Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of November 13, 2000
Among
OPENTV CORP.,
CABLESOFT ACQUISITION COMPANY,
CABLESOFT CORPORATION
AND
SELLING STOCKHOLDERS
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TABLE OF CONTENTS
Page
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TABLE OF CONTENTS................................................................................ i
ARTICLE I The Merger............................................................................. 3
SECTION 1.1. The Merger..................................................................... 3
SECTION 1.2. Closing........................................................................ 3
SECTION 1.3. Effective Time of the Merger................................................... 3
SECTION 1.4. Effects of the Merger.......................................................... 4
SECTION 1.5. Certificate of Incorporation; Bylaws........................................... 4
SECTION 1.6. Directors...................................................................... 4
SECTION 1.7. Officers....................................................................... 4
SECTION 1.8. Exemption from Registration.................................................... 4
ARTICLE II Effect of the Merger on the Capital Stock of the Constituent Corporations............. 4
SECTION 2.1. Effect on Capital Stock........................................................ 4
SECTION 2.2. Exchange of Certificates....................................................... 5
SECTION 2.3. Treatment of Options........................................................... 8
SECTION 2.4. Treatment of Convertible Debt.................................................. 8
ARTICLE III...................................................................................... 9
Representations and Warranties................................................................... 9
SECTION 3.1. Representations and Warranties of the Company.................................. 9
SECTION 3.2. Representations and Warranties of Parent and Sub............................... 13
SECTION 3.3. Tax Matters.................................................................... 15
SECTION 3.4. Representations and Warranties of Each Selling Stockholder..................... 15
ARTICLE IV Covenants Relating to Conduct of Business Prior to Merger............................. 16
SECTION 4.1. Conduct of Business............................................................ 16
ARTICLE V Additional Agreements.................................................................. 19
SECTION 5.1. Access to Information; Confidentiality......................................... 19
SECTION 5.2. Commercially Reasonable Efforts................................................ 19
SECTION 5.3. Indemnification................................................................ 19
SECTION 5.4. Public Announcements........................................................... 20
SECTION 5.5. No Solicitation................................................................ 21
SECTION 5.6. Lock-up Agreement.............................................................. 21
SECTION 5.7. Change of Name................................................................. 21
SECTION 5.8. Section 367 Covenants.......................................................... 21
SECTION 5.9. Funding........................................................................ 22
ARTICLE VI Conditions Precedent.................................................................. 22
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger..................... 22
SECTION 6.2. Conditions to Obligations of Parent and Sub.................................... 22
SECTION 6.3. Conditions to Obligation of the Company........................................ 23
ARTICLE VII Termination, Amendment and Waiver.................................................... 23
SECTION 7.1. Termination.................................................................... 23
SECTION 7.2. Effect of Termination.......................................................... 24
SECTION 7.3. Amendment...................................................................... 24
SECTION 7.4. Extension; Waiver.............................................................. 24
ARTICLE VIII Indemnification..................................................................... 24
SECTION 8.1. Indemnification................................................................ 24
ARTICLE IX General Provisions.................................................................... 26
SECTION 9.1. Expenses....................................................................... 26
SECTION 9.2. Notices........................................................................ 26
SECTION 9.3. Definitions.................................................................... 27
SECTION 9.4. Interpretation................................................................. 29
SECTION 9.5. Counterparts................................................................... 29
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries................................. 29
SECTION 9.7. Selling Stockholders; Attorney-in-Fact......................................... 29
SECTION 9.8. GOVERNING LAW.................................................................. 30
SECTION 9.9. Assignment..................................................................... 30
SECTION 9.10. Enforcement................................................................... 30
SECTION 9.11. Severability of Provisions.................................................... 30
SECTION 9.12. Exclusive Jurisdiction........................................................ 30
SECTION 9.13. Waiver of Jury Trial.......................................................... 30
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AGREEMENT AND PLAN OF MERGER, dated as of November 13, 2000, among
OpenTV Corp., a company organized under the laws of the British Virgin Islands
("Parent"), CableSoft Acquisition Company, a corporation organized under the
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laws of Delaware and a wholly owned subsidiary of Parent ("Sub"), CableSoft
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Corporation, a corporation organized under the laws of Delaware (the "Company"),
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and the stockholders of the Company identified on the signature pages hereto
(collectively, the "Selling Stockholders").
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WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have determined that the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
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Agreement, would be fair and in the best interests of their respective
stockholders;
WHEREAS, such Boards of Directors have approved the Merger, pursuant
to which each share of Common Stock, par value $0.01, of the Company (the
"Company Common Stock"), other than shares owned, directly or indirectly, by
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Sub, will be converted into the right to receive the Merger Consideration (as
defined herein);
WHEREAS, the holders of a majority of the outstanding shares of the
Company Common Stock have approved the Merger and this Agreement by written
consent (the "Company Stockholder Approval");
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WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
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SECTION 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "Delaware Code"), Sub shall be merged with and
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into the Company at the Effective Time of the Merger. At the Effective Time of
the Merger, the separate existence of Sub shall cease, and the Company shall
continue as the surviving corporation.
SECTION 1.2. Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
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at the offices of General Instrument Corporation as soon as practicable after
the satisfaction of the conditions set forth in Section 6.1 (or as soon as
practicable thereafter following satisfaction or waiver of the conditions set
forth in Sections 6.2 and 6.3) (the "Closing Date"), unless another date, time
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or place is agreed to in writing by the parties hereto.
SECTION 1.3. Effective Time of the Merger. As soon as practicable
following the satisfaction or waiver of the conditions set forth in Article VI,
the parties hereto shall cause the
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Merger to be consummated by filing a certificate of merger with the Secretary of
State of the State of Delaware, in such form as required by and executed in
accordance with the relevant provisions of the Delaware Code (the date and time
of the filing of such certificate of merger with the Secretary of State of the
State of Delaware being the "Effective Time of the Merger").
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SECTION 1.4. Effects of the Merger. The Merger shall have the effects
set forth in this Agreement and in the applicable provisions of the Delaware
Code. As used herein, "Surviving Corporation" shall mean and refer to the
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Company, at and after the Effective Time of the Merger, as the surviving
corporation in the Merger.
SECTION 1.5. Certificate of Incorporation; Bylaws. (a) At the
Effective Time of the Merger, and without any further action on the part of the
Company or Sub, the certificate of incorporation of the Sub as in effect at the
Effective Time of the Merger shall be the certificate of incorporation of the
Surviving Corporation.
(b) At the Effective Time of the Merger, and without any further
action on the part of the Company or Sub, the bylaws of Sub as in effect at the
Effective Time of the Merger shall be the bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6. Directors. The directors of Sub at the Effective Time of
the Merger shall be the directors of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.7. Officers. The officers of the Sub at the Effective Time
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their death, respective
successors are duly elected or appointed and qualified, as the case may be.
SECTION 1.8. Exemption from Registration. The shares of Parent Common
Stock to be issued in connection with the Merger will be issued in a transaction
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of Rule 506 of Regulation D thereof and under the
blue sky laws of all applicable jurisdictions.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations
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SECTION 2.1. Effect on Capital Stock. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
Company, Sub or any holder of any shares of Company Common Stock or any shares
of capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time of the Merger shall be
converted into one share of the common stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancellation of Parent-Owned Company Common Stock. Each share of
Company Common Stock that is owned by Sub shall automatically be canceled and
retired and
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shall cease to exist, and no cash, Parent Common Stock or other consideration
shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.2(c),
2.2(e) and 2.2(g), each issued and outstanding share of Company Common Stock
(other than shares canceled pursuant to Section 2.1(b) shall be converted into
the right to receive a fraction equal to the Exchange Ratio of a Class A
Ordinary Share, no par value, of Parent (the "Parent Common Stock") (the amount
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of Parent Common Stock into which each such share of Company Common Stock is
converted being referred to herein as the "Merger Consideration").
