EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made and entered into as of October 26, 2000 by and among xxxxxxxxx.xxx,
Inc., a Delaware corporation ("Parent"), Metal Acquisition Corp., a
Delaware corporation and a wholly-owned Parent Subsidiary ("Metal Merger
Sub"), WW Acquisition Corp., a New York corporation and a wholly-owned
Parent Subsidiary ("WW Merger Sub"), Xxxx.xxx, Inc., a Delaware corporation
(the "Company"), Welcome Wagon International Inc., a New York corporation
("WW"), Cendant Membership Services Holdings, Inc., a Delaware corporation
("CMS"), and Cendant Corporation, a Delaware corporation (the
"Stockholder").
RECITALS
A. The Company is engaged in the Business (as defined in Section
1.6(a) of this Agreement).
B. The Boards of Directors of each of the Stockholder, the
Company, Parent, Metal Merger Sub and WW Merger Sub believe it is in the
best interests of each company and its respective stockholders that Parent
acquire (i) the Company through the statutory merger of Metal Merger Sub
with and into the Company with the Company continuing as the surviving
corporation (the "Metal Merger") and (ii) WW through the statutory merger
of WW Merger Sub with and into WW with WW continuing as the surviving
corporation (the "WW Merger" and, together with the Metal Merger, the
"Mergers") and, in furtherance thereof, have approved this Agreement, the
Mergers and the other transactions contemplated hereby.
C. The Board of Directors of the Stockholder has authorized the
Stockholder to approve this Agreement, the Mergers and the other
transactions contemplated hereby and the Stockholder has approved, and all
subsidiaries of the Stockholder that have any beneficial ownership of the
Company or WW have approved, the Mergers.
D. The Board of Directors of Parent has authorized the approval of
this Agreement, the Merger, the issuance of Parent Common Stock (as defined
below) and the other transactions contemplated hereby.
E. Pursuant to the Mergers, among other things, and subject to the
terms and conditions of this Agreement (i) all of the issued and
outstanding capital stock of the Company and WW immediately prior to the
Mergers will be converted into shares of the common stock of Parent, and
(ii) all issued and outstanding options, warrants and other rights to
acquire or receive shares of the capital stock of the Company and of the
Stockholder which is designed to reflect the performance of the Company
(the "Tracking Stock") and (to the extent such options for Tracking Stock
are beneficially owned by employees of the Company or WW immediately prior
to the Mergers) shall be assumed by Parent, and shall thereafter represent
options, warrants or other rights to acquire or receive common stock of
Parent.
F. Concurrently with the execution and delivery of this Agreement,
the Stockholder, Parent and the Company are entering into certain of the
operating agreements and other agreements which are attached hereto as
Exhibits A-1 through A-10 (collectively, the "Commercial Agreements").
G. Concurrently with the execution and delivery of this Agreement,
the Stockholder and Parent are executing and delivering a Stockholder
Agreement in the form attached hereto as Exhibit B hereto (the "Stockholder
Agreement") and a Registration Rights Agreement in the form attached hereto
as Exhibit C (the "Registration Rights Agreement" and, together with the
Stockholder Agreement and the Commercial Agreements, the "Ancillary
Agreements").
H. Concurrently with the execution of this Agreement, each of the
persons set forth on Exhibit D hereto is entering into a support agreement
with the Stockholder in the form attached hereto as Exhibit E
(collectively, the "Support Agreements").
I. The Stockholder, Parent, Metal Merger Sub and WW Merger Sub
desire to make certain representations and warranties and other agreements
in connection with the Mergers.
J. For U.S. federal income tax purposes, it is intended by the
parties hereto that each of the Mergers shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code") and that this Agreement with respect to each of the
Mergers constitutes a "plan of reorganization" within the meaning of
Section 1.368-2(g) of the income tax regulations promulgated under the
Code.
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements, covenants, promises and representations set forth
herein, the mutual benefits to be gained by the performance of the terms
hereof, and for other good and valuable consideration, intending to be
legally bound hereby the parties agree as follows:
ARTICLE I
THE MERGERS
1.1 The Metal Merger. At the Effective Time (as defined in Section
1.2 hereof) and subject to and upon the terms and conditions of this
Agreement and the applicable provisions of the Delaware General Corporation
Law ("Delaware Law"), Metal Merger Sub shall be merged with and into the
Company, the separate corporate existence of Metal Merger Sub shall cease
and the Company shall continue as the surviving corporation and shall
become a wholly-owned subsidiary of Parent. The surviving corporation after
the Metal Merger is sometimes referred to hereinafter as the "Metal
Surviving Corporation."
1.2 The WW Merger. At the Effective Time and subject to the terms
and conditions of this Agreement and the applicable provisions of the New
York Business Corporation Law ("New York Law"), WW Merger Sub shall be
merged with and into WW, the separate corporation existence of WW Merger
Sub shall cease and WW shall continue as the surviving corporation (the "WW
Surviving Corporation") and shall become a wholly-owned subsidiary of
Parent.
1.3 Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 8.1 hereof, the closing of the Mergers and the other
transactions contemplated by this Agreement (the "Closing") will take place
as promptly as practicable following the execution and delivery of this
Agreement by each of the parties hereto, but in no event later than two (2)
business days following satisfaction or waiver of the conditions set forth
in Article VI hereof, at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, unless
another place and/or time is agreed to in writing by Parent and the
Stockholder. 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 each of the Mergers to be consummated by filing a Certificate
of Merger (or like instrument) (each, a "Certificate of Merger" with
respect to one of the Mergers, and collectively with respect to both
Mergers, the "Certificates of Merger") with the Secretaries of State of the
State of Delaware and the State of New York, respectively, in accordance
with the relevant provisions of Delaware Law and New York Law (the times at
which both Mergers have become fully effective (or such later time as may
be agreed in writing by the Company and Parent and specified in the
Certificates of Merger) is referred to herein as the "Effective Time").
1.4 Effect of the Mergers. At the Effective Time, the effect of
the Mergers shall be as provided in the applicable provisions of Delaware
Law and New York Law, as the case may be. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, except as
provided herein, (i) all the property, rights, privileges, powers and
franchises of the Company and Metal Merger Sub shall vest in the Metal
Surviving Corporation, and all debts, liabilities and duties of the Company
and Metal Merger Sub shall become the debts, liabilities and duties of the
Metal Surviving Corporation and (ii) all of the property, rights,
privileges, powers and franchises of WW and WW Merger Sub shall vest in the
WW Surviving Corporation, and all debts, liabilities and duties of WW and
WW Merger Sub shall become the debts, liabilities and duties of the WW
Surviving Corporation.
1.5 Certificates of Incorporation; Bylaws.
(a) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time, (i) the Certificate of Incorporation of Metal
Merger Sub as in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Metal Surviving Corporation at and
after the Effective Time until thereafter amended in accordance with the
Delaware Law and the terms of such Certificate of Incorporation; provided,
however, that at the Effective Time, Article I of the Certificate of
Incorporation of the Metal Surviving Corporation shall be amended and
restated in its entirety to read as follows: "The name of the corporation
is Xxxx.xxx, Inc." and (ii) the Certificate of Incorporation of WW Merger
Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the WW Surviving Corporation at and after
the Effective Time until thereafter amended in accordance with the New York
Law and the terms of such Certificate of Incorporation; provided, however,
that at the Effective Time, Article I of the Certificate of Incorporation
of the WW Surviving Corporation shall be amended and restated in its
entirety to read as follows: "The name of the Corporation is Welcome Wagon
International Inc."
(b) Unless otherwise determined by Parent prior to the Effective
Time, (i) the Bylaws of Metal Merger Sub as in effect immediately prior to
the Effective Time shall be the Bylaws of the Metal Surviving Corporation
at and after the Effective Time, until thereafter amended in accordance
with Delaware Law and the terms of Certificate of Incorporation of the
Metal Surviving Corporation and such Bylaws and (ii) the Bylaws of WW
Merger Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the WW Surviving Corporation at and after the Effective Time,
until thereafter amended in accordance with New York Law and the terms of
the Certificate of Incorporation of the WW Surviving Corporation and such
Bylaws.
1.6 Metal Directors and Officers.
(a) Unless otherwise determined by Parent prior to the Effective
Time, the directors of Metal Merger Sub immediately prior to the Effective
Time shall be the directors of the Metal Surviving Corporation at and after
the Effective Time, each to hold the office of a director of the Metal
Surviving Corporation in accordance with the provisions of Delaware Law and
the Certificate of Incorporation and Bylaws of the Metal Surviving
Corporation until their successors are duly elected and qualified.
(b) Unless otherwise determined by Parent prior to the Effective
Time, the officers of Metal Merger Sub immediately prior to the Effective
Time shall be the officers of the Metal Surviving Corporation at and after
the Effective Time, each to hold office in accordance with the provisions
of the Bylaws of the Metal Surviving Corporation.
1.7 WW Directors and Officers.
(a) Unless otherwise determined by Parent prior to the Effective
Time, the directors of WW Merger Sub immediately prior to the Effective
Time shall be the directors of the WW Surviving Corporation at and after
the Effective Time, each to hold the office of a director of the WW
Surviving Corporation in accordance with the provisions of New York Law and
the Certificate of Incorporation and Bylaws of the WW Surviving Corporation
until their successors are duly elected and qualified.
(b) Unless otherwise determined by Parent prior to the Effective
Time, the officers of WW Merger Sub immediately prior to the Effective Time
shall be the officers of the WW Surviving Corporation at and after the
Effective Time, each to hold office in accordance with the provisions of
the Bylaws of the WW Surviving Corporation.
1.8 Merger Consideration.
(a) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Additional Options" shall mean the number of Company Options
reserved but unissued under the 2000 Option Plan such that, immediately
prior to the Effective Time and after giving effect to any acceleration of
vesting to the Company Options that occurs as a result of the Mergers and
any additional grants of Company Options required to be granted as a result
of the Mergers, the sum of (i) the number of unvested Continuing Employee
Options issued and outstanding and (ii) such Additional Options equals no
less than 10.7% of the Fully Converted Shares (inclusive of the Additional
Options).
"Business" shall mean, subject to the last paragraph of Section
4.1 of this Agreement, the business conducted by Xxxx.xxx, Inc., RentNet,
Inc., HouseNet, Inc. and Welcome Wagon International Inc., and all of their
respective subsidiaries and business divisions, including without
limitation, SeniorHousingNet, CorporateHousingNet, SelfStorageNet and
Movedotcom(U.K.) Ltd. ("Xxxx.xxx U.K."), and excluding the hosting of
websites for Century 21, Coldwell Banker and ERA.
"Company Capital Stock" shall mean shares of Company Common Stock
and any other shares of other capital stock of the Company.
"Company Common Stock" shall mean shares of the voting common
stock of Company, par value $.01 per share and the non-voting common stock
of the Company, par value $.01 per share.
"Company Convertible Securities" shall mean the Company Options
together with any other rights to acquire or receive shares of Company
Capital Stock, including all options, warrants and convertible preferred
stock.
"Company Options" shall mean (i) all, if any, issued and
outstanding options to purchase or otherwise acquire Company Capital Stock
(whether or not vested), (ii) all issued and outstanding options to
purchase or otherwise acquire Tracking Stock (whether or not vested)
granted under the Options Plans and held by Continuing Employees and (iii)
all reserved but unissued shares under the 2000 Option Plan.
"Continuing Employee" shall mean those employees who are, as of
the Closing, employed by the Company or WW or any of the Subsidiaries.
"Continuing Employee Option" shall mean each Company Option issued
to and held by a Continuing Employee.
"Fully Converted Shares" shall mean the sum of (i) all issued and
outstanding shares of Tracking Stock, (ii) all shares of Tracking Stock
issuable upon the exercise of all options or other rights to acquire
Tracking Stock, (iii) the Stockholder's notional interest in Tracking
Stock, (iv) all Company Options (without double counting any options or
other rights to acquire Tracking Stock), and (v) all Additional Options.
"Knowledge" shall mean, with respect to the Stockholder, what is
within the actual knowledge of any of the directors or officers of the
Stockholder, the Company or WW, and in the case of Parent, what is within
the actual knowledge of any of the directors or officers of Parent or any
of the Parent Subsidiaries.
"Metal Consideration" shall mean that number of shares of Parent
Common Stock set forth on Schedule 1.8(a).
"Metal Exchange Ratio" shall mean a number of shares of Parent
Common Stock equal to the quotient obtained by dividing (i) the Metal
Consideration by (ii) the Metal Outstanding Shares (with the result rounded
to four decimal places).
"Metal Outstanding Shares" shall mean the aggregate number of
shares of Company Capital Stock outstanding immediately prior to the
Effective Time, including the aggregate number of shares of Company Capital
Stock, if any, issuable (with or without the passage of time or
satisfaction of other conditions) upon exercise or conversion of any
Company Convertible Securities outstanding or issuable (with or without the
passage of time or satisfaction of other conditions) immediately prior to
the Effective Time.
"1997 Option Plan" shall mean the Cendant Corporation amended and
restated 1997 Stock Incentive Plan.
"1999 Option Plan" shall mean the Cendant Corporation Xxxx.xxx
Group 1999 Stock Option Plan.
"Option Exchange Ratio" shall mean a number of shares of Parent
Common Stock equal to the quotient obtained by dividing (i) the Total
Consideration by (ii) the Fully Converted Shares (with the result rounded
to four decimal places).
"Option Plans" shall mean the 1999 Option Plan, the 1997 Option
Plan and the 2000 Option Plan.
"Options Assumed" shall mean the sum of the Company Options and
the Additional Options.
"Parent Common Stock" shall mean the common stock of Parent,
$0.001 par value per share.
"Parent Closing Price" shall mean the average of the closing
prices of Parent Common Stock as quoted on the Nasdaq National Market for
the ten (10) days prior to the Closing Date.
"RentNet" shall mean RentNet, Inc., a Delaware corporation and a
Metal Subsidiary.
"SpringStreet" shall mean SpringStreet, Inc., a California
corporation and a Parent Subsidiary.
"Total Consideration" shall mean 26,275,602 shares of Parent
Common Stock.
"Total Option Consideration" shall mean a number of shares of
Parent Common Stock equal to the product obtained by multiplying (i)
Options Assumed by (ii) the Option Exchange Ratio.
"Total Outstanding Shares" shall mean the sum of the Metal
Outstanding Shares and the WW Outstanding Shares.
"2000 Option Plan" shall mean the Xxxx.xxx, Inc. 2000 Stock Option
Plan.
"WW Capital Stock" shall mean shares of common stock of WW, par
value $.01 per share and any other shares of other capital stock of WW.
"WW Consideration" shall mean that number of shares of Parent
Common Stock equal to the Total Consideration minus the Total Option
Consideration minus the Metal Consideration.
"WW Convertible Securities" shall mean any other rights to acquire
or receive shares of WW Capital Stock, including all options, warrants and
convertible preferred stock.
"WW Exchange Ratio" shall mean a number of shares of Parent Common
Stock equal to the quotient obtained by dividing (i) the WW Consideration
by (ii) the WW Outstanding Shares (with the result rounded to four decimal
places).
"WW Outstanding Shares" shall mean the aggregate number of shares
of WW Capital Stock outstanding immediately prior to the Effective Time,
including the aggregate number of shares of WW Capital Stock issuable (with
or without the passage of time or satisfaction of other conditions) upon
exercise or conversion of any WW Convertible Securities outstanding or
issuable (with or without the passage of time or satisfaction of other
conditions) immediately prior to the Effective Time.
