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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXX.XXX, INC.,
AI ACQUISITION, INC.,
ALEXA INTERNET
AND
XXXXXXXX XXXXX
DATED AS OF APRIL 24, 1999
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CONTENTS
ARTICLE I -- THE MERGER.......................................................... 1
1.1 The Merger.............................................................. 1
1.2 The Closing............................................................. 2
1.3 Effective Date and Time................................................. 2
1.4 Articles of Incorporation of the Surviving Corporation.................. 2
1.5 Bylaws of the Surviving Corporation..................................... 3
1.6 Directors and Officers.................................................. 3
1.7 Conversion of Shares.................................................... 3
1.7.1 Exchange Ratio; Pledged Shares................................... 3
1.7.2 Exchange of Certificates......................................... 7
1.7.3 No Fractional Shares............................................. 8
1.7.4 No Further Transfers............................................. 9
1.8 Shareholder Representative.............................................. 9
1.9 Amendment to Provide for Forward Triangular Merger...................... 9
1.10 Tax Free Reorganization................................................. 9
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDER........................................................ 10
2.1 Organization............................................................. 10
2.2 Enforceability........................................................... 11
2.3 Capitalization........................................................... 11
2.4 Subsidiaries and Affiliates.............................................. 12
2.5 No Approvals; No Conflicts............................................... 13
2.6 Financial Statements..................................................... 13
2.7 Absence of Certain Changes or Events..................................... 14
2.8 Taxes.................................................................... 16
2.9 Property................................................................. 19
2.10 Contracts................................................................ 21
2.11 Claims and Legal Proceedings............................................. 22
2.12 Labor and Employment Matters............................................. 23
2.13 Employee Benefit Plans................................................... 23
2.13.1 Employee Benefit Plan Listing.................................... 23
2.13.2 Documents Provided............................................... 24
2.13.3 Compliance....................................................... 25
2.13.4 Contributions and Premium Payments............................... 26
2.13.5 Related Employers................................................ 26
2.13.6 Multiemployer and Title IV Plans................................. 26
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2.13.7 Post-Termination Welfare Benefits................................ 26
2.13.8 Suits, Claims and Investigations................................. 26
2.13.9 Payments Resulting From Transactions............................. 27
2.14 Intellectual Property.................................................... 27
2.14.1 General...........................................................27
2.14.2 Company Technology............................................... 28
2.14.3 Third Party Technology........................................... 28
2.14.4 Trademarks....................................................... 29
2.14.5 Intellectual Property Rights..................................... 29
2.14.6 Maintenance of Rights............................................ 30
2.14.7 Third Party Claims............................................... 30
2.14.8 Infringement by the Company...................................... 31
2.14.9 Confidentiality.................................................. 31
2.14.10 Warranty Against Defects......................................... 31
2.14.11 Domain Names..................................................... 31
2.14.12 Year 2000........................................................ 32
2.14.13 Indemnification.................................................. 32
2.14.14 Restrictions on Intellectual Property............................ 32
2.15 Corporate Books and Records.............................................. 32
2.16 Licenses, Permits, Authorizations, etc................................... 33
2.17 Compliance With Laws..................................................... 33
2.18 Insurance................................................................ 33
2.19 Brokers or Finders....................................................... 34
2.20 Absence of Questionable Payments......................................... 34
2.21 Bank Accounts............................................................ 34
2.22 Insider Interests........................................................ 35
2.23 Compliance With Environmental Laws....................................... 35
2.24 Information Supplied by the Company...................................... 36
2.25 Full Disclosure.......................................................... 36
2.26 Xxxx-Xxxxx-Xxxxxx........................................................ 36
2.27 Operating Data........................................................... 36
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF XXXXXX.XXX AND THE PURCHASER.... 37
3.1 Organization............................................................ 37
3.2 Enforceability.......................................................... 38
3.3 Securities.............................................................. 38
3.4 No Approvals or Notices Required; No Conflicts With Instruments......... 39
3.5 Capitalization.......................................................... 39
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3.6 SEC Documents........................................................... 39
3.7 Absence of Certain Changes.............................................. 40
3.8 Information Supplied by Xxxxxx.xxx...................................... 40
3.9 Full Disclosure......................................................... 40
3.10 Brokers or Finders...................................................... 40
ARTICLE IV -- CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX.XXX AND THE
PURCHASER.......................................................... 40
4.1 Accuracy of Representations and Warranties.............................. 41
4.2 Performance of Agreements............................................... 41
4.3 Opinion of Counsel for the Company...................................... 41
4.4 Compliance Certificate.................................................. 41
4.5 Material Adverse Change................................................. 41
4.6 Approvals and Consents.................................................. 41
4.7 Proceedings and Documents; Secretary's Certificate...................... 42
4.8 Nonforeign Affidavit.................................................... 42
4.9 Compliance With Laws.................................................... 42
4.10 Shareholder Approval.................................................... 42
4.11 Legal Proceedings....................................................... 42
4.12 Employment and Noncompetition Arrangements.............................. 43
4.13 Affiliate Letters....................................................... 43
4.14 Termination of Certain Agreements....................................... 43
4.15 Exercise of Stock Purchase Rights....................................... 43
4.16 No Dissenter Rights Exercised Greater Than 5% of Stock.................. 43
4.17 Transmittal Letters..................................................... 44
4.18 Consents to Merger...................................................... 44
4.19 Delivery of Audited Financial Statements................................ 44
ARTICLE V -- CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.................. 45
5.1 Accuracy of Representations and Warranties.............................. 45
5.2 Performance of Agreements............................................... 45
5.3 Opinion of Counsel...................................................... 45
5.4 Compliance Certificate.................................................. 45
5.5 Legal Proceedings....................................................... 45
5.6 Material Adverse Change................................................. 46
5.7 Approvals and Consents.................................................. 46
5.8 Compliance With Laws.................................................... 46
5.9 Tax Opinion............................................................. 46
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ARTICLE VI -- COVENANTS.......................................................... 46
6.1 Conduct of Business by the Company Pending the Merger................... 47
6.2 Access to Information; Confidentiality.................................. 49
6.3 No Alternative Transactions............................................. 49
6.4 Notification of Certain Matters......................................... 50
6.5 Further Action; Commercially Reasonable Efforts......................... 50
6.6 Shareholder Approval.................................................... 50
6.7 Proxy Statement......................................................... 50
6.8 Xxxxxx.xxx Common Stock................................................. 51
6.9 Securities Act Compliance............................................... 51
6.10 Dissenting Shares....................................................... 52
6.11 Publicity............................................................... 52
6.12 Option Grants........................................................... 52
6.13 Option Shares; Registration............................................. 52
6.14 Indemnification of Officers and Directors............................... 53
6.15 Benefits Rollover....................................................... 53
ARTICLE VII -- TERMINATION, AMENDMENT AND WAIVER................................. 54
7.1 Termination............................................................. 54
7.2 Effect of Termination................................................... 54
7.3 Amendment............................................................... 55
7.4 Waiver.................................................................. 55
ARTICLE VIII -- SURVIVAL AND INDEMNIFICATION..................................... 55
8.1 Survival................................................................ 55
8.2 Indemnification by the Holders of Company Capital Stock................. 55
8.3 Threshold and Limitations............................................... 56
8.4 Procedure for Indemnification........................................... 58
8.5 Remedies; Specific Performance.......................................... 61
ARTICLE IX -- GENERAL............................................................ 62
9.1 Tax Matters............................................................. 62
9.2 Expenses................................................................ 64
9.3 Notices................................................................. 64
9.4 Severability............................................................ 65
9.5 Entire Agreement........................................................ 66
9.6 Assignment.............................................................. 66
9.7 Parties in Interest..................................................... 66
9.8 Governing Law........................................................... 66
9.9 Headings................................................................ 66
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9.10 Counterparts............................................................ 66
9.11 Waiver of Jury Trial.................................................... 67
EXHIBITS
1.6 -- Officers of the Surviving Corporation
1.7.2 -- Letter of Transmittal
2 -- Company Disclosure Memorandum
4.3 -- Opinion of Counsel for the Company
4.8 -- Real Property Tax Affidavit
4.12 -- Form of Confidentiality, Noncompetition and Invention
Assignment Agreement
4.13 -- Form of Affiliate Letter
5.3 -- Opinion of Counsel for Xxxxxx.xxx and Purchaser
6.12 -- List of Company Employees and Options
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of April 24, 1999, by and among Xxxxxx.xxx, Inc., a Delaware corporation
("Xxxxxx.xxx"), AI Acquisition, Inc., a Washington corporation and wholly owned
subsidiary of Xxxxxx.xxx (the "Purchaser"), Alexa Internet, a California
corporation (the "Company"), and Xxxxxxxx Xxxxx (the "Shareholder").
RECITALS
A. The Company, Xxxxxx.xxx, the Shareholder and the Purchaser
believe it advisable and in their respective best interests to effect a merger
of Purchaser with and into the Company pursuant to this Agreement (the
"Merger").
B. The Board of Directors of the Company has approved this
Agreement and the Merger as required by applicable law.
C. The Boards of Directors of Xxxxxx.xxx and the Purchaser and the
sole shareholder of the Purchaser have approved this Agreement and the Merger as
required by applicable law.
D. It is intended that the Merger will qualify as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
E. It is intended that shareholders holding approximately ninety
percent (90%) of the voting securities of the Company will enter into Voting
Agreements with Xxxxxx.xxx concurrently herewith.
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as
follows:
ARTICLE I -- THE MERGER
1.1 THE MERGER
Upon the terms and subject to the conditions hereof, (a) at the
Effective Time (as defined in Section 1.3 hereof) the separate existence of the
Purchaser shall cease and the Purchaser shall be merged with and into the
Company (the Company as the surviving corporation after the Merger is sometimes
referred to herein as the "Surviving Corporation"), and (b) from and after the
Effective Time, the Merger shall
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have all the effects of a merger under the laws of the State of Washington, the
State of California and other applicable law.
1.2 THE CLOSING
Subject to the terms and conditions of this Agreement, the closing of
the Merger pursuant to this Agreement (the "Closing") shall take place on the
earliest practicable business day (the "Closing Date") following the
satisfaction or waiver of the conditions set forth in Articles IV and V at 10:00
a.m. local time at the offices of Xxxxxxx Coie LLP, 1201 Third Avenue, 48th
Floor, Seattle, Washington, or such other date, time or location as Xxxxxx.xxx
and the Company shall agree.
1.3 EFFECTIVE DATE AND TIME
On the Closing Date and subject to the terms and conditions hereof, the
parties hereto shall cause the appropriate certificates (the "Articles of
Merger") complying with the applicable provisions of the Washington Business
Corporation Act ("Washington Law") and the California General Corporation Law
("California Law"), to be properly executed and filed with the Secretary of
State of the State of Washington (the "Washington Secretary of State") and the
Secretary of State of the State of California ("California Secretary of State").
The Merger shall become effective on the date (the "Effective Date") and at the
time (the "Effective Time") of filing of the Articles of Merger or at such other
time as may be specified in the Articles of Merger as filed. If the Washington
Secretary of State or the California Secretary of State requires any changes in
the Articles of Merger as a condition to filing or to issuing its certificate to
the effect that the Merger is effective, Xxxxxx.xxx, the Purchaser and the
Company will execute any necessary revisions incorporating such changes,
provided such changes are not inconsistent with and do not result in any
material change in the terms of this Agreement.
1.4 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION
At the Effective Time, the Articles of Incorporation of the Surviving
Corporation shall be amended and restated in their entirety to conform to the
Articles of Incorporation of the Purchaser as in effect immediately prior to the
Effective Time; provided, however, that Article I thereof shall be amended to
read as follows: "The name of this corporation is Alexa Internet." Thereafter,
the Articles of Incorporation of the Surviving Corporation may be amended in
accordance with their terms and as provided by law.
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1.5 BYLAWS OF THE SURVIVING CORPORATION
At the Effective Time, the Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall become the Bylaws of the Surviving
Corporation. Thereafter, the Bylaws may be amended or repealed in accordance
with their terms and the Articles of Incorporation of the Surviving Corporation
and as provided by law.
1.6 DIRECTORS AND OFFICERS
At the Effective Time, the directors of the Surviving Corporation shall
be Xxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxxxx Xxxxx and
the officers of the Surviving Corporation shall be as set forth on Exhibit 1.6
hereto, and such directors and officers shall hold office in accordance with and
subject to the Articles of Incorporation and Bylaws of the Surviving
Corporation.
1.7 CONVERSION OF SHARES
1.7.1 EXCHANGE RATIO; PLEDGED SHARES
As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof:
(a) All shares of any class of capital stock of the Company
held by the Company as treasury shares shall be canceled.
(b) Each issued and outstanding share of Common Stock of the
Company (the "Company Common Stock"), including each share of Company Common
Stock issued upon conversion of each issued and outstanding share of the
Company's Series A Preferred Stock (the "Company Preferred Stock"), other than
shares of Company Common Stock for which dissenters' rights are perfected or as
provided in Section 1.7.1(a), shall be converted into the right to receive from
Xxxxxx.xxx a number of shares of Xxxxxx.xxx common stock, par value $0.01 per
share ("Xxxxxx.xxx Common Stock"), determined by dividing (i) the total number
of shares of Xxxxxx.xxx Common Stock to be issued in the Merger, which shall be
equal to $250,000,000, less any adjustments pursuant to Section 9.2, divided by
the average of the closing price of Xxxxxx.xxx Common Stock as reported on the
NASDAQ National Market for each of the five trading days immediately preceding
the trading day immediately preceding the Closing Date (the "Base Price"), by
(ii) the Fully Diluted Common Stock Number, rounded to ten decimal points. The
"Fully Diluted Common Stock Number" shall mean the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time on a
fully diluted basis, including (x) the exercise of all outstanding rights,
warrants or options, vested or
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unvested, to acquire Company Common Stock, regardless of restrictions on
exercise or conversion and (y) the conversion of all outstanding securities
(including, without limitation, the Company Preferred Stock) and notes
convertible at any time into Company Common Stock (such rights, warrants,
options and convertible securities referenced in clauses (x) and (y) being
referred to herein as "Stock Purchase Rights"). The shares of Xxxxxx.xxx Common
Stock so issued shall be referred to herein as the "Merger Consideration" and
the quotient as derived being referred to as the "Exchange Ratio." The Company
Common Stock together with the Company Preferred Stock shall be referred to
herein as the "Company Capital Stock." The number of shares of Xxxxxx.xxx Common
Stock to be issued to each shareholder of the Company under this Section
1.7.1(b) shall be calculated by aggregating all shares of Company Common Stock
held by each such shareholder, so that such number of shares of Xxxxxx.xxx
Common Stock to be issued shall be equal to the number of shares of Company
Common Stock held by such shareholder multiplied by the Exchange Ratio, with
cash paid in lieu of any fractional share of Xxxxxx.xxx Common Stock pursuant to
Section 1.7.3 hereof.
(c) Notwithstanding the foregoing:
(i) As collateral security for the indemnification
obligations of the shareholders of the Company pursuant to Article VIII, the
shareholders of the Company, by approving the Merger at a special meeting of
shareholders or by written consent, shall thereby pledge, transfer and assign to
Xxxxxx.xxx, subject to the effectiveness of the Merger, that number of shares of
Xxxxxx.xxx Common Stock that equals the quotient of $37,500,000 divided by the
Base Price (the "Pledged Shares"). Each shareholder of the Company, by approving
the Merger at a special meeting of shareholders or by written consent, shall
thereby pledge, transfer and assign to Xxxxxx.xxx, subject to the effectiveness
of the Merger, a security interest in such shareholder's pro rata share of the
Pledged Shares, and the certificates and instruments, if any, representing or
evidencing such Pledged Shares. Fractional shares of Xxxxxx.xxx Common Stock
shall not be pledged. In lieu thereof, each shareholder of the Company shall
round up such fractional share to the nearest whole number and pledge a full
share of Xxxxxx.xxx Common Stock for such fractional share. The pledge pursuant
to this Section 1.7.1(c)(i) includes all securities hereafter delivered to such
shareholder with respect to or in substitution for such shareholder's Pledged
Shares, all certificates and instruments representing or evidencing such
securities, and all cash and noncash dividends and other property at any time
received, receivable or otherwise distributed in respect of or in exchange for
any or all thereof. In the event such shareholder receives any such property,
such shareholder shall hold such property
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in trust for Xxxxxx.xxx and shall immediately deliver such property to
Xxxxxx.xxx to be held as Pledged Shares.
(ii) Each certificate, if any, evidencing a
shareholder's Pledged Shares issued in his, her or its name in the Merger shall
be delivered to Xxxxxx.xxx directly by the transfer agent, such certificate
bearing no restrictive or cautionary legend other than those imprinted by the
transfer agent at Xxxxxx.xxx's request or as set forth herein. Each shareholder
of the Company shall, at the Closing, deliver to Xxxxxx.xxx, for each such
certificate, a stock power duly signed in blank by him, her or it.
(iii) The pledgor of any Pledged Share shall be the
holder of record thereof and entitled to exercise any voting powers incident to
such Pledged Share until such time, if any, as such Pledged Share is transferred
to Xxxxxx.xxx to satisfy any indemnification obligations pursuant to Article
VIII. In addition, upon any release of such Pledged Share from the pledge
pursuant to the terms hereof, such pledgor shall be entitled to any cash or
other proceeds from such Pledged Share.