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(d) Cancellation and Retirement of Company Common Stock. At the
Effective Time of the Merger, all shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
Company Common Stock (collectively, the "Certificates") shall, to the extent
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such Certificate represents such shares, cease to have any rights with respect
thereto, except the right to receive the Merger Consideration (and cash in lieu
of fractional shares of Parent Common Stock) to be issued or paid in
consideration therefor upon surrender of such Certificate in accordance with
Section 2.2.
SECTION 2.2. Exchange of Certificates. (a) Exchange Agent. At the
Effective Time of the Merger, Parent shall enter into an agreement with Xxxxx
Xxxxxx Shareholder Services, LLC or such bank or trust company as may be
designated by Parent (the "Exchange Agent") which shall provide that Parent
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shall deposit with the Exchange Agent, for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Parent Common Stock issuable pursuant to Section 2.1
in exchange for outstanding shares of Company Common Stock, together with any
dividends or distributions with respect thereto with a record date after the
Effective Time of the Merger, and any cash payable in lieu of any fractional
shares of Parent Common Stock (such shares and cash being hereinafter referred
to as the "Exchange Fund").
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(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder of
record of Certificates immediately prior to the Effective Time of the Merger
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.1(c), (i) a letter of transmittal (which shall
specify 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, and which shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article II (after taking into account all shares of Company Common Stock then
held by such holder), certain dividends or other distributions in accordance
with Section 2.2(c) and cash in lieu of any fractional share in accordance with
Section 2.2(e), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Company Common Stock which
is not registered in the
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transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the Certificate
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2 each Certificate shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such surrender the Parent
Common Stock into which the shares of Company Common Stock represented by such
Certificate have been converted as provided in this Article II and the right to
receive upon such surrender cash in lieu of any fractional shares of Parent
Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e), until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
distributed to any such holder (i) the certificate or certificates representing
whole shares of Parent Common Stock issued in exchange therefor without
interest, (ii) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and the amount of any dividends or other
distributions with a record date after the Effective Time of the Merger
theretofore paid (but withheld pursuant to the immediately preceding sentence)
with respect to such whole shares of Parent Common Stock, and (iii) at the
appropriate payment date, the amount of any dividends or other distributions
with a record date after the Effective Time of the Merger but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of shares of Company Common Stock in
accordance with the terms hereof, and all cash paid pursuant to Sections 2.2(c)
and 2.2(e), shall be deemed to have been issued 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
Corporation of the shares of Company Common Stock which were outstanding prior
to the Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In lieu
of such issuance of fractional shares, the Exchange Agent shall pay from the
Exchange Fund each holder of Certificates an amount in cash equal to the product
obtained by multiplying (a) the fractional share interest to which such holder
(after taking into account all shares of Company Common Stock held immediately
prior to the Effective Time of the Merger by such holder) would otherwise be
entitled by (b) the Parent Common Stock Price.
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(ii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates with respect to any
fractional share interests, the Exchange Agent shall make available such amounts
to such holders of Certificates, subject to and in accordance with the terms of
Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
deposited with the Exchange Agent pursuant to this Section 2.2 which remains
undistributed to the holders of the Certificates for six months after the
Effective Time of the Merger shall be delivered to Parent, upon demand, and any
holders of Certificates prior to the Merger who have not theretofore complied
with this Article II shall thereafter look only to Parent and only as general
creditors thereof for payment of their claim for Parent Common Stock, cash in
lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock to which such holders may be
entitled.
(g) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any shares of Parent Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to three years after the Effective Time of the Merger, or
immediately prior to such earlier date on which any Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock would otherwise escheat to or
become the property of any Governmental Entity, any such Merger Consideration or
cash shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Withholding. Each of the Exchange Agent, Parent, and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state, local
or foreign tax law or under any other applicable legal requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the person to whom
such amounts would otherwise have been paid.
(j) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Company Common Stock (and cash in lieu of fractional shares) as may be required
pursuant to Section 2.1; provided, however, that Parent may, in its discretion
and as a condition precedent to such issuance require the owner of such lost,
stolen or destroyed Certificates to provide an agreement of indemnification to
Parent in a form reasonably satisfactory to Parent as indemnity against any
claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
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SECTION 2.3. Treatment of Options. (a) At the Effective Time of the
Merger, each outstanding option to purchase Company Common Stock (a "Company
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Stock Option") issued pursuant to the CSS Acquisition Corporation 2000 Special
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Stock Incentive Plan or the CSS Acquisition Corporation 2000 Stock Plan (the
"Company Stock Plans"), whether vested or unvested, shall be deemed to
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constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, the same number of shares of Parent
Common Stock as the holder of such Company Stock Option would have been entitled
to receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time of the Merger (without giving effect to
the Option Exercise Adjustment), at a price per share equal to (y) the aggregate
exercise price for the shares of Company Common Stock otherwise purchasable
pursuant to such Company Stock Option divided by (z) the number of full shares
of Parent Common Stock deemed purchasable pursuant to such Company Stock Option;
provided, in determining the aggregate exercise price for the shares of Company
Common Stock under (y) above, fractions of a cent shall be rounded up to the
nearest cent; provided, in determining the number of shares of Parent Common
Stock under (z) above, fractional shares shall be rounded down to the nearest
whole share and; provided, further, that in the case of any option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code ("incentive stock options"), the option price, the number of shares
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purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424(a) of the
Code.
(b) As soon as practicable after the Effective Time of the Merger,
Parent shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the Company Stock Plans and the
agreements evidencing the grants of such Company Stock Options shall continue in
effect on the same terms and conditions (subject to adjustments required by this
Section 2.3 after giving effect to the Merger and the provisions set forth above
and until otherwise determined). If necessary, Parent shall comply with the
terms of the Company Stock Plans and ensure, to the extent required by, and
subject to the provisions of, the Company Stock Plans, that Company Stock
Options that qualified as incentive stock options prior to the Effective Time of
the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
(c) Prior to the Effective Time of the Merger, Parent shall have taken
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Company Stock
Options. As soon as practicable after the Effective Time of the Merger, Parent
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), or another appropriate form, with
respect to the shares of Parent Common Stock subject to such options and shall
use its reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
SECTION 2.4. Treatment of Convertible Debt. The Convertible Debt shall
be converted into the right to receive the whole number of shares of Parent
Common Stock equal to (i) the amount of outstanding principal and accrued but
unpaid interest payable as of the Closing Date under such Convertible Debt
divided by (ii) the Parent Common Stock Price. A certificate representing the
shares of Parent Common Stock to which each holder of Convertible Debt shall be
entitled pursuant to this Section 2.4 shall be delivered to such holder at such
time as the
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Exchange Agent delivers to such holder a certificate representing the number of
whole shares of Parent Common Stock that such holder is entitled to receive in
respect of all Certificates held by such holder that are surrendered for
exchange pursuant to the provisions of Article II of this Agreement. Each holder
of Convertible Debt agrees that, upon issuance of the shares of Parent Common
Stock pursuant to this Section 2.4, all Convertible Debt held by such holder
shall be deemed paid in full as of the Closing Date and that the Company shall
have no further obligations to such holder under the Convertible Debt.
