FINAL EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
IAC/INTERACTIVECORP,
AJI ACQUISTION CORP.
AND
ASK JEEVES, INC.
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DATED AS OF MARCH 21, 2005
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
Section 1.1 The Merger...................................................1
Section 1.2 Closing; Effective Time......................................1
Section 1.3 Tax Consequences.............................................2
ARTICLE II
DIRECTORS, OFFICERS AND CHARTER DOCUMENTS
Section 2.1 Directors....................................................2
Section 2.2 Officers.....................................................2
Section 2.3 Certificate of Incorporation and Bylaws of the Surviving
Corporation................................................2
ARTICLE III
TREATMENT OF SECURITIES
Section 3.1 Effect of the Merger on Capital Stock........................2
Section 3.2 Exchange of Certificates.....................................3
Section 3.3 Company Options, Other Equity-Based Awards and
Employee Stock Purchase Plan...............................6
Section 3.4 Convertible Notes............................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Corporate Organization.......................................8
Section 4.2 Capitalization...............................................9
Section 4.3 Authority; No Violation.....................................11
Section 4.4 Amendment to Rights Agreement...............................12
Section 4.5 Consents and Approvals......................................12
Section 4.6 SEC Reports; Financial Statements...........................12
Section 4.7 Broker's Fees...............................................13
Section 4.8 Absence of Certain Changes or Events........................13
Section 4.9 Legal Proceedings...........................................14
Section 4.10 Taxes and Tax Returns.......................................15
Section 4.11 Certain Other Tax Matters...................................16
Section 4.12 Employees...................................................16
Section 4.13 Securities Law Matters......................................18
Section 4.14 Compliance with Applicable Law, Permits and Licenses........19
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PAGE
Section 4.15 Intellectual Property; Proprietary Rights; Employee
Restrictions; Assets......................................20
Section 4.16 Certain Contracts; Leases...................................22
Section 4.17 Undisclosed Liabilities.....................................23
Section 4.18 Insurance...................................................23
Section 4.19 Environmental Liability.....................................24
Section 4.20 State Takeover Laws.........................................24
Section 4.21 Registration Statement......................................24
Section 4.22 Transactions with Affiliates................................24
Section 4.23 Opinions of Financial Advisors..............................24
Section 4.24 Relationship with Google....................................25
Section 4.25 Traffic Metrics.............................................25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.1 Corporate Organization......................................25
Section 5.2 Capitalization..............................................26
Section 5.3 Authority; No Violation.....................................27
Section 5.4 SEC Reports; Financial Statements...........................27
Section 5.5 Consents and Approvals......................................28
Section 5.6 Securities Law Matters......................................29
Section 5.7 Compliance with Applicable Law..............................29
Section 5.8 Intellectual Property.......................................30
Section 5.9 Undisclosed Liabilities.....................................30
Section 5.10 Conduct of Business.........................................30
Section 5.11 Broker's Fees...............................................30
Section 5.12 Taxes and Tax Returns.......................................30
Section 5.13 Certain Other Tax Matters...................................31
Section 5.14 Registration Statement......................................31
Section 5.15 Absence of Certain Changes or Events........................31
Section 5.16 Legal Proceedings...........................................31
Section 5.17 Ownership of Company Common Stock...........................32
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Businesses Prior to the Merger Closing...........32
Section 6.2 Forbearances................................................32
Section 6.3 Certain Tax Matters.........................................35
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PAGE
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Regulatory Matters..........................................35
Section 7.2 Access to Information.......................................36
Section 7.3 Acquisition Transactions....................................37
Section 7.4 Stockholders' Approval......................................39
Section 7.5 Legal Conditions to the Merger..............................39
Section 7.6 Affiliates..................................................40
Section 7.7 Stock Exchange Quotation or Listing.........................40
Section 7.8 Additional Agreements.......................................40
Section 7.9 Advice of Changes...........................................40
Section 7.10 Section 16..................................................40
Section 7.11 Directors' and Officers' Indemnification and Insurance......40
Section 7.12 Reorganization..............................................42
Section 7.13 Registration Statement......................................42
Section 7.14 Employees...................................................42
Section 7.15 Obligations of Merger Sub...................................43
Section 7.16 Dividends...................................................43
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger................................................44
Section 8.2 Conditions to Obligations of the Company....................45
Section 8.3 Conditions to Obligations of Parent.........................45
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination.................................................46
Section 9.2 Effect of Termination.......................................48
Section 9.3 Amendment...................................................49
Section 9.4 Extension; Waiver...........................................49
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and
Agreements................................................50
Section 10.2 Expenses....................................................50
Section 10.3 Notices.....................................................50
Section 10.4 Interpretation..............................................51
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PAGE
Section 10.5 Counterparts................................................51
Section 10.6 Entire Agreement............................................52
Section 10.7 Governing Law...............................................52
Section 10.8 Publicity...................................................52
Section 10.9 Assignment; Third Party Beneficiaries.......................53
Section 10.10 Specific Enforcement........................................53
Section 10.11 Severability................................................53
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EXHIBIT LIST
Exhibit A Form of Amended and Restated Certificate of Incorporation of
the Surviving Corporation
Exhibit B Affiliate List
Exhibit C Form of Rule 145 Affiliate Letter
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INDEX OF DEFINED TERMS
TERM PAGE
Acquisition Proposal...............................37
Acquisition Transaction............................37
Adware.............................................21
Agreement...........................................1
Business Day........................................2
Certificate.........................................4
Certificate of Merger...............................1
Certificates........................................4
Closing.............................................1
Closing Date........................................1
Code................................................1
Company.............................................1
Company 10-K Balance Sheets........................12
Company Active Business............................15
Company Affiliate Transactions.....................24
Company Benefit Plan...............................16
Company Charter.....................................8
Company Common Stock................................3
Company Contract...................................21
Company Disclosure Schedule.........................7
Company ERISA Affiliate............................16
Company Financial Statements.......................12
Company Intellectual Property......................19
Company Licensed Intellectual Property.............19
Company Option......................................6
Company Owned Intellectual Property................19
Company Permits....................................19
Company Regulatory Agreement.......................14
Company Reports....................................12
Company Series A Junior Participating Preferred
Stock............................................ 3
Company Stock Plans.................................9
Company Stockholder Approval.......................10
Confidentiality Agreement..........................36
Convertible Notes...................................7
DGCL................................................1
DHT................................................15
Effective Time......................................1
ERISA..............................................16
ESPP................................................7
Excess Parent Common Stock..........................5
Exchange Act........................................8
Exchange Agent......................................4
Exchange Ratio......................................3
GAAP...............................................12
Google.............................................21
Governmental Entity................................11
HSR Act............................................11
Indemnified Parties................................40
Insurance Policies.................................23
Intellectual Property..............................19
Japanese JV.........................................8
Knowledge..........................................11
Leased Real Property...............................22
Leases.............................................22
Liens...............................................9
Material Adverse Effect.............................8
Maximum Premium....................................40
Merger..............................................1
Merger Consideration................................3
Merger Sub..........................................1
Multiple Employer Plan.............................16
NES................................................15
NOL Carryforwards..................................15
NOLs...............................................15
Parent..............................................1
Parent 10-K Balance Sheets.........................27
Parent 10-K Financial Statements...................27
Parent Class B Common Stock........................25
Parent Common Stock.................................3
Parent Disclosure Schedule.........................24
Parent Option.......................................6
Parent Preferred Stock.............................25
Parent Proxy Statement.............................25
Parent Reports.....................................27
Parent Spin-Off....................................35
Parties.............................................1
Pending ESPP Shares.................................9
Pending ISH Merger Shares...........................9
Pending Option Exercise Shares......................9
Potential Acquirer.................................37
Proxy Statement/Prospectus.........................34
Qualifying Proposal................................37
Registration Statement.............................28
Requisite Regulatory Approval......................43
Right...............................................3
Rights Agreement....................................3
SEC................................................11
Securities Act.....................................12
Series A Preferred Stock...........................25
Spyware............................................21
Stock Plans.........................................6
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TERM PAGE
Stockholder Meeting................................38
Stockholder Proposal...............................38
Subsidiary..........................................8
Superior Proposal..................................37
Surviving Corporation...............................1
Tax................................................15
Tax Return.........................................15
Taxes..............................................15
Termination Date...................................45
Third Party Intellectual Property..................19
Transferring Employee..............................42
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of March
21, 2005 (this "AGREEMENT"), by and among IAC/InterActiveCorp, a Delaware
corporation ("PARENT"), AJI Acquisition Corp., a Delaware corporation and wholly
owned Subsidiary (as defined herein) of Parent ("MERGER SUB"), and Ask Jeeves,
Inc., a Delaware corporation (the "COMPANY") (collectively, the "PARTIES").
WHEREAS, the respective Boards of Directors of each of the Parties
have approved and declared advisable this Agreement, pursuant to which Merger
Sub shall merge with and into the Company (the "MERGER"), with the Company being
the surviving corporation in the Merger, upon the terms and subject to the
conditions, and with the effects, set forth in this Agreement;
WHEREAS, the Parties intend that the Merger shall constitute a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and that this Agreement shall constitute
a plan of reorganization for purposes of Sections 354 and 361 of the Code; and
WHEREAS, the Parties desire to make certain representations,
warranties and agreements in connection with the Merger and other transactions
contemplated hereby and also to prescribe certain conditions to the Merger and
other transactions contemplated hereby.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
Parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined herein), Merger
Sub shall be merged with and into the Company in accordance with Section 251 of
the Delaware General Corporation Law (the "DGCL"). Following the Effective Time,
the Company shall continue as the surviving corporation in the Merger (the
"SURVIVING CORPORATION"), shall be a direct, wholly owned Subsidiary of Parent
and shall succeed to all of the rights and obligations of Merger Sub in
accordance with the DGCL, and the separate corporate existence of Merger Sub
shall cease. The Merger shall have the effects and consequences specified in
Section 259 of the DGCL.
Section 1.2 CLOSING; EFFECTIVE TIME. The closing of the Merger (the
"CLOSING") shall take place at the offices of Wachtell, Lipton, Xxxxx & Xxxx, at
10:00 a.m., Eastern time, on the third Business Day (as defined herein)
immediately following the date on which the last of the conditions set forth in
Article VIII hereof is satisfied or waived (other than conditions that by their
nature cannot be satisfied until the Closing Date, but subject to satisfaction
or waiver of such conditions), or at such other time and date and place as
Parent and the Company shall mutually agree (the "CLOSING DATE"). The term
"EFFECTIVE TIME" shall mean the time and date of the filing of a properly
executed certificate of merger (the "CERTIFICATE OF MERGER") with the Secretary
of State of the State of Delaware in accordance with the DGCL, or
at such later time as agreed to by the Parties and set forth in the Certificate
of Merger. The term "BUSINESS DAY" shall mean any day, other than a Saturday,
Sunday or a day on which the commercial banks in the state of New York are
authorized or required by law to remain closed.
Section 1.3 TAX CONSEQUENCES. It is intended that the Merger
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
and the Parties agree to treat the Merger consistently with this intention for
all purposes.
ARTICLE II
DIRECTORS, OFFICERS AND CHARTER DOCUMENTS
Section 2.1 DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time shall become the directors of the Surviving Corporation,
which individuals shall serve as directors of the Surviving Corporation until
the earlier of their resignation or removal or their otherwise ceasing to be
directors or until their respective successors are duly appointed or elected in
accordance with the Amended and Restated Certificate of Incorporation and Bylaws
of the Surviving Corporation and applicable law.
Section 2.2 OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation as of
the Effective Time and shall serve until their resignation or removal or their
otherwise ceasing to be officers or until their respective successors are duly
appointed or elected in accordance with the Amended and Restated Certificate of
Incorporation and Bylaws of the Surviving Corporation and applicable law.
Section 2.3 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. At the Effective Time, (i) the Certificate of Incorporation of the
Surviving Corporation shall be amended and restated to read the same as the
Certificate of Incorporation of Merger Sub in effect immediately before the
Effective Time and as set forth on Exhibit A, except that the name shall be
changed to Ask Jeeves, Inc., until altered, amended or repealed as provided
therein and under the DGCL, and (ii) the Bylaws of the Surviving Corporation
shall be amended and restated to read the same as the Bylaws of Merger Sub in
effect immediately before the Effective Time until altered, amended or repealed
as provided under the DGCL or in the Amended and Restated Certificate of
Incorporation or Bylaws of the Surviving Corporation.
ARTICLE III
TREATMENT OF SECURITIES
Section 3.1 EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company or Merger Sub:
(a) CANCELLATION OF CERTAIN COMPANY SECURITIES. Each share, if any,
of Company Common Stock (as defined herein) that is held in the treasury of the
Company and all shares of Company Common Stock, if any, that are owned by Parent
and any of its wholly
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owned subsidiaries immediately prior to the Effective Time shall be cancelled
and shall cease to exist, and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(b) CONVERSION OF COMPANY SECURITIES. By virtue of the Merger and
without any action on the part of any holder thereof:
(i) Other than shares cancelled pursuant to Section 3.1(a), each share
of common stock, par value $0.001 per share, of the Company
(together with the related right (a "RIGHT") to purchase Series A
Junior Participating Preferred Stock, par value $0.001 per share, of
the Company (the "COMPANY SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK") issued pursuant to the Rights Agreement (the "RIGHTS
AGREEMENT") entered into between the Company and Fleet National
Bank, N.A., dated as of April 26, 2001, the "COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be retired and cease to exist and
shall be converted automatically, subject to Sections 3.1(d) and
3.2(d), into the right to receive 1.2668 (the "EXCHANGE RATIO")
fully paid and nonassessable shares of common stock, $0.01 par value
per share, of Parent ("PARENT COMMON STOCK") (such shares of Parent
Common Stock together with any cash in lieu of fractional shares of
Parent Common Stock to be paid pursuant to Section 3.2(d),
collectively are referred to as the "MERGER CONSIDERATION").
(ii) At the Effective Time, each Certificate (as defined herein)
theretofore representing shares of Company Common Stock, as the case
may be, shall, without any action on the part of the Company, Parent
or the holder thereof, represent, and shall be deemed to represent
from and after the Effective Time, the number of shares of Parent
Common Stock (and cash in lieu of fractional securities) as
determined in accordance with Section 3.1(b)(i) above and shall
cease to represent any rights in any shares of capital stock of the
Company or the Surviving Corporation.
(c) CONVERSION OF MERGER SUB STOCK. Each share of common stock
of Merger Sub, par value $0.01 per share, issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
(d) CERTAIN ADJUSTMENTS. The Exchange Ratio shall be appropriately
and proportionately adjusted to fully reflect the effect of any
reclassification, stock split, reverse split, stock dividend (whether such
securities are stock of Parent or a subsidiary, including as a result of any
spin-off), reorganization, recapitalization or other like change, with respect
to Parent Common Stock or Company Common Stock occurring (or for which a record
date is established) after the date of this Agreement and prior to the Effective
Time.
Section 3.2 EXCHANGE OF CERTIFICATES.
(a) DEPOSIT WITH EXCHANGE AGENT. Immediately after the
Effective Time, Parent shall deposit or cause to be deposited with a bank or
trust company selected by Parent
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that is reasonably acceptable to the Company (the "EXCHANGE AGENT"), pursuant to
an agreement in form and substance reasonably acceptable to Parent and the
Company, certificates representing the shares of Parent Common Stock issuable at
the Effective Time in the Merger pursuant to Section 3.1(b).
