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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
FEBRUARY 1, 2000
AMONG
THE KNOT, INC.,
KNOT ACQUISITION CORPORATION
AND
WEDDINGPAGES, INC.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 1, 2000, (this
"Agreement"), among The Knot, Inc., a Delaware corporation ("The Knot"), KNOT
ACQUISITION CORPORATION, a Delaware corporation ("Buyer") and Weddingpages,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company, The Knot and Buyer
have approved and declared fair and advisable and in the best interests of their
respective companies and stockholders, that Buyer and the Company combine
pursuant to the Merger (as defined in Section 2.1 below) in which the Surviving
Corporation (as defined in Section 2.1(a) below) will become a subsidiary of The
Knot upon the terms and subject to the conditions provided in this Agreement;
WHEREAS, in order to induce Buyer to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement, certain
holders of shares of common stock of the Company have entered into (or will
enter into) a Voting Agreement (together, the "Voting Agreements") providing for
certain actions relating to such shares; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as used herein, have
the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. As used in this definition, "control" (including with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).
"BENEFIT ARRANGEMENT" means any employment, severance or similar
contract or arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option, or other stock-related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical benefits,
disability benefits, worker's compensation, supplemental unemployment
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benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or other
benefits) that (i) is not an U.S. Plan, (ii) is entered into, maintained,
administered or contributed to, as the case may be, by the Company or any
Subsidiary and (iii) covers any employee or former employee of the Company or
any Subsidiary employed in the United States.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means (i) the common stock, $.01 par value, of the
Company and (ii) the class A common stock, $.01 par value, of the Company.
"CONTEMPLATED TRANSACTIONS" means the transactions contemplated by this
Agreement.
"DISCLOSURE LETTER" means the disclosure letter dated as of the date of
this Agreement delivered by the Company to Buyer.
"ENVIRONMENTAL LAWS" means any applicable federal, state, local or
foreign law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or requirement or any agreement with any governmental
authority or other third party, relating to human health and safety, the
environment or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
financial condition, business, assets or results of operations of the Company
and the Subsidiaries, taken as a whole, provided that changes in the public
market price of the Common Stock will not be considered in determining whether
there has been a Material Adverse Effect.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
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"SHARES" means shares of Common Stock.
"SUBSIDIARY" means any corporation or other business entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time directly or indirectly owned by the Company and/or one or more
of its subsidiaries.
"TAX" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any Taxing Authority, (ii) in the case of
the Company or any Subsidiary, liability for the payment of any amount of the
type described in clause (i) as a result of being or having been before the
Closing Date a member of an affiliated, consolidated, combined or unitary group,
or a party to any agreement or arrangement, as a result of which liability of
the Company or any Subsidiary to a Taxing Authority is determined or taken into
account with reference to the liability of any other Person and (iii) liability
of the Company or any Subsidiary for the payment of any amount as a result of
being party to any Tax sharing agreement or with respect to the payment of any
amount of the type described in (i) or (ii) as a result of any existing express
or implied obligation.
"TAXING AUTHORITY" means any governmental authority responsible for the
imposition of any Tax (domestic or foreign).
"TAX RETURN" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
"U.S. PLAN" means any "employee benefit plan", as defined in Section
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Company or any Subsidiary and
(iii) covers any employee or former employee of the Company or any Subsidiary.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
Acquisition Proposals 6.4
Agreement Preamble
Balance Sheet 4.8
Balance Sheet Date 4.8
Buyer Preamble
Buyer Disclosure Documents 4.9(c)
Company Preamble
Company Disclosure Documents 4.9
Company Proxy Statement 6.2
Company Securities 4.5(b)
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Company Stockholder Meeting 6.2
Delaware Law 2.1(d)
Dissenting Shares 2.4
Effective Time 2.1(b)
Escrow Agreement 2.8
Exchange Agent 2.3(a)
GAAP 4.8
Intellectual Property Right 4.22
Leases 4.23
Material Contracts 4.12
Merger 2.1(a)
Merger Consideration 2.3(a)
Payment Event 6.4(c)
Shareholder Representative 2.8
Subsidiary Securities 4.6(b)
Surviving Corporation 2.1(a)
Surviving Corporation Share 2.2(b)
Third Party 6.4(a)
Transaction Statement 7.1
Voting Agreements Recital
Year 2000 Compliant 4.25 (c)
Except where the context otherwise requires, "as of the date hereof" and "date
of this Agreement" means February 1, 2000.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, Buyer shall be merged (the "Merger") with and into
the Company in accordance with the Delaware Law, whereupon the separate
existence of Buyer shall cease, and the Company shall be the surviving
corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger, the
Company and Buyer will file a certificate of merger in accordance with
Delaware Law with the Delaware Secretary of State and make all other
filings or recordings required by Delaware Law in connection with the
Merger. The Merger shall become effective at such time as the
certificate of merger is duly filed with the Delaware Secretary of
State (or at such later time as may be specified in the certificate of
merger) (the "Effective Time").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, powers, privileges and
franchises and be subject to all of the obligations, liabilities and
restrictions of the Company and Buyer, all as provided under Delaware
Law.
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(d) The Company hereby represents that its Board of Directors,
at one or more meetings duly called and held, has unanimously (i)
determined, among other things, that this Agreement, the Voting
Agreements and the Contemplated Transactions, including the Merger, are
fair to and in the best interest of the Company's stockholders, (ii)
approved this Agreement and the Contemplated Transactions, including
the Merger, which approval satisfies in full the requirements of the
General Corporation Law of the State of Delaware (the "Delaware Law")
(including, without limitation, Section 203 thereof), other than the
requirement to obtain stockholder approval set forth in Section 251(c)
of the Delaware Law and (iii) resolved to recommend to its stockholders
approval and adoption of this Agreement and the Merger by its
stockholders. The Company has been advised that all of its directors
and executive officers intend to vote all of their Shares in favor of
approval and adoption of this Agreement and the Merger.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by Buyer immediately prior to the Effective Time shall be canceled, and
no payment shall be made with respect thereto;
(b) each Common Share of the Company outstanding immediately
prior to the Effective Time shall, except as otherwise provided in
Section 2.2(a) or as provided in Section 2.4 with respect to Shares as
to which appraisal rights have been exercised, be converted into the
right to receive in cash an amount equal to $1.78, less an amount per
share determined by dividing $500,000 by the sum of the total number of
Shares for which payment is required to be made pursuant hereto and the
number of Shares that are issuable upon exercise of the stock options
described in Section 2.5 (the "Merger Consideration"); and
(c) an aggregate amount of $500,000 (the "Escrow Deposit")
shall be paid by The Knot, by wire transfer of immediately available
funds, to the escrow agent (the "Escrow Agent") to be held by the
Escrow Agent in the escrow account (the "Escrow Account"), pursuant to
the terms of the Escrow Agreement substantially in the form attached
hereto as Exhibit A (the "Escrow Agreement").
SECTION 2.3. Surrender and Payment.
(a) Prior to the mailing of the Company Proxy Statement, Buyer
shall appoint an agent reasonably acceptable to the Company (the
"Exchange Agent") for the purpose of exchanging certificates (the
"Certificates") representing Shares for the Merger Consideration. Prior
to or at the Effective Time, Buyer shall deposit with the Exchange
Agent, for the benefit of the holders of Shares, for exchange in
accordance with this Article 2, the Merger Consideration. For purposes
of determining the Merger Consideration to be made available, Buyer
shall assume that no holder of Shares will perfect his or her right to
appraisal of his or her Shares. Promptly after the Effective Time, the
Surviving Corporation will use its reasonable best efforts to send or
cause the Exchange Agent to send, within 5 business days thereafter, to
each holder of Shares at the Effective Time a letter of transmittal and
instructions for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the Certificates to the Exchange Agent);
provided, however, that the Surviving Corporation will cause the
Exchange Agent to deliver the Merger Consideration in good funds
immediately following the Effective Time to each such
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holder who delivers to the Exchange Agent prior to the Effective Time a
duly completed and executed letter of transmittal together with stock
certificates representing such holder's Shares.
(b) Each holder of Shares that have been converted into the
right to receive the Merger Consideration will be entitled to receive
and the Exchange Agent shall deliver, upon surrender to the Exchange
Agent of a Certificate or Certificates representing such Shares,
together with a properly completed letter of transmittal covering such
Shares, the Merger Consideration payable in respect of such Shares. The
Merger Consideration shall not be used for any other purpose. Until so
surrendered, each such Certificate shall, after the Effective time,
represent for all purposes, only the right to receive such Merger
Consideration. No interest will be paid or will accrue on any cash
payable as Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the Shares represented
by the Certificate or Certificates surrendered in exchange therefor, it
shall be a condition to such payment that the Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the Person requesting such payment
shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder
of such Shares or establish to the reasonable satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and
in accordance with the procedures set forth, in this Article 2.
(e) If any portion of the Merger Consideration (other than the
Escrow Deposit) made available to the Exchange Agent pursuant to
Section 2.3(a) remains unclaimed by the holders of Shares six months
after the Effective Time, such amount shall be returned to the
Surviving Corporation, upon demand, and any such holder who has not
exchanged his or her Shares for such Merger Consideration in accordance
with this Section 2.3 prior to that time shall thereafter look only to
the Surviving Corporation for payment of the Merger Consideration in
respect of his or her Shares. Notwithstanding the foregoing, neither
the Surviving Corporation nor the Company shall be liable to any holder
of Shares for any amount paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by holders of Shares two years after the Effective
Time (or such earlier date immediately prior to such time when such
amounts would otherwise escheat to or become the property of any
governmental authority) shall become, to the extent permitted by
applicable law, the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for
which appraisal rights have been perfected shall be returned to the
Company, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares
which are issued and outstanding immediately prior to the Effective Time and
which are held by a holder who has not voted such Shares in favor of the Merger,
who shall have delivered a written demand for
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appraisal of such Shares in the manner provided by the Delaware Law and who, as
of the Effective Time, shall not have effectively withdrawn such demand or lost
such right to appraisal and payment therefor under the Delaware Law ("Dissenting
Shares") shall not be converted into a right to receive the Merger
Consideration. The holders thereof shall be entitled only to such rights as are
granted by Section 262 of the Delaware Law. Each holder of Dissenting Shares who
becomes entitled to payment for such Shares pursuant to Section 262 of the
Delaware Law shall receive payment therefor from the Surviving Corporation in
accordance with the Delaware Law; provided, however, that (i) if any such holder
of Dissenting Shares shall have failed to establish his or her entitlement to
appraisal rights as provided in Section 262 of the Delaware Law, (ii) if any
such holder of Dissenting Shares shall have effectively withdrawn his or her
demand for appraisal of such Shares or lost his or her right to appraisal and
payment for his or her Shares under Section 262 of the Delaware Law or (iii) if
neither any holder of Dissenting Shares nor the Surviving Corporation shall have
filed a petition demanding a determination of the value of all Dissenting Shares
within the time provided in Section 262 of the Delaware Law, such holder shall
forfeit the right to appraisal of such Shares and each such Share shall be
treated as if it had been, as of the Effective Time, converted into a right to
receive the Merger Consideration, without interest thereon, from the Surviving
Corporation as provided in Section 2.2. The Company shall give Buyer notice as
promptly as practicable of any demands received by the Company for appraisal of
Shares, and Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Buyer, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 2.5. Stock Options.
