERSION OF SECURITIES.
(a) Conversion of Company Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent
Parties, Merger Sub, the Company or the holders of any of their respective
securities:
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(i) Each share of Company Common Stock outstanding
immediately prior to the Effective Time (other than Dissenting Shares and shares
to be cancelled in accordance with Section 2.3(a)(ii)) shall be converted into
and represent the right to receive, and shall be exchangeable for, $3.00 in cash
(the "Merger Consideration"), subject to adjustment in the event of any stock
split, stock combination, stock dividend, reclassification or other similar
action taken with respect to the outstanding Company Common Stock prior to the
Effective Time.
(ii) Each share of Company Common Stock that
immediately prior to the Effective Time is owned of record by the Company or any
Subsidiary of the Company or owned of record by Liberty or any Wholly Owned
Subsidiary of Liberty shall be canceled and retired without payment of any
consideration therefor and without any conversion thereof into the Merger
Consideration.
(iii) All shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration to be issued pursuant to this Section 2.3(a) upon the
surrender of such certificate in accordance with Section 2.4, without interest.
(b) Treatment of Company Stock Options and Stock Purchase
Plan.
(i) The Company shall take all reasonably necessary
actions so that at the Effective Time the Company Stock Plans shall have been
terminated and each outstanding option to purchase shares of Company Common
Stock (a "Company Stock Option") issued by the Company shall, without any action
on the part of any holder thereof, terminate and be of no further force or
effect; provided, however, that each Company Stock Option shall be converted
into the right to receive a cash payment from the Surviving Entity, on
substantially the same vesting and other material terms and conditions as were
applicable to the terminated Company Stock Option, of an amount equal to the
excess of (A) the dollar amount of the Merger Consideration for each share of
Company Common Stock subject to such Company Stock Option over (B) the exercise
price per share of Company Common Stock with respect to such Company Stock
Option, payable at the time and only to the extent such Company Stock Option
would have vested under the terms of the applicable Company Stock Plan and
related Company Stock Option agreements had such Company Stock Option not been
terminated in connection with the Merger.
(ii) In accordance with the terms of the Company 1999
Employee Stock Purchase Plan (the "ESPP"), the Company shall ensure that (i) no
offerings that would commence on a date following the date of this Agreement
shall be permitted, (ii) with respect to any offering thereunder that is in
effect immediately prior to the Effective Time, each participant's accumulated
payroll deductions shall be used to purchase Company Common Stock immediately
prior to the Effective Time in accordance with the terms of the ESPP and (iii)
the ESPP shall terminate at the Effective Time. Any shares of Company Common
Stock acquired prior to the Effective Time by exercise of an option under the
ESPP shall be converted into Merger Consideration as provided in Section 2.3(a).
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(c) Conversion of Merger Sub Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parent Parties,
Merger Sub, the Company or the holders of any of their respective securities,
each share of capital stock of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into one share of the common stock of the
Surviving Entity and the shares of common stock of the Surviving Entity so
issued in such conversion shall constitute the only outstanding shares of
capital stock of the Surviving Entity and the Surviving Entity shall be a wholly
owned subsidiary of WII.
2.4 EXCHANGE OF SHARES.
(a) Appointment of Exchange Agent. On or before the Closing
Date, the Parent Parties shall enter into an agreement (the "Exchange Agent
Agreement") with an exchange agent selected by the Parent Parties and reasonably
acceptable to the Company (the "Exchange Agent"), authorizing such Exchange
Agent to act as Exchange Agent hereunder.
(b) Letter of Transmittal. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (the
"Certificates") whose shares were converted into the right to receive the Merger
Consideration: (i) a notice of the effectiveness of the Merger and (ii) a letter
of transmittal (which shall state that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) with instructions for use in effecting the
surrender and exchange of the Certificates. Such notice, letter of transmittal
and instructions shall contain such provisions and be in such form as the Parent
Parties and the Company reasonably specify.
(c) Exchange Procedure. Promptly following the surrender, in
accordance with such instructions, of a Certificate to the Exchange Agent (or
such other agent or agents as may be appointed by the Exchange Agent or the
Parent Parties pursuant to the Exchange Agent Agreement), together with such
letter of transmittal (duly executed) and any other documents required by such
instructions or letter of transmittal, the Exchange Agent shall, subject to
Section 2.4(d), cause to be distributed to the Person in whose name such
Certificate shall have been issued, a check representing the amount of cash into
which the shares of Company Common Stock previously represented by the
surrendered Certificate shall have been converted at the Effective Time pursuant
to this Article II. Each Certificate so surrendered shall be cancelled.
(d) Unregistered Transfers of Company Common Stock. In the
event of a transfer of ownership of Company Common Stock that is not registered
in the transfer records of the Company, the Merger Consideration may be paid to
the transferee if (i) the Certificate representing such Company Common Stock
surrendered to the Exchange Agent in accordance with Section 2.4(c) is properly
endorsed for transfer or is accompanied by appropriate and properly endorsed
stock powers and is otherwise in proper form to effect such transfer, (ii) the
Person requesting such transfer pays to the Exchange Agent any transfer or other
taxes payable by reason of such transfer or establishes to the satisfaction of
the Exchange Agent that such taxes have been paid or are not required to be paid
and (iii) such Person establishes to the satisfaction of the Parent Parties that
such transfer would not violate applicable Federal or state securities laws.
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(e) Lost, Stolen or Destroyed Certificates. If any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed satisfactory to the Parent Parties and complying with any other
reasonable requirements imposed by the Parent Parties, the Exchange Agent will
cause to be delivered to such Person in respect of such lost, stolen or
destroyed Certificate the Merger Consideration in respect thereof as determined
in accordance with this Article II. The Parent Parties may, in their discretion,
require the owner of such lost, stolen or destroyed Certificate to give the
Parent Parties a bond in such reasonable sum as they may direct as indemnity
against any claim that may be made against the Parent Parties or the Surviving
Entity with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(f) No Further Ownership Rights in Company Common Stock. All
Merger Consideration issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Entity of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. Subject to
Section 2.4(g), if, after the Effective Time, Certificates are presented to the
Surviving Entity for any reason, they shall be canceled and exchanged as
provided in, an in accordance with, this Article II.
(g) Abandoned Property Laws. Payment or delivery of the Merger
Consideration shall be subject to applicable abandoned property, escheat and
similar laws and none of Liberty, the Parent Parties nor the Surviving Entity
shall be liable to any holder of shares of Company Common Stock for any Merger
Consideration that may be delivered to any public official pursuant to any such
abandoned property, escheat or similar law.
2.5 DISSENTING SHARES. Notwithstanding anything to the contrary in this
Agreement, each outstanding share of Company Common Stock, the holder of which
has demanded and perfected his demand for appraisal of the fair value of such
shares in accordance with Section 262 of the DGCL ("Section 262") and has not
effectively withdrawn or lost his right to such appraisal (the "Dissenting
Shares"), shall not be converted into or represent a right to receive the Merger
Consideration, but the holder thereof shall be entitled only to such rights as
are granted by Section 262. The Company shall give the Parent Parties prompt
notice upon receipt of any such written demands for appraisal of the fair value
of shares of Company Common Stock and of withdrawals of such demands and any
other instruments provided to the Company pursuant to Section 262.
ARTICLE III
CERTAIN ACTIONS
3.1 STOCKHOLDER MEETING. The Company and its Board of Directors (the
"Company Board") shall take all action necessary in accordance with applicable
law and the Company's Second Amended and Restated Certificate of Incorporation
(the "Company Charter") and Bylaws (the "Company Bylaws") to duly call and hold,
as soon as reasonably practicable after the date hereof, a meeting of the
Company's stockholders (the "Special Meeting") for the
13
purpose of considering and voting upon the approval and adoption of this
Agreement and the Merger contemplated hereby (the "Merger Proposal"). The only
matters the Company shall propose to be acted on by the Company's stockholders
at the Special Meeting shall be the Merger Proposal and related matters
incidental to the consummation of the Merger. Subject to Section 6.5, the
Company Board will recommend that the Company's stockholders vote in favor of
approval and adoption of the Merger Proposal and the Company will use its
reasonable best efforts to solicit from its stockholders proxies in favor of
such approval and adoption and take all other action necessary or advisable to
secure the vote or consent of stockholders of the Company required by the DGCL,
the Company Charter or otherwise to effect the Merger. The Company shall not
require any vote greater than a majority of the votes entitled to be cast by the
holders of the issued and outstanding shares of Company Common Stock for
approval of the Merger Proposal. Unless this Agreement is previously terminated
in accordance with Article VIII, the Company shall submit the Merger Proposal to
a vote of its stockholders at the Special Meeting even if the Company Board
determines at any time after the date hereof that the Merger is no longer
advisable and withdraws its recommendation that the Company's stockholders
approve the Merger Proposal.
3.2 PROXY STATEMENT. As soon as reasonably practicable after the
execution of this Agreement, the Parent Parties and the Company shall cooperate
in the preparation of, and the Company shall file with the Commission, a
preliminary proxy statement in form and substance reasonably satisfactory to the
Parent Parties and the Company. The Company shall use its reasonable best
efforts to respond to any comments of the Commission and to cause the proxy
statement as filed with the Commission and as thereafter amended or supplemented
to be approved by the Commission and mailed to the Company's stockholders at the
earliest practicable time (such proxy statement in the definitive form mailed to
the Company's stockholders, as thereafter amended or supplemented, being
referred to as the "Proxy Statement"). The Proxy Statement shall include the
recommendation of the Company Board in favor of approval and adoption of the
Merger Proposal, except to the extent the Company Board shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger as
permitted by Section 6.5. The Company will notify the Parent Parties promptly of
the receipt of any comments from the Commission or its staff and of any request
by the Commission or its staff or any other government officials for amendments
or supplements to the Proxy Statement or any other filing or for additional
information, and will supply the Parent Parties with copies of all
correspondence between it and any of its representatives, on the one hand, and
the Commission or its staff or any other governmental officials, on the other
hand, with respect to the Proxy Statement, the Merger or any filing with the
Commission or other government officials relating thereto. At any time prior to
the Special Meeting, whenever a party becomes aware of any event that is
required to be set forth in an amendment or supplement to the Proxy Statement or
any other filing with the Commission or other government officials in connection
with this Agreement or the transactions contemplated hereby, such party shall
promptly inform the other parties of such occurrence and cooperate in the prompt
filing with the Commission or its staff or any other governmental officials,
and/or mailing to stockholders of the Company, of such amendment or supplement,
which shall comply in all material respects with the provisions of the
Securities Act and the Exchange Act. The Company, on the one hand, and the
Parent Parties, on the other hand, shall promptly provide the other (or the
other's counsel) copies of all filings made by such party or parties with any
Governmental Entity in connection with this Agreement or the transactions
contemplated hereby. Each party hereto agrees to cooperate
14
reasonably with each other party in connection with the preparation and filing
of the preliminary proxy statement referred to above and the Proxy Statement,
and any amendments or supplements to the foregoing, including providing
information to the other parties with respect to itself as may be reasonably
required in connection therewith.
3.3 STATE TAKEOVER STATUTES. Upon the request of Parent, the Company
will take all reasonable steps to (i) exempt the Merger from the requirements of
any applicable state takeover law and (ii) assist in any challenge by the Parent
Parties to the validity or applicability to the Merger of any state takeover
law.
3.4 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement and applicable law, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement as
soon as reasonably practicable, including such actions or things as any other
party hereto may reasonably request in order to cause any of the conditions to
such other party's obligation to consummate such transactions specified in
Article VII to be fully satisfied. Without limiting the generality of the
foregoing, the parties shall (and shall cause their respective directors,
officers and Subsidiaries, and use their reasonable best efforts to cause their
respective Affiliates, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide reasonable
assistance to each other in (i) the preparation and filing with the Commission
of the preliminary proxy statement referred to in Section 3.2, the Proxy
Statement and any necessary amendments or supplements to any of the foregoing;
(ii) using all reasonable best efforts to obtain all necessary consents,
approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permissions or actions by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other Person; (iii) filing all
pre-merger notification and report forms required under the Xxxx-Xxxxx Act and
responding to any requests for additional information made by any Governmental
Entity pursuant to the Xxxx-Xxxxx Act; (iv) using all reasonable best efforts to
cause to be lifted any permanent or preliminary injunction or restraining order
or other similar order issued or entered by any court or Governmental Entity (an
"Injunction") of any type referred to in Section 7.1(c), or to cause to be
rescinded or rendered inapplicable any statute, rule or regulation of any type
referred to in Section 7.2(d); (v) providing all such information about such
party, its Subsidiaries and its officers, directors, partners and Affiliates to,
and making all applications and filings with, any Governmental Entity or other
Person as may be necessary or reasonably requested in connection with any of the
foregoing; and (vi) in general, consummating and making effective the
transactions contemplated hereby; provided, however, that in order to obtain any
consent, approval, waiver, license, permit, authorization, registration,
qualification, or other permission or action or the lifting of any Injunction,
or causing to be rescinded or rendered inapplicable any statute, rule or
regulation, referred to in clause (ii) or (iv) of this sentence, (A) no party
shall be required to pay any consideration (other than customary filing and
similar fees), to divest itself of any of, or otherwise rearrange the
composition of, its assets or to agree to any of the foregoing or any other
condition or requirement that is materially adverse or burdensome; (B) Liberty
and the Parent Parties shall not be required to take any action pursuant to the
foregoing if the taking of such action is reasonably likely to result in the
imposition of a condition or restriction of the type referred to in Section
7.2(d); and (C) without the Parent Parties' prior written consent, the Company
shall not, and shall not permit any of its Subsidiaries
15
to, amend any License or Contract, pay any consideration or make any agreement
or reach any understanding or arrangement. Subject to applicable laws relating
to the exchange of information, prior to making any application to or filing
with any Governmental Entity or other Person in connection with this Agreement,
each party shall provide the other party with drafts thereof and afford the
other party a reasonable opportunity to comment on such drafts.
3.5 EMPLOYEE MATTERS. Subject to the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the Code, none of Liberty, the Parent
Parties nor the Surviving Entity shall be required to maintain any Company Plan
after the Effective Time. The Company shall terminate the Wink Communications,
Inc. 401(k) Profit Sharing Plan prior to the Effective Time. To the extent the
Surviving Entity elects to terminate any Company Plan after the Effective Time,
each employee of the Surviving Entity at such time who was an employee of the
Company immediately prior to the Effective Time (i) shall be entitled to
participate in the "employee benefit plans", as defined in Section 3(3) of
ERISA, maintained by Liberty (the "Liberty Plans") to the same extent as
similarly situated employees of Parent, (ii) shall receive credit for such
employee's past service with the Company as of the Effective Time for purposes
of determining eligibility, participation and vesting (but not for purposes of
benefit accrual) under the Liberty Plans to the extent such service was credited
under the Company Plans on the Closing Date, and (iii) shall not be subject to
any waiting periods or limitations on benefits for pre-existing conditions under
the Liberty Plans, including any group health and disability plans, except to
the extent such employees were subject to such limitations under the Company
Plans, provided, however, that in the case of any Liberty Plans that are welfare
plans that require a waiting period until the first day of a calendar month,
such employees shall continue to participate in a comparable Company Plan until
such waiting period has expired.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent Parties and
Merger Sub as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company (a) is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of
Delaware, (b) has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (c) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of its activities makes such qualification necessary,
except, in the case of clause (c), in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing has not had and is not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company has made available to the Parent Parties true and
complete copies of the Company Charter and Company Bylaws in effect on the date
hereof. No corporate action has been taken with respect to any amendment to the
Company Charter or the Company Bylaws and no such corporate action is currently
proposed. The Company's minute books, true and complete copies of which have
been made available to the Parent Parties (except for minutes of meetings of
directors pertaining to Alternative Proposals made prior to the date of this
Agreement, which have previously not been made available to the
16
Parent Parties), reflect in all material respects the actions taken at all
meetings of directors and stockholders of the Company since January 1, 2000.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the approval of its stockholders specified in Section 4.16,
to perform its obligations hereunder and consummate the Merger and the other
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions contemplated hereby have been duly and validly authorized
by the Company Board and by all other necessary corporate action on the part of
the Company, subject, in the case of the consummation by the Company of the
Merger, to the approval of the Company's stockholders described in the previous
sentence. This Agreement has been duly executed and delivered by the Company and
is a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
4.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of the
Company consists solely of (i) 100,000,000 shares of Company Common Stock and
(ii) 5,000,000 shares of preferred stock, par value $0.001 per share (the
"Company Preferred Stock"). As of the close of business on June 20, 2002, (i)
33,312,470 shares of Company Common Stock were issued and outstanding, (ii) no
shares of Company Common Stock were issued and held by the Company or by
Subsidiaries of the Company, (iii) no shares of Company Preferred Stock were
issued and outstanding or issued and held by the Company or by any Subsidiary of
the Company, (iv) 2,474,120 shares of Company Common Stock were reserved for
issuance upon exercise of outstanding Company Stock Options, (v) 6,790,886
shares were reserved for issuance upon exercise of Company Stock Options
available for grant under the Company Stock Plans (other than the ESPP), (vi)
approximately 118,099 shares (as calculated in the manner set forth in Section
4.3(a) of the Company Disclosure Letter) were reserved for issuance upon
exercise of outstanding options to purchase Company Common Stock granted
pursuant to the ESPP (the "ESPP Options"), (vii) approximately 93,954 shares
were reserved for issuance upon exercise of ESPP Options available for grant
under the ESPP and (viii) 5,945,776 shares were reserved for issuance upon
exercise of the warrants to purchase shares of Company Common Stock described in
Section 4.3(c) of the Company Disclosure Letter (the "Warrants"). Except as set
forth in the preceding sentence, at the close of business on June 20, 2002, no
shares of capital stock or other securities or other ownership interests of the
Company (including stock purchase rights issuable pursuant to the Company Plans)
were issued, reserved for issuance or outstanding. Since the close of business
on June 20, 2002, no shares of capital stock or other securities or other
ownership interests of the Company (including stock purchase rights issuable
pursuant to the Company Plans) have been issued other than shares of Company
Common Stock issued upon exercise of Company Stock Options, ESPP Options and
Warrants outstanding at the close of business on June 20, 2002 referred to in
clauses (iv), (vi) and (viii) of the second preceding sentence in accordance
with the their terms. All outstanding shares of Company Common Stock are, and
all shares of Company Common Stock which may be issued upon the exercise of
17
Company Stock Options, ESPP Options or Warrants will be, when issued, duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights. All outstanding shares of Company Common Stock, Company Stock
Options, ESPP Options and Warrants were issued, and all shares of Company Common
Stock which may be issued upon the exercise of Company Stock Options, ESPP
Options or Warrants will be issued, when issued, in compliance with all
applicable state and federal laws concerning the offer, sale and issuance of
such securities.