(iv) The Pledged Shares shall be available solely to
satisfy any indemnification obligations of the shareholders of the Company
pursuant to Article VIII for the Survival Period (as defined in Section 8.1).
Within five (5) business days following the end of the Survival Period,
Xxxxxx.xxx shall return or cause to be returned to the respective former
shareholders of the Company, the Pledged Shares less (A) any Pledged Shares
previously forfeited to Xxxxxx.xxx to satisfy any indemnification obligations
pursuant to Article VIII and (B) an additional number of Pledged Shares
sufficient to satisfy any pending Claims for indemnification made by any
Indemnified Parties (as such terms are defined in Article VIII). Any remaining
Pledged Shares shall be released within five (5) business days following final
resolution of, and full payment in connection with, any such pending Claims.
(v) Stop transfer instructions will be given to
Xxxxxx.xxx's transfer agent with respect to those certificates evidencing the
Pledged Shares and certificates evidencing the Pledged Shares will contain a
legend, stating in substance:
"THESE SHARES HAVE BEEN PLEDGED AS COLLATERAL PURSUANT TO THAT
CERTAIN AGREEMENT AND PLAN OF MERGER DATED AS OF APRIL 24, 1999
BY AND AMONG XXXXXX.XXX, INC., AI ACQUISITION, INC., ALEXA
INTERNET AND XXXXXXXX XXXXX. PRIOR TO THE EXPIRATION OF THE
PLEDGE AS SET FORTH IN SUCH AGREEMENT, SUCH SHARES MAY NOT BE
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OFFERED, SOLD, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF."
Xxxxxx.xxx will terminate such stop transfer instructions and authorize its
transfer agent to remove such restrictive legend with respect to any
certificates representing Pledged Shares that are returned by Xxxxxx.xxx
pursuant to Section 1.7.1(c)(iv).
(d) Each issued and outstanding share of capital stock of the
Purchaser shall be converted into one share of common stock of the Surviving
Corporation.
(e) Xxxxxx.xxx shall assume the Company's Amended and Restated 1997
Stock Option Plan (the "Company Option Plan"), and each outstanding option to
purchase shares of Company Common Stock issued pursuant to the Company Option
Plan or any other stock option agreement, whether or not vested or exercisable
(each an "Option"), shall be assumed by Xxxxxx.xxx and shall constitute an
option to acquire, on the same vesting terms, and on substantially the same
other terms and conditions as were applicable under such assumed Option, that
number of shares of Xxxxxx.xxx Common Stock equal to the product of the Exchange
Ratio and the number of shares of Company Common Stock subject to such Option,
at a price per share (rounded to the nearest $0.01) equal to the aggregate
exercise price for the shares of Company Common Stock subject to such Option
divided by the number of full shares of Xxxxxx.xxx Common Stock deemed to be
purchasable pursuant to such Option; provided, however, that (i) subject to the
provisions of clause (ii) below, the number of shares of Xxxxxx.xxx Common Stock
that may be purchased upon exercise of such Option shall not include any
fractional shares, and, upon the last exercise of such Option, Xxxxxx.xxx shall
pay to the holder thereof as soon as practicable an amount of cash equal to such
fraction multiplied by the average of the high and low selling price of
Xxxxxx.xxx Common Stock on the date the Company Option Plan is assumed, and (ii)
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, the option price, the number of
shares 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
of the Code. Xxxxxx.xxx shall assume the obligations of the Company under the
Company Option Plan and shall comply with the terms of such plan as they apply
to the Options assumed as set forth above.
(f) Holders of shares of Company Capital Stock who have complied
with all the requirements for perfecting dissenters' rights, as required under
California Law, shall be entitled to their rights under California Law with
respect to such shares (the "Dissenting Shares"). Notwithstanding the foregoing,
if any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) the
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right to dissent, then, as of the later of the Effective Time and the occurrence
of such event, such holder's shares shall automatically be converted into and
represent only the right to receive the shares of Xxxxxx.xxx Common Stock to
which such holder is then entitled under this Agreement and California Law,
without interest thereon and upon surrender of the certificate representing such
shares. Notwithstanding any provision of this Agreement to the contrary, any
Dissenting Shares held by a shareholder who has perfected Dissenter's rights for
such shares in accordance with California Law shall not be converted in
Xxxxxx.xxx Common Stock pursuant to this Section 1.7.1.
(g) If, prior to the Effective Time, Xxxxxx.xxx recapitalizes
through a split-up of its outstanding shares of capital stock into a greater
number, or a combination of its outstanding shares of capital stock into a
lesser number, reorganizes, reclassifies or otherwise changes its outstanding
shares of capital stock into the same or a different number of shares of other
classes of capital stock, or declares a dividend on its outstanding shares of
capital stock payable in shares or securities convertible into shares, the
number of shares of Xxxxxx.xxx Common Stock into which the shares of Company
Capital Stock are to be converted, and the number of shares of Xxxxxx.xxx Common
Stock issuable upon the exercise of each assumed Option, will be adjusted
appropriately so as to maintain the proportionate interests and economic
benefits of the holders of the Company Capital Stock and Options and the holders
of shares of capital stock of Xxxxxx.xxx.
1.7.2 EXCHANGE OF CERTIFICATES
(a) ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon"), as
exchange agent, shall mail prior to the Closing Date to each holder of record as
of the date 20 business days prior to the Closing Date of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Capital Stock (and as soon as practicable to
shareholders that become holders of Company Capital Stock subsequent to such
date), other than shares to be cancelled in accordance with Section 1.7.1(a),
(i) a letter of transmittal (the "Letter of Transmittal") in substantially the
form set forth at Exhibit 1.7.2 and (ii) instructions for effecting the
surrender of the certificates in exchange for certificates representing
Xxxxxx.xxx Common Stock. Upon surrender of a certificate for cancellation to
ChaseMellon or to such other agent or agents as may be appointed by Xxxxxx.xxx,
together with such Letter of Transmittal, duly executed, and such other
documents as may reasonably be required by ChaseMellon, the holder of such
certificate shall be entitled to receive in exchange therefor, by the later of
(a) three business days following the Effective Time and (b) three business days
following the surrender of such certificate, a certificate representing that
number of whole shares of Xxxxxx.xxx Common Stock which such holder has the
right to receive pursuant to the provisions of Section 1.7.1, and the
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certificate so surrendered shall forthwith be cancelled. In the event that any
certificates representing shares of Company Capital Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
shareholder claiming such certificate to be lost, stolen or destroyed,
Xxxxxx.xxx shall issue in exchange for such lost, stolen or destroyed
certificate the shares of Xxxxxx.xxx Common Stock that such shareholder is
entitled to receive pursuant to Section 1.7.1 hereof; provided, however, that
Xxxxxx.xxx may in its discretion and as a condition precedent to the issuance
thereof, require such shareholder to provide Xxxxxx.xxx with an indemnity
agreement against any claim that may be made against Xxxxxx.xxx with respect to
the certificate alleged to have been lost, stolen or destroyed. The shares of
Xxxxxx.xxx Common Stock that each shareholder of the Company shall be entitled
to receive pursuant to the Merger shall be deemed to have been issued at the
Effective Time. No interest shall accrue on the Merger Consideration. If the
Merger Consideration (or any portion thereof) is to be delivered to any person
other than the person in whose name the certificate or certificates representing
shares of Company Capital Stock surrendered in exchange therefor is registered,
it shall be a condition to such exchange that the person requesting such
exchange shall pay to Xxxxxx.xxx any transfer or other taxes required by reason
of the payment of the Merger Consideration to a person other than the registered
holder of the certificate or certificates so surrendered, or shall establish to
the satisfaction of Xxxxxx.xxx that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither Xxxxxx.xxx nor any other party hereto
shall be liable to a holder of shares of Company Capital Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
(b) Xxxxxx.xxx or the exchange agent will be entitled to deduct and
withhold from the Merger Consideration such amounts as Xxxxxx.xxx or the
exchange agent are required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld, such amounts will be treated
for all purposes of this Agreement as having been paid to the former holder of
the Company Capital Stock in respect of whom such deduction and withholding were
made by Xxxxxx.xxx or the exchange agent.
1.7.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional shares of Xxxxxx.xxx
Common Stock shall be issued by virtue of the Merger, and no dividend, stock
split or other distribution with respect to Xxxxxx.xxx Common Stock shall relate
to any such fractional interest, and any such fractional interests shall not
entitle the owner thereof to vote or to any rights of a security holder. In lieu
thereof, Xxxxxx.xxx shall pay to
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the holder of shares of Company Capital Stock who would otherwise be entitled to
a fraction of a share of Xxxxxx.xxx Common Stock, as soon as practicable after
the Effective Date (and in the same timely manner required for delivery of
certificates of Xxxxxx.xxx Common Stock provided in Section 1.7.2), an amount in
cash equal to such fraction multiplied by the Base Price.
1.7.4 NO FURTHER TRANSFERS
After the Effective Time, there shall be no transfers of any shares of
Company Capital Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, certificates formerly representing shares of
Company Capital Stock are presented to the Surviving Corporation, they shall be
forwarded to Xxxxxx.xxx and be canceled and exchanged in accordance with this
Section 1.7, subject to applicable law in the case of Dissenting Shares.
1.8 SHAREHOLDER REPRESENTATIVE
By approving the Merger at a special meeting of shareholders or by
written consent of the shareholders, each shareholder of the Company shall have
irrevocably authorized and appointed Xxxxx Xxxxxxx (the "Shareholder
Representative"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
in his, her or its name, place and stead as contemplated by Article VIII.
1.9 AMENDMENT TO PROVIDE FOR FORWARD TRIANGULAR MERGER
If at any time prior to the Closing Date, Xxxxxx.xxx elects to have
Purchaser be the Surviving Corporation or elects to have the Company merge
directly into Xxxxxx.xxx or a different subsidiary of Xxxxxx.xxx merge with and
into the Company, the parties shall promptly enter into an amendment to this
Agreement to so provide, so long as such action does not result in a breach of a
representation or warranty set forth in Article II hereof, the inability to
satisfy any of the conditions set forth in Articles IV and V hereof, and
Xxxxxx.xxx makes representations, warrants and covenants consistent with Section
9.1 hereof.
1.10 TAX FREE REORGANIZATION
(a) Except as otherwise required by the Internal Revenue Service
(the "IRS") pursuant to a determination (as defined in Section 1313 of the Code)
or otherwise, or by applicable law, the parties shall not take a position on any
tax returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
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(b) In addition, Xxxxxx.xxx represents, now and as of the Closing
Date, that it presently intends to continue the Company's historic business or
use a significant portion of the Company's business assets in business in a
manner that satisfies the continuity of business enterprise requirement set
forth in Treasury Regulation Section 1.368-1(d); provided, however, that nothing
contained herein shall constitute a representation by Xxxxxx.xxx regarding the
tax consequences of the Merger or the transactions contemplated herein to the
Company or any shareholder of the Company.
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDER
Except as is otherwise set forth with appropriate Section references in
the Disclosure Memorandum attached as Exhibit 2 (the "Disclosure Memorandum"),
and in order to induce Xxxxxx.xxx and the Purchaser to enter into and perform
this Agreement and the other agreements and certificates that are required to be
executed pursuant to this Agreement (collectively, the "Operative Documents"),
the Company and the Shareholder severally and not jointly represent and warrant
to Xxxxxx.xxx and the Purchaser as of the date of this Agreement and as of the
Closing as follows in this Article II.
2.1 ORGANIZATION
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Company has all
requisite corporate power and authority to own, operate and lease its properties
and assets, to carry on its business as now conducted and as currently proposed
to be conducted, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which the Company is a party, and
to consummate the transactions contemplated hereby and thereby. The Company is
duly qualified and licensed as a foreign corporation to do business and is in
good standing in each jurisdiction in which the character of the Company's
properties occupied, owned or held under lease or the nature of the business
conducted by the Company makes such qualification or licensing necessary, except
where the failure to be so qualified or in good standing would not have a
Company Material Adverse Effect. For purposes of this Agreement, the term
"Company Material Adverse Effect" shall mean any change, event or effect that is
or is reasonably likely to be materially adverse to the Company's business,
properties or prospects; provided, however, that a Company Material Adverse
Effect shall not include any change, circumstance, event or effect that relates
to or results from the announcement or other disclosure or consummation of the
transactions contemplated by this Agreement or general economic conditions.
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2.2 ENFORCEABILITY
The Company has all necessary corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Operative Documents to which it is a party and each of the certificates,
instruments and documents executed or delivered by it pursuant to the terms of
this Agreement. All corporate action on the part of the Board of Directors of
the Company necessary for the authorization, execution, delivery and performance
of this Agreement, the consummation of the Merger, and the performance of all
the Company's obligations under this Agreement to which the Company is a party
has been taken. All corporate action on the part of the Board of Directors of
the Company necessary for the authorization, execution, delivery and performance
of the Operative Documents to which it is a party and the performance of all of
the Company's obligations under the Operative Documents to which it is a party
has been or will be taken prior to the Effective Time. All corporate action on
the part of the shareholders of the Company necessary for the authorization,
execution, delivery and performance of this Agreement and the other Operative
Documents to which the Company is a party has been taken or will be taken as of
or prior to the Effective Time. This Agreement has been, and each of the other
Operative Documents to which the Company is a party at the Closing will have
been, duly executed and delivered by the Company, and this Agreement is, and
each of the other Operative Documents to which the Company is a party will be at
the Closing, a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as to the effect, if
any, of (a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (b) rules of law governing specific performance, injunctive
relief and other equitable remedies, and (c) the enforceability of provisions
requiring indemnification in connection with the offering, issuance or sale of
securities.
2.3 CAPITALIZATION
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock and 10,524,792 shares of preferred
stock, of which 10,524,792 shares are designated as Company Preferred Stock.
(b) As of the date of this Agreement, the issued and outstanding
capital stock of the Company consists solely of 15,410,964 shares of Company
Common Stock and 10,524,792 shares of Company Preferred Stock, which are held of
record and, to the knowledge of the Company and the Shareholder, beneficially by
the shareholders of the Company as set forth on Schedule 2.3(b) to the
Disclosure Memorandum. Such outstanding shares are, and immediately prior to the
Closing will be, duly authorized and validly issued, fully paid and
nonassessable, and issued in compliance with all
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applicable federal and state securities laws. To the knowledge of the Company
and the Shareholder, no Person (as defined in Section 2.5 hereof) other than the
shareholders of the Company holds any interest in any of the outstanding shares.
True and correct copies of the stock records of the Company, showing all
issuances and transfers of shares of capital stock of the Company since
inception, have been provided to Xxxxxx.xxx or its counsel.
(c) As of the date of this Agreement, other than Options to purchase
up to 1,838,495 shares of Company Common Stock and except as set forth on
Schedule 2.3(c) to the Disclosure Schedule, there are no outstanding rights of
first refusal or offer, preemptive rights, Stock Purchase Rights or other
agreements, either directly or indirectly, for the purchase or acquisition from
the Company, to the knowledge of the Company and the Shareholder, or any
shareholder of any shares of Company Capital Stock or any securities convertible
into or exchangeable for shares of Company Capital Stock. Set forth on Schedule
2.3(c) to the Disclosure Memorandum is a spreadsheet accurately reflecting the
number of such Options and other Stock Purchase Rights outstanding, the grant or
issue dates, vesting schedules and exercise or conversion prices thereof, and,
in each case, the identities of the holders and an indication of their
relationships to the Company (if any exist other than a security holder). The
Company has delivered to Xxxxxx.xxx or its counsel true and correct copies of
the Company Option Plan, the stock option agreements relating to Options granted
thereunder and all agreements with respect to Stock Purchase Rights. Schedule
2.3(c) to the Disclosure Memorandum also identifies all Options or Stock
Purchase Rights that have been offered in connection with any employee or
consulting agreement but that, as of the date hereof, have not been issued or
granted.
(d) The Company is not a party or subject to any agreement or
understanding, and, to the knowledge of the Company and the Shareholder (other
than voting agreements entered into in connection with this Agreement), there is
no agreement or understanding between any Persons that affects or relates to the
voting or giving of written consents with respect to any securities of the
Company or the voting by any director of the Company. The Company is not under
any contractual or other obligation to register any of its presently outstanding
securities or any of its securities that may hereafter be issued.
2.4 SUBSIDIARIES AND AFFILIATES
The Company does not own or control, and has not in the past owned or
controlled, directly or indirectly, any corporation, partnership, limited
liability company or other business entity. The Company does not own, directly
or indirectly,
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any ownership, equity, or voting interest in any corporation,
partnership, joint venture or other entity, and has no agreement or commitment
to purchase any such interest.
2.5 NO APPROVALS; NO CONFLICTS
The execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
constitute a material violation (with or without the giving of notice or lapse
of time, or both) of any provision of law or any judgment, decree, order,
regulation or rule of any court or other governmental authority applicable to
the Company, (b) require any consent, approval or authorization of, or
declaration, filing or registration with, any person, corporation, partnership,
joint venture, association, organization, other entity or governmental or
regulatory authority (a "Person"), except (i) compliance with applicable
securities laws, (ii) the filing of all documents necessary to consummate the
Merger with the Washington Secretary of State and California Secretary of State,
(iii) the approval by the shareholders of the Company of the transactions
contemplated hereby, as provided under California Law and the Articles of
Incorporation and Bylaws of the Company and (iv) the notification requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx-Xxxxxx Act"), (c) result in a material default (with or without the
giving of notice or lapse of time, or both) under, or acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any material agreement, lease, note or other
restriction, encumbrance, obligation or liability to which the Company is a
party or by which it is bound or to which any assets of the Company are subject,
(d) result in the creation of any Encumbrance (as defined in Section 2.9(d))
upon any material assets of the Company or, to the knowledge of the Company and
the Shareholder, upon any outstanding shares or other securities of the Company,
(e) conflict with or result in a breach of or constitute a default under any
provision of the Articles of Incorporation or Bylaws of the Company, or (f)
invalidate or adversely affect any permit, license or authorization currently
material to the conduct of the business of the Company.