ARTICLE III
Representations and Warranties
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SECTION 3.1. Representations and Warranties of the Company. Except as
set forth in the disclosure schedule of the Company dated as of the date hereof
and delivered herewith to Parent (the "Company Disclosure Schedule"), the
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Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is duly
organized, validly existing and in good standing under the laws of Delaware and
has the requisite corporate power and authority to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect with respect to the Company. Complete and correct copies of the
Certificate of Incorporation, as amended, and the Company's By-laws, as amended
(the "By-laws"), as currently in effect have previously been provided to Parent
and Sub. The Company is not in violation of its Certificate of Incorporation or
By-laws.
(b) Subsidiaries. The Company does not have any subsidiaries.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 3,333,333 shares of Company Common Stock, par value $0.01
per share. As of the date hereof, there are: (A) 1,035,046 shares of Company
Common Stock issued and outstanding; and (B) 115,129 shares of Company Common
Stock reserved for issuance upon exercise of outstanding Company Stock Options
(which Company Stock Options have exercise prices as specified in Section 3.1(b)
of the Company Disclosure Schedule). Except as set forth above, as of the date
hereof, there are no shares of capital stock or other equity securities of the
Company issued, reserved for issuance or outstanding.
(ii) All outstanding shares of capital stock of the Company were
not issued in violation of preemptive rights or rights of first refusal; all
outstanding shares of Company capital stock are duly authorized, validly issued,
fully paid and non-assessable and are free of any liens; and all shares of
Company Common Stock which may be issued pursuant to the Company Stock Plans
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and free of any liens and not subject to preemptive rights or
rights of first refusal.
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(iii) All outstanding shares of capital stock of the Company (and
all options for shares of Company Common Stock which were issued pursuant to the
Company Stock Plans) were issued in compliance with all applicable federal and
state securities laws.
(iv) Except for the Convertible Debt, there are no outstanding
bonds, debentures, notes or other indebtedness or debt securities of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote (collectively, "Voting Debt"). Except for the Company Stock Options and
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the Convertible Debt, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company is a party or by which it is bound obligating the Company
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments, understandings or
arrangements of the Company to repurchase, redeem or otherwise acquire or make
any payment in respect of any shares of capital stock of the Company.
(d) Authority; Noncontravention. (i) The Company has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and (assuming due authorization, execution and delivery by Parent
and Sub) constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement do not, and the
consummation by the Company of the transactions contemplated by this Agreement
and compliance by the Company with the provisions hereof will not, conflict
with, or result in any breach or violation of, or any default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of, or a "put" right with respect to any obligation
under, or to a loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of the Company under, (A) the
Certificate of Incorporation or By-laws, (B) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, or (C) subject to the governmental filings and other matters referred
to in the following sentence, any material judgment, order, decree, statute,
law, ordinance, rule, regulation, settlement or arbitration award ("Order")
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applicable to the Company or its properties or assets, other than, in the case
of clause (B), any such conflicts, breaches, violations, defaults, rights,
losses or liens that individually or in the aggregate would not have a Material
Adverse Effect with respect to the Company or prevent or materially delay the
ability of the Company to consummate the transactions contemplated by this
Agreement. Except as would not have a Material Adverse Effect, no consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
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domestic or foreign (a "Governmental Entity"), is required by or with respect to
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the Company in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby or the performance by the Company of its obligations hereunder, except
for (x) the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and (y) those required under the Delaware Code.
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(e) Litigation; Compliance with Laws. Except as set forth in Section
3.1(e) of the Company Disclosure Schedule, there is (A) no suit, action, claim,
arbitration, inquiry, complaint, charge or other proceeding ("Litigation")
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pending before any court, governmental agency, administrative agency or
commission, and (B) to the knowledge of the Company, no Litigation threatened
against or investigation or inquiry pending with respect to the Company, nor is
there any judgment, decree, citation, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company. The business
of the Company is not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for any such violation, if any,
that individually or in the aggregate would not have a Material Adverse Effect
with respect to the Company.
(f) Employee Benefit Plans. Except as set forth in Section 3.1(f) of
the Company Disclosure Schedule, the Company has no employee benefit plans,
agreements, programs, policies or other arrangements, under which any employee
or former employee of the Company has any present or future right to benefits or
under which the Company has any present or future liability ("Company Employee
----------------
Plans"). Except as set forth in Section 3.1(f) of the Company Disclosure
-----
Schedule, (i) there has been no "prohibited transaction," as such term is
defined in Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and Section 4975 of the Code, and not exempt under Section
408 of ERISA or Section 4975 of the Code, with respect to any Company Employee
Plan, which would reasonably be expected to have, in the aggregate, a Material
Adverse Effect; (iii) each Company Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not have, in the aggregate, a Material Adverse Effect, and
Company or any ERISA affiliate have performed all obligations required to be
performed by them under, are not in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the Company
Employee Plans, except as would not have, in the aggregate, a Material Adverse
Effect; and no compensation paid or payable to any employee of Company has been,
or will be, non-deductible by reason of application of Section 162(m) or 280G of
the Code. The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
Company or any other ERISA affiliate to severance benefits or any other payment
(including, without limitation, unemployment compensation, golden parachute or
bonus), except as expressly provided in this Agreement, or (ii) accelerate the
time of payment or vesting of any such benefits, or increase the amount of
compensation due any such employee or service provider. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of Company (ii) materially
increase any benefits otherwise payable by Company, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits. Section
3.1(f) of the Company Disclosure Schedule contains a complete list all contracts
and agreements relating to
12
employment that provide for annual compensation in excess of $100,000 and all
severance agreements, with any of the directors, officers or employees of
Company.
(g) Real Property. Section 3.1(g) of the Company Disclosure Schedule
lists all material real property leases to which the Company is a party as a
lessee (the "Company Real Property Lease Agreements"). The Company does not own
--------------------------------------
any real property. The Company has a valid and binding leasehold interest in,
the property that is the subject of the Company Real Property Lease Agreements
free and clear of all liens, except for Permitted Liens. The Company has made
available to Parent true, correct and complete copies of each Company Real
Property Lease Agreement.
(h) Brokers; Legal and Accounting Fees. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its affiliates. The Company is not obligated
to pay any fees or expenses of any Selling Stockholder in connection with this
Agreement and the transactions contemplated by this Agreement. The Company has
not incurred any legal or accounting fees or any expenses in connection with
this Agreement and the transactions contemplated by this Agreement.
(i) Tax Matters. To the Company's knowledge, neither the Company nor
any of its affiliates has taken or agreed to take any action that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(j) Financial Statements. Section 3.1(j) of the Company Disclosure
Schedule includes a true, correct and complete copy of Company's unaudited
statement of operations and related balance sheet as at, and for the six-month
period ended June 30, 2000 (collectively, the "Financial Statements"). Except as
--------------------
set forth in Section 3.1(j) of the Company Disclosure Schedule, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles (except that the Financial Statements do not have notes thereto)
applied on a consistent basis throughout the periods indicated and with each
other. Except as set forth in Section 3.1(j) of the Company Disclosure Schedule,
the Financial Statements present fairly in all material respects the financial
condition and results of operations of the Company as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments. The
Financial Statements were prepared in accordance with the books and records of
the Company. The Company has not modified its standard system of accounting
since the date of the Financial Statements.
(k) Absence of Undisclosed Liabilities. The Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet as of June 30, 2000 (the "Company Balance Sheet"), (ii)
---------------------
obligations and liabilities incurred in the ordinary course of business since
the Company Balance Sheet date, and (iii) obligations and liabilities pursuant
to contracts, agreements or arrangements disclosed in Section 3.1(l) of the
Company Disclosure Schedule and not required to be reflected on the Company
Balance Sheet.