(b) There are no issued or outstanding bonds, debentures,
notes or other Indebtedness of the Company or any of its Subsidiaries that have
the right to vote (or that are convertible into other securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt").
Other than ordinary course payments or commissions to sales representatives of
the Company based upon revenues generated by them without augmentation as a
result of the transactions contemplated by this Agreement, there are no
Contracts pursuant to which any Person is or may (contingently or otherwise) be
entitled to receive any payment based on the revenues, earnings or financial
performance of the Company or any of its Subsidiaries or assets or calculated in
accordance therewith.
(c) Section 4.3(c) of the Company Disclosure Letter describes
all outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other Contracts of any character to or by which the Company
or any of its Subsidiaries is a party or is bound that, directly or indirectly,
obligate the Company or any of its Subsidiaries (contingently or otherwise) to
issue, deliver or sell or cause to be issued, delivered or sold any shares of
Company Common Stock or any Company Preferred Stock or other capital stock,
equity interest or Voting Debt of the Company or any Subsidiary of the Company,
any securities convertible into, or exercisable or exchangeable for, or
evidencing the right (contingent or otherwise) to subscribe for any such shares,
interests or Voting Debt, or any phantom shares, phantom equity interests or
stock or equity appreciation rights, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such subscription, option,
warrant, call or right (collectively, "Convertible Securities"). Section 4.3(c)
of the Company Disclosure Letter sets forth with respect to each outstanding
Warrant (i) the name of the Person that holds such Warrant, (ii) the total
number of shares of Company Common Stock issuable upon exercise of such Warrant
(assuming that all conditions to the exercise thereof, including the passage of
time, had been met), (iii) the total number of shares of Company Common Stock
issuable upon exercise of such Warrant as of the date of this Agreement, (iv)
the schedule upon which such Warrant becomes exercisable (to the extent such
Warrant is not exercisable in full as of the date of this Agreement), and a
description of any conditions to such exercise, (v) the expiration date of such
Warrant, (vi) the per share exercise price of such Warrant, (vii) whether such
Warrant shall terminate in connection with the consummation of the Merger and
(viii) with respect to each Warrant that does not terminate in connection with
the consummation of the Merger, (A) a description of the kind and amount of
shares of stock, other securities, money or property the holder of such Warrant
is entitled to receive upon the exercise of such Warrant and payment of the
exercise price thereof after consummation of the Merger, (B) the per share
exercise price of such Warrant after consummation of the Merger and (C) other
than as provided in clauses (viii)(A) and (B) of this sentence, any changes to
the material terms and conditions of such Warrant resulting from the
consummation of the Merger (whether alone or in conjunction with other actions).
Section 4.3(c) of the Company Disclosure Letter sets forth with respect to each
Company Stock Option
18
(1) the name of the Person holding such Company Stock Option, (2) the number of
shares of Company Common Stock underlying such Company Stock Option, (3) the
vesting schedule for such Company Stock Option, (4) the expiration date of such
Company Stock Option and (5) any other material terms or conditions of such
Company Stock Option (including any provisions providing for or relating to the
acceleration of the vesting of such Company Stock Option). Neither the Company
nor any Subsidiary thereof is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock.
(d) Except as described on Section 4.3(d) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has adopted,
authorized or assumed any plans, arrangements or practices for the benefit of
its officers, employees or directors that require or permit the issuance, sale,
purchase or grant of any capital stock, other equity interests or Voting Debt of
the Company or any Subsidiary of the Company, any phantom shares, phantom equity
interests or stock or equity appreciation rights or any Convertible Securities.
4.4 REPORTS AND FINANCIAL STATEMENTS. The Company has heretofore made
available to the Parent Parties true and complete copies of all reports,
registration statements and other documents (including exhibits and in each case
together with all amendments thereto) filed by the Company with the Commission
from January 1, 2000 to the date of this Agreement (such reports, registration
statements and other documents, together with any amendments thereto, filed with
the Commission and publicly available as of the date of this Agreement are
collectively referred to as the "Company SEC Reports"). The Company SEC Reports
constitute all of the documents (other than preliminary materials) that the
Company was required to file with the Commission from January 1, 2000, to the
date hereof. As of their respective dates, each of the Company SEC Reports
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act. When filed with the Commission, none of the
Company SEC Reports 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 the circumstances under which they were made,
not misleading. The financial statements included in the Company SEC Reports
comply as to form in all material respects with the applicable rules and
regulations of the Commission and were prepared in accordance with GAAP,
consistently applied (except as may be indicated therein or in the notes or
schedules thereto). Such financial statements fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended, subject, in the case of
unaudited interim financial statements, to normal recurring year-end audit
adjustments. Except as disclosed in the Company SEC Reports, none of the Company
or any of its Subsidiaries has any actual or potential liability or obligation
of any kind that, individually or in the aggregate, has had or is reasonably
likely to have a Company Material Adverse Effect or is required by the
applicable rules and regulations of the Commission and GAAP to be disclosed,
reflected or reserved against in financial statements (including the notes
thereto). Except as set forth on Section 4.4 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has guaranteed or otherwise
agreed to become responsible for any Indebtedness of any other Person.
4.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS. The
execution and delivery by the Company of this Agreement do not, and the
performance by the
19
Company of its obligations hereunder and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not:
(a) assuming approval and adoption of the Merger Proposal by
the Company's stockholders as contemplated by Section 4.16, conflict with or
violate the Company Charter or Company Bylaws or the charter, bylaws or similar
organizational documents of any Subsidiary of the Company;
(b) require any consent, approval, order or authorization of
or other action by any Governmental Entity (a "Governmental Consent") or any
registration, qualification, declaration or filing with or notice to any
Governmental Entity (a "Governmental Filing"), in each case on the part of the
Company or any Subsidiary of the Company, except for (A) 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 is qualified to do business, (B) the Governmental Filings required to be
made pursuant to the pre-merger notification requirements of the Xxxx-Xxxxx Act,
(C) the filing with the Commission of (1) the preliminary proxy statement and
the Proxy Statement as contemplated by Section 3.2(a) and (2) such reports under
Sections 13(a), 13(d) or 15(d) of the Exchange Act as may be required in
connection with this Agreement or the transactions contemplated hereby and (D)
such other Governmental Consents and Governmental Filings the absence or
omission of which will not, either individually or in the aggregate, have a
Company Material Adverse Effect;
(c) except as described on Section 4.5(c) of the Company
Disclosure Letter, require, on the part of the Company or any Subsidiary of the
Company, any consent by or approval or authorization of (a "Contract Consent")
or notice to (a "Contract Notice") any other Person (other than a Governmental
Entity), under any License or other Contract, except for such Contract Consents
and Contract Notices the absence or omission of which will not, either
individually or in the aggregate, have a Company Material Adverse Effect;
(d) except as described on Section 4.5(d) of the Company
Disclosure Letter, assuming that the Contract Consents and Contract Notices
described in clause (c) of this Section 4.5 are obtained and given, conflict
with or result in any violation or breach of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation, suspension, modification or acceleration of any obligation or any
increase in any payment required by, or the impairment, loss or forfeiture of
any material benefit, rights or privileges under, or the creation of a Lien or
Restriction on any properties or assets pursuant to (any such conflict,
violation, breach, default, right of termination, cancellation or acceleration,
loss or creation, a "Violation"), any Contract to which the Company or any
Subsidiary of the Company is a party, by which the Company, any Subsidiary of
the Company or any of their respective assets or properties is bound or affected
or pursuant to which the Company or any Subsidiary of the Company is entitled to
any rights or benefits (including Licenses)), except for such Violations that
will not, individually or in the aggregate, have a Company Material Adverse
Effect; or
(e) assuming approval and adoption of the Merger Proposal by
the Company's stockholders as described in Section 4.16 and assuming that the
Governmental Consents and Governmental Filings specified in clause (b) of this
Section 4.5 are obtained, made
20
and given, result in a Violation of, under or pursuant to any law, rule,
regulation, order, judgment or decree applicable to the Company or any
Subsidiary of the Company or by which any of their respective properties or
assets are bound, except for such Violations that will not, individually or in
the aggregate, have a Company Material Adverse Effect.
4.6 SUBSIDIARIES AND AFFILIATES; INVESTMENT SECURITIES.
(a) Section 4.6(a) of the Company Disclosure Letter (i) lists
each direct and indirect Subsidiary and Equity Affiliate of the Company, (ii)
lists the jurisdiction of organization of each direct and indirect Subsidiary
and Equity Affiliate of the Company, (iii) describes the number and type of the
authorized and outstanding equity interests or securities of each direct and
indirect Subsidiary and Equity Affiliate of the Company, (iv) describes the
number and type of the equity interests or securities, including interests or
securities convertible into or exchangeable or exercisable for any equity
interest or security, in each such Subsidiary and Equity Affiliate owned
directly or indirectly by the Company (each a "Company Investment") and (v)
lists all material Contracts to which the Company or any of its Subsidiaries are
parties or by which their respective assets or properties are bound evidencing
such equity interests or securities, pursuant to which such equity interests or
securities are held, evidencing Restrictions affecting such equity interests or
securities or entered into in connection with the acquisition of such equity
interests or securities (the "Company Investment Agreements"). True and complete
copies of the Company Investment Agreements have been made available to the
Parent Parties. The Company or the applicable Subsidiary thereof has good and
valid title to the Company Investments, free and clear of any Liens and not
subject to any Restrictions, other than as described in Section 4.6(a) of the
Company Disclosure Letter or as may have been created by this Agreement and
except for restrictions on transfer under federal or state securities laws. The
shares of capital stock of each corporate Subsidiary of the Company are validly
issued, fully paid and non-assessable. Except as set forth on Section 4.6(a) of
the Company Disclosure Letter, there are not, and immediately after the
Effective Time, there will not be, any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or other agreements of any
character to or by which the Company or any of its Subsidiaries is a party or by
which any of their respective properties or assets are bound that, directly or
indirectly, (x) call for or relate to the sale, pledge, transfer or other
disposition by the Company or any Subsidiary of the Company of any shares of
capital stock, any partnership or other equity interests or any Voting Debt of
any Subsidiary of the Company or (y) relate to the voting or control of such
capital stock, partnership or other equity interests or Voting Debt. Assuming
the due execution and delivery by each of the other parties thereto that is not
the Company or a Subsidiary of the Company, each Company Investment Agreement
constitutes the legal, valid and binding obligation of Company or the applicable
Subsidiary thereof that is a party to such Company Investment Agreement. Except
as set forth in Section 4.6(a) of the Company Disclosure Letter, there is no
Legal Proceeding pending or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries relating to any of such Company Investments
or Company Investment Agreements. Except as set forth on Section 4.6(a) of the
Company Disclosure Letter, none of the Company or any of its Subsidiaries has
any obligation to contribute any additional capital to, or acquire any
additional interest in, any Subsidiary or Equity Affiliate of the Company.
(b) Each of the Company's Subsidiaries and Equity Affiliates
(i) is a corporation, partnership or limited liability company duly organized,
validly existing and in good
21
standing under the laws of the jurisdiction of its incorporation or
organization, (ii) has all requisite corporate, partnership or limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and (iii) is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except, where the failure to be so
organized, qualified, licensed or in good standing, or to have such power or
authority when taken together with all other such failures, has not had and is
not reasonably likely to have a Company Material Adverse Effect.
(c) The Company has made available to the Parent Parties true
and complete copies of (i) the certificate of incorporation and bylaws (or
similar organizational documents) as in effect on the date hereof of each
Subsidiary and Equity Affiliate (other than MediaServe, Inc.) of the Company and
(ii) the minute books of each Subsidiary of the Company, which contain the
minutes (or draft copies of the minutes) of all meetings of directors (or
similar governing body) and stockholders (or other equity holders) of each such
Subsidiary of the Company since January 1, 2000.
(d) The assets owned or leased by the Company and its
Subsidiaries are suitable and adequate for the conduct of their respective
businesses as presently conducted and as proposed to be conducted under the
Company's current business plan and the Company or the applicable Subsidiary
thereof has good and valid title to or valid leasehold or other contractual
interests in all such assets that are material to its business free and clear of
all Liens other than Permitted Encumbrances and not subject to any Restrictions
other than Liens or Restrictions the existence of which has not had and is not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
(e) Section 4.6(e) of the Company Disclosure Letter sets forth
a complete and accurate list of each capital, participating, equity or other
interest owned of record or beneficially by the Company in any corporation,
partnership, joint venture or other Person, other than the Subsidiaries or
Equity Affiliates of the Company (each, an "Investment Security" and
collectively, the "Investment Securities"). Section 4.6(e) of the Company
Disclosure Letter includes, with respect to each Investment Security, the name
of the corporation, partnership, joint venture or other Person in respect of
which such Investment Security relates, the amount and nature of such interest,
and a description of the material terms of any Liens and Restrictions with
respect to such Investment Securities.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise disclosed
in the Company SEC Reports or as set forth on Section 4.7 of the Company
Disclosure Letter, since December 31, 2001, (a) there has not been any change,
and no event has occurred and no condition exists, that individually or together
with all other such changes, events and conditions, has had or is reasonably
likely to have a Company Material Adverse Effect and (b) no action has been
taken by the Company or any Subsidiary of the Company that, if Section 6.4 of
this Agreement had then been in effect, would have been prohibited by such
Section without the consent or approval of the Parent Parties.
4.8 PROXY STATEMENT. The Proxy Statement will not, and the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in, and that is
22
included or incorporated by reference in, any documents filed or to be filed
with the Commission or any other Governmental Entity in connection with the
transactions contemplated hereby, will not, at the respective times such
documents are filed, and at the time of the stockholder vote taken at the
Special Meeting or on the Closing Date, be false or misleading with respect to
any 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 were made, not misleading or necessary to correct
any statement in any earlier communication. The Proxy Statement and the
furnishing thereof by the Company will comply in all respects with the
applicable requirements of the Exchange Act and the DGCL.
