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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
Among
GETTY IMAGES, INC.,
PRINT CORP.
and
XXX.XXX, INC.
Dated as of May 4, 1999
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AGREEMENT AND PLAN OF MERGER dated as of May 4, 1999 (this
"Agreement") among GETTY IMAGES, INC., a Delaware corporation ("Parent"), PRINT
CORP., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and XXX.XXX, INC., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Parent and the Company will enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
the Company (the "Merger");
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and fair to, advisable and in the
best interests of, the Company and its stockholders and has approved and adopted
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (ii) has recommended the approval and adoption of this Agreement
by the stockholders of the Company;
WHEREAS, the Board of Directors of Parent has determined that
the Merger is consistent with and in furtherance of the long-term business
strategy of Parent and fair to, advisable and in the best interests of, Parent
and its stockholders and has approved and adopted this Agreement, the Merger and
the other transactions contemplated by this Agreement;
WHEREAS, for federal income tax purposes, the Merger is intended
to qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, certain stockholders of the Company own such number of
shares of common stock, par value $0.001 per share, of the Company ("Company
Common Stock") and such number of shares of Series A Preferred Stock, par value
$0.001 per share (the "Company Preferred Stock") as is set forth on Exhibit A
hereto (such stockholders being referred to herein as the "Individual
Stockholders");
WHEREAS, as a condition and inducement to Parent's and Merger
Sub's entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement, Parent
is entering into a Company Stock Option Agreement with the Company, dated the
date hereof (the "Company Stock Option Agreement") and attached hereto as
Exhibit B, pursuant to which, among other things, the Company has agreed,
subject to the terms and conditions contained therein, to grant an option to
Parent to purchase such number of newly issued shares of Company Common Stock as
shall equal 19.9% of the outstanding shares of Company Common Stock; and
WHEREAS, as a further condition and inducement to Parent's and
Merger Sub's entering into this Agreement and incurring the obligations set
forth herein, concurrently with the execution and delivery of this Agreement,
Parent is entering into an Investor
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Agreement with the Individual Stockholders, dated the date hereof (the "Investor
Agreement") and attached hereto as Exhibit C, pursuant to which, among other
things, the Individual Stockholders have agreed, subject to the terms and
conditions contained therein, to guarantee certain obligations of the Company
hereunder, to make certain representations and warranties as to themselves, to
vote all shares of Company Common Stock and Company Preferred Stock owned by
them to approve and adopt this Agreement and have granted to Parent an option to
acquire their shares of Company Common Stock and Company Preferred Stock upon
the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with the DGCL, at the
Effective Time (as defined in Section 1.02), Merger Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as
practicable and in no event later than the second business day following the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (or such other date as may be agreed by each of the parties hereto), the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger (the "Certificate of Merger") with the Secretary of State of the State
of Delaware in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL. The term "Effective Time" means the date and
time of the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware (or such later time as may be agreed by each of the
parties hereto and specified in the Certificate of Merger). Immediately prior to
the filing of the Certificate of Merger, a closing (the "Closing") will be held
at the offices of Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL and this Agreement. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
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SECTION 1.04. Certificate of Incorporation; By-Laws. (a) At the
Effective Time, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; provided, however, that, at the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended to read as follows: "The name of the Corporation is Xxx.xxx,
Inc."
(b) At the Effective Time, the By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) each share of Company Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares (as defined in Section 2.05) and Shares to be canceled pursuant to
Section 2.01(d)) shall be canceled and converted automatically into the right to
receive the Merger Consideration (as defined in Section 2.01(f));
(b) each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares and Shares to be canceled pursuant to Section 2.01(d)) shall be canceled
and converted automatically into the right to receive the Merger Consideration
(all shares described in Sections 2.01(a) and (b) being hereinafter referred to
as the "Shares");
(c) from and after the Effective Time, the holders of
certificates formerly representing Shares (the "Certificates") shall cease to
have any rights with respect to such Shares, except the right to receive the
Merger Consideration (such Merger Consideration to be
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payable (except as provided in Section 2.05 hereof) to the holder of each such
Share, upon surrender, in the manner provided in Section 2.02, of the
Certificate that formerly evidenced such Share);
(d) each Share held in the treasury of the Company and each
Share owned by Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto;
(e) each share of common stock, par value $0.01 per share,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation; and
(f) as used in this Agreement, the following terms have the
following meanings:
(i) "Fully Diluted Share Amount" means the sum of (i) the
number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, (ii) the number of shares of
Company Preferred Stock issued and outstanding immediately prior to the
Effective Time and (iii) the number of shares of Company Common Stock
issuable upon exercise of all Company Stock Options and warrants (if
any) that have been granted immediately prior to the Effective Time.
(ii) "Merger Consideration" means (A) a Contingent Deferred
Payment and (B) a number of shares of common stock, par value $0.01 per
share, of Parent ("Parent Common Stock") determined by dividing (x)
4,510,000 by (y) the Fully Diluted Share Amount (the number of shares
obtained pursuant to clause (B) herein is also referred to as the
"Exchange Ratio").
(iii) "Contingent Deferred Payment" means the payment
described in Exhibit 2.01(f).
SECTION 2.02. Exchange of Certificates. (a) Exchange Procedures.
At the Closing, the Company shall surrender to Parent all Certificates delivered
to it and any stockholder may surrender to Parent Certificates (in each case
together with any stock transfer tax stamps required by reason of the payment of
the Merger Consideration to a person other than the registered holder of the
Certificate surrendered), together with such other customary documents as may
reasonably be required by Parent reasonably in advance of the Closing, in
exchange for, and Parent shall cause to be delivered to the stockholders whose
Certificates have been so delivered, the Merger Consideration. Immediately
following the Effective Time, all Certificates surrendered to Parent shall be
canceled. Any stockholder of the Company whose Certificates are not delivered at
the Closing shall receive (and Parent shall cause to be delivered to such
stockholder) the Merger Consideration with respect to such Certificates upon
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delivery to Parent after the Closing of such Certificates and the other items
required pursuant to the first sentence of this Section 2.02(a). Shares of
Parent Common Stock issued in the Merger (other than these issued in respect of
the Contingent Deferred Payment) shall be issued as of, and be deemed to be
outstanding as of, the Effective Time.
(b) Distributions with Respect to Unexchanged Shares of
Parent Common Stock. No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock comprising part of the
Merger Consideration with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Parent Common Stock represented thereby, and no cash payment in lieu of any
fractional shares shall be paid to any such holder pursuant to Section 2.02(d),
until the holder of such Certificate shall surrender such Certificate (at which
time such payments shall be made).
(c) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of the Shares in accordance with the
terms hereof (together with any cash paid pursuant to Section 2.02(d) and the
Contingent Deferred Payment) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, except the right to
receive the Merger Consideration.
(d) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. Each holder of a fractional share interest shall be paid an amount in
cash (without interest) equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into account all
fractional share interests then held by such holder) would otherwise be entitled
by (ii) the average of the per share closing bid and ask prices on the National
Market System of the National Association of Securities Dealers Automated
Quotation System (the "NASDAQ") of shares of Parent Common Stock during the 10
consecutive trading days ending on (and including) the trading day immediately
preceding the date of the Effective Time.
(e) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of Shares for any such Shares (or
dividends or distributions with respect thereto), or cash delivered to a public
official pursuant to any abandoned property, escheat or similar law.
(f) Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this
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Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(g) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by the Surviving Corporation, the posting by such person of
a bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, Parent shall issue in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. From and after the Effective Time, the holders of Certificates
representing Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided in this Agreement or by Law (as defined in Section 3.05).
SECTION 2.04. Company Stock Options. (a) All options (the
"Company Stock Options") outstanding (meaning for this purpose, those listed on
Exhibit 2.04(a)), whether or not exercisable and whether or not vested, at the
Effective Time under the Company's 1999 Stock Option Plan (the "Company Stock
Option Plan"), shall remain outstanding following the Effective Time. At the
Effective Time, the Company Stock Options shall, by virtue of the Merger and
without any further action on the part of the Company or the holder thereof, be
assumed by Parent in such manner that Parent (i) is a corporation "assuming a
stock option in a transaction to which Section 424(a) applies" within the
meaning of Section 424 of the Code and the regulations thereunder or (ii) to the
extent that Section 424 of the Code does not apply to any such Company Stock
Options, would be such a corporation were Section 424 of the Code applicable to
such Company Stock Options. From and after the Effective Time, all references to
the Company in the Company Stock Option Plan shall be deemed to refer to Parent,
which shall have assumed the Company Stock Option Plan as of the Effective Time
by virtue of this Agreement and without any further action. Each Company Stock
Option assumed by Parent (each, a "Substitute Option") shall be exercisable upon
the same terms and conditions as under the applicable Company Stock Option Plan,
except that (A) each such Substitute Option shall be exercisable for, and
represent the right to acquire, (x) that whole number of shares of Parent Common
Stock (rounded down to the nearest whole share) equal to the number of shares of
Company Common Stock subject to such Company Stock Option multiplied by the
Exchange Ratio and (y) a Contingent Deferred Payment, and (B) the option price
per share of Parent Common Stock shall be an amount equal to the option price
per share of Company Common Stock subject to such Company Stock Option in effect
immediately prior to the Effective Time divided by the Exchange Ratio (the
option price per share, as so determined, being rounded upward to the nearest
full cent). On the date of settlement of the Contingent Deferred Payment, each
such Substitute Option shall be further adjusted by (i) increasing the aggregate
number of shares of Parent Common Stock for which
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such Substitute Option is exercisable by the number of shares of Parent Common
Stock receivable in respect of the number of Shares previously underlying such
Substitute Stock Option upon payment of the Contingent Deferred Payment
(assuming the Contingent Deferred Payment were settled entirely in Parent Common
Stock), if any, and (ii) making a corresponding adjustment to the per share
exercise price of such Substitute Option. Upon the exercise of any Substitute
Option after the Effective Time but prior to the payment of the Contingent
Deferred Payment, the holder of such Substitute Option shall be entitled to
receive (i) the shares for which such Substitute Option was exercised and (ii),
at the time the Contingent Deferred Payment is due, a portion of the Contingent
Deferred Payment underlying such Substitute Option equal to a fraction, the
numerator of which is the number of shares of Parent Common Stock for which the
Substitute Option was exercised and the denominator of which is the number of
shares of Parent Common Stock for which the Substitute Option was exercisable
immediately prior to such exercise.
(b) As soon as practicable after the Effective Time, Parent
shall deliver to each holder of an outstanding Company Stock Option an option
agreement, in the form as previously agreed by Parent and the Company, setting
forth such holder's rights pursuant thereto and such Company Stock Option shall
continue in effect on such terms and conditions (including any antidilution
provisions, and subject to the adjustments required by this Section 2.04 after
giving effect to the Merger). Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Substitute Options pursuant to the terms set forth in
this Section 2.04. As soon as reasonably practicable after the Effective Time
(but in no event prior to the settlement of the Contingent Deferred Payment),
the shares of Parent Common Stock subject to Company Stock Options will be
covered by an effective registration statement on Form S-8 (or any successor
form) or another appropriate form, and Parent shall use its reasonable efforts
to maintain the effectiveness of such registration statement or registration
statements for so long as Substitute Options remain outstanding.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such Shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders shall be entitled to receive payment of the
appraised value of such Shares held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Shares under such Section 262 shall thereupon
be deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.02, of the
certificate or certificates that formerly evidenced such Shares.
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(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the
Company to Parent and Merger Sub concurrently with the execution of this
Agreement (the "Company Disclosure Schedule"), the Company hereby represents and
warrants to Parent and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each
of the Company and each subsidiary of the Company (the "Company Subsidiaries")
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such corporate power
and authority have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect (as defined
below). Each of the Company and the Company Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that have not had, and could not reasonably be expected to have
a Company Material Adverse Effect. The term "Company Material Adverse Effect"
means any change in or effect on the business of the Company and the Company
Subsidiaries that is materially adverse to the business of the Company and the
Company Subsidiaries taken as a whole (but judged in light of the fact that the
Company is an unprofitable start-up operation and the value of the Company
contemplated by the aggregate Merger Consideration), except for any such changes
or effects resulting from or arising in connection with (i) any occurrence or
condition affecting any of the online, e-commerce, visual image or art or art
print industries generally, or (ii) any changes in economic, market, regulatory
or political conditions.
SECTION 3.02. Certificate of Incorporation and By-Laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Restated Certificate of Incorporation and the By-Laws of the Company. Such
Restated Certificate of Incorporation and By-Laws are in full force and effect.
The Company is not in violation of any of the provisions of its Restated
Certificate of Incorporation or By-Laws.
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SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of (a) 35,000,000 shares of Company Common Stock and (b)
30,000,000 shares of preferred stock, par value $0.001 per share. As of the date
hereof, (i) 5,317,000 shares of Company Common Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock are held in the treasury of the Company or by the Company
Subsidiaries and (iii) 3,183,000 shares are reserved for future issuance
pursuant to the Company Stock Options. As of the date of this Agreement,
11,500,000 shares of Company Preferred Stock are issued and outstanding, all of
which are validly issued, fully paid and non-assessable. There are no other
shares of preferred stock outstanding. Except for the Company Stock Options
granted pursuant to the Company Stock Option Plan and the issuance of shares of
Company Common Stock upon the conversion of Company Preferred Stock, there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any Company Subsidiary or obligating the Company or any Company Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Company Subsidiary. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or any capital
stock of any Company Subsidiary. Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Company Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever, except where failure to own such shares free and clear
would not have a Company Material Adverse Effect. There are no material
outstanding contractual obligations of the Company or any Company Subsidiary to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Company Subsidiary or any other person.