(b) EXCHANGE AND PAYMENT PROCEDURES. As soon as practicable after the
Effective Time but in no event later than two (2) Business Days after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates (each, a "CERTIFICATE" and collectively,
the "CERTIFICATES") that immediately prior to the Effective Time represented
issued and outstanding shares of Company Common Stock whose shares were
converted into the right to receive the Merger Consideration pursuant to Section
3.1(b): (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for Parent
Common Stock (which shall be in uncertificated book-entry form unless a physical
certificate is requested) and any cash payable in lieu of fractional shares of
Parent Common Stock. Upon surrender of the Certificates to the Exchange Agent,
together with a duly executed letter of transmittal and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificates shall be entitled to receive in exchange therefor (i) a book-entry
account statement reflecting ownership of (or, if requested, a stock certificate
representing) that number of whole shares of Parent Common Stock into which the
shares of Company Common Stock previously represented by such Certificates are
converted in accordance with Section 3.1(b), and (ii) cash in lieu of fractional
shares of Parent Common Stock which such holder has the right to receive
pursuant to Section 3.2(d). In the event that the Merger Consideration is to be
delivered to any person who is not the person in whose name the Certificate
surrendered in exchange therefor is registered in the transfer records of the
Company, the Merger Consideration may be delivered to a transferee if the
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence reasonably
satisfactory to the Exchange Agent that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 3.2, each
Certificate (other than a Certificate representing shares of Company Common
Stock to be cancelled in accordance with Section 3.1(a)) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the applicable Merger Consideration contemplated by Sections 3.1 and
3.2. The Merger Consideration will be delivered to each former stockholder of
the Company by the Exchange Agent as promptly as practicable following surrender
of a Certificate and a duly executed letter of transmittal. No interest will be
paid or will accrue on any cash payable to holders of Certificates pursuant to
provisions of this Article III.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to Parent Common Stock
represented thereby and no cash payment in lieu of fractional shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 3.2(d) until
the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect, if any, of unclaimed property, escheat and other
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the
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certificates representing whole shares of Parent Common Stock issued in exchange
for Company Common Stock pursuant to the Merger, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 3.2(d) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock and (ii) at the applicable payment date, any dividends or
other distributions with a record date after the Effective Time but with a
payment date subsequent to the date of such surrender.
(d) NO FRACTIONAL SECURITIES. In lieu of any fractional securities,
each holder of Company Common Stock who would otherwise have been entitled to
receive a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article III will be paid an amount in
cash (without interest) equal to such holder's respective proportionate interest
in the net proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such holders, of the aggregate fractional shares of
Parent Common Stock issued pursuant to this Article III. As soon as practicable
following the Effective Time, the Exchange Agent shall determine the excess of
(i) the number of shares of Parent Common Stock issuable upon surrender of
Certificates by the holders of Company Common Stock (without excluding
fractional shares), delivered to the Exchange Agent by Parent in accordance with
Section 3.2(a), over (ii) the aggregate number of whole shares of Parent Common
Stock to be distributed to holders of Company Common Stock (excluding fractional
shares)(such excess being collectively called the "EXCESS PARENT COMMON STOCK").
The Exchange Agent, as agent and trustee for the former holders of Company
Common Stock, shall as promptly as reasonably practicable sell the Excess Parent
Common Stock at the prevailing prices on NASDAQ (or on the principal exchange on
which the Parent Common Stock is then traded or quoted). The sales of the Excess
Parent Common Stock by the Exchange Agent shall be executed on NASDAQ (or such
other exchange) through one or more member firms of NASDAQ (or such other
exchange) and shall be executed in round lots to the extent practicable. Parent
shall pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent and costs
associated with calculating and distributing the respective cash amounts payable
to the applicable former Company stockholders, incurred in connection with such
sales of Excess Parent Common Stock. Until the net proceeds of such sales have
been distributed to the former holders of Company Common Stock to whom
fractional shares of Parent Common Stock otherwise would have been issued, the
Exchange Agent will hold such proceeds in trust for such former holders. As soon
as practicable after the determination of the amount of cash to be paid to
former holders of Company Common Stock in lieu of any fractional shares of
Parent Common Stock, the Exchange Agent shall distribute such amounts to such
former holders.
(e) CLOSING OF TRANSFER BOOKS. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged for certificates (or a book-entry position) representing the
appropriate number of shares of Parent Common Stock as provided in Section 3.1
and this Section 3.2 and any cash payable in lieu of fractional shares.
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(f) TERMINATION OF EXCHANGE AGENT. Any certificates representing
Parent Common Stock deposited with the Exchange Agent pursuant to Section 3.2(a)
and not exchanged within six months after the Effective Time pursuant to this
Section 3.2 shall be returned by the Exchange Agent to Parent, which shall
thereafter act as Exchange Agent. All funds or securities held by the Exchange
Agent for payment to the holders of unsurrendered Certificates and unclaimed at
the end of one year from the Effective Time shall be returned to Parent, after
which time any holder of unsurrendered Certificates shall look as a general
creditor only to Parent for payment of such funds or securities to which such
holder is entitled, subject to applicable law.
(g) ESCHEAT. To the fullest extent permitted by applicable law,
neither Parent nor the Company shall be liable to any person for any funds or
securities delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event 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 reasonably required by Parent, the posting by such
person of a bond in such amount as Parent may determine is reasonably necessary
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 deliverable in respect thereof
pursuant to this Agreement.
(i) WITHHOLDING RIGHTS. Each of the Exchange Agent, the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Certificates which, prior to the Effective Time, represented shares of Company
Common Stock such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code and the rules and regulations
promulgated thereunder, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Exchange Agent, the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Exchange Agent, the Surviving Corporation or Parent,
as the case may be.
(j) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock and cash paid upon the conversion of shares of Company
Common Stock in accordance with the terms of Articles I, II and III (including
any cash paid pursuant to Section 3.2(d)) shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock.
Section 3.3 COMPANY OPTIONS, OTHER EQUITY-BASED AWARDS AND EMPLOYEE
STOCK PURCHASE PLAN. (a) Each option to purchase shares of Company Common Stock
(a "COMPANY OPTION") granted under the employee and director stock plans of the
Company, but excluding the ESPP (the "STOCK PLANS"), whether vested or unvested,
that is outstanding immediately prior to the Effective Time shall, at the
Effective Time, cease to represent a right to acquire shares of Company Common
Stock and shall be converted, at the Effective Time, into an option to purchase
shares of Parent Common Stock (a "PARENT OPTION"), on the same terms and
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conditions (including vesting) as were applicable under such Company Option as
of immediately prior to the Effective Time. The number of shares of Parent
Common Stock subject to each such Parent Option shall be equal to the number of
shares of Company Common Stock subject to each such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded, if
necessary, down to the nearest whole share of Parent Common Stock, and such
Parent Option shall have an exercise price per share (rounded up to the nearest
cent) equal to the per share exercise price of such Company Option immediately
prior to the Effective Time divided by the Exchange Ratio.
(b) The Company shall take any actions with respect to the Company's
Employee Stock Purchase Plan (the "ESPP") as are necessary to (i) provide that
the ESPP shall terminate immediately prior to the Effective Time and all
balances in ESPP participant accounts shall be applied to the purchase of shares
in accordance with the terms of the ESPP immediately prior to the Effective
Time, and (ii) limit the total number of shares purchased between the date
hereof and the Effective Time to 260,000 in the aggregate.
(c) At the Effective Time all other equity based awards of the Company
outstanding immediately prior to the Effective Time will be converted into
equity based awards of Parent and the number of shares of Parent Common Stock
subject to such awards shall be equal to the number of shares of Company Common
Stock subject to each such equity-based award of the Company immediately prior
to the effective time multiplied by the Exchange Ratio, rounded, if necessary,
down to the nearest whole share of Parent Common Stock.
(d) Prior to the Effective Time, the Company shall take all
necessary action for the adjustment of the Company Options under this Section
3.3 and the adjustment of other equity based awards of the Company under this
Section 3.3, and will take all necessary action to ensure that no holders of
Company Options or other equity-based awards of the Company will be able to
receive shares of Company Common Stock after the Effective Time. Parent shall
reserve for issuance a number of shares of Parent Common Stock at least equal to
the number of shares of Parent Common Stock, that will be subject to Parent
Options as a result of the actions contemplated by this Section 3.3. As soon as
practicable following the Effective Time (and in any event not later than two
Business Days following the Effective Time), Parent shall file a registration
statement on Form S-8 (or any successor form, or if Form S-8 is not available,
other appropriate form) with respect to the shares of Parent Common Stock
subject to such Parent Options and shall use reasonable efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Parent Options remain outstanding and are required to be
registered.
Section 3.4 CONVERTIBLE NOTES. The Company shall give all such
notices as may be required by the terms of the Zero Coupon Convertible
Subordinated Notes, due June 1, 2008 (the "CONVERTIBLE NOTES") in respect of the
matters contemplated by this Article III, at the times and in the manner
required by such Convertible Notes.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the corresponding number and subsection of
the Company disclosure schedule delivered to Parent concurrently herewith (the
"COMPANY DISCLOSURE SCHEDULE"), or in such other number and subsection of the
Company Disclosure Schedule where the applicability of such exception is
reasonably apparent, as an inducement to Parent and Merger Sub entering into
this Agreement and completing the transactions contemplated hereby, the Company
hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.1 CORPORATE ORGANIZATION. (a) The Company is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware. The Company has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company. As used in this Agreement, the term
"MATERIAL ADVERSE EFFECT" means, with respect to Parent or the Company, as the
case may be, any condition, state of facts, change or effect that is or would
reasonably be expected to be materially adverse to (i) the business, assets,
liabilities, operations, results of operations or financial condition, of such
entity and its Subsidiaries taken as a whole or (ii) the ability of such entity
to timely consummate the transactions contemplated hereby PROVIDED, HOWEVER,
that Material Adverse Effect shall not be deemed to include the impact of any
condition, fact, change or effect relating to or arising from (A) the execution,
announcement, or consummation of this Agreement and the transactions
contemplated hereby, including any impact thereof on relationships, contractual
or otherwise, with partners (including, without limitation, joint venture
partners, syndication partners and strategic partners), customers, suppliers or
employees, (B) (x) changes in economic or regulatory conditions in the
industries in which the Company or Parent carries on business as of the date
hereof, and (y) changes in general economic, regulatory or political conditions,
including, without limitation, acts of war or terrorism, except, in the case of
clauses (B)(x) and (B)(y), to the extent such changes have a materially
disproportionate effect on the Company or Parent and their respective
Subsidiaries taken as a whole, as the case may be, relative to other
participants in the industries in which the Company or Parent carries on
business as of such date or (C) any changes or effects resulting from any
matter, which matter is expressly contemplated or permitted by the terms of this
Agreement, including any matter which is approved by Parent following the date
hereof pursuant to Article VI. As used in this Agreement, the word "SUBSIDIARY"
shall mean (i) a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") and, (ii) with respect to the Company, the companies listed in Section
4.1(a) of the Company Disclosure Schedule and with respect to Parent, the
companies listed on Exhibit 21.1 to Parent's Annual Report on Form 10-K. The
Company has previously made available true and complete copies of (i) the
Certificate of Incorporation of the Company (the "COMPANY CHARTER") and the
Bylaws of the Company, each as in effect as of the date of this Agreement, and
(ii) the minutes of the meetings of the Board of Directors and any Committee
thereof in respect of meetings of the Board of Directors and such Committees
held
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since January 31, 2002 through the date hereof for which minutes have been
prepared and approved.
(b) Each Company Subsidiary and, to the Knowledge of the Company,
Ask Jeeves Kabushiki Kaisha (the "JAPANESE JV" ) (i) is duly organized and
validly existing under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and, where such status is recognized, in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would,
individually or in the aggregate, have a Material Adverse Effect on the Company,
and (iii) has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now conducted.
Section 4.2 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (i) 150,000,000 shares of Company Common Stock, of which, as
of the close of business on March 18, 2005, 59,455,548 shares were issued (or
issuable as described in this sentence) and outstanding, including, without
limitation, 473,856 shares held in the Company's treasury and 191,997 shares
issuable (but not yet issued) under the Company's merger agreement with
Interactive Search Holdings upon tender of shares of Interactive Search
Holdings, Inc. by their holders (the "PENDING ISH MERGER SHARES"), 4,393 shares
issuable (but not yet issued) in connection with stock option exercises that
occurred prior to the close of business on March 18, 2005 (the "PENDING OPTION
EXERCISE SHARES"), and 10 shares issuable (but not yet issued) to participants
in the January 31, 2005 purchase under the Employee Stock Purchase Plan (the
"PENDING ESPP SHARES"); (ii) 5,000,000 shares of preferred stock, par value
$.001 per share, of which no shares are issued and outstanding, and no such
shares are held in the Company's treasury, and of which 150,000 shares have been
designated as Company Series A Junior Participating Preferred Stock, of which no
shares are issued and outstanding, and no such shares are held in the Company's
treasury. As of the close of business on March 18, 2005, no shares of Company
Common Stock or Company Series A Junior Participating Preferred Stock were
reserved for issuance, except for (A) 74,277 shares of Company Series A Junior
Participating Preferred Stock, such number of shares being sufficient to permit
the exercise in full of all Rights either outstanding or issuable together with
the Company Common Stock described in the remainder of this sentence; (B)
7,832,388 shares of Company Common Stock reserved for issuance pursuant to the
exercise of outstanding Company Options under the 1996 Equity Incentive Plan,
the 1999 Equity Incentive Plan, the 1999 Non-Qualified Equity Incentive Plan,
the 1998 Direct Hit Stock Plan, the ISH 2001 Equity Incentive Plan, and the ISH
2003 Equity Incentive Plan (collectively, together with the 1999 Employee Stock
Purchase Plan, the "COMPANY STOCK PLANS"); (C) a total of 445,635 shares
available for issuance under the Employee Stock Purchase Plan; (D) 135,000
shares of Company Common Stock potentially issuable under the Conditional Stock
Award Agreements listed in Section 4.12(a) of the Company Disclosure Schedule;
(E) 50,000 shares of Company Common Stock potentially issuable under a
Restricted Stock Award Agreement listed in Section 4.12(d) of the Company
Disclosure Schedule (the "50,000 SHARE RESTRICTED AWARD AGREEMENT"); and (F)
6,804,733 shares of Company Common Stock reserved for issuance upon conversion
of the outstanding Convertible Notes. All of the issued and outstanding shares
of Company Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this
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Agreement, except for the Rights, the Company Options, Conditional Stock Award
Agreements, the 50,000 Share Restricted Award Agreement, the Employee Stock
Purchase Plan (and, other purchase rights arising under the Company Stock
Plans), the Convertible Notes (including the Indenture related thereto and the
forms of Convertible Note), and the obligations to issue the Pending ISH Merger
Shares, the Pending Option Exercise Shares and the Pending ESPP Shares, the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, preemptive rights, commitments or agreements of any
character calling for the purchase or issuance of any shares of Company Common
Stock or any other equity securities of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock. Since the close of business on March 18, 2005 through the date
hereof, the Company has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
other than (x) awards of stock options in the ordinary course under the Company
Stock Plans and (y) pursuant to the exercise of stock options granted under the
Company Stock Plans prior to such date. Section 4.2(a) of the Company Disclosure
Schedule sets forth a list of the Company Option holders as of the close of
business on March 18, 2005, including the date as of which each Company Option
was granted, the number of shares subject to each such Company Option at March
18, 2005 (i.e., the original amount less exercises and any cancellations), the
expiration date of each such Company Option and the price at which each such
Company Option may be exercised under an applicable Company Stock Plan.
(b) Section 4.2(b) of the Company Disclosure Schedule sets forth, for
each Subsidiary of the Company and the Japanese JV, the name and state of
incorporation of such entity, and the number of its outstanding shares of
capital stock or other equity interests and type(s) of such outstanding shares
of capital stock or other equity interests (or a statement that the Company owns
all of the outstanding shares of capital stock or other equity interests of such
Subsidiary). The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the Company's Subsidiaries and 47.17% of the issued and outstanding equity
ownership interests of the Japanese JV, free and clear of any liens, pledges,
charges, encumbrances and security interests whatsoever ("LIENS"), and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. None of the Company's
Subsidiaries and, to the Company's Knowledge the Japanese JV, has or is bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or the Japanese
JV, as the case may be, or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary or the Japanese JV, as the case may be. Except for interests in
its Subsidiaries and the Japanese JV, neither the Company nor any of its
Subsidiaries own directly or indirectly any equity interest in any firm,
corporation, partnership or other entity, whether incorporated or
unincorporated, that is material to the business of the Company or otherwise to
the Company or to any of its Subsidiaries or has any obligation or has made any
commitment to acquire any such interest or to make any investment. No Company
Subsidiary nor, to the Company's Knowledge the Japanese JV, owns any capital
stock of the Company.