(a) At or immediately prior to the Effective Time, the Company
shall use its reasonable best efforts to cause each stock option to
purchase Shares outstanding under any stock option or compensation plan
or arrangement of the Company to be canceled, and the Company shall pay
each holder of any such option at or within five business days after
the Effective Time for each such option an amount in cash not to exceed
an aggregate amount of $1,253,250 for all such stock options (less the
amount per share calculated pursuant to Section 2.2(b)). Each option
holder's share of the Merger Consideration shall be determined by
multiplying (i) the excess, if any, of the Merger Consideration per
Share over the applicable exercise price of such option by (ii) the
number of Shares such holder could have purchased (assuming full
vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time.
(b) Prior to the Effective Time, the Company shall use its
reasonable efforts to (i) obtain any consents from holders of options
to purchase Shares granted under the Company's stock option or
compensation plans or arrangements and (ii) make any amendments to the
terms of such stock option or compensation plans or arrangements or
warrants that, in the case of either clauses (i) or (ii), are necessary
to give effect to the transactions contemplated by Section 2.5(a).
Notwithstanding any other provision of this Section 2.5, payment may be
withheld in respect of any stock option until such necessary consents
are obtained.
SECTION 2.6. Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
Person pursuant to this Article 2 such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. If the Surviving Corporation so
withholds amounts, such amounts shall be treated for all purposes of this
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Agreement as having been paid to the holder of the Shares in respect of which
the Surviving Corporation made such deduction and withholding.
SECTION 2.7. 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 issue, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 2.
SECTION 2.8. Shareholder Representative. Each shareholder and option
holder (collectively, the "Shareholders"), by acceptance of the Merger
Consideration, shall be deemed to have designated and appointed Xxxxxxx Xxxxxxx
(the "Shareholder Representative") as the representative of any such Shareholder
to perform all such acts as are required, authorized or contemplated by this
Agreement to be performed by the Shareholders (including, without limitation,
any acts, agreements, amendments or resolution of disputes related to the Escrow
Deposit and any matters referred to in Article XI hereof) and hereby
acknowledges that the Shareholder Representative shall be the only person
authorized to take any action so required, authorized or contemplated by this
Agreement by any Shareholder. Each Shareholder is thereby deemed to have further
acknowledged that the foregoing appointment and designation shall be deemed to
be coupled with an interest and shall survive the death or incapacity of such
Shareholder and that the Shareholder Representative shall not be liable for any
such action taken in good faith. Each Shareholder is thereby deemed to have
authorized the other parties hereto to disregard any notice or other action
taken by each Shareholder pursuant to this Agreement except for the Shareholder
Representative. The other parties hereto are and will be entitled to rely on any
action so taken or any notice given by the Shareholder Representative and are
and will be entitled and authorized to give notices only to the Shareholder
Representative for any notice contemplated by this Agreement to be given to any
Shareholder.
SECTION 2.9. Payment of the Escrow Balance.
(a) To the extent there is a remaining balance in the Escrow
Account upon the termination of the Escrow Agreement (the "Escrow
Balance"), the Escrow Agent shall deliver to the Exchange Agent the
Escrow Balance. The Exchange Agent shall pay to each person who held
Shares (which for the purposes hereof shall include the stock options
as described in Section 2.5) (other than Dissenting Shares) immediately
prior to the Effective Time out of the Escrow Balance that amount that
is equal to the product of (A) the Escrow Balance multiplied by (B) a
fraction, (x) the numerator of which is the number of Shares held by
such Shareholder (plus the number of Shares issuable upon exercise of
the stock options outstanding) immediately prior to the Effective Time
and (y) the denominator of which is the aggregate number of Shares
(other than Dissenting Shares) outstanding immediately prior to the
Effective Time (plus the number of Shares issuable upon exercise of the
stock options outstanding).
(b) The Exchange Agent shall make such payment to each such
Shareholder in the manner and at the location specified in the letter
of transmittal previously delivered by each such Shareholder to the
Exchange Agent pursuant to Section 2.3 (unless the Exchange Agent has
otherwise been notified in writing by the Shareholder Representative).
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ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with the terms thereof and applicable law.
SECTION 3.2. Bylaws. The bylaws of the Company in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation
from and after the Effective Time until amended in accordance with the terms
thereof and applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation and
bylaws, (i) the directors of Buyer at the Effective Time shall be the directors
of the Surviving Corporation, and (ii) the officers of the Company at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
THE COMPANY REPRESENTS AND WARRANTS TO BUYER THAT:
SECTION 4.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing, in good standing under the laws
of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
in Section 4.1 of the Disclosure Letter, the Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. The Company
has heretofore made available to Buyer or its representative true and complete
copies of the Company's certificate of incorporation and bylaws as currently in
effect.
SECTION 4.2. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Contemplated Transactions are within the Company's corporate powers and,
except for any required approvals of the Company's stockholders in connection
with the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of the Company. The affirmative vote of the holders
of a majority of the outstanding Shares is the only vote of the holders of any
of the Company's capital stock necessary in connection with the consummation of
the Merger. This Agreement constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect, affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
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SECTION 4.3. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Contemplated Transactions require no action by or in respect of, or
filing with, any governmental body, agency, official or authority, domestic or
foreign, other than (i) the filing of a certificate of merger with respect to
the Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified to do
business, (ii) compliance with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable securities laws, whether state or foreign and
(iii) any actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or materially impair the ability of the Company to consummate the
Contemplated Transactions.
SECTION 4.4. Non-contravention. Except as set forth in Section 4.4 of
the Disclosure Letter, the execution, delivery and performance by the Company of
this Agreement and the consummation of the Contemplated Transactions do not and
will not (i) contravene, conflict with, or result in any violation or breach of
any provision of the certificate of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 4.3, contravene,
conflict with or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order, or decree binding upon or applicable to the Company or any Subsidiary or
any of their properties or assets, (iii) require any consent or other action by
any Person who is not a party to this Agreement under, constitute a default
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation of the Company or any Subsidiary or the loss
of any benefit to which the Company or any Subsidiary is entitled under, any
provision of any agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, Permit other similar
authorization held by the Company or any Subsidiary that is necessary for the
continued operation of its business or (iv) result in the creation or imposition
of any Lien on any asset of the Company or any Subsidiary, except in the case of
clauses (ii), (iii) and (iv), for any such violation, failure to obtain any such
consent or other action, default, right, loss or Lien that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
SECTION 4.5. Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of common stock, $.01 par value per share; 1,000,000
shares of Class A common stock, $.01 par value per share; and 1,000
shares of convertible preferred stock, $.01 par value per share, of
which as of December 31, 1999 there were outstanding 3,666,932 shares
of common stock, 397,653 shares of Class A common stock, no shares of
convertible preferred stock and stock options to purchase an aggregate
of 1,210,000 shares of common stock. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Section 4.5(a) of the Disclosure
Letter lists, with respect to each option to purchase Shares
outstanding as of the date of this Agreement: (i) the name of the
holder of each such option, (ii) the number of Shares subject to each
such option, (iii) the per Share exercise price of each such option and
(iv) the expiration date of each such option. Other than the options
listed in Section 4.5(a) of the Disclosure Letter, no current or former
employee, director or consultant of the Company or any Subsidiary has
any right or claim of right against the Company or any Subsidiary
relating to or arising from any Share-related plan, policy or
arrangement, including, without limitation, any Share purchase option,
stock appreciation right or similar right with respect to the Shares or
any other Share-related compensation arrangement.
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(b) Except as set forth in Section 4.5(a) and Section 4.5(a)
of the Disclosure Letter and for changes since December 31, 1999
resulting from the exercise of stock options outstanding on such date,
there are no outstanding (i) shares of capital stock or voting
securities of the Company, (ii) securities of the Company convertible
into or exchangeable for shares of capital stock or voting securities
of the Company or (iii) options or other rights to acquire from the
Company, or other obligations of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the
"Company Securities"). Except as set forth in Section 4.5(a) and in
Section 4.5(a) of the Disclosure Letter, there are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any Company Securities.
SECTION 4.6. Subsidiaries.
(a) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all powers and all material
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted except for those
licenses, authorizations, permits, consents and approvals the absence
of which would not have, individually or in the aggregate, a Material
Adverse Effect. Each Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of
its activities makes such qualifications necessary, except for those
jurisdictions where the failure to be in good standing or to be so
qualified would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.
(b) Except as set forth in Section 4.6(b) of the Disclosure
Letter, all of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of
any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
voting securities or ownership interests). All such capital stock,
other voting securities or ownership interests has been duly authorized
and validly issued and is fully paid and non-assessable. There are no
outstanding (i) securities of the Company or any Subsidiary convertible
into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary or (ii) options or
other rights to acquire from the Company or any Subsidiary, or other
obligations of the Company or any Subsidiary to issue, any capital
stock or other voting securities or ownership interest in, or any
securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary (the
items in clauses (i) and (ii) being referred to collectively as the
"Subsidiary Securities"). There are no outstanding obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire
any outstanding Subsidiary Securities.
SECTION 4.7. SEC Filings.