SECTION 3.04. Authority Relative to This Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, and, subject to obtaining the necessary approvals of the Company's
stockholders, to perform its obligations hereunder and to consummate the Merger
and the other transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Merger and the other transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Merger and the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the approval of this
Agreement by the holders of a majority of then outstanding Shares (voting
separately by class) and the filing and recordation of appropriate merger
documents as required by the DGCL)). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
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authorization, execution and delivery by Parent and Merger Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Restated Certificate of Incorporation or By-laws of the Company or
any Company Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.05(b) have been obtained
and all filings and obligations described in Section 3.05(b) have been made or
fulfilled, conflict with or violate any foreign or domestic law, statute,
ordinance, rule, regulation, order, judgment or decree ("Law") applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, or (iii) with respect to
those matters listed on Section 3.05 of the Company Disclosure Schedule, except
as otherwise indicated thereon, result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument (collectively "Instruments"), except, with respect
to clause (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that have not had, and could not reasonably be expected to have a
Company Material Adverse Effect, and that could not reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement (it being understood and agreed that the foregoing clause (iii)
is not applicable with respect to any Instrument which is silent as to transfer
or assignability to the extent such silence may be construed as requiring the
consent of another party to the assignment or transfer thereof or of rights
and/or obligations thereunder).
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
applicable with respect to it ("Governmental Entity"), except (i) for applicable
requirements, if any, of state securities or "blue sky" laws ("Blue Sky Laws"),
state takeover laws, the filing and recordation of appropriate merger documents
as required by the DGCL and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
has not had, and could not reasonably be expected to have a Company Material
Adverse Effect, and could not reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
(c) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require the filing of a pre-
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merger notification pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act").
SECTION 3.06. Permits; Compliance. (a) Each of the Company and
the Company Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any Company Subsidiary to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Company Permits"),
except where the failure to have any of the Company Permits has not had, and
could not reasonably be expected to have a Company Material Adverse Effect, and,
as of the date of this Agreement, no suspension or cancellation of any of the
Company Permits is pending or, to the knowledge of the Company, threatened,
except where the suspension or cancellation of, any of the Company Permits has
not had, and could not reasonably be expected to have a Company Material Adverse
Effect.
(b) Neither the Company nor any Company Subsidiary is in
conflict with, or in default or violation of, (i) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Company Subsidiary is
a party or by which the Company or any Company Subsidiary or any property or
asset of the Company or any Company Subsidiary is bound or affected or (iii) any
Company Permits, except, in the case of each of (i), (ii) and (iii), for any
such conflicts, defaults or violations that have not had, and could not
reasonably be expected to have, a Company Material Adverse Effect.
SECTION 3.07. Financial Statements. (a) True and complete copies
of (i) the audited consolidated balance sheet of the Company as of December 31,
1998, and the related audited statements of income, changes in stockholders'
equity and cash flows for the year ended December 31, 1998, together with all
related notes and schedules thereto (collectively referred to herein as the
"1998 Financial Statements"), and (ii) the unaudited consolidated balance sheet
of the Company as of March 31, 1999 (the "Reference Balance Sheet"), and the
related statements of income and cash flows for the fiscal period ended March
31, 1999 of the Company (collectively referred to herein as the "Interim
Financial Statements"), are attached as Section 3.07 of the Company Disclosure
Schedule. The 1998 Financial Statements and the Interim Financial Statements
(including, in each case, any notes thereto) were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by GAAP) and each
present fairly, in all material respects, the consolidated financial position of
the Company and the consolidated Company Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, in each case except as
otherwise noted therein (and subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which are not expected to have a
Company Material Adverse Effect).
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SECTION 3.08. Absence of Certain Changes or Events. Since
January 1, 1999, except as contemplated by or as disclosed in this Agreement or
the Company Disclosure Schedule, the Company and the Company Subsidiaries have
conducted their businesses only in the ordinary course and, since such date,
there has not been (a) any Company Material Adverse Effect, (b) any material
change by the Company in its accounting methods, principles or practices, (c)
any declaration, setting aside or payment of any dividend or distribution in
respect of the Shares or any redemption, purchase or other acquisition of any of
the Company's securities or (d) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of the
Company or any Company Subsidiary, except in the ordinary course of business.
SECTION 3.09. Absence of Litigation. There is no litigation,
suit, claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary, before any court,
arbitrator or Governmental Entity, domestic or foreign, which (i) has had, or
could reasonably be expected to have a Company Material Adverse Effect or (ii)
seeks to delay or prevent the consummation of the Merger or any other material
transaction contemplated by this Agreement (and which, in the reasonable opinion
of outside counsel, has a reasonable prospect of success). Neither the Company
nor any Company Subsidiary nor any property or asset of the Company or any
Company Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any Governmental Entity,
or any order, writ, judgment, injunction, decree, determination or award of any
Governmental Entity or arbitrator having a Company Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans; Labor Matters. (a) With
respect to each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained or contributed to by the Company or any Company
Subsidiary, or with respect to which the Company or any Company Subsidiary could
incur liability under section 4069, 4212(c) or 4204 of ERISA (the "Company
Benefit Plans"), the Company has made available to the Parent a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service (the "IRS"), (ii) a complete copy of such Company Benefit Plan,
(iii) each trust agreement relating to such Company Benefit Plan, (iv) the most
recent summary plan description for each Company Benefit Plan for which a
summary plan description is required, (v) the most recent actuarial report or
valuation relating to a Company Benefit Plan subject to Title IV of ERISA and
(vi) the most recent determination letter, if any, issued by the IRS with
respect to any Company Benefit Plan qualified under section 401(a) of the Code.
No Company Benefit Plan is subject to Title IV of ERISA. No Company Benefit Plan
is a "multiemployer plan" (as such term is defined in section 3(37) of ERISA).
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(b) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances in connection with which the Company or any Company Subsidiary
could be subject to any material liability under the terms of such Company
Benefit Plans, ERISA, the Code or any other applicable law, other than the
obligation to pay benefits under any Company Benefit Plan. Each of the Company
Benefit Plans has been operated and administered in all material respects in
accordance with applicable laws and administrative or governmental rules and
regulations, including, but not limited to, ERISA and the Code. 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 letter as to such
qualification from the IRS, and no event has occurred, either by reason of any
action or failure to act, which would cause the loss of any such qualification.
All contributions or other amounts payable by the Company or any Company
Subsidiary with respect to each Company Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP and Section
412 of the Code.
(c) Neither the Company nor any Company Subsidiary is a
party to any collective bargaining or other labor union contract applicable to
persons employed by the Company or any Company Subsidiary and no collective
bargaining agreement is being negotiated by the Company or any Company
Subsidiary. As of the date of this Agreement, there is no labor dispute, strike
or work stoppage against the Company or any Company Subsidiary pending or
threatened in writing which may interfere with the respective business
activities of the Company or any Company Subsidiary. As of the date of this
Agreement, to the knowledge of the Company, none of the Company, any Company
Subsidiary, or their respective representatives or employees, has committed any
unfair labor practices in connection with the operation of the respective
businesses of the Company or any Company Subsidiary, and there is no charge or
complaint against the Company or any Company Subsidiary by the National Labor
Relations Board or any comparable state agency pending or threatened in writing.
(d) The Company has made available to Parent prior to the
date of this Agreement (i) copies of all employment agreements with officers of
the Company and each Company Subsidiary; (ii) copies of all severance
agreements, programs and policies of the Company with or relating to its
employees; and (iii) copies of all plans, programs, agreements and other
arrangements of the Company with or relating to its employees which contain
change of control provisions.
(e) No Company Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of the Company or any Company Subsidiary
beyond their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under any
"employee pension benefit plan" (as such term is defined in Section 3(2) of
ERISA), (iii) deferred compensation benefits accrued as liabilities on the books
of the Company or any Company Subsidiary or (iv) benefits the full cost of which
are borne by the current or former employees (or their beneficiaries).
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(f) Section 3.10(f) of the Company Disclosure Schedule sets
forth the name of each individual who has been granted Company Stock Options
under the Company Stock Option Plan or otherwise, the number of Company Stock
Options granted to such individual and the vesting schedule and per share
exercise price of such Company Stock Options.
(g) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, either alone or
together with another event, will (i) result in any material payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due under any Company Benefit Plan or any agreement
described in Section 3.10(d), (ii) materially increase any benefits otherwise
payable under any Company Benefit Plan or any agreement described in Section
3.10(d), (iii) result in the acceleration of the time of payment, vesting or
funding of any material benefits including, but not limited to, the acceleration
of the vesting and exercisability of any Company Stock Options, or (iv) affect
in any material respect any Company Benefit Plan's current treatment under any
Laws including any Tax or social contribution law.
No inaccuracy in any of the foregoing paragraphs of this Section
3.10 shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.11. Contracts. (a) Section 3.11(a) of the Company
Disclosure Schedule lists each of the following written contracts and agreements
of the Company (such contracts and agreements being "Material Contracts"):
(i) each material contract and agreement for the purchase or
lease of personal property with any supplier (including suppliers of
images) or for the furnishing of services to the Company;
(ii) all exclusive dealing or exclusivity, all material
broker, distributor, dealer, manufacturer's representative, franchise,
agency, sales promotion, market research, marketing consulting and
advertising contracts and agreements to which the Company is a party or
any other contract that compensates any person based on any sales by the
Company;
(iii) all leases and subleases of real property;
(iv) all contracts and agreements relating to indebtedness
for borrowed money other than trade indebtedness of the Company;
(v) all contracts and agreements with any Governmental
Entity to which the Company is a party;
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(vi) all contracts and agreements that limit or purport to
limit the ability of the Company to compete in any line of business or
with any person or in any geographic area or during any period of time;
(vii) all contracts containing confidentiality requirements
(including all nondisclosure agreements, but excluding all contracts
containing confidentiality restrictions entered into in the ordinary
course of business which do not materially restrict the conduct of the
Company's business);
(viii) all material contracts relating to trafficking
arrangements, domain name registration and customer list agreements;
(ix) all contracts and agreements between or among the
Company and any stockholder of the Company or any affiliate of such
person;
(x) a form of Affiliate License Agreement a form of
agreement relating to the supply of Images (as defined in Section 3.13);
(xi) any other material agreement of the Company which
expressly is terminable upon or prohibits a change of control of the
Company; and
(xii) all other contracts and agreements, whether or not made
in the ordinary course of business, which are material to the Company.
provided, however, that the Company Disclosure Schedule (whether pursuant to
this paragraph (a) or otherwise pursuant to this Agreement) shall not be
required to list any contract or agreement with regard to the supply of any
Image (as defined in Section 3.13) nor shall it include any so-called Affiliate
License Agreement; provided, further, that the fact that such a contract,
agreement or Affiliate License Agreement is not included on the Company
Disclosure Schedule by virtue of the immediately foregoing proviso shall not
exclude such contract, agreement or Affiliate License Agreement from the
definition of Material Contract for purposes of paragraph (b) next below.
(b) Each Material Contract: (i) is valid and binding on the
Company and, to the knowledge of the Company, on the other parties thereto, and
is in full force and effect, and (ii) with respect to those items listed on
Section 3.11(b)(ii) of the Company Disclosure Schedule, except as otherwise
indicated thereon, upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without penalty or other
adverse consequence (it being understood that this clause (ii) is not applicable
with respect to any Instrument which is silent as to transfer or assignability
to the extent such silence may be construed as requiring the consent of another
party to the assignment or transfer thereof or of rights and/or obligations
thereunder). The Company is not in material breach of, or material default
under, any Material Contract and, to the knowledge of the Company, no other
party to any Material Contract is in material breach thereof or material default
thereunder.
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(c) The Company is not a party to any material oral contract
or, to the knowledge of the Company, any other oral contract.
SECTION 3.12. Environmental Matters. Except as would not have a
Company Material Adverse Effect:
(a) The Company and the Company Subsidiaries (i) are in
compliance with all applicable Environmental Laws (as defined below), (ii) hold
all Environmental Permits (as defined below) and (iii) are in compliance with
their respective Environmental Permits.
(b) None of the Company or any Company Subsidiary has
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA (as defined below) or any similar
Law of any state, locality or any other jurisdiction.
(c) None of the Company or any Company Subsidiary has
entered into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as defined
below) and, to the knowledge of the Company, no investigation, litigation or
other proceeding is pending or threatened in writing with respect thereto.
(d) None of the real property owned or leased by the Company
or any Company Subsidiary is listed or, to the knowledge of The Company,
proposed for listing on the "National Priorities List" under CERCLA, as updated
through the date of this Agreement, or any similar list of sites in the United
States or any other jurisdiction requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Environmental Laws" means any federal, state or local statute,
law, ordinance, regulation, rule, code or order of the United States, or
any other jurisdiction and any enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials, as in effect as
of the date of this Agreement.
"Environmental Permits" means any permit, approval, license and
other authorization required under any applicable Environmental Law to
conduct the Company's business in the manner in which it is currently
conducted.
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"Hazardous Materials" means (a) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (b) any
chemical, material or substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant under any applicable
Environmental Law.
