EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BULLDOG HOLDINGS, INC.,
XXXXXX SUB ACQUISITION, LLC,
THE EXCITE NETWORK, INC.
MAXWORLDWIDE, INC.,
L90, INC.,
PICASSO MEDIA ACQUISITION, INC.,
AND
XXXXXX SUB, LLC
Dated as of March 12, 2003
Portions of this document have been redacted pursuant to a Request for
Confidential Treatment filed with the Securities and Exchange Commission.
Redacted portions are indicated with the notation "*****".
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of the 12th day of March, 2003 by and among Bulldog Holdings,
Inc., a Delaware corporation ("Bulldog"), The Excite Network, Inc., a Delaware
corporation ("Evita"), Xxxxxx Sub Acquisition, LLC, a Delaware limited liability
company ("Evita Sub"), MaxWorldwide, Inc., a Delaware corporation ("Xxxxxx"),
L90, Inc., a Delaware corporation ("L90"), Picasso Media Acquisition, Inc., a
Delaware corporation ("Picasso Media"), and Xxxxxx Sub, LLC, a Delaware limited
liability company ("Xxxxxx Sub"). Certain terms used and not otherwise defined
in the text of this Agreement are defined in Article I of this Agreement.
W I T N E S S E T H
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WHEREAS, the Boards of Directors of Evita, Millie, L90 and Picasso
Media and the managers and/or members of Evita Sub and Xxxxxx Sub have approved
and deem it advisable and in the best interests of the stockholders of such
corporations and the members of such limited liability companies to effect a
business combination of Evita Sub and Xxxxxx Sub through the transactions
provided for herein, as a result of which Evita Sub shall merge with and into
Xxxxxx Sub, with Xxxxxx Sub surviving as a wholly-owned Subsidiary of Evita (the
"Merger");
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Article I shall have the meanings specified for all purposes of this Agreement.
Except as otherwise expressly provided, all accounting terms used in
this Agreement, whether or not defined in this Article I, shall be construed in
accordance with GAAP.
"Act" means the Delaware Limited Liability Company Act.
"Action" means any action, claim, dispute, proceeding, suit or
investigation (whether civil, criminal, administrative or investigative), or any
appeal therefrom.
"Affiliate" of any Person means any other Person which directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person. The term "control" (including the
terms "controlled by" and "under common control with") as used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the Preamble.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit A.
"Audit" has the meaning set forth in Section 2.11(d) hereof.
"Audit Period" has the meaning set forth in Section 2.11(d) hereof.
"Bulldog" means Bulldog Holdings, Inc., a Delaware corporation.
"Business Day" means a day other than a Saturday, Sunday or day on
which banking institutions in New York are authorized or required to remain
closed.
"Cause" with respect to an employee means misappropriation of funds
or property, commission of an act constituting fraud, gross negligence or
willful misconduct, failure or refusal to perform the material duties of such
employee's position, or commission of a felony or other crime involving moral
turpitude.
"CERCLA" has the meaning set forth in Section 3.21(b) hereof.
"Certificate of Merger" has the meaning set forth in Section 2.2
hereof.
"Closing" has the meaning set forth in Section 2.3 hereof.
"Closing Cash" has the meaning set forth in Section 2.8(a)(i)
hereof.
"Closing Date" has the meaning set forth in Section 2.3 hereof.
"Closing Date Balance Sheet" has the meaning set forth in Section
2.11(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constituent Companies" has the meaning set forth in Section 2.1
hereof.
"Contingent Cash" has the meaning set forth in Section 2.8(a)(iii)
hereof.
"Contingent Cash Period" has the meaning set forth in Section
2.8(g)(ii) hereof.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Deferred Cash" has the meaning set forth in Section 2.8(a)(ii)
hereof.
"Effective Time" has the meaning set forth in Section 2.2 hereof.
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"Encumbrances" has the meaning set forth in Section 3.2(b) hereof.
"Environmental Claim" means any written claim, action, cause of
action, investigation, request for information, or notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) of Xxxxxx
or any Xxxxxx Subsidiary arising out of, based on, or resulting from (A) the
presence, or release or threatened release, of any Hazardous Materials at any
location, whether or not owned or operated by Xxxxxx or any Xxxxxx Subsidiary,
or (B) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.
"Environmental Law" means any Law of any Governmental Entity
relating to the regulation or protection of human health, safety, or the
environment or to emissions, discharges, releases, or threatened releases of
Hazardous Material, pollutants, contaminants, chemicals, or industrial, toxic,
or hazardous substances or wastes into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" has the meaning set forth in Section 2.8(i).
"Evita" means The Excite Network, Inc., a Delaware corporation.
"Evita Sub" means Xxxxxx Sub Acquisition, LLC, a Delaware limited
liability company.
"Evita Sub Operating Agreement" means the Operating Agreement of
Evita Sub, LLC, dated as of March 4, 2003, as amended from time to time.
"Evita Sub Membership Interests" means the membership interests in
Evita Sub.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" has the meaning set forth in Section 8.1(b)
hereof.
"Fairness Opinion" has the meaning set forth in Section 5.1(j)
hereof.
"Final Net Working Capital Amount" has the meaning set forth in
Section 2.11(a) hereof.
"Financing Statement" has the meaning set forth in Section 5.1(l)
hereof.
"First Anniversary" has the meaning set forth in Section 2.8(f)
hereof.
"GAAP" means United States generally accepted accounting principles
consistently applied.
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"Governmental Entity" means any Federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board,
bureau, agency, regulatory authority or instrumentality thereof, or any court,
judicial, administrative or arbitral body or public or private tribunal.
"Gross Xxxxxxxx" has the meaning set forth in Section 2.8(g)(i)
hereof.
"Hazardous Material" means (A) any petroleum or petroleum products,
flammable materials, radioactive materials, friable asbestos, urea formaldehyde
foam insulation, and transformers or other equipment that contain dielectric
fluid containing regulated levels of polychlorinated biphenyls (PCB's); (B) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import
under any Environmental Law; and (C) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited, or
regulated by any Governmental Entity under any Environmental Law.
"Independent Accounting Firm" has the meaning set forth in Section
2.11(e) hereof.
"Intellectual Property" means trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and applications
related to the foregoing; patents and industrial designs (including any
continuations, divisionals, continuations-in-part, renewals, reissues, and
applications for any of the foregoing); copyrights (including any registrations
and applications for any of the foregoing) and all content and information
contained on any website; Software; technology, trade secrets and other
confidential information, know-how, inventions, proprietary processes, formulae,
algorithms, models, and methodologies; and any licenses to use any of the
foregoing.
"IRS" means the Internal Revenue Service.
"Law" means any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction and any other similar
act or law.
"L90" means L90, Inc., a Delaware corporation and wholly-owned
Subsidiary of Xxxxxx, and a member of Xxxxxx Sub.
"Material Adverse Effect" means any change in or effect on the
business of such Person (or, in the case of Xxxxxx or Xxxxxx Sub, the Xxxxxx
Online Business) that, individually or in the aggregate (taking into account all
other such changes or effects) is, or is reasonably likely to be, materially
adverse to the business, liabilities, properties or assets of such Person (or
such business, as the case may be); provided that (a) the failure to retain or
hire employees and the consequences thereof shall not itself be deemed to be a
Material Adverse Effect, (b) circumstances, developments, changes in or effects
on general economic or financial or securities market conditions in the United
States and elsewhere or changes affecting the industry generally in which a
Person operates
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(whether or not such circumstances, developments, changes or effects are the
direct or indirect result of the initiation, continuation, escalation or
cessation of armed hostilities involving or the declaration of war by or against
the United States or its territories), provided that such changes do not affect
such Person in a materially disproportionate way, shall not itself be deemed to
be a Material Adverse Effect, (c) any change or effect caused by or relating to,
the announcement of or pendency of the Merger shall not itself be deemed to be a
Material Adverse Effect, (d) any adverse change arising from or relating to any
change in accounting requirements or principles or any change in applicable Laws
or the interpretation thereof shall not itself be deemed to be a Material
Adverse Effect, (e) any loss of customers from one party to another shall not
itself be deemed to be a Material Adverse Effect, (f) any change or effect
caused by, or relating to, Millie's offline or Direct businesses or operations
shall not in and of itself be deemed to be a Material Adverse Effect, (g) any
adverse change or development in (i) the current investigation of Xxxxxx or any
of its Subsidiaries or any of their respective current or former directors,
officers or employees by the Securities and Exchange Commission's Division of
Enforcement (the "SEC Investigation") or (ii) any of the civil litigation filed,
instituted or otherwise initiated against Xxxxxx or any of its Subsidiaries or
any of their respective current or former directors, officers or employees
relating to, or derived or arising from, the SEC Investigation or the subject
matter thereof shall not itself be deemed to be a Material Adverse Effect, (h)
any restatement of Millie's financial statements for periods prior to the date
of this Agreement shall not itself be deemed to be a Material Adverse Effect,
and (i) any change in the market price or trading volume of Millie's stock after
the date of this Agreement shall not itself be deemed to be a Material Adverse
Effect.
"Merger" has the meaning set forth in the Preamble hereof.
"Xxxxxx" means MaxWorldwide, Inc., a Delaware corporation.
"Xxxxxx Common Stock" means the common stock of Xxxxxx, $0.001 par
value per share.
"Xxxxxx Designee" has the meaning set forth in the Stockholders
Agreement.
"Xxxxxx Network" means the advertising network consisting of the
advertising inventory of a collection of Web sites that are organized and
managed as the Xxxxxx Network (including, without limitation, exclusive sites,
non-exclusive sites and outsource partners); it being understood that Web sites
in the Xxxxxx Network are (i) owned by a third party or by Xxxxxx or any of its
Affiliates (including, without limitation, xxxXxxxxxx.xxx) and (ii) comprised of
content intended primarily for users in the United States and Canada (provided,
however, that certain Web sites in the Xxxxxx Network are located outside of the
United States and Canada).
"Millie's Objection Notice" has the meaning set forth in Section
2.11(e) hereof.
"Xxxxxx Online Business" means the business of (i) offering and
selling advertising inventory to advertisers on a collection of Web sites that
are organized and
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managed as the Xxxxxx Network, (ii) offering and selling advertising inventory
to advertisers through email lists owned or operated by third parties or by
Xxxxxx or any of its Affiliates (including, without limitation, xxxXxxxxxx.xxx),
(iii) offering and performing advertising sales services on behalf of Web
publishers for its Web sites that are part of the Xxxxxx Network or Web sites
that are owned or operated by any Affiliate of Xxxxxx and (iv) offering and
performing advertising sales services on behalf of email list owners and/or
brokers for their email lists; provided, however, that the Xxxxxx Online
Business shall exclude any services provided by other business units or
divisions of Xxxxxx, including Millie's offline or Direct division.
"Xxxxxx Online Employee Benefit Plans" has the meaning set forth in
Section 3.17(a) hereof.
"Xxxxxx Online Financial Statements" has the meaning set forth in
Section 3.6 hereof.
"Xxxxxx Requisite Vote" has the meaning set forth in Section 3.8
hereof.
"Xxxxxx Sub" means Xxxxxx Sub, LLC, a Delaware limited liability
company.
"Xxxxxx Sub Operating Agreement" means the Limited Liability Company
Agreement of Xxxxxx Sub, LLC, dated as of March 3, 2003, as amended from time to
time.
"Xxxxxx Sub Intellectual Property" has the meaning set forth in
Section 3.10(c)(i) hereof.
"Xxxxxx Sub Licensed Intellectual Property" has the meaning set
forth in Section 3.10(b) hereof.
"Xxxxxx Sub Owned Intellectual Property Rights" has the meaning set
forth in Section 3.10(b) hereof.
"Xxxxxx Sub Units" means units issued by Xxxxxx Sub representing
each member's limited liability company interest in Xxxxxx Sub.
"Net Working Capital" means cash, cash equivalents, prepaid
expenses, security deposits and accounts receivable less all current
liabilities, all as determined in accordance with GAAP except as expressly
modified herein and expressly excluding all real property lease obligations.
"Preliminary Net Working Capital Amount" has the meaning set forth
in Section 2.10 hereof.
"Net Working Capital Date" has the meaning set forth in Section 2.10
hereof.
"Preliminary Net Working Capital Statement" has the meaning set
forth in Section 2.10 hereof.
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"Permits" has the meaning set forth in Section 3.15(c) hereof.
"Permitted Encumbrances" means (a) Encumbrances for Taxes,
assessments or similar charges incurred in the ordinary course of business
consistent with past practice that are not yet due and payable or are being
contested in good faith to the extent accruals or reserves are included therefor
on the Closing Date Balance Sheet; (b) pledges or deposits made in the ordinary
course of business consistent with past practice; (c) Encumbrances of mechanics,
materialmen, warehousemen or other like Encumbrances securing obligations
incurred in the ordinary course of business consistent with past practice that
are not yet due and payable or are being contested in good faith; and (d)
similar Encumbrances which are incurred in the ordinary course of business
consistent with past practice and which do not in the aggregate materially
detract from the value of such assets or properties or materially impair the use
thereof in the operation of such business.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation, Governmental
Entity or other entity.
"Picasso Media" means Picasso Media Acquisition, Inc., a Delaware
corporation and wholly-owned Subsidiary of Xxxxxx, and a member of Xxxxxx Sub.
"Preliminary Balance Sheet" has the meaning set forth in Section
2.10 hereof.
"Purchase Price" has the meaning set forth in Section 2.8(a) hereof.
"Representatives" means with respect to any Person, its
stockholders, employees, officers, directors, investment bankers, attorneys,
agents, representatives or Affiliates.
"Security Agreement" has the meaning set forth in Section 2.8(h)
hereof.
"Software" means any and all (a) computer programs, including any
and all software implementation of algorithms, models and methodologies, whether
in source code or object code form, (b) computerized databases and compilations,
including any and all data and collections of data, and (c) all documentation,
including user manuals and training materials, relating to any of the foregoing.
"Stockholders Agreement" means the Stockholders Agreement in
substantially the form attached hereto as Exhibit B.
"Subsidiary" means any corporation, association, trust, limited
liability company, partnership, joint venture or other business association or
entity at least 50% of the outstanding voting securities of which are at the
time owned or controlled directly or indirectly by a Person.
"Superior Proposal" has the meaning set forth in Section 6.7(c)(ii)
hereof.
"Surviving LLC" has the meaning set forth in Section 2.1 hereof.
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"Takeover Proposal" has the meaning set forth in Section 6.7(c)(i)
hereof.
"Taxes" means all federal, state, local, or foreign taxes, charges,
fees, levies or other assessments of a similar nature (whether imposed directly
or through withholding), including any interest, additions to tax or penalties
applicable thereto.
"Tax Return" means any return, declaration, statement, report,
schedule, form, information return or other document required to be supplied to
any tax authority with respect to Taxes, including any amendments thereto.
"Termination Fee" has the meaning set forth in Section 8.2 hereof.
"Third Party Claim" has the meaning set forth in Section 10.4(a)
hereof.
"Total Daily Impressions" has the meaning set forth in Section
5.2(k) hereof.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreement, the Stockholders Agreement, the Transition Services
Agreement, the Security Agreement and the Financing Statement and any and all
other documents or agreements executed in connection with the Merger.
"Transferred Intellectual Property" means the Intellectual Property
set forth on Exhibit C including both the Xxxxxx Sub Owned Intellectual Property
Rights and the Xxxxxx Sub Licensed Intellectual Property.
"Transition Services Agreement" means the Transition Services
Agreement in substantially the form attached hereto as Exhibit D.
"Working Capital Surplus" has the meaning set forth in Section
2.11(a)(ii) hereof.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions set forth in
this Agreement and in accordance with the Act, at the Effective Time, Evita Sub
shall be merged with and into Xxxxxx Sub (together with Evita Sub, the
"Constituent Companies") in accordance with this Agreement and the separate
existence of Evita Sub shall cease. Xxxxxx Sub shall survive the Merger and
Xxxxxx Sub shall become a wholly-owned Subsidiary of Evita and shall continue to
be governed by the laws of the State of Delaware (as such, the "Surviving LLC").
The Merger shall have the effects set forth in Section 18-209 of the Act.
2.2 Effective Time of the Merger. The Merger shall become effective
on the date and at the time (the "Effective Time") at which a properly executed
certificate of merger (the "Certificate of Merger") is duly filed with the
Secretary of State of the State of Delaware, or at such later date and time as
may be specified therein. The Certificate of Merger filing shall be made on the
Closing Date.
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2.3 Closing. The closing of the Merger (the "Closing") shall occur
at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 00 X. 00xx Xxxxxx,
Xxxxx Xxxxx, Xxx Xxxx, XX 00000, on the third Business Day after the
satisfaction or waiver of all of the conditions set forth in Article V hereof or
at such other time and place as Evita and Xxxxxx may agree (the "Closing Date").
2.4 Certificate of Formation. The certificate of formation of the
Surviving LLC shall be amended and restated at and as of the Effective Time to
read as did the certificate of formation of Evita Sub immediately prior to the
Effective Time, unless and until amended as provided by Law, except that it
shall provide that the name of the Surviving LLC shall be: "MaxOnline, LLC."
2.5 Operating Agreement. The limited liability company agreement of
the Surviving LLC shall be amended and restated at and as of the Effective Time
to read as did the limited liability company agreement of Evita Sub immediately
prior to the Effective Time, unless and until amended in accordance with its
terms.
2.6 Managers. The managers of the Evita Sub at the Effective Time
shall be the initial managers of the Surviving LLC and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the limited liability company
agreement of the Surviving LLC or as otherwise provided by Law.
2.7 [Reserved].
2.8 Effect on membership interests. At the Effective Time, by virtue
of the Merger and without any action on the part of any member or manager of
either of the Constituent Companies:
(a) Conversion of Xxxxxx Sub Units. The Xxxxxx Sub Units
outstanding immediately prior to the Effective Time shall be converted into the
right to receive:
(i) an aggregate of Three Million Dollars ($3,000,000)
in cash, subject to adjustment as provided in Section 2.10 (the "Closing Cash"),
payable at Closing in accordance with Section 2.8(e); and
(ii) an aggregate of Two Million Dollars ($2,000,000)
in cash, subject to adjustment as provided in Sections 2.10 and 2.11 (plus
interest, if applicable, in accordance with the provisions of Section 2.8(f))
(the "Deferred Cash"), payable in accordance with Section 2.8(f); and
(iii) up to an aggregate of One Million Dollars
($1,000,000) in cash (plus interest, if applicable, in accordance with the
provisions of Section 2.8(g)) (the "Contingent Cash," and together with the
Closing Cash and the Deferred Cash, the "Purchase Price"), payable in accordance
with Section 2.8(g). Payment of the Purchase Price hereunder shall be the joint
and several obligation of Evita, Bulldog and Evita Sub.