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Section 4.3 AUTHORITY; NO VIOLATION. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and (subject
to obtaining the Company Stockholder Approval) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized (including such authorization and corporate actions as may be
required so that no state interested director or anti-takeover statutes or
similar statute or regulation, including, without limitation, Sections 144 and
203 of the DGCL, respectively, is or becomes operative with Parent, its
affiliates or transferees, this Agreement or the transactions contemplated
hereby). Except for the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware pursuant to the DGCL and the approval of this
Agreement by the affirmative vote of the holders of shares representing a
majority of the voting power of the outstanding shares of the Company Common
Stock (the "COMPANY STOCKHOLDER APPROVAL"), no other corporate proceedings on
the part of the Company are necessary to approve this Agreement or to consummate
the transactions contemplated hereby. The Company's Board of Directors, by
unanimous vote (i) has duly and validly adopted this Agreement and the
transactions contemplated hereby and declared this Agreement advisable, (ii) has
directed that this Agreement and the Merger be submitted to the stockholders of
the Company for approval at the Stockholder Meeting; and (iii) subject to
Section 7.4, recommends that stockholders of the Company approve this Agreement
and the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and (assuming due authorization,
execution and delivery by the other Parties) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, including the Merger, nor compliance by the Company with any of the
terms or provisions hereof, will (i) violate any provision of the Company
Charter or the Bylaws of the Company, or violate or conflict with any agreement
or instrument pursuant to which any shares of capital stock of the Company, or
securities exercisable for or convertible into shares of capital stock of the
Company, have been issued, or (ii) subject to the making of the filings and
obtaining the approvals referred to in Section 4.5 and the effectiveness of such
filings and/or receipt of the consents and approvals in connection therewith,
(A) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to the Company, any of its Subsidiaries or
any of their respective properties or assets or (B) violate, conflict with,
result in a breach of any provision of or the loss of any material benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by,
result in the creation of any Lien upon any of the respective properties or
assets of the Company or any of its Subsidiaries under, or require any increased
payment under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (ii) above) for such
violations, conflicts, breaches, losses of benefits, defaults, terminations,
cancellations,
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accelerations, Liens or payments which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
Section 4.4 AMENDMENT TO RIGHTS AGREEMENT. (a) The Board of
Directors of the Company has taken all necessary action to amend the Rights
Agreement so that, for so long as this Agreement is in full force and effect:
(i) the execution or delivery of this Agreement and the consummation of the
transactions contemplated hereby will not cause (A) the Rights to become
exercisable under the Rights Agreement, (B) Parent or Merger Sub or any of their
affiliates to be deemed an Acquiring Person (as that term is used in the Rights
Agreement), or (C) the Distribution Date or the Share Acquisition Date (as these
terms are used in the Rights Agreement) to occur; and (ii) immediately prior to
the Effective Time, the Rights shall expire and no longer be outstanding.
(b) The Distribution Date (as that term is used in the Rights Agreement)
has not occurred.
Section 4.5 CONSENTS AND APPROVALS. Except for (a) the filing of the
pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (b) filings with the
Securities and Exchange Commission (the "SEC") as may be required by the Company
in connection with this Agreement and the transactions contemplated by this
Agreement, (c) the filing of the Certificate of Merger and the Amended and
Restated Certificate of Incorporation of the Surviving Corporation with the
Secretary of State of the State of Delaware pursuant to the DGCL, (d) the
filings with any court, administrative agency or commission or other
governmental, regulatory or self-regulatory authority or instrumentality (each a
"GOVERNMENTAL ENTITY") as required under applicable law in each case as set
forth in Section 4.5 of the Company Disclosure Schedule, (e) the Company
Stockholder Approval, (f) such filings as may be required under the rules and
regulations of NASDAQ and (g) such other consents, approvals or filings the
failure of which to obtain or make would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, no consents or approvals of or
filings or registrations with any Governmental Entity or third party are
necessary in connection with (A) the execution and delivery by the Company of
this Agreement and (B) the consummation by the Company of the transactions
contemplated hereby. As of the date hereof, to the Company's Knowledge, there is
no reason why the receipt of any such consents or approvals will not be obtained
in a customary time frame once complete and appropriate filings have been made
by the Company and Parent. For purposes of this Agreement, the "KNOWLEDGE" of
any person that is not an individual means, with respect to any matter in
question, the actual knowledge of such person's executive officers and other
officers having primary responsibility for such matter, in each case based upon
reasonable inquiry consistent with such person's title and responsibilities.
Section 4.6 SEC REPORTS; FINANCIAL STATEMENTS. (a) The Company has
made available to Parent an accurate and complete copy of each (i) report,
schedule, final registration statement, prospectus and definitive proxy
statement filed by the Company with the SEC on or after January 1, 2002 and
prior to the date hereof pursuant to the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or the Exchange Act (all such filings, the "COMPANY
REPORTS"), which are all the forms, reports and documents required to be filed
by the Company with the SEC since such date; and (ii) communication mailed by
the Company to its stockholders since
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January 1, 2004 and prior to the date hereof. As of their respective dates, the
Company Reports and communications (A) complied in all material respects with
requirements of the Securities Act or the Exchange Act, as the case may be, and
the published rules and regulations of the SEC thereunder applicable thereto,
and (B) did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were made,
not misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date.
(b) The Company has previously made available to Parent copies of the
consolidated balance sheets (the "COMPANY 10-K BALANCE SHEETS") of the Company
and its Subsidiaries as of December 31, 2003 and December 31, 2004, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the fiscal years ended December 31, 2003 and December 31,
2004, as reported in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 filed with the SEC under the Exchange Act (such
financial statements included in such Annual Report on Form 10-K, together with
the Company 10-K Balance Sheets, the "COMPANY FINANCIAL STATEMENTS"), in each
case, accompanied by the audit report of Ernst & Young LLP, independent public
accountants with respect to the Company. The Company Financial Statements
(including the related notes) (i) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries at the
respective dates thereof and the consolidated results of operations, cash flows
and changes in stockholders' equity (deficit) of the Company and its
Subsidiaries for the years indicated, (ii) have been prepared consistent with
the books and records of the Company and its Subsidiaries and consistent with
the Company's accounting policies and procedures, each in a manner consistent
with prior financial statements of the Company (except for adoption of
accounting pronouncements and other changes in accounting policy, each as
disclosed in the Company Reports), (iii) comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto and (iv) have been prepared in
all material respects in accordance with United States generally accepted
accounting principles ("GAAP") consistently applied during the periods involved,
except, in each case, as indicated in such statements or in the notes thereto.
The books and records of the Company and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP (to the
extent applicable) and any other applicable legal and accounting requirements
and reflect only actual transactions.
Section 4.7 BROKER'S FEES. Other than Xxxxx & Company LLC and
Citigroup Global Markets Inc., none of the Company or any Company Subsidiary or
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees
payable on behalf of the Company in connection with the Merger or the other
transactions contemplated by this Agreement. A true and complete copy of each
engagement letter pursuant to which any such fee or commission is payable has
been previously delivered to Parent.
Section 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since December
31, 2004, no event or events have occurred which have had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
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(b) Except as publicly disclosed in the Company Reports filed prior to
the date hereof, since December 31, 2004, the Company and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
course consistent with past practice.
(c) Except as publicly disclosed in the Company Reports filed prior to
the date hereof, neither the Company nor any of its Subsidiaries has, since
December 31, 2004, (i) except for such actions as are in the ordinary course of
business or except as required by applicable law, (A) materially increased the
wages, salaries, compensation, pension, or other fringe benefits or perquisites
payable to any executive officer, employee, or director from the amount thereof
in effect as of December 31, 2004, or (B) granted any material severance or
termination pay, entered into any contract to make or grant any material
severance or termination pay, or paid any material bonuses (other than customary
bonuses for the fiscal year 2004) or (ii) suffered any material strike, work
stoppage, slowdown, or other labor disturbance.
(d) From the period beginning on December 31, 2004 through the date
hereof, the Company has not granted any stock options with respect to Company
Common Stock to any director, officer, employee, or independent contractor of
the Company or any of its Subsidiaries at an exercise price per share below the
fair market value per share of the Company Common Stock on the date of such
grant.
(e) Since December 31, 2004 through the date hereof, neither the
Company nor any of its Subsidiaries has taken any action described in Section
6.2 (j), (m), (n) or (u) that if taken after the date hereof and prior to the
Effective Time would violate such provision.
Section 4.9 LEGAL PROCEEDINGS. Except as publicly disclosed in the
Company Reports filed prior to the date hereof,
(a) Neither the Company nor any of its Subsidiaries is a party to any,
and there are no pending or, to the Company's Knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations in which the Company is a plaintiff, defendant or
otherwise might be deemed liable (including by virtue of indemnification or
otherwise), (i) against (x) the Company or any of its Subsidiaries, (y) any
present or former officer, director or employee of the Company or any of its
Subsidiaries, in such person's capacity as a present or former officer, director
or employee or (z) otherwise such that the Company or any of its Subsidiaries
would reasonably be expected to be liable (whether by virtue of indemnification
or otherwise), in each case other than such proceedings, claims, actions or
investigations which would not, individually or in the aggregate, (A) result in
any material fines, judgments or amounts paid in settlement, (B) if adversely
determined against the Company or any of its Subsidiaries, restrict in any
material respect the conduct of the business of the Company and its Subsidiaries
or (C) as of the date hereof, challenge the validity or propriety of the
transactions contemplated by this Agreement.
(b) Neither the Company nor any of its Subsidiaries (i) is subject to
any outstanding order, injunction or decree or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or
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similar undertaking to, or is subject to any order or directive applicable to
the Company or any of its Subsidiaries by, or is a recipient of any supervisory
letter from or has adopted any resolutions at the request of, any Governmental
Entity that restricts in any respect the conduct of its business (each, a
"COMPANY REGULATORY AGREEMENT"), or (ii) has, since December 31, 2002, been
advised by any Governmental Entity that it is considering issuing or requesting
any such Company Regulatory Agreement.
Section 4.10 TAXES AND TAX RETURNS. (a) Each of the Company and its
Subsidiaries has duly and timely filed all material Tax Returns (as defined
herein) required to be filed by it, each of the Company and its Subsidiaries has
duly paid or made adequate provision in accordance with GAAP in the Company's
10-K Balance Sheet for the payment of all material Taxes (as defined herein)
which have become due as of the date thereof, and have withheld from their
employees all material Taxes required to have been withheld and have paid over
all such material Taxes to the proper governmental authority, and all such filed
Tax Returns are accurate and complete in all material respects. Federal, state
and local Tax Returns have been filed by the Company and its Subsidiaries for
all periods for which Tax Returns were due with respect to income tax
withholding, Social Security and unemployment Taxes, except for such failures to
file such Tax Returns that, in the aggregate would not have a Material Adverse
Effect on the Company. There are no disputes pending or, to the knowledge of the
Company, threatened, related to, or claims asserted for, material Taxes or
assessments upon the Company or any of its Subsidiaries for which the Company
does not have specific and adequate contingency reserves to the extent required
by GAAP. There are no material liens for Taxes upon any property or assets of
the Company or its Subsidiaries, other than liens for Taxes that are not
delinquent. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any material Taxes of the Company
or any of its Subsidiaries for any period. No claim has ever been made by any
taxing authority in any jurisdiction where the Company or any of its
Subsidiaries currently does not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to material Tax in such jurisdiction. Neither
the Company nor any of its Subsidiaries has been a "distributing corporation" or
a "controlled corporation" in a material distribution intended to qualify under
Section 355(a) of the Code. Neither the Company nor any of its Subsidiaries is a
party to any Tax sharing, allocation or indemnification agreement or
arrangement, other than any such customary agreements with customers, vendors,
lessors or the like entered into in the ordinary course of business. Neither the
Company nor any of its Subsidiaries has been a member of an affiliated group
filing a consolidated, combined or unitary Tax Return (other than the affiliated
group of which the Company is the common parent or of which such Subsidiary was
the common parent) or has any material liability for the Taxes of any person
(other than the Company or its Subsidiaries) under Treasury Regulation ss.
1.1502-6 (or any similar provision of state, local or foreign law). The Company
will have continuously and directly conducted, by performing active and
substantial management and operational functions, an active trade or business
having both revenues and expenses (the "COMPANY ACTIVE BUSINESS"), for the
entire five year period ending at the Effective Time and will have directly
employed and compensated at least 50 individuals in the Company Active Business
in each of the five years during the five year period ending at the Effective
Time. The fair market value of the gross assets of the Company Active Business
on the date hereof equals, and immediately prior to the Effective Time, will
equal, at least five percent of the total fair market value of the gross assets
of the Company. Neither the Company nor any of its Subsidiaries has engaged in,
or
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is a party to, any "reportable transaction" within the meaning of Treasury
Regulation Section 1.6011-4 that has not been reported in accordance with
Treasury Regulation Section 1.6011-4.
(b) As of December 31, 2004, the Company and its Subsidiaries had net
operating loss carryforwards for U.S. federal income tax purposes purposes
("NOLS"), other than those NOLs attributable to Interactive Search Holdings
("ISH"), Net Effect Systems, Inc. ("NES") and Direct Hit Technologies, Inc.
("DHT"), totaling approximately $270 million (such NOLs excluding the ISH, NES
and DHT NOLs, the "NOL CARRYFORWARDS"). The NOL Carryforwards are subject to the
limitations under Section 382 of the Code described in Section 4.10(b) of the
Company Disclosure Schedule.
(c) Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any material amount that will
not be fully deductible as a result of Section 162(m) of the Code (or any
similar provision of state, local or foreign law).
(d) INTENTIONALLY LEFT BLANK
(e) INTENTIONALLY LEFT BLANK
(f) As used in this Agreement, the term "TAX" or "TAXES" means all
federal, state, local and foreign income, excise, gross receipts, gross income,
AD VALOREM, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding and other taxes, or like assessments together with all penalties and
additions to tax and interest thereon, and the term "TAX RETURN" means any
return, declaration, report, claim for refund, information return or statement
filed or required to be filed with a Governmental Entity relating to Taxes.
Section 4.11 CERTAIN OTHER TAX MATTERS. Neither the Company nor any
of its Subsidiaries has taken or agreed to take any action, has failed to take
any action or knows of any fact, agreement, plan or other circumstance, in each
case that would or could reasonably be expected to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code. The parties agree that none of the transactions contemplated by this
Agreement could reasonably be expected to prevent the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
Section 4.12 EMPLOYEES. (a) Set forth on Section 4.12(a) of the
Company Disclosure Schedule is a true and complete list of each Company Benefit
Plan. For purposes of this Agreement, "COMPANY BENEFIT PLAN" means any employee
benefit plan, program, policy, practices, agreement or other arrangement
providing benefits to any current or former employee, officer, director or
consultant of the Company or any of its Subsidiaries or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries contributes or
is obligated to contribute, whether or not written, including without limitation
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA
(as defined herein), any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any
bonus, incentive, deferred compensation, vacation, stock purchase, stock option,
severance,
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employment, change of control or fringe benefit plan, program, policy,
practices, agreement or other arrangement.
(b) The Company has heretofore made available to Parent true and
complete copies of each of the Company Benefit Plans and (i) the actuarial
report for such Company Benefit Plan (if applicable) for each of the last two
years, (ii) the most recent determination letter from the Internal Revenue
Service (if applicable) for such Company Benefit Plan, (iii) the summary plan
description for such Company Benefit Plan (if any), and (iv) the Form 5500 for
such Company Benefit Plan (if applicable) for each of the last two years. Except
as specifically provided in the foregoing documents delivered to Parent, there
are no amendments to any Company Benefit Plan that have been adopted or approved
nor has the Company or any of its Subsidiaries undertaken to make any such
amendments or to adopt or approve any new Company Benefit Plan.