2.6 FINANCIAL STATEMENTS
The Company has delivered to Xxxxxx.xxx (a) audited balance sheets,
statements of income and expense, statements of cash and statements of
shareholders' equity of the Company as of or for the fiscal years ended December
31, 1996 and 1997, (b) an unaudited balance sheet, statement of income and
expense, statement of cash and statement of shareholder's equity of the Company
as of and for the fiscal year ended 1998 and (c) an unaudited balance sheet,
statement of income and expense, statements of cash flow and statements of
shareholders' equity of the Company as of
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and for the three-month period ended March 31, 1999. All the foregoing
financial statements are herein referred to as the "Financial Statements." The
unaudited balance sheet of the Company as of December 31, 1998 is herein
referred to as the "Company Balance Sheet." The Financial Statements have been
prepared in conformity with generally accepted accounting principles in the
United States ("GAAP") on a basis consistent with prior accounting periods,
except as set forth therein, and fairly present in all material respects the
financial position, results of operations and changes in financial position of
the Company as of the dates and for the periods indicated, subject in the case
of interim Financial Statements to normal recurring year-end audit adjustments.
The Company has no liabilities or obligations of any nature (absolute,
contingent or otherwise) that are not fully reflected or reserved against in the
Company Balance Sheet and that would be required under GAAP to be reflected or
reserved, except liabilities or obligations incurred since the date of the
Company Balance Sheet in the ordinary course of business and consistent with
past practice that are not in excess of $40,000 in the aggregate or $30,000
individually. The Company maintains standard systems of accounting that are
adequate for its business. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person. The Company's practices
with respect to capitalizing software development costs, as reflected in the
Financial Statements, are reasonable, in accordance with industry standards and
consistent with the advice of the Company's independent accountants.
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except for transactions specifically contemplated in this Agreement,
since the date of the Company Balance Sheet through the date of this Agreement,
neither the Company nor any of its officers or directors in their representative
capacities on behalf of the Company have:
(a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;
(b) forgiven or canceled any indebtedness for money borrowed or
waived any claims or rights of material value (including, without limitation,
any indebtedness owing by any shareholder, officer, director, employee or
affiliate of the Company);
(c) granted, other than in the ordinary course of business and
consistent with past practice, any increase in the compensation of directors,
officers, employees or consultants (including any such increase pursuant to any
employment agreement or bonus, pension, profit-sharing, lease payment or other
plan or
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commitment) or any increase in the compensation payable or to become payable to
any director, officer, employee or consultant;
(d) suffered any change having a Company Material Adverse Effect;
(e) borrowed or agreed to borrow any funds, incurred or become
subject to, whether directly or by way of assumption or guarantee or otherwise,
any obligations or liabilities (absolute, accrued, contingent or otherwise)
individually in excess of $30,000 or in excess of $40,000 in the aggregate,
except liabilities and obligations (i) that are incurred in the ordinary course
of business and consistent with past practice or (ii) that would not be required
to be reflected or reserved against in a balance sheet prepared in accordance
with GAAP, or increased, or experienced any change in any assumptions underlying
or methods of calculating, any bad debt, contingency or other reserves;
(f) paid, discharged or satisfied any material claims, liabilities
or obligations (absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of claims, liabilities and obligations reflected
or reserved against in the Company Balance Sheet or incurred in the ordinary
course of business and consistent with past practice since the date of the
Company Balance Sheet, or prepaid any material obligation having a fixed
maturity of more than 90 days from the date such obligation was issued or
incurred;
(g) knowingly permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien, security interest, encumbrance, restriction or charge,
except in the ordinary course of business and consistent with past practice;
(h) purchased or sold, transferred (except by way of license) or
otherwise disposed of any of its material properties or assets (real, personal
or mixed, tangible or intangible) except in the ordinary course of business and
consistent with past practice;
(i) disposed of or permitted to lapse any rights to the use of any
material trademark, trade name, patent or copyright, or disposed of or disclosed
to any Person without obtaining an appropriate confidentiality agreement from
any such Person any material trade secret, formula, process or know-how not
theretofore a matter of public knowledge;
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(j) made any single capital expenditure or commitment in excess of
$10,000 for additions to property, plant, equipment or intangible capital assets
or made aggregate capital expenditures in excess of $30,000 for additions to
property, plant, equipment or intangible capital assets;
(k) made any change in accounting methods or practices or internal
control procedure other than as required as a result of changes in law or GAAP;
(l) issued any capital stock or other securities, or declared, paid
or set aside for payment any dividend or other distribution in respect of its
capital stock, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company, or
otherwise permitted the withdrawal by any of the holders of Company Capital
Stock of any cash or other assets (real, personal or mixed, tangible or
intangible), in compensation, indebtedness or otherwise, other than (i) payments
of compensation in the ordinary course of business and consistent with past
practice, (ii) pursuant to the exercise of Company Options, or (iii) repurchases
of Company Common Stock at cost from holders thereof pursuant to the Company's
repurchase rights;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to any of the Company's shareholders, officers, directors or
employees or any affiliate of any of the Company's shareholders, officers,
directors or employees, except compensation paid to officers and employees at
rates not exceeding the rates of compensation paid during the fiscal year last
ended and except for advances for travel and other business-related expenses; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 2.7.
2.8 TAXES
(a) (i) All Tax Returns (as defined below) required to be filed by
or on behalf of the Company have been filed on a timely basis with the
appropriate governmental authority in all jurisdictions in which such Tax
Returns are required to be filed, and all such Tax Returns were (at the time
they were filed) true, correct and complete in all material respects; (ii) all
Taxes (as defined below) of the Company shown on such Tax Returns have been
fully and timely paid; (iii) no waivers of statutes of limitation have been
given or requested with respect to the Company in connection with any Tax
Returns covering the Company with respect to any Taxes payable by it; (iv) to
the knowledge of the Company and the Shareholder no taxing authority in a
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jurisdiction where the Company does not file Tax Returns has made a claim,
assertion, or threat to the Company that the Company is or may be subject to
taxation by such jurisdiction; (v) the Company has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the appropriate
governmental authority all amounts required to be so withheld and paid over for
all periods under all applicable laws; and no amounts have been or would be
required to be withheld with respect to the lapse of restrictions on Company
Capital Stock; (vi) there are no liens with respect to Taxes on any of the
Company's property or assets other than liens for current Taxes not yet payable;
(vii) there are no Tax rulings, requests for rulings, or closing agreements
relating to the Company which could affect the liability for Taxes or the amount
of taxable income of the Company for any period (or portion of a period) after
the date hereof; and (viii) any adjustment of Taxes of the Company made by the
IRS in any examination which is required to be reported to the appropriate
state, local or foreign taxing authorities has been reported, and any additional
Taxes due with respect thereto have been paid.
(b) Neither the Company nor any other Person on behalf of the Company
(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481 (a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.
(c) There is no dispute or claim concerning any Tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company have knowledge based on contact or correspondence with
any agent of such authority. Schedule 2.8 to the Disclosure Memorandum lists all
Tax Returns filed with respect to the Company for taxable periods ended on or
after December 31, 1996 that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has delivered to Xxxxxx.xxx
or its counsel correct and complete copies of all Tax Returns, examination
reports and statements of deficiencies assessed against or agreed to by the
Company since the Company's inception.
(d) The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that under certain circumstances
could
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obligate it to make any payments that will not be deductible under Section
280G of the Code (or any similar provision of state, local or foreign law).
(e) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(f) The Company is not a party to any Tax allocation or sharing
agreement. The Company (i) has not been a member of a Tax Group (as defined
below) filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law) and (ii) does not have
any liability for Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise.
(g) The unpaid Taxes of the Company (i) did not, as of December 31,
1998, exceed the reserve for Tax liability set forth on the face (rather than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time and operations in the ordinary
course of business through the Closing Date.
(h) All Options that the Company has treated as incentive stock options
under Section 421 of the Code at the time of grant met the requirements of
Section 422 of the Code.
As used in this Agreement, the following terms shall have the following
meanings:
"Taxes" means all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties, and other assessments, including, but
not limited to, any income, alternative minimum or add-on tax, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59A of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax; and "Tax"
means any of the foregoing Taxes.
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"Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.
"Tax Returns" means any return, declaration, report, claim or refund,
information return, statement, or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
2.9 PROPERTY
(a) The Company owns no real property other than the leasehold
interests described on Schedule 2.9(a) to the Disclosure Memorandum, which
contains a complete and accurate list of all real property owned, leased or
currently being used by the Company (the "Real Property"). The Company has
delivered to Xxxxxx.xxx or its counsel true and complete copies of all written
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
relating to the Real Property and written summaries of the terms of any oral
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
to which the Real Property is subject.
(b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete
and accurate list of each item of personal property having a value in excess of
$5,000 which is owned, leased, rented or used by the Company as of the date of
this Agreement (the "Personal Property"); provided that such list need not
describe the Technology or the IP Rights (as defined in Sections 2.14.2 and
2.14.5, respectively), listed on Schedule 2.14 to the Disclosure Memorandum. The
Company has delivered to Xxxxxx.xxx or its counsel true and complete copies of
all leases, subleases, rental agreements, contracts of sale, tenancies or
licenses to which the Personal Property is subject.
(c) The Real Property and the Personal Property include all the
properties and assets (whether real, personal or mixed, tangible or intangible)
(other than, in the case of the Personal Property, property rights with an
individual value of less than $5,000) reflected in the Company Balance Sheet
(except for such properties or assets sold since the date of the Company Balance
Sheet in the ordinary course of business and consistent with past practice) and
all the properties and assets purchased by the Company since the date of the
Company Balance Sheet (other than, in the case of the Personal Property,
property rights with an individual value of less than $5,000 and the Technology
and the IP Rights). The Real Property and the Personal Property include all
material property used in the business of the Company, other than the Technology
and IP Rights. The Company's offices and other structures and its Personal
Property are of a quality consistent with industry standards, are in good
operating condition and
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repair, normal wear and tear excepted, are adequate for the uses to which they
are being put, and comply in all material respects with applicable material
safety and other laws and regulations.
(d) The Company's leasehold interest in each parcel of the Real
Property is free and clear of all liens, mortgages, pledges, deeds of trust,
security interests, charges, encumbrances and other adverse claims or interests
of any kind (each, an "Encumbrance"), except for (i) Encumbrances related to
Taxes not yet due and payable, (ii) Encumbrances for inchoate mechanics' and
materialmen's liens for construction in progress and workmen's, repairmen's,
warehousemen's and carriers' liens arising in the ordinary course, (iii)
Encumbrances for Taxes being contested in good faith, (iv) Encumbrances in favor
of Xxxxxx.xxx or Purchaser arising out of, under or in connection with this
Agreement, and (v) Encumbrances and imperfections of title that do not secure
payment of indebtedness and the existence of which would not materially affect
the use of the property subject thereto, consistent with past practice
(collectively, "Permitted Encumbrances"). Each lease of any portion of the Real
Property is valid, binding and enforceable in accordance with its terms against
the Company and, to the knowledge of the Company and the Shareholder, any other
Person with an interest in such Real Property (except as to the effect, if any,
of (a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies), the Company has performed in
all material respects all material obligations imposed upon it thereunder, and
neither the Company nor, to the knowledge of the Company and the Shareholder,
any other party thereto is in default thereunder, nor is there any event which
with notice or lapse of time, or both, would constitute a default thereunder by
the Company or, to the knowledge of the Company and the Shareholder, by any
other party. The Company has not granted any lease, sublease, tenancy or license
of, or entered into any rental agreement or contract of sale with respect to,
any portion of the Real Property.
(e) The Personal Property is free and clear of all Encumbrances
other than Permitted Encumbrances and Encumbrances of the owner thereof, and,
other than leased Personal Property which is so noted on the list supplied
pursuant to Section 2.9(b) hereof, the Company owns such Personal Property. Each
lease, license, rental agreement, contract of sale or other agreement to which
the Personal Property is subject is valid, binding and enforceable in accordance
with its terms against the Company (except as to the effect, if any, of (a)
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and (b) rules of law governing specific performance, injunctive relief
and other equitable remedies), the Company has performed in all material
respects all material obligations imposed upon it thereunder,
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and neither the Company nor, to the knowledge of the Company and the
Shareholder, any other party thereto is in default thereunder, nor is there any
event which with notice or lapse of time, or both, would constitute a default by
the Company or, to the knowledge of the Company and the Shareholder, any other
party thereunder. The Company has not granted any lease, sublease, tenancy or
license of any portion of the Personal Property, except in the ordinary course
of business.
2.10 CONTRACTS
Schedule 2.10 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 2.14 to the
Disclosure Memorandum) of all contracts, agreements and understandings, oral or
written, to which the Company is a party as of the date of this Agreement or by
which the Company is currently bound as of the date of this Agreement providing
for potential future payments by or to the Company in excess of $20,000 (except
for those contracts, agreements and understandings listed on Schedules 2.9(a)
and 2.9(b)), including, without limitation, security agreements, license
agreements, software development agreements, distribution agreements, joint
venture agreements, reseller agreements, credit agreements and instruments
relating to the borrowing of money. All contracts set forth on Schedule 2.10 are
valid, binding and enforceable in accordance with their terms against the
Company and, to the knowledge of the Company and the Shareholder, each other
party thereto, except as to the effect, if any, of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally, (b) rules of law
governing specific performance, injunctive relief and other equitable remedies,
and (c) the enforceability of provisions requiring indemnification in connection
with the offering, issuance or sale of securities, and are in full force and
effect, the Company has performed in all material respects all material
obligations imposed on it thereunder, and neither the Company nor, to the
knowledge of the Company and the Shareholder, any other party thereto is in
default thereunder, nor to the knowledge of the Company and the Shareholder is
there any event which with notice or lapse of time, or both, would constitute a
default by the Company or, to the knowledge of the Company and the Shareholder,
any other party thereunder. True and complete copies of each such written
contract (or written summaries of the terms of any such oral contract) have been
delivered to Xxxxxx.xxx or its counsel by the Company. Except as set forth on
Schedule 2.10, as of the date of this Agreement the Company has no currently
binding
(a) contracts with directors, officers, stockholders, employees,
agents, consultants, advisors, salespeople, sales representatives, distributors
or dealers that cannot be canceled by the Company within 30 days' notice without
liability, penalty or premium, any agreement or arrangement providing for the
payment of any bonus or
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commission based on sales or earnings, or any compensation agreement or
arrangement affecting or relating to former employees of the Company;
(b) employment agreement, or any other agreement for services that
contains severance or termination pay liabilities or obligations;
(c) noncompetition agreement or other arrangement that would prevent
the Company from carrying on its business anywhere in the world;
(d) notice that any party to a contract listed on Schedule 2.10
intends to cancel, terminate or refuse to renew such contract (if such contract
is renewable);
(e) material dispute with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;
(f) product distribution agreement, development agreement, or
license agreement as licensor or licensee (except for standard nonexclusive
software licenses granted to end-user customers in the ordinary course of
business the form of which has been provided to Xxxxxx.xxx or its counsel or
standard licenses purchased by the Company for off-the-shelf software);
(g) joint venture contract or arrangement or any other agreement
that involves a sharing of profits with other Persons;
(h) instrument evidencing indebtedness of the Company for borrowed
money by way of a direct loan, sale of debt securities, purchase money
obligation, conditional sale or guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business, and except as
disclosed in the Financial Statements; and
(i) agreements or commitments of the Company to provide
indemnification.
2.11 CLAIMS AND LEGAL PROCEEDINGS
Except as set forth on Schedule 2.11 or 2.14 to the Disclosure
Memorandum, as of the date hereof there are no claims, actions, suits,
arbitrations, investigations or proceedings pending or, to the Company's and the
Shareholder's knowledge, threatened against the Company before or by any court
or governmental or nongovernmental department, commission, board, bureau, agency
or instrumentality, or any other Person. Except as set forth on Schedule 2.11 or
2.14, to the knowledge of the Company and the Shareholder, there are no events
or circumstances now in existence
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that could reasonably be expected to give rise to any claim, action, suit,
arbitration, proceeding or investigation before or by any Person. There are no
outstanding or unsatisfied judgments, orders, decrees or stipulations to which
the Company is a party. Schedule 2.11 sets forth a description of any material
disputes that have been settled or resolved by litigation or arbitration since
the Company's inception.