(b) Shares to be Issued; Effect on Capital Stock. The number of
shares of Parent Common Stock issuable (including Parent Common Stock to be
reserved for issuance upon exercise of any of the Company Options to be
assumed by Parent) in exchange for the acquisition by Parent of all
outstanding Company Capital Stock and all outstanding WW Capital Stock and
the assumption of all (if any) unexpired and unexercised Company
Convertible Securities shall be equal to the Total Consideration minus the
Total Option Consideration. Subject to the terms and conditions of this
Agreement, as of the Effective Time, by virtue of the Mergers and without
any action on the part of Metal Merger Sub, WW Merger Sub, the Company, WW
or the holder of any shares of the Company Capital Stock, WW Capital Stock
or Company Convertible Securities, the following shall occur:
(i) Effect on Company Capital Stock. At the Effective Time, by
virtue of the Metal Merger and without any action on the part of Company or
the Stockholder, each share of Company Capital Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and extinguished
and shall be converted automatically into the right to receive, upon the
terms and subject to conditions set forth below and throughout this
Agreement, a number of shares of Parent Common Stock equal to the Metal
Exchange Ratio (the "Metal Merger Consideration").
(ii) Effect on WW Capital Stock. At the Effective Time, by virtue
of the WW Merger and without any action on the part of WW or the
Stockholder, each share of WW Capital Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and extinguished
and shall be converted automatically into the right to receive, upon the
terms and subject to the conditions set forth below and throughout this
Agreement, a number of shares of Parent Common Stock equal to the WW
Exchange Ratio (the "WW Merger Consideration" and together with the Metal
Merger Consideration, the "Merger Consideration").
(iii) Assumption of Certain Company Options. Effective as of the
Effective Time, each outstanding Continuing Employee Option issued to and
held by Continuing Employees pursuant to the Option Plans (including any
Company Options required to be issued to a Continuing Employee as a result
of the Mergers) and each Additional Option, in each case whether vested or
unvested and in the case of Additional Options whether issued or unissued,
will be assumed by Parent in connection with the Mergers. Each Continuing
Employee Option and Additional Option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Option Plans and/or as provided in the
respective option or similar agreement immediately prior to the Effective
Time (including any vesting schedule or repurchase rights), except that (i)
each Continuing Employee Option and Additional Option will be exercisable
for that number of whole shares of Parent Common Stock equal to the product
of the number of shares of Tracking Stock or Company Common Stock, as
applicable, that were issuable upon exercise of such Continuing Employee
Option or Additional Option, as applicable, immediately prior to the
Effective Time multiplied by the Option Exchange Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock and (ii) the per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such assumed Continuing Employee Option or Additional Option,
as applicable, will be equal to the quotient determined by dividing the
exercise price per share of Tracking Stock or Company Common Stock, as
applicable, at which such Continuing Employee Option or Additional Option,
as applicable, was exercisable immediately prior to the Effective Time by
the Option Exchange Ratio, rounded up to the nearest whole cent. The
Stockholder shall be responsible for, and shall indemnify and hold harmless
Parent and its affiliates and their officers, directors, employees,
affiliates and agents from and against any and all claims, losses, damages,
costs and expenses (including attorneys' fees, costs and expenses) and
other liabilities and obligations relating to or arising out of Parent's
assumption of Continuing Employee Options under this Agreement or failure
of Parent to assume any options, rights or other securities of the
Stockholder, the Company or any of their respective affiliates in
connection with the transactions contemplated by this Agreement; provided
that this indemnity shall not apply to (i) Parent's failure to issue Parent
Common Stock in accordance with the Option Exchange Ratio upon the due
exercise of such Continuing Employee Options held by Continuing Employees
and assumed by Parent pursuant to this Section, (ii) Parent's other
obligations under the Option Plans with respect to the Continuing Employee
Options or the agreements governing such Continuing Employee Options by
virtue of such assumption, (iii) any actions taken by Parent after the
Closing with respect to the termination of employment of any Continuing
Employee who holds a Continuing Employee Option, or (iv) any misstatement
or omission in any Registration Statement on Form S-8 or prospectus or
similar securities law document prepared by Parent and distributed to its
employees with respect to the Continuing Employee Options.
(iv) Fractional Shares. No fractional share of Parent Common Stock
shall be issued in the Mergers. In lieu thereof, any fractional share shall
be rounded to the nearest whole share of Parent Common Stock (with .5 being
rounded up).
(v) Cancellation of Company-Owned Stock. At the Effective Time, by
virtue of the Metal Merger and without any action on the part of any of the
parties hereto, each share of Company Capital Stock owned by, the Company
or any Metal Subsidiary immediately prior to the Effective Time, shall be
cancelled and extinguished without any conversion thereof.
(vi) Cancellation of WW-Owned Stock. At the Effective Time, by
virtue of the WW Merger and without any action on the part of any of the
parties hereto, each share of WW Capital Stock owned by WW or any WW
Subsidiary immediately prior to the Effective Time, shall be cancelled and
extinguished without any conversion thereof.
(vii) Capital Stock of Metal Merger Sub. At the Effective Time, by
virtue of the Metal Merger and without any action on the part of any of the
parties hereto, each share of capital stock of Metal Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
common stock of the Metal Surviving Corporation. Each stock certificate of
Metal Merger Sub evidencing ownership of any such shares of Metal Merger
Sub shall thereafter evidence ownership of an equivalent number of shares
of capital stock of the Metal Surviving Corporation.
(viii) Capital Stock of WW Merger Sub. At the Effective Time, by
virtue of the WW Merger and without any action on the part of any of the
parties hereto, each share of capital stock of WW Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
common stock of the WW Surviving Corporation. Each stock certificate of WW
Merger Sub evidencing ownership of any such shares of WW Merger Sub shall
thereafter evidence ownership of an equivalent number of shares of capital
stock of the WW Surviving Corporation.
1.9 Surrender of Certificates.
(a) At the Closing, the Stockholder shall surrender all
certificates formerly representing shares of Company Capital Stock and WW
Capital Stock (collectively, the "Certificates") for cancellation to
Parent.
(b) Upon proper presentation of the Certificates and in exchange
therefor, the Stockholder shall be entitled to receive, and Parent shall
deliver, a certificate representing the number of whole shares of Parent
Common Stock to which Stockholder is entitled pursuant to this Article I,
and the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of Company Capital Stock and WW Capital Stock 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 Parent Common Stock into which such shares of
Company Capital Stock and WW Capital Stock shall have been so converted.
(c) No Liability. Notwithstanding anything to the contrary in this
Section 1.9, neither Parent nor any party hereto shall be liable to a
holder of shares of Parent Common Stock, Company Capital Stock or WW
Capital Stock for any amount properly paid to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(d) No Further Ownership Rights in Company Capital Stock. The
shares of Parent Common Stock issued in accordance with the terms hereof
shall be deemed to be full satisfaction of all rights pertaining to shares
of each of Company Capital Stock and WW Capital Stock outstanding prior to
the Effective Time, and there shall be no further registration of transfers
on the records of (i) the Metal Surviving Corporation of shares of Company
Capital Stock or (ii) the WW Surviving Corporation of shares of WW Capital
Stock that were outstanding prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Parent, Metal Surviving
Corporation or the WW Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Article I.
(e) Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Metal Surviving
Corporation or the WW Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and
franchises of the Business, then Parent, Merger Sub and the Company, and
the officers and directors of the Company, WW, Parent, Metal Merger Sub and
WW Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary action.
1.10 Treatment of Stockholder Guaranty. Following the Closing,
Parent shall use commercially reasonable efforts to release and cancel (or,
to the extent that it cannot be so released and cancelled, to cause Parent
to be substituted for the Stockholder with respect to) the guaranty of
Stockholder in the agreement set forth in Schedule 1.10 of the Stockholder
Disclosure Letter (the "Stockholder Guaranty") (or if not possible added as
the primary obligor with respect thereto). Parent shall indemnify and hold
harmless Stockholder against liabilities incurred by Stockholder arising as
a result of events following the Closing Date with respect to the guaranty
of Stockholder in the agreement set forth in Schedule 1.10 of the
Stockholder Disclosure Letter after the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
As of the date hereof, the Stockholder represents and warrants to
Parent and Metal Merger Sub and WW Merger Sub, subject to such exceptions
as are specifically disclosed in the disclosure letter supplied by the
Stockholder to Parent (the "Stockholder Disclosure Letter") and dated as of
the date hereof, as follows:
2.1 Organization of the Company.
(a) Each of the Company and each Metal Subsidiary (as defined in
Section 2.3 hereof) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each
of the Company and each Metal Subsidiary has the corporate power to own its
respective properties and to carry on its respective businesses as
conducted. Each of the Company and each Metal Subsidiary is duly qualified
to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified (either individually
or collectively) would have a Material Adverse Effect on the Company. The
Stockholder has delivered to Parent a true and correct copy of the
certificate of incorporation and bylaws of each of the Company and the
Metal Subsidiaries, each as amended to date and in full force and effect on
the date hereof. There are no proposed or considered amendments to the
certificate of incorporation or bylaws of any of the Company or any Metal
Subsidiary. Schedule 2.1(a) of the Stockholder Disclosure Letter lists the
directors and officers of the Company and each Metal Subsidiary and each
jurisdiction in which the Company is qualified to do business.
(b) Each of WW and each WW Subsidiary (as defined in Section 2.3
hereof) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of WW
and each WW Subsidiary has the corporate power to own its respective
properties and to carry on its respective businesses as now being conducted
and as proposed to be conducted. Each of WW and each WW Subsidiary is duly
qualified to do business and in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified (either
individually or collectively) would have a Material Adverse Effect on WW.
The Stockholder has delivered to Parent a true and correct copy of the
certificate of incorporation and bylaws of each of WW and the WW
Subsidiaries, each as amended to date and in full force and effect on the
date hereof. There are no proposed or considered amendments to the
certificate of incorporation or bylaws of any of the Company or any WW
Subsidiary. Schedule 2.1(b) of the Stockholder Disclosure Letter lists the
directors and officers of each WW Subsidiary and each jurisdiction in which
WW is qualified to do business.
2.2 Company Capital Structure.
(a) The authorized Company Capital Stock consists of (i)
37,500,000 shares of common stock, par value $.01 per share, of which
22,500,000 shares are issued and outstanding as of the date hereof, (ii)
12,500,000 shares of non-voting common stock, par value $.01 per share,
none of which are issued and outstanding as of the date hereof; and (iii)
5,000,000 shares of Preferred Stock, par value $.01 per share, none of
which are issued and outstanding as of the date hereof. The total number of
shares of Company Capital Stock outstanding as of immediately prior to the
Effective Time (assuming the conversion, exercise or exchange of all
Company Convertible Securities) will be as set forth in Schedule 2.2(a) of
the Stockholder Disclosure Letter. All outstanding shares of the Company
Capital Stock are held (and as of immediately prior to the Effective Time
will be held) of record and beneficially by CMS. All of the capital stock
of CMS is held (and as of immediately prior to the Effective Time will be
held) of record and beneficially by the Stockholder. All outstanding shares
of Company Capital Stock are duly authorized, validly issued, fully paid
and non-assessable and not subject to preemptive rights created by statute,
the Certificate of Incorporation or Bylaws of the Company or any agreement
to which the Company or any of its Metal Subsidiaries is a party or by
which it is bound, and have been issued in compliance with federal and
state securities laws. There are no declared or accrued but unpaid
dividends with respect to any shares of Company Common Stock. The Company
has no other capital stock authorized, issued or outstanding. The Company
has no obligation to redeem or repurchase any capital stock of any
corporation or other entity, and has no liability in respect of any capital
stock of any corporation or other entity.
(b) The authorized WW Capital Stock consists of (i) 1,000 shares
of Common Stock, par value $.01 per share, of which 1,000 shares are issued
and outstanding as of the date hereof, and (ii) no shares of Preferred
Stock, par value $.01 per share, none of which are issued and outstanding
as of the date hereof. The total number of shares of WW Capital Stock
outstanding as of immediately prior to the Effective Time (assuming the
conversion, exercise or exchange of all WW Convertible Securities) will be
as set forth in Schedule 2.2(b) of the Stockholder Disclosure Letter. All
of the outstanding shares of the WW Capital Stock is held (and as of
immediately prior to the Effective Time will be held) of record and
beneficially by CMS. All outstanding shares of WW Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and not subject
to preemptive rights created by statute, the Certificate of Incorporation
or Bylaws of WW or any agreement to which WW or any of its WW Subsidiaries
is a party or by which it is bound, and have been issued in compliance with
federal and state securities laws. There are no declared or accrued but
unpaid dividends with respect to any shares of WW Common Stock. WW has no
other capital stock authorized, issued or outstanding. WW has no obligation
to redeem or repurchase any capital stock of any corporation or other
entity, and has no liability in respect of any capital stock of any
corporation or other entity.
(c) Except for the Option Plans, neither the Company, WW nor any
of their respective Subsidiaries nor the Stockholder on behalf of the
Company, WW or any of its Subsidiaries has ever adopted or maintained any
stock option plan or other plan providing for equity compensation of any
person. The Stockholder has reserved an aggregate of 11,000,000 shares of
Tracking Stock for issuance to employees, directors and consultants upon
the exercise of Company Options pursuant to the Option Plans, of which (i)
573,250 and 5,768,946 shares are issuable, as of the date hereof, upon the
exercise of outstanding, unexercised Company Options granted under the 1997
Option Plan and 1999 Option Plan, respectively and (ii) 4,426,750 and
231,054 shares remain available for future grant under the 1997 Option Plan
and 1999 Option Plan, respectively. The Stockholder has reserved an
aggregate of 1,586,000 shares of Tracking Stock for future issuance
pursuant to the exercise of outstanding warrants. Schedule 2.2(c) of the
Stockholder Disclosure Letter sets forth for each outstanding Company
Convertible Security and each Fully Converted Share, the name of the holder
of such Company Convertible Security or Fully Converted Share, the number
and type of shares subject to such Convertible Security or Fully Converted
Share, the exercise price of such Convertible Security or Fully Converted
Share, the vesting schedule for such Convertible Security or Fully
Converted Share, including the extent vested to date and whether the
vesting exercisability of such Convertible Security or Fully Converted
Share will be accelerated and become exercisable by reason of the
transactions contemplated by this Agreement and whether such Convertible
Security or Fully Converted Share is intended to qualify as an incentive
stock option as defined in Section 422 of the Code. All Company Options are
held by employees of the Company or its Subsidiaries and have been issued
in compliance with federal and state securities laws. Except for the
Company Convertible Securities described in Schedule 2.2(c) of the
Stockholder Disclosure Letter, there are no options, warrants, calls,
rights, commitments or agreements of any character, written or oral, to
which the Company, WW or any of their respective Subsidiaries is a party or
by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of Company
Capital Stock, WW Capital Stock or Fully Converted Shares or the capital
stock of any of the Subsidiaries or obligating the Company, WW or any of
their respective Subsidiaries to grant, extend, accelerate the vesting of,
change the price of, otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
other similar rights with respect to the Company, WW or any of their
respective Subsidiaries. Except as contemplated hereby, there are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting stock of the Company Capital Stock, WW Capital Stock or the Fully
Converted Shares. The holders of Company Convertible Securities, WW
Convertible Securities and Fully Converted Shares have been or will be
given, or shall have properly waived, any required notice prior to the
Mergers, and all such rights will be terminated at or prior to the
Effective Time. Without limiting the foregoing, neither the Company nor WW
is, and nor will either of them be obligated, to issue any Company Capital
Stock or WW Capital Stock in connection with any Tracking Stock or any
obligation to issue any Tracking Stock. As a result of the Mergers, Parent
will be, upon the Effective Time, the sole record holder and sole
beneficial owner of all capital stock of the Company, WW and their
respective Subsidiaries and rights to acquire or receive such capital
stock. As a result of the Mergers and following the Mergers, other than
Continuing Employee Options, Parent shall have no liabilities or
obligations to any holders of Tracking Stock or options, warrants or other
convertible securities to acquire Tracking Stock.
(d) Under the terms of this agreement, the sum of (i) the WW
Consideration plus (ii) the Metal Consideration is equal to the sum of (x)
the product obtained by multiplying Stockholder's notional interest in the
Tracking Stock (as expressed in shares of Tracking Stock) times the Option
Exchange Ratio plus (y) the product obtained by multiplying the aggregate
number of outstanding shares of Tracking Stock held by persons other than
Stockholder plus the aggregate number of outstanding options or other
rights to purchase Tracking Stock held by persons other than Stockholder
times the Option Exchange Ratio, such that each holder of a Continuing
Employee Option would receive upon exercise of such Continuing Employee
Option an equivalent proportional amount of Parent Common Stock in respect
of such holder's interest in the Business as Stockholder is receiving in
respect of Stockholder's interest in the Company and WW in satisfaction of
the Stockholder's notional interest in the Tracking Stock.