No inaccuracy in any of the foregoing paragraphs of this Section
3.12, shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.13. Intellectual Property. (a) Section 3.13 of the
Company Disclosure Schedule sets forth a true and complete list of all (i)
patents and patent applications, trademarks, service marks, trademark and
service xxxx registrations, and trademark and service xxxx applications,
registered copyrights and copyright applications, and Internet domain names, in
each case owned by the Company or a Company Subsidiary and material to the
business of the Company and the Company Subsidiaries (together with unregistered
copyrights and confidential and proprietary information, including trade secrets
and know-how, owned by the Company or a Company Subsidiary and material to the
business of the Company and the Company Subsidiaries, "Owned Intellectual
Property"), (ii) Software (as defined herein), and (iii) licenses, sublicenses,
and other agreements pertaining to Intellectual Property, Software or Images (as
defined herein) to which the Company or a Company Subsidiary is a party,
including agreements with major Internet service providers and major Internet
portals, but excluding Affiliate License Agreements (as defined herein), in each
case that are material to the business of the Company and the Company
Subsidiaries (together with Affiliate License Agreements, "Licensed Intellectual
Property") For purposes hereof, "Intellectual Property" means any and all of the
following, but excluding Images: (i) United States, international, and foreign
patents, patent applications and statutory invention registrations, (ii)
trademarks, service marks, trade names, trade dress, slogans, logos, and
Internet domain names, including registrations and applications for registration
thereof, (iii) copyrights, including registrations and applications for
registration thereof and (iv) confidential and proprietary information,
including trade secrets and know-how. For purposes hereof, "Image" means a
reproduction of any artwork, photograph or image of any type. For purposes
hereof, "Software" means all material computer software developed by or on
behalf of the Company or any Company Subsidiary, or used by the Company or any
Company Subsidiary, including all material computer software and databases
operated or used by the Company on its web sites or used by the Company in
connection with processing customer orders, storing customer information, or
storing and archiving Images. For purposes hereof, "Affiliate License Agreement"
means any agreement pursuant to which any third party participant in the
Affiliate Program of the Company is granted the right to display, copy,
reproduce, or distribute any Licensed Images, or pursuant to which a third party
is granted the right to establish a link from such third party's web site to the
Company's Xxx.xxx web site. For purposes hereof, "Approved Images" means Images
used or held for use by the Company and the Company Subsidiaries in connection
with their business for which the Company or a
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Company Subsidiary has the right to grant sublicenses to third parties. For
purposes hereof, "Unapproved Images" means Images used or held for use by the
Company and the Company Subsidiaries in connection with their business for which
the Company or a Company Subsidiary has not been granted the right to grant
sublicenses to third parties (the Approved Images and Unapproved Images
collectively being "Licensed Images").
(b) To the knowledge of the Company, the use of the Owned
Intellectual Property, Software, Licensed Images, and Licensed Intellectual
Property by the Company and the Company Subsidiaries in the ordinary course of
business does not infringe upon or misappropriate the valid Intellectual
Property rights of any third party. No written claim has been made that the use
of the Owned Intellectual Property, Software, Licensed Images, or Licensed
Intellectual Property in the ordinary course of business does or may infringe
upon or misappropriate the Intellectual Property rights of any third party.
(c) Except as set forth in Section 3.13 of the Company
Disclosure Schedule, the Company or a Company Subsidiary is the owner of the
entire and unencumbered right, title and interest in and to each item of Owned
Intellectual Property, and the Company and the Company Subsidiaries are entitled
to use the Owned Intellectual Property, Software, Licensed Images, and Licensed
Intellectual Property in the ordinary course of business.
(d) The Owned Intellectual Property, Software, and Licensed
Intellectual Property include all of the Intellectual Property and computer
software used in the ordinary day-to-day conduct of the business of the Company
and the Company Subsidiaries, and there are no other items of Intellectual
Property or computer software that are material to such ordinary day-to-day
conduct of such business. The Owned Intellectual Property and, to the knowledge
of the Company, any Intellectual Property licensed to the Company or any Company
Subsidiary under the Licensed Intellectual Property, is subsisting, valid and
enforceable, and has not been adjudged invalid or unenforceable in whole or
part.
(e) No legal proceedings have been asserted, are pending, or
threatened against the Company or any Company Subsidiary (i) based upon or
challenging or seeking to deny or restrict the use by the Company or any Company
Subsidiary of any of the Owned Intellectual Property, Software, Licensed Images,
or Licensed Intellectual Property, (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by the Company or any
Company Subsidiary infringe upon or misappropriate any Intellectual Property
right of any third party, or (iii) alleging that any Intellectual Property
licensed under the Licensed Intellectual Property infringes upon any
Intellectual Property right of any third party or is being licensed or
sublicensed in conflict with the terms of any license or other agreement.
(f) To the knowledge of the Company, no person is engaging
in any activity that infringes upon the Owned Intellectual Property, Software,
or any Intellectual Property licensed to the Company and the Company
Subsidiaries under the Licensed Intellectual Property. Except with respect to
Licensed Intellectual Property, neither the Company nor any
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Company Subsidiary has granted any license or other right to any third party
with respect to the Owned Intellectual Property, Software, Licensed Images, or
Licensed Intellectual Property. The consummation of the transactions
contemplated by this Agreement will not result in the termination or impairment
of any of the Owned Intellectual Property.
(g) The Company and the Company Subsidiaries have delivered
or made available to Parent correct and complete copies of all the licenses,
sublicenses and agreements of the Licensed Intellectual Property. With respect
to each such license, sublicense or agreement:
(i) to the knowledge of the Company, such license,
sublicense or agreement is valid and binding and in full force and
effect and represents the entire agreement between the parties thereto
with respect to the subject matter thereof;
(ii) such license, sublicense or agreement will not cease to
be valid and binding and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a breach
or default under such license, sublicense or agreement or otherwise give
any party thereto a right to terminate such license, sublicense or
agreement;
(iii) (A) neither the Company nor any Company Subsidiary has
received any notice of termination or cancellation under such license,
sublicense or agreement, (B) neither the Company nor any Company
Subsidiary has received any notice of a breach or default under such
license, sublicense or agreement, which breach has not been cured, and
(C) neither the Company nor any Company Subsidiary has granted to any
other third party any rights, adverse or otherwise, under such license,
sublicense or agreement that would constitute a breach thereof; and
(iv) to the Company's knowledge, neither the Company, any
Company Subsidiary, nor any other party to such license, sublicense or
agreement is in breach or default in any material respect, and, to the
Company's knowledge, no event has occurred that, with notice or lapse of
time would constitute such a breach or default or permit termination,
modification or acceleration under such license, sublicense or
agreement.
(h) To the knowledge of the Company, the Software is free of
all viruses, bugs, errors, or problems that materially disrupt its operation or
have a material adverse impact on the operation of other software programs or
operating systems, and no rights in the Software have been transferred to any
third party.
(i) The Internal MIS Systems are Euro Compliant except to
the extent that the failure to be Euro Compliant could not reasonably be
expected to have a Company Material Adverse Effect. For purposes hereof,
"Internal MIS Systems" means any computer software
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and systems (including hardware, firmware, operating system software, utilities
and applications software) used in the ordinary course of the business of the
Company that process financial information and that are material to the
operation of the business of the Company, including, where applicable, payroll,
accounting, billing/receivables, purchasing payables, inventory, asset tracking,
customer service, and human resources. For purposes hereof, "Euro Compliant"
means that the Internal MIS Systems will record, store, process and present
currency denominated in Euros, in the same manner, and with the same
functionality, as the Internal MIS Systems record, store, process and present
currencies denominated in U.S. Dollars and major European currencies.
(j) The Company and the Company Subsidiaries have taken
reasonable steps in accordance with normal industry practice to maintain the
confidentiality of their customer lists and customer information, trade secrets
and other confidential or proprietary Intellectual Property. To the knowledge of
the Company (i) there has been no misappropriation of any material trade secrets
or other material confidential or proprietary Intellectual Property of the
Company or any Company Subsidiary by any person, (ii) no employee, independent
contractor or agent of the Company or any Company Subsidiary has misappropriated
any trade secrets of any other person in the course of such performance as an
employee, independent contractor or agent and (iii) no employee, independent
contractor or agent of the Company or any Company Subsidiary is in default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of
Intellectual Property.
No inaccuracy in any of the foregoing paragraphs of this Section
3.13 shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.14. Images. (a) The Company and the Company
Subsidiaries do not own any Images used or held for use by the Company and the
Company Subsidiaries in connection with their business. The Licensed Images
include all of the Images used or held for use by the Company and the Company
Subsidiaries in connection with their business or material to the operation of
the business of the Company and the Company Subsidiaries as currently conducted.
With respect to each Image of the Licensed Images, the Company or a Company
Subsidiary has the right to display, reproduce, distribute, and sublicense the
use of such Image to the extent required for the continued operation of the
business of the Company and the Company Subsidiaries in a manner consistent with
past practice.
(b) Neither the Company nor any Company Subsidiary has
granted any license, sublicense or other right to any other person with respect
to any Unapproved Images. Neither the Company nor any Company Subsidiary has
granted any license, sublicense or other right to any other person with respect
to any Approved Image that would constitute a breach of any agreement or license
pertaining to such Approved Image.
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(c) To the knowledge of the Company, the display, sale,
marketing, distribution and sublicensing of the Licensed Images by the Company
and the Company Subsidiaries does not infringe upon the Intellectual Property
right of any third party. The display, sale, marketing, distribution and
sublicensing of the Licensed Images by the Company and the Company Subsidiaries
does not constitute a breach of any agreement or license to which the Company or
a Company Subsidiary is a party.
(d) No claims have been made, asserted, are pending, or
threatened, against the Company or any Company Subsidiary (i) based upon or
challenging or seeking to deny or restrict the display, sale, marketing,
distribution or sublicensing by the Company or any Company Subsidiary of any of
the Licensed Images, or (ii) alleging that the sale, reproduction, distribution
or sublicensing of the Licensed Images does or may infringe upon the
Intellectual Property rights of any third party, and to the knowledge of the
Company, no such claims have been made, asserted, are pending, or threatened
against any third party licensor or licensee of Licensed Images.
(e) To the knowledge of the Company, no person is engaging
in any activity that infringes upon the Licensed Images or upon the rights of
the Company or any Company Subsidiary therein. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of the right of the Company or a Company Subsidiary to sell,
reproduce, distribute or sublicense any of the Licensed Images.
(f) Each of the Company and the Company Subsidiaries has,
prior to any display, sale, reproduction, distribution or sublicensing of any
Licensed Image, obtained in writing all such releases and/or other third party
consents or authorizations necessary for such display, sale, reproduction,
distribution or sublicensing, copies of which are kept by the Company or any
such Company Subsidiary at its offices. The Company and the Company Subsidiaries
do not maintain an inventory of Images, and neither the Company nor any Company
Subsidiary has entered into any contract under which the Company or a Company
Subsidiary has assumed any obligation for the storage and handling of Images.
(g) With respect to each license or agreement by which the
Company has obtained the right to display, sell, reproduce, distribute or
sublicense the Licensed Images or by which the Company has granted to any third
party the right to display, sell, reproduce, or distribute any Licensed Images:
(i) to the knowledge of the Company, such license or
agreement is legal, valid, binding and enforceable and in full force and
effect and represents the entire agreement between the parties thereto
with respect to the subject matter thereof;
(ii) such license or agreement will not cease to be legal,
valid binding and enforceable and in full force and effect on terms
identical to those currently in effect as a result of the consummation
of the transactions contemplated by this Agreement, nor will the
consummation of the transactions contemplated by this Agreement
constitute a
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breach or default under such license or agreement, or otherwise give any
party thereto a right to terminate such license or agreement;
(iii) with respect to each such license or agreement, (A)
neither the Company nor any Company Subsidiary has received any notice
of termination or cancellation under such license or agreement, and no
party thereto has any right of termination or cancellation thereunder
except in accordance with its terms, (B) neither the Company nor any
Company Subsidiary has received any notice of a breach or default under
such license or agreement which breach or default has not been cured,
and (C) neither the Company nor any Company Subsidiary has granted to
any other person any rights, adverse or otherwise, under such license or
agreement; and
(iv) none of the Company, any Company Subsidiary nor, to the
knowledge of the Company, any other party to such license or agreement,
is in breach or default thereof in any material respect, and, to the
knowledge of the Company, no event has occurred that, with notice or
lapse of time would constitute such a breach or default or permit
termination, modification or acceleration under such license or
agreement.
(h) Section 3.14 of the Company Disclosure Schedule
identifies each third party that has, since January 1, 1998, revoked the right
of the Company or a Company Subsidiary to display, reproduce, distribute or
sublicense the use of any Image owned or controlled by such third party.
No inaccuracy in any of the foregoing paragraphs of this Section
3.14 shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.15. Taxes. (a) (i) All returns and reports in respect
of Taxes (as defined herein) required to be filed with respect to the Company
and each Company Subsidiary have been timely filed; (ii) all Taxes required to
be shown on such returns and reports or otherwise due have been timely paid;
(iii) all such returns and reports are true, correct and complete in all
material respects; (iv) no adjustment relating to such returns has been proposed
formally or informally by any Tax authority; (v) there are no pending or, to the
best knowledge of the Company and the Company Subsidiaries (after reasonable
investigation), threatened actions or proceedings for the assessment or
collection of Taxes against the Company or any Company Subsidiary; (vi) no
consent under section 341(f) of the Code has been filed with respect to the
Company or any Company Subsidiary; (vii) there are no tax liens on any assets of
the Company or any Company Subsidiary other than for Taxes not yet due; (viii)
neither the Company nor any affiliate is a party to any agreement or arrangement
that would result, separately or in the aggregate, in the actual or deemed
payment by the Company or a Company Subsidiary of any "excess parachute
payments" within the meaning of Section 280G of the Code (without regard to
Section 280G(b)(4)); (ix) none of the Company or the Company Subsidiaries is
doing business in or engaged in a trade or business in any jurisdiction
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in which it has not filed any applicable income or franchise tax return; and (x)
no power of attorney that is currently in force has been granted with respect to
any matter relating to Taxes that could affect the Company or a Company
Subsidiary.
