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Exhibit 99.1
[Execution Copy]
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IVILLAGE INC.,
STANHOPE ACQUISITION SUB, LLC
AND
XXXXX.XXX NETWORKS, INC.
DATED AS OF FEBRUARY 5, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................... 2
ARTICLE II THE MERGER................................................................................ 10
2.1 The Merger.................................................................................... 10
2.2 Effective Time; Closing....................................................................... 11
2.3 Effect of the Merger.......................................................................... 11
2.4 Conversion of Company Common Stock............................................................ 11
2.5 Exchange of Certificates...................................................................... 12
2.6 Dividends..................................................................................... 13
2.7 No Liability.................................................................................. 13
2.8 Lost Certificates............................................................................. 14
2.9 Withholding Rights............................................................................ 14
2.10 Shares held by the Company Affiliates......................................................... 14
2.11 Closing of Company Transfer Books............................................................. 14
2.12 Taxable Transaction........................................................................... 14
2.13 Rule 16b-3 Approval........................................................................... 15
ARTICLE III THE SURVIVING CORPORATION................................................................. 15
3.1 Certificate of Incorporation.................................................................. 15
3.2 Bylaws........................................................................................ 15
3.3 Directors and Officers........................................................................ 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 15
4.1 Organization and Standing..................................................................... 15
4.2 Authority for Agreement....................................................................... 16
4.3 Capitalization................................................................................ 16
4.4 Subsidiaries.................................................................................. 17
4.5 No Conflict................................................................................... 17
4.6 Required Filings and Consents................................................................. 18
4.7 Compliance.................................................................................... 18
4.8 Litigation.................................................................................... 18
4.9 Company Reports; Financial Statements......................................................... 18
4.10 Absence of Certain Changes or Events.......................................................... 19
4.11 Taxes......................................................................................... 20
4.12 Title to Personal Property.................................................................... 21
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.13 Real Property................................................................................. 21
4.14 Environmental Compliance and Disclosure....................................................... 21
4.15 Officers and Employees........................................................................ 22
4.16 Employee Benefit Plans........................................................................ 22
4.17 Labor Relations............................................................................... 25
4.18 Contracts and Commitments..................................................................... 26
4.19 Information Supplied.......................................................................... 26
4.20 Intellectual Property......................................................................... 27
4.21 Insurance Policies............................................................................ 29
4.22 Transactions with Affiliates.................................................................. 29
4.23 No Existing Discussions....................................................................... 29
4.24 Antitakeover Statutes; Absence of Dissenters' Rights.......................................... 30
4.25 Brokers....................................................................................... 30
4.26 Vote Required................................................................................. 30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT................................... 30
5.1 Organization and Standing..................................................................... 30
5.2 Authority for Agreement....................................................................... 31
5.3 No Conflict................................................................................... 31
5.4 Required Filings and Consents................................................................. 32
5.5 Compliance.................................................................................... 32
5.6 Capitalization................................................................................ 32
5.7 Litigation.................................................................................... 33
5.8 Subsidiaries.................................................................................. 33
5.9 Parent Reports; Parent Financial Statements................................................... 34
5.10 Absence of Certain Changes or Events.......................................................... 34
5.11 Taxes......................................................................................... 35
5.12 Information Supplied.......................................................................... 35
5.13 Intellectual Property......................................................................... 35
5.14 No Existing Discussions....................................................................... 37
5.15 Vote Required................................................................................. 37
5.16 Brokers....................................................................................... 37
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PAGE
ARTICLE VI COVENANTS................................................................................. 38
6.1 Conduct of the Business Pending the Merger.................................................... 38
6.2 Access to Information; Confidentiality........................................................ 39
6.3 Notification of Certain Matters............................................................... 39
6.4 Stockholders' Meetings........................................................................ 40
6.5 Board Recommendations......................................................................... 40
6.6 Stockholder Litigation........................................................................ 41
6.7 Indemnification............................................................................... 41
6.8 Public Announcements.......................................................................... 42
6.9 Acquisition Proposals......................................................................... 42
6.10 Proxy Statement/Prospectus.................................................................... 42
6.11 Further Assurances............................................................................ 43
6.12 Nasdaq Listing................................................................................ 45
6.13 Tax Treatment................................................................................. 45
6.14 Undertakings of Parent........................................................................ 45
6.15 Director Resignations......................................................................... 45
6.16 Company Affiliates............................................................................ 45
6.17 Employee Matters.............................................................................. 46
6.18 Advertiser Visits............................................................................. 46
ARTICLE VII CONDITIONS................................................................................ 46
7.1 Conditions to the Obligation of Each Party.................................................... 46
7.2 Conditions to Obligations of Parent and Merger Sub to Effect the Merger....................... 48
7.3 Conditions to Obligations of Company to Effect the Merger..................................... 49
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER......................................................... 49
8.1 Termination................................................................................... 49
8.2 Effect of Termination......................................................................... 51
8.3 Amendments.................................................................................... 51
8.4 Waiver........................................................................................ 52
ARTICLE IX GENERAL PROVISIONS........................................................................ 52
9.1 No Third Party Beneficiaries.................................................................. 52
9.2 Entire Agreement.............................................................................. 52
9.3 Succession and Assignment..................................................................... 52
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PAGE
9.4 Counterparts.................................................................................. 52
9.5 Headings...................................................................................... 52
9.6 Governing Law................................................................................. 52
9.7 Severability.................................................................................. 52
9.8 Specific Performance.......................................................................... 53
9.9 Construction.................................................................................. 53
9.10 Non-Survival of Representations and Warranties and Agreements................................. 53
9.11 Fees and Expenses............................................................................. 53
9.12 Notices....................................................................................... 53
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (together with all letters, schedules
and exhibits hereto, this "Agreement"), dated as of February 5, 2001, by and
among iVillage Inc., a Delaware corporation (the "Parent"), Stanhope Acquisition
Sub, LLC, a Delaware limited liability company (the "Merger Sub") and wholly
owned subsidiary of the Parent, and Xxxxx.xxx Networks, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to effect a strategic
business combination;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to
the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), the Merger Sub will merge with and into the
Company (the "Merger") in accordance with the provisions of the DGCL, with the
Company as the surviving corporation;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the Parent and the Company
entering into this Agreement, certain stockholders of the Parent and the
Company, respectively, have entered into voting agreements with the Parent
(collectively, the "Voting Agreements"), dated as of the date hereof, pursuant
to which, among other things, each such stockholder has agreed to vote its
shares in favor of this Agreement and the Merger, subject to the terms and
conditions contained therein;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the Parent and the Company
entering into this Agreement, the Major Stockholder has entered into the
Investment Agreements, dated as of the date hereof, pursuant to which, among
other things, Major Stockholder will purchase shares of Parent Common Stock upon
completion of the Merger and has agreed to take and not take certain actions
relating to the corporate governance of the Parent;
WHEREAS, the Board of Directors of each of the Parent and the Company
has approved and determined that this Agreement, the Voting Agreements, the
Investment Agreements and the transactions contemplated herein, including the
Merger, are advisable, fair to, and in the best interests of, their respective
corporations and stockholders;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the transactions contemplated herein, including the Merger, which
approval was based in part on the opinion of Xxxxxxx Xxxxx Xxxxxx (the
"Independent Advisor"), independent financial advisor to the Board of Directors
of the Company, that, as of the date of such opinion and based on the
assumptions, qualifications and limitations contained therein, the Per Share
Merger Consideration is fair, from a financial point of view, to the holders of
the Company Common Stock (the "Company Stockholders);
WHEREAS, the Board of Directors of each of the Parent and the Company
has resolved to recommend adoption and approval of the Merger, this Agreement
and the transactions contemplated herein to the holders of Parent Common Stock
(the "Parent Stockholders") and the Company Stockholders, respectively, and has
determined that the Merger, this Agreement, the Voting Agreements and the
Investment Agreements are fair to the Parent Stockholders and the Company
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Stockholders, as the case may be, and to recommend that the Parent Stockholders
and the Company Stockholders, as the case may be, approve and adopt the Merger,
this Agreement and the transactions contemplated herein; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall not qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Article.
(a) "10-K" shall mean the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
(b) "Acquisition Agreement" shall mean any letter of intent,
agreement in principle, merger agreement, acquisition agreement, voting
agreement or other similar agreement (other than any letter of intent, agreement
in principle, merger agreement, acquisition agreement or other similar agreement
with the Parent) related to any Acquisition Proposal.
(c) "Acquisition Proposal" shall mean any bona fide proposal
or offer from any Person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of a Person and its subsidiaries, taken as
a whole, or 20% or more of the combined voting power of the shares of such
Person's Common Stock, any tender offer or exchange offer that if consummated
would result in any other Person beneficially owning 20% or more of the combined
voting power of the shares of such Person's Common Stock, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving such Person or any of its subsidiaries in which
the other party thereto or its stockholders will own 20% or more of the combined
voting power of the parent entity resulting from any such transaction, other
than the transactions contemplated by this Agreement.
(d) "ADA" shall mean the Americans with Disabilities Act.
(e) "ADEA" shall mean the Age Discrimination in Employment
Act.
(f) "Affiliate" of a party shall mean an "affiliate" of such
party as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (including at a minimum, all those Persons subject to the
reporting requirements of Rule 16(a) under the Exchange Act.
(g) "Affiliates Letter" shall mean a letter agreement in the
form of Exhibit A delivered by each Person identified pursuant to Section 6.16
as an Affiliate of the Company for purposes of Rule 145 under the Securities
Act.
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(h) "Agreement" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(i) "Applicable Benefit Laws" means ERISA, the Code and all
other applicable laws, regulations, orders or other legislative, administrative
or judicial promulgations, including those of a jurisdiction outside the United
States of America.
(j) "Cash Amount" shall mean an amount of cash equal to one
percent of the product of the average of the high and low prices of a share of
Parent Common Stock on the Nasdaq on the Closing Date multiplied by 0.322;
provided that, the Cash Amount shall be proportionately reduced to account for
any decrease in the Exchange Ratio pursuant to Section 7.2(g) and Schedule
7.2(g) to the extent necessary so that the Cash Amount equals one percent of the
Per Share Merger Consideration.
(k) "CERCLA" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act.
(l) "Certificate" shall mean each certificate representing a
share or shares of Company Common Stock.
(m) "Certificate of Merger" shall mean the certificate of
merger filed with the Secretary of State of the State of Delaware by the parties
hereto in connection with the Merger.
(n) "Closing" shall mean the date on which the Merger becomes
effective.
(o) "Code" shall have the meaning set forth in the Recitals of
this Agreement.
(p) "Company" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(q) "Company Benefit Plans" shall mean each Employee Benefit
Plan sponsored or maintained or required to be sponsored or maintained at any
time by the Company or any Subsidiary or to which the Company or any Subsidiary
makes or has made, or has or has had an obligation to make, contributions at any
time.
(r) "Company Bylaws" shall mean the bylaws of the Company.
(s) "Company Certificate of Incorporation" shall mean the
Company's certificate of incorporation, including any certificates of
designations attached thereto.
(t) "Company Common Stock" shall mean the common stock, par
value $.001 per share, of the Company.
(u) "Company Confidentiality Agreement" shall mean the
confidentiality agreement between the Company and the Parent, dated January 30,
2001.
(v) "Company Disclosure Letter" shall mean the Company
Disclosure Schedule delivered by the Company to the Parent concurrently with the
execution of this Agreement. The
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Company Disclosure Letter shall include specific references to each provision of
this Agreement to which information contained in the Company Disclosure Letter
is intended to apply.
(w) "Company Financial Statements" shall mean all of the
financial statements included in the Company Reports.
(x) "Company Licensed Software" shall mean all software (other
than Company Proprietary Software) used by the Company and the Subsidiaries.
(y) "Company Material Adverse Effect" shall mean, with respect
to the Company, any change, event or effect shall have occurred or been
threatened that, when taken together with all other adverse changes, events or
effects that have occurred or been threatened, is or is reasonably likely to (i)
be materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including contingent
liabilities) of the Company and the Subsidiaries taken as a whole or (ii)
prevent or materially delay the performance by the Company of any of its
obligations under this Agreement or the consummation of the Merger or the other
transactions contemplated herein; provided that none of the following alone
shall be deemed, in and of itself, to constitute a Company Material Adverse
Effect: (a) a change in the market price or trading volume of Company Common
Stock; (b) a loss by the Company of its suppliers, customers or employees that
is directly and principally related to Parent being a party to this Agreement,
(c) changes in general economic conditions or changes affecting the industry in
which the Parent or the Company operates generally (as opposed to
Parent-specific or Company-specific changes) or (d) an event which would
otherwise constitute a Company Material Adverse Effect which is the direct and
principal result of an action or omission by the Company which was taken or not
taken at the specific instruction of the Parent.
(z) "Company Preferred Stock" shall mean shares of preferred
stock of the Company.
(aa) "Company Proprietary Software" shall mean all software
owned by the Company and the Subsidiaries.
(bb) "Company Reports" shall mean all forms, reports,
statements and all other documents required to be filed by the Company with the
SEC since October 14, 1999.
(cc) "Company Software" shall mean the Company Licensed
Software together with the Company Proprietary Software.
(dd) "Company Stock" shall mean the Company Common Stock
together with the Company Preferred Stock.
(ee) "Company Stockholders" shall have the meaning set forth
in the Recitals of this Agreement.
(ff) "Company Stock Option" shall mean each outstanding option
to purchase shares of Company Common Stock.
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(gg) "Company Stock Plan" shall mean any stock option plan or
restricted stock plan of the Company, whether established or assumed by the
Company in connection with an acquisition.
(hh) "Company Stockholders' Meeting" shall mean the meeting of
the Company Stockholders to be called to consider the Merger.
(ii) "D&O Insurance" shall mean the Company's directors' and
officers' liability insurance policies as of the date of this Agreement.
(jj) "DGCL" shall have the meaning set forth in the Recitals
of this Agreement.
(kk) "Effective Time" is the time the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
other time as the parties hereto agree shall be specified in such Certificate of
Merger.
(ll) "Employee/Consulting Agreements" shall mean any
contracts, consulting agreements, termination or severance agreements, change of
control agreements or any other agreements respecting the terms and conditions
of employment or of an independent contract relationship in respect to any
officer, employee or former employee, consultant or independent contractor.
(mm) "Employee Benefit Plan" shall mean with respect to any
Person each plan, fund, program, agreement, arrangement or scheme, including,
but not limited to each plan, fund, program, agreement, arrangement or scheme
maintained or required to be maintained, in each case, that is at any time
sponsored or maintained or required to be sponsored or maintained by such Person
or to which such Person makes or has made, or has or has had an obligation to
make, contributions providing for employee benefits or for the remuneration,
direct or indirect, of the employees, former employees, directors, officers,
consultants, independent contractors, contingent workers or leased employees of
such Person or the dependents of any of them (whether written or oral),
including each deferred compensation, bonus, incentive compensation, pension,
retirement, stock purchase, stock option and other equity compensation plan,
"welfare" plan (within the meaning of Section 3(1) of the ERISA, determined
without regard to whether such plan is subject to ERISA); each "pension" plan
(within the meaning of Section 3(2) of ERISA, determined without regard to
whether such plan is subject to ERISA); each severance plan or agreement,
health, vacation, summer hours, supplemental unemployment benefit,
hospitalization insurance, medical, dental, legal and each other employee
benefit plan, fund, program, agreement or arrangement.
(nn) "Environmental Laws" shall mean local, state and federal
laws and regulations relating to protection of the environment, pollution
control, product registration and hazardous materials.
(oo) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(pp) "ERISA Affiliate" shall mean any Person (whether
incorporated or unincorporated), that together with the Company or any
Subsidiary would be deemed a "single employer" within the meaning of Section 414
of the Code.
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(qq) "ERISA Affiliate Plan" shall mean each Employee Benefit
Plan sponsored or maintained or required to be sponsored or maintained at any
time by an ERISA Affiliate or to which such ERISA Affiliate makes or has made,
or has or has had an obligation to make, contributions at any time.
