Exhibit 2.01
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
MACROMEDIA, INC.,
ANDROMEDIA, INC.
AND
PEAK ACQUISITION CORP.
OCTOBER 6, 1999
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is
entered into as of October 6, 1999, by and among Macromedia, Inc., a Delaware
corporation ("MACROMEDIA"), Andromedia, Inc., a California corporation
("ANDROMEDIA"), and Peak Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Macromedia ("NEWCO").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Newco will merge with and into Andromedia in a reverse
triangular merger (the "MERGER"), with Andromedia to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, an Agreement of Merger substantially in the form of EXHIBIT A-1
(the "AGREEMENT OF MERGER"), a Certificate of Merger substantially in the
form of EXHIBIT A-2 (the "CERTIFICATE OF MERGER") and the applicable
provisions of the laws of California and Delaware. Upon the effectiveness of
the Merger, (i) all the outstanding Common Stock and Preferred Stock of
Andromedia will be converted into Common Stock of Macromedia and (ii) all
warrants and options to purchase Common Stock or Preferred Stock of
Andromedia will be assumed and converted into warrants and options to
purchase Common Stock of Macromedia, in the manner and on the basis
determined herein and as provided in the Agreement of Merger and Certificate
of Merger.
B. Concurrently with the execution of this Agreement, and as a
condition and inducement to Macromedia's willingness to enter into this
Agreement, Andromedia shall execute and deliver a Stock Option Agreement in
favor of Macromedia in substantially the form attached hereto as EXHIBIT B
(the "STOCK OPTION AGREEMENT"), which has been approved by the Board of
Directors of Andromedia.
C. Concurrently with the execution
of this Agreement, and as a condition and inducement to Macromedia's
willingness to enter into this Agreement, Andromedia and each of the
shareholders of Andromedia listed on EXHIBIT C (collectively, the "PRINCIPAL
SHAREHOLDERS") shall execute and deliver a Support Agreement in substantially
the form attached hereto as Exhibit C (the "SUPPORT AGREEMENT") agreeing to
vote in favor of this Agreement and the Merger.
C. Concurrently with the execution of this Agreement, and
as a condition and inducement to Macromedia's willingness to enter into this
Agreement, (i) certain employees of Andromedia shall execute and deliver to
Macromedia employment agreements with Macromedia and Andromedia (the
"EMPLOYMENT AGREEMENTS"), to be effective upon the Effective Time (as defined
in this Agreement) and (ii) certain current and former employees of
Andromedia shall execute and deliver to Macromedia noncompetition agreements
with Macromedia and Andromedia (the "NONCOMPETITION AGREEMENTS"), to be
effective upon the Effective Time.
D. The Merger is intended to be treated as a "pooling of
interests" for accounting purposes and a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "CODE"), by virtue of the
provisions of Section 368(a)(2)(E) of the Code. At the time of execution of
this Agreement, the parties hereto have received from their respective
accountants drafts of letters indicating that nothing contained herein is
inconsistent with the treatment of the transactions as contemplated by this
Agreement as a "pooling of interests" for accounting purposes.
NOW, THEREFORE, the parties hereto agree as follows:
1. PLAN OF REORGANIZATION
1.1 THE MERGER. The Agreement of Merger will be filed with
the Secretary of State of the State of California and the Certificate of
Merger will be filed with the Secretary of State of the State of Delaware as
soon as practicable after the Closing (as defined in Section 6.1 below). The
effective time of the Merger (the "EFFECTIVE TIME") shall be the time of
filing of the Agreement of Merger unless otherwise specified in the Agreement
of Merger. Subject to the terms and conditions of this Agreement, the
Agreement of Merger and the Certificate of Merger, Newco will be merged with
and into Andromedia (or Andromedia will be merged with and into Newco in a
forward triangular merger or into Macromedia in a straight in merger) in a
statutory merger pursuant to the Agreement of Merger and the Certificate of
Merger and in accordance with applicable provisions of Delaware and
California laws as follows:
1.1.1 CONVERSION OF ANDROMEDIA SHARES. Each share of
Andromedia Common Stock, no par value per share (the "ANDROMEDIA COMMON
STOCK"), that is issued and outstanding immediately prior to the Effective
Time, other than shares, if any, for which dissenters rights have been or may
be perfected in compliance with applicable law, will, by virtue of the Merger
and at the Effective Time, and without further action on the part of any
holder thereof, be converted into the Applicable Number (determined in
accordance with Section 1.1.4 hereof) of fully paid and nonassessable shares
of Macromedia Common Stock, $0.001 par value per share ("MACROMEDIA COMMON
STOCK"). Each share of Andromedia Preferred Stock, no par value (the
"ANDROMEDIA PREFERRED STOCK"), that is issued and outstanding immediately
prior to the Effective Time, other than shares, if any, for which dissenters
rights have been or may be perfected in compliance with applicable law, will,
by virtue of the Merger and at the Effective Time, and without further action
on the part of any holder thereof, be converted into a number of shares of
Macromedia Common Stock equal to the Applicable Number multiplied by the
number of shares of Andromedia Common Stock into which a share of the
applicable series of Andromedia Preferred Stock could be converted
immediately prior to the Effective Time.
1.1.2 CONVERSION OF ANDROMEDIA OPTIONS. Effective at
the Effective Time, Macromedia will assume all outstanding options to
purchase Andromedia Common Stock (the "ANDROMEDIA OPTIONS"), and each of the
Andromedia Options shall by its terms be converted into an option (a
"MACROMEDIA OPTION"), to purchase that number of shares of Macromedia Common
Stock which equals the number of shares of Andromedia Common Stock that could
be purchased pursuant to the Andromedia Option immediately prior to the
Effective Time multiplied by the Applicable Number (determined in accordance
with Section 1.1.4 hereof), such number of shares being rounded down to the
nearest whole share. The exercise price per share of
-2-
Macromedia Common Stock purchasable under each Macromedia Option shall be
equal to the exercise price per share of Andromedia Common Stock under the
corresponding Andromedia Options divided by the Applicable Number, such
exercise price being rounded up to the nearest whole cent. All of the other
terms and conditions of each Macromedia Option will be the same in all
material respects as the corresponding Andromedia Option. It is the intention
of the parties that the Andromedia Options assumed by Macromedia qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent the Andromedia Options qualified as incentive
stock options immediately prior to the Effective Time. No cash will be paid
in lieu of fractional shares which are rounded down pursuant to this section.
1.1.3 CONVERSION OF ANDROMEDIA WARRANTS. Effective at
the Effective Time, Macromedia will assume the outstanding warrants to
purchase Andromedia Preferred Stock and Common Stock (the "ANDROMEDIA
WARRANTS"), and each of the Andromedia Warrants shall by its terms be
converted into a warrant (a "MACROMEDIA WARRANT") to purchase that number of
shares of Macromedia Common Stock which equals (a) in the case of an
Andromedia Warrant to purchase Andromedia Preferred Stock, the number of
shares of Andromedia Common Stock into which the Andromedia Preferred Stock
that could be purchased pursuant to the Andromedia Warrant immediately prior
to the Effective Time could be converted or (b) in the case of an Andromedia
Warrant to purchase Andromedia Common Stock, that number of shares of
Andromedia Common Stock which could be purchased pursuant to the Andromedia
Warrant immediately prior to the Effective Time, in each case multiplied by
the Applicable Number (determined in accordance with Section 1.1.4 hereof),
such number of shares being rounded down to the nearest whole share. The
exercise price per share of Macromedia Common Stock purchasable under each
Macromedia Warrant shall be equal to the exercise price per share of
Andromedia Common Stock (on an as-if converted to Andromedia Common Stock
basis in the case of an Andromedia Warrant to purchase Andromedia Preferred
Stock) under the corresponding Andromedia Warrants divided by the Applicable
Number, such exercise price being rounded up to the nearest whole cent. All
of the other terms and conditions of each Macromedia Warrant will be the same
in all material respects as the corresponding Andromedia Warrant. No cash
will be paid in lieu of fractional shares which are rounded down pursuant to
this section.
1.1.4 APPLICABLE NUMBER. Unless there is an adjustment
to the shares to be issued in the Merger pursuant to Section 1.1.5 below, the
"APPLICABLE NUMBER" shall equal (a) the Total Macromedia Shares to be Issued
(as defined below) divided by (b) the sum of (i) the total number of shares
of Andromedia Common Stock issued and outstanding at the Effective Time, (ii)
the total number of shares of Andromedia Common Stock issuable upon
conversion of all shares of Andromedia Preferred Stock issued and outstanding
at the Effective Time, (iii) the total number of shares of Andromedia Common
Stock issuable upon exercise of all Andromedia Options outstanding at the
Effective Time and (iv) the total number of shares of Andromedia Common Stock
(on an as-if converted to Andromedia Common Stock basis in the case of an
Andromedia Warrant to purchase Andromedia Preferred Stock) issuable upon
exercise of all Andromedia Warrants outstanding at the Effective Time.
"TOTAL MACROMEDIA SHARES TO BE ISSUED" will equal (A) $210,000,000 (plus the
aggregate exercise price payable to Andromedia upon exercise of the
Andromedia Options and Andromedia Warrants outstanding at the Effective Time)
divided by (B) $42.36 (the average closing price as quoted on the Nasdaq
National Market and as reported in the
-▇-
▇▇▇▇ ▇▇▇▇▇▇ Journal of one share of Macromedia Common Stock for the ten
trading days prior to and including the trading day ending one day prior to
the date of this Agreement).
1.1.5 ADJUSTMENTS FOR CAPITAL CHANGES. If prior to the
Merger, Macromedia recapitalizes either through a split-up of the outstanding
shares of Macromedia Common Stock into a greater number, or through a
combination of such outstanding shares into a lesser number, or reorganizes,
reclassifies or otherwise changes such outstanding shares into the same or a
different number of shares of other classes (other than through a split-up or
combination of shares provided for in the previous clause), or declares a
dividend on its outstanding shares payable in shares or securities
convertible into shares or sets a record date with respect to any of the
foregoing that is before the Effective Time, the calculation of the
Applicable Number will be adjusted appropriately.
1.1.6 CONVERSION OF NEWCO SHARES. Each share of Newco
Common Stock ("NEWCO COMMON STOCK"), that is issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without further action on the part of the sole stockholder of Newco, be
converted into and become one (1) share of Andromedia Common Stock that is
issued and outstanding immediately after the Effective Time, and the shares
of Andromedia Common Stock into which the shares of Newco Common Stock are so
converted shall be the only shares of Andromedia Common Stock that are issued
and outstanding immediately after the Effective Time.
1.1.7 FORWARD TRIANGULAR OR STRAIGHT IN MERGER. The
parties agree that, upon Macromedia's request, they will amend these
documents to cause Andromedia to merge with and into Newco or Macromedia;
PROVIDED, HOWEVER, no such amendment will be made if it would result in any
material delay in the consummation of the Merger as a result of additional
third party consents being required or otherwise; and PROVIDED, FURTHER, that
Andromedia will be allowed to restate the Andromedia Disclosure Letter (as
defined in Section 2) to take into account any changes resulting from any
such amendment.
1.2 FRACTIONAL SHARES. No fractional shares of Macromedia
Common Stock will be issued in connection with the Merger, but in lieu
thereof, the holder of any shares of Andromedia Common Stock or Andromedia
Preferred Stock who would otherwise be entitled to receive a fraction of a
share of Macromedia Common Stock will receive from Macromedia, promptly after
the Effective Time, an amount of cash equal to the closing price of
Macromedia Common Stock on the Nasdaq National Market on the last trading day
before the Effective Time multiplied by the fraction of a share of Macromedia
Common Stock to which such holder would otherwise be entitled.
1.3 EFFECTS OF THE MERGER. At the Effective Time: (a) the
separate existence of Newco will cease and Newco will be merged with and into
Andromedia and Andromedia will be the surviving corporation (the "SURVIVING
CORPORATION") pursuant to the terms of the Agreement of Merger and
Certificate of Merger; (b) the Articles of Incorporation and Bylaws of
Andromedia will continue unchanged to be the Articles of Incorporation and
Bylaws of the surviving corporation; (c) each share of Andromedia Common
Stock outstanding immediately prior to the Effective Time will be converted
as provided in this Section 1; (d) each share of Newco Common
-4-
Stock outstanding immediately prior to the Effective Time will be converted
into one (1) outstanding share of Andromedia Common Stock; (e) the Board of
Directors and executive officers of Macromedia will remain unchanged and the
sole director of Newco immediately prior to the Effective Time will become
the sole director of the surviving corporation and the officers of Newco will
become the officers of the surviving corporation; and (f) the Merger will, at
and after the Effective Time, have all of the effects provided by applicable
law. Immediately following the Effective Time, the surviving corporation
shall cause to be filed with the Secretary of State of California Articles of
Incorporation substantially in the form of EXHIBIT 1.3.
1.4 FURTHER ASSURANCES. Andromedia agrees that if, at any
time after the Effective Time, Macromedia considers or is advised that any
further deeds, assignments or assurances are reasonably necessary or
desirable to vest, perfect or confirm in Macromedia title to any property or
rights of Andromedia as provided herein, Macromedia and any of its officers
are hereby authorized by Andromedia to execute and deliver all such proper
deeds, assignments and assurances and do all other things necessary or
desirable to vest, perfect or confirm title to such property or rights in
Macromedia and otherwise to carry out the purposes of this Agreement, in the
name of Andromedia or otherwise.
1.5 TAX-FREE REORGANIZATION. The parties intend to adopt
this Agreement as a tax-free plan of reorganization and to consummate the
Merger in accordance with the provisions of Section 368(a)(1)(A) of the Code,
by virtue of the provisions of Section 368(a)(2)(E) of the Code. The shares
of Macromedia Common Stock issued in the Merger will be issued solely in
exchange for the issued and outstanding shares of Andromedia Common Stock and
Andromedia Preferred Stock pursuant to this Agreement, the Macromedia Options
issued in the Merger will be issued solely in exchange for the outstanding
Andromedia Options and the Macromedia Warrants issued in the Merger will be
issued solely in exchange for the outstanding Andromedia Warrants, and no
other transaction other than the Merger represents, provides for or is
intended to be an adjustment to the consideration paid for the Andromedia
Common Stock, Andromedia Preferred Stock, Andromedia Options or Andromedia
Warrants. Except for cash paid in lieu of fractional shares, no
consideration that could constitute "other property" within the meaning of
Section 356 of the Code will be paid by Macromedia for shares of Andromedia
Common Stock, Andromedia Preferred Stock, Andromedia Options or Andromedia
Warrants in the Merger. In addition, Macromedia represents that it presently
intends, and that at the Effective Time it will intend, to continue
Andromedia's historic business or use a significant portion of Andromedia's
business assets in a business.
1.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILINGS. Each of Macromedia and
Andromedia will promptly prepare and file the applicable notices (if any)
required to be filed by it under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), and comply promptly with any requests to it from
the Federal Trade Commission or United States Department of Justice for
additional information.
1.7 POOLING OF INTERESTS. The parties intend that the
Merger be treated as a "pooling of interests" for accounting purposes.