(c)(i) Each of the Company Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each Company Benefit
Plan has been administered in all material respects in accordance with its
terms, (iii) each of the Company Benefit Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has received a favorable determination
or opinion letter from the Internal Revenue Service, and there are no existing
circumstances nor any events that have occurred that would be reasonably
expected to affect adversely the qualified status of any such Company Benefit
Plan, (iv) no Company Benefit Plan is subject to Title IV of the Employee Income
Security Act of 1974, as amended ("ERISA") or Section 302 of ERISA or Section
412 or 4971 of the Code, (v) no Company Benefit Plan provides welfare benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees or directors of the
Company or its Subsidiaries beyond their retirement or other termination of
service, other than coverage mandated by applicable law, or under any employment
or severance agreement disclosed to Parent (vi) no material liability under
Title IV of ERISA has been incurred by the Company, its Subsidiaries or any
trade or business, whether or not incorporated (a "COMPANY ERISA AFFILIATE"),
which together with the Company would be deemed a "single employer" within the
meaning of Section 4001 of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to the Company, its Subsidiaries
or any Company ERISA Affiliate of incurring a material liability thereunder,
(vii) no Company Benefit Plan is a "multiemployer pension plan" (as such term is
defined in Section 3(37) of ERISA) or a plan that has two or more contributing
sponsors at least two of whom are not under common control (a "MULTIPLE EMPLOYER
PLAN"), within the meaning of Section 4063 of ERISA and none of the Company and
its Subsidiaries nor any of their respective ERISA Affiliates has, at any time
during the last six years, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan, (viii) all contributions or other
amounts payable by the Company or its Subsidiaries with respect to each Company
Benefit Plan and all premiums due or payable with respect to insurance policies
funding any Company Benefit Plan for any period through the date hereof have
been timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof, have been fully reflected on the Company's
financial statements, (ix) none of the Company, its Subsidiaries or, to the
Company's Knowledge, any other person, including any fiduciary, has engaged in a
transaction in connection with which the Company, its Subsidiaries or any
Company Benefit
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Plan will be subject to either a material civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a material Tax imposed pursuant to Section
4975 or 4976 of the Code, (x) there are no pending, or to the knowledge of the
Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Company Benefit Plans or any
trusts related thereto or any fiduciaries thereof that could reasonably be
expected to result in a material liability for the Company or its Subsidiaries
or any Company Benefit Plan; (xi) each individual who renders services to the
Company or any of its Subsidiaries who is classified by the Company or such
Subsidiary, as applicable, as having the status of an independent contractor or
other non-employee status for any purpose (including for purposes of taxation
and tax reporting and under Company Benefit Plans) is properly so characterized,
except to the extent that, in the aggregate, any such misclassifications would
not reasonably be expected to result in a material liability for the Company or
its Subsidiaries or any Company Benefit Plan and (xii) there does not now exist,
nor do any circumstances exist that could reasonably be expected to result in,
any Controlled Group Liability (as defined below) that would be a liability of
the Company or any of its subsidiaries following the Effective Time. "Controlled
Group Liability" means any and all liabilities (i) under Title IV of ERISA, (ii)
under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv)
as a result of a failure to comply with the continuation coverage requirements
of Section 601 et seq. of ERISA and Section 4980B of the Code, and (v) under
corresponding or similar provisions of foreign laws or regulations.
(d) Section 4.12(d)(i) of the Company Disclosure Schedule sets forth
(i) an accurate and complete description of each provision of any Company
Benefit Plan and any employment-related agreement under which the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby could (either alone or in conjunction with any other event) result in,
cause the accelerated vesting, funding or delivery of, or increase the amount or
value of, any payment or benefit to any employee, officer or director of the
Company or any of its Subsidiaries, or could limit the right of the Company or
any of its Subsidiaries to amend, merge, terminate or receive a reversion of
assets from any Company Benefit Plan or related trust and (ii) the maximum
amount of the "excess parachute payments" within the meaning of Section 280G of
the Code that could become payable by the Company and its Subsidiaries in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, using stock price
assumptions set forth in Section 4.12(d)(i) of the Company Disclosure Schedule.
(e) Except to the extent required by any Company Benefit Plan, as of
the date hereof, none of the Company, the Company's Board of Directors or the
Compensation Committee of the Company's Board of Directors has taken any action
to accelerate the vesting of any stock options or other equity-based
compensation awards in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.13 SECURITIES LAW MATTERS.
(a) With respect to each Annual Report on Form 10-K and each Quarterly
Report on Form 10-Q included in the Company Reports, the financial statements
and other financial information included in such reports fairly present in all
material respects the financial
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condition as of the dates thereof and the results of operations for the periods
then ended of the Company and its consolidated Subsidiaries.
(b) There are no significant deficiencies or material weaknesses in
either the design or operation of internal controls of the Company or any of its
Subsidiaries that are reasonably likely to adversely affect the ability of the
Company or any of its Subsidiaries to record, process, summarize and report
financial information. With respect to periods after January 1, 2002, the
Company has no knowledge of any fraud or suspected fraud involving (x)
management of the Company (including its consolidated Subsidiaries) who have a
significant role in the internal controls related to financial reporting, (y)
any employees of the Company (including its consolidated Subsidiaries) where
such fraud could have a material effect on the consolidated financial statements
of the Company or (z) any officer or employee of the Company whose role, actions
or activities would be required to be considered in certifying internal controls
of the Company pursuant to Section 404 of the Sarbanes Oxley Act of 2002.
(c) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated Subsidiaries, is
made known to the Company's principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; and such disclosure controls and procedures are effective in timely
alerting the Company's principal executive officer and its principal financial
officer to material information required to be included in the Company's
periodic reports required under the Exchange Act.
Section 4.14 COMPLIANCE WITH APPLICABLE LAW, PERMITS AND LICENSES.
(a) Neither the Company nor any of its Subsidiaries is in conflict with, is in
default or violation of, or has since December 31, 2001 been investigated for,
or charged by any Governmental Entity with, a violation of any material law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its Subsidiaries or by which its or any of their respective properties is bound
or affected. In furtherance and not in limitation of the foregoing, neither the
Company nor any of its Subsidiaries has, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of property, however
characterized, to any government official or other governmental party, in the
United States or any other country, which is in any manner related to the
business or operations of such entities and which is or was illegal under any
applicable law (including, without limitation, the U.S. Foreign Corrupt
Practices Act and the rules and regulations promulgated thereunder).
(b) The Company, its Subsidiaries and their respective employees hold
all material permits, licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities that are required for the operation of
the businesses of the Company and its Subsidiaries (the "COMPANY PERMITS").
Section 4.14(b) of the Company Disclosure Schedule contains a list of the
Company Permits. Each of the Company and its Subsidiaries is, and for the past
five years has been, in compliance in all material respects with the terms of
the Company Permits, all of the Company Permits are in full force and effect and
no suspension, modification or revocation of any of them is pending or, to the
knowledge of the
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Company, threatened, nor, to the knowledge of the Company, do reasonable grounds
exist for any such action.
Section 4.15 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS, EMPLOYEE
RESTRICTIONS; ASSETS. (a) To the Knowledge of the Company, all U.S. and foreign
(i) copyrights, (ii) trademarks, service marks, trade dress and logos, (iii)
trade names, (iv) Internet domain names, (v) patents and patent applications,
and (vi) trade secrets rights, including any of the foregoing rights in any
inventions, know how, practices, methods, processes, designs, or other
information used by the Company and its Subsidiaries to compete with third
parties, computer hardware and software, including programming processes, source
code, object code, algorithms, structure, display screens, user interfaces,
layouts, development tools, instructions, and templates, technology, processes
and formulae, and including all registrations and applications for the foregoing
intellectual property rights (collectively, "INTELLECTUAL PROPERTY") used by the
Company or its Subsidiaries in their respective businesses (collectively,
"COMPANY INTELLECTUAL PROPERTY") are owned by the Company or such Subsidiaries
by operation of law, or have been assigned to the Company or such Subsidiaries
("COMPANY OWNED INTELLECTUAL PROPERTY"), or the Company and such Subsidiaries
otherwise have the right to use such Company Intellectual Property in their
businesses as currently conducted, such as by license ("COMPANY LICENSED
INTELLECTUAL PROPERTY"). To the Knowledge of the Company, the Company
Intellectual Property is sufficient to carry on the business of the Company and
its Subsidiaries as presently conducted. Except as set forth in Section 4.15 of
the Company Disclosure Schedule, to the Knowledge of the Company, the Company or
its Subsidiaries have exclusive ownership of all Company Owned Intellectual
Property used by the Company and its Subsidiaries, or are entitled to use all
Company Licensed Intellectual Property in the Company's and its Subsidiaries'
businesses as presently conducted, subject, in the case of Company Licensed
Intellectual Property, to the terms of the license agreements or other
agreements covering such Company Licensed Intellectual Property. The Company and
its Subsidiaries and, to the Knowledge of the Company, having made reasonable
inquiry of appropriate Company personnel, the other parties thereto are not in
material breach of any of the license agreements or other agreements covering
the Company Licensed Intellectual Property, except for any breaches that would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. To the Knowledge of the Company, the present business activities or
products of the Company and its Subsidiaries do not infringe in any material
respect any Intellectual Property of others ("THIRD PARTY INTELLECTUAL
Property"). To the Knowledge of the Company, the Company and its Subsidiaries
have not, within the past two (2) years, received any notice or other claim from
any third party asserting that any of the Company's or its Subsidiaries'
activities infringe or may infringe any Third Party Intellectual Property of
such third party, nor do any active material infringement claims made prior to
such period remain unresolved, or the Company or its Subsidiaries have not
received any further communications from such third parties regarding any
infringement claim prior to such two year period.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, (i) to the Knowledge of the Company, the
Company and its Subsidiaries have the right to use all Intellectual Property and
other information material to their businesses as presently conducted, (ii) the
Company and its Subsidiaries have taken reasonable measures in accordance with
customary industry practices to protect and preserve the security and
confidentiality of their trade secrets and other confidential information, (iii)
to the
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Knowledge of the Company, all trade secrets and other confidential information
of the Company and its Subsidiaries that are material to their businesses are
not part of the public domain or knowledge, nor, to the knowledge of the
Company, have they been misappropriated by any person having an obligation to
not use such trade secrets or to maintain such trade secrets or other
confidential information in confidence for the Company or its Subsidiaries or
disclosed by such a person in violation of such obligations, and (iv) to the
Knowledge of the Company, no employee or consultant of the Company or any of its
Subsidiaries has made unauthorized use of any trade secrets or other
confidential information of any other person or entity in the course of the
employee's or consultant's work for the Company or such Subsidiary. Schedule
4.15(b) sets forth all material patents, patent applications, domain name
registrations, registered copyrights, applications for registration of
copyright, registered trademarks, and applications for registration of
trademarks that are part of the Company Owned Intellectual Property; provided
that Company Intellectual Property shall not be deemed to be Company Owned
Intellectual Property unless it is owned outright by the Company. By way of
example and not limitation, ownership or possession by the Company or its
Subsidiary of a security interest or exclusive license with respect to Company
Intellectual Property shall not cause such Company Intellectual Property to be
deemed to be Company Owned Intellectual Property for purposes of this Section
4.15(b).
(c) To the Knowledge of the Company, no university or government
agency (whether federal, state or foreign) has any claim of ownership in the
Company Owned Intellectual Property, except as identified in Section 4.15(c)(1)
of the Company Disclosure Schedule. The Company has no Knowledge of any active
material infringement, dilution or misappropriation by others of the Company
Owned Intellectual Property, or any material violation of the confidentiality of
any of its trade secrets or other confidential information, except as identified
in Section 4.15(c)(2) of the Company Disclosure Schedule. To the Company's
Knowledge, the Company is not making unlawful use of any third party
confidential information or trade secrets of any past or present employees of
the Company or any of its Subsidiaries.
(d) The Company or its Subsidiaries have good and valid title to or
the current right to possess all material real property and material personal
property owned or leased by them, and, to the Knowledge of the Company, the
assets, properties and rights owned or leased by or licensed to the Company and
its Subsidiaries constitute all such assets, properties and rights as are
necessary in the conduct of the business of the Company and its Subsidiaries as
currently conducted and as identified in Section 4.15(b) of the Company
Disclosure Schedule.
(e) To the Knowledge of the Company, neither the Company nor any of
its Subsidiaries distributes Spyware or Adware in connection with the businesses
they conduct. "SPYWARE" means any software that covertly gathers information
regarding user online activity through the user's Internet connection (I.E.,
without notice that such information may be gathered), whether or not such
software is bundled as a hidden component of the Company's toolbar or like
applications, other than information (i) reasonably gathered in connection with
services or information provided by Company or its Subsidiaries to such users,
or (ii) that is not associated with personally identifiable information.
"ADWARE" means any software that causes advertising to pop-up as a new window
(over or under) on the user's computer based on the user's online activity
(other than advertisements that Company serves to visitors to the Company's web
site domains while those customers are visiting or exiting such domains) or
which is used to distribute Spyware. Each of the Company's applications can be
readily
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uninstalled by users using commercially available uninstall utilities, and no
such application, if uninstalled, can reinstall itself without the consent of
such users; provided that Company makes no representation or warranty that such
uninstall process will always operate without error.
Section 4.16 CERTAIN CONTRACTS; LEASES. Section 4.16 of the Company
Disclosure Schedule sets forth each contract, arrangement, commitment or
understanding (whether written or oral) to which it or its Subsidiaries is a
party:
(a) that is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of
this Agreement;
(b) that materially restricts the conduct of any line of business by
the Company or upon consummation of the transactions contemplated by this
Agreement will restrict the conduct of any line of business by Parent, or
Parent's Subsidiaries or the ability of Parent or any of Parent's
Subsidiaries to engage in any line of business;
(c) that upon consummation of the transactions contemplated by this
Agreement will subject any of the Company or any of its Subsidiaries to any
exclusivity arrangements with or to a labor union or guild (including any
collective bargaining agreement);
(d) (other than any plan or agreement covered by Section 4.12 hereof)
any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any stockholder
approval or the consummation of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement;
(e) that is with Google, Inc. or any of its Subsidiaries ("GOOGLE");
(f) that is a material license or contract relating to Company
Intellectual Property; or
(g) the absence, breach, non-performance, amendment or termination of
which would have a Material Adverse Effect on the Company.
Each contract, arrangement, commitment or understanding of the type
described in this Section 4.16 is referred to herein as a "COMPANY CONTRACT,"
and neither the Company nor any of its Subsidiaries knows of, or has received
notice of, any material violation of the above by any of the other parties
thereto which would have, individually or in the aggregate, a Material Adverse
Effect on the Company, or with respect to a Company Contract described in
Section 4.16(b), a Material Adverse Effect on Parent following the Merger. The
Company has heretofore made available to Parent, or publicly filed with the SEC,
a true and complete copy of each Company Contract. Except for those Company
Contracts marked with an asterisk (*) as set forth in Section 4.16 of the
Company Disclosure Schedule, no Company Contract requires the consent of any
other contracting party to prevent a breach of, or a default under, or a
termination, change in the terms or conditions or modification of, such Company
Contract as a result of the consummation of the transactions contemplated
hereby.
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(h)(i) Each Company Contract is valid and binding on the Company or
any of its Subsidiaries, as applicable, and in full force and effect, (ii)
the Company and each of its Subsidiaries has in all material respects
performed all material obligations required to be performed by it to date
under each Company Contract, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of the Company or any of its Subsidiaries
under any such Company Contract.
(i) Section 4.16(i) of the Company Disclosure Schedule sets forth a
complete and accurate list and description of all real property leased,
subleased or otherwise occupied by the Company or its Subsidiaries (the
"LEASED REAL PROPERTY"). The Company and its Subsidiaries do not own any
real property. All of the leases or subleases of the Leased Real Property
(the "LEASES") are valid, binding and in full force and effect. No Lease is
subject to any mortgage, pledge, lien, encumbrance, sublease, assignment,
license or other agreement granting to any third party any interest in such
Lease or any right to the use or occupancy of any Leased Real Property. The
Company, a Subsidiary or valid sublessee, as lessee under each Lease, is
now in possession of all of the applicable Leased Real Property. To the
Knowledge of the Company, there is no pending or threatened proceeding that
might interfere in any material respect with the quiet enjoyment of each
lessee. To the Company's Knowledge, the Company or a Subsidiary has
performed all material obligations required to be performed by it to date
under each Lease, and no event or condition exists which constitutes or,
after notice or lapse of time or both, will constitute, a material default
on the part of the Company or such Subsidiary under any such Lease. The
Company or a Subsidiary has exercised within the time prescribed in each
Lease any option provided therein to extend or renew the term thereof. As
used herein, the term "Lease" shall also include subleases, the term
"lessor" shall also include any sublessor, and the term "lessee" shall also
include any sublessee.
Section 4.17 UNDISCLOSED LIABILITIES. Except for those liabilities
that are disclosed in the footnotes to or reserved against on the Company
Financial Statements (and only to the extent of such disclosure or reserve) and
for liabilities incurred in the ordinary course of business consistent with past
practice which have not had or would not have, individually or in the aggregate,
a Material Adverse Effect on the Company, since December 31, 2004, neither the
Company nor any of its Subsidiaries have incurred any liability of any nature
whatsoever (whether absolute, accrued, determined, determinable, contingent or
otherwise and whether due or to become due).
