EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VALUECLICK, INC.,
XXXXXXXXXXX.XXX, INC.,
VALUECLICK ACQUISITION CORP.
AND
THE OTHER PARTIES SIGNATORY TO THIS AGREEMENT
DATED AS OF NOVEMBER 1, 2000
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 1, 2000, by and
among ValueClick, Inc., a Delaware corporation ("Acquiror"), XxxxxXxxxxx.xxx,
Inc., a Delaware corporation (the "Company"), ValueClick Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Acquiror ("Merger Sub"),
and with respect to Section 8.2 only, Xxxxxxxx Xxxxxx, as Stockholder Agent, and
ChaseMellon Shareholder Services, L.L.C., as Depositary Agent.
RECITALS
A. The boards of directors of each of Acquiror and the Company believe
it is in the best interests of Acquiror, Merger Sub and the Company (as
applicable) and their respective stockholders that Acquiror acquire the Company
through the merger of Merger Sub with and into the Company (the "Merger") and,
in furtherance thereof, have approved the Merger, this Agreement and the
transactions contemplated hereby.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, (i) all of the shares of capital stock of the
Company which are issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive shares of common stock, par value
$.001 per share, of Acquiror ("Acquiror Common Stock") and (ii) all Company
Options then outstanding will become exercisable for shares of Acquiror Common
Stock, on the terms and subject to the conditions set forth herein.
C. As a condition and an inducement to the willingness of Acquiror to
enter into this Agreement, certain stockholders of the Company ("Major
Stockholders") have concurrently herewith entered into Support Agreements with
Acquiror in substantially the form attached hereto as EXHIBIT A ("Support
Agreements") pursuant to which, among other things, such stockholders have
agreed to vote the shares of Company Common Stock owned by them in favor of the
Merger.
D. Acquiror and the Company intend that the Merger shall (i) constitute
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and in furtherance thereof intend that this Agreement shall be a "Plan of
Reorganization" within the meaning of Sections 354(a) and 361(a) of the Internal
Revenue Code, and (ii) qualify as a Pooling of Interests, reportable as a
Pooling of Interests of the Company and Acquiror for financial accounting
purposes by Acquiror from and after the Closing.
E. A portion of the shares of Acquiror Common Stock otherwise issuable
or reserved for issuance by Acquiror in connection with the Merger shall be
placed in escrow by Acquiror, the release of which amount shall be contingent
upon certain events and conditions, all as set forth in Article 8.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth herein, intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Acquiror" has the meaning ascribed to it in the forepart of
this Agreement.
"Acquiror Common Stock" has the meaning ascribed to it in
Recital B to this Agreement.
"Acquiror Disclosure Schedule" has the meaning ascribed to it
in the forepart of Article 4.
"Acquiror Financial Statements" has the meaning ascribed to it
in Section 4.4.
"Acquiror Indemnitee" has the meaning ascribed to it in
Section 8.2(b).
"Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under common control
with, that Person, (b) any other Person that owns or controls (i) ten percent or
more of any class of equity securities of that Person or any of its Affiliates
or (ii) ten percent or more of any class of equity securities (including any
equity securities issuable upon the exercise of any option or convertible
security) of that Person or any of its Affiliates, or (c) as to a corporation,
each director and officer thereof, and as to a partnership, each general partner
thereof, and as to a limited liability company, each managing member or
similarly authorized person thereof. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling,"
"controlled by," and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"Aggregate Common Number" means the aggregate number of shares
of Company Common Stock outstanding immediately prior to the Effective Time
(including all shares of Company Common Stock issued or issuable upon the
exercise or purchase (in cash) in full of all unvested and vested Company
Options which are not exercised, converted or expired as of the Effective Time).
"Agreement" means this Agreement and Plan of Merger, including
(unless the context otherwise requires) the Exhibits and the Disclosure
Schedules and the certificates and instruments delivered in connection herewith,
or incorporated by reference, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.
"Ancillary Agreements" has the meaning ascribed to it in
Section 3.3.
"Approval" means any approval, authorization, consent, permit,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
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"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned, licensed or leased by such Person, including
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation
or other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent or more of any
class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Audited Financial Statement Date" means December 31, 1999.
"Audited Financial Statement" means the audited consolidated
balance sheets of the Company as of the fiscal year ended December 31, 1999 and
the related audited consolidated statements of operations, stockholders' equity
and cash flows for the fiscal year then ended, including the notes thereto
together with the unqualified report of the Company's independent accountants
with respect thereto.
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the Company,
including financial statements, internal reports, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs (including data processing files and records), retrieval programs,
operating data and plans and environmental studies and plans.
"Business Combination" means, with respect to any Person, (a)
any merger, consolidation, share exchange reorganization or other business
combination transaction to which such Person is a party, (b) any sale, dividend,
split or other disposition of any capital stock or other equity interests of
such Person, (c) any tender offer (including a self tender), exchange offer,
recapitalization, restructuring, liquidation, dissolution or similar or
extraordinary transaction, (d) any sale, dividend or other disposition of all or
a material or significant portion of the Assets and Properties of such Person
(including by way of exclusive license or joint venture formation) or (e) the
entering into of any agreement or understanding, the granting of any rights or
options, or the acquiescence of such Person, with respect to any of the
foregoing.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York are authorized or obligated
to close.
"Business or Condition of Acquiror" means the business,
condition (financial or otherwise), results of operations, prospects or Assets
and Properties of the Acquiror and its Subsidiaries, in the aggregate.
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"Business or Condition of the Company" means the business,
condition (financial or otherwise), results of operations, prospects or Assets
and Properties of the Company.
"California Code" means the California Corporations Code and
all amendments and additions thereto.
"California Permit" has the meaning ascribed to it in Section
2.13.
"Certificates" has the meaning ascribed to it in Section
2.10(b).
"Certificate of Merger" has the meaning ascribed to it in
Section 2.2.
"Closing" means the closing of the transactions contemplated
by Section 2.2.
"Closing Date" has the meaning ascribed to it in Section 2.2.
"Closing Price" means the average closing sales price of
Acquiror Common Stock as traded on the NNM and reported in THE WALL STREET
JOURNAL (WESTERN EDITION), for the thirty consecutive marketing trading days
commencing on the thirty second market trading day prior to the Closing Date and
ending on (inclusive) the third market trading day prior to the Closing Date.
"COBRA" has the meaning ascribed to it in Section 3.15(f).
"Common Share Number" means 5,333,333 shares of Acquiror
Common Stock as appropriately adjusted to reflect the effect of any stock split,
stock dividend, stock combination, reorganization, reclassification or similar
change occurring after the date of this Agreement and prior to the Effective
Time.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company 401(k) Plan" has the meaning ascribed to it in
Section 6.19.
"Company Common Stock" has the meaning ascribed to it in
Section 3.2.
"Company Disclosure Schedule" means the schedules delivered to
Acquiror by or on behalf of the Company, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein in connection with the representations and warranties made by the
Company in Article 3 of this Agreement or otherwise.
"Company Financials" means the Audited Financial Statement and
the Interim Financial Statements.
"Company Indemnified Party" has the meaning ascribed to it in
Section 6.10.
"Company Intellectual Property" shall mean any Intellectual
Property that (a) is owned by the Company; (b) is licensed to the Company; (c)
was developed or created by or for the Company or (d) is used in or necessary
for the conduct of the business of the Company as presently or heretofore
conducted or as proposed to be conducted in the Company's 2000
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Operating Plan, including any Intellectual Property created by any of the
Company's founders, employees or consultants and including any Intellectual
Property created by any of the Company's founders prior to the creation of the
Company.
"Company Option(s)" means any Option to purchase any shares of
Company Common Stock.
"Company Registered Intellectual Property" means all
Registered Intellectual Property owned by, filed in the name of, assigned to or
applied for by, the Company.
"Company Stock Plan" means the XxxxxXxxxxx.xxx, Inc. Stock
Option Plan.
"Company Stockholder Action" has the meaning ascribed to it in
Section 6.2.
"Competing Proposed Transaction" has the meaning ascribed to
it in Section 5.2.
"Contract" means any contract, agreement or other business
arrangement (whether oral or written) including:
(a) any distributor, sales, advertising, agency or
manufacturer's representative contract;
(b) any continuing contract for the purchase of
materials, supplies, equipment or services involving in the
case of any such contact more than $50,000 over the life of
the contract;
(c) any contract that expires or may be renewed at
the option of any person other than the Company so as to
expire more than one year after the date of this Agreement;
(d) any trust indenture, mortgage, promissory
note, loan agreement or other contract for the borrowing of
money, any currency exchange, commodities or other hedging
arrangement or any leasing transaction of the type required
to be capitalized in accordance with generally accepted
accounting principles;
(e) any contract for capital expenditures in excess
of $50,000 in the aggregate;
(f) any contract limiting the freedom of the Company
to engage in any line of business or to compete with any other
Person or any confidentiality, secrecy or non-disclosure
contract;
(g) any contract pursuant to which the Company is a
lessor of any machinery, equipment, motor vehicles, office
furniture, fixtures or other personal property;
(h) any contract with any person with whom the
Company does not deal at arm's length;
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(i) any contract that is not terminable by the
Company upon thirty days (or less) notice by the Company
without penalty or obligation to make payments based on such
termination; or
(j) any agreement of guarantee, support,
indemnification, assumption or endorsement of, or any similar
commitment with respect to, the obligations, liabilities
(whether accrued, absolute, contingent or otherwise) or
indebtedness of any other Person.
"Delaware Law" means the Delaware General Corporation Law and
all amendments and additions thereto.
"Depositary Agent" means ChaseMellon Shareholder Services,
L.L.C. (or other institution acceptable to Acquiror and the Stockholder Agent).
"Disclosure Schedules" means the Company Disclosure Schedule
and the Acquiror Disclosure Schedule.
"Dissenting Shares" has the meaning ascribed to it in Section
2.9.
"Effective Time" has the meaning ascribed to it in Section
2.2.
"Environmental and Safety Laws" shall mean any applicable
federal, state or local or any foreign laws, ordinances, codes, regulations,
rules, policies and orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water, groundwater, solid
waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees, workers
or other persons, including the public.
"Equity Equivalents" means securities (including Options to
purchase any shares of Company Common Stock) which, by their terms, are or may
be exercisable, convertible or exchangeable for or into common stock, preferred
stock or other securities at the election of the holder thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is under "common control" with the Company (within the
meaning of Section 4001 of ERISA) or with respect to which the Company could
otherwise incur liability under Title IV of ERISA.
"Escrow Amount" means the number of shares of Acquiror Common
Stock obtained by multiplying (a) the Common Share Number by (b) 0.10.
"Escrow Fund" has the meaning ascribed to it in Section
8.2(a).
"Escrow Period" has the meaning ascribed to it in Section
8.2(c).
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Exchange Agent" means ChaseMellon Shareholder Services,
L.L.C.
"Exchange Ratio" shall mean the Common Share Number divided by
the Aggregate Common Number.
"Facilities" shall mean all buildings and improvements on the
Site of the Company.
"Fairness Hearing" has the meaning ascribed to it in Section
2.13.
"Expiration Date" has the meaning ascribed to it in Section
8.1.
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, bureau, board, commission, department,
official or other instrumentality of the United States, any foreign country or
any domestic or foreign state, county, city or other political subdivision, and
shall include any stock exchange, quotation service and the National Association
of Securities Dealers.
"Hazardous Materials" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant, or infectious or
radioactive substance or material, including without limitation, those
substances, materials and wastes defined in or regulated under any Environmental
and Safety Laws.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indebtedness" of any Person means all obligations of such
Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (d) under capital leases and (e) in the nature of guarantees of the
obligations described in clauses (a) through (d) above of any other Person.
"Information Statement" has the meaning ascribed to it in
Section 6.1.
"Intellectual Property" means all trademarks and trademark
rights, trade names and trade name rights, service marks and service xxxx
rights, service names and service name rights, patents and patent rights,
utility models and utility model rights, copyrights, mask work rights, brand
names, trade dress, product designs, product packaging, business and product
names, logos, slogans, rights of publicity, trade secrets, inventions (whether
patentable or not), invention disclosures, improvements, processes, formulae,
industrial models, processes, designs, specifications, technology,
methodologies, computer software (including all source code and object code),
firmware, development tools, flow charts, annotations, all Web addresses, sites
and
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domain names, all data bases and data collections and all rights therein,
any other confidential and proprietary right or information, whether or not
subject to statutory registration, and all related technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, utility models, trademarks,
service marks and copyrights, and the right to xxx for past infringement, if
any, in connection with any of the foregoing, and all documents, disks, records,
files and other media on which any of the foregoing is stored.
"Interim Financial Statements" means the unaudited balance
sheet of the Company as of September 30, 2000, and the related unaudited
statement of operations and statement of cash flows for the nine-month period
ended on such date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company.
"IRS" means the United States Internal Revenue Service or any
successor entity.
"IT" has the meaning ascribed to it in Section 6.17.
"Law" or "Laws" means any law, statute, order, decree, consent
decree, judgment, rule, regulation, ordinance or other pronouncement having the
effect of law whether in the United States, any foreign country, or any domestic
or foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person, whether absolute, accrued, contingent (or based upon
any contingency), known or unknown, fixed or otherwise, or whether due or to
become due.
"License" means any Contract that grants a Person the right to
use or otherwise enjoy the benefits of any Intellectual Property (including
without limitation any covenants not to xxx with respect to any Intellectual
Property).
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, easement, license, covenant, condition, restriction,
adverse claim, levy, charge, option, equity, adverse claim or restriction or
other encumbrance of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing, except for any
restrictions on transfer generally arising under any applicable federal or state
securities law.
"Loss(es)" means any and all damages, fines, fees, Taxes,
penalties, deficiencies, losses (including lost profits or diminution in value)
and expenses, including interest, reasonable expenses of investigation, court
costs, reasonable fees and expenses of attorneys, accountants and other experts
or other expenses of litigation or other proceedings or of any claim, default or
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assessment (such fees and expenses to include all fees and expenses, including
fees and expenses of attorneys, incurred in connection with (a) the
investigation or defense of any Third Party Claims or (b) asserting or disputing
any rights under this Agreement against any party hereto or otherwise), net of
any insurance proceeds actually received (without any adverse effect on the
premiums paid for such insurance) or proceeds received by virtue of third party
indemnification.
"Major Stockholders" has the meaning ascribed to it in Recital
C to this Agreement.
"Merger" has the meaning ascribed to it in Recital A to this
Agreement.
"Merger Sub Common Stock" means the shares of common stock,
par value $.001 per share, of Merger Sub.
"NASD" means the National Association of Securities Dealers,
Inc.
"New Shares" has the meaning ascribed to it in Section
8.2(d)(ii).
"NNM" means the distinct tier of The Nasdaq Stock Market
referred to as the Nasdaq National Market.
"Non-Prevailing Party" has the meaning ascribed to it in
Section 8.2(g)(iii).
"Officer's Certificate" has the meaning ascribed to it in
Section 8.2(e)(i).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (a) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person or (b) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including any rights to
participate in the equity, income or election of directors or officers of such
Person.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"Permit Application" has the meaning ascribed to it in Section
2.13.
"Permitted Grants" means the grant of Company Options to newly
hired employees in the ordinary course of business and to existing employees in
accordance with past practice after consultation with, and the prior written
consent of, Acquiror.
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"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company or partnership,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"Plan" means any employee benefit fund, plan, program, policy,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA and any plan, program, policy,
arrangement or contract providing for severance; medical, dental or vision
benefits; life insurance or death benefits; disability benefits, sick pay or
other wage replacement; vacation, holiday or sabbatical pay; pension or
profit-sharing benefits; deferred compensation; stock options or other equity
compensation; bonus or incentive pay or other material fringe benefits), whether
written or not, maintained, sponsored or contributed to or required to be
contributed to by the Company or any Subsidiary.
"Pooling of Interests" shall mean pooling of interests
accounting treatment under Accounting Principles Board Opinion No. 16.
"PTO" means the United States Patent and Trademark Office.
"Registered Intellectual Property" shall mean all United
States, international and foreign: (a) patents and patent applications
(including provisional applications); (b) registered trademarks and
servicemarks, applications to register trademarks and servicemarks,
intent-to-use applications, other registrations or applications to trademarks or
servicemarks, or trademarks or servicemarks in which common law rights are owned
or otherwise controlled; (c) registered copyrights and applications for
copyright registration; (d) any mask work registrations and applications to
register mask works; and (e) any other Intellectual Property that is the subject
of an application, certificate, filing, registration or other document issued
by, filed with, or recorded by, any state, government or other public legal
authority.
"Registration Rights Agreement" has the meaning ascribed to it
in Section 6.1(c).
"Representatives" has the meaning ascribed to it in Section
5.2.
"SEC" means the Securities and Exchange Commission or any
successor entity.
"SEC Documents" means, with respect to any Person, each
report, schedule, form, statement or other document filed or required to be
filed with the SEC by such Person pursuant to Section 13(a) of the Exchange Act.
"Securities Act" has the meaning ascribed to it in Section
2.14.
"Site" means any of the real properties currently or
previously owned, leased, occupied, used or operated by the Company, any
predecessors of the Company, or any entities previously owned by the Company,
including all soil, subsoil, surface waters and groundwater.
"Stockholder Agent" has the meaning ascribed to it in Section
8.2(h)(i).
"Stockholder Certificate" has the meaning ascribed to it in
Section 6.1(c).
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"Subsidiary" means any Person in which the Company or
Acquiror, as the context requires, directly or indirectly through Subsidiaries
or otherwise, beneficially owns at least 50% of either the equity interest in,
or the voting control of, such Person, whether or not existing on the date
hereof.
"Support Agreements" has the meaning ascribed to it in Recital
C.
"Surviving Corporation" has the meaning ascribed to it in
Section 2.1.
"Takeover Statute" means a "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States, including without
limitation Section 203 of the Delaware Law.
"Tax" or "Taxes" has the meaning ascribed to it in Section
3.14(a).
"Tax Returns" has the meaning ascribed to it in Section
3.14(a).
"Tax Authority" has the meaning ascribed to it in Section
3.14(a).
"Third Party Claim" has the meaning ascribed to it in Section
8.2(j).
"Third Party Expenses" has the meaning ascribed to it in
Section 6.5.
"Warranty Obligations" has the meaning ascribed to it in
Section 3.34.