(a) The Company is not currently required to file periodic
reports with the SEC pursuant to the 1934 Act because its registration
under Section 12(g) of the 1934 Act was terminated pursuant to
Section 12(g)-4 of the 1934 Act and such conditions continue to apply
to the Company.
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SECTION 4.8. Financial Statements.
(a) The audited consolidated financial statements dated as of
June 30, 1999 (the "Balance Sheet Date"), the balance sheet included
therein being referred to herein as the "Balance Sheet", and the
audited consolidated financial statements of the Company as of December
31, 1999 and for the sixth month period then ended ("12/31 Audit") do
and with respect to the 12/31 Audit will fairly present, in all
material respects, in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of
the Company and its consolidated Subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash flows
for the periods then ended.
(b) Section 4.8(b) of the Disclosure Letter sets forth a list
of all notes payable by the Company and the Subsidiaries (and the
amounts outstanding thereunder) as of December 31, 1999.
SECTION 4.9. Disclosure Documents.
(a) Any proxy or information statement of the Company prepared
to solicit shareholder approval of the Merger shall contain the
information required by Regulation 14A under the 1934 Act, and, if
applicable, Rule 13e-3 and Schedule 13E-3 under the 1934 Act (the
"Company Proxy Statement") and any amendments or supplements thereto
will comply as to form in all material respects with the applicable
requirements of the 1934 Act. The representations and warranties
contained in this Section 4.9 will not apply to statements or omissions
included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Buyer or its representatives
specifically for use therein.
(b) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to stockholders of the Company,
at the time such stockholders vote on adoption of this Agreement and at
the Effective Time, the Company Proxy Statement, as supplemented or
amended, if applicable, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing
of any Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution thereof, such Company
Disclosure Document will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
contained in this Section 4.9(b) will not apply to statements or
omissions included in the Company Disclosure Documents based upon
information furnished to the Company in writing by Buyer or its
representatives specifically for use therein.
(c) The information with respect to the Company or any
Subsidiary that the Company furnishes to Buyer in writing specifically
for use in the Buyer Disclosure Documents will not, at the time of the
filing thereof, at the time of any distribution thereof and at the time
of the meeting of the Company's stockholders, 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 made therein, in the light of the circumstances under which
they were made, not misleading.
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SECTION 4.10. Absence of Certain Changes. Except as set forth in
Section 4.10 of the Disclosure Letter or as contemplated by this Agreement,
since the Balance Sheet Date, the Company and the Subsidiaries have conducted
their respective businesses in the ordinary course consistent with past
practices and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts that has had or reasonably could be expected to
have, individually or in the aggregate, a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of
the Company or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or
any Subsidiary;
(c) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with
past practices, but not in any event in excess of the Company's
existing line of credit;
(e) any creation or other incurrence by the Company or any
Subsidiary of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(f) any making of any material loan, advance or capital
contributions to or investment in any Person other than loans, advances
or capital contributions to or investments in any Subsidiary in the
ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or any assets of the
Company or any Subsidiary that has had or reasonably could be expected
to have, individually or in the aggregate, a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to
any capital expenditure, its material assets or business (including the
acquisition or disposition of any material assets) or any
relinquishment or modification by the Company or any Subsidiary of any
contract or other right, in either case, material to the Company and
the Subsidiaries, taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past
practices and the Contemplated Transactions;
(i) any material change in any method of accounting, method of
tax accounting or accounting principles or practice by the Company or
any Subsidiary, or (ii) any reevaluation in any material respect of any
of the material assets of the Company or any Subsidiary, except in the
case of either clause (i) or (ii) for any such change required by
reason of a concurrent change in GAAP;
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(j) any (i) grant of any severance or termination pay to (or
amendment to any existing arrangement with) any director, officer or
employee of the Company or any Subsidiary, (ii) increase in benefits
payable under any existing severance or termination pay policies or
employment agreements, (iii) entering into any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the
Company or any Subsidiary, (iv) establishment, adoption or amendment
(except as required by applicable law) of any collective bargaining,
bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any director, officer or employee
of the Company or any Subsidiary or (v) increase in the compensation,
bonus or other benefits payable to any director, officer or employee of
the Company or any Subsidiary, other than increases in non-executive
employee compensation in the ordinary course of business consistent
with past practice;
(k) any cancellation of any material licenses, sublicenses,
franchises, permits or agreements to which the Company or any
Subsidiary is a party, or to the knowledge of the Company any
notification to the Company or any Subsidiary that any party to any
such arrangements intends to cancel or not renew such arrangements
beyond its expiration date as in effect on the date of this Agreement,
which cancellation or notification, individually or in the aggregate,
has had or reasonably could be expected to have a Material Adverse
Effect; or
(l) any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not subject to a collective bargaining
agreement at the Balance Sheet Date, or any material lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
that could reasonably be expected to result in such a liability or obligation
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, other than:
(a) liabilities or obligations disclosed or provided for in
the Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the Balance Sheet Date;
and
(c) liabilities under this Agreement.
SECTION 4.12. Material Contracts. Section 4.12 of the Disclosure Letter
lists the agreements of the Company and the Subsidiaries with its franchises and
other persons setting forth (a) the name of the franchisee, (b) the commencement
date and scheduled expiration date and (c) the fee payable to the Company
thereunder; and, with respect to other agreements (including employment
contracts) involving the potential expenditure of more than $50,000 in any
annual fiscal period, the names of the parties thereto, the subject matter
thereof and the amount involved. Each Material Contract is a valid and binding
agreement of the Company or
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one of the Subsidiaries and is in full force and effect, and none of the
Company, the Subsidiaries nor, to the knowledge of the Company and the
Subsidiaries, any other party thereto is in default or breach in any material
respect under the terms of any such Material Contract, and, to the knowledge of
the Company and the Subsidiaries, no event or circumstance has occurred that,
with notice or lapse of time or both, would constitute a material event of
default thereunder. True and complete copies of each such Material Contract have
been made available to Buyer or its representatives.
SECTION 4.13. Compliance with Laws and Court Orders. The Company and
each Subsidiary is and since the Balance Sheet Date has been in compliance with,
and to the knowledge of the Company is not under investigation by any
governmental authority with respect to and has not been threatened to be charged
with or given notice of any violation of, any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree, except for
failures to comply or violations that have not had and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.14. Litigation. There is no action, suit, investigation or
proceeding (or to the knowledge of the Company any basis therefor) pending
against, or to the knowledge of the Company threatened against or affecting, the
Company or any Subsidiary, any present or former officer, director or employee
of the Company or any Subsidiary who is or may be entitled to indemnity under
the Company's certificate of incorporation or bylaws or the Delaware Corporate
Law or any other Person for whom the Company or any Subsidiary may be liable or
any of their respective properties before any court or arbitrator or before or
by any governmental body, agency or official, domestic or foreign, that, if
determined or resolved adversely to the Company or any Subsidiary in accordance
with the plaintiff's demands, could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect or that in any manner challenges
or seeks to prevent, enjoin, alter or materially delay the Merger or any of the
other Contemplated Transactions.
SECTION 4.15. Finders' Fees; Transaction Expenses.
(a) Except as set forth in Section 4.15 of the Disclosure
Letter, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on
behalf of the Company or any Subsidiary who is entitled to any fee or
commission from the Company or any of its Affiliates in connection with
the Contemplated Transactions.
(b) The expenses payable by the Company and the Subsidiaries
in connection with the consummation of the Contemplated Transactions
(excluding expenses of Buyer and its Affiliates) will not exceed the
following: (i) $20,000 in legal fees and expenses for work performed
after the date of this Agreement, (ii) $20,000 in accounting fees
specifically relating to the Contemplated Transactions and (iii)
consulting fees not to exceed $92,500.
SECTION 4.16. Taxes.
(a) The Company and each Subsidiary and each affiliated
combined, consolidated or unitary group of which the Company or any
Subsidiary is or has been a member, has timely filed (or has had timely
filed on its behalf) or will file or cause to be timely filed all
material Tax Returns required by applicable law to be filed by it prior
to or as of the Effective Time, and all material Tax Returns are, or
will be at the time of
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filing, true and complete in all material respects. The Company and
each Subsidiary has not granted any extension or waiver of the statute
of limitations applicable to any Tax Return, which period (after giving
effect to such extension or waiver) has not yet expired.
(b) The Company and each Subsidiary has paid (or has had paid
on its behalf), or, where payment is not yet due, has established (or
has had established on its behalf and for its sole benefit and
recourse) or will establish or cause to be established in accordance
with GAAP on or before the Effective Time an adequate accrual for the
payment of, all material Taxes due with respect to any period ending
prior to or as of the Effective Time.
(c) The Company and the Subsidiaries have never been audited
by the Internal Revenue Service (the "IRS") or by any foreign Taxing
Authority.
(d) There are no material Liens or encumbrances for Taxes on
any of the assets of Company or any Subsidiary.
(e) The Company and the Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes.
(f) No federal, state, local or foreign audits or
administrative proceedings are pending with regard to any material
Taxes or Tax Return of the Company or the Subsidiaries and none of them
has received a written notice of any proposed audit or proceeding
regarding any pending audit or proceeding. The Company and the
Subsidiaries have no knowledge of any requests for rulings or
determinations in respect of any Tax pending between the Company or any
Subsidiary and any Tax Authority.
SECTION 4.17. Employee Benefit Plans.
(a) Section 4.17(a) of the Disclosure Letter lists each U.S.
Plan. The Company has provided or made available to Buyer copies of the
U.S. Plans (and, if applicable, related trust agreements) and all
amendments thereto together with the most recent annual reports (Form
5500 including, if applicable, Schedule B thereto).
(b) Neither the Company nor any ERISA Affiliate presently
sponsors maintains, contributes to or is required to contribute to any
plan subject to Title IV of ERISA, nor has the Company or any ERISA
Affiliate sponsored, maintained, contributed to or been required to
contribute to any such plan at any time in the past.
(c) Neither the Company nor any ERISA Affiliate presently
contributes to or is required to contribute to any "multiemployer plan"
as defined in Section 3(37) of ERISA, nor has the Company or any ERISA
Affiliate contributed to any such plan at any time in the past, and
neither the Company nor any ERISA Affiliate has any actual or potential
withdrawal liability under any such plan.