Section 4.18 INSURANCE. The Company and its Subsidiaries have in
effect insurance coverage with reputable insurers or are self-insured, which, in
respect of amounts, premiums, types and risks insured, constitutes reasonably
adequate coverage against all risks customarily insured against by companies and
their subsidiaries in the same or similar lines of business as the Company and
its Subsidiaries and comparable in size and operations to the Company and its
Subsidiaries. The Company has made available to Parent a copy of all material
insurance policies and all material self insurance programs and arrangements
relating to the business, assets and operations of the Company and its
Subsidiaries (the "INSURANCE POLICIES"). Each of such Insurance Policies is in
full force and effect as of the date of this Agreement. From December 31, 2002
through the date hereof, none of the Company or any of its Subsidiaries has
received any notice or other communication regarding any actual or possible (a)
cancellation of
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any Insurance Policy that has not been renewed in the ordinary course without
any lapse in coverage, (b) invalidation of any Insurance Policy, (c) refusal of
any coverage or rejection of any material claim under any Insurance Policy, or
(d) material adjustment in the amount of the premiums payable with respect to
any Insurance Policy.
Section 4.19 ENVIRONMENTAL LIABILITY. Except for matters which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the imposition, on
the Company of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance relating
to human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, pending or, to the Company's Knowledge, threatened against the Company,
which liability or obligation would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company. To
the knowledge of the Company, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose any
liability or obligation that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company, and
the Company is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability or obligation.
Section 4.20 STATE TAKEOVER LAWS. No "fair price," "moratorium,"
"control share acquisition" or other anti-takeover statute (including Section
203 of the DGCL) is applicable to the Merger or to any of the transactions
contemplated by this Agreement.
Section 4.21 REGISTRATION STATEMENT. None of the information
supplied or to be supplied by the Company in writing specifically for inclusion
or incorporation by reference in the Registration Statement (as defined herein)
will, at the time such Registration Statement becomes effective, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information provided by Parent, Merger Sub and/or by their
auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Registration Statement.
Section 4.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in
the Company Reports or compensation or other employment arrangements in the
ordinary course, there are no transactions, agreements, arrangements or
understandings between the Company or any of its Subsidiaries, on the one hand,
and any affiliate (including any officer or director) thereof, but not including
any wholly owned Subsidiary of the Company, on the other hand ("COMPANY
AFFILIATE TRANSACTIONS").
Section 4.23 OPINIONS OF FINANCIAL ADVISORS. The Company's Board of
Directors has received the opinions, dated as of the date hereof, of Xxxxx &
Company and Citigroup Global Markets to the effect that the Exchange Ratio in
the Merger is fair to holders of
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Company Common Stock from a financial point of view as of such date. Such
opinion has not been withdrawn or modified in any material respect.
Section 4.24 RELATIONSHIP WITH GOOGLE. Since December 31, 2004 there
has not been any adverse change in the business relationship of the Company or
any of its Subsidiaries with Google. Neither the Company nor any of its
Subsidiaries have received, prior to the date hereof, notice of (i) Google's
intention to breach, terminate, or alter any contract between Google and the
Company or any of its Subsidiaries, or (ii) early termination of, or a request
for a concession by, the Company or any of its Subsidiaries of any such
contract, or (iii) Google's belief that the Company or any of its Subsidiaries
are not in compliance with any such contract.
Section 4.25 TRAFFIC METRICS. Section 4.25 of the Company Disclosure
Schedule sets forth certain web site "traffic metrics," and the data contained
therein fairly presents the specified internet traffic of the Company and its
Subsidiaries for the periods indicated therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the corresponding number and subsection of
the Parent disclosure schedule delivered to the Company concurrently herewith
(the "PARENT DISCLOSURE SCHEDULE"), or in such other number and subsection of
the Parent Disclosure Schedule where the applicability of such exception is
reasonably apparent, as an inducement to the Company entering into this
Agreement and completing the transactions contemplated hereby, Parent and Merger
Sub hereby represent and warrant to the Company as follows:
Section 5.1 CORPORATE ORGANIZATION. Each of Parent, the Merger Sub
and the Subsidiaries of Parent is duly organized and validly existing as an
entity in good standing under the laws of the jurisdiction of its incorporation,
except, with respect to the Subsidiaries of Parent, as would not, either
individually or in the aggregate, have a Material Adverse Effect on Parent. Each
of Parent, Merger Sub and the Subsidiaries of Parent has the power and authority
to own, lease and operate all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned, leased or operated by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in good
standing would not, either individually or in the aggregate, have a Material
Adverse Effect on Parent. Each of Parent, Merger Sub and the Subsidiaries of
Parent is in possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the failure
to have such franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Parent has previously made
available true and complete copies of (i) the Certificate of Incorporation of
Parent and the Bylaws of Parent, each as in effect as of the date of this
Agreement, and (ii) the minutes of the meetings of the Board of Directors and
any Committee
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thereof in respect of meetings of the Board of Directors and such Committees
held since January 31, 2003 through the date hereof for which minutes have been
prepared and approved.
Section 5.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of Parent consists of 1,600,000,000 shares of Parent Common Stock,
400,000,000 shares of Class B common stock, par value $.01 per share ("PARENT
CLASS B COMMON STOCK") and 100,000,000 shares of preferred stock, par value $.01
per share ("PARENT PREFERRED STOCK" ), of which 13,125,000 shares have been
designated as "Series A Cumulative Convertible Preferred Stock" (the "SERIES A
PREFERRED STOCK"). At the close of business on February 28, 2005, (a)
699,118,128 shares of Parent Common Stock were issued, 634,907,937 shares of
Parent Common Stock were outstanding, 64,629,996 shares of Parent Class B Common
Stock were issued and outstanding and 13,118,182 shares of Series A Preferred
Stock were issued and outstanding, in each case, except as disclosed in the
Parent's proxy statement dated May 10, 2004 (the "PARENT PROXY STATEMENT"), not
subject to any preemptive rights, and (b) 64,210,191 shares of Parent Common
Stock, no shares of Parent Class B Common Stock and no shares of Parent
Preferred Stock were held in treasury by Parent or by Subsidiaries of Parent.
All of the outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. As of the
close of business on February 28, 2005, other than (a) options to purchase
75,609,969 shares of Parent Common Stock issued pursuant to employee benefit
plans and agreements of Parent, (b)71,152,538 shares of Parent Common Stock
issuable upon exercise of outstanding warrants, (c) up to a maximum of
25,720,819 and 64,629,996 shares of Parent Common Stock issuable upon conversion
of Series A Preferred Stock and Parent Class B Common Stock, respectively, (d)
263,318 restricted shares of Parent Common Stock, (e) 12,220,846 shares of
Parent Common Stock issuable in respect of restricted stock units and (f) 36,276
deferred share units of Parent Common Stock issued pursuant to Parent's
Non-Employee Directors Deferred Compensation Plan, each unit representing one
share of Parent Common Stock, (x) there are no options, warrants, rights, puts,
calls, commitments or other contracts, arrangements or understandings issued by
or binding upon Parent or any Subsidiary of Parent requiring or providing for,
and (y) there are no outstanding debt or equity securities of Parent or any
Subsidiary of Parent which upon the conversion, exchange or exercise thereof
would require or provide for the issuance by Parent or any Subsidiary of Parent
of any new or additional shares of Parent Common Stock (or any other securities
of Parent or any Subsidiary of Parent) which, with or without notice, lapse of
time and/or payment of monies, are or would be convertible into or exercisable
or exchangeable for Parent Common Stock (or any other securities of Parent or
any Subsidiary of Parent). Since December 31, 2004 through the date hereof,
neither Parent has nor any Subsidiary of Parent thereof has issued any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than as disclosed in Section 5.2 of the
Parent Disclosure Schedule or pursuant to the exercise of employee stock options
granted prior to such date and the vesting of restricted stock units. The
authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub
Common Stock, of which, as of the date hereof, 100 shares are issued and
outstanding and held solely by Parent. There are no options, warrants, rights,
agreements or understandings that could give rise to the acquisition of equity
in Merger Sub by any person other than Parent. The shares of Parent Common Stock
to be issued in the Merger will, upon issuance, be validly issued, fully paid,
nonassessable, not subject to any preemptive rights and free and clear of all
security interests, liens, claims, pledges or other encumbrances of any nature
whatsoever (in each case to which Parent is a party).
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Section 5.3 AUTHORITY; NO VIOLATION. (a) Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by Parent and Merger Sub of the transactions contemplated
hereby, including the Merger, have been unanimously, duly and validly authorized
by all necessary corporate action on the part of Parent and Merger Sub. This
Agreement has been duly and validly approved and declared advisable by the Board
of Directors of each of Parent and Merger Sub. No vote of Parent's stockholders
is required in connection with the Merger. No other corporate proceedings on the
part of Parent and Merger Sub are necessary to approve this Agreement and to
consummate the transactions contemplated hereby, other than the approval by
Parent as the sole stockholder of Merger Sub of this Agreement (which shall be
obtained prior to the Effective Time). This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and (assuming due authorization,
execution and delivery by the Company) constitutes a legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against each in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by each of
Parent and Merger Sub, nor the consummation by Parent and Merger Sub of the
transactions contemplated hereby, including the Merger, nor compliance by Parent
or Merger Sub with any of the terms or provisions of this Agreement, will (i)
violate any provision of the Restated Certificate of Incorporation or Bylaws of
Parent, or the Certificate of Incorporation or Bylaws of Merger Sub, or violate
or conflict with any agreement or instrument pursuant to which any shares of
capital stock of Parent or Merger Sub, or securities exercisable for or
convertible into shares of capital stock of Parent or Merger Sub, have been
issued, or (ii) subject to the making of the filings referred to in Section 5.5
and the effectiveness of such filings and/or receipt of the consents and
approvals in connection therewith, (A) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
Parent or Merger Sub or any of their respective properties or assets or (B)
violate, conflict with, result in a breach of any provision of or the loss of
any material benefit under, constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, result in the creation of any Lien upon any of the
respective properties or assets of Parent, Merger Sub or any Subsidiary of
Parent under, or require any increased payment under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Parent,
Merger Sub or any Subsidiary of Parent is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the
case of clause (ii) above) for such violations, conflicts, breaches, defaults,
terminations, losses of benefits, cancellations, accelerations, Liens or
payments which, individually or in the aggregate, would not have a Material
Adverse Effect on Parent.
Section 5.4 SEC REPORTS; FINANCIAL STATEMENTS. (a) Parent has made
available to the Company an accurate and complete copy of each (i) report,
schedule, final registration statement, prospectus, and definitive proxy
statement filed by Parent with the SEC on or after January 1, 2002 and prior to
the date hereof (the "PARENT REPORTS"), which are all the forms,
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reports and documents required to be filed by Parent with the SEC since such
date; and (ii) communication mailed by Parent to its stockholder since January
1, 2004 and prior to the date hereof. As of their respective dates, the Parent
Reports and communications (A) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the published rules and regulations of the SEC thereunder applicable thereto,
and (B) did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were made,
not misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date.
(b) Parent has previously made available to the Company copies of the
consolidated balance sheets (the "PARENT 10-K BALANCE SHEETS") of Parent and its
Subsidiaries as of December 31, 2003 and December 31, 2004, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the fiscal years ended December 31, 2003 and December 31, 2004, as
reported in Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 filed with the SEC under the Exchange Act (as defined herein)
(such financial statements included in such Annual Report on Form 10-K, together
with the Parent 10-K Balance Sheets, the "PARENT FINANCIAL STATEMENTS"), in each
case, accompanied by the audit report of Ernst & Young LLP, independent public
accountants with respect to Parent. The Parent Financial Statements (including
the related notes) (i) fairly present in all material respects the consolidated
financial position of Parent and its Subsidiaries at the respective dates
thereof and the consolidated results of operations, cash flows and, changes in
stockholders' equity (deficit), of Parent and its Subsidiaries for the years
indicated, (ii) have been prepared consistent with the books and records of
Parent and its Subsidiaries and consistent with Parent's accounting policies and
procedures, each in a manner consistent with prior financial statements of
Parent (except for adoption of accounting pronouncements and other changes in
accounting policy, each as disclosed in the Parent Reports), (iii) comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto and (iv)
have been prepared in all material respects in accordance with GAAP consistently
applied during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of Parent and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP (to the extent applicable) and any other applicable legal
and accounting requirements and reflect only actual transactions.
Section 5.5 CONSENTS AND APPROVALS. Except for (a) the filing of the
pre-merger notification report under the HSR Act, (b) the filing with the SEC of
(i) the Proxy Statement/Prospectus, (ii) a Registration Statement of Parent on
Form S-4 with respect to shares of Parent Common Stock which may be issued to
stockholders of the Company in the Merger or pursuant to converted Company
Options (together with any amendments or supplements thereto, the "REGISTRATION
STATEMENT") and (iii) such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (c)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Parent Common Stock pursuant to this Agreement, (d) the filing
of applications for the authorization of quotation on NASDAQ or such other
national exchange on which the Parent Common Stock is quoted or listed at the
Effective Time of the Parent Common Stock issuable under this Agreement, (e) the
Company
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Stockholder Approval, (f) the filings with any Governmental Entity as required
under applicable law in each case as expressly set forth in Section 5.5 of the
Parent Disclosure Schedule, (g) the filing of the Certificate of Merger and the
Amended and Restated Certificate of Incorporation of the Surviving Corporation
with the Secretary of State of the State of Delaware pursuant to the DGCL, and
(h) consents and approvals previously obtained, (i) such filings, consents and
approvals in respect of the Company Permits (without giving effect to the
materiality qualifier contained in the definition thereof) as are required by
applicable law and (j) such other consents, approvals or filings the failure of
which to obtain or make would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, no consents or approvals of or filings or
registrations with any Governmental Entity or third party are necessary in
connection with (A) the execution and delivery by Parent or Merger Sub of this
Agreement and (B) the consummation by Parent or Merger Sub of the transactions
contemplated hereby. As of the date hereof, to Parent's Knowledge, there is no
reason why the receipt of any such consents or approvals will not be obtained in
a customary time frame once complete and appropriate filings have been made by
the Company and Parent.
Section 5.6 SECURITIES LAW MATTERS.
(a) With respect to each Annual Report on Form 10-K and each
Quarterly Report on Form 10-Q included in the Parent Reports, the financial
statements and other financial information included in such reports fairly
present in all material respects the financial condition as of the dates thereof
and the results of operations for the periods then ended of Parent and its
consolidated Subsidiaries.
(b) There are no significant deficiencies or material weaknesses in
either the design or operation of internal controls of Parent that are
reasonably likely to adversely affect the ability of Parent to record, process,
summarize and report financial information. With respect to periods after
January 1, 2002, Parent has no knowledge of any fraud or suspected fraud
involving (x) management of Parent (including its consolidated Subsidiaries) who
have a significant role in the internal controls related to financial reporting,
(y) any employees of Parent (including its consolidated Subsidiaries) where such
fraud could have a material effect on the consolidated financial statements of
Parent or (z) any officer or employee of Parent whose role, actions or
activities would be required to be considered in certifying internal controls of
Parent pursuant to Section 404 of the Sarbanes Oxley Act of 2002.
(c) Parent has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to Parent, including its consolidated Subsidiaries, is made
known to Parent's principal executive officer and its principal financial
officer by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being prepared;
and such disclosure controls and procedures are effective in timely alerting
Parent's principal executive officer and its principal financial officer to
material information required to be included in Parent's periodic reports
required under the Exchange Act.
Section 5.7 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Section 5.7 of the Parent Disclosure Schedule, neither Parent nor any of the
Subsidiaries of Parent is in
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conflict with, is in default or violation of, or has since December 31, 2001
been investigated for, or charged by any Governmental Entity with, a violation
of any material law, rule, regulation, order, judgment or decree applicable to
Parent or any of the Subsidiaries of Parent or by which they or any of their
respective properties is bound or affected which would reasonably be likely to
have a Material Adverse Effect on Parent. In furtherance and not in limitation
of the foregoing, neither Parent nor any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission or other sum of money or item
of property, however characterized, to any government official or other
governmental party, in the United States or any other country, which is in any
manner related to the business or operations of such entities and which is or
was illegal under any applicable law (including, without limitation, the U.S.
Foreign Corrupt Practices Act and the rules and regulations promulgated
thereunder).