ARTICLE 2
THE MERGER
2.1 THE MERGER. At the Effective Time and upon the terms and subject to
the conditions of this Agreement and the applicable provisions of Delaware Law,
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation. The Company is sometimes referred to herein as the
"Surviving Corporation."
2.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
pursuant to Section 9.1, the closing of the Merger (the "Closing") will take
place on the second Business Day following satisfaction or waiver of the
conditions set forth in Article 6 at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, unless another place
or time is agreed to by Acquiror and the Company. The date upon which the
Closing actually occurs is herein referred to as the "Closing Date." On the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger (or like instrument), in substantially the form
attached hereto as EXHIBIT B (the "Certificate of Merger"), with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of
applicable law (the time of acceptance by the Secretary of State of the State of
Delaware of such filing or such later time as may be agreed to by the parties
and set forth in the Certificate of Merger being referred to herein as the
"Effective Time").
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2.3 EFFECT OF THE MERGER ON CONSTITUENT CORPORATIONS. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of Merger Sub and the Company shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION.
(a) At the Effective Time, the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation and bylaws of
the Surviving Corporation.
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by such bylaws, the certificate of incorporation
and applicable law.
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, each to hold office in accordance with the bylaws of the
Surviving Corporation.
2.6 MAXIMUM NUMBER OF SHARES OF ACQUIROR COMMON STOCK TO BE ISSUED;
EFFECT ON OUTSTANDING SECURITIES OF THE COMPANY. The maximum number of shares of
Acquiror Common Stock to be issued (including Acquiror Common Stock to be
reserved for issuance upon exercise of any of the Company Options to be assumed
by Acquiror as provided herein) in exchange for the acquisition by Acquiror of
all shares of Company Common Stock which are issued and outstanding immediately
prior to the Effective time and all vested and unvested Company Options which
are then outstanding shall not exceed the Common Share Number. No adjustment
shall be made in the number of shares of Acquiror Common Stock issued in the
Merger as a result of any consideration (in any form whatsoever) received by the
Company from the date hereof to the Effective Time as a result of any exercise,
conversion or exchange of Company Options. On the terms and subject to the
conditions of this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of Acquiror, the Company or the holder of any
shares of Company Common Stock or Company Options, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Common Stock to be cancelled pursuant to
Section 2.6(b) and any Dissenting Shares) will be cancelled and extinguished and
each share of Company Common Stock which is issued and outstanding immediately
prior to the Effective Time shall be converted automatically into
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the right to receive that number of shares of Acquiror Common Stock equal to the
Exchange Ratio.
(b) CANCELLATION OF ACQUIROR-OWNED AND COMPANY-OWNED STOCK. Each
share of Company Common Stock owned by Acquiror or the Company or any Subsidiary
of Acquiror or the Company immediately prior to the Effective Time shall be
automatically canceled and extinguished without any conversion thereof and
without any further action on the part of Acquiror or the Company.
(c) CAPITAL STOCK OF MERGER SUB. Each share of Merger Sub
Common Stock which is issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving
Corporation, with identical rights and privileges. From and after the
Effective Time, each share certificate of Merger Sub theretofore evidencing
ownership of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
(d) COMPANY OPTIONS AND COMPANY STOCK PLAN. All unexpired and
unexercised Company Options, then outstanding, whether vested or unvested,
together with the Company Stock Plan, shall be assumed by Acquiror in accordance
with provisions described below.
(i) Each unexpired and unexercised Company Option then
outstanding, whether vested or unvested, shall be, in connection with the
Merger, assumed by Acquiror, together with the Company Stock Plan. Each Company
Option so assumed by Acquiror under this Agreement shall continue to have, and
be subject to, the same terms and conditions as were applicable to such Company
Option immediately prior to the Effective Time (including, but not limited to,
any repurchase rights or vesting provisions); PROVIDED, that (A) such Company
Option shall be exercisable for that number of whole shares of Acquiror Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (rounded down to the nearest
whole number of shares of Acquiror Common Stock) and (B) the per share exercise
price for the shares of Acquiror Common Stock issuable upon exercise of such
assumed Company Option, shall be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio (rounded up to the nearest whole cent). It is the intention of the parties
that the Company Options assumed by Acquiror shall qualify following the
Effective Time as incentive stock options as defined in Section 422 of the
Internal Revenue Code to the same extent the Company Options qualified as
incentive stock options immediately prior to the Effective Time and the
provisions of this Section 2.6(c) shall be applied consistent with this intent.
(ii) The Company shall take all necessary actions to amend,
prior to the Effective Time, the terms of the Company Options to provide that
except as set forth in Section 2.6(d) of the Company Disclosure Schedule, the
vesting of such Company Options does not accelerate upon the consummation of the
transactions contemplated by this Agreement.
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(e) No adjustment shall be made in the number of shares of
Acquiror Common Stock issued in the Merger as a result of any consideration (in
any form whatsoever) received by the Company from the date hereof to the
Effective Time as a result of any exercise, conversion or exchange of Company
Options.
(f) No certificate or scrip or shares of Acquiror Common Stock
representing fractional shares of Acquiror Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share interests will
not entitle the owner thereof to vote or to have any rights of a stockholder of
the Company or a holder of shares of Acquiror Common Stock. Notwithstanding any
other provision of this Agreement, each holder of shares of Company Common Stock
who would otherwise have been entitled to receive a fraction of a share of
Company Common Stock (determined after taking into account all shares of Company
Common Stock held by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
share of Acquiror Common Stock multiplied by (ii) the Closing Price. As promptly
as practicable after the determination of the amount of cash, if any, to be paid
to holders of fractional interest, the Exchange Agent shall so notify Acquiror,
and Acquiror shall deposit such amount with the Exchange Agent and shall cause
the Exchange Agent to forward payments to such holders of fractional interest
subject to and in accordance with the terms of this Agreement.
2.7 RESERVATION OF SHARES. Acquiror will reserve sufficient shares of
Acquiror Common Stock for issuance pursuant to Section 2.6(d).
2.8 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
equitably adjusted to reflect fully the effect of any stock split, reverse
split, stock combination, stock dividend (including any dividend or distribution
of securities convertible into Acquiror Common Stock or Company Common Stock),
reorganization, reclassification, recapitalization or other like change with
respect to Acquiror Common Stock or Company Common Stock the effective date of
which occurs after the date hereof and prior to the Effective Time.
2.9 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Common Stock held by a holder who has demanded
and perfected appraisal rights for such shares in accordance with Delaware Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal or dissenters' rights ("Dissenting Shares") shall not be converted
into or represent a right to receive Acquiror Common Stock pursuant to Section
1.6, but the holder thereof shall only be entitled to such rights as are granted
by Delaware Law.
(b) Notwithstanding the provisions of Section 2.9(a), if any
holder of shares of Company Common Stock who demands appraisal of such shares
under Delaware Law shall effectively withdraw or lose (through failure to
perfect or otherwise) the right to appraisal, then, as of the later of (i) the
Effective Time or (ii) the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive Acquiror
Common Stock as provided in Section 2.6, without interest thereon, upon
surrender to the Company of the certificate representing such shares in
accordance with Section 2.10.
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(c) The Company shall give Acquiror (i) prompt notice of its
receipt of any written demands for appraisal of any shares of Company Common
Stock, withdrawals of such demands, and any other instruments relating to the
Merger served pursuant to Delaware Law and received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Acquiror or as may be required under applicable law,
voluntarily make any payment with respect to any demands for appraisal of
Company Common Stock or offer to settle or settle any such demands.
2.10 EXCHANGE PROCEDURES.
(a) ACQUIROR COMMON STOCK. On the Closing Date, Acquiror shall
deliver to the Exchange Agent the aggregate number of shares of Acquiror Common
Stock issuable in exchange for outstanding shares of Company Common Stock and
cash in an amount sufficient to permit the payment of cash in lieu of fractional
shares pursuant to Section 2.6; PROVIDED, HOWEVER, that, on behalf of the
holders of Company Common Stock, Acquiror shall deposit into an escrow account a
number of shares of Acquiror Common Stock equal to the Escrow Amount. The
portion of the Escrow Amount contributed on behalf of each holder of Company
Common Stock shall be in proportion to the aggregate number of shares of
Acquiror Common Stock which such holder would otherwise be entitled to receive
by virtue of ownership of outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURES. At the Closing, each holder of record of
a certificate or certificates (the "Certificates") which immediately prior to
the Effective Time represented outstanding shares of Company Common Stock and
which shares were converted into the right to receive shares of Acquiror Common
Stock pursuant to Section 2.6, shall deliver the Certificates to the Acquiror.
Upon surrender of a Certificate for cancellation and a stock power indorsed in
blank with respect to the shares held pursuant to Article 8, Acquiror shall
deliver to the holder of such Certificate in exchange therefor (i) a certificate
representing the number of whole shares of Acquiror Common Stock (less the
number of shares of Acquiror Common Stock to be deposited in the Escrow Fund on
such holder's behalf pursuant to Article 8), to which such holder is entitled
pursuant to Section 2.6, and the Certificate so surrendered shall be canceled
and (ii) cash in lieu of any fractional shares to which such holder is entitled
pursuant to Section 2.6(g). As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Article 8, the Acquiror
shall cause to be distributed to the Depositary Agent a certificate or
certificates (in such denominations as may be requested by the Depositary
Agent), registered in the name of each former stockholder of the Company,
representing that number of shares of Acquiror Common Stock equal to the Escrow
Amount. Such shares shall be beneficially owned by the holders on whose behalf
such shares were deposited in the Escrow Fund and shall be available to
compensate the Acquiror as provided in Article 8. Until surrendered, each
outstanding Certificate will be deemed, from and after the Effective Time, for
all corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Acquiror Common Stock into which such
shares of Company Common Stock shall have been so converted.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF COMPANY
COMMON STOCK. No dividends or other distributions with respect to Acquiror
Common Stock declared or
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made after the Effective Time and with a record date after the Effective Time
will be paid to the holder of any unsurrendered Certificate with respect to the
shares of Acquiror Common Stock represented thereby until the holder of record
of such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Acquiror Common Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section
2.10(c)) with respect to such whole shares of Acquiror Common Stock.
2.11 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Acquiror Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any cash in
lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Company of shares of Company Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.
2.12 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue certificates representing
such shares of Acquiror Common Stock in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof; PROVIDED, HOWEVER, that Acquiror or the Exchange Agent may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to provide an indemnity or
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Acquiror or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
2.13 EXEMPTION FROM REGISTRATION; CALIFORNIA PERMIT. The shares of
Acquiror Common Stock to be issued pursuant to Section 2.6 in connection with
the Merger will be issued in a transaction exempt from registration under the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act"), by reason of Section 3(a)(10)
thereof, or pursuant to Section 6.1(c), by reason of Section 4(2) of the
Securities Act and SEC rules and regulations promulgated thereunder. Subject to
the provisions of Section 6.1(c), Acquiror and the Company intend that the
shares of Acquiror Common Stock to be issued pursuant to Section 2.6 in
connection with the Merger will be qualified under the California Code, pursuant
to Section 25121 thereof, after a fairness hearing has been held by the
Commissioner of Corporations of the State of California pursuant to the
authority granted by Section 25142 of such law (the "Fairness Hearing"), and (if
deemed necessary by Acquiror in its good faith judgment) such fairness hearing
shall also address the assumption by Acquiror of all Company Options pursuant to
Section 2.6 hereof. Each of Acquiror and the Company shall use all requisite
commercially reasonable efforts (i) to file promptly following the execution and
delivery of this Agreement, an application for issuance of a permit pursuant to
Section 25121 of the California Code to issue such securities and (if deemed
necessary by Acquiror in its good faith judgment) to assume such Company Options
(the "California Permit") and (ii) to obtain the California Permit as promptly
as practicable thereafter.
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2.14 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, or to effect the assignment to the Company
of any and all Company Intellectual Property created by a founder, employee or
consultant of the Company (including Intellectual Property created by any of the
Company's founders prior to the creation of the Company), or to complete and
prosecute all domestic and foreign patent filings related to such Company
Intellectual Property, the officers and directors of the Surviving Corporation
are fully authorized to take, and will use their reasonable efforts to take, all
such lawful and necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations or prospects of such
entity or group of entities. In this Agreement, any reference to a "material
adverse effect" with respect to any entity or group of entities means any event,
change or effect that is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business, operations or results of
operations or prospects of such entity and its subsidiaries, taken as a whole.
Except as disclosed in a document of even date herewith delivered by
the Company to Acquiror prior to the execution and delivery of this Agreement
and referring to the representations and warranties in this Agreement (the
"Company Disclosure Schedule"), the Company represents and warrants to Acquiror
as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES. The Company is a
corporation duly organized and validly existing and, to the extent applicable in
such jurisdiction, in good standing under the laws of its jurisdiction of
organization. The Company has the corporate power to own its properties and to
carry on its business as now being conducted and as currently proposed to be
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which it is required to be so qualified. The Company has
delivered a true and correct copy of the certificate of incorporation, bylaws or
other charter or organizational documents, as applicable, of the Company, each
as amended to date, to Acquiror. The Company is not in violation of any of the
provisions of its certificate of incorporation, bylaws or equivalent charter or
organizational documents. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity. Section 3.1
of the Company Disclosure Schedule sets forth each jurisdiction where the
Company is so qualified, licensed or admitted to do business and separately
lists each other jurisdiction in which the Company owns, uses, licenses or
leases its Assets and Properties, or conducts business or has employees or
engages independent contractors.
3.2 CAPITAL STOCK.
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(a) The authorized capital stock of the Company consists only of
30,000,000 shares of Common Stock, $0.0001 par value per share (the "Company
Common Stock"), of which 17,000,000 shares of Company Common Stock are issued
and outstanding as of the date hereof. All of the issued and outstanding shares
of Company Common Stock are validly issued, fully paid and nonassessable, have
not been issued in violation of any preemptive rights and have been issued in
compliance with all applicable federal, state and foreign securities Laws.
Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, no
shares of Company Common Stock are held in treasury or are authorized or
reserved for issuance.
(b) Section 3.2(b) of the Company Disclosure Schedule lists each
holder of Company Common Stock, including the state of residence of each holder
and the number of Company Common Stock owned by each such holder. On the Closing
Date, the Company shall deliver to Acquiror an updated Section 3.2(b) of the
Company Disclosure Schedule current as of such date.
(c) With respect to any Company Common Stock that has been issued
subject to a repurchase option on the part of the Company, Section 3.2(c) of the
Company Disclosure Schedule sets forth the holder thereof, the number and type
of securities covered thereby, and the vesting schedule thereof (including a
description of the circumstances under which such vesting schedule can or will
be accelerated).
(d) Except as set forth in Section 3.2(d) of the Company
Disclosure Schedule pursuant to, there are no outstanding Company Options or
agreements, arrangements or understandings to which the Company is a party
(written or oral) to issue any Options with respect to the Company. Section
3.2(d) of the Company Disclosure Schedule sets forth the holder of all
outstanding Company Options, the number and type of securities issuable
thereunder, and the exercise price therefor, the exercise period and vesting
schedule thereof (including a description of the circumstances under which such
vesting schedule can or will be accelerated). All of the Company Options were
issued in compliance with all applicable federal, state and foreign securities
Laws.
(e) There are no preemptive rights or agreements, arrangements or
understandings to issue preemptive rights with respect to the issuance or sale
of Company Common Stock created by statute, the certificate of incorporation or
bylaws of the Company, or any agreement or other arrangement to which the
Company is a party or to which it is bound and there are no agreements,
arrangements or understandings to which the Company is a party (written or oral)
pursuant to which the Company has the right to elect to satisfy any Liability by
issuing Company Common Stock or Equity Equivalents.
(f) The terms of the Company Stock Plan and the applicable
stock option agreements related to the outstanding Company Options permit the
assumption or substitution of options to purchase Acquiror Common Stock as
provided in this Agreement, without the consent or approval of the holders of
such securities, Company Stockholder Action or otherwise and without any
acceleration of the exercise schedule or vesting provisions in effect for
those options. True and complete copies of all agreements and instruments
relating to or issued under the Company Stock Plan have been provided to
Acquiror and such agreements and instruments have not been amended, modified
or supplemented, and there are no agreements to amend,
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modify or supplement such agreements or instruments in any case from the form
provided to Acquiror. Except for the Support Agreements, the Company is not a
party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement, arrangement or understanding between or
among any Persons which affects, restricts or relates to voting, giving of
written consents, dividend rights or transferability of shares with respect
to the Company Common Stock, including without limitation, any voting trust
agreement or proxy. No debt securities of the Company are issued and
outstanding.
3.3 AUTHORITY. Subject only to the requisite approval of the Merger and
this Agreement by the stockholders of the Company, the Company has full
corporate power and authority to execute and deliver this Agreement and the
other agreements which are attached (or forms of which are attached) as exhibits
hereto (the "Ancillary Agreements") to which the Company is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and Ancillary Agreements to which the Company is a party and the
consummation by the Company of the transactions contemplated hereby and thereby,
and the performance by the Company of its obligations hereunder and thereunder,
have been duly and validly authorized by all necessary action by the board of
directors of the Company, and no other action on the part of the board of
directors of the Company is required to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which the Company
is a party and the consummation by the Company of the transactions contemplated
hereby and thereby. This Agreement and the Ancillary Agreements to which the
Company is a party have been or will be, as applicable, duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Acquiror, each constitutes or will constitute,
as applicable, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
3.4 TITLE; LIENS AND ENCUMBRANCES. The Company has good, valid and
marketable title to all of its properties, interests in properties and assets,
real and personal, reflected in the Company Financials or acquired after the
Audited Financial Statement Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Audited Financial Statement Date
in the ordinary course of business), or with respect to leased properties and
assets, valid leasehold interests in such properties and assets, free and clear
of all Liens, except (i) the statutory Liens of taxes not yet due and payable
(none of which shall be the obligation of Acquiror), (ii) such imperfections of
title, liens and easements as do not and will not materially detract from or
interfere with the use of the properties subject thereto or affected thereby, or
otherwise materially impair business operations involving such properties and
(iii) the Liens set forth on Section 3.4 of the Company Disclosure Schedule. The
Assets and Properties are not subject to any preemptive right, right of first
refusal or other right or restriction, are in good operating condition and
repair, reasonable wear and tear excepted, and are suitable and adequate for use
in the ordinary course of business and conform in all material respects to all
applicable laws. The Assets and Properties, taken as a whole, constitute all the
assets and the properties relating to or used or held for use in connection with
the Business or Condition of the Company during the past twelve months (except
inventory sold, cash disposed of, accounts receivable collected,
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prepaid expenses realized, contracts fully performed, properties or assets
replaced by equivalent or superior properties or assets, in each case in the
ordinary course of business, and employees not hired by Acquiror) and comprise
all the assets required for the continued conduct of the Business or Condition
of the Company as now being conducted. All leases are in good standing and are
binding, valid, effective and enforceable on the Company in accordance with
their terms, and, to the knowledge of the Company, are enforceable against the
other party or parties thereto in accordance with their terms, in each case
subject to the effect, if any, of (i) applicable bankruptcy and other similar
laws affecting the rights of creditors generally, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
The Company is not in default under any lease and there has not occurred any
event that, with the giving of notice or lapse of time or both, would constitute
a material default under any lease. To the knowledge of the Company, there are
no current defaults by any other party to any lease or events that have occurred
that, with the giving of notice or lapse of time or both, would constitute a
material default by such party under any lease. After the Closing Date, the
Company will be entitled to the continued possession and use of the personal
property leased by the Company, for the terms specified in such leases and for
the purposes consistent with the past practices of the Company.