-5-
2. REPRESENTATIONS AND WARRANTIES OF ANDROMEDIA
Andromedia hereby represents and warrants that, except as set
forth in the Andromedia disclosure letter (the "ANDROMEDIA DISCLOSURE
LETTER") delivered by Andromedia to Macromedia herewith, including INTER ALIA
items in the Andromedia Disclosure Letter referred to as "ITEMS" below:
2.1 ORGANIZATION AND GOOD STANDING. Andromedia and each of
its Subsidiaries (as defined in Section 2.4 below) is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation, has the corporate power and authority to own, operate
and lease its properties and to carry on its business as now conducted and is
qualified as a foreign corporation in each jurisdiction (as listed on ITEM
2.1) in which a failure to be so qualified could reasonably be expected to
have a Material Adverse Effect (as defined below) on Andromedia. For
purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT" when used in
connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, assets
(including intangible assets), capitalization, financial condition or results
of operations of such entity taken as a whole with its subsidiaries except to
the extent that (i) such change, event, violation, inaccuracy, circumstance
or effect results from changes in general economic conditions or changes
affecting the industry generally in which such entity operates or (ii) the
affected entity successfully bears the burden of proving such change, event,
violation, inaccuracy, circumstance or effect resulted from such entity
entering into this Agreement.
2.2 POWER, AUTHORIZATION AND VALIDITY.
2.2.1 Andromedia has the corporate right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement and all agreements to which Andromedia is or will be a party that
are required to be executed pursuant to or in connection with this Agreement
(the "ANDROMEDIA ANCILLARY AGREEMENTS"). This Agreement and the Andromedia
Ancillary Agreements have been duly and validly approved by the unanimous
vote of the Andromedia Board of Directors.
2.2.2 No filing, authorization or approval,
governmental or otherwise, is necessary to enable Andromedia to enter into
and to perform its obligations under this Agreement and the Andromedia
Ancillary Agreements, except for (a) the filing of the Agreement of Merger
and the Certificate of Merger with the Secretaries of State of the States of
California and Delaware, respectively, the filing of such officers'
certificates and other documents as are required to effectuate the Merger
under Delaware and California law and the filing of appropriate documents
with the relevant authorities of the states other than California in which
Andromedia is qualified to do business, if any, (b) such filings as may be
required to comply with federal and state securities laws including the
Permit Application (as defined in Section 4.6), (c) the approval of the
shareholders of Andromedia (the "ANDROMEDIA SHAREHOLDERS") of the
transactions contemplated hereby, and (d) the filings required by the HSR Act.
-6-
2.2.3 This Agreement and the Andromedia Ancillary
Agreements are, or when executed and delivered by Andromedia and the other
parties thereto will be, valid and binding obligations of Andromedia
enforceable against Andromedia in accordance with their respective terms,
except as to the effect, if any, of (a) applicable bankruptcy and other
similar laws affecting the rights of creditors generally, (b) rules of law
governing specific performance, injunctive relief and other equitable
remedies and (c) the enforceability of provisions requiring indemnification;
provided, however, that the Agreement of Merger, the Certificate of Merger
and the Andromedia Ancillary Agreements will not be effective until the
earlier of the Effective Time or the date provided for therein.
2.3 CAPITALIZATION.
(a) AUTHORIZED/OUTSTANDING CAPITAL STOCK. As of the
date hereof, the authorized capital stock of Andromedia consists of
20,000,000 shares of Andromedia Common Stock, no par value per share, and
10,110,195 shares of Preferred Stock, no par value per share, of which
248,120 shares are designated as Series A Preferred Stock, 496,790 shares are
designated as Series B Preferred Stock, 1,818,182 shares are designated as
Series C Preferred Stock, 3,301,420 shares are designated as Series D
Preferred Stock and 4,245,683 shares are designated as Series E Preferred
Stock. As of the date hereof, there are issued and outstanding: 6,396,911
shares of Andromedia Common Stock; 248,120 shares of Series A Preferred Stock
each of which is convertible into four shares of Andromedia Common Stock;
496,790 shares of Series B Preferred Stock each of which is convertible into
one share of Andromedia Common Stock; 1,627,269 shares of Series C Preferred
Stock each of which is convertible into one share of Andromedia Common Stock;
3,301,420 shares of Series D Preferred Stock each of which is convertible
into 1.1609 shares of Andromedia Common Stock; and 4,227,521 shares of Series
E Preferred Stock each of which is convertible into one share of Andromedia
Common Stock. All issued and outstanding shares of Andromedia Common Stock
and Andromedia Preferred Stock have been duly authorized and validly issued,
are fully paid and nonassessable, are not subject to any right of rescission
and have been offered, issued, sold and delivered by Andromedia in compliance
with all registration or qualification requirements (or applicable exemptions
therefrom) of applicable federal and state securities laws. Listed on Item
2.3 are the names, number and type of shares held by each of the Andromedia
Shareholders as of the date hereof, to be updated as of the Closing Date.
(b) OPTIONS/RIGHTS. Except as listed on ITEM 2.3(b),
there are no stock appreciation rights, options, warrants, calls,
commitments, conversion privileges or preemptive or other rights or
agreements outstanding to purchase or otherwise acquire any of Andromedia's
authorized but unissued capital stock; there are no options, warrants, calls,
commitments, conversion privileges or preemptive or other rights or
agreements to which Andromedia is a party involving the purchase or other
acquisition of any shares of Andromedia Common Stock or Andromedia Preferred
Stock; there is no liability for dividends accrued but unpaid; and there are
no voting agreements, registration rights, rights of first refusal or other
restrictions (other than normal restrictions on transfer under applicable
federal and state securities laws) applicable to any of Andromedia's
outstanding securities.
-7-
2.4 SUBSIDIARIES AND GUARANTIES. Except for the
subsidiaries of Andromedia listed on ITEM 2.4 (collectively the
"SUBSIDIARIES" and each a "SUBSIDIARY"), each of which is wholly-owned by
Andromedia, Andromedia does not have any equity interest, direct or indirect,
in any corporation, partnership, joint venture or other business entity.
Andromedia is not a guarantor of any obligation of a third party, whether or
not such third party is related to or affiliated with Andromedia. For
purposes of Sections 2.9 through 2.25, references to Andromedia shall be
deemed to include the Subsidiaries.
2.5 NO VIOLATION OF EXISTING AGREEMENTS. Neither the
execution and delivery of this Agreement or any Andromedia Ancillary
Agreement, nor the consummation of the transactions provided for herein or
therein, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of, (a) any
provision of the Articles of Incorporation or Bylaws of Andromedia or any
Subsidiary, as currently in effect, (b) any material instrument or contract
to which Andromedia or any Subsidiary is a party or by which Andromedia or
any Subsidiary is bound or (c) any federal, state, local or foreign judgment,
writ, decree, order, statute, rule or regulation applicable to Andromedia or
any Subsidiary or their respective assets or properties. The consummation of
the Merger in and of itself will not require the consent of any third party
(except as set forth in ITEM 2.5) and will not have a material adverse effect
upon any rights, licenses, franchises, leases or agreements of Andromedia or
its Subsidiaries pursuant to the terms thereof.
2.6 LITIGATION. There is no action, proceeding or, to
Andromedia's knowledge, investigation pending, nor, to Andromedia's
knowledge, are any of the foregoing threatened against Andromedia before any
court or administrative agency that, if determined adversely to Andromedia or
any Subsidiary, may reasonably be expected to have a Material Adverse Effect
on Andromedia. To the knowledge of Andromedia, there is no basis for any
person, firm, corporation or entity to assert a claim against Andromedia or
any Subsidiary, or Macromedia as successor in interest to Andromedia or any
Subsidiary, based upon: (a) ownership or rights to ownership of any shares
of Andromedia Common Stock or Andromedia Preferred Stock or other securities,
(b) any rights as an Andromedia securities holder, including, without
limitation, any option, warrant or other right to acquire any Andromedia
securities, any preemptive rights or any rights to notice or to vote, or (c)
any rights under any agreement between Andromedia and any Andromedia
securities holder or former Andromedia securities holder in such holder's
capacity as such. There is no action, suit, proceeding, claim, arbitration
or investigation pending as to which Andromedia or any Subsidiary has
received notice of assertion against Andromedia or any Subsidiary, which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay
any of the transactions contemplated by this Agreement.
2.7 ANDROMEDIA FINANCIAL STATEMENTS. Andromedia has
delivered to Macromedia in ITEM 2.7 Andromedia's audited balance sheet as of
December 31, 1998 and its unaudited balance sheet as of June 30, 1999 (the
"BALANCE SHEET DATE"), Andromedia's audited income statements and cash flows
for the years ended December 31, 1996, 1997 and 1998 and its unaudited income
statement and cash flow for the period from January 1, 1999 through June 30,
1999 and audited balance sheets of LikeMinds, Inc. as of October 8, 1998 and
audited income statements and cash flows of LikeMinds, Inc. for the fiscal
year ending December 31, 1997 and for
-8-
the period from January 1, 1998 to October 8, 1998 (collectively, the
"ANDROMEDIA FINANCIAL STATEMENTS"). The Andromedia Financial Statements (a)
are in accordance with the books and records of Andromedia, (b) fairly and
accurately represent the financial condition of Andromedia at the respective
dates specified therein and the results of operations for the respective
periods specified therein and (c) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. The
financial information as of June 30, 1999 and for the six month period ended
June 30, 1999, may not contain footnotes and, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations of Andromedia for the unaudited interim period. Andromedia has no
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected, reserved against or disclosed in the Andromedia Financial
Statements or on ITEM 2.7, except for those that may have been incurred after
the Balance Sheet Date in the ordinary course of Andromedia's business,
consistent with past practice and that are in an aggregate amount not to
exceed $100,000 through the date of this Agreement.
2.8 TAXES. Andromedia and each of its Subsidiaries has
filed all federal, state, local and foreign tax and material information
returns required to be filed prior to the date hereof, has paid all taxes
required to be paid in respect of all periods prior to the date hereof for
which returns have been filed, has made all necessary estimated tax payments,
and has no liability for taxes in excess of the amount so paid, except to the
extent adequate reserves have been established in the Andromedia Financial
Statements. True, correct and complete copies of all such tax and
information returns have been provided or made available by Andromedia to
Macromedia. Neither Andromedia nor any of its Subsidiaries is delinquent in
the payment of any tax or in the filing of any tax returns, and no
deficiencies for any tax have been threatened, claimed, proposed or assessed
which have not been settled or paid. No tax return of Andromedia or any
Subsidiary has ever been audited by the Internal Revenue Service or any state
taxing agency or authority. For the purposes of this Section 2.8, the terms
"TAX" and "TAXES" include all federal, state, local and foreign income,
gains, franchise, excise, property, sales, use, employment, license, payroll,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding),
and, with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax.
Neither Andromedia nor any Subsidiary has any current or deferred federal
income tax liabilities and will not as a result of the merger become liable
for any income tax not adequately reserved against on the Andromedia
Financial Statements. Andromedia has not filed a consent pursuant to Section
341(f) of the Code.
2.9 TITLE TO PROPERTIES. Andromedia has good and marketable
title to all of its assets as shown on the balance sheet as of the Balance
Sheet Date included in the Andromedia Financial Statements, free and clear of
all liens, charges or encumbrances (other than for taxes not yet due and
payable). Except as set forth in ITEM 2.9, there are no UCC financing
statements of record with the State of California naming Andromedia as debtor
and Andromedia does not own any property in any other state. All leases of
real or personal property to which Andromedia is a party are fully effective
and afford Andromedia peaceful and undisturbed possession of the subject
matter of the lease. To its knowledge, Andromedia is not in violation of any
zoning, building,
-9-
safety or environmental ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties, and
Andromedia has not received any notice of such violation with which it has
not complied or had waived.
2.10 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet
Date, Andromedia has carried on its business in the ordinary course
substantially in accordance with the procedures and practices in effect on
the Balance Sheet Date, and except as set forth in ITEM 2.10 or expressly
permitted by the terms of this Agreement, since the Balance Sheet Date and
(except as otherwise indicated below) through the date of Closing there has
not been with respect to Andromedia:
(a) any Material Adverse Effect on Andromedia;
(b) any contingent liability incurred by Andromedia
as guarantor or surety with respect to the obligations of others which exceed
in the aggregate $50,000;
(c) any mortgage, encumbrance or lien placed on any
of the properties of Andromedia;
(d) any obligation or liability incurred by
Andromedia other than in the ordinary course of business, which obligations
or liabilities do not exceed in the aggregate $100,000 through the date of
this Agreement;
(e) any purchase, license, sale or other disposition,
or any agreement or other arrangement for the purchase, license, sale or
other disposition, of any of the properties, assets or goodwill of Andromedia
other than in the ordinary course of business and consistent with past
practice;
(f) any damage, destruction or loss, whether or not
covered by insurance that would have or is reasonably likely to have a
Material Adverse Effect on Andromedia;
(g) any declaration, setting aside or payment of any
dividend on, or the making of any other distribution in respect of, the
capital stock of Andromedia, any split, stock dividend, combination or
recapitalization of the capital stock of Andromedia or any direct or indirect
redemption, purchase or other acquisition by Andromedia of the capital stock
of Andromedia, other than repurchases of unvested shares subject to a
repurchase right in favor of Andromedia in connection with the termination of
a relationship with any employee, consultant, officer or director;
(h) any labor dispute or claim of unfair labor
practices, any change in the compensation payable or to become payable to any
of Andromedia's officers, employees or agents earning compensation at an
anticipated annual rate in excess of $100,000, or any bonus payment or
arrangement made to or with any of such officers, employees or agents; or any
change in the compensation payable or to become payable to any of
Andromedia's other officers, employees or agents other than normal annual
raises in accordance with past practice or any bonus
-10-
payment or arrangement made to or with any of such officers, employees or
agents other than normal bonuses or compensation increases noted on
ITEM 2.10(h) hereof or other arrangements made in accordance with
past practices;
(i) any material and adverse change with respect to
the management, supervisory, development or other key personnel of Andromedia
(the management, supervisory, development and other key personnel of
Andromedia are listed on ITEM 2.10(i) hereof);
(j) any payment or discharge of a lien or liability
thereof, which lien or liability was not either (i) shown on the balance
sheet as of the Balance Sheet Date included in the Andromedia Financial
Statements or (ii) incurred in the ordinary course of business after the
Balance Sheet Date;
(k) any obligation or liability incurred by
Andromedia to any of its officers, directors or shareholders, or any loans or
advances made to any of its officers, directors, shareholders or affiliates,
except normal compensation and expense allowances payable to officers or
directors;
(l) any loss of one or more material Andromedia
customers or such number of Andromedia customers which together represent a
material amount of business;
(m) any amendment or change in the Articles of
Incorporation or Bylaws of Andromedia;
(n) any issuance or sale of any debt or equity
securities (including but not limited to stock) of Andromedia or of any
options or other rights to acquire from Andromedia, directly or indirectly,
any debt or equity securities (including but not limited to stock) of
Andromedia other than the issuance of Andromedia Common Stock and Andromedia
Preferred Stock pursuant to the exercise of options and warrants, or the
conversion of Andromedia Preferred Stock, outstanding as of the date of this
Agreement and the issuance of additional Andromedia Options for an aggregate
of 100,000 shares of Andromedia Common Stock per calendar month (and the
issuance of Andromedia Common Stock upon the exercise thereof) to new hires
in the ordinary course of business consistent with past practices and
Andromedia's normal guidelines in effect prior to the date of this Agreement
for option grants to new hires in such positions; or
(o) any execution, amendment, relinquishment,
termination or non-renewal by Andromedia of, any material contract, lease,
transaction or legally binding commitment other than in the ordinary course
of Andromedia's business or, to Andromedia's knowledge, any written or oral
indication or assertion by the other party thereto of its desire to so amend,
relinquish, terminate or not renew any such contract, lease transaction or
legally binding commitment.