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Each of the Xxxxxx Sub Units converted in accordance with this Section 2.8(a)
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of Xxxxxx Sub Units shall cease to
have any rights with respect thereto, except the right to receive the Purchase
Price set forth in this Section 2.8(a).
(b) [Reserved]
(c) Conversion of Evita Sub Membership Interests. The membership
interests of Evita Sub (the "Evita Sub Membership Interests") outstanding
immediately prior to the Effective Time shall be converted into an identical
number of membership interests of the Surviving LLC with the same rights, powers
and privileges as the membership interests so converted and shall constitute the
only outstanding membership interests of the Surviving LLC.
(d) [Reserved]
(e) Distribution. At the Effective Time, L90 and Picasso Media,
upon surrender to Evita of the Xxxxxx Sub Units, shall be entitled (i) to
immediately receive the Closing Cash, (ii) to receive the Deferred Cash in
accordance with the provisions of Section 2.8(f) below and (iii) to receive the
Contingent Cash in accordance with the provisions of Section 2.8(g) below.
(f) Deferred Cash. In addition to the Closing Cash and the
Contingent Cash, the Xxxxxx Sub Units shall be converted at the Effective Time
into the right to receive the Deferred Cash (including interest thereon as
provided below), payable, at the election of Evita, (i) on the first anniversary
of the Closing Date (the "First Anniversary") or (ii) six (6) months following
the First Anniversary. Payment of the Deferred Cash and interest accrued thereon
shall be made without deduction, defense, set off or counterclaim (except as
expressly provided in Sections 2.10, 2.11 and 10.6 hereof or Schedule 2.8(f)
hereto), in lawful money of the United States of America, and in same day funds
and delivered to L90 and Picasso Media (as former holders of the Xxxxxx Sub
Units) by wire transfer to bank accounts of such holders, as specified by such
holders from time to time, or at such other place as shall be designated by
notice by such holders.
(i) Interest. Beginning on the Closing Date and until
payment in full is made (before and after any Event of Default, before and after
the First Anniversary and before and after judgment), interest will accrue on
the Deferred Cash at the rate of eight percent (8%) per annum, calculated on the
basis of the actual number of days elapsed and on the basis of a 365 day year;
provided, however, that in the event that Evita does not pay the Deferred Cash
(including all interest accrued thereon) on or before the First Anniversary,
Evita shall pay interest, subject to Section 2.8(o), on the Deferred Cash (x)
from the Closing Date up to the date of the First Anniversary at a rate of eight
percent (8%) per annum and (y) from the date of the First Anniversary up to the
date of actual payment of such amount (before and after judgment), at a rate per
annum equal to four percent (4%) in excess of the eight percent (8%) per annum
rate otherwise applicable to the Deferred Cash.
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(ii) Prepayment. The Deferred Cash may be prepaid at
the option of Evita, plus interest accrued and unpaid thereon to the date of
such prepayment at any time in whole or from time to time in part, without
premium or penalty. Any prepayment of the Deferred Cash shall be credited first
upon interest accrued and the remainder, if any, upon the outstanding amount of
the Deferred Cash.
(g) Contingent Cash. In addition to the Closing Cash and the
Deferred Cash, the Xxxxxx Sub Units shall be converted at the Effective Time
into the right to receive the Contingent Cash, which in no event shall exceed
One Million Dollars ($1,000,000), (plus interest, if any), as provided below.
(i) For purposes of this Agreement, "Gross Xxxxxxxx"
shall mean (x) gross xxxxxxxx for all advertising, products and services (net of
sales allowances not to exceed 2% of gross xxxxxxxx) generated by the Xxxxxx
Online Business (other than gross xxxxxxxx generated primarily through the
efforts of employees of Evita or its Affiliates who are employed principally to
service business units or divisions other than the Xxxxxx Online Business) and
(y) to the extent not included in clause (x), gross xxxxxxxx for advertising,
products and services (net of sales allowances not to exceed 2% of gross
xxxxxxxx) generated by the former, current and/or future employees of the Xxxxxx
Online Business (regardless of whether such gross xxxxxxxx relate to sales of
advertising, products or services of the Xxxxxx Online Business or sales of
advertising, products or services of any business unit or division of Evita or
its Affiliates other than the Xxxxxx Online Business). Evita and Evita Sub shall
follow the same invoicing and other billing procedures for the Xxxxxx Online
Business as for their other businesses, which shall be in accordance with GAAP.
(ii) Subject to adjustment in accordance with Schedule
2.8(g), if Gross Xxxxxxxx for the period beginning on January 1, 2003 and ending
on December 31, 2003 (the "Contingent Cash Period") is equal to or exceeds
Thirty-Five Million Dollars ($35,000,000) but is less than Forty Million Dollars
($40,000,000) (the "First Target Range"), then the Xxxxxx Sub Units shall have
been converted into the right to receive an additional amount equal to Five
Hundred Thousand Dollars ($500,000) in cash.
(iii) Subject to adjustment in accordance with Schedule
2.8(g), if Gross Xxxxxxxx for the Contingent Cash Period is equal to or exceeds
Forty Million Dollars ($40,000,000) (the "Second Target Range"), then the Xxxxxx
Sub Units shall have been converted into the right to receive an additional
amount equal to One Million Dollars ($1,000,000) in cash.
(iv) The Contingent Cash, if any, shall be paid by
Evita to L90 and Picasso Media (as former holders of the Xxxxxx Sub Units), at
the election of Evita, (i) within fifteen (15) days of the First Anniversary or
(ii) after the fifteenth (15th) day following the First Anniversary but on or
before the date six (6) months following the First Anniversary. In the event
Evita elects to pay the Contingent Cash after the fifteenth (15th) day following
the First Anniversary but on or before the date six (6) months following the
First Anniversary, Evita shall pay interest, subject to Section 2.8(o), on the
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Contingent Cash from the First Anniversary Date up to the date of actual payment
(before and after judgment) of the Contingent Cash (including all interest
accrued thereon), at a rate per annum equal to twelve percent (12%). Payment of
the Contingent Cash (including interest accrued thereon) shall be made without
deduction, defense, set off or counterclaim (except as expressly provided in
Sections 2.10 and 2.11 hereof), in lawful money of the United States of America,
and in same day funds and delivered to L90 and Picasso Media (as former holders
of the Xxxxxx Sub Units) by wire transfer to bank accounts of such holders, as
specified by such holders from time to time, or at such other place as shall be
designated by notice by such holders.
(v) Xxxxxx shall have the right to dispute Evita's
calculation of Gross Xxxxxxxx. In the event of any such dispute by Xxxxxx,
Xxxxxx and Evita shall negotiate in good faith for thirty (30) days to resolve
such dispute. Notwithstanding the provisions of Article X hereof, to the extent
Xxxxxx and Evita are unable to resolve such dispute within such 30 day period,
Xxxxxx and Evita shall select a nationally recognized independent accounting
firm (other than an accounting firm then engaged by Xxxxxx or Evita) to resolve
such dispute within thirty (30) days after submission to the accounting firm by
the parties. The determination of such accounting firm as to the calculation of
Gross Xxxxxxxx shall be conclusive and binding upon the parties for purposes of
this Section 2.8(g). The fees and expenses of the accounting firm shall be borne
equally by Xxxxxx and Evita.
(h) Security for Deferred Cash, Contingent Cash and Working
Capital Surplus. Evita's obligation to pay the Deferred Cash and interest
hereunder and, if payable, the Contingent Cash and, if applicable, interest
thereon, and the Working Capital Surplus shall be secured by a first priority
security interest (junior only to current and future capital leases permitted in
accordance with Section 7.4(a) below) granted by Evita and Xxxxxx Sub to L90,
Xxxxxx and Picasso Media (as former holders of Xxxxxx Sub Units), or such other
collateral agent appointed by L90 and Picasso Media, in certain assets of Evita
and Xxxxxx Sub pursuant to a security agreement substantially in the form of
Exhibit E attached hereto (the "Security Agreement").
(i) Events of Default. Each of the following events shall be
defined as an "Event of Default:"
(i) A default made in the due and punctual payment of
the Deferred Cash when and as the same shall become due and payable; or
(ii) A default made in the due and punctual payment of
the Contingent Cash, if the same shall become due and payable; or
(iii) A default made in the due and punctual payment of
any interest on the Deferred Cash or Contingent Cash when and as such interest
shall become due and payable; or
(iv) A default made in the due and punctual payment of
the Working Capital Surplus; or
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(v) A default made in the due and punctual performance
of any covenant or agreement in the Security Agreement, and such default shall
continue for more than the period of notice and/or grace, if any, therein
specified and shall not have been waived; or
(vi) Other than on the basis of any breach of this
Agreement or any Transaction Document hereunder by Xxxxxx, Xxxxxx Sub (on or
prior to the Effective Time), Picasso Media or L90, the validity or
enforceability of this Agreement or any other Transaction Document is contested
by Evita or Evita Sub or any security holder or creditor of Evita or Evita Sub
or any action, suit or proceeding is commenced by Evita or Evita Sub that
alleges or contends that this Agreement or any other Transaction Document is no
longer in full force or effect or is null and void or Evita or Evita Sub denies
that it has any further liability or obligation under this Agreement; or
(vii) Evita or any of its Subsidiaries (x) files a
petition seeking relief for itself under Title 11 of the United States Code, as
now constituted or hereafter amended, or files an answer consenting to,
admitting the material allegations of, or otherwise not controverting, or fail
timely to controvert, a petition filed against it seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or (y) files
such a petition or answer with respect to relief under the provisions of any
other now existing or future applicable bankruptcy, insolvency, or other similar
law of the United States of America, or State thereof, or of any other country
or jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or an arrangement, composition, extension or adjustment with its
creditors; or
(viii) An order for relief is entered against Evita,
Bulldog or any of their Subsidiaries under Title 11 of the United States Code,
as now constituted or hereafter amended, which order is not stayed; or upon the
entry of an order, judgment or decree by operation of law, or by a court having
jurisdiction which is not stayed, adjudging it a bankrupt or insolvent under, or
ordering relief against it under, or approving as properly filed a petition
seeking relief against it under, the provisions of any other now existing or
future applicable bankruptcy, insolvency or other similar law of the United
States of America or any State thereof, or of any other country or jurisdiction
providing for the reorganization, winding-up or liquidation of corporations or
any arrangement, composition, extension or adjustment with creditors, or
appointing a receiver, liquidator, assignee, sequestrator, trustee or custodian
of Evita, Bulldog or any of their Subsidiaries or any substantial part of its
property, or ordering the reorganization, winding-up or liquidation of its
affairs or upon the expiration of thirty (30) days after the filing of any
involuntary petition against it seeking any of the relief specified in Section
2.8(i)(vi) or this Section 2.8(i)(vii) hereof without the petition being
dismissed prior to that time; or
(ix) Evita, Bulldog or any of their Subsidiaries (v)
makes a general assignment for the benefit of its creditors, (w) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
sequestrator, trustee or custodian of Evita or any of its Subsidiaries of all or
a substantial part of its property, or (x) admits its insolvency or inability to
pay its debts generally as such debts become due, or (y) fails
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generally to pay its debts as such debts become due, or (z) takes any action (or
if such action is taken by its directors or stockholders) looking to the
dissolution or liquidation of Evita, Bulldog or any of their Subsidiaries.
(j) Remedies.
(i) Except in the case of an Event of Default described
in Section 2.8(i)(vi) or 2.8(i)(vii), upon the occurrence of an Event of
Default, at the option of Xxxxxx exercised by written notice to Evita, the
unpaid amount of the Deferred Cash (including the interest accrued thereon), the
Contingent Cash (if payable, including the interest accrued thereon (if
applicable) and the Working Capital Surplus shall forthwith become due and
payable without presentment, demand, protest or further notice of any kind, all
of which are expressly waived by Evita anything herein to the contrary
notwithstanding, and Evita will forthwith pay to the L90 and Picasso Media (as
former holders of Xxxxxx Sub Units) the entire outstanding amount of, and
interest accrued on, the Deferred Cash, the Contingent Cash (if payable) and the
Working Capital Surplus; and
(ii) In the case of an Event of Default described in
Section 2.8(i)(vi) or 2.8(i)(vii), the Deferred Cash (including all accrued
interest thereon), the Working Capital Surplus and a percentage of the
Contingent Cash (including all accrued interest thereon) shall automatically
become immediately due and payable without presentment, demand, or notice of any
kind, all of which are hereby expressly waived by Evita. For purposes of this
Section 2.8(j)(ii), if the Event of Default occurs after December 31, 2003, then
the Contingent Cash (including all accrued interest thereon) to be due and
payable shall be calculated in accordance with the provisions of Section 2.8(g)
and if the Event of Default occurs prior to January 1, 2004, then the amount of
the Contingent Cash to be due and payable shall be calculated in accordance with
the provisions of Section 2.8(g), provided, however, that if the Event of
Default occurs prior to January 1, 2004, then the amount of Gross Xxxxxxxx shall
be multiplied by a fraction, the numerator of which shall be 365 and the
denominator of which shall be the number of days from January 1, 2003 to the
date of the Event of Default.
(k) Enforcement. If any one or more Events of Default shall have
occurred, L90 and Picasso Media (as former holders of Xxxxxx Sub Units) may
proceed to protect and enforce their rights by suit in equity or action at law
or the employment of any other available right or remedy, as such holders shall
deem most effective to protect and enforce any such rights. Evita promises to
pay all costs and expenses, including reasonable attorneys' fees and expenses,
incurred in the collection and enforcement of the Deferred Cash (including
interest thereon), the Working Capital Surplus and, if payable, the Contingent
Cash (including interest thereon).
(l) Foreclosure of Security Interest. Without limiting any other
rights L90 or Picasso Media (as former holders of the Xxxxxx Sub Units) may have
under this Agreement, upon the occurrence of any Event of Default, L90 or
Picasso Media (as a holder of the Xxxxxx Sub Units) may enforce its rights under
the Security Agreement or under the UCC (as defined in the Security Agreement).
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(m) Remedies Cumulative. No right, power or remedy conferred
upon L90 and Picasso Media (as former holders of the Xxxxxx Sub Units) shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy, whether conferred hereby or now
or hereafter available at law or in equity or by statute or otherwise.
(n) Remedies Not Waived. No course of dealing between Evita and
Xxxxxx or L90 or Picasso Media (as former holders of any Xxxxxx Sub Units), and
no delay in exercising any right, power or remedy conferred herby or now or
hereafter existing at law or in equity or by statute or otherwise, shall operate
as a waiver of or otherwise prejudice any such right, power or remedy, and no
single or partial exercise of any right, power or remedy shall preclude any
other or further exercise of the same or any other right, power or remedy
available to L90 and Picasso Media hereunder and under the Security Agreement.
(o) Interest Limitation. Anything in this Agreement to the
contrary notwithstanding, in no event whatsoever shall the interest and other
charges agreed to be paid by Evita hereunder exceed the maximum amounts
collectible under applicable laws in effect from time to time. It is understood
and agreed by the parties that, if for any reason whatsoever the interest or
other charges paid or contracted to be paid by Evita in respect of the Deferred
Cash or the Contingent Cash shall exceed the maximum amounts collectible under
applicable laws in effect from time to time, then ipso facto, the obligation to
pay such interest and/or other charges shall be reduced to the maximum amounts
collectible under applicable laws in effect from time to time, and any amounts
collected by L90 or Picasso Media (as former holders of the Xxxxxx Sub Units)
that exceed such maximum amounts shall be applied to the reduction of the unpaid
amount of the Deferred Cash or the Contingent Cash (as the case may be) and/or
refunded to Evita so that at no time shall the interest or other charges paid or
payable in respect of the Deferred Cash or the Contingent Cash (as the case may
be) exceed the maximum amounts permitted from time to time by applicable law.
2.9 Closing of Xxxxxx Sub Transfer Books. At the Effective Time, the
Xxxxxx Sub Unit transfer books of Xxxxxx Sub shall be closed and no transfer of
Xxxxxx Sub Units shall thereafter be made. If, after the Effective Time, Xxxxxx
Sub Units are presented to the Surviving LLC, they shall be cancelled and
exchanged for the consideration set forth in Section 2.8(a).
2.10 Preliminary Net Working Capital Amount. At least three (3) days
before the Effective Time, Xxxxxx will prepare and deliver to Evita a
certificate computed in a manner consistent with Exhibit F, signed by Millie's
Chief Financial Officer, including (x) an estimated unaudited balance sheet of
Xxxxxx Sub immediately prior to the Effective Time (the "Net Working Capital
Date") prepared in accordance with GAAP (except (i) for the absence of footnotes
and year-end audit adjustments, (ii) with respect to accounts receivable, only
Gross AR (as defined below) will be included on the balance sheet, (iii) all
Gross AR outstanding and uncollected for more than one hundred twenty (120) days
as of the Net Working Capital Date (other than Gross AR from Evita or any of its
Affiliates ("Xxxxx Xxxxx AR")) shall be reserved 100% and all other accounts
receivable
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shall have no reserve and (iv) with respect to accounts payable (the "AP"), all
Net AP (as defined below) outstanding and unpaid as of the Net Working Capital
Date for which there is an associated Gross AR that remains outstanding and
uncollected for more than one hundred twenty (120) days as of the Net Working
Capital Date shall not be included on the balance sheet) and on a basis
consistent with the Xxxxxx Online Financial Statements (the "Preliminary Balance
Sheet"), and (y) a reasonably detailed estimated calculation of the Net Working
Capital of Xxxxxx Sub immediately prior to the Effective Time based on the
Preliminary Balance Sheet (such statement being the "Preliminary Net Working
Capital Statement" and such amount being the "Preliminary Net Working Capital
Amount") including supporting documentation with respect thereto. In connection
with Millie's computation of the Preliminary Net Working Capital Amount, Xxxx
Xxxxxxxx and Xxx Xxxxxx or their respective designees will consult and
cooperate, in good faith, with respect to Millie's computation of the
Preliminary Net Working Capital Amount pursuant to this Section 2.10. For
purposes of this Section 2.10 and Section 2.11 below:
"Gross AR" shall mean accounts receivable from advertising customers of Xxxxxx
or its Subsidiaries that have been or will be transferred to Xxxxxx Sub prior to
the Effective Time that relate to advertising sales by Xxxxxx or its
Subsidiaries in connection with the Xxxxxx Online Business.
"Net AP" shall mean accounts payable to advertising customers of Xxxxxx or its
Subsidiaries that have or will be transferred to Xxxxxx Sub prior to the
Effective Time that relate to advertising sales by Xxxxxx or its Subsidiaries in
connection with the Xxxxxx Online Business for which Xxxxxx or its Subsidiaries
are not obligated to compensate its inventory partners unless and until Xxxxxx
and its Subsidiaries collect from such advertising customers.