2.3 Subsidiaries. Except for the subsidiaries of each of the
Company and WW listed in Schedule 2.3 of the Stockholder Disclosure Letter
(each subsidiary of the Company, a "Metal Subsidiary" and each subsidiary
of WW, a "WW Subsidiary" and together with Metal Subsidiaries, the
"Subsidiaries"), each of which are wholly owned by the Company or WW, as
the case may be, and except as set forth on Schedule 2.3 of the Stockholder
Disclosure Letter, each of the Company and WW does not have and has never
had any subsidiaries and does not otherwise own and has never otherwise
owned any shares of capital stock or any interest in, or control, directly
or indirectly, any other corporation, partnership, association, joint
venture or other business entity. Schedule 2.3 of the Stockholder
Disclosure Letter sets forth the capitalization of each Subsidiary. The
Company or WW, as the case may be, is the record and beneficial owner of
all of the outstanding capital stock of each Subsidiary. Schedule 2.3 of
the Stockholder Disclosure Letter also sets forth the names of the
directors and officers of each Subsidiary. Each of the Company and WW has
provided Parent with true and correct copies of each Subsidiary's
certificate of incorporation, bylaws or other applicable charter documents.
There are no options, warrants, calls, rights, commitments or agreements of
any character, written or oral, to which either the Company, WW or any
Subsidiary is a party or by which it is bound obligating any Subsidiary to
issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of the capital stock
of any Subsidiary or obligating any Subsidiary to grant, extend, accelerate
the vesting of, change the price of, otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to any Subsidiary.
Getko Canada has no interest in any asset, property or right of any type or
description, real, personal, tangible and intangible.
2.4 Authority. Each of the Company, WW, CMS and the Stockholder
(and each subsidiary of the Stockholder, as appropriate) has all requisite
corporate power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements to which it is party and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of the
Company, WW, CMS and the Stockholder (and each subsidiary of the
Stockholder, as appropriate), as the case may be, in accordance with
applicable law and the Certificate of Incorporation of the Company, WW, CMS
and the Stockholder (and each subsidiary of the Stockholder, as
appropriate), as the case may be. The respective Boards of Directors of the
Company, WW, CMS and the Stockholder have approved and adopted the Mergers,
this Agreement and the Ancillary Agreements to which it (and/or a
subsidiary of it) is a party. This Agreement and the Ancillary Agreements
to which it is party have been duly executed and delivered by each of the
Company, WW, CMS and the Stockholder (and each subsidiary of the
Stockholder, as appropriate) and, assuming the due execution and delivery
by Parent, Metal Merger Sub and WW Merger Sub, constitute the valid and
binding obligations of the Company, WW, CMS and the Stockholder (and each
subsidiary of the Stockholder, as appropriate), as the case may be,
enforceable in accordance with their respective terms. Except as set forth
in Schedule 2.4 of the Stockholder Disclosure Letter, the execution and
delivery of this Agreement and the Ancillary Agreements to which it is a
party by the Company, WW, CMS and the Stockholder (and each subsidiary of
the Stockholder, as appropriate), as the case may be, does not, and, as of
the Effective Time, the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of,
or default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit under (any such event, a "Conflict") (i)
any provision of the Certificate of Incorporation or Bylaws of the Company,
WW, CMS or the Stockholder, as the case may be, or (ii) any agreement that
would be required to be disclosed pursuant to Section 2.11 or 2.12 of this
Agreement or any instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company, WW, CMS or the Stockholder or their respective
properties or assets. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or foreign
governmental authority, instrumentality, agency or commission
("Governmental Entity") or any third party (so as not to trigger any
Conflict) is required by or with respect to the Company, WW, CMS or the
Stockholder in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, except for:
(i) the filing of the Certificates of Merger with the Secretaries of State
for the State of Delaware and the State of New York, respectively; (ii)
such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws; (iii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"); and (iv) such other consents, waivers, authorizations,
filings, approvals and registrations which are set forth on Schedule 2.4 of
the Stockholder Disclosure Letter. Each of the Stockholder and CMS has
approved the Mergers in its capacity as stockholder of the Company and WW.
2.5 Company Financial Statements. Schedule 2.5 of the Stockholder
Disclosure Letter sets forth the audited combined balance sheets of the
Company (together with WW and the WW Subsidiaries as though WW and the WW
Subsidiaries were subsidiaries of the Company) as of December 31, 1999 and
December 31, 1998 and the unaudited combined balance sheet of the Company
(together with WW and the WW Subsidiaries as though WW and the WW
Subsidiaries were subsidiaries of the Company) as of September 30, 2000
(the "Balance Sheet") and the related audited combined statements of
operations and cash flows for each of the two one-year periods ended
December 31, 1998 and December 31, 1999, respectively, and the related
unaudited combined statements of operations and cash flows for the
nine-month period ended September 30, 2000 (collectively, the "Company
Financials"). The Company Financials, including the related schedules and
notes thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent throughout the
periods indicated and consistent with each other (subject, in the case of
unaudited statements, to normal audit adjustments). The Company Financials,
including the related schedules and notes thereto, present fairly the
financial condition and operating results of the Company, WW, their
respective Subsidiaries and the Business as of the dates and during the
periods indicated therein. Except as disclosed on Schedule 2.5 of the
Stockholder Disclosure Letter, (i) there are no asset or revenue items that
are included in the Company Financials that would not be included in
financial statements prepared in accordance with GAAP of the Company, WW
and the Subsidiaries on a stand-alone basis for the same amounts and for
the same periods, and (ii) there are no liabilities or expenses that would
be included in financial statements prepared in accordance with GAAP of the
Company, WW and their respective Subsidiaries on a stand alone basis that
are not included in the Company Financials for the same amounts and for the
same periods. At no time has the Company, WW or any Subsidiary factored its
accounts receivable or otherwise sold or transferred the right to collect
any of its accounts receivable. In addition, at no time has the Company, WW
or any Subsidiary, or any assets of the Company, WW or any Subsidiary, been
placed in receivership or otherwise been subject to any bankruptcy,
insolvency or liquidation proceeding.
2.6 No Undisclosed Liabilities. The Company, WW, the Subsidiaries
and the Business do not have any liability, indebtedness, obligation,
expense, claim, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other, of a nature required to
be reflected in financial statements (including the notes thereto) in
accordance with GAAP ("Liabilities"), which individually or in the
aggregate (i) has not been reflected in the Balance Sheet, or (ii) has not
arisen in the ordinary course of the Company's or WW's business since the
date of the Balance Sheet, consistent with past practices, and does not
reflect a material change to the business (as previously conducted),
results of operations or financial condition of the Company, WW or any of
the Subsidiaries (taking into account any growth in revenues and
commensurate growth in expenses).
2.7 No Changes. (i) Since June 30, 2000 and through the date
hereof, there has not been, occurred or arisen any:
(a) transaction by the Company, WW or any Subsidiary except in the
ordinary course of business as conducted on June 30, 2000;
(b) transfer in, sale, lease, license or allocation of any assets
(including intangible assets), Liabilities or employees to the Company, WW
or any Subsidiary by the Stockholder or any of its subsidiaries (other than
the Company, WW and its Subsidiaries);
(c) amendments or changes to the certificate of incorporation or
bylaws or other applicable charter documents of the Company, WW or any
Subsidiary;
(d) use by the Business of any assets owned by or licensed to the
Stockholder or any of its subsidiaries (other than the Company, WW and its
Subsidiaries);
(e) labor trouble or claim of wrongful discharge or other unlawful
labor practice or action;
(f) addition to or modification of the employee benefit plans,
arrangements or practices described in Section 2.20 of this Agreement
(other than as described in Section 5.19 hereof);
(g) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company,
WW or any Subsidiary;
(h) revaluation by the Company, WW or any Subsidiary of any of its
assets;
(i) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of the Company, WW or any
Subsidiary, or any split, combination or reclassification with respect to
the capital stock of the Company, WW or any Subsidiary, or any issuance or
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of capital stock of the Company, WW
or any Subsidiary or any direct or indirect redemption, purchase or other
acquisition by the Company, WW or any Subsidiary of any of its capital
stock (or options, warrants or rights convertible into, exercisable or
exchangeable therefor);
(j) increase in the salary or other compensation payable or to
become payable to any of its officers or directors of the Company, WW or
any Subsidiary other than increases made in the ordinary course of business
consistent with past practices and in no event in excess of ten percent
(10%) of such officer's or director's base salary, or the declaration,
payment or commitment or obligation of any kind for the payment of a bonus
or other additional salary or compensation to any such person, other than
bonuses or additional salary or compensation paid in the ordinary course of
business consistent with past practices;
(k) waiver or release of any right or claim of the Company, WW or
any Subsidiary in excess of $50,000 in the aggregate, including any
write-off or other compromise of any account receivable of the Company, WW
or any Subsidiary;
(l) except as contemplated by this Agreement, issuance, sale, or
contract to issue or sell, by the Company, WW or any Subsidiary of any
shares of Company Capital Stock or WW Capital Stock or shares of capital
stock of any Subsidiary or securities convertible into, or exercisable or
exchangeable for, shares of Company Capital Stock or WW Capital Stock or
shares of capital stock of any Subsidiary, or any securities, warrants,
options or rights to purchase any of the foregoing;
(m) commencement or written notice or, to the Stockholder's
Knowledge, threat of any lawsuit or, to the Stockholder's Knowledge,
proceeding or investigation against the Company, WW or its affairs;
(n) agreement, understanding or commitment, or any modification to
or amendment of any such agreement, understanding or commitment, between
the Stockholder and any of its subsidiaries or affiliates on the one hand,
and the Company or WW, on the other hand;
(o) adoption of a plan of or resolutions providing for the
liquidation, dissolution, merger, consolidation or other arrangement of the
Company, WW or the Subsidiaries (except for the transactions contemplated
hereby); or
(p) negotiation or agreement by the Company, WW or any Subsidiary
or any officer or employees thereof to do any of the things described in
the preceding clauses (a) through (o) (other than negotiations with Parent
and its representatives regarding the transactions contemplated by this
Agreement).
(ii) Since September 30, 2000 and through the date hereof, there
has not been, occurred or arisen any:
(a) material adverse change in the Company's or WW's condition
(financial or otherwise), results of operations, assets, liabilities,
working capital or reserves, except for changes contemplated hereby or set
forth in the Company Financials;
(b) payment, discharge or satisfaction, in any amount in excess of
$100,000 in any one case, or $250,000 in the aggregate, of any claim,
liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) of the Company, WW or any Subsidiary, other than
payment, discharge or satisfaction of Liabilities in the ordinary course of
business consistent with past practices;
(c) capital expenditure or commitment by or on behalf of the
Company, WW or any Subsidiary or the Business, either individually or in
the aggregate, exceeding $100,000, other than, in the case of the Company
and the Metal Subsidiaries only, in the ordinary course of business
consistent with past practices;
(d) event or condition that has had or would be reasonably
expected to have a Material Adverse Effect (as defined in Section 10.2
hereof) on the Company, WW or any Subsidiary;
(e) loan by the Company, WW or any Subsidiary to any person or
entity, incurring by the Company, WW of any indebtedness, guaranteeing by
the Company, WW or any Subsidiary of any indebtedness, issuance or sale of
any debt securities of the Company or any Subsidiary or guaranteeing of any
debt securities of others, except for advances to employees for travel and
business expenses in the ordinary course of business, consistent with past
practices;
(f) cancellation of any material indebtedness owed to the Company,
WW or its Subsidiaries relating to any of the Company's or WW's business
activities or properties (or the business activities or properties of the
Subsidiaries), whether or not in the ordinary course of business;
(g) making or changing in any election in respect of Taxes (as
defined in Section 2.8 hereof) of the Company, WW or any Subsidiary,
adoption or change in any accounting method in respect of Taxes of the
Company, WW or any Subsidiary, agreement or settlement of any claim or
assessment in respect of Taxes of the Company, WW or any Subsidiary, or
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes of the Company, WW or any Subsidiary; or
(h) negotiation or agreement by the Company, WW or any Subsidiary
or any officer or employees thereof to do any of the things described in
the preceding clauses (a) through (g) (other than negotiations with Parent
and its representatives regarding the transactions contemplated by this
Agreement).
(iii) Since March 31, 2000 and through the date hereof, there has
not been, occurred or arisen any transfer out, sale, lease or license of
any assets (including intangible assets and URLs), Liabilities or employees
of the Company, WW or any Subsidiary to (with respect to material assets
only) a third party or to (with respect to all assets) the Stockholder or
any of its subsidiaries (other than the Company, WW and the Subsidiaries).
2.8 Tax and Other Returns and Reports
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or, collectively, "Taxes," means (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts, (ii) any
liability for the payment of any amounts of the type described in clause
(i) of this Section 2.8(a) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, and (iii) any
liability for the payment of any amounts of the type described in clauses
(i) or (ii) of this Section 2.8(a) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations
under any agreements or arrangements with any other person with respect to
such amounts and including any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule 2.8(b)
of the Stockholder Disclosure Letter:
(i) Each of the Company, WW and each Subsidiary has prepared and
timely filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns") relating to any
and all Taxes concerning or attributable to it or its operations and such
Returns are true and correct and have been completed in accordance with
applicable law.
(ii) Each of the Company, WW and each Subsidiary (A) has paid or
accrued all Taxes it is required to pay or accrue and (B) has reported and
withheld with respect to employees of the Company, WW and each Subsidiary
all federal and state income taxes, Federal Income Contribution Act
("FICA"), Federal Unemployment Tax Act ("FUTA"), and other Taxes required
to be reported and withheld.
(iii) Neither the Company, WW nor any Subsidiary has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against the Company, WW or any
Subsidiary, nor has the Company, WW or any Subsidiary executed any waiver
of any statute of limitations on or extending the period for the assessment
or collection of any Tax.
(iv) No audit or other examination of any Return of the Company,
WW or any Subsidiary is currently in progress, nor has the Company, WW or
any Subsidiary been notified of any request for such an audit or other
examination.
(v) Neither the Company, WW nor any Subsidiary has any liabilities
for unpaid federal, state, local and foreign Taxes which have not been
accrued or reserved against in accordance with GAAP on the Balance Sheet,
whether asserted or unasserted, contingent or otherwise, and the
Stockholder has no Knowledge of any basis for the assertion of any such
liability attributable to the Company, WW or any Subsidiary, or any of
their respective assets or operations.
(vi) The Stockholder has provided to Parent copies of all foreign,
federal, state and local income and all state and local sales and use Tax
Returns relating to any and all Taxes concerning or attributable to the
Company, WW or any Subsidiary for the past two (2) years.
(vii) There are no liens, pledges, charges, claims, security
interests or other encumbrances of any sort except for liens for Taxes not
yet due and payable ("Liens") on the assets of the Company, WW or any
Subsidiary relating to or attributable to Taxes.
(viii) The Stockholder has no Knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the
Company, WW or any Subsidiary.
(ix) None of the Company's, WW's or any Subsidiary's assets are
treated as "tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(x) There is not any contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of the Company, WW or any Subsidiary that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code.
(xi) Neither the Company, WW nor any Subsidiary has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a Subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the Company,
WW or any Subsidiary.
(xii) Neither the Company, WW nor any Subsidiary is a party to a
tax sharing or allocation agreement nor does the Company, WW or any
Subsidiary owe any amount under any such agreement.
(xiii) No adjustment relating to any Return filed by the Company,
WW or any Subsidiary has been proposed formally or, to the Knowledge of the
Stockholder, informally by any tax authority to the Company, WW or any
Subsidiary or any representative thereof.
(xiv) Neither the Company, WW nor any Subsidiary has ever been a
party to any joint venture, partnership or other agreement that could be
treated as a partnership for Tax purposes.