3.5 FINANCIAL STATEMENTS. Section 3.5 of the Company Disclosure
Schedule sets forth the Company Financials. The Company Financials delivered to
Acquiror are correct and complete in all material respects and have been
prepared in accordance with GAAP applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be indicated in
the notes thereto as delivered to Acquiror prior to the date hereof, and, in the
case of the Interim Financial Statements, subject to normal year-end
adjustments, which adjustments will not be material in amount or significance).
The Company Financials present fairly and accurately the financial condition and
operating results of the Company as of the dates and during the periods
indicated therein, subject, in the case of the Interim Financial Statements, to
normal year-end adjustments, which adjustments will not be material in amount or
significance and except that the Interim Financial Statements may not contain
footnotes. Except as set forth in Section 3.5 of the Company Disclosure
Schedule, since the date of Company's incorporation, there has been no change in
any accounting policies, principles, methods or practices, including any change
with respect to reserves (whether for bad debts, contingent liabilities or
otherwise), of the Company.
3.6 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.6 of
the Company Disclosure Schedule, since the Audited Financial Statement Date, the
Company has conducted its business in the ordinary course consistent with past
practice and there has not occurred: (i) any change, event or condition (whether
or not covered by insurance) that has resulted in, or could reasonably be
expected to result in, a material adverse effect on the Company; (ii) any
acquisition, sale or transfer of any material Asset or Property of the Company;
(iii) any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any
revaluation by the Company of any of its assets; (iv) any declaration, setting
aside, or payment of a dividend or other distribution with respect to the shares
of the Company, or any direct or indirect redemption, purchase or other
acquisition by the Company of any of its share capital, other than share
repurchases as a result of termination of employees in accordance with the
Company Stock Plan; (v) any material contract entered into by the Company, or
any material amendment or termination of, or default under, any material
contract to which the Company is a party or by which any of them is bound; (vi)
any amendment
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or change to the certificate of incorporation or bylaws or other charter or
organizational documents of the Company; (vii) any increase in or modification
of the compensation or benefits payable or to become payable by the Company to
any of its respective directors or employees, (viii) any change of any Tax
election or settlement or compromise of any material state, local or foreign Tax
liability, (ix) any negotiation or agreement by the Company to do any of the
things described in the preceding clauses (i) through (viii) (other than
negotiations with Acquiror and its representatives regarding the transactions
contemplated by this Agreement) or (x) any other event or condition of any
character which has resulted in, or might reasonably be expected to result in, a
material adverse effect on the Company. Since October 6, 2000, the Company has
operated its business in accordance with its 2000 Operating Plan (a copy of
which has been provided to and approved by Acquiror), and any material
deviations therefrom or modifications to the 2000 Operating Plan shall require
the prior approval by Acquiror.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Company Financials, (ii) those incurred in the ordinary course of business and
not required to be set forth in the Company Financials under GAAP, (iii) those
incurred in the ordinary course of business since the Audited Financial
Statement Date and consistent with past practice; and (iv) those incurred in
connection with the execution of this Agreement.
3.8 LITIGATION. Except as set forth in Section 3.8 of the Company
Disclosure Schedule, there is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic by or against the Company or, to the knowledge
of the Company, threatened by or against the Company, or relating to any of its
respective properties or any of its respective officers or directors (in their
capacities as such). There is no judgment, decree or order against the Company
or any of its respective directors or officers (in their capacities as such),
that could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
material adverse effect on the Company.
3.9 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon the Company or any of the
Subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any current or currently proposed business practice of
the Company or any of the Subsidiaries, any acquisition of property by the
Company or any of the Subsidiaries or the conduct of business by the Company or
any of the Subsidiaries as currently conducted or as currently proposed to be
conducted by the Company or any of the Subsidiaries.
3.10 GOVERNMENTAL AUTHORIZATION. Section 3.10 of the Company Disclosure
Schedule contains a list of all material Approvals of Governmental or Regulatory
Authorities relating to the business conducted by the Company which are required
to be given to or obtained by the Company from any and all Governmental or
Regulatory Authorities in connection with the consummation of the transactions
contemplated by this Agreement (other than filing of the Certificate of Merger,
together with the required officers' certificates, and such consents, approvals,
orders, authorizations, registration declarations and filings as may be required
under state or federal securities laws). The Company has obtained each federal,
local or foreign
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governmental consent, license, permit, grant, or other authorization of a
Governmental or Regulatory Authority (i) pursuant to which the Company currently
operates or holds any interest in any of properties or (ii) that is required for
the operation of the Company's business or the holding of any such interest, and
all Approvals from Governmental or Regulatory Authorities are in full force and
effect, except where the failure to obtain or have any of the Approvals could
not reasonably be expected to have a material adverse effect on the Company.
Each of the Approvals from Governmental or Regulatory Authorities are assignable
or otherwise transferable to Acquiror in connection with the transactions
contemplated hereby without the consent or approval of any Governmental or
Regulatory Authorities or other third party.
3.11 REAL PROPERTY. All properties used in the operations of the
Company are reflected in the Company Financials to the extent GAAP requires the
same to be reflected. Section 3.11 of the Company Disclosure Schedule identifies
each parcel of real property owned or leased by the Company or used in the
operation of its businesses or where any Assets and Properties are located, the
name of the lessor, the date of the lease and each amendment thereto and the
aggregate annual rental and other fees payable under such lease.
3.12 INTELLECTUAL PROPERTY.
(a) Section 3.12(a) of the Company Disclosure Schedule lists all
Company Registered Intellectual Property (including all trademarks and service
marks that the Company has used with the intent of creating or benefiting from
any common law rights relating to such marks) and lists any proceedings or
actions pending as of the date hereof before any court or tribunal (including
the PTO or equivalent authority anywhere in the world) related to any of the
Company's Registered Intellectual Property.
(b) The Company has all requisite right, title and interest in or
valid and enforceable rights under Contracts or Licenses to use all Company's
Intellectual Property necessary to the conduct of its business as presently
conducted. Each item of Company's Intellectual Property, including all of the
Company's Registered Intellectual Property listed in Section 3.12(a) of the
Company Disclosure Schedule, is owned exclusively by the Company (excluding
Intellectual Property licensed to the Company under any License and is free and
clear of any Liens. The Company (i) owns exclusively all trademarks, service
marks and trade names used by the Company in connection with the operation or
conduct of the business of the Company, including the sale of any products or
technology or the provision of any services by the Company and (ii) owns
exclusively, and has good title to, all copyrighted works that are Company
products or other works of authorship that the Company otherwise purports to
own; PROVIDED, HOWEVER, that such works may incorporate copyrighted works or
works of authorship, trademarks or trade names of third parties which are
licensed to the Company or are in the public domain.
(c) To the extent that any of the Company's Intellectual Property
has been developed or created by any Person other than the Company, the Company
has a written agreement with such Person with respect thereto and the Company
has either (i) obtained ownership of, and is the exclusive owner of, all such
Intellectual Property by operation of law or by valid assignment of any such
rights or (ii) has obtained a License under or to such Intellectual Property.
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(d) Except pursuant to agreements described in Section 3.12(d)
of the Company Disclosure Schedule, the Company has not transferred ownership
of or granted any License of or other right to use or authorized the
retention of any rights to use any Intellectual Property that is or was
Company Intellectual Property, to any other Person.
(e) The Company Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the Company's
business as it currently is conducted or as reasonably contemplated to be
conducted, including, without limitation, the design, development, distribution,
marketing, manufacture, use, import, license, and sale of the products,
technology and services of the Company (including products, technology, or
services currently under development).
(f) Section 3.12(f) of the Company Disclosure Schedule lists all
Contracts and Licenses (including all inbound Licenses) to which the Company is
a party with respect to any Intellectual Property (other than in connection with
commercially available "shrink wrap" software). No Person other than the Company
has ownership rights to improvements made by the Company in Intellectual
Property which has been licensed to the Company.
(g) Section 3.12(g) of the Company Disclosure Schedule lists all
Contracts, Licenses and agreements between the Company and any other Person
wherein or whereby the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or Liability or provide a right of rescission with respect
to the infringement or misappropriation by the Company or such other Person of
the Intellectual Property of any Person other than the Company.
(h) The operation of the business of the Company as currently
conducted or as presently proposed to be conducted, including the Company's
design, development, use, import, manufacture and sale of the products,
technology or services (including products, technology or services currently
under development) of the Company does not infringe or misappropriate the
Intellectual Property of any Person, violate the rights of any Person (including
rights to privacy or publicity), or constitute unfair competition or an unfair
trade practice under any Law, and the Company has not received notice from any
Person claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of the
Company infringes or misappropriates the Intellectual Property of any Person or
constitutes unfair competition or trade practices under any Law, including
notice of third party patent or other Intellectual Property rights from a
potential licensor of such rights.
(i) Each item of Company Registered Intellectual Property is valid
and subsisting, and all necessary registration, maintenance, renewal fees,
annuity fees and taxes in connection with such Registered Intellectual Property
have been paid and all necessary documents and certificates in connection with
such Company Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property. Section 3.12(i)(1) of the Company Disclosure
Schedule lists all actions that must be taken by the Company within 180 days
from the date hereof, including the payment of any registration, maintenance,
renewal fees, annuity fees and taxes or the filing of any documents,
applications or certificates for the purposes of maintaining, perfecting or
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preserving or renewing any Company Registered Intellectual Property. Except as
set forth in Section 3.12(i)(2) of the Company Disclosure Schedule, the Company
has registered the copyright with the U.S. Copyright Office for the latest
version of each product or technology of the Company that constitutes or
includes a copyrightable work. In each case in which the Company has acquired
ownership of any Intellectual Property rights from any Person, the Company has
obtained a valid and enforceable assignment sufficient to irrevocably transfer
all rights in such Intellectual Property (including the right to seek past and
future damages with respect to such Intellectual Property) to the Company and,
to the maximum extent provided for by, and in accordance with, applicable Laws,
the Company has recorded each such assignment of Registered Intellectual
Property with the relevant Governmental or Regulatory Authority, including the
PTO, the U.S. Copyright Office, or their respective equivalents in any relevant
foreign jurisdiction, as the case may be.
(j) There are no Contracts or Licenses between the Company and any
other Person with respect to Company Intellectual Property under which there is
any dispute (or facts that may reasonably lead to a dispute) known to the
Company regarding the scope of such Contract or License, or performance under
such Contract or License, including with respect to any payments to be made or
received by the Company thereunder.
(k) To the knowledge of the Company, no Person is infringing or
misappropriating any Company Intellectual Property.
(l) The Company has taken commercially reasonable steps to protect
the Company's rights in confidential information and trade secrets of the
Company or provided by any other Person to the Company subject to a duty of
confidentiality. Without limiting the generality of the foregoing, the Company
has, and enforces, a policy requiring each employee, consultant and independent
contractor to execute proprietary information, confidentiality and invention and
copyright assignment agreements substantially in the form set forth in Section
3.12(l) of the Company Disclosure Schedule, and all current and former
employees, consultants and independent contractors of the Company have executed
such an agreement. Copies of all such agreements have been provided to Acquiror
or made available to Acquiror for review.
(m) No Company Intellectual Property or product, technology or
service of the Company is subject to any Order or Action or Proceeding that
restricts, or that is reasonably expected to restrict in any manner, the use,
transfer or licensing of any Company Intellectual Property by the Company or
that may affect the validity, use or enforceability of such Company Intellectual
Property.
(n) To the best knowledge of the Company, no (i) product,
technology, service or publication of the Company, (ii) material published or
distributed by the Company or (iii) conduct or statement of Company constitutes
obscene material, a defamatory statement or material, false advertising or
otherwise violates any Law.
(o) Neither this Agreement nor any transactions contemplated by
this Agreement will result in Acquiror's granting any rights or licenses with
respect to the Intellectual Property of Acquiror to any Person pursuant to any
Contract to which the Company is a party or by which any of its Assets and
Properties are bound.
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(p) Section 3.12(p) of the Company Disclosure Schedule sets forth
a list of (x) all software which the Company has licensed from any third party
which is used by the Company in its products or otherwise in its business (other
than commercially available "shrink wrap" software) and (y) a list of all
"freeware" and "shareware" incorporated into any product now or heretofore
shipped by the Company. The Company has all rights necessary to the use of such
software, "freeware" and "shareware."
(q) To the best knowledge of the Company, the Company's products
comply in all material respects with all applicable industry standards and with
the feature specifications and performance standards set forth in the Company's
product data sheets. To the best knowledge of the Company, there are no
outstanding claims (or facts that may reasonably lead to a claim) for breach of
warranty by the Company in connection with the foregoing.
(r) All product performance comparisons heretofore furnished by
the Company to customers or Acquiror are accurate in all material respects as of
the dates so furnished (except that, in the case of product performance
comparisons made as of a specified earlier date, such comparisons shall be
accurate as of such specified earlier date, and, in the case of product
performance comparisons superseded by a subsequent product performance
comparison furnished to the customer before the customer's acquisition of a
license on the product covered by the superseded comparison, the superseding
comparison shall be accurate in all material respects and the superseded
comparison shall be disregarded).
(s) Except as set forth in Section 3.12(s) of the Company
Disclosure Schedule, the Company has taken necessary and appropriate steps to
protect and preserve ownership of Company Intellectual Property. The Company has
secured valid written assignments from all consultants and employees who
contributed to the creation or development of the Company Intellectual Property.
In the event that the consultant is concurrently employed by the Company and a
third party, the Company has taken additional steps to ensure that any Company
Intellectual Property developed by such a consultant does not belong to the
third party or conflict with the third party's employment agreement. Such steps
include, but are not limited to, ensuring that all research and development work
performed by such a consultant are performed only on the Company's facilities
and only using the Company's resources.
3.13 ENVIRONMENTAL MATTERS.
The Company represents and warrants that during the time the
Company occupied the Facilities and Sites and to the best knowledge of the
Company: (i) no methylene chloride or asbestos is contained in or has been used
at or released from the Facilities; (ii) all Hazardous Materials and wastes have
been disposed of in accordance with all Environmental and Safety Laws; and (iii)
the Company has not received any notice (verbal or written) of any noncompliance
of the Facilities or its past or present operations with Environmental and
Safety Laws; (iv) no notices, administrative actions or suits are pending or
threatened relating to a violation of any Environmental and Safety Laws; (v) the
Company is not a potentially responsible party under the Federal Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), or state analog
statute, arising out of events occurring prior to the Closing Date; (vi) for so
long as the Company shall have leased or owned the Facilities or Sites, there
have not been, and there are not now, any Hazardous Materials on, under or
migrating to or
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from the Facilities or Sites; (vii) for so long as the Company shall have leased
or owned the Sites, there have not been, and there are not now, any underground
tanks or underground improvements at, on or under the Sites including without
limitation, treatment or storage tanks, sumps, or water, gas or oil xxxxx;
(viii) there are no polychlorinated biphenyls (PCBs) deposited, stored, disposed
of or located on the Sites or Facilities or any equipment on the Sites
containing PCBs at levels in excess of fifty parts per million; (ix) there is no
formaldehyde on the Sites or in the Facilities, nor any insulating material
containing urea formaldehyde in the Facilities; (x) the Facilities and the
Company's uses and activities therein have at all times complied in all material
respects with all Environmental and Safety Laws; and (xi) the Company has all
the permits and licenses required to be issued under federal, state or local or
any foreign laws regarding Environmental and Safety Laws and is in compliance in
all material respects with the terms and conditions of those permits.
3.14 TAXES.
(a) The Company, and any consolidated, combined, unitary or
aggregate group for Tax purposes of which the Company is or has been a member,
have properly completed and timely filed all Tax Returns required to be filed by
them and have paid all Taxes shown thereon to be due. The Company Financials
reflect any unpaid Taxes of the Company for periods (or portions of periods)
through the Audited Financial Statement Date. The Company has no liability for
unpaid Taxes accruing after the Audited Financial Statement Date except for
Taxes incurred in the ordinary course of business subsequent to the Audited
Financial Statement Date. There is (i) no material claim for Taxes that is a
Lien against the property of the Company or is being asserted against the
Company other than Liens for Taxes not yet due and payable, (ii) no audit of any
Tax Return of the Company being conducted by any governmental entity responsible
for the imposition of any such tax (domestic or foreign) (a "Tax Authority") and
(iii) no extension of any statute of limitations on the assessment of any Taxes
granted by the Company and currently in effect. The Company is not a party to
any Tax sharing or Tax allocation agreement nor does the Company have any
liability or potential liability to another party under any such agreement. The
Company has not filed any disclosures under Section 6662 or comparable
provisions of state, local federal or foreign law to prevent the imposition of
penalties with respect to any Tax reporting position taken on any Tax Return.
The Company has never been a member of a consolidated, combined, unitary or
aggregate group of which the Company was not the ultimate parent corporation.
The Company has in its possession receipts for any Taxes paid to foreign Tax
Authorities. "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
(i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Tax Authority, (ii) any liability for the payment of any amounts
of the type described in (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of being a transferee of or successor to any person or as a
result of any express or implied obligation to indemnify any other person. "Tax
Return" shall mean any return, statement, report or form (including, without
limitation, estimated
-26-
tax returns and reports, withholding tax returns and reports and information
returns and reports) required to be filed with respect to Taxes.