(rr) "Estimated Statement of Working Capital" shall mean the
statement of working capital prepared by the Company and delivered to the Parent
pursuant to Schedule 7.2(g).
(ss) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(tt) "Exchange Agent" shall mean a commercial bank or trust
company reasonably designated by the Parent.
(uu) "Exchange Ratio" shall mean 0.322, as may be decreased
pursuant to Section 7.2(g) and Schedule 7.2(g).
(vv) "Fair Market Value" of one share of Parent Common Stock
shall be the average (rounded to the nearest 1/10,000) of the volume weighted
averages (rounded to the nearest 1/10,000) of the trading prices of Parent
Common Stock on the Nasdaq, as reported by Bloomberg Financial Markets (or such
other source as the parties shall agree in writing) for the 20 consecutive
trading days immediately preceding the second business day before the date of
the Closing.
(ww) "Final Statement of Working Capital" shall mean the
statement of working capital prepared by the Parent and delivered to the Company
pursuant to Schedule 7.2(g).
(xx) "FLSA" shall mean the Fair Labor Standards Act.
(yy) "FMLA" shall mean the Family and Medical Leave Act.
(zz) "Form S-4" shall mean the Registration Statement on Form
S-4 to be filed with the SEC by the Parent under the Securities Act in
connection with the issuance of the Parent Common Stock in the Merger.
(aaa) "FTC" shall mean the Federal Trade Commission.
(bbb) "GAAP" shall mean generally accepted accounting
principles.
(ccc) "Governmental Entity" shall mean any United States
federal, state or local or any foreign government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
(ddd) "Hazardous Materials" shall mean any waste, pollutant,
hazardous substance, toxic, ignitable, reactive or corrosive substance,
hazardous waste, special waste, industrial substance, by-product, process
intermediate product or waste, petroleum or petroleum-derived substance or
waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company is in any way governed by or subject to any applicable Law,
rule or regulation of any Governmental Entity.
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(eee) "Indemnified Parties" shall mean each present and former
director, officer, employee and agent of the Company or any Subsidiary with
rights to indemnification by the Company existing as of the date of this
Agreement as provided in the Company Certificate of Incorporation or the Company
Bylaws, in each case as in effect on the date of this Agreement, or pursuant to
any other agreements in effect on the date hereof, copies of which have been
provided to the Parent.
(fff) "Independent Advisor" shall have the meaning set forth
in the Recitals of this Agreement.
(ggg) "Intellectual Property" shall mean all copyrights, trade
names, trademarks, service marks, patents, universal resource locators ("URLs"),
Internet domain names, (and all applications or registrations therefor), trade
secrets, know-how, member lists for a Person's network of websites, marketing
plans, advertising and sponsorship strategy, content on such Person's network of
websites, internet tools, proprietary processes, technology, rights of publicity
and privacy relating to the use of the names, likenesses, voices, signatures,
and which are used by such Person and its subsidiaries or as to which such
Person or any of its subsidiaries claim an ownership interest or as to which
such Person or any of its subsidiaries is a licensee or licensor.
(hhh) "Investment Agreements" shall mean the Securities
Purchase Agreement and the Stockholder Agreement between Parent and Investor,
dated as of February 5, 2001.
(iii) "Investor" means Hearst Communications, Inc., a Delaware
corporation.
(jjj) "Labor Laws" shall mean ERISA, the Immigration Reform
and Control Act of 1986, the National Labor Relations Act, the Civil Rights Acts
of 1866 and 1964, the Equal Pay Act, ADEA, ADA, FMLA, WARN, the Occupational
Safety and Health Act, the Xxxxx-Xxxxx Act, the Xxxxx-Xxxxx Act, the Service
Contract Act, Executive Order 11246, FLSA and the Rehabilitation Act of 1973 and
all regulations under such acts.
(kkk) "Law" shall mean any United States federal, state or
local or any foreign statute, law, rule, regulation, ordinance, code, order,
judgment, decree or any other requirement or rule of law.
(lll) "Major Stockholder" means Hearst Communications, Inc., a
Delaware corporation.
(mmm) "Litigation" shall mean claims, suits, actions,
investigations, indictments or information, or administrative, arbitration or
other proceedings.
(nnn) "Merger" shall have the meaning set forth in the
Recitals of this Agreement.
(ooo) "Merger Sub" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(ppp) "Nasdaq" shall mean the Nasdaq National Market System,
a.k.a. the Nasdaq Stock Market.
(qqq) "Necessary Approval" shall have the meaning set forth in
Section 6.11(a).
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(rrr) "NLRB" shall mean the United States National Labor
Relations Board.
(sss) "OSHA" shall mean the Occupational Safety and Health
Administration.
(ttt) "Parent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(uuu) "Parent Common Stock" shall mean the common stock of the
Parent, par value $.01 per share.
(vvv) "Parent Disclosure Letter" shall mean the Parent
Disclosure Letter delivered by the Parent to the Company concurrently with the
execution of this Agreement. The Parent Disclosure Letter shall include
references to each provision of this Agreement to which information contained in
the Parent Disclosure Letter is intended to apply.
(www) "Parent Financial Statements" shall mean all of the
financial statements included in the Parent Reports.
(xxx) "Parent Licensed Software" shall mean all software
(other than Parent Proprietary Software) used by the Parent and its
subsidiaries.
(yyy) "Parent Material Adverse Effect" shall mean, with
respect to the Parent, any change, event or effect shall have occurred or been
threatened that, when taken together with all other adverse changes, events or
effects that have occurred or been threatened, is or is reasonably likely to (i)
be materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including contingent
liabilities) of the Parent and its subsidiaries taken as a whole or (ii) prevent
or materially delay the performance by the Parent of any of its obligations
under this Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement; provided that none of the following alone shall
be deemed, in and of itself, to constitute a Parent Material Adverse Effect: (a)
a change in the market price or trading volume of Parent Common Stock; (b) a
loss by the Parent of its suppliers, customers or employees that is directly and
principally related to the Company being a party to this Agreement or (c)
changes in general economic conditions or changes affecting the industry in
which the Parent or the Company operates generally (as opposed to
Parent-specific or Company-specific changes).
(zzz) "Parent Proprietary Software" shall mean all software
owned by the Parent and its subsidiaries.
(aaaa) "Parent Reports" shall mean all forms, reports,
statements and all other documents required to be filed by the Parent with the
SEC since March 1, 1999.
(bbbb) "Parent Software" shall mean the Parent Licensed
Software together with the Parent Proprietary Software.
(cccc) "Parent Stockholders" shall have the meaning set forth
in the Recitals of this Agreement.
(dddd) "Parent Stockholders' Meeting" shall mean the meeting
of the Parent Stockholders to be called to consider the Merger.
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(eeee) "Per Share Merger Consideration" shall mean a fraction
of a share of Parent Common Stock calculated in accordance with the Exchange
Ratio (as may be adjusted downward pursuant to Section 7.2(g) and Schedule
7.2(g)), plus the Cash Amount.
(ffff) "Person" shall mean any individual, corporation,
partnership (general or limited), limited liability company, limited liability
partnership, trust, joint venture, joint-stock company, syndicate, association,
entity, unincorporated organization or government or any political subdivision,
agency or instrumentality thereof.
(gggg) "Proxy Statement/Prospectus" shall have the meaning set
forth in Section 6.10.
(hhhh) "Regulatory Law" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and all
other Federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to regulate mergers, acquisitions or other business combinations.
(iiii) "Representatives" shall mean officers, directors,
employees, auditors, attorneys, financial advisors, lenders and other agents.
(jjjj) "Required Vote" shall mean the Company Required Vote as
set forth in Section 4.26 or the Parent Required Vote as set forth in Section
5.16, as the case may be.
(kkkk) "SEC" shall mean the Securities and Exchange
Commission.
(llll) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(mmmm) "Securities Purchase Agreement" means the Securities
Purchase Agreement, between Parent and Investor, dated as of February 5, 2001.
(nnnn) "Shortfall" shall mean the amount by which the Working
Capital or cash of the Company as at March 31, 2001, is less than the amounts
set forth in Section 7.2(g); provided however, that any amount of Working
Capital in excess of the amount set forth in Section 7.2(g) shall be added to
the amount of cash of the Company as at March 31, 2001 when determining any cash
Shortfall.
(oooo) "Stockholders' Meetings" shall mean the Company
Stockholders' Meeting and the Parent Stockholders' Meeting.
(pppp) "Subsidiary" shall mean each subsidiary of the Company.
(qqqq) "Superior Proposal" shall mean any proposal made by a
third party (i) relating to any direct or indirect acquisition or purchase of
all or substantially all of the assets of a Person and its subsidiaries, taken
as a whole, or 80% of the combined voting power of the shares of such Person's
Common Stock, or any tender offer or exchange offer that if consummated would
result in any other Person beneficially owning 80% or more of the combined
voting power of the shares of such Person's Common Stock and (ii) otherwise on
terms which the Board of Directors of such Person determines in its good faith
judgment (based upon the advice of a financial advisor of nationally recognized
reputation), taking into account the Person making the proposal and the legal,
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financial, regulatory and other aspects of the proposal deemed appropriate by
the Board of Directors of such Person, (x) is more favorable from a financial
point of view than the Merger to its stockholders taken as a whole, (y) is
reasonably capable of being completed and (z) for which financing, to the extent
required, is then committed or is capable of being obtained by such third party.
(rrrr) "Surviving Corporation" shall mean the corporation
surviving the Merger.
(ssss) "Tax" (and, with correlative meaning, "Taxes") means
any federal, state, local or foreign income, gross receipts, property, sales,
use, license, excise, franchise, employment, payroll, premium, withholding,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty or addition thereto,
whether disputed or not, imposed by any Governmental Entity.
(tttt) "Tax Opinion" shall mean a written opinion of Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, counsel to the Parent, addressed and reasonably
acceptable to the Parent, to the effect that the Merger will not give rise to
gain or loss to the Parent or the Parent Stockholders.
(uuuu) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.
(vvvv) "Termination Fee" shall mean $1 million.
(wwww) "Voting Agreements" shall have the meaning set forth in
the Recitals of this Agreement.
(xxxx) "WARN" shall mean the United States Worker Adjustment
and Retraining Notification Act.
(yyyy) "Working Capital" shall mean current assets (excluding
prepaid expenses) minus current liabilities of the Company (excluding deferred
revenue and including accrued liabilities for the MSN and Alta Vista matters set
forth in the Company Disclosure Letter), and shall not reflect the transaction
expenses set forth on Schedule 1, whether or not such expenses or any portion
thereof have been paid. A statement of estimated Working Capital for the Company
as at March 31, 2001, illustrating the elements of Working Capital, is attached
hereto as Schedule 2.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, and in accordance with the DGCL, at the Effective Time, the Merger
Sub shall be merged with and into the Company. As a result of the Merger, the
separate existence of the Merger Sub shall cease and the Company shall continue
as the Surviving Corporation. The corporate existence of the Company, with all
its purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Delaware.
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2.2 Effective Time; Closing. As promptly as practicable (and in any
event within five business days) after the satisfaction or waiver of the
conditions set forth in Article VII hereof, the parties hereto shall cause the
Merger to be consummated by filing the Certificate of Merger with the Secretary
of State of the State of Delaware and by making all other filings or recordings
required under the DGCL in connection with the Merger, in such form as is
required by, and executed in accordance with the relevant provisions of, the
DGCL. The Merger shall become effective at the Effective Time. The Closing shall
be held at 10:00 a.m., local time, at the offices of Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP, located at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, or at such other
time and location as the parties hereto shall otherwise agree.
2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of the Company
and the Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and the Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
2.4 Conversion of Company Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parent, the
Merger Sub, the Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
Section 2.4(b)) shall be canceled and shall by virtue of the Merger and without
any action on the part of the holder thereof be converted automatically into the
right to receive the Per Share Merger Consideration (as may be adjusted downward
pursuant to Section 7.2(g) and Schedule 7.2(g)), upon the surrender of the
Certificate representing such share in the manner set forth in Section 2.5. All
such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a Certificate representing such shares shall cease to
have any rights with respect thereto, except the right to receive that amount of
cash and number of shares of Parent Common Stock into which such shares of
Company Common Stock have been converted, cash in lieu of fractional shares as
provided in Section 2.6(c) and any dividends or other distributions payable
pursuant to Section 2.6.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by the Parent or the
Merger Sub and each share of Company Common Stock that is owned by the Company
as treasury stock shall be canceled and retired and cease to exist and no
payment or distribution shall be made with respect thereto.
(c) Each limited liability company interest of the Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(d) If after the date hereof and prior to the Effective Time,
the Parent shall have declared a stock split (including a reverse split) of
Parent Common Stock or a dividend payable in
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Parent Common Stock or effected any recapitalization or reclassification of its
common stock or any other similar transaction, then the Exchange Ratio shall be
appropriately adjusted to reflect such stock split, dividend, recapitalization,
reclassification or similar transaction.
(e) Stock Options. At the Effective Date, each Company Stock
Option, other than any option issued under the Employee Stock Purchase Plan,
shall be assumed by the Parent in such manner that it is converted into an
option to purchase shares of Parent Common Stock, as provided below. Following
the Effective Time, each Company Stock Option shall continue to have, and be
subject to, the same terms and conditions set forth in the relevant Company
Stock Plan and applicable award agreement immediately prior to the Effective
Time; except that (i) each such Company Stock Option will be exercisable (or
will become exercisable in accordance with its terms) for that number of whole
Shares of Parent Common Stock equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such the Company Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of Shares of Parent Common Stock and
(ii) the per share exercise price for Parent Common Stock issuable upon exercise
of such Company Stock Option will be equal to the difference between the
quotient determined by dividing the exercise price per share of the Company
Common Stock at which such Company Stock Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent, minus the Cash Amount. The Parent shall file with the SEC, no later
than 30 days after the Effective Time, a registration statement on a Form S-8
relating to the shares of Parent Common Stock issuable with respect to the
Company Options assumed by the Parent in accordance with this Section 2.4(e)
2.5 Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall appoint the
Exchange Agent for the purpose of exchanging Certificates. At or prior to the
Effective Time, the Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II through the Exchange Agent, cash and
certificates representing Parent Common Stock issuable pursuant to Section 2.4
in exchange for outstanding shares of Company Common Stock. The Parent agrees to
make available to the Exchange Agent on a timely basis as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.5(c)
and any dividends or other distributions payable pursuant to Section 2.6.
(b) As soon as reasonably practicable after the Effective
Time, the Parent and the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of record of Company Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent accompanied by a properly executed letter of
transmittal and shall be in such form and have such other provisions as the
Parent may reasonably specify), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for cash and certificates representing
shares of Parent Common Stock. Upon the surrender to the Exchange Agent of one
or more Certificates for cancellation, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder will receive cash and certificates representing that
amount of cash and number of whole shares of Parent Common Stock to be issued in
respect of the aggregate number of such shares of Company Common Stock
previously represented by the Certificates surrendered and cash in lieu of
fractional shares as
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provided in Section 2.5(c) and any dividends or other distributions payable
pursuant to Section 2.6. No interest will be paid or will accrue on cash payable
pursuant to Section 2.5(c) or 2.6.
(c) No certificate or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights as a stockholder of the Parent. All fractional
shares of Parent Common Stock that a holder of Company Common Stock would
otherwise be entitled to receive as a result of the Merger shall be aggregated
and if a fractional share results from such aggregation, such holder shall be
entitled to receive, in lieu thereof, an amount in cash determined by
multiplying (i) the per share closing price of Parent Common Stock quoted on the
Nasdaq on the date of the Closing by (ii) the fraction of a share of Parent
Common Stock to which such holder would otherwise have been entitled. The Parent
shall timely make available to the Exchange Agent any cash necessary to make
payments in lieu of fractional shares as aforesaid. No such cash in lieu of
fractional shares of Parent Common Stock shall be paid to any holder of Company
Common Stock until Certificates are surrendered and exchanged in accordance with
Section 2.5(a).