4.9 LEGAL PROCEEDINGS. Except as otherwise disclosed in the Company SEC
Reports or as set forth on Section 4.9 of the Company Disclosure Letter, there
is no (a) Legal Proceeding pending or, to the knowledge of the Company,
threatened, against, involving or affecting the Company, any Subsidiary of the
Company or any of its or their respective assets or rights that, if adversely
determined, would have, either individually or in the aggregate, a Company
Material Adverse Effect, (b) judgment, decree, Injunction or order of any
Governmental Entity entered against and binding on the Company or any Subsidiary
of the Company that is reasonably likely to have, either individually or in the
aggregate, a Company Material Adverse Effect, (c) Legal Proceeding pending or,
to the knowledge of the Company, threatened, against the Company or any
Subsidiary of the Company that seeks to restrain, enjoin or delay the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or that seeks damages in connection therewith, or (d) Injunction of
any type referred to in Section 7.1(c).
4.10 LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS.
(a) The Company and its Subsidiaries hold all licenses,
franchises, ordinances, authorizations, permits, certificates, variances,
exemptions, concessions, leases, rights of way, easements, instruments, orders
and approvals, domestic or foreign, required for the ownership of the assets and
the operation of the businesses of the Company or any of its Subsidiaries,
except for the failure to hold any of the foregoing as would not be reasonably
likely to have, either individually or in the aggregate, a Company Material
Adverse Effect (collectively, the "Licenses"). The Company and each of its
Subsidiaries are in compliance with, and have conducted their respective
businesses so as to comply with, the terms of their respective Licenses and with
all applicable laws, rules, regulations, ordinances and codes, except where the
failure so to comply has not had and is not reasonably likely to have, either
individually or in the aggregate, a Company Material Adverse Effect. Without
limiting the generality of the foregoing, the Company and its Subsidiaries (i)
have all Licenses of foreign, state and local Governmental Entities required for
the operation of the facilities being operated on the date hereof by the Company
or any of its Subsidiaries (the "Permits"), (ii) have duly and currently filed
all reports and other information required to be filed with any Governmental
Entity in connection with such Permits and (iii) are not in violation of any of
such Permits, other than the lack of Permits, delays in filing reports or
possible violations that have not had and, are not reasonably likely to have, a
Company Material Adverse Effect.
(b) (i) The Company and its Subsidiaries and the operation of
their respective businesses, equipment and other assets and the facilities owned
or leased by them are in compliance in all material respects with all applicable
Environmental Laws, (ii) the Company
23
and its Subsidiaries hold all Licenses required under Environmental Laws
necessary to enable them to own, lease or otherwise hold their assets and to
carry on their businesses as presently conducted, except for such Licenses which
the failure to hold has not had, and is not reasonably likely to have, either
individually or in the aggregate, a Company Material Adverse Effect (iii) there
are no investigations, administrative proceedings, judicial actions, orders,
claims or notices that are pending, or, to the knowledge of the Company,
anticipated or threatened against the Company or any of its Subsidiaries
relating to or arising under any Environmental Laws, (iv) there is no ongoing
remediation of material contamination required by Environmental Law or any
Governmental Entity and, to the knowledge of the Company, no condition that
would be reasonably expected to give rise to such a requirement, and no
Governmental Entity has proposed or threatened any such remediation, at any real
property currently or formerly leased or owned by the Company or any of its
Subsidiaries or resulting from any activity of the Company or any of its
Subsidiaries, and (v) neither the Company nor any of its Subsidiaries has
received any written notice alleging a violation of or liability of the Company
or any of its Subsidiaries under any Environmental Laws. For purposes of this
Agreement, the term "Environmental Laws" means any federal, state, local or
foreign law, statute, rule or regulation or the common law relating to the
environment, the protection of natural resources or wildlife, or occupational or
public health and safety, including the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), and
any state or foreign law counterpart.
4.11 BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other Person is or will be entitled, by reason of any agreement, act
or statement by the Company or any of its Subsidiaries or their respective
directors, officers, employees or Affiliates, to any financial advisory,
broker's, finder's or similar fee or commission, to reimbursement of expenses or
to indemnification or contribution in connection with any of the transactions
contemplated by this Agreement, except Greenbridge Partners LLC, whose fees and
expenses will not exceed $1,500,000 and will be paid by the Company at the
Effective Time in accordance with the Company's agreement with such firm (copies
of which have been provided by the Company to the Parent Parties prior to the
date of this Agreement), and the Company agrees to indemnify and hold Liberty,
the Parent Parties and Merger Sub harmless from and against any and all claims,
liabilities or obligations with respect to any other such fees, commissions,
expenses or claims for indemnification or contribution asserted by any Person on
the basis of any act or statement made or alleged to have been made by the
Company or any of its Subsidiaries, directors, officers, employees or
Affiliates.
4.12 TAX MATTERS. Except as set forth on Section 4.12 of the Company
Disclosure Letter:
(a) The Company and each of its Subsidiaries have timely filed
(taking into account any extension of time within which to file) all Tax Returns
that they were required to file. All such Tax Returns were correct and complete
in all material respects. All Taxes owed by the Company and each of its
Subsidiaries (whether or not shown on any Tax Return) have been timely paid. A
reserve, which the Company reasonably believes to be adequate, has been set up
for the payment of all such Taxes anticipated to be payable by the Company and
each of its Subsidiaries in respect of periods through the most recent fiscal
quarter end, except where the failure to establish adequate reserves has not had
and would not be reasonably likely to have a
24
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is currently the beneficiary of any extension of time within which to file any
Tax Return.
(b) No claim in writing has ever been made by an authority in
a jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
(c) There are no Liens or security interests on any of the
assets or properties of the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax (except for
Liens that arise by operation of law for Taxes not yet due and payable).
(d) The Company and its Subsidiaries have withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder, or
other third party.
(e) None of the Tax Returns filed by the Company or any of its
Subsidiaries has been or is currently being examined by the Internal Revenue
Service or relevant state, local or foreign taxing authorities. There are no
examinations or other administrative or court proceedings relating to Taxes of
the Company or any of its Subsidiaries in progress or pending, nor has the
Company or any of its Subsidiaries received any written notice or report
asserting a Tax deficiency with respect to the Company or any of its
Subsidiaries. There are no current or, to the knowledge of the Company,
threatened actions, suits, proceedings, investigations, audits or claims
relating to or asserted for material Taxes of the Company or any of its
Subsidiaries.
(f) All deficiencies or assessments asserted against the
Company or any of its Subsidiaries by any taxing authority have been paid or
fully and finally settled and, to the best knowledge of the Company, no issue
previously raised in writing by any such taxing authority reasonably could be
expected to result in a material assessment for any taxable period (or portion
of a period) beginning on or after the Closing Date.
(g) The Company and its Subsidiaries have not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(h) Neither the Company nor any of its Subsidiaries (A) has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations, or (B) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method.
(i) There is no contract, agreement, plan or arrangement to
which the Company or any of its Subsidiaries is a party covering any employee,
former employee, officer, director, shareholder or contract worker of the
Company or any of its Subsidiaries, which, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
Section 280G or 162(m) of the Code.
(j) Neither the Company nor any of its Subsidiaries (A) is or
has been a member of an affiliated group (within the meaning of Section 1504 of
the Code) filing a
25
consolidated federal income Tax Return other than an affiliated group the common
parent of which is the Company, (B) is or has been a member of any affiliated,
combined, consolidated, unitary, or similar group for state, local or foreign
Tax purposes other than a group the common parent of which is the Company, (C)
is or has been a party to any Tax allocation or Tax sharing agreement, or (D)
has any liability for the Taxes of any Person (other than any of the Company and
its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(k) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (x) in the two (2) years prior to the date of this Agreement or (y) in
a distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement.
(l) The Company has not requested a ruling from, or entered
into a closing agreement with, the Internal Revenue Service or any other taxing
authority which will have an effect on the Surviving Entity in any taxable
period ending after the Closing Date.
(m) None of the assets of the Company or any of its
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code, "tax-exempt bond financed property" within the meaning of
Section 168(g)(5) of the Code, or may be treated as owned by any other person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986.
(n) Neither the Company nor any of its Subsidiaries has
participated in a corporate tax shelter within the meaning of Treasury
Regulations Section 1.6011-4T or participated in a transaction that it has
disclosed pursuant to IRS Announcement 2002-2, 2002-2 I.R.B. 304. The Company
and its Subsidiaries have disclosed on their U.S. federal Tax Returns all
positions taken therein that are likely to give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code.
(o) There are no material "deferred intercompany transactions"
or "intercompany transactions" between the Company and any of its Subsidiaries
(or any of their respective predecessors), the gain or loss in which has not yet
been taken into account under the consolidated return Treasury Regulations
currently or previously in effect.
4.13 EMPLOYEE MATTERS.
(a) Section 4.13(a) of the Company Disclosure Letter contains
a true and complete list of all: (i) employee benefit plans (as defined in
Section 3(3) of ERISA), including retirement, pension, profit sharing, savings,
deferred compensation, supplemental retirement, hospitalization, medical,
dental, vision care, disability, life, accident or other insurance plans,
programs or arrangements, (ii) stock option, stock purchase, phantom stock or
stock appreciation right, plans, programs or arrangements, (iii) severance,
termination pay or supplemental unemployment benefits plans, programs or
arrangements, and (iv) bonus or incentive plans,
26
programs or arrangements (including fringe benefit plans or arrangements)
sponsored, maintained or contributed to or required to be contributed to at any
time by the Company or by any trade or business, whether or not incorporated
("ERISA Affiliate"), that together with the Company would be deemed a
"controlled group" within the meaning of Section 4001 of ERISA or section 414 of
the Code, for the benefit of any employee or former employee of the Company,
including any such type of plan established, maintained, sponsored or
contributed to under the laws of any foreign country (the "Company Plans"). The
Company has heretofore made available to the Parent Parties true and complete
copies of (i) each Company Plan and, if the Company Plan is funded through a
trust or any third party funding vehicle, a copy of the trust or other funding
document, (ii) the most recent determination letter issued by the IRS with
respect to each Company Plan for which such a letter has been obtained, (iii)
annual reports on Form 5500 required to be filed with any Governmental Entity
for each Company Plan for the three most recent plan years and all required
actuarial reports for the last three plan years of each Company Plan.
(b) No Company Plan is subject to Title IV of ERISA or section
412 of the Code and neither the Company nor any ERISA Affiliate made, or was
required to make, contributions to any employee benefit plan subject to Title IV
of ERISA or section 412 of the Code during the six year period ending on the
Effective Time.
(c) Neither the Company nor any ERISA Affiliate maintains or
has an obligation to contribute to or has within the past six years maintained
or had an obligation to contribute to a "multiemployer plan" within the meaning
of Section 3(37) of ERISA.
(d) Each Company Plan that utilizes a funding vehicle
described in Section 501(c)(9) of the Code or is subject to the provisions of
Section 505 of the Code has been the subject of a notification by the IRS that
such funding vehicle (i) qualifies for tax-exempt status under Section 501(c)(9)
of the Code and (ii) complies with Section 505 of the Code, unless the IRS does
not as a matter of policy issue such notification with respect to that
particular type of plan. Each such Company Plan satisfies, where appropriate,
the requirements of Sections 501(c)(9) and 505 of the Code.
(e) There has been no event or circumstance which has resulted
in any liability being asserted by any Company Plan, the Pension Benefit
Guaranty Corporation ("PBGC") or any other Person or entity under Title IV of
ERISA or section 412 of the Code against the Company or any ERISA Affiliate and
there has not been any event or circumstance which could reasonably be expected
to result in such liability.
(f) Neither the Company nor any Subsidiary of the Company is a
party to or bound by the terms of any collective bargaining agreement. The
Company and each of its Subsidiaries is in compliance in all material respects
with all applicable laws respecting the employment and employment practices,
terms and conditions of employment and wage and hours of its employees and is
not engaged in any unfair labor practice. There is no labor strike or labor
disturbance pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary of the Company, and during the past five years neither
the Company nor any Subsidiary of the Company has experienced a work stoppage.
27
(g) Each Company Plan has been operated and administered in
accordance with its terms and applicable law in all material respects, including
Section 406 of ERISA and Section 4975 of the Code.
(h) Each Company Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the Code.
(i) No Company Plan provides welfare benefits, including death
or medical benefits, with respect to current or former employees or consultants
of the Company or any Subsidiary of the Company beyond their retirement or other
termination of service (other than coverage mandated by applicable law).
(j) There are no pending, or to the knowledge of the Company,
threatened claims by or on behalf of any Company Plan, by any employee or
beneficiary covered under any such Company Plan with respect to such Company
Plan, or otherwise involving any such Company Plan (other than routine claims
for benefits).
(k) Section 4.13(k) of the Company Disclosure Letter sets
forth a true and complete list as of the date hereof of each of the following
agreements, arrangements and commitments to which the Company or any of its
Subsidiaries is a party or by which any of them may be bound (true and complete
copies of which have been made available to the Parent Parties): (i) each
employment, consulting, agency or commission agreement not terminable without
liability to the Company or any of its Subsidiaries upon 60 days' or less prior
notice to the employee, consultant or agent; (ii) each agreement with any
employee of the Company or any Subsidiary of the Company the benefits of which
are contingent, or the terms of which are materially altered, upon the
consummation of the transactions contemplated by this Agreement; (iii) each
agreement with respect to any employee of the Company or any Subsidiary of the
Company providing any term of employment or compensation guarantee extending for
a period longer than one year; and (iv) each other agreement or Company Plan any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
(l) Except as set forth in Section 4.13(l) of the Company
Disclosure Letter, no employee of the Company or any of its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Company Plan as a result of the
consummation of the transactions contemplated by this Agreement (whether alone
or in conjunction with other actions). No amount payable, or economic benefit
provided, by the Company or any of its Subsidiaries (including any acceleration
of the time of payment or vesting of any benefit) as a result of the
consummation of the transactions contemplated by this Agreement (whether alone
or in conjunction with other actions) could be considered an "excess parachute
payment" under Section 280G of the Code. No Person is entitled to receive any
additional payment from the Company, any of its Subsidiaries or any other Person
(a "Parachute Gross-Up Payment") in the event that the excise tax of Section
4999 of the Code is imposed on
28
such Person. Neither the Company nor any of its Subsidiaries has granted to any
Person any right to receive any Parachute Gross-Up Payment.
4.14 FAIRNESS OPINION. The Company Board has received the opinion of
Greenbridge Partners LLC to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to the holders of the
Company Common Stock (the "Fairness Opinion"). The Company has made available to
the Parent Parties a true and complete copy of the executed Fairness Opinion.
The Company will include an executed copy of the Fairness Opinion in or as an
annex to the Proxy Statement.
4.15 RECOMMENDATION OF THE COMPANY BOARD. The Company Board, by vote at
a meeting duly called and held, has approved this Agreement, determined that the
Merger is fair to and in the best interests of the Company's stockholders and
has adopted resolutions recommending approval and adoption of this Agreement and
the Merger contemplated hereby by the stockholders of the Company.
4.16 VOTE REQUIRED. The only vote of stockholders of the Company
required under the DGCL, the Nasdaq Stock Market requirements, the Company
Charter, the Company Bylaws or otherwise in order to consummate the transactions
contemplated by this Agreement, including the Merger, is the affirmative vote of
a majority of the total number of votes entitled to be cast by the holders of
the issued and outstanding shares of Company Common Stock voting as a single
class, and no other vote or approval of or other action by the holders of any
capital stock of the Company is required for such approval and adoption.
4.17 PATENTS, TRADEMARKS AND OTHER RIGHTS.
(a) List of Patents, Trademarks and Similar Rights. Sections
4.17(a)(i)-(vi) of the Company Disclosure Letter set forth complete and accurate
lists and status of:
(i) all Intellectual Property registrations and
issued patents, or if a registration or patent has not been issued, all pending
and abandoned applications for patents, and all applications to register
trademarks, trade names, service marks, copyrights and domain names, and all
extensions, renewals, restorations, resuscitations, continuations,
continuations-in-part, divisionals, reissues, and reexaminations thereof, as
well as all invention disclosure records for which the Company or its
Subsidiaries has not filed for patent protection, which the Company and/or any
of its Subsidiaries own or in which the Company or any of its Subsidiaries claim
or can claim ownership;
(ii) all material products, including computer
software or technology, commercially sold or licensed by the Company or its
Subsidiaries and all types of material services commercially provided by the
Company or its Subsidiaries;
(iii) any material computer software and applications
in development by and owned by the Company or its Subsidiaries;
(iv) in the case of Intellectual Property not owned
by the Company or its Subsidiaries, all agreements under which any patents
identified by number or group or any material Intellectual Property is licensed
by the Company or any of its Subsidiaries from others
29
or otherwise permitted by other Persons to use, indicating the parties to each
such agreement, other than retail "shrinkwrap" or generally available retail
types of licenses;
(v) all agreements pursuant to which the Company or
any of its Subsidiaries has granted, or has an obligation to grant, any rights
in, to or concerning any patents identified by number or group or other material
Intellectual Property, including agreements that singularly provide or that
contain one or more provisions providing with respect to Intellectual Property,
assignments, covenants-not-to-xxx or assert, licenses or sublicenses identifying
patents by number or group, releases, grant backs, material cross-licenses,
exclusive or escrow arrangements, and all settlement, consent or coexistent
agreements involving Intellectual Property, except employment or consulting
agreements; and
(vi) all other Intellectual Property (not identified
pursuant to clauses (i)-(v) above) that is material to the business and
operations of the Company and/or its Subsidiaries.