(l) Material Contracts. Section 3.1(l) of the Company Disclosure
Schedule contains a list of all contracts, agreements and arrangements to which
the Company is a party
13
and that are material to the business, results of operations, or condition
(financial or otherwise), of the Company (such contracts, agreements and
arrangements as are required to be set forth in Section 3.1(l) of the Company
Disclosure Schedule being referred to herein collectively as the "Material
--------
Contracts"). The Company is not in default under or in material breach of any
---------
Material Contract, and, to the Company's knowledge, no other party to any
Material Contract is in default under or in material breach of any Material
Contract. The Company has not received written notice of any termination or
change to, or receipt of a proposal with respect to, any Material Contract in
connection with the Merger or any other notice of termination for any Material
Contract. The Company has made available to the Parent true and complete copies
of all Material Contracts together with all amendments, waivers or other changes
thereto.
SECTION 3.2. Representations and Warranties of Parent and Sub Parent
and Sub represent and warrant to the Company and to the Selling Shareholders as
follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
and each of Parent's "significant subsidiaries" (within the meaning of Rule 1-02
of Regulation S-X of the SEC) (collectively, the "Parent Subsidiaries") is duly
-------------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent, Sub
and the Parent Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction (domestic or foreign) in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not reasonably be expected to have a Material Adverse Effect with respect to
Parent. Parent has made available to the Company complete and correct copies of
its certificate of incorporation and bylaws and the articles of incorporation
and bylaws of Sub.
(b) Capital Structure. (i) As of the date of this Agreement, the
authorized capital stock of Parent consists of 500,000,000 Class A Ordinary
Shares of no par value, 200,000,000 Class B Ordinary Shares of no par value and
500,000,000 Class C Preference Shares of no par value. As of September 30, 2000,
there were: (A) 31,030,868 Class A Ordinary Shares outstanding, (B) 30,631,746
Class B Ordinary Shares outstanding and (C) 11,561,103 Class A Ordinary Shares
reserved for issuance pursuant to Parent's stock option plans, Parent's employee
stock purchase plan and Parent's exchange plan (relating to the exchange of
OpenTV, Inc. common stock for Parent Class A Ordinary Shares) (such plans, the
"Parent Stock Plans").
------------------
(ii) All outstanding shares of capital stock of Parent are, and all
shares which may be issued as described above will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There is no outstanding Voting Debt of Parent. Except as set
forth above, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Parent is a party or by which it is bound obligating Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
Parent Common Stock or obligating Parent to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
(iii) Except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement and as disclosed to the Company after the date of this
Agreement and prior to
14
the Closing Date, and except for the issuance by the Parent of its Parent Common
Stock in connection with the exercise by employees and former employees of
options and exchange rights under Parent's benefit plans, there has not been any
material change to the capitalization of Parent or its outstanding capital stock
(including securities which are convertible into, or exercisable or exchangeable
for Parent Common Stock). As of the date hereof and except for the issuance by
Parent of its Parent Common Stock in connection with the exercise by employees
and former employees of options and exchange rights under Parent's benefit
plans, Parent does not have any current intention to make any material change to
the capitalization of Parent or its outstanding Parent Common Stock (including
securities which are convertible into, or exercisable or exchangeable for Parent
Common Stock).
(iv) As of the date hereof, the authorized capital stock of Sub
consists of 20,000 shares of capital stock, of which 10,000 shares are
designated common stock, par value $0.001 per share, and 10,000 are designated
preferred stock, par value $0.001 per share. As of the date hereof, 1000 shares
of such common stock of Sub are outstanding, have been validly issued, are fully
paid and nonassessable and are owned by Parent, free and clear of any lien. At
the Effective Time of the Merger, all the issued and outstanding shares of the
common stock of Sub will be owned by Parent free and clear of any lien, and no
shares of the preferred stock of Sub will be issued and outstanding.
(c) Authority; Noncontravention. (i) Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub. This Agreement has been duly executed and
delivered by each of Parent and Sub and (assuming due authorization, execution
and delivery by the Company) constitutes the valid and binding obligations of
Parent and Sub, enforceable against each of them in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law).
(ii) The execution and delivery of this Agreement do not, and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement and compliance by Parent and Sub with the provisions of this Agreement
will not, conflict with, or result in any breach or violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of, or a "put" right with
respect to any obligation under, or to a loss of a material benefit under, or
result in the creation of any lien upon any of the properties or assets of
Parent, Sub or any Parent Subsidiary under, (A) the certificate of incorporation
(or similar organizational document) or bylaws of Parent, Sub or such Parent
Subsidiary, or (B) subject to the governmental filings and other matters
referred to in the following sentence, any Order applicable to Parent, Sub, any
Parent Subsidiary or their respective properties or assets, other than, in the
case of clause (B), any such conflicts, breaches, violations, defaults, rights,
losses or liens that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect with respect to Parent or prevent or
materially delay the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement or perform their respective obligations
hereunder. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity
15
is required by or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement or the consummation by Parent and Sub of any of
the transactions contemplated hereby, except for (v) the filing of a premerger
notification and report form under the HSR Act, (w) the filing with the SEC and
the Nasdaq National Market of such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the filing of such reports by Parent
------------
with the Amsterdam Stock Exchange and the Securities Board of the Netherlands as
may be required under applicable Netherlands law, as may be required in
connection with this Agreement and the transactions contemplated hereby, (x)
those required by the Delaware Code, (y) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices as may be
required under the "takeover" or "blue sky" laws of various states and (z) such
other consents, approvals, orders, authorizations, registrations, declarations,
filings or notices the failure of which to make or obtain, individually or in
the aggregate, would not (1) prevent or materially delay consummation of the
Merger or the other transactions contemplated hereby or performance of Parent's
and Sub's obligations hereunder or (2) have a Material Adverse Effect with
respect to Parent.
(d) Parent SEC Reports. Parent has filed all forms, reports,
statements and documents required to be filed with the SEC since November 23,
1999 (collectively with all exhibits and schedules thereto and documents
incorporated by reference therein, the "Parent SEC Reports"). Except to the
------------------
extent revised or superseded by a subsequent filing with the SEC, none of the
Parent SEC Reports filed prior to the date hereof, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(e) Absence of Certain Changes or Events. Except as disclosed in the
Parent SEC Reports filed prior to the date hereof, there is not and has not been
any Material Adverse Change with respect to Parent.
(f) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Sub.
(g) Interim Operations of Sub. Sub was formed on October 13, 2000
solely for purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 3.3. Tax Matters. To Parent's knowledge, neither Parent nor
any of its affiliates has taken or agreed to take any action that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION 3.4. Representations and Warranties of Each Selling
Stockholder. Each Selling Stockholder, severally and not jointly, represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Such Selling
Stockholder, to the extent such Selling Stockholder is a legal entity and not an
individual, is duly organized,
16
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted.
(b) Authority; Noncontravention. Such Selling Stockholder has the
requisite corporate or other power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by such Selling Stockholder and the consummation by
such Selling Stockholder of the transactions contemplated hereby have been duly
authorized by all necessary corporate or other action on the part of such
Selling Stockholder. This Agreement has been duly executed and delivered by such
Selling Stockholder and (assuming due authorization, execution and delivery by
the other parties hereto) constitutes the valid and binding obligation of such
Selling Stockholder, enforceable against such Selling Stockholder in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law).
(c) Accredited Investor. Such Selling Stockholder is an accredited
investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
ARTICLE IV
Covenants Relating to Conduct of Business Prior to Merger.