(d) If a certificate for Parent Common Stock is to be sent to
a Person other than the Person in whose name the Certificates for shares of
Company Common Stock surrendered for exchange are registered, it shall be a
condition of the exchange that the Person requesting such exchange shall pay to
the Exchange Agent any transfer or other taxes required by reason of the
delivery of such Certificate to a Person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(e) The cash paid and shares of Parent Common Stock issued
upon the surrender of Certificates in accordance with the terms hereof shall be
deemed to have been paid and issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
2.6 Dividends. No dividends or other distributions that are declared or
made after the Effective Time with respect to Parent Common Stock payable to
holders of record thereof after the Effective Time shall be paid to a Company
Stockholder entitled to receive certificates representing Parent Common Stock
until such stockholder has properly surrendered such stockholder's Certificates.
Upon such surrender, there shall be paid to the stockholder in whose name the
certificates representing such Parent Common Stock shall be issued any dividends
which shall have become payable with respect to such Parent Common Stock between
the Effective Time and the time of such surrender, without interest. After such
surrender, there shall also be paid to the stockholder in whose name the
certificates representing such Parent Common Stock shall be issued any dividend
on such Parent Common Stock that shall have a record date subsequent to the
Effective Time and prior to such surrender and a payment date after such
surrender; provided that such dividend payments shall be made on such payment
dates. In no event shall the stockholder entitled to receive such dividends be
entitled to receive interest on such dividends.
2.7 No Liability. None of the Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Parent Common Stock, any dividends or distributions with respect
thereto or any cash in lieu of fractional shares of applicable Parent Common
Stock, in each case delivered to a public official pursuant to any
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applicable abandoned property, escheat or similar law. If any Certificate shall
not have been surrendered prior to six months after the Effective Time (or
immediately prior to such earlier date on which any Parent Common Stock, any
dividends or distributions payable to the holder of such Certificate, the Cash
Amount or any cash payable in lieu of fractional shares of Parent Common Stock
pursuant to this Article II, would otherwise escheat to or become the property
of any Governmental Entity), any such Parent Common Stock, dividends or
distributions in respect thereof or such cash shall, to the extent permitted by
applicable law, be delivered to the Parent, upon demand, and any holders of
Company Common Stock who have not theretofore complied with the provisions of
this Article II shall thereafter look only to the Parent for satisfaction of
their claims for such Parent Common Stock, dividends or distributions in respect
thereof or such cash.
2.8 Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the Parent Common Stock and cash to be issued pursuant to Section
2.4 with respect to the shares of Company Common Stock formerly represented
thereby, any cash in lieu of fractional shares of Parent Common Stock, and
unpaid dividends and distributions on shares of Parent Common Stock deliverable
in respect thereof, pursuant to this Agreement.
2.9 Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any Company Stockholder such amounts as it is required to deduct
and withhold with respect to the making of such payment under the Code and the
rules and regulations promulgated thereunder, or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Company Stockholder in respect of which
such deduction and withholding was made by the Surviving Corporation.
2.10 Shares held by the Company Affiliates. Anything to the contrary in
this Agreement notwithstanding, no shares of Parent Common Stock (or
certificates therefor) shall be issued in exchange for any certificate to any
Person who may be an "affiliate" of the Company (identified pursuant to Section
6.16) until the Person shall have delivered to Parent and the Company a duly
executed letter as contemplated by Section 6.16.
2.11 Closing of Company Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of Company
Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall, when
accompanied by proper documentation, be exchanged for the Per Share Merger
Consideration for each share of Company Common Stock represented thereby in the
manner provided in this Article II, any cash in lieu of fractional shares
payable pursuant to Section 2.5(c) and any dividends or distributions payable
pursuant to Section 2.6.
2.12 Taxable Transaction. The Merger is intended not to constitute a
reorganization within the meaning of Section 368(a) of the Code. The parties
hereto agree to report the Merger consistent with such treatment.
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2.13 Rule 16b-3 Approval. The Parent and the Company each agree that
its Board of Directors shall, at or prior to the Effective Time, adopt
resolutions specifically approving, for purposes of Rule 16b-3 ("Rule 16b-3")
under the Exchange Act, the transactions contemplated by Section 2.4(e) and any
other dispositions of Company equity securities (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) in the
case of the Company is a director or officer of the Company and (b) in the case
of the Parent is, or at the Effective Time will become, a director or officer of
the Parent.
ARTICLE III
THE SURVIVING CORPORATION
3.1 Certificate of Incorporation. The Certificate of Merger shall
provide that the Restated Certificate of Incorporation of the Company as amended
and restated as set forth in such Certificate of Merger shall become the
Certificate of Incorporation of the Surviving Corporation, until the same shall
thereafter be altered, amended or repealed in accordance with applicable law or
such Certificate of Incorporation.
3.2 Bylaws. The Certificate of Merger shall provide that the Bylaws of
the Company as in effect immediately prior to the Effective Time shall become
the Bylaws of the Surviving Corporation, until the same shall thereafter be
altered, amended or repealed in accordance with applicable law, the Certificate
of Incorporation of the Surviving Corporation or such Bylaws.
3.3 Directors and Officers. The Certificate of Merger shall provide
that from and after the Effective Time, until the earlier of their resignation
or removal or until their respective successors are duly elected or appointed
and qualified in accordance with applicable law, (i) the directors of the Merger
Sub at the Effective Time shall become the directors of the Surviving
Corporation, and (ii) the officers of the Merger Sub at the Effective Time shall
become the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter delivered by the
Company to the Parent prior to the execution of this Agreement, the Company
represents and warrants to each of the other parties hereto as follows:
4.1 Organization and Standing. Except as set forth in the Company
Disclosure Letter, the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and assets and
to conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company has furnished or made available to the Parent true and complete copies
of the Company Certificate of Incorporation and the Company Bylaws, each as
amended to date. Such Company Certificate of Incorporation and Company
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Bylaws are in full force and effect, and the Company is not in violation of any
provision therein.
4.2 Authority for Agreement.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger and the other transactions contemplated
by this Agreement. The execution, delivery and performance by the Company of
this Agreement, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action (including the approval of the Board of Directors of
the Company) and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Merger or the other
transactions contemplated herein (other than, with respect to the Merger, the
approval and adoption of this Agreement by the Required Vote and the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by the Parent and the Merger Sub,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited against the Company by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers.
(b) At a meeting duly called and held on February 5, 2001, the
Board of Directors of the Company (i) determined that this Agreement and the
other transactions contemplated herein, including the Merger, are advisable,
fair to and in the best interests of the Company and the Company Stockholders,
(ii) approved, authorized and adopted this Agreement, the Merger and the other
transactions contemplated herein, (iii) recommended approval and adoption of
this Agreement and the Merger by the Company Stockholders and (iv) established a
record date and meeting date and time for the Company Stockholders' Meeting.
(c) The Independent Advisor has delivered to the Board of
Directors of the Company its written opinion, dated as of the date of this
Agreement, that, as of such date and based on the assumptions, qualifications
and limitations contained therein, the Per Share Merger Consideration is fair,
from a financial point of view, to the Company Stockholders. A copy of such
opinion has been provided to the Parent. The Board of Directors of the Company
has received as of the date hereof from the Independent Advisor consent to the
inclusion of its name in any documents to be delivered to the Company
Stockholders in connection with the transactions contemplated by this Agreement.
4.3 Capitalization. The authorized capital stock of the Company
consists of 195,000,000 shares of Company Common Stock and 5,000,000 shares of
Company Preferred Stock. As of the date hereof, (i) 47,249,399 shares of Company
Common Stock, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock are held in
the treasury of the Company and (iii) 7,337,255 Company Stock Options are
outstanding pursuant to the Company Stock Plans, each such option entitling the
holder thereof to purchase one share of Company Common Stock, and 4,800,087
shares of Company Common Stock are authorized and reserved for future issuance
pursuant to the exercise of such Company Stock
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Options and (iv) no shares of Company Preferred Stock are issued and
outstanding. The Company Disclosure Letter sets forth a true and complete list
of the Company Stock Options outstanding as of the date of this Agreement with
the exercise prices and periods of exercisability. Except as set forth above or
in the Company Disclosure Letter, as of the date of this Agreement, there are no
options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued or
authorized by the Company relating to the issued or unissued capital stock of
the Company or obligating the Company to issue or sell any shares of capital
stock of, or options, warrants, convertible securities, subscriptions or other
equity interests in, the Company. All shares of capital stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in the Company
Disclosure Letter, there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of Company Stock
or to pay any dividend or make any other distribution in respect thereof or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Person. As of the date hereof, there are no
voting trusts or other agreements or understandings to which the Company is a
party with respect to the voting of stock of the Company.
4.4 Subsidiaries.
(a) The Company Disclosure Letter sets forth the name and
state or jurisdiction of incorporation of each Subsidiary. Each of the
Subsidiaries (i) is a corporation or other business entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing necessary
except where failure to be so qualified or licensed would not, individually or
in the aggregate, have a Company Material Adverse Effect. The Company has
furnished or made available to the Parent true and complete copies of the
certificate of incorporation, bylaws or comparable organizational documents of
each Subsidiary, each as amended to date. Such organizational documents are in
full force and effect, and no Subsidiary is in violation of any provision
therein.
(b) The Company owns beneficially and of record all of the
issued and outstanding capital stock or other securities of each Subsidiary and
does not own an equity interest in any other corporation, partnership or entity,
other than in the Subsidiaries. Each outstanding share of capital stock or other
securities of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share or other equity interest owned by the Company
or another Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
the Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
4.5 No Conflict. The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company and the
consummation of the Merger (subject to the approval and adoption of this
Agreement by the Company Required Vote) and the other transactions contemplated
by this Agreement will not, (i) conflict with or violate the Company
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Certificate of Incorporation or Company Bylaws or equivalent organizational
documents of any of the Subsidiaries, (ii) subject to Section 4.6, conflict with
or violate any Law applicable to the Company or any of the Subsidiaries or by
which any material property or asset of the Company or any of the Subsidiaries
is bound or affected, or (iii) result in a breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, give to others any right of termination, amendment, acceleration or
cancellation of, result in triggering any payment or other obligations, or
result in the creation of a lien or other encumbrance on any material property
or asset of the Company or any of the Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries or any material
property or asset of any of them is bound or affected, except in the case of
clauses (ii) and (iii) above for any such conflicts, violations, breaches,
defaults or other occurrences which could not reasonably be expected to have,
individually or in the aggregate, have a Company Material Adverse Effect.
4.6 Required Filings and Consents. The execution and delivery of this
Agreement by the Company do not, and the performance of this Agreement by the
Company will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate, have a
Company Material Adverse Effect.
4.7 Compliance. Except as disclosed in the Company Reports filed by the
Company with the SEC prior to the date of this Agreement, the businesses of the
Company and the Subsidiaries are not being conducted in violation of any law,
ordinance, regulation, judgment, order, decree, writ, injunction, license or
permit of any Governmental Entity, except for violations which have not had, and
could not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No investigation or review by any Governmental
Entity with respect to the Company or any Subsidiary is pending or, to the
knowledge of the Company threatened, in each case other than those the outcome
of which have not had, and could not reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect.
4.8 Litigation. Except as set forth in the Company Disclosure Letter,
there is no claim, suit, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary which, either individually or in the aggregate, has had, or could be
reasonably expected to have, a Company Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary, either
individually or in the aggregate, which has had, or could be reasonably expected
to have, a Company Material Adverse Effect.
4.9 Company Reports; Financial Statements.
(a) The Company has filed all Company Reports, each of which
has complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations
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promulgated thereunder, each as in effect on the date so filed. None of the
Company Reports (including but not limited to, any financial statements or
schedules included or incorporated by reference therein) contained when filed
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated or incorporated by reference therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) All of the Company Financial Statements have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Company and the
Subsidiaries at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(c) There are no liabilities of the Company or any of the
Subsidiaries of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that are material to the Company and the Subsidiaries,
taken as a whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and the Subsidiaries at September 30,
2000, including the notes thereto, (ii) liabilities disclosed in the Company
Reports, (iii) liabilities incurred on behalf of the Company under this
Agreement and the contemplated Merger, and (iv) liabilities incurred in the
ordinary course of business consistent with past practice since September 30,
2000, none of which are, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(d) The Company has heretofore furnished or made available to
the Parent a complete and correct copy of any amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by the Company with the SEC as
exhibits to the Company Reports pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
4.10 Absence of Certain Changes or Events. Except as disclosed in the
Company Disclosure Letter and the Company Reports and except for any Subsidiary
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, since September 30, 2000, the Company and its subsidiaries
have conducted their business only in the ordinary course or as disclosed in any
Company Reports, and there has not been (i) any change or event having, or that
could reasonably be expected to have, a Company Material Adverse Effect, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (iii) any split, combination or reclassification of any of the
Company's capital stock or any substitution for shares of the Company's capital
stock, except for issuances of Company Common Stock upon the exercise of options
awarded prior to the date hereof in accordance with the Company Stock Plans,
(iv) except as set forth in the Company Disclosure Letter (1) any granting by
the Company or any Subsidiary, to any current or former director, executive
officer or other key employee of the Company or any Subsidiary, of any increase
in compensation, bonus or other benefits, except for normal increases in the
ordinary course of business or as was required under any employment agreements
in effect as of the date of the most recent audited financial statements
included in the Company Reports filed and publicly available prior to the date
of this Agreement which have been disclosed to Parent in the manner described in
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Section 4.15, (2) any granting by the Company or any Subsidiary, to any such
current or former director, executive officer or key employee of any increase in
severance or termination pay or (3) any entry by the Company or any Subsidiary
into, or any amendment of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current or
former director, executive officer or key employee, (v) except insofar as may
have been disclosed in the Company Reports or required by a change in GAAP, any
change in accounting methods, principles or practices by the Company or any
Subsidiary, materially affecting its assets, liabilities or business or (vi)
except insofar as may have been disclosed in the Company Reports, any tax
election that individually or in the aggregate could reasonably be expected to
have a Company Material Adverse Effect.
4.11 Taxes.
(a) Each of the Company and the Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by any of the Company and the
Subsidiaries (whether or not shown on any Tax Return) have been paid. None of
the Company and the Subsidiaries currently is the beneficiary of any extension
of time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company or any Subsidiary does not file
Tax Returns that it is or may be subject to taxation in that jurisdiction. There
are no security interests on any of the assets of any of the Company and the
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) Each of the Company and the Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(c) There is no dispute or claim concerning any Tax liability
of any of the Company or the Subsidiaries either (i) claimed or raised by any
Governmental Entity in writing or (ii) as to which any of the directors,
officers and employees responsible for Tax matters of the Company and the
Subsidiaries has knowledge based upon personal contact with any agent of such
Governmental Entity. The Company Disclosure Letter lists all Tax Returns filed
with respect to any of the Company and the Subsidiaries that have been audited,
and indicates those Tax Returns that currently are the subject of audit. The
Company and the Subsidiaries have delivered to the Parent correct and complete
copies of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Company and the
Subsidiaries since January 1, 1998.
(d) None of the Company and the Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(e) None of the Company and the Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
None of the Company and the Subsidiaries is a party to any Tax allocation or
sharing agreement. None of the Company and the Subsidiaries (A) has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) or (B) has any
liability for the Taxes of any Person (other than any of the Company and the
Subsidiaries) under Treasury
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Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise.
(f) The unpaid Taxes of the Company and the Subsidiaries did
not, as of September 30, 2000, 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 balance sheet (disregarding
any notes thereto) included in the Company's unaudited financial statements as
of and for the nine months ended September 30, 2000 included in the Company's
Form 10-Q for such period as filed with the SEC.