(xv) Neither the Company, WW nor any Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution prior to the Mergers which could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Mergers.
2.9 Restrictions on Business Activities. Except as set forth in
Schedule 2.9(a) of the Stockholder Disclosure Letter, there is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or
decree to which the Company, WW or any Subsidiary is a party or otherwise
binding upon the Company, WW or any Subsidiary or the Business which has or
reasonably would be expected to have the effect of prohibiting or impairing
any business practice of the Company, WW or any Subsidiary, any acquisition
of property (tangible or intangible) by the Company, WW or any Subsidiary.
Without limiting the foregoing, except as set forth in Schedule 2.9(b) of
the Stockholder Disclosure Letter, neither the Company, WW nor any
Subsidiary has entered into or is bound by any agreement under which any of
them is restricted from selling, licensing or otherwise distributing any of
its technology to any class of customers during any period of time or in
any segment of the market.
2.10 Title to Properties; Absence of Liens and Encumbrances
(a) Except as set forth in Schedule 2.10 of the Stockholder
Disclosure Letter, neither the Company, WW nor any Subsidiary owns any real
property. Schedule 2.10(a) of the Stockholder Disclosure Letter sets forth
a list of all real property currently leased by the Company, WW or any
Subsidiary. All such current leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a
default).
(b) Each of the Company, WW and each Subsidiary has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of their tangible properties and assets (including
accounts receivable), real, personal and mixed, used or held for use in the
Business, free and clear of any Liens, except as reflected in the Company
Financials and except for liens for taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the
value, or materially interfere with the present use, of the property
subject thereto or affected thereby.
(c) Other than as set forth in Schedule 2.10(c) of the Stockholder
Disclosure Letter, all material items of equipment (the "Equipment")
(including all of the Equipment contained in the San Francisco location of
the Business) used in or by the Business are owned or leased by the
Company, WW or a Subsidiary.
(d) All of the assets, properties and rights of every type and
description, real, personal, tangible and intangible, used in the conduct
of the Business are licensed by third parties to or owned by the Company or
WW or the Company or WW otherwise has the right to use such assets
properties and rights. Neither the Stockholder nor any subsidiary or
affiliate of Stockholder (including NRT) has any ownership, license or
similar interest to any of the assets, properties or rights of any type and
description, real, personal, tangible and intangible, used in the conduct
of the Business. Except as provided for in Exhibit A to the Transition
Services Agreement or Schedule 2.10(d) of the Stockholder Disclosure
Letter, (i) the Stockholder and its subsidiaries (other than the Company,
WW and the Subsidiaries) do not provide any products or services used in
the conduct of the Business, and (ii) there is no other agreement or
understanding between the Stockholder or any of its affiliates and the
Company, WW or any Subsidiary.
2.11 Intellectual Property
For the purposes of this Agreement, the following terms have the
following definitions:
"Intellectual Property" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (i)
all United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all proprietary
inventions (whether patentable or not), proprietary invention disclosures,
proprietary improvements, proprietary trade secrets, proprietary
information (insofar as such proprietary information relates to
intellectual property), proprietary know how, proprietary technology,
proprietary technical data and proprietary customer lists, and all
documentation relating to any of the foregoing; (iii) all copyrights,
copyright registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all industrial designs and
any registrations and applications therefor throughout the world; (v) all
trade names, logos, domain names, URLs, common law trademarks and service
marks, trademark and service xxxx registrations and applications therefor
throughout the world (except that trade names, common law trademarks and
service marks and trademark and service xxxx registrations and applications
therefor shall be limited to those arising in the United States and the
United Kingdom); (vi) all databases and data compilations and collections
and all rights therein throughout the world; (vii) all software in object
code and source code form and related documentation; (viii) all moral and
economic rights of authors and inventors, however denominated, throughout
the world; (ix) any similar or equivalent rights to any of the foregoing
anywhere in the world; and (x) all tangible embodiments of any of the
foregoing.
"Company Intellectual Property" shall mean any
Intellectual Property that is owned by, or exclusively licensed to, the
Company, WW or any of the Subsidiaries.
"Registered Intellectual Property" means all United
States, international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or other
registrations or applications related to trademarks; (iii) registered
copyrights and applications for copyright registration; and (iv) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by
any state, government or other public legal authority.
"Company Registered Intellectual Property" means all of
the Registered Intellectual Property owned by, or filed in the name of, the
Company, WW or any Subsidiary.
(a) No Company Intellectual Property or product or service of the
Company, WW or any Subsidiary is party to any proceeding or outstanding
decree, order, judgment, agreement or stipulation restricting in any manner
the use, transfer, or licensing thereof by the Company, WW or any
Subsidiary, or which may affect the validity, use or enforceability of such
Company Intellectual Property.
(b) Schedule 2.11(b) of the Stockholder Disclosure Letter is a
complete and accurate list of all Company Registered Intellectual Property
and specifies, where applicable, the jurisdictions in which each such item
of Company Registered Intellectual Property has been issued or registered
or in which an application for such issuance and registration has been
filed, including the respective registration or application numbers. Each
item of Company Registered Intellectual Property is valid and subsisting,
all necessary registration, maintenance and renewal fees currently due in
connection with such Registered Intellectual Property have been made and
all necessary documents, recordations and certificates in connection with
such 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 in the jurisdictions where the
Business is conducted.
(c) Each of the Company, WW and each of its Subsidiaries owns and
has good and exclusive title to, or has license (sufficient for the conduct
of the Business as conducted) to, each item of Company Intellectual
Property or other Intellectual Property used by the Company, WW or any
Subsidiary, as applicable, in the Business as conducted free and clear of
any lien or encumbrance; and the Company, WW or one of the Subsidiaries is
the exclusive owner of all URLs, domain names, trademarks and trade names
used in connection with the operation or conduct of the Business as
conducted, including the sale of any products or the provision of any
services by the Company, WW or any of the Subsidiaries.
(d) Neither Stockholder nor any of its subsidiaries (other than
the Company, WW and the Subsidiaries) owns or licenses to the Company, WW
or the Subsidiaries any Intellectual Property that is used in the Business
as conducted or otherwise permits the Company to use any Intellectual
Property that is licensed by the Stockholder or its subsidiaries (other
than the Company, WW and the Subsidiaries).
(e) The Company, WW and the Subsidiaries own exclusively, and have
good title to, all copyrighted works that are the products of the Company,
WW or any of the Subsidiaries or which the Company, WW or any of the
Subsidiaries otherwise expressly purports to own. The Company, WW and the
Subsidiaries own exclusively, and have good title to or a license to use
(which license is disclosed on Schedule 2.11(i) of the Stockholder
Disclosure Letter), all source-code and object-code used in or incorporated
in the products or services of the Company, WW or any of the Subsidiaries.
(f) The Company, WW and the Subsidiaries own, and have good title
to and all necessary rights for the use of, all Intellectual Property used
in the operation of the websites listed on Schedule 2.11(f), and no such
right will terminate or be adversely affected by virtue of the Mergers and
the transactions contemplated hereby.
(g) To the extent that any Intellectual Property has been
developed or created by a third party for the Company, WW or any
Subsidiary, the Company, WW or such Subsidiary, as the case may be, has a
written agreement with such third party (each of which agreements is in
full force and effect and is binding and enforceable against the parties
thereto) with respect thereto and the Company, WW or such Subsidiary, as
the case may be, thereby either (i) has obtained ownership of, and is the
exclusive owner of or (ii) has obtained a license (sufficient for the
conduct of its business) to all such third party's Intellectual Property in
such work, material or invention by operation of law or by valid
assignment.
(h) Neither the Company, WW nor any Subsidiary has transferred
ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material to the Company Intellectual
Property, to any third party (including Stockholder and its subsidiaries
other than the Company, WW and the Subsidiaries).
(i) Schedule 2.11(i) lists all material contracts, licenses and
agreements to which the Company, WW or any Subsidiary is a party (i) with
respect to the Company Intellectual Property licensed or transferred to any
third party, including without limitation, any agreement pursuant to which
the Company, WW or any Subsidiary has granted or may grant in the future to
any party a source-code license or option or other rights to use or acquire
source code; or (ii) pursuant to which a third party or the Stockholder and
its subsidiaries (other than the Company, WW and the Subsidiaries) has
licensed or transferred any material Intellectual Property to the Company,
WW or any Subsidiary.
(j) The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements or the loss of, or any adverse effect on, any ownership or
license rights of the Company or WW in any Company Intellectual Property.
The Company, WW and the Subsidiaries are in compliance with, and have not
breached any material term of any of such contracts, licenses and
agreements and, to the Knowledge of the Stockholder, all other parties to
such contracts, licenses and agreements are in compliance with, and have
not breached any term of, such contracts, licenses and agreements.
Following the Effective Time, the Surviving Corporation will be permitted
to exercise all of the rights of the Company, WW and the Subsidiaries under
such contracts, licenses and agreements to the same extent the Company, WW
or the Subsidiaries, as the case may be, would have been able to had the
transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which the Company, WW or the Subsidiaries would
otherwise be required to pay.
(k) The operation of the Business as conducted in the
jurisdictions conducted, including the design, development, manufacture,
marketing and sale of the products or services of the Company, WW or any
Subsidiary (including with respect to products and services currently under
development) has not, does not and will not infringe or misappropriate the
Intellectual Property of any third party or the Stockholder or any of its
subsidiaries (other than the Company, WW and the Subsidiaries), or
constitute unfair competition or trade practices under the laws of any
jurisdiction in which the Business is conducted.
(l) Neither the Company, WW nor any Subsidiary has received notice
from any third party that the operation of the Business or any act, product
or service of the Company, WW or any Subsidiary, infringes or
misappropriates the Intellectual Property of any third party or constitutes
unfair competition or trade practices under the laws of any jurisdiction.
(m) To the Knowledge of the Stockholder, no person has or is
infringing or misappropriating, any Company Intellectual Property or
engaging in any unfair competition or trade practice against the Company,
WW or any Subsidiary under the laws of any jurisdiction.
(n) Neither this Agreement nor the transactions contemplated by
this Agreement, including the assignment to Parent, Metal Merger Sub or WW
Merger Sub by operation of law or otherwise of any contracts or agreements
to which the Company or WW is a party, will result in (i) either Parent,
Metal Merger Sub or WW Merger Sub granting to any third party any right to
or with respect to any material Intellectual Property right owned by, or
licensed to, either of them, (ii) the Company, WW, Parent, Metal Merger Sub
or WW Merger Sub being bound by, or subject to, any non-compete or other
material restriction on the operation or scope of their respective
businesses, or (iii) either Parent, Metal Merger Sub or WW Merger Sub being
obligated to pay any royalties or other material amounts to any third party
in excess of those payable by Parent, Metal Merger Sub, WW Merger Sub, WW
or the Company or any of the Subsidiaries, respectively, prior to the
Closing.
(o) Each of the Company and WW has taken all reasonable steps to
protect the rights of the Company, WW and the Subsidiaries in the rights of
the Company, WW and the Subsidiaries in confidential information and trade
secrets that it wishes to protect or any trade secrets or confidential
information of third parties provided to the Company, WW or any Subsidiary,
and, without limiting the foregoing, the Company has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality and invention assignment agreement with the
Company, and all current and former employees and contractors of the
Company, WW an the Subsidiaries have executed such an agreement with the
Company or WW, as applicable, except where the failure to do so is not
reasonably expected to be material to the Company, WW or any of its
Subsidiaries.
(p) No (i) product, technology, service or publication of the
Company, WW or any Subsidiary, (ii) material published or distributed by
the Company, WW or any Subsidiary, or (iii) conduct or statement of the
Company, WW or any Subsidiary constitutes obscene material, a defamatory
statement or material, false advertising or otherwise violates any law or
regulation in the jurisdictions where the Business is conducted.
(q) The Company licenses all right, title and interest to the
assets and Intellectual Property related to the development by Stockholder,
the Company and/or WW of real estate transaction management platform
technologies which will provide transaction processing and support services
designed to aid real estate brokers in assisting real estate purchasers and
sellers in fulfilling the closing conditions of a real estate purchase
contract as described by Stockholder to Parent as Project Red Head
("Project Red Head").
2.12 Agreements, Contracts and Commitments
(a) Except as set forth in Schedule 2.12(a) of the Stockholder
Disclosure Letter, as of the date hereof, neither the Company, WW nor any
Subsidiary has, is a party to, is bound by, and the Business is not the
beneficiary of, or subject to, any of the following (those agreements,
arrangements, contracts or commitments to which the Business is subject,
but to which the Company, WW or the Subsidiaries is not, as between the
Stockholder or its subsidiaries (other than the Company, WW and the
Subsidiaries) and the Company, WW and the Subsidiaries, are clearly marked
as such on Schedule 2.12(a)):
(i) any collective bargaining agreements,
(ii) any agreements or arrangements that contain any severance pay
or post-employment liabilities or obligations,
(iii) any bonus, deferred compensation, pension, profit sharing or
retirement plans, or any other employee benefit plans or arrangements,
(iv) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or any
consulting or sales agreement, contract or commitment under which any firm
or other organization provides services to the Company, WW or any
Subsidiary,
(v) any agreement or plan, including any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement,
(vi) any agreement or plan to issue, grant, deliver or sell or
authorize, or that proposes the issuance, grant, delivery or sale of, or to
purchase or that proposes the purchase of, any shares, or any rights
attached to any shares, in the Company, WW or any Subsidiary or any
securities convertible into or exchangeable for shares in the Company, WW
or any Subsidiary, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it
to issue any shares in the Company, WW or any Subsidiary or other
convertible securities,
(vii) any fidelity or surety bond or completion bond,
(viii) any lease of personal property requiring payments over the
term of such lease or series of related leases individually in excess of
$200,000 or any lease of real property,
(ix) any agreement of indemnification or guaranty,
(x) any agreement, contract or commitment containing any covenant
limiting the freedom of the Company, WW or any Subsidiary to engage in any
line of business or to compete with any person,
(xi) any agreement, contract or commitment relating to capital
expenditures or involving future payments or a series of related payments
in excess of $100,000,
(xii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's or WW's business,
as applicable,
(xiii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit, including guaranties referred to
in clause (ix) hereof,
(xiv) any purchase order or contract for the purchase of raw
materials involving $50,000 or more,
(xv) any construction contracts involving future payments or a
series of related payments in excess of $50,000,
(xvi) any sales representative, original equipment manufacturer,
value added, remarketer, reseller or independent software vendor or other
agreement for use of distribution of the Company's or WW's products,
technologies or services;
(xvii) any distribution, joint marketing or development agreement
that includes any provision granting any person a right of first refusal,
right of first negotiation or exclusive, "most favored nation" or
preferential placement or other preferential rights,
(xviii) any agreement pursuant to which the Company, WW or any
Subsidiary has developed for and/or delivered to or has received funds from
any Governmental Entity to develop and/or deliver any Intellectual
Property,
(xix) any agreement, contract or commitment for the purchase of
advertising,
(xx) any other agreement, contract or commitment that involves
$100,000 or more or is not cancelable without penalty within thirty (30)
days
(b) Except for such alleged breaches, violations and defaults, and
events that would constitute a breach, violation or default with the lapse
of time, giving of notice, or both, as are all noted in Schedule 2.12(b) of
the Stockholder Disclosure Letter, neither the Company, WW nor any
Subsidiary nor the Stockholder nor any of its subsidiaries has materially
breached, violated or defaulted under, or received written notice that it
has materially breached, violated or defaulted under, any of the terms or
conditions of any agreement, contract or commitment required to be set
forth on Schedule 2.12(a) of the Stockholder Disclosure Letter or Schedule
2.11(g) of the Stockholder Disclosure Letter (any such agreement, contract
or commitment, a "Contract"). Each Contract is in full force and effect
(assuming the Contracts have been duly authorized, executed and delivered
by the respective other parties thereto) and is not subject to any default
thereunder of which the Stockholder has Knowledge by any party obligated to
the Company, WW or any Subsidiary pursuant thereto.