(b) The Company has withheld all amounts required to be withheld
by law in connection with compensation paid or deemed paid to its employees. The
Company has timely paid to the appropriate tax authorities all amounts so
withheld or otherwise due in connection with the employment by the Company of
employees, and has timely filed all requisite returns with the tax authorities
with respect to said taxes. The Company is not a party to any tax proceedings
with respect to the withholding of taxes from its employees and/or payment to
the tax authorities of withholding taxes or other dues with respect to their
employment with the Company. To the best knowledge of the Company, no
investigation is being conducted against the Company by any tax authority with
respect to any of the above withholding, payment, filing or any other
obligations in connection with the above. The Company shall not recover or
attempt to recover from any of its employees any taxes asserted against the
Company and/or collected from it whether prior, upon or after the Closing. For
the purpose of this Section 3.14(b), (1) "tax" shall include, without
limitation, income taxes, levies, social security dues, health insurance
premiums, compulsory loans and any other compulsory payments with respect to the
employment of the employees of the Company under the laws of the United States,
and the term "tax authority" shall be construed accordingly, and (2) the Company
shall also include, where applicable, the existing trustee or trustees of the
Company Stock Plan.
(c) Notwithstanding the foregoing, the representations contained
in this Section 3.14 shall not apply to any Taxes resulting from the Merger.
3.15 EMPLOYEE BENEFIT PLANS.
(a) Section 3.15 of the Company Disclosure Schedule lists each
Plan. With respect to each Plan, the Company has delivered or made available to
Acquiror a true, complete and correct copy of (i) such Plan (or, if not written,
a written summary of its material terms) and the most recent summary plan
description, if any, related to such Plan, (ii) each trust agreement or other
funding arrangement relating to such Plan, (iii) the most recent annual report
(Form 5500) filed with the IRS with respect to such Plan (and, if the most
recent annual report is a Form 5500-R, the most recent Form 5500-C filed with
respect to such Plan), (iv) the most recent actuarial report or financial
statement relating to such Plan and (v) the most recent determination letter, if
any, issued by the IRS with respect to such Plan and any pending request for
such a determination letter. The Company is not and, to the Company's knowledge,
no other person or entity, has any express or implied commitment, whether
legally enforceable or not, to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Internal Revenue Code.
(b) Each Plan has been administered in all material respects in
accordance with its terms and all applicable laws, including ERISA and the
Internal Revenue Code, and contributions required to be made under the terms of
any of the Plans as of the date of this Agreement have been timely made or, if
not yet due, have been properly reflected on the Interim Financial Statements.
With respect to the Plans, no event has occurred and there exists no condition
or set of circumstances in connection with which Company could be subject to any
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material liability (other than for routine benefit liabilities) under the terms
of, or with respect to, such Plans, ERISA, the Internal Revenue Code or any
other applicable Law.
(c) (i) Each Plan which is intended to qualify under Section
401(a), 401(k), 401(m) or 4975(e)(6) of the Internal Revenue Code has received a
favorable determination letter, opinion, notification or advisory letter from
the IRS as to its qualified status, and no fact or event has occurred that could
adversely affect the qualified status of any such Plan; (ii) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code and other than a transaction that is exempt
under a statutory or administrative exemption) with respect to any Plan that
could result in liability to the Company and (iii) each Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without liability (other than (A) liability for ordinary
administrative expenses typically incurred in a termination event or (B) if the
Plan is pension benefit plan subject to Part 2 of Title I of ERISA, liability
for the accrued benefits as of the date of such termination (if and to the
extent required by ERISA) to the extent that either there are sufficient assets
set aside in a trust or insurance contract to satisfy such liability or such
liability is reflected on the Interim Financial Statements). No suit,
administrative proceeding, action or other litigation has been brought, or to
the Company's knowledge is threatened, against or with respect to any such Plan,
including any audit or inquiry by the IRS or United States Department of Labor
(other than routine benefits claims).
(d) No Plan is a multiemployer pension plan (as defined in Section
3(37) of ERISA) or other pension plan subject to Title IV or Part 3 of Title I
of ERISA or Section 412 of the Internal Revenue Code and neither the Company nor
any ERISA Affiliate has sponsored or contributed to or been required to
contribute to a multiemployer pension plan or other pension plan subject to
Title IV of ERISA. No material liability under Title IV of ERISA has been
incurred by Company or any ERISA Affiliate that has not been satisfied in full,
and no condition exists that presents a material risk to Company of incurring or
being subject (whether primarily, jointly or secondarily) to a material
liability thereunder. None of the Company's assets is, or may reasonably be
expected to become, the subject of any lien arising under ERISA or Section
412(n) of the Internal Revenue Code.
(e) With respect to each Plan that is subject to Title IV or Part
3 of Title I of ERISA or Section 412 of the Internal Revenue Code, (i) no
reportable event (within the meaning of Section 4043 of ERISA, other than an
event that is not required to be reported before or within thirty days of such
event) has occurred or is expected to occur, (ii) there was not an accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Internal Revenue Code), whether or not waived, as of the most recently ended
plan year of such Benefit Plan; and (iii) there is no "unfunded benefit
liability" (within the meaning of Section 4001(a)(18) of ERISA).
(f) Except as required by Law, no Plan provides any of the
following retiree or post-employment benefits to any person: medical, disability
or life insurance benefits. The Company and any ERISA Affiliates are in material
compliance with (i) the applicable requirements of the health care continuation
and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA") and the regulations (including proposed regulations)
thereunder and (ii) the applicable requirements of the Health Insurance
-28-
Portability and Accountability Act of 1996, as amended, and the regulations
(including the proposed regulations) thereunder.
(g) PARACHUTE PAYMENTS. There is no contract, agreement or benefit
arrangement covering any current or former employee or consultant of the Company
which, individually or collectively, could give rise to the payment of any
amount which would constitute an "excess parachute payment" (as defined in
Section 280G of the Internal Revenue Code). Neither the execution of this
Agreement nor the consummation of any of the transactions contemplated hereby
(whether alone or upon the occurrence of any additional or further acts or
events) will (i) result in any obligation or liability (with respect to accrued
benefits or otherwise) on the part of the Company, Acquiror, the Surviving
Corporation, or any of their respective Subsidiaries to the PBGC, to any Plan,
or to any present or former employee, director, officer, stockholder, contractor
or consultant of Acquiror, the Surviving Corporation, or any their respective
Subsidiaries or any of their dependents, (ii) be a trigger event under any Plan
that will result in any payment (whether of severance pay or otherwise) becoming
due to any such present or former employee, officer, director, stockholder,
contractor, or consultant, or any of their dependents or (iii) accelerate the
time of payment or vesting, or increase the amount, of any compensation
theretofore or thereafter due or granted to any employee, officer, director,
stockholder, contractor, or consultant of the Company or any of their
dependents.
(h) With respect to any insurance policy which provides, or has
provided, funding for benefits under any Plan, (i) there is and will be no
liability of the Company, Acquiror or any of their respective Subsidiaries in
the nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or actual or contingent liability as of the Closing Date, nor would
there be any such liability if such insurance policy were terminated as of the
Closing Date, and (ii) no insurance company issuing any such policy is in
receivership, conservatorship, bankruptcy, liquidation, or similar proceeding,
and, to the knowledge of the Company, no such proceedings with respect to any
insurer are imminent.
3.16 EMPLOYEES; LABOR RELATIONS.
(a) The Company is not a party to any collective bargaining
agreement and there is no unfair labor practice or labor arbitration proceedings
pending with respect to the Company, or, to the knowledge of the Company,
threatened, and there are no facts or circumstances known to the Company that
could reasonably be expected to give rise to such complaint or claim. To the
knowledge of the Company, there are no organizational efforts presently underway
or threatened involving any employees of the Company or any of the employees
performing work for the Company but provided by an outside employment agency, if
any. There has been no work stoppage, strike or other concerted action by
employees of the Company.
(b) All employees of the Company are employed at will, and no
employees of the Company are represented by a union. Section 3.16(i) of the
Company Disclosure Schedule sets forth, individually and by category, the name
of each officer, employee and consultant, together with such person's position
or function, annual base salary or wage and any incentive, severance or bonus
arrangements with respect to such person. Except as described in Section
3.16(b)(ii) of the Company Disclosure Schedule, the completion of the
transactions contemplated by this Agreement will not result in any payment or
increased payment becoming due from the
-29-
Company to any current or former officer, director, or employee of, or
consultant to, the Company, and to the knowledge of the Company no employee of
the Company has made any threat, or otherwise revealed an intent, to terminate
such employee's relationship with the Company, for any reason, including because
of the consummation of the transactions contemplated by this Agreement. The
Company is not a party to any agreement for the provision of labor from any
outside agency. Since the Company's date of incorporation, there have been no
claims by employees of such outside agencies, if any, with regard to employees
assigned to work for the Company, and no claims by any governmental agency with
regard to such employees.
(c) Since the Company's date of incorporation, there have been no
federal or state claims based on sex, sexual or other harassment, age,
disability, race or other discrimination or common law claims, including claims
of wrongful termination, by any employees of the Company or by any of the
employees performing work for the Company but provided by an outside employment
agency, and there are no facts or circumstances known to the Company that could
reasonably be expected to give rise to such complaint or claim. The Company has
complied with all laws related to the employment of employees and, except as set
forth in Section 3.16(c) of the Company Disclosure Schedule, since the Company's
date of incorporation, the Company has not received any notice of any claim that
it has not complied in any material respect with any Laws relating to the
employment of employees, including without limitation, any provisions thereof
relating to wages, hours, collective bargaining, the payment of Social Security
and similar taxes, equal employment opportunity, employment discrimination, the
WARN Act, employee safety, or that it is liable for any arrearages of wages or
any taxes or penalties for failure to comply with any of the foregoing.
(d) The Company has no written policies and/or employee handbooks
or manuals except as described in Section 3.16(d) of the Company Disclosure
Schedule.
(e) To the knowledge of the Company, no officer, employee or
consultant of the Company is obligated under any Contract or other agreement or
subject to any Order or Law that would interfere with the Company's business as
currently conducted. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company's business as presently conducted nor any
activity of such officers, employees or consultants in connection with the
carrying on of the Company's business as presently conducted, will conflict with
or result in a breach of the terms, conditions or provisions of, constitute a
default under, or trigger a condition precedent to any rights under any Contract
or other agreement under which any of such officer's, employees or consultants
is now bound.
3.17 INTERESTED PARTY TRANSACTIONS. The Company is not indebted to any
director, officer, employee or agent of the Company (except for amounts due as
normal salaries and bonuses and in reimbursement of ordinary expenses), and no
such person is indebted to the Company.
3.18 INSURANCE. The Company has policies of insurance listed on Section
3.18 of the Company Disclosure Schedule, which are of the type and in amounts
customarily carried by persons conducting businesses or owning assets similar to
those of the Company in the same geographic area. There is no material claim
pending under any such policies as to which
-30-
coverage has been questioned, denied or disputed by the underwriters of such
policies. All premiums due and payable under all such policies have been paid
and the Company is otherwise in compliance with the terms of such policies. The
Company has no knowledge of any threatened termination of, or material premium
increase with respect to, any of such policies.
3.19 COMPLIANCE WITH LAWS AND ORDERS. Neither the Company nor any of
its directors, officers, and to the best knowledge of the Company, Affiliates,
agents or employees, has, since the incorporation of the Company, violated or is
currently in default or violation in any material respect under, any Law or
Order applicable to the Company or any of its Assets and Properties, and the
Company is not aware of any claim of violation, or of any actual violation, of
any such Laws and Orders by the Company since the incorporation of the Company.
3.20 OTHER NEGOTIATIONS; BROKERS; THIRD PARTY EXPENSES. Neither the
Company nor any of its officers, directors, employees, agents, or, to the
knowledge of the Company, any of its stockholders or Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Company or any such Affiliate) (a)
has entered into any Contract that conflicts with any of the transactions
contemplated by this Agreement or (b) has entered into any Contract or had any
discussions with any Person regarding any transaction involving the Company
which could result in Acquiror, the Company or any general partner, limited
partner, manager, officer, director, employee, agent or Affiliate of any of them
being subject to any claim for liability to said Person as a result of entering
into this Agreement or consummating the transactions contemplated hereby. No
broker, investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or similar fee or commission in
connection with this Agreement and the transactions contemplated hereby based on
arrangements made by or on behalf of the Company. Section 3.20 of the Company
Disclosure Schedule sets forth the principal terms and conditions of any
Contract with respect to, and a reasonable estimate of, all Third Party Expenses
expected to be incurred by the Company in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby. Any Third Party Expenses incurred by the Company that are
not approved by Acquiror in accordance with Section 6.5 shall be deemed to
constitute a Loss indemnifiable under Section 8.2(b).
3.21 FOREIGN CORRUPT PRACTICES ACT. Neither the Company, nor to the
knowledge of the Company, any agent, employee or other Person associated with or
acting on behalf of the Company has, directly or indirectly, used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment.
3.22 NO SUBSIDIARIES. The Company has no (and prior to the Closing will
have no) Subsidiaries and does not (and prior to the Closing will not) otherwise
hold any equity, membership, partnership, joint venture or other ownership
interest in any Person.
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3.23 DIRECTORS AND OFFICERS. The name of each director and officer of
the Company on the date hereof, and his or her position with the Company, are
listed in Section 3.23 of the Company Disclosure Schedule.
3.24 NO CONFLICTS. The execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which the Company is a party does not,
and the performance by the Company of its obligations under this Agreement and
the Ancillary Agreements to which the Company is a party and the consummation of
the transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or bylaws of
the Company;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 3.24(c) of the
Company Disclosure Schedule, if any, conflict with or result in a violation or
breach of any Law or Order applicable to the Company or any of its Assets and
Properties, except as could not reasonably be expected to have a material
adverse effect on the Business or Condition of the Company, or
(c) except as set forth in Section 3.24(c) of the Company
Disclosure Schedule or as could not reasonably be expected to have a material
adverse effect on the Business or Condition of the Company, (i) conflict with or
result in a violation or breach of, (ii) constitute a default (or an event that,
with or without notice or lapse of time or both, would constitute a default)
under, (iii) require the Company to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of (except for (A) the filing of the Certificate of Merger, together with
the required officer's certificate; and (B) such consents approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state or federal securities laws), (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance, (vi) result in the creation or imposition of (or the obligation to
create or impose) any Lien upon the Company or any of its Assets and Properties
or (vii) result in the loss of a material benefit under any of the terms,
conditions or provisions of any Contract or License to which the Company is a
party or by which any of the Company's Assets and Properties is bound.
3.25 MINUTE BOOKS. The minute books of the Company made available to
Acquiror contain a complete and accurate summary of all meetings of directors
and stockholders or actions by written consent since the time of incorporation
of the Company through the date of this Agreement, and reflect all transactions
referred to in such minutes accurately in all material respects.
3.26 COMPLETE COPIES OF MATERIALS. The Company has delivered or made
available true and complete copies of each document that has been requested by
Acquiror or its counsel in connection with their legal and accounting review of
the Company.
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3.27 BOARD APPROVAL. The board of directors of the Company has (i)
approved this Agreement and the Ancillary Agreements, (ii) determined that this
Agreement and the Ancillary Agreements are in the best interests of the
stockholders of the Company and are on terms that are fair to such stockholders
and (iii) recommended that the stockholders of the Company approve this
Agreement and the Ancillary Agreements.
3.28 INVENTORY. The inventories shown on the Company Financials or
thereafter acquired by the Company consisted of items of a quantity and quality
usable or salable in the ordinary course of business. The Company has continued
to replenish inventories in a normal and customary manner consistent with past
practices. The Company has not received written or oral notice from any supplier
that they will expect to experience in the foreseeable future any difficulty in
obtaining, in the desired quantity and quality and at a reasonable price and
upon reasonable terms and conditions, the raw materials, supplies or component
products required for the manufacture, assembly or production of its products.
The values at which inventories are carried reflect the inventory valuation
policy of the Company, which is consistent with its past practice and in
accordance with GAAP applied on a consistent basis. Since the Audited Financial
Statement Date, due provision was made on the books of the Company in the
ordinary course of business consistent with past practices to provide for all
slow-moving, obsolete, or unusable inventories to their estimated useful or
scrap values and such inventory reserves are adequate to provide for such
slow-moving, obsolete or unusable inventory and inventory shrinkage. As of the
date hereof, the Company has no inventory in the distribution channel or any
commitments to purchase inventory.
3.29 ACCOUNTS RECEIVABLE. Subject to any reserves set forth in the
Company Financials, the accounts receivable shown on the Company Financials
represent bona fide claims against debtors for sales and other charges, and are
not subject to discount except for normal cash and immaterial trade discounts.
The amount carried for doubtful accounts and allowances disclosed in the Company
Financials was calculated in accordance with GAAP and in a manner consistent
with prior periods and is sufficient to provide for any losses which may be
sustained on realization of the receivables.
3.30 CUSTOMERS AND SUPPLIERS. Except as set forth in Section 3.30 of
the Company Disclosure Schedule, no customer which individually accounted for
more than 1% of the Company's consolidated gross revenues during the 12-month
period preceding the date hereof, and no supplier of the Company has canceled or
otherwise terminated, or made any written threat to the Company to cancel or
otherwise terminate its relationship with the Company, or has decreased
materially its services or supplies to the Company, in the case of any such
supplier, or its usage of the services or products of the Company, in the case
of such customer and, to the best knowledge of the Company, no such supplier or
customer intends to cancel or otherwise terminate its relationship with the
Company or to decrease materially its services or supplies to the Company or its
usage of the services or products of the Company, as the case may be. The
Company has not knowingly breached, so as to provide a benefit to the Company
that was not intended by the parties, any agreement with, or engaged in any
fraudulent conduct with respect to, any customer or supplier of the Company.
3.31 CONTRACTS.
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(a) Section 3.31(a)(1) of the Company Disclosure Schedule contains
a true and complete list of each of the Contracts or other arrangements (true
and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been made available to Acquiror prior to
the execution of this Agreement), to which the Company is a party or by which
any of its Assets and Properties is bound. Section 3.31(a)(2) of the Company
Disclosure Schedule contains a true and complete list of each Contract of the
Company (i) not terminable by the Company upon thirty days (or less) notice by
the Company without penalty or obligation to make payments based on such
termination or (ii) which provides for continuing design or other services by
the Surviving Corporation after the Closing Date.