4.12 Title to Personal Property. Except as set forth in the 10-K or in
the Company Disclosure Letter, the Company and each of the Subsidiaries have
good and marketable title to, or a valid leasehold interest in, all of their
tangible personal properties and assets reflected in the 10-K or acquired after
December 31, 1999 (other than assets disposed of since December 31, 1999 in the
ordinary course of business consistent with past practice), in each case free
and clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever, except for such as which
secure indebtedness and which are properly reflected in the 10-K. The tangible
personal property and assets of the Company and the Subsidiaries are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, and are usable in the regular and ordinary course of
business. The Company and the Subsidiaries either own, or have valid leasehold
interests in, all tangible personal properties and assets used by them in the
conduct of their business, except where the absence of such ownership or
leasehold interest could not individually or in the aggregate have a Company
Material Adverse Effect. Neither the Company nor any of the Subsidiaries has any
legal obligation, absolute or contingent, to any other Person to sell or
otherwise dispose of any of its tangible personal properties or assets with an
individual value of $50,000 or an aggregate value in excess of $100,000.
4.13 Real Property. Except as set forth in the 10-K, the Company and
the Subsidiaries have good and marketable title to, or a valid leasehold
interest in, all of their real properties reflected in the 10-K or acquired
after December 31, 1999, in each case free and clear of all title defects,
liens, encumbrances and restrictions, except for (i) liens, encumbrances or
restrictions which secure indebtedness and which are properly reflected in the
10-K; (ii) liens for Taxes accrued but not yet payable; (iii) liens arising as a
matter of law in the ordinary course of business with respect to obligations
incurred after December 31, 1999, provided that the obligations secured by such
liens are not delinquent; and (iv) such other title defects, liens, encumbrances
and restrictions, if any, as individually or in the aggregate are not reasonably
likely to have a Company Material Adverse Effect. The Company Disclosure Letter
sets forth a true, correct and complete list of all real property owned by the
Company or a Subsidiary at any time during the past five years and a true and
correct list of all real property leased by each of the Company and the
Subsidiaries identifying with respect to each lease of such real property the
date of, the parties to, and any amendments, modifications, extensions or other
supplements to such lease. Neither the Company nor any Subsidiary has sent or
received any written notice of any material default under any of the leases of
real property to which it is party. Neither the Company nor any Subsidiary has
breached or is in default in any material respect under any covenant, agreement,
term or condition of or contained in any lease of real property to which it is a
party and there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a default or breach.
4.14 Environmental Compliance and Disclosure.
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(a) Each of the Company and the Subsidiaries possesses, and is
in compliance in all material respects with, all permits, licenses and
government authorizations and has filed all notices that are required under
Environmental Laws applicable to the Company and the Subsidiaries, and each of
the Company and the Subsidiaries is in compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any Law, regulation, code, plan, order, decree, judgment, notice, permit or
demand letter issued, entered, promulgated or approved thereunder, except where
the failure to so comply, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect.
(b) Neither the Company nor any Subsidiary has received
written notice of actual or threatened liability under CERCLA or any similar
state or local statute or ordinance from any Governmental Entity or any third
party.
(c) Neither the Company nor any Subsidiary has entered into or
agreed to, or does it contemplate entering into any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree or
judicial or administrative order relating to compliance with any applicable
Environmental Laws.
(d) Neither the Company nor any Subsidiary has received notice
that it is subject to any claim, obligation, liability, loss, damage or expense
of whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any act or
omission of the Company or any Subsidiary, its employees, agents or
representatives.
4.15 Officers and Employees. The Company Disclosure Letter contains a
true and complete list of all of the (a) executive officers of the Company and
the Subsidiaries and (b) all other key employees of the Company and the
Subsidiaries with annual compensation in excess of $125,000, in each case,
specifying, by individual, their position, annual salary and other amounts paid
and benefits provided to such individual. Except as set forth in the Company
Disclosure Letter, none of the Company and the Subsidiaries is a party to or
bound by any Employee/Consulting Agreement. The Company has provided to the
Parent true, correct and complete copies of each such Employee/Consulting
Agreement. The Company has provided the Parent with true, correct and complete
copies of any arbitration agreements or confidentiality agreements between the
Company or any Subsidiary and an officer, employee, or former employee,
consultant or independent contractor of the Company or any Subsidiary. None of
the Company and the Subsidiaries has made any verbal commitments to any such
officers, employees or former employees, consultants or independent contractors
with respect to compensation, promotion, retention, termination, severance or
similar matters in connection with the transactions contemplated by this
Agreement or otherwise. Except as set forth in the Company Disclosure Letter,
all officers and employees of the Company and the Subsidiaries are active on the
date hereof.
4.16 Employee Benefit Plans.
(a) The Company Disclosure Letter contains a true and complete
list of each Company Benefit Plan sponsored, maintained or contributed to by the
Company or any Subsidiary within the last five calendar years. Each Company
Benefit Plan currently in effect is identified as a
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"current plan" on the Company Disclosure Letter and any special tax status
enjoyed by such plan is noted on the Company Disclosure Letter.
(b) With respect to each Company Benefit Plan identified on
the Company Disclosure Letter, the Company has heretofore delivered or made
available to the Parent true and complete copies of (i) the plan documents and
any amendments thereto (or if the plan is not written, a written description
thereof), (ii) any related trust or other funding vehicle, (iii) annual reports
required to be filed with any Governmental Entity with respect to such plan,
actuarial reports, funding and financial information returns and statements for
the past three years, (iv) all contracts with any parties providing services or
insurance to such plan, (v) all material internal memoranda regarding such
plans, (vi) copies of material correspondence with all Governmental Entities,
plan summaries or summary plan descriptions, summary annual reports, booklets
and personnel manuals and any other reports or summaries required under
Applicable Benefit Laws, (vii) the most recent determination letter received
from the Internal Revenue Service with respect to each such plan intended to
qualify under Section 401 of the Code, if applicable, and (viii) such other
documentation with respect to any Company Benefit Plan as is reasonably
requested by the Parent.
(c) The Company and the Subsidiaries have maintained all
material employee data necessary to administer each Company Benefit Plan,
including data required to be maintained under Sections 107 and 209 of ERISA,
and such data is materially true and correct and is maintained in a usable form.
(d) No Company Benefit Plan or ERISA Affiliate Plan is or was
subject to Title IV of ERISA or Section 412 of the Code, nor is any Company
Benefit Plan or ERISA Affiliate Plan a "multiemployer pension plan", as defined
in Section 3(37) of ERISA, or subject to Section 302 of ERISA. Neither the
Company, any Subsidiary, an ERISA Affiliate nor a predecessor in interest of any
of them has or has had an obligation to make contributions or reimburse another
employer, either directly or indirectly, including through indemnification or
otherwise, for making contributions to a plan that is or was subject to Title IV
of ERISA. Neither the Company nor any Subsidiary has incurred, and no facts
exist which reasonably could be expected to result in, liability to the Company
or any Subsidiary as a result of a termination, withdrawal or funding waiver
with respect to any ERISA Affiliate Plan or Company Benefit Plan.
(e) Each Company Benefit Plan has been established,
registered, qualified, invested, operated and administered in all respects in
accordance with its terms in compliance with all Applicable Benefit Laws and in
accordance with all understandings, written or oral, between the Company and
each Subsidiary and their respective current or former employees, directors,
officers, consultants, independent contractors, contingent workers or leased
employees, as applicable. None of the Company and the Subsidiaries has incurred,
and the Company has no knowledge of any facts that exist which reasonably could
be expected to result in any liability to the Company or any Subsidiary with
respect to any Company Benefit Plan or any ERISA Affiliate Plan, including any
liability, tax, penalty or fee under ERISA, the Code or any Applicable Benefit
Law (other than to pay premiums, contributions or benefits in the ordinary
course).
(f) All obligations regarding each Company Benefit Plan have
been satisfied, and there are no outstanding defaults or violations by any party
to any Company Benefit Plan. No taxes, penalties or fees are owing under any
Company Benefit Plan.
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(g) The Company has no knowledge of any facts or circumstances
that exist that is likely to adversely affect the tax-exempt status of a Company
Benefit Plan that is intended to be tax-exempt. Further, each Company Benefit
Plan intended to be "qualified" within the meaning of Section 401(a) of the Code
and the trusts maintained thereunder that are intended to be exempt from
taxation under Section 501(a) of the Code has received a favorable determination
or other letter indicating that it is so qualified.
(h) The assets of each Company Benefit Plan are reported at
their fair market value on the financial statements of each such plan.
(i) Other than those Company Benefit Plans listed in the
Company Disclosure Letter and as specifically described therein, no Company
Benefit Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for current or former employees, directors,
officers, consultants, independent contractors, contingent workers or leased
employees (or any of their dependents, spouses or beneficiaries) of the Company
or any Subsidiary or any predecessor in interest of such Company or Subsidiary
for periods extending beyond their retirement or other termination of service,
other than continuation coverage mandated by any Applicable Benefit Law and only
to the extent required under such law.
(j) All contributions or premiums required to be made by the
Company or any Subsidiary under the terms of each Company Benefit Plan or by
Applicable Benefit Laws have been made in a timely fashion in accordance with
Applicable Benefit Laws and the terms of the Company Benefit Plan. Contributions
or premiums will be paid by the Company or a Subsidiary for the period up to the
Closing even though not otherwise required to be made until a later date. Each
Company Benefit Plan is fully funded or fully insured on both an ongoing and
termination or wind-up basis, pursuant to the actuarial assumptions set forth in
the Company Disclosure Letter.
(k) No insurance policy or any other contract or agreement
affecting any Company Benefit Plan requires or permits a retroactive increase in
premiums or payments due thereunder. The level of insurance reserves under each
insured Company Benefit Plan is reasonable and sufficient to provide for all
incurred but unreported claims.
(l) There have been no improper withdrawals, applications or
transfers of assets from any Company Benefit Plan or the trusts or other funding
media relating thereto which would have a Company Material Adverse Effect, and
neither the Company, any Subsidiary nor any of their agents has been in breach
of any material fiduciary obligation with respect to the administration of any
Company Benefit Plan or the trusts or other funding media relating thereto.
(m) The Company or a Subsidiary has the right under the terms
of each Company Benefit Plan and under Applicable Benefit Law to amend, revise,
merge or terminate such plan (or its participation in such plan) or transfer the
assets of such plan to another arrangement, plan or fund at any time exclusively
by action of the Company or such Subsidiary, and no additional contributions
would be required to properly effect such termination.
(n) The execution, delivery and performance of, and
consummation of the transactions contemplated by, this Agreement will not (i)
entitle any current or former employee, director, officer, consultant,
independent contractors, contingent worker or leased employee (or any of their
dependents, spouses or beneficiaries) of the Company or any Subsidiary to
severance pay,
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unemployment compensation or any other payment, (ii) accelerate the time of
payment or vesting or (iii) increase the amount of compensation due any such
individual.
(o) None of the Company and the Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate the Company or any Subsidiary to make
any payments that will not be deductible for federal income tax purposes by
reason of Section 280G of the Code.
(p) There are no pending or, to the Company's knowledge,
threatened or anticipated claims, investigations, examinations, audits or other
proceedings or actions by, against, involving or on behalf of any Company
Benefit Plan by any current or former employee, director, officer, consultant,
independent contractors, contingent worker or leased employee (or any of their
dependents, spouses or beneficiaries) of the Company or any Subsidiary or any
predecessor in interest covered under such Company Benefit Plan, by any
Governmental Entities or otherwise involving any such Company Benefit Plan
(other than routine claims for benefits).
4.17 Labor Relations. Except as set forth in the Company Disclosure
Letter:
(a) the employees of the Company and the Subsidiaries have not
been, and currently are not, represented by a labor organization or group which
was either certified or voluntarily recognized by any labor relations board,
including the NLRB or certified or voluntarily recognized by any other
Governmental Entity;
(b) no claim, complaint, charge or investigation for unpaid
wages, bonuses, commissions, employment withholding taxes, penalties, overtime
or other compensation, benefits, child labor or record keeping violations has
been filed or is pending or, the knowledge of the Company, is threatened under
the FLSA, Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx Act, or Service Contract Act or any
other federal, state, local, provincial or foreign law, regulation or ordinance;
(c) no discrimination and/or retaliation claim, complaint,
charge or investigation has been filed or is pending or, to the knowledge of the
Company, is threatened against the Company or any Subsidiary under the 1866 or
1964 Civil Rights Acts, the Equal Pay Act, the ADEA, the ADA, the FMLA, the
FLSA, ERISA or any other federal law or comparable state fair employment
practices act or foreign law, including any provincial law regulating
discrimination in the workplace;
(d) neither the Company nor any Subsidiary has taken any
action that would constitute a "mass layoff", "mass termination" or "plant
closing" within the meaning of WARN or otherwise trigger notice requirements or
liability under any federal, local, state or foreign plant closing notice or
collective dismissal law;
(e) no wrongful discharge, retaliation, libel, slander or
other claim, complaint, charge or investigation that arises out of the
employment relationship between the Company or any Subsidiary and its respective
employees has been filed or is pending or, the knowledge of the Company, is
threatened against the Company or any Subsidiary under any applicable law;
(f) each of the Company and the Subsidiaries has maintained
and currently maintains adequate insurance as required by applicable law with
respect to workers' compensation claims and unemployment benefits claims;
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(g) each of the Company and the Subsidiaries is in compliance
with all applicable laws, regulations and orders governing or concerning
conditions of employment, employment discrimination and harassment, wages, hours
or occupations safety and health, including the Labor Laws, except where the
failure to so comply , individually or in the aggregate, could not reasonably be
expected to have a Company Material Adverse Effect;
(h) neither the Company nor any Subsidiary is liable for any
liabilities, judgments, decrees, orders, arrearage of wages or taxes, fines or
penalties for failure to comply with any of the Labor Laws; and
(i) the Company has provided the Parent with a copy of the
policy of each of the Company and the Subsidiaries for providing leaves of
absence under the FMLA and the Company Disclosure Letter identifies each
employee who is eligible to request FMLA leave and the amount of FMLA leave
utilized by each such employee during the current leave year; each employee who
will be on FMLA leave at the Closing and his or her job title and description,
salary and benefits; each employee who has requested FMLA leave to begin after
the Closing; a description of the leave requested; and a copy of all notices
provided to such employee regarding that leave.
4.18 Contracts and Commitments. Except as set forth in the Company
Disclosure Letter or disclosed in the Company Reports, neither the Company nor
any Subsidiary is a party to, or is bound or affected by, or receives benefits
under any (a) servicing agreements providing for aggregate payments in any
calendar year in excess of $100,000; (b) contracts of employment; (c) agreements
or arrangements for the purchase or sale of any assets (other than in the
ordinary course of business); (d) contracts or agreements containing covenants
limiting the freedom of the Company, or any Subsidiary, to engage in any line of
business or to compete with any entity; (e) any joint venture, partnership or
similar agreement; (f) exchange traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial contract, or any other interest
rate or foreign currency protection contract; (g) agreement providing for
aggregate payments to any director, officer or consultant of the Company or any
Subsidiary in any calendar year in excess of $125,000; (h) material agreement,
indenture or other instrument relating to the borrowing of money by the Company
or any Subsidiary, the guarantee by the Company or any Subsidiary of any such
obligation (other than trade payables and instruments relating to transactions
entered into in the ordinary course of business), or the sale, securitization or
servicing of loans or loan portfolios of the Company or any Subsidiary; or (i)
other contract or agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company with the SEC as of the
date of this Agreement. Neither the Company nor any Subsidiary is in breach or
default under any such contracts, agreements, instruments or arrangements, which
default or breach has had or could reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default.
4.19 Information Supplied.
(a) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in (A) the Form S-4 to be
filed with the SEC by the Parent in connection with the issuance of the Parent
Common Stock in the Merger will, at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements
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therein not misleading and (B) the Proxy Statement/Prospectus included in the
Form S-4 related to the Stockholders' Meetings and the Parent Common Stock to be
issued in the Merger will, on the date it is first mailed to the stockholders of
the Parent and the Company Stockholders or at the time of the Stockholders'
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act.