2.11 AGREEMENTS AND COMMITMENTS. Except as set forth in ITEM
2.11 and delivered or made available by Andromedia to Macromedia herewith, or
as listed in ITEM 2.12, ITEM 2.15.3 or ITEM 2.15.6 as required by Section
2.12, Section 2.15.3 or Section 2.15.6, as the case may be, Andromedia is not
a party or subject to any oral or written executory agreement, obligation or
-11-
commitment that is material to Andromedia, its financial condition or
business or which is described below and is not terminable within 60 days
without cost or penalty to Andromedia, including but not limited to the
following:
(a) Any contract, commitment, letter agreement,
quotation or purchase order providing for payments by or to Andromedia in an
amount with respect to any single transaction of (i) $100,000 or more in the
ordinary course of business or (ii) $50,000 or more not in the ordinary
course of business;
(b) Any license agreement under which Andromedia is
licensor (except for any nonexclusive software license granted by Andromedia
to end-user customers where the form of the license, excluding standard
immaterial deviations, has been provided or made available to Macromedia's
counsel) which provides for the payment of $50,000 or more to Andromedia; or
under which Andromedia is licensee (except for standard "shrink wrap"
licenses for off-the-shelf software products);
(c) Any agreement by Andromedia to encumber, transfer
or sell any material rights in or with respect to any Andromedia Intellectual
Property (as defined in Section 2.12 hereof) except in the ordinary course of
business consistent with past practice;
(d) Any agreement for the sale or lease of real or
personal property involving more than $25,000 per year;
(e) Any dealer, distributor, sales representative,
original equipment manufacturer, value added remarketer or other agreement
for the distribution of Andromedia's products;
(f) Any franchise agreement or financing statement;
(g) Any stock redemption or purchase agreement;
(h) Any joint venture contract or arrangement or any
other agreement that involves a sharing of profits with other persons or the
payment of royalties to any other person;
(i) Any instrument evidencing indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee or otherwise, except for trade
indebtedness or any advance to any employee of Andromedia incurred or made in
the ordinary course of business, and except as disclosed in the Andromedia
Financial Statements;
(j) Any contract containing covenants purporting to
limit Andromedia's freedom to compete in any line of business in any
geographic area or to sell products or services to a specific entity; or
-12-
(k) Any contract or commitment for the employment of
any officer, employee or consultant of Andromedia or any other type of
contract or understanding with any officer, employee or consultant of
Andromedia that is not immediately terminable by Andromedia without cost or
liability.
All agreements, obligations and commitments listed in
ITEM 2.11, ITEM 2.12, ITEM 2.15.3 or ITEM 2.15.6 as required by Section 2.11,
Section 2.12, Section 2.15.3 or Section 2.15.6, as the case may be, are valid
and in full force and effect, and except as expressly noted, a true and
complete copy of each has been delivered or made available to Macromedia.
Except as noted on ITEM 2.11, neither Andromedia nor, to the knowledge of
Andromedia, any other party is in material breach of or default under any
material term of any such agreement, obligation or commitment. Andromedia
has no liability for renegotiation of government contracts or subcontracts
which are material to Andromedia, its financial condition, business or
prospects.
2.12 INTELLECTUAL PROPERTY. Andromedia owns all right, title
and interest in, or has the right to use, all patent applications, patents,
trademark applications, trademarks, service marks, trade names, copyright
applications, copyrights, trade secrets, know-how, technology and other
intellectual property and proprietary rights used in or reasonably necessary
to the conduct of its business as presently conducted and the business of the
development, production, marketing, licensing and sale of commercial products
using such intellectual property and proprietary rights ("ANDROMEDIA
INTELLECTUAL PROPERTY"). Andromedia has taken commercially reasonable
measures to protect all Andromedia Intellectual Property, and, except as set
forth on ITEM 2.12, to the knowledge of Andromedia, Andromedia is not aware
of any infringement of any Andromedia Intellectual Property by any third
party. Set forth on ITEM 2.12 delivered to Macromedia herewith is a true and
complete list of all copyright, mask work and trademark registrations and
applications and all patents and patent applications for Andromedia
Intellectual Property owned by Andromedia. Andromedia is not aware of any
loss, cancellation, termination or expiration of any such registration or
patent except as set forth on ITEM 2.12. The business of Andromedia as
conducted as of the date hereof does not, and the business of the
development, production, marketing, licensing and sale of commercial products
using such intellectual property and proprietary rights after the Effective
Time will not cause Andromedia to, infringe or violate any of the patents,
trademarks, service marks, trade names, mask works, copyrights, trade
secrets, proprietary rights or other intellectual property of any other
person, and, except as noted in ITEM 2.12, Andromedia has not received any
written or oral claim or notice of infringement or potential infringement of
the intellectual property of any other person which could be reasonably
expected to have a Material Adverse Effect on Andromedia. Andromedia is not
aware of any restrictions on its worldwide right to reproduce, manufacture,
sell, license and distribute all of its products (such products being set
forth in ITEM 2.12) and the right to use all of its registered user lists
and, to Andromedia's knowledge, it is not using any confidential information
or trade secrets of any former employer of any past or present employees.
2.13 COMPLIANCE WITH LAWS. Andromedia has complied, or prior
to the Closing Date (as defined in Section 6.1 hereof) will have complied,
and is or will be at the Closing Date (as defined in Section 6.1 hereof) in
compliance, in all respects material to Andromedia, with all applicable laws,
ordinances, regulations and rules, and all orders, writs, injunctions,
awards, judgments and decrees, applicable to Andromedia or to the assets,
properties and business of Andromedia, including, without
-13-
limitation: (a) all applicable federal and state securities laws and
regulations, (b) all applicable federal, state and local laws, ordinances and
regulations, and all orders, writs, injunctions, awards, judgments and
decrees, pertaining to (i) the sale, licensing, leasing, ownership or
management of Andromedia's owned, leased or licensed real or personal
property, products or technical data, (ii) employment or employment
practices, terms and conditions of employment, or wages and hours or (iii)
safety, health, fire prevention, environmental protection (including toxic
waste disposal and related matters described in Section 2.21 hereof),
building standards, zoning or other similar matters, (c) the Export
Administration Act and regulations promulgated thereunder or other laws,
regulations, rules, orders, writs, injunctions, judgments or decrees
applicable to the export or re-export of controlled commodities or technical
data, (d) the Immigration Reform and Control Act and (e) all governmental and
nongovernmental regulations related to the operation and use of the Internet.
Andromedia has received all material permits and approvals from, and has
made all material filings with, third parties, including government agencies
and authorities, that are necessary to the conduct of its business as
presently conducted.
2.14 CERTAIN TRANSACTIONS AND AGREEMENTS. No person who is
an officer or director of Andromedia, or a member of any officer's or
director's immediate family, has any direct or indirect ownership interest in
or any employment or consulting agreement with any firm or corporation that
competes with Andromedia or Macromedia (except with respect to any interest
in less than 1% of the outstanding voting shares of any corporation whose
stock is publicly traded). No person who is an officer or director of
Andromedia, or any member of any officer's or director's immediate family, is
directly or indirectly interested in any contract or informal arrangement
with Andromedia, including, but not limited to, any loan arrangements, except
for compensation for services as an officer (listed in Item 2.15.3), director
or employee of Andromedia and except for the normal rights of a shareholder,
warrantholder or optionholder. None of such officers or directors or family
members has any interest in any (a) Andromedia Intellectual Property or (b)
property (other than Andromedia Intellectual Property) used in the business
of Andromedia whether such property is real or personal, tangible or
intangible.
2.15 EMPLOYEES.
2.15.1 Except as set forth in ITEM 2.15.1, (i)
Andromedia has no employment contract or consulting agreement currently in
effect that is not terminable at will without penalty or payment of
compensation by Andromedia (other than agreements with the sole purpose of
providing for the confidentiality of proprietary information or assignment of
inventions) and (ii) all employees and consultants of Andromedia have
executed Andromedia's standard form of assignments of copyright and other
intellectual property rights to Andromedia.
2.15.2 Andromedia (a) has never been and is not now
subject to a union organizing effort, (b) is not subject to any collective
bargaining agreement with respect to any of its employees, (c) is not subject
to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization, and (d) has no current labor
dispute. Andromedia has good labor relations, and Andromedia has no knowledge
of any facts indicating that the consummation of the transactions provided
for herein will have a material adverse effect
-14-
on its labor relations, and has no knowledge that any of its key development
or other employees (each of whom is listed on ITEM 2.15.2) intends to leave
its employ.
2.15.3 ITEM 2.15.3 delivered by Andromedia to
Macromedia herewith contains a list of all employment and consulting
agreements, pension, retirement, disability, medical, dental or other health
plans, life insurance or other death benefit plans, profit sharing, deferred
compensation agreements, stock, option, bonus or other incentive plans,
vacation, sick, holiday or other paid leave plans, severance plans or other
similar employee benefit plans maintained by Andromedia or any trade or
business which is treated as a single employer with Andromedia within the
meaning of the Code Section 414(b), (c), (m) or (o) (each an "ERISA
AFFILIATE") (the "EMPLOYEE PLANS"), including without limitation all
"employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Andromedia
shall deliver to Macromedia no later than ten days after the date of this
Agreement a true and complete copy of, to the extent applicable, (a) all
Employee Plans, (b) the three most recent annual reports (Form 5500s), (c)
each trust agreement related to such Employee Plans, (d) most recent summary
plan description for each Employee Plan for which a description is required,
(e) the most recent Internal Revenue Service determination letter issued with
respect to any Employee Plan, and (f) any material contract regarding the
funding arrangement for any Employee Plan. Except as set forth in ITEM
2.15.3, each of the Employee Plans, and its operation and administration, is
in compliance with each of the respective Employee Plans' terms and all
applicable, federal, state, local and other governmental laws and ordinances,
orders, rules and regulations, including the requirements of ERISA and the
Code, except to the extent that any operational or administrative deviation
from the terms of any such Employee Plan which is a qualified plan within the
meaning of Section 401(a) of the Code may be corrected as set forth in
Revenue Procedure 98-22. Except as set forth in ITEM 2.15.3, all such
Employee Plans that are "employee pension benefit plans" (as defined in
Section 3(2) of ERISA) which are intended to qualify under Section 401(a) of
the Code have received favorable determination opinion, notification or
advisory letters with respect to such plans that such plans comply with the
Tax Reform Act of 1986 or have remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such a
letter and make any amendments necessary to obtain a favorable determination
as to the qualified states of each such Employee Plan. In addition,
Andromedia has never been a participant in any "prohibited transaction,"
within the meaning of Section 406 of ERISA which was not otherwise exempt
pursuant to Section 4975 or Section 408 of ERISA (including, but not limited
to, any individual exemption granted under Section 408(a) of ERISA) with
respect to any employee pension benefit plan (as defined in Section 3(2) of
ERISA) which Andromedia sponsors as employer or in which Andromedia
participates as an employer. Except as set forth in ITEM 2.15.3, no Employee
Plans will be subject to any surrender fees or service fees upon termination
other than the normal and reasonable administrative fees associated with the
termination of benefit plans. All Employee Plans, to the extent applicable,
are in compliance, with (a) the continuation coverage requirements of Section
4980B of the Code and Sections 601 through 608 of ERISA, (b) the Americans
with Disabilities Act of 1990, as amended, and (c) the Family Medical Leave
Act of 1993, as amended, and the regulations thereunder.
-15-
2.15.4 To Andromedia's knowledge, no employee of
Andromedia is in violation of any material term of any employment contract,
patent disclosure agreement or noncompetition agreement or any other contract
or agreement, or any restrictive covenant, relating to the right of any such
employee to be employed by Andromedia or to use trade secrets or proprietary
information of others, and the employment of any employee of Andromedia does
not subject Andromedia to any material liability to any third party.
2.15.5 Except as set forth in ITEM 2.15.5, Andromedia
is not a party to any (a) agreement with any employee of Andromedia (i) the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving Andromedia in the
nature of any of the transactions contemplated by this Agreement, the
Agreement of Merger or the Certificate of Merger, (ii) providing any term of
employment or compensation guarantee or (iii) providing severance benefits or
other benefits after the termination of employment of such employee
regardless of the reason for such termination of employment, or (b) agreement
or plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be materially increased, or the vesting of benefits of which will be
materially accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, the Agreement of Merger or the Certificate of
Merger or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement, the
Agreement of Merger and the Certificate of Merger. Except as set forth on
ITEM 2.15.5, Andromedia is not obligated to make any parachute payment, as
defined in Section 280G(b)(2) of the Code, nor will any parachute payment be
deemed to have occurred as a result of the transactions contemplated by this
Agreement, the Articles of Merger or the Certificate of Merger.
2.15.6 A list of all employees, officers and
consultants of Andromedia and their current compensation and benefits as of
the date of this Agreement is set forth on ITEM 2.15.6.
2.15.7 All contributions required by Andromedia under
the terms of any of the Employee Plans have been made or accrued on the
Andromedia Financial Statements, and no further contributions will be due or
will have accrued thereunder as of the Closing Date.
2.16 NO BROKERS. Except as set forth in ITEM 2.16,
Andromedia is not obligated for the payment of fees or expenses of any
investment banker, broker or finder in connection with the origin,
negotiation or execution of this Agreement, the Agreement of Merger or the
Certificate of Merger or in connection with any transaction provided for
herein or therein.
2.17 DISCLOSURE. This Agreement and its exhibits and
schedules, taken together, do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading.
2.18 POOLING ACCOUNTING. To Andromedia's knowledge, neither
Andromedia nor any of its affilates has taken or agreed to take any action
that could be expected to prevent
-16-
Andromedia from being a party to a business combination for which
the pooling of interests method of accounting would be available.
2.19 INSURANCE. Andromedia maintains, and at all times
during the prior three years, maintained, fire and casualty, workers
compensation or general liability insurance (as listed on ITEM 2.19) which it
believes to be reasonably prudent for similarly sized and similarly situated
businesses.
2.20 ENVIRONMENTAL MATTERS.
2.20.1 During the period that Andromedia has leased the
premises currently occupied by it and those premises occupied by it since the
date of its incorporation, to Andromedia's best knowledge, there have been no
disposals, releases or threatened releases of Hazardous Materials (as defined
below) on any such premises. Andromedia has no knowledge of any presence,
disposals, releases or threatened releases of Hazardous Materials on or from
any of such premises, which may have occurred prior to Andromedia having
taken possession of any of such premises. For purposes of this Agreement,
the terms "DISPOSAL," "RELEASE," and "THREATENED RELEASE" have the
definitions assigned thereto by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA"). For the purposes of this Section 2.22, "HAZARDOUS
MATERIALS" mean any hazardous or toxic substance, material or waste which is
or becomes prior to the Closing Date (as defined in Section 6.1 hereof)
regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic substance" or
"hazardous chemical" under (i) CERCLA; (ii) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; (iii) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; (iv)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.; (v) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 ET SEQ.;
(vi) regulations promulgated under any of the above statutes; or (vii) any
other applicable federal, state or local statute, ordinance, rule or
regulation that has a scope or purpose similar to those identified above.
2.20.2 To Andromedia's knowledge, during the time that
Andromedia has leased the premises, none of the premises currently leased by
Andromedia or any premises previously occupied by Andromedia is in violation
of any federal, state or local law, ordinance, regulation or order relating
to industrial hygiene or to the environmental conditions in such premises.
2.20.3 To Andromedia's knowledge, during the time that
Andromedia has leased the premises currently occupied by it or any premises
previously occupied by Andromedia, neither Andromedia nor any third party,
has used, generated, manufactured or stored in such premises or transported
to or from such premises any Hazardous Materials.
2.20.4 During the time that Andromedia has leased the
premises currently occupied by it or any premises previously occupied by
Andromedia, there has been no litigation, proceeding or administrative action
brought or, to Andromedia's knowledge, threatened in writing against
Andromedia, or any settlement reached by Andromedia with, any party or
parties alleging
-17-
the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such premises.
2.20.5 To Andromedia's knowledge, during the period
that Andromedia has leased the premises currently occupied by it or any
premises previously occupied by Andromedia, no Hazardous Materials have been
transported from such premises to any site or facility now listed or proposed
for listing on the National Priorities List, at 40 C.F.R. Part 300, or any
list with a similar scope or purpose published by any state authority.
2.21 YEAR 2000 COMPLIANCE. Andromedia has conducted a
reasonable review of all of its software products and all material operating
codes, programs, utilities and other software, as well as all hardware and
systems, utilized by it (collectively, "SYSTEMS") to determine whether such
software products and Systems are designed to record, store, process and
present millennial dates in the same manner, and with the same functionality,
as provided on or before December 31, 1999, and are designed to not lose
functionality or degrade in performance as a consequence of such software
operating at a millennial date (such design and performance being referred to
as "Y-2000 COMPLIANT"). To the extent such review identified software
products or Systems that are not Y-2000 Compliant, (a) Andromedia has taken,
or is planning to take, appropriate corrective action with respect to such
software products and Systems, and to the knowledge of Andromedia, as of the
date hereof, the costs of such corrective action will not exceed, in the
aggregate, $100,000, and (b) such software products and Systems and the
related appropriate corrective action is described in ITEM 2.21. Except as
set forth in Item 2.21, to the knowledge of Andromedia, all suppliers of
technology or other critical products or services to Andromedia are Y-2000
Compliant.
2.22 WARRANTIES. Except as set forth in ITEM 2.22,
Andromedia has not provided to its customers (i) any express warranties,
including any warranties related to Y-2000 Compliant issues, regarding the
software products and services it provides to such customers or (ii) rights
to obtain refunds with respect to such products or services.
2.23 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Andromedia for inclusion in the Notice Materials and the
Information Statement (both as defined in Section 4.6 below), at the date
such information is supplied and at the time of the meeting of the Andromedia
Shareholders (or a written consent of the Andromedia Shareholders) to be held
to approve the Merger, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
2.24 CORPORATE DOCUMENTS. Andromedia has made available to
Macromedia for examination all documents and information listed in the
Andromedia Disclosure Letter or other exhibits called for by this Agreement,
including, without limitation, the following: (a) copies of Andromedia's
Articles of Incorporation and Bylaws as currently in effect; (b) Andromedia's
minute book containing all records of all proceedings, consents, actions and
meetings of Andromedia's directors and shareholders; (c) Andromedia's stock
ledger, journal and other records reflecting all stock issuances and
transfers; and (d) all permits, orders and consents issued
-18-
by any regulatory agency with respect to Andromedia, or any securities of
Andromedia, and all applications for such permits, orders and consents.
2.25 BOOKS AND RECORDS. The books, records and accounts of
Andromedia (a) are in all material respects true and complete, (b) have been
maintained in accordance with reasonable business practices on a basis
consistent with prior years and (c) accurately and fairly reflect in all
material respects the transactions and dispositions of the assets of
Andromedia.
2.26 CLAIMS TO ANDROMEDIA STOCK. To Andromedia's knowledge,
no Andromedia Shareholder has claimed any interest in any additional shares
of capital stock of Andromedia, or any options, warrants or other securities
of Andromedia, except for the number of shares of Andromedia Common Stock or
Andromedia Preferred Stock which such person is shown to be the owner of on
Item 2.3(a), and (b) no third party who is not listed on Item 2.3(a) has
made, or has, any claim of entitlement to receive any shares of the capital
stock of Andromedia, any warrants or other rights to acquire any capital
stock of Andromedia or any other securities of Andromedia.
3. REPRESENTATIONS AND WARRANTIES OF MACROMEDIA
Each of Macromedia and Newco, where applicable, hereby
represents and warrants, that, except as set forth on the Macromedia
disclosure letter delivered to Andromedia herewith:
3.1 ORGANIZATION AND GOOD STANDING. Each of Macromedia and
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own, operate and lease its properties and to carry on its
business as now conducted and as proposed to be conducted.
3.2 POWER, AUTHORIZATION AND VALIDITY.
3.2.1 Each of Macromedia and Newco has the corporate
right, power, legal capacity and authority to enter into and perform its
obligations under this Agreement, and all agreements to which Macromedia or
Newco is or will be a party that are required to be executed pursuant to this
Agreement (the "MACROMEDIA ANCILLARY AGREEMENTS"). The execution, delivery
and performance of this Agreement and the Macromedia Ancillary Agreements
have been duly and validly approved and authorized by Macromedia's Board of
Directors and Newco's Board of Directors, as applicable.
3.2.2 No filing, authorization or approval,
governmental or otherwise, is necessary to enable Macromedia to enter into,
and to perform its obligations under, this Agreement and the Macromedia
Ancillary Agreements, except for (a) the filing of the Agreement of Merger
and the Certificate of Merger with the California Secretary of State and the
Delaware Secretary of State, respectively, and the filing of appropriate
documents with the relevant authorities of other states in which Macromedia
is qualified to do business, if any, (b) such filings as may be required to
comply with federal and state securities laws, and (c) the filings required
by the HSR Act.
-19-
3.2.3 This Agreement and the Macromedia Ancillary
Agreements are, or when executed by Macromedia and Newco (as applicable) and
the other parties thereto will be, valid and binding obligations of
Macromedia and Newco, enforceable against Macromedia and Newco in accordance
with their respective terms, except as to the effect, if any, of (a)
applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (b) rules of law governing specific performance,
injunctive relief and other equitable remedies and (c) the enforceability of
provisions requiring indemnification; provided, however, that the Agreement
of Merger, the Certificate of Merger and the Macromedia Ancillary Agreements
will not be effective until the earlier of the Effective Time or the date
provided for therein.
3.3 NO VIOLATION OF EXISTING AGREEMENTS. Neither the
execution nor delivery of this Agreement or any Macromedia Ancillary
Agreement, nor the consummation of the transactions contemplated hereby or
thereby, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of (a) any
provision of the Certificate of Incorporation or Bylaws of Macromedia or
Newco, as currently in effect, (b) any material instrument or contract to
which Macromedia is a party or by which Macromedia is bound or (c) any
federal, state, local or foreign judgment, writ, decree, order, statute or
regulation applicable to Macromedia or its assets or properties.
3.4 DISCLOSURE. Macromedia has furnished Andromedia with
its annual report on Form 10-K for its fiscal year ended March 31, 1999, its
proxy statement for its annual stockholders meeting held on July 28, 1999 and
all other reports or documents required to be filed by Macromedia pursuant to
Section 13(a) or 15(d) of the 1934 Act since the filing of the most recent
annual report on Form 10-K (such documents, together with documents filed
after the date hereof, being the "MACROMEDIA DISCLOSURE PACKAGE").
Macromedia has filed all such reports and documents required to be filed by
it since January 1, 1998. The Macromedia Disclosure Package, this Agreement,
the exhibits and schedules hereto, and any certificates or documents to be
delivered to Andromedia pursuant to this Agreement, when taken together, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which such statements were made,
not misleading.
3.5 VALID ISSUANCE. The Macromedia Common Stock to be
issued in the Merger will, when issued in accordance with the provisions of
this Agreement, the Agreement of Merger and the Certificate of Merger, be
validly issued, fully paid and nonassessable.
3.6 CAPITALIZATION. As of the dates set forth in the
Macromedia Disclosure Package, the authorized capital stock of Macromedia and
the numbers of shares of issued and outstanding Macromedia Common Stock were
as set forth in the Macromedia Disclosure Package.
3.7 MACROMEDIA FINANCIAL STATEMENTS. As of the dates set
forth in the Macromedia Disclosure Package, the financial statements of
Macromedia included therein (a) were in accordance with the books and records
of Macromedia, (b) fairly and accurately represented the financial condition
of Macromedia at the respective dates specified therein and the results of
operations for the respective periods specified therein and (c) were prepared
in accordance with generally accepted accounting principles applied on a
consistent basis.
-20-
3.8 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Macromedia for inclusion in the Notice Materials and the
Information Statement, at the date such information is supplied and at the
time of the meeting of the Andromedia Shareholders to be held to approve the
Merger, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3.9 POOLING ACCOUNTING. To Macromedia's knowledge, neither
Macromedia nor any of its affilates has taken or agreed to take any action
that could be expected to prevent the Merger from being treated for
accounting purposes as a pooling of interests.
4. ANDROMEDIA PRECLOSING COVENANTS
During the period from the date of this Agreement until the
Effective Time, Andromedia covenants to and agrees with Macromedia as follows:
4.1 ADVICE OF CHANGES. Andromedia will promptly advise
Macromedia in writing, (a) of any event occurring subsequent to the date of
this Agreement that would render the representations and warranties of
Andromedia contained in this Agreement, if made on or as of the date of such
event or the Closing Date (as defined in Section 6.1 hereof), untrue or
inaccurate in any material respect unless Andromedia reasonably believes such
event will be cured within 30 days and (b) of any Material Adverse Effect on
Andromedia.
4.2 MAINTENANCE OF BUSINESS. If Andromedia becomes aware of
a material deterioration in the relationship with any customer, supplier or
key employee, it will promptly bring such information to the attention of
Macromedia in writing and, if requested by Macromedia, will exert all
reasonable efforts to restore the relationship.
4.3 CONDUCT OF BUSINESS. Except as provided otherwise
herein or as approved or recommended by Macromedia, Andromedia will not,
without the prior written consent of the Chief Executive Officer or Chief
Financial Officer of Macromedia, not to be unreasonably withheld:
(a) incur any indebtedness for borrowed money
individually or in the aggregate in excess of $100,000;
(b) enter into any transaction or make any commitment
involving an expense of Andromedia or capital expenditure by Andromedia in
excess of $100,000;
(c) encumber or permit to be encumbered any of its
assets except in the ordinary course of its business consistent with past
practice and to an extent which is not material;
(d) dispose of any of its assets except in the
ordinary course of business consistent with past practice;
-21-
(e) enter into any material lease or contract for the
purchase or sale of any property, real or personal, tangible or intangible,
except in the ordinary course of business consistent with past practice or
enter into any agreement of the types described in Section 2.11;
(f) fail to maintain its equipment and other assets
in good working condition and repair according to the standards it has
maintained to the date of this Agreement, subject only to ordinary wear and
tear;
(g) except as set forth on ITEM 4.3(g), pay any
bonus, royalty, increased salary (except for increases in the ordinary course
of business consistent with past practice) or special remuneration to any
officer, employee or consultant (except pursuant to existing arrangements
heretofore disclosed in writing to Macromedia) or enter into any new
employment or consulting agreement with any such person, or enter into any
new agreement or plan of the type described in Section 2.15.3;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock
dividend or other distribution in respect of capital stock, or redeem or
otherwise acquire any of its capital stock;
(j) amend or terminate any contract, agreement or
license to which it is a party except those amended or terminated in the
ordinary course of business, consistent with past practice;
(k) lend any amount to any person or entity, other
than advances for travel and expenses which are incurred in the ordinary
course of business consistent with past practice, not material in amount,
which travel and expenses shall be documented by receipts for the claimed
amounts;
(l) guarantee or act as a surety for any obligation
except for the endorsement of checks and other negotiable instruments in the
ordinary course of business, consistent with past practice;
(m) waive or release any material right or claim
except in the ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital stock of
any class or any other of its securities, or issue or create any warrants,
obligations, subscriptions, options, convertible securities, stock
appreciation rights or other commitments to issue shares of capital stock
other than the issuance of Andromedia Common Stock and Andromedia Preferred
Stock pursuant to the exercise of outstanding Andromedia Options and
Andromedia Warrants, or the conversion of Andromedia Preferred Stock,
outstanding as of the date of this Agreement and the issuance of additional
Andromedia Options for an aggregate of 100,000 shares of Andromedia Common
Stock per calendar month (and the issuance of Andromedia Common Stock upon
the exercise thereof) to new hires in the ordinary course of business
consistent with past practices and Andromedia's normal guidelines in effect
prior to the date of this Agreement for option grants to such positions, or
accelerate the vesting of any outstanding option or other security;
-22-
(o) split or combine the outstanding shares of its
capital stock of any class or enter into any recapitalization affecting the
number of outstanding shares of its capital stock of any class or affecting
any other of its securities;
(p) except for the Merger, merge, consolidate or
reorganize with, or acquire any entity;
(q) amend its Articles of Incorporation or Bylaws;
(r) agree to any audit assessment by any tax
authority or file any federal or state income or franchise tax return unless
copies of such returns have been delivered to Macromedia for its review prior
to filing;
(s) license any of Andromedia's technology or any of
Andromedia's Intellectual Property, except in the ordinary course of business
consistent with past practice;
(t) change any insurance coverage or issue any
certificates of insurance except in the ordinary course of business;
(u) terminate the employment of any key employee
listed in Item 2.10(i); or
(v) agree to do any of the
things described in the preceding clauses 4.3(a) through 4.3(u).
4.4 CERTAIN AGREEMENTS. Andromedia will use all
commercially reasonable efforts to cause all present employees and
consultants of Andromedia who have not previously executed Andromedia's forms
of assignments of copyright and other intellectual property rights to
Andromedia to execute such forms, copies of which are attached hereto as
EXHIBIT 4.4.
4.5 NECESSARY CONSENTS. Andromedia will use all
commercially reasonable efforts to obtain such written consents and take such
other actions as may be necessary or appropriate for Andromedia, in addition
to those set forth in Section 4.6, to facilitate and allow the consummation
of the transactions provided for herein and to facilitate and allow
Macromedia to carry on Andromedia's business after the Closing Date (as
defined in Section 6.1 hereof).
4.6 PREPARATION OF PERMIT APPLICATION, HEARING REQUEST,
HEARING NOTICE AND INFORMATION STATEMENT. As promptly as practicable after
the date hereof, Macromedia and Andromedia shall prepare and file with the
California Commissioner of Corporations the documents required by the
California Corporate Securities Law of 1968, as amended (the "CCSL")
including, but not limited to, any required "PERMIT APPLICATION," "HEARING
REQUEST," and "HEARING NOTICE", pursuant to Sections 25121 and 25142 of the
CCSL (collectively, the "NOTICE MATERIALS"), in connection with the Merger,
in order to perfect the exemption from registration provided by Section
3(a)(10) of the Securities Act of 1933 (the "SECURITIES ACT"). Each of
Macromedia and Andromedia shall use reasonable efforts to have the Permit
Application, Hearing Request and Hearing Notice declared effective under the
CCSL as promptly as practicable after such filing. In addition, Andromedia
and Macromedia will prepare and Andromedia will distribute an information
statement or proxy statement (the "INFORMATION STATEMENT") along with the
-23-
Notice Materials, as may be required by California Law, at the earliest
practicable date to submit this Agreement, the Merger and related matters for
the consideration and approval of the Andromedia Shareholders, which approval
will be recommended by Andromedia's Board of Directors and management. Such
Information Statement will contain information, and will be solicited, in
compliance with applicable law. Each of Macromedia and Andromedia will
promptly provide all information relating to their respective business and
operations necessary for inclusion in the Notice Materials to satisfy all
requirements of applicable state and federal securities laws. Each of
Macromedia and Andromedia shall be solely responsible for any statement,
information or omission in the Notice Materials relating to it or its
affiliates based upon written information furnished by it.
4.7 MEETING OF ANDROMEDIA SHAREHOLDERS.
(a) Andromedia will take all action necessary in
accordance with the California Law and its Articles of Incorporation and
Bylaws to call, notice, convene and hold the Andromedia Shareholders' Meeting
to be held as promptly as practicable, and in any event (to the extent
permissible under applicable law) no more than ten (10) days after the
California Commissioner of Corporations has issued a permit declaring the
Permit Application, Hearing Request and Hearing Notice with respect to the
Merger effective, for the purpose of voting upon approval of this Agreement
and the Merger. Subject to Section 4.7(c), Andromedia will solicit from its
shareholders proxies in favor of the approval of this Agreement and the
Merger, and will use its commercially reasonable efforts to take all other
action necessary or advisable to secure the vote or consent of its
shareholders required by the rules of California Law to obtain such
approvals. Notwithstanding anything to the contrary contained in this
Agreement, Andromedia may adjourn or postpone the Andromedia Shareholders'
Meeting if as of the time for which Andromedia Shareholders' Meeting is
originally scheduled there are insufficient shares of Andromedia Common Stock
represented (either in person or by proxy) to constitute a quorum necessary
to conduct the business of the Andromedia Shareholders' Meeting. Andromedia
shall ensure that the Andromedia Shareholders' Meeting is called, noticed,
convened, held and conducted prior to and separate from any meeting of the
Andromedia Shareholders at which any Acquisition Proposal (as defined in
Section 4.8) or Acquisition Transaction (as defined in Section 4.8) is
considered or voted upon. Andromedia will use its commercially reasonable
efforts to ensure that all proxies solicited by Andromedia in connection with
the Andromedia Shareholders' Meeting are solicited in compliance with the
California Law, its Articles of Incorporation and Bylaws, and all other
applicable legal requirements. Andromedia's obligation to call, give notice
of, convene, hold and conduct the Andromedia Shareholders' Meeting in
accordance with this Section 4.7(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to
Andromedia of any Acquisition Proposal (as defined in Section 4.8) (including
a Superior Offer (as defined in Section 4.7(c)), or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of
Andromedia to the Andromedia Shareholders to approve this Agreement and the
Merger.
(b) Subject to Section 4.7(c): (i) the Board of
Directors of Andromedia shall recommend that Andromedia's shareholders vote
in favor of and approve this Agreement and the Merger at the Andromedia
Shareholders' Meeting; (ii) the Information Statement shall include a
statement to the effect that the Board of Directors of the Andromedia has
recommended that the
-24-
Andromedia Shareholders vote in favor of and approve this Agreement and the
Merger at the Andromedia Shareholders' Meeting; and (iii) neither the
Board of Directors of Andromedia nor any committee thereof shall withdraw,
amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to Macromedia, the recommendation of the Board of
Directors of Andromedia that Andromedia's shareholders vote in favor of and
approve this Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Board
of Directors of Andromedia from withholding, withdrawing, amending or
modifying its recommendation in favor of the Merger if (i) a Superior Offer
is made to Andromedia and is not withdrawn, (ii) Andromedia shall have
provided written notice to Macromedia (a "NOTICE OF SUPERIOR OFFER") advising
Macromedia that Andromedia has received a Superior Offer, specifying all of
the material terms and conditions of such Superior Offer and identifying the
person or entity making such Superior Offer, (iii) Macromedia shall not have,
within two business days following Macromedia's receipt of the Notice of
Superior Offer, made an offer that the Andromedia Board by a majority vote
determines in its good faith judgment (after consultation with its financial
adviser) to be at least as favorable to the Andromedia Shareholders as such
Superior Offer (it being agreed that the Board of Directors of Andromedia
shall convene a meeting to consider any such offer by Macromedia promptly
following the receipt thereof), (iv) the Board of Directors of Andromedia
concludes in good faith, after consultation with its outside counsel, that,
in light of such Superior Offer, the withholding, withdrawal, amendment or
modification of such recommendation is required in order for the Board of
Directors of Andromedia to comply with its fiduciary obligations to the
Andromedia Shareholders under applicable law and (v) Andromedia shall not
have violated any of the restrictions set forth in Section 4.8 or this
Section 4.7. The Board of Directors of Andromedia shall provide Macromedia
with at least one business day prior notice (or such lesser prior notice as
provided to the members of Andromedia's Board of Directors) of any meeting of
Andromedia's Board of Directors at which Andromedia's Board of Directors is
reasonably expected to consider any Acquisition Proposal (as defined in
Section 4.8) to determine whether such Acquisition Proposal is a Superior
Offer. Nothing contained in this Section 4.7 shall limit Andromedia's
obligation to hold and convene the Andromedia Shareholders' Meeting
(regardless of whether the recommendation of the Board of Directors of
Andromedia shall have been withheld, withdrawn, amended or modified). For
purposes of this Agreement "SUPERIOR OFFER" shall mean an unsolicited, bona
fide written offer made by a third party to consummate any of the following
transactions: (i) a merger or consolidation involving Andromedia pursuant to
which the shareholders of Andromedia immediately preceding such transaction
hold less than 50% of the equity interests in the surviving or resulting
entity of such transaction or (ii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or a two step
transaction involving a tender offer followed with reasonable promptness by a
cash-out merger involving Andromedia), directly or indirectly, of ownership
of all of the then outstanding shares of capital stock of Andromedia, on
terms that the Board of Directors of Andromedia determines, in its reasonable
judgment (after consultation with its financial adviser) to be more favorable
to Andromedia's shareholders than the terms of the Merger; PROVIDED, HOWEVER,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer
is not likely in the reasonable judgment of the Board of Directors of
Andromedia to be obtained by such third party on a timely basis.
-25-
(d) Nothing contained in this Agreement shall
prohibit Andromedia or its Board of Directors from taking and disclosing to
its shareholders a position contemplated by Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act.
4.8 NO SOLICITATION.
(a) From and after the date of this Agreement until
the Effective Time or termination of this Agreement pursuant to Section 9,
Andromedia and its Subsidiaries will not, nor will they authorize or permit
any of their respective officers, directors, affiliates or employees or any
investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly: (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
hereinafter defined); (ii) furnish to any person any non-public information
with respect to any Acquisition Proposal; (iii) participate or engage in any
discussions or negotiations with any person with respect to any Acquisition
Proposal, except that Andromedia may inform third parties, in response to
unsolicited inquiries, of the existence of these provisions; (iv) except as
permitted by Section 4.7(c), approve, endorse or recommend any Acquisition
Proposal; or (v) enter into any letter of intent or similar document or any
contract, agreement, agreement in principle or commitment contemplating or
otherwise relating to any Acquisition Transaction (as hereinafter defined);
PROVIDED, HOWEVER, that prior to the approval of this Agreement and the
Merger at Andromedia Stockholders' Meeting, this Section 4.8(a) shall not
prohibit Andromedia from furnishing nonpublic information regarding
Andromedia and its Subsidiaries to, or entering into discussions with, any
person or group who has submitted (and not withdrawn) to Andromedia an
unsolicited, written, bona fide Acquisition Proposal that the Board of
Directors of Andromedia reasonably concludes (after consultation with its
financial adviser) may constitute, or may be reasonably expected to lead to,
a Superior Offer if (1) neither Andromedia nor any representative of
Andromedia or its Subsidiaries shall have violated any of the restrictions
set forth in this Section 4.8, (2) the Board of Directors of Andromedia
concludes in good faith, after consultation with its outside legal counsel,
that such action is required in order for the Board of Directors of
Andromedia to comply with its fiduciary obligations to Andromedia's
stockholders under applicable law, (3) prior to furnishing any such nonpublic
information to, or entering into any such discussions with, such person or
group, Andromedia gives Macromedia written notice of the identity of such
person or group and all of the material terms and conditions of such
Acquisition Proposal and of Andromedia's intention to furnish nonpublic
information to, or enter into discussions with, such person or group, and
Andromedia receives from such person or group an executed confidentiality
agreement containing terms at least as restrictive with regard to
Andromedia's confidential information as the non-disclosure agreement between
Andromedia and Macromedia executed prior to this Agreement, (4) Andromedia
gives Macromedia at least two business days advance notice of its intent to
furnish such nonpublic information or enter into such discussions, and (5)
contemporaneously with furnishing any such nonpublic information to such
person or group, Andromedia furnishes such nonpublic information to
Macromedia (to the extent such nonpublic information has not been previously
furnished by Andromedia to Macromedia). Andromedia and its Subsidiaries will
immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding two sentences by
any officer, director or employee of Andromedia or any of its
-26-
subsidiaries or any investment banker, attorney or other advisor or
representative of Andromedia or any of its subsidiaries shall be deemed to be
a breach of this Section 4.8 by Andromedia. Notwithstanding any provision of
this Agreement to the contrary, Andromedia will be allowed to (i) communicate
with and provide information to the underwriters of its proposed initial
public offering to the extent legally required as a result of having filed
its registration statement on form S-1 and (ii) pursue financing alternatives
that do not constitute a change of control of Andromedia in the event
Macromedia does not comply with its obligations under Section 5.12.
For purposes of this Agreement, "ACQUISITION PROPOSAL"
shall mean any offer or proposal (other than an offer or proposal by
Macromedia) relating to any Acquisition Transaction. For the purposes of
this Agreement, "ACQUISITION TRANSACTION" shall mean any transaction or
series of related transactions other than the transactions contemplated by
this Agreement involving: (A) any acquisition or purchase from Andromedia by
any person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) of more than a 5% interest in the total
outstanding voting securities of Andromedia or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any person
or "group" (as defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) beneficially owning 5% or more of the total
outstanding voting securities of Andromedia, or any of its subsidiaries or
any merger, consolidation, business combination or similar transaction
involving Andromedia; (B) any sale, lease (other than in the ordinary course
of business), exchange, transfer, license (other than in the ordinary course
of business), acquisition or disposition of more than 5% of the assets of
Andromedia; or (C) any liquidation or dissolution of Andromedia.
(b) In addition to the obligations of Andromedia set
forth in paragraph (a) of this Section 4.8, Andromedia as promptly as
practicable shall advise Macromedia orally and in writing of any request for
non-public information or any other inquiry which Andromedia reasonably
believes could lead to an Acquisition Proposal or of any Acquisition
Proposal, the material terms and conditions of such request, inquiry or
Acquisition Proposal, and the identity of the person or group making any such
request, inquiry or Acquisition Proposal. Andromedia will keep Macromedia
informed as promptly as practicable in all material respects of amendments to
any such request, inquiry or Acquisition Proposal.
4.9 REGULATORY APPROVALS. Andromedia will execute and file,
or join in the execution and filing, of any application or other document
that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, federal, state, local or foreign, which may
be reasonably required, or which Macromedia may reasonably request, in
connection with the consummation of the transactions provided for in this
Agreement. Andromedia will use all reasonable efforts to obtain or assist
Macromedia in obtaining all such authorizations, approvals and consents.
4.10 ACCESS TO INFORMATION. Until the Closing Date (as
defined in Section 6.1 hereof) and subject to the terms and conditions hereof
relating to the confidentiality and use of confidential and proprietary
information, Andromedia will provide Macromedia and its agents with
reasonable access, during regular business hours, to the files, books,
records and offices of Andromedia, including, without limitation, any and all
information relating to Andromedia taxes,
-27-
commitments, contracts, leases, licenses, real, personal and intangible
property, and financial condition, and specifically including, without
limitation, access to Andromedia source code reasonably necessary for
Macromedia to complete its diligence review of Andromedia products and
technology. Andromedia will cause its accountants to cooperate with
Macromedia and its agents in making available all financial information
reasonably requested, including without limitation the right to examine all
working papers pertaining to all financial statements prepared or audited by
such accountants.
4.11 SATISFACTION OF CONDITIONS PRECEDENT. Andromedia will
use all commercially reasonable efforts to satisfy or cause to be satisfied
all the conditions precedent which are set forth in Section 8, and Andromedia
will use all commercially reasonable efforts to cause the transactions
provided for in this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of
third parties and to make all filings with, and give all notices to, third
parties that may be necessary or reasonably required on its part in order to
effect the transactions provided for herein.
4.12 BLUE SKY LAWS. Andromedia shall use reasonable efforts
to assist Macromedia to the extent necessary to comply with the securities
and Blue Sky laws of all jurisdictions applicable in connection with the
Merger.
4.13 NOTIFICATION OF EMPLOYEE PROBLEMS. Andromedia will
promptly notify Macromedia if any of Andromedia's officers becomes aware that
any of the key employees listed in ITEM 2.15.2 intends to leave its employ.
4.14 ANDROMEDIA AFFILIATES AGREEMENTS. To help ensure that
the issuance of Macromedia Common Stock in the Merger complies with the
Securities Act and that the Merger will be accounted for as a "pooling of
interests," concurrently with the execution of this Agreement Andromedia will
deliver to Macromedia a letter identifying all persons who are, in
Andromedia's reasonable judgment, "affiliates" of Andromedia at the time this
Agreement is executed (the "ANDROMEDIA AFFILIATES"). Andromedia will provide
Macromedia with all information and documents needed to evaluate this list
for compliance with securities laws. Andromedia will, concurrently with the
execution of this Agreement or as soon as practicable thereafter, cause each
of its affiliates to deliver to Macromedia, a written agreement (the
"ANDROMEDIA AFFILIATES AGREEMENT"), in the form of EXHIBIT 4.14.
4.15 ANDROMEDIA DISSENTING SHARES. As promptly as
practicable after the date the Information Statement is distributed to
Andromedia Shareholders and prior to the Closing Date, Andromedia shall
furnish Macromedia with the name and address of each Andromedia Shareholder
who has up to such time dissented and the number of shares owned by such
Andromedia Shareholders.
4.16 POOLING ACCOUNTING. Andromedia shall use all
commercially reasonable efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests.
Andromedia shall use reasonable efforts to cause Andromedia Affiliates not to
take any action that would adversely affect the ability of Macromedia to
account for the business combination to be effected by the Merger as a
pooling of interests.
-28-
4.17 LITIGATION. Andromedia will notify Macromedia in
writing promptly after learning of any material action, suit, proceeding or
investigation by or before any court, board or governmental agency, initiated
by or against Andromedia or threatened against it.
4.18 CERTAIN EMPLOYEE BENEFITS. As soon as practicable after
the execution of this Agreement, Andromedia and Macromedia shall confer and
work together in good faith to agree upon mutually acceptable employee
benefit and compensation arrangements for Andromedia's and its Subsidiaries'
employees following the Merger. Andromedia and its Subsidiaries shall take
such actions as are necessary to terminate such Employee Plans as are
requested by Macromedia to be terminated, provided that those Andromedia and
Subsidiary employees who are eligible to participate in each such Employee
Plan shall be provided the opportunity to participate in a substantially
comparable employee benefit plan maintained by Macromedia and provided
further that Macromedia requests such termination no later than ten days
prior to the Closing Date. Andromedia agrees that it and its Subsidiaries
shall terminate any and all group severance, separation, retention and salary
continuation plans, programs or arrangements (other than certain Change in
Control Agreements entered into by six employees identified in the Andromedia
Disclosure Letter) prior to the Closing.
5. MACROMEDIA COVENANTS
During the period from the date of this Agreement and, in the
case of Sections 5.1 through 5.5 and Sections 5.8 through 5.10, until the
Effective Time, Macromedia covenants to and agrees with Andromedia as follows:
5.1 ACCESS TO INFORMATION. Until the Closing Date (as
defined in Section 6.1 hereof) and subject to the terms and conditions hereof
relating to confidentiality and use of confidential and proprietary
information, Macromedia will provide Andromedia and its agents with
reasonable access to its management and officers and material information
regarding Macromedia, including, without limitation, material information
relating to Macromedia's business, intellectual property and financial
condition. Macromedia will cause its accountants to cooperate with
Andromedia's accountants in making available all financial information
reasonably requested to evaluate Macromedia's financial package.
5.2 SATISFACTION OF CONDITIONS PRECEDENT. Macromedia will
use all commercially reasonable efforts to satisfy or cause to be satisfied
all the conditions precedent which are set forth in Section 7, and Macromedia
will use all commercially reasonable efforts to cause the transactions
provided for in this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of
third parties and to make all filings with, and give all notices to, third
parties that may be necessary or reasonably required on its part in order to
effect the transactions provided for herein.
5.3 REGULATORY APPROVALS. Macromedia will execute and file,
or join in the execution and filing, of any application or other document
that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, federal, state, local or foreign,
-29-
which may be reasonably required, or which Andromedia may reasonably request,
in connection with the consummation of the transactions provided for in this
Agreement. Macromedia will use all commercially reasonable efforts to obtain
all such authorizations, approvals and consents.
5.4 MACROMEDIA AFFILIATES AGREEMENTS. To facilitate the
treatment of the Merger for accounting purposes as a "pooling of interests,"
Macromedia will, concurrently with the execution of this Agreement or a soon
as practicable thereafter, cause each of its affiliates ("MACROMEDIA
AFFILIATES") to execute and deliver to Macromedia a written agreement (the
"MACROMEDIA AFFILIATE AGREEMENT") in substantially the form of EXHIBIT 5.4.
5.5 PREPARATION OF PERMIT APPLICATION, HEARING REQUEST AND
HEARING NOTICE. As promptly as practicable after the date hereof,
Macromedia, with Andromedia's assistance, shall prepare and file with the
California Commissioner of Corporations the Notice Materials, including the
Permit Application, Hearing Request and Hearing Notice, in connection with
the Merger. Macromedia, with Andromedia's assistance, shall use reasonable
efforts to have the Permit Application, Hearing Request and Hearing Notice
declared effective under the CCSL as promptly as practicable after such
filing.
5.6 EMPLOYEE BENEFIT PLANS.
(a) Macromedia agrees that individuals who are
employed by Andromedia or any Subsidiary immediately prior to the Effective
Time shall remain employees of Andromedia or become employees of Macromedia
following the Effective Time (each such employee, an "AFFECTED EMPLOYEE");
provided, however, that this Section 5.6(a) shall not be construed to limit
the ability of the applicable employer to terminate the employment of any
Affected Employee at any time for any reason.
(b) To the extent that Affected Employees become
eligible to participate in any employee benefit plans or arrangements
maintained by Macromedia, Macromedia will, give Affected Employees full
credit for purposes of eligibility (including service and waiting period
requirements), vesting, benefit accrual and determination of the level of
benefits under any employee benefit plans or arrangements maintained by
Macromedia, for such Affected Employees' service with Andromedia or any
Subsidiary to the same extent recognized by either Andromedia or a Subsidiary
for the comparable employee benefit program immediately prior to the
Effective Time.
(c) To the extent consistent with the terms of
Macromedia's employee benefit plans and programs as applied to eligible
Macromedia employees, Macromedia will, or will cause Andromedia to waive all
limitations as to preexisting conditions, exclusions and waiting periods and
service requirements with respect to participation and coverage requirements
applicable to the Affected Employees under any welfare benefit plans that
such employees may be eligible to participate in after the Effective Time.
In the event that Macromedia causes the termination of an Employee Plan which
is a group health plan prior to the end of the 1999 calendar year, Macromedia
shall take such actions as are commercially reasonable to provide each such
affected participant with credit for any co-payments and deductibles paid
prior to the Effective Time for purposes of satisfying any applicable
deductible, out-of-pocket, or similar requirements
-30-
for the 1999 calendar year under the comparable group health plan maintained
by Macromedia in which each such affected participant is eligible to
participate after the Effective Time. Notwithstanding any of the foregoing to
the contrary, none of the provisions contained herein shall operate to
duplicate any benefit provided to any employee of Andromedia or the funding
of any such benefit.
5.7 INDEMNIFICATION OF DIRECTORS AND OFFICERS; DIRECTORS &
OFFICERS INSURANCE.
(a) From and after the Effective Time, Macromedia
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Andromedia pursuant to any indemnification agreements between
Andromedia and its directors and officers as of or prior to the date hereof
(or indemnification agreements in Andromedia's customary form for directors
joining Andromedia's Board of Directors prior to the Effective Time) and any
indemnification provisions under Andromedia's articles of incorporation or
bylaws as in effect immediately prior to the Effective Time.
(b) For a period of three years after the Effective
Time, Macromedia will maintain or cause the Surviving Corporation to maintain
in effect, if available, directors' and officers' liability insurance
covering those persons who, as of immediately prior to the Effective Time,
were scheduled to be covered by Andromedia's directors' and officers'
liability insurance policy (the "INSURED PARTIES") pursuant to the written
insurance quote (the "QUOTE") delivered to Macromedia prior to the date
hereof on terms as favorable to the Insured Parties as can be provided by
expending 150% of the $300,000 annual premium contemplated by the Quote for
such coverage.
(c) The provisions of this Section 5.7 are intended
to be for the benefit of, and will be enforceable by, each Insured Party
entitled to indemnification hereunder and the heirs and representatives of
such Insured Party. Macromedia will not permit the Surviving Corporation to
merge or consolidate with any other entity unless the Surviving Corporation
will ensure that the surviving or resulting entity assumes the obligations
imposed by this Section 5.7.
5.8 ADVICE OF CHANGES. Macromedia will promptly advise
Andromedia in writing (a) of any event occurring subsequent to the date of
this Agreement that would render the representations and warranties of
Macromedia contained in this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect
unless Macromedia reasonably believes such event will be cured within 30 days
and (b) of any Material Adverse Effect on Macromedia.
5.9 NECESSARY CONSENTS. Macromedia will use all
commercially reasonable efforts to obtain such written consents and take such
other actions as may be necessary or appropriate for Macromedia, in addition
to those set forth in Section 4.6, to facilitate and allow the consummation
of the transactions provided for herein and to allow Macromedia to carry on
Andromedia's business after the Effective Time.
5.10 BLUE SKY LAWS. Macromedia shall use all reasonable
efforts to comply with the securities and Blue Sky laws of all jurisdictions
applicable in connection with the Merger.
-31-
5.11 POOLING ACCOUNTING. Macromedia shall use all
commercially reasonable efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests.
Macromedia shall use reasonable efforts to cause Macromedia Affiliates not to
take any action that would adversely affect the ability of Macromedia to
account for the business combination to be effected by the Merger as a
pooling of interests.
5.12 INTERIM FINANCING. If the Merger is not consummated on
or before November 30, 1999 and Andromedia has not breached in any material
respect any covenant contained in Article 4 of this Agreement, then on or
before November 30, 1999 Macromedia and Andromedia shall in good faith
establish a mutually acceptable operating plan for the continued operations
of Andromedia in the ordinary course of business consistent with past
practice and materially consistent with Andromedia's current operating plan
supplied to Macromedia, and Macromedia will provide interim debt financing,
at prevailing market interest rates and terms, sufficient to meet
Andromedia's reasonable cash requirements in accordance with such mutually
acceptable plan during the period from December 1, 1999 until the earlier of
the Effective Time or three months after the termination of this Agreement.
6. CLOSING MATTERS
6.1 THE CLOSING. Subject to termination of this Agreement
as provided in Section 9 below, the closing of the transactions provided for
herein (the "CLOSING") will take place at the offices of Fenwick & West LLP,
Two ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Pacific Time
no later than the third business day after all conditions to closing have
been satisfied or waived (the "CLOSING DATE"). Prior to or concurrently with
the Closing, the Agreement of Merger and such officers' certificates or other
documents as may be required to effectuate the Merger will be filed in the
office of the California Secretary of State and the Certificate of Merger and
such certificates of approval or other documents as may be required to
effectuate the Merger will be filed in the office of the Delaware Secretary
of State.
6.2 EXCHANGE OF CERTIFICATES.
6.2.1 As of the Effective Time, all shares of
Andromedia Common Stock and Andromedia Preferred Stock that are outstanding
immediately prior thereto will, by virtue of the Merger and without further
action, cease to exist, and all such shares (other than dissenters' shares)
will be converted into the right to receive from Macromedia the number of
shares of Macromedia Common Stock determined as set forth in Section 1.1,
subject to Section 1.2 hereof.
6.2.2 At and after the Effective Time, each certificate
representing outstanding shares of Andromedia Common Stock and Andromedia
Preferred Stock will represent the number of shares of Macromedia Common
Stock into which such shares of Andromedia Common Stock and Andromedia
Preferred Stock have been converted, and such shares of Macromedia Common
Stock will be deemed registered in the name of the holder of such
certificate. As soon as practicable after the Effective Time, each holder of
shares of Andromedia Common Stock and Andromedia Preferred Stock will
surrender (a) the certificates for such shares (the "ANDROMEDIA
CERTIFICATES") to Macromedia for cancellation or (b) an affidavit of lost (or
unissued) certificate and a bond in form reasonably satisfactory to
Macromedia (a "BOND") and
-32-
will execute and deliver representations as to such Andromedia Shareholders'
valid and marketable title to such holder's shares of Andromedia Common Stock
and Andromedia Preferred Stock (the "ANDROMEDIA SHAREHOLDER REPRESENTATIONS").
Promptly following the Effective Time and receipt of Andromedia Certificates
and/or the Bonds and Andromedia Shareholder Representations, Macromedia
will cause its transfer agent to issue to such surrendering holder
certificate(s) for the number of shares of Macromedia Common Stock to
which such holder is entitled pursuant to Section 1.1, subject to Section 1.2
hereof, and Macromedia will distribute any cash payable under Section 1.2.
6.2.3 All shares of Macromedia Common Stock (and, if
applicable, cash in lieu of fractional shares) delivered upon the surrender
of Andromedia Certificates in accordance with the terms hereof will be
delivered to the registered holder. After the Effective Time, there will be
no further registration of transfers of the shares of Andromedia Common Stock
and Andromedia Preferred Stock on the stock transfer books of Andromedia.
If, after the Effective Time, Andromedia Certificates are presented for
transfer or for any other reason, they will be canceled and exchanged and
certificates therefor will be delivered as provided in this Section 6.2.
Notwithstanding anything herein to the contrary, except to the extent waived
by Macromedia, any Andromedia Certificate that is not properly submitted to
Macromedia for exchange and cancellation within three years after the
Effective Time shall no longer evidence ownership of or any right to receive
shares of Macromedia Common Stock and all rights of the holder of such
Andromedia Certificate, with respect to the shares previously evidenced by
such Andromedia Certificate, shall cease.
6.2.4 Until Andromedia Certificates representing
Andromedia Common Stock and Andromedia Preferred Stock outstanding prior to
the Merger are surrendered pursuant to Section 6.2.2 above, such certificates
will be deemed, for all purposes, to evidence ownership of (a) the number of
shares of Macromedia Common Stock into which the shares of Andromedia Common
Stock and Andromedia Preferred Stock will have been converted and (b) if
applicable, cash in lieu of fractional shares.
6.3 ASSUMPTION OF WARRANTS AND OPTIONS. Within a reasonable
time period, and in any event within thirty (30) days, after the Effective
Time, Macromedia will notify in writing each holder of an Andromedia Option
or Andromedia Warrant of: (i) the assumption of such Andromedia Options or
Andromedia Warrants, as applicable, by Macromedia, (ii) the conversion of
such Andromedia Options into Macromedia Options or the conversion of such
Andromedia Warrants into Macromedia Warrants, as applicable, (iii) the number
of shares of Macromedia Common Stock that are subject to such Macromedia
Options and Macromedia Warrants and (iv) the exercise price of such
Macromedia Options as determined pursuant to Section 1.1.2 hereof and the
exercise price of such Macromedia Warrants as determined pursuant to Section
1.1.3 hereof. Within a reasonable time period, and in any event within
thirty (30) days following the Effective Time, Macromedia shall file a
registration statement on Form S-8 (or any successor form) or another
appropriate form with respect to shares of Macromedia Common Stock subject to
Macromedia Options for which such form is available and shall use all
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such options remain outstanding.
-33-
6.4 DISSENTING SHARES. Notwithstanding anything to the
contrary contained in this Agreement, any shares of Andromedia Common Stock
or Andromedia Preferred Stock that, as of the Effective Time, are or may
become "dissenting shares" within the meaning of Section 1300(b) of the
California Corporations Code shall not be converted into or represent the
right to receive Macromedia Common Stock in accordance with Section 1.1.1 (or
cash in lieu of fractional shares in accordance with Section 1.2), and the
holder or holders of such shares shall be entitled only to such rights as may
be granted to such holder or holders in Chapter 13 of the California General
Corporation Law; provided, however, that if the status of any such shares as
"dissenting shares," shall not be perfected, or if any such shares lose their
status as "dissenting shares," then, as of the latter of the Effective Time
or the time of the failure to perfect such status or the loss of such status,
such shares shall automatically be converted into and shall represent only
the right to receive (upon surrender of the certificate or certificates
representing such shares) Macromedia Common Stock in accordance with Section
1.1.1 (and cash in lieu of fractional shares in accordance with Section 1.2).
6.5 EMPLOYEE PLANS. As of the Effective Time, Macromedia
and Andromedia shall take such actions as are necessary to effect the
mutually acceptable employee benefit and compensation arrangements as
determined pursuant to Section 4.18.
7. CONDITIONS TO OBLIGATIONS OF ANDROMEDIA
Andromedia's obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions
(any one or more of which may be waived by Andromedia, but only in a writing
signed on behalf of Andromedia by its Chief Executive Officer or Chief
Financial Officer):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Macromedia contained in this Agreement
shall be true and correct as of the date hereof and at and as of the Closing
Date as if made at and as of such time, except that to the extent such
representations and warranties address matters only as of a particular date,
such representations and warranties shall, to such extent, be true and
correct as of the date hereof and at and as of such particular date as if
made at and as of such particular date; provided that if any of such
representations and warranties shall not be true and correct as aforesaid,
then this condition shall nevertheless be deemed satisfied if the cumulative
effect of all inaccuracies of such representations and breaches of such
warranties shall not be or have a Material Adverse Effect on Macromedia, and
Andromedia shall have received a certificate to such effect executed on
behalf of Macromedia by its Chief Executive Officer or Chief Financial
Officer.
7.2 COVENANTS. Macromedia shall have performed and complied
in all material respects with all of its covenants contained in Section 5 on
or before the Closing Date, and Andromedia shall have received a certificate
to such effect executed on behalf of Macromedia by its Chief Executive
Officer or Chief Financial Officer.
7.3. ABSENCE OF MATERIAL ADVERSE EFFECT. There shall not
have been any Material Adverse Effect with respect to Macromedia.
-34-
7.4 COMPLIANCE WITH LAW. There shall be no order, decree,
or ruling by any court or governmental agency or threat thereof, or any other
fact or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
7.5 GOVERNMENT CONSENTS. There shall have been obtained at
or prior to the Closing Date such permits or authorizations, and there shall
have been taken such other actions, as may be required to consummate the
Merger by any regulatory authority having jurisdiction over the parties and
the actions herein proposed to be taken, including but not limited to
satisfaction of all requirements under applicable federal and state
securities laws.
7.6 OPINION OF MACROMEDIA'S COUNSEL. Andromedia shall have
received from Fenwick & West LLP, counsel to Macromedia, an opinion in form
and substance reasonably satisfactory to Andromedia.
7.7 PERMIT. The California Commissioner of Corporations
shall have issued a permit declaring the Permit Application, Hearing Request
and Hearing Notice with respect to the Merger effective or the issuance of
the Macromedia Common Stock in connection with the Merger shall have been
registered pursuant to a registration statement declared effective by the
Securities and Exchange Commission (the "SEC").
7.8 REQUISITE APPROVALS. The principal terms of this
Agreement, the Agreement of Merger and the Certificate of Merger shall have
been approved and adopted by the written consent or vote of all the
Andromedia Shareholders, as required by applicable law and Andromedia's
Articles of Incorporation and Bylaws.
7.9 POOLING OPINION. Andromedia shall have received an
opinion from PricewaterhouseCoopers LLP that it concurs with Andromedia
management's conclusion that, as of the date of such opinion, no conditions
exist that would preclude Andromedia from being a party to a business
combination for which the pooling of interests method of accounting would be
available; and Macromedia shall have received an opinion from KPMG LLP that
it concurs with Macromedia management's conclusion that pooling of interests
accounting for the Merger is appropriate under Accounting Principles Board
Opinion No. 16, if the Merger is consummated in accordance with this
Agreement; provided that the failure to receive either opinion shall not
constitute a failure of this condition if such opinion cannot be rendered as
a result of any action taken, or any failure to take any action, by
Andromedia.
7.10 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Macromedia
shall have executed and delivered the Employment Agreements and the
Noncompetition Agreements.
7.11 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ COMPLIANCE. All applicable waiting
periods under the HSR Act shall have expired or early termination shall have
been granted by both the Federal Trade Commission and the United States
Department of Justice.
7.12 TAX OPINIONS. Macromedia and Andromedia shall each have
received written opinions from their respective tax counsel (Fenwick & West
LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, respectively), in form and
substance reasonably satisfactory to them, to the
-35-
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and such opinions shall not have been withdrawn;
PROVIDED, HOWEVER, that if the counsel to either Macromedia or Andromedia
does not render such opinion, this condition shall nonetheless be deemed to
be satisfied with respect to such party if counsel to the other party renders
such opinion to such party. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
8. CONDITIONS TO OBLIGATIONS OF MACROMEDIA
The obligations of Macromedia hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the
following conditions (any one or more of which may be waived by Macromedia,
but only in a writing signed on behalf of Macromedia by its Chief Executive
Officer or Chief Financial Officer):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Andromedia contained in this Agreement
shall be true and correct as of the date hereof and at and as of the Closing
Date as if made at and as of such time, except that, to the extent such
representations and warranties address matters only as of a particular date,
such representations and warranties shall, to such extent, be true and
correct at and as of such particular date as if made at and as of such
particular date; provided that if any of such representations and warranties
shall not be true and correct as aforesaid, then this condition shall
nevertheless be deemed satisfied if the cumulative effect of all inaccuracies
of such representations and breaches of such warranties shall not be or have
a Material Adverse Effect on Andromedia, and Macromedia shall have received a
certificate to such effect executed on behalf of Andromedia by its Chief
Executive Officer or Chief Financial Officer.
8.2 COVENANTS. Andromedia shall have performed and complied
in all material respects with all of its covenants contained in Section 4 on
or before the Closing and Macromedia shall have received a certificate to
such effect signed on behalf of Andromedia by its Chief Executive Officer or
Chief Financial Officer.
8.3 ABSENCE OF MATERIAL ADVERSE EFFECT. There shall have
not been any Material Adverse Effect with respect to Andromedia.
8.4 COMPLIANCE WITH LAW. There shall be no order, decree,
or ruling by any court or governmental agency or threat thereof, or any other
fact or circumstance, which would prohibit or render illegal the transactions
provided for in this Agreement.
8.5 GOVERNMENT CONSENTS. There shall have been obtained at
or prior to the Closing Date such permits or authorizations and there shall
have been taken such other action, as may be required to consummate the
Merger by any regulatory authority having jurisdiction over the parties and
the actions herein proposed to be taken, including but not limited to
satisfaction of all requirements under applicable federal and state
securities laws.
8.6 OPINION OF ANDROMEDIA'S COUNSEL. Macromedia shall have
received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Andromedia, an
opinion in form and substance
-36-
reasonably satisfactory to Macromedia, including, among other things,
an opinion on the capitalization of Andromedia.
8.7 REQUISITE APPROVALS. The principal terms of this
Agreement, the Agreement of Merger and the Certificate of Merger shall have
been approved and adopted by the written consent or vote of the Andromedia
Shareholders, as required by applicable law and Andromedia's Articles of
Incorporation and Bylaws and by Andromedia's Board of Directors.
8.8 POOLING OPINION. Andromedia shall have received an
opinion from PricewaterhouseCoopers LLP that it concurs with Andromedia
management's conclusion that, as of the date of such opinion, no conditions
exist that would preclude Andromedia from being a party to a business
combination for which the pooling of interests method of accounting would be
available; and Macromedia shall have received an opinion from KPMG LLP that
it concurs with Macromedia management's conclusion that pooling of interests
accounting for the Merger is appropriate under Accounting Principles Board
Opinion No. 16, if the Merger is consummated in accordance with this
Agreement; provided that the failure to receive either opinion shall not
constitute a failure of this condition if such opinion cannot be rendered as
a result of any action taken, or any failure to take any action, by
Macromedia.
8.9 TERMINATION OF RIGHTS. Any registration rights, rights
of first refusal, rights to any liquidation preference, or redemption rights
of any Andromedia Shareholder shall have been terminated or waived as of the
Closing.
8.10 RESIGNATIONS. The directors of Andromedia in office
immediately prior to the Effective Time of the Merger shall have resigned as
directors of Andromedia effective as of the Effective Time of the Merger.
8.11 PERMIT. The California Commissioner of Corporations
shall have issued a permit declaring the Permit Application, Hearing Request
and Hearing Notice with respect to the Merger effective or the issuance of
the Macromedia Common Stock in connection with the Merger shall have been
registered pursuant to a registration statement declared effective by the SEC.
8.12 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ COMPLIANCE. All applicable waiting
periods under the HSR Act shall have expired or early termination shall have
been granted by both the Federal Trade Commission and the United States
Department of Justice.
8.13 DISSENTING SHARES. The number of shares of Andromedia
Common Stock or Andromedia Preferred Stock eligible to become dissenting
shares shall not constitute more than 7% of the total number of shares of
Andromedia Common Stock (on an as-if converted to Andromedia Common Stock
basis) outstanding immediately prior to the Effective Time.
9. TERMINATION OF AGREEMENT
-37-
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
Merger by the shareholders of Andromedia:
(a) by the mutual written consent of Macromedia and
Andromedia;
(b) unless otherwise specifically provided herein or
agreed in writing by Macromedia and Andromedia, upon notice by either party,
this Agreement will be terminated if all the conditions to Closing have not
been satisfied or waived on or before January 31, 2000, or, if on or before
such date Macromedia files a registration statement with the SEC to register
the shares of Macromedia Common Stock to be issued in the Merger due to the
unavailability of the Securities Act Section 3(a)(10) exemption, on or before
March 31, 2000 (as applicable, the "FINAL DATE") other than as a result of a
breach of this Agreement by the terminating party, or a breach by any of the
affiliates of the terminating party of the Affiliate Agreements;
(c) by Macromedia (at any time prior to the approval
of this Agreement and the Merger by the required vote of the stockholders of
Andromedia) if a Triggering Event (as defined below) shall have occurred;
(d) by Andromedia, if there has been a breach by
Macromedia of any representation, warranty, covenant or agreement set forth
in this Agreement on the part of Macromedia, or if any representation of
Macromedia will have become untrue, in either case to an extent that would
cause the conditions set forth in Section 7.1 or 7.2 not to be satisfied and
which Macromedia fails to cure within a reasonable time, not to exceed thirty
(30) days, after written notice thereof (except that no cure period will be
provided for a breach by Macromedia which by its nature cannot be cured);
(e) by Macromedia, if there has been a breach by
Andromedia of any representation, warranty, covenant or agreement set forth
in this Agreement on the part of Andromedia, or if any representation of
Andromedia will have become untrue, in either case to an extent that would
cause the conditions set forth in Section 8.1 or 8.2 not to be satisfied and
which Andromedia fails to cure within a reasonable time not to exceed thirty
(30) days after written notice thereof (except that no cure period will be
provided for a breach by Andromedia which by its nature cannot be cured);
(f) by either party, if a permanent injunction or
other order by any Federal or state court which would make illegal or
otherwise restrain or prohibit the consummation of the Merger will have been
issued and will have become final and nonappealable. Any termination of this
Agreement under this Section 9.1 will be effective by the delivery of written
notice of the terminating party to the other party hereto; or
(g) by either Andromedia or Macromedia if the
required approval of the Andromedia Shareholders contemplated by this
Agreement shall not have been obtained by reason of the failure to obtain the
required vote at a meeting of the Andromedia Shareholders duly convened
therefore or at any adjournment thereof; provided, however, that the right to
terminate this Agreement under this Section 9.1(g) shall not be available to
a party where the failure to
-38-
obtain the Andromedia Shareholder approval shall have been caused by the action
or failure to act of such party and such action or failure to act constitutes
a material breach of this Agreement.
For the purposes of this Agreement, a "TRIGGERING EVENT"
shall be deemed to have occurred if: (i) the Board of Directors of
Andromedia or any committee thereof shall for any reason have withdrawn or
shall have amended or modified in a manner adverse to Macromedia its
recommendation in favor of the approval of this Agreement or the Merger; (ii)
Andromedia shall have failed to include in the Information Statement the
recommendation of the Board of Directors of Andromedia in favor of the
approval of this Agreement and the Merger; (iii) the Board of Directors of
Andromedia fails to reaffirm its recommendation in favor of the adoption and
approval of this Agreement and the Merger within 10 business days after
Macromedia requests in writing that such recommendation be reaffirmed at any
time following the public announcement of an Acquisition Proposal; (iv) the
Board of Directors of Andromedia or any committee thereof shall have approved
or publicly recommended any Acquisition Proposal; (v) Andromedia shall have
entered into any letter of intent of similar document or any agreement,
contract or commitment accepting any Acquisition Proposal; or (vi) a tender
or exchange offer relating to securities of Andromedia shall have been
commenced by a person or entity unaffiliated with Macromedia, and Andromedia
shall not have sent to its shareholders pursuant to Rule 14e-2 promulgated
under the Securities Act, within 10 business days after such tender or
exchange offer is first published sent or given, a statement disclosing that
Andromedia recommends rejection of such tender or exchange offer.
9.2 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 9.2, each
party will bear its respective expenses and fees of its own accountants,
attorneys, investment bankers and other professionals incurred with respect
to this Agreement and the transactions contemplated hereby. If the Merger is
consummated, Macromedia will pay at or immediately following the Closing the
reasonable investment banking, accounting and attorneys' fees and expenses
and other fees and expenses incurred by Andromedia in connection with the
Merger. Andromedia will not incur in connection with the Merger more than
$2,000,000 in such fees and expenses unless any such fees or expenses
incurred by Andromedia in excess of the applicable amount set forth for above
are paid by the Andromedia Shareholders on or before the Closing.
(b) ANDROMEDIA PAYMENTS.
(i) In the event that this Agreement is terminated by
Macromedia pursuant to Section 9.1(c) Andromedia shall promptly, but
in no event later than two days after the date of such termination,
pay Macromedia in immediately available funds a fee equal to $10
million (the "TERMINATION FEE") plus an amount equal to Macromedia's
reasonable investment banking, accounting and attorneys' fees and
expenses and other fees and expenses incurred by Macromedia with
respect to this Agreement and the transactions contemplated hereby
("MACROMEDIA'S EXPENSES");
(ii) In the event that this Agreement is terminated by
Macromedia pursuant to Section 9.1(b) (at a time when Andromedia is in
material breach of any of its
-39-
obligations under this Agreement and Macromedia is not in material
breach of any of its obligations under this Agreement) or Section
9.1(e), or by either Macromedia or Andromedia pursuant to Section
9.1(g), and within 12 months following the termination of this
Agreement a Competing Transaction (as defined below) is consummated
or Andromedia enters into an agreement providing for a Competing
Transaction, then Andromedia shall, within two days after the
consummation of a Competing Transaction, pay Macromedia in
immediately available funds an amount equal to the Termination Fee
plus Macromedia's Expenses.
(iii) Andromedia acknowledges that the agreements
contained in this Section 9.2(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Macromedia would not enter into this Agreement;
accordingly, if Andromedia fails to pay in a timely manner the
amounts due pursuant to this Section 9.2(b), and, in order to obtain
such payment, Macromedia makes a claim that results in a judgment
against Andromedia for the amounts set forth in this Section 9.2(b),
Andromedia shall pay to Macromedia its reasonable costs and expenses
(including reasonable attorneys' fees and expenses) in connection
with such suit, together with interest on the amounts set forth in
this Section 9.2(b) at the prime rate of The Chase Manhattan Bank
in effect on the date such payment was required to be made.
Payment of the fees described in this Section 9.2(b) shall not be in
lieu of damages incurred in the event of breach of this
Agreement.
(c) In the event that Andromedia shall terminate this
Agreement pursuant to Section 9.1(d), then Macromedia shall immediately pay
to Andromedia immediately available funds an amount equal to the Termination
Fee plus an amount equal to Andromedia's reasonable investment banking,
accounting and attorneys' fees and expenses and other fees and expenses
incurred by Andromedia with respect to this Agreement and the transactions
contemplated hereby ("ANDROMEDIA'S EXPENSES"). Such payment shall be treated
as liquidated damages and shall be in lieu of any other payments for damages
incurred by Andromedia or its shareholders for any non-willful breach of this
Agreement by Macromedia.
(d) Neither Andromedia nor Macromedia shall be entitled to
reimbursement for its Andromedia's Expenses or Macromedia's Expenses in
excess of $1,000,000 in the aggregate.