2.12 LABOR AND EMPLOYMENT MATTERS
There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the Company's and the Shareholder's
knowledge, threatened against the Company or any of its present or former
employees in their capacity as such. There is no labor strike, dispute, slowdown
or stoppage pending or, to the knowledge of the Company and the Shareholder,
threatened against or affecting the Company, and the Company has not experienced
any work stoppage or other labor difficulty since its incorporation. No
collective bargaining agreement is binding on the Company. The Company and the
Shareholder has no knowledge of any organizational efforts presently being made
or threatened by or on behalf of any labor union with respect to employees of
the Company. Each employee, officer and consultant of the Company has executed a
nondisclosure agreement substantially in the form provided to Xxxxxx.xxx or its
counsel. To the knowledge of the Company and the Shareholder, no employee (or
person performing similar functions) of the Company is in violation of any such
agreement or any employment agreement, noncompetition agreement, patent
disclosure agreement, invention assignment agreement, proprietary information
agreement or other contract or agreement relating to the relationship of such
employee with the Company or any other party. Schedule 2.12 to the Disclosure
Memorandum sets forth as of the date hereof a true and complete list of (a) the
names and current compensation amounts of all directors and officers of the
Company; (b) the wage rates for nondirector and nonofficer salaried employees of
the Company by classification, and all labor union contracts (if any); (c) all
group insurance programs in effect for employees of the Company; and (d) the
names and current compensation packages of all independent contractors and
consultants of the Company. The Company is not in default with respect to any of
its obligations referred to in clause (b) above and has no material obligation
or liability for severance or back pay owed through or by virtue of the Merger.
Except as disclosed on Schedule 2.12, all employees of the Company are employed
on an "at will" basis.
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2.13 EMPLOYEE BENEFIT PLANS
2.13.1 EMPLOYEE BENEFIT PLAN LISTING
Schedule 2.13.1 to the Disclosure Memorandum sets forth a true, accurate
and complete list and description of all retirement, pension, profit sharing,
deferred compensation, savings, bonus, incentive, cafeteria, flexible benefits,
medical, dental, vision, hospitalization, life insurance, group insurance,
medical expense reimbursement, dependent care assistance, tuition reimbursement,
disability, accident, sick pay, holiday, vacation, severance, stock purchase,
stock option, stock appreciation rights, fringe benefit and other employee
benefit plans, funds, policies, programs, contracts, arrangements and payroll
practices (including, but not limited to, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all employment, consulting and personal service
contracts and agreements, whether formal or informal, whether written or
unwritten, and whether legally binding or not, (a) sponsored, maintained or
contributed to by the Company, (b) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual) with respect to, or as a
result of, such, individual's relationship with the Company, or (c) with respect
to which the Company has (or could have) any obligation or liability (such
plans, funds, policies, programs, contracts, arrangements and payroll practices
are hereinafter referred to collectively as "Employee Benefit Plans" and each
individually as an "Employee Benefit Plan"). The Company does not have any
agreement, arrangement, commitment or obligation, whether formal or informal,
whether written or unwritten and whether legally binding or not, to create (or
contribute to) any employee benefit plan, fund, policy, program, contract,
arrangement or payroll practice that is not identified in Schedule 2.13.1 as an
Employee Benefit Plan or to modify or amend any existing Employee Benefit Plan
(except as may be required by applicable law and has been disclosed in Schedule
2.13.1). There has been no amendment, written interpretation or announcement
(whether or not written) by the Company relating to, or change in participation
or coverage under, any Employee Benefit Plan that, either alone or together with
other such items or events, could materially increase the expense of maintaining
the Employee Benefit Plans above the level of expense incurred with respect
thereto for the most recent fiscal year included in the Financial Statements.
2.13.2 DOCUMENTS PROVIDED
The Company has delivered to Xxxxxx.xxx or its counsel true, correct and
complete copies (or, in the case of unwritten Employee Benefit Plans,
descriptions) of all Employee Benefit Plans (and all amendments thereto), along
with, to the extent
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applicable to the particular Employee Benefit Plan, the
following information: (a) copies of the last three annual reports (Form 5500
series) filed with respect to such Employee Benefit Plan; (b) copies of the
summary plan descriptions, and summaries of material modifications filed or
distributed with respect to such Employee Benefit Plan during the last three
years; (c) copies of all contracts (and any amendments thereto) relating to such
Employee Benefit Plan, including, but not limited to, service provider
agreements, administrative service agreements, insurance contracts, annuity
contracts, investment management agreements and record-keeping agreements; and
(d) the most recent determination letter issued by the IRS with respect to such
Employee Benefit Plan.
2.13.3 COMPLIANCE
With respect to each Employee Benefit Plan, (a) such Employee Benefit
Plan is, and at all times since its inception has been, maintained, administered
and operated in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
and all requirements prescribed thereby, including, but not limited to, ERISA
and the Code; (b) all amendments and actions required to bring such Employee
Benefit Plan into conformity with the applicable provisions of ERISA, the Code
and other applicable laws and regulations have been made or taken within the
time prescribed by law, except to the extent that such amendments or actions are
not required by law to be made or taken until after the Closing Date; (c) all
returns, reports and other disclosures relating to such Employee Benefit Plan
required to be filed with any governmental entity or agency or furnished to any
participant or beneficiary have been properly completed or prepared and timely
filed or furnished in accordance with applicable law; (d) neither the Company,
nor to the knowledge of the Company or the Shareholder, any other fiduciary of
such Employee Benefit Plan has engaged in any transaction or acted or failed to
act in a manner that violates the fiduciary requirements of ERISA or any other
applicable law; and (e) none of the Company, any employee of the Company or, to
the knowledge of the Company or the Shareholder, any other Person has engaged in
or is about to engage in a nonexempt prohibited transaction under Section 406 or
407 of ERISA or under Section 4975 of the Code. Each Employee Benefit Plan that
constitutes a "group health plan," as defined in Section 607(1) or 733(a)(1) of
ERISA or Section 4980B(g)(2) of the Code, has been maintained, administered and
operated at all times since its inception in compliance in all material respects
with (and the Company has never violated any of) the requirements of Parts 6 and
7 of Subtitle B of Title I of ERISA, Section 4980B(f) of the Code, any
regulations under such ERISA and Code sections and any other applicable federal,
state, local or foreign law regarding the provision or continuation of health
insurance coverage or other welfare
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benefits (within the meaning of Section 3(1) of ERISA). Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code is the
subject of an unrevoked favorable determination letter from the IRS with respect
to such qualification; its related trust or annuity contract has been determined
to be exempt from taxation under Section 501(a) of the Code; and nothing has
occurred since the date of such letter, and no circumstances exist or are
reasonably expected by the Company or the Shareholder to occur, that could
adversely affect such qualification or exemption. No event or omission has
occurred, or is reasonably expected by the Company to occur (including, but not
limited to, any of the transactions contemplated in or by this Agreement), with
respect to any Employee Benefit Plan that has or could subject, directly or
indirectly, the Company or, to the knowledge of the Company or the Shareholder,
any other Person to a tax under Chapter 43 of Subtitle D of the Code or a
penalty under Part 5 of Subtitle B of Title I of ERISA.
2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS
All contributions, premiums and other payments due or required to be
made to each Employee Benefit Plan under the terms of such Employee Benefit
Plan, ERISA, the Code or other applicable law have been timely paid, or, if not
yet due, have been properly recorded on the books of the Company.
2.13.5 RELATED EMPLOYERS
The Company is not, and has never been, a member of (a) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (b) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (c) an affiliated service group, within the meaning
of Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.
2.13.6 MULTIEMPLOYER AND TITLE IV PLANS
The Company does not maintain or contribute to, and has never maintained
or contributed to (or been obligated to contribute to), any multiemployer plan
as defined in Section-3(37) or Section 4001(a)(3) of ERISA or 414(f) of the
Code, any multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA or Section 413(c) of the Code, or any employee benefit plan, fund,
program, contract or arrangement that is subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA.
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2.13.7 POST-TERMINATION WELFARE BENEFITS
Neither the Company nor any Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) health, severance or
any other welfare benefits (within the meaning of Section 3(1) of ERISA) with
respect to any current or former officer, employee, agent, director or
independent contractor of the Company or any other entity beyond such
individual's retirement or other termination of service, other than continuation
coverage mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of
the Code.
2.13.8 SUITS, CLAIMS AND INVESTIGATIONS
There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the knowledge of the Company or the Shareholder,
threatened with respect to (or against the assets of) any Employee Benefit Plan,
nor, to the knowledge of the Company or the Shareholder, is there a basis for
any such action, suit or claim. No Employee Benefit Plan is currently under
investigation, audit or review, directly or indirectly, by the IRS, the
Department of Labor (the "DOL") or any other governmental entity or agency, and,
to the knowledge of the Company and the Shareholder, no such action is
contemplated or under consideration by the IRS, the DOL or any other
governmental entity or agency.
2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS
Neither the execution and delivery of this Agreement or any of the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or any of the other Operative Documents will (a) entitle any
current or former officer, employee, agent, director or independent contractor
of the Company to severance pay, unemployment compensation or any other payment
from the Company or any other Person, or otherwise increase the amount of
compensation due to any such individual, or (b) result in any benefit or right
becoming established or increased, or accelerate the time of payment or vesting
of any benefit, under any Employee Benefit Plan, whether or not some other
subsequent action or event would be required to trigger any of the items
specified in (a) or (b) above.
2.14 INTELLECTUAL PROPERTY
2.14.1 GENERAL
The Company owns or is licensed and has all rights in and to the
following as required to conduct its business as now conducted and as proposed
to be conducted: (a) all products, tools, computer programs, specifications,
source code, object code,
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graphics, devices, techniques, algorithms, methods, processes, procedures,
packaging, trade dress, formulae, drawings, designs, improvements, discoveries,
concepts, user interfaces, the "look and feel" of any software or web sites,
software, software development and other tools, content, data inventions
(whether or not patentable or copyrightable and whether or not reduced to
practice), designs, logos, themes, know-how, concepts and other technology that
are now or are currently proposed to be developed, produced, used, marketed or
sold by the Company (collectively, the "Technology-Related Assets"); and (b) all
intellectual property and other proprietary rights in the Technology-Related
Assets, including, without limitation, all: (i) domain names; (ii) trade names,
trademarks, service marks, logos, brand names and other identifiers, with
respect only to the goods and services on which they are currently used by the
Company; (iii) trade secrets,(iv) copyrights and (v) domestic and foreign
letters patent, and the registrations, applications, renewals, extensions and
continuations (in whole or in part) thereof, together with all goodwill
associated with the Company Marks (as defined in Section 2.14.4), and all rights
and causes of action for infringement, misappropriation, misuse, dilution or
unfair trade practices associated with the Company IP Rights (as defined in
Section 2.14.5).
2.14.2 COMPANY TECHNOLOGY
Schedule 2.14.2 to the Disclosure Memorandum sets forth a list of all
products and tools developed, produced, used, marketed or sold by the Company
during the two years prior to the date of this Agreement (collectively, the
"Products"). Except for the Third Party Technologies (as defined in Section
2.14.3), the Company owns all right, title and interest in and to the following
(collectively, the "Technology"), free and clear of all Encumbrances (except for
Permitted Encumbrances and licenses granted by the Company which are disclosed
in the Disclosure Memorandum or, under the terms of this Agreement, are not
required to be so disclosed): (a) the Products, together with any and all codes,
techniques, software tools, formats, designs, user interfaces, content, data and
"look and feel" related thereto; (b) any and all updates, enhancements,
corrections, modifications, improvements and new releases related to the items
set forth in clause (a) above; (c) any and all technology and work in progress
related to the items set forth in clauses (a) and (b) above; and (d) all
inventions, discoveries, processes, designs, trade secrets, know-how and other
confidential or proprietary information related to the items set forth in
clauses (a), (b) and (c) above. The Technology, excluding the Third Party
Technologies, is sometimes referred to herein as the "Company Technology."
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2.14.3 THIRD PARTY TECHNOLOGY
Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
Technology used in the Company's business for which the Company does not own all
right, title and interest (collectively, the "Third Party Technologies"), and
all license agreements or other contracts pursuant to which the Company has the
right to use (in the manner used by the Company, or intended or necessary for
use with the Company Technology) the Third Party Technologies (the "Third Party
Licenses"), indicating, with respect to each of the Third Party Technologies
listed therein, and the Third Party License applicable thereto. The Company has
the lawful right to use (to the full extent permitted under the terms of the
applicable Third Party License) (a) all Third Party Technology that is
incorporated in or used in the development or production of the Company
Technology as currently being developed, licensed, marketed or used by the
Company, and (b) all other Third Party Technology necessary for the conduct of
the Company's business as now conducted and as proposed to be conducted. All
Third Party Licenses are valid, binding and in full force and effect, the
Company and, to the knowledge of the Company and the Shareholder, each other
party thereto have performed in all material respects their obligations
thereunder, and neither the Company nor, to the knowledge of the Company and the
Shareholder, any other party thereto is in default thereunder, nor to the
knowledge of the Company and the Shareholder has there occurred any event or
circumstance which with notice or lapse of time or both would constitute a
default or event of default on the part of the Company or, to the knowledge of
the Company and the Shareholder, any other party thereto or, to the knowledge of
the Company and the Shareholder, give to any other party thereto the right to
terminate or modify any Third Party License. The Company has not received
written notice or, to the best of the knowledge of the Company and the
Shareholder, oral or other notice that any party to any Third Party License
intends to cancel, terminate or refuse to renew (if renewable) such Third Party
License or to exercise or decline to exercise any option or right thereunder.
2.14.4 TRADEMARKS
Schedule 2.14.4 to the Disclosure Memorandum sets forth as of the date
hereof a list of (a) all trademarks, trade names, brand names, service marks,
logos or other identifiers for the Products owned or claimed to be owned by the
Company in its business together with a description of the goods and/or services
on or with respect to which such identifiers are used (the "Company Marks") and,
if applicable, the application or registration numbers for such Company Marks,
and (b) all trademarks, trade names, brand names, service marks, logos or other
identifiers for the Products which are used but not owned by the Company in its
business (the "Licensed Marks"). The Company has full legal and beneficial
ownership, free and clear of any
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Encumbrances (except for Permitted Encumbrances and licenses granted by the
Company which are disclosed in the Disclosure Memorandum or, under the terms of
this Agreement, are not required to be so disclosed), of all rights conferred by
use of the Company Marks on or with respect to the goods and/or services
identified in Schedule 2.14.4 and, as to those Company Marks that have been
registered in the United States Patent and Trademark Office, by federal
registration of the Company Marks on the goods and/or services set forth in such
federal registrations. The Company is licensed or otherwise has sufficient
rights in and to the Licensed Marks as required to conduct its business as now
conducted and as proposed to be conducted.
2.14.5 INTELLECTUAL PROPERTY RIGHTS
Schedule 2.14.5 to the Disclosure Memorandum sets forth as of the date
hereof all patents, patent applications, copyright registrations (and
applications therefor) and trademark registrations (and applications therefor)
filed or obtained by the Company and claiming or covering the Company Technology
(or any portion thereof) and the Company Marks (collectively, the "IP
Registrations"). The Company owns all right, title and interest, free and clear
of any Encumbrances (except for Permitted Encumbrances and licenses granted by
the Company which are disclosed in the Disclosure Memorandum or, under the terms
of this Agreement, are not required to be so disclosed), in and to the IP
Registrations, together with any other rights in or to any copyrights
(registered or unregistered), rights in the Company Marks (registered or
unregistered), trade secret rights and other intellectual property rights
(including, without limitation, rights of enforcement) contained or embodied in
the Company Technology and the Company Marks (collectively, the "Company IP
Rights").
2.14.6 MAINTENANCE OF RIGHTS
Except as set forth on Schedule 2.14.6 to the Disclosure Memorandum, the
Company has not conducted its business, and has not used or enforced (or, to the
knowledge of the Company or the Shareholder, failed to use or enforce) the
Company IP Rights as currently being used by the Company, in a manner that would
result in the abandonment, cancellation or unenforceability of any item of the
Company IP Rights, and the Company has not taken (or, to the knowledge of the
Company or the Shareholder, failed to take) any action that would result in the
forfeiture or relinquishment of any Company IP Rights, in each case where such
abandonment, cancellation, unenforceability, forfeiture or relinquishment would
have a Company Material Adverse Effect. Except as set forth in Schedule 2.14.6,
the Company has not granted to any third party any rights or permissions to use
any of the Technology or the IP Rights. To the best of the Company's and the
Shareholder's knowledge, except pursuant to reasonably prudent safeguards,
(a) no third party has been given by the
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Company any confidential information relating to the Technology or the Company
IP Rights, and (b) the Company is not under any contractual or other obligation
to disclose to any third party any confidential information relating to the
Company Technology.
2.14.7 THIRD PARTY CLAIMS
Except as set forth on Schedule 2.14.7 to the Disclosure Memorandum, (a)
the Company has not received any notice or claim (whether written, oral or
otherwise) challenging the Company's ownership or rights in the Company
Technology or the Company IP Rights or claiming that any other person or entity
has any legal or beneficial ownership with respect thereto; (b) the Company has
not received any notice or claim (whether written, oral or otherwise)
challenging the validity or enforceability of any of the Company IP Rights; and
(c) to the knowledge of the Company and the Shareholder, no other person or
entity is infringing or misappropriating any part of the Company IP Rights or
otherwise making any unauthorized use of the Company Technology.
2.14.8 INFRINGEMENT BY THE COMPANY
Except as set forth on Schedule 2.14.8 to the Disclosure Memorandum, the
use of any of the Company Technology, Company Marks or Company IP Rights in the
Company's business as currently used or proposed to be used does not infringe,
violate or constitute an appropriation of any right, title or interest
(including, without limitation, any patent, copyright or trade secret right)
held by any other person or entity, and there have been no claims made with
respect thereto.