(b) Notwithstanding the foregoing provisions of this Section
4.19, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by the Parent for inclusion
or incorporation by reference therein.
4.20 Intellectual Property.
(a) Section 4.20(a) of the Company Disclosure Letter sets
forth a true and correct list of all Intellectual Property owned by the Company
and the Subsidiaries that is the subject of registration, issuance or an
application for registration and the jurisdictions where each is registered,
issued or applied for and any such registration, filing and issuance remains in
full force and effect as of the date of this Agreement. The Company or a
Subsidiary is listed in the records of the appropriate United States, state, or
foreign registry as the sole current owner of record for each application,
issuance and registration and has the exclusive right to file, prosecute and
maintain all applications and registrations with respect to the Intellectual
Property that is listed on such Section 4.20(a).
(b) The Company and the Subsidiaries have good and marketable
title to or possesses adequate licenses or other valid rights to use all
Intellectual Property (not just the Intellectual Property listed on the Section
4.20(a) of the Company Disclosure Letter, free and clear of all liens and has
paid all maintenance fees, renewals or expenses, if any, related to such
Intellectual Property. To the best knowledge of the Company and its
Subsidiaries, neither the use of such Intellectual Property nor the conduct of
the Company and the Subsidiaries in accordance with their businesses as
presently conducted, misappropriates, infringes upon or conflicts with any
patent, copyright, trade name, trade secret, trademark or other intellectual
property rights of any third party. Except as set forth on such Section 4.20(a)
of the Company Disclosure Letter, no party has filed a claim against, or
threatened to file a claim against, or has provided a notice to, the Company or
any Subsidiary alleging that it (the Company or the Subsidiary) has violated,
infringed on or otherwise improperly used the intellectual property rights of
such party and, to the best knowledge of the Company and the Subsidiaries,
neither the Company nor any Subsidiary has violated or infringed any patent,
trademark, trade name, service xxxx, service name, copyright, trade secret or
other intellectual property held by others. Except as set forth on Section
4.20(b) of the Company Disclosure Letter, the Company and its Subsidiaries do
not believe that any other entity has violated, infringed on or otherwise
improperly used any of the Intellectual Property owned by the Company or any
Subsidiary and the Company and its Subsidiaries have not filed a claim against,
or threatened to file a claim against, and have not provided a notice to, any
third party alleging any such violation, infringement or improper use of the
Intellectual Property owned by the Company or any Subsidiary.
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(c) Section 4.20(c) of the Company Disclosure Letter sets
forth a true and complete list of: (i) all Company Proprietary Software; (ii)
all Company Licensed Software or Intellectual Property licensed by the Company
or any Subsidiary material to the operation of the business of the Company and
its Subsidiaries as presently conducted; and (iii) all technical and restricted
materials relating to the acquisition, design, development, use or maintenance
of computer code program documentation and materials used by the Company and the
Subsidiaries material to the operation of the business of the Company and its
Subsidiaries as presently conducted.
(d) Subject to any licenses and other agreements identified on
Section 4.20(d) of the Company Disclosure Letter, the Company and the
Subsidiaries have all right, title and interest in and to all intellectual
property rights in the Company Proprietary Software. The Company and the
Subsidiaries have developed the Company Proprietary Software through their own
efforts, as described in such Section 4.20(f) of the Company Disclosure Letter,
and for their own account, or have obtained all rights thereto, and the Company
Proprietary Software is free and clear of all Liens. The use of the Company
Licensed Software and the use of the Company Proprietary Software does not
breach any terms of any license or other contract between the Company or any
Subsidiary and any third party that would have a Company Material Adverse
Effect. Each of the Company and the Subsidiaries is in compliance with the terms
and conditions of all license agreements in favor of the Company and the
Subsidiaries relating to the Company Licensed Software material to the operation
of the business of the Company as presently conducted.
(e) To the best knowledge of the Company and the Subsidiaries,
the Company Proprietary Software does not infringe any patent, copyright or
trade secret or any other intellectual property right of any third party in such
a manner that would have a Company Material Adverse Effect. The source code for
the Company Proprietary Software has been maintained in confidence, and has not
been disclosed to any persons or entities outside the Company and its
Subsidiaries, except as set forth on the Company Disclosure Letter, all such
disclosures being made pursuant to appropriate confidentiality provisions.
(f) The Company Proprietary Software was: (i) developed by the
employees of the Company and the Subsidiaries working within the scope of their
employment at the time of such development; (ii) developed by agents,
consultants, contractors or others who have executed appropriate instruments of
assignment or instruments of obligation to assign in favor of the Company or a
Subsidiary as assignee that have conveyed or obligate such agents, consultants
and contractors to convey to the Company or such Subsidiary ownership of all of
its intellectual property rights in the Company Proprietary Software; or (iii)
acquired by the Company or a Subsidiary in connection with acquisitions in which
the Company or such Subsidiary obtained appropriate representations, warranties
and indemnities from the transferring party relating to the title to such
Company Proprietary Software. Neither the Company nor any Subsidiary has
received notice from any third party claiming any right, title or interest in
the Company Proprietary Software.
(g) Except as set forth on Section 4.20(g) of the Company
Disclosure Letter, neither the Company nor any Subsidiary has granted rights or
licenses in Company Software or any other Intellectual Property owned by the
Company or any Subsidiary to any third party.
(h) The licenses and agreements set forth on such Sections
4.20(c), 4.20(d) and 4.20(g) of the Company Disclosure Letter are valid and
binding obligations of the Company or a Subsidiary, as applicable, enforceable
in accordance with their terms, and to the Company's
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knowledge, there exists no event or condition which will result in a violation
or breach of, or constitute (with or without due notice of lapse of time or
both) a default by any party under any such licenses or agreements.
(i) The Company and each Subsidiary take reasonable measures
to protect the confidentiality of its trade secrets, including requiring their
employees and other parties having access thereto to execute written non-
disclosure agreements. To the knowledge of the Company and its Subsidiaries, no
trade secret of the Company or its Subsidiaries has been disclosed or authorized
to be disclosed to any third party other than pursuant to a non-disclosure
agreement. To the knowledge of the Company and its Subsidiaries, no party to any
non-disclosure agreement relating to its trade secrets is in breach or default
thereof.
(j) To the knowledge of the Company and the Subsidiaries, no
current or former partner, director, officer, or employee of the Company or any
Subsidiary (or any of their respective predecessors in interest) will, after
giving effect to the transactions contemplated herein, directly own or retain
any rights to use any of the Intellectual Property owned or used by the Company
or any Subsidiary.
4.21 Insurance Policies. The Company and the Subsidiaries maintain
insurance with reputable insurers for the business and assets of the Company and
the Subsidiaries against all risks normally insured against, and in amounts
normally carried, by corporations of similar size engaged in similar lines of
business and such coverage is sufficient. Section 4.21 of the Company Disclosure
Letter sets forth a correct and complete list of all policies of insurance
carried by the Company and the Subsidiaries with respect to their business or
assets. All insurance policies and bonds with respect to the business and assets
of the Company and the Subsidiaries are in full force and effect and will be
maintained by the Company and the Subsidiaries in full force and effect as they
apply to any matter, action or event relating to the Company and the
Subsidiaries occurring through the Closing Date and neither the Company nor any
Subsidiary has reached or exceeded its policy limits for any insurance policies
in effect at any time during the past five years.
4.22 Transactions with Affiliates. Except as set forth in the Company
Disclosure Letter (other than compensation and benefits received in the ordinary
course of business as an employee or director of the Company or the
Subsidiaries), no director, officer or other "affiliate" or "associate" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of the Company or any
Subsidiary or any entity in which, to the knowledge of the Company, any such
director, officer or other affiliate or associate, owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by any such Persons) or has any interest
in: (i) any contract, arrangement or understanding with, or relating to, the
business or operations of the Company or any Subsidiary; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any Subsidiary; or (iii) any property (real,
personal or mixed), tangible, or intangible, used or currently intended to be
used in, the business or operations of the Company or any Subsidiary.
4.23 No Existing Discussions. As of the date hereof, the Company is not
engaged, directly or indirectly, in any negotiation, discussion or exchange of
information with any other party with respect to or in contemplation of an
Acquisition Proposal.
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4.24 Antitakeover Statutes; Absence of Dissenters' Rights. As of the
date of this Agreement, each of the Company and the Board of Directors of the
Company has taken all action required to be taken by it to exempt this Agreement
and the Voting Agreements and the transactions contemplated hereby and thereby
from, and this Agreement and the Voting Agreements and the transactions
contemplated hereby and thereby are exempt from the requirements of, any
"moratorium", "control share", "fair price", "affiliate transaction", "business
combination" or other antitakeover laws and regulations of any state, including
the provisions of Section 203 of the DGCL. No holder of any capital stock of the
Company or any other securities of the Company is entitled to any dissenters'
rights, appraisal rights or similar rights by virtue of this Agreement, the
Merger or any of the other transactions contemplated hereby (including those
contemplated by the Voting Agreements).
4.25 Brokers. No broker, finder or investment banker (other than the
Independent Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company Disclosure Letter includes a complete and
correct copy of all agreements between the Company and the Independent Advisor
pursuant to which such firm would be entitled to any payment relating to this
Agreement, the Merger or the other transactions contemplated by this Agreement.
4.26 Vote Required. The affirmative vote of the holders of shares
representing a majority of the shares of Company Common Stock entitled to vote
on the approval and adoption of this Agreement and the Merger (the "Company
Required Vote") is the only vote or approval of the holders of any class or
series of capital stock of the Company necessary to adopt this Agreement and to
approve the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
Except as disclosed in the Parent Disclosure Letter delivered by the
Parent to the Company prior to the execution of this Agreement, each of the
Parent and the Merger Sub represents and warrants to the Company as follows:
5.1 Organization and Standing. (a) The Parent (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has full corporate power and authority
to own, lease and operate its properties and assets and to conduct its business
as presently conducted and (iii) is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Parent Material Adverse Effect. The Parent has furnished or
made available to the Company true and complete copies of its Certificate of
Incorporation and Bylaws, each as amended to date. Such Certificate of
Incorporation and Bylaws are in full force and effect, and the Parent is not in
violation of any provision therein.
(b) Merger Sub (i) is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has full company power and authority to own,
lease and operate its properties and assets and to conduct its business as
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presently conducted and (iii) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Parent Material Adverse Effect. The Merger Sub has furnished
or made available to the Company a true and complete copy of its Certificate of
Formation, as amended to date. Such Certificate of Formation is in full force
and effect, and the Merger Sub is not in violation of any provision therein.
5.2 Authority for Agreement.
(a) Such Person has all necessary corporate or company power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger and the other transactions contemplated
by this Agreement. The execution, delivery and performance by such Person of
this Agreement, and the consummation by each such Person of the Merger and the
other transactions contemplated by this Agreement, have been duly authorized by
all necessary corporate or company action and no other corporate or company
proceedings on the part of such Person are necessary to authorize this Agreement
or to consummate the Merger or the other transactions contemplated by this
Agreement (other than, with respect to the Merger, the approval and adoption of
this Agreement by the Parent Required Vote and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly executed and delivered by such Person and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of such Persons enforceable against such Person in accordance
with its terms, except as enforcement thereof may be limited against such Person
by (i) bankruptcy, insolvency, reorganization, moratorium and similar laws, both
state and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect or (ii) the exercise by courts of equity
powers.
(b) At a meeting duly called and held on February 5, 2001, the
Board of Directors of the Parent (i) determined that this Agreement and the
other transactions contemplated herein, including the Merger, are advisable,
fair to and in the best interests of the Parent and the Parent Stockholders,
(ii) approved, authorized and adopted this Agreement, the Merger and the other
transactions contemplated herein, (iii) recommended approval and adoption of
this Agreement and the Merger by the Parent Stockholders, and (iv) to the extent
not previously established, established a record date and meeting date and time
for the Parent Stockholders' Meeting.
(c) The Parent's financial advisor has delivered to the Board
of Directors of the Parent its written opinion, dated as of the date of this
Agreement, that, as of such date and based on the assumptions, qualifications
and limitations contained therein, the transactions contemplated by this
Agreement, including the Merger, and the Securities Purchase Agreement are fair
to the Parent from a financial point of view. A copy of such opinion has been
provided to the Company. The Board of Directors of the Parent has received as of
the date hereof from its financial advisor consent to the inclusion of its name
in any documents to be delivered to the Parent Stockholders in connection with
the transactions contemplated by this Agreement.
5.3 No Conflict. The execution and delivery of this Agreement by such
Person do not, and the performance of this Agreement by such Person and the
consummation of the Merger (subject to the approval and adoption of this
Agreement by the Parent Required Vote of the Parent stockholders) and the other
transactions contemplated by this Agreement will not, (i) conflict with
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or violate such Person's Certificate of Incorporation, Bylaws or Certificate of
Formation, as the case may be, (ii) subject to Section 5.4, conflict with or
violate any Law applicable to such Person or by which any material property or
asset of such Person is bound or affected, or (iii) result in a breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of, result in triggering any payment or
other obligations, or result in the creation of a lien or other encumbrance on
any material property or asset of such Person pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Person is a party or by which such
Person or any material property or asset of any of it is bound or affected,
except in the case of clauses (ii) and (iii) above for any such conflicts,
violations, breaches, defaults or other occurrences which could not reasonably
be expected to have, individually or in the aggregate, have a Parent Material
Adverse Effect.
5.4 Required Filings and Consents. The execution and delivery of this
Agreement by such Person do not, and the performance of this Agreement by such
Person will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate, have a
Parent Material Adverse Effect.
5.5 Compliance. Except as disclosed in the Parent Reports filed by the
Parent with the SEC prior to the date of this Agreement, as of the date of this
Agreement the businesses of the Parent and its subsidiaries are not being
conducted in violation of any law, ordinance, regulation, judgment, order,
decree, writ, injunction, license or permit of any Governmental Entity, except
for violations which have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to the Parent or
any of its subsidiaries is pending or, to the knowledge of the Parent
threatened, in each case other than those the outcome of which have not had, and
could not reasonably be expected to have, either individually or in the
aggregate, a Parent Material Adverse Effect.
5.6 Capitalization. The authorized capital stock of the Parent consists
of 65,000,000 shares of Parent Common Stock and 5,000,000 shares of Parent
Preferred Stock. As of the date hereof, there were (i) 29,706,770 shares of
Parent Common Stock outstanding, all of which are validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) 35,293,230 shares of Parent
Common Stock are held in the treasury of the Parent and (iii) 8,055,049 Parent
Stock Options are outstanding pursuant to the Parent's stock plans (excluding
Parent Stock Options issued pursuant to the Family Point Inc. Stock Option
Plan), each such option entitling the holder thereof to purchase one share of
Parent Common Stock, and 1,597,056 shares of Parent Common Stock are authorized
and reserved for future issuance pursuant to the exercise of such Parent Stock
Options and (iv) no shares of Parent Preferred Stock are issued and outstanding.
The Parent Disclosure Letter sets forth the aggregate amount of the outstanding
Parent Stock Options outstanding under each of Parent's stock plans as of the
date of this Agreement. Except as set forth above or in the Parent Disclosure
Letter, there are no options, warrants, convertible securities, subscriptions,
stock appreciation rights, phantom stock plans or stock equivalents or other
rights, agreements, arrangements or commitments (contingent or otherwise) of any
character issued or authorized by
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the Parent relating to the issued or unissued capital stock of the Parent or
obligating the Parent to issue or sell any shares of capital stock of, or
options, warrants, convertible securities, subscriptions or other equity
interests in, the Parent. All shares of capital stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in the Parent
Disclosure Letter, as of the date of this Agreement, there are no outstanding
contractual obligations of the Parent to repurchase, redeem or otherwise acquire
any shares of capital stock of Parent or to pay any dividend or make any other
distribution in respect thereof or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Person in
excess of $1,000,000 in any single calendar year. As of the date hereof, except
as set forth in the Investment Agreements, there are no voting trusts or other
agreements or understandings to which the Parent is a party with respect to the
voting of stock of the Parent.