In the event that the Preliminary Net Working Capital Amount set
forth on the Preliminary Net Working Capital Statement is less than $1,800,000
(any such difference, the "Net Working Capital Deficit"), Xxxxxx will cause L90
and/or Picasso Media to contribute in cash an amount equal to the Net Working
Capital Deficit to Xxxxxx Sub prior to the Effective Time.
2.11 Final Net Working Capital Adjustment.
(a) Within one hundred and fifty (150) days following the
Effective Time, Evita will prepare and deliver to Xxxxxx a certificate computed
in a manner consistent with Exhibit F, signed by Evita's Chief Financial
Officer, including (x) an unaudited balance sheet of Xxxxxx Sub as of the
Effective Time prepared in accordance with GAAP (except (i) for the absence of
footnotes and year-end audit adjustments, (ii) with respect to accounts
receivables, only Gross AR collected and received by Evita between the Effective
Time and the date one hundred and twenty (120) days following the Effective Time
("Collected Gross AR") and all Xxxxx Xxxxx AR will be included on the balance
sheet (with no reserve applied to such Collected Gross AR or the Xxxxx Xxxxx
AR), (iii) no Gross AR other than the Collected Gross AR and the Xxxxx Xxxxx AR
will be included on the balance sheet and (iv) with respect to AP, only (A) AP
paid by Evita or Evita Sub
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between the Effective Time and the date one hundred and twenty (120) days
following the Effective Time and (B) outstanding and unpaid AP as of the date
one hundred and twenty (120) days following the Effective Time for which Gross
AR associated with such AP has been collected and received by Evita or Evita Sub
on or before the date one hundred and twenty (120) days following the Effective
Time shall be included on the balance sheet (the "Closing Date Balance Sheet"),
and (y) a reasonably detailed calculation of the Net Working Capital of Xxxxxx
Sub as of the Effective Time based on the Closing Date Balance Sheet including
supporting documentation with respect thereto (such statement being the "Final
Net Working Capital Statement" and such amount, which amount shall include the
amount of any Net Working Capital Deficit contributed to Xxxxxx Sub pursuant to
Section 2.10 hereof, being the "Final Net Working Capital Amount").
Upon determination of the Final Net Working Capital
Amount pursuant to Section 2.11(a) above:
(i) in the event that the Final Net Working Capital
Amount set forth on the Final Net Working Capital Statement is less than zero,
then for each such dollar the Final Net Working Capital Amount is below zero (x)
Xxxxxx shall pay to Evita an amount equal to the Final Net Working Capital
Amount within five (5) Business Days by wire of immediately available funds, or,
(y) at the election of Evita, the amount of the Deferred Cash shall be reduced
by one dollar; and
(ii) in the event that the Final Net Working Capital
Amount set forth on the Final Net Working Capital Statement exceeds zero, then
for each such dollar the Final Net Working Capital Amount exceeds zero (such
excess, the "Working Capital Surplus"), Evita shall pay to Xxxxxx an amount
equal to the Final Net Working Capital Amount within one (1) year following the
Closing Date by wire of immediately available funds.
(b) Other than as provided in Section 2.11(f), all costs and
expenses of Evita relating to determining the Final Net Working Capital Amount
shall be paid by Evita and all costs and expenses of Xxxxxx relating to
determining the Final Net Working Capital Amount shall be paid by Xxxxxx.
(c) Xxxxxx, its independent public accountants and its other
representatives, shall have the right to review the books and records of Xxxxxx
Sub to audit the computation of the Final Net Working Capital Amount, including,
without limitation, the determination of the applicable components thereof (the
"Audit"). Subject to Section 2.11(f), any Audit shall be at Millie's sole cost
and expense. Xxxxxx shall notify Evita within thirty (30) days after receipt of
the notice from Evita setting forth the Final Net Working Capital Amount if it
elects to conduct the Audit, and shall have thirty (30) days after receipt of
the notice from Evita setting forth the Final Net Working Capital Amount to
conduct the Audit (the "Audit Period").
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(d) If Xxxxxx objects to any aspect of the Final Net Working
Capital Amount as initially determined by Evita, Xxxxxx must deliver to Evita a
written notice of such objection (the "Millie's Objection Notice") setting forth
in reasonable detail such objections prior to the termination of the Audit
Period, or if Xxxxxx does not conduct an Audit, within thirty (30) days after
receipt of the notice from Evita setting forth the Final Net Working Capital
Amount. If no Millie's Objection Notice is delivered to Evita by Xxxxxx within
the 30 day period, Xxxxxx shall be deemed to have accepted the Final Net Working
Capital Amount delivered by Evita. If a Millie's Objection Notice is delivered
to Evita by Xxxxxx within such specified period, Xxxxxx and Evita shall use
their respective reasonable best efforts to resolve all objections and disputes
relating to the Final Net Working Capital Amount. If Xxxxxx and Evita do not
reach a final resolution of all such objections and disputes within forty-five
(45) days after delivery of Millie's Objection Notice to Evita, Xxxxxx and Evita
shall submit the dispute to a mutually agreed upon accounting firm (which shall
in any event not be Millie's or Evita's independent accounting firm) (the
"Independent Accounting Firm") for resolution. Such Independent Accounting Firm
shall calculate the Final Net Working Capital Amount consistent with Exhibit F
and Section 2.11(a). No other documents shall be submitted to the Independent
Accounting Firm, either unilaterally or at the Independent Accounting Firm's
request, unless such document is also simultaneously submitted to the other
party. The Independent Accounting Firm's decision shall be rendered within
thirty (30) days after submission. The decision of the Independent Accounting
Firm shall be set forth in writing and shall be conclusive and binding upon
Xxxxxx and Evita, and each of Xxxxxx and Evita hereby irrevocably waives any
right to appeal such decision. The Final Net Working Capital Amount shall be
revised as appropriate to reflect the resolution of any such objections among
the parties or by the Independent Accounting Firm.
(e) In the event Xxxxxx and Evita submit a dispute on the Final
Net Working Capital Amount to the Independent Accounting Firm for resolution as
provided herein, Xxxxxx and Evita shall pay for the fees and expenses of the
Independent Accounting Firm as follows:
(i) if the Independent Accounting Firm resolves the
dispute in favor of Xxxxxx, Evita shall be responsible for all of the fees and
expenses of the Independent Accounting Firm;
(ii) if the Independent Accounting Firm resolves the
dispute in favor of Evita, Xxxxxx shall be responsible for all of the fees and
expenses of the Independent Accounting Firm; and
(iii) if the Independent Accounting Firm resolves the
dispute so that Xxxxxx and Evita both prevail in part, the Independent
Accounting Firm shall allocate the fees and expenses between Xxxxxx and Evita,
as it reasonably determines
2.12 Additional Cash.
(a) During the period beginning on the date one hundred twenty
(120) days following the Effecting Date and ending on the first anniversary of
the Effective
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Time (the "Collection Period"), Evita shall pay to Xxxxxx, or such other Person
as Xxxxxx may direct, within fifteen (15) days following the end of each
calendar month (each, a "Collection Month") during the Collection Period, an
amount equal to the product obtained by multiplying the Gross AR collected by
Evita or Evita Sub (less all reasonable third party collection costs incurred by
Evita or Evita Sub in connection with the collection of such Gross AR)
("Collected Accounts Receivable") during each such applicable Collection Month
by seventy percent (70%); provided, however, that if such Collected Accounts
Receivable relates to advertising sales by Xxxxxx or its Subsidiaries in
connection with the Xxxxxx Online Business for which Xxxxxx or its Subsidiaries
are not obligated to compensate its inventory partners unless and until Xxxxxx
and its Subsidiaries collect from such advertising customers ("Collected Net
AR"), then the amount payable by Evita to Xxxxxx pursuant to this Section 2.12
with respect to such Collected Net AR shall equal the product obtained by
multiplying seventy percent (70%) by the difference of (x) the Collected Net AR,
less (y) the Net AP related to such Collected AR. The sum of all payments made
to Xxxxxx under this Section 2.12 shall be referred to as the "Additional Cash."
(a) Evita acknowledges and agrees that if, during the Collection
Period, it or any of its Subsidiaries should collect or receive any amount from
a client with whom Evita or any of its Subsidiaries has an outstanding accounts
receivable balance, then such collected amount shall be treated as a Collected
Accounts Receivable for which payment shall be made by Evita to Xxxxxx pursuant
to this Section 2.12 if (x) such client designates that its payment is being
made against a Gross AR acquired by Evita Sub hereunder or (y) in the absence of
any designation by such client, if Evita determines (in accordance with this
Section 2.12) that client intends such payment to be made against a Gross AR
acquired by Evita Sub. If (a) such client designates that its payment is being
made against an account receivable that was not acquired by Evita Sub hereunder,
or (b) in the absence of any designation by such client, if Evita determines (in
accordance with this Section 2.12) that client does not intend such payment to
be made against a Gross AR acquired by Evita Sub hereunder, then such payment
shall not be treated as a Collected Accounts Receivable for which payment shall
be made pursuant to this Section 2.12. If such client fails to specify whether
such payment is being made against an outstanding Gross AR balance or fails to
specify which account receivable balance is being paid if there is more than one
account receivable balance applicable to such client, Evita shall act in good
faith and reasonably to determine whether such client intends such payment to be
made against an outstanding Gross AR acquired by Evita Sub hereunder and, if
there is more than one account receivable balance applicable to such client,
which account receivable balance is being paid. In all instances, the
specification made by each client as to which account receivable it is paying
shall be binding on the parties hereto for purposes of this Section 2.12.
(b) From and after the Effective Date, Evita shall treat, and
use the same efforts to collect, all Gross AR acquired by Evita Sub pursuant to
this Agreement in the same manner as Evita treats and attempts to collect its
own accounts receivable. Within fifteen (15) days following the end of each
calendar month during the Collection Period, Evita shall provide a written
report to Xxxxxx with each payment of Additional Cash for the calendar month
preceding such report, each such report to show in reasonable detail
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the customer payment information, including the individual amounts received by
Evita, customer names and invoice numbers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF XXXXXX, L90 AND PICASSO MEDIA
Xxxxxx, L90 and Picasso Media each represents and warrants to Evita,
as of the date hereof and, except where such representation and warranty is made
as of a specified earlier date, as of the Effective Time, as follows:
3.1 Capitalization.
(a) Annex A attached hereto is an accurate and complete list of
the members of Xxxxxx Sub and is an accurate and complete list of their
respective membership interests in Xxxxxx Sub and the number of Xxxxxx Sub Units
representing such membership interests held by such members as of the date of
this Agreement. Immediately prior to the Closing, Xxxxxx Sub will have no Xxxxxx
Sub Units authorized, issued or outstanding other than those held by Picasso
Media and L90. All of the Xxxxxx Sub Units will be duly authorized, validly
issued and are fully paid and nonassessable as of the Closing.
(b) Other than the issuance of the Xxxxxx Sub Units in
connection with the Assignment and Assumption Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any Xxxxxx Sub Units or any
other interest in Xxxxxx Sub, or arrangements by which Xxxxxx Sub is or may
become bound to issue additional Xxxxxx Sub Units, nor are any such issuances or
arrangements contemplated, (ii) Xxxxxx Sub has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof, (iii) Xxxxxx Sub has not reserved any Xxxxxx Sub Units for
issuance pursuant to any equity option plan or similar arrangement, and (iv)
Xxxxxx Sub has no obligation (contingent or otherwise) to acquire any equity
securities or other securities of any other Person or any direct or indirect
equity or ownership interest in any other business.
3.2 Ownership of Membership Interests.
(a) Upon the Closing, there will be 1,000 Xxxxxx Sub Units
outstanding, which will represent all of the limited liability company interests
of Xxxxxx Sub;
(b) Upon the Closing, the Xxxxxx Sub Units will be owned of
record and beneficially by L90 and Picasso Media, free and clear of any liens,
claim, judgment, charge, mortgage, security interest, pledge, escrow or other
encumbrance (collectively, "Encumbrances");
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(c) All of the issued and outstanding shares of L90 and Picasso
Media are owned of record and beneficially by Xxxxxx, free and clear of any
Encumbrances; and
(d) Upon the Closing, Evita will have good and valid title to
the Xxxxxx Sub Units.
3.3 Organization. Each of Xxxxxx, L90 and Picasso Media is a
corporation validly existing and in good standing under the DGCL. Xxxxxx Sub is
a limited liability company validly existing and in good standing under the Act.
Each of Xxxxxx, X00, Picasso Media and Xxxxxx Sub is duly qualified to do
business as a foreign corporation or limited liability company, as applicable,
and is in good standing in each jurisdiction where the nature of the property
owned or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect on the Xxxxxx Online Business. Schedule 3.3 sets
forth a true and complete list of all foreign jurisdictions in which Xxxxxx Sub
will be so qualified or licensed and in good standing as of the Closing Date.
3.4 Xxxxxx Sub Subsidiaries. Xxxxxx Sub has no Subsidiaries and has
no equity interest, directly or indirectly, in any corporation, partnership,
joint venture, limited liability company or other Person.
3.5 No Violation; Consents. Except as set forth on Schedule 3.5,
neither the execution, delivery or performance of this Agreement or any of the
other Transaction Documents to which Xxxxxx, X00, Picasso Media or Xxxxxx Sub is
a party , nor the consummation by them of their respective obligations hereunder
or thereunder or the transactions contemplated hereby or thereby requires any
consent of, authorization by, exemption from, filing with or notice to any
Governmental Entity or any other Person, other than the filing of the
Certificate of Merger, and except as set forth on Schedule 3.5, no such consent,
authorization, exemption, filing or notice is necessary to enable the Surviving
LLC to conduct the Xxxxxx Online Business after the Closing in a manner
consistent with that in which it is presently conducted.
3.6 Xxxxxx Online Financial Statements. Schedule 3.6 includes (i) an
unaudited balance sheet of the Xxxxxx Online Business as of December 31, 2001,
(ii) unaudited statements of operations and cash flows of the Xxxxxx Online
Business for the year ended December 31, 2001, (iii) an unaudited balance sheet
of the Xxxxxx Online Business as of December 31, 2002 and (iv) unaudited
statements of operations and cash flows of the Xxxxxx Online Business for the
period beginning on January 1, 2002 and ending on December 31, 2002
(collectively, the "Xxxxxx Online Financial Statements"). For purposes of
subsections (i), (ii), (iii) and (iv), however, the Xxxxxx Online Financial
Statements shall be consolidated and include information relating to Millie's
offline MaxDirect business and will not include any information relating to the
business operated by DoubleClick prior to July 11, 2002. The Xxxxxx Online
Financial Statements were prepared in conformity with GAAP (except for the
absence of footnotes, year-end audit adjustments and adjustments customary for
"carve-out" financial statements) and, subject to the immediately preceding
sentence, fairly present, in all material respects, the financial position and
results of operations of the Xxxxxx Online Business as of the dates,
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and for the periods, referred to therein. Schedule 3.6(a) sets forth, in all
material respects, the aggregate amount of accounts receivable of the Xxxxxx
Online Business written off during the period commencing July 1, 2002 and ending
September 30, 2002. The amount on Schedule 3.6(a) also sets forth the aggregate
amount of accounts receivable of the Xxxxxx Online Business written off during
the period commencing October 1, 2002 and ending December 31, 2002.
3.7 Title to Property and Assets; Condition and Sufficiency of
Assets.
(a) As of the Closing, after consummation of the Assignment and
Assumption Agreement, the Surviving LLC will own the personal property and
assets reflected as owned in the Xxxxxx Online Financial Statements, including,
without limitation, all assets identified in the Assignment and Assumption
Agreement, but excluding all assets previously used in Millie's offline
MaxDirect business that were sold to American List Counsel, Inc. or its
Affiliates. All such personal property and assets will be owned free and clear
of all Encumbrances, except Permitted Encumbrances. With respect to any real
property, Xxxxxx Sub is not in material violation of any of its leases.
(b) Set forth on Schedule 3.7 hereto is a complete and accurate
list of all leases, subleases, licenses and other agreements under which Xxxxxx,
X00, Picasso Media or Xxxxxx Sub uses or occupies or has the right to use or
occupy any real property in connection with the Xxxxxx Online Business. As of
the Closing, after consummation of the Assignment and Assumption Agreement, the
Surviving LLC will have the same rights to use or occupy any such property in
connection with the Xxxxxx Online Business as did Xxxxxx, X00, Picasso Media or
Xxxxxx Sub prior to the Closing.
(c) As of the Closing, the Assignment and Assumption Agreement
(i) is in full force and effect and is enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and (ii) was
duly and validly executed and delivered to Xxxxxx Sub. As of the Closing, those
items identified in the Assignment and Assumption Agreement will have been duly
and properly assigned by L90 and Picasso Media to Xxxxxx Sub pursuant to such
agreement.
(d) Except as set forth on Schedule 3.7, as of the Closing,
after consummation of the Assignment and Assumption Agreement, the personal
property and assets of the Xxxxxx Sub, including the Contracts set forth on
Schedule 3.11(a) and the Xxxxxx Sub Intellectual Property, will constitute all
of the material assets, tangible and intangible, sufficient for the continued
conduct of the Xxxxxx Online Business immediately following the Closing in
substantially the same manner as currently conducted.
3.8 Authorization; Enforcement.
(a) Subject to the approval of the Merger by the holders of a
majority of the outstanding shares of Xxxxxx Common Stock (the "Xxxxxx Requisite
Vote") and the
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receipt by Xxxxxx from Xxxxx & Company Incorporated of the Fairness Opinion (as
defined in Section 5.1(j) hereof), each of Xxxxxx, X00, Picasso Media and Xxxxxx
Sub has all requisite corporate power and authority (or limited liability
company power and authority with respect to Xxxxxx Sub) to enter into this
Agreement and the other Transaction Documents to which it is a party and has
taken all necessary corporate action (or limited liability company action with
respect to Xxxxxx Sub) required for the due authorization, execution, delivery
and performance by it of this Agreement and the other Transaction Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby.
(b) This Agreement and the other Transaction Documents to which
Xxxxxx, X00, Picasso Media or Xxxxxx Sub is a party have been duly executed and
delivered by Xxxxxx, X00, Picasso Media and Xxxxxx Sub and constitute the valid
and binding obligations of Xxxxxx, X00, Picasso Media and Xxxxxx Sub,
enforceable against Xxxxxx, X00, Picasso Media and Xxxxxx Sub, respectively, in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally, and by general
equitable principles.