(d) Each U.S. Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period since its adoption; each trust created under any such
Plan is exempt from tax under Section 501(a) of the Code and has been
so exempt since its creation. The Company has provided or made
available to Buyer the most recent determination letter of the IRS
relating to each such U.S. Plan, if applicable.
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(e) Section 4.17(e) of the Disclosure Letter lists each
Benefit Arrangement. The Company has provided or made available to
Buyer copies or descriptions of each Benefit Arrangement (and, if
applicable, related trust agreements) and all amendments thereto.
(f) Neither the Company nor any Subsidiary provides or has
made any commitment to provide any post-employment or post-retirement
health or medical or life insurance benefits to any current or former
employee, consultant or director of the Company or any Subsidiary and
neither the Company nor any Subsidiary has any current or projected
liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for retired, former or current
employees of the Company or any Subsidiary, except as required to avoid
excise tax under Section 4980B of the Code.
(g) There have been no material failures of any U.S. Plan or
any group health plan (as defined in Section 5000(b)(1) of the Code) to
meet the requirements of Code Section 4980B(f) with respect to a
qualified beneficiary (as defined in Code Section 4980B(g)).
(h) Each U.S. Plan, Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations (including any special rules relating to qualification or
registration where any such plan arrangement is intended to be so
qualified or registered) and has been maintained in good standing with
applicable regulatory authorities.
(i) All contributions and payments required under each U.S.
Plan, Benefit Arrangement determined in accordance with prior funding
and accrual practices have been timely made or have been reflected on
the Balance Sheet, will be discharged and paid or accrued on or prior
to the Effective Time. There has been no amendment to, written
interpretation of or announcement (whether or not written) by the
Company or any Subsidiary relating to, or change in employee
participation or coverage under, any U.S. Plan, Benefit Arrangement
that would increase materially the expense of maintaining such U.S.
Plan, Benefit Arrangement above the level of the expense incurred in
respect thereof for the most recent fiscal year ended prior to the date
of this Agreement.
(j) The execution and performance of the Contemplated
Transactions will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any U.S.
Plan, Benefit Arrangement or any trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to increase benefits or obligation to fund
benefits with respect to any current or former employee, consultant or
director of the Company or any Subsidiary. Section 4.17(k) of the
Disclosure Letter lists each employee agreement or similar Benefit
Arrangement which provides a severance or redundancy benefit to any
employee (or former employee if such liability has not been fully
discharged) of the Company or any Subsidiary in excess of three months
base salary (the "Employment Agreements") and itemizes for each such
agreement or Benefit Arrangement: (i) the name of the employee or
former employee covered thereby, (ii) the agreement or Benefit
Arrangement covering such employee or former employee and (iii) the
maximum amount for the severance or redundancy payments and benefits
that are or would be payable to such employee or former employee upon a
qualifying termination of employment. Except as described in Section
4.17(k) of
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the Disclosure Letter, no U.S. Plan, Benefit Arrangement provides to
any employee or former employee of the Company or any Subsidiary an
employment severance or redundancy benefit in an amount in excess of
three months base salary. Except as described in Section 4.17(k) of the
Disclosure Letter, there is no contract, plan or arrangement (written
or otherwise) covering any employee or former employee of the Company
or any Subsidiary that, individually or collectively, could give rise
to the payment of any amount that would not be deductible pursuant to
the terms of Sections 280G of the Code. To the knowledge of the
Company, all payments made to employees have been deductible under
Section 162(m) of the Code.
SECTION 4.18. Employees. Section 4.18 of the Disclosure Letter sets
forth a true and complete list of names, titles, annual salaries and other
material compensation of all employees of the Company and the Subsidiaries and a
description of all cash bonuses and other cash incentives payable to any
employee of the Company or the Subsidiaries (including the name of each such
employee and the amount of bonus or incentive payable to each such employee
where such information is determinable or the formula for determining such
amounts where such amounts are not determinable). Except as described therein,
to the knowledge of the Company, none of the employees listed in Section 4.18 of
the Disclosure Letter has indicated to the Company as of the date of this
Agreement that he or she intends to resign or retire as a result of the
Contemplated Transactions or otherwise within six months after the Effective
Time.
SECTION 4.19. Labor Matters. Neither the Company nor any Subsidiary is
a party to any collective bargaining agreement or work council agreement
covering any employee and no employee or former employee of the Company or any
Subsidiary is or was represented by a labor union organization or works council
in connection with his or her employment with the Company or any Subsidiary.
Each of the Company and the Subsidiaries is in substantial compliance in all
material respects with all currently applicable laws respecting employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. There is no unfair labor practice
complaint or other employment-related claim or dispute pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary.
SECTION 4.20. Environmental Matters.
(a) Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:
(i) no notice, notification, demand, request for
information, citation, summons or order has been received, no
complaint has been filed, no penalty has been assessed, and no
investigation, action, claim, suit, proceeding or review (or
any basis therefor) is pending or, to the knowledge of the
Company, is threatened by any governmental entity or other
Person relating to or arising out of any Environmental Law;
and
(ii) there are no liabilities of or relating to the
Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise arising under or relating to any Environmental Law
and there are no facts, conditions, situations or set of
circumstances that could reasonably be expected to result in
or be the basis for any such liability.
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(b) There has been no environmental investigation, study,
audit, test, review or other analysis conducted of which the Company
has knowledge in relation to the current or prior business of the
Company or any Subsidiary or any property or facility now or previously
owned, leased or operated by the Company or any Subsidiary that has not
been provided to Buyer or its representatives at least five days prior
to the date of this Agreement.
(c) Neither the Company nor any Subsidiary owns or leases or
has owned or leased any real property in New Jersey or Connecticut.
(d) For the purposes of this Section 4.20, the terms "Company"
and "Subsidiary" shall include any entity that is, in whole or in part,
a predecessor of the Company or any Subsidiary.
SECTION 4.21. Licenses and Permits. Section 4.21 of the Disclosure
Letter correctly describes each license, franchise, permit, certificate,
approval or other similar authorization held by the Company or the Subsidiaries
with respect to the assets or business of the Company and the Subsidiaries (the
"Permits"), together with the name of the government agency or entity issuing
such Permit, which the failure to possess could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Permits
disclosed in Section 4.21 of the Disclosure Letter are valid and in full force
and effect and neither the Company nor any Subsidiary is in default in any
material respect under, and no condition exists that with notice or lapse of
time or both would constitute a default in any material respect under, the
Permits.
SECTION 4.22. Intellectual Property.
(a) Except as set forth in Section 4.22(a) of the Disclosure
Letter, the Company and the Subsidiaries own or possess adequate
licenses or other rights to use all Intellectual Property Rights
necessary to conduct the business now operated by them, except where
the failure to own or possess such licenses or rights would not be
reasonably likely to have a Material Adverse Effect. To the knowledge
of the Company, (i) the Intellectual Property Rights of the Company and
the Subsidiaries do not now infringe upon or violate any present
Intellectual Property Rights of others to the extent that, if
sustained, such conflict or infringement would be reasonably likely to
have a Material Adverse Effect, and (ii) there has been no claim or
assertion by or on behalf of any third party that the use of the
Software constitutes unfair competition or infringes or interferes
with, or is likely to infringe or interfere with, any Intellectual
Property Right of any third party and, furthermore, the Company does
not know of any basis for any such claim. For purposes of this
Agreement, "Intellectual Property Right" means any trademark, service
xxxx, trade name, mask work, copyright, patent, software license, other
data base, invention, trade secret, know-how (including any
registrations or applications for registration of any of the foregoing)
or any other similar type of proprietary intellectual property right.
For purposes of this Agreement, "Software" means all computer software
programs, source code and object code, portions of code, scripts and
subroutines, including all works in progress relating to corrections,
modifications or enhancements thereto as well as all current and prior
versions of such software and user manuals constituting the material
software used in the business of the Company and the Subsidiaries;
provided that the term "Software" does not include any Software which
has not been customized in any way for use by or sublicense to others
by the Company or the Subsidiaries and which is broadly commercially
available from computer software resellers.
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(b) None of the Intellectual Property Rights owned, licensed
to, or held by the Company and the Subsidiaries have been canceled, and
the Company is not aware of any facts which would invalidate or render
unenforceable any of the Intellectual Property Rights. There are no
licenses now outstanding or other rights granted to third parties under
any of the Intellectual Property Rights, and neither the Company nor
any Subsidiary is a party to any other agreement or understanding with
respect to any Intellectual Property Rights relating to the Software.
SECTION 4.23. Leases. Section 4.23 of the Disclosure Letter lists all
leases of real property of the Company and the Subsidiaries (the "Leases"). Each
Lease is a valid and binding agreement of the Company or one of the Subsidiaries
and is in full force and effect, and none of the Company, the Subsidiaries nor,
to the knowledge of the Company and the Subsidiaries, any other party thereto,
is in default or breach in any material respect under the terms of any such
Lease, and, to the knowledge of the Company and the Subsidiaries, no event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute a material event of default thereunder on the part of the Company or
the applicable Subsidiary. True and complete copies of each such Lease have been
made available to Buyer or its representatives.
SECTION 4.24. Inapplicability of Certain Restrictions. Section 203 of
the Delaware Law "Business Combinations With Interested Stockholders" does not
in any way restrict the consummation of the Merger or the other Contemplated
Transactions. The adoption of this Agreement by the affirmative vote of the
holders of Shares entitling such holders to exercise at least a majority of the
voting power of the Shares is the only vote of holders of any class or series of
the capital stock of the Company required to adopt this Agreement or to approve
the Merger or any of the other Contemplated Transactions and no higher or
additional vote is required pursuant to the Company's certificate of
incorporation or otherwise.