(b) Each Contract required to be disclosed in Section 3.31(a) of
the Company Disclosure Schedule is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its terms
against the Company and to the knowledge of the Company, each other party
thereto; and except as disclosed in Section 3.31(b) of the Company Disclosure
Schedule, to the knowledge of the Company, no other party to such Contract is,
nor has the Company received notice that it is, in violation or breach of or
default under any such Contract (or with notice or lapse of time or both, would
be in violation or breach of or default under any such Contract).
(c) Except as disclosed in Section 3.31(c) of the Company
Disclosure Schedule, the Company is not a party to or bound by any Contract that
has been or could reasonably be expected to be, individually or in the aggregate
with any other similar Contracts, materially adverse to the Business or
Condition of the Company or that has been or could reasonably be expected to
result, individually or in the aggregate with any such other Contracts, in
Losses to the Company or be materially adverse to the Business or Condition of
the Company.
(d) Except as disclosed in Section 3.31(d) of the Company
Disclosure Schedule, the Company is not a party to or bound by any Contract that
(i) automatically terminates or allows termination by the other party thereto
upon consummation of the transactions contemplated by this Agreement or (ii)
contains any covenant or other provision which limits the Company's ability to
compete with any Person in any line of business or in any area or territory.
3.32 EXPORT CONTROL LAWS. The Company has conducted its export
transactions in accordance with applicable provisions of all export control laws
and regulations, including but not limited to the Export Administration Act and
implementing Export Administration Regulations. Without limiting the foregoing,
the Company represents and warrants that:
(a) the Company has obtained all export licenses and other
approvals required for its exports of products, software and technologies from
the United States;
(b) the Company is in compliance with the terms of all applicable
export licenses or other approvals;
(c) There are no pending or, to the Company's knowledge,
threatened claims against the Company with respect to such export licenses or
other approvals;
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(d) To the Company's knowledge, there are no actions, conditions
or circumstances pertaining to the Company's export transactions that may give
rise to any future claims; and
(e) No consents or approvals for the transfer of export licenses
to Acquiror are required, or such consents and approvals can be obtained
expeditiously without material cost.
3.33 BANKS AND BROKERAGE ACCOUNTS. Section 3.33 of the Company
Disclosure Schedule sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Company has an account or safe deposit box or
maintains a banking, custodial, trading or other similar relationship, (b) a
true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the
respective officers, employees, agents or other similar representatives of the
Company having signatory power with respect thereto and (c) a list of each
Investment Asset, the name of the record and beneficial owner thereof, the
location of the certificates, if any, therefor, the maturity date, if any, and
any stock or bond powers or other authority for transfer granted with respect
thereto.
3.34 WARRANTY OBLIGATIONS.
(a) Section 3.34(a) of the Company Disclosure Schedule sets forth
(i) a list of all forms of written warranties, guarantees and written warranty
policies of the Company in respect of any of the Company's products and
services, which are currently in effect (the "Warranty Obligations"), and the
duration of each such Warranty Obligation, (ii) each of the Warranty Obligations
which is subject to any dispute or, to the knowledge of the Company, threatened
dispute and (iii) the experience of the Company with respect to warranties,
guarantees and warranty policies of or relating to the Company's products and
services. True and correct copies of the Warranty Obligations have been
delivered to Acquiror prior to the execution of this Agreement.
(b) Except as disclosed in Section 3.34(b) of the Company
Disclosure Schedule, (i) there have not been any material deviations from the
Warranty Obligations, and salespersons, employees and agents of the Company are
not authorized to undertake obligations to any customer or other Person in
excess of such Warranty Obligations and (ii) the balance sheet included in the
Interim Financial Statements reflects adequate reserves for Warranty
Obligations. All products manufactured, designed, licensed, leased, rented or
sold by the Company (A) are and were free from material defects in construction
and design and (B) satisfy any and all Contract or other specifications related
thereto to the extent stated in writing in such Contracts or specifications, in
each case, in all material respects.
3.35 POOLING OF INTERESTS; TAX-FREE REORGANIZATION. To the best
knowledge of the Company and in reliance on the opinion of Company's accountants
pursuant to Section 7.2(d), neither the Company nor any of its directors,
officers or stockholders has taken any action which could reasonably be expected
to jeopardize the status of the Merger as a Pooling of Interests or jeopardize
the status of the Merger as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code.
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3.36 FINANCIAL PROJECTIONS/OPERATING PLAN.
(a) The Company has made available to Acquiror certain financial
projections with respect to the Company's business which projections were
prepared for internal use only. The Company makes no representation or warranty
regarding the accuracy of such projections or as to whether such projections
will be achieved, except that the Company represents and warrants that such
projections were prepared in good faith and are based on assumptions believed by
the Company to be reasonable.
(b) The Company has made available to Acquiror the 2000 Operating
Plan. The Company makes no representation or warranty regarding its ability to
successfully execute the 2000 Operating Plan, except that the Company represents
and warrants that the 2000 Operating Plan was prepared in good faith and is
based on assumptions believed by it to be reasonable as of the date of this
Agreement.
3.37 TAKEOVER STATUTES. No Takeover Statute applicable to the Company
is applicable to the Merger or the transactions contemplated hereby.
3.38 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in the Company Disclosure Schedule or in
any certificate, list or other writing furnished to Acquiror pursuant to any
provision of this Agreement (including the Company Financials and the notes
thereto) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Except as disclosed in a document of even date herewith and
delivered by Acquiror to the Company and the Major Stockholders prior to the
execution and delivery of this Agreement and referring to the representations
and warranties in this Agreement (the "Acquiror Disclosure Schedule"), Acquiror
represents and warrants to the Company as follows:
4.1 ORGANIZATION, STANDING AND POWER. Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Acquiror has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good standing
could reasonably be expected to have a material adverse effect on Acquiror.
Acquiror is not in violation of any of the provisions of its certificate of
incorporation or bylaws or equivalent organizational documents.
4.2 AUTHORITY. Acquiror has full corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Acquiror of this Agreement and the Ancillary Agreements to which it is a party
and the consummation by Acquiror of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action by the
Board of Directors of Acquiror, and no other action on the part of the Board of
Directors of Acquiror is
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required to authorize the execution, delivery and performance of this Agreement
and the Ancillary Agreements to which it is a party and the consummation by
Acquiror of the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements to which Acquiror is a party have been or will be, as
applicable, duly and validly executed and delivered by Acquiror and, assuming
the due authorization, execution and delivery hereof by the Company, constitutes
or will constitute, as applicable, a legal, valid and binding obligation of
Acquiror enforceable against Acquiror in accordance with its respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws relating
to the enforcement of creditors' rights generally and by general principles of
equity.
4.3 ISSUANCE OF ACQUIROR COMMON STOCK. The shares of Acquiror Common
Stock to be issued pursuant to the Merger, when issued, will be duly authorized,
validly issued, fully paid, non-assessable and, subject to the truth and
accuracy of the representations made by the Company in Section 3.2, issued in
compliance with applicable federal and state securities laws.
4.4 SEC DOCUMENTS; ACQUIROR FINANCIAL STATEMENTS. Acquiror has
furnished or made available to the Company true and complete copies of all SEC
Documents filed by it with the SEC since March 30, 2000, all in the form so
filed. As of their respective filing dates, such SEC Documents filed by Acquiror
and all SEC Documents filed after the date hereof but before the Closing
complied or, if filed after the date hereof, will comply in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC thereunder, as the case may be, and none of
the SEC Documents contained or will contain any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent such SEC Documents
have been corrected, updated or superseded by a document subsequently filed with
the SEC. The financial statements of Acquiror, including the notes thereto,
included in the SEC Documents (the "Acquiror Financial Statements") comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited financial statements, as permitted by Form 10-Q under the
Exchange Act) and present fairly the consolidated financial position of Acquiror
at the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited financial
statements, to normal year-end adjustments). There has been no change in
Acquiror's accounting policies except as described in the notes to the Acquiror
Financial Statements. Except as reflected or reserved against in the Acquiror
Financial Statements, Acquiror has no material Liabilities, except for
Liabilities and obligations (i) incurred in the ordinary course of business or
(ii) that would not be required to be reflected or reserved against in the
balance sheet of Acquiror prepared in accordance with GAAP.
4.5 NO CONFLICTS. The execution and delivery by Acquiror of this
Agreement and the Ancillary Agreements to which it is a party does not, and the
performance by Acquiror of its obligations under this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
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(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or bylaws of
Acquiror;
(b) conflict with or result in a violation or breach of any Law or
Order applicable to Acquiror or its Assets or Properties; or
(c) except as would not have a material adverse effect on the
Business or Condition of Acquiror, (i) conflict with or result in a violation or
breach of, (ii) constitute a default (or an event that, with or without notice
or lapse of time or both, would constitute a default) under, (iii) require
Acquiror to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result of the terms of (except for (A) the
filing of the Certificate of Merger and California Agreement of Merger, together
with the required officer's certificate; (B) such consents approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state or federal securities laws; and (C) such filings as may be
required under the HSR Act), (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
(v) result in or give to any person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments or performance under,
(vi) result in the creation or imposition of (or the obligation to create or
impose) any Lien upon Acquiror or any of its Assets or Properties, or (vii)
result in the loss of a material benefit under, any of the terms, conditions or
provisions of any Contract or License to which Acquiror is a party or by which
any of its Assets and Properties are bound.
4.6 INVESTMENT ADVISORS. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or similar fee or commission in connection with this Agreement and the
transactions contemplated hereby based on arrangements made by or on behalf of
Acquiror.
4.7 TAX-FREE REORGANIZATION. To the knowledge of Acquiror, neither
Acquiror nor any of its directors, officers or shareholders has taken any action
which could reasonably be expected to jeopardize the status of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
4.8 ABSENCE OF CERTAIN CHANGES. Since October 12, 2000, there is not
and has not been a material adverse effect on Acquiror.
ARTICLE 5
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, the Company agrees (unless the Company is
required to take such action pursuant to this Agreement or Acquiror shall give
its prior consent in writing which consent shall not be unreasonably withheld)
to carry on its business in the usual, regular and ordinary course consistent
with past practice and in any event consistent with the Company's 2000 Operating
Plan provided prior to the date of this Agreement to Acquiror, to pay its
Liabilities and Taxes consistent with the Company's past practices (and in any
event when due, unless subject to a
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good faith dispute), to pay or perform other obligations when due consistent
with the Company's past practices (other than Liabilities, Taxes and other
obligations, if any, contested in good faith through appropriate proceedings),
and, to the extent consistent with such business, to use reasonable efforts and
institute all policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, licensors,
licensees, independent contractors and other Persons having business dealings
with it, all with the express purpose and intent of preserving unimpaired its
goodwill and ongoing businesses at the Effective Time. Except as expressly
contemplated by this Agreement, the Company shall not, without the prior written
consent of Acquiror, take or agree in writing or otherwise to take, any action
that would result in the occurrence of any of the changes described in Section
3.6 of this Agreement. Without limiting the generality of the foregoing, during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, except as set forth in
the Company Disclosure Schedule or as required or expressly permitted by this
Agreement, the Company shall not do, cause or permit any of the following,
without the prior written consent of Acquiror:
(a) CHARTER DOCUMENTS: cause or permit any amendments to its
certificate of incorporation or bylaws;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK: declare or pay any
dividend on or make any other distribution (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to it;
(c) STOCK OPTION PLANS: accelerate, amend or change the period of
exercisability or vesting of options or other rights granted under its stock
plans or authorize cash payments in exchange for any options or other rights
granted under any of such plans; or grant any Option with an exercise price of
less than the fair market value of the Company Common Stock on the date the
Option was granted (as determined in good faith by the Company's board of
directors following consultation with, and consistent with the advice provided
by, each of the Company's and Acquiror's independent public accountants);
(d) CONTRACTS: enter into any Contract or commitment, or violate,
amend or otherwise modify or waive any of the terms of any of its Contracts,
other than Contracts in the ordinary course of business consistent with past
practice which involve total obligations of less than $50,000 and which are not
otherwise material to the business of the Company;
(e) ISSUANCE OF SECURITIES: issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, any shares of Company Common Stock or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (a) the
issuance of shares of its Common Stock pursuant to the exercise of Company
Options outstanding as of October 6, 2000 and (b) Permitted Grants;
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(f) INTELLECTUAL PROPERTY: transfer to any person or entity any
rights to any Intellectual Property other than non-exclusive licenses in
connection with the sale of Company products in the ordinary course of business
consistent with past practice;
(g) EXCLUSIVE RIGHTS: enter into or amend any agreement pursuant
to which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of the Company's products or
technology;
(h) DISPOSITIONS: sell, lease, license or otherwise dispose of or
encumber any of the Company's properties or assets, except for sales of products
(and related nonexclusive licenses) in the ordinary course consistent with past
practice;
(i) INDEBTEDNESS: incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) LEASES: enter into any operating lease;
(k) PAYMENT OF OBLIGATIONS: pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Company Financials and reasonable expenses incurred in connection
with the transactions contemplated by this Agreement;
(l) CAPITAL EXPENDITURES: make any capital expenditures, capital
additions or capital improvements except in accordance with the Company's 2000
Operating Plan;
(m) INSURANCE: reduce the amount of any insurance coverage
provided by existing insurance policies;
(n) TERMINATION OR WAIVER: terminate or waive any right of
substantial value;
(o) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES: adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level, consultant, employee, pay any special bonus or
special remuneration to any employee, consultant or director or increase the
salaries, wage rates or compensation of any employee or consultant;
(p) SEVERANCE ARRANGEMENTS: grant any severance or termination pay
(i) to any director, officer or consultant or (ii) to any other employee or
consultant except payments made pursuant to standard written agreements
outstanding on the date hereof;
(q) LAWSUITS: commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business; PROVIDED, that it consults with Acquiror prior to the
filing of such a suit, or (iii) for a breach of this Agreement or any Ancillary
Agreements;
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(r) ACQUISITIONS: acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(s) TAXES: make or change any election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any Tax Return or any
amendment to a Tax Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes;
(t) REVALUATION: revalue any of its assets, including writing down
the value of inventory or writing off notes or accounts receivable;
(u) ISSUANCE OF COMPANY OPTIONS: issue any Company Options;
PROVIDED, that the Company shall only make Permitted Grants; or
(v) OTHER: take or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through (u) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect in any material respect or prevent it from performing or
cause it not to perform its covenants and agreements in this Agreement in any
material respect or cause any condition to Acquiror's closing obligations in
Section 7.1 or Section 7.3 not to be satisfied.
5.2 NO SOLICITATION. Until the earlier of the Effective Time or the
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, the Company will not take, nor will the Company permit any of the
Company's officers, directors, employees, stockholders, attorneys, investment
advisors, agents, representatives, Affiliates or Associates (collectively,
"Representatives") to (directly or indirectly) take any of the following actions
with any Person other than Acquiror, Merger Sub and their designees: (a)
solicit, encourage, initiate, entertain, accept receipt of, review or encourage
any proposals or offers from, or participate in or conduct discussions with or
engage in negotiations with, any Person relating to any offer or proposal, oral,
written or otherwise, formal or informal (a "Competing Proposed Transaction"),
with respect to any possible Business Combination with the Company or any of its
Subsidiaries, (b) provide information with respect to the Company to any Person,
other than Acquiror or Merger Sub, relating to (or which the Company believes
would be used for the purpose of formulating an offer or proposal with respect
to), or otherwise assist, cooperate with, facilitate or encourage any effort or
attempt by any such Person with regard to, any possible Business Combination
with the Company or any Subsidiary of the Company (whether such Subsidiaries are
in existence on the date hereof or are hereafter organized), (c) agree to, enter
into a Contract with any Person, other than Acquiror or Merger Sub, providing
for, or approve a Business Combination with the Company or any Subsidiary
(whether such Subsidiaries are in existence on the date hereof or are hereafter
organized), (d) make or authorize any statement, recommendation, solicitation or
endorsement in support of any possible Business Combination with the Company or
any Subsidiary (whether such Subsidiary is in existence on the date hereof or
are hereafter organized) other than by Acquiror or Merger Sub, or (e) authorize
or permit any of the Company's Representatives to take any such action. The
Company shall immediately cease and cause to be terminated any such contacts or
negotiations with any Person relating to
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any such transaction or Business Combination. In addition to the foregoing, if
the Company receives prior to the Effective Time or the termination of this
Agreement any offer or proposal (formal or informal, oral, written or otherwise)
relating to, or any inquiry or contact from any Person with respect to, a
Competing Proposed Transaction, the Company shall immediately notify Acquiror
thereof and provide Acquiror with the details thereof, including the identity of
the Person or Persons making such offer or proposal, and will keep Acquiror
fully informed on a current basis of the status and details of any such offer or
proposal and of any modifications to the terms thereof; PROVIDED, HOWEVER, that
this provision shall not in any way be deemed to limit the obligations of the
Company and its Representatives set forth in the previous sentence. Each of the
Company and Acquiror acknowledge that this Section 5.2 was a significant
inducement for Acquiror to enter into this Agreement and the absence of such
provision would have resulted in either (i) a material reduction in the merger
consideration to be paid to the stockholders of the Company or (ii) a failure to
induce Acquiror to enter into this Agreement.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 INFORMATION STATEMENT; PERMIT APPLICATION; REGISTRATION EXEMPTION
AND RESALE.
(a) As soon as practicable after the execution of this Agreement,
the Company shall prepare, with the cooperation of Acquiror, the information for
inclusion in the information statement to be sent to the stockholders of the
Company (such information statement as amended or supplemented is referred to
herein as the "Information Statement") to approve this Agreement and the
transactions contemplated hereby. Acquiror and the Company shall each use
reasonable commercial efforts to cause the Information Statement to comply with
applicable federal and state securities laws requirements. Each of Acquiror and
the Company agrees to provide promptly to the other such information concerning
its business and financial statements and affairs as, in the reasonable judgment
of the providing party or its counsel, may be required or appropriate for
inclusion in the Information Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the other's
counsel and auditors in the preparation of the Information Statement. The
Company will promptly advise Acquiror, and Acquiror will promptly advise the
Company, in writing if at any time prior to the Effective Time either the
Company or Acquiror, as applicable, shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the Information
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law. The Information
Statement shall contain the unanimous recommendation of the board of directors
of the Company that the Company's stockholders approve the Merger and this
Agreement and the conclusion of the board of directors that the terms and
conditions of the Merger are advisable and fair and reasonable to, and in the
best interests of, the stockholders of the Company. Anything to the contrary
contained herein notwithstanding, the Company shall not include in the
Information Statement any information with respect to Acquiror or its affiliates
or associates, the form and content of which information shall not have been
approved by Acquiror prior to such inclusion; PROVIDED, that the Acquiror shall
not unreasonably withhold, condition or delay such approval.