(c) The board of directors (or managers with respect to Xxxxxx
Sub) of each of Xxxxxx, X00, Picasso Media and Xxxxxx Sub, and the stockholders
(or members with respect to Xxxxxx Sub) of L90, Picasso Media and Xxxxxx Sub
have approved and taken all corporate action (or limited liability company
action with respect to Xxxxxx Sub) required to be taken by such board of
directors, stockholders, managers and members (as applicable) for the
consummation of the transactions contemplated by this Agreement. Millie's board
of directors has unanimously declared advisable, adopted and approved the Merger
and this Agreement and has unanimously recommended that Millie's stockholders
approve the Merger and adopt this Agreement.
3.9 No Conflicts. The execution, delivery and performance of this
Agreement by Xxxxxx, X00, Picasso Media and Xxxxxx Sub and the other Transaction
Documents to which it is a party do not and the consummation of the transactions
contemplated hereby will not (a) conflict with or result in a violation of the
certificate of incorporation or bylaws of Xxxxxx, X00 or Picasso Media (or the
certificate of formation of Xxxxxx Sub or the Xxxxxx Sub Operating Agreement),
as the case may be, (b) except as set forth on Schedule 3.9 hereof, conflict
with or result in the material breach of the terms, conditions or provisions of
or constitute a material default (or an event which with notice or lapse of time
or both would become a default) under, or give rise to any right of termination,
acceleration or cancellation under, or materially impair Xxxxxx or any of its
Subsidiaries' rights or materially alter the rights or obligations of any third
party under, any material Contract relating to the Xxxxxx Online Business to
which Xxxxxx or any of its Subsidiaries is a party which would have a Material
Adverse Effect on the Xxxxxx Online Business, (c) except as set forth on
Schedule 3.9 hereof, conflict with or violate any Law applicable in any material
respect to the Xxxxxx Online Business or by which any material property or asset
of Xxxxxx or any of its Subsidiaries relating to the Xxxxxx Online Business is
bound or affected, (d) result in the creation of any Encumbrance upon any of the
assets of Xxxxxx or any of its Subsidiaries relating to the Xxxxxx Online
Business, (e) cause any of the assets
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relating exclusively to the Xxxxxx Online Business owned by Xxxxxx, X00, Picasso
Media or Xxxxxx Sub to be reassessed or revalued by any Tax authority or other
Governmental Entity, or (f) result in the imposition or creation of any
Encumbrance upon any of the assets relating to the Xxxxxx Online Business owned
or used by Xxxxxx or any of its Subsidiaries.
3.10 Intellectual Property.
(a) Except as set forth in Schedule 3.10, all of Millie's and
its Subsidiaries' registered trademarks, trademark applications and registered
copyrights included in the Transferred Intellectual Property are valid and
remain in good standing with all fees and filings due as of the date hereof duly
paid and made, and the consummation of the transactions contemplated hereby will
not alter or impair any such rights. Exhibit C sets forth an accurate and
complete listing and a summary description of all Intellectual Property used in
the Xxxxxx Online Business, including an indication of whether such Intellectual
Property is owned by Xxxxxx or a Xxxxxx Subsidiary, or a third party, and a
listing of each license or other agreement or arrangement relating to such
Intellectual Property to which Xxxxxx or any Xxxxxx Subsidiary is a party.
(b) All items and rights in the Transferred Intellectual
Property are: (i) owned by Xxxxxx or its Subsidiaries (the "Xxxxxx Sub Owned
Intellectual Property Rights"); (ii) in the public domain; or (iii) rightfully
used by Xxxxxx or its Subsidiaries pursuant to a valid license or other
agreement other than software programs which are readily commercially available
or for which substitutes are available from more than one source (the "Xxxxxx
Sub Licensed Intellectual Property").
(c) Except as set forth on Schedule 3.10:
(i) immediately following the Closing, Evita or the
Surviving LLC will own or have the right to use the Xxxxxx Sub Owned
Intellectual Property Rights and the Xxxxxx Sub Licensed Intellectual Property
(collectively, the "Xxxxxx Sub Intellectual Property" or the "Transferred
Intellectual Property") free and clear of all Encumbrances;
(ii) neither Xxxxxx, X00, Picasso Media nor Xxxxxx Sub
has received written notice from any Person regarding any actual or potential
infringement or misappropriation by Xxxxxx or any of its Subsidiaries of the
Intellectual Property of that or another Person that is material to the Xxxxxx
Online Business; and
(iii) neither Xxxxxx nor any of its Subsidiaries has
received written notice from any Person regarding any assertion or claim
challenging the validity of any Xxxxxx Sub Intellectual Property.
3.11 Contracts.
(a) Schedule 3.11(a) contains a complete and accurate list, as
of the date of this Agreement or such other date expressly set forth in this
clause (a), of the following to which Xxxxxx or any of its Subsidiaries is a
party :
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(i) each Contract (other than email and Web site sales
representation Contracts and related insertion orders) relating to the Xxxxxx
Online Business that involves performance of services or delivery of goods or
materials by Xxxxxx or any of its Subsidiaries in the twelve (12) month period
prior to the date of this Agreement of an amount or value in excess of $50,000;
(ii) each Contract relating to the Xxxxxx Online
Business that was not entered into by Xxxxxx or any of its Subsidiaries in the
ordinary course of business and that involves expenditures or receipts in excess
of $10,000;
(iii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Contract relating
to the Xxxxxx Online Business and affecting Millie's or any of its Subsidiaries'
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, by Xxxxxx or any of its Subsidiaries, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate annual payments of less than $10,000);
(iv) each joint venture, partnership, and other
Contract relating to the Xxxxxx Online Business and involving a sharing of
profits, losses, costs, or liabilities by Xxxxxx or any of its Subsidiaries with
any other Person;
(v) each Contract relating to the Xxxxxx Online
Business and containing covenants that in any way purport to restrict the
business activity of Xxxxxx or any of its Subsidiaries or limit the freedom of
Xxxxxx or any of its Subsidiaries to engage in any line of business or to
compete with any Person;
(vi) each power of attorney with respect to Xxxxxx Sub
that is currently effective and outstanding;
(vii) each Contract for capital expenditures by Xxxxxx
Sub in excess of $10,000;
(viii) each written indemnification, warranty,
guaranty, and other similar undertaking with respect to contractual performance
extended by Xxxxxx or any of its Subsidiaries and relating to the Xxxxxx Online
Business (other than in the ordinary course of business);
(ix) each email and Web site sales representation
Contract relating to the Xxxxxx Online Business that involves performance of
services or delivery of goods or materials by Xxxxxx or any of its Subsidiaries
in the three (3) month period ended December 31, 2002 of an amount or value in
excess of $40,000;
(x) each ad sales insertion order relating to the
Xxxxxx Online Business that involves performance of services or delivery of
goods or materials by Xxxxxx or any of its Subsidiaries in the three (3) month
period prior ended December 31, 2002 an amount or value in excess of $40,000;
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(xi) the names of each Web publisher, advertiser and
advertising network that has a Contract relating to the Xxxxxx Online Business
as of March 5, 2003; and
(xii) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing, except for any
changes to insertion orders issued in the ordinary course of operation of the
Xxxxxx Online Business.
(b) Except as set forth in Schedule 3.11(b) and except for such
Contracts that expire by their terms prior to the Closing, each Contract
identified or required to be identified in Schedule 3.11(a) is in full force and
effect and is valid and enforceable against Xxxxxx or its Subsidiary, as the
case may be, in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors' rights generally. Neither Xxxxxx nor any of
its Subsidiaries, as the case may be, is in default in any material respect
under the terms of any Contract required to be disclosed pursuant to Section
3.11(a), nor has any event or circumstance occurred that, with notice or lapse
of time or both, would constitute any material default thereunder.
(c) Except as set forth in Schedule 3.11(c), no consent by,
notice to or approval from any third party is required under any Contract
required to be disclosed pursuant to Section 3.11(a) as a result of or in
connection with the execution, delivery or performance of this Agreement, any
other Transaction Document to which Xxxxxx or any of its Subsidiaries is a party
and the consummation of the Merger and the other transactions contemplated
hereby and such Contracts shall continue in full force and effect after the
consummation of the Merger and the other transactions contemplated hereby.
(d) None of Xxxxxx, X00, Picasso Media or Xxxxxx Sub has any
knowledge of any material default under any material Contract required to be
disclosed pursuant to Section 3.11(a) by any third party nor is any director or
senior executive of Xxxxxx, X00, Picasso Media or Xxxxxx Sub aware of any fact,
condition or event, including, without limitation, the execution, delivery and
performance of this Agreement and the consummation of the Merger, that could
reasonably be expected to result in the termination of any such Contract.
(e) Xxxxxx Sub is not a party to or bound by any Contract for
the employment (including as a consultant) of any manager, officer, employee or
agent of Xxxxxx Sub (including, without limitation, collective bargaining
agreements) and no present or former manager, officer, employee or agent of
Xxxxxx Sub is or would be eligible to receive, or has received, as a result of
the consummation of the Merger or any of the other transactions contemplated
hereby, any severance pay, lump-sum or other similar payment, compensation or
other remuneration from the Xxxxxx Sub.
3.12 Absence of Certain Developments. Since December 31, 2002 until
the date of this Agreement, there has been no change or development which has
had a Material Adverse Effect on the Xxxxxx Online Business. Since December 31,
2002 until
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the date of this Agreement, Xxxxxx and its Subsidiaries have conducted the
Xxxxxx Online Business in the ordinary and usual course consistent with past
practices and (with respect to the Xxxxxx Online Business) has not (a) sold,
leased, transferred or otherwise disposed of any of the material assets (other
than dispositions in the ordinary course of business consistent with past
practices), (b) suffered any loss, damage or destruction, whether or not covered
by insurance, to the properties or assets used in the Xxxxxx Online Business,
(c) made any change in the accounting methods or practices it follows, whether
for general financial or tax purposes, (d) incurred, created or suffered to
exist any Encumbrances, other than Permitted Encumbrances, (e) made or obligated
itself to make any capital expenditures in excess of $10,000 individually or in
the aggregate or (f) entered into any agreement to do any of the foregoing.
3.13 No Undisclosed Liabilities. Except as set forth on Schedule
3.13 and in the Xxxxxx Online Financial Statements, (i) at December 31, 2002,
neither Xxxxxx (with respect to the Xxxxxx Online Business) nor any of its
Subsidiaries (with respect to the Xxxxxx Online Business) had any liability
(whether absolute, accrued, contingent, or otherwise, and whether then due or to
become due) nor any loss contingency, except as reflected in the Xxxxxx Online
Financial Statements, which would be required to be included therein in
accordance with generally accepted accounting principles, consistently applied
with prior periods and (ii) since December 31, 2002, neither Xxxxxx (with
respect to the Xxxxxx Online Business) nor any of its Subsidiaries (with respect
to the Xxxxxx Online Business) has incurred any liabilities of any kind,
character and description, whether accrued, absolute, secured or unsecured,
known or unknown, contingent or otherwise and whether or not required to be
reflected in the Xxxxxx Online Financial Statements in accordance with GAAP
other than liabilities or obligations incurred in the ordinary course of
business in accordance with past practices. Xxxxxx Sub has no liabilities except
for those liabilities assumed pursuant to the Assignment and Assumption
Agreement, which liabilities relate to the Xxxxxx Online Business.
3.14 Litigation. Except as set forth on Schedule 3.14, there is no
claim, action, proceeding, lawsuit, inquiry, arbitration or investigation before
or by any court, public board, arbitrator, governmental body, agency or
official, self-regulatory organization or body pending or, to the knowledge of
Xxxxxx or any of its Subsidiaries, threatened against or affecting, with respect
to the Xxxxxx Online Business, Xxxxxx or any of its Subsidiaries, or their
respective assets or properties or its respective directors or officers in their
capacities as such. Neither Xxxxxx nor any of its Subsidiaries is subject to any
outstanding order, ruling, judgment or decree that would have a Material Adverse
Effect on the Xxxxxx Online Business.
3.15 Compliance with Laws.
(a) The Xxxxxx Online Business is not being nor has it been
conducted in violation of any Law, except for violations that, either singly or
in the aggregate, would not have a Material Adverse Effect on the Xxxxxx Online
Business.
(b) Neither Xxxxxx nor Xxxxxx Sub has received any written
notification from any Governmental Entity (i) asserting a violation of any Law
applicable to the
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conduct of the Xxxxxx Online Business, (ii) threatening to revoke any Permit
relating to the Xxxxxx Online Business or (iii) restricting or in any way
limiting the Xxxxxx Online Business as currently conducted.
(c) Except as set forth on Schedule 3.15(c), Xxxxxx and its
Subsidiaries have such material licenses, permits, exemptions, consents,
waivers, authorizations, certificates, registrations, classifications, orders
and approvals and similar documents or instruments from appropriate Governmental
Entities ("Permits") as are necessary to own, lease, license or operate the
Xxxxxx Online Business as currently conducted and all such Permits are valid and
in full force and effect. All such Permits are validly held and are in full
force and effect, and Xxxxxx and/or its Subsidiaries have complied in all
material respects with all requirements in connection therewith, and the same
will not be subject to suspension, modification or revocation as a result of
this Agreement or the consummation of the transactions contemplated hereby.
(d) Schedule 3.15(d) sets forth a true and complete list of all
Permits issued or granted to Xxxxxx or any Xxxxxx Subsidiary that are required
for the Xxxxxx Online Business and operations. Except as set forth on Schedule
3.15(d), all such Permits shall be assigned to and assumed by Xxxxxx Sub
pursuant to the Assignment and Assumption Agreement.
3.16 Taxes.
(a) Except as disclosed on Schedule 3.16, with respect to the
Xxxxxx Online Business, each of Xxxxxx and its Subsidiaries (i) has filed or
there has been filed on its behalf, within the time and in the manner prescribed
by Law (taking into account any extensions of time permitted by Law), all Tax
Returns with respect to Taxes of Xxxxxx or such Subsidiary, as the case may be,
and all such Tax Returns are true, complete and correct in all material
respects, (ii) has timely paid or there has been paid on its behalf all Taxes of
Xxxxxx or such Subsidiary, as the case may be, that are required to be paid,
except with respect to matters contested in good faith and as to which adequate
cash reserves have been provided on the Xxxxxx Online Financial Statements,
(iii) has not waived any statute of limitations with respect to Taxes of Xxxxxx
or such Subsidiary, as the case may be, or agreed to any extension of time
within which to file any such Tax Return for any taxable period, which such Tax
Return has not since been filed or to extend the period for the assessment or
collection of any Taxes of Xxxxxx or such Subsidiary, as the case may be, and
(iv) has provided adequate accruals in the Xxxxxx Online Financial Statements
for the payment of all Taxes of Xxxxxx or such Subsidiary, as the case may be,
not yet due and payable (including deferred income taxes).
(b) Except as disclosed on Schedule 3.16, with respect to the
Xxxxxx Online Business, (i) there are no Encumbrances for Taxes upon the assets
of Xxxxxx or any of its Subsidiaries except for statutory liens for Taxes not
yet due, (ii) there are not pending or threatened in writing any audits,
examinations, investigations, or other proceedings in respect of Taxes or Tax
Returns of Xxxxxx or any of its Subsidiaries, (iii) no power of attorney with
respect to any Taxes of Xxxxxx or any of its Subsidiaries is currently
outstanding, pending or otherwise in effect with the IRS or any other
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Governmental Entity and (iv) all Tax deficiencies which have been claimed,
proposed or asserted against Xxxxxx or any of its Subsidiaries have been fully
paid or finally settled.
(c) Except as disclosed on Schedule 3.16, with respect to the
Xxxxxx Online Business, neither Xxxxxx nor any of its Subsidiaries is a party to
or bound by, or has, any obligation under any written Tax sharing, allocation,
indemnity or similar agreement or arrangement currently effective under which
Xxxxxx or such Subsidiary, as the case may be, would be required to pay income
Taxes of any Person other than of Xxxxxx or such Subsidiary, as the case may be.
(d) No election under any of Sections 108, 168, 338, 441, 463,
472, 1017, 1033, or 4977 of the Code (or any predecessor provisions) has been
made or filed by or with respect to Xxxxxx or any of its Subsidiaries. No
consent to the application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to Xxxxxx or any of its
Subsidiaries or any of its assets. None of the assets of Xxxxxx or any of its
Subsidiaries is an asset or property that is or will be required to be treated
as being: (i) owned by any Person (other than Xxxxxx or any of its Subsidiaries)
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986; or (ii) tax-exempt use property within the meaning of
Section 168(h)(1) of the Code.
(e) Neither Xxxxxx nor any of its Subsidiaries has agreed to nor
is it required to make any adjustment pursuant to Section 481(a) of the Code (or
any predecessor provision) by reason of any change in any accounting method of
Xxxxxx or any of its Subsidiaries, and there is no application pending with any
taxing authority requesting permission for any changes in any accounting method
of Xxxxxx or any of its Subsidiaries. The IRS has not proposed any such
adjustment or change in accounting method.
(f) Neither Xxxxxx nor any of its Subsidiaries is in violation
(or with notice or lapse of time or both, would be in violation) of any
applicable Law relating to the payment or withholding of Taxes. Xxxxxx and its
Subsidiaries has duly and timely withheld from employee salaries, wages, and
other compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable Laws.
(g) Neither Xxxxxx nor any of its Subsidiaries has filed with
the IRS any request for a ruling with respect to Xxxxxx and its Subsidiaries or
any of its assets, services or products.
(h) There is no claim pending for a refund or adjustment of any
Taxes paid by Xxxxxx and its Subsidiaries.
(i) The parties agree that for U.S. federal income tax purposes,
the Merger shall be treated as a taxable sale of the assets of Xxxxxx Sub by
Xxxxxx, X00 and Picasso Media. Neither party will take any inconsistent
reporting position on any Tax Return.
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3.17 Employee Relations.
(a) All bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock or unit ownership, stock or unit
bonus, stock or unit purchase, restricted stock or unit and stock or unit option
plans, employment or severance contracts, health and medical insurance plans,
life insurance and disability insurance plans, other material employee benefit
plans, contracts or arrangements which cover employees of the Xxxxxx Online
Business (collectively, the "Xxxxxx Online Employee Benefit Plans"), are listed
on Schedule 3.17. Schedule 3.17 also includes a list of all employees of the
Xxxxxx Online Business and the salaries for such employees as of the date of
this Agreement. No Xxxxxx Online Employee Benefit Plans are or were collectively
bargained for or have terms requiring assumption or any guarantee by Evita or
Evita Sub. Neither Xxxxxx nor any of its Subsidiaries has now, or previously,
sponsored, maintained, or contributed to any "employee benefit plan" within the
meaning of Section 3(3) of ERISA. Xxxxxx Sub does not currently have and has
never had any employees, and Xxxxxx Sub has no Contracts with respect to
employment. Xxxxxx Sub has no Xxxxxx Online Employee Benefit Plans.