Section 5.8 INTELLECTUAL PROPERTY. To the Knowledge of Parent, (a)
except as would not, individually or in the aggregate have a Material Adverse
Effect on Parent, Parent or its Subsidiaries own or otherwise have the right to
use the Intellectual Property rights that are material to the operation of their
current business activities, (b) Parent and its Subsidiaries are not in material
breach of any of the license agreements or other agreements covering the
Intellectual Property licensed by Parent or its Subsidiaries, except for any
breaches that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, (c) the present business activities or products of
Parent and its Subsidiaries do not infringe in any material respect any
Intellectual Property of others, except for any infringing activity that would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
Section 5.9 UNDISCLOSED LIABILITIES. Except for those liabilities
that are disclosed in the footnotes to or reserved against on the Parent
Financial Statements (and only to the extent of such disclosure or reserve) and
for liabilities incurred in the ordinary course of business consistent with past
practice which have not had or would not have, individually or in the aggregate,
a Material Adverse Effect on Parent, since December 31, 2004, neither Parent nor
any of its Subsidiaries have incurred any liability of any nature whatsoever
(whether absolute, accrued, determined, determinable, contingent or otherwise
and whether due or to become due).
Section 5.10 CONDUCT OF BUSINESS. Merger Sub is a corporation formed
solely for the purpose of consummating the Merger and the other transactions
contemplated hereby and has not engaged in any business activity except as
contemplated by this Agreement.
Section 5.11 BROKER'S FEES. None of Parent, the Subsidiaries of
Parent, Merger Sub or any of their respective officers or directors has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees payable on behalf of Parent in connection with the
Merger or the other transactions contemplated by this Agreement.
Section 5.12 TAXES AND TAX RETURNS. Each of Parent and the Parent
Subsidiaries has duly and timely filed all material Tax Returns required to be
filed by it, each of Parent and the Parent Subsidiaries has duly paid or made
adequate provision in accordance with GAAP in the Parent 10-K Balance Sheet for
the payment of all material Taxes (as defined herein) which have become due as
of the date thereof, and have withheld from their employees all material Taxes
required to have been withheld and have paid over all such material Taxes to the
proper governmental authority, and all such filed Tax Returns are accurate and
complete in all material
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respects. There are no disputes pending or, to the knowledge of Parent,
threatened, related to, or claims asserted for, material Taxes or assessments
upon the Parent or any of the Parent Subsidiaries for which Parent does not have
specific and adequate contingency reserves to the extent required by GAAP. To
the knowledge of Parent, there are no material liens for Taxes upon any property
or assets of Parent or Parent Subsidiaries, other than liens for Taxes that are
not delinquent. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any material federal income Taxes
of Parent or any of the Parent Subsidiaries for any period. To the knowledge of
Parent, there are no current claims by any taxing authority in any jurisdiction
where Parent or any of the Parent Subsidiaries currently does not file income
Tax Returns that Parent or any of the Parent Subsidiaries is or may be subject
to material income Tax in such jurisdiction. Neither Parent nor any of the
Parent Subsidiaries is a party to any material Tax sharing, allocation or
indemnification agreement or arrangement, other than such agreements with
customers, vendors, lessors or the like entered into in the ordinary course of
business. Neither Parent nor any of the Parent Subsidiaries has been a member of
an affiliated group filing a consolidated, combined or unitary Tax Return (other
than the affiliated group of which Parent is the common parent or of which such
Parent Subsidiary was the common parent) or has any material liability for the
Taxes of any person (other than Parent or any of the Parent Subsidiaries) under
Treasury Regulation ss. 1.1502-6 (or any similar provision of state, local or
foreign law.
Section 5.13 CERTAIN OTHER TAX MATTERS. Parent and its affiliates
have not taken or agreed to take any action, have not failed to take any action
and do not know of any fact, agreement, plan or other circumstance, in each case
that would or could reasonably be expected to prevent the Merger from qualifying
as a "reorganization" within the meaning of Section 368(a) of the Code. The
parties agree that none of the transactions contemplated by this Agreement could
reasonably be expected to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 5.14 REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Parent in writing for inclusion or incorporation
by reference in the Registration Statement will, at the time any Registration
Statement becomes effective, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. Notwithstanding the foregoing, Parent and Merger
Sub make no representation or warranty with respect to any information supplied
by the Company and/or its auditors, legal counsel, financial advisors or other
consultants or advisors specifically for inclusion or incorporation by reference
in the Registration Statement. The Registration Statement, including the
prospectus contained therein (as supplemented or amended prior to the Effective
Time), will comply as to form in all material respects with the provisions of
the Securities Act and the rules and regulations promulgated by the SEC
thereunder.
Section 5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 2004, no event or events have occurred which have had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent.
Section 5.16 LEGAL PROCEEDINGS. Except as disclosed in the Parent
Reports filed prior to the date hereof, neither Parent nor any of its
Subsidiaries is a party to any, and there are
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no pending or, to the best of Parent's Knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Parent or any of its
Subsidiaries, in each case other than such proceedings, claims actions or
investigations which would not, individually or in the aggregate, (a) result in
any material fines, judgments or amounts paid in settlement, (b) if adversely
determined against Parent or any of the Subsidiaries of Parent, restrict in any
material respect the conduct of the business of Parent and the Subsidiaries of
Parent or (c) as of the date hereof, challenge the validity or propriety of the
transactions contemplated by this Agreement.
Section 5.17 OWNERSHIP OF COMPANY COMMON STOCK. As of the date
hereof, Parent owns no shares of Company Common Stock. No subsidiary of Parent,
including Merger Sub, owns any shares of Company Common Stock. Parent has not
taken any action in its capacity as a stockholder of the Company that would
cause Section 203 of the Delaware Statute to be applicable to this Agreement or
the Merger.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 CONDUCT OF BUSINESSES PRIOR TO THE MERGER CLOSING.
Commencing upon execution of this Agreement and continuing through to the
earlier of the Closing or the termination of this Agreement pursuant to Section
9.1, except as expressly contemplated or permitted by this Agreement or as
disclosed in Section 6.1 of the Company Disclosure Schedule, the Company shall,
and shall cause its Subsidiaries to (a) conduct its business in the ordinary
course consistent with past practices, (b) use reasonable efforts to maintain
and preserve intact its business organization and advantageous business
relationships and to retain the services of its key officers and key employees,
and (c) take no action which would reasonably be likely to adversely affect or
delay the ability of any of the parties from obtaining any necessary approvals
of any regulatory agency or other governmental authority required for the
transactions contemplated hereby, performing its covenants and agreements under
this Agreement or consummating the transactions contemplated hereby or otherwise
delay or prohibit consummation of the Merger or other transactions contemplated
by this Agreement.
Section 6.2 FORBEARANCES. Commencing upon execution of this
Agreement and continuing through to the earlier of the Closing or the
termination of this Agreement pursuant to Section 9.1, except as set forth in
Section 6.2 of the Company Disclosure Schedule or expressly contemplated by this
Agreement, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed):
(a) incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make
any loan or advance, in excess of $5,000,000 in the aggregate;
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(b) adjust, split, combine or reclassify any capital stock, except
for any such transaction by a wholly owned Subsidiary of the Company which
remains a wholly owned Subsidiary after consummation of such transaction;
(c) make, declare or pay any dividend other than dividends or
distributions by a direct or indirect wholly owned Subsidiary of the
Company to its parent or to another direct or indirect wholly owned
Subsidiary of the Company, or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire or encumber, any shares
of its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its
capital stock, except in connection with cashless exercises or similar
transactions pursuant to the exercise of stock options issued and
outstanding as of the date hereof under the Company Stock Plans;
(d) subject to Section 6.2(l), grant to any individual, corporation
or other entity any right to acquire shares of its capital stock;
(e) issue any shares of capital stock of the Company, except pursuant
to the exercise of stock options outstanding as of the date hereof under
the Company Stock Plans, or any other securities convertible into shares of
Company Common Stock issued and outstanding as of the date hereof and in
accordance with its terms;
(f) INTENTIONALLY LEFT BLANK
(g) amend or terminate the Rights Agreement, other than in connection
with a transaction entered into pursuant to Section 9.1(e);
(h) sell, transfer, mortgage, encumber or otherwise dispose of any of
its lines of business or any of its material properties or assets to any
individual, corporation or other entity, other than to a wholly owned
Subsidiary, or cancel, release or assign any material indebtedness to any
such person or any claims held by any such person, except pursuant to
contracts or agreements in force at the date thereof or, in the case of
cancellation or release of material indebtedness, as a result of debt
collections;
(i) pay, or agree to pay, cash consideration of more than $25,000,000
in the aggregate, whether by purchase of stock or securities, contributions
to capital, property transfers, or purchase of any property or assets of
any other individual, corporation or other entity other than to a wholly
owned Subsidiary of the Company or any wholly owned Subsidiary thereof;
(j) terminate, or amend or waive any material provision of, any
Company Contract, as the case may be, or make any material change in any
instrument or agreement governing the terms of any lease or contract;
(k) establish, adopt, amend or terminate any Company Benefit Plan, or
amend the terms of any outstanding equity based award;
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(l)(i) establish, or increase compensation or benefits provided under,
or make any payment not required by, any stay, bonus, incentive, insurance,
severance, termination, change of control, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation,
the granting of stock options, stock appreciation rights, performance
awards, restricted stock awards or similar instruments), stock purchase or
other employee benefit plan, program, policy, or agreement or arrangement
or (ii) otherwise increase or accelerate the vesting or payment of the
compensation payable or the benefits provided or to become payable or
provided to any of its current or former directors, officers, employees,
consultants or service providers or those of any Subsidiary, or otherwise
pay any amounts not due such individual, (iii) enter into any new or amend
any existing employment or consulting agreement with any director, officer,
employees, consultants or service provider or retain the services of any
such person if the compensation (base and bonus) shall exceed $250,000 or
(iv) establish, adopt or enter into any collective bargaining agreement,
except in each of clauses (i) and (ii), as may be required to comply with
applicable law or existing contractual arrangements;
(m) settle any material claim, action or proceeding;
(n) amend its certificate of incorporation or its bylaws or, in the
case of the Company, enter into any agreement with its stockholders in
their capacity as such;
(o) take any action that is intended or would reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue such that the condition set forth in
Section 8.3(a) shall be incapable of satisfaction;
(p) other than in the ordinary course of business consistent with
past practice, (i) sell, assign, otherwise transfer, sublicense or enter
into any material license agreement with respect to any Company
Intellectual Property used by it in its business or buy or enter into any
material license agreement with respect to Third Party Intellectual
Property; (ii) sell, license or transfer to any person or entity any
material rights to any Company Intellectual Property Rights used by it in
its business; or (iii) enter into or materially amend any Company Contract,
as the case may be, pursuant to which any other party is granted marketing
or distribution rights of any type or scope with respect to any material
products or services of its or any of its Subsidiaries;
(q) enter into any "non-compete" or similar agreement that would
materially restrict the businesses of the Surviving Corporation or its
Subsidiaries following the Effective Time or that reasonably would be
expected to restrict the businesses of Parent and its Subsidiaries
(excluding the Surviving Corporation and its Subsidiaries);
(r) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of such entity, other than in relation to a wholly owned
Subsidiary of the Company or any wholly owned Subsidiary thereof, and other
than a merger of a wholly owned Subsidiary of the Company or any wholly
owned Subsidiary thereof with or into a third party in which the sole
consideration to be issued in such transaction to such third party is cash
solely to the extent such transaction is permitted by, and is in accordance
with, clause (i) of this Section 6.2;
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(s) implement or adopt any change in its accounting principles,
practices or methods, other than as consistent with or as may be required
by law, GAAP or regulatory guidelines;
(t) settle or compromise any material liability for Taxes, file any
material amended Tax Return, file any material Tax Return in a materially
inconsistent manner with past practice (except as otherwise required by
law), make any material Tax election (other than in the ordinary course of
business) or change any material method of accounting for Tax purposes;
(u) enter into any new, or amend or otherwise alter any current,
Company Affiliate Transaction; or
(v) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 6.2.
Section 6.3 CERTAIN TAX MATTERS. Commencing upon execution of this
Agreement and continuing through to the Closing, each Party hereto shall use
commercially reasonable efforts to cause the Merger to qualify, and will not
take any action, cause any action to be taken, fail to take any commercially
reasonable action or cause any commercially reasonable action to fail to be
taken, which action or failure to act would or could reasonably be expected to
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 REGULATORY MATTERS. (a) As promptly as practicable after
the date hereof, Parent shall prepare and file with the SEC the Registration
Statement, which will contain (i) the prospectus of Parent relating to the
shares of Parent Common Stock (including shares of Parent Common Stock issuable
pursuant to Company Options converted into Parent Options in accordance with
Section 3.3, and the conversion of Company Notes; and (ii) the proxy statement
of the Company relating to the Stockholder Meeting (collectively, the "PROXY
STATEMENT/PROSPECTUS"). Each of Parent and the Company shall use their
respective reasonable efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing,
and the Company shall thereafter promptly mail or deliver the Proxy
Statement/Prospectus to its stockholders. Each of Parent and the Company shall
use its reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement, and the Company shall furnish all information concerning the
Company and the holders of the Company Common Stock as may be reasonably
requested in connection with any such action.
(b) The Parties shall cooperate with each other and use reasonable
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable
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to consummate the transactions contemplated by this Agreement, and to comply
with the terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Parent and the Company shall
have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the
exchange of material non-public information, any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement, provided, that Parent or
the Company may restrict access to such documents that discuss the pricing or
valuation of the other Party or its businesses. In exercising the foregoing
right, each of the Parties shall act reasonably, in good faith and as promptly
as reasonably practicable. The Parties agree that they will consult with each
other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other reasonably apprised of the status of matters relating
to completion of the transactions contemplated herein.
(c) Parent and the Company shall, upon request, furnish the other
Parties with all information concerning themselves, their Subsidiaries and their
Subsidiaries' affiliates, directors, officers and stockholders and such other
matters as may be reasonably necessary for the preparation and filing in
compliance with applicable legal requirements of the Proxy Statement/Prospectus,
the Registration Statement or any other legally required statement, filing,
notice or application made by or on behalf of Parent or the Company or any of
their respective Subsidiaries to any Governmental Entity in connection with the
transactions contemplated by this Agreement.
(d) The Company and Parent shall, and Parent shall cause Merger Sub to,
promptly advise the other Parties upon receiving any communication from any
Governmental Entity whose consent or approval is required for consummation of
the transactions contemplated by this Agreement that causes such party to
believe that there is a reasonable likelihood that any Requisite Regulatory
Approval (as defined herein) will not be obtained or that the receipt of any
such approval may be materially delayed. Subject to applicable laws relating to
the exchange of material non-public information, such Party shall provide a copy
of such communication to the other Party promptly upon request.
(e) The separation of Parent into two separate companies which is
expected to occur in the second quarter of 2005 (the "PARENT SPIN-OFF") will not
be effected in a manner that will jeopardize the status of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Parent shall
not take any action that, for federal income tax purposes, will cause the Parent
Spin-Off to result in the recognition of material gain or loss by any Company
stockholder as a result of any distribution with respect to shares of Parent
Common Stock acquired by such Company shareholder in the Merger. Parent shall
not effect or consummate the Parent Spin-Off until after the transactions
contemplated by this Agreement shall have been consummated.
Section 7.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of material non-public
information, each of the Parties shall, and shall cause each of their respective
Subsidiaries to, afford to the officers, employees,
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accountants, counsel and other representatives of the other Parties, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records, in order to
reasonably verify the representations and warranties of the other Party herein
and to the extent otherwise reasonably required for the transactions
contemplated by this Agreement. During such period, each of the Parties shall,
and shall cause their respective Subsidiaries to, make available to the other
Parties: (i) a copy of each report, schedule, registration statement, SEC
comment letter and other document filed or received by it during such period
pursuant to the requirements of federal securities laws (other than reports or
documents which such party is not permitted to disclose under applicable law)
and (ii) all other information concerning its business, properties and personnel
as such other Parties may reasonably request. No Party shall be required to
provide access to or to disclose information where such access or disclosure
would violate the rights of its customers, jeopardize the attorney-client or
work product or other legally recognized privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding written agreement
entered into prior to the date of this Agreement. The Parties will in good faith
consider and seek to implement reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Each of the Parties shall hold all information furnished by or on
behalf of any other Party or any of such Party's Subsidiaries or representatives
pursuant to Section 7.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the Mutual Non-Disclosure Agreement between
Parent and the Company, dated as of January 10, 2005 (the "CONFIDENTIALITY
AGREEMENT"). The Parties acknowledge and agree that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby shall not be deemed a breach or violation of the
Confidentiality Agreement.