---------------------------------------------------------
SECTION 4.1. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective Time
of the Merger (except as otherwise expressly contemplated by the terms of this
Agreement), and except as approved by Parent, which approval shall not be
unreasonably withheld or delayed, the Company shall act and carry on its
businesses in the ordinary course of business consistent with past practice and
use its commercially reasonable efforts to preserve substantially intact its
current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having significant business
dealings with it. Without limiting the generality of the foregoing and except as
set forth in Section 4.1 of the Company Disclosure Schedule, during the period
from the date of this Agreement to the Effective Time of the Merger, the Company
shall not, and the Selling Stockholders shall cause the Company not to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (B) split, combine
or reclassify any capital stock of the Company or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of the Company, other than any issuance permitted by
Section 4.1(a)(ii), or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or
17
convertible securities or any other securities or equity equivalents (including
without limitation stock appreciation rights), other than the issuance of
Company Common Stock upon the exercise of Company Stock Options awarded prior to
the date of this Agreement but unexercised on the date of this Agreement in
accordance with their present terms;
(iii) amend its Certificate of Incorporation or By-laws;
(iv) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the stock or assets of, or by any
other manner, any business or any corporation, limited liability company,
partnership, joint venture, association or other business organization or
division thereof;
(v) except in the ordinary course of business, lease, license,
mortgage or otherwise encumber or subject to any lien (other than Permitted
Liens) or otherwise dispose of any of its properties or assets other than any
such properties or assets the value of which do not exceed $25,000 individually
and $100,000 in the aggregate;
(vi) (A) except as set forth in Section 4.1(a)(vi)(A) of the Company
Disclosure Schedule, incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another person, or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings (not exceeding $100,000 in the aggregate), or (B) make any loans,
advances or capital contributions to, or investments in, any other person;
(vii) other than in connection with the transactions contemplated by
this Agreement, adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(viii) change any accounting principle used by it, except as required
by generally accepted accounting principles;
(ix) settle or compromise any litigation or claim (whether or not
commenced prior to the date of this Agreement) , other than settlements or
compromises of litigation or claims that do not provide for injunctive or
similar relief and where the amount paid (after giving effect to insurance
proceeds actually received) in settlement or compromise does not exceed $25,000,
provided that the aggregate amount paid in connection with the settlement or
compromise of all such litigation matters shall not exceed $100,000;
(x) enter into, terminate or amend any agreement pursuant to which
any other party is granted exclusive marketing or other exclusive rights of any
type or scope with respect to any of its products or technology;
(xi) make or change any tax election, change any annual tax
accounting period, change any method of tax accounting, file any amended tax
return, enter into any closing agreement relating to any tax, settle any tax
claim or assessment, surrender any right to claim a tax refund or consent to any
extension or waiver of the limitations period applicable to any tax claim or
assessment;
18
(xii) (A) adopt or amend (except as may be required by law) any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any employee, director or
former director or employee or (B) other than increases for individuals (other
than officers and directors) in the ordinary course of business consistent with
past practice, increase the compensation or fringe benefits of any director,
employee or former director or employee or pay any benefit not required by any
existing plan, arrangement or agreement;
(xiii) grant any new or modified severance or termination arrangement
or increase or accelerate any benefits payable under its severance or
termination pay policies in effect on the date hereof; or
(xiv) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Conduct of Business by Parent. During the period from the date of this
Agreement to the Effective Time of the Merger (except as otherwise expressly
contemplated by the terms of this Agreement), and except as approved by the
Company, which approval shall not be unreasonably withheld or delayed, Parent
shall not:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, Parent Common Stock, other than stock splits in the
form of a stock dividend or (B) combine or reclassify the Parent Common Stock or
issue or authorize the issuance of any other securities in lieu of or in
substitution for shares of Parent Common Stock; or
(ii) authorize, or commit or agree to take, any of the foregoing
actions.
(c) Tax-Free Reorganization Treatment. The Company and Parent shall not,
and shall not permit any of their respective subsidiaries to, intentionally take
or cause to be taken any action which would disqualify the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
(d) Other Actions. The Company and Parent shall not, and shall not permit
any of their respective subsidiaries to, (i) intentionally take any action that,
if taken on or prior to the date of this Agreement, would have resulted in any
of its representations and warranties set forth in this Agreement being untrue,
(ii) intentionally take any action that would or reasonably might be expected to
result in any of the conditions set forth in Article VI not being satisfied, or
(iii) intentionally take any action that would reasonably be expected to
materially delay or impair the ability of such party to consummate the
transactions contemplated by this Agreement. The Company and Parent shall
promptly advise the other party orally and in writing of (A) any action of the
type set forth in clause (i) above, (B) the failure by such party to comply with
any covenant, condition or agreement hereunder and (C) any event which would
reasonably be expected to cause the conditions set forth in Article VI not being
satisfied; provided, however, that no such notice shall affect the
representations, warranties, covenants and agreement of the parties or the
conditions to their obligations hereunder.
19
ARTICLE V
Additional Agreements
---------------------
SECTION 5.1. Access to Information; Confidentiality. The Company
shall, and shall cause its officers, employees, counsel, financial advisors and
other representatives to, afford to the Parent and its representatives
reasonable access during normal business hours, during the period prior to the
Effective Time of the Merger, to its properties, books, contracts, commitments,
personnel and records, and, during such period, the Company shall, and shall
cause its respective officers, employees and representatives to, furnish
promptly to the Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties, financial condition, operations and
personnel as Parent may from time to time reasonably request. The Parent shall,
and shall cause its respective officers, employees and representatives to,
furnish promptly to the Company any information concerning its business,
properties, financial condition, operations and personnel as Company may from
time to time reasonably request, provided such requested information is not
included in any report, schedule, registration statement or other document filed
by Parent pursuant to the requirements of federal or state securities laws. Each
of the Company and Parent will hold, and will cause its respective directors,
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in confidence.
No investigation pursuant to this Section 5.1 shall affect any representations
or warranties of the parties herein or the conditions to the obligations of the
parties hereto.
SECTION 5.2. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (a) obtaining all consents, approvals,
waivers, licenses, permits or authorizations as are required to be obtained
under any applicable law or regulation or from any Governmental Entities or
third parties in connection with the transactions contemplated by this
Agreement, (b) defending any lawsuits or other proceedings challenging this
Agreement and (c) accepting and delivering additional instruments necessary to
consummate the transactions contemplated by this Agreement. The Company agrees
that Parent shall have the opportunity to negotiate and consult directly with
all applicable Governmental Entities in connection with their consideration of
the transactions contemplated by this Agreement; provided, however, that Parent
will consult with the Company before submitting, and will afford the Company the
opportunity to review and comment upon, any materials or other statements with
respect to such transaction to such Governmental Entities.