SECTION 4.25. Year 2000 Compliance. Each item of hardware, Software or
firmware (a "System") that is, or is part of, a material asset of, or any
product or service designed, manufactured, sold or provided by, or that is used
in connection with, the business of, the Company or the Subsidiaries, is in all
material respects Year 2000 Compliant except to the extent it could not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Section 4.25, "Year 2000 Compliant" means that all date-related functions of the
System will accurately reflect the change from the year 1999 to the year 2000
and beyond, including leap year calculations, and the System will: (i) properly
calculate, display, enter, store, manipulate and otherwise include symbols,
numbers and words that represent dates, including dates prior to, during and
after the year 2000, in all computations, reports and displays involving dates,
and are able and shall remain able to accurately process date data (including,
but not limited to, calculating, comparing and sequencing) from, into and
between the twentieth and twenty-first centuries, (ii) resolve any ambiguities
as to century date data in input and output without abnormal endings, user
intervention or change in operations, and (iii) include an indication of century
in all date-related user and data interface functionalities, and all
date-related data fields, generated by or embodied in the System. Neither the
Company nor any Subsidiary knows of any inability on the part of any of its
suppliers, customers or service providers to timely ensure that the Systems of
any such Person are Year 2000 Compliant, which inability, individually or in the
aggregate, reasonably could be expected to have a Material Adverse Effect.
SECTION 4.26. Rights Plan. Neither the Company nor any Subsidiary has
any rights plan or similar common stock or preferred stock purchase plan or
similar arrangement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND THE KNOT
BUYER AND THE KNOT REPRESENT AND WARRANT TO THE COMPANY THAT:
SECTION 5.1. Corporate Existence and Power. Buyer and The Knot are
corporations duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of their incorporation and have all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on their businesses as now conducted. Since the date of its
incorporation, Buyer has not engaged in any activities other than in connection
with or as contemplated by this Agreement and the Merger.
SECTION 5.2. Corporate Authorization. The execution, delivery and
performance by Buyer and The Knot of this Agreement and the consummation by
Buyer and the Knot of the Contemplated Transactions are within the corporate
powers of Buyer and The Knot and have been duly authorized by all necessary
corporate action on the part of Buyer and The Knot. This Agreement constitutes a
valid and binding agreement of Buyer and The Knot enforceable against Buyer and
The Knot in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
SECTION 5.3. Governmental Authorization. The execution, delivery and
performance by Buyer and The Knot of this Agreement and the consummation by
Buyer and The Knot of the Contemplated Transactions require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State, (ii)
compliance with any applicable requirements of the 1933 Act, the 1934 Act and
any other securities laws, whether state or foreign.
SECTION 5.4. Non-contravention. The execution, delivery and performance
by Buyer and The Knot of this Agreement and the consummation by Buyer and The
Knot of the Contemplated Transactions do not and will not (i) contravene,
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of Buyer or The Knot, (ii) assuming
compliance with the matters referred to in Section 5.3, contravene, conflict
with or result in a violation or breach of any provision of, any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree
binding upon or applicable to the Company or any Subsidiary, (iii) require any
consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Buyer or The Knot is
entitled under, any provision of any agreement or other instrument binding upon
Buyer or The Knot or any license, franchise, Permit or other similar
authorization held by Buyer or The Knot.
SECTION 5.5. Disclosure Documents.
(a) The information with respect to Buyer and The Knot that
Buyer and The Knot furnish to the Company in writing specifically for
use in any Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading (i) in the
case of the Company Proxy Statement, at the time the Company Proxy
Statement or any amendment or supplement thereto is first mailed to
stockholders of the Company, at the time the
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stockholders vote on adoption of this Agreement and at the Effective
Time, and (ii) in the case of any Company Disclosure Document other
than the Company Proxy Statement, at the time of the filing of such
Company Disclosure Document or any supplement or amendment thereto and
at the time of any distribution thereof.
(b) The Buyer and The Knot Disclosure Documents, will comply
as to form in all material respects with the applicable requirements of
the 1934 Act and will not at the time of the filing thereof, at the
time of any distribution thereof or at the time of the meeting of the
Company's stockholders, contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty
will not apply to statements or omissions in the Buyer and The Knot
Disclosure Documents based upon information furnished to Buyer in
writing by the Company specifically for use therein.
SECTION 5.6. Financing. The Knot has agreed to provide Buyer with the
funds necessary for Buyer to pay the Merger Consideration.
SECTION 5.7. Capitalization. The authorized capital stock of Buyer
consists of 1,000 shares of Buyer Common Stock, of which as of the date of this
Agreement, there were outstanding 1,000 shares. All outstanding shares of
capital stock of Buyer have been duly authorized and validly issued and are
fully paid and nonassessable. As of the moment immediately prior to the
Effective Time, 1,000 shares of Buyer Common Stock will be outstanding; except
as set forth in this Section 5.7, there will be, at the Effective Time, (a) no
shares of capital stock or other voting securities of Buyer, (b) no securities
of Buyer convertible into or exchangeable for shares of capital stock or voting
securities of Buyer and (c) no options or other rights to acquire from Buyer,
and no obligation of Buyer to issue any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Buyer (the items referred to in clauses (a), (b) and (c) being
referred to collectively as the "Buyer Securities"). There are no outstanding
obligations of Buyer to repurchase, redeem or otherwise acquire any Buyer
Securities.
ARTICLE VI
COVENANTS OF THE COMPANY
THE COMPANY AGREES THAT:
SECTION 6.1. Conduct of the Company. Except as otherwise specifically
provided in this Agreement or as approved in writing by Buyer, which approval
shall not be unreasonably withheld, from the date hereof to the Effective Time,
the Board of Directors of the Company shall not approve or authorize any action
that would allow the Company and the Subsidiaries to carry on their respective
businesses other than in the ordinary and usual course of business and
consistent with past practice or any action that would prevent the Company and
the Subsidiaries from (i) preserving intact its present business organization,
(ii) keeping available the services of its key officers and employees and (iii)
maintaining satisfactory relationships with its material customers, lenders,
suppliers and others having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise specifically provided in
this Agreement, without the prior written consent of Buyer, prior to the
Effective Time, the Board of Directors of the Company shall not, nor shall it
authorize or direct the Company or any Subsidiary, directly or indirectly, to:
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(a) adopt or propose any change in its certificate of
incorporation or bylaws, except as provided in Section 6.6;
(b) except pursuant to existing agreements or arrangements (i)
acquire (by merger, consolidation or acquisition of stock or assets)
any material corporation, partnership or other business organization or
division thereof, or sell, lease or otherwise dispose of a material
subsidiary or a material amount of assets or securities; (ii) waive,
release, grant, or transfer any rights of material value; (iii) modify
or change in any material respect any existing material license, lease,
contract, or other document; (iv) except to refund or refinance
commercial paper, incur, assume or prepay an amount of long-term or
short-term debt in excess of $50,000 in the aggregate, other than
additional borrowings pursuant to the Company's existing line of
credit; (v) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person which, are in excess of $50,000 in the
aggregate; (vi) make any loans, advances or capital contributions to,
or investments in, any other Person of more than $5,000 in each case or
$10,000 in the aggregate, or purchase for an amount in excess of
$25,000 in the aggregate any property or assets of any other Person;
(vii) authorize any new capital expenditures which, individually, is in
excess of $50,000 or, in the aggregate, are in excess of $50,000; or
(viii) enter into any material interest rate, currency or other swap or
derivative transaction;
(c) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect
at, or as of any time prior to, the Effective Time, or omit to take any
action necessary to prevent any such representation or warranty from
being inaccurate in any material respect at any such time;
(d) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, other than cash dividends and
distributions by a wholly-owned Subsidiary to the Company or to a
Subsidiary all of the capital stock of which is owned directly or
indirectly by the Company, or redeem, repurchase or otherwise acquire
or offer to redeem, repurchase, or otherwise acquire any of its
securities or any Subsidiary Securities;
(e) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust,
plan, fund or other arrangement for the benefit and welfare of any
director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and
that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or any Subsidiary or as
otherwise required by law) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit
not required by any existing plan or arrangement (including, without
limitation, the granting of stock options or stock appreciation rights
or the removal of existing restrictions in any benefit plans or
agreements, except for normal increases in non-executive employee
compensation in the ordinary course of business that are consistent
with past practices and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company or
any Subsidiary or as otherwise required by law);
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(f) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory in
any material manner or write-off of notes or accounts receivable in any
material manner;
(g) pay, discharge or satisfy any material claims, liabilities
or obligations (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business, consistent with past
practices, of liabilities reflected or reserved against in the
consolidated financial statements of the Company or incurred in the
ordinary course of business, consistent with past practices;
(h) make any tax election or settle or compromise any material
income tax liability;
(i) take any action other than in the ordinary course of
business and consistent with past practices; or
(j) agree or commit to do any of the foregoing.
SECTION 6.2. Stockholder Meeting; Proxy Material.
(a) The Company shall cause a meeting of its stockholders (the
"Company Stockholder Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval and
adoption of this Agreement and the Merger. The Board of Directors of
the Company shall recommend approval and adoption of this Agreement and
the Merger by the Company's stockholders and shall not, subject to
Section 6.4, withdraw such recommendation, save to the extent that the
Board of Directors shall have concluded in good faith on the basis of
written advice from outside counsel that failure to withdraw such
recommendation would constitute a breach of the fiduciary duties of the
Board of Directors. In any event a resolution to approve and adopt this
Agreement and the Merger shall be submitted to the Company's
stockholders.
(b) In connection with the Company Stockholder Meeting, the
Company and Buyer (i) will as promptly as practicable prepare
thereafter mail to its stockholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting,
(ii) will use its best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the Contemplated Transactions and
(iii) will otherwise comply with all legal requirements applicable to
the Company Stockholder Meeting. Buyer shall furnish all information
concerning Buyer and its Affiliates as the Company may reasonably
request in connection with the Company Proxy Statement.
SECTION 6.3. Access to Information. From the date of this Agreement
until the Effective Time, the Company will (i) give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to its offices as scheduled by the Company's
Chairman, properties, books and records of the Company and the Subsidiaries,
(ii) furnish to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct the
Company's employees, counsel and financial advisors to cooperate with Buyer in
its investigation of the business of the Company and the Subsidiaries; provided
that no investigation pursuant to this Section 6.3 shall affect any
representation or warranty given by the Company to Buyer hereunder.
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SECTION 6.4. Other Offers.