2.13 Interested Party Transactions. Other than as contemplated by
this Agreement, none of the Stockholder or any trust, partnership or
corporation in which the Stockholder has an interest or is affiliated, any
subsidiary of the Stockholder or any officer or director of the Company, WW
or any Subsidiary, has directly or indirectly, (i) an economic interest in
any entity which furnished or sold, or furnishes or sells, services or
products that the Company, WW or any Subsidiary furnishes or sells, or
proposes to furnish or sell, (ii) an economic interest in any entity that
purchases from or sells or furnishes to, or licenses to or licenses from,
the Company, WW or any Subsidiary, any goods or services or Intellectual
Property or (iii) a material pecuniary interest in any contract or
agreement set forth in Schedule 2.12(a) of the Stockholder Disclosure
Letter or Schedule 2.11(i) of the Stockholder Disclosure Letter; provided,
that ownership of no more than one percent (1%) of the outstanding voting
stock of a publicly traded corporation shall not be deemed an "economic
interest in any entity" for purposes of this Section 2.13.
2.14 Governmental Authorization. Schedule 2.14 of the Stockholder
Disclosure Letter accurately lists each material consent, license, permit,
grant or other authorization issued to the Company or WW relating to the
Business by a Governmental Entity (herein collectively referred to as
"Company Authorizations"), which Company Authorizations are in full force
and effect and constitute all Company Authorizations required to permit the
Company and WW to operate or conduct the Business or hold any interest in
their respective properties or assets.
2.15 Litigation. Except as set forth in Schedule 2.15 of the
Stockholder Disclosure Letter, there is no action, suit or proceeding of
any nature pending or to Knowledge of the Stockholder, threatened against
the Company, WW or any of its Subsidiaries or Stockholder or any of its
subsidiaries, their respective properties or any of their respective
officers or directors, in their respective capacities as such. To the
Knowledge of the Stockholder, there is no investigation pending or
threatened against the Company, WW or any Subsidiary or the Stockholder or
any of its subsidiaries, their respective properties or any of their
respective officers or directors by or before any Governmental Entity.
Schedule 2.15 of the Stockholder Disclosure Letter sets forth, with respect
to any such pending or threatened action, suit, proceeding or
investigation, the forum, the parties thereto, the subject matter thereof
and the amount of damages claimed or other remedy requested. No
Governmental Entity has at any time challenged or questioned the legal
right of the Company, WW or any Subsidiary or the Stockholder or any of its
subsidiaries to conduct the Business or offer or sell any of its products
or services.
2.16 Insurance. Schedule 2.16 of the Stockholder Disclosure Letter
contains a true and complete list of all current policies or insurance
binders of fire, property, title, business interruption, general liability,
workers' compensation and errors or omissions insurance (showing as to each
policy or binder as are applicable to the Business, the carrier, policy
number, coverage limits (including without limitation, retentions and
deductibles), expiration dates, annual premiums and a general description
of the type of coverage provided) maintained by the Company or WW on the
Business, property or employees within the last three years. All of such
policies are sufficient for compliance with all material contracts or
leases to which the Company, WW or any Subsidiary is a party and, to the
Knowledge of the Stockholder, all material requirements of applicable law.
Neither the Company nor WW has not failed to give any written notice or to
present any material claim under any such policy or binder in a due and
timely fashion. There are no outstanding unpaid claims under any such
policies or binders for which adequate reserves have not been established.
Such policies and binders are in full force and effect on the date hereof
and shall be kept in full force and effect by the Company and WW through
the Closing Date. True and complete copies of the documents described above
have been delivered or made available to Parent.
2.17 Minute Books. The minute books of the Company, WW and each of
the Subsidiaries made available to counsel for Parent are the only minute
books of the Company, WW and such Subsidiaries and contain a reasonably
accurate summary of all meetings of directors (or committees thereof) and
stockholders or actions by written consent since the incorporation of the
Company, WW or such Subsidiary, as the case may be.
2.18 Environmental Matters
(a) Definitions:
(i) "Hazardous Material" is any material or substance that is
prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Authority to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment.
(ii) "Governmental Authority" is any local, state, provincial,
federal, or international governmental authority or agency which has had or
now has jurisdiction over any portion of the subject matter of this
Agreement, any Business Facility, the Company, WW or any Subsidiary.
(iii) "Business Facility" is any property including the land, the
improvements thereon, the groundwater thereunder and the surface water
thereon, that is or at any time has been owned, operated, occupied,
controlled or leased by the Company, WW or any Subsidiary in connection
with the operation of the Business.
(iv) "Disposal Site" is a landfill, disposal site, disposal agent,
waste hauler or recycler of Hazardous Materials, or any real property other
than a Business Facility receiving Hazardous Materials used or generated by
a Business Facility.
(v) "Environmental Laws" are all applicable laws, directives,
guidance, rules, regulations, orders, treaties, statutes, and codes
promulgated by any Governmental Authority which prohibit, regulate or
control any Hazardous Material or any Hazardous Material Activity,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Resource Recovery and
Conservation Act of 1976, the Federal Water Pollution Control Act, the
Clean Air Act, the Hazardous Materials Transportation Act, the Clean Water
Act, all as amended at any time.
(vi) "Hazardous Materials Activity" is the transportation,
transfer, disposal, discharge, recycling, storage, use, treatment,
manufacture, removal, remediation, release, exposure of others to, sale, or
distribution of any Hazardous Material or any product or waste containing a
Hazardous Material, or product manufactured with Ozone depleting
substances.
(vii) "Environmental Permit" is any approval, permit,
registration, certification, license, clearance or consent required to be
obtained from any private person or any Governmental Authority with respect
to a Hazardous Materials Activity which is or was conducted by the Company,
WW or any Subsidiary.
(b) Condition of Property: As of the Closing, except in compliance
with Environmental Laws in a manner that could not reasonably be expected
to subject the Company, WW or any Subsidiary to liability, no Hazardous
Materials are present on any Business Facility currently owned, operated,
occupied, controlled or leased by the Company, WW or any Subsidiary or were
present on any other Business Facility at the time it ceased to be owned,
operated, occupied, controlled or leased by the Company, WW or any
Subsidiary. Except as set forth in Schedule 2.18(b) of the Stockholder
Disclosure Schedule, there are no underground storage tanks, asbestos which
is friable or likely to become friable or PCBs present on any Business
Facility currently owned, operated, occupied, controlled or leased by the
Company, WW or any Subsidiary or as a consequence of the acts of the
Company, WW or any Subsidiary or their respective agents.
(c) Hazardous Materials Activities: Each of the Company, WW and
each Subsidiary has conducted all Hazardous Material Activities relating to
its business in compliance in all material respects with all applicable
Environmental Laws. The Hazardous Materials Activities of the Company, WW
and each Subsidiary prior to the Closing have not resulted in the exposure
of any person to a Hazardous Material in a manner which has caused or could
reasonably be expected to cause an adverse health effect to any such
person.
(d) Permits: Schedule 2.18(d) of the Stockholder Disclosure
Schedule accurately describes all of the Environmental Permits currently
held by the Company, WW or any Subsidiary and relating to the Business and
the listed Environmental Permits are all of the Environmental Permits
necessary for the continued conduct of any Hazardous Material Activity of
the Company, WW or any Subsidiary relating to the Business as such
activities are currently being conducted. All such Environmental Permits
are valid and in full force and effect. The Company, WW or the Subsidiary,
as applicable, has complied in all material respects with all covenants and
conditions of any Environmental Permit which is or has been in force with
respect to its Hazardous Materials Activities. No circumstances exist which
could cause any Environmental Permit to be revoked, modified, or rendered
non-renewable upon payment of the permit fee. All Environmental Permits and
all other consent and clearances required by any Environmental Law or any
agreement to which the Company, WW or any Subsidiary is bound as a
condition to the performance and enforcement of this Agreement, have been
obtained or will be obtained prior to the Closing at no cost to Parent.
(e) Environmental Litigation: Except as set forth in Schedule
2.18(e) of the Stockholder Disclosure Schedule, no action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the best of the Stockholder's knowledge, threatened,
concerning or relating to any Environmental Permit or any Hazardous
Materials Activity of the Company, WW or any Subsidiary relating to the
Business or any Business Facility.
(f) Offsite Hazardous Material Disposal: Each of the Company, WW
and each Subsidiary has transferred or released Hazardous Materials only to
those Disposal Sites set forth in Schedule 2.18(f) of the Stockholder
Disclosure Schedule; and no action, proceeding, liability or claim exists
or is threatened against any Disposal Site or against the Company, WW or
any Subsidiary with respect to any transfer or release of Hazardous
Materials relating to the Business to a Disposal Site which could
reasonably be expected to subject the Company, WW or any Subsidiary to
liability.
(g) Environmental Liabilities: The Stockholder is not aware of any
fact or circumstance, which could result in any environmental liability
which could reasonably be expected to harm the Business or financial status
of the Company, WW or any Subsidiary.
(h) Reports and Records: Each of the Company and WW, as
applicable, has delivered to Parent or made available for inspection by
Parent and its agents, representatives and employees all records in the
Stockholder's, the Company's and WW's possession concerning the Hazardous
Materials Activities of the Company, WW or any Subsidiary relating to the
Business and all environmental audits and environmental assessments of any
Business Facility conducted at the request of, or otherwise in the
possession of the Stockholder, the Company and WW. Each of the Company, WW
and each Subsidiary has complied with all environmental disclosure
obligations imposed by applicable law with respect to this transaction.
2.19 Brokers' and Finders' Fees; Third Party Expenses. Neither
the Company, WW nor any Subsidiary has incurred, nor will any of them
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges or any other transaction
expenses in connection with this Agreement, the Commercial Agreements or
any transaction contemplated hereby and thereby.
2.20 Employee Matters and Benefit Plans
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.20(a)(i) below (which definition shall
apply only to this Section 2.20), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity under common
control with the Company or WW within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder;
(ii) "Company Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether formal or informal, funded or unfunded,
including each "employee benefit plan", within the meaning of Section 3(3)
of ERISA, which is or has been maintained, contributed to, or required to
be contributed to, by the Stockholder or the Company or WW or any Affiliate
for the benefit of any "Employee" (as defined below), and pursuant to which
the Stockholder or the Company or WW or any Affiliate has or is reasonably
expected to have any material liability contingent or otherwise;
(iii) "DOL" means the Department of Labor;
(iv) "Employee" shall mean any current, former, or retired
employee, officer, or director of the Company, WW or any Subsidiary;
(v) "Employee Agreement" shall refer to each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between the
Stockholder, the Company, WW or any Subsidiary and any Employee or
consultant of the Company, WW or any Subsidiary;
(vi) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(vii) "IRS" shall mean the Internal Revenue Service;
(viii) "Multiemployer Plan" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37)
of ERISA; and
(ix) "Pension Plan" shall refer to each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) Schedule. Schedule 2.20(b) of the Stockholder Disclosure
Letter contains an accurate and complete list of each Company Employee Plan
and each Employee Agreement. Except as set forth in Schedule 2.20(b) of the
Stockholder Disclosure Letter, none of the Stockholder, the Company, WW nor
any Subsidiary has any plan or commitment, whether legally binding or not,
to establish any new Company Employee Plan or Employee Agreement, to modify
any Company Employee Plan or Employee Agreement (except to the extent
required by law or to conform any such Company Employee Plan or Employee
Agreement to the requirements of any applicable law, in each case as
previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any Company Employee Plan or Employee
Agreement, nor does it have any intention or commitment to do any of the
foregoing.
(c) Documents. The Stockholder has made available to Parent (i)
correct and complete copies of all documents embodying or relating to each
Company Employee Plan and each Employee Agreement including all amendments
thereto and written interpretations thereof; (ii) the most recent annual
actuarial valuations, if any, prepared for each Company Employee Plan;
(iii) the three (3) most recent annual reports (Series 5500 and all
schedules thereto), if any, required under ERISA or the Code in connection
with each Company Employee Plan or related trust; (iv) if the Employee Plan
is funded, the most recent annual and periodic accounting of Company
Employee Plan assets; (v) the most recent summary plan description together
with the most recent summary of material modifications, if any, required
under ERISA with respect to each Company Employee Plan; (vi) the most
recent IRS determination letters and rulings relating to Company Employee
Plans and copies of all applications and material correspondence to or from
the IRS or DOL with respect to any Company Employee Plan; and (vii) all
communications material to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plans, in each
case, relating to any amendments, terminations, establishments, increases
or decreases in benefits, acceleration of payments or vesting schedules or
other events which would result in any material liability to the Company.
(d) Employee Plan Compliance. (i) Each of the Company, WW and each
Subsidiary has performed all material obligations required to be performed
by it under each Company Employee Plan, is not in material default or
violation of, and the Stockholder has no Knowledge of any material default
or violation by any party to any Company Employee Plan, and each Company
Employee Plan has been established and maintained in all material respects
in accordance with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including but not limited to ERISA
or the Code; (ii) each Company Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code has either received a favorable determination, opinion,
notification or advisory letter from the IRS with respect to each such
Company Employee Plan as to its qualified status under the Code, including
all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such a
letter and make any amendments necessary to obtain a favorable
determination as to the qualified status of each such Company Employee
Plan; (iii) no "prohibited transaction," within the meaning of Section 4975
of the Code or Section 406 and 407 of ERISA, and not otherwise exempt under
Section 408 of ERISA, has occurred with respect to any Company Employee
Plan; (iv) there are no actions, suits or claims pending, or, to the
Knowledge of the Stockholder, the Company, WW or any Affiliates, threatened
or anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued
after the Effective Time in accordance with its terms, without liability to
the Company, WW, Parent or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (vi)
there are no audits, inquiries or proceedings pending or, to the Knowledge
of the Stockholder, the Company, WW or any Affiliates, threatened by the
IRS or DOL with respect to any Company Employee Plan; and (vii) none of the
Company, WW, the Stockholder nor any Affiliate is subject to any penalty or
tax with respect to any Company Employee Plan under Section 502(i) of ERISA
or Section 4975 through 4980 of the Code.
(e) Pension Plans. Neither the Company, WW nor any Subsidiary has,
nor has the Stockholder on behalf of the Company, WW or any Subsidiary,
ever maintained, established, sponsored, participated in, or contributed
to, any Pension Plan which is subject to Part 3 of Subtitle B of Title I of
ERISA, Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Stockholder (on behalf
of the Company, WW or any Subsidiary), the Company, WW or any Subsidiary
contributed to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, life insurance, medical or other
employee benefits to any Employee upon his or her retirement or termination
of employment for any reason, except as may be required by statute.
(h) COBRA. The Company and each Affiliate has, prior to the
Effective Time, complied in all material respects with the health care
continuation requirements of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(i) Effect of Transaction.
(i) Except as set forth on Schedule 2.20(i) of the Stockholder
Disclosure Letter, the execution of this Agreement and the consummation of
the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made by the
Company, WW or any Subsidiary with respect to any Employee will be
characterized as an "excess parachute payment", within the meaning of
Section 280G(b)(1) of the Code.
(j) Employment Matters. Each of the Company, WW and each
Subsidiary: (i) is in material compliance with all applicable federal,
state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and
hours, in each case, with respect to Employees; (ii) has withheld and
reported all amounts required by law or by agreement to be withheld and
reported with respect to the wages, salaries and other payments to
Employees by virtue of their employment; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (iv) is not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect
to unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, or to the Knowledge of the Stockholder, threatened claims or
actions against the Company, WW or any Subsidiary under any worker's
compensation policy or long-term disability policy.
(k) Labor. No work stoppage or labor strike against the Company or
any Subsidiary is pending or, to the Knowledge of the Stockholder or any
Affiliate, threatened. None of the Stockholder, the Company, WW nor any
Subsidiary is involved in or, to the Knowledge of the Stockholder,
threatened with, any labor dispute, grievance, or litigation relating to
labor, safety or discrimination matters involving any Employee, including
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in
liability to the Company or WW. None of the Stockholder, Company, WW nor
any Subsidiary has engaged in any unfair labor practices within the meaning
of the National Labor Relations Act which would, individually or in the
aggregate, directly or indirectly result in a liability to the Company, WW
or any Subsidiary. Neither the Stockholder, the Company nor WW is
presently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to Employees
and no collective bargaining agreement is being negotiated by the
Stockholder (with respect to the Company, WW or any Subsidiary), the
Company, WW or any Subsidiary.