SECTION 5.3. Indemnification. From and after the Effective Time of the
Merger, Parent and the Surviving Corporation shall indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time of the Merger eligible for
indemnification pursuant to the Certificate of Incorporation and By-laws (the
"Indemnitees") against (a) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement of or in
connection with
20
any claim, action, suit, proceeding or investigation based in whole or in part
on or arising in whole or in part out of the fact that such person is or was a
director, officer or employee of the Company, arising as a result of any act, or
failure to act, at or prior to the Effective Time of the Merger, whether
asserted or claimed prior to, or at or after, the Effective Time of the Merger
("Indemnified Liabilities") and (b) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the extent
the Company would have been permitted under the Certificate of Incorporation and
By-laws to indemnify such person. Nothing contained herein shall limit any
rights to indemnification which any director or officer of the Company may have
under any indemnification agreement or the Certificate of Incorporation or By-
laws. In the event any such claim, action, suit, proceeding or investigation is
brought against any Indemnitees (whether arising before or after the Effective
Time of the Merger), (A) any counsel retained by the Indemnitees for any period
after the Effective Time of the Merger shall be reasonably satisfactory to
Parent and the Surviving Corporation; (B) after the Effective Time of the
Merger, the Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnitees promptly as statements therefor are received;
and (C) after the Effective Time of the Merger, the Surviving Corporation will
cooperate in the defense of any such matter; provided, that the Surviving
Corporation shall not be liable for any settlement of any claim effected without
its written consent, which consent, however, shall not be unreasonably withheld;
and, provided further, the maximum liability of Parent and the Surviving
Corporation under this Section 5.3 to indemnify the Indemnitees shall, in the
aggregate, including all fees and expenses, not exceed the value of the assets
of the Company immediately prior to the Effective Time of the Merger. Any
Indemnitee wishing to claim indemnification under this Section 5.3(i), upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Parent and the Surviving Corporation (but the failure so to notify the
Surviving Corporation shall not relieve Parent or the Surviving Corporation from
any liability which they may have under this Section 5.3(i) except to the extent
such failure materially prejudices Parent and the Surviving Corporation), and
shall deliver to Parent and the Surviving Corporation the undertaking, if any,
required by the Delaware Code. Parent and the Surviving Corporation shall be
liable for the reasonable fees and expenses hereunder with respect to only one
law firm to represent the Indemnitees as a group with respect to each such
matter unless there is, under applicable standards of professional conduct, a
conflict between the positions of any two or more Indemnitees that would
preclude or render inadvisable joint or multiple representation of such parties.
SECTION 5.4. Public Announcements. Neither Parent and Sub, on the one
hand, nor the Company, on the other hand, will issue any press release or public
statement with respect to the transactions contemplated by this Agreement,
including the Merger, without the other party's prior consent (such consent not
to be unreasonably withheld or delayed), except as may be required by applicable
law, court process or by obligations pursuant to any agreement with, or rules
of, any securities exchange or quotation system on which securities of the
disclosing party are listed or quoted. In addition to the foregoing, Parent, Sub
and the Company will, if practicable under the circumstances, consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with respect to
such transactions that may be required by the exception in the preceding
sentence. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall be
mutually agreed upon prior to the issuance thereof.
21
SECTION 5.5. No Solicitation. The Company shall not (whether directly
or indirectly through advisors, agents or other intermediaries) authorize or
permit any of its officers, directors, agents, representatives or advisors to
(a) solicit, initiate or take any action knowingly to facilitate the submission
of inquiries, proposals or offers from any person (other than Sub or Parent)
relating to (i) any acquisition or purchase of 15% or more of the consolidated
assets of the Company or of over 15% of any class of equity securities of the
Company, (ii) any tender offer (including a self tender offer) or exchange offer
that if consummated would result in any person beneficially owning 15% or more
of any class of equity securities of the Company, (iii) any merger,
consolidation, business combination, sale of substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company other than the transactions contemplated by this Agreement, or (iv) any
other transaction the consummation of which would or would reasonably be
expected to impede, interfere with, prevent or materially delay the Merger
(collectively, "Transaction Proposals"), or agree to or endorse any Transaction
---------------------
Proposal, or (b) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any information
with respect to its business, properties or assets in connection with any of the
foregoing, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any other
person (other than Sub or Parent) to do or seek any of the foregoing. The
Company will immediately cease and cause its advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing, and shall use its reasonable best efforts to cause any such parties
in possession of confidential information about the Company that was furnished
by or on behalf of the Company to return or destroy all such information in the
possession of any such party or in the possession of any agent or advisor of any
such party.
SECTION 5.6. Lock-up Agreement. Each of General Instrument Corporation
("GIC") and Cablesoft Communications, Inc. ("CCI"), severally and not jointly,
agree, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of (i) 50% of any Parent Common Stock received
in the Merger on or before the first anniversary of the Closing Date and (ii)
the remaining 50% of the Parent Common Stock received in the Merger on or before
the second anniversary of the Closing Date.
SECTION 5.7. Change of Name. As soon as practicable after the Closing,
Cablesoft Communications, Inc. covenants and agrees to change its name to
another name that does not include the name "Cablesoft" or any derivative
thereof.
SECTION 5.8. Section 367 Covenants. Parent acknowledges that General
Instrument Corporation, through its parent, Motorola, Inc. ("Motorola"), has
informed Parent that Motorola will probably enter into a gain recognition
agreement ("GRA") with the Internal Revenue Service ("IRS") under Treas. Reg.
(S)1.367(a)-8. In entering into the GRA, Motorola will act in reliance on the
Tax Representations of Parent and Sub, which are attached as Exhibit A and are
hereby incorporated into this Agreement; however, Motorola acknowledges that
Parent does not represent or warrant that Motorola will qualify for the gain
recognition treatment it may seek under such GRA. If Motorola enters into the
GRA, Parent agrees that prior to the earlier of (i) January 1, 2006, or (ii) the
termination of the GRA, it will not: (a) directly or indirectly, voluntarily
dispose of the Company stock received from Motorola in a transaction in which
gain or loss would be required to be recognized by it under United States income
tax principles (a "Taxable Transaction"), (b) permit the Company to, directly or
indirectly, voluntarily dispose of substantially all of its assets in a Taxable
Transaction, or (c) permit any entity which is directly or indirectly owned by
Parent to, directly or indirectly,
22
voluntarily dispose of such Company stock or such assets in a Taxable
Transaction. During the period in the preceding sentence, Parent agrees that it
will provide such information to Motorola which Motorola has specifically
requested in writing and which it needs to comply with the annual certification
requirements contained in Treas. Reg. (S)1.367(a)-8. General Instrument
Corporation agrees to notify Parent if Motorola decides not to enter into a GRA
or if a GRA is entered into but subsequently terminated. Parent and Sub
represent and warrant to the Company and to the Selling Shareholders that the
statements set forth on Exhibit A are true and correct.
SECTION 5.9. Funding. Each of Cablesoft Communications, Inc. and
General Instrument Corporation covenants and agrees that, within two (2)
business days after the Closing Date, it will fund $73,000 to the Company, or to
such entity designated by the Company, by wire transfer to the account
designated in writing by the Company or such designee. The parties agree that
such funding shall constitute full satisfaction of any and all claims arising
from or related to amounts payable by the Company to Spyglass, Inc. under that
certain Professional Services Agreement dated as of March 31, 2000 by and
between Spyglass, Inc. and CableSoft Corporation and that certain Statement of
Work effective March 31, 2000. Such funding will be deemed to be Convertible
Debt for all purposes hereunder.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties hereto shall use their best efforts to have any such injunction, order,
restraint or prohibition vacated.
SECTION 6.2. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company and each Selling Stockholder set forth in this
Agreement that are qualified as to Material Adverse Effect shall be true and
correct, and (ii) the representations and warranties of the Company and each
Selling Shareholder that are not so qualified shall be true and correct in all
material respects, in each case as of the Closing Date as though made on or as
of such date (other than representations and warranties that by their terms
address matters only as of another specified date, which shall be true and
correct only as of such other specified date), except where
23
the failure of such representations and warranties (excluding those
representations and warranties contained in Section 3.1(c)(i) hereof) referred
to in clause (ii) to be so true and correct, in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) Performance of Obligations of the Company. The Company and each
Selling Stockholder shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) Third Party Consents. Parent shall have been furnished with
evidence satisfactory to it that Company has obtained those consents, waivers,
approvals or authorizations of those Governmental Entities and third parties
whose consent or approval are required in connection with the Merger as set
forth in Section 6.2(c) of the Company Disclosure Schedule.