(b) Free Title and Liens. The Company or its Subsidiaries own
exclusively all the Intellectual Property identified and indicated in Sections
4.17(a)(i), (ii), (iii) and (vi) of the Company Disclosure Letter. Except as set
forth in Section 4.17(b)(i)-(iii) of the Company Disclosure Letter:
(i) with respect to the Intellectual Property (other
than patents, patent applications, or invention disclosure records) owned by the
Company or its Subsidiaries, the Company or the appropriate Subsidiary thereof
has good and valid title thereto free and clear of all Liens, or exclusive
licenses or covenants-not-to-xxx or assert, or any obligations to impose or
enter into any of the foregoing;
(ii) with respect to the patents, patent applications
and inventions owned by the Company or its Subsidiaries, the Company or the
appropriate Subsidiary thereof has good and valid title thereto free and clear
of any Liens or restrictions on title; and
(iii) with respect to all Intellectual Property held
by the Company or any of its Subsidiaries under license, other than retail or
generally available licenses, the Company or the appropriate Subsidiary thereof
has the right to use such Intellectual Property in the manner and subject to
limitations on the scope of such use as set forth in such licenses, and, to the
knowledge of the Company, free from any Lien and not subject to any
restrictions, other than as set forth in such license agreement.
(c) Protection of Intellectual Property. Except as set forth
in Sections 4.17(c)(i)-(iv) of the Company Disclosure Letter:
(i) to the knowledge of the Company, (x) the Company
or the appropriate Subsidiary thereof has taken actions that in its reasonable
business judgment are appropriate consistent with industry standards
("Reasonable Actions") to protect its Intellectual Property identified in
Section 4.17(a)(i) of the Company's Disclosure Letter, including filing the
necessary documents with the United States Patent and Trademark Office, or such
other filing offices, domestic or foreign, and duly registering with or causing
the respective Intellectual Property to be issued by such filing offices; and
(y) to the extent necessary to protect its interest
30
therein, the Intellectual Property of the Company and its Subsidiaries has been
used with all patent, trademark, copyright and other Intellectual Property
notices and legends prescribed by law;
(ii) to the knowledge of the Company, (x) with
respect to its Intellectual Property identified in Section 4.17(a)(i) of the
Company's Disclosure Letter that has been applied for or filed with the relevant
Governmental Entities, or that have been registered or issued by such relevant
Governmental Entities, the Company or the appropriate Subsidiary thereof has
protected and maintained, respectively, such Intellectual Property under
applicable laws, and such registrations and issuances, remain valid, in full
force and effect, and, to the extent registered or issued, fully enforceable by
the Company or the appropriate Subsidiary thereof; and (y) none of the material
Intellectual Property rights identified in Section 4.17(a)(i) of the Company's
Disclosure Letter or licensed to any of them has expired or fallen into the
public domain, has been canceled or adjudicated invalid (except with respect to
applications that have been rejected by a Governmental Entity in the ordinary
course of the patent application process), or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting the
Company's or its Subsidiaries rights thereto;
(iii) to the knowledge of the Company, there are no
allegations by any non-Governmental Entity third party to indicate pending
applications owned by the Company or any of its Subsidiaries that have been
applied for or filed with the relevant Governmental Entities or that have not
been registered or issued by such relevant Governmental Entities, that such
pending applications are not entitled to registration or issuance by the
relevant Governmental Entities; and
(iv) the Company and its Subsidiaries have complied
with, are complying with and will comply with: (1) their duty of disclosure
before the United States Patent and Trademark Office, as defined by the relevant
rules and regulations governing such duty, in connection with the prosecution of
the pending United States patent applications as identified in Section
4.17(a)(i) of the Company's Disclosure Letter; and (2) any comparable duty of
disclosure before other patent offices in countries other than the United
States, if any, in connection with the prosecution of the pending patent
applications in those countries as identified in Section 4.17(a)(i) of the
Company's Disclosure Letter.
(d) Intellectual Property from Employees and Others.
(i) The employment policy of the Company requires,
and at all times in the past has required, that the entire right, title and
interest of any and all Intellectual Property conceived, created, invented,
developed or caused to be reduced to practice by any employee of the Company or
of any of its Subsidiaries during the term of, and that relates to, such
employee's employment with the Company or such Subsidiary shall promptly vest in
the Company or the appropriate Subsidiary thereof, and the Company and its
Subsidiaries have taken reasonable actions to generally enforce such employment
policies.
(ii) True and complete copies of the Company's
current employment policy, and all past and current forms of employment
agreements used by the Company or any of its Subsidiaries is attached to Section
4.17(d)(ii) of the Company Disclosure Letter.
31
(iii) Every current employee of the Company or any of
its Subsidiaries has executed an agreement that sets forth therein a covenant
and assignment implementing the policy set forth in clause (d)(i) above.
(iv) Except for those individuals identified in
Section 4.17(d)(iv) of the Company Disclosure Letter, the Company has a policy
to obtain, and has obtained, from all technical consultants and technical
contractors who have contributed to the creation or the development of
Intellectual Property for the Company or any of its Subsidiaries, written
assignments to the Company or one or more of its Subsidiaries of such
consultant's or contractor's rights to any such contribution that the Company or
its Subsidiaries do not, or will not, own by operation of Law and the Company
and its Subsidiaries have generally enforced such policy.
(v) None of the individuals identified in Sections
(d)(iii) and (iv) of the Company Disclosure Letter has either generated or
retained any Intellectual Property listed in Section 4.17(a) of the Company
Disclosure Letter.
(vi) For those patents, patent applications,
invention disclosure records and copyrightable materials listed in Section
4.17(a)(i) of the Company Disclosure Letter that do not identify the Company as
the assignee, the Company has obtained, or the Company shall procure prior to
Closing without providing any additional compensation, obligation or
consideration unless with prior written approval from the Parent Parties, the
necessary agreements and/or assignments to vest complete title to such patents,
patent applications, invention disclosure records, and copyrightable materials
in the Company.
(e) Trade Secrets. The Company and its Subsidiaries have taken
all actions that in its reasonable business judgment, consistent with industry
standards, are appropriate to protect and preserve the secrecy, confidentiality
and value of all of their material Trade Secrets and there are no unauthorized
uses, disclosures or misappropriations of any material Trade Secret and, to the
knowledge of the Company, there are no unauthorized uses, disclosures or
misappropriations of any Trade Secret.
(f) Intellectual Property Infringement. Except as set forth in
Section 4.17(f) of the Company Disclosure Letter:
(i) to the knowledge of the Company, the Company's
and its Subsidiaries' activities, products and services have not, as presently
conducted do not, and as presently contemplated by the Company to be conducted
in the future will not, infringe upon or otherwise misappropriate or violate,
any Intellectual Property rights of any other Person;
(ii) as to or against the Company or its
Subsidiaries, there are no claims or suits pending, no written notice provided,
no legal proceedings or claims threatened in writing, including any
indemnification or contribution claims, and, to the knowledge of the Company, no
oral notice provided or threatened and no basis for:
(x) alleging that the Company or any of its
Subsidiaries or any of their respective activities, products or services
infringe upon, violate or otherwise constitute an unauthorized use of any other
Person's Intellectual Property;
32
(y) challenging the Company's or any of its
Subsidiaries' ownership of, right to use, or the validity or enforceability or
effectiveness of the Intellectual Property listed in Section 4.17(a) of the
Company Disclosure Letter; or
(z) contending, with respect to any agreement entered
into by the Company or any of its Subsidiaries, that the Company or any of its
Subsidiaries has breached or violated an Intellectual Property-related provision
of such agreement, that any Intellectual Property licensed to or used by the
Company or any Subsidiaries under such agreements has been infringed or is
invalid, unenforceable, unpatentable, unregisterable or cancelable, or, to the
knowledge of the Company, violates, infringes or misappropriates any other
Person's Intellectual Property, that a party to such agreement intends to
cancel, terminate or fail to renew such agreement, or that there exists an
event, condition or occurrence that, with the giving of notice or lapse of time,
or both, would constitute a material breach or default by any party to such
agreement;
(iii) none of the Company or any of its Subsidiaries
has filed a claim against or provided notice to any Person claiming the
infringement, violation, or unauthorized use by any Person of any Intellectual
Property owned by or licensed to the Company or any of its Subsidiaries and, to
the knowledge of the Company, no Person is infringing, violating or
misappropriating any such Intellectual Property; and
(iv) the execution and delivery of this Agreement by
the Company does not, and the consummation of the Merger and the other
transactions contemplated by this Agreement will not, result in the loss of the
Company's or its Subsidiary's rights in any of the Company's Intellectual
Property.
(g) Adequacy of Rights. The Company and its Subsidiaries own
or otherwise hold sufficient rights to use all Intellectual Property used to
carry on their respective business and all such rights shall survive the
execution, consummation and performance of this Agreement unchanged in any
material respect.
(h) Certain Agreements. With respect to certain agreements
referred to on Section 4.17(h) of the Company Disclosure Letter, the Company
makes the representations, warranties and covenants set forth in Section 4.17(h)
of the Company Disclosure Letter.
4.18 CERTAIN AGREEMENTS, AFFILIATE TRANSACTIONS AND INSURANCE.
(a) Section 4.18(a) of the Company Disclosure Letter lists
or describes each Contract to which the Company or any of its Subsidiaries is a
party, or by which any of their respective assets are subject or bound, of the
following nature (each Contract listed or required to be listed on Section
4.18(a) of the Company Disclosure Letter, along with each Contract listed or
described, or required to be listed or described, on Sections 4.3(c), 4.3(d),
4.6(a), 4.17(a)(iv), 4.17(a)(v), 4.18(b) or 4.18(c) of the Company Disclosure
Letter, a "Material Contract"):
(i) Contracts that are required to be filed with the
Commission pursuant to the Exchange Act as an exhibit to the Company's Annual
Report on Form 10-K;
33
(ii) Contracts that were entered into outside the
ordinary course of business and pursuant to which any obligations or liabilities
(whether absolute, contingent or otherwise) remain outstanding;
(iii) employment, bonus or consulting agreements
involving potential payments in excess of $75,000 over any period of 12 months
or more;
(iv) Contracts evidencing or securing Indebtedness of
the Company or any of its Subsidiaries (other than trade accounts arising in the
ordinary course of business that do not exceed $50,000 individually or $250,000
in the aggregate);
(v) Contracts in which the Company or any of its
Subsidiaries has guaranteed the obligations of any Person;
(vi) Contracts that may require the Company or any of
its Subsidiaries to indemnify any other Person;
(vii) any Contract involving the potential payment
(A) by the Company or any of its Subsidiaries of $100,000 or more or (B) to the
Company or any of its Subsidiaries of an amount that is reasonably likely to be
$200,000 or more, in each case including agreements with television networks
(including broadcast and cable networks), cable and direct broadcast system
operators, manufacturers of televisions and set-top boxes and advertisers
(collectively, "Company Customers");
(viii) Contracts that contain any "most favored
nations" provisions, as such term is commonly understood in the cable television
and satellite television industries;
(ix) Contracts that guarantee any Person a particular
amount of payment from the Company or any of the Company's Subsidiaries
irrespective of such Person's performance of any of its obligations under such
Contract;
(x) Contracts between the Company or any of its
Subsidiaries, on the one hand, and any director, officer or Significant
Stockholder of the Company or any of its Subsidiaries or Equity Affiliates, on
the other hand;
(xi) Contracts between the Company or any of its
Subsidiaries, on the one hand, and any Major Customer, on the other hand;
(xii) Contracts that contain a Change of Control
Covenant; and
(xiii) Contracts giving any Person the right
(contingent or otherwise) to require the Company or any of its Subsidiaries to
register under the Securities Act any securities or to participate in any
registration of such securities.
Except as set forth in Section 4.18(a) of the Company
Disclosure Letter, each Material Contract is in full force and effect and is
valid and enforceable in all material respects in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights
34
generally, or by principles governing the availability of equitable remedies and
except that employees' covenants not to compete may not be enforceable in
accordance with their terms in California and certain other jurisdictions), and
the Company or the applicable Subsidiary of the Company, as the case may be, has
taken all actions necessary to comply in all material respects with such
Material Contract and is not in default (with or without notice or lapse of time
or both) thereunder in any material respect. To the knowledge of the Company,
except as set forth in Section 4.18(a) of the Company Disclosure Letter, all
parties to the Material Contracts other than the Company and its Subsidiaries
have complied in all material respects with the provisions thereof and no party
is in breach or violation in any material respect of, or in default (with or
without notice or lapse of time, or both) in any material respect under, such
Material Contracts. The Company has not received written notice or, to the
Company's knowledge, any oral notice, of any actual or threatened termination,
cancellation or limitation to any of the Material Contracts. The Company has
made available to Parent a true and correct copy of each Material Contract that
is in writing, and a description of all material terms of each Material Contract
or arrangement that is not in writing, listed or described or required to be
listed or described on Section 4.18(a) of the Company Disclosure Letter.
(b) Except as set forth in Section 4.18(b) of the Company
Disclosure Letter, (i) there is no Contract or any judgment, injunction, order
or decree binding upon the Company or any of its Subsidiaries that has or would
reasonably be likely to have the effect of prohibiting or materially restricting
or limiting the ability of the Company to conduct its business as the same is
currently conducted or contemplated to be conducted and (ii) none of the Company
or any of the Company's Subsidiaries is a party to, and none of their respective
assets is bound by, any Contract or any judgement, injunction, order or decree
that, after the consummation of the transactions contemplated by this Agreement,
would be or would purport to be binding upon Liberty or any of Liberty's
Affiliates (other than the Surviving Entity and the Surviving Entity's
Subsidiaries) or any Contract or any judgement, injunction, order or decree in
respect of which any act or omission of Liberty or any of its Affiliates (other
than the Surviving Entity and the Surviving Entity's Subsidiaries) would result
in a breach or violation thereof or, in the case of any Contract, constitute
(with or without notice or lapse of time or both) a default or event of default
thereunder, or give rise to any right of termination, cancellation, amendment,
acceleration, repurchase, prepayment or repayment or to increased payments
thereunder, or give rise to or accelerate any material obligation or result in
the loss or modification of any material rights or benefits thereunder or result
in any Lien or Restriction on any of the material assets of the Surviving Entity
or any of its Subsidiaries. The Company has made available to the Parent Parties
a true and correct copy of each Contract that is in writing, a description of
all material terms of each Contract or arrangement that is not in writing, and a
true and correct copy of each judgment, injunction, order or decree, listed or
described, or required to be listed or described, on Section 4.18(b) of the
Company Disclosure Letter.
(c) Section 4.18(c) of the Company Disclosure Letter lists
or describes all transactions and Contracts between the Company or any of its
Subsidiaries, on the one hand, and any director, executive officer or
Significant Stockholder of the Company or any of its Subsidiaries or Equity
Affiliates, on the other hand of the kind required to be disclosed by the
Company pursuant to Item 404 of Regulation S-K promulgated under the Exchange
Act (but without regard to Instruction 9 in paragraph (a) thereof). The Company
has made available to the Parent Parties a true and correct copy of each
Contract and arrangement that is in writing, and
35
a description of all material terms of each transaction and each Contract that
is not in writing, listed or described, or required to be listed or described,
on Section 4.18(c) of the Company Disclosure Letter.
(d) Section 4.18(d) of the Company Disclosure Letter sets
forth all directors' and officers', errors and omissions, fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries. Such policies are with reputable insurance carriers, provide
adequate coverage for all normal risks incident to the business of the Company
and its Subsidiaries and their respective properties and assets, and are in
character and amount at least equivalent to that carried by Persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect. The Company has made available to the Parent Parties true and complete
copies of each policy set forth, or required to be set forth, on Section 4.18(d)
of the Company Disclosure Letter.