5.7 Litigation. Except as set forth in the Parent Disclosure Letter,
there is no claim, suit, action, proceeding or investigation pending or, to the
knowledge of the Parent, threatened against or affecting the Parent or any of
its subsidiaries which, either individually or in the aggregate, has had, or
could be reasonably expected to have, a Parent Material Adverse Effect, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Parent or any of its subsidiaries, either
individually or in the aggregate, which has had, or could be reasonably expected
to have, a Parent Material Adverse Effect.
5.8 Subsidiaries.
(a) The Parent Disclosure Letter sets forth the name and state
or jurisdiction of incorporation or formation of each of its subsidiaries. Each
of such subsidiaries (i) is a corporation or other business entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has full corporate power and authority
and all necessary government approvals to own, lease and operate its properties
and assets and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary except where failure to be so qualified or licensed would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
The Parent has furnished or made available to the Company true and complete
copies of the certificate of incorporation, bylaws or comparable organizational
documents of each such subsidiary, each as amended to date. Such organizational
documents are in full force and effect, and no such subsidiary is in violation
of any provision therein.
(b) The Parent owns beneficially, directly or indirectly, all
of the issued and outstanding capital stock or other securities of each such
subsidiary and, except as set forth in the Parent Disclosure Letter, does not
own an equity interest in any other corporation, partnership or entity, other
than in such subsidiaries. Each outstanding share of capital stock or other
securities of each such subsidiary is duly authorized, validly issued, fully
paid and nonassessable (or the foreign equivalent for foreign subsidiaries) and
each such share or other equity interest owned by the Parent or one of its
subsidiaries is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Parent's or such other subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
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(c) The Merger Sub was formed for the purpose of effecting the
Merger and the other transactions contemplated hereby, and has not undertaken
any business or other activities other than in connection with entering into
this Agreement, pursuing the Merger and engaging in the other transactions
contemplated hereby.
5.9 Parent Reports; Parent Financial Statements.
(a) The Parent has filed all Parent Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Parent Reports (including any financial
statements or schedules included or incorporated by reference therein) contained
when filed any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated or incorporated by reference therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) All of the Parent Financial Statements have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Parent and its
subsidiaries at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(c) Except as set forth in the Parent Disclosure Letter, there
are no liabilities of the Parent or any of its subsidiaries of any kind
whatsoever, whether or not accrued and whether or not contingent or absolute,
that are material to the Parent and its subsidiaries, taken as a whole, other
than (i) liabilities disclosed or provided for in the consolidated balance sheet
of the Parent and its subsidiaries at September 30, 2000, including the notes
thereto, (ii) liabilities disclosed in the Parent Reports, (iii) liabilities
incurred on behalf of the Parent under this Agreement and the contemplated
Merger, and (iv) liabilities incurred in the ordinary course of business
consistent with past practice since September 30, 2000, none of which are,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect.
(d) Except as set forth in the Parent Disclosure Letter, the
Parent has heretofore furnished or made available to the Company a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Parent with the SEC as exhibits to the Parent Reports pursuant
to the Securities Act and the rules and regulations promulgated thereunder or
the Exchange Act and the rules and regulations promulgated thereunder.
5.10 Absence of Certain Changes or Events. Except as set forth in the
Parent Disclosure Letter and the Parent Reports and except for the transactions
contemplated by this Agreement, since September 30, 2000, the Parent and its
subsidiaries have conducted their business only in the ordinary course and there
has not been (i) any change or event having, or that could reasonably be
expected to have a Parent Material Adverse Effect, (ii) any split, combination
or reclassification of any of the Parent's outstanding capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of the Parent's outstanding capital
stock, (iii) except insofar as may have been disclosed in the Parent Reports or
required by a
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change in GAAP, any change in accounting methods, principles or practices by the
Parent or any subsidiary, materially affecting its assets, liabilities or
business, or (iv) except insofar as may have been reasonably disclosed in the
Parent Reports, any tax election that individually or in the aggregate could
reasonably be expected to have a Parent Material Adverse Effect.
5.11 Taxes.
(a) Except as set forth in the Parent Disclosure Letter, each
of the Parent and its subsidiaries has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by any of the Parent and its subsidiaries have been
paid. Except as set forth in the Parent Disclosure Letter, none of the Parent
and its subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where the Parent or any subsidiary does not file Tax Returns
that it is or may be subject to taxation in that jurisdiction. There are no
security interests on any of the assets of any of the Parent and its
subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) Each of the Parent and its subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
5.12 Information Supplied.
(a) None of the information supplied or to be supplied by the
Parent for inclusion or incorporation by reference in (A) the Form S-4 to be
filed with the SEC by the Parent in connection with the issuance of the Parent
Common Stock in the Merger will, at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (B) the Proxy
Statement/Prospectus included in the Form S-4 related to the Stockholders'
Meetings and the Parent Common Stock to be issued in the Merger will, on the
date it is first mailed to the stockholders of the Parent and of the Company or
at the time of the Stockholders' Meetings, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Exchange Act.
(b) Notwithstanding the foregoing provisions of this Section
5.12, no representation or warranty is made by the Parent with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by the Company for inclusion
or incorporation by reference therein.
5.13 Intellectual Property.
(a) The Parent Disclosure Letter sets forth a true and correct
list of all Intellectual Property owned by the Parent or its subsidiaries that
is the subject of registration, issuance or an application for registration and
the jurisdictions where each is registered, issued or applied for and any such
registration, filing and issuance remains in full force and effect as of the
date of this Agreement. The Parent or a subsidiary of the Parent is listed in
the records of the
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appropriate United States, state, or foreign registry as the sole current owner
of record for each application, issuance and registration and has the exclusive
right to file, prosecute and maintain all applications and registrations with
respect to the Intellectual Property that is listed on the Parent Disclosure
Letter.
(b) The Parent and its subsidiaries have good and marketable
title to or possesses adequate licenses or other valid rights to use all
Intellectual Property (not just the Intellectual Property listed on the Parent
Disclosure Letter, free and clear of all liens and has paid all maintenance
fees, renewals or expenses, if any, related to such Intellectual Property. To
the best knowledge of the Parent and its subsidiaries, neither the use of such
Intellectual Property nor the conduct of the Parent and its subsidiaries in
accordance with their businesses as presently conducted, misappropriates,
infringes upon or conflicts with any patent, copyright, trade name, trade
secret, trademark or other intellectual property rights of any third party.
Except as set forth on the Parent Disclosure Letter, no party has filed a claim
against, or threatened to file a claim against, or has provided a notice to, the
Parent or any of its subsidiaries alleging that either the Parent or any of its
subsidiaries has violated, infringed on or otherwise improperly used the
intellectual property rights of such party and, to the best knowledge of the
Parent and its subsidiaries, neither the Parent nor any of its subsidiaries has
violated or infringed any patent, trademark, trade name, service xxxx, service
name, copyright, trade secret or other intellectual property held by others.
Except as set forth on the Parent Disclosure Letter, the Parent and its
subsidiaries do not believe that any other entity has violated, infringed on or
otherwise improperly used any of the Intellectual Property owned by the Parent
or any of its subsidiaries and the Parent and its subsidiaries have not filed a
claim against, or threatened to file a claim against, and have not provided a
notice to, any third party alleging any such violation, infringement or improper
use of the Intellectual Property owned by the Parent or any of its subsidiaries.
(c) Subject to any licenses and other agreements identified on
the Parent Disclosure Letter, the Parent and its subsidiaries have all right,
title and interest in and to all intellectual property rights in the Parent
Proprietary Software. The Parent and its subsidiaries have developed the Parent
Proprietary Software through their own efforts, and for their own account, or
have obtained all rights thereto, and the Parent Proprietary Software is free
and clear of all liens, except loans in the ordinary course of business. The use
of the Parent Licensed Software and the use of the Parent Proprietary Software
does not breach any terms of any license or other contract between Parent or any
of its subsidiaries and any third party that would have a Parent Material
Adverse Effect. Each of the Parent and its subsidiaries is in compliance with
the terms and conditions of all license agreements in favor of the Parent and
its subsidiaries relating to the Parent Licensed Software material to the
operation of the business of the Parent and its subsidiaries as presently
conducted.
(d) To the knowledge of Parent and its subsidiaries, the
Parent Proprietary Software does not infringe any patent, copyright or trade
secret or any other intellectual property right of any third party in such a
manner that would have a Parent Material Adverse Effect. The source code for the
Parent Proprietary Software has been maintained in confidence, and has not been
disclosed to any persons or entities outside the Parent and its subsidiaries,
except such disclosure being made pursuant to appropriate confidentiality
provisions.
(e) The Parent Proprietary Software was: (i) developed by the
employees of the Parent and its subsidiaries working within the scope of their
employment at the time of such
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development; (ii) developed by agents, consultants, contractors or others who
have executed appropriate instruments of assignment or instruments of obligation
to assign in favor of the Parent or any of its subsidiaries as assignee that
have conveyed or obligate such agents, consultants and contractors to convey to
the Parent or such subsidiary ownership of all of its intellectual property
rights in the Parent Proprietary Software; or (iii) acquired by the Parent or
any of its subsidiaries in connection with acquisitions in which the Parent or
such subsidiary, where appropriate in the nature of the overall transaction,
obtained appropriate representations, warranties and indemnities from the
transferring party relating to the title to such Parent Proprietary Software.
Neither the Parent nor any of its subsidiaries has received notice from any
third party claiming any right, title or interest in the Parent Proprietary
Software.
(f) The Parent and each of its subsidiaries take reasonable
measures to protect the confidentiality of its trade secrets, including
requiring their employees and other parties having access thereto to execute
written non- disclosure agreements. To the knowledge of the Parent and its
subsidiaries, no trade secret of the Parent or its subsidiaries has been
disclosed or authorized to be disclosed to any third party other than pursuant
to a non-disclosure agreement. To the knowledge of the Parent and its
subsidiaries, no party to any non-disclosure agreement relating to its trade
secrets is in breach or default thereof.
(g) To the knowledge of the Parent and its subsidiaries, no
current or former partner, director, officer, or employee of the Parent or any
of its subsidiaries (or any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated herein, directly own or
retain any rights to use any of the Intellectual Property owned or used by the
Parent or any of its subsidiaries.
5.14 No Existing Discussions. As of the date hereof, the Parent is not
engaged, directly or indirectly, in any negotiation, discussion or exchange of
information with any other party with respect to or in contemplation of an
Acquisition Proposal.
5.15 Vote Required. The affirmative vote of the holders of shares
representing a majority of the shares of Parent Common Stock entitled to vote on
the approval and adoption of this Agreement and the Merger (the "Parent Required
Vote") is the only vote or approval of the holders of any class or series of
capital stock of the Parent necessary to adopt this Agreement and to approve the
transactions contemplated hereby.
5.16 Brokers. No broker, finder or investment banker (other than the
Parent's financial advisor, Xxxxx & Company) is entitled to any brokerage,
finder's or other fee or commission in connection with this Agreement, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent. A complete and correct copy of
all agreements between the Parent and its financial advisor pursuant to which
such firm would be entitled to any payment relating to this Agreement, the
Merger or the other transactions contemplated by this Agreement has been
provided to the Company.
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ARTICLE VI
COVENANTS
6.1 Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of
this Agreement and the Effective Time, unless the Parent shall otherwise agree
in writing (and except as expressly contemplated, permitted or required by this
Agreement), (i) the business of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with prior practice, (ii) the Company and the Subsidiaries shall use all
commercially reasonable efforts to preserve substantially intact their business
organizations, to keep available the services of their current officers and
employees and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other Persons with which the Company
or the Subsidiaries has significant business relations, and (iii) the Company
will comply in all material respects with all applicable Laws and regulations
wherever its business is conducted, including the timely filing of all reports,
forms or other documents with the SEC required pursuant to the Securities Act or
the Exchange Act.
(b) The Company covenants and agrees that between the date of
this Agreement and the Effective Time, the Company shall not, nor shall the
Company permit any of the Subsidiaries to, (i) declare or pay any dividends on
or make other distributions (whether in cash, stock or property) in respect of
any of its capital stock, except for dividends by a wholly owned Subsidiary of
the Company to the Company or another wholly owned Subsidiary of the Company;
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase or otherwise
acquire any shares of its capital stock; (iv) issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into any such shares of its capital
stock, or any rights, warrants or options to acquire any such shares or
convertible securities or any stock appreciation rights, phantom stock plans or
stock equivalents, other than the issuance of shares of Company Common Stock
upon the exercise of Company Stock Options outstanding as of the date of this
Agreement; (v) take any action that would make the Company's representations and
warranties set forth in Article IV not true and correct in all material
respects; (vi) take any action that would, or could reasonably be expected to,
result in any of the conditions set forth in Article VII not being satisfied;
(vii) amend its certificate of incorporation (including any certificate of
designations attached thereto) or bylaws or other equivalent organizational
documents; (viii) incur any indebtedness for borrowed money or guaranty any such
indebtedness of another Person, other than (A) borrowings under existing lines
of credit (or under any refinancing of such existing lines) or (B) indebtedness
owing to, or guaranties of indebtedness owing to, the Company; (ix) make any
loans or advances to any other Person other than loans or advances between the
Company and any Subsidiary and other than loans or advances less than $100,000
made in the ordinary course of business consistent with past practice; (x) merge
or consolidate with any other entity in any transaction, or sell any business or
assets in a single transaction or series of transactions in which the aggregate
consideration is $100,000 or greater; (xi) change its accounting policies except
as required by GAAP; (xii) make any change in employment terms for any of its
directors or officers; (xiii) alter, amend or create any obligations with
respect to compensation, severance, benefits, change of control payments or any
other payments to employees, directors or Affiliates of the Company or the
Subsidiaries, other than with
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respect to alterations or amendments made with respect to non-officers and
non-directors in the ordinary course of business consistent with past practice
or as expressly contemplated by this Agreement or consented to in writing by the
Parent; (xiv) make any change to the Company Benefit Plans; (xv) sell, license,
mortgage or otherwise encumber or subject to any lien or otherwise dispose of
any material properties or assets, other than in the ordinary course of business
consistent with past practice; or (xvi) commit or agree to take any of the
actions described in this Section 6.1(b).
(c) The Parent covenants and agrees that between the date of
this Agreement and the Effective Time, unless the Company shall otherwise agree
in writing (and except as expressly contemplated, permitted or required by this
Agreement, including except for the Parent Required Vote contemplated by this
Agreement), the Parent shall not approve any transaction or agreement that would
require the approval or consent of its stockholders.
6.2 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company
shall, and shall cause the Representatives of the Company to, afford the
Representatives of the Parent and the Merger Sub reasonable access during normal
business hours to the officers, employees, agents, properties, offices and other
facilities, books and records of the Company and the Subsidiaries, and shall
furnish the Parent and the Merger Sub with all financial, operating and other
data and information as the Parent or the Merger Sub, through its
Representatives, may reasonably request. The Parent will remain subject to the
terms of the Company Confidentiality Agreement.
(b) From the date hereof to the Effective Time, the Parent
shall, and shall cause the Representatives of the Parent to, afford the
Representatives of the Company reasonable access during normal business hours to
the officers, employees, agents, properties, offices and other facilities, books
and records of the Parent and the Subsidiaries, and shall furnish the Company
with all financial, operating and other data and information as the Company ,
through its Representatives, may reasonably request. The Company will remain
subject to the terms of the Company Confidentiality Agreement.
(c) 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.