(d) Termination of Company's 401(k) Plan. If Company maintains or
sponsors a plan subject to Section 401(k) of the Code, Company's Board of
Directors shall have adopted a resolution terminating such plan contingent on
the Closing and effective as of at least one calendar day prior to the Effective
Time.
SECTION 6.3. Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to the following
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Sub set forth in this Agreement that are qualified as
to Material Adverse Effect shall be true and correct, and (ii) the
representations and warranties of Parent and Sub that are not so qualified shall
be true and correct in all material respects, in each case as of the Closing
Date as though made on or as of such date (other than representations and
warranties that by their terms address matters only as of another specified
date, which shall be true and correct only as of such other specified date)
except where the failure of such representations and warranties referred to in
clause (ii) to be so true and correct, in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect on the Parent.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be performed
by each of them under this Agreement at or prior to the Closing Date.
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.1. Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time of the Merger:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; or
24
(c) by either Parent or the Company if the Merger shall not have been
consummated on or before January 31, 2001 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Time of the
Merger).
SECTION 7.2. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company.
SECTION 7.3. Amendment. This Agreement may be amended at any time by
an instrument in writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
ARTICLE VIII
Indemnification
---------------
SECTION 8.1. Indemnification.
(a) Each Selling Stockholder shall severally and not jointly (and in
proportion to the amount of Company Common Stock owned by the Selling
Stockholders on the Closing Date), indemnify, defend and hold Parent and its
affiliates (including, after the Closing Date, the Company) and their respective
officers, directors, partners, employees, agents and representatives (the
"Parent Indemnified Parties") harmless from and in respect of any and all
--------------------------
losses, damages, costs and reasonable expenses that are actually sustained or
incurred (including, without limitation, reasonable fees and expenses of
counsel) (collectively, "Losses"), arising out of any breach of any
------
representation, warranty, covenant or other agreement of such Selling
Stockholder or the Company contained in this Agreement. Anything to the contrary
contained herein notwithstanding, expect with respect to claims for indemnity
for breaches of Sections 3.1(c)(i) and 3.1(c)(ii) hereof (x) none of the Parent
Indemnified Parties shall be entitled to recover from the Selling Stockholders
for any claims for indemnity unless and until the total of all Losses pursuant
to this Section 8.1(a) exceeds $1,000,000, and then only for the amount by which
such Losses exceed such amount and (y) the Parent Indemnified Parties shall not
be entitled to recover Losses in excess of an amount of $5,000,000 from the
Selling Stockholders provided, such limitations shall not apply to any claim
arising from a breach of Section 5.6.
(b) Parent shall indemnify, defend and hold the Selling Stockholders
and their affiliates and, as applicable, their respective officers, directors,
partners, employees, agents and representatives (the "Stockholder Indemnified
-----------------------
Parties") harmless from and in respect of any and
-------
25
all Losses, arising out of any breach of any representation, warranty, covenant
or other agreement of Parent or Sub contained in this Agreement. Anything to the
contrary contained herein notwithstanding, (x) none of the Stockholder
Indemnified Parties shall be entitled to recover from Parent or Purchaser for
any claims for indemnity unless and until the total of all Losses pursuant to
this Section 8.1(b) exceeds $1,000,000, and then only for the amount by which
such Losses exceed such amount and (y) the Stockholder Indemnified Parties shall
not be entitled to recover more than an aggregate of $5,000,000 of Losses from
Parent or Purchaser; provided, such limitations shall not apply to any claim
arising from a breach of Section 5.8.
(c) All representations and warranties contained in this Agreement will
survive the Closing Date and will remain in full force and effect thereafter
until one (1) year after the Closing Date, provided, however, that such
representations and warranties shall survive (if at all) beyond such period with
respect to any inaccuracy therein or breach thereof, if written notice of such
breach shall have been duly given within such applicable period in accordance
with section 9.2 of this Agreement.
(d) If there occurs an event which the Parent Indemnified Parties assert
is an indemnifiable event pursuant to Section 8.1(a) or the Stockholder
Indemnified Parties assert is an indemnifiable event pursuant to Section 8.1(b),
(the Parent Indemnified Parties and the Stockholder Indemnified Parties, as the
case may be, being referred to herein as the "Indemnified Parties"), the
-------------------
Indemnified Parties shall notify the other parties obligated to provide
indemnification (the "Indemnifying Parties") promptly. If such event involves
--------------------
(i) any claim or (ii) the commencement of any action or proceeding by a third
person, the Indemnified Parties will give the Indemnifying Parties prompt
written notice of such claim or the commencement of such action or proceeding;
provided, however, that the failure to provide prompt notice as provided herein
-------- -------
will relieve the Indemnifying Parties of their obligations hereunder only to the
extent that such failure prejudices the Indemnifying Parties hereunder. In case
any such action shall be brought against any Indemnified Parties and they shall
notify the Indemnifying Parties of the commencement thereof, the Indemnifying
Parties shall be entitled to participate therein or, following the delivery by
the Indemnifying Parties to the Indemnified Parties of the Indemnifying Parties'
acknowledgement in writing that the relevant Loss is an indemnified liability
hereunder and that the Indemnifying Parties, in their good faith judgment, will
be able to pay any award of money damages against the Indemnified Parties in
connection with such action, to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Parties and, after notice from the
Indemnifying Parties to such Indemnified Parties of such election so to assume
the defense thereof, the Indemnifying Parties shall not be liable to the
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by the Indemnified Parties in connection with the
defense thereof. The Indemnifying Parties and the Indemnified Parties agree to
cooperate fully with each other and their respective counsel in connection with
the defense, negotiation or settlement of any such action or asserted liability.
The Indemnified Parties shall have the right to participate at their own expense
in the defense of such action or asserted liability. If the Indemnifying Parties
assume the defense of an action (a) no settlement or compromised thereof may be
effected (i) by the Indemnifying Parties without the written consent of the
Indemnified Parties (which consent shall not be unreasonably withheld or
delayed) unless (x) there is no finding or admission of any violation of law or
any violation of the rights of any person by any Indemnified Party and no
adverse effect on any other claims that may be made against any Indemnified
Party and (y) all relief provided is paid or satisfied in full by the
Indemnifying Parties or (ii) by the Indemnified Parties without the consent
26
of the Indemnifying parties and (b) the Indemnified Parties may subsequently
assume the defense of such action if a court of competent jurisdiction
determines that the Indemnifying Parties are not vigorously defending such
action. In no event shall an Indemnifying Party be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed).
(e) The amount of any payment for which an Indemnified Party shall be
entitled to indemnification under this Article VIII shall be net of the amount
of insurance proceeds and the value of any net tax benefit realized (by reason
of a tax deduction, basis reduction, shifting of income, credits or deductions
or otherwise), if any, related to such payment actually received by or on behalf
of the Indemnified Party or any affiliate thereof. If an Indemnified Party
actually receives any insurance recoveries or net tax benefits after an
Indemnifying Party has made any payment with respect to such damages, the
Indemnified Party must promptly return such payment to the Indemnifying Party to
the extent of such insurance recoveries or net tax benefits, but only to the
extent such insurance recoveries or net tax benefits do not exceed the amount of
such original payment to the Indemnified Party.