4.19 NO INVESTMENT COMPANY. The Company is not an "investment company"
subject to the registration requirements of, or regulation as an investment
company under, the Investment Company Act of 1940, as amended.
4.20 TAKEOVER STATUTES. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (including
Section 203 of the DGCL) or any anti-takeover provision in the Company Charter
or Company Bylaws is, or at the Effective Time will be, applicable to the
Company, the Company Common Stock, the Merger or the other transactions
contemplated by this Agreement. The Company Board has taken all action so that
neither Liberty nor any of its Affiliates (including Parent and WII) will be
prohibited from entering into a "business combination" with the Company as an
"interested stockholder" (in each case as such term is used in Section 203 of
the DGCL) as a result of the execution of this Agreement, or the consummation of
the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES
The Parent Parties, jointly and severally, hereby represent and warrant
to the Company as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of the Parent Parties and
Merger Sub (a) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of
Delaware, (b) has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and (c) is duly qualified or
licensed and is in good standing to do business in each jurisdiction in which
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except, in the case of clause (c), in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing has not had and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Liberty and its Subsidiaries taken
as a whole, Parent and its Subsidiaries (including WII) taken as a whole or a
material adverse effect on the ability of
36
Parent and Merger Sub to perform their obligations under, and to consummate the
transactions contemplated by this Agreement (collectively, a "Parent Material
Adverse Effect"). The Parent Parties have made available to the Company a true
and complete copy of Merger Sub's certificate of incorporation and bylaws, each
as amended to the date hereof.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of the Parent Parties
and Merger Sub has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated hereby. The execution, delivery
and performance by the Parent Parties and Merger Sub of this Agreement and the
consummation by each of the Parent Parties and Merger Sub of the Merger and the
other transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Parent Parties and Merger Sub.
This Agreement has been duly executed and delivered by the Parent Parties and
Merger Sub and is a legal, valid and binding obligation of the Parent Parties
and Merger Sub, enforceable against the Parent Parties and Merger Sub in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
5.3 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS. The
execution and delivery by Liberty, the Parent Parties and Merger Sub of this
Agreement do not, and the performance by Liberty, the Parent Parties and Merger
Sub of their respective obligations hereunder and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated hereby will
not:
(a) conflict with or violate the certificate of
incorporation or bylaws of Liberty, Parent, WII or Merger Sub;
(b) except as described on Schedule 5.3, require any
Governmental Consent or Governmental Filing, in each case on the part of Liberty
or any Subsidiary of Liberty (including the Parent Parties), except for (i) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, (ii) the Governmental Filings required to be made pursuant to the
pre-merger notification requirements of the Xxxx-Xxxxx Act, (iii) the filing
with the Commission of such reports under Sections 13(a), 13(d) or 15(d) of the
Exchange Act as may be required in connection with this Agreement or the
transactions contemplated hereby and (iv) such other Governmental Consents and
Governmental Filings the absence or omission of which will not, either
individually or in the aggregate, have a Parent Material Adverse Effect;
(c) require, on the part of Liberty or any Subsidiary of
Liberty (including the Parent Parties), any Contract Consent by, or Contract
Notice to, any other Person (other than a Governmental Entity), under any
License or other Contract, except for such Contract Consents and Contract
Notices the absence or omission of which will not, either individually or in the
aggregate, have a Parent Material Adverse Effect;
(d) give rise to any Violation of any Contract to which
Liberty or any Subsidiary of Liberty (including the Parent Parties) is a party,
by which Liberty, any Subsidiary of Liberty (including the Parent Parties)
37
or any of their respective assets or properties is bound or affected or pursuant
to which Liberty or any Subsidiary of Liberty (including the Parent Parties) is
entitled to any rights or benefits, except for such Violations that will not,
individually or in the aggregate, have a Parent Material Adverse Effect; or
(e) assuming that the Governmental Consents and Governmental
Filings specified in clause (b) of this Section 5.3 are obtained, made and
given, result in a Violation of, under or pursuant to any law, rule, regulation,
order, judgment or decree applicable to Parent or any Subsidiary of Liberty
(including the Parent Parties) or by which any of their respective properties or
assets are bound, except for such Violations that will not, individually or in
the aggregate, have a Parent Material Adverse Effect.
5.4 PROXY STATEMENT. None of the information concerning Liberty or any
of its Subsidiaries (including the Parent Parties) supplied or to be supplied by
the Parent Parties or Merger Sub for inclusion or incorporation by reference in,
and that is included or incorporated by reference in any documents filed or to
be filed with the Commission or any other Governmental Entity in connection with
the transactions contemplated hereby, will, at the respective times such
documents are filed, be false or misleading with respect to any 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 were made, not misleading or necessary to correct any statement in any
earlier communication.
5.5 BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other Person is or will be entitled, by reason of any agreement, act
or statement by Liberty or any of its Subsidiaries (including the Parent
Parties) or their respective directors, officers, employees or Affiliates, to
any financial advisory, broker's, finder's or similar fee or commission, to
reimbursement of expenses or to indemnification or contribution in connection
with any of the transactions contemplated by this Agreement.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, upon reasonable notice, the
Company will (and will use reasonable efforts to cause each of its Subsidiaries
to) afford to the officers, employees, counsel, accountants and other authorized
representatives of the Parent Parties reasonable access during normal business
hours to all its properties, personnel, books and records and furnish promptly
to such Persons such financial and operating data and other information
concerning its business, properties, personnel and affairs as such Persons will
from time to time reasonably request and instruct the officers, directors,
employees, counsel and financial advisors of the Company to discuss the business
operations, affairs and assets of the Company and otherwise fully cooperate with
the other party in its investigation of the business of the Company. The Parent
Parties agree that they will not, and will cause their respective officers,
employees, counsel, accountants and other authorized representatives not to, use
any information obtained pursuant to this Section 6.1 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. No
investigation pursuant to this Section 6.1 will affect any representation or
warranty given by the Company to the Parent Parties hereunder.
38
6.2 CONFIDENTIALITY. Unless otherwise agreed to in writing by the party
disclosing (or whose Representatives disclosed) the same (a "disclosing party"),
each party (a "receiving party") will, and will cause its Affiliates, directors,
officers, employees, agents and controlling Persons (such Affiliates and other
Persons with respect to any party being collectively referred to as such party's
"Representatives") to, (i) keep all Confidential Information of the disclosing
party confidential and not disclose or reveal any such Confidential Information
to any Person other than those Representatives of the receiving party who are
participating in effecting the transactions contemplated hereby or who otherwise
need to know such Confidential Information, (ii) use such Confidential
Information only in connection with consummating the transactions contemplated
hereby and enforcing the receiving party's rights hereunder, and (iii) not use
Confidential Information in any manner detrimental to the disclosing party. In
the event that a receiving party is requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any Confidential
Information of the disclosing party, the receiving party will provide the
disclosing party with prompt notice of such request(s) to enable the disclosing
party to seek an appropriate protective order. A party's obligations hereunder
with respect to Confidential Information that (i) is disclosed to a third party
with the disclosing party's written approval, (ii) is required to be produced
under order of a court of competent jurisdiction or other similar requirements
of a governmental agency, or (iii) is required to be disclosed by applicable law
or regulation, will, subject in the case of clauses (ii) and (iii) above to the
receiving party's compliance with the preceding sentence, cease to the extent of
the disclosure so consented to or required, except to the extent otherwise
provided by the terms of such consent or covered by a protective order. If a
receiving party uses a degree of care to prevent disclosure of the Confidential
Information that is at least as great as the care it normally takes to preserve
its own information of a similar nature, it will not be liable for any
disclosure that occurs despite the exercise of that degree of care, and in no
event will a receiving party be liable for any indirect, punitive, special or
consequential damages. In the event this Agreement is terminated, each party
will, if so requested by the other party, promptly return or destroy all of the
Confidential Information of such other party, including all copies,
reproductions, summaries, analyses or extracts thereof or based thereon in the
possession of the receiving party or its Representatives; provided, however,
that the receiving party will not be required to return or cause to be returned
summaries, analyses or extracts prepared by it or its Representatives, but will
destroy (or cause to be destroyed) the same upon request of the disclosing
party.
For purposes of this Section 6.2, "Confidential Information" of a party
means all confidential or proprietary information about such party that is
furnished by it or its Representatives to the other party or the other party's
Representatives, regardless of the manner in which it is furnished.
"Confidential Information" does not include, however, information which (a) has
been or in the future is published or is now or in the future is otherwise in
the public domain through no fault of the receiving party or its
Representatives, (b) was available to the receiving party or its Representatives
on a non-confidential basis prior to its disclosure by the disclosing party, (c)
becomes available to the receiving party or its Representatives on a
non-confidential basis from a Person other than the disclosing party or its
Representatives who is not otherwise bound by a confidentiality agreement with
the disclosing party or its Representatives, or is not otherwise prohibited from
transmitting the information to the receiving party or its Representatives, or
(d) is independently developed by the receiving party or its Representatives
through Persons who have not had, either directly or indirectly, access to or
knowledge of such information. Nothing contained in this Section 6.2 shall be
construed to limit a receiving party's
39
right to independently develop or acquire products without use of the disclosing
party's Confidential Information. Further, a receiving party shall be free to
use for any purpose the residuals resulting from access to or work with such
Confidential Information, provided that such receiving party shall maintain the
confidentiality of the Confidential Information as provided herein. The term
"residuals" means information in non-tangible form, which may be retained
without extraordinary effort by persons who have had access to the Confidential
Information in the normal course of their use or review of Confidential
Information pursuant to this letter, including ideas, concepts, know-how or
techniques contained therein. Neither the Company nor Parent shall have any
obligation to limit or restrict the assignment of such persons or to pay
royalties for any work resulting from the use of residuals.
6.3 PUBLIC ANNOUNCEMENTS. Unless otherwise required by applicable law
or by obligations pursuant to any listing agreement with or rules of any
securities exchange, the National Association of Securities Dealers, Inc. or The
Nasdaq Stock Market, each party shall use commercially reasonable efforts to
consult with, and use commercially reasonable efforts to accommodate the
comments of the other parties before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions
contemplated hereby. Notwithstanding the preceding sentence, upon execution of
this Agreement and upon the Closing, the Company and the Parent Parties will
consult with each other with respect to the issuance of a joint press release
with respect to this Agreement and the transactions contemplated hereby.
6.4 CONDUCT OF THE COMPANY'S BUSINESS PENDING THE EFFECTIVE TIME. The
Company will, and will cause each of its Subsidiaries to, except as permitted,
required or specifically contemplated by this Agreement, including Section 6.5
hereof, or consented to or approved in writing by the Parent Parties (which, in
the case of an action listed in Sections 6.4(d) and 6.4(h) that is proposed to
be taken by the Company in the ordinary course of business consistent with past
practice, will not be unreasonably withheld or delayed except as otherwise
provided on Schedule 6.4), during the period commencing on the date hereof and
ending at the Effective Time:
(a) conduct its business only in, and not take any action
except in, the ordinary and usual course of its business and consistent with
past practices;
(b) use commercially reasonable efforts to preserve intact
its business organization, to preserve its Licenses in full force and effect and
to preserve the goodwill of those having business relationships with it;
(c) not (i) make or permit any change or amendments in its
certificate or articles of incorporation, bylaws or similar organizational
documents; (ii) issue, grant, sell or deliver any shares of its capital stock or
any of its other equity interests or securities (other than shares of Company
Common Stock issued upon the exercise of any Company Stock Options outstanding
on the date hereof or Warrants outstanding on the date hereof), any Convertible
Securities or any phantom shares, phantom equity interests or stock or equity
appreciation rights; (iii) split, combine or reclassify the outstanding shares
of its capital stock or any of its other outstanding equity interests or
securities or issue any capital stock or other equity interests or securities in
exchange for any such shares or interests; (iv) redeem, purchase or otherwise
40
acquire, directly or indirectly, any shares of capital stock or any equity
interests, other securities, Convertible Securities or phantom shares, phantom
equity interests or stock or equity appreciation rights of the Company or any
Subsidiary of the Company; (v) amend or modify, or accelerate, amend or change
the New Option Grant Date (as defined in the Offer to Exchange) or the period of
exercisability or vesting of, any outstanding Convertible Securities, or adopt,
authorize or amend any other stock or equity appreciation rights, restricted
stock or equity, stock or equity purchase, stock or equity bonus, option or
similar plan, arrangement or agreement (including any Company Stock Plan or the
Offer to Exchange); (vi) make any changes in its equity capital structure; (vii)
declare, set aside, pay or make any dividend or other distribution or payment
(whether in cash, property or securities) with respect to its capital stock or
other securities, except for dividends by a Subsidiary of the Company paid
ratably to its stockholders or the partners thereof, as the case may be
(provided in the case of any non-Wholly Owned Subsidiary of the Company that the
other stockholders of or partners in such Subsidiary are not officers,
directors, employees or Affiliates of the Company or of any of its
Subsidiaries); (viii) sell, transfer or otherwise dispose of, or pledge any
stock, equity or partnership interest owned by it in any Subsidiary or Equity
Affiliate of the Company; or (ix) enter into or assume any Contract with respect
to any of the foregoing;
(d) not (i) modify or change in any material respect any
License, any Material Contract or any other Contract that is material to the
business of the Company, other than in the ordinary course of business
consistent with past practice; (ii) modify or change in any respect any of the
Contracts set forth on Section 6.4(d)(ii) of the Company Disclosure Letter (the
"Specified Contracts") or enter into any new Contract that would be a Specified
Contract; (iii) terminate any License, Material Contract or any other Contract
that is material to the business of the Company, (iv) offer to enter into,
assume or enter into, a Contract with any Person where the terms and provisions
so offered, or the terms and provisions of the Contract to be entered into or
assumed would give any other Person (an "MFN Beneficiary") the right to require
at any time that the terms and conditions of such MFN Beneficiary's Contract
with the Company or any of its Subsidiaries be adjusted, changed or modified
(including retroactively) in any manner based upon the terms and provisions in
the first Person's Contract or that such Contract be terminated; (v) enter into
any new employment, consulting, contractor, agency or commission agreement, make
any amendment or modification to any such existing agreement or grant any
increases in compensation, other than the regular annual salary increases
granted in the ordinary course of business and consistent with past practice to
employees of the Company or its Subsidiaries who are not directors or executive
officers of the Company; (vi) establish, amend or modify any employee benefit
plan of any kind referred to in Section 4.13(a), except to the extent required
by any applicable law, the existing terms of any such plan or the provisions of
this Agreement; (vii) provide security for any of its outstanding unsecured
Indebtedness, provide additional security for any of its outstanding secured
Indebtedness or grant, create or suffer to exist any Lien on or with respect to
any assets or rights of the Company or any Subsidiary of the Company, except in
any such case for Permitted Encumbrances; (viii) pay, discharge or satisfy
claims, liabilities or obligations (absolute, accrued, contingent or otherwise),
other than any payment, discharge or satisfaction in the ordinary course of
business consistent with past practice; (ix) cancel any of its material
Indebtedness or waive any claims or rights of substantial value; (x) make or
authorize any capital expenditures other than in the ordinary course of business
in amounts of more than $100,000 individually or $250,000 in the aggregate; (xi)
accelerate the payment of, or otherwise prepay, any of its existing outstanding
Indebtedness; (xii) other than as otherwise permitted by
41
this Agreement and, in the case of transactions between the Company and any of
its Wholly Owned Subsidiaries or between Wholly Owned Subsidiaries of the
Company, other than the normal cash management practices (including the
reimbursement of business expenses) of the Company and its Subsidiaries
conducted in the ordinary and usual course of their business and consistent with
past practice, make any advance or loan to or engage in any transaction with any
Significant Stockholder or director, officer, partner, Affiliate or Equity
Affiliate of the Company or any of its Subsidiaries not required by the terms of
an existing Contract described in Section 4.18 of the Company Disclosure Letter;
(xiii) guarantee or otherwise become responsible for any Indebtedness of any
other Person; (xiv) settle or compromise any claims or litigation; (xv) enter
into or assume any Contract that would be a Specified Contract, or amend any
term of any existing Contract in a manner that would cause it to become a
Specified Contract; or (xvi) enter into or assume any Contract with respect to
any of the foregoing;
(e) not acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to otherwise acquire any assets
that are material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole;
(f) not sell, lease or encumber or otherwise voluntarily
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets that are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole;
(g) not incur any amount of Indebtedness, or assume or enter
into any Contract to do so;
(h) not (i) modify or change in any material respect, or
terminate or fail to renew or extend (where such renewal or extension is at the
option of the Company or a Subsidiary and the terms are set forth in the
applicable agreement), any agreement related to material Intellectual Property;
(ii) provide, or enter into any Contract that provides, or amend, modify or
change any existing Contract to provide (A) any assignment, grant-backs,
cross-license, of, or covenant not-to-xxx, covenant not to assert or grant of
release regarding, any Intellectual Property, (B) the granting or licensing to
any other Persons of (1) any exclusive right (within any geographic area or line
of products or services or field of use) to use any of the Company's or its
Subsidiaries' owned or licensed Intellectual Property or (2) any right (within
any geographic area or line of products or services or field of use) to use any
of the Company's or its Subsidiaries' material owned or licensed Intellectual
Property, (C) any Person with "most favored nations" (as such term is
customarily understood in the cable television and satellite television
industries) terms and conditions, (D) that the Company or any of its
Subsidiaries would be required to exclusively use the products or services
provided by another party (or an Affiliate thereof) or a specified third party
(or refrain from using the products and services of any Person other than such
other party or such specified other Person) within any geographic area or line
of products or services, (E) that the Company or any of its Subsidiaries will
not xxx or otherwise institute legal action against any other Person for any
reason, (F) any agreements with third parties for the exchange and/or protection
of confidential information, (G) rights or obligations that are binding upon, or
purport to be binding upon, any Person (other than any Subsidiary of the
Company) that is not a party to such Contract or (H) any provisions requiring
42
the Company or any of its Subsidiaries to indemnify any Person; (iii) terminate
or modify or change in any material respect any agreement setting forth a
covenant or assignment implementing the policies set forth in Section 4.17(d);
(iv) xxx or otherwise institute legal action (including by the assertion of a
counterclaim) against any Person for any reason; or (v) solicit, initiate or
encourage inquiries or submission of proposals or offers from any Person
relating to, or enter into or assume any Contract with respect to, any of the
foregoing;
(i) not (i) make, revoke or amend any Tax election, (ii)
make any material change in any accounting, financial reporting or Tax practice
or policy, (iii) execute any waiver of restrictions on assessment or collection
of any Tax, (iv) enter into or amend any agreement or settlement with any Tax
authority or (v) permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated, except, in the case of clause
(v), in the ordinary course of business consistent with past practice;
(j) not take any action that would cause its representations
and warranties contained in Section 4.1 to be untrue in any respect or, except
as otherwise contemplated by this Agreement, make any changes to the corporate
structure of the Company and its Subsidiaries (including the structure of the
ownership by the Company of the direct and indirect interests in its
Subsidiaries and of the ownership by the Company and its Subsidiaries of their
respective businesses and assets);
(k) not make any capital contribution to any Person other
than as required pursuant to the terms of a Company Investment Agreement listed
on Section 4.6(a) of the Company Disclosure Letter each of which as in effect on
the date hereof, or acquire any securities or other debt or equity interests in
any other Person or enter into or assume any Contract with respect to the
foregoing; and
(l) not revalue any of its assets, including writing down
the value of any assets or writing off any notes or accounts receivable, except
as required by GAAP.