(l) No Interference or Conflict. No director, stockholder,
manager, officer, employee or consultant of the Company, WW or any of their
respective Subsidiaries is obligated under any Contract or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with such person's efforts to promote the interests of the
Company, WW or any of the Subsidiaries. To the Knowledge of the
Stockholder, neither the execution nor delivery of this Agreement, nor the
carrying on of the Business, as presently conducted, nor any activity of
such officers, directors, employees or consultants in connection with the
carrying on of the Business as presently conducted, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute
a default under, any Contract under which any of such officers, directors,
employees or consultants is now obligated.
2.21 Compliance with Laws. Each of Company, WW and each
Subsidiary has complied in all material respects with, is not in violation
of, and has not received any written notices of violation with respect to,
any foreign, federal, state or local statute, law or regulation.
2.22 Investment Representations
(a) Stockholder is aware of Parent's business affairs and
financial condition and has acquired sufficient information about Parent to
reach an informed and knowledgeable decision to acquire the shares of
Parent Common Stock constituting the Merger Consideration. Stockholder is
receiving the shares of Parent Common Stock constituting the Merger
Consideration for investment for its own account only and not with a view
to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
(b) Stockholder understands that the shares of Parent Common Stock
constituting the Merger Consideration have not been registered under the
Securities Act by reason of a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of its investment
intent and other representations as expressed herein.
(c) Stockholder further acknowledges and understands that the
shares of Parent Common Stock constituting the Merger Consideration must be
held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
Stockholder understands that the certificate evidencing the shares of
Parent Common Stock constituting the Merger Consideration will be imprinted
with a legend which prohibits the transfer of the securities unless they
are registered or Parent receives an opinion of counsel, reasonably
acceptable to it, to the effect that such registration is not required.
(d) Stockholder, by reason of Stockholder's business or financial
experience has the capacity to protect its own interests in connection with
the receipt of the shares of Parent Common Stock constituting the Merger
Consideration.
(e) Stockholder is aware of the adoption of Rule 144 by the
Securities and Exchange Commission (the "SEC"), promulgated under the
Securities Act, which permits limited public resale of securities acquired
in a non-public offering subject to the satisfaction of certain conditions
set forth therein, including, among other things, a one-year holding
period, the availability of certain public information about the issuer,
the requirement that the sale be effected through a "broker's transaction"
or in transactions directly with a "market maker" (as defined in Rule 144)
and the number of shares being sold in any three-month period not exceeding
specific limitations.
(f) Stockholder further acknowledges that in the event all of the
requirements of Rule 144 are not met, some other registration exemption
will be required; and that although Rule 144 is not exclusive, the staff of
the SEC has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and other than
pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales and that such persons and the brokers who participate in
the transactions do so at their own risk.
(g) Stockholder is an "accredited investor" as defined in Rule 501
of the Rules and Regulations promulgated under the Securities Act.
2.23 Bank Accounts. Schedule 2.23 of the Stockholder Disclosure
Letter contains a true and complete listing of all bank accounts or other
depositary accounts maintained by the Company or WW and the authorized
signatories thereto.
2.24 No Other Agreements. Except as contemplated hereby, each of
the Company and WW has no legal obligation, absolute or contingent, to any
other person or entity to sell any material portion of the assets of the
Company or WW, as applicable, to sell Company Capital Stock or WW Capital
Stock, as applicable, to effect any merger, consolidation or reorganization
of the Company or WW, or to enter into any agreement with respect thereto.
2.25 Liberty Digital Stock. As of the date hereof, the Company
owns an aggregate of 697,041 shares of common stock of Liberty Digital,
Inc. ("Liberty Digital Stock"), and since August 14, 2000, the Company has
disposed of only 116,174 shares of Liberty Digital Stock for aggregate
proceeds of $2,700,000 (the "Liberty Digital Proceeds").
2.26 Representations Complete. None of the representations or
warranties made by the Stockholder (as modified by the Stockholder
Disclosure Letter) contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein, in the light of the circumstances under which made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, METAL
MERGER SUB AND WW MERGER SUB
As of the date hereof, Parent, Metal Merger Sub and WW Merger Sub
represent and warrant to the Stockholder, subject to such exceptions as are
specifically disclosed in the disclosure letter supplied by the Parent to
the Stockholder (the "Parent Disclosure Letter") and dated as of the date
hereof, as follows:
3.1 Organization, Standing and Power. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of Metal Merger Sub and WW Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and the State of New York, respectively. Each
of Parent, Metal Merger Sub and WW Merger Sub has the corporate power to
own its respective properties and to carry on its respective business as
now being conducted. Each of Parent, Metal Merger Sub and WW Merger Sub is
duly qualified to do business and is in good standing in each jurisdiction
in which the failure to be so qualified (either individually or
collectively) would have a Material Adverse Effect on Parent. Each of the
subsidiaries required to be listed in the periodic reports of Parent
pursuant Item 601(b) of Regulation S-K of the Rules and Regulations
promulgated under the Securities Act (the "Parent Subsidiaries") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has the corporate or other applicable
power to owns its property and carry on its business as now being
conducted. Each of the Parent Subsidiaries is duly qualified to do business
and is in good standing in each jurisdiction outside of the jurisdiction of
formation in which the failure to be so qualified (either individually or
collectively) would have a Material Adverse Effect on Parent.
3.2 Authority. Parent, Metal Merger Sub and WW Merger Sub have all
requisite corporate power and authority to enter into this Agreement and
the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of each of Parent, Metal Merger
Sub and WW Merger Sub, subject only to the approval of the stockholders of
Parent of the issuance of the Parent Common Stock in connection with the
Mergers pursuant to the rules of the Nasdaq Stock Market. The respective
Boards of Directors of Parent, Metal Merger Sub and WW Merger Sub have
approved the Mergers, this Agreement and the Ancillary Agreements to which
Parent, Metal Merger Sub or WW Merger Sub, as applicable, is a party. This
Agreement and the Ancillary Agreements to which it is a party have been
duly executed and delivered by each of Parent, Metal Merger Sub and WW
Merger Sub and, assuming the due execution and deliver by the Company, WW,
CMS and the Stockholder, constitute the valid and binding obligations of
Parent, Metal Merger Sub and WW Merger Sub, enforceable in accordance with
their respective terms. The execution and delivery of this Agreement and
the Ancillary Agreements to which it is a party by Parent, Metal Merger Sub
and WW Merger Sub does not, and as of the Effective Time, will not result
in any Conflict with (i) any provision of the Certificate of Incorporation
or Bylaws of Parent, Metal Merger Sub or WW Merger Sub; or (ii) any
material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order,
decree, statute law, ordinance, rule or regulation applicable to Parent,
Metal Merger Sub or WW Merger Sub, as applicable, or their respective
properties or assets. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity or
any third party (so as not to trigger any Conflict) is required by or with
respect to the Parent, Metal Merger Sub or WW Merger Sub in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the
Certificates of Merger with the Secretaries of State for the State of
Delaware and the State of New York, respectively, (ii) such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities
laws; (iii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the HSR
Act; (iv) approval of the stockholders of Parent of the issuance of the
shares of Parent Common Stock in connection with the Mergers pursuant to
the rules of the Nasdaq Stock Market; and (v) such other consents, waivers,
authorizations, filings, approvals and registrations as would not have a
Material Adverse Effect on Parent. Parent has approved the Mergers in its
capacity as stockholder of Metal Merger Sub and WW Merger Sub.
3.3 Capital Structure
The authorized stock of Parent consists of 500,000,000 shares of
Common Stock, $0.001 par value per share, of which 83,245,513 shares were
issued and outstanding as of October 23, 2000, and 5,000,000 shares of
Preferred Stock, $0.001 par value per share, one share of which was issued
or outstanding. As of October 23, 2000, there were unvested options to
purchase 11,826,574 shares of Parent Common Stock. The authorized capital
stock of Metal Merger Sub consists of 1,000 shares of Common Stock, 1,000
shares of which, as of the date hereof, are issued and outstanding and are
held by Parent. The authorized capital stock of WW Merger Sub consists of
1,000 shares of Common Stock, 1,000 shares of which, as of the date hereof,
are issued and outstanding and are held by Parent. All outstanding shares
of Parent Common Stock are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of the Parent or any agreement to
which Parent or any Parent Subsidiary is a party or by which it is bound,
and have been issued in compliance with federal and state securities laws.
There are no declared or accrued but unpaid dividends with respect to any
shares of Parent Common Stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights
with respect to Parent. Except as contemplated hereby, there are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting stock of Parent.
3.4 SEC Documents; Parent Financial Statements. Parent has
furnished or made available to the Company true and complete copies of all
reports or registration statements filed by it with the Securities and
Exchange Commission (the "SEC") since August 7, 1999, all in the form so
filed (all of the foregoing being collectively referred to as the "SEC
Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Act or the Securities Exchange Act of 1934 (the "Exchange Act") as the case
may be, and none of the SEC Documents contained 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
corrected by a document subsequently filed with the SEC. The financial
statements of Parent, including the notes thereto, included in the SEC
Documents (the "Parent Financial Statements") comply as to form in all
material respects with applicable accounting requirements and 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 statements, as
permitted by Form 10-Q of the SEC) and present fairly the consolidated
financial position of Parent 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 statements, to normal audit
adjustments). There has been no change in Parent accounting policies except
as described in the notes to the Parent Financial Statements; provided,
however, Parent may have restated or may restate one or more of the Parent
Financial Statements to reflect acquisitions entered into subsequent to the
respective dates thereof. The SEC Documents contained an audited
consolidated balance sheet of Parent as of December 31, 1999 (the "Parent
Balance Sheet") and the related audited consolidated statements of income
and cash flow for the year then ended (collectively, the "Parent
Financials").
3.5 No Undisclosed Liabilities. Parent does not have any
Liabilities, except for those that, (i) have been reflected in the Parent
Balance Sheet, or (ii) have arisen in the ordinary course of the Parent's
business since the date of the Parent Balance Sheet, or (iii) do not have a
Material Adverse Effect on Parent.
3.6 No Material Adverse Effect. Since the date of the Parent
Balance Sheet and through the date hereof, there has not occurred any event
or condition of any character that has had a Material Adverse Effect on
Parent.
3.7 Tax and Other Returns and Reports
(a) Tax Returns and Audits.
(i) Except as set forth on Schedule 3.7(a)(i) of the Parent
Disclosure Letter, Parent has prepared and filed all material (as to
Parent) required federal, state, local and foreign Returns, relating to any
and all Taxes concerning or attributable to Parent or its operations and
such Returns shall be true and correct in all material respects and have
been completed in all material respects in accordance with applicable law.
Notwithstanding the foregoing, no representation or warranty is hereby made
regarding the amount or availability of the net operating losses of Parent.
(ii) Parent, (A) has paid or accrued all material (as to Parent)
Taxes that Parent is required to pay or accrue and (B) has reported and
withheld with respect to employees of the Parent all material federal and
state income taxes, FICA, FUTA, and other Taxes required to be reported and
withheld.
(iii) Parent has not been delinquent in the payment of any
material Tax nor is there any material Tax deficiency outstanding, proposed
or assessed against the Parent, nor has Parent executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of Parent is
currently in progress, nor has Parent been notified of any request for such
an audit or other examination.
(v) There are no Liens on the assets of Parent relating to or
attributable to Taxes.
(vi) Parent is not a party to a tax sharing or allocation
agreement nor does Parent owe any amount under any such agreement.
(b) No material adjustment relating to any Return filed by Parent
has been proposed formally, or, to Parent's Knowledge, informally by any
tax authority to Parent or any representative thereof.
3.8 Agreements, Contracts, Commitments. Parent and each Parent
Subsidiary is in compliance in all material respects with and has not, in
any material respects, breached, violated or defaulted under or received
notice that it has breached, violated or defaulted under, any of the terms
or conditions of any agreement, contract or commitment that is included in
any Securities Act or Exchange Act filing a "Material Contract" pursuant to
Item 601(b)(10) of Regulation S-K of the Rules and Regulations promulgated
under the Securities Act. Except as set forth on Schedule 3.8 of the Parent
Disclosure Letter, Parent has no agreement regarding the repurchase from
any person of a number of shares of Parent Common Stock in excess of
200,000 shares.
3.9 Interested Party Transactions. To Parent's Knowledge, no
executive officer or director of Parent is a party to any transaction
required to be disclosed under Item 404 of Regulation S-K of the Rules and
Regulations promulgated under the Securities Act in the SEC Documents that
has not been disclosed in the SEC Documents.
3.10 Environmental Matters
(a) Hazardous Material. Neither Parent nor any Parent Subsidiary
has operated any underground storage tanks, and neither Parent has no
Knowledge of the existence, at any time, of any underground storage tank
(or related piping or pumps), at any property that Parent or any Parent
Subsidiary has at any time owned, operated, occupied or leased. Neither
Parent nor any Parent Subsidiary has released any amount of any Hazardous
Materials. No Hazardous Materials are present as a result of the actions or
omissions of Parent, or, to the Knowledge of Parent, as a result of any
actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water
thereof, that Parent or any Parent Subsidiary has at any time owned,
operated, occupied or leased.
(b) Hazardous Materials Activities. Neither Parent nor any Parent
Subsidiary has engaged in Hazardous Materials Activities in violation of
any rule, regulation, treaty or statute promulgated by any Governmental
Entity in effect prior to or as of the date hereof to prohibit, regulate or
control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Parent and each Parent Subsidiary currently hold all
Environmental Permits necessary for the conduct of the Hazardous Material
Activities of Parent or any Parent Subsidiary and other businesses of
Parent or any Parent Subsidiary as such activities and businesses are
currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or
to the Knowledge of Parent, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of Parent or any
Parent Subsidiary. Parent is not aware of any fact or circumstance which
could involve Parent or any Parent Subsidiary in any environmental
litigation or impose upon Parent or any Parent Subsidiary any environmental
liability.
3.11 Brokers' and Finders' Fees; Third Party Expenses. Except for
fees payable to Xxxxxx Xxxxxxx & Co. Incorporated, neither Parent nor any
Parent Subsidiary has incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement, the Commercial
Agreements or any transaction contemplated hereby or thereby.