(f) No claim shall be made by a party with respect to a breach of a
representation, warranty or a covenant if the nature of such breach was known to
and waived by such party at the time of the Closing. If the Closing occurs, the
indemnification provided by Article VIII shall be the exclusive remedy for any
breach of a representation, warranty or covenant made in this Agreement.
ARTICLE IX
General Provisions
------------------
SECTION 9.1. Expenses. (a) In the event that the Merger is consummated,
Parent shall pay, or shall cause the Surviving Corporation to pay, all out-of-
pocket costs, fees and expenses otherwise payable by the Surviving Corporation
(other than in respect of fees and expenses incurred by stockholders of the
Company, all of which shall be borne by such stockholders) in connection with
the transactions contemplated by this Agreement. Cablesoft Communications, Inc.
agrees to promptly reimburse General Instrument Corporation for 50% of the for
reasonable third party legal fees incurred by General Instrument Corporation
arising from the transaction contemplated by this Agreement.
(b) Except as provided otherwise in paragraph (a) above, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
SECTION 9.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by facsimile or by overnight courier
(providing proof of delivery) to the parties at the following addresses and
facsimile numbers (or at such other address or facsimile number for a party as
shall be specified by like notice):
27
(a) if to Parent or Sub, to
OpenTV Corp.
000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
OpenTV, Inc.
000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
Attention: General Counsel
(b) if to the Company, to
CableSoft Corporation
00 Xxxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
General Instrument Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
Cablesoft Communications, Inc.
c/o Xxxxx X. Xxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with,
28
such first person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract or otherwise;
(b) "Convertible Debt" means the outstanding indebtedness of the Company
----------------
pursuant to the promissory notes set forth on Section 9.3(b) of the Company
Disclosure Schedule together with any accrued but unpaid interest payable
pursuant to such promissory notes.
(c) "Convertible Debt Adjustment" means the aggregate amount of
---------------------------
outstanding principal and accrued but unpaid interest payable as of the Closing
Date under the Convertible Debt.;
(d) "Exchange Ratio" the sum of (A) a fraction, rounded to the
--------------
nearest1/10,000th (x) the numerator of which is (i) an amount of $40,000,000
minus the Convertible Debt Adjustment, divided by (ii) 1,150,175 shares of
Company Common Stock (which includes the shares of Company Common Stock to be
issued pursuant to the Company Option Plans), and (y) the denominator of which
is the Parent Common Stock Price, plus (B) the Option Exercise Adjustment;
(e) "Material Adverse Change" or "Material Adverse Effect" means, when
----------------------- -----------------------
used in connection with the Company or Parent, any change, effect, event or
occurrence that is materially adverse to the business, properties, financial
condition or results of operations of the Company or Parent, as the case may be,
and its respective subsidiaries taken as a whole;
(f) "Option Exercise Adjustment" means the amount equal to the fraction
--------------------------
equal to (x) the fraction equal to (A) the aggregate exercise price of all
outstanding Company Stock Options immediately prior to the Closing Date divided
by (B) the Parent Common Stock Price, divided by (y) the number of shares of
Company Common Stock issued and outstanding immediately prior to the Closing
Date;
(g) "Parent Common Stock Price" means the average of the closing sales
-------------------------
prices of a share of Parent Common Stock on the Nasdaq National Market on each
of the 5 consecutive trading days immediately preceding the Effective Time of
the Merger;
(h) "Permitted Liens" means with respect to the Company, (A) liens for
---------------
taxes or governmental assessments, charges or claims the payment of which is not
yet due, or for taxes the validity of which are being contested in good faith by
appropriate proceedings, (B) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other similar persons and other liens
imposed by applicable Law of any Governmental Entity incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
(C) liens relating to deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, (D) liens on the real or personal property of the Company that
do not in the aggregate materially interfere with or impair the use or operation
of any such real or personal property for the purposes for which it is or may
reasonably be expected to be used, (E) liens disclosed on the Financial
Statement or securing liabilities disclosed on the Financial Statements, and (F)
other liens approved by Parent and Sub in writing;
29
(i) "person" means an individual, corporation, partnership, limited
------
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(j) a "subsidiary" of any person means another person, an amount of the
----------
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.4. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. 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. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 9.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. Each of the
parties hereby acknowledges that no party has relied or will rely in respect of
this Agreement or the transactions contemplated hereby upon any document or
written or oral information previously furnished to or by or discovered by it or
its representatives, other than this Agreement. This Agreement is not intended
to confer upon any person other than the parties hereto any rights or remedies,
other than Section 2.3, Section 5.3, and Section 5.8 which will be binding on
Parent and the Surviving Corporation and their respective successors and
assigns, and will be enforceable by the officers and directors of the Company.
SECTION 9.7. Selling Stockholders; Attorney-in-Fact.
Each of the Selling Stockholders and each of the individuals named under the
heading `Option Holders' on the signature page hereof (the "Option Holders"),
--------------
hereby irrevocably makes, constitutes and appoints Xxxxxxx X. Xxxxx as his, her
or its attorney-in-fact with full power to act in his, her or its place and
stead to compromise any claim or to take any other action (including receipt of
any notices pursuant to Section 9.2) with respect to this Agreement or the
transactions contemplated hereby. Each of the Selling Stockholders and each of
the Option Holders hereby acknowledges that it has reviewed this Agreement and
hereby releases each of the directors of the Company and each of the Selling
Stockholders of any and all liability and waive any claims they may have against
such directors or Selling Stockholders and hereby ratifies and confirms all of
their actions in connection with this Agreement and the transactions
contemplated hereby. Each Stockholder and Option Holder represents and warrants
that it has had sufficient time to read this Agreement and Plan of Merger and to
consult with any of his or her legal or other advisors and understands all of
the provisions of this Agreement and Plan of Merger, including the effects of
the
30
transactions contemplated by this Agreement and Plan of Merger on any Company
Options.
SECTION 9.8. GOVERNING LAW.THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
SECTION 9.9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. 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.
SECTION 9.10. 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 an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
SECTION 9.11. Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 9.12. Exclusive Jurisdiction. Each party, and each express
beneficiary as a condition to its right to enforce or defend its rights under or
in connection with this Agreement, (a) agrees that any action with respect to
this Agreement or the Merger shall be brought exclusively in the courts of the
State of Delaware, (b) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and (c)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any action in those jurisdictions;
provided, however, that any party may assert in an action in any other
jurisdiction or venue each mandatory defense, third-party claim or similar claim
that, if not so asserted in such action, may thereafter not be asserted by such
party in an original action in the courts referred to in clause (a) above.
SECTION 9.13. Waiver of Jury Trial. Each party, and each express
beneficiary, as a condition to its right to enforce or defend its rights under
or in connection with this Agreement waives any right to a trial by jury in any
action to enforce or defend any right under this Agreement and agrees that any
action shall be tried before a court and not before a jury.
[remainder of page intentionally left blank]
31
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
OPENTV CORP.
By:___________________________
Name:
Title:
CABLESOFT ACQUISITION COMPANY
By:___________________________
Name:
Title:
CABLESOFT CORPORATION
By:___________________________
Name:
Title:
EACH OF THE SELLING STOCKHOLDERS:
GENERAL INSTRUMENT CORPORATION
By:___________________________
Name:
Title:
CABLESOFT COMMUNICATIONS, INC.
By:___________________________
Name:
Title:
_________________________________
Xxxxx Xxxxxxx
32
EACH OF THE OPTION HOLDERS:
_________________________________
Xxxxx Xxxxxxx
_________________________________
Xxxx Xxxxxxxx
_________________________________
Xxxxxx Xxxxx
_________________________________
Xxxxxx Xxxxxxxx