(b) On the Reference Balance Sheet, reserves and allowances
have been provided adequate to satisfy all liabilities for Taxes relating to the
Company and the Company Subsidiaries as of the date thereof (without regard to
the materiality thereof).
(c) The Company is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying under Section 368(a)
of the Code.
(d) As used in this Agreement, "Taxes" shall mean any and
all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges.
No inaccuracy in any of the foregoing paragraphs of this Section
3.15, shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.16. Vote Required. The only votes of the holders of
any classes or series of capital stock of the Company necessary to approve this
Agreement, the Merger and the other transactions contemplated by this Agreement
is the affirmative vote of the holders of a majority of the outstanding shares
of (i) Company Common Stock and (ii) Company Preferred Stock in favor of the
approval of this Agreement, in each case voting separately as a class.
SECTION 3.17. Assets. Except as set forth in Section 3.17 of the
Company Disclosure Schedule, the Company owns, leases or has the legal right to
use all of the material properties and assets, including, without limitation,
real property and personal property (other than Intellectual Property, which is
covered by Sections 3.13 and 3.14 hereof), used or situated for use in the
conduct of the business of the Company or otherwise owned, leased or used by the
Company in or relating to the conduct of the business of the Company (all such
properties, assets and contract rights being the "Assets"). Except as set forth
in Section 3.17 of the Company Disclosure Schedule, the Company has good and
marketable title to, or, in the case of leased or subleased Assets, valid and
subsisting leasehold interests in, all the Assets, free and clear of all
encumbrances except for the following: (i) statutory liens for Taxes not yet
due; (ii) statutory liens of landlords, carriers, warehousemen, mechanics and
materialmen
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incurred in the ordinary course of business for sums not yet due; (iii) liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations; and (iv) minor irregularities of title
which do not in the aggregate materially detract from the value or use of the
Company's assets.
SECTION 3.18. Certain Interests. (a) No stockholders of the
Company or their affiliates or any officer or director of the Company and, to
the knowledge of the Company, no immediate relative or spouse (or immediate
relative of such spouse) who resides with, or is a dependent of, any such
officer or director:
(i) has any direct or indirect financial interest in any,
material supplier or material customer of the Company, provided,
however, that the ownership of securities representing no more than 5%
of the outstanding voting power of any supplier or customer, and which
are listed on any national securities exchange or traded actively in the
national over-the-counter market, shall not be deemed to be a "financial
interest" as long as the person owning such securities has no other
connection or relationship with such supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, any
tangible or intangible property which the Company uses or has used (and
has a reasonable prospect of using in the future) in the conduct of its
business (except for any such ownership or interest resulting from the
ownership of securities in a public company); or
(iii) except as set forth in Section 3.18(a)(iii) of the
Company Disclosure Schedule, has outstanding any indebtedness for money
borrowed to the Company.
(b) Except as set forth in Section 3.18(b) of the Company
Disclosure Schedule, except for the payment of employee compensation in the
ordinary course of business, and other employment related matters, and matters
related to officer or director service, including, without limitation, rights to
indemnification, contribution, advancement of expenses and the like, the Company
does not have any liability or any other obligation of any nature whatsoever to
any stockholder of the Company or any affiliate thereof or to any officer or
director of the Company or, to the knowledge of the Company, to any immediate
relative or spouse (or immediate relative of such spouse) of any such officer or
director. The foregoing does to apply to or address any liability or obligation
(i) to the stockholders of the Company or any of their affiliates or
representatives or related persons or entities arising in connection with or
related to the transactions contemplated by that certain Series A Stock Purchase
Agreement dated as of December 4, 1998, or otherwise derivative therefrom, or
(ii) to a stockholder as a stockholder.
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SECTION 3.19. Insurance Policies. Section 3.19 of the Company
Disclosure Schedule sets forth a true and complete list and description
(including face amount of policy, name of insured, carrier, premium, expiration
date and whether it is a "claims made" or an "occurrence" policy) of all
insurance policies held by the Company. All premiums due to the date hereof on
such policies have been paid. All pending claims, if any, made against the
Company which are covered by insurance are being defended by the appropriate
insurance companies and are described on the Company Disclosure Schedule. The
Company has not failed to give any notice or present any claim under any such
policy in a timely fashion, except where such failure would not prejudice the
Company's ability to make a claim and result in a Company Material Adverse
Effect. Such insurance to the date hereof has (i) been maintained in full force
and effect and (ii) not been canceled or changed, except to extend the maturity
dates thereof.
SECTION 3.20. State Takeover Statutes. The Board of Directors of
the Company has taken all action necessary to ensure that the restrictions on
business combinations contained in Section 203 of the DGCL will not apply to the
Merger and the other transactions contemplated by this Agreement. To the
knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated by this Agreement.
SECTION 3.21. Year 2000 Compliance. The Company has (i)
undertaken an assessment of those Company Systems that could be adversely
affected by a failure to be Year 2000 Compliant and (ii) disclosed such plan to
Parent. To the knowledge of the Company, the Company Systems are Year 2000
Compliant except to the extent that failure to be so compliant could not
reasonably be expected to have a Company Material Adverse Effect. For purposes
hereof, "Company Systems" shall mean all computer, hardware, software, Software,
systems, and equipment (including embedded microcontrollers in non-computer
equipment) embedded within or required to operate the current products of the
Company and the Company Subsidiaries, and/or material to or necessary for the
Company and the Company Subsidiaries to carry on their businesses as currently
conducted. For purposes hereof, "Year 2000 Compliant" means that the Company
Systems provide uninterrupted millennium functionality in that the Company
Systems will record, store, process and present calendar dates falling on or
after January 1, 2000, in the same manner and with the same functionality as the
Company Systems record, store, process, and present calendar dates falling on or
before December 31, 1999.
SECTION 3.22. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company.
SECTION 3.23. Limitations on Warranties. The Company makes no
express or implied warranty of any kind whatsoever, including with respect to
(i) any information (including projections) furnished by the Company or any of
the Company's representatives or agents and (ii) the physical condition or value
of any of the Company's assets. Parent and
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Merger Sub agree that neither the Company nor any other person or entity shall
have any liability to Parent or Merger Sub or any other person resulting from
the distribution of any such information to Parent or Merger Sub, or Parent's or
Merger Sub's use of any such information, documents or materials made available
to Parent or Merger Sub in any form. ALL IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Disclosure Schedule delivered by
Parent and Merger Sub to the Company concurrently with the execution of this
Agreement (the "Parent Disclosure Schedule") and the Parent SEC Reports (as
defined in Section 4.07), Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each
of Parent and each subsidiary of Parent (the "Parent Subsidiaries") is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all corporate requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such corporate power and
authority have not had, and could not reasonably be expected to have a Parent
Material Adverse Effect (as defined below). Each of Parent and the Parent
Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that have not had, and could not
reasonably be expected to have a Parent Material Adverse Effect. The term
"Parent Material Adverse Effect" means any change in or effect on the business
of Parent and the Parent Subsidiaries that is materially adverse to the
financial condition or results of operations of Parent and the Parent
Subsidiaries taken as a whole, except for any such changes or effects resulting
from or in connection with (i) any occurrence or condition affecting the online
or visual image industries generally, (ii) any changes in economic, regulatory
or political conditions and (iii) any declines in the price of Parent Common
Stock.
SECTION 4.02. Certificate of Incorporation and By-Laws. Parent
has heretofore made available to the Company a complete and correct copy of the
Certificate of Incorporation and the By-Laws of Parent and the Certificate of
Incorporation and By-Laws of Merger Sub. Such Certificates of Incorporation and
By-Laws are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws.
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SECTION 4.03. Capitalization. The authorized capital stock of
Parent consists of (a) 75,000,000 shares of Parent Common Stock and (b)
5,000,000 shares of preferred stock, par value $0.01 per share ("Parent
Preferred Stock"). As of April 22, 1999, (i) 30,694,000 shares of Parent Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and non-assessable, (ii) 3,034 shares of Parent Common Stock are held in the
treasury of Parent or by Parent Subsidiaries and (iii) 10,000,000 shares are
reserved for future issuance pursuant to stock options. As of the date of this
Agreement, no shares of Parent Preferred Stock were issued and outstanding.
Except for stock options granted pursuant to the stock option plans of Parent
(the "Parent Stock Option Plans") and the issuance of shares of Parent Common
Stock upon the conversion of the 4.75% Convertible Subordinated Notes due 2003,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Parent or any Parent Subsidiary or obligating Parent or any Parent Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in,
Parent or any Parent Subsidiary. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. There are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or any capital stock of
any Parent Subsidiary. Each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and non-assessable and
each such share owned by Parent or another Parent Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever, except
where failure to own such shares free and clear would not have a Parent Material
Adverse Effect. There are no material outstanding contractual obligations of
Parent or any Parent Subsidiary to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any Parent Subsidiary
or any other person. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share, all of which are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereof and all of which are owned by Parent. The
shares of Parent Common Stock to be issued pursuant to the Merger in accordance
with Section 2.01 (i) will be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Parent's Certificate of Incorporation or By-Laws or any agreement to which the
Parent is a party or is bound and (ii) will, when issued, be exempt from
registration under the Securities Act of 1933, as amended (together with the
rules and regulations promulgated thereunder, the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act") and exempt from
registration under applicable Blue Sky Laws.
SECTION 4.04. Authority Relative to This Agreement. 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 to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this
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Agreement by each of Parent and Merger Sub and the consummation by each of
Parent and Merger Sub of the Merger and the other transactions contemplated by
this Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the Merger and the other transactions
contemplated by this Agreement (other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by the DGCL).
This Agreement has been duly and validly executed and delivered by each of
Parent and Merger Sub and, assuming the 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 of Parent and Merger Sub
in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by each of Parent and Merger Sub do
not, and the performance of this Agreement by each of Parent and Merger Sub will
not, (i) conflict with or violate the Certificate of Incorporation or By-laws of
Parent or any equivalent organizational documents of Merger Sub or any other
Parent Subsidiary, (ii) assuming that all consents, approvals, authorizations
and other actions described in Section 4.05(b) have been obtained and all
filings and obligations described in Section 4.05(b) have been made, conflict
with or violate any Law applicable to Parent or any Parent Subsidiary or by
which any property or asset of Parent or any Parent Subsidiary is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of Parent or any Parent Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clause (iii), for any such
conflicts, violations, breaches, defaults, or other occurrences that have not
had, and could not reasonably be expected to have a Parent Material Adverse
Effect, and that could not reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by each of
Parent and Merger Sub do not, and the performance of this Agreement by each of
Parent and Merger Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws, the
Securities Act, the NASDAQ, state takeover laws, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, has not had, and could not reasonably be expected to
have a Parent Material Adverse Effect, and could not reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement
(c) Assuming all of the information supplied by the Company
to Parent is true and complete in all respects, Parent is not aware of any facts
which would require, in connection with the transactions contemplated hereby,
the filing of a pre-merger notification pursuant to the HSR Act.
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SECTION 4.06. Permits; Compliance. Each of Parent and the Parent
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for Parent or any
Parent Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Parent Permits"), except where the
failure to have, or the suspension or cancellation of, any of Parent Permits has
not had, and could not reasonably be expected to have a Parent Material Adverse
Effect, and, as of the date of this Agreement, no suspension or cancellation of
any of Parent Permits is pending or, to the knowledge of Parent, threatened,
except where the failure to have, or the suspension or cancellation of, any of
Parent Permits has not had, and could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements. (a) Parent has
filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1998 through the
date of this Agreement (collectively, the "Parent SEC Reports"). As of the
respective dates they were filed, (i) the Parent SEC Reports were prepared, and
all forms, reports and documents filed with the SEC after the date of this
Agreement and prior to the Effective Time will be prepared, in all material
respects in accordance with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and (ii) none of the Parent SEC Reports
contained, nor will any forms, reports and documents filed after the date of
this Agreement and prior to the Effective Time contain, any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Parent Subsidiary
is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent SEC Reports
and in any form, report or document filed after the date of this Agreement and
prior to the Effective Time was, or will be, as the case may be, prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and each presented
or will present fairly, in all material respects, the consolidated financial
position of Parent and the consolidated Parent Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments which were not and are not expected to have a
Parent Material Adverse Effect).
SECTION 4.08. Absence of Certain Changes or Events. Since
January 1, 1998, except as contemplated by or as disclosed in this Agreement, or
as disclosed in any Parent SEC Report filed since January 1, 1998 and prior to
the date hereof, Parent and Parent Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (a) any Parent Material Adverse Effect, (b)
any material change by Parent in its accounting methods, principles or
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practices, (c) any declaration, setting aside or payment of any dividend or
distribution in respect of Parent's capital stock or any redemption, purchase or
other acquisition of any of Parent's securities or (d) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of Parent or any Parent Subsidiary, except in
the ordinary course of business consistent with past practice.