3.12 Representations Complete. None of the representations or
warranties made by Parent, Metal Merger Sub or WW Merger Sub (as modified
by the Parent Disclosure Letter) contains any untrue statement of a
material fact, or omits to state any material fact necessary in order to
make the statements contained herein, in the light of the circumstances
under which they were made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 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 or the Effective Time, except for those matters set forth
in Schedule 4.1 of the Stockholder Disclosure Letter, each of the Company
and WW agrees and the Stockholder agrees to cause the Company and WW
(except to the extent that Parent shall otherwise consent in writing) to
carry on the Business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay the debts and
Taxes of the Company, WW and the Subsidiaries when due, to pay or perform
other obligations when due, and, to the extent consistent with the
Business, to use all reasonable efforts consistent with past practice and
policies to preserve intact its present business organization, keep
available the services of its present officers and key employees and
preserve their relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it, all with
the goal of preserving unimpaired its goodwill and ongoing businesses as of
the Effective Time. Except as expressly contemplated by this Agreement,
neither the Company, WW nor any Subsidiary will, nor will the Stockholder
permit the Company, WW or any of the Subsidiaries to, without the prior
written consent of Parent:
(a) Enter into any commitment, activity or transaction that would
have been an exception to the representations or warranties set forth in
Section 2.7, had such commitment, activity or transaction occurred on or
after March 31, 2000, June 30, 2000 or August 31, 2000, as the case may be,
and prior to the date of this Agreement;
(b) Transfer or license to the Stockholder or any of its
subsidiaries (other than the Company, WW or any of the Subsidiaries) any
rights to any Company Intellectual Property or any other asset (other than
cash (except for the Liberty Digital Proceeds) and assets as of the date
hereof of National Home Connection, MetroRent or Getko Canada) or enter
into any agreement with respect to Company Intellectual Property or any
other asset (other than assets relating to National Home Connection) with
Stockholder or its subsidiaries (other than the Company, WW and the
Subsidiaries);
(c) Transfer to the Stockholder or any of its subsidiaries (other
than the Company, WW or any of the Subsidiaries) any employee engaged in
the Business;
(d) Hire or terminate any employees other than for cause or
encourage any employees to resign from the Company, WW or any Subsidiary;
(e) Enter into or amend any agreement pursuant to which any party
is granted marketing, distribution, development or similar rights of any
type or scope which includes any provision granting any person a right of
first refusal, right of first negotiation or exclusive, "most favored
nation" or preferential placement or other preferential rights, except for
agreements regarding sponsorship or the sale of advertising to third
parties for placement on the Company's website with no payment or other
obligations on the part of the Company or any Subsidiary outside the
ordinary course of business and that are terminable within sixty (60) days
without penalty;
(f) Adversely amend or otherwise modify (or agree to do so),
except in the ordinary course of business, or violate the material terms
of, any agreement set forth or described in the Stockholder Disclosure
Letter;
(g) Commence or settle any litigation involving claims or payments
in excess of $100,000 or which seeks equitable relief; provided, however,
that this restriction shall not apply to the commencement of (i) any
litigation regarding accounts receivable in the ordinary course of business
or other litigation relating to the ordinary course enforcement of
contractual rights generally or (ii) any litigation regarding a breach of
this Agreement;
(h) Declare, set aside or pay any dividends on or make any other
distributions (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 capital stock of the Company, WW
or any Subsidiary, or repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of its capital stock (or options, warrants or other
rights exercisable therefor);
(i) Issue, sell, grant, contract to issue, grant or sell, or
authorize the issuance, delivery, sale or purchase of any shares of Company
Capital Stock or securities convertible into, or exercisable or
exchangeable for, shares of Company Capital Stock, or any securities,
warrants, options or rights to purchase any of the foregoing;
(j) Cause or permit any amendments to its Certificate of
Incorporation or Bylaws;
(k) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire or divest any assets which are material, individually or in the
aggregate, to the Business;
(l) Sell, lease, license or otherwise dispose of any of the assets
or properties of Company, WW or any Subsidiary except in the ordinary
course of business consistent with past practices or create any security
interest in such assets or properties;
(m) Grant any loan to any person or entity, incur any indebtedness
or guarantee any indebtedness, issue or sell any debt securities, guarantee
any debt securities of others, purchase any debt securities of others or
amend the terms of any outstanding agreements related to borrowed money,
except for advances to employees for travel and business expenses in the
ordinary course of business consistent with past practices;
(n) Grant any severance or termination pay (i) to any director or
officer or (ii) to any employee or consultant, except payments made
pursuant to standard written agreements outstanding as of the date hereof
and disclosed on Schedule 4.1(n) of the Stockholder Disclosure Letter, or
increase in the salary or other compensation payable or to become payable
by Company or any of their respective Subsidiaries to any of their
officers, directors, employees or advisors other than increases made in the
ordinary course of business consistent with past practices and in no event
in excess of ten percent (10%) of such individual's base salary, or
declare, pay or make any commitment or obligation of any kind for the
payment by the Company, WW or any of their respective Subsidiaries of a
bonus or other additional salary or compensation to any such person other
than bonuses or additional salary or compensation paid in the ordinary
course of business consistent with past practices, or adopt or amend any
employee benefit plan or enter into any employment contract;
(o) Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business and consistent with past practice;
(p) Other than the acceleration of not more than twenty-five
percent (25%) of the shares underlying Company Options (or acceleration of
such greater amount as disclosed in the Employment Agreements set forth on
Schedule 4.1(p)) outstanding as of the date hereof in connection with the
transactions contemplated by this Agreement, take any action to accelerate
the vesting schedule of any of the outstanding Company Options, Company
Capital Stock or WW Capital Stock;
(q) Pay, discharge or satisfy, in an amount in excess of $100,000
(in any one case) or $250,000 (in the aggregate) any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities;
(r) Make or change any election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement or settle any claim or assessment in respect of Taxes;
(s) Enter into any agreement of the type described in Section 2.12
hereof except, with respect to 2.12(a)(xvii), for agreements regarding
sponsorship or the sale of advertising to third parties for placement on
the Company's website with no payment or other obligations on the part of
the Company or any Subsidiary outside the ordinary course of business and
that are terminable within sixty (60) days without penalty and, with
respect to 2.12(a)(xix), for agreements that are cancelable without penalty
within thirty (30) days and for which, if such agreement is in effect after
the Closing, (i) Stockholder shall be the sole obligor under such agreement
after the Closing and (ii) Parent has no liability after the Closing under
the agreement, by operation of law or otherwise;
(t) Fail to pay or otherwise satisfy its monetary obligations as
they become due, except such as are being contested in good faith;
(u) Cancel, materially amend or renew any insurance policy other
than in the ordinary course of business;
(v) Except as contemplated by this Agreement, alter, or enter into
any commitment to alter, its interest in any corporation, association,
joint venture, partnership or business entity in which the Company, WW or
any Subsidiary directly or indirectly holds any interest on the date
hereof; or
(w) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (v) above, or any other action
that would prevent the Company, WW or the Subsidiaries from performing or
cause the Company, WW or the Subsidiaries not to perform its covenants
hereunder.
Notwithstanding the foregoing, Stockholder will cause the transfer
prior to the Closing, and shall be permitted without receiving the prior
written consent of Parent to transfer, out of the Company the business of
National Home Connections, LLC, Getko Canada and MetroRent and the
employees set forth on Schedule 4.1(x), such that neither the Company, WW
nor any Subsidiary has any Liabilities with respect to such business or
employees following the Closing.
4.2 No Solicitation. Until the earlier of the Effective Time or
the date of termination of this Agreement pursuant to the provisions of
Section 8.1 hereof, the Stockholder will not permit (nor will it permit any
of the respective officers, directors, employees, stockholders, agents,
representatives or affiliates of) the Company, WW or any of the
Subsidiaries to directly or indirectly, take any of the following actions
with any party other than Parent and its designees: (a) solicit, initiate,
entertain, or encourage any proposals or offers from, or conduct
discussions with or engage in negotiations with, any person relating to any
possible acquisition of the Company or WW, any of its subsidiaries or the
Business (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its capital stock or assets
or any equity interest in the Company, WW, any of the Subsidiaries or the
Business, (b) provide information with respect to it to any person, other
than Parent, relating to, or otherwise cooperate with, facilitate or
encourage any effort or attempt by any such person with regard to, any
possible acquisition of the Company, WW, any of the Subsidiaries or the
Business (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its capital stock or assets
or any equity interest in the Company, WW, any of the Subsidiaries or the
Business, (c) enter into an agreement with any person, other than Parent,
providing for the acquisition of the Company, WW, any of the Subsidiaries
or the Business (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise), any material portion of its capital stock
or assets or any equity interest in the Company, WW, any of the
Subsidiaries or the Business, or (d) make or authorize any statement,
recommendation or solicitation in support of any possible acquisition of
the Company, WW, any of the Subsidiaries or the Business (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise), any
material portion of its capital stock or assets or any equity interest in
the Company, WW, any of the Subsidiaries or the Business by any person,
other than by Parent. The Stockholder shall immediately cease and cause to
be terminated any such contacts or negotiations with third parties relating
to any such transaction or proposed transaction. In addition to the
foregoing, if the Company, WW or the Stockholder receives prior to the
Effective Time or the termination of this Agreement any offer or proposal
relating to any of the above, the Stockholder shall immediately notify
Parent thereof, including information as to the identity of the offeror or
the party making any such offer or proposal and the specific terms of such
offer or proposal, as the case may be, and such other information related
thereto as Parent may reasonably request. Except as contemplated by this
Agreement, disclosure by the Company, WW or Stockholder of the terms hereof
(other than the prohibition of this Section 4.2) shall be deemed to be a
violation of this Section 4.2. The parties hereto agree that irreparable
damage would occur in the event that the provisions of this Section 4.2
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed by the parties hereto that
Parent shall be entitled to seek an injunction or injunctions to prevent
breaches of the provisions of this Section 4.2 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 Parent may be entitled at law or in equity.
4.3 Conduct of Business of Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of
this Agreement and the Effective Time, Parent agrees it shall not, without
the prior written consent of the Stockholder, enter into any transaction
which would (i) require the approval of the stockholders of Parent under
the rules of the Nasdaq Stock Market, or Delaware Law, or its Certificate
of Incorporation, or (ii) both (A) require a pre-merger notification filing
to be made under the HSR Act (without respect to whether the "size of the
person" test pertaining to the entity to be acquired is met) and (B) be
reasonably likely to materially delay or impede approval of the Mergers
under the HSR Act. If Parent intends to enter into any transaction which
would require a pre-merger notification filing to be made under the HSR Act
(without respect to whether the "size of the person" test pertaining to the
entity to be acquired is met), then it shall, prior entering into such
transaction, consult with the Stockholder to discuss the reasonable likely
effects of such transaction on approval of the Mergers under the HSR Act.
Parent shall instruct and provide training to its sales force and the sales
force of Spring Street and Parent not to use the existence of the proposed
Mergers as a means of persuading potential customers and advertisers of
RentNet or the Company not to sign up with RentNet or the Company but to
sign up with Spring Street or Parent instead.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Stockholder Approval; Proxy Statement; Delivery of Financials
(a) As promptly as practicable after the execution of this
Agreement, Parent will prepare and file, with the cooperation of the
Company, WW and the Stockholder, a proxy statement (the "Proxy Statement")
relating to approval of the issuance of the shares of Parent Common Stock
in connection with the Mergers pursuant to the rules and regulations of the
Nasdaq Stock Market and the SEC. The Company, WW and Stockholder shall
provide promptly to Parent such information concerning their respective
business and financial statements and affairs, as, in the reasonably
judgment of Parent or its counsel, may be required or appropriate for
inclusion in the Proxy Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with Parent's
counsel and auditors in the preparation of the Proxy Statement, including,
without limitation, that each of the Company and WW agrees, and the
Stockholder agrees to cause the Company and WW, to deliver an audited
combined consolidated balance sheet of the Company (together with WW and
the WW Subsidiaries as though WW and the WW Subsidiaries were subsidiaries
of the Company) as of September 30, 2000 and the related audited combined
consolidated statements of operations and cash flows for the nine-month
period ended September 30, 2000 as soon as practicable after the date of
this Agreement and in no event later than November 15, 2000. Without
limiting the generality of the foregoing, in particular, the Stockholder,
the Company and WW will cause its management and its independent auditors
to facilitate on a timely basis (and no later than fifteen (15) business
days after the date of this Agreement) (i) the preparation and delivery to
Parent for inclusion in the Proxy Statement of financial statements
(including pro forma financial statements if required) as required by
Parent to comply with applicable rules and regulations of the SEC, (ii) the
review of any Company or WW audit or review work papers for up to the past
three (3) complete fiscal years, including the examination of selected
interim financial statements and data and (iii) the delivery of such
consents and representations from the Stockholder's, the Company's and WW's
independent accountants as may be required by applicable laws or the rules
or regulations promulgated thereunder.
Parent shall use commercially reasonable efforts to respond after
consultation with the other parties hereto to any comments of the SEC as
promptly as promptly practicable after such filing. Parent shall give the
Stockholder and its counsel the opportunity to review the Proxy Statement
prior to its being filed with the SEC and shall give the Stockholder and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all written responses to requests for additional
information and written replies to comments prior to their being filed
with, or sent to, the SEC. Parent will cause the Proxy Statement to be
mailed to all stockholders of Parent, at the earliest practicable time
after the expiration of the period of time prescribed by Rule 14a-6(a) of
the Exchange Act or if comments are received by the SEC prior to the
expiration of such period of time, upon receipt of written notice from the
SEC advising Parent of the SEC's permission to file the Proxy Statement in
definitive form. As promptly as practicable after the date of this
Agreement, Parent, the Company, WW and Stockholder will prepare and file
any other filings required under the Securities Act, Exchange Act or any
other federal, foreign, or state "Blue Sky" laws relating to the Mergers
and the transactions contemplated by this Agreement (the "Other Filings").
The Proxy Statement will comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs that is required to be set forth in
amendment or supplement to the Proxy Statement or any Other Filing, as the
case may be, Parent, the Company, WW or Stockholder, as the case may be,
will promptly inform the others of such occurrence and cooperate in filing
with the SEC or its staff or any other government officers, and/or mailing
to the stockholders of Parent, such amendment or supplement as promptly as
practicable. The Proxy Statement shall include the recommendation of the
Board of Directors of Parent in favor of the issuance of shares of Parent
Common Stock in connection with the Mergers; provided, however, that such
recommendation may be withdrawn or amended in the event (i) of termination
of this Agreement pursuant to Section 8.1 or (ii) that the Stockholder, the
Company or WW has engaged in fraudulent behavior with respect to this
Agreement, the Mergers or the transactions contemplated hereby.
(b) At the earliest practicable date after the expiration of the
period of time prescribed by Rule 14a-6(a) of the Exchange Act or if
comments are received by Parent from the SEC prior to the expiration of
such period of time, upon receipt of written notice from the SEC advising
Parent of the SEC's permission to file the Proxy Statement in definitive
form, Parent will use its good faith reasonable efforts to take all action
necessary in accordance with Delaware Law, the Certificate of Incorporation
and Bylaws of Parent, and the rules and regulations of the Nasdaq Stock
Market to duly call, give notice of and convene and hold a special meeting
of stockholders for purposes of voting on a proposal to approve the
issuance of the shares of Parent Common Stock in connection with the
Mergers. Parent will, subject to federal and state securities laws and the
rules and regulations promulgated thereunder, solicit from its stockholders
proxies in favor of the issuance of the shares of Parent Common Stock in
connection with the Mergers.
5.2 Nasdaq Listing. Parent shall use commercially reasonable
efforts to ensure that at the Effective Time, the shares of Parent Common
Stock to be delivered to the Stockholder pursuant to this Agreement shall
have been accepted for quotation on the Nasdaq National Market.
5.3 Restrictions on Transfer. Except for certificates representing
those shares of Parent Common Stock which are subject to an effective
registration statement on Form S-3 filed by Parent pursuant to Section
5.12, all certificates representing Parent Common Stock deliverable to the
Stockholder or any of its Subsidiaries pursuant to this Agreement in
connection with the Mergers and any certificates subsequently issued with
respect thereto or in substitution therefor (including any shares issued or
issuable in respect of any such shares upon any stock split stock dividend,
recapitalization, or similar event) shall bear the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR A WRITTEN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE, THAT
SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND VOTING CONTAINED IN
STOCKHOLDER AGREEMENT WHICH MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST OF THE HOLDER OR RECORD OF THIS SECURITY TO THE SECRETARY
OF THE CORPORATION AT THE PRINCIPAL OFFICES OF THE CORPORATION.
If, and to the extent shares of Parent Common Stock held by the
Stockholder are no longer subject to the restrictions described in the
legends set forth above, upon the request of the Stockholder, Parent shall
cause its transfer agent to remove the appropriate legend set forth above
from the certificates evidencing the shares of Parent Common Stock or
issue to the Stockholder new certificates therefor free of such legend.
Such certificate shall also bear any legend required by any federal, state,
local or foreign law governing such securities.