(b) There have been no violations of ERISA, the Code or other
applicable Law by Xxxxxx, X00, Picasso Media or Xxxxxx Sub.
3.18 Brokers. Except as set forth on Schedule 3.18, there is no
broker, investment banker, financial advisor, finder or other Person which has
been retained by or is authorized to act on behalf of Xxxxxx or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the execution of this Agreement.
3.19 Insurance. With respect to the Xxxxxx Online Business, Xxxxxx
has in force fire, casualty, product liability and other insurance policies
sufficient in amount to allow it to replace any of its material properties or
assets which might be damaged or destroyed or sufficient to cover liabilities to
which Xxxxxx may reasonably become subject.
3.20 Labor Relations. Except as set forth on Schedule 3.20, (i)
neither Xxxxxx nor any of its Subsidiaries is a party to, nor bound by, any
collective bargaining agreement or any other agreements with a labor union with
respect to the employees of the Xxxxxx Online Business; (ii) to the knowledge of
Xxxxxx or any of its Subsidiaries, there has been no labor union prior to the
date hereof organizing any of the employees of the Xxxxxx Online Business into
one or more collective bargaining units; (iii) neither Xxxxxx nor any of its
Subsidiaries has received notice that any representation petition respecting the
employees of the Xxxxxx Online Business has been filed with the National Labor
Relations Board; (iv) there is not now, and there has not been in the last two
years, any actual or threatened labor dispute, strike, slowdown or work stoppage
which affects or may affect the Xxxxxx Online Business or which may interfere
with its continued operations; (v) neither Xxxxxx nor any of its Subsidiaries
has committed any unfair labor practice as defined in the National Labor
Relations Act, as amended; and (vi) neither Xxxxxx nor any of its Subsidiaries
has received written notice of any investigation, charge or complaint against
Xxxxxx or any of its Subsidiaries pending before the Equal Employment
Opportunity Commission or any other federal or state government agency
- 30 -
or court or other tribunal regarding an unlawful employment practice with
respect to the employees of the Xxxxxx Sub Business.
3.21 Environmental Matters.
(a) Pending or Threatened Claims. Except as set forth in
Schedule 3.21(a), there is no Environmental Claim pending or, to the knowledge
of Xxxxxx or any of its Subsidiaries, threatened against Xxxxxx or any of its
Subsidiaries or, to the knowledge of Xxxxxx or any of its Subsidiaries, pending
or threatened against any Person whose liability for any Environmental Claim
Xxxxxx or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
(b) National Priorities List. Except as set forth in Schedule
3.21(b), to the knowledge of Xxxxxx or any Xxxxxx Subsidiary, no site or
facility now or previously owned or operated by Xxxxxx or any Xxxxxx Subsidiary
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA").
3.22 Disclosure. No representation or warranty of Xxxxxx, X00,
Picasso Media or Xxxxxx Sub contained in this Agreement, or in any of the
schedules and exhibits to the Agreement, or in any certificate delivered
pursuant to Section 5.2(e) hereof, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements herein or therein not misleading.
3.23 Books and Records. All accounting, financial reporting, Tax,
business, marketing, legal, corporate, and other files, documents, instruments,
papers, books, and records (including without limitation financial statements,
budgets, projections, ledgers, journals, deeds, legal documents, title policies,
manuals, minute books, stock certificates and books, stock transfer ledgers,
contracts, franchises, permits, licenses, investor lists, registered
representative lists, reports, computer tapes, discs, and other files, retrieval
programs, operating data or plans, and environmental studies or plans) relating
to the Xxxxxx Online Business that are required to conduct the Xxxxxx Online
Business immediately following the Closing in substantially the same manner as
currently conducted will be transferred to Xxxxxx Sub at or prior to the Closing
Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EVITA
Evita and Bulldog, jointly and severally, represent and warrant to
Xxxxxx, as of the date hereof and as of the Effective Time, as follows:
4.1 Organization. Except as set forth on Schedule 4.1, each of Evita
and Bulldog are corporations duly organized, validly existing and in good
standing under the DGCL. Evita Sub is a limited liability company duly
organized, validly existing and in good standing under the Act. Except as set
forth on Schedule 4.1, each of Evita, Bulldog
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and Evita Sub is duly qualified to do business as a foreign corporation or
limited liability company, as the case may be, and is in good standing in each
jurisdiction where the nature of the property owned or leased by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect on Evita, Bulldog or Evita Sub. Schedule 4.1 sets forth a true and
complete list of all foreign jurisdictions in which each of Evita and Evita Sub
is so qualified or licensed and in good standing.
4.2 No Violation; Consents. Except as set forth on Schedule 4.2,
neither the execution, delivery or performance of this Agreement or any of the
other Transaction Documents to which it is a party by Evita, Bulldog or Evita
Sub, nor the consummation by them of their respective obligations and
transactions contemplated hereby or thereby requires any consent of,
authorization by, exemption from, filing with or notice to any Governmental
Entity or any other Person, other than the filing of the Certificate of Merger.
4.3 Authorization; Enforcement.
(a) Evita and Bulldog have all requisite corporate power and
authority and Evita Sub has all requisite limited liability company power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party and has taken all necessary corporate or limited liability
company action, as the case may be, required for the due authorization,
execution, delivery and performance by it of this Agreement and the other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby.
(b) This Agreement and the other Transaction Documents to which
it is a party have been duly executed and delivered by Evita, Bulldog and Evita
Sub and constitute the valid and binding obligation of Evita, Bulldog and Evita
Sub, enforceable against Evita, Bulldog and Evita Sub, respectively, in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally, and by general
equitable principles.
4.4 No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
conflict with or result in a violation of the certificate of incorporation or
bylaws of Evita or Bulldog or the certificate of formation of Evita Sub or the
Evita Sub Operating Agreement, (b) conflict with or result in the material
breach of the terms, conditions or provisions of or constitute a material
default (or an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, acceleration or
cancellation under, or materially impair Evita or any of its Subsidiaries'
rights or materially alter the rights or obligations of any third party under,
any material Contract to which Evita or any of its Subsidiaries is a party which
would have a Material Adverse Effect on their assets or business, (c) conflict
with or violate any Law applicable in any material respect to Evita or any of
its Subsidiaries or by which any material property or asset of Evita or any of
its
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Subsidiaries is bound or affected, (d) result in the creation of any material
Encumbrance upon any of the assets of Evita or any of its Subsidiaries, (e)
cause any of the assets owned by Evita or any of its Subsidiaries to be
reassessed or revalued by any Tax authority or other Governmental Entity, or (f)
result in the imposition or creation of any Encumbrance upon or with respect to
any of the assets owned or used by Evita or any of its Subsidiaries.
4.5 Financing. Evita has and will have sufficient cash available to
pay, and will pay to Xxxxxx in accordance with this Agreement, the Purchase
Price.
4.6 Compliance with Laws.
(a) The business of Evita and its Subsidiaries is not being nor
has it been conducted in violation of any Law, except for violations that,
either singly or in the aggregate, would not have a Material Adverse Effect on
Evita.
(b) Neither Evita nor any of its Subsidiaries has received any
written notification from any Governmental Entity (i) asserting a violation of
any Law applicable to the conduct of the business of Evita or any of its
Subsidiaries, (ii) threatening to revoke any Permit relating to the business,
assets or properties of Evita or any of its Subsidiaries, or (iii) restricting
or in any way limiting Evita's operations as currently conducted.
(c) Except as set forth on Schedule 4.6, Evita and its
Subsidiaries have such Permits as are necessary to own, lease, license or
operate their respective properties and to conduct their respective businesses
as currently owned and conducted and all such Permits are valid and in full
force and effect, except such Permits that the failure to have or to be in full
force and effect could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Evita.
4.7 Brokers. There is no broker, investment banker, financial
advisor, finder or other Person which has been retained by or is authorized to
act on behalf of Evita or any of its Subsidiaries who might be entitled to any
fee or commission in connection with the execution of this Agreement.
4.8 Evita Financial Statements. Evita has caused to be delivered to
Xxxxxx (i) an audited consolidated balance sheet of Evita and its Subsidiaries
as of December 31, 2000 (the "Evita Balance Sheet"), (ii) audited consolidated
statements of income and retained earnings and cash flows of Evita and its
Subsidiaries for the year ended December 31, 2000, (iii) an unaudited
consolidated balance sheet of Evita and its Subsidiaries as of December 31, 2002
and (iv) unaudited consolidated statements of income and retained earnings and
cash flows of Evita and its Subsidiaries for the twelve months ended December
31, 2002 (collectively, the "Evita Financial Statements"). The Evita Financial
Statements were prepared in conformity with GAAP (except, in the case of the
unaudited interim financials, for the absence of footnotes and year-end audit
adjustments) and fairly present, in all material respects, the financial
position and results of operations of Evita as of the dates, and for the
periods, referred to therein.
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4.9 Title to Property and Assets; Condition and Sufficiency of
Assets. Each of Evita and its Subsidiaries owns the personal property and assets
they each purport to own located in the facilities operated by each of them or
reflected as owned in the Evita Financial Statements. All such personal property
and assets are owned free and clear of all Encumbrances, except Permitted
Encumbrances. With respect to any real property, Evita is not in material
violation of any of its leases.
4.10 Absence of Certain Developments. Since December 31, 2002 and
until the date of this Agreement, there has been no change or development which
has had a Material Adverse Effect on Evita or its Subsidiaries. Since December
31, 2002 and until the date of this Agreement, Evita and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practices and have not (a) sold, leased, transferred or
otherwise disposed of any of their material assets (other than dispositions in
the ordinary course of business consistent with past practices), (b) suffered
any loss, damage or destruction, whether or not covered by insurance, to the
properties or assets used in their respective businesses, (c) made any change in
the accounting methods or practices they follow, whether for general financial
or tax purposes, (d) incurred, created or suffered to exist any Encumbrances,
other than Permitted Encumbrances, (e) made or obligated themselves to make any
capital expenditures in excess of $50,000 individually or in the aggregate or
(f) entered into any agreement to do any of the foregoing.
4.11 No Undisclosed Liabilities. Except as set forth on Schedule
4.11 and in the Evita Financial Statements, (i) at December 31, 2002, neither
Evita nor any of its Subsidiaries had any liability (whether absolute, accrued,
contingent, or otherwise, and whether then due or to become due) nor any loss
contingency, except as reflected in the Evita Financial Statements, which would
be required to be included therein in accordance with GAAP and (ii) since
December 31, 2002, neither Evita nor any of its Subsidiaries has incurred any
liabilities of any kind, character and description, whether accrued, absolute,
secured or unsecured, known or unknown, contingent or otherwise other than (a)
liabilities incurred in the ordinary course of business and (b) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under GAAP to be reflected in the Evita Financial Statements.
4.12 Litigation. Except as set forth on Schedule 4.12, there is no
claim, action, proceeding, lawsuit, inquiry, arbitration or investigation before
or by any court, public board, arbitrator, governmental body, agency or
official, self-regulatory organization or body pending or, to the knowledge of
Evita or any of its Subsidiaries, threatened against or affecting, Evita or any
of its Subsidiaries, or their respective assets or properties or its respective
directors or officers in their capacities as such. Neither Evita nor any of its
Subsidiaries is subject to any outstanding order, ruling, judgment or decree
that would have a Material Adverse Effect on Evita or could prevent or
materially delay the consummation of the transactions contemplated hereby.
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4.13 Taxes.
(a) Except as disclosed on Schedule 4.13, each of Evita and its
Subsidiaries (i) has filed or there has been filed on its behalf, within the
time and in the manner prescribed by Law (taking into account any extensions of
time permitted by Law), all Tax Returns with respect to Taxes of Evita or such
Subsidiary, as the case may be, and all such Tax Returns are true, complete and
correct in all material respects, (ii) has timely paid or there has been paid on
its behalf all Taxes of Evita or such Subsidiary, as the case may be, that are
required to be paid, except with respect to matters contested in good faith and
as to which adequate cash reserves have been provided on the Evita Financial
Statements, (iii) has not waived any statute of limitations with respect to
Taxes of Evita or such Subsidiary, as the case may be, or agreed to any
extension of time within which to file any such Tax Return for any taxable
period, which such Tax Return has not since been filed or to extend the period
for the assessment or collection of any Taxes of Evita or such Subsidiary, as
the case may be, and (iv) has provided adequate accruals in the Evita Financial
Statements for the payment of all Taxes of Evita or such Subsidiary, as the case
may be, not yet due and payable (including deferred income taxes).
(b) Except as disclosed on Schedule 4.13, (i) there are no
Encumbrances for Taxes upon the assets of Evita or any of its Subsidiaries
except for statutory liens for Taxes not yet due, (ii) there are not pending or
threatened in writing any audits, examinations, investigations, or other
proceedings in respect of Taxes or Tax Returns of Evita or any of its
Subsidiaries, (iii) no power of attorney with respect to any Taxes of Evita or
any of its Subsidiaries is currently outstanding, pending or otherwise in effect
with the IRS or any other Governmental Entity and (iv) all Tax deficiencies
which have been claimed, proposed or asserted against Evita or any of its
Subsidiaries have been fully paid or finally settled.
(c) Except as disclosed on Schedule 4.13, neither Evita nor any
of its Subsidiaries is a party to or bound by, or has, any obligation under any
written Tax sharing, allocation, indemnity or similar agreement or arrangement
currently effective under which Evita or such Subsidiary, as the case may be,
would be required to pay income Taxes of any Person other than of Evita or such
Subsidiary, as the case may be.
(d) No election under any of Sections 108, 168, 338, 441, 463,
472, 1017, 1033, or 4977 of the Code (or any predecessor provisions) has been
made or filed by or with respect to Evita or any of its Subsidiaries. No consent
to the application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to Evita or any of its
Subsidiaries or any of its assets. None of the assets of Evita or any of its
Subsidiaries is an asset or property that is or will be required to be treated
as being: (i) owned by any Person (other than Evita or any of its Subsidiaries)
pursuant to the provisions of Section 168(f) (8) of the Internal Revenue Code of
1954, as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986; or (ii) tax-exempt use property within the meaning of
Section 168(h)(1) of the Code.
(e) Neither Evita nor any of its Subsidiaries has agreed to nor
is it required to make any adjustment pursuant to Section 481(a) of the Code (or
any predecessor
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provision) by reason of any change in any accounting method of Evita or any of
its Subsidiaries, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of Evita. The IRS
has not proposed any such adjustment or change in accounting method.
(f) Neither Evita nor any of its Subsidiaries is in violation
(or with notice or lapse of time or both, would be in violation) of any
applicable Law relating to the payment or withholding of Taxes. Evita and its
Subsidiaries have duly and timely withheld from employee salaries, wages, and
other compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable Laws.
(g) Neither Evita nor any of its Subsidiaries has filed with the
IRS any request for a ruling with respect to Evita and its Subsidiaries or any
of its assets, services or products.
(h) There is no claim pending for a refund or adjustment of any
Taxes paid by Evita and its Subsidiaries.
(i) The parties agree that for U.S. federal income tax purposes,
the Merger shall be treated as a taxable sale of the assets of Xxxxxx Sub by
Xxxxxx, X00 and Picasso Media. Neither party will take any inconsistent
reporting position on any Tax Return.
4.14 Insurance. Evita has in force fire, casualty, product liability
and other insurance policies sufficient in amount to allow it to replace any of
its material properties or assets which might be damaged or destroyed or
sufficient to materially cover liabilities to which Evita may reasonably become
subject.
4.15 Environmental Matters.
(a) Pending or Threatened Claims. Except as set forth in
Schedule 4.15(a), there is no Environmental Claim pending or, to the knowledge
of Evita or any of its Subsidiaries, threatened against Evita or any of its
Subsidiaries or, to the knowledge of Evita or any of its Subsidiaries, pending
or threatened against any Person whose liability for any Environmental Claim
Evita or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
(b) National Priorities List. Except as set forth in Schedule
4.15(b), to the knowledge of Evita or any Evita Subsidiary, no site or facility
now or previously owned or operated by Evita or any Evita Subsidiary is listed
or proposed for listing on the National Priorities List promulgated pursuant to
CERCLA.
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ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions of Millie's and Xxxxxx Sub's Obligations. The
obligations of Xxxxxx and Xxxxxx Sub are subject to the fulfillment prior to or
on the Effective Time of all of the following conditions, any of which may be
waived in whole or in part by Xxxxxx:
(a) Representations and Warranties. The representations and
warranties of Evita and Bulldog contained in this Agreement and the other
Transaction Documents to which it is a party shall be true and correct in all
material respects (or in all respects for any representation and warranty
qualified as to materiality or Material Adverse Effect) on and as of the
Effective Time, as if made at the Effective Time, except to the extent that any
such representation or warranty is made as of a certain date, in which case it
shall be true and correct in all material respects as of such certain date.
(b) Covenants. Evita and Evita Sub shall have performed in all
material respects all of their respective covenants and obligations hereunder
required to be performed by it at or prior to the Effective Time.
(c) Stockholder Approval. If required by applicable Law
(including the DGCL), this Agreement shall have been adopted and the Merger
shall have been duly approved by the holders of Xxxxxx Common Shares
constituting the Xxxxxx Requisite Vote.
(d) Injunctions. No proceeding brought by any administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking to prevent the consummation of the Merger shall be
pending.
(e) Certificate of Officer. Each of Evita, Bulldog and Evita Sub
shall have delivered to Xxxxxx and Xxxxxx Sub a certificate dated the Closing
Date, executed by an appropriate officer, certifying the satisfaction of the
conditions specified in paragraphs (a) and (b) of this Section 5.1.
(f) Supporting Documents. Xxxxxx and Xxxxxx Sub shall have
received the following:
(i) Copies of resolutions of the board of directors of
each of Evita and Bulldog and resolutions of the sole member of Evita Sub
certified by the Secretary or other authorized officer of Evita, Bulldog and
Evita Sub, as the case may be, authorizing and approving, the execution,
delivery and performance of the Agreement, the other Transaction Documents to
which it is a party and all other documents and instruments to be delivered
pursuant hereto and thereto; and
(ii) A certificate of incumbency executed by the
Secretary or other authorized officer of each of Evita, Bulldog and Evita Sub
(A) certifying the names, titles and signatures of the officers authorized to
execute the Agreement and the other Transaction Documents to which it is a party
and (B) further certifying that the certificate of incorporation and the bylaws
of Evita and Bulldog and the certificate of
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formation and Evita Sub Operating Agreement delivered to Xxxxxx at the time of
the execution of this Agreement have been validly adopted and have not been
amended or modified.