(a) Neither the Company nor any Subsidiary shall (whether
directly or indirectly through advisors, agents or other
intermediaries), nor shall the Company or any Subsidiary authorize or
permit any of its or their officers, directors, agents,
representatives, advisors or subsidiaries to,
(A) solicit, initiate or take any action knowingly to facilitate the
submission of inquiries, proposals or offers from any Third Party
(other than Buyer) relating to (i) any acquisition or purchase of 20%
or more of the consolidated assets of the Company and the Subsidiaries
or of over 20% of any class of equity securities of the Company or any
Subsidiary, (ii) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any Third Party
beneficially owning 20% or more of any class equity securities of the
Company or any Subsidiary, (iii) merger, consolidation, business
combination, sale of substantially all assets, recapitalization,
liquidation, or similar transaction involving the Company or any
Subsidiary whose assets, individually or in the aggregate, constitute
more than 20% of the consolidated assets of the Company and the
Subsidiaries, other than the Contemplated Transactions, or (iv) any
other transaction the consummation of which would or could reasonably
be expected to impede, interfere with, prevent or materially delay the
Merger or which would or could reasonably be expected to materially
dilute the benefits to Buyer of the Contemplated Transactions
(collectively, "Acquisition Proposals"), or agree to or endorse any
Acquisition Proposal,
(B) enter into, entertain or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Third Party any
information with respect to its business, properties or assets in order
to facilitate or encourage any effort or attempt by any Third Party to
do or seek any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party to do or seek any of the
foregoing, or
(C) grant any waiver or release under any standstill or similar agreement
with respect to any class of equity securities of the Company or any
Subsidiary; provided, however, that the foregoing shall not prohibit
the Company (either directly or indirectly through advisors, agents or
other intermediaries) from (v) furnishing information, including,
without limitation, nonpublic information, pursuant to an appropriate
confidentiality letter concerning the Company and its businesses,
properties or assets to a Third Party who, without prior solicitation
by or negotiation with the Company, has made a bona fide Acquisition
Proposal, (w) engaging in discussions or negotiations with such a Third
Party who has made such a bona fide Acquisition Proposal, (x) following
receipt of such a bona fide Acquisition Proposal, taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) or Rule
14d-9 under the 1934 Act or otherwise making disclosures to its
stockholders, (y) following receipt of such a bona fide Acquisition
Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 6.2 and/or (z) taking any
non-appealable, final action ordered to be taken by the Company by any
court of competent jurisdiction, but in each case referred to in the
foregoing clauses (v) through (z) only to the extent that the Board of
Directors of the Company shall have concluded in good faith on the
basis of written advice from outside counsel that such action is
required to prevent the Board of Directors of the Company from
breaching its fiduciary duties to the stockholders of the Company under
applicable law; and provided, further, that the Board of Directors of
the Company shall not take any of the foregoing actions referred to in
clauses (v) through (y) until after reasonable notice to Buyer with
respect to such action and the Board of Directors shall continue to
advise
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Buyer after taking such action and, in addition, if the Board of
Directors of the Company receives an Acquisition Proposal, then the
Company shall promptly inform Buyer of the terms and conditions of such
proposal and the identity of the Person making it. The Company will
immediately cease and cause its advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
of the foregoing, and shall use its reasonable best efforts to cause
any such parties in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or
destroy all such information in the possession of any such party or in
the possession of any agent or advisor of any such party. As used in
this Agreement, the term "Third Party" means any person, corporation,
entity or "group" as defined in Section 13(d) of the Exchange Act,
other than Buyer or any of its Affiliates.
(b) If a Payment Event occurs, the Company shall pay to Buyer,
within two business days following such Payment Event, a fee of
$350,000 which shall include all of Buyer's and The Knot's costs
relating to this Agreement and the Contemplated Transactions.
(c) "Payment Event" shall mean: (i) this Agreement shall have
been terminated pursuant to any of Sections 10.1(e) or 10.1(f); (ii)
the termination of this Agreement by Buyer pursuant to Section 10.1(c),
but only if the breach of covenant or warranty or misrepresentation in
question arises out of the bad faith or willful misconduct of the
Company; or (iii) (A) a Third Party shall have made (whether orally or
in writing) an Acquisition Proposal prior to the Company Stockholder
Meeting, (B) this Agreement shall have been terminated pursuant to
Section 10.1(g) and (C) the Company shall have entered into a binding
written agreement in connection with any Acquisition Proposal (whether
or not proposed prior to the Company Stockholder Meeting and whether or
not it involves the Third Party making the Acquisition Proposal
referred to in Section 6.4(c)(iii)(A) above) within twelve months after
the termination of this Agreement.
(d) The Company acknowledges that the agreements contained in
this Section 6.4 are an integral part of the Contemplated Transactions,
and that, without these agreements, Buyer would not enter into this
Agreement; accordingly, if the Company fails promptly to pay any amount
due pursuant to this Section 6.4, and, in order to obtain such payment,
the other party commences a suit which results in a judgment against
the Company for the fee set forth in this Section 6.4, the Company
shall also pay to Buyer its costs and expenses incurred in connection
with such litigation.
(e) This Section 6.4 shall survive any termination of this
Agreement, however caused.
SECTION 6.5. Resignation of Directors. Prior to the Effective Time, the
Company shall deliver to Buyer evidence satisfactory to Buyer of the resignation
of all directors of the Company (except as requested by Buyer) effective at the
Effective Time.
ARTICLE VII
COVENANTS OF BUYER AND THE KNOT
BUYER AND THE KNOT AGREE THAT:
SECTION 7.1. SEC Filings. As soon as practicable after the date of
announcement of the execution of the Merger Agreement, Buyer shall file
(separately, or as part of the Company Proxy
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Statement) with the SEC, if required, a Rule 13E-3 Transaction Statement (the
"Transaction Statement") with respect to the Merger (together with any
supplements or amendments thereto, collectively the "Buyer Disclosure
Documents"). Buyer and the Company each agree to correct any information
provided by it for use in the Buyer Disclosure Documents if and to the extent
that it shall become aware that such information has become false or misleading
in any material respect. Buyer agrees to take all steps necessary to cause the
Buyer Disclosure Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
at least 3 business days opportunity to review and comment on each Buyer
Disclosure Document prior to its being filed with the SEC along with any
amendments thereto that are subsequently filed with the SEC.
SECTION 7.2. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 7.3. Director and Officer Liability.
(a) For a period of three years after the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless each
Person who is now, or has been at any time prior to the date of this
Agreement or who becomes prior to the Effective Time, an officer or
director of the Company or any Subsidiary (each such Person, an
"Indemnified Party") against all losses, claims, damages, liabilities,
fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts
paid in settlement (provided that any such settlement is effected with
the prior written consent of the Surviving Corporation)) arising in
whole or in part out of acts or omissions existing or occurring on or
prior to the Effective Time to the full extent provided under
applicable law or the Company's certificate of incorporation and bylaws
in effect on the date of this Agreement and the Company's written
indemnification agreements in effect on the date of this Agreement,
including provisions therein relating to the advancement of expenses
incurred in the defense of any action or suit; provided that (i) such
indemnification shall be subject to any limitation imposed from time to
time under applicable law, (ii) in the event any claim or claims are
asserted or made within such Indemnification Period, all rights to
indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims, (iii) any determinations
required to be made with respect to whether an indemnified party's
conduct complies with the standards set forth under the Delaware Law,
the Company's certificate of incorporation or bylaws or such
agreements, as the case may be, shall be made by independent counsel
mutually acceptable to the Surviving Corporation and the Indemnified
Party, and (iv) nothing herein shall impair any rights or obligations
of any Indemnified Party under the Company's certificate of
incorporation or bylaws as in effect immediately prior to the Effective
Time, or otherwise. In the event that any claim or claims are brought
against any Indemnified Party (whether arising before or after the
Effective Time), such Indemnified Party may select counsel for the
defense of such claim, which counsel shall be reasonably acceptable to
the Company and Buyer (if selected prior to the Effective Time) and the
Surviving Corporation (if selected after the Effective Time);
(b) Prior to the Effective Time, the Company shall purchase, a
"run-off" officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each
such person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and
amounts no
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less favorable than those of such policy in effect on the date of this
Agreement, such "run-off" policy to be in effect for a period of six
years following the Effective Time.
(c) In the event that the Surviving Corporation or any of its
respective successors and assigns 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 transfers and conveys
substantially all of its properties and assets to any Person, then, and
in each case, proper provisions shall be made so that the successors
and assigns of the Surviving Corporation, as applicable, assume the
obligations set forth in this Section 7.3.
(d) The rights under this Section 7.3 are intended to benefit
the Company and each Indemnified Party hereunder, shall be binding on
all successors and assigns of the Surviving Corporation and shall be
enforceable by each Indemnified Party and his or her heirs and
representatives. The parties hereto acknowledge and agree that the
remedy at law for any breach of the obligations of the Surviving
Corporation under this Section 7.3 is and will be insufficient and
inadequate and that the Indemnified Parties, in addition to any
remedies at law, shall be entitled to equitable relief (including
specific performance). The Surviving Corporation shall pay all
reasonable expenses, including reasonable attorneys' fees, in each
case, as incurred, incurred by an Indemnified Party in enforcing the
indemnity and other obligations set forth in this Section 7.3.
SECTION 7.4. Employee Benefits.
(a) Buyer shall maintain, or shall cause the Company to
maintain, for a period of at least six months after the Effective Time,
without interruption, employee compensation and benefit plans, programs
and policies and fringe benefits that will provide benefits to
employees of the Company and the Subsidiaries that are no less
favorable in the aggregate than those provided immediately prior to the
Effective Time (other than any equity or other stock-based benefits
provided to employees). Employees shall be given credit for all service
with the Company or the Subsidiaries (or service credited by the
Company or the Subsidiaries for similar plans, programs or policies)
under any plans, policies or programs established by Buyer or the
Company, as the case may be, following the Effective Time, except for
defined benefit pension or retirement benefit plans and except to the
extent that the crediting of such service would result in any
duplication of benefits.
(b) Buyer acknowledges that as of the Effective Time, the
Surviving Corporation shall assume all of the obligations under the
Employment Agreements listed in Section 4.17 (e) of the Disclosure
Letter and the Surviving Corporation hereby agrees to discharge all
obligations under each such Employment Agreement.
SECTION 7.5. Non-Interference. Buyer will not willfully take any direct
or indirect action that Buyer knows or should reasonably know would materially
and adversely affect or delay the ability of Buyer or the Surviving Corporation
to perform any of their respective obligations under this Agreement.