2.14.9 CONFIDENTIALITY
Except as set forth on Schedule 2.14.9 to the Disclosure Memorandum, (a)
the Company has not disclosed any source code regarding the Technology to any
person or entity other than an employee of the Company and under a written
nondisclosure agreement; (b) the Company has at all times maintained and
diligently enforced commercially reasonable procedures to protect all
confidential information relating to the Technology; (c) neither the Company
nor, to the knowledge of the Company and the Shareholder, any escrow agent is
under any contractual or other obligation to disclose the source code or any
other proprietary information included in or relating to the Technology; and (d)
the Company has not deposited any source code relating to the Technology into
any source code escrows or similar arrangements. If, as disclosed on Schedule
2.14.9, the Company has deposited any source code to the Technology into source
code escrows or similar arrangements, the Company has not taken any action
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and has not failed to take any action which action or omission has or could
reasonably form the basis for a release of such source code from such escrows or
arrangements.
2.14.10 WARRANTY AGAINST DEFECTS
Except as set forth in Schedule 2.14.10 to the Disclosure Memorandum,
the Technology is free from known material defects and substantially conforms to
the applicable specifications and documentation of such Technology.
2.14.11 DOMAIN NAMES
Schedule 2.14.11 sets forth a list of all Internet domain names used by
the Company in its business (collectively, the "Domain Names"). The Company has,
and after the Closing the Surviving Corporation will have, a valid registration
and all material rights (free of any material restriction) in and to the Domain
Names, including, without limitation, all rights necessary to continue to
conduct the Company's business as it is currently conducted, subject only to a
successful challenge to the Company's registration of a Domain Name by the third
party owner of the registered United States trademark that corresponds to the
Domain Name.
2.14.12 YEAR 2000
Each hardware, software and firmware product developed by or for the
Company in its business (collectively, the "Software") will accurately process
date data (including, but not limited to, calculating, comparing and sequencing)
from, into and between the twentieth and twenty-first centuries, including,
without limitation, leap year calculations, without a decrease in the
functionality of the Software. The Software is designed to be used prior to,
during and after the calendar year 2000 A.D. and will operate during each such
time period without breach of this Section 2.14.12. Without limiting the
generality of the foregoing, the Software (a) will not abnormally end or provide
invalid or incorrect results as a result of correctly entered date data,
specifically including date data which represents or references different
centuries or more than one century; (b) has been designed to ensure date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century; and (c) provides that all date-related user interface
functionalities and data fields include the indication of century.
2.14.13 INDEMNIFICATION
Except as set forth in Schedule 2.14.13, the Company has not entered
into any agreement or offered to indemnify any Person against any charge of
infringement by
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the Technology or Company IP Rights, or any other intellectual property or
right. The Company has not entered into any agreement granting any Person the
right to bring any infringement action with respect to, or otherwise to enforce,
any of the Technology or Company IP Rights.
2.14.14 RESTRICTIONS ON INTELLECTUAL PROPERTY
To the knowledge of the Company and the Shareholder, none of the
Company's officers, employees, consultants, distributors, agents or
representatives have on their own behalf entered into any agreement regarding
know-how, trade secrets, assignment of rights in inventions, or prohibition or
restriction of competition or solicitation of customers, or any other similar
restrictive agreement or covenant, whether written or oral, with any Person
other than the Company during the period in which such officer, employee,
consultant, agent or representative was employed with or engaged by the Company.
2.15 CORPORATE BOOKS AND RECORDS
The Company has furnished to Xxxxxx.xxx or its representatives for their
examination true and complete copies of (a) the Articles of Incorporation and
Bylaws of the Company as currently in effect, including all amendments thereto,
(b) the minute books of the Company through the date hereof, and (c) the stock
transfer books of the Company through the date hereof. Such minutes reflect all
meetings of the Company's shareholders, Board of Directors and any committees
thereof since the Company's inception, and such minutes accurately reflect in
all material respects the events of and actions taken at such meetings. Such
stock transfer books accurately reflect all issuances and transfers of shares of
capital stock of the Company since its inception.
2.16 LICENSES, PERMITS, AUTHORIZATIONS, ETC.
Except as identified on Schedule 2.1 or 2.5 to the Disclosure
Memorandum, the Company has received all currently required governmental
approvals, authorizations, consents, licenses, orders, registrations and permits
of all agencies relating to the operation of its business, whether federal,
state, local or foreign, the failure to obtain of which would have a Company
Material Adverse Effect. The Company has not received any notifications of any
asserted present failure by it to have obtained any such governmental approval,
authorization, consent, license, order, registration or permit, or past and
unremedied failure to obtain such items.
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2.17 COMPLIANCE WITH LAWS
Except as described on Schedule 2.17 to the Disclosure Memorandum, the
Company is in compliance with all federal, state, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to it, to its employees
or to the Real Property and the Personal Property, including, without
limitation, all such laws, rules, regulations, ordinances, decrees and orders
relating to intellectual property protection, antitrust matters, consumer
protection, environmental protection, equal employment opportunity, health and
occupational safety, pension and employee benefit matters, securities and
investor protection matters, labor and employment matters and practices, except
where the failure of the Company to so comply would not have a Company Material
Adverse Effect. The Company has not received any notification of any asserted
present or past unremedied failure by the Company to comply with any of such
laws, rules, ordinances, decrees or orders.
2.18 INSURANCE
The Disclosure Memorandum sets forth a true and correct list of all
insurance policies maintained by the Company. The Company maintains commercially
reasonable levels of (a) insurance on its property (including leased premises)
that insures against loss or damage by fire or other casualty and (b) insurance
against liabilities, claims and risks of a nature and in such amounts as are
normal and customary in the Company's industry for companies of similar size and
financial condition. As of the date hereof, all insurance policies of the
Company are in full force and effect, all premiums with respect thereto covering
all periods up to and including the date this representation is made have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy or binder. Such policies or binders are sufficient
for compliance with all requirements of law currently applicable to the Company
and of all agreements to which the Company is a party, will remain in full force
and effect through the respective expiration dates of such policies or binders
without the payment of additional premiums, and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. The Company has not been refused any insurance with respect to its
assets or operations, nor has its coverage been limited, by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance.
2.19 BROKERS OR FINDERS
The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by or on behalf of the Company, any
liability for brokerage
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or finders' fees or agents' commissions or any similar charges in connection
with the Merger, this Agreement or any transaction contemplated hereby.
2.20 ABSENCE OF QUESTIONABLE PAYMENTS
Neither the Company nor any director, officer, agent, employee or other
Person acting on behalf of the Company has used any Company funds for improper
or unlawful contributions, payments, gifts or entertainment, or made any
improper or unlawful expenditures relating to political activity to domestic or
foreign government officials or others. The Company has reasonable financial
controls to prevent such improper or unlawful contributions, payments, gifts,
entertainment or expenditures. Neither the Company nor any current director,
officer, agent, employee or other Person acting on behalf of the Company, in
their capacity as such, has accepted or received any improper or unlawful
contributions, payments, gifts or expenditures. The Company has at all times
complied, and is in compliance, in all respects with the Foreign Corrupt
Practices Act and all foreign laws and regulations relating to prevention of
corrupt practices and similar matters.
2.21 BANK ACCOUNTS
Schedule 2.21 to the Disclosure Memorandum sets forth as of the date
hereof the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Company maintains
safe deposit boxes or accounts of any nature and the names of all Persons
authorized to draw thereon, make withdrawals therefrom or have access thereto.
2.22 INSIDER INTERESTS
Except as set forth on Schedule 2.22 to the Disclosure Memorandum, no
shareholder or officer or director of the Company has any interest (other than
as a shareholder of the Company) (a) in any Real Property, Personal Property,
Technology or IP Rights used in or directly pertaining to the business of the
Company, including, without limitation, inventions, patents, trademarks or trade
names, or (b) in any agreement, contract, arrangement or obligation relating to
the Company, its present or prospective business or its operations. Except as
set forth on Schedule 2.22, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors,
shareholders, affiliates or any affiliate thereof. As of the date hereof, the
Company and its officers and directors have no interest, either directly or
indirectly, in any entity, including, without limitation, any corporation,
partnership, joint venture, proprietorship, firm, licensee, business or
association (whether as an employee, officer, director, shareholder, agent,
independent contractor, security holder,
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creditor, consultant or otherwise) that presently (i) provides any services,
produces and/or sells any products or product lines, or engages in any activity
that is the same, similar to or competitive with any activity or business in
which the Company is now engaged or proposes to engage; (ii) is a supplier,
customer or creditor; or (iii) has any direct or indirect interest in any asset
or property, real or personal, tangible or intangible, of the Company or any
property, real or personal, tangible or intangible, that is necessary or
desirable for the present or currently anticipated future conduct of the
Company's business.
2.23 COMPLIANCE WITH ENVIRONMENTAL LAWS
Neither the Company nor, to the knowledge of the Company and the
Shareholder, any other Person (including, without limitation, any previous
owner, lessee or sublessee) has treated, stored or disposed of any material
amounts of petroleum products, hazardous waste, hazardous substances, pollutants
or contaminants on the Real Property, or any real property previously owned,
leased, subleased or used by the Company in the operation of its business, in
violation of any applicable material, federal, state or local statutes,
regulations or ordinances, or common law, in each case as in existence at or
prior to the Closing. To the knowledge of the Company and the Shareholder, there
have been no releases of any material amounts of petroleum, petroleum products,
hazardous waste, hazardous substances, pollutants or contaminants on, at or from
any assets or properties, including, without limitation, the Real Property,
owned, leased, subleased or used by the Company in the operation of its business
during the time such assets or properties were owned, leased, subleased or used
by the Company (or, to the knowledge of the Company and the Shareholder, prior
to such time), including, without limitation, any releases of any material
amounts of petroleum, petroleum products, hazardous waste, hazardous substances,
pollutants or contaminants in violation of any law.
2.24 INFORMATION SUPPLIED BY THE COMPANY
None of the information supplied or to be supplied by the Company for
inclusion in the proxy statement to be delivered to its shareholders in
connection with any written consent by or meeting of such shareholders
(collectively, "Shareholder Materials"), at the date on which such information
was supplied prior to the time the Company's shareholders were requested to
approve the Merger, contained or will contain any untrue statement of a material
fact or omits or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not materially misleading; provided,
however, that the Company makes no representations or
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warranties regarding information furnished by or related to Xxxxxx.xxx or the
Purchaser.
2.25 FULL DISCLOSURE
No information furnished by the Company to Xxxxxx.xxx or its
representatives in connection with this Agreement (including, but not limited
to, the Financial Statements and all information in the Disclosure Memorandum
and the other Exhibits hereto) or the other Operative Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements so made or information so delivered not
misleading in light of all the circumstances in which they were made or
delivered.
2.26 XXXX-XXXXX-XXXXXX
The Company is its own ultimate parent entity as defined under the rules
and regulations promulgated under the Xxxx-Xxxxx-Xxxxxx Act. The Company is not
a $10 million person as defined thereunder.
2.27 OPERATING DATA
On or prior to the date hereof, the Company has delivered to Xxxxxx.xxx
certain of its operating data and certain performance data for its Web Site
including, without limitation, information with respect to downloads, users,
page views and click-through rates, all as set forth in Schedule 2.27 of the
Disclosure Memorandum (the "Operations and Web Site Data"). The Operations and
Web Site Data accurately and fairly present the operations of and other data
related to the Company and the performance of its Web Site, for the period
therein indicated.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF
XXXXXX.XXX AND THE PURCHASER
In order to induce the Company to enter into and perform this Agreement
and the other Operative Documents, Xxxxxx.xxx and the Purchaser jointly and
severally represent and warrant to the Company as follows in this Article III:
3.1 ORGANIZATION
Xxxxxx.xxx is a corporation duly organized validity existing and in good
standing under the laws of the state of Delaware. The Purchaser is a corporation
validly existing and in good standing under the laws of the State of Washington.
Each of Xxxxxx.xxx and the Purchaser has all requisite corporate power and
authority to
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own, operate and lease its respective properties and assets, to
carry on its respective business as now conducted, and as proposed to be
conducted and to enter into and perform its respective obligations under this
Agreement and the other applicable Operative Documents to which Xxxxxx.xxx or
the Purchaser is a party, and to consummate the transactions contemplated hereby
and thereby. Each of Xxxxxx.xxx and the Purchaser is duly qualified and licensed
as a foreign corporation to do business and is in good standing in each
jurisdiction in which the character of properties occupied, owned or held under
lease by Xxxxxx.xxx or the Purchaser, as applicable, or the nature of the
business conducted by Xxxxxx.xxx or the Purchaser, as applicable, makes such
qualification or licensing necessary, except where the failure to be so
qualified or in good standing would not have a material adverse effect on the
business, properties, or prospects of Xxxxxx.xxx taken as a whole (an
"Xxxxxx.xxx Material Adverse Effect"); provided, however, that Xxxxxx.xxx
Material Adverse Effect shall not include any change, circumstance, event or
effect that relates to or results from the announcement or other disclosure or
consummation of the transactions contemplated by this Agreement or general
economic conditions. Each of Xxxxxx.xxx and the Purchaser has full corporate
power and authority to execute, deliver and perform this Agreement and the other
Operative Documents to which it is a party, and to carry out the transactions
contemplated hereby and thereby. All the issued and outstanding shares of
capital stock of the Purchaser are held of record and beneficially by
Xxxxxx.xxx. Since the date of its incorporation, the Purchaser has not engaged
in any activities other than in connection with or as contemplated by this
Agreement or the Operative Documents or the transactions contemplated hereby or
thereby.
3.2 ENFORCEABILITY
Xxxxxx.xxx and the Purchaser each have full corporate power and
authority to execute, deliver and perform their obligations under this Agreement
and each of the other Operative Documents to which they are a party and each of
the certificates, instruments and documents executed or delivered by them
pursuant to the terms of this Agreement. All corporate action on the part of
Xxxxxx.xxx and the Purchaser and their respective officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other applicable Operative Documents to
which Xxxxxx.xxx or the Purchaser is a party, the consummation of the Merger and
the performance of all of their respective obligations under this Agreement and
the other applicable Operative Documents to which Xxxxxx.xxx or the Purchaser is
a party has been taken or will be taken prior to the Effective Time. This
Agreement has been, and each of the other Operative Documents to which
Xxxxxx.xxx is a party will have been at the Closing, duly executed and
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delivered by Xxxxxx.xxx, and this Agreement is, and each of the other Operative
Documents to which Xxxxxx.xxx is a party will be at the Closing, a legal, valid
and binding obligation of Xxxxxx.xxx, enforceable against Xxxxxx.xxx in
accordance with its terms, except as to the effect, if any, of (a) applicable
bankruptcy and other similar laws affecting the rights of creditors generally,
(b) rules of law governing specific performance, injunctive relief and other
equitable remedies, and (c) the enforceability of provisions requiring
indemnification in connection with the offering, sale or issuance of securities.
This Agreement has been, and each of the other Operative Documents to which the
Purchaser is a party will have been at the Closing, duly executed and delivered
by the Purchaser, and this Agreement is, and each of the other Operative
Documents to which the Purchaser is a party will be at the Closing, a legal,
valid and binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms, except as to the effect, if any, of (i) applicable
bankruptcy and other similar laws affecting the rights of creditors generally,
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies, and (iii) the enforceability of provisions requiring
indemnification in connection with the offering, sale or issuance of securities.
3.3 SECURITIES
The Xxxxxx.xxx Common Stock to be issued pursuant to this Agreement has
been, or will be prior to the Effective Time, duly authorized for issuance, and
such Xxxxxx.xxx Common Stock, when issued and delivered to the Company's
shareholders pursuant to this Agreement, shall be validly issued, fully paid and
nonassessable.
3.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS
The execution, delivery and performance of this Agreement and the other
Operative Documents by the Purchaser and Xxxxxx.xxx, as applicable, and the
consummation by them of the transactions contemplated hereby and thereby will
not (a) constitute a violation (with or without the giving of notice or lapse of
time, or both) of any provision of law applicable to Xxxxxx.xxx or the
Purchaser; (b) require any consent, approval or authorization of any Person,
except (i) compliance with applicable securities laws, (ii) the filing of all
documents necessary to consummate the Merger with the Washington Secretary of
State and California Secretary of State and (iii) the notification requirements
of the Xxxx-Xxxxx-Xxxxxx Act; (c) result in a default (with or without the
giving of notice or lapse of time, or both) under, or acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any agreement, lease, note or other restriction,
encumbrance, obligation or liability to which Xxxxxx.xxx or the Purchaser is a
party or by which it is bound or to
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which any assets of Xxxxxx.xxx or the Purchaser are subject; or (d) conflict
with or result in a breach of or constitute a default under any provision of the
Certificate of Incorporation or Bylaws of Xxxxxx.xxx or the Articles of
Incorporation or Bylaws of Purchaser.
3.5 CAPITALIZATION
The authorized capital stock of Xxxxxx.xxx consists of 300,000,000
shares of Xxxxxx.xxx Common Stock of which 161,371,398 shares were issued and
outstanding as of March 31, 1999 and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which is issued or outstanding. Such issued and
outstanding shares of Xxxxxx.xxx Common Stock are validly issued, fully paid and
nonassessable.