SECTION 4.09. Intellectual Property. Except as would not have a
Parent Material Adverse Effect, (i) to the knowledge of Parent, the conduct of
the business of Parent as currently conducted does not infringe upon or
misappropriate the Intellectual Property rights of any third party, and no claim
has been asserted to Parent that the conduct of the business of Parent as
currently conducted infringes upon or may infringe upon, or misappropriates, the
Intellectual Property rights of any third party, (ii) with respect to each item
of Intellectual Property owned by Parent and material to the business of Parent
as currently conducted ("Parent Intellectual Property"), Parent is the owner of
the entire right, title and interest in and to such Intellectual Property and is
entitled to use such Intellectual Property in the continued operation of its
business, (iii) with respect to each Image used or held for use by Parent in
connection with its business that is material to the business of Parent as
currently conducted ("Parent Images"), Parent is entitled to use such Image in
the continued operation of its business, (iv) with respect to each item of
Intellectual Property licensed to Parent that is material to the business of
Parent as currently conducted ("Parent Licensed Intellectual Property"), Parent
has the right to use such Parent Licensed Intellectual Property in the continued
operation of its business in accordance with the terms of the license agreement
governing such Parent Licensed Intellectual Property, (v) the Parent
Intellectual Property has not been adjudged invalid or unenforceable in whole or
part, and to the knowledge of Parent, is valid and enforceable, (vi) to the
knowledge of Parent, no person is engaging in any activity that infringes upon
the Parent Intellectual Property or Parent Images, (vii) to the knowledge of
Parent, each license of the Parent Licensed Intellectual Property is valid and
enforceable, is binding on all parties to such license, and is in full force and
effect, and to the knowledge of Parent, no party to any such license is in
breach thereof or default thereunder and (viii) to the knowledge of Parent, each
license or agreement by which the Company has obtained the right to display,
sell, reproduce, distribute or sublicense Images or by which the Company has
granted to any third party the right to display, sell, reproduce, or distribute
any Images is valid and enforceable, is binding on all parties to such license
or agreement, is in full force and effect, and to the knowledge of Parent, no
party to such license or agreement is in breach thereof or default thereunder.
SECTION 4.10. Taxes. Except for such matters that would not have
a Parent Material Adverse Effect, (a) Parent and each of the Parent Subsidiaries
have timely filed or will timely file all material returns and reports required
to be filed by them with any taxing authority with respect to Taxes for any
period ending on or before the Effective Time, taking into account any extension
of time to file granted to or obtained on behalf of Parent and the
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Parent Subsidiaries, (b) all Taxes shown to be payable on such returns or
reports that are due prior to the Effective Time have been paid or will be paid
and (c) as of the date of this Agreement, no deficiency for any material amount
of Tax has been asserted or assessed by a taxing authority against Parent or any
of the Parent Subsidiaries.
SECTION 4.11. Employee Benefit Plans; Labor Matters. (a) No
employee benefit plan, program, arrangement or contract (including, without
limitation, any "employee benefit plan"as defined in section 3(3) of ERISA)
maintained or contributed to by Parent or any Parent Subsidiary (a "Parent
Benefit Plan") is subject to Title IV of ERISA. No Parent Benefit Plan is a
"multiemployer plan" (as such term is defined in section 3(37) of ERISA). With
respect to the Parent Benefit Plans, no event has occurred and, to the knowledge
of Parent, there exists no condition or set of circumstances in connection with
which Parent or any Parent Subsidiary could be subject to any material liability
under the terms of such Parent Benefit Plans, ERISA, the Code or any other
applicable law, other than the obligation to pay benefits under any Parent
Benefit Plan. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, either alone or together
with another event, will result in any material payment under or any material
increase in benefits under any Parent Benefit Plan.
(b) Neither Parent nor any Parent Subsidiary is a party to
any collective bargaining or other labor union contract applicable to persons
employed by Parent or any Parent Subsidiary and no collective bargaining
agreement is being negotiated by Parent or any Parent Subsidiary. As of the date
of this Agreement, there is no labor dispute, strike or work stoppage against
Parent or any Parent Subsidiary pending or threatened in writing which may
interfere with the respective business activities of Parent or any Parent
Subsidiary.
No inaccuracy in any of the foregoing paragraphs of this Section
4.11, shall give rise to any breach of any of the representations or warranties
herein contained except to the extent that such inaccuracy could reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 4.12. Absence of Litigation. There is no litigation,
suit, judgment, order, decree, claim, action, proceeding or investigation
pending or, to the knowledge of Parent, threatened against Parent or any Parent
Subsidiary, or any property or asset of Parent or any Parent Subsidiary, by or
before any court, arbitrator or Governmental Entity, domestic or foreign, which
(i) has had, or could reasonably be expected to have a Parent Material Adverse
Effect or (ii) seeks to delay or prevent the consummation of the Merger or any
other material transaction contemplated by this Agreement (and which, in the
reasonable opinion of outside counsel, has a reasonable prospect of success).
Parent's conduct of its business has been lawful, except to the extent that
failure to be lawful has not had or could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 4.13. Operations of Merger Sub. Merger Sub is a wholly
owned subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions
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contemplated by this Agreement, has engaged in no other business activities and
has conducted its operations only as contemplated by this Agreement.
SECTION 4.14. Investment Purpose. Parent is acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.01 of the Company Disclosure
Schedule or as contemplated by any other provision of this Agreement, unless
Parent shall otherwise consent in writing:
(i) the businesses of the Company and the Company
Subsidiaries shall be conducted only in, and the Company and the Company
Subsidiaries shall not take any action except in, the ordinary course of
business, except in connection with the transaction contemplated by this
Agreement; and
(ii) subject to the limitations contained herein, the Company
shall use its reasonable best efforts to preserve substantially intact
its business organization, to keep available the services of the current
officers, employees and consultants of the Company and the Company
Subsidiaries and to preserve the current relationships of the Company
and the Company Subsidiaries with customers, suppliers and other persons
with which the Company or any Company Subsidiary has significant
business relations.
By way of amplification and not limitation, except as
contemplated by this Agreement or in connection with the transactions
contemplated hereby or as set forth in Section 5.01 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary shall, between the date
of this Agreement and the Effective Time, directly or indirectly, do, or propose
to do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change its Restated Certificate of
Incorporation or ByLaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (i)
except upon exercise of warrants or options or conversion rights in existence on
the date hereof, any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Company
Subsidiary or (ii)
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any material assets of the Company or any Company Subsidiary, except in the
ordinary course of business;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or any material division
or assets thereof;
(ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse (other than endorsements
of checks, other negotiable instruments and the like in the ordinary
course of business), or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances,
except for indebtedness incurred in the ordinary course of business and
consistent with past practice and other indebtedness with a maturity of
not more than one year in a principal amount not, in the aggregate, in
excess of $50,000;
(iii) enter into any contract or agreement material to the
business, results of operations or financial condition of the Company
and the Company Subsidiaries taken as a whole other than in the ordinary
course of business;
(iv) authorize any capital expenditure, other than capital
expenditures reflected in the Company 1999 Business Plan dated April 1,
1999 and other capital expenditures which are not, in the aggregate, in
excess of $50,000 for the Company and the Company Subsidiaries taken as
a whole (it being expressly understood and agreed, without implication
that the contrary would otherwise be true, that Parent's prior consent
with respect to any such actions shall not be unreasonably withheld or
delayed and shall be based upon the best interests of the Company and of
Parent in light of the transactions contemplated hereby); or
(v) enter into or amend any contract, agreement, commitment
or arrangement that, if fully performed, would not be permitted under
this Section 5.01(e);
(f) increase the compensation payable or to become payable
to its officers or employees, except for increases in the ordinary course of
business and in accordance with past practice in salaries or wages of employees
of the Company or any Company Subsidiary who are not officers of the Company, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Company
or any Company Subsidiary (other than employment agreements with employees not
of the officer level in the ordinary course of business), or establish, adopt,
enter into or amend
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any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee;
(g) take any action to cause, or fail to take any action to
prevent, the accelerated vesting and exercisability of the Company Stock
Options; or
(h) take any action, other than reasonable and usual actions
in the ordinary course of business, with respect to accounting policies or
procedures.
SECTION 5.02. Notification of Certain Matters. Parent shall give
prompt notice to the Company, and the Company shall give prompt notice to
Parent, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause (x) any representation or
warranty of it contained in this Agreement to be untrue or inaccurate or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (ii) any failure of Parent or the Company, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.02 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Stockholder Approval. The Company shall
use its best efforts to, and the Individual Stockholders shall ensure that, the
stockholders of the Company, acting by written consent pursuant to Section 228
of the DGCL, take all action necessary for the approval of the Merger and
adoption of this Agreement within 10 days of the date hereof. By way of
amplification and not limitation, the Company, acting through its Board of
Directors, shall, in accordance with all applicable legal requirements and its
Restated Certificate of Incorporation and By-Laws, (i) promptly solicit an
action by written consent in lieu of a meeting of stockholders of the Company
(or if, required by law, duly call, give notice of, convene and hold a meeting
of stockholders of the Company), (ii) recommend the approval of the Merger and
adoption this Agreement, (iii) take all lawful action to solicit such approval
and (iv) take all other action necessary or advisable to secure the vote or
consent of stockholders required by the DGCL.
SECTION 6.02. Information Statement; Registration Statement. (a)
As promptly as practicable after the execution of this Agreement (but in no
event later than 15 days after the date hereof, assuming there has not been a
breach of Section 6.01), the Company shall prepare and disseminate to its
stockholders an information statement (together with any
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amendments thereof or supplements thereto, the "Information Statement") relating
to the action of the Company's stockholders, by written consent in lieu of a
meeting, to adopt this Agreement and approve the Merger.
SECTION 6.03. Access to Information; Confidentiality. (a) Except
with respect to information subject to applicable legal privilege and except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which Parent or the Company or any of their respective
subsidiaries is a party or pursuant to applicable Law, from the date of this
Agreement to the Effective Time, Parent and the Company shall (and shall cause
their respective subsidiaries to): (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of the other and its subsidiaries and to the books and records
thereof and (ii) furnish promptly such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of the
other party and its subsidiaries as the other party or its Representatives may
reasonably request.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement dated March 6, 1999 (the "Confidentiality
Agreement") between the Company and Parent.
SECTION 6.04. No Solicitation of Transactions. (a) The Company
will not, directly or indirectly, and will instruct its officers, directors,
employees, subsidiaries, agents or advisors or other representatives (including,
without limitation, any investment banker, attorney or accountant retained by
it), not to, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing nonpublic information), or take any other action
knowingly to facilitate, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of the Company or any Company Subsidiaries, or any investment banker, financial
advisor, attorney, accountant or other representative retained by the Company or
any of Company Subsidiaries, to take any such action. The Company shall notify
Parent promptly if any proposal or offer, or any inquiry or contact with any
person with respect thereto, regarding a Competing Transaction is made. The
Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Competing Transaction. The Company agrees not to release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which it is a party.
(b) A "Competing Transaction" means any of the following
involving the Company (other than the Merger and the other transactions
contemplated by this Agreement):
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(i) a merger, consolidation, share exchange, business combination or other
similar transaction; (ii) any sale, lease, exchange, transfer or other
disposition of a material portion of the assets of the Company, taken as a
whole; (iii) a tender offer or exchange offer for 25% or more of the outstanding
voting securities of such party or (iv) any solicitation in opposition to
approval by the Company's stockholders of this Agreement and the Merger.
SECTION 6.05. Employee Benefits Matters. (a) Parent shall
provide the Company's employees with retirement, health, welfare and other
employee benefits that in the aggregate are substantially equivalent to, and no
less favorable than, those provided to Parents' employees located in the United
States who are similarly situated.
(b) To the extent that service is relevant for eligibility
and vesting (and, solely for purposes of calculating entitlement to vacation and
sick days, benefit accruals) under any retirement plan, employee benefit plan,
program or arrangement established or maintained by Parent or any of the Parent
Subsidiaries for the benefit of employees located in the United States of Parent
and any of the Parent Subsidiaries, such plan, program or arrangement shall
credit Company employees for service on or prior to the Effective Time with the
Company or any affiliate or predecessor thereof. In addition, Parent shall waive
limitations on benefits relating to any pre-existing conditions to the same
extent eligible for coverage under a Company Benefit Plan and recognize, for
purposes of annual deductible and out-of-pocket limits under its medical and
dental plans, deductible and out-of-pocket expenses paid by the Company's
employees in the calendar year in which the Effective Time occurs.
(c) On or after the Effective Time, Parent shall grant to
employees of the Company an aggregate of 400,000 stock options (the
"Post-Closing Options") to purchase Parent Common Stock under the terms of
Parent's 1998 Stock Incentive Plan, of which the grants of Post-Closing Options
to be made as of the Effective Time shall be substantially in accordance as set
forth in Exhibit 6.05(c). With respect to the remainder of such amount,
following the Effective Time, Parent shall determine (i) the number of
Post-Closing Options to be granted as of the Effective Time, (ii) the
appropriate distribution of the Post-Closing Options among Company employees and
(iii) the amount to be reserved for future hires of the Company, based on
factors such parties shall determine to be applicable including, but not limited
to, the level of responsibility of each Company employee, such employee's length
of service with the Company and potential future contribution to the Company's
and Parent's businesses, as well as the amount of options previously granted to
similarly situated Parent employees. The Post-Closing Options shall have
substantially identical terms to stock options previously granted by Parent to
its similarly situated employees. The exercise price of the Post-Closing Options
shall be the fair market value of Parent's Common Stock as determined under the
terms of Parent's 1998 Stock Incentive Plan. The Post-Closing Options shall
become 25% vested on the first anniversary of their date of grant, and will
continue to vest over a period of three years in equal monthly installments
commencing on the first day of the first calendar month following the first
anniversary of their date of grant.
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SECTION 6.06. 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 subject to the
conditions set forth in this Agreement.