6.5 NO SOLICITATION.
(a) From and after the date hereof until the earlier of the Effective
Time or the termination of this Agreement in accordance with its terms, the
Company agrees that it shall not, nor shall it permit any of its Subsidiaries or
Affiliates to, nor shall it authorize or permit any officer, director, employee,
agent or representative (including any investment banker, attorney, accountant
or other adviser) of the Company or any of its Subsidiaries to, directly or
indirectly, or otherwise (i) solicit, initiate, encourage or otherwise
facilitate any inquiries or the submission of any proposals or offers from any
Person that relates to any Alternative Proposal, (ii) participate in any
discussions or negotiations regarding any Alternative Proposal, (iii) cooperate
with, or furnish or cause to be furnished any non-public information concerning
the business or assets of the Company or any of its Subsidiaries, to any Person
in connection with any Alternative Proposal, (iv) approve, recommend or permit
the Company or any Subsidiary to enter into an agreement or understanding with
any Person relating to any Alternative Proposal, (v) amend or grant any waiver
or release of any standstill agreement or (vi) vote for, execute a written
consent (or equivalent instrument) in favor of, or otherwise approve or enter
into any agreements or understandings with respect to any of the foregoing;
provided, however, that
43
nothing contained in this Section 6.5 shall prevent the Company or the Company
Board from (A) complying with Rule 14e-2 and Rule 14d-9 promulgated under the
Exchange Act with regard to an Alternative Proposal by means of a tender offer;
or (B) recommending an Alternative Proposal to the stockholders of the Company
if (x) the Company Board determines in good faith by a majority vote that such
Alternative Proposal is a Superior Proposal (as defined below), and, after
consultation with the Company's legal counsel, that it must recommend such
Superior Proposal to the stockholders of the Company in order to comply with its
fiduciary duties under applicable law, and (y) the Company has complied with
paragraphs (b), (c), (d) and (e) of this Section 6.5. The Company agrees that it
will take the necessary steps to promptly inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 6.5.
(b) The restrictions set forth in Section 6.5(a) shall not
prevent the Company Board (or any officer, director or employee of, or any
investment banker, attorney, accountant or other advisor, representative or
agent, of the Company) in the exercise of and as required by its fiduciary
duties under applicable law as determined by the Company Board in good faith
(after consultation with the Company's outside legal counsel) (i) from engaging
in discussions or negotiations with (but not directly or indirectly soliciting
or initiating such discussions or negotiations or directly or indirectly
encouraging inquiries or the making of any Alternative Proposal), and furnishing
information concerning the Company and its business and assets to, a Person who
makes a written, unsolicited, bona fide Alternative Proposal (except that for
purposes of this Section 6.5(b), to constitute an Alternative Proposal such
proposal, (w) if relating to the issuance by the Company or any of its
Subsidiaries of any equity interest in or any voting securities of the Company
or such Subsidiary must contemplate the issuance of more than 50% rather than
10% or more, of the total of such equity interests or voting securities, (x) if
relating to the acquisition in any manner of any of the assets of the Company or
its Subsidiaries, must contemplate the acquisition of more than 50%, rather than
10% or more, of the total of such assets, (y) if relating to the acquisition by
any Person in any manner of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of,
outstanding shares of capital stock of the Company, must contemplate the
acquisition of more than 50%, rather than 10% or more, of the then outstanding
shares of capital stock of the Company and (z) may not be an Alternative
Proposal with respect to an Intellectual Property Transaction) that, (A) the
economic terms of the Alternative Proposal are superior from a financial point
of view to the economic terms of the Merger, as determined in good faith by a
majority of the Company Board after consultation with, and the receipt of a
written opinion from, the Company's financial advisors, which shall be of
national reputation (and, for the purposes of this Section 6.5(b), shall include
Greenbridge Partners LLC), (B) will constitute a transaction for which
financing, to the extent required, is then committed or which, in the good faith
judgment of a majority of the Company Board, is reasonably capable of being
obtained and (C) if accepted, is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the transaction and
the Person making the proposal, as determined in the good faith judgment of a
majority of the Company Board (after consultation with its outside legal
counsel)(any such Alternative Proposal satisfying clauses (A), (B) and (C) above
is herein referred to as a "Superior Proposal") or (ii) if the Company receives
an unsolicited Alternative Proposal that the Company Board believes in good
faith may constitute a Superior Proposal, from making such inquiries as would
44
be necessary to allow the Company Board to inform itself of such Alternative
Proposal and to determine whether or not it constitutes a Superior Proposal;
provided, that in the case of clause (i), that in advance of the taking of any
such actions by the Company, the Parent Parties shall have been notified in
writing of such Superior Proposal and given a copy of such Superior Proposal.
(c) The Company shall provide the Parent Parties (for at
least three business days following the receipt of such notice) an opportunity
to propose an amendment to this Agreement to provide for terms and conditions no
less favorable than the Superior Proposal in which event the Company shall cause
its respective financial and legal advisors to negotiate in good faith with the
Parent Parties for a reasonable period of time (which shall not exceed two
business days if the proposal by the Parent Parties is solely to increase the
cash amount of the Merger Consideration) after the Company Board determines that
the terms and conditions proposed by the Parent Parties are no less favorable
than the Superior Proposal, to make such adjustments to the terms and conditions
of this Agreement as would enable the Company to proceed with the transactions
contemplated hereby. The provisions of this paragraph shall apply to successive
Superior Proposals (provided that each such Superior Proposal shall meet the
then applicable requirements thereof, based upon the terms of this Agreement in
effect on the date hereof or as such terms shall be modified, amended or
superseded).
(d) The Company shall promptly advise the Parent Parties
orally and in writing of any request for information or of any Alternative
Proposal, or any inquiry, offer or proposal with respect to or which could lead
to any Alternative Proposal (whether made directly to the Company or one of its
advisers), the material terms and conditions of such request, Alternative
Proposal or inquiry, offer or proposal, and the identity of the Person making
any such request, Alternative Proposal or inquiry, offer or proposal. The
Company shall keep the Parent Parties fully informed of the status and details
of any such request, Alternative Proposal or inquiry, offer or proposal.
(e) Notwithstanding Section 6.5(b), the Company shall not
provide any non-public information to a third party unless the Company provides
such non-public information pursuant to a non-disclosure agreement with terms
regarding the protection of confidential information at least as restrictive as
such terms set forth in Section 6.2.
(f) The Company shall immediately cease and cause to be
terminated any existing discussion or negotiations with any Persons (other than
the Parent Parties) conducted prior to the date of this Agreement with respect
to any of the foregoing and will exercise its rights under any confidentiality
agreements with any such Persons to require the return or destruction of
confidential information provided by the Company or its representatives to any
such Persons.
(g) For the avoidance of doubt, the Parent Parties agree
that the delivery of any written opinion by the Company's financial advisor
pursuant to Section 6.5(b) shall in no way give rise to any claim by the Parent
Parties or any of their Affiliates against the Company's financial advisor, and
each of the Parent Parties expressly waives and releases any such claim.
45
6.6 EXPENSES. Except as otherwise provided in this Agreement, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby will be paid by the
party incurring such cost or expense, except that the Commission filing fee for
the Proxy Statement and the fee for filing under the Xxxx-Xxxxx Act will be
borne one-half by the Parent Parties and one-half by the Company.
6.7 ACTIONS BY MERGER SUB. In its capacity as the sole stockholder of
Merger Sub, WII will cause Merger Sub to approve and adopt the Merger Proposal
and to take all corporate action necessary on its part to consummate the Merger
and the transactions contemplated hereby
6.8 DEFENSE OF LITIGATION. Each of the parties agrees to vigorously
defend against all actions, suits or proceedings in which such party is named as
a defendant which seek to enjoin, restrain or prohibit the transactions
contemplated hereby or seek damages with respect to such transactions. The
Company will not settle any such action, suit or proceeding or fail to perfect
on a timely basis any right to appeal any judgment rendered or order entered
against the Company therein without the consent of the Parent Parties. Each of
the parties further agrees to use its reasonable efforts to cause each of its
Affiliates, directors and officers to vigorously defend any action, suit or
proceeding in which such Affiliate, director or officer is named as a defendant
and which seeks any such relief to comply with this Section to the same extent
as if such Person were a party hereto.
6.9 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) From and after the Effective Time, the Surviving Entity
will indemnify, defend and hold harmless the present and former officers and
directors of the Company (when acting in such capacity) (each, an "Indemnified
Party" and together, the "Indemnified Parties") (and will also, subject to
Section 6.9(b), advance expenses as incurred to the fullest extent permitted
under the DGCL, provided that the Person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
Person is not entitled to indemnification), against all losses, costs, expenses,
claims, damages, judgments or liabilities incurred in connection with, any
claim, action, suit, proceeding or investigation based in whole or in part on
the fact that the Indemnified Party is or was an officer or director of the
Company pertaining to any matter existing or occurring before or at the
Effective Time and whether asserted or claimed before, at or after, the
Effective Time (the "Indemnified Liabilities") to the fullest extent permitted
under the DGCL; provided, however, that such indemnification will be provided
only to the extent any directors' and officers' liability insurance policy of
the Company or its Subsidiaries does not provide coverage and actual payment
thereunder with respect to the matters that would otherwise be subject to
indemnification hereunder (it being understood that the Surviving Entity shall,
subject to Section 6.9(b), advance expenses on a current basis as provided in
this paragraph (a) notwithstanding such insurance coverage to the extent that
payments thereunder have not yet been made, in which case the Surviving Entity
shall be entitled to repayment of such advances from the proceeds of such
insurance coverage). Parent and Merger Sub agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a "Claim"), existing in favor of the
Indemnified Parties as provided in the Company Charter or Company Bylaws or
pursuant to other agreements, or certificates of incorporation or bylaws or
similar documents of any Subsidiaries of the Company,
46
as in effect as of the date hereof, with respect to matters occurring through
the Effective Time, will survive the Merger and will continue in full force and
effect for a period of not less than six years after the Effective Time. The
Surviving Entity shall maintain in effect for not less than six years after the
Effective Time the current policies of directors' and officers' liability
insurance maintained by the Company with respect to matters occurring prior to
or at the Effective Time; provided, however, that (i) the Surviving Entity shall
not be required to pay an annual premium for such insurance in excess of two
times the last annual premium paid prior to the date hereof, and (ii) that if
such insurance expires, is terminated or canceled during such six-year period,
the Surviving Entity will use its reasonable efforts to obtain as much
directors' and officers' liability coverage as can be obtained for such amount.
(b) If any Claim relating hereto or to the transactions
contemplated by this Agreement is commenced before the Effective Time, the
Company and the Surviving Entity agree to cooperate and use their respective
reasonable efforts to vigorously defend against and respond thereto. Any
Indemnified Party wishing to claim indemnification under paragraph (a) of this
Section 6.9, upon learning of any such claim, action, suit, proceeding or
investigation (whether arising before, at or after the Effective Time), will
promptly notify the Surviving Entity thereof, whereupon the Surviving Entity
will have the right, from and after the Effective Time, to assume from such
Indemnified Party and control the defense thereof on behalf of such Indemnified
Party, and upon such assumption, the Surviving Entity will not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof. Notwithstanding the foregoing, if counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Surviving Entity and the Indemnified Parties, the
Indemnified Parties may retain separate counsel and the Surviving Entity will
pay or cause to be paid all reasonable fees and expenses of such counsel;
provided, however, that the Surviving Entity will not be obligated pursuant to
this Section 6.9(b) to pay for more than one firm or counsel to represent all
Indemnified Parties in any jurisdiction and (ii) the Indemnified Parties will
cooperate in the defense of such matter. The Surviving Entity will not be liable
for any settlement effected without its prior written consent (which consent
will not be unreasonably withheld or delayed). Notwithstanding anything to the
contrary contained in this Section 6.9, the Surviving Entity shall not have any
obligation hereunder to any Indemnified Party if and when a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in a manner
contemplated hereby is prohibited by applicable law.
(c) This Section 6.9 is intended to benefit the Indemnified
Parties and will be enforceable by each Indemnified Party, his or her heirs and
representatives and will be binding on all successors and assigns of the Parent
Parties, Merger Sub and the Surviving Entity.
6.10 LICENSE AGREEMENT. In the event that (i) the Company is required
to pay the Termination Fee pursuant to the terms of Section 8.5(b), or (ii) this
Agreement is terminated by the Parent Parties pursuant to Section 8.4(b) because
of a breach of a representation or warranty made by the Company or the failure
of the Company to perform any covenant or agreement contained herein, which
breach or failure to perform results from or arises out of the gross negligence
of the Company, then, effective upon the date such Termination Fee shall become
payable or such termination shall become effective, as applicable, the rights
and licenses set forth
47
on Section 6.10 of the Company Disclosure Letter shall vest in the Parent
Parties in accordance with the terms and provisions included thereon.
6.11 LIBERTY UNDERTAKING. Liberty covenants and agrees to use its best
efforts to cause the Parent Parties to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms and subject to the conditions hereof. In respect of this Section
6.11 only, Liberty makes the representation set forth in Section 5.2 as to
itself.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT PARTIES,
MERGER SUB AND THE COMPANY. The respective obligations of the Parent Parties,
Merger Sub and the Company to consummate the Merger are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which, to the extent permitted by applicable law, may be
waived by either Parent Party, for each Parent Party and Merger Sub (but not for
the Company), or by the Company for itself (but not for the Parent Parties or
Merger Sub):
(a) Approval of Stockholders. This Agreement will have been
approved and adopted by such vote of the stockholders of the Company in
accordance with applicable law, the Company Charter and the Company Bylaws.