3.6 SEC DOCUMENTS
Xxxxxx.xxx has furnished the shareholders with true and complete copies
of its Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
all Forms 8-K and 10-Q's filed after the date of the last Form 10-K, and its
Proxy Statement relating to its 1999 Annual Meeting of Stockholders
(collectively, the "SEC Documents"). As of their respective filing dates, each
of the SEC Documents complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
3.7 ABSENCE OF CERTAIN CHANGES
Since the December 31, 1998 financial statements included in the SEC
Documents, there has not been any change which by itself or in conjunction with
all other such changes, has had or could reasonably be expected to have an
Xxxxxx.xxx Material Adverse Effect, except as disclosed in the SEC Documents to
the date of this Agreement.
3.8 INFORMATION SUPPLIED BY XXXXXX.XXX
None of the information supplied or to be supplied by Xxxxxx.xxx for
inclusion in the Shareholder Materials, including the SEC Documents, at the date
such information was supplied prior to the time the shareholders of the Company
were requested to approve the Merger at either a special meeting of shareholders
or by executing a written consent, contained or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the
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circumstances under which they are made, not materially misleading; provided,
however, that Xxxxxx.xxx makes no representations or warranties regarding
information furnished by or related to the Company.
3.9 FULL DISCLOSURE
No information furnished by Xxxxxx.xxx or the Purchaser to the Company
or its representatives in connection with this Agreement or the other Operative
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements so made or information
so delivered not misleading in light of all the circumstances in which they were
made or delivered.
3.10 BROKERS OR FINDERS
Xxxxxx.xxx has not incurred, and will not incur, directly or indirectly,
as a result of any action taken by or on behalf of Xxxxxx.xxx, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby that would result in a claim against the Company or the Shareholders.
ARTICLE IV -- CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXX.XXX AND THE PURCHASER
The obligations of Xxxxxx.xxx and the Purchaser to perform and observe
the covenants, agreements and conditions hereof to be performed and observed by
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Xxxxxx.xxx:
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company and the Shareholder
contained herein (including applicable Exhibits or Schedules to the Disclosure
Memorandum) and in the other Operative Documents shall have been true and
correct in all material respects when made and, except (a) for changes
contemplated by this Agreement and the other Operative Documents and (b) to the
extent that such representations and warranties speak as of an earlier date,
shall be true and correct in all material respects as of the Closing Date as
though made on that date.
4.2 PERFORMANCE OF AGREEMENTS
The Company shall have performed in all material respects all
obligations and agreements and complied with all covenants contained in this
Agreement or any other
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Operative Document to be performed and complied with by them at or prior to the
Closing.
4.3 OPINION OF COUNSEL FOR THE COMPANY
Xxxxxx.xxx shall have received the opinion letter of Xxxxxx & Xxxxxxx,
counsel for the Company, dated the Closing Date, substantially in the form of
Exhibit 4.3.
4.4 COMPLIANCE CERTIFICATE
Xxxxxx.xxx shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance satisfactory to Xxxxxx.xxx, certifying that the conditions to the
obligations of Xxxxxx.xxx and the Purchaser in Sections 4.1, 4.2, 4.5 and 4.6
have been fulfilled.
4.5 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any Company Material Adverse Effect.
4.6 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.
4.7 PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE
All corporate and other proceedings in connection with the transactions
contemplated hereby and by the other Operative Documents, and all documents and
instruments incident to such transactions, shall have been approved by
Xxxxxx.xxx's counsel. Xxxxxx.xxx shall have received a certificate of the
Secretary of the Company, in form and substance satisfactory to Xxxxxx.xxx, as
to the authenticity and effectiveness of the actions of the Board of Directors
and shareholders of the Company authorizing the Merger, the transactions
contemplated by this Agreement and the other Operative Documents, copies of the
Company's Articles of Incorporation, certified by the California Secretary of
State, and Bylaws, certified by the Secretary of the Company, shall be attached
to such certificate.
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4.8 NONFOREIGN AFFIDAVIT
Xxxxxx.xxx shall have received from the Company, pursuant to Section
1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit
substantially in the form of Exhibit 4.8.
4.9 COMPLIANCE WITH LAWS
The consummation of other transactions contemplated by this Agreement
and the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject. The waiting period
specified in the Xxxx-Xxxxx-Xxxxxx Act, including any extensions thereof, shall
have expired or been terminated, if applicable.
4.10 SHAREHOLDER APPROVAL
The principal terms of this Agreement shall have been approved by the
holders of not less than a majority (or such higher percentage as required by
the Company's Articles of Incorporation) of each class of Company Capital Stock.
4.11 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.
4.12 EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS
Xxxxx Xxxxxxx, Xxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx X'Xxxxxxxx, and Xxxxx
Xxxxxx shall have accepted an oral offer of employment with Xxxxxx.xxx and shall
have executed the Xxxxxx.xxx standard form of Confidentiality, Noncompetition
and Invention Assignment Agreement substantially in the form attached hereto as
Exhibit 4.12.
4.13 AFFILIATE LETTERS
The Company shall have delivered or caused to be delivered to Xxxxxx.xxx
an Affiliate Letter substantially in the form of Exhibit 4.13 from each of those
Persons who were, on the date on which the requisite number of consents has been
obtained to
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approve the Merger, "affiliates" of the Company within the meaning
of Rule 145 of the rules and regulations promulgated under the Securities Act.
4.14 TERMINATION OF CERTAIN AGREEMENTS
Any and all rights of refusal, co-sale rights and registration rights
for the benefit of the holders of Company Capital Stock, if any, set forth in
the Disclosure Memorandum shall have been terminated. All amounts due and
payable to Imperial Bank under the Equipment Loan Facilities dated June 19, 1997
and March 25, 1998, shall have been paid in full and any security interest in
the assets and Personal Property of the Company (including, without limitation,
Technology-Related Assets, Company Technology and IP Rights) shall have been
released. The Promotion and Licensing Agreement, dated March 1999, by and
between the Company and Wired Digital Inc., shall have been terminated or
amended in form and substance reasonably acceptable to Xxxxxx.xxx.
4.15 EXERCISE OF STOCK PURCHASE RIGHTS
Any and all Stock Purchase Rights shall have been exercised or
converted, as the case may be (including the conversion of the Company Preferred
Stock), for shares of Company Common Stock immediately prior to the Effective
Time, except for Options assumed by Xxxxxx.xxx pursuant to Section 1.7.1(d).
4.16 NO DISSENTER RIGHTS EXERCISED GREATER THAN 5% OF STOCK
No holders of the Preferred Stock shall have delivered to the Company
before the Effective Time timely written notice of such holder's intent to
demand payment for such shares in accordance with California Law, unless such
holder shall have withdrawn or otherwise lost his or her right to such payment
as an assenting shareholder. Holders of not more than 5% of the shares of
Company Common Stock shall have not voted in favor of the Merger or not
consented thereto in writing and shall have delivered before the Effective Time
timely written notice of such holder's intent to demand payment as a dissenting
shareholder for such shares in accordance with California Law.
4.17 TRANSMITTAL LETTERS
All holders of the Company Series A Stock and holders of at least 95% of
the Company Common Stock shall have executed Letters of Transmittal in the form
attached hereto as Exhibit 1.7.2, addressing, among other issues, (i) the
mechanics of share exchange, (ii) representations and share ownership, and (iii)
agreement to be bound to indemnification obligations hereunder.
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4.18 CONSENTS TO MERGER
Schedule 4.18 lists certain agreements, leases, notes or other documents
identified on Schedules 2.5, 2.9, 2.10 and 2.14 to the Disclosure Memorandum
that treat the Merger as an assignment or otherwise by their terms require
consent. Unless otherwise set forth in Schedule 4.18, the Company shall have
received and shall have delivered to Xxxxxx.xxx or its counsel written consents
to the Merger from each of the parties (other than the Company) to such
agreements, leases, notes or other documents, which consents shall be reasonably
satisfactory in all respects to Xxxxxx.xxx.
4.19 DELIVERY OF AUDITED FINANCIAL STATEMENTS
The Company shall deliver to Xxxxxx.xxx an audited balance sheet,
statement of income and expense, statements of cash and statement of
shareholder's equity of the Company as of and for the fiscal year ended 1998.
Except as set forth on Schedule 4.19, the audited balance sheet, statement of
income and expense, statement of cash and statement of shareholder's equity of
the Company as of December 31, 1998 shall conform in all material respects with
the unaudited balance sheet, statement of income and expense, statement of cash
and statement of shareholder's equity of the Company as of December 31, 1998.
ARTICLE V -- CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by the Company.
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Xxxxxx.xxx and the Purchaser
contained herein and in the other Operative Documents shall have been true and
correct in all material respects when made and, except for (a) changes
contemplated by this Agreement and the other Operative Documents and (b) to the
extent that such representations and warranties speak as of an earlier date,
shall be true and correct as of the Closing Date as though made on that date.
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5.2 PERFORMANCE OF AGREEMENTS
Xxxxxx.xxx and the Purchaser shall have performed all obligations and
agreements and complied with all covenants contained in this Agreement or any
other Operative Document to be performed and complied with by them at or prior
to the Closing.
5.3 OPINION OF COUNSEL
The Company shall have received the opinion letter of Xxxxxxx Coie LLP,
counsel for Xxxxxx.xxx and the Purchaser, dated the Closing Date, substantially
in the form of Exhibit 5.3.
5.4 COMPLIANCE CERTIFICATE
The Company shall have received a certificate of an officer of
Xxxxxx.xxx, dated the Closing Date, substantially in form and substance
satisfactory to the Company, certifying that the conditions to the obligations
of the Company have been fulfilled.
5.5 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.
5.6 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any Xxxxxx.xxx Material Adverse Effect. Changes in the trading
prices of Xxxxxx.xxx Common Stock shall not be deemed to have an Xxxxxx.xxx
Material Adverse Effect under this Agreement.
5.7 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified
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by law shall have passed. All other consents, approvals and notices referred to
in this Agreement shall have been obtained or delivered.
5.8 COMPLIANCE WITH LAWS
The consummation of other transactions contemplated by this Agreement
and the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject. The waiting period
specified in the Xxxx-Xxxxx-Xxxxxx Act, including any extensions thereof, shall
have expired or been terminated, if applicable.
5.9 TAX OPINION
The Company shall have received an opinion of Xxxxxx & Xxxxxxx, dated as
of the Closing Date, in form and substance reasonably satisfactory to the
Company, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, for federal income
tax purposes, the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code. In rendering such opinion, Xxxxxx & Xxxxxxx may
receive and rely upon representations including those contained in this
Agreement or in certificates of officers of the parties or others.
ARTICLE VI -- COVENANTS
Between the date of this Agreement and the Effective Time (or such later
period as set forth in Sections 6.5, 6.8, 6.9, 6.13 and 6.14), the parties
covenant and agree as set forth in this Article VI.
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER
Unless Xxxxxx.xxx shall otherwise agree in writing, the business of the
Company shall be conducted in and only in, and the Company shall not take any
action except in, the ordinary course of business and in accordance with
applicable law; and the Company shall use its best efforts to preserve intact
the business organization of the Company, to keep available the services of the
current officers, employees and consultants of the Company and to preserve the
current relationships of the Company with, and the goodwill of, customers,
suppliers and other Persons with which the Company has significant business
relations. By way of amplification and not limitation, except as otherwise
contemplated by this Agreement or in the corresponding portion of Section 6.1 to
the Company Disclosure Schedules, the Company shall not, between the date of
this Agreement and the Effective Time, directly or indirectly do, or propose to
do, any of the following without the prior written consent of Xxxxxx.xxx, which
will not be unreasonably withheld:
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(a) amend or otherwise change its Articles of Incorporation or
Bylaws;
(b) except for the issuance of shares of Company Capital Stock upon
the exercise or conversion of currently outstanding Stock Purchase Rights or
Options, issue, sell, contract to issue or sell, pledge, dispose of, grant,
encumber or authorize the issuance, sale, pledge, disposition, grant or
Encumbrance of (i) any assets of the Company, except in the ordinary course of
business and in a manner consistent with past practice, or (ii) any shares of
capital stock of any class of the Company or (iii) any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) of the Company;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any of its capital stock other than repurchases of employee
shares at cost pursuant to contractual arrangements;
(d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure which is in excess of $30,000 or capital expenditures which
are, in the aggregate, in excess of $40,000 for the Company taken as a whole;
(v) enter into any agreement in which the obligation of the Company exceeds
$40,000 or which shall not terminate or be subject to termination for
convenience within 180 days following execution; (vi) license any Technology or
IP Rights other than customer downloading of software from the Internet in the
ordinary course of business; or (vii) amend any contract, agreement, commitment
or arrangement with respect to any matter set forth in this subsection (e);
(f) enter into or amend any employment, consulting or agency
agreement, or increase the compensation payable or to become payable to its
officers, employees, agents or consultants, or grant any severance or
termination pay to, or enter
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into any employment or severance agreement with, any director, officer or other
employee of the Company, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance, benefit, Employee Benefit Plan or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting methods, policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection of
accounts receivable) or as required as a result in a change in law or GAAP;
(h) make any Tax election or settle or compromise any Tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice or as reserved on the books of the Company;
(j) take any action that would or is reasonably likely to result in
any of the representations and warranties of the Company set forth in this
Agreement being untrue in any material respect, or in any covenant of the
Company set forth in this Agreement being breached, or in any of the conditions
to the Merger specified in Article IV hereof not being satisfied; or
(k) agree to do any of the foregoing.
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY
From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees and agents of the Company to, afford
the officers, employees and agents of Xxxxxx.xxx access at all reasonable times
to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and shall furnish Xxxxxx.xxx with
all financial, operating and other data and information as Xxxxxx.xxx, through
its officers, employees or agents, may reasonably request for continuation of
the transactions contemplated hereby. From the date hereof until the Effective
Time, the Company shall provide Xxxxxx.xxx with monthly and other financial
statements of the Company as they become available internally at the Company,
all of which financial statements shall fairly present the financial position
and results of operations of the Company as of the dates and for the
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periods therein specified. No investigation pursuant to this Section 6.2 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. The parties shall
continue to comply with and to perform their respective obligations under the
Mutual Nondisclosure Agreement between Xxxxxx.xxx and the Company entered into
as of April 22, 1999.
6.3 NO ALTERNATIVE TRANSACTIONS
Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any material portion of
the assets of, or any equity interest in (other than pursuant to the exercise of
Options), the Company or any business combination with the Company or
participate in any negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate or negotiate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. The Company
shall notify Xxxxxx.xxx promptly if any such proposal or offer, or any inquiry
or contact with any Person with respect thereto, is made and shall, in any such
notice to Xxxxxx.xxx, indicate in reasonable detail the identity of the Person
making such proposal, offer, inquiry or contact and the terms and conditions of
such proposal, offer, inquiry or contact. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
(e.g. agreement not to invest in or seek change of control of the Company)
agreement to which the Company is a party.
6.4 NOTIFICATION OF CERTAIN MATTERS
Each party shall give prompt notice to the other parties of (a) the
occurrence or nonoccurrence of any event which would be likely to cause any
representation or warranty made by such party contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any material failure by
such party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.4 shall not limit or otherwise affect
the remedies available to the parties hereunder.
6.5 FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS
Upon the terms and subject to the conditions hereof, each of Xxxxxx.xxx,
Purchaser and the Company shall use commercially reasonable efforts to take, or
cause
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to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable on their part under the Agreement or under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, including, without limitation, using its
commercially reasonable efforts to obtain all waivers, licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company as are necessary for the
consummation of the transactions contemplated hereby and to fulfill the
conditions to the Merger. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall use commercially reasonable
efforts to take all such action. After the Closing Date, each party hereto, at
the request of and without any further cost or expense to the other parties,
will take any further actions necessary or desirable to carry out the purposes
of this Agreement or any other Operative Document, to vest in the Surviving
Corporation full title to all properties, assets and rights of the Company and
to effect the issuance of the Xxxxxx.xxx Common Stock to the shareholders of the
Company pursuant to the terms and conditions hereof.
6.6 SHAREHOLDER APPROVAL
The Company will seek the approval at a special meeting of shareholders
or the written consent of the shareholders at the earliest practicable date
approving this Agreement, the other Operative Documents, the Merger and related
matters, which approval will be recommended by the Board of Directors of the
Company.
6.7 PROXY STATEMENT
The Company will send the Shareholder Materials to the shareholders of
the Company, in a timely manner, for the purposes of considering approval of the
Merger, either at a special meeting of shareholders or by their execution of a
written consent. The Company and Xxxxxx.xxx each will promptly provide all
information relating to its respective business or operations necessary for
inclusion in the Shareholder Materials to satisfy all requirements of applicable
state and federal securities laws. The Company and Xxxxxx.xxx each shall be
solely responsible for any statement, information or omission in the Shareholder
Materials relating to it or its affiliates based on written information
furnished by it. The Company and Xxxxxx.xxx will not provide or publish to the
shareholders of the Company any material concerning them or their affiliates
that violates the Securities Act or the Exchange Act with respect to the
transactions contemplated hereby.
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6.8 XXXXXX.XXX COMMON STOCK
Xxxxxx.xxx agrees to authorize for listing on the NASDAQ National Market
the shares of Xxxxxx.xxx Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger by filing with the NASDAQ
National Market a Notification of Listing of Additional Shares (or such other
form as may be required by the NASDAQ National Market) in a timely manner prior
to the Closing or otherwise in accordance with the rules and regulations of the
NASDAQ National Market.