(c) No investigation by any of the Parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
Section 7.3 ACQUISITION TRANSACTIONS. (a) After the date hereof and
prior to the Effective Time, the Company agrees that neither it, nor any of its
Subsidiaries, nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall use its commercially reasonable efforts to cause its
and its Subsidiaries' employees, attorneys, accountants, investment bankers,
financial advisors or other agents acting on the Company's behalf, not to
initiate, solicit, negotiate, encourage or provide non-public or confidential
information or in any way facilitate any proposal or offer to acquire more than
twenty-five percent (25%) of the business, properties or assets of the Company,
or fifteen percent (15%) of the capital stock or voting power of the Company or
its Subsidiaries, in each case, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"ACQUISITION TRANSACTION").
(b) Notwithstanding the provisions of paragraph (a) above but subject
to compliance with Section 7.3(c), (i) the Company or the Board of Directors of
the Company may, directly or indirectly through advisors, agents or other
intermediaries, prior to receipt of the Company Stockholders Approval, in
response to a bona fide written offer or proposal not
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solicited in violation of Section 7.3(a) with respect to a potential or proposed
Acquisition Transaction ("ACQUISITION PROPOSAL") from a corporation,
partnership, person or other entity or group (a "POTENTIAL ACQUIRER") (a) which
the Company's Board of Directors determines, in good faith and after
consultation with an independent financial advisor of nationally recognized
reputation, would reasonably be expected to result (if consummated pursuant to
its terms) in an Acquisition Transaction more favorable to the Company's
stockholders than the Merger (a "QUALIFYING PROPOSAL"), (b) which the Company's
Board of Directors determines, in good faith, is reasonably possible to
consummate, and (c) where the Company's Board of Directors after consultation
with its independent outside legal counsel determines in good faith that the
failure to engage in such action reasonably would be likely to cause the members
of the Board of Directors of the Company to breach their fiduciary duties under
applicable law, furnish confidential or non-public information to (provided that
the Company and the Potential Acquirer shall have fully executed and delivered a
confidentiality agreement containing terms at least as stringent as the terms of
the Confidentiality Agreement, but explicitly permitting the Company to disclose
to Parent the terms of the Acquisition Proposal), and negotiate with, such
Potential Acquirer, and may resolve to accept, or recommend, and, upon
termination of this Agreement in accordance with Section 9.1(e) and after
payment to Parent of the fee pursuant to Section 9.2(b), enter into agreements
relating to, a Qualifying Proposal as to which the Company's Board of Directors
(x) has determined in good faith after consultation with an independent
financial advisor of nationally recognized reputation would result in an
Acquisition Transaction more favorable to the Company's stockholders than the
Merger and is reasonably capable of being financed and consummated (such
Qualifying Proposal being a "SUPERIOR PROPOSAL") and (y) after consultation with
its independent outside legal counsel determines in good faith that failure to
engage in such action would cause the members of the Board of Directors of the
Company to breach their fiduciary duties under applicable law and (ii) the
Company's Board of Directors may take and disclose to the Company's stockholders
a position contemplated by Rule 14d-9 or Rule 14e-2 under the Exchange Act or
otherwise make disclosure required by the federal securities laws. It is
understood and agreed that negotiations and other activities conducted in
accordance with this paragraph (b) shall not constitute a violation of paragraph
(a) of this Section 7.3.
(c) The Company shall notify Parent orally and in writing promptly, but
in no event later than two Business Days, after receipt of any Acquisition
Proposal, indication of interest or request for non-public information relating
to the Company or its Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any Subsidiary
by any person or entity that after the date hereof informs the Board of
Directors of the Company or such Subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall indicate the
identity of the offeror.
(d) The Company shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than the Parties with respect to any of the
foregoing; PROVIDED, HOWEVER, that neither the Company nor any of its affiliates
shall waive any standstill or confidentiality provisions.
(e) The Company shall promptly provide to Parent any information
regarding the Company or its Subsidiaries provided to any corporation,
partnership, person or other
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entity or group making an Acquisition Proposal, unless such information has been
previously provided to Parent.
Section 7.4 STOCKHOLDERS' APPROVAL. The Company shall use reasonable
efforts to cause a special meeting of stockholders of the Company (the
"STOCKHOLDER MEETING") to be held as soon as practicable after the Registration
Statement is declared effective by the SEC and the Proxy Statement/Prospectus is
available to be mailed to the Company Stockholders for the purpose of obtaining
the requisite stockholder approval of this Agreement (the "STOCKHOLDER
PROPOSAL"). The Company's Board of Directors shall use its reasonable efforts to
obtain from the stockholders of the Company the vote required by the DGCL in
favor of the approval of this Agreement and shall recommend to the stockholders
of the Company that they so vote at the Stockholder Meeting or any adjournment
or postponement thereof; PROVIDED that the Company's Board of Directors shall
not be required to use such reasonable efforts to obtain the vote in favor of
the approval of this Agreement or to make or continue to make such
recommendation if such Board of Directors, after having consulted with and
considered the advice of independent outside legal counsel, determines that the
making of such reasonable best efforts to obtain the vote in favor of the
approval of this Agreement or making or continuing to make such recommendation
would cause the members of the Company's Board of Directors to breach their
fiduciary duties under applicable laws. Notwithstanding anything to the contrary
in this Agreement, unless this Agreement is earlier terminated in accordance
with its terms, the Company shall be required to submit the Stockholder Proposal
for approval by its stockholders at the Stockholder Meeting, whether with or
without the recommendation of the Company's Board of Directors.
Section 7.5 LEGAL CONDITIONS TO THE MERGER. Each of Parent and the
Company shall, and shall cause their respective Subsidiaries to, use their
reasonable efforts (a) to take, or cause to be taken, all actions necessary,
proper or advisable to comply promptly with all legal requirements that may be
imposed on such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VIII, to consummate the
transactions contemplated by this Agreement, and (b) to obtain (and to cooperate
with the other party to obtain) any material consent, authorization, order or
approval of, or any exemption by, any Governmental Entity and any other third
party that is required to be obtained by Parent or the Company or any of their
respective Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement. Notwithstanding anything to the contrary in this
Agreement (including Section 7.1(b)), (i) the Company shall not, without the
prior written consent of Parent, agree to divest any assets or businesses of the
Company or any of its affiliates or to in any way limit the ownership or
operation of any business of the Company or its affiliates and (ii) neither
Parent nor the Company shall be required to (x) divest or encumber any assets or
corporations of Parent or the Company, respectively, or any of their respective
affiliates that could reasonably be expected to have a Material Adverse Effect
on Parent (assuming the Merger has been consummated) or to substantially impair
the benefits to Parent and the Company expected, as of the date hereof, to be
realized from consummation of the Merger, and neither Parent nor the Company
shall be required to agree to or effect any divestiture, hold separate any
business or take any other action that is not conditioned upon consummation of
the Merger, or (y) enter into any agreements that in any way limit the ownership
or operation of any business of Parent or the Company, respectively, or any of
their respective affiliates.
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Section 7.6 AFFILIATES. The Company shall use its reasonable efforts
to cause each person, listed on EXHIBIT B hereto to deliver to Parent, as soon
as practicable after the date of this Agreement, and in any event prior to the
Effective Time, a written agreement, in the form of EXHIBIT C hereto, providing
that such persons will not sell, pledge, transfer or otherwise dispose of any
shares of Parent Common Stock to be received by such "affiliate" in the Merger,
other than in compliance with Rule 145 under the Securities Act. Other than
those persons listed on EXHIBIT B, there are no "affiliates" (for purposes of
Rule 145 under the Securities Act) of the Company.
Section 7.7 STOCK EXCHANGE QUOTATION OR LISTING. Parent shall use
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and upon exercise of Parent Options into which Company Options are
converted pursuant to the Merger to be listed and authorized for quotation on
NASDAQ or such other national exchange on which the Parent Common Stock may then
be quoted or listed (subject only to official notice of issuance) prior to the
Effective Time.
Section 7.8 ADDITIONAL AGREEMENTS. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest, perfect or confirm of record or otherwise
establish in the Surviving Corporation full right, title and interest in, to or
under any of the assets, property, rights, privileges, powers and franchises of
the Company and Merger Sub, (a) the proper officers and directors of each Party
and their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by Parent, and (b) the officers and directors of the
Surviving Corporation are fully authorized in the name and on behalf of the
Surviving Corporation to take all such lawful and reasonably necessary or
desirable action.
Section 7.9 ADVICE OF CHANGES. Parent and the Company shall each
promptly advise the other Party of any change or event having a Material Adverse
Effect on it, and Parent and the Company shall each promptly advise the other of
any change or event that it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants contained herein such that the conditions contained in Sections
8.3(a) or 8.3(b) shall no longer be capable of satisfaction.
Section 7.10 SECTION 16. Prior to the Effective Time, each of the
Company and Parent shall take all such steps as may be prudent or required to
cause the transactions contemplated by this Agreement, including any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) and acquisitions of Parent Common Stock
(including derivative securities with respect to such Parent Securities) by each
person who is or will be subject to the reporting requirements of Section 16(a)
of the Exchange Act with respect to the Company or Parent, as the case may be,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.11 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) Parent shall, or shall cause the Surviving Corporation to maintain in effect
for six years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially
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less advantageous) with respect to matters or events occurring prior to the
Effective Time to the extent available; provided, however, that in no event
shall the Surviving Corporation or its affiliates be required to expend more
than an amount per year equal to 250% of current annual premiums paid by the
Company (which amounts under current policies are set forth in Section 7.11 of
the Company Disclosure Schedule) (the "MAXIMUM PREMIUM")to maintain or procure
insurance coverage pursuant hereto; and, provided, further that if the annual
premiums of such insurance coverage exceed the Maximum Premium, the Surviving
Corporation shall be obligated to obtain or to cause to be obtained a policy
with the greatest coverage available for a cost not exceeding the Maximum
Premium and provided, further, that if such insurance policies cannot be
obtained at all, Parent or the Surviving Corporation shall be required to
purchase all available extended reporting periods with respect to pre-existing
insurance in an amount that, together with all other policies purchased pursuant
to this Section 7.11(a), does not exceed the amount equal to the Maximum Premium
multiplied by six.
(b) From and after the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, indemnify and hold harmless each present and former
director and officer of the Company, determined as of the Effective Time (the
"INDEMNIFIED PARTIES"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters relating to their duties or actions in their
capacity as such (or in such capacity in another corporation, partnership, joint
venture, trust or other enterprise at the request of the Company) and existing
or occurring at or prior to the Effective Time (including those matters relating
to the transactions contemplated by this Agreement), whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent permitted to be
so indemnified by the Surviving Corporation or such Subsidiary, as the case may
be, under applicable law (including, without limitation, the advancement of
reasonable attorney's fees and disbursements, which shall be paid, reimbursed or
advanced by Parent or the Surviving Corporation prior to the final disposition
thereof without the requirement of any bond or other security). Parent agrees
that all rights to indemnification, expense advancement and exculpation existing
in favor of the present and former directors and officers of the Company and its
Subsidiaries as provided in the Company's or any such Subsidiary's certificate
of incorporation and bylaws or existing indemnification agreements, as in effect
as of the date hereof, with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect,
without any amendment that would adversely affect the rights thereunder of the
individuals who on or at any time prior to the Effective Time were entitled to
rights thereunder.
(c) Nothing in this Agreement is intended to, shall be construed to or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its officers, directors or employees, it being understood and
agreed that the indemnification provided for in this Section 7.11 is not prior
to or in substitution for any such claims under such policies.
(d) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or
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substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 7.11.
(e) The rights of each Indemnified Party under this Section 7.11 shall
be in addition to any rights such person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under
Delaware law or any other applicable laws or under any agreement of any
Indemnified Party with the Company or any of its Subsidiaries. These rights
shall survive consummation of the Merger and are intended to benefit, and shall
be enforceable by, each Indemnified Party.
Section 7.12 REORGANIZATION. Following the Effective Time, neither
the Company, the Surviving Corporation, Parent nor any of their affiliates shall
take any action, cause any action to be taken, fail to take any commercially
reasonable action or cause any commercially reasonable action to fail to be
taken, which action or failure to act would or could reasonably be expected to
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
Section 7.13 REGISTRATION STATEMENT. (a) If at any time prior to the
date of the Stockholder Meeting, or any adjournment thereof, any event with
respect to Parent, its officers and directors or any of its Subsidiaries shall
occur which is required to be described in an amendment of, or a supplement to
the Registration Statement, Parent shall notify the Company thereof in writing
by reference to this Section 7.13(a) and shall describe such event in reasonable
detail and shall reasonably cooperate with the Company (to the extent the
Company's assistance or cooperation is reasonably required) in preparing and
filing an amendment or supplement to the extent required by applicable law. Any
such amendment or supplement shall be promptly filed with the SEC, and such
amendment or supplement shall comply in all material respects with all
provisions of the Securities Act.
(b) If at any time prior to the date of the Stockholder Meeting (as
defined herein), or any adjournment thereof, any event with respect to the
Company, its officers and directors or any of its Subsidiaries shall occur which
is required to be described in an amendment of, or a supplement to the
Registration Statement, the Company shall notify Parent thereof in writing by
reference to this Section 7.13(b) and shall describe such event in reasonable
and shall reasonably cooperate with Parent in preparing and filing an amendment
or supplement to the extent required by applicable law. Any such amendment or
supplement shall be promptly filed with the SEC and, as and to the extent
required by law, disseminated to the stockholders of the Company, and such
amendment or supplement shall comply in all material respects with all
provisions of the Securities Act.
Section 7.14 EMPLOYEES
(a) Each of the employees employed as of the Closing Date by the Company
or a Subsidiary is hereinafter referred to as a "TRANSFERRING EMPLOYEE." Parent
shall, or Parent shall cause the Company or a Subsidiary to, for the period
beginning on the Closing Date and ending on December 31, 2005, provide to the
Transferring Employees, who continue
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employment with the Company or a Subsidiary, salary and employee benefits that
in the aggregate are substantially similar to the salary and benefits as
provided by the Company and its Subsidiaries to such Transferring Employees as
of immediately prior to the Closing Date. Parent agrees that it will not
terminate or amend the Company severance plan in effect on the date hereof, a
true and complete copy of which has previously been provided to Parent, for the
period beginning on the Closing Date and ending on December 31, 2005 and such
Company severance plan shall remain in full force and effect during such period
for all Transferring Employees. Notwithstanding anything to the contrary in this
Section 7.14, nothing in this Agreement shall limit the right of Parent or the
Company to, subject to the immediately preceding sentence, modify, amend,
suspend or terminate any Company Benefit Plan.
(b) Transferring Employees shall be credited for their length of service
with the Company and any Subsidiary to the extent of the employee benefit plans
maintained by Parent, the Company or a Subsidiary that cover such Transferring
Employees on or after the Closing Date for purposes of eligibility, vesting and
any pre-existing condition limitations, other than (i) under any defined benefit
pension plan, (ii) to the extent that any such crediting of service would result
in duplication of benefits, (iii) for purposes of eligibility for subsidized
early retirement benefits or (iv) for any new program for which credit prior to
the effective date of such program is not given to similarly situated employees
of Parent other than the Transferring Employees.
(c) The health plans that cover the Transferring Employees in the plan
year in which the Closing Date occurs shall credit such Transferring Employees
with all co-payments, deductibles and similar amounts paid by the Transferring
Employees under the applicable Company Benefits Plans prior to the Closing Date
to the extent credited under the applicable Company Benefit Plans.
(d) No Transferring Employee or other current or former employee of the
Company or any Subsidiary, including any beneficiary or dependent thereof, or
any other person not a party to this Agreement, shall be entitled to assert any
claim hereunder.
Section 7.15 OBLIGATIONS OF MERGER SUB. Parent shall take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
Section 7.16 DIVIDENDS. Parent shall not, and shall not permit any
of its Subsidiaries to, make, declare or pay any dividend in cash other than
cash dividends or distributions by a direct or indirect wholly owned Subsidiary
of the Parent to its parent or to another direct or indirect wholly owned
Subsidiary of Parent.
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ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of the Parties to effect the Merger shall be
subject to the following conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approval shall
have been obtained.
(b) STOCK EXCHANGE LISTINGS. The shares of Parent Common Stock to
be issued in the Merger shall have been authorized for quotation on NASDAQ
or such other national exchange on which Parent Common Stock may be quoted
or listed as of the Closing Date.