(g) Governmental Approvals. Evita, Evita Sub, Bulldog, Xxxxxx,
Xxxxxx Sub and their respective subsidiaries shall have timely obtained from
each Governmental Entity all approvals, waivers and consents, if any, necessary
for consummation of or in connection with the Merger and the several
transactions contemplated hereby, including, without limitation, such approvals,
waivers and consents as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(h) Consents and Waivers. Each of Evita, Bulldog and Evita Sub
shall have obtained all consents or waivers, necessary to execute and perform
its obligations under this Agreement and the other Transaction Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby. All corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the other Transaction Documents to which
it is a party and other agreements and instruments executed and delivered by
Evita, Bulldog and Evita Sub in connection herewith shall have been made or
taken.
(i) Legal Opinion. Xxxxxx and Xxxxxx Sub shall have received the
opinion of Xxxxxxx & Xxxxxx, LLP, counsel to Evita and Evita Sub, in
substantially the form of Exhibit G.
(j) Fairness Opinion. Xxxxxx shall have received the opinion
(the "Fairness Opinion") of Xxxxx & Company Incorporated, to the effect that, as
of the date of such opinion, the consideration to be received by the holders of
Xxxxxx Sub Units pursuant to this Agreement is fair to the members of Xxxxxx Sub
and the stockholders of Xxxxxx from a financial point of view, which fairness
opinion shall otherwise be satisfactory to the board of directors of Xxxxxx in
the exercise of its reasonable business judgment.
(k) Security Agreement. Evita and Xxxxxx Sub and Xxxxxx shall
have entered into the Security Agreement and all exhibits thereto requiring
execution and delivery by such parties.
(l) Financing Statement. Evita shall have executed a UCC-1
Financing Statement, as "debtor," substantially in the form of Exhibit H hereto
(the "Financing Statement").
(m) Evita Board of Directors. At the Effective Time, the Xxxxxx
Designee, who initially shall be Xxxxxxx Xxxxxxxxx, shall be appointed to
Evita's board of directors. Evita and the Xxxxxx Designee shall have entered
into Evita's standard form director's indemnification agreement providing for
indemnification of such Evita Designee to the fullest extent permitted by Law.
- 38 -
(n) Stockholders Agreement. Bulldog and the stockholders of
Bulldog named on the signature pages of the Stockholders Agreement shall have
executed and delivered the Stockholders Agreement.
(o) Transition Services Agreement. Evita, Evita Sub and Xxxxxx
shall have executed and delivered the Transition Services Agreement.
5.2 Conditions of Evita's Obligations. The obligations of Evita,
Bulldog and Evita Sub are subject to the fulfillment prior to or on the
Effective Time of all of the following conditions, any of which may be waived in
whole or in part by Evita:
(a) Representations and Warranties. The representations and
warranties of Xxxxxx, X00 and Picasso Media contained in this Agreement and the
other Transaction Documents to which it is a party shall be true and correct in
all material respects (or in all respects for any representation and warranty
qualified as to materiality or material adverse effect) on and as of the
Effective Time, as if made at the Effective Time, except to the extent that any
such representation or warranty is made as of a certain date, in which case it
shall be true and correct in all material respects as of such certain date.
(b) Covenants. Xxxxxx, X00, Picasso Media and Xxxxxx Sub shall
have performed in all material respects all of their respective covenants and
obligations hereunder required to be performed by them at or prior to the
Effective Time.
(c) Stockholder and Member Approval. This Agreement shall have
been adopted and the Merger shall have been duly approved by the holders of all
of the issued and outstanding capital stock of L90, Picasso Media and the
holders of the Xxxxxx Sub Units, and if required by applicable Law (including
the DGCL), this Agreement shall have been adopted and the Merger shall have been
duly approved by the holders of Xxxxxx Common Shares constituting the Xxxxxx
Requisite Vote.
(d) Injunctions. No proceeding brought by any administrative
agency or commission of other governmental authority or instrumentality,
domestic or foreign, seeking to prevent the consummation of the Merger shall be
pending.
(e) Certificate of Officer. Each of Xxxxxx, X00, Picasso Media
and Xxxxxx Sub shall have delivered to Evita a certificate dated the Closing
Date, executed by an appropriate officer, certifying the satisfaction of the
conditions specified in paragraphs (a) and (b) of this Section 5.2.
(f) Supporting Documents. Evita shall have received the
following:
(i) Copies of resolutions of the boards of directors of
Xxxxxx, X00 and Picasso Media and resolutions of the managers of Xxxxxx Sub
certified by the Secretary or other authorized officer or manager of Xxxxxx,
X00, Picasso Media or Xxxxxx Sub, as the case may be, authorizing and approving,
the execution, delivery and performance of the Agreement, the other Transaction
Documents to which it is a party and all other documents and instruments to be
delivered pursuant hereto and thereto; and
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(ii) A certificate of incumbency executed by the
Secretary or other authorized officer or manager of Xxxxxx and Xxxxxx Sub (A)
certifying the names, titles and signatures of the officers authorized to
execute the Agreement and the other Transaction Documents to which it is a party
and (B) further certifying that the certificate of incorporation and bylaws of
Xxxxxx, X00 and Picasso and the certificate of formation of Xxxxxx Sub and the
Xxxxxx Sub Operating Agreement delivered to Evita at the time of the execution
of this Agreement have been validly adopted and have not been amended or
modified.
(g) Governmental Approvals. Evita, Bulldog, Evita Sub, Xxxxxx,
Xxxxxx Sub and their respective subsidiaries shall have timely obtained from
each Governmental Entity all approvals, waivers and consents, if any, necessary
for consummation of or in connection with the Merger and the several
transactions contemplated hereby, including, without limitation, such approvals,
waivers and consents as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(h) Legal Opinion. Evita shall have received the opinion of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel to Xxxxxx, X00, Picasso Media and
Xxxxxx Sub, in substantially the form of Exhibit I.
(i) Consents and Waivers. Each of Xxxxxx and Xxxxxx Sub shall
have obtained all consents or waivers necessary to execute and perform its
obligations under this Agreement and the other Transaction Documents to which it
is a party and to carry out the transactions contemplated hereby and thereby.
All corporate and other action and governmental filings necessary to effectuate
the terms of this Agreement, the other Transaction Documents to which it is a
party and other agreements and instruments executed and delivered by Xxxxxx and
Xxxxxx Sub in connection herewith shall have been made or taken.
(j) Fairness Opinion. Xxxxxx shall have received the Fairness
Opinion.
(k) Conversion of Ad Technology.
(i) Providers of Web site advertising inventory to the
Xxxxxx Online Business representing at least ninety two and one-half percent
(92.5%) of the total impressions (expressly excluding email deliveries) (the
"Total Daily Impressions") served by a third party on behalf of Xxxxxx and its
Affiliates (but expressly excluding impressions served by third parties not
acting on behalf of Xxxxxx or its Affiliates, such as impressions served under
Millie's One-to-One, MaxConnect or outsource Contracts ("MaxConnect Contracts"))
on the Business Day immediately preceding the Effective Time shall have been
converted to, or shall be capable of having advertisements served by, Evita's
advertisement serving system or third party advertisement serving system in a
manner reasonably acceptable to Evita that does not require the use of
DoubleClick DART for Publishers or DART for Advertisers technology (any such
converted Web site advertising Inventory, a "Converted Site"); provided,
however, that the Total Daily Impressions shall not be less than the average
daily impressions (expressly excluding email deliveries) (the "90 Day Daily
Average")
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served by third parties on behalf of Xxxxxx and its Affiliates (but expressly
excluding impressions served by a third party with respect to MaxConnect
Contracts) during the ninety (90) days immediately preceding the Effective Time.
For purposes of calculating the number of Total Daily Impressions on the
Business Day immediately preceding the Effective Date pursuant to this Section
5.2(k), the number of impressions served with respect to any Web site
advertising inventory subject to a sales representation Contract entered into
between Xxxxxx or Xxxxxx Sub and the provider of such inventory after the date
of this Agreement shall be deemed to equal the lower of the actual number of
impressions served under such sales representation Contract or one and one-half
percent (1.5%) of the 90 Day Daily Average.
(ii) Immediately prior to the Effective Time, the value
of signed ad sales insertion orders (other than email ad sales) that are
contracted to run on or after the Effective Time on a site specific basis on any
provider of Web site advertising inventory to the Xxxxxx Online Business under a
sales representation Contract with Xxxxxx or Xxxxxx Sub (other than with respect
to Converted Sites and MaxConnect Contracts), shall not constitute more than two
percent (2%) of the aggregate value of signed ad sales insertion orders (other
than email ad sales) that are contracted to run on or after the Effective Time
on all providers of Web site advertising inventory to the Xxxxxx Online Business
under a sales representation Contract with Xxxxxx or Xxxxxx Sub (other than
MaxConnect Contracts).
(iii) Immediately prior to the Effective Time, with
respect to signed ad sales insertion orders that are contracted to run on or
after the Effective Time on a run-of-category basis, the value of such insertion
orders relating to the ad sales that would reasonably be deemed to run on any
provider of Web site advertising inventory to the Xxxxxx Online Business under a
sales representation Contract with Xxxxxx or Xxxxxx Sub (other than with respect
to Converted Sites and MaxConnect Contracts) based on anticipated volume on a
run-of-category basis, shall not constitute more than two and one-half percent
(2.5%) of the aggregate value of signed ad sales insertion orders (other than
email ad sales) that are contracted to run on or after the Effective Time on all
providers of Web site advertising inventory to the Xxxxxx Business under a sales
representation Contract with Xxxxxx or Xxxxxx Sub (other than MaxConnect
Contracts).
(l) Continued Employment. At least seventy-five percent (75%) of
the employees employed by Xxxxxx and its Affiliates on the date hereof in
connection with the Xxxxxx Online Business shall be so employed; provided,
however, that such calculation shall not include employees terminated by Xxxxxx
or any Affiliate of Xxxxxx for Cause.
(m) Transition Services Agreement. Evita, Evita Sub and Xxxxxx
shall have executed and delivered the Transition Services Agreement.
(n) Minimum Net Working Capital. As of the Effective Time,
Xxxxxx Sub's Preliminary Net Working Capital Amount, as calculated in accordance
with Section 2.10 hereof, shall be no less than $1,800,000.
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ARTICLE IV
COVENANTS OF XXXXXX, L90, PICASSO MEDIA AND XXXXXX SUB
6.1 Interim Covenants. From the date of this Agreement until the
earlier to occur of the Effective Time or the termination of this Agreement in
accordance with its terms, except to the extent expressly permitted by this
Agreement or otherwise consented to by an instrument in writing signed by Evita,
Xxxxxx, X00, Picasso Media and Xxxxxx Xxx, Xxxxxx, X00, Picasso Media and Xxxxxx
Sub shall operate the Xxxxxx Online Business as it is presently being conducted
and shall notify Evita of the amendment or entering of any Contract relating to
the Xxxxxx Online Business and involves expenditure or receipts in excess of
$50,000 on terms or conditions less favorable in any material respect than those
in effect with such party on the date hereof except in the ordinary course of
business. Furthermore, without limiting the generality of the foregoing, Xxxxxx
Sub shall not, without the prior written consent of Evita:
(a) Adopt or propose any change in its certificate of formation
or the Xxxxxx Sub Operating Agreement (other than an amendment to reflect the
issuance of an aggregate of 990 Xxxxxx Sub Units to Picasso Media and L90 upon
consummation of the transactions contemplated by the Assignment and Assumption
Agreement);
(b) Merge or consolidate with any other entity or acquire all or
substantially all of the assets of any other entity, other than in connection
with the transactions contemplated by the Assignment and Assumption Agreement;
(c) Other than as described in Subsection 6.1(a) above, issue or
sell any Xxxxxx Sub Units, bonds, or other securities of which Xxxxxx Sub is the
issuer or grant, issue or change any stock or unit options, warrants or other
rights to purchase securities of Xxxxxx Sub;
(d) Amend any term of any outstanding securities of Xxxxxx Sub;
(e) Incur any bank indebtedness or borrowings, whether or not in
the ordinary course of its business, or issue any commercial paper;
(f) Split, combine or reclassify any of its membership interests
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for its membership interests;
(g) Discontinue making payments to third parties in the ordinary
course of business and in accordance with past practices;
(h) *****
***** Material is confidential and has xxxx omitted and filed separately with
the Securities and Exchange Commission.
- 42 -
(i) ***** or
(j) Agree to do any of the foregoing.
6.2 Notification of Certain Matters. From the date hereof through
the Effective Time, Xxxxxx shall promptly notify Evita of the occurrence or
non-occurrence of any fact or event which has caused or could reasonably likely
cause (x) any representation or warranty made by it in this Agreement or any
other Transaction Document to which it is a party to be untrue or inaccurate in
any material respect or (y) any covenant, condition or agreement under this
Agreement not to be complied with or satisfied by it or Xxxxxx Sub in any
material respect; provided, however, that no such notification shall modify the
representations or warranties of any party or the conditions to the obligations
of any party hereunder. From the date hereof through the Effective Time, Xxxxxx
agrees, to the extent possible, to provide Evita with reasonable advance notice
of any termination by Xxxxxx of the employment of any employee of the Xxxxxx
Online Business and prompt notice of any resignation or the tendering of notice
of resignation by any employee of the Xxxxxx Online Business.
6.3 *****
***** Material is confidential and has xxxx omitted and filed separately with
the Securities and Exchange Commission.
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*****
6.4 Access to Information and Employees. Upon reasonable notice and
subject to applicable laws relating to the exchange of information, Xxxxxx
shall, and shall cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of Evita, during
normal business hours and upon prior notice during the period prior to the
Effective Time, reasonable access to all its properties, books, contracts,
commitments and records, and to its officers, employees, accountants, counsel
and other representatives and, during such period, Xxxxxx shall, and shall cause
its Subsidiaries to, make available to Evita all information concerning the
Xxxxxx Online Business as Evita may reasonably request, including without
limitation, if requested, reasonable bi-weekly sales meetings with Xxxx Xxxx
and/or Xxxxx Xxxxxx to review sales information and issues related to the Xxxxxx
Online Business and, if requested, reasonable bi-weekly finance meetings with
Xxxx Xxxxxxxx and/or Xxxxxxx Xxxxxx to discuss finance information and issues
related to the Xxxxxx Online Business. Neither Xxxxxx nor any of its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the work product privilege of the entity in possession or
control of such information or contravene any Law, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
6.5 Employees. Neither Xxxxxx, X00, Picasso Media nor Xxxxxx Sub
shall terminate (other than for cause) the employment of, or revise in any
material respect the job responsibilities or other terms of employment of Xxxxx
Xxxxxx or Xxxx Xxxxxxxxx without the prior written consent of Evita.
6.6 Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement (including, without limitation, the inclusion of links on the
Xxxxxxxxxxxx.xxx domain directing traffic for the Xxxxxx Online Business to
Evita Sub) or to vest the Surviving LLC with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the parties to
the Merger, the proper officers and directors of each party to this
***** Material is confidential and has xxxx omitted and filed separately with
the Securities and Exchange Commission.
- 44 -
Agreement and their respective subsidiaries shall take all such necessary action
as may be reasonably requested by, and at the sole expense of, Evita.
6.7 No Solicitation.
(a) Xxxxxx and its Subsidiaries shall immediately cease, and
shall cause their respective officers, directors, employees, investment bankers,
attorneys, accountants and other representatives to cease, any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as defined herein). From the date hereof until the Effective Time or
the termination of this Agreement, Xxxxxx and its Subsidiaries shall, and shall
use reasonable efforts to cause its officers, directors, employees, investment
bankers, attorneys, accountants and other representatives not to, directly or
indirectly, (i) solicit or knowingly encourage the initiation of (including by
way of furnishing information that has not been previously publicly
disseminated) any inquiries or proposals that constitute, or may reasonably be
expected to lead to, any Takeover Proposal, or (ii) participate in any
discussions regarding, or furnish to any person any non-public information with
respect to, or assist or facilitate any Takeover Proposal; provided, however,
that if, prior to the Effective Time and following the receipt of a Takeover
Proposal, the board of directors of Xxxxxx or a committee thereof determines in
good faith, after considering applicable provisions of state law and after
consultation with outside counsel, that (i) a failure to do so would constitute
a breach by it of its fiduciary duties to its stockholders under applicable law
and (ii) the Takeover Proposal is or is reasonably likely to result in a
Superior Proposal (as defined herein), Xxxxxx may, in response to such Takeover
Proposal and subject to compliance with Section 6.7(b): (x) furnish nonpublic
information with respect to Xxxxxx and its Subsidiaries to the party making such
Takeover Proposal pursuant to a customary confidentiality agreement (but no less
favorable to Xxxxxx than the confidentiality agreement entered into with Evita)
provided that (i) such confidentiality agreement must include a provision
prohibiting solicitation of key employees of Xxxxxx or its Subsidiaries, such
provision lasting until the earlier of (A) at least one year or (B) the
consummation of a transaction, and may not include any provision calling for an
exclusive right to negotiate with Xxxxxx and (ii) Xxxxxx advises Evita of all
such nonpublic information delivered to such person promptly following its
delivery to the requesting party, and (y) participate in negotiations with such
party regarding such Takeover Proposal; and (z) prior to the Effective Date,
withdraw or modify its recommendation referred to in Section 3.8(c) following
receipt of an unsolicited, bona fide Takeover Proposal from a third party which
is a Superior Proposal or enter into an agreement with such third party and
terminate this Agreement pursuant to Section 8.1(e) hereof.
(b) In addition to the obligations of Xxxxxx set forth in
paragraph (a) of this Section 6.7, and subject to the terms of any
confidentiality agreement signed prior to the date hereof, Xxxxxx shall promptly
advise Evita orally and in writing, and in no event later than 48 hours after
receipt, if any proposal, offer, inquiry, or other contact is received by, any
information is requested from, or any discussions or negotiations are sought to
be initiated or continued with, Xxxxxx in respect of any Takeover Proposal, and
shall, in any such notice to Evita, indicate the identity of the person making
such proposal, offer, inquiry, or other contact and the terms and conditions of
any proposals or offers or the
- 45 -
nature of any inquiries or contacts, and thereafter shall keep Evita informed,
on a reasonably current basis, of all material developments affecting the status
and terms of any such proposals or offers or the status of any such discussions
or negotiations. Xxxxxx shall not release any person from, or waive any material
provision of, any confidentiality or standstill agreement entered into as of the
date of this Agreement.