6.9 SECURITIES ACT COMPLIANCE
Xxxxxx.xxx represents and warrants that the issuance of the Xxxxxx.xxx
Common Stock in connection with the Merger will have been registered on or prior
to the Closing under the Securities Act, pursuant to a registration statement on
Form S-4, which shall be effective as of the Closing. As a result, the shares of
Xxxxxx.xxx Common Stock issuable in the Merger will be freely tradable, without
restriction under the Securities Act, other than those restrictions imposed on
affiliates of the Company pursuant to Rule 145 under the Securities Act and
those restrictions imposed on affiliates of Xxxxxx.xxx pursuant to Rule 144
under the Securities Act. Xxxxxx.xxx agrees to use commercially reasonable
efforts to cause such registration statement to remain effective as of the
Effective Date and to prepare and file with the Securities and Exchange
Commission such amendments to such registration statement and amendments or
supplements to the prospectus used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the sale of
Xxxxxx.xxx Common Stock at the Closing. For so long as any shares of Xxxxxx.xxx
Common Stock issued in connection with the Merger remain subject to Rule 145 of
the Securities Act, Xxxxxx.xxx agrees to use commercially reasonable efforts to
timely file all required reports under the Exchange Act, and otherwise satisfy
the requirements of Rule 144(c) under the Securities Act.
6.10 DISSENTING SHARES
Prior to the Closing Date, the Company shall furnish Xxxxxx.xxx with the
name and address of each shareholder of the Company who, prior to the Closing,
has requested appraisal rights pursuant to California law and the number of
Dissenting Shares owned by such shareholder.
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6.11 PUBLICITY
No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby until the issuance by Xxxxxx.xxx and the Company of a joint
press release announcing this Agreement and the transactions contemplated
hereby.
6.12 OPTION GRANTS
Promptly following the Effective Date, Xxxxxx.xxx will act to grant
stock options in the numbers specified and to the employees of the Company set
forth in Schedule 6.12 at an exercise price per share equal to Xxxxxx.xxx Common
Stock fair market value as determined under the Xxxxxx.xxx 1999 Stock Option
Plan (the "Xxxxxx.xxx 1999 Plan") at the first date the plan administrator of
the Xxxxxx.xxx 1999 Plan acts following the Closing Date, with vesting in
accordance with the standard five-year vesting schedule under the Xxxxxx.xxx
1999 Plan. Xxxxxx.xxx shall offer employment, effective immediately following
the Effective Time, to those employees of the Company set forth at Exhibit 6.12
who immediately prior to the Effective Time continue to be employees of the
Company.
6.13 OPTION SHARES; REGISTRATION
Xxxxxx.xxx shall take all corporate action necessary to reserve for
issuance a sufficient number of Xxxxxx.xxx Common Stock for delivery upon
exercise of the Options assumed in accordance with Section 1.7.1(d). Xxxxxx.xxx
shall use best efforts to cause to be filed with respect to Xxxxxx.xxx Common
Stock subject to such Options a registration statement on Form S-8 (or any
successor form) with respect to those shares eligible to be registered on a
primary basis on such form to be effective within 10 business days of the date
on which the requirements of Items 2, 5 and 7 of Form 8-K have been satisfied
and the responsive Report on Form 8-K, as it may be amended, with respect to the
Merger has been filed with the SEC. Xxxxxx.xxx shall use all commercially
reasonable 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.
Xxxxxx.xxx shall pay all expenses incident to the registration of shares
under this Section 6.13.
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6.14 INDEMNIFICATION OF OFFICERS AND DIRECTORS
From the Effective Time through the date that is six years after the
Effective Time, Xxxxxx.xxx agrees that it will, and will cause the Company to,
indemnify and hold harmless each present and former director and officer (the
"Indemnified Persons"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
California law and its Articles of Incorporation or bylaws in effect on the date
hereof to indemnify such Indemnified Person (and Xxxxxx.xxx and the Company
shall also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Indemnified Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Indemnified Person is not entitled to indemnification). The provisions
of this Section 6.14 are intended to be in addition to the rights otherwise
available to the current officers and directors of the Company by law, charter,
bylaw or agreement, and shall operate for the benefit of, and shall be
enforceable by, each of the Indemnified Persons, their heirs and their
representatives.
6.15 BENEFITS ROLLOVER
After Closing and until December 31, 1999, Xxxxxx.xxx, the Surviving
Corporation and their affiliates shall provide employees of the Company who
become employed by Xxxxxx.xxx or the Surviving Corporation or any of their
affiliates on the Closing Date or as a result of the transactions contemplated
herein (the "Retained Employees") with employee benefit plans, policies,
programs and arrangements that in the aggregate are not materially less
favorable than those currently provided to such employees by the Company. For
purposes of determining the amount of vacation and sick leave to which Retained
Employees shall be entitled upon becoming employees of Xxxxxx.xxx, the Surviving
Corporation or any of their affiliates, Xxxxxx.xxx, the Surviving Corporation
and each of their affiliates shall treat each Retained Employee's entire period
of employment with the Company as if it had been employment with Xxxxxx.xxx, the
Surviving Corporation and their affiliates, even though the Retained Employees
were not actually employed by Xxxxxx.xxx or any of its affiliates prior to
Closing.
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ARTICLE VII -- TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the shareholders of the Company):
(a) by mutual written consent;
(b) by either the Company or Xxxxxx.xxx, if the Merger has not been
consummated by June 30, 1999; provided, however, that the right to terminate
this Agreement under this subsection (b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by either the Company or Xxxxxx.xxx, if there shall be any law
or regulation that makes consummation of the Merger illegal or if any judgment,
injunction, order or decree enjoining Xxxxxx.xxx, the Purchaser or the Company
from consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable; provided, however, that the party
seeking to terminate this Agreement pursuant to this subsection (c) shall have
used all reasonable efforts to remove such judgment, injunction, order or
decree;
(d) by the Company, in the event of a material breach by Xxxxxx.xxx
of any representation, warranty or agreement contained herein which has not been
cured or is not curable by June 30, 1999; or
(e) by Xxxxxx.xxx, in the event of a material breach by the Company
of any representation, warranty or agreement contained herein which has not been
cured or is not curable by June 30, 1999.
7.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement pursuant to Section
7.1 hereof, there shall be no further obligation on the part of any party
hereto, other than the provisions of this Section 7.2 and Section 6.2. Nothing
herein shall relieve any party from liability for any willful breach hereof.
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7.3 AMENDMENT
This Agreement may be amended by the parties hereto at any time before
or after approval of the Company's shareholders; but after such approval,
however, no amendment will be made which by applicable law requires the further
approval of the Company's shareholders without obtaining such further approval.
7.4 WAIVER
At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
ARTICLE VIII -- SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL
All representations and warranties contained in this Agreement or in the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall survive the Closing for a period of one year after the Effective
Time (the "Survival Period"), and shall not be deemed waived or otherwise
affected by any investigation made or any knowledge acquired with respect
thereto, or by any notice delivered pursuant to Section 6.4 hereof; provided,
however, that any claim based on Section 2.8 (Taxes) shall survive until the end
of the applicable statute of limitations. The covenants and agreements contained
in this Agreement or in the other Operative Documents shall survive the Closing
and shall continue until all obligations with respect thereto shall have been
performed or satisfied or shall have been terminated in accordance with their
terms.
8.2 INDEMNIFICATION BY THE HOLDERS OF COMPANY CAPITAL STOCK
Subject to the limitations set forth in this Article VIII, from and
after the Closing, each holder of Company Capital Stock severally and not
jointly shall indemnify and hold Xxxxxx.xxx, its officers, directors and
affiliates (as "affiliate" is defined in Rule 12b-2 of the Exchange Act) (the
"Indemnified Parties") harmless from and against, and shall reimburse the
Indemnified Parties for, any and all actual out-of-pocket losses, damages,
debts, liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, Taxes, costs or expenses (including, but not limited
to, any reasonable legal or accounting fees or expenses and any Taxes or other
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costs or damages arising under, caused by or related to Section 280G of the Code
or any comparable provision of state, local or foreign law) net of insurance
proceeds and any tax benefits attributable to such Losses which reduces the
Taxes of Xxxxxx.xxx or its subsidiaries ("Losses") arising out of (i) any
inaccuracy or misrepresentation in, or breach of, any representation or warranty
made by the Company in this Agreement or in any other Operative Document or in
the certificates delivered hereto or thereto; (ii) any failure by the Company to
perform or comply, in whole or in part, with any covenant or agreement in this
Agreement or in any other Operative Document; (iii) all liability for Taxes of
the Company assessed during or attributable to any taxable period ending on or
prior to the Effective Date, and the portion of any taxable period that
includes, but does not end on, the Effective Date to the extent such Taxes
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Company Balance Sheet (rather than in any notes thereto);
(iv) any liability for Taxes resulting from the transactions contemplated by
this Agreement, excluding any Taxes resulting from a reassessment of Real
Property or Personal Property occurring as a result of the Merger or (v) those
expenses of the Company incurred in connection with the transactions
contemplated hereby in excess of $200,000 (as such amount is described and
limited in Section 9.2 hereof) that are not deducted from the Merger
Consideration as set forth in Sections 1.7.1(b)(i) and 9.2 hereof.
8.3 THRESHOLD AND LIMITATIONS
(a) No Indemnified Party shall be entitled to receive any
indemnification payment with respect to any claims for indemnification under
this Article VIII ("Claims") until the aggregate Losses for which such
Indemnified Parties would be otherwise entitled to receive indemnification
exceed $100,000 (the "Threshold"); provided, however, that once such aggregate
Losses exceed the Threshold, such Indemnified Parties shall be entitled to
indemnification for the aggregate amount of all Losses without regard to the
Threshold; and provided further, that the Indemnified Parties shall be entitled
to indemnification for all Losses based on fraud or arising in connection with
Section 9.2 (Expenses).
(b) (i) The obligation of the shareholders to indemnify
Xxxxxx.xxx and the other Indemnified Parties under Section 8.2 shall be
Xxxxxx.xxx's sole and exclusive remedy under this Agreement against the
shareholders.
(ii) The indemnity obligations of the shareholders with
respect to Losses (other than Losses based upon a claim of fraud or arising in
connection with Section 2.14 (Intellectual Property) or Section 9.2) ("Section
8.3(b)(ii) Losses")shall be limited to $25,000,000 in the aggregate (as
determined in accordance with Section
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8.3(d)) (the "Initial Loss Limit") and at no time shall any shareholder's
indemnity obligations with respect to Section 8.3(b)(ii) Losses exceed such
shareholder's pro rata portion of the Initial Loss Limit.
(iii) Notwithstanding any other provision of this Agreement
to the contrary, the indemnity obligations of the shareholders under Section 8.2
for Losses based upon claims arising in connection with Section 2.14 ("Section
8.3(b)(iii) Losses") shall be limited to the Pledged Shares, and at no time
shall such indemnity obligation of a shareholder exceed such shareholder's pro
rata portion of the Pledged Shares (as determined in accordance with Section
8.3(d) below).
(iv) Each Section 8.3(b)(ii) Loss and Section 8.3(b)(iii)
Loss paid shall reduce dollar for dollar the amount available for the
satisfaction of any subsequent claim for Section 8.3(b)(ii) and Section
8.3(b)(iii) Losses.
(v) Notwithstanding any other provision of this Agreement to
the contrary, the indemnity obligations of the shareholders under Section 8.2
for Losses based upon claims of fraud or for Losses arising in connection with
Section 9.2 shall be limited to the Merger Consideration, and at no time shall
such indemnity obligations of a shareholder exceed such shareholder's pro rata
portion of the Merger Consideration.
(c) An indemnifying party shall not be obligated to defend and hold
harmless an Indemnified Party, or otherwise be liable to such party, with
respect to any claims made by the Indemnified Party after the expiration of the
applicable time period as set forth in Section 8.1 hereof. Notwithstanding the
foregoing, indemnity may be sought after the expiration of the Survival Period
pursuant to this Article VIII if a Claim Notice (as defined in Section 8.4(a)
hereof) shall have been delivered to the Shareholder Representative prior to the
expiration of the Survival Period.
(d) The indemnification obligations of the shareholders of the
Company under this Article VIII shall be satisfied, first, by means of the
forfeiture to Xxxxxx.xxx of Pledged Shares in accordance with the provisions of
this Article VIII. The number of Pledged Shares to be forfeited to Xxxxxx.xxx in
payment of any claims for indemnification under this Article VIII ("Claims")
shall be determined by dividing (x) the aggregate dollar amount of such Claims
by (y) the Base Price. The aggregate value of Claims paid by means of the
forfeiture to Xxxxxx.xxx of Pledged Shares shall be deemed to reduce the total
Merger Consideration otherwise payable to the shareholders of the Company
pursuant to Section 1.7 of this Agreement. Any such Claims shall be deemed to
reduce the Pledged Shares, pro rata with respect to each shareholder of the
Company, as determined by reference to the number of shares of
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Xxxxxx.xxx Common Stock such shareholder is entitled to receive in the Merger as
compared to all other shareholders of the Company; provided, however, that any
Claims paid with respect to any representation, warranty covenant or agreement
of the Shareholder shall not result in a pro rata reduction of the Pledged
Shares but shall reduce only the Pledged Shares of such Shareholder.
8.4 PROCEDURE FOR INDEMNIFICATION
(a) An Indemnified Party shall give written notice (the "Claim
Notice") of any Claim for indemnification under this Article VIII to the
Shareholder Representative reasonably promptly after the assertion against an
Indemnified Party of any claim by a third party (a "Third Party Claim"), or, if
such Claim is not in respect of a Third Party Claim, reasonably promptly after
the discovery of facts upon which the Indemnified Party intends to base a Claim
for indemnification pursuant to Article VIII hereof; provided, however, that the
failure or delay to so notify the Shareholder Representative shall not relieve
the Shareholder Representative of any obligation or liability that the
Shareholder Representative may have to the Indemnified Party except to the
extent that the Shareholder Representative demonstrates that the indemnifying
parties' ability to defend or resolve such Claim is adversely affected thereby.
Any such Claim Notice shall describe the facts and circumstances on which the
asserted Claim for indemnification is based and shall specify how such
Indemnified Party intends to recover such funds pursuant to this Agreement and
the basis for the determination of the amount which the Indemnified Party intend
to recover.
(b) If, within 30 days of the receipt by the Shareholder
Representative of a Claim Notice, the Shareholder Representative contests in
writing to the Indemnified Party that Losses identified in such Claim Notice
constitute indemnifiable Claims (the "Representative Notice"), then the
Indemnified Party and the Shareholder Representative, acting in good faith,
shall attempt to reach agreement with respect to the contested portions of such
Claims. Unless a Claim is contested within such 30-day period, the Indemnified
Party shall, subject to the other terms of this Article VIII, be paid the amount
of the Losses related to such Claim or the uncontested portion thereof. The
Shareholder Representative shall not object to any Claim unless (i) it believes
in good faith that the Indemnified Party is not entitled to be indemnified with
respect to the Losses specified therein, or (ii) it lacks sufficient information
to assess the validity or amount of the Claim. If the Shareholder Representative
objects to a Claim on the basis that it lacks sufficient information, it shall
promptly request from the Indemnified Party any additional information
reasonably necessary in order for it to assess such Claim and the Indemnified
Party shall, to the extent the Indemnified Party reasonably can, provide
additional information reasonably requested. Upon receipt of such additional
information, the Shareholder Representative shall review it as soon as
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reasonably practicable and notify the Indemnified Party of any withdrawal or
modification of the objection. If the Indemnified Party and the Shareholder
Representative are unable to reach agreement with respect to any contested
Claims within 45 days of the delivery of the Representative Notice, the matter
shall be settled by binding arbitration in Portland, Oregon as set forth below.
All claims shall be settled in accordance with the Commercial Arbitration Rules
then in effect of the American Arbitration Association (the "AAA Rules"). The
Shareholder Representative and the Indemnified Party shall each designate one
arbitrator within 15 days after the termination of such 45-day period. The
Shareholder Representative and the Indemnified Party shall cause such designated
arbitrators mutually to agree upon and designate a third arbitrator; provided,
however, that (i) failing such agreement within 70 days of delivery of the
Representative Notice, the third arbitrator shall be appointed in accordance
with the AAA Rules and (ii) if either the Shareholder Representative or the
Indemnified Party fails to timely designate an arbitrator, the dispute shall be
resolved by the one arbitrator timely designated. All of the fees and expenses
of the arbitrators shall be paid from proceeds of the Pledged Shares in the
event that Xxxxxx.xxx or the Purchaser is the prevailing party in a dispute, and
all such fees and expenses shall be paid by Xxxxxx.xxx in the event that the
shareholders or the Shareholder is the prevailing party in a dispute. The
Shareholder Representative and the Indemnified Party shall cause the arbitrators
to decide the matter to be arbitrated pursuant hereto within 30 days after the
appointment of the last arbitrator. The arbitrators' decision shall relate
solely to whether the Indemnified Party is entitled to be indemnified for the
contested Claim, or the contested portion thereof, pursuant to the applicable
terms of this Agreement. The final decision of the majority of the arbitrators
shall be furnished to the Shareholder Representative and the Indemnified Party
in writing and shall constitute the conclusive determination of the issue in
question binding upon the Shareholder Representative, the Shareholders, and the
Indemnified Party, and shall not be contested by any of them. Such decision may
be used in a court of law only for the purpose of seeking enforcement of the
arbitrators' decision.