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ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
THE PARTIES HERETO AGREE THAT:
SECTION 8.1. Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each party will use all commercially reasonable efforts to 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 Contemplated Transactions, including
delivering such documents relating to corporate existence and authority
as the other party may reasonably request. Each party shall also
refrain from taking, directly or indirectly, any action contrary to or
inconsistent with the provisions of this Agreement, including action
which would impair such party's ability to consummate the Merger and
the Contemplated Transactions. Without limiting the foregoing, the
Company and the Board of Directors of the Company shall use their
commercially reasonable efforts to (i) take all action reasonably
necessary so that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger or any of the other
Contemplated Transactions and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to any of the
foregoing, take all action reasonably necessary so that the Merger and
the other Contemplated Transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise
to minimize the effect of such statute or regulation on the Merger and
the other Contemplated Transactions.
SECTION 8.2. Notices of Certain Events. Each party shall promptly
notify the other of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the Contemplated Transactions;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Contemplated
Transactions;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating
to or involving or otherwise affecting such party (or in the case of
the Company only, any Subsidiary) or Buyer (in the case of Buyer),
which, if pending on the date of this Agreement, would have resulted in
a breach of Section 4.14 (in the case of the Company or any Subsidiary
only) or which relate to the consummation of the Contemplated
Transactions; and
(d) any other fact or circumstance which, if existing on the
date of this Agreement, would have resulted in a breach of any of the
representations and warranties of such party, contained herein.
SECTION 8.3. Certain Filings.
(a) The Company and Buyer shall use their respective
commercially reasonable efforts to take or cause to be taken, (i) all
actions necessary, proper or advisable by such party with respect to
the prompt preparation and filing with the Company Disclosure Documents
and the Buyer Disclosure Documents, (ii) such actions as may be
reasonably required to have the Company Proxy Statement prepared and
distributed, and (iii) such actions as may be reasonably required to
have to be taken under state securities or
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applicable Blue Sky laws in connection with the issuance of the
securities contemplated hereby, in each case as promptly as
practicable.
(b) The Company and Buyer shall cooperate with one another (i)
in determining whether any action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required, or
any actions, consents, approvals or waivers are required to be obtained
from parties to any material contracts, in connection with or as a
result of the consummation of the Contemplated Transactions and (ii) in
seeking any such actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents and Buyer Disclosure Documents
and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 8.4. Public Announcements. Buyer and the Company will consult
with each other and give due consideration to such comments as the other party
may have before issuing any press release or making any public statement or
announcement with respect to this Agreement or the Contemplated Transactions
and, except as may be required by applicable law or any listing agreement with
any national securities exchange or the Nasdaq Stock Market, will not issue any
such press release or make any such public statement prior to such consultation.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and The Knot to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with the Delaware Law;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Merger; and
(c) All consents, approvals and licenses of any governmental
or other regulatory body required in connection with the execution,
delivery and performance of this Agreement and for the Surviving
Corporation to conduct the business of the Company and the Subsidiaries
in substantially the manner now conducted, shall have been obtained,
unless the failure to obtain such consents, authorizations, orders or
approvals could not reasonably be expected to have a Material Adverse
Effect after giving effect to the Contemplated Transactions.
SECTION 9.2. Conditions to the Obligations of Buyer and The Knot. The
obligations of Buyer and The Knot to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Effective Time, (ii) the representations and
warranties of the Company contained in this Agreement and in any
certificate or other writing delivered by the Company pursuant hereto
(x) that are qualified by materiality or
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Material Adverse Effect shall be true at and as of the Effective Time
as if made at and as of such time, and (y) that are not qualified by
materiality or Material Adverse Effect shall be true in all material
respects at and as of the Effective Time as if made at and as of such
time and (iii) Buyer shall have received a certificate signed by the
Chief Executive Officer of the Company to the foregoing effect;
(b) There shall not be instituted or pending any action or
proceeding by any government or governmental authority or agency or any
other person, that has a reasonable likelihood of success, before any
court or governmental authority or agency, (i) challenging or seeking
to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the Merger or
seeking to obtain material damages directly or indirectly relating to
the Contemplated Transactions, (ii) seeking to restrain or prohibit the
Surviving Corporation's (including its subsidiaries' and Affiliates')
ownership or operation of all or any material portion of the business
or assets of the Company and the Subsidiaries, taken as a whole, or to
compel the Surviving Corporation or any of its subsidiaries or
Affiliates to dispose of or hold separate all or any material portion
of the business or assets of the Company and the Subsidiaries, taken as
a whole, (iii) seeking to impose or confirm material limitations on the
ability of the Surviving Corporation or any of its subsidiaries or
Affiliates to effectively control the business or operations of the
Company and the Subsidiaries, taken as a whole, or the ability of The
Knot or any of its Affiliates effectively to exercise full rights of
ownership of any Surviving Corporation Shares or any shares of the
Surviving Corporation's subsidiaries or Affiliates prior to the
Effective Time on all matters properly presented to the Surviving
Corporation's stockholders, or (iv) seeking to require divestiture by
The Knot or any of its Affiliates of any Surviving Corporation Shares,
and no court, arbitrator or governmental body, agency or official shall
have issued any judgment, order, decree or injunction, and there shall
not be any statute, rule or regulation, that, in the sole judgment of
Buyer is likely, directly or indirectly, to result in any of the
consequences referred to in the preceding clauses (i) through (iv);
(c) Buyer shall have received all documents it may reasonably
request relating to the organization of the Company and the
Subsidiaries as in effect immediately prior to the Effective Time and
the authority of the Company for this Agreement, all in form and
substance satisfactory to Buyer;
(d) The holders of not more than 2% of the outstanding Shares
shall have demanded appraisal of their Shares in accordance with
Delaware Law;
(e) Since January 1, 2000, there shall not have been any
event, occurrence, development or state of circumstance which,
individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;
(f) Xxx Xxxxxxx shall have entered into a confidentiality and
non-compete agreement with the Company in the form of Exhibit B hereof;
and
(g) Xxx Xxxxxxx shall have entered into a consulting agreement
with the Company in the form of Exhibit C hereof; and
(h) Buyer shall have received evidence satisfactory to Buyer
that the revenue and operating income of the Company, (each as
classified and calculated in a manner consistent with the
classifications and calculations used for the financial statements
described in Section 4.8) for the six month period commencing July 1,
1999 and ending December 31, 1999 is not less than $5,000,000 and
$200,000, respectively, provided that
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the calculation of the operating income figure shall not include any
specifically identified costs or expenses directly arising out of the
Contemplated Transactions.
(i) The Escrow Agreement in the form attached hereto as
Exhibit A shall have been executed and delivered to The Knot by the
Company and the Shareholder Representative.
(j) The Knot shall have received a copy of the 12/31 Audit,
and it shall not disclose any material adverse change in the assets or
liabilities of the Company as reflected on the Balance Sheet as of the
Balance Sheet Date.
SECTION 9.3. Conditions to the Obligation of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction of the following further conditions:
(a) (i) Buyer and The Knot shall have performed in all
material respects all of their obligations hereunder required to be
performed by them at or prior to the Effective Time, (ii) the
representations and warranties of Buyer and The Knot contained in this
Agreement and in any certificate or other writing delivered by Buyer
pursuant hereto (x) that are qualified by materiality or Material
Adverse Effect shall be true at and as of the Effective Time as if made
at and as of such time, and (y) that are not qualified by materiality
or Material Adverse Effect shall be true in all material respects at
and as of the Effective Time as if made at and as of such time and
(iii) the Company shall have received a certificate signed by the
President of Buyer to the foregoing effect.
(b) There shall not be issued and in effect by or before any
court or other Governmental Authority having jurisdiction, an order or
injunction restraining or prohibiting the Contemplated Transactions.
(c) Buyer shall have delivered to the Company (i) copies of
its organizational documents as in effect immediately prior to the
Effective Time, (ii) copies of resolutions adopted by the Board of
Directors of Buyer authorizing the Contemplated Transactions, and (iii)
a certificate of good standing of Buyer issued by the Delaware
Secretary of State as of a date not more than five business days prior
to the Effective Time, certified in each case as of the Effective Time
by an authorized officer of Buyer as being true, correct and complete.
(d) The Company shall have received such other documents,
instruments and certificates incidental to the Contemplated Transaction
as are reasonably requested by it.
(e) The Agreements referred to in subparagraphs 9.2(e), (f)
and (g) shall have been entered into.
ARTICLE X
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
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(a) by mutual written consent of the Company on the one hand
and Buyer on the other hand;
(b) by either the Company or Buyer, if the Merger has not been
consummated by April 30, 2000 provided that the party seeking to
exercise such right is not then in breach in any material respect of
any of its obligations under this Agreement;
(c) by either the Company or Buyer, if (i) Buyer (in the case
of termination by the Company), or the Company (in the case of
termination by Buyer) shall have breached (so long as such terminating
party is not then in breach in any material respect of its obligations
under this Agreement) in any material respect any of its obligations
under this Agreement, which breach shall not be remedied within 10
business days of written notice specifying such breach in reasonable
detail and demanding that the same be remedied or (ii) any
representation and warranty of Buyer (in the case of termination by the
Company) or the Company (in the case of termination by Buyer) shall
have been incorrect in any material respect when made or at any time
prior to the Effective Time;
(d) by either the Company or Buyer, if there shall be any
applicable law or regulation that makes consummation of the Merger
illegal or otherwise prohibited or if any judgment, injunction, order
or decree enjoining Buyer or the Company from consummating the Merger
is entered and such judgment, injunction, order or decree shall become
final and nonappealable;
(e) by Buyer (so long as it is not then in material breach of
its obligations under this Agreement) if the Board of Directors of the
Company shall have withdrawn or modified or amended its approval or
recommendation of this Agreement and the Merger or its recommendation
that stockholders of the Company adopt and approve this Agreement and
the Merger, or approved, recommended or endorsed any Acquisition
Proposal, or if the Company has failed to call the Company Stockholder
Meeting or failed as promptly as practicable to cause to be mailed the
Company Proxy Statement to its stockholders or failed to include in
such statement the recommendation referred to above;
(f) by the Company, if (i) the Board of Directors of the
Company authorizes the Company, subject to complying with the terms of
this Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company
notifies Buyer in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement (or a
description of all material terms and conditions thereof) to such
notice, (ii) Buyer does not make, within five business days of receipt
of the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer that is at least as
favorable to the shareholders of the Company as the Superior Proposal,
it being understood that the Company shall not enter into any such
binding agreement during such five-day period and (iii) the Company
prior to such termination pursuant to this clause 10.1(f) pays to Buyer
in immediately available funds the fees required to be paid pursuant to
Section 6.4. The Company agrees to notify Buyer promptly if its
intention to enter into a written agreement referred to in its
notification shall change at any time after giving such notification.