(b) Xxxx-Xxxxx Act. Any applicable waiting period (and any
extension thereof) under the Xxxx-Xxxxx Act will have expired or been
terminated.
(c) Absence of Injunctions. No permanent or preliminary
Injunction or restraining order by any court or other Governmental Entity of
competent jurisdiction, or other legal restraint or prohibition, shall be in
effect preventing consummation of the transactions contemplated hereby as
provided herein, or permitting such consummation subject to any condition or
restriction that has had or would have a material adverse effect on the
transactions contemplated hereby or a Material Adverse Effect on Liberty and its
Subsidiaries taken as a whole, Parent and its Subsidiaries (including WII) taken
as a whole, or the Surviving Entity and its Subsidiaries taken as a whole.
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT PARTIES AND
MERGER SUB. The obligations of the Parent Parties and Merger Sub to consummate
the Merger are also subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by either Parent Party:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Company contained in this Agreement shall,
if specifically qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects in each case as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of a specified earlier date) on and as of the Closing Date
as though made on and as of the Closing Date.
48
(b) Performance of Agreements. The Company shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) Officers' Certificate. The Company shall have delivered
to Parent (i) a certificate, dated the Closing Date, signed on behalf of the
Company by an executive officer of the Company certifying as to the fulfillment
of the conditions specified in Sections 7.2(a) and 7.2(b) and (ii) a certificate
of the Secretary of the Company certifying, among other things, (A) the
incumbency of all officers of the Company having authority to execute and
deliver this Agreement and the agreements and documents contemplated hereby and
(B) the resolutions of the Company Board referred to in Section 4.15 and any
subsequent resolutions of the Company Board with respect to the Merger.
(d) No Adverse Enactments. There shall not have been any
statute, rule, regulation, order, judgment or decree proposed, enacted,
promulgated, entered, issued, enforced or deemed applicable by any foreign or
United States federal, state or local Governmental Entity, which (i) makes this
Agreement, the Merger, or any of the other transactions contemplated by this
Agreement illegal or imposes material damages or penalties in connection
therewith, (ii) requires Liberty, Parent, WII, the Surviving Entity or any of
their respective Subsidiaries to divest or hold separate any material portion of
the assets or business of Liberty, Parent, WII, the Surviving Entity or any of
their respective Subsidiaries, if the Merger is consummated, (iii) imposes
material limitations on the ability of Liberty, Parent or WII to effectively
exercise full rights of ownership of shares of capital stock of the Surviving
Entity (including the right to vote such shares on all matters properly
presented to the stockholders of the Surviving Entity) or makes the holding by
any of such parties of any such shares illegal or subject to any materially
burdensome requirement or condition, (iv) requires Liberty, Parent, WII or the
Company or any of their respective Subsidiaries or Affiliates to cease or
refrain from engaging in any material business, including any material business
conducted by the Company or any of its Subsidiaries, if the Merger is
consummated, or (v) otherwise prohibits or unreasonably delays consummation of
the Merger or any of the other transactions contemplated by this Agreement or
increases in any material respect the liabilities or obligations of Liberty,
Parent or WII arising out of this Agreement, the Merger or any of the other
transactions contemplated by this Agreement.
(e) Contract Consents and Notices. All Contract Consents and
Contract Notices which are referred to in Section 4.5 or otherwise required in
connection with the consummation of the transactions contemplated hereby and
which, if not obtained or given, would have, individually or in the aggregate, a
material adverse effect on the transactions contemplated hereby or a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole or the Surviving
Entity and its Subsidiaries taken as a whole, shall have been obtained and
given.
(f) No Material Adverse Change. Since the date hereof,
nothing shall have occurred, and the Parent Parties shall not have become aware
of any circumstance, change or event having occurred prior to such date, which
individually or in the aggregate, has had or could reasonably be expected to
have (i) a material adverse effect on the transactions contemplated hereby or
Liberty's or the Parent Parties' liabilities or obligations with respect to such
49
transactions, or (ii) a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, or the Surviving Entity and its Subsidiaries,
taken as a whole, other than, in each case, any circumstance, change or effect
resulting from or relating to (i) changes in general economic conditions, (ii)
changes generally affecting the industries in which the Company, Liberty or the
Parent Parties operate so long as such changes do not affect such Person in
disproportionate manner, or (iii) the resignation or termination of any
employees of the Company.
(g) Receipt of Licenses, Permits and Consents. Other than
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and filings due after the Effective Time, all Government Consents as
are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect, all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be) would not, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole, Liberty and its Subsidiaries taken as a
whole, Parent and its Subsidiaries (including WII) taken as a whole or the
Surviving Entity and its Subsidiaries taken as a whole.
(h) Certain Specified Contracts. Each of the Specified
Contracts referenced in item 1 of Section 6.4(d)(ii) of the Company Disclosure
Letter shall be in full force and effect immediately prior to the Effective Time
and no party shall have taken any action (including the delivery of notice) to
terminate, cancel or accelerate any such Specified Contract, which action (or
notice) has not been withdrawn, rescinded or otherwise been legally determined
to be ineffective.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate the Merger is also subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by the Company:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Parent Parties contained herein shall, if
specifically qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects in each case as of the
date of this Agreement and (except to the extent such representations and
warranties speak of a specified earlier date) on and as of the Closing Date, as
though made on and as of the Closing Date.
(b) Performance of Agreements. Each of the Parent Parties
and Merger Sub shall have performed in all material respects all obligations and
agreements, and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied with by them
prior to or on the Closing Date.
(c) Officers' Certificates. The Parent Parties shall have
delivered to the Company a certificate dated the Closing Date, signed by an
officer of the Parent Parties certifying as to the fulfillment of the conditions
specified in Sections 7.3(a) and 7.3(b).
50
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and the Parent Parties
if the Boards of Directors of each so determines by the affirmative vote of a
majority of the members of its entire Board of Directors.
8.2 TERMINATION BY EITHER THE PARENT PARTIES OR THE COMPANY. This
Agreement may be terminated (upon notice from the terminating parties to the
other parties) and the Merger may be abandoned at any time prior to the
Effective Time by either Parent or the Company if (i) the Merger shall not have
been consummated by September 30, 2002, whether such date is before or after the
date of approval by the stockholders of the Company (the "Termination Date"),
provided, that the right to terminate this Agreement pursuant to this clause (i)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement proximately contributed to the failure of the Merger to be
consummated by the Termination Date, and provided, further, that in the event
that the failure of the Merger to occur on or before September 30, 2002 is the
result of the failure of the conditions set forth in Sections 7.1(a), 7.1(b) or
7.2(g) to be satisfied or waived prior to September 30, 2002, either the Parent
Parties or the Company may extend such date to October 31, 2002 (so long as the
party extending such date believes in good faith that such conditions are
capable of being satisfied by such date), (ii) the approval of the stockholders
of the Company referred to in Section 7.1(a) shall not have been obtained at the
Special Meeting or at any duly held adjournment or postponement thereof,
provided, that the right to terminate pursuant to this clause (ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement proximately contributed to the failure to obtain the approval of the
stockholders of the Company, or (iii) any order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after the approval by the
stockholders of the Company).
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by action of the Company Board:
(a) if (i) the Company is not in breach of Section 6.5 or in
material breach of any of the other terms of this Agreement, (ii) the Company
Board authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies the Parent Parties
in writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice, (iii) the Parent Parties do
not make, (A) within three business days of receipt of the Company's written
notification of its intention to enter into a binding agreement for a Superior
Proposal, an offer that the Company Board determines, in good faith after
consultation with its financial advisors, is no less favorable, from a financial
point of view, to the stockholders of the Company as the Superior Proposal, or
(B) if such offer is made,
51
such adjustments to the terms and conditions of this Agreement within the
applicable time period provided in Section 6.5(c) as would enable the Company to
proceed with the transactions contemplated hereby, and (iv) the Company pays to
Parent in immediately available funds the Termination Fee. The Company agrees
(x) that it will not enter into a binding agreement referred to in clause (ii)
above until at least the fourth business day after it has provided the notice to
the Parent Parties required thereby or, if the Parent Parties make the offer
referred to in clause (iii) (A) above, until after the expiration of the
applicable time period provided in Section 6.5(c), and (y) to notify the Parent
Parties promptly if its intention to enter into a written agreement referred to
in its notification shall change at any time after giving such notification; or
(b) if the Parent Parties or Merger Sub breach or fail in
any material respect to perform or comply with any of their covenants and
agreements contained herein or breach any of their representations and
warranties, in each case that is not curable, such that the conditions set forth
in Sections 7.3(a) or 7.3(b) cannot be satisfied.
8.4 TERMINATION BY THE PARENT PARTIES. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by the stockholders of the Company referred to in
Section 7.1(a), by the Parent Parties if (a) the Company Board shall have
withdrawn or modified in a manner adverse to the Parent Parties its approval or
recommendation of this Agreement or failed to reconfirm its recommendation of
this Agreement within three business days after a written request by the Parent
Parties to do so, (b) the Company breaches or fails in any material respect to
perform or comply with any of its covenants or agreements contained herein, or
breaches any of its representations and warranties, in each case that is not
curable, such that the conditions set forth in 7.2(a) or 7.2(b) cannot be
satisfied, or (c) the Company fails to comply in all material respects with its
covenants in Section 6.5.
8.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article VIII, this Agreement (other than as set
forth in Section 6.6, Section 6.10, this Section 8.5 and Article IX each of
which shall survive the termination of this Agreement) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors or other
representatives); provided, however, except as otherwise provided herein, (i) no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful or intentional breach of this Agreement, and (ii)
notwithstanding the terms of Section 6.6, in the event this Agreement is
terminated by the Parent Parties pursuant to Sections 8.4(b) or (c) (except in
the case of a breach where the Company is required to pay a Termination Fee as
provided in Section 8.5(b)(y)(iii) below or in the case of a breach of a
representation or warranty as a result of events or developments after the date
hereof outside of the Company's control) or by the Company pursuant to Section
8.3(b) (except in the case of a breach of a representation or warranty as a
result of events or developments after the date hereof outside of the Parent
Parties' or Merger Sub's control), the non-terminating party shall reimburse the
terminating party for all of its costs and expenses (including legal, consulting
and accounting fees and disbursements and the costs and expenses incurred in
connection with printing and mailing the Proxy Statement (and any amendment or
supplement thereto) and the costs of filing under the Xxxx-Xxxxx Act) incurred
by
52
the terminating party in connection with this Agreement. The non-terminating
party shall promptly, but in no event later than two days after the date it
receives notice from the terminating party setting forth the amount of such
costs and expenses, pay such amount by wire transfer of same day funds to an
account designated by the terminating party.
(b) In the event that (x) an Alternative Proposal shall have been made
to the Company or its stockholders or any Person shall have publicly announced
an intention (whether or not conditional) to make an Alternative Proposal with
respect to the Company and thereafter this Agreement is terminated by the Parent
Parties or the Company pursuant to Section 8.2(i) or (y) this Agreement is
terminated (i) by the Company pursuant to Section 8.3(a), (ii) by the Parent
Parties pursuant to Section 8.2(ii) or 8.4(a), or (iii) by the Parent Parties
pursuant to Section 8.4(b) as a result of the Company having (A) failed to
perform its obligations pursuant to Sections 3.1 or 3.2 or (B) willfully
breached this Agreement, then the Company shall promptly, but in no event later
than two days after the date of such termination, pay Parent a termination fee
of $3,500,000 in cash (the "Termination Fee") by wire transfer of same day funds
to an account designated by Parent; provided, however, that no Termination Fee
shall be payable to Parent under clause (x) of this paragraph (b) or in the
event this Agreement is terminated by the Parent Parties pursuant to Section
8.2(ii) unless at any time within 18 months following such termination of this
Agreement, a transaction that if proposed prior to termination would have
constituted an Alternative Proposal is consummated, or the Company enters into a
definitive agreement with another Person (other than the Parent Parties) for
such a transaction, in which case such Termination Fee shall be payable within
two days of the consummation or entering into of such transaction, as the case
may be. For purposes of the proviso clause of the immediately preceding sentence
only, (I) the issuance by the Company or any Subsidiary of any equity interest
in or voting securities of the Company or such Subsidiary in a capital raising
transaction which, after giving effect to such transaction, does not result in
any Person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) becoming the beneficial owner of 30% or
more (or, in the case of a bank, brokerage firm, venture capital or private
equity firm or similar financial institution or investor that is not affiliated
with any business engaged in the broadband communications or interactive
television business, 35% or more) of the outstanding equity interests or voting
securities of the Company or such Subsidiary, or (II) the grant in the ordinary
course of business to any Person of a non-exclusive license or non-exclusive
cross-license of any Intellectual Property of the Company that does not include,
as a term thereof, a covenant not-to-xxx, covenant not-to-assert, release of
future claims or similar release, shall not constitute an Alternative Proposal.
The Company acknowledges that the agreements contained in this Section 8.5(b)
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, the Parent Parties and Merger Sub would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 8.5(b), and, in order to obtain such
payment, the Parent Parties or Merger Sub commences a suit which results in a
judgment against the Company for the Termination Fee set forth in this paragraph
(b), the Company shall pay to Parent, in addition to the Termination Fee, the
reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the
Termination Fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
53
ARTICLE IX
MISCELLANEOUS
9.1 NO WAIVER OR SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The respective representations and warranties of the Parent Parties,
Merger Sub and the Company contained herein or in any certificate or other
instrument delivered pursuant hereto prior to or at the Closing shall not be
deemed waived or otherwise affected by any investigation made by any party
hereto. All representations and warranties made by each of the parties herein
shall expire at the Effective Time and shall thereafter be of no further force
or effect. The respective covenants and agreements of the parties contained
herein which are to be performed after the Closing shall survive the Effective
Time and shall only terminate in accordance their respective terms.
9.2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
(by courier service or otherwise) or mailed, certified or registered mail with
postage prepaid, or sent by confirmed telecopier, as follows:
(a) If to Liberty, the Parent Parties or Merger Sub:
Liberty Broadband Interactive Television, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx III
Facsimile: (000) 000-0000
with a copy to:
Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
and an additional copy to:
Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
54
(b) If to the Company:
Wink Communications, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Person or address as any party shall
specify by notice in writing to the other party. Any such notice shall be deemed
to have been given (i) upon actual delivery, if delivered by hand, (ii) on the
third (3rd) business day following deposit of such notice, properly addressed
with postage prepaid, with the United States Postal Service if mailed by
registered or certified mail, return receipt requested, or (iii) upon sending
such notice, if sent via facsimile, with confirmation of receipt, except that
any notice of change of address shall be effective only upon actual receipt
thereof.
9.3 ENTIRE AGREEMENT. This Agreement (including the Schedules, Annexes,
Exhibits and other documents referred to herein) constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
9.4 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor any
of the rights, benefits or obligations hereunder may be assigned by any party
(whether by operation of law or otherwise) without the prior written consent of
the other party. 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. Except for the provisions of Section
6.9 (which may be enforced by the Indemnified Parties), nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.5 AMENDMENT. This Agreement may be amended by action of all the
parties, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval and adoption of this Agreement and the
Merger by the stockholders of the Company, but, after any such approval by the
stockholders of the Company, no amendment shall be made which by law requires
further approval by such stockholders of the Company without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
55
9.6 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties, by action taken or authorized by each such party's Board of Directors,
may, to the extent legally allowed, (i) extend the time specified herein for the
performance of any of the obligations of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, (iii) waive compliance by
the other party with any of the agreements or covenants of such other party
contained herein or (iv) waive any condition to such waiving party's obligation
to consummate the transactions contemplated hereby or to any of such waiving
party's other obligations hereunder. 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 by such party. Any such extension or waiver by any party shall
be binding on such party but not on the other party entitled to the benefits of
the provision of this Agreement affected unless such other party also has agreed
to such extension or waiver. No such waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to strictly
comply with the provisions of this Agreement. The failure of any party to insist
on strict compliance with this Agreement or to assert any of its rights or
remedies hereunder or with respect hereto shall not constitute a waiver of such
rights or remedies. Whenever this Agreement requires or permits consent or
approval by any party, such consent or approval shall be effective if given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 9.6.