(b) As soon as practicable after the execution of this Agreement,
Acquiror shall prepare, with the cooperation of the Company, and file the Permit
Application. Acquiror and the
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Company shall each use commercially reasonable efforts to cause the Permit
Application to comply with the requirements of applicable federal and state
laws. Each of Acquiror and the Company agrees to provide promptly to the other
such information concerning its business and financial statements and affairs
as, in the reasonable judgment of the providing party or its counsel, may be
required or appropriate for inclusion in the Permit Application, or in any
amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Permit
Application. The Company will promptly advise Acquiror, and Acquiror will
promptly advise the Company, in writing if at any time prior to the Effective
Time either the Company or Acquiror, as applicable, shall obtain knowledge of
any facts that might make it necessary or appropriate to amend or supplement the
Permit Application in order to make the statements contained or incorporated by
reference therein not misleading or to comply with applicable law. Anything to
the contrary contained herein notwithstanding, Acquiror shall not include in the
Permit Application any information with respect to the Company or its affiliates
or associates, the form and content of which information shall not have been
approved by the Company prior to such inclusion; PROVIDED, that the Company
shall not unreasonably withhold, condition or delay such approval.
(c) In the event that the California Permit cannot be obtained in
time to permit the Closing to occur on or before December 31, 2000, then, at the
Company's election, unless Acquiror shall certify to the Company that Acquiror
believes in good faith that the California Permit can be obtained within thirty
days after such date, Acquiror and the Company shall use commercially reasonable
efforts to effect the issuance of the shares of Acquiror Common Stock to be
issued pursuant to Section 2.6 in a private placement pursuant to Section 4(2)
of the Securities Act on terms and conditions that are reasonably satisfactory
to Acquiror and the Company. The parties hereto acknowledge and agree that: (i)
as a condition to effecting such issuance as a private placement pursuant to
Section 4(2) of the Securities Act, Acquiror shall be entitled to obtain from
each stockholder of the Company a Stockholder Certificate in the form attached
hereto as EXHIBIT C (or such other form as shall be reasonably satisfactory to
Acquiror) (the "Stockholder Certificate") and that Acquiror will be relying upon
the representations made by each stockholder of the Company in the applicable
Stockholder Certificate in connection with the issuance of Acquiror Common Stock
to such stockholder, (ii) at the Closing, Acquiror shall execute and deliver a
registration rights agreement (the "Registration Rights Agreement") in
substantially the form attached hereto as EXHIBIT D; (iii) the shares of
Acquiror Common Stock so issued pursuant to Section 2.6 will not be registered
under the Securities Act and will constitute "restricted securities" within the
meaning of the Securities Act; and (iv) the certificates representing the shares
of Acquiror Common Stock shall bear appropriate legends to identify such
privately placed shares as being restricted under the Securities Act to comply
with applicable state securities laws and, if applicable, to notice any
applicable restrictions on transfer of such shares.
6.2 STOCKHOLDER APPROVAL. As soon as practicable following the
execution and delivery of this Agreement, the Company shall give written notice
of this Agreement and the proposed Merger to all Company stockholders and shall
use commercially reasonable efforts to take all other action necessary in
accordance with Delaware Law and its certificate of incorporation and bylaws to
convene a meeting of the stockholders of the Company or to secure the written
consent of its stockholders ("Company Stockholder Action") before the Closing
Date. The Company shall submit this Agreement to its stockholders for adoption
whether or not the Company's board
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of directors determines at any time subsequent to declaring its advisability
that this Agreement is no longer advisable and recommends that its stockholders
reject it. The Company shall consult with Acquiror regarding the date of the
Company Stockholder Action and shall not postpone or adjourn (other than for the
absence of a quorum) any meeting of the stockholders of the Company without the
consent of Acquiror, which consent shall not be unreasonably withheld. The
Company shall use all commercially reasonable efforts required to solicit and
obtain from stockholders of the Company proxies or written covenants in favor of
the Merger and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required to effect the Merger. The materials
submitted to the stockholders of the Company in respect of the Merger shall have
been subject to prior review and comment by Acquiror and shall include (a)
information regarding the Company, the terms of the Merger and this Agreement,
(b) the unanimous recommendation of the board of directors of the Company that
the Company's stockholders adopt this Agreement and the transactions
contemplated hereby and approve and execute such other documents as may be
required to satisfy the applicable requirements of the Securities Act in
connection with the issuance and sale of Acquiror Common Stock in the Merger,
(c) the conclusion of the board of directors of the Company that the terms and
conditions of the Merger are advisable, fair and reasonable to, and in the best
interests of, the Company's stockholders and (d) such other documents as may be
required to satisfy the applicable requirements of the Securities Act in
connection with the issuance and sale of Acquiror Common Stock in connection
with the Merger.
6.3 ACCESS TO INFORMATION. Between the date of this Agreement and the
earlier of the Effective Time or the termination of this Agreement, upon
reasonable notice, the Company shall (a) give Acquiror and its officers,
employees, accountants, counsel, financing sources and other agents and
representatives full access to all buildings, offices, and other facilities and
to all Books and Records of the Company, whether located on the premises of the
Company or at another location; (b) permit Acquiror to make such inspections as
they may require; (c) cause its officers to furnish Acquiror such financial,
operating, technical and product data and other information with respect to the
business and Assets and Properties of the Company as Acquiror from time to time
may request, including without limitation financial statements and schedules;
(d) allow Acquiror the opportunity to interview such employees and other
personnel and Affiliates of the Company with the Company's prior written
consent, which consent shall not be unreasonably withheld or delayed; and (e)
assist and cooperate with Acquiror in the development of integration plans for
implementation by Acquiror and the Surviving Corporation following the Effective
Time; PROVIDED, HOWEVER, that no investigation pursuant to this Section 6.3
shall affect or be deemed to modify any representation or warranty made by the
Company herein. Materials furnished to Acquiror pursuant to this Section 6.3 may
be used by Acquiror for strategic and integration planning purposes relating to
accomplishing the transactions contemplated hereby.
6.4 CONFIDENTIALITY. Each of the parties hereto hereby agrees to keep
the existence and terms of this Agreement (except to the extent contemplated
hereby) and such information or knowledge obtained in any investigation pursuant
to Section 6.3, or pursuant to the negotiation and execution of this Agreement
or the effectuation of the transactions contemplated hereby, confidential;
PROVIDED, HOWEVER, that the foregoing shall not apply to information or
knowledge which (a) a party can demonstrate was already lawfully in its
possession prior to the disclosure thereof by the other party, (b) is generally
known to the public and did not become so known through any violation of Law, or
a confidentiality agreement or other contractual, legal or
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fiduciary obligation of confidentiality of the disclosing party or any other
party with respect to such information, (c) became known to the public through
no fault of such party, (d) is later lawfully acquired by such party without
confidentiality restrictions from other sources not bound by applicable
confidentiality restrictions, (e) is required to be disclosed by order of court
or Governmental or Regulatory Authority with subpoena powers (PROVIDED, that
such party shall have provided the other party with prior notice of such order
and an opportunity to object or seek a protective order and take any other
available action) or (f) is disclosed in the course of any Action or Proceeding
between any of the parties hereto.
6.5 EXPENSES. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger, including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties ("Third Party Expenses") incurred by a party in connection with
the negotiation and effectuation of the terms and conditions of this Agreement
and the transactions contemplated hereby, shall be the obligation of the
respective party incurring such fees and expenses. Acquiror shall have the right
to approve Third Party Expenses to be incurred by the Company between the date
hereof and the Closing, including necessary fees and expenses of legal counsel,
auditors and tax advisors, which such approvals will not be unreasonably
withheld; PROVIDED, that the Company shall not be required to seek approval for
any expenses less than $10,000 in the aggregate; PROVIDED, FURTHER, that the
Company shall not be required to seek approval for (i) legal expenses less than
$70,000 in the aggregate or (ii) auditors and tax expenses less than $30,000 in
the aggregate.
6.6 PUBLIC DISCLOSURE. Unless otherwise required by Law (including
federal and state securities laws) or, as to Acquiror, by the rules and
regulations of the NASD, no public disclosure (whether or not in response to any
inquiry) of the existence of any subject matter of, or the terms and conditions
of, this Agreement shall be made by any party hereto unless approved by Acquiror
and the Company prior to release; PROVIDED, HOWEVER, that such approval shall
not be unreasonably withheld or delayed.
6.7 APPROVALS. The Company shall use commercially reasonable efforts to
obtain all Approvals from Governmental or Regulatory Authorities or under any of
the Contracts or other agreements as may be required in connection with the
Merger (all of such Approvals are set forth in the Company Disclosure Schedule)
so as to preserve all rights of and benefits to the Company thereunder and
Acquiror shall provide the Company with such assistance and information as is
reasonably required to obtain such Approvals.
6.8 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Acquiror, and Acquiror shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which is likely to cause any representation or warranty of the Company or
Acquiror, respectively, contained in this Agreement to be untrue or inaccurate
at or prior to the Closing Date and (b) any failure of the Company or Acquiror,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 6.8 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
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6.9 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party agrees to
use commercially reasonable efforts to cause the conditions to its obligations
to consummate the Merger to be satisfied. Each party hereto, at the request of
the other party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things (including, but not limited to, all
action reasonably necessary to seek and obtain any and all consents and
approvals of any Government or Regulatory Authority or Person required in
connection with the Merger; PROVIDED, HOWEVER, that Acquiror shall not be
obligated to consent to any divestitures or operational limitations or
activities in connection therewith and no party shall be obligated to make a
payment of money as a condition to obtaining any such condition or approval) as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
6.10 INDEMNIFICATION. Acquiror, the Company and the Surviving
Corporation agree that all rights to indemnification or exculpation now existing
in favor of the employees, agents, directors or officers of the Company (the
"Company Indemnified Parties") as provided in its certificate of incorporation
or bylaws or indemnification agreements as in effect on the date of this
Agreement shall continue in full force and effect for a period of not less than
six years from the Closing Date; PROVIDED, HOWEVER, that, in the event any claim
or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue to
disposition of any and all such claims. Any determination required to be made
with respect to whether a Company Indemnified Party's conduct complies with the
standards set forth in the certificate of incorporation or bylaws or
indemnification agreements of the Surviving Corporation or otherwise shall be
made by independent counsel selected by the Surviving Corporation reasonably
satisfactory to the Company Indemnified Party (whose fees and expenses shall be
paid by the Surviving Corporation). Notwithstanding anything to the contrary in
this Section 6.10, Acquiror and the Surviving Corporation shall not be liable
for any amounts payable resulting from any claim or action brought by any
officer or director of the Company or any of their Affiliates. The Company
hereby represents and warrants to Acquiror that no claim for indemnification has
been made by any director or officer of the Company and, to the knowledge of the
Company, no basis exists for any such claim for indemnification.
6.11 FORM S-8. Acquiror shall file a registration statement on Form S-8
for the shares of Acquiror Common Stock issuable with respect to assumed Company
Options promptly after the Effective Time to the extent the shares of Acquiror
Common Stock issuable upon exercise of such Company Options qualify for
registration on Form S-8.
6.12 COMPANY'S AUDITORS; POOLING OF INTERESTS ACCOUNTING. The Company
will use commercially reasonable efforts to cause its management and its
independent auditors to facilitate on a timely basis (a) the preparation of
financial statements (including pro forma financial statements if required) as
required by Acquiror to comply with applicable SEC regulations, (b) the review
of any Company audit or review work papers, including the examination of
selected interim financial statements and data, (c) the delivery of such
representations from the Company's independent accountants as may be reasonably
requested by Acquiror or its accountants and (d) the securing of a binding fee
commitment (on terms similar to those in place on the date of this Agreement)
with respect to consents and comfort letters requested by Acquiror after the
Closing. 6.13 The Company shall use commercially reasonable efforts (i) to allow
the business combination to be effected by the Merger to be accounted for as a
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Pooling of Interests from and after the Effective Time and (ii) to cause its
employees, directors, shareholders, Affiliates and Associates not to take any
action that would adversely affect the ability of Acquiror to account for the
business combination to be effected by the Merger as a Pooling of Interests from
and after the Effective Time.
6.14 TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the transactions contemplated hereby, the board of directors of
the Company will grant such approvals and take such actions as are necessary so
that the transactions contemplated by this Agreement and the Ancillary
Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate the effects of any Takeover
Statute on any of the transactions contemplated hereby.
6.15 TREATMENT AS REORGANIZATION. Neither Acquiror, Merger Sub nor the
Company shall take any action prior to or following the Closing that would cause
the Merger to fail to qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
6.16 COMPANY REPURCHASES. The Company will exercise any rights that
mature between the date hereof and the Effective Time to repurchase any
outstanding shares of Company Common Stock at the price at which such shares
were issued (to the extent that such repurchases would not affect the ability of
the parties to account for the Merger as a Pooling of Interests).
6.17 INFORMATION TECHNOLOGY ACCESS. In furtherance of the Company's
agreement in Section 6.3 and to facilitate prompt integration following the
Closing of the Company's information technology ("IT") inventory (e.g., voice
and data network services and software and hardware, licenses,
financial/accounting software, IT budgets, etc.) with Acquiror's, the Company
will provide Acquiror and its Representatives with access to the Company's IT
inventory, as well as the Company's personnel responsible for such IT inventory.
Because of the substantial lead time that may be required to order and install
new software and hardware to integrate the Company's IT systems with Acquiror's,
and the importance of a smooth integration of such IT systems promptly after the
Closing, the Company agrees that Acquiror may order, either in Acquiror's name
or the Company's name, any new IT services, hardware and software that Acquiror
believes will be needed at the Company's facilities in order to integrate
Acquiror's and the Company's respective operations following the Closing. The
Company will cooperate with Acquiror in the installation of such IT systems,
hardware and software prior to and in anticipation of the Closing, including,
but not limited to, providing Acquiror with reasonable access to and use of the
Company's appropriate personnel. If necessary, at Acquiror's request, the
Company will place IT systems, hardware and software orders in the Company's
name. For clarity, it is the parties' intent not to connect any of the ordered
services or systems prior to the Closing. Acquiror and the Company agree to
cooperate with each other to minimize any potential disruption to the Company's
business from the IT integration efforts; PROVIDED, HOWEVER, that Acquiror will
not have any liability to the Company for any such disruption or as may
otherwise result from the IT integration efforts, except as may be directly
caused by Acquiror's gross negligence or willful misconduct; and, PROVIDED,
FURTHER, that in no event will Acquiror have any liability to the Company for
any indirect, incidental, consequential, special or speculative damages,
including, but not limited to, damages for loss of profits or use, business
interruption or loss of goodwill, irrespective of whether such damages arise
under contract, tort,
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statute or otherwise and whether or not the Company has given Acquiror advance
notice of the possibility of such damages. If the Closing does not occur, other
than because of the Company's breach of this Agreement, Acquiror will reimburse
the Company for its reasonable and documented out-of-pocket costs incurred by it
in connection with the ordering and installation of IT services, hardware and
software. If Acquiror is so required to reimburse the Company, Acquiror will own
any such hardware and software and will pay for its removal from Company
premises. Acquiror and the Company will cooperate in the removal of any such
hardware or software so as to minimize any disruption to the Company's business.
In addition, if the Closing does not occur, the Company will cooperate with
Acquiror in canceling any orders for IT services, hardware or software and will
otherwise act to minimize the costs which might be incurred in connection with
the IT integration efforts.
6.18 INTELLECTUAL PROPERTY. The Company shall give Acquiror prompt
notice if any Person shall have (a) commenced, or shall have notified the
Company that it intends to commence, an Action or Proceeding or (b) provided the
Company with notice, in either case which allege(s) that any of the Intellectual
Property, including the Company Intellectual Property, presently embodied, or
proposed to be embodied, in the Company's products or utilized in
Company-designed or modified development tools (including standard cells) or
design environments infringes or otherwise violates the intellectual property
rights of such Person, is available for licensing from a potential licensor
providing the notice or otherwise alleges that the Company does not otherwise
own or have the right to exploit such Intellectual Property, including the
Company Intellectual Property. The Company shall cooperate with Acquiror in
making arrangements, prior to the Closing Date, satisfactory to Acquiror in its
sole discretion to effect the assignment to the Company of all Intellectual
Property created by the Company's founders, employees and consultants, including
certain Intellectual Property created by the Company's founders prior to the
Company's incorporation, and to obtain the cooperation of such Persons to
complete all appropriate patent filings related thereto at the Company's or the
Surviving Corporation's expense. The Company shall take commercially reasonable
actions to maintain, perfect, preserve or renew the Company Registered
Intellectual Property, including, without limitation, the payment of any
registration, maintenance, renewal fees, annuity fees and taxes or the filing of
any documents, applications or certificates related thereto, and to promptly
respond and prepare to respond to all requests, related to the Company
Registered Intellectual Property, received from Governmental or Regulatory
Authorities. At the Closing, the Company will notify Acquiror of all material
actions which must be taken within the 180 days following the Closing Date and
which are necessary to maintain, perfect, preserve or renew the Company
Registered Intellectual Property, including the payment of any registration,
maintenance, renewal fees, annuity fees and taxes or the filing of any
documents, applications or certificates related thereto.
6.19 OFFERS OF EMPLOYMENT. Acquiror shall cause the Surviving
Corporation to offer employment, effective at the Effective Time, to the
employees of the Company, as of the Effective Time, for compensation and
benefits commensurate with those offered to employees of the Acquiror with
equivalent industry experience and responsibilities within Acquiror. Nothing in
this Agreement shall be construed to create any right to continued employment
with the Company, Acquiror or its parents or subsidiaries and the employment of
each such employee shall be an "at will" basis.