"Superior Proposal" means any bona fide Acquisition Proposal for or in
respect of at least a majority of the outstanding Shares on terms that
are more favorable to all of the Company's shareholders than the Merger
(it being understood that, for this purpose, if it is the judgment of
the Company's Board of Directors that such Acquisition
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Proposal is superior, from a financial point of view, to the Company's
shareholders, applicable fiduciary duties may require that such Board
of Directors not reject such proposal);
(g) by either the Company or Buyer if, at a duly held
stockholders meeting of the Company or any adjournment thereof at which
this Agreement and the Merger are voted upon, the requisite stockholder
adoption and approval shall not have been obtained; and
The party desiring to terminate this Agreement pursuant to Sections
10.1(b)-(g) shall give written notice of such termination to the other party in
accordance with Section 12.1.
SECTION 10.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other party hereto,
except that the Confidentiality Agreement dated January 28, 2000 between The
Knot and the Company shall remain in full force and effect and the agreements
contained in Sections 6.4 and 12.4 shall survive any termination hereof pursuant
to Section 10.1.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. Survival. No claim for indemnification by the
Shareholders under this Agreement shall be made by The Knot later than one year
after the Closing Date; provided that if a Claim Notice is given in accordance
with Article XI with respect to any claim, prior to such expiration date, the
claim shall continue indefinitely until such claim is finally resolved.
SECTION 11.2. Obligation of the Shareholders.
(a) From and after the Effective Time, by acceptance of the
Merger Consideration pursuant to Article II hereof, the Shareholders
agree, jointly and severally, to indemnify and hold harmless the
Surviving Corporation, The Knot, and their respective directors,
officers, employees, affiliates, agents, successors and assigns
(collectively, the "Indemnified Parties") from and against any and all
Losses (as defined below) of any such person, directly or indirectly,
as a result of, or based upon or arising from any third party claims
which if adversely determined would be deemed to be a breach of the
representations and warranties set forth in Article IV (the
"Indemnified Losses").
(b) The amount of any Indemnified Losses which the Indemnified
Parties shall be entitled to receive in accordance with this Section
11.2 shall be reduced by the aggregate of any amounts, (less any
related out-of-pocket expenses incurred by any Indemnified Party),
actually recovered by such Indemnified Party under insurance policies
covering any such Loss or Losses.
(c) Notwithstanding any provision of this Agreement or the
Escrow Agreement to the contrary, the maximum aggregate liability of
the Shareholders to Buyer and The Knot under this Article XI shall not
exceed the amount of the Escrow Deposit and the indemnification
provisions contained in this Article XI and the Escrow Agreement shall
be the exclusive remedy which the Indemnified Parties have for monetary
damages for Indemnified Losses.
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SECTION 11.3. Indemnification Procedures. In the event that any action,
proceeding, complaint or litigation is commenced by a third party involving a
claim for which the Shareholders may be liable to a Indemnified Party hereunder
(an "Asserted Liability"), the Indemnified Party shall promptly notify the
Shareholder Representative in writing of such Asserted Liability (the "Claim
Notice"); provided that no delay on the part of the Indemnified Party in giving
any such Claim Notice shall relieve the Shareholders of any indemnification
obligation hereunder unless (and then solely to the extent that) the
Shareholders are materially prejudiced by such delay. The Shareholder
Representative shall have thirty (30) days (or less if the nature of the
Asserted Liability requires) from its receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party whether or not the Shareholder
Representative desires, at the Shareholders' sole cost and expense and by
counsel of its own choosing, which shall be reasonably satisfactory to the
Indemnified Party, to defend against such Asserted Liability. If the Shareholder
Representative undertakes to defend against such Asserted Liability, (i) the
Shareholder Representative shall use its reasonable best efforts to defend and
protect the interests of the Indemnified Party with respect to such Asserted
Liability and shall defray the costs and expenses thereof out of the Escrow
Deposit, (ii) the Indemnified Party, prior to or during the period in which the
Shareholder Representative assumes the defense of such matter, may take such
reasonable actions as the Indemnified Party deems necessary to preserve any and
all rights with respect to such matter (including, but not limited to,
participating in the defense proceedings with counsel so chosen by Indemnified
Party), provided, however such actions shall not be construed as a waiver of the
Indemnified Party's rights to defense and indemnification pursuant to this
Agreement, (iii) the Shareholder Representative shall not, without the prior
written consent of the Indemnified Party, consent to any settlement which (A)
does not contain an unconditional release of the Indemnified Party from the
subject matter of the settlement, (B) imposes any liabilities or obligations on
the Indemnified Party, and (C) with respect to any non-monetary provision of
such settlement, could impose conditions upon such Indemnified Party which, in
the Indemnified Party's judgment could have a material adverse effect on the
business operations, assets, properties or prospects of the Surviving
Corporation or the Indemnified Party and (iv) in the event that the Shareholder
Representative undertakes to defend against such Asserted Liability, unless
otherwise agreed to in writing between The Knot and the Shareholder
Representative, the Shareholder Representative shall be deemed to have
unconditionally accepted the obligation that the Shareholders will indemnify the
Indemnified Party pursuant hereto. Notwithstanding the foregoing, in any event,
the Indemnified Party shall have the right to control, pay or settle any
Asserted Liability which the Shareholder Representative shall have undertaken to
defend so long as the Indemnified Party shall also waive any right to
indemnification therefor by the Shareholders. If the Shareholder Representative
undertakes to defend against such Asserted Liability, the Indemnified Party
shall cooperate to the extent reasonable with the Shareholder Representative and
its counsel in the investigation, defense and settlement thereof at the expense
of the Shareholders. If the Indemnified Party desires to participate in any such
defense it shall pay its own counsel fees. If the Shareholder Representative
does not undertake within the Notice Period to defend against such Asserted
Liability, then the Shareholder Representative shall have the right to
participate in any such defense at the Shareholders' sole cost and expense, but,
in such case, the Indemnified Party shall control the investigation and defense
and may settle or take any other actions the Indemnified Party deems reasonably
advisable without in any way waiving or otherwise affecting the Indemnified
Party's rights to indemnification pursuant to this Agreement. The Indemnified
Party and the Shareholder Representative agree to make available to each other,
their counsel and other representatives, all information and documents available
to them which relate to such claim or demand. The Indemnified Parties and the
Shareholder Representative also agree to render to each other such assistance
and cooperation as may reasonably be required to ensure the proper and adequate
defense of such claim or demand.
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SECTION 11.4. Certain Definitions. For purposes of this Agreement,
"Loss" means any action, cost, damage, disbursement, expense, liability, loss,
injury, deficiency, penalty, diminution in value, settlement or obligation of
any kind or nature (collectively, "Claims For Losses"), including but not
limited to interest, penalties, fines, legal, accounting, and other professional
fees and expenses incurred in the investigation, collection, prosecution,
determination and defense of Claims For Losses, amounts paid in settlement, any
incidental or punitive damages payable to third parties that may be imposed on
or otherwise incurred or suffered by the Indemnified Party.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
Knot Acquisition Corporation
c/o : The Knot, Inc.
000 Xxxxxxxx-0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx L.L.P.
000 Xxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx, Esq.
if to The Knot, to:
The Knot, Inc.
000 Xxxxxxxx-0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
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with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx L.L.P.
000 Xxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx, Esq.
if to the Company, to:
Weddingpages, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxx
with a copy to:
Xxxxx Xxxx
0000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx Xxxxxxxxx, Esq.
if to the Shareholder Representative, to:
Xxxxxxx Xxxxxxx
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5
p.m., and such day is a business day, in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the
place of receipt.
SECTION 12.2. Survival of Representations, Warranties and Covenants.
(a) Except as otherwise expressly provided in Article XI of
this Agreement and in the Escrow Agreement, the representations and
warranties contained herein and in any certificate or other writing
delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement.
(b) The covenants and agreements of the parties to be
performed after the Effective Time contained in this Agreement shall
survive the Effective Time.
SECTION 12.3. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by each party
to this Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective, provided that, after the adoption
of
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this Agreement by the stockholders of the Company and without their
further approval, no such amendment or waiver shall alter or change (i)
the amount or kind of consideration to be received in exchange for any
shares of capital stock of the Company or (ii) any of the terms or
conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 12.4. Expenses. Except as otherwise provided in Section 6.4 or
agreed in writing by the parties, all costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 12.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to enter into the Contemplated Transactions.
SECTION 12.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 12.7. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the Contemplated Transactions may be brought in any
federal court located in the State of Delaware or any Delaware state court, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 12.1 shall be deemed effective service of
process on such party.
SECTION 12.8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS.
SECTION 12.9. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns.
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SECTION 12.10. Entire Agreement. Except for the Voting Agreements, this
Agreement and the Disclosure Letter constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.
SECTION 12.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
SECTION 12.13. Disclosure Schedules. The inclusion of any matter in the
Disclosure Letter will not be deemed an admission by any party that such listed
matter is material or that such listed matter has or would have a Material
Adverse Effect on the Company and its Subsidiaries.
SECTION 12.14. Severability. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WEDDINGPAGES, INC.
By: /S/ Xxxxxxx Xxxxxxx
-------------------
KNOT ACQUISITION CORPORATION
By: /S/ Xxxxx Xxx
-------------
THE KNOT, INC.
By: /S/ Xxxxx Xxx
-------------
The undersigned hereby acknowledges his appointment as the Shareholder
Representative and his willingness to fulfill the duties of the Shareholder
Representative as contemplated by this Agreement
SHAREHOLDER REPRESENTATIVE
By: /S/ Xxxxxxx Xxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxx
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