(c) For purposes of this Agreement,
(i) "Takeover Proposal" means any inquiry, proposal or
offer from any person (other than Evita and its Subsidiaries, affiliates, and
representatives) relating to (A) any direct or indirect acquisition or purchase
of assets of Xxxxxx and its Subsidiaries equal to 15% or more of Millie's
consolidated assets or to which 15% or more of Millie's and its Subsidiaries'
revenues or earnings on a consolidated basis are attributable or (B) any direct
or indirect acquisition of 15% or more of any class of equity securities of
Xxxxxx or any of its Subsidiaries, (C) any tender offer or exchange offer that
if consummated would result in any person beneficially owning 15% or more of any
class of equity securities of Xxxxxx or any of its Subsidiaries, or (D) any
merger, consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Xxxxxx or any of its
Subsidiaries or any assets of Xxxxxx and its Subsidiaries equal to 15% or more
of Millie's consolidated assets or to which 15% or more of Millie's revenues or
earnings on a consolidated basis are attributable, other than the transactions
contemplated by this Agreement. Notwithstanding the foregoing, any sale by
Xxxxxx or any of its Subsidiaries of any business other than the Xxxxxx Online
Business shall not be considered a "Takeover Proposal" for purposes of this
Agreement.
(ii) "Superior Proposal" means a Takeover Proposal, for
consideration consisting of cash and/or securities, made by a third party on
terms and conditions which the board of directors of Xxxxxx or a committee
thereof determines in its good faith and reasonable judgment after consultation
with its financial advisor to be more favorable (other than in immaterial
respects) from a financial point of view than the Merger and the transactions
contemplated by this Agreement, taking into account at the time of determination
any changes to the terms of this Agreement that as of that time had been
proposed by Evita and the ability of the Person making such Takeover Proposal to
consummate such Takeover Proposal (based upon, among other things, the
availability of financing and the expectation of obtaining required regulatory
approvals).
(d) Xxxxxx and its Subsidiaries shall use their reasonable
efforts to ensure that the officers, directors and employees of Xxxxxx and of
each Subsidiary and any investment banker or other advisor or representative
retained by Xxxxxx or any Subsidiary are aware of the restrictions described in
this Section 6.7.
(e) Nothing in this Section 6.7 shall (i) permit Xxxxxx to
terminate this Agreement or (ii) permit Xxxxxx or any Subsidiary of Xxxxxx to
enter into any written agreement with respect to a Takeover Proposal during the
term of this Agreement (it being agreed that during the term of this Agreement
Xxxxxx shall not enter into any written agreement with any person that provides
for, or in any way facilitates, a Takeover
- 46 -
Proposal, other than a confidentiality agreement in the form referred to above),
it being understood that Section 8.1(e) sets forth the sole right of Xxxxxx to
terminate this Agreement in the circumstances specified in Section 6.7(a).
6.8 Customer Payments. Xxxxxx agrees that for a period of six (6)
months following the Effective Time, it shall promptly forward and remit to
Evita any payment received by Xxxxxx or any of its Affiliates with respect to
any of the accounts receivable of the Xxxxxx Online Business acquired by Xxxxxx
Sub pursuant to the Assignment and Assumption Agreement.
ARTICLE VII
COVENANTS OF EVITA AND EVITA SUB
7.1 Interim Covenants. From the date of this Agreement until the
earlier to occur of the Effective Time or the termination of this Agreement in
accordance with its terms, except to the extent expressly permitted by this
Agreement or otherwise consented to by an instrument in writing signed by
Xxxxxx, Evita Sub shall not, without the prior written consent of Xxxxxx, (such
consent not to be unreasonably withheld or delayed) merge or consolidate with
any other entity or agree to do any of the foregoing.
7.2 Notification of Certain Matters. From the date hereof through
the Effective Time, Evita shall promptly notify Xxxxxx of the occurrence or
non-occurrence of any fact or event which has caused or could reasonably likely
cause (x) any representation or warranty made by it or any of its Subsidiaries
in this Agreement or any other Transaction Document to which it is a party to be
untrue or inaccurate in any material respect or (y) any covenant, condition or
agreement under this Agreement not to be complied with or satisfied by it,
Bulldog or Evita Sub in any material respect; provided, however, that no such
notification shall modify the representations or warranties of any party or the
conditions to the obligations of any party hereunder.
7.3 Affirmative Covenants. Evita and Bulldog agree that unless
Xxxxxx otherwise consents or approves in writing (which consent or approval
shall not be unreasonably withheld or delayed), so long as the Deferred Cash or,
if payable, the Contingent Cash remains unpaid, Evita (and each of its
Subsidiaries unless the context otherwise requires) will do the following:
(a) Maintain Corporate Rights and Facilities. Maintain and
preserve its corporate existence and all rights, franchises and other authority
adequate for the conduct of its business; maintain its properties, equipment and
facilities in good order and repair; and conduct its business in an orderly
manner without voluntary interruption;
(b) Maintain Insurance. Maintain in full force and effect a
policy or policies of insurance issued by insurers of recognized responsibility,
insuring it and its properties and business against such losses and risks, and
in such amounts, as are customary in the case of corporations of established
reputation engaged in the same or a similar business and similarly situated;
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(c) Pay Taxes and Other Liabilities. Pay and discharge, before
the same become delinquent and before penalties accrue thereon, all Taxes,
assessments and governmental charges upon or against it or any of its
properties, and all its other material liabilities at any time existing, except
to the extent and so long as (i) the same are being contested in good faith and
by appropriate proceedings in such manner as not to cause any materially adverse
effect upon its financial condition or the loss of any right of redemption from
any sale thereunder, and (ii) it shall set aside on its books reserves
(segregated to the extent required by GAAP) deemed by it adequate with respect
thereto;
(d) Records and Reports.
(i) Accurately and fairly maintain its books of account
in accordance with GAAP; employ a firm of independent certified public
accountants, which firm is either one of the four largest national accounting
firms, to make annual audits of its accounts in accordance with generally
accepted auditing standards; permit Xxxxxx and its representatives to have
access to and to examine its properties, and books and records (and to copy and
make extracts therefrom) at such reasonable times and intervals as Xxxxxx may
request and to discuss its affairs, finances and accounts with its officers and
auditors, all to such reasonable extent and at such reasonable times and
intervals as Xxxxxx may request, provided that such access shall not be granted
more than once in any six (6) month period without Evita's prior written
consent, which consent may be withheld in Evita's sole discretion;
(ii) As soon as practicable, and in any event within 60
days after the end of each calendar quarter (other than the fourth calendar
quarter in any calendar year), prepare and provide to Xxxxxx the consolidated
and consolidating balance sheet of Evita and its Subsidiaries as at the end of
such calendar quarter and the consolidated and consolidating statement of
operations for such calendar quarter, and its statement of cash flows for the
portion of the calendar year ended with such calendar quarter, all in reasonable
detail. Such financial statements shall be certified by a Chief Financial
Officer of Evita as fairly presenting the financial condition, results of
operations and cash flows of Evita and its Subsidiaries in accordance with GAAP
(other than footnote disclosures), consistently applied, as at such date and for
such periods, subject only to normal year end accruals and audit adjustments;
(iii) As soon as practicable, and in any event within
60 days after the end of each calendar year, prepare and provide to Xxxxxx the
consolidated and consolidating balance sheet of Evita and its Subsidiaries as at
the end of such calendar year and the consolidated and consolidating statement
of operations for such calendar year, and its statement of cash flows for the
portion of the calendar year then ended, all in reasonable detail. Such
financial statements shall be certified by a Chief Financial Officer of Evita as
fairly presenting the financial condition, results of operations and cash flows
of Evita and its Subsidiaries in accordance with GAAP (other than footnote
disclosures), consistently applied, as at such date and for such periods,
subject only to normal year end accruals and audit adjustments;
- 48 -
(iv) Within five (5) days of receiving the audit report
described below in this subsection (iv) (and in no event later than 8 calendar
months after the end of each calendar year), prepare and provide to Xxxxxx the
consolidated and consolidating balance sheet of Evita and its Subsidiaries as at
the end of such calendar year and the consolidated and consolidating statements
of operations, stockholders' equity and cash flows, in each case of Evita and
its Subsidiaries for such calendar year, in each case as at the end of and for
the calendar year, all in reasonable detail. Such financial statements shall be
prepared in accordance with GAAP, consistently applied, and such consolidated
balance sheet and consolidated statements shall be accompanied by a report of
one of the four largest public accounting firms in the United States of America
or other independent public accountants of recognized standing selected by Evita
and reasonably satisfactory to the Xxxxxx, which report shall be prepared in
accordance with generally accepted auditing standards as at such date, and shall
not be subject to any qualifications or exceptions as to the scope of the audit
nor to any other qualification or exception determined by Xxxxxx in its good
faith business judgment to be adverse to the interests of Xxxxxx;
(v) As soon as practicable, and in any event (x) with
respect to the calendar year 2003, within 45 days following the Closing Date and
(y) with respect to any calendar year after 2003, within 45 days after the
commencement of each calendar year, prepare and provide to Xxxxxx a revenue
projection by calendar quarter for that calendar year, and prepare and provide
to Xxxxxx projected consolidated balance sheets, statements of operations and
statements of cash flow, all in reasonable detail;
(e) Contingent Cash Reporting. In order to permit Xxxxxx to
monitor the conditions relating to the payment of the Contingent Cash, Evita
shall, at its expense, within thirty (30) days of the end of each calendar month
after the Closing, deliver to Xxxxxx a certificate of its Chief Financial
Officer setting forth in reasonable detail the Gross Xxxxxxxx for such calendar
month. In addition, promptly upon learning of the occurrence of an Event of
Default or a condition or event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default, a certificate signed by the
chief executive officer or chief financial officer of Evita describing such
Event of Default or condition or event and stating what steps are being taken to
remedy or cure the same;
(f) Notice of Litigation and Disputes. Promptly notify Xxxxxx of
each legal action, suit, arbitration or other administrative or governmental
investigation or proceeding (whether federal, state, local or foreign)
instituted or threatened against Evita which could materially and adversely
affect its condition (financial or otherwise), properties, assets, liabilities,
business, operations or prospects, or of any occurrence or dispute which
involves a reasonable likelihood of any such action, suit, arbitration,
investigation or proceeding being instituted;
(g) Conduct of Business. Conduct its business in accordance with
all applicable provisions of federal, state, local and foreign law; and
- 49 -
(h) Compliance With Certificate of Incorporation and Bylaws.
Perform and observe all requirements of Evita's Bylaws and Certificate of
Incorporation.
7.4 Negative Covenants. Evita agrees that unless Xxxxxx otherwise
consents or approves in writing (which consent or approval shall not be
unreasonably withheld or delayed), so long as the Deferred Cash or, if payable,
the Contingent Cash remains unpaid, Evita (and each of its Subsidiaries unless
the context otherwise requires) will not do any of the following:
(a) Indebtedness and Liens. Assume, create, incur or suffer to
exist any indebtedness that is pari passu with, prior or senior in right or time
of payment to the Deferred Cash or the Contingent Cash, excluding indebtedness
assumed, created, incurred or suffered to exist in connection with the purchase
or financing of any capital equipment in an aggregate amount not to exceed
$10,000,000;
(b) Restrictive Agreements. Enter into or become a party to any
agreement or instrument which by its terms would violate or be in conflict with
or restrict Evita's performance of, its obligations under this Agreement;
(c) Restricted Payments. Declare, set aside or pay any dividend
on any class of capital stock of Evita or purchase or redeem any shares of any
class of capital stock of Evita;
(d) Relocate Offices. Relocate any of Evita's sales offices
located in Kings County, New York as of the Closing Date to a location outside
of Kings County if such re-location would adversely and materially affect
Evita's ability to generate Gross Xxxxxxxx; or
(e) Agreements. Enter into any contract or agreement to do any
of the actions set forth in subsections (a) through (d).
7.5 *****
***** Material is confidential and has xxxx omitted and filed separately with
the Securities and Exchange Commission.
- 50 -
*****
ARTICLE VIII
TERMINATION
8.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual written agreement of the parties; or
(b) by Evita, on the one hand, or Xxxxxx, on the other hand, if
the Closing shall not have occurred on or before August 31, 2003 (the
"Expiration Date"); provided that the right to terminate this Agreement under
this Section 8.1(b) shall not be available to a party whose material
misrepresentation, material breach of warranty or failure to fulfill any
material obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date; or
(c) by Evita, on the one hand, or Xxxxxx, on the other hand, if
there is or has been a material breach, failure to fulfill or default on the
part of the other party or any of its Subsidiaries of any of the representations
and warranties contained herein or in the due and timely performance and
satisfaction of any of the covenants, agreements or conditions contained herein,
and the curing of such default shall not have been made or shall not reasonably
be expected to occur before the Expiration Date; or
(d) by Evita, on the one hand, or Xxxxxx, on the other hand, if
there shall be a final nonappealable order of a Governmental Entity in effect
preventing the consummation of the transactions contemplated by this Agreement;
or
(e) by Xxxxxx if it enters into a definitive agreement providing
for a Takeover Proposal entered into in accordance with Section 6.7; provided,
that prior thereto or simultaneously therewith Xxxxxx has paid or caused to be
paid the Termination Fee to Evita in accordance with Section 8.2 and such
termination of this Agreement by Xxxxxx shall not take effect unless and until
it shall have paid Evita the Termination Fee; provided, further, that Xxxxxx has
given Evita at least three (3) business days following Evita's receipt of
written notice advising Evita that the board of directors of Xxxxxx is prepared
to terminate this Agreement pursuant to this Section 8.1(e); or
(f) by Evita if (i) the board of directors of Xxxxxx or any
committee thereof shall have withdrawn or modified, in a manner materially
adverse to Evita, its approval or
***** Material is confidential and has xxxx omitted and filed separately with
the Securities and Exchange Commission.
- 51 -
recommendation of the Merger and the transactions contemplated by this Agreement
or (ii) Xxxxxx shall have entered into any agreement respecting any Takeover
Proposal other than a confidentiality agreement permitted by Section 6.7(a)
hereof or the board of directors of Xxxxxx shall have recommended to the
stockholders of Xxxxxx a Takeover Proposal.
8.2 Effect of Termination. If this Agreement is terminated as
permitted by Sections 8.1(a) or (d), such termination shall be without liability
of any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement. If this
Agreement is terminated as permitted by Sections 8.1(b) or (c), such termination
shall be without prejudice to any rights that the terminating party or parties
may have against the breaching party or parties or any other Person under the
terms of this Agreement or otherwise. If this Agreement is terminated pursuant
to Sections 8.1(e) or (f) (other than as a result of Xxxxx & Company
Incorporated failing to deliver the Fairness Opinion satisfying the condition
specified in Section 5.1(j)), Xxxxxx shall pay to Evita a termination fee of Two
Hundred Thousand Dollars ($200,000) (the "Termination Fee") in cash. Any payment
of the Termination Fee shall be made to Evita not later than two business days
after delivery to Xxxxxx of notice of demand for payment by wire transfer of
immediately available funds to an account designated by Evita in the notice
delivered pursuant to this Section 8.2. Any termination pursuant to Sections
8.1(e) or (f) shall be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party)
to the other party to this Agreement other than the payment of the Termination
Fee.
ARTICLE IX
PROXY STATEMENT
9.1 Proxy Statement. As soon as practicable after the execution of
this Agreement, Xxxxxx shall prepare, with the cooperation of Evita, and file
with the SEC preliminary proxy materials relating to the meeting of Millie's
stockholders to be held in connection with the approval of this Agreement and
the transactions contemplated hereby (collectively with any amendments or
supplements thereto, the "Proxy Statement"). The Proxy Statement shall
constitute a disclosure document for the offer and payment of the Purchase Price
to be received by the holders of the Xxxxxx Sub Units in the Merger. As promptly
as practicable after comments, if any, are received from the SEC with respect to
such preliminary proxy materials and after the furnishing by Xxxxxx and Evita of
all information required to be contained therein, Xxxxxx shall file a definitive
Proxy Statement and mail or cause to be mailed the Proxy Statement to its
stockholders.
9.2 Best Efforts. Xxxxxx and Evita shall each use its best efforts
to cause the Proxy Statement to comply with applicable federal and state
securities laws requirements. Each of Xxxxxx and Evita agrees to provide
promptly to the other such information concerning its business and financial
statements and affairs and that of its Subsidiaries as, in the reasonable
judgment of the providing party or its counsel, may be required or appropriate
for inclusion in the Proxy Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the other's
counsel and
- 52 -
auditors in the preparation of the Proxy Statement. The information supplied by
each of Xxxxxx and Evita for inclusion in the Proxy Statement shall not, at (i)
the time the Proxy Statement is first mailed to the holders of capital stock of
Xxxxxx, (ii) the time of the meeting to be convened pursuant to the Proxy
Statement for the purposes of voting upon the adoption of this Agreement and the
transactions contemplated hereby, and (iii) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; provided, however, that Evita acknowledges and agrees that the
preliminary proxy materials filed with the SEC will not contain the financial
information required by the federal proxy rules. Xxxxxx will promptly advise
Evita, and Evita will promptly advise Xxxxxx, in writing if at any time prior to
the Effective Time either Xxxxxx or Evita shall obtain knowledge of any facts
that might make it necessary or appropriate to amend or supplement the Proxy
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable Law.
ARTICLE X
INDEMNIFICATION
10.1 Survival. All representations, warranties, covenants, and
agreements contained in this Agreement shall survive the Closing; provided that
any such representations and warranties shall survive only for a period of
eighteen (18) months after the Closing, and shall thereafter be of no further
force or effect. Additionally, the parties agree that the indemnification
obligations set forth in this Article X shall survive with respect to all
litigation described in Section 10.2(d) and to claims for indemnification made
within the applicable survival period until finally determined in accordance
with the terms hereof. The representations, warranties, covenants, and
agreements contained in this Agreement shall not be affected by any
investigation, verification, or examination by any party hereto or by any Person
acting on behalf of any such party.