(e) For the purposes of this Section 9.2, a "COMPETING
TRANSACTION" shall mean any of the following involving Macromedia or
Andromedia (as the case may be) other than the Merger: (a) any merger,
consolidation, share exchange, business combination or other similar
transaction in which a majority of Andromedia's voting stock is transferred
to any third party; (b) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 50% or more of the assets of such party and its
subsidiaries, taken as a whole in single transaction or series of
transactions; (c) any license, joint venture or other arrangement pursuant to
which Andromedia provides or permits exclusive access to all or a majority of
its intellectual property (on a value basis) to a third party; (d) any tender
offer or exchange offer for 50% or more of the outstanding voting securities
of such party or the filing of a registration statement under the Securities
Act in connection therewith; or (e) any person having acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the
-40-
Exchange Act) having been formed that beneficially owns or has the right to
acquire beneficial ownership of, 50% or more of the outstanding voting
securities of such party.
9.3 NOTICE OF TERMINATION AND EFFECT OF TERMINATION. Any
termination of this Agreement under Section 9.1 above will be effective
immediately upon the delivery of written notice of the terminating party to
the other parties hereto. In the event of the termination of this Agreement
as provided in Section 9.1, this Agreement shall be of no further force or
effect, except (i) as set forth in this Section 9.3, Section 9.2 and Article
11, each of which shall survive the termination of this Agreement, and (ii)
nothing herein shall relieve any party from liability for any willful breach
of this Agreement. No termination of this Agreement shall affect the
obligations of the parties pursuant to any agreement to maintain the
confidentiality of information regarding the other party, all of which
obligations shall survive termination of this Agreement in accordance with
their terms.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 OBLIGATIONS OF ANDROMEDIA. Except for the obligations of
Andromedia under Section 9 above and Section 11 below, the representations,
warranties and covenants of Andromedia contained in this Agreement will
terminate as of the termination of this Agreement in accordance with its
terms. If the Closing occurs, all of Andromedia's representations, warranties
and covenants except for those set forth in Section 4.18 and 6.5 will
terminate and be of no further effect after the Closing.
10.2 OBLIGATIONS OF MACROMEDIA. Except for Macromedia's
obligations pursuant to Section 9 above and Section 11 below, Macromedia's
representations, warranties and covenants contained in this Agreement will
terminate as of the termination of this Agreement in accordance with its
terms. If the Closing occurs, all of Macromedia's representations, warranties
and covenants except for those set forth in Sections 5.6, 5.7, 5.12, 6.3 and
6.5 will terminate and be of no further effect after the Closing.
11. MISCELLANEOUS
11.1 GOVERNING LAW; DISPUTE RESOLUTION. The internal laws of
the State of California (irrespective of its choice of law principles) will
govern the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties
hereto. Any dispute hereunder ("DISPUTE") shall be settled by arbitration in
San Francisco, California, and, except as herein specifically stated, in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA RULES") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now
or hereafter be contained in the AAA Rules. Any judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
over the subject matter thereof. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any
judicial proceeding instituted to resolve a Dispute.
-41-
11.1.1 COMPENSATION OF ARBITRATOR. Any such arbitration
will be conducted before a single arbitrator who will be compensated for his
or her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon
his or her rate of compensation.
11.1.2 SELECTION OF ARBITRATOR. The American
Arbitration Association will have the authority to select an arbitrator from
a list of arbitrators who are lawyers familiar with California contract law;
provided, however, that such lawyers cannot work for a firm then performing
services for either party, that each party will have the opportunity to make
such reasonable objection to any of the arbitrators listed as such party may
wish and that the American Arbitration Association will select the arbitrator
from the list of arbitrators as to whom neither party makes any such
objection. In the event that the foregoing procedure is not followed, each
party will choose one person from the list of arbitrators provided by the
American Arbitration Association (provided that such person does not have a
conflict of interest), and the two persons so selected will select from the
list provided by the American Arbitration Association the person who will act
as the arbitrator.
11.1.3 PAYMENT OF COSTS. Macromedia and Andromedia or
the Andromedia Shareholders after the Closing will bear the expense of
deposits and advances required by the arbitrator in equal proportions, but
either party may advance such amounts, subject to recovery as an addition or
offset to any award. The arbitrator will award to the prevailing party, as
determined by the arbitrator, all costs, fees and expenses related to the
arbitration, including reasonable fees and expenses of attorneys, accountants
and other professionals incurred by the prevailing party.
11.1.4 BURDEN OF PROOF. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
11.1.5 AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons
for any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award.
11.1.6 TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement.
11.1.7 EXCLUSIVE REMEDY. Except as specifically
otherwise provided in this Agreement, arbitration will be the sole and
exclusive remedy of the parties for any Dispute arising out of this Agreement.
11.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS.
Neither party hereto may assign any of its rights or obligations hereunder
without the prior written consent of the other party hereto. This Agreement
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
-42-
11.3 SEVERABILITY. If any provision of this Agreement, or
the application thereof, is for any reason held to any extent to be invalid
or unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision.
11.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
name appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
both parties reflected hereon as signatories.
11.5 OTHER REMEDIES. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by
law on such party, and the exercise of any one remedy will not preclude the
exercise of any other.
11.6 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by a writing signed by the party to be
bound thereby. The waiver by a party of any breach hereof or default in the
performance hereof will not be deemed to constitute a waiver of any other
default or any succeeding breach or default. This Agreement may be amended
by the parties hereto at any time prior to the Effective Time and before or
after approval of the Andromedia shareholders.
11.7 NO WAIVER. The failure of any party to enforce any of
the provisions hereof will not be construed to be a waiver of the right of
such party thereafter to enforce such provisions. The waiver by any party of
the right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision
on any other occasion.
11.8 NOTICES. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be
delivered personally or by mail or express delivery, postage prepaid, and
will be deemed given upon actual delivery or, if mailed by registered or
certified mail, on the third business day following deposit in the mails,
addressed as follows:
(i) If to Macromedia:
Macromedia, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
-43-
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Andromedia:
Andromedia, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 11.8.
11.9 CONSTRUCTION OF AGREEMENT. The language hereof will not
be construed for or against either party. A reference to an article, section
or exhibit will mean an article or section in, or an exhibit to, this
Agreement, unless otherwise explicitly set forth. The titles and headings in
this Agreement are for reference purposes only and will not in any manner
limit the construction of this Agreement. For the purposes of such
construction, this Agreement will be considered as a whole.
11.10 NO JOINT VENTURE. Nothing contained in this Agreement
will be deemed or construed as creating a joint venture or partnership
between the parties hereto. No party is by virtue of this Agreement
authorized as an agent, employee or legal representative of any other party.
No party will have the power to control the activities and operations of any
other, and the parties' status is, and at all times, will continue to be,
that of independent contractors with respect to each other. No party will
have any power or authority to bind or commit any other. No party will hold
itself out as having any authority or relationship in contravention of this
Section.
-44-
11.11 FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other party and to execute such further instruments, documents
and agreements and to give such further written assurances as may be
reasonably requested by the other party to evidence and reflect the
transactions provided for herein and to carry into effect the intent of this
Agreement.
11.12 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No
provisions of this Agreement are intended, nor will be interpreted, to
provide or create any third party beneficiary rights or any other rights of
any kind in any client, customer, affiliate, partner or employee of any party
hereto or any other person or entity, unless specifically provided otherwise
herein, and, except as so provided, all provisions hereof will be personal
solely between the parties to this Agreement.
11.13 PUBLIC ANNOUNCEMENT. Macromedia and Andromedia will
issue a press release approved by both parties announcing the Merger as soon
as practicable following the execution of this Agreement. Each of Macromedia
and Andromedia may issue such press releases, and make such other disclosures
regarding the Merger, as it determines to be required or appropriate under
applicable securities laws or Nasdaq Stock Market rules after reasonable
consultation, where possible, with the other. Andromedia will not make any
other public announcement or disclosure of the transactions contemplated by
this Agreement. Each of Macromedia and Andromedia will take all reasonable
precautions to prevent any trading in the securities of Macromedia by
officers, directors, employees and agents of Macromedia or Andromedia,
respectively, (a) having knowledge of any material information regarding
Macromedia provided hereunder, including, without limitation, the existence
of the transactions contemplated by this Agreement (the "MACROMEDIA MATERIAL
INFORMATION") until the information in question has been publicly disclosed
or (b) to the extent that such trading would adversely affect the treatment
of the Merger as a "pooling of interests" for accounting purposes.
11.14 CONFIDENTIALITY. Except as expressly authorized by
Macromedia in writing, Andromedia will not directly or indirectly divulge to
any person or entity or use any Macromedia Confidential Information, except
as required for the performance of its duties under this Agreement. Except
as expressly authorized by Andromedia in writing, Macromedia will not
directly or indirectly divulge to any person or entity or use any Andromedia
Confidential Information, except as required for the performance of its
duties under this Agreement. As used herein, "MACROMEDIA CONFIDENTIAL
INFORMATION" consists of (a) any information designated by Macromedia as
confidential whether developed by Macromedia or disclosed to Macromedia by a
third party, (b) the source code to any Macromedia software and any trade
secrets relating to any of the foregoing, and (c) any information relating to
Macromedia's product plans, product designs, product costs, product prices,
product names, finances, marketing plans, business opportunities, personnel,
research development or know-how. As used herein, "ANDROMEDIA CONFIDENTIAL
INFORMATION" consists of (x) any information designated by Andromedia as
confidential whether developed by Andromedia or disclosed to Andromedia by a
third party, (y) the source code to any Andromedia software, and any trade
secrets related to any of the foregoing, and (z) any information relating to
Andromedia product plans, product designs, product costs, product prices,
product names, finances, marketing plan, business opportunities, personnel,
research, development or know-how. "MACROMEDIA CONFIDENTIAL INFORMATION" and
"ANDROMEDIA CONFIDENTIAL INFORMATION" also include the terms and conditions
of this Agreement, except as disclosed in
-46-
accordance with Section 11.13 above. The foregoing restriction will apply to
information about a party whether or not it was obtained from such party's
employees, acquired or developed by the other party during such other party's
performance under this Agreement, or otherwise learned. The foregoing
restrictions will not apply to information that (i) has become publicly known
through no wrongful act of the receiving party, (ii) has been rightfully
received from a third party authorized by the party which is the owner,
creator or compiler to make such disclosure without restriction, (iii) has
been approved or released by written authorization of the party which is the
owner, creator or compiler, or (iv) is being or has therefore been disclosed
pursuant to a valid court order after a reasonable attempt has been made to
notify the party which is the owner, creator or compiler.
11.15 TIME IS OF THE ESSENCE. The parties hereto acknowledge
and agree that time is of the essence in connection with the execution,
delivery and performance of this Agreement.
11.16 ENTIRE AGREEMENT. This Agreement and the exhibits
hereto constitute the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect to the
subject matter hereof. The express terms hereof control and supersede any
course of performance or usage of trade inconsistent with any of the terms
hereof.
-46-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MACROMEDIA, INC. ANDROMEDIA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
PEAK ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
[SIGNATURE PAGE TO AGREEMENT AND
PLAN OF REORGANIZATION]
-47-
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment is entered into as of November 23, 1999 and amends the
Agreement and Plan of Reorganization entered into as of October 6, 1999 (the
"Agreement") by and among Macromedia, Inc., a Delaware corporation
("Macromedia"), Andromedia, Inc., a California corporation ("Andromedia") and
Peak Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Macromedia ("Newco").
1. Section 1.1.4 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"APPLICABLE NUMBER. Unless there is an adjustment to the shares
to be issued in the Merger pursuant to Section 1.1.5 below, the
"APPLICABLE NUMBER" shall equal (a) the Total Macromedia Shares to
be Issued (as defined below) divided by (b) the sum of (i) the
total number of shares of Andromedia Common Stock issued and
outstanding at the Effective Time, (ii) the total number of shares
of Andromedia Common Stock issuable upon conversion of all shares
of Andromedia Preferred Stock issued and outstanding at the
Effective Time, (iii) the total number of shares of Andromedia
Common Stock issuable upon exercise of all Andromedia Options
outstanding at the Effective Time (other than options to purchase
up to 1,732,615 shares that are granted by Andromedia after the
date of this Agreement and before the Effective Time with the
prior written approval of Macromedia) and (iv) the total number of
shares of Andromedia Common Stock (on an as-if converted to
Andromedia Common Stock basis in the case of an Andromedia Warrant
to purchase Andromedia Preferred Stock) issuable upon exercise of
all Andromedia Warrants outstanding at the Effective Time. "TOTAL
MACROMEDIA SHARES TO BE ISSUED" will equal (A) $210,000,000 plus
(i) the aggregate exercise price paid to Andromedia upon exercise
of Andromedia Options and Andromedia Warrants that were
outstanding on the date of the Agreement and are exercised prior
to the Effective Time and (ii) the aggregate exercise price
payable to Andromedia upon exercise of the Andromedia Options and
Andromedia Warrants that are outstanding at the Effective Time
(other than options to purchase up to 1,732,615 shares that are
granted by Andromedia after the date of this Agreement and before
the Effective Time with the prior written approval of Macromedia),
divided by (B) $42.36 (the average closing price as quoted on the
Nasdaq National Market and as reported in the WALL STREET JOURNAL
of one share of Macromedia Common Stock for the ten trading days
prior to and including the day ending one day prior to the date of
this Agreement)."
2. The following Section 4.19 is hereby added in its entirety to read
as follows:
"4.9 ACCELERATION OF VESTING AND EXERCISE OF UNVESTED ANDROMEDIA
OPTIONS. Andromedia agrees not to take any action to accelerate
or otherwise alter the vesting schedule for any Andromedia Options
or to allow the exercise of any
unvested Andromedia Options between the date hereof and the
Effective Time without first obtaining the consent of Macromedia."
3. The following Section 6.6 is hereby added in its entirety to read
as follows:
"6.6 ASSUMPTION OF THE 1999 STOCK PLAN. At the Effective Time,
Macromedia will assume Andromedia's 1999 Stock Plan (the
"ANDROMEDIA STOCK PLAN"). Upon such assumption, all references in
the Andromedia Stock Plan to "Andromedia" or the "Company" shall
be deemed to refer to Macromedia and all references therein to the
Common Stock of "Andromedia" or the "Company" shall be deemed to
refer to Macromedia Common Stock. The number of shares of
Macromedia Common Stock that Macromedia shall reserve under the
assumed Andromedia Stock Plan for grants of options and other
equity compensation awards that Macromedia may make after the
Effective Time shall be equal to the number of shares of Common
Stock of Andromedia available for grants of options or other
equity compensation awards pursuant to the Andromedia Stock Plan
at the Effective Time multiplied by the Applicable Number, as
determined in accordance with Section 1.1.4 hereof, rounded down
to the nearest whole number. Such shares of Macromedia Common
Stock subject to the assumed Andromedia Stock Plan will be
registered at the same time and on the same registration form as
the Macromedia Options pursuant to Section 6.3 hereof."
4. Section 1.1.4 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"8.13 DISSENTING SHARES. The number of shares of Andromedia
Common Stock or Andromedia Preferred Stock eligible to become
dissenting shares shall not constitute more than 9% of the total
number of shares of Andromedia Common Stock and Andromedia
Preferred Stock (on an as-if converted to Andromedia Common Stock
basis) outstanding immediately prior to the Effective Time."
5. Except as set forth in this Amendment, the Agreement shall remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
MACROMEDIA, INC. ANDROMEDIA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
PEAK ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