6.3 Notification of Certain Matters. The Company shall give prompt
notice to the Parent, and the Parent shall give prompt notice to the Company, of
(i) the occurrence, or nonoccurrence, of any event which would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by such party (or the Merger Sub, in the case of
the Parent) 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 6.3 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice. If any
event or matter arises after the date of this Agreement which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Company Disclosure Letter or which is necessary to
correct any information in the Company Disclosure Letter which has been rendered
inaccurate thereby, then the Company shall promptly supplement, or amend, and
deliver to the Parent the Company Disclosure Letter which it has delivered
pursuant to this Agreement. If any event or matter arises after the date
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of this Agreement which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in the Parent Disclosure
Letter or which is necessary to correct any information in the Parent Disclosure
Letter which has been rendered inaccurate thereby, then the Parent shall
promptly supplement, or amend, and deliver to the Company the Parent Disclosure
Letter which it has delivered pursuant to this Agreement.
6.4 Stockholders' Meetings.
(a) The Company shall, as promptly as practicable following
the execution of this Agreement, duly call, give notice of, convene and hold the
Company Stockholders' Meeting for the purpose of obtaining the Required Vote
with respect to the Merger and this Agreement, shall use its reasonable best
efforts to solicit the approval of this Agreement by the Required Vote
(regardless of whether the Board of Directors of the Company modifies its
recommendation of the Merger and this Agreement) and, subject to the exercise of
its fiduciary duties described in Section 6.5, the Board of Directors of the
Company shall recommend the approval of this Agreement by the Company
Stockholders. Without limiting the generality of the foregoing but subject to
its rights pursuant to Sections 6.5 and 8.1(e), the Company agrees that its
obligations pursuant to the first sentence of this Section 6.4(a) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal.
(b) The Parent shall, as promptly as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold the
Parent Stockholders' Meeting for the purpose of obtaining the Required Vote with
respect to the Merger and this Agreement, shall use its reasonable best efforts
to solicit the approval of this Agreement by the Required Vote and the Board of
Directors of the Parent shall recommend the approval of this Agreement by the
Parent Stockholders. Without limiting the generality of the foregoing the Parent
agrees that its obligations pursuant to the first sentence of this Section
6.4(b) shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
6.5 Board Recommendations.
(a) Neither the Board of Directors of the Company or the
Parent nor any committee thereof shall (i) withdraw, or propose publicly to
withdraw, in a manner adverse to the other party, the approval or recommendation
of such Board of Directors or such committee of the Merger or this Agreement,
(ii) subject to Section 6.5(b), modify, or propose publicly to modify in a
manner adverse to the other party, the approval or recommendation of such Board
of Directors or such committee of the Merger or this Agreement, (iii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition Proposal
with respect to the Company or Parent, as the case may be, or (iv) approve or
recommend or propose to approve or recommend, or execute or enter into any
Acquisition Agreement related to any Acquisition Proposal. Notwithstanding the
foregoing, if, prior to the date that is the earlier of the 60th day following
the date of execution of this Agreement and the date of the Stockholders'
Meetings, in response to a Superior Proposal that did not result from a breach
of Section 6.9, the Board of Directors of the Company, in exercise of its
fiduciary duties, reasonably determines in good faith, based upon the written
advice of independent outside legal counsel, that its Board of Directors is
required to do so to comply with its fiduciary duties to its stockholders under
applicable Law, such Board of Directors may, after providing the Parent with at
least 72 hours advance written notice of its decision to take such action,
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modify or propose publicly to modify, in a manner adverse to the Parent, the
approval or recommendation of the Merger or this Agreement by such Board of
Directors.
(b) Nothing contained in this Section 6.5 or any other
provision hereof shall prohibit the Parent or the Company or the Board of
Directors of the Company or of the Parent from (A) taking and disclosing to its
stockholders pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act a position with respect to a tender or exchange offer by a third party,
which is consistent with its obligations hereunder or (B) making such disclosure
to its stockholders as, in the reasonable good faith judgment of such Board of
Directors, after receiving advice from independent outside legal counsel, is
consistent with its obligations hereunder and is required by applicable law;
provided, that neither the Board of Directors of the Parent or the Board of
Directors of the Company may, except as provided by this Section 6.5 with
respect to the Company's Board of Directors, modify, or propose publicly to
modify, in a manner adverse to other's company, the approval or recommendations
of the Parent's Board of Directors or the Company's Board of Directors of the
Merger or this Agreement or approve or recommend an Acquisition Proposal, or
propose publicly to approve or recommend an Acquisition Proposal.
6.6 Stockholder Litigation. The Company shall give the Parent the
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement or the Merger; and no such settlement shall be
agreed to without the Parent's consent, which consent will not be unreasonably
withheld.
6.7 Indemnification.
(a) It is understood and agreed that all rights to
indemnification by the Company now existing in favor of the Indemnified Parties
shall survive the Merger and the Parent shall (i) cause the Surviving
Corporation to continue in full force and effect for a period of at least six
years from the Effective Time and (ii) perform, or cause the Surviving
Corporation to perform, in a timely manner, the Surviving Corporation's
obligation with respect thereto. The Parent and the Merger Sub agree that any
claims for indemnification hereunder as to which they have received written
notice prior to the sixth anniversary of the Effective Time shall survive,
whether or not such claims shall have been finally adjudicated or settled.
(b) The Parent shall cause the Surviving Corporation to, and
the Surviving Corporation shall, maintain in effect for six years from the
Effective Time, if available, the D&O Insurance (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend pursuant
to this Section 6.7(b) more than an amount per year equal to one hundred fifty
percent (150%) of current annual premiums paid by the Company for such
insurance. In the event that, but for the proviso to the immediately preceding
sentence, the Surviving Corporation would be required to expend more than one
hundred fifty percent (150%) of current annual premiums, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to one hundred fifty percent (150%) of current
annual premiums. If the Surviving Corporation elects to reduce the amount of
insurance coverage pursuant to the preceding sentence, it will furnish to the
officers and directors covered by such D&O Insurance as of the date of this
Agreement reasonable notice of
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such reduction in coverage and shall, to the extent additional coverage is
available, afford such Persons the opportunity to pay such additional premiums
as may be necessary to maintain the existing level of D&O Insurance coverage.
(c) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 6.7.
(d) The provisions of this Section 6.7 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
6.8 Public Announcements. During the term of this Agreement, the Parent
and the Company shall consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by Law or any
listing agreement with a national securities exchange or trading system to which
the Parent or the Company is a party.
6.9 Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of the Subsidiaries or Representatives of the Company
to, and the Parent shall not, nor shall it authorize or permit any of its
subsidiaries or Representatives to, directly or indirectly through another
Person, (a) solicit, initiate or encourage (including by way of furnishing
information) or otherwise take any action to facilitate, the making of any
proposal that constitutes an Acquisition Proposal or (b) participate in any
discussions or negotiations regarding, any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal; provided, however,
that if, at any time prior to the date that is the earlier of the 60th day
following the date of execution of this Agreement and the date of the
Stockholders' Meetings, the Board of Directors of the Company, in exercise of
its fiduciary duties, reasonably determines in good faith, based upon the
written advice of independent outside legal counsel, that such Board of
Directors is required to do so to comply with its fiduciary duties to its
stockholders under applicable Law, such Board of Directors and its
Representatives may, in response to a Superior Proposal that did not result in a
breach of this Section 6.9, and subject to providing contemporaneous notice of
its decision to take such action to the other party, (i) furnish information
with respect to the Company and the Subsidiaries to any Person making a Superior
Proposal pursuant to a customary confidentiality agreement and (ii) participate
in discussions or negotiations regarding such Superior Proposal. The Company
shall provide immediate oral and written notice to the party of (a) the receipt
of any such Acquisition Proposal or any inquiry which could reasonably be
expected to lead to any Acquisition Proposal, (b) the material terms and
conditions of such Acquisition Proposal or inquiry, and (c) the identity of such
Person or entity making any such Acquisition Proposal or inquiry. The Company
shall continue to keep the Parent informed of the status and details of any such
Acquisition Proposal or inquiry, as well as any related discussions or
negotiations permitted under this Section 6.9.
6.10 Proxy Statement/Prospectus. As promptly as practicable following
the date hereof, the Parent and the Company shall jointly prepare and file with
the SEC preliminary proxy materials and any amendments or supplements thereof
which shall constitute the joint proxy
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statement/prospectus (such proxy statement/prospectus, and any amendments or
supplements thereto, the "Proxy Statement/Prospectus") and the Parent shall
prepare and file with the SEC the Form S-4 with respect to the issuance of
Parent Common Stock in the Merger in which the Proxy Statement/Prospectus will
be included as a prospectus. The Form S-4 and the Proxy Statement/Prospectus
shall comply as to form in all material respects with the applicable provisions
of the Securities Act and the Exchange Act. Each of the Parent and the Company
shall use all reasonable efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after filing it with the SEC and
to keep the Form S-4 effective as long as is necessary to consummate the Merger.
The Parties shall promptly provide copies, consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Form S-4 and the Proxy Statement/Prospectus and promptly
advise the other party of any oral comments received from the SEC. The Parent
agrees that none of the information supplied or to be supplied by the Parent for
inclusion or incorporation by reference in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the Stockholders' Meeting, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company agrees that none of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
Stockholders' Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood and agreed
that information concerning or related to the Parent, Merger Sub and the Parent
Stockholders' Meeting will be deemed to have been supplied by the Parent and
information concerning or related to the Company and the Company Stockholders'
Meeting shall be deemed to have been supplied by the Company. Any opinions
regarding the federal income tax consequences of the Merger or other matters set
forth in the Form S-4 and the Proxy Statement/Prospectus shall be rendered by
(i) Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP with respect to matters regarding the
Parent and its stockholders, and (ii) Cooley Godward LLP with respect to matters
regarding the Company and its stockholders.
6.11 Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each party hereto will use its commercially reasonable efforts to (i) take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof and (ii) obtain and maintain all
approvals, consents, waivers, registrations, permits, authorizations, clearances
and other confirmations required to be obtained from any third party and/or any
Governmental Entity that are necessary, proper or advisable to consummate the
Merger and the transactions contemplated hereby (each a "Necessary Approval").
In furtherance and not in limitation of the foregoing, each party hereto agrees
to make as promptly as practicable, to the extent it has not already done so,
all necessary filings with other Governmental Entities relating to the Merger,
and, in each case, to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to such laws
and to use its commercially reasonable efforts to cause the expiration or
termination of the applicable waiting periods and the receipt of Necessary
Approvals under such other laws as soon as practicable. Notwithstanding the
foregoing, nothing in this Section 6.11 shall require, or be deemed to require,
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the Parent to agree to or effect any divestiture (including divestitures of
assets of the Parent or the Company) or take any other action if, in the
reasonable judgment of the Parent, doing so could, individually or in the
aggregate, reasonably be expected to impair the Parent's ability to achieve the
overall benefits expected, as of the date hereof, to be realized from the
consummation of the Merger.
(b) Each of the Parent and the Company shall, in connection
with the efforts referenced in Section 6.11(a) to obtain all Necessary
Approvals, use its commercially reasonable efforts to (i) cooperate in all
respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) promptly inform the other party of any
communication received by such party from, or given by such party to, any other
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby, and (iii) permit the other party to review
any communications given by it to, and consult with each other in advance to the
extent practicable of any meeting or conference with, any Governmental Entity
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by any other applicable Governmental Entity or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Sections 6.11(a) and 6.11(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law (as
hereinafter defined), or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated or
enforced by a Governmental Entity which would make the Merger or the
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of the Merger or the transactions
contemplated hereby, each of the Parent and the Company shall cooperate in all
respects with each other and use its respective commercially reasonable efforts
to contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other action or
order, whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the Merger or the transactions
contemplated by this Agreement and to have such statute, rule, regulation,
executive order, decree, injunction or administrative order repealed, rescinded
or made inapplicable. Notwithstanding any provision of this Agreement to the
contrary, neither the Parent nor the Surviving Corporation shall be required
under the terms of this Agreement to dispose of or hold separate all or any
portion of the businesses or assets of the Parent or any of its subsidiaries or
of the Company or any Subsidiary in order to remedy or otherwise address the
concerns (whether or not formally expressed) of any Governmental Entity under
any antitrust statute or regulation.
(d) In connection with, and without limiting the foregoing,
the Company shall (i) take all actions necessary to ensure that no antitakeover
statute or similar statute or regulation is or becomes operative with respect to
this Agreement, the Merger, the Voting Agreements or any other transactions
contemplated by this Agreement and (ii) if any antitakeover statute or similar
statute or regulation of any jurisdiction is or becomes operative with respect
to this Agreement, the Merger, the Voting Agreements or any other transaction
contemplated by this Agreement, take all actions necessary to ensure that this
Agreement, the Merger and any other transactions
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contemplated by this Agreement and the Voting Agreements may be consummated as
promptly as practicable on the terms contemplated by this Agreement and the
Voting Agreements and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by this
Agreement.
(e) In connection with, and without limiting the foregoing,
the Parent shall (i) take all reasonable actions necessary to ensure that no
antitakeover statute or similar statute or regulation is or becomes operative
with respect to this Agreement, the Merger, the Voting Agreements, the
Investment Agreements or any other transactions contemplated by this Agreement
and (ii) if any antitakeover statute or similar statute or regulation of any
jurisdiction is or becomes operative with respect to this Agreement, the Merger,
the Voting Agreements, the Investment Agreements or any other transaction
contemplated by this Agreement, take all reasonable actions necessary to ensure
that this Agreement, the Merger and any other transactions contemplated by this
Agreement and the Voting Agreements and the Investment Agreements may be
consummated as promptly as practicable on the terms contemplated by this
Agreement, the Voting Agreements and the Investment Agreements and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
6.12 Nasdaq Listing. The Parent will use commercially reasonable
efforts to cause to be approved for listing on the Nasdaq, subject to official
notice of issuance, a sufficient number of shares of Parent Common Stock to be
issued in the Merger and pursuant to Company Stock Options.
6.13 Tax Treatment.
(a) Parent shall use reasonable efforts to obtain the Tax
Opinion referred to in Section 7.1(e), including the execution of the letter of
representation from the Parent referred to therein updated as necessary.
(b) The Parent, in its sole discretion, may make an election
under Section 338 of the Code, in which case the Company will cooperate in
facilitating such election, and shall grant all consents, waivers and
authorizations necessary to effect such election by the Parent.
6.14 Undertakings of Parent. The Parent shall perform, or cause to be
performed, when due all obligations of the Merger Sub under this Agreement.
6.15 Director Resignations. The Company shall cause to be delivered to
the Parent resignations of all the directors of the Company and the Subsidiaries
to be effective upon the consummation of the Merger. The Company shall cause
such directors, prior to resignation, to appoint new directors nominated by the
Parent to fill such vacancies.
6.16 Company Affiliates. The Company shall deliver to the Parent a
letter identifying all Persons who are, at the time the Merger is submitted to a
vote of the stockholders of the Company, Affiliates of the Company for purposes
of Rule 145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each Person who is identified as a possible Affiliate in such
letter to deliver to the Parent on or prior to the Effective Time an Affiliate
Letter. The Parent shall be entitled to place legends on any certificates of
Parent Common Stock issued to such possible Affiliates to restrict transfer of
such shares.
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6.17 Employee Matters.
(a) The Company shall (i) take all commercially reasonable
actions necessary to correct any compliance deficiencies identified to the
Company by the Parent with respect to any Company Employee Benefit Plan in a
manner satisfactory to the Parent and provide evidence reasonably satisfactory
to the Parent of such corrections; (ii) take all appropriate corporate action to
cease, effective upon Closing, all benefit accruals under and terminate any
401(k) and retirement plans; and (iii) take all appropriate corporate action to
terminate, effective prior to the Closing, the Employee Stock Purchase Plan.
(b) The Company will provide to the Parent as promptly as
practicable after the date hereof (and in any event within 2 days hereof) a true
and complete list of all of the (a) officers, (b) employees (whether full-time,
part-time or otherwise) and (c) consultants or independent contractors of each
of the Company and the Subsidiaries, in each case, specifying, by individual,
their position, annual salary, hourly wages, consulting or other independent
contractor fees, date of birth, date of hire, social security number, work
location, length of service, hours of service, together with an appropriate
notation next to the name of any officer or other employee on such list who is
subject to any written employment agreement or any other written term sheet or
other document describing the terms and/or conditions of employment of such
employee or of the rendering of services by such consultant or independent
contractor.