10.2 Indemnification of Evita. Each of Xxxxxx, L90 and Picasso
Media, jointly and severally, agrees to indemnify, defend, and save Evita and
its directors, officers, employees, owners, agents, Affiliates, and their
respective successors and assigns or heirs and personal representatives, as the
case may be (each an "Evita Indemnified Party"), forever harmless from and
against, and to promptly pay to an Evita Indemnified Party or reimburse an Evita
Indemnified Party for any and all losses, damages, expenses (including, without
limitation, court costs, amounts paid in settlement, judgments, reasonable
attorneys' fees, or other expenses, including, without limitation, those arising
out of the enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities, or obligations (collectively, the "Losses"; for purposes hereof,
any Losses incurred by the Surviving LLC shall be considered as Losses to an
Evita Indemnified Party), sustained or incurred by such Evita Indemnified Party
relating to, caused by or resulting from:
(a) any misrepresentation or breach of warranty of Xxxxxx or its
Subsidiaries contained in this Agreement or any other Transaction Document to
which it
- 53 -
is a party, or any failure of Xxxxxx or its Subsidiaries to fulfill or satisfy
any covenant or agreement contained herein or in any other Transaction Document
to which it is a party;
(b) the operation of all businesses of Xxxxxx, X00 or Picasso
Media other than the Xxxxxx Online Business;
(c) any liability of Xxxxxx or its Subsidiaries for Taxes for
any period prior to the Closing, except to the extent that the same have been
reserved against in the Final Net Working Capital Amount;
(d) any litigation brought prior to or pending as of the
Closing, whether or not disclosed on Schedule 3.14 of the Disclosure Schedule,
or elsewhere, or any litigation by the stockholders of Xxxxxx in their capacity
as stockholders of Xxxxxx;
(e) any liability related to any employee benefit plan or
pension plan, or ERISA-related matters or the severance of any employees of
Xxxxxx or any of its Subsidiaries before the Closing (other than the employment
agreement between L90 and Xxxxxxx X. Xxxx and the Severance Agreement between
L90 and Xxxxx Xxxxxx);
(f) the employment (including the initial hiring and all terms,
conditions, and events relating to the ongoing employment) or termination of
employment (including constructive termination) by Xxxxxx or its Subsidiaries of
any individual (including without limitation any current or former employee of
Xxxxxx or its Subsidiaries) attributable to any action or inaction of Xxxxxx or
its Subsidiaries occurring before the Closing;
(g) any claim by any current or former employee of Xxxxxx or its
Subsidiaries for any type of benefits under any Law, including without
limitation workers' compensation, unemployment, temporary or permanent
disability, and social security, that is based on employment by Xxxxxx or its
Subsidiaries before the Closing.; and
(h) any claim by DoubleClick for breach of any Contract by and
between DoubleClick and L90, Picasso Media, Xxxxxx or Xxxxxx Sub or otherwise
arising out or based, in whole or in part, on any such Contract.
10.3 Indemnification of Xxxxxx. Evita and Bulldog, jointly and
severally, agree to indemnify, defend, and save Xxxxxx and its directors,
officers, employees, owners, agents, Affiliates, and their respective successors
and assigns or heirs and personal representatives, as the case may be (as
applicable (each, a "Xxxxxx Indemnified Party"), forever harmless from and
against, and to promptly pay to such Xxxxxx Indemnified Party or reimburse such
Xxxxxx Indemnified Party for, any and all Losses, , sustained or incurred by
such Xxxxxx Indemnified Party relating to, caused by, or resulting from any
misrepresentation or breach of warranty of Evita or its Subsidiaries contained
in this Agreement or any other Transaction Document to which it is a party, or
failure to fulfill or satisfy any covenant or agreement contained herein or in
any other Transaction Document to which it or its Subsidiaries is a party.
- 54 -
10.4 Indemnification Procedure for Third-Party Claims Against
Indemnified Parties.
(a) In the event that subsequent to the Closing any Evita
Indemnified Party or Xxxxxx Indemnified Party (each, an "Indemnified Party")
receives notice of the assertion of any claim or of the commencement of any
action, suit, or proceeding by any Person who is not a party to this Agreement
(including, without limitation, any Governmental Entity) (a "Third-Party
Claim"), with respect to which Evita or Xxxxxx, as the case may be (the
"Indemnifying Party"), may be required to provide indemnification under this
Agreement, the Indemnified Party shall promptly give written notice, together
with a statement of any available information regarding such claim
(collectively, the "Third-Party Indemnification Notice"), to the Indemnifying
Party promptly after learning of such claim (or within such shorter time as may
be necessary to give the Indemnifying Party a reasonable opportunity to respond
to such claim). The Indemnifying Party shall have the right, upon delivering
written notice to the Indemnified Party (the "Defense Notice") within thirty
days after receipt from an Indemnified Party of a Third-Party Indemnification
Notice, to conduct, at the Indemnifying Party's sole cost and expense, with
counsel of its choice and reasonably acceptable to the Indemnified Party, the
defense against such Third-Party Claim in the Indemnifying Party's own name, or,
if necessary, in the name of the Indemnified Party.
(b) In the event that the Indemnifying Party shall fail to give
the Defense Notice within the time and as prescribed by Section 10.4(a), then in
any such event the Indemnified Party shall have the right to conduct such
defense in good faith with counsel reasonably acceptable to the Indemnifying
Party, but the Indemnified Party shall be prohibited from compromising or
settling any such claim without the prior written consent of the Indemnifying
Party. In addition, if either the Indemnified Party or the Indemnifying Party
reasonably determines that there may be a conflict between the Indemnifying
Party and the Indemnified Party in conducting the defense of such Third Party
Claim, then the Indemnified Party shall have the right to conduct such defense
in good faith with counsel reasonably acceptable to the Indemnifying Party, but
the Indemnified Party shall be prohibited from compromising or settling any such
claim without the prior written consent of the Indemnifying Party.
(c) In the event that the Indemnifying Party does deliver a
Defense Notice and thereby elects to conduct the defense of the subject
Third-Party Claim, the Indemnified Party will cooperate with and make available
to the Indemnifying Party such assistance and materials as the Indemnifying
Party may reasonably request, all at the sole cost and expense of the
Indemnifying Party. Regardless of which party defends such claim, the other
party hereto shall have the right at its own cost and expense to participate in
the defense of any Third-Party Claim assisted by counsel of its own choosing.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement of any Third-Party Claim if pursuant to
or as a result of such settlement, such settlement would lead to liability or
create any financial or other obligation on the part of the Indemnified Party
for which the Indemnified Party is not entitled to indemnification hereunder. If
a firm decision is made to settle a Third-Party Claim, which offer the
Indemnifying Party is permitted to settle under this Section
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(a) 10.4(c), and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give at least five days' prior written notice
to the Indemnified Party to that effect, setting forth in reasonable detail the
terms and conditions of any such settlement (the "Settlement Notice"). If the
Indemnified Party objects to such firm offer within ten calendar days after its
receipt of such Settlement Notice, the Indemnified Party may continue to contest
or defend such Third-Party Claim and, in such event, the maximum liability of
the Indemnifying Party as to such Third-Party Claim will not exceed the amount
of such settlement offer described in the Settlement Notice, plus reasonable
costs and expenses paid or incurred by the Indemnified Party up to the point
such Settlement Notice has been delivered. If an Indemnified Party settles any
Third-Party Claim without the prior written consent of the Indemnifying Party,
the Indemnifying Party shall have no obligation to indemnify the Indemnified
Party under this Article X with respect to such Third-Party Claim.
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall be
conclusively deemed to be an obligation with respect to which the Indemnified
Party is entitled to prompt indemnification hereunder, subject to the
Indemnifying Party's right to appeal an appealable judgment or order. To the
extent that the consent or approval of either the Indemnifying Party or the
Indemnified Party is required in this Section 10.4, any such consent or approval
shall not be unreasonably withheld and will be deemed given in the absence of a
written response within ten (10) days of any request therefor.
(e) Any failure by an Indemnified Party to give a timely, complete,
or accurate Third-Party Indemnification Notice as provided in this Section 10.4
will not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party entitled to receive
such Third-Party Indemnification Notice was deprived of its right to recover any
payment under its applicable insurance coverage or was otherwise materially
adversely affected or damaged as a result of such failure to give a timely,
complete, and accurate Third-Party Indemnification Notice.
10.5 Notice of Indemnified Party Claims. In the case of a claim for
indemnification under either Section 10.2 or Section 10.3 that is not a Third
Party Claim, the Indemnified Party shall deliver notice of such claim to the
Indemnifying Party, setting forth in reasonable detail the basis and amount of
such claim for indemnification (each, an "Indemnification Notice"). Upon the
Indemnification Notice having been given to the Indemnifying Party, the
Indemnifying Party shall have thirty days in which to notify the Indemnified
Party in writing (the "Indemnification Dispute Notice") that the basis of or the
amount of the claim for indemnification is in dispute, setting forth in
reasonable detail the grounds of such dispute. In the event that an
Indemnification Dispute Notice is not given to the Indemnified Party within the
required thirty-day period, the Indemnifying Party shall be obligated to pay to
the Indemnified Party the amount set forth in the Indemnification Notice within
sixty days after the date that the Indemnification Notice has been given to the
Indemnifying Party.
10.6 Deferred Cash and Contingent Cash. Evita may, in its sole
discretion, offset any indemnification obligations of Xxxxxx, X00 and Picasso
Media set forth in
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Section 10.2 of this Agreement against the Deferred Cash and the Contingent
Cash; provided, however, that if the amount of any indemnification obligation to
be offset by Evita is disputed in accordance with the terms of this Agreement,
then such amount shall be paid by Evita into a third party escrow (the terms of
which shall be mutually acceptable to Evita and Xxxxxx), and, upon final
resolution of such dispute in accordance with the terms of this Agreement, paid
over to L90 and Picasso Media (as former holders of Xxxxxx Sub Units) or
returned to Evita, as applicable.
10.7 Indemnification.
(a) There shall be no liability for indemnification under this
Article X, (i) unless the aggregate amount of Losses exceeds $125,000 (the
"Indemnity Basket") at which time the Indemnifying Party shall be liable only to
the extent such Losses exceed the Indemnity Basket, (ii) unless the Indemnified
Party delivers to the Indemnifying Party written notice, setting forth in
reasonable detail the identity, nature and amount of Losses related to such
claim or claims, and (iii) to the extent that an Indemnified Party has suffered,
incurred, sustained or become subject to, Losses by reason of all such claims in
excess of $5,000,000 the Indemnifying Parties shall not be obligated to pay
anything other than or more than $5,000,000, in the aggregate for all claims
under this Article X (the "Indemnity Cap"). Notwithstanding any provision to the
contrary, neither the Indemnification Basket nor the Indemnity Cap shall apply
to any claim for Losses relating to or arising from the provisions of Section
2.8, 2.10, 2.11, 2.12 or 7.5. Furthermore, notwithstanding any provision to the
contrary, (x) none of Xxxxxx, X00 or Picasso Media shall have any liability to
indemnify any Evita Indemnified Party for any Losses resolved by the parties
pursuant to Sections 2.8(g)(v), 2.10, 2.11, 2.12 or 7.5 hereof and (y) Evita
shall have no liability to indemnify any Xxxxxx Indemnified Party for any Losses
resolved by the parties pursuant to Sections 2.8(g)(v), 2.10, 2.11 or 7.5
hereof.
(b) The following Losses shall not be included in the calculation of
the Indemnity Basket nor the Indemnity Cap and an Indemnified Party shall be
entitled to indemnification with respect to such Losses in accordance with this
Article X as though there were no Indemnity Basket or Indemnity Cap in this
Agreement:
(i) Payment of investment banker's fees for which an
Indemnifying Party is liable; and
(ii) Losses relating to, caused by or resulting from
any existing litigation relating to the period prior to the Closing.
(c) Except for fraud and except with respect to the provisions
of Section 2.8, 2.10, 2.11 and 2.12, and subject to any party's right for
equitable relief, the indemnification provisions of this Article X shall
constitute the sole and exclusive remedy of the parties hereto for any Losses
under this Agreement, and the parties each waive any other remedy which they or
any other Person entitled to indemnification hereunder may have at Law or
otherwise with respect thereto.
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ARTICLE XI
MISCELLANEOUS
11.1 Waivers and Amendments. Any provisions of this Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Evita, Evita
Sub, Xxxxxx, L90, Picasso Media and Xxxxxx Sub, or in the case of a waiver, by
the party against whom the waiver is to be effective.
11.2 Public Announcements. At the proper time, as determined by the
parties hereto in good faith consultation with each other, the parties hereto
shall issue a press release or make a public statement concerning this Agreement
and the related transactions containing disclosure which is mutually agreeable
to the parties; provided, that prior to the issuance of a press release, none of
the parties hereto shall make any announcement of such transaction or disclose
the existence of and/or particulars of any negotiations related thereto,
including, but not limited to, the terms, conditions, consideration to be paid
or other facts related to this Agreement, the other Transaction Documents and
the related transactions. Notwithstanding the foregoing, Xxxxxx may make such
disclosures as may be required (based on the advice of counsel) due to its
status as a public company, after good faith consultation with the other parties
hereto.
11.3 Notices of Certain Events.
(a) Each of the parties hereto shall promptly notify the other
parties of: (i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement and the other Transaction Documents
if the failure of any of the parties hereto, as the case may be, to obtain such
consent would result in a Material Adverse Effect on the notifying party; and
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents.
(b) The parties hereto shall promptly notify the other parties
of any Actions commenced or, to the best of such party's knowledge threatened
against, relating to or involving or otherwise affecting such party or any of
its Subsidiaries which relate to the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents.
11.4 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered, sent by nationally-recognized overnight courier, mailed postage
prepaid by registered or certified mail or transmitted by facsimile transmission
(with immediate telephonic confirmation thereafter),
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(a) If to Xxxxxx, X00, Picasso Media or Xxxxxx Sub
(pre-Closing):
MaxWorldwide, Inc.
00 Xxxx 00xx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
with a copy to (which shall not constitute notice):
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Jr., Esq.
Facsimile No.: (000) 000-0000
or (b) If to Evita, Bulldog, Evita Sub or the Surviving LLC
(post-Closing):
Bulldog Holdings, Inc.
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx & Xxxxxx, LLP
Three Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or at such other address as the parties may specify by written notice to the
others, and each such notice, request, consent and other communication shall for
all purposes of the Agreement be treated as being effective or having been given
when delivered if delivered personally, on the next Business Day if dispatched
by overnight courier upon receipt of facsimile confirmation if transmitted by
facsimile, or, if sent by mail, at the earlier of its receipt or seventy-two
(72) hours after the same has been deposited in a regularly maintained
receptacle for the deposit of United States mail, addressed and postage prepaid
as aforesaid.
11.5 No Implied Waivers. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of
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any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
11.6 Successors and Assigns. Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect; provided, however, that Xxxxxx, X00
and Picasso Media may assign all or any portion of its rights to receive the
Purchase Price under Sections 2.8, without the written consent of Evita. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
11.7 Headings. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
11.8 Governing Law. Subject to the application of the DGCL to the
Merger, the internal Laws, and not the Laws of conflicts (other than Section
5-1401 General Obligations Law of the State of New York), of New York shall
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties.
11.9 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the other Transaction
Documents shall be paid by the party incurring such cost or expense.
11.10 Transfer Taxes. Evita shall pay all transfer, sales and use,
registration, stamp and similar Taxes imposed in connection with the
transactions contemplated by this Agreement and the other Transaction Documents.
11.11 Jurisdiction. Except as provided in Section 2.8(g) or 2.11
with respect to any dispute to be resolved in accordance therewith, any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in any federal or state court located in the
County and State of New York, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by Law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
every party agrees that service of process on such party as provided in Section
11.4 shall be deemed effective service of process on such party.
11.12 Waiver of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
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LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.13 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts (including by facsimile) and by different parties
hereto in separate counterparts, with the same effect as if all parties had
signed the same document. All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
11.14 Entire Agreement. This Agreement and the other Transaction
Documents (including the Exhibits and Schedules hereto and thereto) contain the
entire agreement among the parties hereto with respect to the subject matter
hereof and such Agreement and other Transaction Documents supersede and replace
all other prior agreements, written or oral, among the parties hereto with
respect to the subject matter hereof. Notwithstanding the foregoing sentence,
that certain Confidentiality Agreement dated October 11, 2002 by and between
Xxxxxx and Evita shall survive the execution and delivery of this Agreement and
continue in full force and effect in accordance with the terms contained
therein.
11.15 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
11.16 Best Efforts. The parties shall each cooperate with the other
and use (and shall cause their respective Subsidiaries to use) their respective
commercially reasonable best efforts to promptly (i) take or cause to be taken
all necessary actions, and do or cause to be done all things, necessary, proper
or advisable under this Agreement the other Transaction Documents and applicable
Laws (other than the payment of monies in order to solicit or obtain any consent
or approval, including without limitation, any stockholder approval) to
consummate and make effective all the transactions contemplated by this
Agreement and the other Transaction Documents as soon as practicable, including,
without limitation, converting the providers of Web site advertising inventory
to the Xxxxxx Online Business to Converted Sites as contemplated by Section
5.2(k), preparing and filing promptly and fully all documentation to effect all
necessary filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents and (ii) obtain all approvals
required to be obtained from any third party necessary, proper or advisable to
the transactions contemplated by this Agreement and the other Transaction
Documents.
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[Execution Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Merger to be duly executed as of the day and year first above
written.
MAXWORLDWIDE, INC. BULLDOG HOLDINGS, INC.
By:/s/ Xxxxxxxx Xxxxxxx By:/s/ Xxxxx Xxxxxxxx
--------------------------------- ---------------------------------
Name: Xxxxxxxx Xxxxxxx Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer Title: Co-Chief Executive Officer
XXXXXX SUB, LLC XXXXXX SUB ACQUISITION, LLC
By The Excite Network, Inc., Sole Member
By:/s/ Xxxxxxxx Xxxxxxx By:/s/ Xxxxx Xxxxxxxx
--------------------------------- ---------------------------------
Name: Xxxxxxxx Xxxxxxx Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer Title: Co-Chief Executive Officer
THE EXCITE NETWORK, INC.
By:/s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Co-Chief Executive Officer
L90, INC.
By:/s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Chief Executive Officer
PICASSO MEDIA ACQUISITION, INC.
By:/s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Chief Executive Officer
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Schedules delivered by MaxWorldwide, Inc.
Schedule 2.8(g) - Contingent Cash
Schedule 3.3 - Organization
Schedule 3.5 - No Violation; Consents
Schedule 3.6 - Financial Statements
Schedule 3.6(a) - Write-Offs
Schedule 3.9 - No Conflicts
Schedule 3.10 - Intellectual Property
Schedule 3.10 - Intellectual Property Exhibit C
Schedule 3.11 - Contracts
Schedule 3.11(b) - Enforceability of Contracts
Schedule 3.12 - Absence of Certain Developments
Schedule 3.13 - No Undisclosed Liabilities
Schedule 3.14 - Litigation
Schedule 3.15 - Compliance with Laws
Schedule 3.16 - Taxes
Schedule 3.17 - Employee Relations
Schedule 3.18 - Brokers
Schedule 3.20 - Labor Relations
Schedule 3.21(a) - Environmental Matters - (Pending or Threatened Claims)
Schedule 3.21(b) - Environmental Matters - (National Priorities List)
Schedules delivered by The Excite Company, Inc.
Schedule 4.1 - Organization
Schedule 4.2 - No Violation; Consents
Schedule 4.6 - Compliance with Laws
Schedule 4.11 - No Undisclosed Liabilities
Schedule 4.12 - Litigation
Schedule 4.13 - Taxes
Schedule 4.15(a) - Environmental Matters; Pending or Threatened Claims
Schedule 4.15(b) - Environmental Matters; National Priorities List
MaxWorldwide, Inc. will deliver the foregoing schedules upon the request of the
Commission.