SECTION 6.07. Further Action; Consents; Filings. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to (i) take, or cause to be taken, all appropriate
action and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the Merger
and the other transactions contemplated by this Agreement, (ii) obtain from
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement and (iii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement, the Merger and the other transactions contemplated by
this Agreement required under (A) the Exchange Act and the Securities Act and
the rules and regulations thereunder and any other applicable federal or state
securities laws and (B) any other applicable Law. The parties hereto shall
cooperate with each other in connection with the making of all such filings,
including by providing copies of all such documents to the nonfiling party and
its advisors prior to filing and, if requested, by accepting all reasonable
additions, deletions or changes suggested in connection therewith.
SECTION 6.08. Registration Rights and Employment Agreement.
Prior to the Effective Time, Parent and the Individual Stockholders shall enter
into a registration rights agreement, the form of which is attached hereto as
Exhibit 6.08(a). At the Effective Time, Parent and the Surviving Corporation
shall enter into an employment agreement with Xxxxxxx X. Xxxxxxx in the form
attached hereto as Exhibit 6.08(b).
SECTION 6.09. Plan of Reorganization. (a) This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable best efforts to cause the Merger to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
could prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code. Following the Effective Time, neither
the Surviving Corporation, Parent nor any of their affiliates shall knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act could cause the
Merger to fail to qualify as a reorganization under Section 368(a) of the Code.
(b) As of the date hereof, the Company does not know of any
reason (i) why it would not be able to deliver to Altheimer & Xxxx or Xxxxxxxx &
Sterling, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto and otherwise
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addressing such matters as set forth in the affidavits attached to Section 6.09
of the Company Disclosure Schedule, to enable such firms to deliver the legal
opinions contemplated by Sections 7.02(d) and 7.03(c), and the Company hereby
agrees to deliver such certificates effective as of the date of such opinions or
(ii) why Altheimer & Xxxx or Xxxxxxxx & Sterling would not be able to deliver
the opinions required by Sections 7.02(d) and 7.03(c).
(c) As of the date hereof, Parent does not know of any
reason (i) why it would not be able to deliver to Altheimer & Xxxx or Xxxxxxxx &
Sterling, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, and otherwise addressing such
matters as set forth in the affidavits attached to Section 6.09 of the Parent
Disclosure Schedule, to enable such firms to deliver the legal opinions
contemplated by Sections 7.02(d) and 7.03(c), and Parent hereby agrees to
deliver such certificates effective as of the date of such opinions or (ii) why
Altheimer & Xxxx or Xxxxxxxx & Sterling would not be able to deliver the
opinions required by Sections 7.02(d) and 7.03(c).
SECTION 6.10. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Parent and the Company. Thereafter, unless otherwise
required by applicable Law, neither the Company nor Parent, nor any of their
officers shall issue any press release or otherwise make any public statements
with respect to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement without the prior written consent of Parent or
the Company, as the case may be.
SECTION 6.11. Indemnification; Directors' and Officers'
Insurance. (a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation by or in the right of the Company or any of the Company
Subsidiaries, in which any of the present officers or directors (the
"Indemnified Officers") of the Company or any of the Company Subsidiaries is, or
is threatened to be, made a party by reason of the fact that he is or was a
director, officer, employee or agent of the Company or any of the Company
Subsidiaries, or is or was serving at the request of the Company or any of the
Company Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Time, the Company, Parent and the Surviving
Corporation shall cooperate and use their respective best efforts to defend
against and respond thereto. The Company shall indemnify and hold harmless, and
after the Effective Time the Surviving Corporation and Parent, jointly and
severally, shall indemnify and hold harmless, as and to the full extent
permitted by applicable law, each such Indemnified Officer against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such claim, action, suit, proceeding or investigation. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Indemnified Officers as a
group may retain only one law firm to represent them with respect to any matter
(together with appropriate local counsel),
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provided, however, that if any Indemnified Officer is advised in writing by
counsel that there exists, or reasonably could be expected to exist, a conflict
of interest by reason of such Indemnified Officer and any other Indemnified
Officer having common counsel in any action or proceeding related to such
matter, such Indemnified Officer shall be entitled to retain separate counsel,
(ii) the Company, or the Surviving Corporation and Parent after the Effective
Time, shall pay all fees and expenses of such counsel for such Indemnified
Officer promptly as statements therefor are received and (iii) the Company, and
the Surviving Corporation and Parent, after the Effective Time, shall use their
respective best efforts to assist in the vigorous defense of any such matter;
provided, that neither the Company nor the Surviving Corporation nor Parent
shall be liable for any settlement effected without its prior written consent
(which consent shall not be reasonably withheld); and provided further, that the
Surviving Corporation and Parent shall have no obligation hereunder to any
Indemnified Officer when, as and if a court of competent jurisdiction shall
finally determine, that indemnification of such Indemnified Officer in the
manner contemplated hereby is prohibited by applicable law. Any Indemnified
Officer which seeks to claim indemnification under this Section 6.11, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Company and, after the Effective Time, the Surviving Corporation and
Parent, thereof (provided failure to provide such notice shall not limit or
adversely affect such Indemnified Officers rights hereunder except to the extent
Parent or the Surviving Corporation is prejudiced thereby).
(b) Until the Effective Time, the Company shall keep in
effect the indemnification, exculpation, advancement of expense and like
provisions of its Restated Certificate of Incorporation and By-laws, and
thereafter, Parent shall cause the Surviving Corporation to keep in effect in
its Charter and By-laws a provision for a period of not less than six years from
the Effective Time (or, in the case of matters occurring prior to the Effective
Time which have not been resolved prior to the sixth anniversary of the
Effective Time, until such matters are finally resolved) which provides for
indemnification advancements exculpation and the like of the Indemnified
Officers to the fullest extent permitted by the DGCL.
(c) Parent shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous to the
Indemnified Officers) with respect to matters occurring prior to the Effective
Time.
(e) In the event Parent, the Company or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of Parent, the Company or the Surviving Corporation, as
the case may be, shall assume the obligations set forth in this Section 6.11.
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(f) In addition to the Indemnified Officers, heirs,
representatives and estates of the Indemnified Officers shall have the right to
enforce the obligations arising under this Section 6.11.
SECTION 6.12. Conduct of Business by Parent After the Effective
Time. Parent agrees that, between the date of this Agreement and the Maturity
Date (as defined in Exhibit 2.01(f)), Parent shall not take any action which
would artificially manipulate or be reasonably expected to adversely affect its
stock price, provided that Parent shall retain all appropriate operating
flexibility and, accordingly, if Parent shall seek to take an action (including,
without limitation, any public announcement) which would reasonably be expected
to adversely affect its stock price, then Parent shall do so only if (i)
required by law, accounting principles or similar regulations or principles or
(ii) prior to taking such action, Parent shall have received the written opinion
of a nationally recognized investment banking firm to the effect that it would
be materially adverse to the business of Parent to fail to take such action
during the pendency of this Section 6.12.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) this Agreement shall have been approved and adopted by
the requisite affirmative vote of the stockholders of the Company in accordance
with the DGCL and the Company's Restated Certificate of Incorporation;
(b) no Governmental Entity or court of competent
jurisdiction located or having jurisdiction in the United States shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
judgment, decree, executive order or award (an "Order") which is then in effect
and has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; and
(c) all authorizations, consents, orders and approvals of
all Governmental Entities and officials shall have been obtained the failure of
which to obtain could reasonably be expected to result in a Parent or Company
Material Adverse Effect.
SECTION 7.02. Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
additional conditions:
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(a) each of the representations and warranties of the
Company contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, in each case except to the
extent failure to be so true and correct would not have a Company Material
Adverse Effect, and Parent shall have received a certificate of the Chief
Executive Officer of the Company, on behalf of the Company, to such effect;
(b) the Company shall have performed or complied in all
material respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time and Parent shall have received a certificate of the Chief Executive Officer
of the Company, on behalf of the Company, to that effect;
(c) Parent shall have received, each in form and substance
reasonably satisfactory to Parent, all third party consents and estoppel
certificates set forth in Section 7.01(c) of the Company Disclosure Schedule;
(d) Parent shall have received the opinion of Shearman &
Sterling, counsel to Parent, based upon representations of Parent, Merger Sub
and the Company and normal assumptions, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Parent, Merger Sub and
the Company will be a party to the reorganization within the meaning of Section
368(b) of the Code, which opinion shall not have been withdrawn or modified in
any material respect. The issuance of such opinion shall be conditioned on
receipt by Shearman & Sterling of representation letters from each of Parent and
the Company as contemplated in Section 6.09 of this Agreement. Each such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect as of the
Effective Time;
(e) Dissenting Shares shall comprise not more than 3% of the
Shares outstanding immediately prior to the Effective Time; and
(f) no event or events shall have occurred, or be reasonably
likely to occur, which have or could reasonably be expected have a Company
Material Adverse Effect, and Parent shall have received a certificate of the
Chief Executive Officer of the Company, on behalf of the Company, to such
effect.
SECTION 7.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) each of the representations and warranties of Parent and
Merger Sub contained in this Agreement shall be true and correct as of the
Effective Time, as though made
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on and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date, in each case except to the extent failure to be so
true and correct would not have a Parent Material Adverse Effect, and the
Company shall have received a certificate of a duly authorized officer of
Parent, on behalf of Parent, to such effect;
(b) Parent and Merger Sub shall have performed or complied
in all material respects with all material agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Company shall have received a certificate of a duly
authorized officer of Parent, on behalf of Parent, to that effect;
(c) the Company shall have received the opinion of Altheimer
& Xxxx, counsel to the Company, based upon representations of Parent, Merger Sub
and the Company, and normal assumptions, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Parent, Merger Sub and
the Company will be a party to the reorganization within the meaning of Section
368(b) of the Code, which opinion shall not have been withdrawn or modified in
any material respect. The issuance of such opinion shall be conditioned on
receipt by Altheimer & Xxxx of representation letters from each of Parent and
the Company as contemplated in Section 6.09 of this Agreement. Each such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect as of the
Effective Time;
(d) no event or events shall have occurred, or be reasonably
likely to occur, which have or could reasonably be expected have, a Parent
Material Adverse Effect, and the Company shall have received a certificate of a
duly authorized officer of Parent, on behalf of Parent, to such effect; and
(e) Parent shall have tendered to the Company for execution,
copies of each of the agreements referred to in Section 6.08.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and
the Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards
of Directors of each of Parent and the Company;
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(b) by either Parent or the Company if the Effective Time
shall not have occurred on or before September 30, 1999; provided, however, that
the right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before September 30, 1999;
(c) there shall be any Order which is final and
nonappealable preventing the consummation of the Merger;
(d) by Parent if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
transactions contemplated hereby in a manner adverse to Parent or shall have
resolved to do so, (ii) the Board of Directors of the Company shall have
recommended to the stockholders of the Company a Competing Transaction or shall
have resolved to do so or (iii) a tender offer or exchange offer for 50% or more
of the outstanding shares of capital stock of the Company is commenced, and the
Board of Directors of the Company fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders) within ten (10) business days after commencement thereof;
(e) by the Company if (i) the Effective Time shall not have
occurred before the 46th day after the date hereof and (ii) the average of the
closing bid and ask prices for Parent Common Stock (as reported on the NASDAQ)
over the 10 consecutive trading days preceding the first date on which all of
the conditions set forth in Sections 7.01, 7.02 and 7.03 have been fulfilled or
satisfied or waived (or are capable of being fulfilled or satisfied or waived)
is less than $20 and (iii) the Company is not otherwise in breach of this
Agreement and the Individual Stockholders have complied with their obligations
under Section 6.01;
(f) by either Parent or the Company if this Agreement shall
fail to receive the requisite vote for approval by the stockholders of the
Company by September 30, 1999;
(g) by Parent upon ten (10) business days written notice
upon a breach of any material representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, in either case such that the
conditions set forth in Section 7.02(a) or Section 7.02(b) would not be
satisfied ("Terminating Company Breach"); provided, however, that, if such
Terminating Company Breach is curable by the Company through the exercise of its
best efforts and for so long as the Company continues to exercise such best
efforts, Parent may not terminate this Agreement under this Section 8.01(g); or
(h) by the Company upon ten (10) business days written
notice upon a breach of any material representation, warranty, covenant or
agreement on the part of Parent and Merger Sub set forth in this Agreement, or
if any representation or warranty of Parent and Merger Sub shall have become
untrue, in either case such that the conditions set forth in
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Section 7.03(a) or Section 7.03(b) would not be satisfied ("Terminating Parent
Breach"); provided, however, that, if such Terminating Parent Breach is curable
by Parent and Merger Sub through the exercise of their respective best efforts
and for so long as Parent and Merger Sub continue to exercise such best efforts,
the Company may not terminate this Agreement under this Section 8.01(h).
SECTION 8.02. Effect of Termination. Except as provided in
Section 9.01, in the event of termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent, Merger Sub or the Company or any of
their respective officers or directors, and all rights and obligations of each
party hereto shall cease, subject to the remedies of the parties set forth in
Sections 8.05(b), provided, however, that nothing herein shall relieve any party
from liability for the wilful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement; provided, further, that
upon payment of the fee required by Section 8.05 hereof, the Company shall have
no further liability or obligation hereunder or with respect to any events
giving rise to payment of such fee (except to the extent that the breach
referred to in Section 8.05(b)(C) is made in bad faith).
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time, subject to the applicable
provisions of the DGCL. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in this Section
8.05, all Expenses (as defined below) incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such Expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Parent each shall pay one-half of all
Expenses relating to printing, filing and mailing the Information Statement and
all SEC and other regulatory filing fees incurred in connection with the
Information Statement. "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Information Statement, the solicitation of stockholder
approvals, the filing of any required notices with any Governmental Entity and
all other
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matters related to the closing of the Merger and the other transactions
contemplated by this Agreement.