(c) The Parent and the Company shall take such action as is
necessary, including action under the relevant Company Stock Plan, to effect the
provisions of Section 2.5 hereof.
(d) The Parent shall (i) provide those employees of the
Company who become employees of the Parent (or a business unit of the Parent)
401(k), medical, group life insurance and accidental death and dismemberment
benefits on such terms and conditions as are substantially similar to similarly
situated employees of the business unit of the Parent which employs such
employees and (ii) recognize prior service with the Company for such employees
for the purpose of eligibility to participate in the medical and 401(k) benefit
plans provided to similarly situated employees of such business unit.
6.18 Advertiser Visits. Between the date hereof and the Closing, and
subject to such reasonable limitations as the Company shall deem reasonable and
necessary, the Company shall permit, and shall cause each Subsidiary to permit,
the Parent to discuss and meet, and shall cooperate in such discussions and
meetings, with any advertiser of the Company and the Subsidiaries that the
Parent so requests. A senior executive of the Company, reasonably satisfactory
to the Parent, shall accompany the Parent's representative to such meetings and
shall participate with the Parent's representative in any such discussions.
Furthermore, the Company shall cooperate with the Parent in the preparation of a
presentation to such advertisers with respect to the Merger.
ARTICLE VII
CONDITIONS
7.1 Conditions to the Obligation of Each Party. The respective
obligations of the Parent, the Merger Sub and the Company to effect the Merger
are subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
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(a) This Agreement and the Merger shall have been approved and
adopted by each of the Parent Stockholders and the Company Stockholders by the
Required Vote.
(b) All consents, authorizations, orders and approvals of (or
filings or registrations with) any Governmental Entity required in connection
with the execution, delivery and performance of this Agreement, the failure to
obtain which would prevent the consummation of the Merger or have, individually
or in the aggregate, a Company Material Adverse Effect or Parent Material
Adverse Effect, shall have been obtained without the imposition of any condition
(i) having, individually or in the aggregate, a Company Material Adverse Effect
or Parent Material Adverse Effect or (ii) requiring the Parent or the Surviving
Corporation to effect, or agree to effect, any divestiture (including
divestitures of assets of the Parent or the Company) or to take any other action
if, in the reasonable judgment of the Parent, doing so would, individually or in
the aggregate, reasonably be expected to impair the Parent's ability to achieve
the overall benefits expected, as of the date hereof, to be realized from the
consummation of the Merger.
(c) All authorizations, consents, waivers and approvals from
parties to contracts or other agreements to which any of the Company or the
Parent (or their respective subsidiaries) is a party, or by which either is
bound, as may be required to be obtained by them in connection with the
performance of this Agreement, the failure to obtain which would prevent the
consummation of the Merger or have, individually or in the aggregate, a Company
Material Adverse Effect or Parent Material Adverse Effect, shall have been
obtained without the imposition of any condition (i) having, individually or in
the aggregate, a Company Material Adverse Effect or Parent Material Adverse
Effect or (ii) requiring the Parent or the Surviving Corporation to effect, or
agree to effect, any divestiture (including divestitures of assets of the Parent
or the Company) or to take any other action if, in the reasonable judgment of
the Parent, doing so would, individually or in the aggregate, reasonably be
expected to impair the Parent's ability to achieve the overall benefits
expected, as of the date hereof, to be realized from the consummation of the
Merger.
(d) No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making illegal, materially
restricting or in any way preventing or prohibiting the Merger.
(e) The Parent shall have received the Tax Opinion. The
parties to this Agreement agree to make such reasonable representations as
requested by counsel for the purpose of rendering such opinion.
(f) The shares of Parent Common Stock to be issued pursuant to
this Agreement and pursuant to the Company Stock Options shall have been
authorized for listing on the Nasdaq, subject to official notice of issuance.
(g) The Form S-4 shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
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7.2 Conditions to Obligations of Parent and Merger Sub to Effect the
Merger. The obligations of the Parent and the Merger Sub to effect the Merger
are further subject to satisfaction or waiver at or prior to the Effective Time
of the following conditions:
(a) (i) The representations and warranties of the Company in
this Agreement that are qualified by materiality shall be true and correct in
all respects as of the Closing (excluding any representation or warranty that
refers specifically to any other date other than the Closing), and (ii) the
representations and warranties of the Company in the Agreement that are not
qualified by materiality shall be true and correct in all material respects as
of the Closing (excluding any representation or warranty that refers
specifically to any other date other than the Closing) (it being understood
that, for purposes of determining the accuracy of such representations and
warranties as of the Closing, (1) any inaccuracy that does not have a Company
Material Adverse Effect shall be disregarded, (2) any inaccuracy that results
from or relates to general business, economic or industry conditions shall be
disregarded, and (3) any inaccuracy that results from or relates to the taking
of any action contemplated or permitted by this Agreement or the announcement or
pendency of the Merger shall be disregarded). The Company shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement at or prior to the Closing.
(b) The Company shall furnish the Parent with a certificate
signed on behalf of the Company by its appropriate officers as to compliance
with the conditions set forth in Section 7.2(a).
(c) The Parent shall have received an Affiliate Letter from
each Affiliate in accordance with Section 6.16.
(d) No injunction, award, decision, judgment, order, ruling,
subpoena, verdict or decree shall have been entered, issued, made, or rendered
by any court, administrative agency, or other Governmental Entity and be in
effect which restrains or prohibits, or results in the obtaining of damages or
other relief from any such party, in connection with this Agreement or the
consummation of the transactions contemplated hereby.
(e) There shall not have occurred any change, condition, event
or development that has resulted in, or would reasonably be expected to result
in, a Company Material Adverse Effect.
(f) The Investment Agreements shall be in full force and
effect.
(g) (i) Subject to the provisions of Schedule 7.2(g), Parent
shall be satisfied that as at March 31, 2001, the Company has at least $20
million of cash and $12 million of working capital, and
(ii) (A) Parent shall be satisfied that the Company's
cash on hand immediately prior to the Closing is equal to or greater than the
difference between the amount of cash on the Final Statement of Working Capital
minus the product of $166,666 multiplied by the number of days elapsed from
March 31, 2001 to the date which is one day prior to the date of the Closing;
and (B) Parent shall be satisfied that Working Capital immediately prior to the
Closing shall be in an amount which is not materially less than the difference
between the amount of Working
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Capital as at March 31, 2001 minus the reduction in the Company's cash on hand
since March 31, 2001.
(h) Company shall, prior to the Closing Date, provide Parent
with a properly executed Foreign Investment and Real Property Tax Act of 1980
Notification Letter, which shall state that shares of capital stock of Company
do not constitute "United States real property interests" under Section 897(c)
of the Code, for purposes of satisfying Parent's obligations under Treasury
Regulation Section 1.1445-2(c)(3) )the "Notification Letter"). In addition,
simultaneously with delivery of such Notification Letter, Company shall have
provided to Parent a form of notice to the Internal Revenue Service in
accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2)
along with written authorization for Parent to deliver such notice form to the
Internal Revenue Service on behalf of Company upon the Closing of the Merger.
7.3 Conditions to Obligations of Company to Effect the Merger. The
obligations of the Company to effect the Merger are further subject to
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) (i) The representations and warranties of the Parent and
the Merger Sub in this Agreement that are qualified by materiality shall be true
and correct in all respects as of the Closing (excluding any representation or
warranty that refers specifically to any other date other than the Closing) and
(ii) the representations and warranties of the Parent and the Merger Sub in this
Agreement that are not qualified by materiality shall be true and correct in all
material respects as of the Closing (excluding any representation or warranty
that refers specifically to any other date other than the Closing) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties as of the Closing, (1) any inaccuracy that does
not have a Parent Material Adverse Effect shall be disregarded, (2) any
inaccuracy that results from or relates to general business, economic or
industry conditions shall be disregarded, and (3) any inaccuracy that results
from or relates to the taking of any action contemplated or permitted by this
Agreement or the announcement or pendency of the Merger shall be disregarded).
(b) The Parent and the Merger Sub each shall have performed in
all material respects all covenants and agreements under this Agreement which
are required to be performed at or prior to the Closing, except where failure to
have complied with such covenants and agreements would not have a Parent
Material Adverse Effect.
(c) The Parent shall furnish the Company with a certificate
signed on behalf of Parent and Merger Sub by appropriate officers as to
compliance with the conditions set forth in Sections 7.3(a) and (b).
(d) There shall not have occurred any change, condition, event
or development that has resulted in, or would reasonably be expected to result
in, a Parent Material Adverse Effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by the Company
Stockholders:
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(a) By mutual written consent duly authorized by the Boards of
Directors of the Parent and the Company;
(b) By any of the Parent, the Merger Sub or the Company if any
court of competent jurisdiction or other Governmental Entity shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; provided however, that
the party terminating this Agreement pursuant to this Section 8.1(b) shall have
used all commercially reasonable efforts to have such order, decree, ruling or
action vacated;
(c) By any of the Parent, the Merger Sub or the Company if the
Merger shall not have been consummated on or before June 30, 2001; provided,
however, that the right to terminate this Agreement under this Section 8.1(c)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the primary cause of, or resulted in, the failure
to consummate the Merger on or before such date;
(d) By the Parent, if the Board of Directors of the Company
takes any of the actions set forth in the second sentence of Section 6.5(a);
(e) By any of the Company or the Parent, if the approval of
the Parent Stockholders or the Company Stockholders required for consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
Required Vote at the Stockholders' Meetings or at any adjournment or
postponement thereof;
(f) By the Parent or the Merger Sub, if (i) any of the
conditions set forth in Section 7.2 shall have become incapable of fulfillment
and shall not have been waived by the Parent and the Merger Sub or (ii) the
Company shall breach in any material respect any of its representations,
warranties, covenants or other obligations hereunder and, within 30 days after
written notice of such breach to the Company from the Parent, such breach shall
not have been cured in all material respects or waived by the Parent or the
Merger Sub and the Company shall not have provided reasonable assurance to the
Parent and the Merger Sub that such breach will be cured in all material
respects on or before the Effective Time; or
(g) By the Company, if (i) any of the conditions set forth in
Section 7.3 shall have become incapable of fulfillment and shall not have been
waived by the Company or (ii) the Parent or the Merger Sub shall breach in any
material respect any of their respective representations, warranties or
obligations hereunder and, within 30 days after written notice of such breach to
the Parent from the Company, such breach shall not have been cured in all
material respects or waived by the Company and the Parent or the Merger Sub, as
the case may be, shall not have provided reasonable assurance to the Company
that such breach will be cured in all material respects on or before the
Effective Time.
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party that (i) is in material breach of its obligations hereunder or (ii) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
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8.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant
to Section 8.1 hereof, this Agreement shall forthwith be terminated and have no
further effect except as specifically provided herein and in Section 9.10 and,
except as provided in this Section 8.2 and in Section 9.11, there shall be no
liability on the part of any party hereto, provided that nothing herein shall
relieve any party from liability for any willful breach hereof.
(b) If the Parent exercises its right to terminate this
Agreement under Section 8.1(d), the Company shall pay to the Parent the
Termination Fee, payable in same-day funds, as liquidated damages and not as a
penalty to reimburse the Parent for its time, expense and lost opportunity costs
of pursuing the Merger, upon entering into any agreement relating to such
Acquisition Proposal.
(c) (i) After termination of this Agreement by the Parent
pursuant to Section 8.1(e) because the approval of the Company Stockholders
required for consummation of the Merger shall not have been obtained at the
Company Stockholders' Meeting, the Company shall pay to the Parent upon demand
the Termination Fee, payable in same-day funds, as liquidated damages and not as
a penalty, to reimburse the Parent for its time, expense and lost opportunity
costs of pursuing the Merger; provided that no such amount shall be payable if
the Termination Fee shall have become payable or have been paid in accordance
with Section 8.2(b) of this Agreement or if this Agreement shall have been
terminated by the Company in accordance with clause (ii) of Section 8.1(g).
(ii) After termination of this Agreement by the
Company pursuant to Section 8.1(e) because the approval of the Parent
Stockholders required for consummation of the Merger shall not have been
obtained at the Parent Stockholders' Meeting, the Parent shall pay to the
Company upon demand the Termination Fee, payable in same-day funds, as
liquidated damages and not as a penalty, to reimburse the Company for its time,
expense and lost opportunity costs of pursuing the Merger; provided that no such
amount shall be payable if this Agreement shall have been terminated by the
Parent in accordance with clause (ii) of Section 8.1(f).
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if either party fails promptly to pay to the other party any amounts
due under this Section 8.2, such party shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee or obligation at
the publicly announced prime rate of Citibank, N.A. in effect from time to time
from the date such fee or obligation was required to be paid.
8.3 Amendments. This Agreement may not be amended except by action
taken or authorized by the board of directors of each of the parties hereto set
forth in an instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after approval of the Merger by the Company
Stockholders, no amendment may be made without the further approval of the
Company Stockholders if such further approval is required by Law or the rules of
any relevant stock exchange or other trading system.
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8.4 Waiver. At any time prior to the Effective Time, whether before or
after the Stockholders' Meeting, any party hereto, by action taken by its board
of directors, may (i) extend the time for the performance of any of the
covenants, obligations or other acts of any other party hereto or (ii) waive any
inaccuracy of any representations or warranties or compliance with any of the
agreements, covenants or conditions of any other party or with any conditions to
its own obligations. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party by its duly authorized officer. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights. The waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
ARTICLE IX
GENERAL PROVISIONS
9.1 No Third Party Beneficiaries. Other than the provisions of Section
6.7 hereof, nothing in this Agreement shall confer any rights or remedies upon
any Person other than the parties hereto.
9.2 Entire Agreement. This Agreement (including the exhibits and the
Disclosure Letters hereto) constitutes the entire Agreement among the parties
with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or among the parties, written
or oral, with respect to the subject matter hereof.
9.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other parties; provided, however, that the Merger Sub may freely assign its
rights to another wholly owned subsidiary of the Parent without such prior
written approval but no such assignment shall relieve the Merger Sub of any of
its obligations hereunder.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. 9.5 Headings. The section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflicts of law thereof.
9.5 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not effect in any way the meaning or
interpretation of this Agreement.
9.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the
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power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
9.8 Specific Performance. Each of the parties acknowledges and agrees
that the other party 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 agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
9.9 Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
9.10 Non-Survival of Representations and Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that (i) the agreements set forth in Articles II
and IX and Sections 6.7 and 6.11 shall survive the Effective Time and (ii) the
agreements set forth in Section 8.2 and in Article IX shall survive the
termination of this Agreement.
9.11 Fees and Expenses. Subject to Sections 8.2(b), (c) and (d), each
party hereto shall pay its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, except that costs and
expenses incurred in connection with the filing, printing and mailing of the
Form S-4 and the Proxy Statement/Prospectus (including SEC filing fees) shall be
borne equally by the Parent and the Company.
9.12 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in Person, by overnight
courier or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses, or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.12:
If to the Parent or the iVillage Inc.
Merger Sub: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: General Counsel
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with a copy to: Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
Old Federal Reserve Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx Xxxxx, Esq.
If to the Company: Xxxxx.xxx Networks, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Attention: General Counsel
with a copy to: Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the Company, the Parent and the Merger Sub have
caused this Agreement to be executed as of the date first written above by their
respective duly authorized officers.
XXXXX.XXX NETWORKS, INC.
By: /s/ Xxxxxxx XxXxxxxx
---------------------------------------------
Name: Xxxxxxx XxXxxxxx
Title: Chief Executive Officer and President
IVILLAGE INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Chief Executive Officer
STANHOPE ACQUISITION SUB, LLC
By: /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE FOR AGREEMENT AND PLAN OF MERGER]