9.7 HEADINGS. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.8 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
9.9 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to jurisdiction over the person of such parties and agree
that
56
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.2 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.9
9.10 JOINT PARTICIPATION IN DRAFTING THIS AGREEMENT. The parties
acknowledge and confirm that each of their respective attorneys have
participated jointly in the drafting, review and revision of this Agreement and
that it has not been written solely by counsel for one party and that each party
has had the benefit of its independent legal counsel's advice with respect to
the terms and provisions hereof and its rights and obligations hereunder. Each
party hereto, therefore, stipulates and agrees that the rule of construction to
the effect that any ambiguities are to be or may be resolved against the
drafting party shall not be employed in the interpretation of this Agreement to
favor any party against another and that no party shall have the benefit of any
legal presumption or the detriment of any burden of proof by reason of any
ambiguity or uncertain meaning contained in this Agreement.
9.11 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provisions of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.12 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Federal courts of the United
States
57
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
[Remainder of Page Intentionally Left Blank]
58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
LIBERTY BROADBAND INTERACTIVE
TELEVISION, INC.
By: /s/ Xxxxx X. Xxxxxx III
---------------------------------------------
Name: Xxxxx X. Xxxxxx III
Title: Authorized Signatory
WINK INTERACTIVE, INC.
By: /s/ Xxxxx X. Xxxxxx III
---------------------------------------------
Name: Xxxxx X. Xxxxxx III
Title: President and Chief Executive Officer
WALNUT MERGER CORP.
By: /s/ Xxxxx X. Xxxxxx III
---------------------------------------------
Name: Xxxxx X. Xxxxxx III
Title: President and Chief Executive Officer
WINK COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxx Xxxxxxxxxxx
---------------------------------------------
Name: Xxxx Xxxxx Xxxxxxxxxxx
Title: President and Chief Executive Officer
AS TO SECTION 6.11 ONLY:
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
SCHEDULE 5.3
CERTAIN FILINGS
The Parent Parties may be required to make a Governmental Filing with,
and to obtain a Governmental Consent from, the appropriate Governmental Entities
in Austria, Ireland and Germany with respect to the transactions contemplated by
the Agreement.
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SCHEDULE 6.4
CERTAIN ACTIONS
Notwithstanding anything to the contrary contained in Section 6.4, the
Parent Parties shall have the right in their sole and absolute discretion, to
withhold or delay their consent to and approval of the taking of the actions set
forth in the following Sections of the Agreement prior to the Effective Time:
1. Section 6.4(d)(ii), unless, in the case of any Specified Contract
that is a Specified Contract only because it requires the Company to indemnify
any Person, the amount of such indemnity is limited so as not to exceed amounts
paid to the Company by such Person under such Contract, provided the terms of
such Contract permit the Company to modify the product or service to avoid
infringement and to terminate such Contract if infringement cannot be avoided;
2. Section 6.4(d)(iv);
3. Section 6.4(d)(xii);
4. Section 6.4(d)(xv), unless, in the case of any Specified Contract
that is a Specified Contract only because it requires the Company to indemnify
any Person, the amount of such indemnity is limited so as not to exceed amounts
paid to the Company by such Person under such Contract, provided the terms of
such Contract permit the Company to modify the product or service to avoid
infringement and to terminate such Contract if infringement cannot be avoided;
5. Section 6.4(h)(ii)(A), other than Contracts with cable system
operators and direct broadcast satellite programming providers entered into in
the ordinary course of business which include the grant of a covenant not-to-xxx
or covenant not-to assert with respect to Intellectual Property relating to a
particular licensed product that is the subject of such Contract;
6. Section 6.4(h)(ii)(B)(1), other than Contracts with advertisers and
television content providers entered into in the ordinary course of business
which include the grant of exclusive rights that do not extend beyond a term of
12 months (including any extension) from the date of such Contract;
7. Section 6.4(h)(ii)(C); and
8. Section 6.4(h)(ii)(H), unless the amount of such indemnity is
limited so as not to exceed amounts paid to the Company by such Person under
such Contract, provided the terms of such Contract permit the Company to modify
the product or service to avoid infringement and to terminate such Contract if
infringement cannot be avoided.
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SCHEDULE 6.10
LICENSE
(a) License Grant. In the event that the Agreement is terminated pursuant to
Section 6.10 of the Agreement, then effective upon the date of such
termination (such date being hereinafter referred to as the "Grant
Date"), the Company grants to the Parent Parties and their direct and
indirect wholly-owned subsidiaries (collectively, the "Licensees") the
right to a non-exclusive, worldwide license, including the right to
sublicense, to the software, products, services and Intellectual Property
of the Company, but only to the extent that such software, products
and/or services and/or Intellectual Property are made commercially
available by the Company to other parties (the "Licensed Properties").
Upon the request of the Licensees, the Licensees and the Company shall
use commercially reasonable efforts to negotiate customary and
commercially reasonable terms and conditions for one or more license
agreements granting the rights as described above which shall include the
right to make, have made, use, sell and offer for sale one or more or all
of the Licensed Properties in defined territories, fields of use and
particular licenses and for the License periods requested by Licensees,
in each case said terms and conditions being commercially reasonable
terms and conditions given the intention of the Company to grant Licensee
the right to distribute and/or sublicense the Licensed Properties to
other parties (the "License"). Such terms and conditions shall also
include covenant not to assert, release, most-favored-nations provisions,
technology escrow provisions, indemnification provisions and arbitration
provisions substantially set forth respectively in Sections (b), (c),
(d), (e), (f) and (g)(vi) of this Schedule below (the "Required Terms").
(b) Covenant not to assert. As of the Grant Date and until expiration of the
License, the Company irrevocably covenants and agrees as to itself and
its direct and indirect subsidiaries (collectively, the "Company
Entities"), that neither the Company nor any Company Entity shall assert
against any Licensee, Sublicensee, or customer any claim of patent,
copyright, trademark, trade secret or other Intellectual Property
infringement (whether direct or indirect) based upon making, having made,
selling, offering for sale, using, or importing or exporting, the
Licensed Properties and/or any other products or services offered by
Licensee or such products or services of Licensees offered by its
Sublicensees or customers. Notwithstanding the foregoing, (a) the
foregoing covenant as to the Sublicensees and customers shall only
provide protection to such Sublicensees and customers to the extent that
their activities are subject to and authorized by the License and (b) the
Company shall be permitted (i) to assert claims against any Licensee in
the event that such Licensee is in material breach of the terms and
conditions of the License and has not cured such breach after a thirty
day period of time following timely delivery of written notice of such
breach by the Company to such Licensee, provided that Company shall not
assert such claims against Licensee or its Subsidiaries or customers in a
discriminatory fashion, and (ii) to assert any counterclaims in the event
that any Licensee asserts an Intellectual Property claim against any of
the Company Entities (collectively (a) and (b) shall be referred to as
the "Exceptions"). For avoidance of doubt, this covenant shall
3
extend only to the Intellectual Property, products and/or services of the
Company Entities and shall not extend to entities not controlled by the
Company.
(c) Release. As of the Grant Date, the Company Entities grant an irrevocable
release to and for the Licensees (and its Sublicensees and customers to
the extent that their activities are subject to and authorized by the
License), permanently and irrevocably releasing the Licensees (and its
Sublicensees and customers to the extent that their activities are
subject to and authorized by the License) from any and all claims and
liabilities that arose, that may have arisen, that may arise, or that
could have been asserted, whether accrued or unaccrued, as a result of
any past or current or future direct or indirect violation,
misappropriation or infringement of any patent, copyright, trademark,
trade secret, or other Intellectual Property rights owned, purported to
be owned, or assertable or enforceable, now or in the future, by the
Company Entities. With regard to future violations, misappropriations and
infringements, this release shall be subject to the Exceptions set forth
in Section (b) above, and shall apply only to conduct taking place during
the term of the covenant provided in Section (b). With regard to the
Sublicensees and customers of Licensees' products or services, such
release shall only relate to periods of time during which such parties
are Sublicensees and/or customers of Licensees.
(d) Most Favored Nations Provision ("MFN"). The terms and conditions for any
particular License granted in Section (a) above shall include an MFN
provision that provides that the License shall, at the Licensee(s)'
option, be on Economic Terms (defined below) that are at least as
favorable to the Licensee(s) as those Economic Terms granted to the
Company's other licensees or customers after the execution date of the
Agreement.
(i) Conditions for Economic Terms. The Company agrees that if the
Company enters into an agreement (including any written renewal,
extension, or modification of an existing agreement) after the
execution date of the Agreement that provides one or more Economic
Terms that is more favorable to the other licensee or party as
compared to such term(s) as applied to Licensees, then the Company
shall offer Licensees all Economic Terms provided to the third
party. For these purposes, "Economic Terms" shall include, license
fees, royalties, payments, subscriber fees, revenue sharing
percentages, provision of advertising inventory and/or
opportunities, such as local avails, and any other benefit having
an economic benefit.
(ii) Notice of Economic Terms. Company shall promptly notify in writing
Licensees of such Economic Terms and offer Licensees the option to
enter into a written amendment of the License containing the
Economic Terms and all of the terms and conditions in such other
agreement which are directly related to such Economic Terms,
except as set forth below, that have been given or received in
consideration of such Economic Terms ("Additional Terms"). If such
Economic Terms or Additional Terms include Economic Terms that
vary based on subscriber volume which include volumes that are
beyond volumes which may be achieved by Licensees, such subscriber
volume-based Economic Terms shall not be disproportionate to the
volume-based Economic Terms which Licensees can reasonably achieve
at that time. Further, the Economic Terms or Additional Terms may
not include (i) any terms or conditions that require Licensee to
surrender, forfeit, diminish, reduce or which
4
negatively impact the benefit of any one or more of the Required
Terms or Licensee(s)' rights thereto in order to receive the
benefit of one or more of the Economic Terms; or (ii) any terms or
conditions that have been uniquely tailored to or for the benefit
of other parties with the result that such terms cannot be met by
Licensees. Such Economic Terms shall be available to Licensees for
the shorter of (i) the period in which the Economic Terms are
available to others under such agreement, and (ii) the remainder
of the License period. If such Economic Terms are for a shorter
term than Licensee(s)' License period, Licensee(s)' terms and
conditions shall revert to the terms and conditions set forth in
the particular License upon the expiration of such shorter term.
(iii) Election by Licensees. Licensees shall have ninety (90) days from
Licensee(s)' receipt of such notice to accept all of the more
favorable Economic Terms ("More Favorable Terms") and such
Additional Terms. Following such acceptance, the parties shall
utilize commercially reasonable good faith efforts to negotiate
and to enter into an agreement reflecting its acceptance of such
Terms. Licensees shall then use commercially reasonable efforts to
meet and satisfy all mandatory Additional Terms but shall be given
a reasonable time period to comply therewith.
(e) Technology Escrow Agreement. The terms and conditions for any particular
License granted in section (a) above shall require the Company to deposit
all the software, including all source code, technical specifications and
related documentation, needed to support the Licensed Properties
(collectively, the "Deposit"), into an escrow account with a reputable
software escrow agent approved by Licensees, under the terms of the
standard form escrow agreement of the escrow agent which shall run
concurrently with the License. Such escrow agreement shall provide
Licensees with access to the Deposit upon the occurrence of a material
and uncured default or breach by the Company under the License so long as
the Licensees are not themselves also in material default under the
License. During the period of the License, the Company shall further be
obligated to deposit any enhancements, updates, amendments,
modifications, or other changes to the most recent version of the Deposit
(individually or collectively, "Modifications") into escrow within thirty
(30) days from when such Modifications become available in general
commercial release form.
(f) Indemnification. The terms and conditions for any particular License
granted in Section (a) above shall require an indemnification provision
subject to customary and commercially reasonable terms, conditions,
exceptions and limitations to the extent not contrary to the following,
providing that the Company will defend at its sole expense, indemnify,
and hold harmless (without limitation as to amount) any and all Licensees
or any of their Sublicensees (collectively "Indemnitees") in connection
with any claim or assertion made against such Indemnitee(s) that the
activities of such Indemnitee(s) infringes, violates, or misappropriates
any of the Intellectual Property rights of a third party; provided that
such activities were or are due to such Indemnitee's adherence to a
Company specification or comprised or comprises the provision or use of
one or more of the particular Licensed Properties in accordance with the
applicable License; and provided further, that the Company shall not be
required to indemnify any Indemnitee for claims (i) arising from any
modifications made or authorized by an Indemnitee and not supported by
the Company specifications, (ii) arising from any combination by an
5
Indemnitee of the Licensed Properties with other products, processes or
materials where the claim relates to such combination and such
combination was (x) not included in and/or supported by the Company
specifications, (y) not expressly authorized and/or permitted by the
Company and/or (z) not affirmatively supported by the Company in any
commercial deployment wherein the Company indemnified a third party for
such combination, or (iii) to the extent an Indemnitee continues the
activity after being notified thereof or after being provided with
modifications that could have avoided or mitigated damages related to the
claim, in both cases after having the opportunity to cease the offending
activity.
(g) Arbitration.
(i) If, after using commercially reasonable efforts, a Licensee and
the Company cannot reach a mutually satisfactory agreement on the
initial Economic Terms for any particular License (the "Initial
Economic Terms"), then either party may elect to commence
fast-track arbitration to determine the Initial Economic Terms
with respect to such particular License in accordance with this
Section (g). For avoidance of doubt, this process shall be limited
only to resolution of a dispute between the parties regarding the
payment terms of a particular License and shall in no event
involve the MFN, technology escrow, indemnification and
arbitration provisions of Sections (d), (e), (f) and (g)(vi), all
of which are required to be included as terms and conditions in
any and all particular Licenses entered pursuant to or under
Section (a) above. Nor shall this process involve any other
non-Economic Terms, including but not limited to the scope of
defined territories or fields of use, or the selection of the
particular Intellectual Property and/or one or more Licensed
Products. This process shall also at a minimum require that each
party submit its proposed payment terms for the particular License
to an arbitrator (selected in accordance with the provisions
below) and the arbitrator shall select either the payment terms
proposed by the Licensees or those proposed by the Company.
(ii) Such arbitration shall be conducted by the American Arbitration
Association ("AAA") and shall be initiated and conducted in
accordance with the Commercial Arbitration Rules ("Commercial
Rules") of the AAA, as such rules shall be in effect on the date
of delivery of a demand for arbitration ("Demand"), except to the
extent that such rules are inconsistent with the provisions
(including timing provisions) set forth herein.
(iii) Such arbitration shall be conducted pursuant to an arbitration
procedure under which the parties shall jointly select within five
(5) days of the Demand an independent arbitrator through Judicial
Arbitration Mediation Services ("JAMS"), the arbitrator having no
prior, existing, or potential business relationship with either
party or an entity controlled by, controlling, or under common
control with either party. If for any reason the parties cannot
mutually agree on an independent arbitrator within such five (5)
days, JAMS shall appoint an arbitrator it deems reasonable.
Notwithstanding Section 9.9(a) of the Agreement, the location of
such arbitration shall be in New York, New York or as otherwise
mutually agreed upon by the parties. Upon the request of either
party, the arbitrator selected will hear each party's presentation
(including each party's proposed terms and conditions and the
bases therefor) within
6
ten (10) days of such selection. The arbitrator will rule within
five (5) business days following the conclusion of such
presentation by the parties, and such ruling shall be
non-appealable.
(iv) Any award by the arbitrator shall be accompanied by a written
opinion setting forth the findings of fact and conclusions of law
relied upon in reaching the decision. The award rendered by the
arbitrator shall be final, binding, and non-appealable. The
parties agree that the existence, conduct, and content of any
arbitration shall be kept confidential and that no party shall
disclose to any person any information about such arbitration,
except as may be required by law or by any governmental authority
or for financial reporting purposes in each party's financial
statements and except in court proceedings to enforce this
arbitration provision or any award hereunder.
(v) Each party shall pay the fees of its own attorneys, expenses of
witnesses (if any), and all other expenses and costs in connection
with the presentation of such party's case (collectively,
"Attorneys' Fees"). The remaining costs of the arbitration,
including without limitation, fees of the arbitrator, costs of
records or transcripts, and administrative fees (collectively,
"Arbitration Costs") shall be borne equally by the parties.
Notwithstanding the foregoing, the arbitrator may modify the
allocation of Arbitration Costs and award Attorneys' Fees in those
cases in which fairness dictates a different allocation of
Arbitration Costs between the parties and/or an award of
Attorneys' Fees to the prevailing party as determined by the
arbitrator.
(vi) The terms and conditions for the License granted in section (a)
above shall include arbitration provisions substantially similar
to those set forth in section (g)(ii)-(v) above and shall provide
each of the Licensees and the Company with the option to elect
fast-track arbitration in accordance with these sections for
purposes of arbitrating any disputes relating to the MFN and/or
escrow provisions required to be included as terms and conditions
for the License.
7