(b) The Company agrees that, if:
(A) Parent shall terminate this Agreement pursuant to
Section 8.01(d) and, within 12 months of the date of such termination,
an agreement relating to a Third Party Acquisition (as defined below)
shall have been entered into, or
(B) (i) Parent or the Company shall terminate this
Agreement pursuant to Section 8.01(f) due to the failure of the Company's
stockholders to approve this Agreement, (ii) at the time of such failure to so
approve this Agreement there shall exist a Competing Transaction with respect to
the Company and (iii) within 12 months of the date of such termination, an
agreement relating to a Third Party Acquisition shall have been entered into, or
(C) (i) Parent shall terminate this Agreement as a
result of a material breach by the Company of its agreements set forth in
Sections 6.01 or 6.04 and (ii) Parent is not otherwise in material breach of
this Agreement,
then the Company shall pay to Parent an amount equal to the sum of $5 million
(which amount shall be treated hereunder as an "Expense").
(c) Any payment required to be made pursuant to Section
8.05(b) shall be made to Parent not later than two business days after delivery
to the Company of notice of demand for payment and shall be made by wire
transfer of immediately available funds to an account designated by Parent.
(d) In the event that the Company shall fail to pay any
Expenses when due, the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by the other (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 8.05, together with interest on such
unpaid Expenses, commencing on the date that such Expenses became due, at a rate
equal to the rate of interest publicly announced by Citibank, N.A., from time to
time, in The City of New York, as such bank's Prime Rate plus 1.00%.
(e) "Third Party Acquisition" means the occurrence of any of
the following events: (i) the acquisition of the Company, as the case may be, by
merger, tender offer, exchange offer, consolidation or otherwise by any person
other than Parent, Merger Sub or any affiliate thereof (a "Third Party"); (ii)
the acquisition by any Third Party of all or substantially all of the assets of
the Company and its subsidiaries, taken as a whole; (iii) the acquisition by a
Third Party of 25% or more of the outstanding Shares; (iv) the adoption by the
Company of a plan of liquidation; or (v) the repurchase by the Company or any
Company Subsidiary of 25% or more of the outstanding Shares.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties;
Indemnification. (a) The representations and warranties contained in this
Agreement, and all statements contained in this Agreement, the Exhibits to this
Agreement, the Disclosure Schedules and any certificate, financial statement or
report or other document delivered or prepared pursuant to this Agreement
(collectively, the "Acquisition Documents"), shall survive the Effective Time
until December 31, 1999; provided, however, that the representations and
warranties of the parties set forth in the Investor Agreement, the Registration
Rights Agreement and the Company Stock Option Agreement shall survive the
Effective Time to the extent specified therein. Neither the period of survival
nor the liability of a party hereto with respect to such party's representations
and warranties shall be reduced by any investigation made from and after the
Effective Time, by or on behalf of another party hereto. No claim may be made
for indemnification with respect to a breach of representation or warranty after
December 31, 1999, except that if written notice of a claim specifying in
reasonable detail the alleged breach has been given in accordance with Section
9.02 prior to the expiration of the applicable representations and warranties by
a party hereto to another party hereto, then the relevant representations and
warranties shall survive as to such claim until such claim has been finally
resolved.
(b) From and after the Effective Time, Parent and its
affiliates, officers, directors, employees, agents, successors and assigns (each
an "Indemnified Person"; and together with similar persons related to the
Company, each an "Indemnified Party") shall be indemnified and held harmless by
the Individual Stockholders for any and all liabilities, losses, damages,
dimunition in value, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, reasonable attorneys' and consultants'
fees and expenses) actually suffered or incurred by them (including, without
limitation, any action brought or otherwise initiated by any of them)
(hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Company or the Individual Stockholders contained in the Acquisition
Documents; or
(ii) the breach of any covenant or agreement by the Company
or the Individual Stockholders contained in the Acquisition Documents.
To the extent that the Individual Stockholders' undertakings set forth in this
Section 9.01 may be unenforceable, the Individual Stockholders shall contribute
the maximum amount that they are permitted to contribute under applicable Law to
the payment and satisfaction of all Losses incurred by Parent or the Surviving
Corporation, subject to the limitations on such liability set forth in Section
9.01(c).
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(c) The obligations of the Individual Stockholders pursuant
to paragraph (b) above shall be subject to the following limitations:
(i) The Indemnified Parties shall not be entitled to recover
under paragraph (b)(i) until the total amount which the Indemnified
Parties would recover under paragraph (b)(i), but for this paragraph
(c), exceeds $1,000,000, and then the Indemnitee shall be entitled to
recover all of such amount (starting from the first dollar);
(ii) The Indemnified Parties shall not be entitled to recover
under paragraph (b):
(A) with respect to any inaccuracy in or breach of
any representation and warranty or covenant by or of the Company
or the Individual Stockholders if at or before the Effective
Time, Parent had knowledge of the inaccuracy or breach;
(B) to the extent the aggregate claims under
paragraph (b)(i) of the Indemnified Parties exceed 15% of the
aggregate Merger Consideration;
(C) to the extent the subject matter of the claim is
covered by insurance (including title insurance) held by the
Company or Parent, except to the extent that utilizing such
coverage will result in a premium increase to the Surviving
Corporation or Parent, in which case, such premium increase
shall be recoverable; or
(D) to the extent the matter in question, taken
together with all similar matters, does not exceed the amount of
any reserves with respect to such matters which are reflected in
the Reference Balance Sheet.
(iii) The amount of any recovery by the Indemnified Parties
pursuant to paragraph (b) shall be net of any foreign, federal, state
and/or local income tax benefits inuring to the Indemnified Parties as a
result of the state of facts which entitled the Indemnified Parties to
recover from the Individual Stockholders pursuant to paragraph (b)
above.
(iv) No Individual Stockholder shall be liable to the
Indemnified Parties for indemnification with respect to any claim of the
Indemnified Parties which is indemnifiable hereunder in an amount which
exceeds such Individual Stockholder's pro rata portion of the aggregate
amount of such claim (such pro rata portion being computed on the basis
of the ratio of the total number of Shares owned by such Individual
Stockholder immediately prior to the Effective Time to the total number
of Shares then outstanding).
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(v) Each Individual Stockholder shall be solely liable for
indemnification with respect to a breach of any of the representations
and warranties and covenants of such Individual Stockholder in such
Individual Stockholder's Investor Agreement.
(vi) The Indemnified Parties shall not be entitled to recover
under Paragraph (b) with respect to a breach of Section 3.15:
(A) to the extent the Tax matter for which a claim
has been asserted is reserved against on the books and records
of the Company as of the Effective Time, provided that such
reserves have been maintained in the ordinary course of
business; or
(B) with respect to any Taxes (excluding any
interest, additions to tax or penalties attributable thereto) to
the extent of the amount of any Tax benefits realized by the
Company attributable to or arising out of the subject matter of
such breach for that year and during the five succeeding taxable
years. For this purpose, the amount of any Tax benefits shall be
computed on a present value basis using a discount rate equal to
the midterm applicable federal rate in effect on the date of the
claim for indemnity and shall assume a tax rate equal to the
combined federal, state and local rate actually paid by the
Company on the basis of the maximum applicable combined
statutory federal and applicable state and local tax rate for
each such year;
(vii) If without regard to this paragraph (c) a state of facts
would allow an Indemnitee to recover under both paragraph (b)(i) and
paragraph (b)(ii), such Indemnitee may recover only under paragraphs
(b)(i).
(viii) There shall be no duplication of indemnity among the
Indemnitees.
(ix) The Individual Stockholders may satisfy any
indemnification obligation under paragraph (b) above either in cash or
by transferring to the Indemnified Parties a number of shares of Parent
Common Stock having an aggregate value equal to the amount of such
Individual Stockholder's indemnification obligation (or by a combination
thereof). For the purposes of the preceding sentence, such shares shall
be valued at the average closing sale price of Parent Common Stock as
reported on the NASDAQ for the ten (10) trading days prior to the date
on which such Parent Common Stock is transferred to Parent.
(x) From and after the Effective Time, all Individual
Stockholder liability with respect to the Company Stock Option shall
cease.
(d) The Individual Stockholders and their Indemnified
Persons shall be indemnified and held harmless by Parent for any and all Losses,
arising out of or resulting from:
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(i) the breach of any representation or warranty made by
Parent or Merger Sub contained in the Acquisition Documents; or
(ii) the breach of any covenant or agreement by Parent or
Merger Sub contained in the Acquisition Documents.
To the extent that Parent's undertakings set forth in this Section 9.01 may be
unenforceable, Parent shall contribute the maximum amount that it is permitted
to contribute under applicable Law to the payment and satisfaction of all Losses
incurred by the Individual Stockholders, subject to the application of the same
limitations on such liability as are applicable to the Individual Stockholders
as set forth in Section 9.01(c) hereof (and all of the provisions of such
Section 9.01(c) shall be read herein mutatis mutandis, except for any pro rata
limitation on the liability of the Individual Stockholders set forth therein).
(e) An Indemnified Party shall give the party from which it
is seeking indemnification (the "Indemnifying Party") notice of any matter which
an Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, within 30 days of such determination,
stating the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises. The obligations and
liabilities of the Indemnifying Party under this Section 9.01 with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Section 9.01 ("Third Party Claims") shall
be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim within 30 days of the receipt by the Indemnified Party of such
notice; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Section
9.01 except to the extent the Indemnifying Party is materially prejudiced by
such failure and shall not relieve the Indemnifying Party from any other
obligation or Liability that it may have to any Indemnified Party otherwise than
under this Section 9.01. If the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Losses that
may result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within twenty days of the receipt of such notice
from the Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its sole and absolute
discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel, in each jurisdiction for which the Indemnified Party determines
counsel is required, at the expense of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Indemnified Party shall cooperate
with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all
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witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by the Indemnifying Party or by
the Indemnified Party without the prior written consent of the other; provided,
however, that if the Indemnifying Party shall have assumed the defense of the
Third Party Claim and the Indemnified Party shall refuse to consent to a
settlement amount negotiated by the Indemnifying Party, the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the settlement amount negotiated by the Indemnifying Party.
(f) Notwithstanding anything to the contrary contained in
this Agreement (but without limiting the application of Section 9.01(c)), for
purposes of determining the maximum amount of indemnifiable Losses which may be
recovered from each Individual Stockholder, the aggregate Merger Consideration,
shall be an amount equal to the fair value, at the time of payment, of the sum
of (i) the aggregate amount of shares of Parent Common Stock issued at the
Effective Time to such Individual Stockholder and (ii) the shares of Parent
Common Stock and any cash received by such Individual Stockholder, in each case
of this clause (ii) pursuant to the Contingent Deferred Payment. Such fair value
shall be measured based on the average of the average closing bid and ask prices
for Parent Common Stock over the 10 trading days immediately preceding the date
of such payment.
(g) In the event that Parent shall make a good faith,
reasonable determination that it has suffered any Losses for which
indemnification is available pursuant to this Section 9.01, Parent shall be
entitled, upon written notice to the Stockholder Representative, to set-off the
amounts of any such Losses against the Gross Deferred Payment Amount (as defined
in Exhibit 2.01(f)). In the event that it is judicially determined by a final
judgment that Parent was not entitled to indemnification with respect to such
Losses (or any portion thereof), Parent shall increase the Net Deferred Payment
Amount (as defined in Exhibit 2.01(f)) by the amount of such Losses for which it
was determined Parent was not entitled to be indemnified.
(h) In all matters relating to this Section 9.01, the
Stockholder Representative shall be the only party entitled to assert the rights
of the Individual Stockholders, and the Stockholder Representative shall perform
all of the obligations of the Individual Stockholders hereunder. Parent shall be
entitled to rely on all statements, representations and decisions of the
Stockholder Representative.
(i) Indemnification pursuant to the provisions of Section
9.01, shall be the exclusive remedy of the parties for any misrepresentation or
breach of any warranty contained
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herein or in any closing document executed and delivered pursuant to the
provisions hereof or in any other Acquisition Document. Without limiting the
generality of the preceding sentence, no legal action sounding in tort or strict
liability may be maintained by any party.
(j) The following provisions shall govern the allocation of
responsibility as between Parent and the Individual Stockholders for certain tax
matters following the Effective Time:
(i) Tax Periods Ending on or Before the Effective Time.
Parent shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Company and any Company Subsidiary for all
periods ending on or prior to the Effective Time which are filed after
the Effective Time. Parent shall permit the Individual Stockholders to
review and comment on each such Tax Return described in the preceding
sentence prior to filing and shall make such revisions to such Tax
Returns as are reasonably requested by the Individual Stockholders.
(ii) Tax Periods Beginning Before and Ending After the
Effective Time. Parent shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company and any Company
Subsidiary for Tax periods which begin before the Effective Time and end
after the Effective Time.
(iii) Cooperation on Tax Matters.
(A) Parent and the Individual Stockholders agree,
upon request, to use their best efforts to obtain any
certificate or other document from any governmental authority or
any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated
hereby).
(B) Parent and the Individual Stockholders further
agree, upon request, to provide the other party with all
information that either party may be required to report pursuant
to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
(iv) Certain Taxes. Except as set forth in Section 2.02 of
this Agreement, all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by
the Individual Stockholders when due, and Parent will, at its own
expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable
law, the Individual Stockholders will, and will cause its affiliates to,
join in the execution of any such Tax Returns and other documentation.