(c) (i) Subject to the rights of or duties to any insurer or
other third party having potential liability therefor, the Shareholder
Representative shall have the right, upon written notice given to the
Indemnified Party within 30 days after receipt of the notice from the
Indemnified Party of any Third Party Claim, to assume the defense or handling of
such Third Party Claim, at the indemnifying party's sole expense, in which case
the provisions of Section 8.4(b)(ii) hereof shall govern; provided, however,
that, notwithstanding the foregoing, Xxxxxx.xxx may elect to assume the defense
and handle any such Third Party Claim if it determines in good faith that the
resolution of such Third Party Claim could result in an adverse impact on the
business, operations,
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assets, liabilities (absolute, accrued, contingent or otherwise), condition
(financial or otherwise) or prospects of Xxxxxx.xxx, in which case the
provisions of Section 8.4(d)(ii) hereof shall govern.
(ii) The Shareholder Representative shall select counsel
reasonably acceptable to the Indemnified Party in connection with conducting the
defense or handling of such Third Party Claim, and the Shareholder
Representative shall defend or handle the same in consultation with the
Indemnified Party and shall keep the Indemnified Party timely apprised of the
status of such Third Party Claim. The Shareholder Representative shall not,
without the prior written consent of the Indemnified Party, agree to a
settlement of any Third Party Claim, unless (A) the settlement provides an
unconditional release and discharge of the Indemnified Party and the Indemnified
Party is reasonably satisfied with such discharge and release and (B) the
Indemnified Party shall not have reasonably objected to any such settlement on
the ground that the circumstances surrounding the settlement could result in an
adverse impact on the business, operations, assets, liabilities (absolute,
accrued, contingent or otherwise), condition (financial or otherwise) or
prospects of the Indemnified Party. The Indemnified Party shall cooperate with
the Shareholder Representative and shall be entitled to participate in the
defense or handling of such Third Party Claim with its own counsel and at its
own expense.
(d) (i) If (A) the Shareholder Representative does not give
written notice to the Indemnified Party pursuant to Section 8.4(c)(i) within 30
days after receipt of the notice from the Indemnified Party of any Third Party
Claim of the indemnifying party's election to assume the defense or handling of
such Third Party Claim or (B) Xxxxxx.xxx elects to assume the defense and the
handling of such Third Party Claim pursuant to Section 8.4(c)(ii), the
provisions of Section 8.4(d)(ii) hereof shall govern.
(ii) The Indemnified Party may, at the indemnifying party's
expense (which shall be paid from time to time by the Shareholder Representative
as such expenses are incurred by the Indemnified Party), select counsel in
connection with conducting the defense or handling of such Third Party Claim and
defend or handle such Third Party Claim in such manner as it may deem
appropriate; provided, however, that the Indemnified Party shall keep the
Shareholder Representative timely apprised of the status of such Third Party
Claim and shall not settle such Third Party Claim without the prior written
consent of the Shareholder Representative, which consent shall not be
unreasonably withheld. If the Indemnified Party defends or handles such Third
Party Claim, the Shareholder Representative shall cooperate with the Indemnified
Party and shall be entitled to participate in the defense or handling of such
Third Party Claim with its own counsel and at its own expense.
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(e) Notwithstanding anything to the contrary herein, with respect to
any claim that is made by any taxing authority which, if successful, might
result in an indemnity payment to any Indemnified Party hereunder (a "Tax
Claim") (other than a Tax Claim relating solely to Taxes of the Company for any
Tax period of the Company that begins before the Closing Date and ends after the
Closing Date (a "Straddle Period")), the Shareholder Representative, after
consulting in good faith with such Indemnified Party and subject to the
requirement that the Shareholder Representative keep such Indemnified Party
fully informed and allow such Indemnified Party to participate in any proceeding
involved, shall control all proceedings taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with respect
thereto, and may, in its sole good faith discretion, either pay the Tax claimed
and xxx for a refund where applicable law permits such refund suits or contest
the Tax Claim in any permissible manner. The Shareholder Representative and
Xxxxxx.xxx shall jointly control all proceedings taken in connection with any
Tax Claim relating solely to Taxes of the Company for a Straddle Period. In no
case shall Xxxxxx.xxx, the Company, any of their Subsidiaries or any of their
respective officers, directors, employees, stockholders, agents or
representatives settle or otherwise compromise any Tax Claim without the
Shareholder Representative's written consent, which shall not be unreasonably
withheld, unless and to the extent such Indemnified Party waives the relevant
indemnity payment and releases the shareholders from the relevant indemnity
obligation. Neither party shall settle a Tax Claim relating solely to Taxes of
the Company for any Straddle Period without the other party's prior written
consent, which shall not be unreasonably withheld, unless and to the extent such
Indemnified Party waives the relevant indemnity payment and releases the
shareholders from the relevant indemnity obligation. Xxxxxx.xxx, the Company,
the Shareholder Representative and each of their respective Affiliates shall
cooperate in contesting any Tax Claim, which cooperation shall include, without
limitation, the retention and (upon request) the provision of records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation or any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
8.5 REMEDIES; SPECIFIC PERFORMANCE
Except as otherwise provided, the indemnification provisions of this
Article VIII are the sole and exclusive remedy of any party to this Agreement
for a breach of any representation, warranty or covenant contained herein.
Notwithstanding the preceding sentence, each of the parties acknowledges and
agrees that the other
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parties hereto would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties hereto agrees that the
other parties hereto shall be entitled to an injunction to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof (including the indemnification provisions
hereof) in any competent court having jurisdiction over the parties, in addition
to any other remedy to which they may be entitled at law or in equity.
ARTICLE IX -- GENERAL
9.1 TAX MATTERS
(a) The parties shall not take a position on any tax returns
inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a) of the Code unless, subject
to the provisions of Section 8.4, compelled by any taxing authority.
(b) Xxxxxx.xxx shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the Company for all periods ending on or
prior to the Closing Date which are filed after the Closing Date. Xxxxxx.xxx
shall permit the Shareholder Representative to review and approve promptly upon
receipt each such Tax Return described in the preceding sentence prior to filing
and shall make such revisions to such Tax Returns as are reasonably requested by
the Shareholder Representative. In no event shall such Tax Returns be filed by
Xxxxxx.xxx without the prior approval of the Shareholder Representative, which
approval shall be given or withheld promptly upon receipt and which shall not be
unreasonably withheld.
(c) Xxxxxx.xxx shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company for any Straddle Period.
Xxxxxx.xxx shall permit the Shareholder Representative to review and approve
promptly upon receipt each such Tax Return described in the preceding sentence
to the extent such Tax Return relates to the portion of a Straddle Period ending
on the Closing Date (the "Pre-Closing Partial Period") and shall make such
revisions to such Tax Returns (to the extent such revisions relate to the
Pre-Closing Partial Period) as are reasonably requested by the Shareholder
Representative. In no event shall such Tax Returns relating to the Pre-Closing
Partial Period be filed by Xxxxxx.xxx without the prior approval of the
Shareholder Representative, which approval shall be given or withheld promptly
upon request and which shall not be unreasonably withheld. For purposes of
allocating Taxes to the Pre-Closing Partial Period, to the extent permitted by
law and administrative practice, the Straddle Period shall be treated as closing
on (and
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including) the Closing Date. In the case of any Taxes that are payable for a
Straddle Period that is not treated under the preceding sentence as closing on
the Closing Date, the portion of such Tax related to the Pre-Closing Partial
Period shall be deemed to be: (i) in the case of real, personal and intangible
Property Taxes ("Property Taxes") of the Company for the Pre-Closing Partial
Period, the amount of such Tax for the Straddle Period shall be equal to the
amount of such Property Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days during the Straddle
Period that are in the Pre-Closing Partial Period and the denominator of which
is the number of days in the Straddle Period, and (ii) the Taxes of the Company
other than property Taxes for the Pre-Closing Partial Period shall be computed
as if such taxable period ended as of the close of business on the Closing Date.
(d) Any refunds of Taxes of the Company that are received by
Xxxxxx.xxx or the Company, and any amounts credited against Tax of the Company
which Xxxxxx.xxx or the Company actually utilizes in reducing its taxes that
relate to Tax periods or portions thereof of the Company ending on or before the
Closing Date shall be for the account of the Shareholders, and Xxxxxx.xxx shall,
if the net refund in the aggregate for all Tax Returns for the periods ending on
or before the Closing Date exceeds $100,000, pay over to the Shareholder
Representative any such refund or the amount of any such credit within fifteen
(15) days after receipt or utilization of the refund or credit.
(e) (i) Xxxxxx.xxx, the Company and the Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 9.1 and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company and the Shareholders agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
Xxxxxx.xxx or the Shareholder Representative, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, the Company or the
Shareholder Representative, as the case may be, shall allow the other party to
take possession of such books and records.
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(ii) Xxxxxx.xxx and the Shareholder Representative further
agree, upon request, to use their best efforts to obtain any certificate or
other document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(iii) Xxxxxx.xxx and the Shareholder Representative further
agree, upon request, to provide the other party with all information that either
party may be required to report pursuant to Section 6043 of the Code and all
Treasury Regulations promulgated thereunder.
9.2 EXPENSES
Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own respective fees and expenses
incident to the negotiation, preparation and execution of this Agreement and the
other Operative Documents (including legal and accounting fees and expenses);
provided, however that, should any action be brought hereunder, the attorneys'
fees and expenses of the prevailing party shall be paid by the other party to
such action; and provided further, that the fees and expenses (including,
without limitation, any success fee payable to PricewaterhouseCoopers, LLC)
incurred by the Company in connection with this Agreement (which shall not
include filing fees related to compliance with the requirements of the
Xxxx-Xxxxx-Xxxxxx Act, fees incurred in connection with the Company's December
31, 1998 audit and legal fees incurred with respect to matters unrelated to the
Merger) in excess of $200,000 shall reduce the Merger Consideration by the
amount in excess of $200,000.
9.3 NOTICES
Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, confirmed facsimile transmission, or
overnight courier service, in each case addressed as respectively set forth
below or to such other address as any party shall have previously designated by
such a notice. The effective date of any notice or request shall be the date of
personal delivery, the date on which successful facsimile transmission is
confirmed or the date actually delivered by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.
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TO XXXXXX.XXX OR THE PURCHASER:
Xxxxxx.xxx, Inc.
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Legal
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
TO THE COMPANY:
Alexa Internet
Presidio Building 37
X.X. Xxx 00000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxxx
9.4 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent
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of the parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
9.5 ENTIRE AGREEMENT
This Agreement, the Mutual Nondisclosure Agreement and the other
Operative Documents constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.
9.6 ASSIGNMENT
This Agreement shall not be assigned by operation of law or otherwise;
provided, however, that Purchaser's rights and obligations may be assigned to
and assumed by any other corporation wholly owned (directly or through
intermediate wholly owned subsidiaries) by Xxxxxx.xxx.
9.7 PARTIES IN INTEREST
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and their respective successors and permitted assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement except as specifically provided.
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 executed in and to be
performed in that state.
9.9 HEADINGS
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.10 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in
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separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. To expedite the process of entering into this Agreement,
the parties acknowledge that Transmitted Copies of this Agreement will be
equivalent to original documents until such time as original documents are
completely executed and delivered. "Transmitted Copies" will mean copies that
are reproduced or transmitted via photocopy, facsimile or other process of
complete and accurate reproduction and transmission.
9.11 WAIVER OF JURY TRIAL
Xxxxxx.xxx, the Company and the Purchaser hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
the actions of such parties in the negotiation, administration, performance and
enforcement thereof.
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXX.XXX, INC.
By /s/ Xxxxx Xxxxxxx
-------------------------------------
Its Treasurer and Vice President
of Corporate Development
-------------------------------------
AI ACQUISITION, INC.
By /s/ Xxxxx Xxxxxxx
-------------------------------------
Its Treasurer and Vice President
of Corporate Development
-------------------------------------
ALEXA INTERNET
By /s/ Xxxxxxxx Xxxxx
-------------------------------------
Its President
-------------------------------------
SHAREHOLDER
By /s/ Xxxxxxxx Xxxxx
-------------------------------------
Xxxxxxxx Xxxxx
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AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF
MERGER
This Amendment (this "Amendment") to the Agreement and Plan of Merger,
dated as of April 24, 1999, between Xxxxxx.xxx, Inc. ("Xxxxxx.xxx"), AI
Acquisition, Inc. ("Purchaser"), Alexa Internet and Xxxxxxxx Xxxxx (the "Merger
Agreement"), is made as of June 3, 1999 by and among Xxxxxx.xxx, Purchaser,
Alexa Internet and Xxxxxxxx Xxxxx. Xxxxxx.xxx, Purchaser, Alexa Internet and
Xxxxxxxx Xxxxx are referred to together as the "Parties" or, individually, as a
"Party."
RECITALS
1. Section 1.4 of the Merger Agreement provides that at the Effective
Time of the Merger, the Articles of Incorporation of the Surviving Corporation
will be amended and restated in their entirety to conform to the Articles of
Incorporation of the Purchaser, and Section 1.5 of the Merger Agreement
provides that at the Effective Time of the Merger, the Bylaws of the Purchaser
shall become the Bylaws of the Surviving Corporation.
2. The Parties wish to amend Section 1.4 and 1.5 to provide that the
Articles of Incorporation and Bylaws of the Purchaser shall be in the forms
attached as exhibits hereto.
3. Section 4.12 of the Merger Agreement provides that it shall be a
condition precedent to the obligations of Xxxxxx.xxx and the Purchaser under
the Merger Agreement that Xxxxx Xxxxxxx, Xxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx
X'Xxxxxxxx and Xxxxx Xxxxxx (the "key Employees") shall have entered into the
Xxxxxx.xxx standard form of Confidentiality, Noncompetition and Invention
Assignment Agreement, the form of which is attached to the Merger Agreement as
Exhibit 4.12.
4. The Parties wish to amend Section 4.12 to provide that it shall be a
condition precedent to the obligations of Xxxxxx.xxx and the Purchaser under
the Merger Agreement that the Key Employees shall have entered into the
agreements described in this Amendment.
5. Capitalized terms not otherwise defined herein shall have the meanings
assigned to those terms in the Merger Agreement.
77
AGREEMENT
1. ARTICLES AND BYLAWS OF THE SURVIVING CORPORATION
Section 1.4 of the Merger Agreement shall be amended in its entirety to
read as follows:
At the Effective Time, the Articles of Incorporation of the
Surviving Corporation shall be amended and restated in their entirety in
the form set forth as Exhibit A hereto. Thereafter, the Articles of
Incorporation of the Surviving Corporation may be amended in accordance
with their terms and as provided by law.
Section 1.5 of the Merger Agreement shall be amended in its entirety to
read as follows:
The Board of Directors of the Surviving Corporation shall, effective
as of the Effective Time, amend and restate its Bylaws in their entirety
in the form set forth as Exhibit B hereto. Thereafter, the Bylaws may be
amended or repealed in accordance with their terms and the Articles of
Incorporation of the Surviving Corporation and as provided by law.
2. EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS
Section 4.12 of the Merger Agreement shall be amended in its entirety to
read as follows:
"Xxxxx Xxxxxxx, Xxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx and Xxxxx
X'Xxxxxxxx shall have accepted an oral offer of employment with Xxxxxx.xxx
and shall have executed the Confidentiality and Invention Assignment
Agreement in the form attached hereto as Exhibit 4.12A. In addition, Xxxxx
Xxxxxxx and Xxxxxxxx Xxxxx shall have executed the Noncompetition
Agreement in the form attached hereto as Exhibit 4.12B and Xxxx Xxxxx,
Xxxxx X'Xxxxxxxx and Xxxxx Xxxxxx shall have executed the Supplemental
Confidentiality Protection Agreement in the form attached hereto as
Exhibit 4.12C."
3. EXHIBITS
Exhibit 4.12 (Form of Confidentiality, Noncompetition and Invention
Assignment Agreement) shall be removed and replaced by Exhibit 4.12A (Form of
Confidentiality and Invention Assignment Agreement), Exhibit 4.12B (Form of
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Noncompetition Agreement) and Exhibit 4.12C (Form of Supplemental
Confidentiality Protection Agreement), each of which is attached to this
Amendment.
4. GENERAL PROVISIONS
4.1 EFFECT OF AMENDMENT
Except for the amended provisions described herein, all other terms and
provisions of the Merger Agreement and the Operative Documents continue in full
force and effect according to the provisions thereof and all references therein
to such Merger Agreement shall henceforth refer to the Merger Agreement as
amended by this Amendment. This Amendment shall be deemed incorporated into,
and a part of, the Merger Agreement and the other applicable Operative
Documents.
4.2 GOVERNING LAW
This Amendment shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed entirely in such State, without reference to any rules governing
conflict of laws.
4.3 HEADINGS
The descriptive headings contained in this Amendment are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Amendment.
4.4 COUNTERPARTS
This Amendment may be executed and delivered (including by facsimile
transmission) in counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXX.XXX, INC.
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
By: Xxxxxxx X. Xxxxxxx
Its: Treasurer and Director of Corporate
Development
AI ACQUISITION, INC.
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
By: Xxxxxxx X. Xxxxxxx
Its: Treasurer and Director of Corporate
Development
ALEXA INTERNET
/s/ Xxxxxxxx Xxxxx
----------------------------------------
By: Xxxxxxxx Xxxxx
Its: President
XXXXXXXX XXXXX
/s/ Xxxxxxxx Xxxxx
----------------------------------------
Xxxxxxxx Xxxxx
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