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6.20 TERMINATION OF 401(k) PLAN. Unless Acquiror requests otherwise in
writing, the Board of Directors of the Company shall adopt resolutions
terminating, effective prior to the Closing Date, any Plan which is intended to
meet the requirements of Section 401(k) of the Internal Revenue Code, and which
is sponsored, or contributed to, by the Company or any Subsidiary (the "Company
401(k) Plan"). At the Closing, the Company shall provide Acquiror (a) executed
resolutions of the Board of Directors of the Company authorizing such
termination and (b) an executed amendment to the Company 401(k) Plan sufficient
to assure compliance with all applicable requirements of the Internal Revenue
Code and regulations thereunder so that the tax-qualified status of the Company
401(k) Plan will be maintained at the time of termination.
6.21 DELIVERY OF STOCK LEDGER AND MINUTE BOOK OF THE COMPANY. The
Company shall deliver its stock ledger and minute book to Acquiror at the
Closing.
ARTICLE 7
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) GOVERNMENTAL AND REGULATORY APPROVALS. Approvals from any
Governmental or Regulatory Authority (if any) necessary for consummation of the
transactions contemplated hereby shall have been timely obtained.
(b) NO INJUNCTIONS OR REGULATORY RESTRAINTS; ILLEGALITY. No
temporary restraining order, preliminary or permanent injunction or other Order
issued by any court of competent jurisdiction or Governmental or Regulatory
Authority or other legal or regulatory restraint or prohibition preventing the
consummation of the Merger shall be in effect; nor shall there be any action
taken, or any Law or Order enacted, entered, enforced or deemed applicable to
the Merger or the other transactions contemplated by the terms of this Agreement
that would prohibit the consummation of the Merger or which would permit
consummation of the Merger only if certain divestitures were made or if Acquiror
were to agree to limitations on its business activities or operations.
(c) LEGAL PROCEEDINGS. No Governmental or Regulatory Authority
shall have notified either party to this Agreement that such Governmental or
Regulatory Authority intends to commence proceedings to restrain or prohibit the
transactions contemplated hereby or force rescission, unless such Governmental
or Regulatory Authority shall have withdrawn such notice and abandoned any such
proceedings prior to the time which otherwise would have been the Closing Date.
(d) STOCKHOLDER APPROVAL. The Merger shall have been approved by
the requisite votes of the Company's stockholders in accordance with Delaware
Law.
(e) FAIRNESS HEARING AND CALIFORNIA PERMIT; PRIVATE PLACEMENT
ALTERNATIVE. The fairness hearing shall have been held by the Commissioner of
Corporations of the State of California and the California Permit shall have
been issued by the State of California. In the
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alternative, each of the stockholders of the Company shall have delivered an
executed copy of the Shareholder Certificate, and Acquiror shall be reasonably
satisfied that the shares of Acquiror Common Stock to be issued in connection
with the Merger pursuant to Section 2.6(a) are issuable without registration
pursuant to Section 4(2) of the Securities Act and SEC rules and regulations
promulgated thereunder.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Acquiror and Merger Sub in this Agreement shall be true
and correct in all material respects (if not qualified by materiality) and in
all respects (if qualified by materiality) when made and on and as of the
Closing Date as though such representation or warranty was made on and as of the
Closing Date (other than representations and warranties which by their express
terms are made solely as of a specified earlier date), and any representation or
warranty made as of a specified date earlier than the Closing Date shall also be
true and correct in all material respects (if not qualified by materiality) and
in all respects (if qualified by materiality) on and as of such earlier date.
(b) PERFORMANCE. Acquiror and Merger Sub shall have performed and
complied with in all material respects each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Acquiror
and Merger Sub at or before the Closing.
(c) OFFICERS' CERTIFICATES. Acquiror shall have delivered to the
Company a certificate, dated the Closing Date and executed by an authorized
officer, substantially in the form set forth in EXHIBIT E hereto.
(d) OPINION OF ACCOUNTANTS. The Company shall have received a
letter, dated on or prior to the Closing Date, from its auditor regarding its
concurrence with the Company management's conclusions as to the appropriateness
of accounting for the Merger as a Pooling of Interests if the Merger is closed
and consummated in accordance with this Agreement; PROVIDED, that this condition
shall be deemed to be satisfied if the Company's auditor is unable to deliver
such letter based upon actions taken by Acquiror.
(e) TAX OPINIONS. The Company shall have received a written
opinion from Xxxxxxxx Xxxxxxx Xxxxxxxxxx LLP, in form and substance satisfactory
to the Company, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code; PROVIDED,
that this condition shall be satisfied if Xxxxxxx, Phleger & Xxxxxxxx LLP shall
have rendered an opinion, dated as of the Closing Date, to the Company to the
same effect. Each of Acquiror and the Company agrees to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR. The
obligations of Acquiror and Merger Sub to consummate the Merger and the other
transactions contemplated by this
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Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by Acquiror and Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Company in this Agreement shall be true and correct
in all material respects (if not qualified by materiality) and in all respects
(if qualified by materiality) when made and on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing Date;
PROVIDED, HOWEVER, that any representation or warranty made as of a specified
date earlier than the Closing Date shall also have been true and correct in all
material respects (if not qualified by materiality) and in all respects (if
qualified by materiality) on and as of such earlier date.
(b) PERFORMANCE. The Company shall have performed and complied
with in all material respects each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company on or
before the Closing Date.
(c) OFFICERS' CERTIFICATES. The Company shall have delivered to
Acquiror a certificate, dated the Closing Date and executed by the President and
Chief Executive Officer of the Company, substantially in the form set forth in
EXHIBIT F-1 hereto, and a certificate, dated the Closing Date and executed by
the Secretary of the Company, substantially in the form set forth in EXHIBIT F-2
hereto.
(d) THIRD PARTY CONSENTS. Acquiror shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers listed in Section 3.24 of the Company Disclosure Schedule
(except for such consents, approvals and waivers the failure of which to receive
could not reasonably be expected to have a material adverse effect on the
Company).
(e) LEGAL OPINION. Acquiror shall have received a legal opinion
from Xxxxxxxx Xxxxxxx Xxxxxxxxxx LLP, legal counsel to the Company, as to the
matters set forth in EXHIBIT G.
(f) SUPPORT AGREEMENTS. Each of the Major Stockholders shall have
executed and delivered to Acquiror a Support Agreement, and no breach of any
Support Agreement shall have occurred or be continuing.
(g) LIMITATION ON DISSENT. Holders of no more than five percent of
the outstanding shares of Company Common Stock shall have exercised, nor shall
they have any continued right to exercise, appraisal, dissenters' or similar
rights under applicable law with respect to their shares by virtue of the
Merger.
(h) CONVERSION OF COMPANY INDEBTEDNESS. All outstanding
Indebtedness of the Company that is convertible or exchangeable into shares of
Company Common Stock shall have been converted or exchanged into shares of
Company Common Stock immediately prior to the Effective Time.
(i) EMPLOYEES. The employees of the Company listed in Section
7.3(i) of the Company Disclosure Schedule shall (i) continue to be employed by
the Company at the Closing
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(and shall not have given any notice or other indication that they are not
willing to be employed by Acquiror or a Subsidiary of Acquiror (as Acquiror
shall designate), following the Merger) and (ii) have executed a Non-Competition
Agreement with Acquiror, substantially in the form set forth in EXHIBIT H.
(j) NO MATERIAL ADVERSE CHANGE. There shall have occurred no
material adverse change in the Business or Condition of the Company since
October 12, 2000.
(k) COMPANY INTELLECTUAL PROPERTY. No Person shall have (i)
commenced, in writing, or shall have notified either Acquiror or the Company
that it intends to commence, an Action or Proceeding or (ii) provided Acquiror
or the Company with notice, in either case which allege(s) that any of the
Intellectual Property, including the Company Intellectual Property, presently
embodied, or proposed to be embodied, in the Company's products or utilized in
Company-designed or modified development tools (including standard cells) or
design environments infringes or otherwise violates the intellectual property
rights of such Person, is available for licensing from a potential licensor
providing the notice or otherwise alleges that the Company does not otherwise
own or have the right to exploit such Intellectual Property, including the
Company Intellectual Property.
(l) ASSIGNMENT OF INTELLECTUAL PROPERTY. Arrangements satisfactory
to Acquiror in its sole discretion shall have been made to effect the assignment
to the Company of all Intellectual Property created by the Company's founders,
employees and consultants, including any Intellectual Property created by the
Company's founders prior to the Company's incorporation, and to obtain the
cooperation of such Persons to complete all appropriate patent filings related
thereto.
(m) TERMINATION OF 401(k) PLAN. The Company shall have provided to
Acquiror (i) executed resolutions of the Board of Directors of the Company
authorizing the termination and (ii) an executed amendment to the 401(k) Plan
sufficient to assure compliance with all applicable requirements of the Internal
Revenue Code and regulations thereunder so that the tax-qualified status of the
401(k) Plan will be maintained at the time of termination.
(n) OPINION OF ACCOUNTANTS. Acquiror shall have received a letter,
dated on or prior to the Closing Date, from Acquiror's auditor regarding its
concurrence with Acquiror management's conclusions as to the appropriateness of
accounting for the Merger as a Pooling of Interests if the Merger is closed and
consummated in accordance with this Agreement.
(o) TAX OPINIONS. Acquiror shall have received a written opinion
from Xxxxxxx, Phleger & Xxxxxxxx LLP, in form and substance satisfactory to
Acquiror, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code; PROVIDED, that this
condition shall be satisfied if Xxxxxxxx Xxxxxxx Xxxxxxxxxx LLP shall have
rendered an opinion, dated as of the Closing Date, to Acquiror to the same
effect. Each of Acquiror and the Company agrees to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
(p) COMPLIANCE WITH ACCOUNTANTS' INSTRUCTIONS. The Company shall
have performed and complied with, in all material respects, any and all requests
and/or instructions
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made by the Company's accountants pursuant to Section 7.2(d)
as soon as practicable after the date hereof in order to account for the Merger
as a Pooling of Interests, including, without limitation, the requests and/or
instructions listed on Section 7.3(p) of the Company Disclosure Schedule
ARTICLE 8
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; ESCROW PROVISIONS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Except for Section 3.2, which shall survive indefinitely, and Sections 3.12,
3.13, 3.14 and 3.15 which shall survive until the termination of the applicable
statute of limitations, all of the representations, warranties, covenants and
agreements of the Company, Acquiror and Merger Sub contained in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Merger and continue until the first anniversary of the Closing Date (the
"Expiration Date").
8.2 ESCROW PROVISIONS.
(a) ESTABLISHMENT OF THE ESCROW FUND. As soon as practicable after
the Effective Time, the Escrow Amount, without any act of any stockholder, will
be deposited with the Depositary Agent (plus a proportionate share of any
additional shares of Acquiror Common Stock as may be issued upon any stock
splits, stock dividends or recapitalizations effected by Acquiror following the
Effective Time), such deposit to constitute the "Escrow Fund" to be governed by
the terms set forth herein. The portion of the Escrow Amount contributed on
behalf of each stockholder of the Company shall be in proportion to the
aggregate number of shares of Acquiror Common Stock which such holder would
otherwise be entitled under Section 2.6.
(b) RECOURSE TO THE ESCROW FUND. The Escrow Fund shall be
available to compensate Acquiror and its respective officers, directors,
employees, agents, Affiliates and Associates (collectively, the "Acquiror
Indemnitees") for any and all Losses (whether or not involving a Third Party
Claim), incurred or sustained by Acquiror or any other Acquiror Indemnitees,
directly or indirectly, as a result of any inaccuracy or breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in the Ancillary Agreements or in any instrument delivered pursuant to this
Agreement or as the result of the exercise by any of the Company's stockholders
of applicable appraisal, dissenters' or similar rights (in the amount of the
excess of the cost of the appraisal over the value, as of the Closing Date, of
the shares of Acquiror Common Stock otherwise issuable in respect of such
Dissenting Shares); PROVIDED, HOWEVER, that Acquiror may not make any claims
against the Escrow Fund unless the aggregate Losses incurred or sustained exceed
$1,200,000 (at which such time claims may be made for all Losses, including the
first $1,200,000 thereof). Notwithstanding the establishment of an Escrow Fund,
Acquiror shall have all remedies available at law or in equity (including for
tort); PROVIDED, HOWEVER, that, notwithstanding anything to the contrary
contained in this Agreement, in no event shall any stockholder of the Company
have any liability in excess of the consideration received by such stockholder
in connection with the Merger (valued as of the Closing Date) or the proceeds,
if any, received by such stockholder in connection with the disposition of such
Merger consideration.
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(c) ESCROW PERIOD; DISTRIBUTION OF ESCROW FUND UPON TERMINATION OF
ESCROW PERIOD. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate at
5:00 p.m., Pacific Time, on the Expiration Date (the period of time from the
Effective Time through and including the Expiration Date is referred to herein
as the "Escrow Period"); and all shares of Acquiror Common Stock remaining in
the Escrow Fund shall be distributed as set forth in this Section 8.2(c);
PROVIDED, HOWEVER, that the Escrow Period shall not terminate with respect to
such amount (or some portion thereof) that is necessary in the reasonable
judgment of Acquiror, subject to the objection of the Stockholder Agent and the
subsequent arbitration of the matter in the manner as provided in Section
8.2(g), to satisfy any unsatisfied claims under this Section 8.2 concerning
facts and circumstances existing prior to the termination of such Escrow Period
which claims are specified in any Officer's Certificate delivered to the
Depositary Agent prior to termination of such Escrow Period. As soon as all such
claims, if any, have been resolved, the Depositary Agent shall deliver to the
stockholders of the Company the remaining portion of the Escrow Fund not
required to satisfy such claims. Deliveries of shares of Acquiror Common Stock
remaining in the Escrow Fund to the stockholders of the Company pursuant to this
Section 8.2(c) shall be made ratably in proportion to their respective
contributions to the Escrow Fund. Each stockholder of the Company who would
otherwise be entitled to a fraction of a share of Acquiror Common Stock (after
aggregating all fractional shares of Acquiror Common Stock to be received by
such holder) shall be entitled to receive from Acquiror an amount of cash
(rounded to the nearest whole cent) equal to the product of (a) such fraction,
multiplied by (b) the Closing Price. Acquiror shall use its commercially
reasonable efforts to have such shares and cash delivered within five Business
Days after such resolution.
(d) PROTECTION OF ESCROW FUND.
(i) The Depositary Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Acquiror
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Acquiror Common Stock or other securities
issued or distributed by Acquiror ("New Shares") in respect of Acquiror Common
Stock in the Escrow Fund which have not been released from the Escrow Fund shall
be added to the Escrow Fund. New Shares issued in respect of shares of Acquiror
Common Stock which have been released from the Escrow Fund shall not be added to
the Escrow Fund but shall be distributed to the record holders thereof. Cash
dividends on Acquiror Common Stock shall not be added to the Escrow Fund but
shall be distributed to the record holders of the Acquiror Common Stock on the
record date set for any such dividend.
(iii) Each stockholder shall have voting rights with respect
to the shares of Acquiror Common Stock contributed to the Escrow Fund by such
stockholder (and on any voting securities added to the Escrow Fund in respect of
such shares of Acquiror Common Stock).
(e) CLAIMS UPON ESCROW FUND.
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(i) Upon receipt by the Depositary Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any officer
of Acquiror (an "Officer's Certificate"): (A) stating that Acquiror or another
Acquiror Indemnitee has paid or properly accrued or reasonably anticipates that
it will have to pay or accrue Losses, directly or indirectly, as a result of any
inaccuracy or breach of any representation, warranty, covenant or agreement of
the Company contained in this Agreement or in any of the Ancillary Agreements or
in any instrument or agreement delivered pursuant to this Agreement, and (B)
specifying in reasonable detail the individual items of Losses included in the
amount so stated, the date each such item was paid or properly accrued, or the
basis for such anticipated liability, and the nature of the misrepresentation,
breach of warranty, agreement or covenant to which such item is related, the
Depositary Agent shall, subject to the provisions of Section 8.2(f) hereof,
deliver to Acquiror out of the Escrow Fund, as promptly as practicable, shares
of Acquiror Common Stock held in the Escrow Fund in an amount equal to such
Losses. Where the basis for a claim upon the Escrow Fund by Acquiror is that
Acquiror reasonably anticipates that it will pay or accrue a Loss, no payment
will be made from the Escrow Fund for such Loss unless and until such Loss is
actually paid or accrued.
(ii) For the purposes of determining the number of shares of
Acquiror Common Stock to be delivered to Acquiror out of the Escrow Fund
pursuant to Section 8.2(e)(i), the shares of Acquiror Common Stock shall be
valued at the Closing Price.
(iii) Whenever a claim is made upon the Escrow Fund, each
stockholder shall have the right, with respect to the shares of Common Stock
contributed to the Escrow Fund by such Stockholder and then subject to such
claim, to substitute therefor an amount in cash equal to the Closing Price
MULTIPLIED BY the number of shares for which such substitution is sought.
(f) OBJECTIONS TO CLAIMS. At the time of delivery of any Officer's
Certificate to the Depositary Agent, a duplicate copy of such certificate shall
be delivered to the Stockholder Agent and for a period of thirty days after such
delivery, the Depositary Agent shall make no delivery to Acquiror of any Escrow
Amounts pursuant to Section 8.2(e) unless the Depositary Agent shall have
received written authorization from the Stockholder Agent to make such delivery.
After the expiration of such thirty day period, the Depositary Agent shall make
delivery of shares of Acquiror Common Stock or cash deposited pursuant to
Section 8.2(e)(iii) from the Escrow Fund in accordance with Section 8.2(e);
PROVIDED, that no such payment or delivery may be made if the Stockholder Agent
shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to the Depositary
Agent prior to the expiration of such thirty day period.