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SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
courier, by cable, telecopy, facsimile, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 9.02):
if to Parent or Merger Sub:
Getty Images, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxx Xxxxx-Lombe
with a copy to:
Shearman & Sterling
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxxx
if to the Company:
Xxx.xxx, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
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with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
(c) "business day" means any day on which banks are not
required or authorized to close in Seattle, Washington or Chicago, Illinois;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "knowledge" means, with respect to any matter in
question, that the officers of the Company or Parent, as the case may be,
responsible to the corporation with respect to such matters have actual
knowledge of such matter (including, in the case of Parent, Xxxx Xxxxx, Xxxxxxxx
X. Xxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxx-Lombe, Xxxx Xxxxxxxx, Xxxxxxx X. Page);
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(f) "person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or instrumentality of a
government; and
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
(h) whenever the word "including" is used, it shall also
mean "including, without limitation,".
SECTION 9.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except for the
provision of Article I, Article II and Section 6.09 and 6.12, all of which are
expressly for the benefit of the holders of Shares (or former holders of Shares
as the case may be), and except for Section 6.05, 6.08 and 6.11, all of which
are expressly for the benefit of the persons contemplated thereby.
SECTION 9.06. Incorporation of Exhibits. The Company Disclosure
Schedule, the Parent Disclosure Schedule and all Exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
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SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.08. Governing Law; Forum. Except to the extent that
the Merger is mandatorily governed by the DGCL, this Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that state. All
actions and proceedings arising out of or relating to this Agreement may be
heard and determined in the federal court for the Western District of Washington
or the Northern District of Illinois or the Southern District of New York. Each
of the parties to this Agreement (a) consents to submit itself to the
non-exclusive personal jurisdiction of the federal court for the Western
District of Washington and the Northern District of Illinois and the Southern
District of New York in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action in relation to this Agreement, the Merger or any of the other
transactions contemplated by this Agreement in any court other than the federal
court of the Western District of Washington or the Northern District of Illinois
or the Southern District of New York.
SECTION 9.09. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.11. Entire Agreement. This Agreement (including the
Exhibits, the Company Disclosure Schedule and the Parent Disclosure Schedule)
and the Confidentiality Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GETTY IMAGES, INC.
Attest by: By
------------------------- --------------------------------------
Name: Name:
Title: Title:
PRINT CORP.
Attest by: By
------------------------- --------------------------------------
Name: Name:
Title: Title:
XXX.XXX, INC.
Attest by: By
------------------------- --------------------------------------
Name: Name:
Title: Title:
STOCKHOLDER REPRESENTATIVE
The undersigned agree to act as, to be
bound by the obligations of, and to
perform the duties of, the Stockholder
Representative
Attest by: By
------------------------- --------------------------------------
Name: Name: Xxxxxxx X. Xxxxxxx
Title:
Attest by: By
------------------------- --------------------------------------
Name: Name: Xxxxxx Xxxxx
Title:
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EXHIBIT A
OWNERSHIP OF COMPANY STOCK
Common Stock Preferred Stock
Name Shares Shares
---- ------------ ----------------
Minotaur Partners, L.P. 959,074 500,000
Benchmark Capital Partners II, L.P. 4,000,000
Sandler Capital IV Partners, L.P. 3,000,000
Softbank Technology Ventures 3,924,800
Softbank Technology Advisors 75,200
Xxxxxxx X. Xxxxxxx 4,111,426
Xxxxx Xxxxxxxx 100,000
Xxxxxxx Xxxx 75,000
Xxxxxx Xxxxxxx as Custodian for 71,500
Xxxxxxx Children
First Corp 15,000
Exhibit A - 1
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TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger............................................................2
SECTION 1.02. Effective Time; Closing...............................................2
SECTION 1.03. Effect of the Merger..................................................2
SECTION 1.04. Certificate of Incorporation; By-Laws.................................3
SECTION 1.05. Directors and Officers................................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities..............................................3
SECTION 2.02. Exchange of Certificates..............................................4
SECTION 2.03. Stock Transfer Books..................................................6
SECTION 2.04. Company Stock Options.................................................6
SECTION 2.05. Dissenting Shares.....................................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries..........................8
SECTION 3.02. Certificate of Incorporation and By-Laws..............................8
SECTION 3.03. Capitalization........................................................8
SECTION 3.04. Authority Relative to This Agreement..................................9
SECTION 3.05. No Conflict; Required Filings and Consents...........................10
SECTION 3.06. Permits; Compliance..................................................11
SECTION 3.07. Financial Statements.................................................11
SECTION 3.08. Absence of Certain Changes or Events.................................11
SECTION 3.09. Absence of Litigation................................................12
SECTION 3.10. Employee Benefit Plans; Labor Matters................................12
SECTION 3.11. Contracts............................................................14
SECTION 3.12. Environmental Matters................................................16
SECTION 3.13. Intellectual Property................................................17
SECTION 3.14. Images...............................................................20
SECTION 3.15. Taxes................................................................22
SECTION 3.16. Vote Required........................................................23
SECTION 3.17. Assets...............................................................23
SECTION 3.18. Certain Interests....................................................23
SECTION 3.19. Insurance Policies...................................................24
SECTION 3.20. State Takeover Statutes..............................................25
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Page
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SECTION 3.21. Year 2000 Compliance.................................................25
SECTION 3.22. Brokers..............................................................25
SECTION 3.23. Limitations on Warranties............................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification; Subsidiaries.........................26
SECTION 4.02. Certificate of Incorporation and By-Laws.............................26
SECTION 4.03. Capitalization.......................................................26
SECTION 4.04. Authority Relative to This Agreement.................................27
SECTION 4.05. No Conflict; Required Filings and Consents...........................28
SECTION 4.06. Permits; Compliance..................................................28
SECTION 4.07. SEC Filings; Financial Statements....................................29
SECTION 4.08. Absence of Certain Changes or Events.................................29
SECTION 4.09. Intellectual Property................................................29
SECTION 4.10. Taxes................................................................30
SECTION 4.11. Employee Benefit Plans; Labor Matters................................30
SECTION 4.12. Absence of Litigation................................................31
SECTION 4.13. Operations of Merger Sub.............................................31
SECTION 4.14. Investment Purpose...................................................31
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger................32
SECTION 5.02. Notification of Certain Matters......................................34
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Stockholder Approval.........................................34
SECTION 6.02. Information Statement; Registration Statement........................34
SECTION 6.03. Access to Information; Confidentiality...............................34
SECTION 6.04. No Solicitation of Transactions......................................35
SECTION 6.05. Employee Benefits Matters............................................35
SECTION 6.06. Obligations of Merger Sub............................................36
SECTION 6.07. Further Action; Consents; Filings....................................36
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SECTION 6.08. Registration Rights and Employment Agreement.........................37
SECTION 6.09. Plan of Reorganization...............................................37
SECTION 6.10. Public Announcements.................................................38
SECTION 6.12. Conduct of Business by Parent Pending the Merger.....................39
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party..........................40
SECTION 7.02. Conditions to the Obligations of Parent and Merger Sub...............40
SECTION 7.03. Conditions to the Obligations of the Company.........................41
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination..........................................................42
SECTION 8.02. Effect of Termination................................................43
SECTION 8.03. Amendment............................................................44
SECTION 8.04. Waiver...............................................................44
SECTION 8.05. Expenses.............................................................44
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties;
Indemnification.............................................45
SECTION 9.02. Notices..............................................................51
SECTION 9.03. Certain Definitions..................................................52
SECTION 9.04. Severability.........................................................53
SECTION 9.05. Assignment; Binding Effect; Benefit..................................53
SECTION 9.06. Incorporation of Exhibits............................................53
SECTION 9.07. Specific Performance.................................................54
SECTION 9.08. Governing Law; Forum.................................................54
SECTION 9.09. Headings.............................................................54
SECTION 9.10. Counterparts.........................................................54
SECTION 9.11. Entire Agreement.....................................................54
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Exhibit A Individual Stockholders (attached)
Exhibit B Company Stock Option Agreement (omitted)
Exhibit C Investor Agreement (omitted)
Exhibit 2.01(f) Contingent Deferred Payment (attached)
Exhibit 2.04(a) Company Stock Options (omitted)
Exhibit 6.05(c) Post-Closing Options (omitted)
Exhibit 6.08(a) Form of Registration Rights Agreement (attached)
Exhibit 6.08(b) Form of Employment Agreement (omitted)
All omitted exhibits will be provided to the Commission upon request.
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63
Glossary of Defined Terms
Location of
Defined Term Definition
------------ ---------------
Acquisition Documents......................................................Section 9.01(a)
affiliate..................................................................Section 9.03(a)
Aggregate Purchase Price...................................................Section 2.01(f)
Agreement..................................................................Preamble
Assets.....................................................................Section 3.16
beneficial owner...........................................................Section 9.03(b)
Blue Sky Laws..............................................................Section 3.05(b)
business day...............................................................Section 9.03(c)
CERCLA.....................................................................Section 3.12(d)
Certificate of Merger......................................................Section 1.02
Certificates...............................................................Section 2.01(c)
Closing....................................................................Section 1.02
Code ......................................................................Recitals
Company....................................................................Preamble
Company Benefit Plans......................................................Section 3.10(a)
Company Common Stock.......................................................Recitals
Company Disclosure Schedule................................................Article III
Company Material Adverse Effect............................................Section 3.01
Company Permits............................................................Section 3.06
Company Preferred Stock....................................................Recitals
Company Stock Option Agreement.............................................Recitals
Company Stock Option Plan..................................................Section 2.04(a)
Company Stock Options......................................................Section 2.04(a)
Company Subsidiaries.......................................................Section 3.01
Company Systems............................................................Section 3.20
Competing Transaction......................................................Section 6.04(b)
Confidentiality Agreement..................................................Section 6.03(b)
control....................................................................Section 9.03(d)
DGCL.......................................................................Recitals
Dissenting Shares..........................................................Section 2.05(a)
Effective Time.............................................................Section 1.02
Effective Time Options.....................................................Section 6.05(c)
Environmental Laws.........................................................Section 3.12(d)
Environmental Permits......................................................Section 3.12(d)
ERISA......................................................................Section 3.10(a)
Exchange Act...............................................................Section 4.03
Exchange Ratio.............................................................Section 2.01(f)
Expenses...................................................................Section 8.05(a)
Fully Diluted Share Amount.................................................Section 2.01(f)
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Location of
Defined Term Definition
------------ ---------------
GAAP.......................................................................Section 3.07(a)
Governmental Entity........................................................Section 3.05(b)
Hazardous Materials........................................................Section 3.12(d)
HSR Act....................................................................Section 3.05(c)
Image......................................................................Section 3.13(a)
Indemnified Party .........................................................Section 9.01(b)
Indemnified Person ........................................................Section 9.01(b)
Indemnified Officers ......................................................Section 6.01
Indemnifying Party ........................................................Section 9.01(d)
Information Statement......................................................Section 6.02(a)
Individual Stockholders....................................................Recitals
Instruments................................................................Section 3.05(a)
Intellectual Property......................................................Section 3.13(a)
Interim Financial Statements...............................................Section 3.07(a)
Internal MIS Systems.......................................................Section 3.13(j)
Investment Agreement.......................................................Recitals
IRS........................................................................Section 3.10(a)
knowledge..................................................................Section 9.03(e)
Law........................................................................Section 3.05(a)
liabilities................................................................Section 3.07(b)
Licensed Images............................................................Section 3.13(a)
Licensed Intellectual Property.............................................Section 3.13(a)
Loss.......................................................................Section 9.01(b)
Material Contracts.........................................................Section 3.11(a)
Merger.....................................................................Recitals
Merger Consideration.......................................................Section 2.01(f)
Merger Sub.................................................................Preamble
NASDAQ.....................................................................Section 2.02(d)
1998 Financial Statements..................................................Section 3.07(a)
Order......................................................................Section 7.01(b)
Owned Images...............................................................Section 3.13(a)
Owned Intellectual Property................................................Section 3.13(a)
Parent.....................................................................Preamble
Parent Benefit Plan........................................................Section 4.11
Parent Common Stock........................................................Section 2.01(f)
Parent Disclosure Schedule.................................................Art. IV
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Location of
Defined Term Definition
------------ ---------------
Parent Licensed Intellectual Property......................................Section 4.09(a)
Parent Material Adverse Effect.............................................Section 4.01
Parent Owned Intellectual Property.........................................Section 4.09(a)
Parent Permits.............................................................Section 4.06
Parent Preferred Stock.....................................................Section 4.03
Parent SEC Reports.........................................................Section 4.07(a)
Parent Stock Option Plans..................................................Section 4.03
Parent Subsidiaries........................................................Section 4.01
person.....................................................................Section 9.03(f)
Post-Closing Options.......................................................Section 6.05(c)
Reference Balance Sheet....................................................Section 3.07(a)
Representatives............................................................Section 6.03(a)
SEC........................................................................Section 4.07
Securities Act.............................................................Section 4.03
Shares.....................................................................Section 2.01(b)
Software...................................................................Section 3.13(a)
subsidiary.................................................................Section 9.03(g)
Substitute Option..........................................................Section 2.04(a)
Surviving Corporation......................................................Section 1.01
Taxes......................................................................Section 3.14(d)
Terminating Company Breach.................................................Section 8.01(g)
Terminating Parent Breach..................................................Section 8.01(h)
Third Party................................................................Section 8.05(e)
Third Party Acquisition....................................................Section 8.05(e)
Third Party Claims.........................................................Section 9.01(d)
Year 2000 Compliant........................................................Section 3.20
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