(c) OTHER APPROVALS. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated and all other material notifications, consents, authorizations
and approvals required to be made or obtained from any Governmental Entity
prior to the Effective Time shall have been made or obtained for the
transactions contemplated by the Merger (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"REQUISITE REGULATORY APPROVAL").
(d) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No injunction
prohibiting the consummation of the Merger shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal the consummation of the
Merger, and there shall not have been instituted or threatened to be
instituted any proceeding seeking an order, injunction or decree which
prohibits, materially restricts or makes illegal the consummation of the
Merger.
(f) FEDERAL TAX OPINIONS.
(i) The Company shall have received a written opinion of Xxxxxx, Xxxx
& Xxxxxxxx LLP, dated the Closing Date, to the effect that the
Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinion, such
counsel may require and rely upon representations contained in
certificates of officers of Parent and the Company.
(ii) Parent shall have received a written opinion of Wachtell, Lipton,
Xxxxx & Xxxx, dated the Closing Date, to the effect that the
Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering
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such opinion, such counsel may require and rely upon
representations contained in certificates of officers of Parent
and the Company.
(iii) Parent and the Company agree to provide to counsel referred to
in clauses (i) and (ii) such representations as such counsel
reasonably requests in connection with rendering the opinions
referred to therein.
Section 8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are also subject to the
satisfaction, or waiver by the Company, at or prior to the Effective Time, of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent set forth in Section 5.2(a) of this Agreement shall be
materially true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
that such representations and warranties speak as of another date, in which case
such representations and warranties shall be materially true and correct as of
such other date), (ii) the representations and warranties of Parent set forth in
this Agreement and qualified by Material Adverse Effect shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that such
representations and warranties speak as of another date, in which case such
representations and warranties shall be true and correct as of such other date),
and (iii) all other representations and warranties of Parent set forth in this
Agreement and not qualified by Material Adverse Effect, disregarding all
qualifications and exceptions contained therein relating to materiality, shall
be true and correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (except to the extent that such
representations and warranties speak as of another date, in which case such
representations and warranties shall be true and correct as of such other date),
except where the failure of such representations and warranties to be true and
correct would not, when taken together, have a Material Adverse Effect on
Parent. The Company shall have received certificates signed on behalf of Parent
by an appropriate executive officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS. Parent shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received
certificates signed on behalf of Parent by an appropriate executive officer to
such effect.
Section 8.3 CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of
Parent to effect the Merger are also subject to the satisfaction or waiver by
Parent at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) the representations and
warranties of the Company set forth in Section 4.2(a) of this Agreement shall be
true and correct (other than insubstantial numerical inaccuracies) as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct (other than insubstantial numerical inaccuracies) as
of such other date), (ii) the representations and warranties of the Company set
forth in this
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Agreement and qualified by Material Adverse Effect shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent that such representations and
warranties speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date), and (iii) the
representations and warranties of the Company set forth in this Agreement and
not qualified by Material Adverse Effect, disregarding all qualifications and
exceptions contained therein relating to materiality, shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent that such representations and
warranties speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date), except where the
failure of such representations and warranties to be true and correct would not,
when taken together, have a Material Adverse Effect on the Company. Parent shall
have received certificates signed on behalf of the Company by its Chief
Executive Officer and Chief Financial Officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Parent shall have received
certificates signed on behalf of the Company by an appropriate officer to such
effect.
(c) CONSENTS. All consents listed on Section 8.3(c) of the Company
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after obtaining the Company
Stockholder Approval:
(a) by mutual consent of Parent and the Company in a written
instrument;
(b) by either Parent or the Company if any Governmental Entity that
must grant a Requisite Regulatory Approval has denied approval of the Merger and
such denial has become final and nonappealable or any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, provided that the terminating party has
fulfilled its obligations under Section 7.1;
(c) by Parent or the Company if the Effective Time shall not have
occurred on or before the six-month anniversary of the date of this Agreement
(the "TERMINATION DATE"), unless the failure of the Effective Time to occur by
such date shall be principally due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such Party set forth herein; PROVIDED, HOWEVER, that if on such date each of the
conditions set forth in Article VIII other than those set forth in Sections
8.1(a) and 8.1(c) has been fulfilled or is capable of being fulfilled, then such
date shall be automatically extended to the nine-month anniversary of the date
of this Agreement;
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(d) (i) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein which breach either individually or in the aggregate would
constitute, if occurring on the Closing Date, the failure of the conditions set
forth in Sections 8.3(a) or Section 8.3(b) of this Agreement) if there shall
have been a breach by Parent of any of its covenants or agreements or any of its
representations or warranties set forth in this Agreement, which breach, either
individually or in the aggregate, would constitute, if occurring or continuing
on the Closing Date, the failure of the conditions set forth in Section 8.2(a)
or Section 8.2(b) of this Agreement, and which is not cured within fifteen (15)
days following written notice to Parent or by its nature or timing cannot be
cured prior to the Closing Date; or
(ii) by Parent (provided that neither Parent nor Merger Sub is then
in material breach of any representation, warranty, covenant or other agreement
contained herein which breach either individually or in the aggregate would
constitute, if occurring on the Closing Date, the failure of the conditions set
forth in Section 8.2(a) or Section 8.2(b) of this Agreement) if there shall have
been a breach by the Company of any of its covenants or agreements or any of its
representations or warranties set forth in this Agreement, which breach, in any
such case, either individually or in the aggregate, would constitute, if
occurring or continuing on the Closing Date, the failure of the conditions set
forth in Section 8.3(a) or Section 8.3(b) of this Agreement, and which is not
cured as promptly as practicable and in any case within fifteen (15) days
following written notice to the Company or by its nature or timing cannot be
cured prior to the Closing Date;
(e) by the Company if, prior to receipt of the Company Stockholder
Approval, (i) the Company receives a Superior Proposal, (ii) the Company shall
have promptly (and in no event later than two calendar days, which shall include
at least one Business Day, after forming such intention) notified Parent of its
intention to terminate this Agreement pursuant to this Section 9.1(e), such
notice to Parent to be in writing and to be accompanied by reasonable details of
the terms and conditions of such Superior Proposal, including the identity of
the offeror, a complete copy of each agreement contemplated to be entered into
by the Company or its Subsidiaries in connection with the Superior Proposal, and
the Company shall have otherwise complied with Section 7.3, (iii) if requested
in good faith by Parent within two Business Days after receipt by Parent of such
notice, the Company shall have negotiated and caused its respective financial
and legal advisers to negotiate during the following three Business Day period
with Parent to in good faith determine with Parent whether adjustments in the
terms and conditions of this Agreement as would enable the Company to proceed
with the transactions contemplated herein on such adjusted terms, and
notwithstanding such negotiations and adjustments, the Board of Directors of the
Company concludes, in its good faith judgment, that the transactions
contemplated herein on such terms as adjusted, are not at least as favorable to
the stockholders of the Company as such Superior Proposal and (iv) the Board of
Directors of the Company thereafter resolves to accept such Superior Proposal
after having consulted with, its independent outside legal counsel and
determined in good faith that the failure to take such action would constitute a
breach of the fiduciary duties of the Board of Directors of the Company under
applicable law; PROVIDED, that such termination under this Section 9.1(e) shall
not be effective until the Company or an Acquiring Person on behalf of the
Company has made payment of the full fee required by Section 9.2(b); and
PROVIDED, FURTHER, that if the Company's Board of Directors concludes that
Parent's proposal under clause (iii) is at least as favorable to
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the stockholders of the Company as the Superior Proposal, this Agreement shall
promptly be amended to reflect such terms and the Company shall no longer have
the right herein with respect to such original Superior Proposal, unless and
until it is subsequently adjusted to again constitute a Superior Proposal;
(f) by Parent, if the Board of Directors of the Company (i) shall
have failed to recommend, or shall have withdrawn, or modified or amended in any
respect materially adverse to Parent, its approval or recommendation of this
Agreement or shall have resolved to do any of the foregoing, or (ii) shall have
recommended another Acquisition Proposal or if the Board of Directors of the
Company shall have resolved to accept a Superior Proposal or shall have failed
to publicly affirm its approval or recommendation of this Agreement (or failed
to publicly state that it cannot at such time make any recommendation pending
completion of its analysis and discussions regarding the Acquisition Proposal
consistent with the Company Board of Directors' fiduciary duties) within 10 days
of Parent's request made after any Acquisition Proposal shall have been
disclosed to the Company's stockholders generally; or
(g) by Parent or the Company if the stockholders of the Company fail
to approve this Agreement upon a vote held at a duly held meeting of
stockholders called for such purpose (including any adjournment or postponement
thereof), but subject, in the case of termination by the Company, to its
obligation to make the payment required by Section 9.2(b)(iv), if applicable.
Section 9.2 EFFECT OF TERMINATION. (a) In the event of termination
of this Agreement by Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect, and none of Parent,
Merger Sub or the Company, any of their respective Subsidiaries or any of the
officers or directors of any of them shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 7.2(b), 10.2, 10.6, 10.7, 10.8 and this Section
9.2 shall survive any termination of this Agreement, and (ii) notwithstanding
anything to the contrary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
(b) The Company agrees to pay to Parent a fee equal to $68.5
million, by wire transfer of immediately available funds, if:
(i) (A) the Company terminates this Agreement pursuant to
Section 9.1(e) or (B) the Company terminates this Agreement pursuant to
Section 9.1(c) and at such time Parent would have been permitted to
terminate this Agreement pursuant to Section 9.1(f), which fee shall be
payable prior to such termination;
(ii) Parent terminates this Agreement pursuant to Section
9.1(f), which fee shall be payable within two Business Days of such
termination;
(iii) (A) the Company terminates this Agreement pursuant to
Section 9.1(c) other than as a result of Parent's failure to proceed in a
timely manner, (B) prior to such termination, a proposal for an
Acquisition Transaction (other than pursuant to this Agreement) shall have
been disclosed publicly or to the Company and (C) within 12
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months following such termination, the Company, directly or indirectly,
enters into an agreement for an Acquisition Transaction or an Acquisition
Transaction is consummated, which fee shall be payable immediately upon
the first to occur of either event described in this clause (C); or
(iv) this Agreement is terminated (A) pursuant to Section
9.1(g) and prior to the vote referred to in Section 9.1(g) a proposal for
an Acquisition Transaction (other than pursuant to this Agreement) shall
have been disclosed publicly, or (B) pursuant to Section 9.1(d)(ii) on the
basis of a material breach by the Company of any covenant or agreement
contained herein if prior to such breach a proposal for an Acquisition
Transaction (other than pursuant to this Agreement) shall have been
disclosed publicly or to the Company, provided in the case of clauses (A)
or (B) that within 12 months of termination of this Agreement the Company,
directly or indirectly, enters into an agreement for an Acquisition
Transaction or an Acquisition Transaction is consummated, which fee shall
be payable immediately upon the first to occur of either event described
in this clause.
For purposes of Sections 9.2(b)(iii) and 9.2(b)(iv), the
percentage in the definition of "Acquisition Transaction" shall be
thirty-three percent (33%) in lieu of both the twenty-five percent (25%)
or fifteen percent (15%).
(c) The Company agrees to pay all fees and expenses actually
incurred by Parent and Merger Sub in connection with the Agreement, not in
excess of $3 million in the aggregate, by wire transfer of immediately
available funds, if:
(i) a fee becomes payable pursuant to Section 9.2(b); or
(ii) this Agreement is terminated by Parent pursuant to
Section 9.1(d)(ii).
(d) Parent agrees to pay all fees and expenses actually incurred
by the Company in connection with the Agreement, not in excess of $3 million
in the aggregate, by wire transfer of immediately available funds, if this
Agreement is terminated by the Company pursuant to Section 9.1(d)(i).
Section 9.3 AMENDMENT. Subject to compliance with applicable law,
this Agreement may be amended by the Parties, by action taken or authorized by
their respective Boards of Directors, at any time before or after the Company
Stockholder Approval; PROVIDED, HOWEVER, that after the Company Stockholder
Approval, there may not be, without further approval of such stockholders, any
amendment of this Agreement that changes the amount or the form of the
consideration to be delivered hereunder to the holders of Company Common Stock
other than as contemplated by this Agreement. This Agreement may not be amended
except by an instrument in writing signed by Parent and the Company.
Section 9.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, the Parties, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained
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herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; PROVIDED, HOWEVER,
that after the Company Stockholder Approval, there may not be, without further
approval of such stockholders, any extension or waiver of this Agreement or any
portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of Company Common Stock hereunder,
other than as contemplated by this Agreement. Any agreement on the part of a
Party to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than the Confidentiality Agreement, which shall terminate in accordance with its
terms) shall survive the Closing or the termination of this Agreement pursuant
to Section 9.1 except for those covenants and agreements contained herein which
by their terms apply in whole or in part after the Closing or are designated as
surviving any such termination.
Section 10.2 EXPENSES. Except as set forth in Section 9.2, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense; PROVIDED,
HOWEVER, that the costs and expenses of printing and mailing the Proxy
Statement/Prospectus, and all filing and other fees paid to the SEC or in
respect of HSR, in each case in connection with the Merger, shall be borne by
Parent.
Section 10.3 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), on the third Business Day after mailing if
mailed by registered or certified mail (return receipt requested) or delivered
by an express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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(a) if to the Company, to:
Ask Jeeves, Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopier: (000) 000-0000
and
(b) if to Parent or Merger Sub, to:
IAC/InterActiveCorp
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telecopier: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
Section 10.4 INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.5 COUNTERPARTS. This Agreement may be executed by
facsimile and in counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
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Section 10.6 ENTIRE AGREEMENT. This Agreement (including the
documents and the instruments referred to herein) constitutes the entire
agreement and supersedes all prior or contemporaneous agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof other than the Confidentiality Agreement.
Section 10.7 GOVERNING LAW. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to any applicable conflicts of law principles.
(b) Each Party irrevocably submits to the jurisdiction of any
Delaware state court or any federal court sitting in the State of Delaware in
any action arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action may be heard and determined in
such Delaware state or federal court. Each Party hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Parties further
agree, to the extent permitted by law, that final and unappealable judgment
against any of them in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of such judgment.
(c) To the extent that any Party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Party hereby irrevocably waives such immunity in respect of its obligations with
respect to this Agreement.
(d) Each Party waives, to the fullest extent permitted by applicable
laws, any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement. Each Party certifies
that it has been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications set forth above in this Section 10.7.
Section 10.8 PUBLICITY. The initial press release concerning the
execution of this Agreement, the Merger and the transactions contemplated hereby
will be a joint release. Subject to Section 7.3(b), except as otherwise required
by applicable law or the rules of NASDAQ, none of the Parties shall, or shall
permit any of its Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by this Agreement
without the consent of the other Parties, which consent shall not be
unreasonably withheld (provided that the consent of Parent shall be deemed to be
the consent of Merger Sub). Prior to the Effective Time, the Company shall not,
and shall not permit any of its Subsidiaries to, without the prior consent of
Parent (which shall not be unreasonably delayed, conditioned or withheld) issue
or cause the publication of any press release or other public announcement with
respect to any material developments in the business strategy of the Company and
its Subsidiaries, except for any such press release or public announcement
required by applicable law or the rules of NASDAQ (in which case the Company
shall, to the extent practicable, consult with Parent prior to making such
release or announcement).
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Section 10.9 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this
Agreement nor any of the rights, interests or obligations shall be assigned by
any of the Parties (whether by operation of law or otherwise) without the prior
written consent of the other Parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns. This Agreement
(including the documents and instruments referred to herein) is not intended to
confer upon any person other than the Parties any rights or remedies hereunder
other than Section 7.11 which confers the rights stated therein.
Section 10.10 SPECIFIC ENFORCEMENT. The Parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached in any material respect. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement. A Party is entitled to seek injunctive relief to prevent any breach
and to enforce terms or provisions if such breach would serve as a basis of
terminating this Agreement by such Party. No Party seeking such relief shall be
required to post bond or other security or to prove the inadequacy of available
remedies at law in order to obtain such relief. The rights provided by this
section are in addition to any other remedy to which the Parties are entitled at
law or in equity including an action seeking damages.
Section 10.11 SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
IAC/INTERACTIVECORP
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President, General Counsel
and Secretary
AJI ACQUISTION CORP.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board and Secretary
ASK JEEVES, INC.
By: /s/ A. Xxxxxx Xxxxxx
-----------------------------------
Name: X. Xxxxxx (Skip) Battle
Title: Executive Chairman of the Board of
Directors