(g) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case the Stockholder Agent shall object in writing to
any claim or claims made in any Officer's Certificate, the Stockholder Agent and
Acquiror shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the Stockholder Agent and
Acquiror should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties and shall be furnished to the Depositary
Agent. The Depositary Agent shall be entitled to rely on any such memorandum and
distribute
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shares of Acquiror Common Stock or cash deposited pursuant to Section
8.2(e)(iii) from the Escrow Fund in accordance with the terms thereof. The
Depositary Agent shall be entitled to rely on any such instructions and
distribute shares of Acquiror Common Stock from the Escrow Fund in accordance
with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Acquiror or the Stockholder Agent may demand arbitration of
the dispute unless the amount of the damage or loss is at issue in a pending
Action or Proceeding involving a Third Party Claim, in which event arbitration
shall not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either event the matter shall be settled by arbitration
conducted by three arbitrators, one selected by Acquiror and one selected by the
Stockholder Agent, and the two arbitrators selected by Acquiror and the
Stockholder Agent shall select a third arbitrator. The arbitrators shall set a
limited time period and establish procedures designed to reduce the cost and
time for discovery of information relating to any dispute while allowing the
parties an opportunity, adequate as determined in the sole judgment of the
arbitrators, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrators shall rule upon motions to
compel, limit or allow discovery as they shall deem appropriate given the nature
and extent of the disputed claim. The arbitrators shall also have the authority
to impose sanctions, including attorneys' fees and other costs incurred by the
parties, to the same extent as a court of law or equity, should the arbitrators
determine that discovery was sought without substantial justification or that
discovery was refused or objected to by a party without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 8.2(f), the Depositary Agent shall be entitled to act in accordance
with such decision and make or withhold payments out of the Escrow Fund in
accordance therewith. Such decision shall be written and shall be supported by
written findings of fact and conclusions regarding the dispute which shall set
forth the award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators may
be entered in any court having competent jurisdiction. Any such arbitration
shall be held in Los Angeles, California under the commercial rules of
arbitration of the American Arbitration Association then in effect. For purposes
of this Section 8.2(g), in any arbitration hereunder in which any claim or the
amount thereof stated in the Officer's Certificate is at issue, Acquiror shall
not be deemed to be the prevailing party (the "Non-Prevailing Party") in the
event that the arbitrators award Acquiror less than the sum of one-half of the
disputed amount of any Losses plus any amounts not in dispute; otherwise, the
stockholders of the Company as represented by the Stockholder Agent shall be
deemed to be the Non-Prevailing Party. The Non-Prevailing Party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative costs of the arbitration and the expenses, including without
limitation, reasonable attorneys' fees and costs, incurred by the other party to
the arbitration.
(h) STOCKHOLDER AGENT OF THE STOCKHOLDERS; POWER OF ATTORNEY.
(i) Xxxxxxxx Xxxxxx shall be appointed as agent and
attorney-in-fact (the "Stockholder Agent") for each stockholder of the Company
(except such stockholder, if any, as shall have perfected their appraisals and
dissenters' rights under Delaware Law for and on
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behalf of the stockholders of the Company, to give and receive notices and
communications, to authorize delivery to Acquiror of shares of Acquiror Common
Stock from the Escrow Fund in satisfaction of claims by Acquiror, to object to
such deliveries, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Stockholder Agent for the accomplishment of
the foregoing. Such agency may be changed by the stockholders of the Company
from time to time upon not less than thirty days prior written notice to
Acquiror; PROVIDED, HOWEVER, that the Stockholder Agent may not be removed
unless holders of a two-thirds interest in the Escrow Fund agree to such removal
and to the identity of the substituted stockholder agent. Any vacancy in the
position of Stockholder Agent may be filled by approval of the holders of a
majority in interest of the Escrow Fund. No bond shall be required of the
Stockholder Agent, and the Stockholder Agent shall not receive compensation for
his services. Notices or communications to or from the Stockholder Agent shall
constitute notice to or from each of the stockholders of the Company.
(ii) The Stockholder Agent shall not incur any liability with
respect to any action taken or suffered by him or omitted hereunder as
Stockholder Agent while acting in good faith and any act done or suffered or
omitted hereunder pursuant to the advice of counsel shall be conclusive evidence
of such good faith. The Stockholder Agent may, in all questions arising
hereunder, rely on the advice of counsel and for anything done, omitted or
suffered in good faith by the Stockholder Agent based on such advice, the
Stockholder Agent shall not be liable to anyone. The Stockholder Agent
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement and no implied covenants or obligations shall be read
into this Agreement or the Escrow Agreement against the Stockholder Agent
(iii) The Stockholder Agent shall have reasonable access to
information about the Company and the reasonable assistance of the Company's
officers and employees for purposes of performing his duties and exercising his
rights hereunder; PROVIDED, that the Stockholder Agent shall treat
confidentially and not disclose any nonpublic information from or about the
Company to anyone (except on a need to know basis to individuals who agree in
writing to treat such information confidentially).
(i) ACTIONS OF THE STOCKHOLDER AGENT. A decision, act, consent or
instruction of the Stockholder Agent shall constitute a decision of all the
stockholders for whom a portion of the Escrow Amount otherwise issuable to them
are deposited in the Escrow Fund and shall be final, binding and conclusive upon
each of such stockholders, and the Depositary Agent and Acquiror may rely upon
any such decision, act, consent or instruction of the Stockholder Agent as being
the decision, act, consent or instruction of every such stockholder of the
Company. The Depositary Agent and Acquiror are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Stockholder Agent.
(j) THIRD-PARTY CLAIMS. In the event Acquiror becomes aware of a
third-party claim (a "Third Party Claim") which Acquiror reasonably expects may
result in a demand against the Escrow Fund, Acquiror shall notify the
Stockholder Agent of such claim, and the Stockholder Agent, as representative
for the stockholders of the Company, shall be entitled, at their expense, to
participate in any defense of such claim. Acquiror shall have the right in its
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sole discretion to settle any Third Party Claim; PROVIDED, HOWEVER, that if
Acquiror settles any Third Party Claim without the Stockholder Agent's consent
(which consent shall not be unreasonably withheld or delayed), Acquiror may not
make a claim against the Escrow Fund with respect to the amount of Losses
incurred by Acquiror in such settlement. In the event that the Stockholder Agent
has consented to any such settlement, the Stockholder Agent shall have no power
or authority to object under any provision of this Article 8 to the amount of
any claim by Acquiror against the Escrow Fund with respect to the amount of
Losses incurred by Acquiror in such settlement.
(k) INDEMNIFICATION FOR STOCKHOLDER AGENT. The stockholders of the
Company shall, severally and not jointly, on a pro rata basis based on their
proportionate ownership interest in the Company, indemnify, defend and hold the
Stockholder Agent harmless from and against any loss, damage, tax, liability and
expense that may be incurred by the Stockholder Agent arising out of or in
connection with the acceptance or administration of the Stockholder Agent's
duties, except as caused by the Stockholder Agent's gross negligence or willful
misconduct, including the legal costs and expenses of defending such Stockholder
Agent against any claim or liability in connection with the performance of the
Stockholder Agent's duties. The Stockholder Agent shall be entitled, but not
limited to, such indemnification from the Escrow prior to any distribution
thereof to the stockholders of the Company, but after any distributions
therefrom to Acquiror.
(l) DEPOSITARY AGENT'S DUTIES.
(i) LIMITATION ON DUTIES OF DEPOSITARY AGENT. The Depositary
Agent shall be obligated only for the performance of such duties as are
specifically set forth herein, and as set forth in any additional written escrow
instructions which the Depositary Agent may receive after the date of this
Agreement which are signed by an officer of Acquiror and the Stockholder Agent,
and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Depositary Agent shall not be
liable for any act done or omitted hereunder as Depositary Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith.
(ii) COMPLIANCE WITH ORDERS. The Depositary Agent is hereby
expressly authorized to comply with and obey Orders of any court of law or
Governmental or Regulatory Authority, notwithstanding any notices, warnings or
other communications from any party or any other person to the contrary. In case
the Depositary Agent obeys or complies with any such Order, the Depositary Agent
shall not be liable to any of the parties hereto or to any other person by
reason of such compliance, notwithstanding any such Order being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction or proper authority.
(iii) LIMITATIONS ON LIABILITY OF DEPOSITARY AGENT. The
Depositary Agent shall not be liable in any respect on account of (A) the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder; or (B) the expiration of any rights under
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any statute of limitations with respect to this Agreement or any documents
deposited with the Depositary Agent.
(iv) GOOD FAITH OF DEPOSITARY AGENT. In performing any duties
under the Agreement, the Depositary Agent shall not be liable to any party for
damages, losses, or expenses, except for gross negligence or willful misconduct
on the part of the Depositary Agent. The Depositary Agent shall not incur any
such liability for (A) any act or failure to act made or omitted in good faith,
or (B) any action taken or omitted in reliance upon any instrument, including
any written statement or affidavit provided for in this Agreement that the
Depositary Agent shall in good faith believe to be genuine, nor will the
Depositary Agent be liable or responsible for forgeries, fraud, impersonations
or determining the scope of any representative authority. In addition, the
Depositary Agent may consult with legal counsel in connection with the
Depositary Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by him/her in good faith in accordance
with the advice of counsel. The Depositary Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(v) NON-RESPONSIBILITY OF DEPOSITARY AGENT. If any controversy
arises between the parties to this Agreement, or with any other party,
concerning the subject matter of this Agreement, its terms or conditions, the
Depositary Agent will not be required to determine the controversy or to take
any action regarding it. The Depositary Agent may hold all documents and shares
of Acquiror Common Stock and may wait for settlement of any such controversy by
final appropriate legal proceedings or other means as, in the Depositary Agent's
discretion, the Depositary Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Depositary Agent will not be
liable for any damages. Furthermore, the Depositary Agent may at its option,
file an action of interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The Depositary Agent is authorized to
deposit with the clerk of the court all documents and shares of Acquiror Common
Stock held in escrow, except all costs, expenses, charges and reasonable
attorney fees incurred by the Depositary Agent due to the interpleader action
and which the parties jointly and severally agree to pay. Upon initiating such
action, the Depositary Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vi) INDEMNIFICATION OF DEPOSITARY AGENT. Acquiror and its
successors and assigns agrees to indemnify and hold the Depositary Agent
harmless against any and all Losses incurred by the Depositary Agent in
connection with the performance of the Depositary Agent's duties under this
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter.
(vii) RESIGNATION OF DEPOSITARY AGENT. The Depositary Agent
may resign at any time upon giving at least thirty days written notice to the
parties; PROVIDED, HOWEVER, that no such resignation shall become effective
until the appointment of a successor depositary agent which shall be
accomplished as follows: the parties shall use their best efforts to mutually
agree on a successor depositary agent within thirty days after receiving such
notice. If the parties fail to agree upon a successor depositary agent within
such time, the Depositary Agent shall have the right to appoint a successor
depositary agent authorized to do business in the State of California. The
successor depositary agent shall execute and deliver an instrument
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accepting such appointment and it shall, without further acts, be vested with
all the estates, properties, rights, powers, and duties of the predecessor
depositary agent as if originally named as Depositary Agent. The Depositary
Agent shall be discharged from any further duties and liability under this
Agreement.
(m) FEES. All fees of the Depositary Agent for performance of its
duties hereunder shall be paid by Acquiror. In the event that the conditions of
this Agreement are not promptly fulfilled, or if the Depositary Agent renders
any service not provided for in this Agreement, or if the parties request a
substantial modification of its terms, or if any controversy arises, or if the
Depositary Agent is made a party to, or intervenes in, any Action or Proceeding
pertaining to this escrow or its subject matter, the Depositary Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or Action or Proceeding. Acquiror agrees to pay these sums upon
demand.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. Except as provided in Section 9.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual agreement of the Company, Acquiror and Merger Sub;
(b) by the Company, Acquiror or Merger Sub if: (i) the Effective
Time has not occurred before 5:00 p.m. (Pacific Time) on December 31, 2000
(PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 9.1(b)(i) shall not be available to any party whose willful failure to
fulfill any obligation hereunder has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date); (ii) there shall
be a final nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any Governmental or Regulatory Authority that would make consummation
of the Merger illegal;
(c) by Acquiror and Merger Sub if there shall be any action taken,
or any Law or Order enacted, promulgated or issued or deemed applicable to the
Merger, by any Governmental or Regulatory Authority, which would: (i) prohibit
Acquiror's or Merger Sub's ownership or operation of all or any portion of the
business of the Company or (ii) compel Acquiror or Merger Sub to dispose of or
hold separate all or any portion of the Assets and Properties of the Company as
a result of the Merger;
(d) by Acquiror if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of the Company and (i) the Company is
not using its reasonable efforts to cure such breach, or has not cured such
breach within thirty days, after notice of such breach to the Company (PROVIDED,
HOWEVER, that, no cure period shall be required for a breach which by its nature
cannot be cured)
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and (ii) as a result of such breach any of the conditions set forth in Section
7.1 or Section 7.3, as the case may be, would not be satisfied prior to the
Closing Date;
(e) by the Company if it is not in material breach of its
representations, warranties, covenants and agreements under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of Acquiror or Merger Sub and (i)
Acquiror or Merger Sub, as applicable, is not using its reasonable efforts to
cure such breach, or has not cured such breach within thirty days, after notice
of such breach to Acquiror or Merger Sub, as applicable, (PROVIDED, HOWEVER,
that no cure period shall be required for a breach which by its nature cannot be
cured), and (ii) as a result of such breach any of the conditions set forth in
Section 7.1 or Section 7.2, as the case may be, would not then be satisfied;
(f) by Acquiror if, at any time after five days following the
meeting at which the Company's stockholders take the Company Stockholder Action,
holders of more than five percent of the outstanding shares of Company Common
Stock shall have exercised, or have any continued right to exercise, appraisal,
dissenters' or similar rights under applicable law with respect to their shares
by virtue of the Merger;
(g) by Acquiror if the Merger shall not have been approved by the
requisite votes of the Company's stockholders in accordance with Delaware Law;
or
(h) by Acquiror and Merger Sub and if any of the individuals
listed in Section 7.3(i) of the Company Disclosure Schedule cease to be employed
by the Company; PROVIDED, HOWEVER, that Acquiror may exercise this termination
right with respect to a particular individual named in Section 7.3(i) of the
Company Disclosure Schedule only if Acquiror gives the Company written notice of
termination of the Agreement within thirty days after receipt of written notice
from the Company that such individual has ceased to be employed by the Company.
9.2 EFFECT OF TERMINATION. In the event of a valid termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Acquiror, Merger
Sub or the Company, or their respective officers, directors or stockholders or
Affiliates or Associates; PROVIDED, HOWEVER, that each party shall remain liable
for any breaches of this Agreement prior to its termination; and PROVIDED
FURTHER that, the provisions of Sections 6.4, 6.5, 9.2 and Article 10 and the
applicable definitions set forth in Article 1 of this Agreement shall remain in
full force and effect and survive any termination of this Agreement.
9.3 AMENDMENT. Except as is otherwise required by applicable law after
the stockholders of the Company approve the Merger and this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
Acquiror, Merger Sub and the Company may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations of the other party
hereto, (b) waive any inaccuracies in the representations
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and warranties made to such party contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements, covenants
or conditions for the benefit of such party contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or sent by internationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
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If to Acquiror or Merger Sub to:
ValueClick, Inc.
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
If to the Company to:
XxxxxXxxxxx.xxx, Inc.
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxx Xxxxxxxxxx LLP
00 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
All such notices, requests and other communications will (a) if
delivered personally or by internationally recognized courier service to the
address as provided in this Section 10.1, be deemed given upon delivery or, (b)
if delivered by facsimile transmission to the facsimile number as provided for
in this Section 10.1, be deemed given upon facsimile confirmation. Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
10.2 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
hereto, including the Company Disclosure Schedule and the Acquiror Disclosure
Schedule, constitute the entire Agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
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10.3 FURTHER ASSURANCES; POST-CLOSING COOPERATION. At any time or from
time to time after the Closing, the parties shall execute and deliver to the
other party such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by this Agreement and
otherwise to cause the other party to fulfill its obligations under this
Agreement and the transactions contemplated hereby. Each party agrees to use
commercially reasonable efforts to cause the conditions to its obligations to
consummate the Merger to be satisfied.
10.4 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
10.5 THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity under Section 6.10 or Article 8.
10.6 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
10.7 HEADINGS. The headings and table of contents used in this
Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof.
10.8 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York, including,
without limitation, Title 14, Section 5-1401 of New York General Obligations
Law, without giving effect to any other choice of law or conflict of law
provision or rule (whether of the State of New York or any other
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jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York; PROVIDED, HOWEVER, that the Merger shall be
governed by Delaware Law.
10.10 WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
10.11 CONSTRUCTION. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
10.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
10.13 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Except where this Agreement specifically provides for arbitration, it
is 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 hereof 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.
10.14 CONSTRUCTION.
(a) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender, (ii) words using the singular or
plural number also include the plural or singular number, respectively, (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement as a whole and not to any particular Article, Section or
other subdivision, (iv) the terms "Article" or "Section" or other subdivision
refer to the specified Article, Section or other subdivision of the body of this
Agreement, (v) the phrases "ordinary course of business" and "ordinary course of
business consistent with past practice" refer to the business and practice of
the Company, (vi) the words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation," and (vii) when a
reference is made in this Agreement to Exhibits, such reference shall be to an
Exhibit to this Agreement unless otherwise indicated. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP. The term "party" or "parties" when used herein refer to Acquiror, on
the one hand, and the Company, on the other.
(b) When used herein, the phrase "to the knowledge of" any Person, "to
the best knowledge of" any Person, "known to" any Person or any similar phrase,
means (i) with respect
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to any Person who is an individual, the actual knowledge of such Person, (ii)
with respect to any other Person, the actual knowledge of the directors and
officers of such Person and other individuals that have a similar position or
have similar powers and duties as the officers and directors of such Person, and
(iii) in the case of each of (i) and (ii), the knowledge of facts that such
individuals should have after due inquiry. For this purpose, "due inquiry" with
respect to any matter means inquiry of and consultations with (A) the directors
and officers of such Person and other individuals that have a similar position
or have similar powers and duties as such officers and directors, (B) other
employees of and the advisors to such Person, including legal counsel and
outside auditors who have principal responsibility for the matter in question or
are otherwise likely to have information relevant to the matter, and (C) the
stockholders owning more than 10% of the equity interests, by vote or value, of
such Person.
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IN WITNESS WHEREOF, Acquiror and the Company, and with respect to
Section 8.2 only, the Stockholder Agent and the Depositary Agent, have caused
this Agreement to be signed by their duly authorized representatives, all as of
the date first written above.
XXXXXXXXXXX.XXX, INC. VALUECLICK, INC.
By: By:
------------------------------- ---------------------------------
Name: Name:
Title: Title:
VALUECLICK ACQUISITION CORP. XXXXXXXX XXXXXX,
AS STOCKHOLDER AGENT
By: By:
------------------------------- ---------------------------------
Name:
Title:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
AS DEPOSITARY AGENT
By:
-------------------------------
Name:
Title:
