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AGREEMENT AND PLAN OF MERGER
by and among
PROQUEST INFORMATION AND LEARNING COMPANY,
CURIOUS ACQUISITION, INC.
and
xxxxxxxx.xxx, Inc.
December 18, 2002
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TABLE OF CONTENTS
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ARTICLE I THE MERGER.........................................................2
Section 1.1. The Merger............................................2
Section 1.2. Effective Time........................................2
Section 1.3. Effect of the Merger..................................2
Section 1.4. Closing...............................................3
Section 1.5. The Certificate of Incorporation......................3
Section 1.6. The By-Laws...........................................3
Section 1.7. Directors of Surviving Corporation....................3
Section 1.8. Officers of Surviving Corporation.....................3
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES................................3
Section 2.1. Merger Consideration..................................3
Section 2.2. Exchange of Company Securities........................4
Section 2.3. Stock Transfer Books..................................6
Section 2.4. Company Options.......................................7
Section 2.5. No Liability..........................................7
Section 2.6. Dissenters' Rights....................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................7
Section 3.1. Organization and Qualification; Subsidiaries..........8
Section 3.2. Certificate of Incorporation and Bylaws...............8
Section 3.3. Capitalization........................................9
Section 3.4. Authority............................................10
Section 3.5. No Conflict..........................................11
Section 3.6. Required Filings and Consents........................12
Section 3.7. Permits; Compliance with Law.........................12
Section 3.8. Financial Statements.................................13
Section 3.9. Undisclosed Liabilities..............................13
Section 3.10. Absence of Certain Changes or Events...................13
Section 3.11. Employees............................................16
Section 3.12. Employee Benefit Plans; Employee Relations...........16
Section 3.13. Contracts............................................18
Section 3.14. Right to Content.....................................20
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Section 3.15. Product and Service Warranty.........................20
Section 3.16. Litigation...........................................20
Section 3.17. Environmental Matters................................21
Section 3.18. Intellectual Property................................21
Section 3.19. Tax Matters..........................................26
Section 3.20. Real Property........................................28
Section 3.21. Non-Competition Agreements...........................28
Section 3.22. Insurance............................................29
Section 3.23. Customers............................................29
Section 3.24. Assets...............................................29
Section 3.25. Certain Statutes.....................................29
Section 3.26. Offers...............................................30
Section 3.27. Certain Interests....................................30
Section 3.28. Brokers..............................................30
Section 3.29. Information Known by Parent..........................30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT....................31
Section 4.1. Organization and Qualification.......................31
Section 4.2. Authority............................................31
Section 4.3. No Conflict..........................................31
Section 4.4. Required Filings and Consents........................32
ARTICLE V COVENANTS...................................................32
Section 5.1. Conduct of Business of the Company...................32
Section 5.2. Notification of Certain Matters......................33
Section 5.3. Access to Information; Confidentiality...............33
Section 5.4. No Solicitation......................................34
Section 5.5. Employee Benefits Matters............................34
Section 5.6. Consents; Filings; Further Action....................34
Section 5.7. Public Announcements.................................35
Section 5.8. Expenses.............................................36
Section 5.9. Conversion Schedule..................................36
Section 5.10. Directors' and Officers' Indemnification.............36
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Section 5.11. Equity...............................................36
ARTICLE VI CONDITIONS..................................................37
Section 6.1. Conditions to Each Party's Obligation to Effect
the Merger...........................................37
Section 6.2. Conditions to Obligations of Parent..................37
Section 6.3. Conditions to Obligation of the Company..............39
ARTICLE VII TERMINATION.................................................39
Section 7.1. Termination..........................................39
Section 7.2. Effect of Termination................................40
ARTICLE VIII SURVIVAL; INDEMNIFICATION.......................................40
Section 8.1. Survival.............................................40
Section 8.2. Indemnification......................................41
Section 8.3. Limitation of Indemnification Obligation.............43
Section 8.4. Reduction of Holdback Fund...........................44
Section 8.5. Third Party Claims...................................46
Section 8.6. Stockholder Representative Committee; Approval
of Disinterested Stockholders........... ............47
ARTICLE IX MISCELLANEOUS...............................................50
Section 9.1. Certain Definitions..................................50
Section 9.2. Counterparts.........................................52
Section 9.3. Waiver of Jury Trial.................................52
Section 9.4. Notices..............................................52
Section 9.5. Entire Agreement.....................................54
Section 9.6. No Third Party Beneficiaries.........................54
Section 9.7. Amendment............................................54
Section 9.8. Waiver...............................................54
Section 9.9. Obligations of Parent and of the Company.............54
Section 9.10. Severability.........................................54
Section 9.11. Interpretation.......................................55
Section 9.12. Assignment...........................................55
Section 9.13. Specific Performance.................................55
Section 9.14. Submission to Jurisdiction; Waivers; Consent to
Service of Process..................... .............55
Section 9.15. Authorship...........................................55
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Section 9.16. Special Committee....................................56
EXHIBITS
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EXHIBIT A - FORM OF CONSENT
EXHIBIT B - CERTIFICATE OF MERGER
EXHIBIT C - LETTER OF TRANSMITTAL
EXHIBIT D - FORM OF LOST STOCK AFFIDAVIT
EXHIBIT E - BYLAWS
EXHIBIT F - CHARTER AMENDMENT
EXHIBIT G - FORM OF WARRANT RELEASE
EXHIBIT H - OPINION OF COUNSEL TO THE COMPANY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated December 18,
2002, by and among ProQuest Information and Learning Company, a Delaware
corporation (the "Parent"), Curious Acquisition, Inc., a Delaware corporation
and a subsidiary of Parent ("Merger Sub"), xxxxxxxx.xxx, inc., a Delaware
corporation (the "Company"), and Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, and Oakleigh
Xxxxxx, each in their capacities as members and on behalf of the Stockholder
Representative Committee (the "Stockholder Representative Committee").
RECITALS
WHEREAS, upon the terms and conditions of this Agreement, Merger Sub
and the Company will enter into a business combination whereby Merger Sub will
merge with and into the Company (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, Parent is the holder of 10,586,463 shares of the Company's
common stock ("Company Common Stock"), the holder of 4,950,495 shares of the
Company's Series B Preferred Stock ("Company Series B Stock") and a party to
various agreements with the Company relating to its business;
WHEREAS, a special committee of independent directors (the "Special
Committee") of the Board of Directors of the Company (the "Board"), at a meeting
duly called and held on December 16, 2002, has unanimously recommended that the
Board approve and authorize the Merger and this Agreement;
WHEREAS, ThinkEquity Partners has delivered to the Special Committee,
for its consideration, its written opinion that, subject to the various
assumptions and limitations set forth therein as of the date of such opinion,
the Merger Consideration to be received by the stockholders of the Company is
fair to such stockholders from a financial point of view (other than Parent or
its affiliates);
WHEREAS, the Board of Directors of the Company has (i) determined that
the Merger is fair to, and in the best interests of, the Company and its
stockholders, (ii) approved this Agreement, the Merger, and the other
transactions contemplated by this Agreement, and (iii) determined to recommend
that the stockholders of the Company approve this Agreement;
WHEREAS, the Board of Directors of Parent have (i) determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Parent and fair to, and in the best interests of, Parent and its stockholders
and (ii) approved this Agreement, the Merger, and the other transactions
contemplated by this Agreement;
WHEREAS, subject to the conditions set forth herein, the Merger will
result in, among other things, the Company becoming a wholly-owned subsidiary of
Parent, and all of the issued and outstanding options, warrants and rights to
acquire capital stock of the Company, including
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the warrants and options listed on Schedule 3.3 hereto (collectively, the
"Company Options") being cancelled with no right to receive any consideration,
and all of the issued and outstanding shares of Company Common Stock, the Series
A Preferred Stock and Series A-2 Preferred Stock (the Series A Preferred Stock
and Series A-2 Preferred Stock, collectively, the "Company Series A Stock"), and
Company Series B Stock (the Company Series B Stock, with the Company Series A
Stock, collectively, the "Company Preferred Stock"), being exchanged and
converted into the right to receive cash on the terms described herein (the
Company Common Stock, and the Company Preferred Stock are sometimes collectively
referred to herein as the "Company Stock," holders of which shall be referred to
as "Company Stockholders");
WHEREAS, the Surviving Corporation shall not assume any Company Options
and the Company Options shall terminate immediately following the Effective
Time;
WHEREAS, it is a condition to Parent closing the transactions
contemplated by this Agreement that at least 95% of the holders of the Company
Preferred Stock (determined on an as-converted basis) execute consents in the
form attached as Exhibit A hereto (the "Stockholder Consents") providing for
certain actions relating to the transactions contemplated by this Agreement,
including their approval of the Merger; and
WHEREAS, certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 9.1.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound by this Agreement, agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined in Section
1.2) and subject to and upon the terms and conditions of this Agreement and the
provisions of the DGCL, Merger Sub shall be merged with and into the Company,
the separate corporate existence of Merger Sub shall cease and the Company
shall, as the surviving corporation in the Merger, continue its existence under
the provisions of the DGCL as a wholly-owned subsidiary of Parent. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation."
Section 1.2. Effective Time. On the Closing Date (as defined below),
the parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger substantially in the form of Exhibit B (the "Certificate
of Merger"), with the Secretary of State of the State of Delaware, executed in
accordance with the relevant provisions of the DGCL (the date and time of such
filing of the Certificate of Merger, or such later date and time as may be
specified in the Certificate of Merger by mutual agreement of Parent and the
Company, being the "Effective Time").
Section 1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers
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and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4. Closing. Subject to the satisfaction or waiver of all of
the conditions to Closing contained in Article VI hereof, the closing of the
Merger (the "Closing") shall take place at the offices of XxXxxxxxx, Will &
Xxxxx, Chicago, Illinois at 9:00 a.m. (Chicago time) on a date to be mutually
agreed upon by the parties which date shall not be later than the third Business
Day after the satisfaction or waiver of the conditions set forth in Article VI
(the "Closing Date").
Section 1.5. The Certificate of Incorporation. The certificate of
incorporation of the Merger Sub in effect immediately prior to the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until duly amended as provided
therein or by applicable law; provided, however, that at the Effective Time, the
certificate of incorporation of Merger Sub shall be amended and restated in its
entirety to reflect substantially the same terms and conditions of the
Certificate of Incorporation of the Company, but with the following changes: (i)
the name of the Surviving Corporation shall be Bigchalk, Inc., and (ii) Article
NINTH shall be deleted in its entirety. The Certificate of Merger as so amended
and restated is set forth in the Certificate of Merger.
Section 1.6. The By-Laws. The by-laws of Merger Sub in effect at the
Effective Time shall, from and after the Effective Time, be the by-laws of the
Surviving Corporation until duly amended as provided therein or by applicable
law.
Section 1.7. Directors of Surviving Corporation. The directors of
Merger Sub at the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Certificate of Incorporation and by-laws of the
Surviving Corporation.
Section 1.8. Officers of Surviving Corporation. The officers of Merger
Sub at the Effective Time shall, from and after the Effective Time, be the
initial officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 2.1. Merger Consideration.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or any of
the Company Stockholders, each share of Company Preferred Stock
outstanding immediately prior to the Effective Time shall be cancelled
and terminated and exchanged for the right to receive the applicable
portion of the Preferred Stock Merger
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Consideration (subject to (i) any reduction for the payment of Company
Expenses as provided in Section 2.2(b), (ii) the Holdback Amount
provisions of Section 2.2(c), and (iii) the Stockholder Representative
Holdback described in Section 8.6) allocated to each share of Company
Preferred Stock issued and outstanding immediately prior to the
Effective Time (other than any such shares to be cancelled pursuant to
Section 2.1(d) and any Dissenting Shares (as defined in Section 2.6))
on a pro rata liquidation preference basis based upon the requirements
set forth in Article Fourth, Paragraph B(2) of the Amended and
Restated Certificate of Incorporation of the Company, as in effect at
the Effective Time;
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or any
Company Stockholders, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be cancelled and
terminated and exchanged for the right to receive $0.0001 per share,
other than shares being cancelled pursuant to Section 2.1(d) and any
Dissenting Shares;
(c) Immediately following the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the
Company, any Company Stockholders or any holders of Company Options,
each Company Option outstanding immediately prior to the Effective
Time shall be canceled and extinguished without any conversion or
assumption thereof and no payment or distribution shall be made with
respect thereto;
(d) each share of Company Stock held in the treasury of the
Company, each Company Option and each share of Company Stock owned by
Parent or any direct or indirect wholly-owned subsidiary of Parent or
the Company, or any direct or indirect parent of Parent ("Parent
Stock") shall be cancelled and extinguished without any conversion
thereof; provided that the Parent Stock shall be deemed to be
outstanding for purposes of the pro rata computations in Sections 2.1,
2.2(a) and 2.2(b) and Parent shall have such rights provided to a
Company Securityholder under those sections based on its ownership of
the Company Preferred Stock prior to the Merger; and
(e) each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted
into and exchanged for the following shares of the Surviving
Corporation:
Series A Preferred Stock 168,262.72
Series A-2 Preferred Stock 60,557.16
Series B Preferred Stock 143,027.53
Common Stock 168,262.72
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Each stock certificate evidencing shares of Merger Sub shall
evidence ownership of shares of the Surviving Corporation as set forth
herein.
Section 2.2. Exchange of Company Securities.
(a) Exchange Procedures. From and after the Effective Time, Parent
shall act as exchange agent in effecting the exchange of cash pursuant to
Section 2.1, as applicable, for certificates which immediately prior to the
Effective Time represented outstanding shares of Company Stock which were
converted into the right to receive such cash ("Company Securities"). Each
holder of Company Securities entitled to receive such cash in exchange for their
Company Securities shall complete and provide to Parent a letter of transmittal
and termination of Company Options (the "Letter of Transmittal"), in the form of
Exhibit C, and instructions for use in surrendering such Company Securities and
receiving cash pursuant to Section 2.1.
Upon the surrender of a properly completed Letter of Transmittal to
Parent, together with the certificate representing the applicable Company
Securities, and such other documents as may reasonably be required by Parent,
Parent promptly shall cause after the Effective Time to be issued to the holder
of such Company Securities in exchange therefor, as applicable, that portion of
the Merger Consideration to which such holder is entitled pursuant to Section
2.1 (less, in the case of Preferred Stock Merger Consideration, (i) the dollar
amount attributable to the pro rata interest of such holder in the Company
Expenses pursuant to Section 2.2(b), (ii) the dollar amount attributable to the
pro rata interest of such holder in the Holdback Fund pursuant to Section
2.2(c), (iii) the dollar amount attributable to the pro rata interest of such
holder in the Stockholder Representative Holdback pursuant to Section 8.6 and
(iv) any amounts withheld for applicable withholding taxes). If a holder of
Company Securities delivers a properly completed Letter of Transmittal, together
with the certificate representing the applicable Company Securities (or an
affidavit of loss as set forth in paragraph (f) below) to Parent at the Closing,
then Parent shall cause such holder's portion of the Merger Consideration
(reduced as described in the preceding sentence) to be paid to such holder by
wire transfer of immediately available funds on the Closing Date or, in case of
amounts less than $5,000, a check. The Company Securities so surrendered shall
forthwith be cancelled.
Until surrendered as contemplated by this Article II, each share of
Company Stock shall (subject to appraisal rights under the DGCL as set forth in
Section 2.6) be deemed at any time after the Effective Time to represent only
the right to receive upon surrender that portion of the Merger Consideration to
which the holder of such Company Stock is entitled pursuant to Section 2.1. All
shares of Company Stock that are converted into the right to receive their
allocable portion of the Merger Consideration are called Company Securities.
Company Securities do not include any Dissenter Shares.
(b) Company Expenses. All Company Expenses whether occurring on, prior
or subsequent to the Closing shall be paid by or otherwise borne by the holders
of Company Preferred Stock that have converted their shares into the right to
receive their allocable portion of the Preferred Stock Merger Consideration
("Company Securityholders"). No later than one (1) Business Day prior to the
Closing Date, the Company shall prepare in good faith and deliver to Parent a
statement setting forth an estimate of the total Company Expenses and shall
submit a
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final statement through Closing (including post-Closing matters) from
each advisor or other service provider whose fees constitute Company Expenses
(which statement shall reflect amounts previously invoiced and/or paid) (the
"Final Company Expense Statements"). Company Expenses shall be deducted from the
Preferred Stock Merger Consideration paid to the holders of Company Securities
in accordance with the Final Company Expense Statements. If the actual Company
Expenses are greater than the amounts set forth in the Final Company Expense
Statements, then the amount of such difference that constitutes Company Expenses
shall be deducted from the Holdback Fund and be deemed to be property of Parent
thereafter. In the event that the Company Expenses are less than the amounts set
forth in the Final Company Expense Statements, then the amount of such
difference shall be added to the Holdback Fund as of the Closing Date.
(c) Holdback Fund. An amount of the Preferred Stock Merger
Consideration equal to $3,378,478.91 that is to be distributed to Company
Securityholders other than Parent (the "Disinterested Stockholders"), and which
amount does not include Parent's pro rata portion of the Preferred Stock Merger
Consideration, shall not be delivered immediately following the Effective Time
to such holders. Such amount, as adjusted and reduced (if applicable) in
accordance with Sections 5.12 and 8.4 (the "Holdback Amount"), shall be paid by
Parent to the Stockholder Representative Committee, on behalf of the
Disinterested Stockholders, in two installments as set forth in Article VIII.
The Holdback Amount and all interest and other amounts earned thereon are
referred to herein as the "Holdback Fund." The Holdback Fund shall be reduced as
set forth in Section 2.2(b), Section 2.6, Section 5.12, and Article VIII. Any
amount by which the Holdback Fund is reduced shall be deemed to be the property
of Parent. Further, any amounts of the Holdback Fund that are subject to any
outstanding Release Notice (as defined in Section 8.4) or claim for Post-Closing
Expenses (as defined in Section 5.12) on the applicable distribution date shall
not be distributed until such Release Notice or claim for Post-Closing Expenses
(as applicable) are no longer deemed to be outstanding as set forth in Section
8.4(c). The amount of the Holdback Fund that is ultimately distributed to
Disinterested Stockholders shall be deemed to bear interest at 2.45% (the
"Holdback Interest") per annum ("Parent Borrowing Rate") for the period
beginning at the Effective Time and ending on the date such funds are delivered
to the Stockholder Representative Committee for distribution. Upon the
distribution of the Holdback Fund to the Stockholder Representative Committee in
accordance with this Agreement, none of Parent, Merger Sub nor the Surviving
Corporation shall have any further obligation with respect thereto.
(d) No Further Rights in Company Securities. All cash issued upon
conversion of the Company Securities in accordance with the terms hereof shall
be deemed to have been issued in full satisfaction of all rights pertaining to
such Company Securities, other than any applicable right to receive a pro rata
portion of the Holdback Fund.
(e) Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Securities such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the United States Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign Tax Law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the
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holder of Company Securities in respect of which such deduction and withholding
was made by the Surviving Corporation or Parent, as the case may be.
(f) Lost Securities. If any certificate evidencing shares of Company
Preferred Stock shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate evidencing shares
of Company Preferred Stock to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such certificate
evidencing shares of Company Preferred Stock in the form attached hereto as
Exhibit D, Parent shall issue in exchange for such lost, stolen or destroyed
certificate evidencing shares of Company Preferred Stock, the cash to which such
person is entitled pursuant to the provisions of this Article II.
Section 2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Stock thereafter on the records
of the Company. From and after the Effective Time, the holders of Company
Options or certificates representing shares of Company Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Company Options or shares of Company Stock, except as otherwise
provided in this Agreement or by Law.
Section 2.4. Company Options. Immediately following the Effective Time,
all Company Options, whether vested or unvested and whether exercisable or
unexercisable shall, by virtue of the Merger and without any action on the part
of the Company or the holder thereof, be cancelled and cease to exist. Neither
Parent nor the Surviving Corporation shall assume any of the Company Options in
connection with the transactions contemplated by this Agreement.
Section 2.5. No Liability. Notwithstanding anything to the contrary in
this Agreement, none of the Parent, Merger Sub or the Surviving Corporation
shall be liable to any holder of Company Stock or Company Options for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
Section 2.6. Dissenters' Rights. All persons who have executed and
delivered a Consent shall have consented to the Merger. Notwithstanding anything
in this Agreement to the contrary, any Company Stock outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger or delivered a valid, unrevoked proxy in favor of the Merger, or
consented thereto in writing and who has delivered written notice to the Company
objecting to the Merger and demanding payment for his shares as required in
accordance, and has otherwise complied, with the applicable provisions of the
DGCL regarding rights of appraisals ("Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration unless and until
such holder fails to elect to dissent from the Merger or effectively withdraws
or otherwise forfeits his or her appraisal rights under the provisions of the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses his or her appraisal rights, such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration to which such
holder is entitled without interest thereon. The Company shall give Parent (i)
prompt notice of any demands for appraisal of any Company Stock, withdrawals of
such demands, and any
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other instruments that related to such demands received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands. Any amounts paid to
holders of Dissenting Shares in an appraisal proceeding, to the extent greater
than the amount of pro rata Merger Consideration such holders would have been
entitled to receive in the Merger (less any adjustments made hereunder), will be
subject to indemnification, as described in Section 8.2(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, as of the date hereof
and as of the Closing Date, subject to such exceptions or qualifications to
specific representations and warranties as are disclosed in writing in the
disclosure letter dated the date hereof delivered by the Company to Parent
simultaneously herewith (the "Disclosure Letter") (which Disclosure Letter shall
contain certain specific references to the representations and warranties to
which the disclosures contained therein related and, subject to any
cross-references or item on the Disclosure Letter, shall be deemed to qualify
only the particular subsection or subsections for such item and any other
subsections to which the disclosure is clearly applicable), that:
Section 3.1. Organization and Qualification; Subsidiaries.
(a) Each of the Company and each subsidiary of the Company
(collectively, the "Company Subsidiaries") has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and has all requisite power
and authority and all necessary governmental approvals to own, lease and
otherwise hold and operate its properties and to carry on its business as it is
now being conducted. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that, individually or in the aggregate, would have no Material Adverse
Effect on the Company. For purposes of this Agreement, "Material Adverse Effect"
or "Material Adverse Effect on the Company" means any state of affairs or change
that has had, or could reasonably be expected to have, a material adverse effect
on the business, assets, properties, reasonably foreseeable prospects, results
of operations or condition (financial or otherwise) of the Company and the
Company Subsidiaries, taken as a whole, or that has materially impaired or will
materially impair the ability of the Company to perform its obligations under
this Agreement or to consummate the Merger and the other transactions
contemplated by this Agreement. Section 3.1(a) of the Disclosure Letter sets
forth each jurisdiction where the Company and the Company Subsidiaries are
qualified or licensed to do business and each jurisdiction in which either the
Company or a Company Subsidiary owns, uses, licenses or leases real property or
currently has employees.
(b) Section 3.1(b) of the Disclosure Letter sets forth a complete and
correct list of all of the Company Subsidiaries, their jurisdiction of
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organization and the ownership or other interest therein of all persons,
including the Company and each Company Subsidiary. Neither the Company nor any
Company Subsidiary holds any interest in any person other than the Company
Subsidiaries so listed.
Section 3.2. Certificate of Incorporation and Bylaws.
(a) The Company has heretofore made available to Parent a
complete and correct copy of (a) the corporate records of each of the
Company and the Company Subsidiaries, (b) the Amended and Restated
Certificate of Incorporation and the Bylaws including all amendments
thereto of each of the Company and the Company Subsidiaries, (c) the
minute books containing all consents, actions and meetings of the
stockholders of the Company and the Company's Board of Directors and
any committees thereof, (d) the stock transfer books of the Company
setting forth all issuances or transfers of any capital stock of the
Company and (e) the stock transfer books and minute books of each
Company Subsidiary containing the information listed in paragraphs (c)
and (d) above. The Amended and Restated Certificate of Incorporation
and Bylaws of the Company are in full force and effect. The Company is
not in violation of any of the provisions of its Amended and Restated
Certificate of Incorporation or Bylaws. The corporate minute books,
stock certificate books, stock registers and other corporate records
of the Company are complete and accurate, and, to the knowledge of the
Company, the signatures appearing on all documents contained therein
are the true or facsimile signatures of the persons purported to have
signed the same. The Bylaws of the Company are attached hereto as
Exhibit E.
(b) The amendment to the Amended and Restated Certificate of
Incorporation as set forth on Exhibit F hereto (the "Charter
Amendment"), was duly authorized by all necessary corporate action on
the part of the Company and, on or prior to the Closing Date, will be
filed with the Secretary of State of the State of Delaware and will be
effective in accordance with the DGCL.
Section 3.3. Capitalization.
(a) The authorized capital stock of the Company consists of 147,600,002
shares divided into: (i) 100,000,000 shares of Company Common Stock; (ii)
1,544,286 shares of Series A Preferred Stock; and 6,055,716 shares of Series A-2
Preferred Stock; (iii) 20,000,000 shares of Company Series B Stock; and (iv)
20,000,000 shares of undesignated Preferred Stock, $.01 par value per share As
of the date hereof: (A) 16,826,272 shares of Company Common Stock, 1,544,286
shares of Company Series A Stock, 6,055,716 shares of Series A-2 Preferred Stock
and 14,302,753 shares of Company Series B Stock were issued and outstanding, all
of which were validly issued and are fully paid, nonassessable and not subject
to preemptive rights, and held of record by the persons indicated in Section
3.3(a) of the Disclosure Letter (which indicates the class of stock and number
of shares held by each such person); (B) no shares of Company Stock were held in
the treasury of the Company or by the Company Subsidiaries, (C) 2,601,453 shares
of Company Common Stock were reserved for issuance upon exercise of outstanding
options to purchase Company Common Stock and an additional 3,398,547 shares of
Company Common Stock were reserved for issuance upon exercise of options not yet
granted under the
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Option Plans, (D) 27,600,002 shares of Company Common Stock were reserved for
issuance upon conversion of Company Preferred Stock and (E) 61,434 shares of the
Company Common Stock were reserved for issuance upon exercise of outstanding
warrants to purchase shares of Company Common Stock ("Company Warrants") and are
held of record by the persons indicated in Section 3.3(a) of the Disclosure
Letter. Except as set forth above, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding and,
since such date, no shares of capital stock or other voting securities or
options in respect thereof have been issued.
(b) Since October 31, 2002, the Company has not granted any Company
Options. Except for (i) options to purchase an aggregate of 2,601,453 shares of
Company Common Stock outstanding or available for grant under the Company's 2000
Stock Plan and the Company's 2001 Stock Plan (the "Company Option Plans"), (ii)
warrants to purchase an aggregate of 61,434 shares of Company Common Stock, and
(iii) agreements or arrangements described in Section 3.3(b) of the Disclosure
Letter, there are no options, warrants, calls, conversion rights, stock
appreciation rights, redemption rights, repurchase rights or other rights,
agreements, arrangements or commitments of any character to which the Company is
a party or by which the Company is bound relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, other
equity interests in, or securities exchangeable for or convertible into capital
stock or other equity interests in, the Company or any Company Subsidiary.
Section 3.3(b) of the Disclosure Letter sets forth a summary of any and all
agreements, arrangements or commitments by which the Company has granted any
rights relating to the registration by the Company of shares of its capital
stock for sale under the Securities Act of 1933, as amended. Section 3.3(b) of
the Disclosure Letter also sets forth (w) the persons to whom Company Options
have been granted, (x) the exercise price for the Company Options held by each
such person, (y) whether such Company Options are subject to vesting and, if
subject to vesting, the dates on which each of those Company Options vest, and
(z) if applicable, the Company Option Plan under which such Company Options were
granted. All of the Company Options shall terminate immediately following the
Effective Time of the Merger, without any obligation of the Surviving
Corporation with respect thereto. Copies of the forms of warrants used with
respect to the issuance of all warrants are being delivered simultaneously to
Parent with the execution of this Agreement. Copies of the forms of option
grants used to grant other Company Options are being delivered simultaneously to
Parent with the execution of this Agreement.
(c) All shares of the Company's capital stock and all Company Options,
whether or not currently outstanding, were issued in compliance (and if
reacquired or cancelled by the Company, reacquired or cancelled in compliance)
with all Laws, including federal and state securities Laws, and the Company made
no misstatements or omissions of material facts in connection with any such
issuances (or reacquisitions or cancellations) which could give rise to
liability under any federal or state securities Laws.
(d) Except as set forth in the Company's Amended and Restated
Certificate of Incorporation, there are no outstanding contractual obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of Company Stock or any capital stock of any Company
Subsidiary. Each outstanding share of capital stock of each
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Company Subsidiary is duly authorized, validly issued, fully paid, nonassessable
and not subject to preemptive rights and each such share owned by the Company or
a Company Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Company Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever (collectively, "Liens"). There are no
outstanding material contractual obligations of the Company or any Company
Subsidiary to make any investment (in the form of a loan, capital contribution
or otherwise) in any Company Subsidiary that is not wholly owned by the Company
or in any other person.
Section 3.4. Authority.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations under this
Agreement and to consummate the Merger and the other transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereunder
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereunder other than, with respect to the Merger, the filing of the Certificate
of Merger. This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to (i) the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar federal or state laws affecting the rights of
creditors and (ii) the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies (regardless of
whether any such remedy is considered in a proceeding at law or in equity).
(b) The Board of Directors of the Company (i) has adopted the plan of
merger set forth in this Agreement and approved this Agreement and the other
transactions contemplated by this Agreement and (ii) has declared that the
Merger, this Agreement and the other transactions contemplated by this Agreement
are fair and advisable, all in accordance with the DGCL.
(c) The only votes of the holders of any classes or series of capital
stock of the Company necessary to approve and adopt this Agreement, the Merger
and the other transactions contemplated by this Agreement are (a) the
affirmative vote of the holders of at least fifty-one percent (51%) of the
outstanding Company Preferred Stock and Company Common Stock, voting together as
a single class, in favor of the approval of this Agreement and the transactions
contemplated hereby; and (b) the affirmative vote of holders of at least
fifty-one percent (51%) of the outstanding Company Preferred Stock, voting
together as a separate class from the Company Stock, in favor of the approval of
this Agreement and the transactions contemplated hereby. No vote or consent of
the holders of Company Options is necessary to approve and adopt this Agreement.
(d) The holders of the requisite number of issued and outstanding
shares of capital stock of the Company required under the DGCL and the Company's
Amended and Restated Certificate of Incorporation to adopt and approve this
Agreement, and all matters contemplated thereby, have adopted and approved this
Agreement and the Charter Amendment in accordance with the DGCL and the
Company's Amended and Restated Certificate of Incorporation. Upon
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consummation of the Merger, the Amended and Restated Stockholders Agreement,
dated December 20, 2000, by and among the Company and certain Company
Stockholders, and any other agreements pursuant to which the Company issued any
shares of its capital stock, or options or warrants therefor (including the
Company Options), shall terminate without any further obligation on the part of
the Parent, the Company or the Surviving Corporation. By the Closing Date, no
further corporate action on the part of the Company or its stockholders shall be
necessary in order for the Company to enter into this Agreement and consummate
the transactions contemplated hereunder.
Section 3.5. No Conflict.
The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not:
(i) conflict with or violate any provision of the Company's
Amended and Restated Certificate of Incorporation or By-laws or any
comparable organizational documents of any Company Subsidiary;
(ii) assuming that all consents, approvals, authorizations and
other actions described in Section 3.6 have been obtained and all
filings and obligations described in Section 3.6 have been made,
conflict with or violate any foreign or domestic (Federal, state or
local) law, statute, franchise, permit, concession, license, writ
ordinance, rule, regulation, order, injunction, judgment or decree
("Law") applicable to the Company or any Company Subsidiary or by
which any property or asset of the Company or any Company Subsidiary
is or may be bound or affected; or
(iii) conflict with, result in any breach of or constitute a
default (or an event which with or without notice or lapse of time or
both would become a default) under, require consent, approval or
notice under or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien
on any property or asset of the Company or any Company Subsidiary
under any note, bond, mortgage or indenture or any material contract,
agreement, commitment, lease, license, permit, franchise or other
instrument or obligation (collectively, "Contracts") to which the
Company or any Company Subsidiary is a party or by which any of them
or their assets or properties is or may be bound or affected.
Section 3.6. Required Filings and Consents. The execution and delivery
of this Agreement by the Company do not, and the performance of this Agreement
by the Company will not, require the Company to obtain or make, as the case may
be, any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign national, federal, state, provincial or
local governmental, regulatory or administrative authority, agency, commission,
court, tribunal or arbitral body or self-regulated entity or any
quasi-governmental or private body exercising any regulatory, taxing, importing,
or other governmental authority (each, a "Governmental Entity"), except for the
filing of the Certificate of Merger as required by the DGCL and any filings
required by the Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended (the "HSR Act").
Neither the Company nor any of the Company Subsidiaries is a party to or bound
by any contract or other agreement that would prohibit the transactions
contemplated by this Agreement.
-12-
Section 3.7. Permits; Compliance with Law.
(a) Each of the Company and the Company Subsidiaries is in possession
of all material franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company or any Company Subsidiary
to own, lease and operate its properties and other assets or to carry on its
business as it is now being conducted (collectively, the "Company Permits"),
and, as of the date of this Agreement, no suspension, cancellation, revocation,
withdrawal or modification of any of the Company Permits is pending or, to the
knowledge of the Company, threatened.
(b) Neither the Company nor any Company Subsidiary is in conflict with,
or in default or violation of (i) any Law applicable to the Company or any
Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is or may be bound or affected; (ii) any Contract to which
the Company is a party or by which the Company or any material property or asset
of the Company is bound or affected or (iii) any Company Permits, which
conflict, default or violation could reasonably be expected to result in a
Material Adverse Effect.
Section 3.8. Financial Statements. The Company has delivered to Parent
and attached hereto as part of Section 3.8 of the Disclosure Letter: (i) audited
balance sheets of the Company as at December 31, 2000 and 2001, and the related
audited consolidated statements of income, changes in stockholders' equity, and
cash flow for the fiscal year then ended, together with the report thereon of
KPMG LLP, independent certified public accountants (the most recent balance
sheet of which, the "Company Balance Sheet"), and (ii) the unaudited
consolidated balance sheet of the Company as of October 31, 2002 (the "Most
Recent Balance Sheet"), and the related statements of operations, changes in
stockholders' equity and changes in cash flows for the ten month period ending
October 31, 2002. Such financial statements and notes (collectively, the
"Company Financial Statements") are true, correct and complete and fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company in all material respects as
at the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse to the
Company) and the absence of notes (that, if presented, would not differ
materially from those included in the Company Balance Sheet). Except as
disclosed therein, the Company Financial Statements reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any person other than the Company and the Company
Subsidiaries are required by GAAP to be included in the Company Financial
Statements.
Section 3.9. Undisclosed Liabilities. None of the Company or any of the
Company Subsidiaries has any debt, liability or obligation, whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due, including any liability for taxes ("Liabilities"), except for (i)
liabilities set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto) to the extent set forth therein, (ii) Liabilities which
have arisen after October 31, 2002 in the ordinary course of business, (iii)
performance obligations under Contracts and as to which
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neither the Company nor any Company Subsidiary is in default, and (iv)
Liabilities that constitute Company Expenses. Reserves are reflected on the Most
Recent Balance Sheet and on the books of account and other financial records of
the Company against all Liabilities of the Company in amounts that have been
established on a basis consistent with the past practice of the Company and in
accordance with GAAP.
Section 3.10. Absence of Certain Changes or Events. Since October 31,
2002, the Company and the Company Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been any Material Adverse Effect on the Company
or any of the Company Subsidiaries or any event which could reasonably be
expected to result in a Material Adverse Effect. Without limiting the generality
of the foregoing, since that date:
(a) none of the Company or any of the Company Subsidiaries has sold,
leased, transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the ordinary course of business;
(b) none of the Company or any of the Company Subsidiaries has entered
into any Contract (or series of related Contracts) either involving more than
$25,000 or outside the ordinary course of business;
(c) no party (including any of the Company and the Company
Subsidiaries) has accelerated, terminated, amended, modified, or cancelled any
Contract (or series of related Contracts) involving more than $25,000 to which
any of the Company and the Company Subsidiaries is a party or by which any of
them is bound;
(d) none of the Company or any of the Company Subsidiaries has imposed
upon any of its assets, tangible or intangible, any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (A) mechanic's,
materialmen's, and similar liens, (B) liens for Taxes not yet due and payable,
(C) purchase money liens and liens securing rental payments under capital lease
arrangements, and (D) other liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money, in each case that has no
Material Adverse Effect on the Company;
(e) none of the Company or any of the Company Subsidiaries has made any
capital expenditure (or series of related capital expenditures) either involving
more than $25,000 or outside the ordinary course of business;
(f) none of the Company or any of the Company Subsidiaries has made any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other person (or series of related capital investments, loans,
and acquisitions) either involving more than $25,000 or outside the ordinary
course of business;
(g) none of the Company or any of the Company Subsidiaries has issued
any note, bond, or other debt security or created, incurred, assumed, loaned or
guaranteed any indebtedness for borrowed money or capitalized lease obligation
either involving more than $10,000 singly or $25,000 in the aggregate;
-14-
(h) none of the Company or any of the Company Subsidiaries has delayed
or postponed the payment of accounts payable and other liabilities outside the
ordinary course of business;
(i) none of the Company or any of the Company Subsidiaries has
discharged, cancelled, compromised, waived, assigned, settled, or released any
right or claim (or series of related rights and claims), obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise) or litigation either
involving more than $25,000 or outside the ordinary course of business;
(j) the Company and the Company Subsidiaries, on a consolidated basis,
have not suffered any decline in net working capital (current assets less
current Liabilities) computed on a basis consistent with the October 31, 2002
balance sheet referred to in Section 3.8;
(k) none of the Company or any of the Company Subsidiaries has granted
any license or sublicense of any rights under or with respect to any
Intellectual Property except in the ordinary course of business;
(l) there has been no amendment or other change made or authorized in
the charter or bylaws or comparable organization documents of any of the Company
and the Company Subsidiaries;
(m) none of the Company or any of the Company Subsidiaries has issued,
reissued sold or pledged, or authorized the issuance, reissuance, sale or pledge
of (x) additional shares of capital stock or other equity securities of any
class, or securities convertible into capital stock or other equity securities
or any rights, warrants or options to acquire any such convertible securities or
capital stock or other equity securities, or (y) any other securities in respect
of, in lieu of, or in substitution for, capital stock of the Company or Company
Subsidiary outstanding on the date hereof;
(n) none of the Company or any of the Company Subsidiaries has
declared, set aside, or paid any dividend or made any distribution with respect
to its capital stock (whether in cash, in kind or other property) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(o) none of the Company or any of the Company Subsidiaries has directly
or indirectly, split, combined, subdivided, reclassified or redeemed, retired,
purchased or otherwise acquired, or propose to redeem, retire or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(p) none of the Company or any of the Company Subsidiaries has
experienced any material damage, destruction, or loss (whether or not covered by
insurance) to its property;
(q) none of the Company or any of the Company Subsidiaries has made any
loan to, or, except in the ordinary course of business, entered into any other
transaction with, any of its directors, officers and employees;
-15-
(r) none of the Company or any of the Company Subsidiaries (i) has
entered into or modified or changed any employment contract, severance agreement
or collective bargaining agreement, written or oral, or any employment terms,
(ii) has increased or granted any increase in the compensation or fringe
benefits of any of its directors, officers and employees, or (iii) has adopted,
amended, modified, terminated or taken any action to accelerate any rights with
respect to any Benefit Plan;
(s) none of the Company or any of the Company Subsidiaries has paid any
benefit not required by any existing Benefit Plan (including the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or granted any severance or termination pay (except pursuant
to existing agreements, plans or policies);
(t) none of the Company or any of the Company Subsidiaries has made any
change in its accounting methods, principles or practices;
(u) none of the Company or any of the Company Subsidiaries has made any
Tax election or settlement or compromise of any Tax Liability;
(v) none of the Company or any of the Company Subsidiaries has entered
into any agreement for the acquisition by or license to the Company or any
Company Subsidiary of any Software or Technology or any third party except in
the ordinary course of business;
(w) none of the Company or any of the Company Subsidiaries has
committed to any of the foregoing.
Section 3.11. Employees. None of the Company or any of the Company
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strike or material grievance, claim of unfair
labor practices, or other collective bargaining dispute within the past three
years. None of the Company or any of the Company Subsidiaries currently has, nor
to the knowledge of the Company is there now threatened, a strike, a picket,
work stoppage, work slowdown or other organized labor dispute. None of the
Company or any of the Company Subsidiaries has committed any material unfair
labor practice. The Company does not have any knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of any of the Company and the Company Subsidiaries.
Except as provided in Section 3.11 of the Disclosure Letter, none of the Company
or any of the Company Subsidiaries has as of the date hereof incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act, as it may have been amended from time to time, or any similar state law.
Section 3.11 of the Disclosure Letter contains a true and complete list of (i)
the positions of all individuals who serve as employees of or consultants to the
Company or any Company Subsidiary as of the date hereof, (ii) in the case of
such employees, the position and base compensation payable for each such
position, and (iii) in the case of each such consultant, the consulting rate
payable to such individual. To the Company's knowledge, no employee of or
consultant to the Company has been injured in the workplace or in the course of
his or her employment or consultancy except for injuries which are covered by
insurance or for which a claim has been made under workers' compensation or
similar laws. Section 3.11 sets forth a list of all
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employees of the Company
whose employment has been terminated, whether voluntarily or involuntarily,
within the three months prior to the Closing Date, and the total severance paid
or payable to each such employee.
Section 3.12. Employee Benefit Plans; Employee Relations.
(a) Section 3.12(a) of the Disclosure Letter contains a true and
complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including multiemployer plans within the meaning of Section 3(37) of
ERISA), stock purchase, stock option, severance, employment, change-in-control,
loans, fringe benefit, welfare benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), under which any employee or former employee of the Company has any
present or future right to benefits or under which the Company has any present
or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Benefit Plans." All
references to the "Company" in this Section 3.12 shall refer to the Company and
each member of its "controlled group," including, without limitation, the
Company Subsidiaries, within the meaning of Section 414 of the Code.
(b) The Company has, with respect to each Benefit Plan, if applicable,
delivered or made available to Parent true and complete copies of: (i) all plan
texts and agreements and related trust agreements (or other funding vehicles);
(ii) the most recent summary plan descriptions and material employee
communications; (iii) the most recent annual report (including all schedules
thereto); (iv) the most recent annual audited financial statement and opinion;
(v) if the plan is intended to qualify under Section 401(a) of the Code, the
most recent determination letter received from the Internal Revenue Service; and
(vi) all material communications with any Governmental Entity (including the
Pension Benefit Guaranty Corporation and the Internal Revenue Service) given or
received within the past three years.
(c) The Company does not currently and has not within the last six
years maintained, contributed to or had any liability under any Benefit Plan is
subject to either Section 412 of the Code or Title IV of ERISA, or any
"multiemployer plan" or "multiple employer" plan as defined in the Code or
ERISA.
(d) No Claims are pending or, to the knowledge of the Company,
threatened (other than routine claims for benefits) with respect to any Benefit
Plan as to which the Company has or could reasonably be expected to have any
direct or indirect actual or contingent material liability.
(e) Each Benefit Plan which is a "group health plan" (as defined in
Section 607(1) of ERISA) is in material compliance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Health
Insurance Portability and Accountability Act and any other applicable federal,
state or local law.
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(f) There are no Benefit Plans maintained by the Company pursuant to
which welfare benefits are provided to current or former employees beyond their
retirement or other termination of service, other than coverage mandated by
applicable Law.
(g) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee of the Company to severance
pay, bonus, unemployment compensation (to the knowledge of the Company) or any
other payment (other than as a stockholder), (ii) accelerate the time of payment
or vesting, or increase the amount of any compensation due to, any current or
former employee of the Company, or (iii) constitute or involve a prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code),
constitute or involve a breach of fiduciary responsibility within the meaning of
Section 502(l) of ERISA as to which the Company has or reasonably could be
expected to have any direct or indirect actual material liability.
(h) Neither the Company nor any Benefit Plan, or to the knowledge of
the Company, any "disqualified person" (as defined in Section 4975 of the Code)
or any "party in interest" (as defined in Section 3(18) of ERISA), has engaged
in any non-exempt prohibited transaction (within the meaning of Section 4975 of
the Code or Section 406 of ERISA) which could reasonably be expected to result
in any material liability to the Company. No event has occurred that could
subject the Company or any Benefit Plan to a material excise tax under Chapter
43 of Subtitle D of the Code.
(i) None of the assets of any Benefit Plan is stock of the Company, or
property leased to or jointly owned by the Company.
Section 3.13. Contracts.
(a) Section 3.13 of the Disclosure Letter lists the following
written or oral Contracts to which any of the Company and the Company
Subsidiaries is a party:
(i) any agreement granting rights to the Company or any
Company Subsidiary to use and/or disseminate information of
others that require the payment of annual royalties in excess of
$25,000;
(ii) any agreement (or group of related agreements) for the
lease of personal property to or from any person providing for
lease payments in excess of $25,000 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of products, or other personal property, or for
the furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a
material loss to any of the Company and the Company Subsidiaries,
or involve consideration in excess of $25,000 (provided that
without regard to such $25,000 figure, for contracts with
customers, only those that involve a Key Customer are so listed);
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(iv) any agreement with any Key Customers;
(v) any agreement providing for the licensing of the
Company's products, Software or Technology, outside the ordinary
course of business;
(vi) any agreement concerning a partnership or joint
venture, collaboration or strategic alliance;
(vii) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000 or under which it has imposed a
Lien on any of its assets, tangible or intangible;
(viii) any agreement concerning confidentiality or
noncompetition;
(ix) any agreement with any of the Company Stockholders or
their affiliates;
(x) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material
plan or arrangement for the benefit of its current or former
directors, officers and employees;
(xi) any collective bargaining agreement;
(xii) any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis providing
annual compensation in excess of $50,000 or providing severance
benefits;
(xiii) any agreement under which it has advanced or loaned
any amount to any of its directors, officers and employees;
(xiv) all contracts and agreements with any Governmental
Entity to which the Company is a party except for any contracts
and agreements entered into in the ordinary course of business;
(xv) all contracts providing for indemnification of any
officer, director, employee or agent of the Company; or
(xvi) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$25,000.
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(b) The Company has made available to Parent a correct and
complete copy of each written agreement listed in Section 3.13 of the
Disclosure Letter and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3.13 of the
Disclosure Letter. With respect to each such agreement:
(A) the agreement is legal, valid, binding,
enforceable, and in full force and effect;
(B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby;
(C) no party is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and
(D) no party has repudiated any provision of an
agreement.
Section 3.14. Right to Content. The Company and each Company Subsidiary
has (i) the right to use in the manner in which it is being used any form of
electronic, magnetic, optical or print media and other materials and databases
used by it in its business as currently conducted (the "Content Materials") and
(ii) the right to reproduce, license and distribute the Content Materials and
the materials created therefrom in the manner in which such activities are
currently conducted, subject in the case of (i) and (ii) to no rights or claims
of any person other than the rights created by the express terms of any
agreements to which the Company or a Company Subsidiary is a party and with
which the Company or the Company Subsidiary, as applicable, as the case may be,
is complying.
Section 3.15. Product and Service Warranty. Each product or service
sold, leased, licensed or delivered by the Company and/or the Company
Subsidiaries has been in conformity with all applicable contractual commitments
and all express and implied warranties, and neither the Company nor any Company
Subsidiary has any Liability (and, to the Company's knowledge, there is no basis
for any present or future claim against it giving rise to any Liability) for
damages in connection therewith. No product or service sold, leased, licensed or
delivered by the Company or any Company Subsidiary is subject to any guaranty,
warranty, or other indemnity beyond the applicable standard terms and conditions
of sale, license or lease. Section 3.15 of the Disclosure Letter includes copies
of the standard terms and conditions of sale, license or lease for the Company
(containing applicable guaranty, warranty, and indemnity provisions) and each
Company Subsidiary.
Section 3.16. Litigation. Except as provided in Section 3.16 of the
Disclosure Letter, there is no (i) litigation, suit, claim, action, proceeding,
investigation, inquiry or arbitration proceeding (collectively, "Claims")
pending or, to the knowledge of the Company, threatened against the Company or
any Company Subsidiary or any property or asset owned or used by the Company or
any Company Subsidiary or to the knowledge of the Company, any person whose
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liability the Company has or may have assumed, either contractually or by
operation of law, or (ii) government inquiry pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary, that, if
adversely determined, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company. Except as provided in
Section 3.16 of the Disclosure Letter, neither the Company nor any Company
Subsidiary is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, would have a Material Adverse Effect on
the Company. The Company is not in default with respect to any order, writ,
injunction or decree of any Governmental Entity. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 3.16 of the
Disclosure Letter could reasonably be expected to result in any Material Adverse
Effect on the Company. The Company has no knowledge that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against any
of the Company and the Company Subsidiaries. Neither the Company nor the Company
Subsidiaries have any plans to initiate any claims against any third party.
Section 3.17. Environmental Matters. Except as would have no Material
Adverse Effect on the Company:
(a) the Company and the Company Subsidiaries are and have been in
compliance with all applicable Laws relating to pollution, protection of the
environment or health and safety ("Environmental Laws");
(b) there is no liability or claim pursuant to Environmental Laws or
principles of common law relating to pollution, protection of the environment or
health and safety pending or, to the knowledge of the Company, threatened
against the Company or any Company Subsidiary; and
(c) there is no civil, criminal or administrative judgment or notice of
responsibility or violation outstanding against the Company or any Company
Subsidiary pursuant to Environment Laws or principles of common law relating to
pollution, protection of the environment or health and safety.
Section 3.18. Intellectual Property.
(a) For purposes of this Agreement, "Intellectual Property" means all
of the following as they exist in any jurisdiction throughout the world, in each
case, to the extent owned by, licensed to, or otherwise used or held for use by
the Company:
(i) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications and patent disclosures, and designs and
improvements described and claimed therein (including any divisions,
continuations, continuations-in-part, substitutions, or reissues
thereof, whether or not patents are issued on any such applications
and whether or not any such applications are amended, modified,
withdrawn, or resubmitted) (collectively, "Patents");
(ii) all trademarks, service marks, trade dress, trade names,
brand names, Internet domain names, designs, logos, or corporate names
(including, in each
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case, the goodwill associated therewith), whether registered or
unregistered, and all registrations and applications for registration
thereof (collectively, "Trademarks");
(iii) all copyrightable works, all copyrights, and all renewals
and extensions, copyright registrations and applications for
registration (collectively, "Copyrights");
(iv) all trade secrets, confidential business information,
concepts, ideas, designs, research or development information,
processes, procedures, techniques, technical information,
specifications, operating and maintenance manuals, engineering
drawings, methods, know-how, data, mask works, discoveries,
inventions, modifications, extensions and improvements (whether or not
patentable or subject to copyright, trademark, or trade secret
protection) (collectively, "Technology");
(v) all computer software and firmware programs or listings,
including all source code, object code, complete system build software
and documentation related thereto ("Software");
(vi) all licenses, and sublicenses, and other agreements or
permissions related to the Patents, Trademarks, Copyrights,
Technology, Software and all other proprietary rights described in
this Section 3.18(a);
(vii) all other proprietary rights;
(viii) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing
or customer support for all Patents, Trademarks, Copyrights,
Technology, Software and all other proprietary rights that is owned or
used by the Company or any of the Company Subsidiaries; and
(ix) all copies and tangible embodiments of the Patents,
Trademarks, Copyrights, Technology, Software and all other proprietary
rights (in whatever form or medium).
(b) Disclosure.
(i) Section 3.18(b)(i) of the Disclosure Letter sets forth all
Patents, Trademark Registrations, and Copyright registrations and
applications for any of the foregoing owned by the Company or any
Company Subsidiary, specifying as to each item, as applicable: (A) the
nature of the item, including the title; (B) the jurisdictions in
which the item is issued or registered or in which an application for
issuance or registration has been filed; and (C) the issuance,
registration or application numbers. The Company has made available to
Parent correct and complete copies of all such Patents (as corrected
or reissued to date). With respect to each item of Intellectual
Property required to be identified in Section 3.18(b)(i) of the
Disclosure Letter:
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(A) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(B) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
knowledge of the Company, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the
item, except as set forth in Section 3.18 of the Disclosure
Letter; and
(C) none of the Company and the Company Subsidiaries has
ever agreed to indemnify any person for or against any
interference, infringement, misappropriation, or other conflict
with respect to the item, except as set forth in Section
3.18(b)(i) of the Disclosure Letter.
(ii) Section 3.18(b)(ii) of the Disclosure Letter sets forth all
licenses, sublicenses and other agreements or permissions ("IP
Licenses") under which the Company or any Company Subsidiary is a
licensee or otherwise is authorized to use or practice any
Intellectual Property, other than off-the-shelf software licensed to
the Company and licenses or sublicenses that are not material to the
business of the Company and the Company Subsidiaries, taken as a
whole. With respect to each IP License required to be identified in
Section 3.18(b)(ii) of the Disclosure Letter:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in
full force and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby;
(C) with respect to such license, sublicense, agreement, or
permission, neither the Company nor any Company Subsidiary, and
no other party thereto, is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof in writing to the
Company;
(E) with respect to each sublicense, to the Company's
knowledge, the representations and warranties set forth in
subsections (A) through (D) above are true and correct with
respect to the underlying license;
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(F) to the Company's knowledge, the underlying item of
Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(G) to the knowledge of the Company, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or is threatened which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual Property;
(H) none of the Company and the Company Subsidiaries has
granted any sublicense or similar right with respect to the
license, sublicense, agreement, or permission, other than those
set forth on Section 3.13 of the Disclosure Letter; and
(I) each of the Company and the Company Subsidiaries is not,
nor as a result of the execution or delivery of this Agreement,
or performance of the Company's or any of the Company
Subsidiaries' obligations hereunder or thereunder, will the
Company or any of the Company Subsidiaries be, in violation of
any IP License that is material to the business of the Company
and the Company Subsidiaries, taken as a whole.
(iii) There are no material agreements (including licenses and
sublicenses, but excluding off-the-shelf software licensed to the
Company) involving Intellectual Property currently in negotiation or
proposed to be licensed for use by the Company or any Company
Subsidiary ("Proposed Intellectual Property Agreements").
(c) Ownership. The Company and the Company Subsidiaries are the owner,
assignee or licensee of all Intellectual Property, free and clear of all Liens,
licenses or other restrictions. The Company and the Company Subsidiaries own or
have the right to use pursuant to an IP License all Intellectual Property
necessary for the operation of the businesses of the Company and the Company
Subsidiaries as presently conducted and as presently proposed to be conducted.
Each item of Intellectual Property owned or used by any of the Company and the
Company Subsidiaries immediately prior to the date hereof and the Closing will
be owned or available for use by the Company or the Company Subsidiary on
identical terms and conditions immediately subsequent to the Closing hereunder.
Except for licenses set forth in Section 3.13 of the Disclosure Letter, each of
the Company and the Company Subsidiaries is not obligated to provide any
consideration (whether financial or otherwise) to any third party, nor is any
third party otherwise entitled to any consideration, with respect to any
exercise of rights by the Company or any of the Company Subsidiaries or their
respective successors or licensees in the Intellectual Property with respect to
which the Company is the assignee.
(d) Claims.
-24-
(i) No claim or action is pending or, to the knowledge of the
Company, threatened and the Company does not know of any basis for any
claim that challenges the validity, enforceability, ownership, or
right to use, sell or license any Company-owned Intellectual Property,
and no item of Intellectual Property is subject to any outstanding
order, ruling, decree, stipulation, charge or agreement restricting in
any manner the use or the licensing thereof, except for those claims,
actions, orders, rulings, decrees, stipulations, charges and
agreements which, individually or in the aggregate, have no Material
Adverse Effect on the Company.
(ii) The Company has not received any notice that it has
infringed upon or otherwise violated the intellectual property rights
of third parties or received any claim, charge, complaint, demand or
notice alleging any such infringement or violation.
(iii) The use, reproduction, modification, distribution,
licensing, sublicensing, sale or any other exercise of rights in any
Company-owned Intellectual Property or any other authorized exercise
of rights in or to the Company-owned Intellectual Property by the
Company or any of the Company Subsidiaries or their respective
successors or licensees does not infringe any copyright, patent, trade
secret, trademark, service xxxx, trade name, firm name, logo, trade
dress, mask work, moral work, other intellectual property right, right
of privacy, right of publicity, or right in personal or other data of
any person. Further, the use, reproduction, modification,
distribution, licensing, sublicensing, sale or any other exercise of
rights in any Intellectual Property underlying any IP License or any
other authorized exercise of rights in or to the such Intellectual
Property by the Company or any of the Company Subsidiaries or their
respective successors or licensees does not infringe any copyright,
patent, trade secret, trademark, service xxxx, trade name, firm name,
logo, trade dress, mask work, other intellectual property right, right
of privacy, right of publicity or right in personal or other data of
any person.
(iv) To the knowledge of the Company, no third party is
infringing upon or otherwise violating any Company-owned rights in
Intellectual Property where the same, individually or in the
aggregate, would have a Material Adverse Effect on the Company.
(v) The Company's products have been marked as required by the
applicable Patent statute and the Company has given the public notice
of its published Copyrights and notice of its registered Trademarks as
required by the applicable Trademark and Copyright statutes.
(e) Protection of Intellectual Property. The Company has taken all
reasonable precautions to protect and maintain its Intellectual Property of the
Company and the Company Subsidiaries, including, without limitation, entering
into confidentiality agreements with all officers, directors, employees and
other persons that have had or currently have access to the Company's
Technology. Since their respective dates of formation, each of the Company and
the Company Subsidiaries has
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obtained from each officer and employee thereof a written agreement under which
such officer or employee is obligated to disclose and transfer to the Company or
any of the Company Subsidiaries, without the receipt by such officer or employee
of any value therefor (other than normal compensation), any inventions,
developments and discoveries which during the period such person is an officer
or employee of the Company or such Company Subsidiary he or she makes or
conceives of either solely or jointly with others, that relate to the business,
products or projects of the Company or any of the Company Subsidiaries, or
involve the use of the Company's or any of the Company Subsidiaries' time,
material or facilities to the extent permitted by Law. Each of the Company and
the Company Subsidiaries has obtained legally binding written agreements from
all officers, employees and third parties with whom the Company or any of the
Company Subsidiaries has shared confidential proprietary information (i) of the
Company or any of the Company Subsidiaries or (ii) received from others which
the Company or any of the Company Subsidiaries is obligated to treat as
confidential, which agreements require such employees and third parties to keep
such information confidential. Neither the Company nor any of the Company
Subsidiaries is aware that any of the officers or employees of the Company or
any of the Company Subsidiaries is obligated under any Contract, or subject to
any judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or any of the Company Subsidiaries.
(f) Software. Section 3.18(f) of the Disclosure Letter sets forth all
Software that is material to the operation of the Company's business and
indicates whether such software is owned or licensed by the Company or any of
the Company Subsidiaries. Following the Merger, the Software may be used by the
Surviving Corporation on identical terms and conditions as the Company enjoyed
immediately prior to the Merger. Neither the Company nor any Company Subsidiary
has transferred any of their source code to any other party.
(g) Breaches. To the Company's knowledge, no employee or contractor of
the Company or any of the Company Subsidiaries has transferred Intellectual
Property or confidential or proprietary information to the Company or any of the
Company Subsidiaries or to any third party in violation of any Law or any
employment agreement, patent or invention disclosure agreement or other contract
or agreement relating to the relationship of such employee with the Company or
any of the Company Subsidiaries or any prior employer.
Section 3.19. Tax Matters.
(a) Each of the Company and the Company Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by any of the Company and the
Company Subsidiaries (whether or not shown on any Tax Return) have been paid.
None of the Company and the Company Subsidiaries currently is the beneficiary of
any extension of time within which to file any Tax Return.
(b) There is no material dispute or claim concerning any Tax liability
of any of the Company and the Company Subsidiaries either (A) claimed or raised
by any authority in writing or (B) as to which any of the Company has knowledge
based upon personal contact with any agent of such authority.
-26-
(c) Section 3.19 of the Disclosure Letter lists all federal, state,
local, and foreign income Tax Returns filed with respect to any of the Company
and the Company Subsidiaries for taxable periods ended after December 31, 1999,
indicates those income Tax Returns that have been audited, and indicates those
income Tax Returns that currently are the subject of audit. The Company has made
available to Parent correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against,
or agreed to by any of the Company and the Company Subsidiaries since December
31, 1999. None of the Company and the Company Subsidiaries has waived any
statute of limitations in respect of income Taxes or agreed to any extension of
time with respect to an income Tax assessment or deficiency.
(d) None of the Company and the Company Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
None of the Company and the Company Subsidiaries has made any material payments,
is obligated to make any material payments, or is a party to any agreement that
under certain circumstances could obligate it to make any material payments that
will not be deductible under Section 280G of the Code. None of the Company and
the Company Subsidiaries has been or will be required to make an adjustment
under Section 481(c) of the Code as a result of a change or proposed change in
accounting method or otherwise. None of the Company and the Company Subsidiaries
has been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. None of the Company and the Company Subsidiaries
is a party to any Tax allocation or sharing agreement. None of the Company and
the Company Subsidiaries (A) has been a member of an Affiliated Group filing a
consolidated federal income tax return (other than a group the common parent of
which was the Company) or (B) has any liability for the Taxes of any person
(other than any of the Company and the Company Subsidiaries) under Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(e) The unpaid income Taxes of the Company and the Company Subsidiaries
(A) did not, as of October 31, 2002, exceed by any material amount of the
reserve for income tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income) set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
and (B) will not exceed by any material amount that reserve as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Company and the Company Subsidiaries in filing their
income Tax Returns.
(f) All Taxes which the Company or any Company Subsidiary is required
by law to withhold or to collect for payment have been duly withheld and
collected and have been paid to appropriate Governmental Entity.
(g) Without implication that any of such carryovers shall be available
for use at any time following the Effective Time, the net operating loss
carryovers of the Company and the Company Subsidiaries as of December 31, 2001
was not less than $54.0 million.
-27-
(h) As used in this Agreement, "Taxes" (or "Tax") shall mean all
federal, state, county, local, foreign, territorial, and other taxes, imposts,
charges, fees, levies, and duties (including, without limitation, income,
profits, premium, estimated, excise, sales, use, license, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
gain, withholding, employment and payroll related, and property taxes, import
duties, and other governmental charges and assessments), whether attributable to
statutory or nonstatutory rules, whether or not measured in whole or in part by
net income, and whether disputed or not, including interest, additions to tax or
interest, and assessments and penalties with respect thereto, and including
expenses associated with contesting any proposed adjustment relating to any of
the foregoing; and "Tax Return" shall mean any and all reports, returns,
declarations, schedules, information returns, statements, or other information
required to be supplied to a taxing or governmental authority with respect to
any Tax or Taxes, including without limitation any individual, combined or
consolidated return.
Section 3.20. Real Property.
(a) None of the Company and the Company Subsidiaries owns any real
property.
(b) Section 3.20 of the Disclosure Letter lists and describes briefly
all real property leased or subleased to any of the Company and the Company
Subsidiaries. The Company has made available to Parent correct and complete
copies of the leases and subleases (as amended to date) listed in Section 3.20
of the Disclosure Letter (as amended to date). With respect to each lease and
sublease listed in Section 3.20 of the Disclosure Letter:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect in all material respects;
(ii) no party to the lease or sublease is in material breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a material breach or default or permit
termination, modification, or acceleration thereunder;
(iii) no party to the lease or sublease has repudiated any
material provision thereof;
(iv) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(v) none of the Company and the Company Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold; and
(vi) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including material licenses
and permits) required in connection with the
-28-
operation thereof, and have been operated and maintained in accordance
with applicable Laws in all material respects.
Section 3.21. Non-Competition Agreements. Other than with Parent or
with respect to the license agreements set forth on Schedule 3.13, neither the
Company nor any Company Subsidiary is a party to any Contract which purports to
restrict or prohibit in any material respect the Company and the Company
Subsidiaries collectively from, directly or indirectly, (i) engaging in any
business currently conducted by or engaged in by the Company or any Company
Subsidiary or (ii) soliciting any person in connection with the business of the
Company. To the knowledge of the Company, none of the Company's officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with the Company, restricts in any material respect the
Company or any Company Subsidiary or affiliate of either of them from, directly
or indirectly, engaging in any of the businesses described above.
Section 3.22. Insurance. Section 3.22 of the Disclosure Letter sets
forth all insurance policies (including policies providing property, casualty,
liability, and workers compensation coverage and bond and surety arrangements)
with respect to which any of the Company and the Company Subsidiaries is a
party, a named insured, or otherwise the beneficiary of coverage. With respect
to each such insurance policy: (i) the policy is legal, valid, binding,
enforceable, and in full force and effect in all material respects; and (ii)
neither any of the Company and the Company Subsidiaries nor any other party to
the policy is in material breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a material breach or
default, or permit termination, modification, or acceleration, under the policy.
Section 3.22 of the Disclosure Letter describes any material self-insurance
arrangements affecting any of the Company and the Company Subsidiaries. Since
December 31, 2000, the Company has not received any written notice or other
written communication regarding any actual or possible (i) cancellation or
threatened termination of any insurance policy, (ii) refusal of any coverage or
rejection of any claim under any insurance policy or (iii) material adjustment
in the amount of the premiums payable with respect to any insurance policy.
Section 3.23. Customers. To the knowledge of the Company, the
relationships of the Company with the customers listed on Schedule 3.23 (the
"Key Customers") are good commercial working relationships. Since December 31,
2001, no Key Customer of the Company has canceled or otherwise terminated its
relationship with the Company, or has decreased materially its purchases of the
services or products of the Company. No Key Customer, has, to the knowledge of
the Company, any plan or intention to terminate, to cancel or otherwise
materially and adversely modify it relationship with the Company or to decrease
materially or limit its purchase or distribution of the services or products of
the Company. The Company, to its knowledge, has not engaged in any fraudulent
conduct with respect to, any customer or supplier of the Company.
Section 3.24. Assets. The Company and the Company Subsidiaries have
good and marketable title to, or a valid leasehold interest in, the material
properties and assets used by them, located on their premises, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, and all such
properties and assets are free and clear of all Liens, except for properties and
assets disposed of in the ordinary course of business since the date of the Most
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Recent Balance Sheet. The assets held by each of the Company and the Company
Subsidiaries after giving effect to the transactions contemplated hereby will be
sufficient to operate their business in the manner in which they are currently
being conducted, and none of such assets or rights will be impaired or become
subject to claims for increased fees or royalties or other costs as a result of
the transactions contemplated hereby.
Section 3.25. Certain Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar state or federal anti-takeover statute or
regulation, including Section 203 of the DGCL is applicable to the Merger.
Section 3.26. Offers. The Company has suspended or terminated, and has
the legal right to terminate or suspend, all negotiations and discussions of any
acquisition, merger, consolidation or sale of all substantially all of the
assets of Company with parties other than Parent.
Section 3.27. Certain Interests. Other than relationships with Parent
and its affiliates, no officer or director of the Company and, to the knowledge
of the Company, no immediate relative or spouse (or immediate relative of such
spouse) who resides with, or is a dependent of, any such officer or director:
has (i) any direct or indirect financial interest in any creditor, competitor,
supplier, manufacturer, agent, representative, distributor or customer of the
Company (except for any such ownership or interest resulting from the ownership
of less than 1% of securities in a public company), or (ii) owns, directly or
indirectly, in whole or in part, or has any other interest, in any tangible or
intangible property which the Company uses in the conduct of its business
(except for any such ownership or interest resulting from the ownership of less
than 1% of securities in a public company). Except for the payment of employee
compensation in the ordinary course of business, the Company does not have any
Liability to any officer or director of the Company or to any immediate relative
or spouse (or immediate relative of such spouse) of any such officer or
director.
Section 3.28. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company, other than Thinkequity
Partners pursuant to an agreement as set forth in Section 3.28 of the Disclosure
Letter. No employee or consultant of the Company is entitled to a bonus or some
other payment as a result of the transactions contemplated by this Agreement,
other than as set forth on Schedule 5.5(b).
Section 3.29. Information Known by Parent. No representation or
warranty is made by the Company in this Article III as to (a) any Liability that
existed on or prior to December 31, 1999, or any matter occurring prior thereto
to the extent that solely with the passage of time would give rise to a
Liability following December 31, 1999 with respect to the portion of the
business of the Company which was contributed to the Company by Parent pursuant
to that certain Master Transaction Agreement (the "Master Transaction
Agreement") dated as of June 15, 1999 (as amended), as to which the Company has
no knowledge on the date hereof; (b) the Company's compliance with any of the
obligations directly to Parent (and not involving any third parties) pursuant to
the agreements entered into between the Company and Parent in December 1999
pursuant to that certain Master Transaction Agreement, to the extent the
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Company's actions are known to Parent and are consistent with the course of
dealing between the Company and Parent under such agreements and as long as such
the Company's lack of compliance does not result in a potential third party
Claim or adversely affect Parent or the Company's relationship with a third
party; (c) any content licensed by Parent or an affiliate of Parent to the
Company solely to the extent of the form of content so supplied and solely to
the extent that such content is used in the manner contemplated by the license
of such content and consistent with the course of dealing between Parent and the
Company, or (d) any matter or condition that was included or referenced in any
materials distributed to the Board of Directors of the Company on or prior to
the date hereof, to the extent a reasonable person would conclude from such
written materials that such matter or condition would apply as an exception to a
representation or warranty contained in this Article III (collectively, the
"Parent Exceptions").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company, subject to such
exceptions or qualifications to specific representations and warranties as are
disclosed in writing in the disclosure letter previously delivered by Parent to
the Company (the "Parent Disclosure Letter"), as follows:
Section 4.1. Organization and Qualification. Each of Parent and Merger
Sub has been duly organized and is validly existing and in good standing under
the laws of the State of Delaware. Each of Parent and Merger Sub is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that, individually or in the aggregate, has no Material Adverse Effect
on Parent. For purposes of this Agreement, "Material Adverse Effect on Parent"
means any state of affairs or change that has had, or will reasonably be likely
to have materially impaired or will materially impair the ability of Parent and
Merger Sub to perform its obligations under this Agreement or to consummate the
Merger and the other transactions contemplated by this Agreement.
Section 4.2. Authority. Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement (the
"Requisite Parent Approval"), to perform its obligations under this Agreement
and to consummate the Merger and the other transactions contemplated by this
Agreement to be consummated by Parent and Merger Sub. This Agreement has been
validly executed and delivered by Parent and Merger Sub, and assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms subject to (i) the
effect of applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, or other similar federal or state laws affecting the rights of
creditors and (ii) the effect of availability of rules of law governing specific
performance, injunctive relief or other agreeable remedies (regardless or
whether any such remedy is considered in a proceeding or law or in equity).
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Section 4.3. No Conflict. Except as set forth in Section 4.3 of the
Parent Disclosure Letter, the execution and delivery of this Agreement by Parent
do not, and the performance of this Agreement by Parent and Merger Sub will not:
(i) conflict with or violate any provision of its organizational
documents; and
(ii) assuming that all consents, approvals, authorizations and
other actions described in Section 4.3 of the Parent Disclosure Letter
have been obtained and all filings and obligations described in
Section 4.3 of the Parent Disclosure Letter have been made, conflict
with or violate any Law applicable to Parent or Merger Sub or by which
any property or asset of Parent or Merger Sub is or may be bound or
affected, except for any such conflicts or violations that,
individually or in the aggregate, have no Material Adverse Effect on
Parent or Merger Sub.
Section 4.4. Required Filings and Consents. The execution and delivery
of this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity except (i) for any applicable requirements of the Exchange Act, the
filing of the Certificate of Merger as required by the DGCL, filings required
under the HSR Act, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications,
individually or in the aggregate, have no Material Adverse Effect on Parent or
Merger Sub. Neither Parent nor Merger Sub is a party to, bound by, any contract
or other agreement that would prohibit or materially delay the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby do not require the
approval of the stockholders of Parent.
Section 4.5. Equity. The outstanding equity of the Surviving
Corporation immediately following the Effective Time shall be as set forth on
Schedule 4.5.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business of the Company. Except as contemplated
by this Agreement or with the prior written approval of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of the Company Subsidiaries to conduct its operations only
in the ordinary course of business and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, will use commercially reasonable efforts to, and to cause each
Company Subsidiary to, preserve intact the business organization of the Company
and each of the Company Subsidiaries, to keep available the services of the
present officers and key employees of the Company and the Company Subsidiaries,
to maintain in effect all material federal, state and local licenses, permits,
approvals and authorizations that are required for each of the Company and the
Company Subsidiaries to carry on its business, to maintain the Intellectual
Property, to preserve and keep confidential the trade secrets of the Company and
the Company Subsidiaries, and to preserve the good will of customers, suppliers
and all other persons having
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business relationships with the Company and the Company Subsidiaries. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement or disclosed in Section 5.1 of the Disclosure
Letter, prior to the Effective Time, the Company will not, and will not permit
any Company Subsidiary to, without the prior written approval of Parent, take
any of the actions referred to in Section 3.10.
Section 5.2. Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which could reasonably be expected (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate at any time
from the date of this Agreement to the Effective Time, (ii) to cause any
material covenant, condition or agreement hereunder not to be complied with or
satisfied or (iii) to result in, in the case of Parent, a Material Adverse
Effect on Parent and, in the case of the Company, a Material Adverse Effect on
the Company, (b) any failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of any party or
the conditions to the obligations of any party hereunder, (c) any notice or
other material communications from any Governmental Entity in connection with
the transactions contemplated by this Agreement and (d) the commencement of any
suit, action or proceeding that seeks to prevent, seeks damages in respect of,
or otherwise directly relates to the consummation of the transactions
contemplated by this Agreement. The Company will keep Parent informed of all
proposed filings and actions with respect to Governmental Entities in respect of
the Company Intellectual Property.
Section 5.3. Access to Information; Confidentiality.
(a) From the date of this Agreement to the Effective Time the Company
shall (and shall cause their respective subsidiaries to): (i) provide to Parent
(and its officers, directors, employees, accountants, consultants, legal
counsel, financial advisors, investment bankers, agents and other
representatives (collectively, "Representatives")) access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of the Company and the Company Subsidiaries and to the books
and records thereof; and (ii) furnish promptly such information concerning the
Company and the Company Subsidiaries as Parent or its Representatives may
reasonably request. No investigation conducted under this Section 5.3 shall
affect or be deemed to modify any representation or warranty made in this
Agreement.
(b) The Company shall, and shall cause its Representatives to, treat
and hold as confidential the terms of this Agreement and the transactions
contemplated by this Agreement and, without the prior written approval of
Parent, shall not disclose such terms to any person except to the Company
Stockholders and Representatives in connection with this Agreement.
(c) Prior to the Effective Time, Parent shall, and shall cause its
Representatives to, treat and hold as confidential the terms of this Agreement
and the transactions contemplated by this Agreement and, without the prior
written approval of the Company, shall not disclose such terms to any person
except to its stockholders and Representatives in connection with this
Agreement; provided that Parent may make such disclosure to others without the
Company's consent if Parent reasonably believes that such disclosure is required
in connection with the operation of its
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business (such as to its lenders) or by applicable law or regulation (including
without limitation the federal securities laws and The New York Stock Exchange
rules and regulations).
Section 5.4. No Solicitation.
(a) The Company agrees that, prior to the Effective Time, neither it
nor the Company Subsidiaries shall authorize or permit any of their
Representatives directly or indirectly, to (i) solicit, initiate or encourage
any inquiries or the making of any offer or proposal with respect to (x) any
merger, consolidation, share exchange, recapitalization, business combination or
similar transaction, (y) any sale, lease, exchange, mortgage, transfer or other
disposition, in a single transaction or series of related transactions, of
assets of the Company or the Company Subsidiaries outside the ordinary course of
business, or (z) any sale of shares of capital stock, other than the
transactions contemplated by this Agreement (any of the foregoing inquiries,
offers or proposals being referred to in this Agreement as a "Proposal"), (ii)
negotiate or otherwise engage in substantive discussions with any person (other
than Parent or its Representatives) that has submitted or proposed to submit any
Proposal, (iii) provide to any person any information or data relating to the
Company or any Company Subsidiary for the purpose of facilitating the making of
any Proposal, or (iv) agree to approve or recommend any Proposal or otherwise
enter into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.4, the Company shall as promptly as is
practicable advise Parent orally and in writing of any request for information
relating to any Proposal and the material terms and conditions of such request
or Proposal and the identity of the person making such request or Proposal. The
Company will keep Parent informed of the status (including amendments or
proposed amendments) of any such request or Proposal.
Section 5.5. Employee Benefits Matters.
(a) Prior to the Effective Time, the Company shall take all necessary
actions to obtain the requisite stockholder approval (if any such approval is
required) under Section 280G(b)(5) of the Code of any payments or benefits that
could be considered "excess parachute payments" within the meaning of Section
280G of the Code and shall require all "disqualified individuals" within the
meaning of Section 280G of the Code, to subject their existing benefits and
payments to the stockholder approval requirements of Section 280G(b)(5) of the
Code, as contemplated in the Proposed Treasury Regulations promulgated
thereunder.
(b) Parent agrees that the Surviving Corporation shall pay to each
employee of the Company listed on Schedule 5.5(b) the amount allocated to such
employee on the Schedule, which amount shall not exceed $2,655,688.25 in the
aggregate, for bonuses and due to loss of employment, as specified on such
schedule. To the extent any such employee of the Company is party to an
agreement with the Company which is listed on the Disclosure Letter, any
payments made by the Company to the employee for a bonus or due to loss of
employment shall be made pursuant to the terms of such agreement as long as such
payment amounts are consistent with and not in excess of the amounts set forth
on Schedule 5.5(b). The amount listed on Schedule
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5.5(b) with respect to each employee that is due to loss of employment shall be
paid in a single lump sum payment within ten days after the employee's delivery
of an executed release and will be subject to all applicable tax withholding
requirements. The amount listed on Schedule 5.5(b) with respect to each employee
that is for a bonus shall be paid in the ordinary course of the Company's
business, consistent with past practice.
(c) The Surviving Corporation shall become the Sponsoring Employer
under the xxxxxxxx.xxx Retirement Savings Plan effective as of the Effective
Time and shall waive the requirement of any advance notice for any trustee
(other than a corporate trustee) of the xxxxxxxx.xxx Retirement Savings Plan who
elects to resign as trustee on or after the Effective Time.
Section 5.6. Consents; Filings; Further Action.
(a) Subject to the terms and conditions of this Agreement, each of the
parties to this Agreement shall use commercially reasonable efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
satisfy the conditions set forth in Article VI and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement,
(ii) obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent or
the Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement, (iii) make all necessary
filings, and thereafter make any other submissions either required or deemed
appropriate by each of the parties, with respect to this Agreement and the
Merger and the other transactions contemplated by this Agreement required under
(A) the Securities Exchange Act of 1934 and any other applicable federal or Blue
Sky Laws, (B) the HSR Act, (C) the DGCL, (D) any other applicable Law and (E)
the rules and regulations of The New York Stock Exchange. The parties to this
Agreement shall cooperate and consult with each other in connection with the
making of all such filings, including by providing copies of all such documents
to the nonfiling party and its advisors prior to filing, and none of the parties
will file any such document if any of the other parties shall have reasonably
objected to the filing of such document. No party to this Agreement shall
consent to any voluntary extension of any statutory deadline or waiting period
or to any voluntary delay of the consummation of the Merger and the other
transactions contemplated by this Agreement at the behest of any Governmental
Entity without the consent and agreement of the other party to this Agreement,
which consent shall not be unreasonably withheld or delayed.
(b) Notwithstanding the foregoing, nothing in this Section 5.6 shall
require, or be construed to require, Parent or the Company, in connection with
the receipt of any regulatory approval, to proffer to, or agree to (A) sell or
hold separate and agree to sell, divest or to discontinue or limit, before or
after the Effective Time, any assets, businesses, or interest in any assets or
businesses of Parent or the Company, or any of their affiliates (or to the
consent to any sale, or agreement to sell, or discontinuance or limitation by
Parent or the Company, as the case may be, of any of its assets or businesses)
or (B) agree to any conditions relating to, or changes or restriction in, the
operations of any such asset or businesses.
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(c) If, at any time after the Effective Time any such further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub or to more fully carry out the terms and intentions of this Agreement, the
officers and director of the Company, Parent or Merger Sub are fully authorized
in the name of their respective corporations or otherwise to take, and will
take, all such lawful and necessary action.
Section 5.7. Public Announcements. The initial press release concerning
the Merger shall be a joint press release and, thereafter, Parent and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any of
the transactions contemplated by this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation,
except that Parent may make a public statement to the extent required by
applicable Law or the requirements of The New York Stock Exchange.
Section 5.8. Expenses. Except as otherwise provided in Section 2.2 and
Section 7.2, whether or not the Merger is consummated, all expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
expense.
Section 5.9. Conversion Schedule. Section 5.9 of the Disclosure Letter
is a schedule prepared by the Company (the "Conversion Schedule") showing that
portion of the Merger Consideration to be paid to each holder of Company Stock,
including the amount of cash to be deposited in the Holdback Fund and the
Stockholder Representative Holdback, as of the execution of this Agreement as if
the Effective Time and the exchange of consideration pursuant to the Merger had
occurred as of the date of the execution of this Agreement. The Conversion
Schedule sets forth the allocation of the Merger Consideration in accordance
with the Amended and Restated Certificate of Incorporation of the Company and
all applicable laws and agreements. The Parent shall not be required to pay any
amounts, except as set forth on the Conversion Schedule.
Section 5.10. Directors' and Officers' Indemnification. The certificate
of incorporation and by-laws of the Surviving Corporation will contain
provisions with respect to exculpation and indemnification at least as favorable
to directors and officers of the Company and the Company Subsidiaries (the
"Indemnified Parties") as those provided in the Amended and Restated Certificate
of Incorporation or By-laws of the Company as in effect on the date hereof,
which provisions will not be amended, repealed or otherwise modified for a
period of three years from the Effective Time in any manner that would adversely
affect the rights thereunder of the Indemnified Parties unless such modification
is required by law. The foregoing parties are expressly made third party
beneficiaries to the provisions of this Section 5.10. From and after the
Effective Time, Parent agrees to guarantee the Surviving Corporation's
indemnification obligations contained in the Surviving Corporation's certificate
of incorporation during such three year period; provided, however, Parent's
obligation for the aggregate of all costs, expenses or Liability with respect
thereto shall not exceed $3,000,000. Prior to the Closing Date, Parent shall
have delivered to the Company the bylaws and certificate of incorporation of
Merger Sub which shall reflect such provisions with respect to exculpation and
indemnification.
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Section 5.11. Surviving Corporation Capitalization. Parent agrees that
until the earlier of Second Survival Period Termination Date or the Release Date
(as defined in Section 8.1(b)), Parent shall use its reasonable best efforts to
maintain the capital structure of the Surviving Corporation, or its successor in
interest, so that the liquidation preference of the preferred stock shall be no
less than that provided in Schedule 4.5.
Section 5.12. Post-Closing Expenses. Following the Effective Time, the
Stockholder Representative Committee shall have the right to contact those
persons who were holders of warrants to purchase common stock of the Company
(the "Warrants") for the sole purpose of obtaining an agreement from such
holders to terminate any rights such holders may assert with respect to the
Warrants, including a release of the Company, the Surviving Corporation and
Parent from any liability with respect to the Warrants, in the form attached
hereto as Exhibit G (the "Warrant Release"). Parent shall pay all expenses
reasonably incurred by the Stockholder Representative Committee in the course of
its actions described in this Section 5.12, including any payments to holders of
Warrants (all such payments and expenses being the "Post-Closing Expenses");
provided that (i) all Post-Closing Expenses in excess of $10,000 in the
aggregate are previously approved in writing by Parent, which approval shall not
be unreasonably withheld, (ii) such Post-Closing Expenses are less than
$844,619.70 in the aggregate (the "Warrant Fund Amount"), (iii) any Post-Closing
Expenses reimbursed by Parent shall reduce the Holdback Fund and (iv) in no
event shall the Stockholder Representative Committee be paid or reimbursed for
any Post-Closing Expenses for which Parent failed to receive written notice
prior to the Release Date. The Stockholder Representative Committee shall keep
Parent and its counsel promptly informed of all matters it undertakes with
respect to the holders of Warrants. The Stockholder Representative Committee
shall take no actions that Parent requests not be taken, unless Parent's request
is not reasonable under the circumstances. In no event shall the Stockholder
Representative Committee enter into any release, settlement or agreement with
the holders of Warrants, other than in the form of the Release. Any disputes
between Parent and the Stockholder Representative Committee with respect to
Post-Closing Expenses shall follow the same procedures set forth for
Indemnification Claims in Section 8.4.
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to consummate the other
transactions contemplated by this Agreement to be consummated on the Closing
Date is subject to the satisfaction or waiver at or prior to the Effective Time
of each of the following conditions:
(a) Consents. All authorizations, consents, approvals and action of any
Governmental Entity required to permit the consummation of the Merger and the
other transactions contemplated by this Agreement shall have been obtained or
made, free of any condition, including without limitation, the expiration or
termination of any waiting period under the HSR Act.
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(b) Injunctions. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law, order,
injunction or decree (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins, makes illegal or otherwise prohibits consummation
of the Merger or the other transactions contemplated by this Agreement.
Section 6.2. Conditions to Obligations of Parent. The obligations of
Parent to consummate the transactions contemplated by this Agreement to be
consummated on the Closing Date are also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and warranties of the Company
set forth in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Closing Date, as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and Parent shall have received a certificate signed on behalf of
the Company by an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company to such
effect.
(c) Opinion. Parent shall have received the opinion of Altheimer &
Xxxx, counsel to the Company, dated the Closing Date, substantially in the form
attached hereto as Exhibit H.
(d) Approvals. Parent shall have received, each in form and substance
reasonably satisfactory to Parent, (i) all third party consents set forth in
Section 6.2(d) of the Disclosure Letter and (ii) any authorization, consent,
order or approval from any third party, the failure to obtain would have, or
could reasonably be expected to have, a Company Material Adverse Effect;
(e) No Company Material Adverse Effect. No event or events shall have
occurred, or could be reasonably likely to occur, which, individually or in the
aggregate, have, or could reasonably be expected to have, a Material Adverse
Effect on the Company or its business;
(f) No Restraints. There shall not be pending or threatened any suit,
action, investigation or proceeding to which a Governmental Entity is a party
(i) seeking to obtain from Parent or the Company any damages that are material
or (ii) seeking to prohibit or limit the ownership or operation by Parent or the
Company of any portion of their respective businesses or assets.
(g) Secretary's Certificate. Parent shall have received a certificate
executed by the Secretary of the Company attaching and certifying as to (i) the
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Company's current Amended and Restated Certificate of Incorporation and Bylaws,
(ii) the resolutions of the Company's Board of Directors and the Company
Stockholders approving this Agreement, the Charter Amendment and the
transactions relating hereto and (iii) the number of votes for and against each
resolution taken with respect to the approval of the Charter Amendment and this
Agreement and the transactions herein contemplated;
(h) Board and Officer Releases. The Company shall have received written
letters of resignation and release agreements in favor of the Company from and
against any Claims, from five of the current members of the Board of Directors
who are not officers of Parent and all of the officers of the Company effective
at the Effective Time, in form and substance reasonably satisfactory to Parent;
(i) Parachute Payments. Prior to the Effective Time, the Company shall
have obtained the requisite stockholder approval (if any such approval is
required) under Section 280G(b)(5) of the Code of any payments or benefits that
could be considered "excess parachute payments" within the meaning of Section
280G of the Code, and any "disqualified individuals" as defined in Section 280G
of the Code shall have agreed to forfeit any payments that would otherwise be
non-deductible if such stockholder approval is not obtained;
(j) Approval of Merger. Holders of 95% of the Company Preferred Stock
(determined on an as-converted to Company Common Stock basis) shall have
consented to and approved the Merger, and the Merger shall have been approved
and adopted by the holders of the requisite number of issued and outstanding
shares of capital stock of the Company required under the DGCL and the Company's
Amended and Restated Certificate of Incorporation to approve and adopt this
Agreement and all matters contemplated hereby.
(k) Company Expense Statements. At Closing, the Final Company Expense
Statements shall be delivered to Parent by the Company.
(l) Disclosure Letter Schedules. The parties acknowledge that certain
sections of the Disclosure Letter and documents relating thereto have not been
delivered to Parent (the "Undelivered Sections"). The Undelivered Sections and
such related documents shall have been delivered to Parent at least four
Business Days prior to the Closing and the Undelivered Sections and related
documents shall be acceptable to Parent in its sole discretion. Parent's
acceptance of the Undelivered Sections shall be conclusively presumed unless
Parent objects in writing on or before the expiration of the fourth Business Day
after delivery.
(m) The Charter Amendment shall be filed with the Secretary of State of
the State of Delaware and be effective in accordance with the DGCL. A copy of a
Charter Amendment, certified by the Secretary of State of the State of Delaware
shall be delivered to Parent.
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Section 6.3. Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger and consummate the other transactions
contemplated by this Agreement to be consummated on the Closing Date is also
subject to the satisfaction or waiver by the Company at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent set forth in this Agreement that are qualified as to materiality shall
be true and correct, and the representations and warranties of Parent and the
Merger Sub set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation and warranty is expressly limited
by its terms to another date, and the Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(c) Certain Parent Deliveries. Parent shall have delivered to the
Company (i) the Consent, executed by Parent in its capacity as a holder of
Company Common Stock and in its capacity as a holder of Company Series B Stock,
and (ii) an agreement that all Warrants issued to Xxxx & Xxxxxx Company shall be
automatically terminated at the Effective Time.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement, as follows:
(a) by mutual written consent of Parent and the Company duly authorized
by the board of directors of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall not
have occurred on or before March 31, 2003; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to the
party whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) by either Parent or the Company, if any order, injunction or decree
preventing the consummation of the Merger shall have been entered by any court
of competent jurisdiction or Governmental Entity and shall have become final and
nonappealable;
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(d) by Parent, in the event of a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue, in either case such that the condition set forth in Section 6.2(a) would
not be satisfied (a "Terminating Company Breach"); provided, however, that, if
such Terminating Company Breach is curable by the Company through the exercise
of commercially reasonable efforts and for so long as the Company continues to
exercise such commercially reasonable efforts, Parent may not terminate this
Agreement under this Section 7.1(d); and
(e) by the Company, in the event of a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue, in either case such that the condition set forth in Section 6.3(a) would
not be satisfied (a "Terminating Parent Breach"); provided, however, that, if
such Terminating Parent Breach is curable by Parent through commercially
reasonable efforts and for so long as Parent continues to exercise such
commercially reasonable efforts, the Company may not terminate this Agreement
under this Section 7.1(e).
Section 7.2. Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of Parent or the
Company or any of their respective Representatives, and all rights and
obligations of each party to this Agreement shall cease; provided, however, that
Sections 5.3(b) and 5.8 and Article IX shall remain in full force and effect,
and nothing in this Agreement shall relieve any party from liability for fraud
or the breach of any of its representations and warranties or covenants or
agreements set forth in this Agreement.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
Section 8.1. Survival.
(a) All representations and warranties made by the Company in
this Agreement or in any document delivered pursuant hereto shall
survive the Closing and shall continue to be fully effective and
enforceable for a period beginning on the Closing and ending on the
date which is fifteen months after the Closing (the "First Survival
Period Termination Date"); provided that the representation and
warranties set forth in Section 3.3(b) (solely as it relates to the
Warrants) shall survive until the earlier of the Second Survival
Period Termination Date or the Release Date.
(b) The indemnification obligations set forth in Section
8.2(a)(iv) shall survive until the earlier of December 31, 2004 (the
"Second Survival Period Termination Date") or the date on which each
holder of Warrants immediately
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prior to the Effective Time executes a Release as provided in Section
5.12 (the "Release Date").
(c) All covenants set forth in this Agreement required to be
performed or completed prior to the Closing shall survive the Closing
and shall survive until the First Survival Period Termination Date;
provided that any covenants relating to the indemnification
obligations set forth in clause (b) above shall expire on the earlier
of the Second Survival Period Termination Date or the Release Date.
All covenants set forth in this Agreement required to be performed or
completed after the Closing shall continue forever until satisfied.
(d) Notwithstanding the foregoing, any claim for indemnification
that is asserted by written notice prior to the applicable Survival
Period Termination Date for such claim shall survive until resolved by
Parent and the Stockholder Representative Committee or pursuant to a
final nonappealable judicial or arbitration determination (as
applicable under Section 8.4(b)).
(e) All representations and warranties made by Parent in this
Agreement or in any document delivered pursuant hereto shall survive
the Closing and terminate at the First Survival Period Termination
Date or upon the termination of this Agreement under Section 7.1, as
the case may be; provided that the representation and warranties set
forth in Section 4.5 and Section 5.11 shall survive until the earlier
of the Second Survival Period Termination Date or the Release Date.
(f) Neither the period of survival nor the liability of the
Company Securityholders with respect to the representations and
warranties contained in this Agreement shall, except to the extent set
forth in Section 3.29, be reduced by any investigation made at any
time (whether before or after the Effective Time) by or on behalf of
Parent or by any actual, implied or constructive knowledge or notice
of any facts or circumstances that Parent may have as a result of any
such investigation or otherwise. If written notice of a claim has been
given prior to the applicable Survival Period Termination Date by
Parent to the Stockholder Representative Committee, then the relevant
representations and warranties shall survive as to such claim until
such claim has been finally resolved.
Section 8.2. Indemnification.
(a) Subject to Section 8.3, and except as described in Section 5.5(b),
Parent shall be indemnified and held harmless by the Disinterested Stockholders,
jointly and severally, for any and all loss, damage, cost, reasonable expense
(including court costs, amounts paid in settlement, judgments, reasonable
attorneys' fees or other expenses for investigating and defending), diminution
in value, suit, action, claim, deficiency, liability or obligation
(collectively, "Loss") suffered by Parent, the Surviving Corporation or any of
their officers, directors, agents, stockholders, representatives, parents,
subsidiaries, affiliates, successors and assigns, related to, caused by or
arising from any:
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(i) misrepresentation or breach of any representations and
warranties by the Company or the failure by the Company to fulfill any
covenant or agreement contained herein or in any other agreement,
instrument or other document delivered pursuant hereto;
(ii) any and all third party claims made based upon facts alleged
that, if true, would have constituted any such misrepresentation,
breach or failure;
(iii) Losses from Claims for breach of contract or otherwise made
by any party alleging to have had a contractual or other right to
acquire the Company's capital stock or assets;
(iv) any claim against Parent, the Company or the Surviving
Corporation in connection with, or related to or resulting from the
Warrants (including the purported exercise thereof) and the
Post-Closing Expenses;
(v) any Company Expenses in excess of the amount set forth in the
Final Company Expense Statements;
(vi) any amounts paid to a holder of Dissenting Shares in excess
of the aggregate amount such holder would have received pursuant to
Section 2.2, plus any expenses incurred by the Surviving Corporation
in connection therewith; and
(vii) any claim asserted by any of the Company Stockholders
against Parent, the Company or the Surviving Corporation, in their
capacity as stockholders (other than claims described in (vi) above or
claims arising out of the breach by Parent or the Surviving
Corporation of any of its representations, warranties and covenants
contained in this Agreement or any of the other related agreements).
(b) Solely for the purposes of determining Losses pursuant to this
Article VIII and not for determining whether there was a breach of a
representation and warranty, any requirement in a representation or warranty
that an event or fact be material or have a Material Adverse Effect on the
Company, which is a condition to such event or fact constituting an inaccuracy
or breach of such representation or warranty, shall be ignored and all Losses
arising out of the inaccuracy or breach of such representation or warranty shall
be taken into account for purposes of determining the rights of Parent to
indemnification pursuant to this Article VIII.
Section 8.3. Limitation of Indemnification Obligation. Notwithstanding
anything to the contrary contained in this Agreement, except with respect to
claims based on fraud or for injunctive relief or specific performance:
(i) the Holdback Fund shall be the sole and exclusive source of
recovery for claims against the Disinterested Stockholders, and the
maximum aggregate amount of indemnifiable Losses arising out of or
resulting from the causes enumerated in (y) Section 8.2(a) (i), (ii),
(iii), (v), (vi) and (vii) that may be recovered from the
Disinterested Stockholders shall not exceed $2,533,859.21 of the
Holdback Fund (the
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"Primary Holdback Amount") and (z) Section 8.2(a)(iv) shall not exceed
the Holdback Fund, subject to Section 8.4(e) below;
(ii) no reduction of the Holdback Fund with respect to any
indemnifiable Losses pursuant to Sections 8.2(a) (i), (ii), (iii),
(iv) and (vii) shall be made until such time as all such indemnifiable
Losses that are recoverable against the Holdback Fund shall aggregate
to more than $175,000 (which amount includes the portion of the Losses
allocated to Parent under clause (iii) below), after which time the
Disinterested Stockholders shall be liable, subject to clause (iii)
below, for all such indemnifiable Losses in excess of $100,000 (which
amounts include the portion of the Losses allocated to Parent);
(iii) with respect to each indemnifiable Loss, 15.538% of the
amount of such indemnifiable Loss (which represents the portion of the
Loss that is hereby allocated to Parent, based upon Parent's ownership
of Company Preferred Stock) shall not be recoverable against the
Holdback Fund;
(iv) Except for claims based on fraud or for injunctive relief or
specific performance, or for claims directed against a Company
Securityholder for breaches of the Consent or the Letter of
Transmittal, the remedies set forth in Section 8.2(a) (as limited by
this Section 8.3) shall provide the sole and exclusive remedy after
the Effective Time against the Company Securityholders for breaches of
the representations, warranties, covenants and agreements contained in
the Agreement or any other related agreement or under any other theory
of liability;
(v) The maximum aggregate amount of Losses that may be recovered
from Parent for any breaches of any provision of this Agreement shall
not exceed the amount of the Holdback Fund that is retained by Parent;
and
(vi) No party shall not be entitled to recover Losses:
(A) due to any consequential damages of any kind or any
unforeseeable punitive damages, unless the consequential or
punitive damages result from a third party Claim;
(B) with respect to the failure to obtain any consent, or to
satisfy any conditions imposed incident to the giving of any
consent, to the extent that such party has expressly waived in
writing the condition with respect thereto; or
(C) to the extent the subject matter of the claim is covered
by third party insurance (including title insurance) and to the
extent of amounts paid by the insurance carrier with respect to
the claim.
Section 8.4. Reduction of Holdback Fund.
(a) In the event Parent is entitled to indemnification from the
Disinterested Stockholders pursuant to Article VIII (including as result of
Section
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5.12), then (subject to Section 8.5 with respect to third party claims) on or
prior to the applicable Survival Period Termination Date, Parent shall deliver a
prompt written notice (a "Release Notice") to the Stockholder Representative
Committee stating (i) that the Parent is entitled to indemnification pursuant to
the Merger Agreement for an indemnifiable claim (an "Indemnification Claim"),
(ii) the basis for such Indemnification Claim (including identifying the
subsection of Section 8.2(a) under which such Indemnification Claim is made),
and (iii) the amount of the Loss related to the Indemnification Claim and the
amount of the Indemnification Claim (which consists of the amount that Parent
believes should reduce the Holdback Fund). No delay on the part of Parent in
notifying the Stockholder Representative Committee shall relieve the Stockholder
Representative Committee from any obligation hereunder unless (and then solely
to the extent) that the Stockholder Representative Committee is prejudiced
thereby. Unless the Stockholder Representative Committee delivers to Parent a
written notice (a "Dispute Notice") within thirty (30) days of the date of the
Release Notice that the Stockholder Representative Committee disputes the amount
of the Indemnification Claim set forth in the Release Notice or the
applicability of Section 8.2 to the matters described in the Release Notice, the
Holdback Fund shall be reduced by the amount of the Indemnification Claim and
such amount shall be deemed the property of Parent. The Dispute Notice, if any,
shall state that the Stockholder Representative Committee disputes the
distribution described in the Release Notice and will contain a description in
reasonable detail of the basis for the dispute and the amount in dispute. During
the period herein in which the Stockholder Representative Committee may dispute
a Release Notice or there exists an outstanding Disputed Claim for which Parent
cannot reduce the Holdback Amount under Section 8.4(d), Parent shall provide the
Stockholder Representative Committee and its authorized representatives with
reasonable access to the documents and employees of the Surviving Corporation
relating to the Indemnification Claim for the sole purpose of enabling the
Stockholder Representative Committee to verify the Indemnification Claim. The
Stockholder Representative Committee agrees that it shall be bound by the
provisions of Section 5.3 with respect to such confidential information for a
period of three years after the date of the Dispute Notice, provided that such
confidential information may be disclosed to the extent necessary in a Court
Action or Arbitration.
(b) If the Stockholders Representative Committee objects to the basis
for indemnification or the amount of the Indemnification Claim within the time
period set forth in subsection (a) hereof, Parent and the Stockholder
Representative Committee shall in good faith attempt to resolve the specified
claims ("Disputed Claims", individually, a "Disputed Claim"). If no resolution
of the Disputed Claims can be reached within thirty (30) days of delivery of the
Dispute Notice, then the Stockholder Representative Committee or the Company may
avail itself of any remedies it may have (i) in a court of competent
jurisdiction, to resolve any Indemnification Claim in which the amount in
dispute is in excess of $250,000 (a "Court Action") or (ii) in Arbitration as
described in
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Section 8.4(c), to resolve any Indemnification Claim in which the amount in
dispute is equal to or less than $250,000.
(c) For this Section 8.4, Arbitration shall mean a dispute resolved in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (except as otherwise provided below), and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding anything to the contrary, the Commercial Arbitration
Rules shall be modified as follows:
(i) The place of hearing shall be Chicago, Illinois.
(ii) There shall be one neutral arbitrator who shall serve by
himself for any one controversy, claim or dispute, who shall be
selected and appointed by the Parent and the Stockholder
Representative Committee (who if such parties cannot agree, shall be
selected by the American Arbitration Association Tribunal
Administrator who receives the application for arbitration pursuant to
the Commercial Arbitration Rules of the American Arbitration
Association);
(iii) Except as agreed by Parent and the Stockholder
Representative Committee, there shall never be the same arbitrator for
different controversies, claims or disputes, except for counterclaims;
(iv) The hearing shall take place within ten (10) days after the
arbitrator is selected;
(v) The hearing shall not be more than three days in length, and
once commenced shall not be adjourned without the express written
consent of both parties; and
(vi) The cost of the arbitrator shall be divided equally.
This right to Arbitration relates only to Disputed Claims in
which the amount in dispute is equal to or less than $250,000
and in no way affects the parties' rights and obligations
under Section 9.14.
(d) The Holdback Fund shall not be reduced by the amount of any
Disputed Claims and become the property of Parent unless and until (i) the
Stockholder Representative Committee consents to such reduction or (ii) with
respect to any unresolved Disputed Claim, the Stockholder Representative
Committee fails to commence a Court Action or Arbitration (as applicable) prior
to the later of (y) the applicable Survival Period Termination Date or (z) the
date that is 60 days after delivery of the Release Notice. No portion of the
Holdback Fund that is the subject of any outstanding Release Notice on the
applicable Survival Period Termination Date shall be distributed to any Company
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Securityholder under Section 2.2(c) until (y) a final, nonappealable and binding
judgment of a Court Action is entered into by a court of competent jurisdiction
or the Arbitration has concluded (as applicable) or (z) the Stockholder
Representative Committee and Parent agree in writing to a settlement of the
dispute.
(e) Distribution of Holdback Fund.
(i) On the Business Day immediately following the First Survival
Period Termination Date, the portion of the Holdback Fund that
constitutes the Primary Holdback Amount (as such amount has been
reduced in accordance with Section 8.4 and including any Holdback
Interest accrued thereon) shall be distributed to the Stockholder
Representative Committee, on behalf of the Disinterested Stockholders;
provided that no amounts shall be distributed that are subject to
outstanding Indemnification Claims or Release Notices (including any
Indemnification Claim pursuant to Section 8.2(a)(iv) or any claim
pursuant to Section 5.12).
(ii) On the Second Business Day immediately following the earlier
of Second Survival Period Termination Date or the Release Date (which
may be before or after the First Survival Period Termination Date),
the Warrant Fund Amount (as such amount has been reduced in accordance
with Section 5.12 and which amount shall be reduced by the amounts of
any Indemnification Claims made pursuant to Section 8.2(a)(iv) (except
to the extent already covered by the Primary Holdback Amount) and
including any Holdback Interest accrued thereon) shall be distributed
to the Stockholder Representative Committee, on behalf of the
Disinterested Stockholders; provided that no amounts shall be
distributed that are subject to outstanding Indemnification Claims or
Release Notices made pursuant to Section 8.2(a)(iv) or any claim
pursuant to Section 5.12.
(iii) To the extent that at the First Survival Period Termination
Date the Primary Holdback Amount is subject to Indemnification
Claim(s) or Release Notice(s) which exceed the aggregate amount of the
remaining Primary Holdback Amount (y) the remaining Primary Holdback
Amount shall first be deemed subject to claims other than those
asserted under Section 5.12 or Section 8.2(a)(iv) and (z) any amounts
thereafter available shall be deemed to be subject to claims asserted
under Section 5.12 or Section 8.2(a)(iv).
Section 8.5. Third Party Claims. For purposes hereof, "Third Party
Claim" shall mean
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any action, suit, proceeding, investigation, or like matter which is asserted or
threatened by a party other than the parties hereto, their successors and
permitted assigns, against Parent or the Surviving Corporation for which Parent
claims that the Disinterested Stockholders are obligated to indemnify Parent
pursuant to Section 8.2(a). Forthwith following the receipt of notice of a Third
Party Claim, Parent shall (i) notify the Stockholder Representative Committee of
its existence, setting forth with reasonable specificity the facts and
circumstances of which Parent has received notice and (ii) specifying the basis
hereunder upon which Parent's claim for indemnification is asserted. Parent
shall have the right to contest, defend and litigate any Third Party Claim with
counsel of its choice after consultation with the Stockholder Representative
Committee. Parent shall keep the Stockholder Representative Committee and its
counsel reasonably informed of all developments in its contest, defense and
litigation of such claim, including the Parent's costs incurred in connection
therewith, and shall consult with the Stockholder Representative Committee, and
allow the Stockholders Representative Committee and its counsel input into (but
not control of), all material decisions in connection therewith. Parent shall
have the right to settle any such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as it deems fair and
reasonable, provided, however, (i) at least ten (10) days prior to any such
settlement, written notice of its intention to settle shall be given to the
Stockholder Representative Committee, and (ii) Parent shall not settle any Third
Party Claim without the written consent of the Stockholder Representative
Committee (which will not be unreasonably withheld or delayed) to the extent
that (x) the Third Party Claim involves an Indemnification Claim for money
damages in an amount that is less than the remaining amount of the Holdback Fund
(less any pending Claims against the Holdback Fund), calculated at the time such
claim is made, (y) the Third Party Claim does not seek an injunction or other
equitable relief, and (z) the Third Party Claim, if decided adverse to the
Parent or the Surviving Corporation, is not reasonably expected to have a
material adverse effect on Parent or the Surviving Corporation.
Section 8.6. Stockholder Representative Committee; Approval of
Disinterested Stockholders.
(a) Authority. The Disinterested Stockholders, by their approval of the
Merger and/or their tender pursuant to Section 2.2(a), will be conclusively
deemed to have consented to, approved and agreed to be personally bound by: (a)
the indemnification provisions of Article VIII, including the Holdback Fund and
the use of the Holdback Fund as payment for the indemnification obligations of
such Company Stockholders under Article VIII, (b) the appointment of a committee
comprised of Oakleigh Xxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxx to serve as the
representative of the Disinterested Stockholders and as the attorney-in-fact and
agent for and on behalf of the Company Stockholders (including their successors
and assigns) (the committee being the "Stockholder Representative Committee")
and (c) the taking by the Stockholder Representative Committee of any and all
actions and the making of any decisions required or permitted to be taken by the
Stockholder Representative Committee hereunder, including, without limitation,
the exercise of the power to: (i) authorize the reduction of the Holdback Fund
in satisfaction of Indemnification Claims made by Parent or any other
indemnified person pursuant to Article VIII; (ii) agree to, negotiate and enter
into settlement and compromises of and comply with orders of courts and
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awards of arbitrators with respect to such claims; (iii) resolve, settle or
compromise any claim for indemnity made pursuant to Article VIII; (iv) waive any
right of any or all of the Disinterested Stockholders following the Merger with
respect to matters set forth in this Agreement or any other agreement
contemplated by this Agreement; (v) give and receive all notices required to be
given under this Agreement; and (vi) take all actions necessary in the sole
judgment of the Stockholder Representative Committee for the accomplishment of
the foregoing. The Stockholder Representative Committee will act by majority and
will have unlimited authority and power to act on behalf of the Disinterested
Stockholders with respect to the disposition, settlement or other handling of
all claims governed by this Article VIII, and all rights or obligations of the
Disinterested Stockholders arising hereunder. In addition, the Stockholder
Representative Committee is authorized to accept service of process upon the
Disinterested Stockholders. All decisions and actions of the Stockholder
Representative Committee in connection with this Agreement shall be binding and
conclusive upon the Disinterested Stockholders and Parent and the Surviving
Corporation will be entitled to rely on any action or decision approved by the
majority of the members of the Stockholder Representative Committee. The
Stockholder Representative Committee will not be a trustee for any Disinterested
Stockholder or have any fiduciary duty to any Disinterested Stockholder, and in
performing the functions specified in this Agreement, the Stockholder
Representative Committee will not be liable to any Company Stockholders for any
act or omission of the Stockholder Representative Committee, except actions or
omissions caused by the Stockholder Representative Committee's gross negligence
or willful misconduct. Any out-of-pocket costs and expenses reasonably incurred
by the Stockholder Representative Committee in performing its obligations
hereunder, at the Stockholder Representative Committee's option, will be either
(i) paid by the Disinterested Stockholders to the Stockholder Representative
Committee, (ii) paid out of the Stockholder Representative Committee Holdback
(which may be effected pursuant to a Contribution Agreement among the
Stockholder Representative Committee and the Disinterested Stockholders), or
(iii) if the Holdback Fund is eligible for distribution to the Disinterested
Stockholders pursuant to the terms of this Agreement, paid out of the amount of
the Holdback Fund that is eligible for distribution to the Disinterested
Stockholders, in any case, pro rata in proportion to the Disinterested
Stockholders' respective percentage interests in the Preferred Stock Merger
Consideration (not including for this purpose, the Parent's interest with
respect thereto). Notwithstanding the foregoing, to the extent any Company
Preferred Stockholder advances funds in excess of its pro rata proportion, the
Stockholder Representative Committee shall remit such excess, together with
interest at 2.45% from the date of such advance, to such Company Preferred
Stockholder out of the Holdback Fund, when received by the Stockholder
Representative Committee prior to any pro rata distribution of the Holdback
Fund.
(b) Stockholder Representative Holdback. A portion of the Preferred
Stock Merger Consideration equal to $50,000 shall be paid by Parent on behalf of
the Disinterested Stockholders to the Stockholder Representative Committee (the
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"Stockholder Representative Holdback"). Upon such payment, none of the Parent,
Merger Sub nor the Surviving Corporation shall have any further obligation with
respect thereto. Such amount shall be used by the Stockholder Representative
Committee to pay all expenses, and to satisfy and discharge any obligations of,
the Stockholder Representative Committee. Upon full satisfaction and discharge
all of the obligations of the Stockholder Representative Committee, and payment
of all expenses in relation thereto, the Stockholder Representative Holdback
shall be distributed to the Disinterested Stockholders.
(c) Standard of Conduct. No member of the Stockholder Representative
Committee nor any of his partners, members, directors, officers, employees or
agents shall be liable to any of the Company Stockholders for any error of
judgment, act done or omitted by them, or mistake of fact or law in connection
with his services pursuant to Article VIII, unless caused by his own gross
negligence or willful misconduct. In taking any action or refraining from taking
any action whatsoever the Stockholder Representative Committee shall be
protected in relying upon any notice, paper or other document reasonably
believed by it to be genuine, or upon any evidence reasonably deemed by it to be
sufficient. The Stockholder Representative Committee may consult with counsel in
connection with its duties and shall be fully protected in any act taken,
suffered or permitted by it in good faith in accordance with the advice of
counsel. In connection with its services under Article VIII, the Stockholder
Representative Committee shall not be responsible for determining or verifying
the authority of any person action or purporting to act on behalf of any party
to this Agreement.
(d) Indemnification. Each Disinterested Stockholder agrees to indemnify
the Stockholder Representative Committee ratably in accordance with his or her
pro rata share of the Holdback Fund, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by or asserted against the Stockholder Representative Committee in
any way relating to or arising out of this Agreement or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, however, that no Company
Securityholder shall be liable for any of the foregoingto the extent they arise
from the Stockholder Representative Committee's gross negligence or willful
misconduct. The Stockholder Representative Committee shall be fully justified in
refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its reasonable satisfaction by the Disinterested
Stockholder against any and all Liability and expense which may be incurred by
the Stockholder Representative Committee by reason of taking or continuing to
take any such action.
(e) Resignation or Removal of a member of Stockholder Representative
Committee. Subject to the appointment and acceptance of a successor member of
the Stockholder Representative Committee as provided below, any person serving
as a member of the Stockholder Representative Committee may (i) resign at any
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time thirty (30) days subsequent to giving notice thereof to the Disinterested
Stockholders and Parent, and (ii) be removed at any time with or without cause
by action of the Company Stockholders who represented a majority of the rights
to the Holdback Fund. Upon such resignation or removal, the Company Stockholders
who represented a majority of the rights to the Holdback Fund may appoint a
successor member of the Stockholder Representative Committee, which successor
shall be reasonably acceptable to Parent. If no successor shall have been
appointed by the Company Stockholders and accepted such appointment within
twenty (20) days after the retiring member of the Stockholder Representative
Committee provides notice of resignation or the Company Stockholders' removal of
a member of the Stockholder Representation Committee, then the retiring or
removed member may, on behalf of the Company Stockholders, appoint a successor,
which shall be reasonably acceptable to Parent. During a vacancy, the remaining
members of the Stockholder Representative Committee may fully act on behalf of
the Stockholder Representative Committee including if there is only one member
as long as such remaining members act unanimously. Upon the acceptance of any
appointment as a member of the Stockholder Representation Committee, hereunder,
such successor member shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed member, and the
retiring or removed member shall be discharged from his duties and obligations
hereunder. After any retiring member's resignation or removal hereunder, the
provisions of Article VIII shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as a
member of the Stockholder Representative Committee.
(f) Member of Stockholder Representative Committee as Company
Stockholder. Any member of the Stockholder Representative Committee, to the
extent he was or is, or was or is affiliated with, a Company Stockholder, shall
have the same rights and powers under this Agreement as any other Company
Stockholder and may exercise the same as though he were not serving as a member
of the Stockholder Representative Committee, and the term "Company Stockholder"
shall include each member in his capacity as such.
(g) Disclaimer of Liability. Parent and the Surviving Corporation are
each hereby relieved from any Liability to any person for any actions done by it
in accordance with such decision, act, consent or instruction of the Stockholder
Representative Committee. Except for a notice regarding the change of the
Stockholder Representative Committee, (as contemplated above), Parent and the
Surviving Corporation shall be entitled to disregard any notices or
communications given or made by any Company Stockholder unless given or made
through the Stockholder Representative Committee.
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ARTICLE IX
MISCELLANEOUS
Section 9.1. Certain Definitions. For purposes of this Agreement:
(a) The term "affiliate," as applied to any person, means any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, the correlative terms "controlling," "controlled by" and "under
common control with"), means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
(b) The term "business day" means any day, other than Saturday, Sunday
or a United States federal holiday, and shall consist of the time period from
12:01 a.m. through 12:00 midnight Eastern Time. In computing any time period
under this Agreement, the date of the event which begins the running of such
time period shall be included, except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "Common Stock Merger Consideration" means $0.0001 per
share of Company Common Stock multiplied by the number of shares of Company
Common Stock outstanding at the Effective Time (other than shares of Company
Stock owned by Parent being cancelled pursuant to Section 2.1(d)).
(d) The term "Company Expenses" means all costs and expenses for third
party services incurred by the Company, the Stockholder Representative Committee
or the Company Securityholders in connection with this Agreement, the Merger and
the other transactions contemplated by this Agreement, whether before or after
the Closing Date, including, without limitation, the fees and expenses of the
Company's financial advisors, accountants and legal counsel, that were paid or
are payable by the Company or paid or to be paid by Parent or the Surviving
Corporation at or following the Effective Time.
(e) The term "Holdback Amount" means $3,378,478.91.
(f) The term "including" means, including but not limited to the things
or matters named or listed after that term.
(g) The term "ordinary course of business" means the ordinary course of
business consistent with past practice.
(h) The term "knowledge" or "knowledge of the Company" shall mean the
knowledge of the following officers of the Company and each Company Subsidiary:
Xxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx Xxxxxx; Xxxxx
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Xxxxxxxxx; Xxxx Xxxxxxxx; Xxxxxxx Xxxxxxxxxxx, Xxxxxx Xxxxxxx, and Xxxxx
Xxxxxxxx.
(i) The term "person" shall include individuals, corporations, limited
and general partnerships, trusts, limited liability companies, associations,
joint ventures, Governmental Entities and other entities and groups (which term
shall include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act).
(j) The term "Merger Consideration" means the Preferred Stock Merger
Consideration plus the Common Stock Merger Consideration.
(k) The term "Preferred Stock Merger Consideration" means fifty-five
million three hundred seventy-five thousand dollars ($55,375,000) less the
Common Stock Merger Consideration.
(l) The term "subsidiary" or "subsidiaries" means, with respect to
Parent, the Company or any other person, any corresponding or other entity of
which Parent, the Company or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or indirectly,
stock or other equity interests constituting more than 50% of the voting or
economic interest in such entity.
Section 9.2. Counterparts. This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
Section 9.3. Waiver of Jury Trial.
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
EACH PARTY (INCLUDING THE STOCKHOLDER REPRESENTATIVE COMMITTEE)
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY (INCLUDING THE STOCKHOLDER
REPRESENTATIVE COMMITTEE) CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY
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MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.3.
Section 9.4. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by overnight mail, or by facsimile (with a copy
sent by overnight mail):
if to Parent:
ProQuest Information and Learning Company
000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with copies to:
XxXxxxxxx, Will & Xxxxx
000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
if to the Company (prior to the Closing):
xxxxxxxx.xxx
0000 Xxxxxxxxxxxx, Xxx. 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxx, Jr.
Fax: 000-000-0000
if to the Stockholder Representative Committee (following the Closing):
Xxxxxx Xxxxxxx General Partner, Apax Partners 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 Fax: 000-000-0000
Oakleigh Xxxxxx
Chairman & CEO, xXxxxxxx.xxx
000 X. Xxxxxxxxxxx
Xxxx Xxxxxx, XX 00000
Fax: 000-000-0000
-54-
Xxxxx Xxxxxx
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
fax: 000-000-0000
with copies (in each case) to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax: 000-000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
Section 9.5. Entire Agreement. This Agreement (including any exhibits
and annexes to this Agreement) and the Disclosure Letter and the Parent
Disclosure Letter constitute the entire agreement and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter of this Agreement.
Section 9.6. No Third Party Beneficiaries. Except as contemplated by
Article II with respect to the holders of issued and outstanding shares of
Company Stock as of immediately prior to the Effective Time (including their
rights with respect to the receipt of Merger Consideration) and Section 5.10,
and except for the rights of the Stockholder Representative Committee hereunder,
this Agreement is not intended to confer upon any person other than the parties
to this Agreement any rights or remedies under this Agreement.
Section 9.7. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties to this Agreement; provided that,
after the approval of this Agreement by the Company Stockholders, no amendment
may be made that would reduce the amount or change the type of consideration
into which each share of Company Preferred Stock shall be converted upon
consummation of the Merger or that is otherwise prohibited by applicable Law.
Section 9.8. Waiver. At any time prior to the Effective Time, any party
to this Agreement may in writing (a) extend the time for the performance of any
obligation or other act of any other party to this Agreement, (b) waive any
inaccuracy in the representations and warranties contained in this Agreement or
in any document delivered pursuant to this Agreement, and (c) waive compliance
with any agreement or condition contained in this Agreement. Any waiver of a
condition set forth in Section 6.1, or any determination that such a condition
has been satisfied, will be effective only if made in writing by the Company or
Parent (as applicable).
Section 9.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a subsidiary of Parent to take any action, that requirement
shall be deemed to include an
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undertaking on the part of Parent to cause that subsidiary to take that action.
Whenever this Agreement requires a Company Subsidiary to take any action, that
requirement shall be deemed to include an undertaking on the part of the Company
to cause that Company Subsidiary to take that action and, after the Effective
Time, on the part of the Surviving Corporation to cause that Company Subsidiary
to take that action.
Section 9.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
Section 9.11. Interpretation. The table of contents and headings in
this Agreement are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
Section, exhibit or annex, that reference shall be to a Section of or exhibit or
annex to this Agreement unless otherwise indicated.
Section 9.12. Assignment. This Agreement shall not be assignable by
operation of
law or otherwise, provided that Parent may designate, by written notice to the
Company, a subsidiary of Parent that is wholly owned directly or indirectly by
Parent to be merged with and into the Company in lieu of Merger Sub, in which
event all references in this Agreement to Merger Sub shall be deemed references
to such subsidiary.
Section 9.13. Specific Performance. The parties to this Agreement agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise reached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 9.14. Submission to Jurisdiction; Waivers; Consent to Service
of Process. Each of Parent, the Company and the Stockholder Representative
Committee irrevocably agree that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by another party hereto or its successors or assigns may be
brought and determined in any Delaware state court or Federal court sitting in
the State of Delaware, and each of Parent and the Company thereby (x)
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the personal
jurisdiction of the aforesaid court in the event any dispute arises out of this
Agreement or any transaction contemplated hereby, (y) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such
-56-
court and (z) agrees that it will not bring any action relating to this
Agreement or any transaction contemplated hereby in any court other than any
Delaware state or Federal court sitting in the State of Delaware. Any service of
process to be made in such action or proceeding may be made by delivery of
process in accordance with the notice provisions contained in Section 9.4.
Section 9.15. Authorship. The parties hereto agree that the terms and
language of this Agreement were the result of negotiations between the parties
and, as a result, there shall be no presumption that any ambiguities in this
Agreement shall be resolved against either party. Any controversy over
construction of this Agreement shall be decided without regard to events of
authorship or negotiation.
Section 9.16. Special Committee. Without limiting the rights of any
other party to this Agreement, at all times prior to the Effective Time, the
Special Committee shall have the right to exercise the Company's rights and
enforce the terms of this Agreement on behalf of the Company.
-57-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date
first written above.
PROQUEST INFORMATION AND LEARNING COMPANY
By:
---------------------------------------
Name:
Title:
XXXXXXXX.XXX, INC.
By:
---------------------------------------
Name:
Title:
CURIOUS ACQUISITION, INC.
By:
---------------------------------------
Name:
Title:
------------------------------------------
Xxxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
------------------------------------------
Oakleigh Xxxxxx
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EXHIBIT A FORM OF CONSENT
-------------------------
WRITTEN CONSENT OF
THE STOCKHOLDERS OF
XXXXXXXX.XXX, INC.
The undersigned, holders of capital stock of xxxxxxxx.xxx, inc., a
Delaware corporation (the "Corporation"), do hereby consent and agree in writing
to the adoption of the following resolutions in all respects and for all
purposes, including, without limitation, pursuant to Section 228(a) of the
General Corporation Law of the State of Delaware, the Second Amended and
Restated Certificate of Incorporation of the Corporation, the Amended and
Restated By-Laws of the Corporation, and the Amended and Restated Stockholders
Agreement between the Corporation and certain of its stockholders, dated as of
December 20, 2000 (the "Stockholders Agreement"), in lieu of holding a special
meeting of the stockholders of the Corporation:
RESOLVED: That the recitals and resolutions attached hereto and
incorporated herein by reference as Exhibit A are hereby approved and
adopted.
FURTHER RESOLVED: That this consent may be signed in any number of
counterparts and by facsimile signature, each of which shall be deemed
to be an original, and all of which taken together shall be deemed to
be a single consent.
Dated as of December __, 2002
[Signature pages follow]
SERIES A INVESTORS:
TBG INFORMATION INVESTORS LLC WS INVESTMENT COMPANY 99B
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
CORE LEARNING GROUP - BC, LLC APA EXCELSIOR V, L.P.
By: ______________________________ By: APA Excelsior Partners LP
Its: ______________________________ Its: General Partner
By: Patricof & Co. Managers, Inc.
Its: General Partner
By: ______________________________
Its: ______________________________
PATRICOF PRIVATE INVESTMENT XXXX X. XXXXXX
CLUB II, L.P.
By: APA Excelsior Partners LP __________________________________
Its: General Partner
By: Patricof & Co. Managers, Inc.
Its: General Partner
By: ______________________________
Its: ______________________________
XXXXX X. XXXXXX, XX. XXXXXXX X. XXXXXX
---------------------------------- ----------------------------------
THE SAN DOMENICO TRUST
By: ______________________________
Its: ______________________________
XXXXXX X. XXXX
----------------------------------
[Additional signature page follows]
SERIES B INVESTORS:
TBG INFORMATION INVESTORS LLC CORE LEARNING GROUP - BC, LLC
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
PATRICOF PRIVATE INVESTMENT CLUB II, L.P. APA EXCELSIOR V, L.P.
By: APA Excelsior Partners LP By: APA Excelsior Partners LP
Its: General Partner Its: General Partner
By: Patricof & Co. Managers, Inc. By: Patricof & Co. Managers, Inc.
Its: General Partner Its: General Partner
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
SB INCUBATION, INC. PROQUEST INFORMATION AND LEARNING
COMPANY
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
XXXXX X. XXXXXX, XX. IGSB LSP I, LLC
__________________________________ By: ______________________________
Its: ______________________________
THE XXXXXXXXX FUND LLC OBERNDORF FAMILY PARTNERS, L.P.
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
XXXXXX XXXXXXX XXXXXXXXX & XXXXXXX
__________________________________ By: ______________________________
Its: ______________________________
XXXXXX X. BLOCK
__________________________________
COMMON STOCKHOLDERS:
PROQUEST INFORMATION TUCOWS, INC.
AND LEARNING COMPANY
By: By:
------------------------------- ---------------------------------
Its: Its:
----------------------------- --------------------------------
EXHIBIT A
---------
WHEREAS, the Directors of the Corporation have considered and
recommended to the stockholders of the Corporation an amendment to the
Corporation's Second Amended and Restated Certificate of Incorporation
(the "Charter"), as reflected on Annex A (the "Charter Amendments");
and
WHEREAS, holders of (i) at least 70% of the Corporation's Series A
Preferred Stock (which includes stockholders of both Series A and
Series A-2), voting as a separate class (ii) at least 70% of the Series
B Preferred Stock, voting as a separate class, (iii) a majority of the
Company's common stock (including holders of Series A Preferred Stock
and Series B Preferred Stock voting on an as converted basis) and (iv)
a majority of the Series A Preferred Stock and Series B Preferred Stock
(together with the Series A Preferred Stock, the "Preferred Stock")
voting together as a single class (on an as-converted basis), deem it
to be advisable to and in the best interest of the Corporation to
approve the Charter Amendments; and
WHEREAS, the Corporation desires to enter into an Agreement and Plan of
Merger (the "Merger Agreement"; capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the
Merger Agreement) by and among the Corporation, ProQuest Information
and Learning Company, a Delaware corporation ("Parent"), and Curious
Acquisition, Inc., a Delaware corporation ("Merger Sub"), pursuant to
which the Corporation will merge with and into Merger Sub (the
"Merger"); and
WHEREAS, the Directors of the Corporation have considered the Merger,
deemed the Merger advisable and in the best interests of the
Corporation and its stockholders and recommended to the stockholders of
the Corporation, that the Corporation merge with and into Merger Sub;
and
WHEREAS, the Directors of the Corporation have received the written
opinion of Think Equity Partners, dated as of December 16, 2002, that
the Merger Consideration (as defined in the Merger Agreement) to be
received by the stockholders of the Corporation in connection with the
Merger is fair to the stockholders of the Corporation from a financial
point of view to such holders (other than Parent and its affiliates);
and
WHEREAS, a majority of the Corporation's Series A Preferred Stock and
Series B Preferred Stock, voting together as a single class, and a
majority of the voting Common Stock and the Preferred Stock of the
Corporation, voting as a single class (on an as-converted basis), deem
it to be advisable and in the best interest of the Corporation to enter
into the Merger Agreement and to consummate the transactions
contemplated by the Merger Agreement; and
WHEREAS, the holders of a majority of the Corporation's Common Stock
and Preferred Stock (voting on an as converted basis), and holders of
60% of the Common Stock and Preferred Stock of the Corporation, voting
together as a single class (on an as-converted basis), deem it
advisable, and in the best interests of, the Corporation and the
holders of Common Stock and Preferred Stock to terminate the
Stockholders Agreement immediately upon consummation of the Merger.
NOW THEREFORE, BE IT RESOLVED, that the Charter Amendments are hereby
adopted and approved substantially in the form reviewed by the
Stockholders.
FURTHER RESOLVED, that the Merger is hereby approved and that the
Corporation is authorized, directed and empowered to enter into the
Merger Agreement and to perform its obligations thereunder.
FURTHER RESOLVED, that immediately prior to the effective time of the
Merger, the Stockholders Agreement be immediately terminated on the
Stockholders' behalf and that the President and Chief Executive Officer
or any Vice President, alone or with the Secretary of the Corporation
(the "Authorized Officers"), be, and each of them hereby is,
authorized, directed and empowered to terminate the Stockholders
Agreement, in the name and on behalf of the Corporation and the
stockholders who are a party thereto.
FURTHER RESOLVED, that, pursuant to the terms and conditions of the
Merger Agreement, each of the stockholders of the Corporation executing
this consent hereby appoints the Stockholder Representative Committee
as its Attorney-In-Fact and Agent, as set forth in Section 8.6 of the
Merger Agreement, with all powers as set forth in such section.
FURTHER RESOLVED, that the Authorized Officers be, and each of them
hereby is, authorized, empowered and directed, in the name and on
behalf of the Corporation to execute, deliver and file the Charter
Amendments, enter into, execute and deliver the Merger Agreement and
any and all amendments or modifications thereto, and any and all other
agreements, documents and instruments to be executed and delivered in
connection therewith, such documents to be in substantially the form
presented to the directors with such changes, modifications and
amendments thereto as any Authorized Officer shall deem necessary or
appropriate, the approval of which shall be conclusively established by
such Authorized Officer's execution and delivery thereof.
FURTHER RESOLVED, that the Authorized Officers be, and each of them
hereby is, authorized, empowered and directed, in the name and on
behalf of the Corporation, to take such actions as they determine to be
necessary or desirable to effect the Charter Amendments and the
consummation of the transactions contemplated by the Merger including,
but not limited to, the execution and delivery of any and all other
agreements, certificates and documents as shall be necessary or
desirable in order for the Corporation to comply with and perform its
obligations under the Merger Agreement, and perform any and all further
acts, as any Authorized Officer shall deem necessary or appropriate to
effect the purposes and intent of the foregoing resolutions and to
consummate the transactions contemplated therein.
FURTHER RESOLVED, that all acts and deeds heretofore done or action
taken by any director of any officer or agent of the Corporation, for
and on behalf of the Corporation, in entering into, executing,
acknowledging or attesting any arrangements, agreements, instruments or
documents in carrying out the terms and intentions of the foregoing
recitals and resolutions and each of them are hereby in all respects,
confirmed, approved and ratified.
EXHIBIT B CERTIFICATE OF MERGER
-------------------------------
CERTIFICATE OF MERGER
OF
CURIOUS ACQUISITION, INC.
(a Delaware Corporation)
with and into
XXXXXXXX.XXX, INC.
(a Delaware Corporation)
It is hereby certified that:
FIRST: The constituent business corporations participating in
the merger herein certified are:
(i) Curious Acquisition, Inc. ("Merger SUB"), which is
incorporated under the laws of the State of Delaware;
and
(ii) xxxxxxxx.xxx Inc. ("Company"), which is
incorporated under the laws of the State of Delaware.
SECOND: An Agreement and Plan of Merger has been approved,
adopted, certified, executed, and acknowledged by each
of the aforesaid constituent corporations in accordance
with the provisions of Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation in the merger
herein certified is xxxxxxxx.xxx, Inc., which shall
herewith be changed to Bigchalk, Inc., which will
continue its existence as said surviving corporation
upon the effective date of said merger pursuant to the
provisions of the General Corporation Law of the State
of Delaware
FOURTH: The Restated Certificate of Incorporation of the Company
shall be the certificate of incorporation of the
surviving corporation as amended and restated in its
entirety to read as set forth on Attachment A
incorporated herein by reference.
FIFTH: The executed Agreement and Plan of Merger between the
aforesaid constituent corporations is ----- on file at
the principal place of business of the aforesaid
surviving corporation, the address of which is as
follows:
Bigchalk, Inc.
c/o ProQuest Information
and Learning Company
Xxx Xxxxx, XX 00000
SIXTH: A copy of the aforesaid Agreement and Plan of Merger
will be furnished by the aforesaid ----- surviving
corporation, on request, and without cost, to any
stockholder of each of the aforesaid constituent
corporations.
SEVENTH: The Plan of Merger between the aforesaid constituent
corporations provides the merger herein certified shall
be effective upon filing.
Curious Acquisition, Inc.
(a Delaware corporation)
Dated: December 30, 2002 By. /s/ Xxxx Xxxxxxxx
--------------------------------------
Its: Vice President and Secretary
--------------------------------------
xxxxxxxx.xxx, Inc.
(a Delaware corporation)
Dated: December 30, 2002 By: /s/ Xxxx X. Xxxxx, Xx.
----------------------
Its: President and Chief Executive Officer
--------------------------------------
ATTACHMENT A
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
XXXXXXXX.XXX, INC.
Xxxxxxxx.xxx, inc., a Delaware corporation (the
"Corporation"), hereby certifies as follows:
1. The name of the Corporation is Xxxxxxxx.xxx, Inc.
The Corporation was originally formed as a Delaware limited
liability company under the name BHW/lNFO/XXXX.XXX, LLC, and its original
certificate of formation was filed with the Secretary of State of the State of
Delaware on September 30, 1999. Said limited liability company was converted
into a corporation, and the applicable certificate of conversion and certificate
of incorporation was filed with the Secretary of State of the State of Delaware
on January 10, 2000. An Amended and Restated Certificate of Incorporation (the
"First Amended and Restated Certificate of Incorporation') was filed with the
Secretary of State of the State of Delaware on December 20, 2000. The Second
Amended and Restated Certificate of Incorporation (the "Second Amended and
Restated Certificate of Incorporation") was filed with the Secretary of State of
the State of Delaware on June 29, 2001, and was amended on December 27, 2002.
2. In connection with the closing of the Agreement and Plan of
Merger, dated December 18, 2002, by and between ProQuest Information and
Learning Company, a Delaware corporation, the Corporation, and Curious
Acquisition, Inc., a Delaware corporation, on December 30, 2002 (the "Effective
Date"), the Second Amended and Restated Certificate of Incorporation was amended
and restated as provided herein.
3. This Third Amended and Restated Certificate of
Incorporation was approved by written consent of the stockholders of the
Corporation pursuant to Section 228 of the General Corporation Law of the State
of Delaware.
4. The Second Amended and Restated Certificate of
Incorporation shall be amended and restated to read in full as follows:
"FIRST: The name of the Corporation is Bigchalk, Inc.
SECOND: The address of the registered office in the State of
Delaware is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, and the name of the
registered agent of the Corporation in the State of Delaware is The Corporation
Trust Company in the County of New Castle.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware ("General Corporation Law").
FOURTH: The total number of shares of stock the Corporation
shall have authority to issue is (i) 100,000,000 shares of Common Stock, $.01
par value per share ("Common Stock"), (ii) 1,544,286 shares of Series A
Preferred Stock, $.01 par value per share ("Series A Preferred Stock") and
6,055,716 shares of Series A-2 Preferred Stock, $.01 par value per share
("Series A-2 Preferred Stock"), (iii) 20,000,000 shares of Series B Preferred
Stock, $.01 par value per share ("Series B Preferred Stock") and (iv) 20,000,000
shares of undesignated Preferred Stock, $.01 par value per share ("Undesignated
Preferred Stock"). The Undesignated Preferred Stock shall have such rights and
preferences as the Board of Directors of the Corporation shall designate from
time to time upon approval of seventy percent (70%) of the members of the Board
of Directors. Except as provided below in Section 4(a)(vi)(4) (Adjustment of
Conversion Price upon Issuance of Additional Shares of Common Stock), Series A
Preferred Stock and Series A-2 Preferred Stock shall have the same rights and
preferences, and the term "Series A Preferred Stock" shall mean collectively the
Series A Preferred Stock and Series A-2 Preferred Stock of the Company.
The following is a statement of the designations and the
powers, privileges and rights, and the qualifications, limitations or
restrictions in respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. The voting, dividend and liquidation rights of the holders of the
Common Stock are subject to and qualified by the rights of the holders of the
Series A Preferred Stock and the Series B Preferred Stock.
2. The holders of Common Stock are entitled to one vote for each share
held at all meetings of stockholders (and written actions in lieu of meetings).
There shall be no cumulative voting.
3. Dividends shall be declared and paid on the Common Stock from funds
lawfully available therefor as and when determined by the Board of Directors and
subject to any preferential dividend rights of any then outstanding Series A
Preferred Stock and Series B Preferred Stock.
B. PREFERRED STOCK.
1. Dividends.
(a) Beginning on the Effective Date, the holders of the Series
A Preferred Stock and the holders of Series B Preferred Stock shall be entitled
to receive cumulative annual dividends at the rate of 6% of the Original Series
A Issue Price or the Original Series B Issue Price, as applicable, per share per
annum, payable in preference and priority to any payment of any dividend on
Common Stock or any other shares of capital stock of the Corporation other than
the Series A Preferred Stock and the Series B Preferred Stock (such Common Stock
and other stock being collectively referred to as "Junior Stock"), when and as
declared by the Board of Directors of the Corporation (the "Preferential
Dividend"). Such dividends shall be deemed to accrue commencing on January 1,
2002. No accumulation of dividends on the Series A Preferred Stock shall bear
interest or cause compounding upon accrued but unpaid dividends except as
provided in Section 6. The "Original Series A Issue Price" means $7.00 (subject
to appropriate adjustments in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares). The
"Original Series B Issue Price" means $3.03 (subject to appropriate adjustments
in the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares). All dividends to be paid to holders of
the Series A Preferred Stock and Series B Preferred Stock under this Section 1
shall be paid on a pari passu basis.
(b) Such dividends shall accrue with respect to each share of
Series A Preferred Stock and Series B Preferred Stock from January 1, 2002 and
thereafter shall be deemed to accrue from day to day whether or not earned or
declared and whether or not there exists profits, surplus or other funds legally
available for the payment of dividends, and shall be cumulative so that if such
dividends on the Series A Preferred Stock and Series B Preferred Stock shall not
have been paid, or declared and set apart for payment, the deficiency shall be
fully paid or declared and set apart for payment before any dividend shall be
paid or declared or set apart for any Junior Stock and before any purchase or
acquisition of any Junior Stock is made by the Corporation. After payment of the
Preferential Dividend to the holders of the Series A Preferred Stock and Series
B Preferred Stock, any further dividends will be paid pro rata to the holders of
the Series A Preferred Stock, Series B Preferred Stock and the Common Stock on
an as-converted basis. The Series A Preferred Stock and Series B Preferred Stock
also will be entitled to receive any non-cash dividends declared by the Board on
an as-converted basis. At the earliest of: (1) the redemption of the Series A
Preferred Stock and Series B Preferred Stock; (2) the consummation of the sale
of securities in the Corporation's initial public offering of securities; or (3)
a liquidation, dissolution or winding up of the Corporation, as described in
Section 2, any accrued but unpaid dividends shall be paid to the holders of
record of outstanding shares of Series A Preferred Stock and Series B Preferred
Stock.
2. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred Stock and Series B Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders, before any payment shall be made to the holders of Junior
Stock, by reason of their ownership thereof, an amount per share equal to the
Series A Liquidation Preference (as defined below) for each share of Series A
Preferred Stock and an amount per share equal to the Series B Liquidation
Preference (as defined below) for each share of Series B Preferred Stock held by
them, as applicable. If upon any such liquidation, dissolution or winding up of
the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Series A Preferred Stock and Series B Preferred Stock the full amount
to which they shall be entitled, the holders of shares of Series A Preferred
Stock and Series B Preferred Stock shall share ratably in any distribution of
the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full. The "Series A Liquidation Preference" means
$10.50 per share of Series A Preferred Stock plus all accrued but unpaid
dividends described in Section 1 (as adjusted for any stock split, stock
dividend or recapitalization after the date of the first issuance of the Series
A Preferred Stock). The "Series B Liquidation Preference" means $4.545 per share
of Series B Preferred Stock plus all accrued but unpaid dividends described in
Section 1 (as adjusted for any stock split, stock dividend or recapitalization
after the date of the first issuance of the Series B Preferred Stock).
(b) Notwithstanding the foregoing, any holder of Series A
Preferred Stock or Series B Preferred Stock may elect to receive, in lieu of the
Series A Liquidation Preference or the Series B Liquidation Preference (as the
case may be), the amount such holder would have received had the Series A
Preferred Stock or Series B Preferred Stock been converted to Common Stock
immediately prior to such payment.
(c) For purposes of this Section 2, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
or its subsidiary (other than a mere reincorporation transaction) or (ii) a sale
of all or substantially all of the assets of the Corporation, shall be treated
as a liquidation, dissolution or winding up of the Corporation and shall entitle
the holders of Series A Preferred Stock and Series B Preferred Stock to receive
at the closing in cash, securities or other property amounts as specified in
Sections 2(a) and (b). Whenever the distribution provided for in this Section 2
shall be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other properly
as determined in good faith by the Board of Directors.
3. Voting.
(a) Each holder of outstanding shares of Series A Preferred
Stock and Series B Preferred Stock shall be entitled to the number of votes
equal to the number of whole shares of Common Stock into which the shares of
Series A Preferred Stock and Series B Preferred Stock held by such holder are
convertible (as adjusted from time to time pursuant to Section 4 hereof), at
each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration.
Holders of Series A Preferred Stock and Series B Preferred Stock shall have no
right to vote their shares of Series A Preferred Stock and Series B Preferred
Stock as a separate class for the election of directors. Except as provided by
law or by the provisions of Subsection 3(b) below, holders of Series A Preferred
Stock and Series B Preferred Stock and of any other outstanding series of Series
A Preferred Stock and Series B Preferred Stock shall vote together with the
holders of Common Stock as a single class.
(b) The Corporation shall not take any of the actions listed
in Section 3(b)(i), (ii), (iii), (iv) and (ix) below without the written consent
or affirmative vote of the holders of at least seventy percent (70%) of the then
outstanding shares of Series B Preferred Stock and shall not take any of the
actions listed in Section 3(b)(v), (vi), (vii), (viii) and (x) below without the
written consent or affirmative vote of the holders of at least fifty-one percent
(51%) of the then outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting as a single class:
(i) any amendment or change of the rights,
preferences, privileges or powers of or the restrictions provided for the
benefit of, the Series B Preferred Stock;
(ii) any action that authorizes, creates or issues
shares of any class or series of stock having preferences superior to the Series
B Preferred Stock;
(iii) any action that reclassifies any outstanding
shares into shares having preferences or priority as to dividends or assets
senior to preferences of the Series B Preferred Stock;
(iv) any amendment of the Corporation's Certificate
of Incorporation that adversely affects the rights of the Series B Preferred
Stock;
(v) any transaction which is described in Section
2(c) hereof unless holders of Preferred Stock receive at least the Series B
Liquidation Preference per share (subject to appropriate adjustments in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares);
(vi) the sale of all or substantially all of the
Corporation's assets unless holders of Series A Preferred Stock and Series B
Preferred Stock receive at least the Series B Liquidation Preference per share
(subject to appropriate adjustments in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares);
(vii) the liquidation or dissolution of the
Corporation;
(viii) the declaration or payment of a dividend on
the Common Stock (other than a dividend payable solely in shares of Common
Stock);
(ix) taking any other actions adversely affecting the
Series B Preferred Stock vis-a-vis the right of holders of any other securities
of the Corporation, provided that issuances of pari passu securities shall not
be deemed to adversely affect the Series B Preferred Stock; or
(x) the repurchase of any shares of Common Stock
except from employees upon termination of employment pursuant to the terms and
conditions of employment agreements approved by the Board.
(c) The Corporation shall not take any of the actions listed
in Section 3(c)(i), (ii), (iii), (iv) and (v) below without the written consent
or affirmative vote of the holders of at least seventy percent (70%) of the then
outstanding shares of Series A Preferred Stock:
(i) any amendment or change of the rights,
preferences, privileges or powers of, or the restrictions provided for the
benefit of, the Series A Preferred Stock;
(ii) any action that authorizes, creates or issues
shares of any class or series of stock having preferences superior to the Series
A Preferred Stock;
(iii) any action that reclassifies any outstanding
shares into shares having preferences or priority as to dividends or assets
senior to preferences of the Series A Preferred Stock;
(iv) any amendment of the Corporation's Certificate
of Incorporation that adversely affects the rights of the Series A Preferred
Stock; or
(v) taking any other actions adversely affecting the
Series A Preferred Stock vis-a-vis the right of holders of any other securities
of the Corporation, provided that issuances of pari passu securities shall not
be deemed to adversely affect the Series A Preferred Stock.
4. Optional Conversion.
(a) The holders of the Series A Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
(i) Right to Convert. Each share of Series A
Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock shall
be convertible, at the option of the holder thereof, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing
$7.00, $7.00 and $3.03, respectively, by the Series A Conversion Price, Series
A-2 Conversion Price arid Series B Conversion Price (as defined below) in effect
art the time of conversion. The "Series A Conversion Price", "Series A-2
Conversion Price" and "Series B Conversion Price" (each of which is sometimes
referred to herein generically as a "Conversion Price") shall be $5.63, $5.63
and $3.03, respectively, upon the effectiveness of this Certificate of
Incorporation. Such Series A Conversion Price, Series A-2 Conversion Price and
Series B Conversion Price, and the rate at which shares of Series A Preferred
Stock, Series A-2 Preferred Stock and Series B Preferred Stock may be converted
into shares of Common Stock, shall be subject to adjustment as provided below.
In the event of a liquidation of the Corporation, the
Conversion Rights shall terminate at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series A Preferred Stock, Series A-2 Preferred
Stock and Series B Preferred Stock.
(ii) Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of the Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock. In lieu of fractional
shares, the Corporation shall pay cash equal to such fraction multiplied by the
then effective Conversion Price.
(iii) Mechanics of Conversion.
(1) In order to convert shares of Series A
Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock into
shares of Common Stock, the holder shall surrender the certificate or
certificates for such shares of Series A Preferred Stock, Series A-2 Preferred
Stock and Series B Preferred Stock at the office of the transfer agent (or at
the principal office of the Corporation if the Corporation serves as its own
transfer agent), together with written notice that such holder elects to convert
all or any number of the shares represented by such certificate or certificates.
Such notice shall state such holder's name or the names of the nominees in which
such holder wishes the certificate or certificates for shares of Common Stock to
be issued. If required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in writing. The
date of receipt of such certificates and notice by the transfer agent or the
Corporation shall be the conversion date ("Conversion Date"). The Corporation
shall, as soon as practicable after the Conversion Date, issue and deliver at
such office to such holder, or to his nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(2) The Corporation shall at all times
during which the Series A Preferred Stock, Series A-2 Preferred Stock and Series
B Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock, such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding Series A
Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock into
fully paid and nonassessable shares of Common Stock at the applicable Conversion
Price.
(3) No adjustment to the Conversion Price
shall be made for any accrued and unpaid dividends on the Series A Preferred
Stock, Series A-2 Preferred Stock and Series B Preferred Stock surrendered for
conversion or on the Common Stock delivered upon conversion (including without
limitation any conversion pursuant to Section 5); the holder, by converting,
waives his right to such accrued but unpaid dividends.
(4) All shares of Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock, which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive dividends, notices and to vote, shall immediately cease and
terminate on the applicable Conversion Date, except only the right of the
holders thereof to receive shares of Common Stock in exchange therefor.
(5) If the conversion is in connection with
an underwritten offer of securities registered pursuant to the Securities Act of
1933, as amended, the conversion may at the option of any holder tendering
Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock for conversion be conditioned upon the closing with the underwriter of the
sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common Stock issuable upon such conversion of the Series
A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock shall
not be deemed to have converted such shares until immediately prior to the
closing of the sale of securities.
(iv) Adjustments to Conversion Price for Diluting
Issues.
(1) Special Definitions. For purposes of
this Subsection 4(a)(iv), the following definitions shall apply:
"Option" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities (as defined below), excluding options granted to
employees, directors or unaffiliated consultants of the Corporation (or the
exercise of such options) pursuant to option plans adopted by the Board of
Directors in amounts calculated as follows: (i) options to purchase up to
3,000,000 shares of the Common Stock (as adjusted in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), (ii) options to purchase up to such number of shares of Common
Stock that equals 20% of the Series A Preferred Stock, Series A-2 Preferred
Stock and Series B Preferred Stock (calculated on an as-converted basis), and
(iii) options to purchase up to such number of shares of Common Stock that
equals 20% of any shares of future capital stock issued by the Corporation
(calculated on an as-converted basis).
"Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
"Additional Shares of Common Stock" shall
mean all shares of Common Stock issued (or, pursuant to Subsection 4(a)(iv)(3)
below, deemed to be issued) by the Corporation on or after the date of
effectiveness of this Certificate of Incorporation, other than shares of Common
Stock issued or issuable:
(i) as a dividend or distribution on Series
A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock;
(ii) by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clause (1);
(iii) upon the exercise of options excluded
from the definition of "Option" in Subsection 4(a)(iv)(1)(A);
(iv) pursuant to equipment lease financing
arrangements with equipment lessors which have been approved by the Board of
Directors of the Corporation, including approval by at least two directors who
were designated by the holders of the Series A Preferred Stock and Series B
Preferred Stock (the "Investor Directors") pursuant to the terms of the
Stockholders Agreement entered into by and among the Corporation and its
stockholders in connection with the issuance of the Series A Preferred Stock;
(v) upon conversion of shares of Series A
Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock; or
(vi) by the unanimous consent of the Board
of Directors which does not have any vacancies among the Investor Directors on
the Board and which consent states that such issuance shall not lead to any
Conversion Price adjustment.
"Rights to Acquire Common Stock" (or
"Rights") shall mean all rights issued by the Corporation to acquire Common
Stock by exercise of a warrant, option or similar call or conversion of any
existing instruments, in any case for consideration fixed, in amount or by
formula, as of the date of issuance.
(2) No Adjustment of Conversion Price. No
adjustment in the number of shares of Common Stock into which the Series A
Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock is
convertible shall be made, by adjustment in the applicable Conversion Price
thereof unless the consideration per share (determined pursuant to Subsection
4(a)(iv)(5)) below for an Additional Share of Common Stock issued or deemed to
be issued by the Corporation is less than the applicable Conversion Price of
such Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock, as the case may be, in effect on the date of, and immediately prior to,
the issue of such additional shares.
(3) Issue of Securities Deemed Issue of
Additional Shares of Common Stock. If the Corporation at any time or from time
to time on or after the date of effectiveness of this Certificate of
Incorporation shall issue any Options or Convertible Securities or other Rights
to Acquire Common Stock, then the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options, Rights or, in the case of Convertible Securities, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subsection
4(a)(iv)(5) hereof) of such Additional Shares of Common Stock would be less than
the applicable Conversion Price of Series A Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock, as the case may be, in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be, and provided further that in any such case in which Additional
Shares of Common Stock are deemed to be issued:
(A) No further adjustment in any Conversion
Price shall be made upon the subsequent issue of shares of Common Stock upon the
exercise of such Rights or conversion or exchange of such Convertible
Securities;
(B) Upon the expiration or termination of
any unexercised Option or Right, no Conversion Price shall be readjusted, but
the Additional Shares of Common Stock deemed issued as the result of the
original issue of such Option or Right shall not be deemed issued for the
purposes of any subsequent adjustment of any Conversion Price; and
(C) In the event of any change in the number
of shares of Common Stock issuable upon the exercise, conversion or exchange of
any Option, Right or Convertible Security, including, but not limited to, a
change resulting from the anti-dilution provisions thereof, the applicable
Conversion Price then in effect shall forthwith be readjusted to such Conversion
Price as would have been obtained had the adjustment that was made upon the
issuance of such Option, Right or Convertible Security not exercised or
converted prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock upon
the exercise or conversion of any such Option, Right or Convertible Security.
(4) Adjustment of Conversion Price upon
Issuance of Additional Shares of Common Stock.
(A) Series A Conversion Price - Weighted
Average Adjustment. If the Corporation shall at any time on or after the date of
effectiveness of this Certificate of Incorporation issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Subsection 4(a)(iv)(3), but excluding shares issued as a dividend or
distribution as provided in Subsection 4(a)(vi) or upon a stock split or
combination as provided in Subsection 4(a)(v)), without consideration or for a
consideration per share less than the applicable Series A Conversion Price in
effect on the date of and immediately prior to such issue, then and in such
event, such Series A Conversion Price shall be reduced, concurrently with such
issue to a price (calculated to the nearest cent) determined by multiplying such
Series A Conversion Price by a fraction, (a) the numerator of which shall be (1)
the number of shares of Common Stock outstanding immediately (assuming the
conversion or exercise of all securities convertible or exercisable for Common
Stock) prior to such issue plus (2) the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Series A
Conversion Price; and (b) the denominator of which shall be (1) the number of
shares of Common Stock outstanding immediately (assuming the conversion or
exercise of all securities convertible or exercisable for Common Stock) prior to
such issue plus (2) the number of such Additional Shares of Common Stock so
issued.
(B) Series A-2 Conversion Price - Full
Ratchet Adjustment. If the Corporation shall at any time on or after the date of
effectiveness of this Certificate of Incorporation issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Subsection 4(a)(iv)(3), but excluding shares issued as a dividend or
distribution as provided in Subsection 4(a)(vi) or upon a stock split or
combination as provided in Subsection 4(a)(v)), without consideration or for a
consideration per share less than the applicable Series A-2 Conversion Price in
effect on the date of and immediately prior to such issue, then and in such
event, such Series A-2 Conversion Price shall be reduced, concurrently with such
issue to a price (calculated to the nearest cent) determined by dividing the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued by the total number of Additional
Shares of Common Stock so issued.
(C) Series B Conversion Price - Full Ratchet
Adjustment. If the Corporation shall at any time on or after the date of
effectiveness of this Certificate of Incorporation issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Subsection 4(a)(iv)(3), but excluding shares issued as a dividend or
distribution as provided in Subsection 4(a)(vi) or upon a stock split or
combination as provided in Subsection 4(a)(v)), without consideration or for a
consideration per share less than the applicable Series B Conversion Price in
effect on the date of and immediately prior to such issue, then and in such
event, such Series B Conversion Price shall be reduced, concurrently with such
issue to a price (calculated to the nearest cent) determined by dividing the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued by the total number of Additional
Shares of Common Stock so issued.
Notwithstanding the foregoing, the applicable Conversion Price
shall not be reduced if the amount of such reduction would be an amount less
than $.05, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $.05 or more.
(5) Determination of Consideration. For
purposes of this Subsection 4(a)(iv), the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(A) Cash and Property. Such consideration
shall:
(1) insofar as it consists of cash, be
computed at the aggregate of cash received by the Corporation, excluding amounts
paid or payable for accrued interest or accrued dividends;
(2) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors, including approval
by at least two of the Investor Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (1) and (2) above, as
determined in good faith by the Board of Directors, including approval by at
least two of the Investor Directors.
(B) Options, Rights and Convertible
Securities. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to
Subsection 4(a)(iv)(3), relating to Options, Rights and Convertible Securities,
shall be determined by dividing:
o the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options, Rights
or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the
Corporation upon the exercise of such Options, Rights or the
conversion or exchange of such Convertible Securities, by
o the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(5) Adjustment for Stock Splits and
Combinations. If the Corporation shall at any time or from time to time on or
after the date of effectiveness of this Certificate of Incorporation effect a
subdivision of the outstanding Common Stock (without a proportional adjustment
to the outstanding Series A Preferred Stock, Series A-2 Preferred Stock and
Series B Preferred Stock), the applicable Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the date of this
Certificate of Incorporation combine the outstanding shares of Common Stock
(without a proportional adjustment to the outstanding Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock), the applicable
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(6) Adjustment or Certain Dividends and
Distributions. In the event the Corporation at any time, or from time to time on
or after the date of effectiveness of this Certificate of Incorporation, shall
make or issue a dividend or other distribution payable in Additional Shares of
Common Stock to holders of Common Stock without a proportional distribution to
holders of Series A Preferred Stock, Series A-2 Preferred Stock and Series B
Preferred Stock, then and in each such event the applicable Conversion Price
shall be decreased as of the time of such issuance, by multiplying the
applicable Conversion Price by a fraction:
o the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time
of such issuance, and
o the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time
of such issuance plus the number of shares of Common Stock
issuable in payment of such dividend or distribution.
(7) Adjustments for Other Dividends and
Distributions. In the event the Corporation at any time or from time to time
after the date of this Certificate of Incorporation shall make or issue a
dividend or other distribution payable in securities of the Corporation other
than shares of Common Stock, then and in each such event provision shall be made
so that the holders of shares of the Series A Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock shall receive upon conversion
thereof in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation that they would have
received had their Series A Preferred Stock, Series A-2 Preferred Stock and
Series B Preferred Stock been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period given application to all adjustments called for
during such period, under this paragraph with respect to the rights of the
holders of the Series A Preferred Stock, Series A-2 Preferred Stock and Series B
Preferred Stock.
(8) Adjustment for Reclassification,
Exchange, or Substitution. If the Common Stock issuable upon the conversion of
the Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization, reclassification,
or otherwise (other than a subdivision or combination of shares or stock
dividend provided for above, or a reorganization, merger, consolidation, or sale
of assets provided for below), then and in each such event the holder of each
share of Series A Preferred Stock, Series A-2 Preferred Stock and Series B
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Series A Preferred
Stock, Series A-2 Preferred Stock and Series B Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
(9) Adjustment for Merger or Reorganization,
etc. In case of any consolidation or merger of the Corporation with or into
another corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation (other than a consolidation, merger or sale
which is treated as a liquidation pursuant to Subsection 2(c)),
(a) if the surviving entity shall consent in
writing to the following provisions, then each share of Series A Preferred
Stock, Series A-2 Preferred Stock and Series B Preferred Stock shall thereafter
be convertible into the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Series A Preferred Stock, Series
A-2 Preferred Stock and Series B Preferred Stock would have been entitled upon
such consolidation, merger or sale; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 4 set forth with respect to the
rights and interest thereafter of the holders of the Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock, to the and that the
provisions set forth in this Section 4 (including provisions with respect to
changes in and other adjustments of the applicable Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock; or
(b) if the surviving entity shall not so
consent, then each holder of Series A Preferred Stock, Series A-2 Preferred
Stock and Series B Preferred Stock may, after receipt of notice specified in
Subsection (1), elect to convert such Stock into Common Shares as provided in
this Section 4 or to accept the distributions calculated in accordance with
Section 2(a) through (c).
(10) No Impairment. The Corporation will
not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock against impairment.
(11) Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the applicable Conversion Price
pursuant to this Section 4(a), the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder, if any, of Series A Preferred Stock, Series A-2
Preferred Stock. and Series B Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based and shall file a copy of such certificate
with its corporate records. The Corporation shall, upon the written request at
any time of any holder of Series A Preferred Stock, Series A-2 Preferred Stock
and Series B Preferred Stock, furnish or cause to be furnished to such holder a
similar certificate setting forth (1) such adjustments and readjustments, (2)
the applicable Conversion Price then in effect, and (3) the number of shares of
Common Stock and the amount, if any, of other property which then would be
received upon the conversion of Series A Preferred Stock, Series A-2 Preferred
Stock or Series B Preferred Stock, as the case may be. Despite such adjustment
or readjustment, the form of each or all Series A Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock Certificates, if the same shall
reflect the initial or any subsequent conversion price, need not be changed in
order for the adjustments or readjustments to be valued in accordance with the
provisions of this Certificate of Incorporation, which shall control.
(12) Notice of Record Date. In the event:
(a) that the Corporation declares a dividend
(or any other distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(b) that the Corporation subdivides or
combines its outstanding shares of Common Stock;
(c) of any reclassification of the Common
Stock of the Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or with
another corporation, or of the sale of all or substantially all of the assets of
the Corporation; or
(d) of the involuntary or voluntary
dissolution, liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of its transfer agent, and shall cause to be mailed to the holders of the
Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock at their last addresses as shown on the records of the Corporation or such
transfer agent, at least ten days prior to the record date specified in (A)
below or twenty days before the date specified in (B) below, a notice stating
(i) the record date of such dividend,
distribution, subdivision or combination, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, subdivision or combination are to be determined, or
(ii) the date on which such
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up is expected to became effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, dissolution or winding up.
5. Mandatory Conversion.
Each share of Series A Preferred Stock and Series B Preferred
Stock then outstanding shall automatically convert into shares of Common Stock,
at the then effective applicable conversion rate pursuant to Section 4,
immediately prior to the consummation of the Corporation's sale of its Common
Stock in an initial public offering pursuant to a registration statement under
the Securities Act which results in the consummation of the sale of such
securities at a public offering price of not less than $11.50 per share (as
adjusted for any stock split, stock dividend or recapitalization on or after the
date of effectiveness of this Certificate of Incorporation) and gross proceeds
to the Corporation in excess of $40,000,000.00 (a "Qualified IPO").
6. Redemption.
(a) Subject to any legal restrictions on the Corporation's
redemption of shares, upon (i) a change of control of ProQuest Company
("ProQuest") or a change of control of ProQuest Information & Learning Company
("PQIL"), such that ProQuest no longer controls PQIL, in either case prior to
December 31, 2003, (ii) the sale, directly or indirectly, by PQIL of greater
than 40% of its interest in the Corporation prior to December 31, 2003, or (iii)
at any time on or after December 31, 2003, the holders of at least a majority of
the then outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, aggregated as a single class, may notify the Corporation that all, but
not less than all, of the Series A Preferred Stock and Series B Preferred Stock
shall be redeemed (an "Optional Redemption"). Upon receipt of any such request
as to an Optional Redemption, the Corporation shall promptly give written notice
of the redemption request to each nonrequesting holder of record of the shares
of Series A Preferred Stock and Series B Preferred Stock, postage prepaid, at
the post office address last shown on the records of the Corporation, and to the
extent it is then lawfully able to do so, redeem the outstanding shares of
Series A Preferred Stock and Series B Preferred Stock by payment in cash of the
greater of (i) the fair market value of each share of Series A Preferred Stock
and Series B Preferred Stock, respectively, or (ii) in respect of each share of
Series A Preferred Stock an amount equal to the Series A Liquidation Preference
per share plus all accrued but unpaid dividends per share (as adjusted for any
stock split, stock dividend or recapitalization after the date of the first
issuance of the Series A Preferred Stock) and in respect of each share of Series
B Preferred Stock an amount equal to the Series B Liquidation Preference per
share plus all accrued but unpaid dividends per share (as adjusted for any stock
split, stock dividend or recapitalization after the date of the first issuance
of the Series B Preferred Stock), respectively. The fair market value of the
Series A Preferred Stock and Series B Preferred Stock shall be determined by a
nationally-recognized investment bank, selected by the Corporation and
reasonably acceptable to the holders of a majority in interest of the Series A
Preferred Stock and Series B Preferred Stock, without regard to minority or
illiquidity discounts. The fees and expenses of such investment bank shall be
borne by the Corporation. For the purpose of this Section 6(a), a change in
control of ProQuest shall mean the merger or consolidation of ProQuest into or
with another corporation which results in the exchange of outstanding shares of
ProQuest for securities or other consideration issued or paid or caused to be
issued or paid by such other corporation or an affiliate thereof, or the sale of
all or substantially all the assets of ProQuest.
(b) Redemption Date. The Corporation shall redeem the shares
of Series A Preferred Stock and Series B Preferred Stock to be redeemed
hereunder no later than one hundred twenty (120) days after the date of the
request by the initially requesting holders of shares of Series A Preferred
Stock and Series B Preferred Stock in cash (or by check), unless a majority in
interest of all holders of shares of Series A Preferred Stock and Series B
Preferred Stock elect to accept payment in securities of the Corporation or a
third party, which election shall be binding on all holders of Series A
Preferred Stock and Series B Preferred Stock. Such date shall be the "Initial
Redemption Date" as described herein.
(c) Procedure. At least thirty (30) days prior to the Initial
Redemption Date, written notice shall be mailed, postage prepaid, to the holder
of record of shares of Series A Preferred Stock and Series B Preferred Stock, at
such holder's post office address last shown on the records of the Corporation,
notifying such holder of the redemption of such shares to be redeemed at that
time, specifying the Initial Redemption Date, the applicable redemption price,
and calling upon such holder to surrender to the Corporation, in the manner and
at the place designated, such holder's certificate or certificates representing
the shares to be redeemed (such notice is hereinafter referred to as the
"Optional Redemption Notice"). On or after the Initial Redemption Date, each
holder of shares of Series A Preferred Stock and Series B Preferred Stock to be
redeemed shall surrender such holder's certificate or certificates representing
shares to the Corporation, in the manner and at the place designated in the
Optional Redemption Notice, and thereupon the applicable redemption price of
such shares shall be payable to the order of the person whose name appears on
such certificate or certificates as the owner of such shares and each
surrendered certificate shall be canceled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(d) Insufficient Funds. If the funds of the Corporation
available for redemption of shares of Series A Preferred Stock and Series B
Preferred Stock on the Initial Redemption Date are insufficient to redeem the
total number of shares of Series A Preferred Stock and Series B Preferred Stock
to be redeemed on such date, the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
aggregated as a single class, may require that the Corporation be put up for
sale in accordance with customary procedures designed to produce the highest
cash price reasonably available for all of the voting securities of the
Corporation. In connection with such sale, the Corporation shall retain a
nationally-recognized investment bank, reasonably acceptable to the holders of a
majority in interest of the Series A Preferred Stock and Series B Preferred
Stock, and the Board of Directors of the Corporation shall appoint a special
committee consisting entirely of directors designated by said holders of Series
A Preferred Stock and Series B Preferred Stock to oversee such sale. The fees
and expenses of such investment bank shall be borne by the Corporation. The sale
price shall be in cash, unless the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
aggregated as a single class, shall elect otherwise, and shall be payable to all
stockholders of the Corporation in accordance with the terms of this Certificate
of Incorporation. Distribution of the proceeds of such a sale shall be in
accordance with the above Section 2 (Liquidation, Dissolution and Winding up).
If the holders of Series A Preferred Stock and Series B
Preferred Stock do not vote to require a sale of the Corporation as described in
the previous paragraph, and on the redemption date the number of shares of
Series B Preferred Stock that may be legally redeemed by the Corporation is less
than the number of such shares to be redeemed, then the shares to be redeemed
but that may not be legally redeemed shall be carried forward and redeemed as
soon as the Corporation has funds legally available to redeem the shares.
(e) Deposit of Optional Redemption Price. On or prior to the
Initial Redemption Date, the Corporation shall deposit the redemption price with
respect to all shares of Series A Preferred Stock and Series B Preferred Stock
designated for redemption in the Optional Redemption Notice and not yet redeemed
with a bank or trust company having aggregate capital and surplus in excess of
$50,000,000.00 as a trust fund for the benefit of the respective holders of the
shares designated for the redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust company to pay the redemption
price for such shares to their respective holders on or after the Initial
Redemption Date upon receipt of notification from the Corporation that such
holder has surrendered his shares certificate to the Corporation pursuant to
Section 6(b) hereof. Such instructions shall also provide that any funds
deposited by the Corporation pursuant to this Section 6(e) for the redemption of
shares subsequently converted into shares of Common Stock no later than the
third (3rd) day preceding the Initial Redemption Date shall be returned to the
Corporation forthwith upon such conversion. The balance of any funds deposited
by the Corporation pursuant to this Section 6(e) remaining unclaimed at the
expiration of two (2) years following the Initial Redemption Date shall be
returned to the Corporation upon its request expressed in a resolution of its
Board of Directors; provided, however, that the Corporation's obligation to pay
the applicable redemption price shall continue.
(f) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 6 and in taking all action as
may be necessary or appropriate to protect the redemption rights of the holders
of the Series A Preferred Stock and Series B Preferred Stock against impairment.
(g) Rights as Stockholders. Anything contained in this Section
6 to the contrary notwithstanding, the holders of shares of Series A Preferred
Stock and Series B Preferred Stock to be redeemed in accordance with this
Section shall have the right, exercisable at any time up to the close of
business on the applicable redemption date (unless the Corporation is legally
prohibited from redeeming such shares on such date, in which event such right
shall be exercisable until the removal of such legal disability), to convert all
or any part of such shares to be redeemed as herein provided into shares of
Common Stock pursuant to Section 4 hereof.
7. Sinking Fund.
There shall be no sinking fund for the payment of dividends,
or liquidation preferences on the Preferred Stock or the redemption of any
shares thereof.
8. Amendment.
The provisions of this Article FOURTH constitute an agreement
between the Corporation and the holders of the Preferred Stock. It may only be
amended by vote of the Board of Directors of the Corporation and the holders of
at least fifty-one percent (51%) of the then outstanding shares of Series A
Preferred Stock and Series B Preferred Stock, voting as a single class on an
as-converted to Common Stock basis.
FIFTH: The name and mailing address of the incorporator are
as follows:
Xxxx X. Xxxxx Xx.
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
SIXTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is expressly forbidden by the General Corporation Law, as the
same exists or may hereafter be amended. No amendment or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
SEVENTH: (i) Each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee or agent or in any other capacity while serving
as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized or permitted by the
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid or to be paid in settlement) actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, and such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person; provided,
however, that, except as provided in paragraph (b), the Corporation shall
indemnify any such person seeking indemnification in connection with an, action,
suit or proceeding (or part thereof) initiated by such person only if such
action, suit or proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification conferred in this
Article shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such action, suit or
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his capacity as such in advance of the final disposition
of any such action, suit or proceeding shall be made only upon receipt by the
Corporation of an undertaking by or an behalf of such director or officer to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article or
otherwise. The Corporation may, by action of the Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(ii) If a claim under paragraph (a) is not paid in
full by the Corporation within 30 days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including the Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law, nor an actual determination by
the Corporation (including the Board of Directors, independent legal counsel or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(iii) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of this
Certificate of Incorporation (as it may be amended), the Bylaws, agreement, vote
of stockholders or disinterested directors or otherwise.
(iv) The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law.
EIGHTH: Meetings of the stockholders may be held within or
without the State of Delaware, as the Bylaws may provide. Subject to the
provisions of any law or regulation, the books of the Corporation may be kept
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws of the Corporation. The
election of directors need not be by written ballot unless the Bylaws so
provide.
NINTH: Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof, or on
the application of any receiver or receivers appointed for the Corporation under
the provision of Section 291 of the General Corporation Law, or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under Section 279 of the General Corporation Law, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned is
such manner as the said count directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
TENTH: Subject to the limitations set forth herein, the
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on stockholders,
directors and officers are subject to this reserved power."
IN WITNESS WHEREOF, the undersigned, being the President and
Chief Executive Officer of the Corporation, does hereby execute this Amended and
Restated Certificate of Incorporation this December 30, 2002.
/s/ Xxxx X. Xxxxx, Xx.
-----------------------------------
Its: President and Chief Executive Officer
EXHIBIT C LETTER OF TRANSMITTAL
-------------------------------
LETTER OF TRANSMITTAL
To accompany certificate(s) formerly representing shares of capital stock of
xxxxxxxx.xxx, inc.
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DESCRIPTION OF SHARES SURRENDERED
(Please fill in. Attach a separate schedule if needed.)
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CLASS OR
NAME(S) AND ADDRESS OF REGISTERED HOLDER(S) SERIES OF STOCK CERTIFICATE NUMBER OF
(Please correct any errors in the name or address shown below) (Common or Series A - B NO(S) SHARES
Preferred Stock)
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PAYMENT FOR YOUR SHARES WILL BE MADE BY WIRE TRANSFER. PLEASE PROVIDE THE WIRE TRANSFER INFORMATION REQUESTED BELOW:
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WIRE TRANSFER INSTRUCTIONS:
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ABA NUMBER:
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ACCOUNT NUMBER:
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The undersigned represents that each of the undersigned has full authority to
surrender without restriction the above-described certificate(s) and the
underlying shares of capital stock of xxxxxxxx.xxx, inc. (the
"Certificate(s)").
Mail this Letter of Transmittal to the address set forth below,
together with the Certificate(s):
ProQuest Information and Learning Company
000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, General Counsel
Fax: (000) 000-0000
Delivery of this instrument to an address other than as set forth above
does not constitute a valid delivery. The method of delivery of the
Certificate(s) is at the option and risk of the owner thereof. See Instruction
1.
PLEASE FOLLOW THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
In connection with the Agreement and Plan of Merger, dated as of
December __, 2002 (the "Merger Agreement"), by and among ProQuest Information
and Learning Company, a Delaware corporation ("ProQuest"), Curious Acquisition,
Inc., a Delaware corporation and wholly-owned subsidiary of ProQuest ("Merger
Sub"), and xxxxxxxx.xxx, inc., a Delaware corporation ("Company"), pursuant to
which Merger Sub was merged with and into Company (the "Merger"), the
undersigned hereby transmits to you, on the terms and conditions of the Merger
Agreement and this Letter of Transmittal, the Certificate(s) formerly
representing shares of the outstanding capital stock of Company (the "Company
Stock"). Unless otherwise defined herein, all defined terms contained herein
shall have the meanings set forth in the Merger Agreement.
Please wire (if amount is over $10,000) or mail to the undersigned, as
instructed below, a wire transfer (or check, if applicable), for the amount of
cash to which the undersigned is entitled pursuant to the Merger Agreement. The
undersigned hereby consents and agrees that the Company and ProQuest shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to the Merger Agreement to any holder of Company Stock ("Company
Stockholder") such amounts as ProQuest is required to deduct and withhold with
respect to the making of such payment under the United States Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Company or
ProQuest, as the case may be, such withheld amounts shall be treated for all
purposes of the Merger Agreement as having been paid to the holder of Company
Stock in respect of which such deduction and withholding was made by the Company
or ProQuest, as the case may be.
The undersigned hereby represents and warrants that:
o the undersigned is the record owner of the shares of Company
Stock formerly represented by the Certificate(s) hereby
delivered and identified in the box on the preceding page;
o the undersigned has full right, power, legal capacity and
authority to sell, transfer and deliver the Certificate(s),
free and clear of all liens, charges and encumbrances and such
shares are not subject to any adverse claims, and there is no
limitation or restriction on the sale, transfer and delivery
of the Certificate(s); and
o the undersigned will, upon request, execute any additional
documents necessary or desirable to complete the sale,
transfer and cancellation of the shares of Company Stock
formerly represented by the Certificate(s) hereby delivered.
All authority conferred or agreed to be conferred in this
Letter of Transmittal shall be binding upon the successors,
assigns, heirs, executors, administrators and legal
representatives of the undersigned and shall not be affected
by, and shall survive, the death or incapacity of the
undersigned. The undersigned understands that payment for the
Certificates will be made as promptly as practicable after the
surrender of the Certificate(s) is made in acceptable form.
As an inducement to ProQuest to enter into the Merger Agreement, the
undersigned hereby consents to the Merger Agreement and the matters contemplated
thereby, including, without limitation, the termination and cancellation of such
Company Stockholders' options, warrants, and rights to acquire Company Stock (if
any) without any payment of any consideration therefore.
Immediately followng the closing of the Merger (the "Effective Date"),
each Company Stockholder and the Company hereby agrees that any agreements
pursuant to which the Company issued an shares of its capital stock, or options
or warrants therefor, to any Company Stockholder (collectively, the "Company
Investor Agreements") shall be deemed terminated and be of no further force and
effect.
Effective upon the consummation of the transactions contemplated under
the Merger Agreement, except for any rights expressly set forth in the Merger
Agreement, the undersigned hereby releases the Company and its affiliates from
any and all claims of such stockholder against the Company and its affiliates or
liabilities or obligations of the Company and its affiliates or to the
undersigned arising under the Company Investor Agreements or in connection with
the issuance of any securities by the Company or its affiliates to Company
Stockholder, or otherwise as a result of the undersigned having been a
stockholder of the Company or its affiliates.
The undersigned hereby appoints Oakleigh Xxxxxx, Xxxxxx Xxxxxxx and
Xxxxx Xxxxxx (the "Stockholder Representative Committee") the attorney-in-fact
of such Company Stockholder, with full power and authority, including power of
substitution, acting in the name of and for and on behalf of such Company
Stockholder to act as provided in the Merger Agreement and to consent to any
change in the form of the Merger Agreement prior to the execution thereof or any
amendment to the Merger Agreement after the execution thereof and to execute a
consent pursuant to Sections 228 and 251 of the DGCL in connection with any such
change or amendment as proxy for such Company Stockholders, and to do all other
things and to take all other action under or related to this Letter of
Transmittal and the Merger Agreement which, in its discretion, the Stockholder
Representative Committee may consider necessary or proper to effectuate the
Merger as contemplated under the Merger Agreement and to resolve any dispute
with ProQuest over any aspect of this Letter of Transmittal or the Merger
Agreement, and on behalf of the undersigned to enter into any agreement to
effectuate any of the foregoing, which shall have the effect of binding such
Company Stockholder as if such Company Stockholder had personally entered into
such an agreement. This appointment and power of attorney shall be deemed as
coupled with an interest and all authority conferred hereby shall be irrevocable
and shall not be subject to termination by operation of law, whether by the
death or incapacity or liquidation or dissolution of any Company stockholder or
the occurrence of any other event or events and the Stockholder Representative
Committee may not terminate this power of attorney with respect to any Company
Stockholder or such Company Stockholder's successors or assigns without the
consent of Company.
The undersigned acknowledges that he or she has received a copy of the
information package dated December ___, 2002 delivered by the Company to Company
Stockholders in connection with the Merger Agreement and the approval of the
Merger.
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If your Certificate(s) have been lost, stolen, misplaced or mutilated,
contact Xxxx Xxxxxxxx at (000) 000-0000.
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ALL STOCKHOLDERS MUST SIGN
IN THE BOX BELOW.
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SIGNATURE(S) REQUIRED
Signature(s) of Registered Holder(s) or Agent
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The undersigned acknowledges that he/she has thoroughly read this Letter
of Transmittal and agrees to be bound by the terms contained herein.
--------------------------------------------------------------------------------
Registered Holder
--------------------------------------------------------------------------------
Registered Holder
--------------------------------------------------------------------------------
Title, if any
Date: Phone No.:
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Must be signed by the registered holder(s) EXACTLY as name(s) appear(s)
on the Certificate(s). If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer for a corporation
acting in a fiduciary or representative capacity, or other person,
please set forth full title.
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ALSO: YOU MUST SIGN AND PROVIDE YOUR TAX ID NUMBER ON THE SUBSTITUTE W-9
ATTACHED AS EXHIBIT A.
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INSTRUCTIONS FOR SURRENDERING CERTIFICATES
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(Please read carefully the instructions below)
1. Method of Delivery: The Certificate(s) and this Letter of Transmittal
must be sent or delivered to Xxxx Xxxxxxxx, General Counsel of ProQuest
Information and Learning Company (the "Exchange Agent"). The method of
delivery of the Certificate(s) to be surrendered to the Exchange Agent at the
address set forth on the front of this Letter of Transmittal is at the option
and risk of the surrendering Company Stockholder. Delivery will be deemed
effective only when received. IF THE CERTIFICATE(S) ARE SENT BY MAIL, IT IS
SUGGESTED THAT THEY BE SENT BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED
AND PROPERLY INSURED.
2. Check issued in the Same Name: The check will be issued in the same name
as the surrendered certificate is registered. This Letter of Transmittal
should be completed and signed exactly as the surrendered certificate is
registered. DO NOT SIGN THE CERTIFICATE(S). If any of the Certificate(s) are
owned by two or more joint owners, all such owners must sign this Letter of
Transmittal exactly as written on the face of the Certificate(s). If any of
the Certificate(s) are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations. Letters of Transmittal
executed by trustees, executors, administrators, guardians, officers of
corporations, or others acting in a fiduciary capacity who are not identified
as such in the registration must be accompanied by proper evidence of the
signer's authority to act.
3. Letter of Transmittal Required; Surrender of the Certificate(s); Lost
Certificate(s): You will not receive your check or wire unless and until you
deliver this Letter of Transmittal, properly completed and duly executed, to
the Exchange Agent, together with the Certificate(s) and any required
accompanying evidences of authority. IF THE CERTIFICATE(S) HAVE BEEN LOST,
STOLEN, MISPLACED OR DESTROYED, IMMEDIATELY CONTACT THE EXCHANGE AGENT FOR
INSTRUCTIONS AT (000) 000-0000 PRIOR TO SUBMITTING YOUR CERTIFICATE(S) FOR
EXCHANGE.
4. Substitute Form W-9/Substitute Form W-8: Each tendering stockholder is
required to provide the Exchange Agent with a correct Taxpayer Identification
Number ("TIN") on the Substitute Form W-9 attached as Exhibit A, and to
certify, under penalties of perjury, that this number is correct and that the
stockholder is not subject to backup withholding of United States federal
income tax. If a tendering Company Stockholder has been notified by the
Internal Revenue Service that the stockholder is subject to backup
withholding, the Company Stockholder must cross out item (2) of the
Certification box of the Substitute Form W-9, unless the stockholder has since
been notified by the Internal Revenue Service that the Company Stockholder is
no longer subject to backup withholding. Failure to provide the information on
the Substitute Form W-9 may subject the tendering stockholder to 30% United
States federal income tax withholding with respect to any payments received
pursuant to the Offer. If the tendering Company Stockholder has not been
issued a TIN and has applied for one or intends to apply for one in the near
future, the Company Stockholder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, and sign and date
the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 30% on all payments of the purchase price to the stockholder until a
TIN is provided to the Depositary.
(a) Exhibit A
PAYER: PROQUEST INFORMATION AND LEARNING COMPANY
-------------------------------- ------------------------------------------ ------------------------------------------
SUBSTITUTE Part 1 -- Please provide your TIN in the TIN:
box at right and certify by signing and ___________________________
FORM W-9 dating below. Social Security Number
Department of the Treasury, or Employer
Internal Revenue Service Identification Number
(If waiting for TIN,
Payer's Request For Taxpayer write "Applied For")
Identification Number (TIN)
and Certification For Payee
Exempt From Backup Withholding
------------------------------------------ ------------------------------------------
Part 2--For payees exempt from backup
withholding, please write "EXEMPT" below.
--------------------------------
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PART 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
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(1) The number shown on this form is my correct taxpayer identification number
(or a taxpayer identification number has not been issued to me).
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(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the IRS that I am subject to
backup withholding as a result of failure to report all interest or dividends or
(c) the IRS has notified me that I am no longer subject to backup withholding.
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(3) Any information provided on this form is true, correct and complete.
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(4) I am a U.S. person (including a U.S. resident alien).
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CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
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(Also see instructions in the enclosed Guidelines.)
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Signature: Date:____________________, 2002
-------------------------------------------------------------
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Name:
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(Please Print)
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACUP WTIHHOLDING OF 30% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN THE SPACE PROVIDED FOR THE TIN IN PART I OF SUBSTITUTE FORM W-9.
EXHIBIT D FORM OF LOST STOCK AFFIDAVIT
--------------------------------------
AFFIDAVIT OF LOST STOCK CERTIFICATE
AND INDEMNITY AGREEMENT
STATE OF ILLINOIS )
) SS.
COUNTY OF XXXX )
The undersigned, __________________________ (hereinafter referred to as
the "Stockholder"), a holder of shares of preferred stock of xxxxxxxx.xxx, inc.,
a Delaware corporation (hereinafter referred to as the "Company"), being duly
sworn, deposes and says:
1. The Stockholder is the lawful owner and is entitled to possession of
stock certificate no. ______ (the "Certificate") representing ______ share(s) of
Series ____ preferred stock of the Company.
2. The Certificate was mislaid, lost, stolen, seized or destroyed. The
Stockholder has made or caused to be made a thorough, careful and diligent
search of Stockholder's records and documents for the Certificate and has been
unable to find or recover same.
3. The Stockholder has not sold, assigned, pledged, transferred,
hypothecated, deposited under any agreement, or otherwise disposed of, either in
whole or in part, the Certificate, any interest therein or any rights
thereunder, or signed any power of attorney or other authorization respecting
same which is now outstanding and in force; and no person, firm, corporation,
agency, governmental entity or other entity other than the Stockholder has, had
or has asserted any right, title, claim, or interest in, to or respecting the
Certificate or the proceeds thereof.
4. The Shareholder makes this Affidavit for the purpose of inducing the
Company to issue to the Stockholder cash to which the Stockholder is entitled
pursuant to the provisions of Article II of the Agreement and Plan of Merger,
dated December ___, 2002, by and among ProQuest Information and Learning
Company, Curious Acquisition, Inc., and xxxxxxxx.xxx, inc.
5. If Stockholder should find or recover the mislaid, lost, stolen,
seized or destroyed Certificate, the Stockholder will immediately surrender the
Certificate to the Company for cancellation without requiring any consideration
therefor.
6. In consideration of compliance with the foregoing request, the
Stockholder hereby agrees to at all times indemnify and hold harmless the
Company and its officers, directors, successors and assigns from and against any
and all claims, actions and suits, and from and against any and all liabilities,
losses, damages, costs, charges, counsel fees and expenses of every nature and
character resulting from, arising out of or in any way relating to the lost,
mislaid, stolen, seized or destroyed Certificate, the issuance of a new
instruments in lieu thereof, or the making of any payment, transfer, delivery or
exchange called for by the Certificate, without the surrender thereof.
7. This Affidavit of Lost Stock Certificate and Indemnity Agreement in
connection with Indemnity Bond shall insure to the benefit of the Company and
its successors and assigns.
IN WITNESS WHEREOF, the undersigned has signed this Affidavit of Lost
Stock Certificate and Indemnity Agreement this ____ day of December, 2002.
By:
--------------------------------------
Subscribed and sworn to before me this ____ day of December, 2002.
------------------------------
Notary Public
My commission expires_____________
EXHIBIT E BYLAWS
----------------
AMENDED AND RESTATED BYLAWS
OF
XXXXXXXX.XXX, INC.
(as adopted December 19, 2000)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. At the meeting, directors
shall be elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, the chief executive officer, the president, or by one or
more stockholders holding shares in the aggregate entitled to cast not less than
ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors, then the request shall be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and shall be delivered personally or sent by registered mail or by telegraphic
or other facsimile transmission to the board of directors, the president, any
vice president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws,
that a meeting will be held at the time requested by the person or persons
calling the meeting, so long as that time is not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request, then the person or
persons requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 2.3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the board
of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
At a stockholders' meeting at which directors are to be elected, or at
elections held under special circumstances, each stockholder shall be entitled
to one (1) vote for each share of common stock held by such stockholder and to
the number of votes equal to the number of shares of common stock into which
their preferred stock, if any, is convertible on the appropriate record date.
There shall be no cumulative voting.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
a corporation, or any action that may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice, and
without a vote if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
3.2 NUMBER OF DIRECTORS
The exact number of directors of the corporation shall be thirteen or
as determined by resolution of the board of directors.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chief executive officer, the president, any
vice president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.14 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may designate one (1) or more committees, each
committee to consist of one (1) or more directors of the corporation. The board
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors or in the bylaws of the
corporation, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority to (i) approve, adopt or recommend to the stockholders, any action or
matter expressly required by the General Corporation Law of Delaware to be
submitted to the stockholders for approval or (ii) adopt, amend or repeal any
bylaw of the corporation.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), and Section 3.12 (action without a meeting), with such changes in
the context of those bylaws as are necessary to substitute the committee and its
members for the board of directors and its members; provided, however, that the
time of regular meetings of committees may also be called by resolution of the
board of directors and that notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall include a chief executive
officer, a president and a secretary. The corporation may also have, at the
discretion of the board of directors, a chief financial officer, one or more
vice presidents, one or more assistant vice presidents, assistant secretaries
and any such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be chosen by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.6 CHIEF EXECUTIVE OFFICER
The chief executive officer of the corporation shall, subject to the
control of the board of directors, have general supervision, direction, and
control of the business and the officers of the corporation. The chief executive
officer shall preside at meetings of the board of directors. The chief executive
officer shall have such other powers and duties as may be prescribed by the
board of directors or these bylaws.
5.7 PRESIDENT
The president shall, in the absence or nonexistence of a chief
executive officer, preside at all meetings of the board of directors. The
president shall have the general powers and duties of management usually vested
in the office of president of a corporation and shall have such other powers and
duties as may be prescribed by the board of directors or these bylaws. If there
is no chief executive officer, then the president shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.6 of these bylaws.
5.8 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the chief executive officer, or the president.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as Chief Financial Officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.12 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chief executive officer, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates. Every
holder of stock represented by certificates shall be entitled to have a
certificate signed by, or in the name of the corporation by the chief executive
officer, the president or vice-president, and by the chief financial officer or
an assistant Chief Financial Officer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, the total amount of the consideration to be paid
therefor and the amount paid thereon shall be stated. Upon the declaration of
any dividend on fully paid shares, the corporation shall declare a dividend upon
partly paid shares of the same class, but only upon the basis of the percentage
of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.7 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.8 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8.9 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.10 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.11 SEAL
This corporation may have a corporate seal, which may be adopted or
altered at the pleasure of the Board of Directors, and may use the same by
causing it or a facsimile thereof, to be impressed or affixed or in any other
manner reproduced.
8.12 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed within
a reasonable time to take steps to dissolve, liquidate or distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
EXHIBIT F FORM OF CHARTER AMENDMENT
-----------------------------------
CERTIFICATE OF AMENDMENT
OF THE
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
XXXXXXXX.XXX, INC.
------------------------
Xxxxxxxx.xxx, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation (the "Board of Directors")
duly adopted, by unanimous written consent in lieu of a meeting in accordance
with Section 141(f) of the General Corporation Law of the State of Delaware (the
"GCL"), resolutions setting forth a proposed amendment to the Second Amended and
Restated Certificate of Incorporation of the Corporation, declaring said
amendment to be advisable and submitting it to the stockholders of the
Corporation for consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that it is advisable to amend the Company's
Certificate of Incorporation in order to amend the terms for
the Preferred Stock by inserting after paragraph 8 of Article
FOURTH and before Article FIFTH a new paragraph 9 to read as
follows:
9. Waiver. Any of the rights of the holders of the
Series A Preferred Stock and/or the Series B
Preferred Stock set forth herein may be waived by the
affirmative vote of the holders of a majority of the
Series A Preferred Stock and Series B Preferred Stock
then outstanding, voting together as a class.
SECOND: That the amendment described above has been approved by written consent
in accordance with Section 228 of the GCL by the holders of (i) a majority of
the issued and outstanding shares of Common Stock, Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock, voting together as a
single class, (ii) at least seventy percent (70%) of the Series A Preferred
Stock and Series A-2 Preferred Stock, voting together as a single class, (iii)
at least seventy percent (70%) of the Series B Preferred Stock, voting as a
class, (iv) at least fifty-one percent (51%) of the Series A Preferred Stock,
Series A-2 Preferred Stock and Series B Preferred Stock, voting together on an
as converted basis as a single class, and (v) a majority of the holders of the
Series A Preferred Stock, Series A-2 Preferred Stock and Series B Preferred
Stock, each voting separately as a single class.
THIRD: That said amendment was duly adopted in accordance with Section 242 of
the GCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to Certificate of Incorporation to be executed by a duly authorized
officer this ____ day of December, 2002.
XXXXXXXX.XXX, INC.
By:______________________
Name:
Title:
EXHIBIT G FORM OF WARRANT RELEASE
---------------------------------
RELEASE AND COVENANT NOT TO XXX
-------------------------------
This Agreement constitutes a general release and covenant not to xxx
and is entered into by and among , a holder of a warrant(s) of Bigchalk, Inc. or
one of its subsidiaries or predecessors (the "Warrant Holder"), Bigchalk, Inc.
(the "Company") and ProQuest Information and Learning Company ("ProQuest")
(collectively, the "Parties").
For good and valuable consideration, the receipt and adequacy of which
hereby is acknowledged by the Warrant Holder, the Warrant Holder on his own
behalf and on behalf of his executors, administrators, legal representatives,
assigns and successors, and all persons acting by, through, under, or in concert
with any or all of each of them, hereby remises, releases, acquits and forever
discharges the Company and ProQuest (which term, for purposes of this document,
shall include all affiliated entities), and each and all of their respective
past and present directors, officers, shareholders, agents, employees,
representatives, predecessors and successors, and all persons acting by,
through, under, or in concert with any or all of each of them, of and from all
manner or actions, cause, rights, causes of action, suits, debts, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims, and demands, whatsoever, in law or in equity, now known or hereafter
discovered, which any or all of them has, had, or may have, by reason of any
actions, omissions, transactions, practices, conduct, matter, cause, or thing
whatsoever, from the beginning of time to the date hereof arising out of or
relating to any options or warrants held by the Warrant Holder to purchase
capital stock of the Company, or any of its subsidiaries or predecessors, or any
rights arising thereunder including without limitation [the warrant] (the
"Warrant") (collectively, the "Released Claims"). The Warrant is hereby
terminated.
The Warrant Holder covenants and agrees that he will never xxx or
institute, cause to institute, assist in instituting, or permit to be
instituted, any proceedings before any tribunal against any or all of the
parties being released (the "Released Parties") to charge any of them with any
liability, or to recover any compensation, for damages based on or relating to,
in whole or in part, any of the Released Claims. The Warrant Holder further
agrees that if he hereafter commences, joins in, or in any manner seeks relief
through any proceeding against any or all of the Released Parties, then the
Warrant Holder shall pay to such Released Parties all reasonable attorneys' fees
and other expenses incurred by the Released Parties in defending or otherwise
responding to said proceedings, in addition to any other damages caused by the
Warrant Holder.
The Warrant Holder acknowledges and intends that the Released Parties
are being released from unknown and unforeseen Released Claims to the fullest
extent permitted by law and the Warrant Holder waives any defenses based
thereon.
This Agreement shall be an absolute defense to any action based on
claims released hereby. Should any provision of this Agreement be declared or be
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby, and said illegal or
invalid part, term or provision shall be deemed not to be a part of this
Agreement.
No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver unless expressly stated in writing by the party
to be charged therewith. No waiver of any provision of this Agreement shall be
binding in any event unless evidenced by a writing executed by the party to be
charged with such waiver.
The Warrant Holder represents and warrants that he has neither made nor
suffered to be made, nor will he make, any assignment or transfer of any of the
Released Claims and that he is the sole and absolute legal and equitable owner
of all thereof.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES
HERETO SHALL BE CONSTRUED PURSUANT TO THE LAWS OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED WITHIN SUCH STATE.
The Warrant Holder represents and warrants that he has relied upon his
own judgment and the advise of counsel regarding the proper, complete, and
agreed upon consideration for and terms and provisions of this document; that
the agreed upon consideration is satisfactory; that no statements or
representations made by any party have unduly influenced or induced him to
execute this document; and that he intends this document to constitute a general
release of each and all of the Released Parties.
The Warrant Holder hereby waives the provisions of California Civil
Code Section 1542, which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
[MUST CONFORM TO ANY APPLICABLE STATE LAW]
Executed this ____ day of 200_
---------
BIGCHALK, INC. WARRANT HOLDER
By: By:
-------------------------- -------------------------
Title:
-----------------------
PROQUEST INFORMATION
AND LEARNING COMPANY
By:
--------------------------
THE STATE OF )
-------------------------------
)
COUNTY OF
----------------------------------)
On this ____ day of ___________________, _____________________
personally known to me, appeared before me and executed this Release and
Covenant Not To Xxx and Waiver of Right of Indemnification.
My commission Expires:
-------------------------- -------------------------
NOTARY PUBLIC
EXHIBIT H OPINION OF COUNSEL TO THE COMPANY
-------------------------------------------
ProQuest Information and Learning Company
000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel for xxxxxxxx.xxx, Inc., a
Delaware corporation (the "Company"), in connection with that certain Agreement
and Plan of Merger, made as of December ____, 2002 (the "Merger Agreement"), by
and among the Company, ProQuest Information and Learning Company ("Parent") and
BC Acquisition, Inc., a Delaware corporation ("Merger Sub"). This opinion letter
is delivered pursuant to Section 6.2(c) of the Merger Agreement. Except as
otherwise indicated, capitalized terms used herein are defined as set forth in
the Merger Agreement.
CUSTOMARY PREAMBLES, ASSUMPTIONS, CERTIFICATES & QUALIFICATIONS]
Based upon and subject to the foregoing, it is our opinion
that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, has the corporate power and authority
to own, lease and operate its properties and assets and to carry on the business
in which it is engaged. The Company is duly qualified to do business and is in
good standing in ___________, _________.
2. The Company owns all of the issued and outstanding capital stock of
________________________ (collectively, the "Company Subsidiaries").
3. Each Company Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and operate
its properties and assets and to carry on the business in which it is engaged.
Each of _______________________ is duly qualified to do business and in good
standing in _______________________.
4. The authorized, issued and outstanding capital stock of the Company
and each Company Subsidiary is accurately set forth on Schedule A. Except as set
forth on Schedule A, there are not any options, rights, warrants, conversion
rights, or other agreements or commitments of which we have knowledge to which
the Company or any Company Subsidiary is a party or by which any of them are
bound providing for the issuance of additional capital stock of the Company or
any Company Subsidiary. Each outstanding share of capital stock of the Company
and of each Company Subsidiary is duly authorized, validly issued, fully paid,
nonassessable and not subject to preemptive rights and, to our knowledge, each
such share owned by the Company or a Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "Liens"), except for the Stockholders Agreement. None of the
Shareholders are entitled to any preemptive or similar rights.
5. The Company is the sole record and beneficial owner of all the
issued and outstanding capital stock of each Company Subsidiary free and clear
of all liens and adverse claims (except as arise pursuant to the Merger
Agreement).
6. The Company has all requisite corporate power and authority to enter
into the Merger Agreement and the agreements and instruments to be entered into
by the Company at Closing (the "Company's Closing Documents"), and, to perform
its obligations thereunder. The execution and delivery of the Merger Agreement
and the Company's Closing Documents, and the consummation of the transactions
contemplated by the Merger Agreement have been duly authorized by all necessary
corporate action on the part of the Company. The Merger Agreement and the
Company's Closing Documents have been duly executed and delivered by the Company
and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
7. The execution and delivery of the Merger Agreement and the Company's
Closing Documents, and the consummation of the transactions contemplated thereby
by the Selling Parties: (A) are not prohibited by, do not violate or conflict
with any provision of and do not constitute a default (or an event which would,
with passage of time or the giving of notice or both, constitute a default)
under, contravene, conflict with, give rise to a right of payment or right to
terminate, amend, modify abandon or accelerate or otherwise result in a
violation or breach of (i) the charter or bylaws of the Company or any Company
Subsidiary, (ii) any material note, bond, indenture, contract, agreement,
permit, license or other instrument known to us and to which the Company or a
Company Subsidiary is a party, or by which any of their assets is bound, (iii)
any order, writ, injunction, decree or judgment of any court or governmental
agency or any arbitration award known to us, or (iv) any law, rule or regulation
applicable to the Company or a Company Subsidiary; and (B) will not require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other person.
8. The only votes of the holders of any classes or series of capital
stock of the Company necessary to approve and adopt the Agreement, the Merger,
and Charter Amendment and the other transactions contemplated by the Agreement
are (a) the affirmative vote of the holders of at least fifty-one percent (51%)
of the outstanding Company Preferred Stock and Company Common Stock, voting
together as a single class; and (b) the affirmative vote of holders of at least
fifty-one percent (51%) of the outstanding Company Preferred Stock, voting
together as a separate class from the Company Stock.
9. The Charter Amendment has been duly authorized by all necessary
corporate action on the part of the Company. The Charter Amendment was filed
with the Secretary of State of the State of Delaware and is effective in
accordance with the DGCL and is in full force and effect. Any and all other
action of the Company's Board of Directors or stockholders required in
connection with or necessitated by the Charter Amendment or the Merger has been
completed in accordance with applicable law and the Company's Amended and
Restated Certificate of Incorporation and By-Laws and remains in full force and
effect.
10. We do not know of any litigation, investigation, arbitration or
other judicial or regulatory proceeding pending or threatened against the
Company with respect to its business or the transactions contemplated by the
Merger Agreement.
11. Upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, the Merger will be legally effective in
accordance with the DGCL.
Upon consummation of the Merger, the Amended and Restated Stockholders
Agreement, dated December 20, 2000, by and among the Company and certain Company
Stockholders, and any other agreements pursuant to which the Company issued any
shares of its capital stock, or options or warrants therefor, shall terminate
without any further obligation on the part of the Parent, the Company or the
Surviving Corporation, and without any payment of consideration therefore.
Very truly yours,
SCHEDULES
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PROQUEST COMPANY AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED SCHEDULE
SET FORTH IN THE DISCLOSURE LETTER TO THE COMMISSION UPON REQUEST.