5.4 Access to Information. The Company and WW shall afford Parent
and its accountants, counsel and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time
to (a) all properties, books, contracts, commitments, records and auditors
of the Company, WW and the Subsidiaries, and (b) all other information
concerning the Business and the properties and personnel of the Company, WW
and the Subsidiaries (subject to restrictions imposed by applicable law) as
Parent may reasonably request; provided that any photocopying or similar
costs of such access shall be incurred at Parent's expense and that such
access will conducted at a reasonable time, under the supervision of the
Stockholder's, the Company's or WW's personnel and in such a manner as to
maintain the confidentiality of this Agreement and the transactions
contemplated hereby and not to interfere unreasonably with the normal
operation of the business of the Company or WW. Parent shall afford
Stockholder, the Company and WW, and their respective accountants, counsel
and other representatives, access during normal business hours during the
period prior to the Effective Time to the senior executive management team
of Parent to the same extent as such access was provided prior to the date
of this Agreement; provided that any photocopying or similar costs of such
access shall be incurred at Stockholder's expense and that such access will
conducted at a reasonable time, under the supervision of Parent's personnel
and in such a manner as to maintain the confidentiality of this Agreement
and the transactions contemplated hereby and not to interfere unreasonably
with the normal operation of the business of Parent. Parent and the
Stockholder acknowledge and agree that all information received from or on
behalf of the Parent, Company, WW or any Subsidiary in connection with the
transactions contemplated hereby prior to the Closing shall be deemed to be
received pursuant to the Confidentiality Agreement dated as of May 19, 2000
and Parent, Metal Merger Sub, WW Merger Sub, the Stockholder, the Company
and WW shall, and shall cause their respective affiliates and
representatives, to comply with the provisions of such Confidentiality
Agreement with respect to such information. No information or knowledge
obtained in any investigation pursuant to this Section 5.4 shall affect or
be deemed to modify any representation or warranty contained herein.
5.5 Expenses. Except as set forth in Section 5.13 hereof, whether
or not the Mergers are consummated, all fees and expenses incurred in
connection with the Mergers 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; provided, however, all
Third Party Expenses incurred by the Company, WW or any Subsidiary in
connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby shall
be the sole obligation of the Stockholder.
5.6 Public Disclosure. Parent and the Stockholder shall consult
with and provide each other the reasonable opportunity to review and
comment upon any public disclosure prior to the public disclosure relating
to this Agreement or the transactions contemplated hereby, provided, that
neither Parent nor the Stockholder shall issue any such public disclosure
prior to such consultation and mutual agreement by the other party except
as may be otherwise required by law (including federal and state securities
laws) or, as to Parent, by the rules and regulations of the National
Association of Securities Dealers, Inc. or the Nasdaq Marketplace Rules.
Parent and Stockholder further agree that for the first twelve (12) months
the key messaging to the public will be that of the initial public
disclosures made by and agreed to by the parties.
5.7 Consents. The Stockholder shall use all commercially
reasonable efforts and shall cause the Company and WW to use all
commercially reasonable efforts to obtain the consents, waivers and
approvals and to give the notices under any of the Contracts as may be
required in connection with the Mergers (all of such consents, waivers and
approvals are set forth in Stockholder Disclosure Letter) so as to preserve
all rights of and benefits to the Company, WW and Parent thereunder.
5.8 FIRPTA Compliance. On or prior to the Closing Date, the
Stockholder shall deliver to Parent an affidavit in a form reasonably
satisfactory to Parent stating under penalties of perjury Stockholder's
taxpayer identification number and that Stockholder is not a foreign person
within the meaning of Section 1445 of the Code.
5.9 Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its
reasonable good faith efforts (subject to, and in accordance with,
applicable law) to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents
and approvals, to effect all necessary registrations and filings, and to
remove any injunctions or other impediments or delays, legal or otherwise,
in order to consummate and make effective the transactions contemplated by
this Agreement for the purpose of securing to the parties hereto the
benefits contemplated by this Agreement, subject to the limitations on
divestiture set forth in Section 5.13 hereof.
5.10 Notification of Certain Matters. The Stockholder shall give
prompt notice to Parent, and Parent shall give prompt notice to the
Stockholder, of (i) the occurrence or non-occurrence of any event of which
such party has Knowledge, the occurrence or non-occurrence of which causes
any representation or warranty of the Company, WW and the Stockholder, on
the one hand, and Parent, on the other hand, contained in this Agreement to
be untrue or inaccurate such that the conditions set forth in Section
6.3(a) hereof or Section 6.2(a) hereof, as the case may be, would not be
satisfied, and (ii) any failure of the Company, WW and the Stockholder, on
the one hand, or Parent, on the other hand, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder in any material respect; provided, however, that
the delivery of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
5.11 S-8 Registration. At the Closing Date, if possible, and
subject to obtaining any necessary consents or approvals, which consents
and approvals Parent will use commercially reasonable efforts to obtain,
Parent agrees to file, if available for use by Parent, with the SEC a
registration statement on Form S-8 registering a number of shares of Parent
Common Stock equal to the number of shares of Parent Common Stock issuable
upon the exercise of all Company Options assumed by Parent pursuant to
Section 1.6(b) hereof.
5.12 S-3 Registration Statement. As promptly as practicable after
the Closing, but in any event not later than the later of (i) May 31, 2001
or (ii) ninety (90) days following the Closing, Parent agrees to prepare
and file with the SEC a registration statement on Form S-3, or any
successor form, registering for distribution to holders of Tracking Stock
(other than in respect of the Stockholder's notional interest therein) and
holders of options to acquire Tracking Stock (other than Continuing
Employee Options) (such holders collectively, the "Distributees") such
number of shares of Parent Common Stock equal to the product obtained by
multiplying (x) the Option Exchange Ratio times (y) the number of Fully
Converted Shares held by such holders and issuable upon exercise of such
options, provided that in no event shall such number of shares of Parent
Common Stock so registered exceed 5,316,930 (the "Distributable Shares").
5.13 HSR Act. Each party agrees to provide the other party with
copies of any documentation or written materials provided to or by
governmental authorities with respect to the HSR approval process.
Notwithstanding anything to the contrary in this Agreement, Parent shall
not be required to agree to any divestiture by Parent, the Company or WW or
any of their respective subsidiaries or affiliates (i) of shares of capital
stock, (ii) of any of their respective businesses, assets or properties or
(iii) the imposition of any material limitation on the ability of any of
them to conduct their respective businesses (including the Business) or to
own or exercise control of such assets, properties and stock. All expenses
incurred by the Company, WW, Parent and the Stockholder (including expenses
of counsel) in connection with obtaining termination of the waiting period
under the HSR Act shall be borne solely by the party incurring such
expense.
5.14 Transfer of Assets.
(a) Subject to the provisions of the last paragraph of Section 4.1
of this Agreement, prior to the Closing, the Stockholder shall transfer,
assign or license (on a worldwide, perpetual, royalty-free and
non-exclusive basis to conduct the Business) to the Company and WW, as
applicable, all tangible, intangible, real and personal property assets
used in the Business, including all Intellectual Property, owned by or
licensed to Stockholder or any of its subsidiaries that are used in the
conduct of the Business, including any assets which are necessary to the
continued realization of any revenues of the Business as conducted;
provided, however, that to the extent that the transfer, assignment or
license of any such assets is provided for in any of the Commercial
Agreements, then the terms of such Commercial Agreement shall govern such
transfer, assignment or license.
(b) Following the Closing, the Stockholder shall assist Parent,
the Company and WW with perfecting the Company's and WW's title in any such
assets. Such assistance shall include the following: (i) executing all
documents prepared by the Company, WW or Parent necessary to perfect the
Company's or WW's title in any such assets; (ii) making available to
Parent, the Company, WW or their counsel, inventors and other persons
employed by Stockholder for interviews and/or testimony to assist in good
faith in further prosecution, maintenance or litigation of any
registrations or applications involving any such assets, including
Registered Intellectual Property; (iii) forwarding copies of all
correspondence sent and received concerning such assets within a reasonable
time after receipt by Stockholder; and (iv) making all relevant documents
in the possession or control of Stockholder and relating to such assets,
available to Parent or its counsel.
5.15 Trade Secret License. Without limiting anything set forth
herein, including Company's and WW's ownership of its trade secrets,
effective as of the Closing, the Stockholder hereby grants to Parent, and
to the Company and WW after the Closing, a non-exclusive license to use
all trade secrets and know-how owned by the Stockholder used in the conduct
of the Business. Subject to the terms of this Agreement and the Commercial
Agreements and the Ancillary Agreements, Parent, the Stockholder, the
Company and WW shall treat such trade secrets in the same manner that they
treat comparable other trade secrets owned by each of them.
5.16 Equitable Remedy. The Stockholder agrees that it would be
impossible or inadequate to measure and calculate Parent's damages from any
breach of the covenants set forth in Sections 5.14 and 5.15. Accordingly,
the Stockholder agrees that if it breaches any provision of Sections 5.14
or 5.15, Parent will have available, in addition to any right or remedy
otherwise available, the right to obtain an injunction from a court of
competent jurisdiction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement. The
Stockholder further agrees that no bond or other security shall be required
in obtaining such equitable relief, nor will proof of actual damages be
required for such equitable relief. The Stockholder hereby expressly
consents to the issuance of such injunctive relief, whether in the form of
a temporary restraining order or otherwise, and to the ordering of such
specific performance.
5.17 Stockholder Employee Plans.
(a) Liabilities Under Plans. From and after the Effective Time,
except as otherwise specifically set forth in this Agreement, the
Stockholder shall (a) sponsor and (b) assume or retain, as the case may be,
and be solely responsible for all Benefits Liabilities (as defined herein)
arising under, resulting from or relating to the Company Employee Plans of
the Stockholder or any of its subsidiaries, whether incurred before, on or
after the Effective Time; provided, however, that the Stockholder shall be
under no obligation (except with respect to any obligation specifically
described in this Agreement or one of the Company Employee Plans) to permit
Continuing Employees to continue to participate in the Company Employee
Plans of Stockholder after the Effective Time. "Benefits Liabilities" shall
mean with respect to any Company Employee Plan of Stockholder, the Company
or WW (if applicable) any and all claims, debts, liabilities, commitment
and obligations, whether fixed, contingent or absolute, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever or however arising, including all costs and expenses
relating thereto (except with respect to any obligations of Parent
specifically described in this Agreement), and including those debts,
liabilities and obligations arising under law, rule, regulation, permits,
action or proceeding before any court or regulatory agency or
administrative agency, order or consent decree or any award of any
arbitrator of any kind, and those arising under contract, commitment or
undertaking; provided, however, that "Benefits Liabilities" shall exclude
any such liabilities arising under the plans listed on Schedule 5.17(a).
(b) COBRA. The Stockholder assumes any and all Benefits
Liabilities relating to, arising out of, or resulting from noncompliance
with or violation of COBRA to the extent incurred prior to the Closing.
5.18 Stay Bonuses. In the event that the Closing has occurred
prior to June 1, 2001, Parent shall pay within ninety (90) days after the
Closing bonuses to the employees of the Company and WW in the amounts set
forth on Schedule 5.18, provided that such bonuses shall be paid to only
those employees who remain employees of the Company or WW, as applicable,
on the date of such bonus payments; provided, further, that Parent shall
notify Stockholder at least six (6) business days prior to the date of such
bonus payments and Stockholder shall pay to Parent in cash any aggregate
amount of such bonuses in excess of $4,000,000, such payment being due to
Parent no fewer than three (3) business days prior to the date of such
bonus payments. In the event that the Closing has not occurred prior to the
June 1, 2001 (the "Bonus Payment Date"), Stockholder shall pay on the Bonus
Payment Date bonuses to the employees of the Company and WW in the amounts
set forth on Schedule 5.18, provided that such bonuses shall be paid to
only those employees who remain employees of the Company or WW, as
applicable, on the Bonus Payment Date; provided, further, that Stockholder
shall notify Parent at least six (6) business days prior to the Bonus
Payment Date and Parent shall pay Stockholder all of such bonuses if the
bonuses aggregate to less than $4,000,000, but only a portion of such
bonuses up to a maximum of $4,000,000 if the bonuses aggregate to more than
$4,000,000, such payment being due to Stockholder no later than May 31,
2001; provided, that Parent shall not be obligated in any manner under this
Section 5.18 if this Agreement is terminated by Parent pursuant to Section
8.1(d) or 8.1(f) hereof.
5.19 Additional Option Grants. Immediately prior to and subject
to the consummation of the Closing, the Company shall, and the Stockholder
shall cause the Company to, adopt the 2000 Option Plan in form and
substance as directed by Parent (which form and substance shall be
substantially similar to Parent's option plan) and shall reserve under such
2000 Option Plan the Additional Options. The Additional Options shall not
be subject to accelerated vesting upon the Mergers, and the Company shall
not, and the Stockholder shall cause the Company not to, issue any
Additional Options without Parent's prior written consent.
5.20 Cancellation of Intercompany Obligations and Liberty Digital
Proceeds. Prior to the Closing, the Stockholder, the Company and WW shall
take all necessary actions so that (i) all liabilities (contingent or
other) and all ongoing obligations (other than pursuant to the Ancillary
Agreements) of (x) the Company, WW or any Subsidiary to the Stockholder or
any of its subsidiaries and (y) the Stockholder or any of its subsidiaries
to the Company, WW or any Subsidiary (but in the case of clause (y), only
to the extent that the Company, WW or any Subsidiary does not have a
corresponding liability or obligation to any third party), in each case are
cancelled as of the Closing and (ii) an amount equal to the Liberty Digital
Proceeds is paid in cash by Stockholder to the Company.
5.21 Tax Matters.
(a) None of the Stockholder, the Company, WW, Parent, Metal Merger
Sub, WW Merger Sub or their respective affiliates shall take any action
that would reasonably be expected to cause the Metal Merger or the WW
Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code. In addition, none of Parent, Metal Merger Sub or WW
Merger Sub, or following the Effective Time, the Company or WW, shall
breach any of the covenants included in the respective certificates
delivered pursuant to Section 5.21(b) hereof to the extent that such breach
causes the Metal Merger or the WW Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code.
(b) Officers of the Stockholder, on the one hand, and, Parent,
Metal Merger Sub, WW Merger Sub, on the other hand, shall execute and
deliver to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP ("Skadden")
certificates substantially in the form attached hereto as Exhibits F-1(a)
and (b) and F-2(a) and (b), respectively, contemporaneously with the
execution of this Agreement and at the Closing, respectively, in connection
with the delivery by Skadden of its opinion pursuant to Section 6.2(f).
5.22 Liberty Digital Stock. After the date hereof, the Company
shall not, and the Stockholder shall cause the Company not to, sell,
transfer or otherwise dispose of any Liberty Digital Stock. Prior to the
Closing, Stockholder shall transfer an amount equal to the Liberty Digital
Proceeds in cash to the Company, and such amount shall be held in the
Company's accounts as of the Effective Time.
5.23 Purchase of New GBR Collating Machine. Prior to the Closing,
Stockholder shall order and pay for in WW's name (or, if full payment is
not due until after Closing, then Stockholder shall transfer sufficient
cash to make full payment to WW as of the Closing) one (1) new GBR
custom-built collating machine according to the description set forth in
Schedule 5.23, with such additional satisfactory specifications as are set
forth in the purchase order for such machine, and, if delivered before
Closing, shall take all necessary efforts to install and enable such
collating machine in the WW facility located at 000 X. Xxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx, including without limitation paying for (or reimbursing
Parent if delivered after Closing) all associated labor costs and any
capital improvements required to such facility in order to accommodate the
ordinary use of such collating machine upon delivery.
5.24 Employees. Parent agrees not to reduce the base salary of
any Continuing Employee during the period beginning immediately after the
Effective Time and ending on the six-month anniversary of the Effective
Time; provided that Parent shall not be restricted from terminating the
employment of any Continuing Employee.
5.25 Termination of Broker Licenses. Prior to the Closing, (i)
the Company shall, and Stockholder shall cause the Company and WW to,
terminate all mortgage broker licenses and related surety bonds held by the
Company or any Subsidiary; provided that Parent shall reimburse Stockholder
for its documented out-of-pocket expenses in connection with such
terminations up to a maximum of $25,000, and (ii) neither the Company nor
any Subsidiary will perform any functions that would require it to be
licensed as a mortgage broker in any jurisdiction. From and after the
Effective Time, neither the Company, WW or Parent will have any liability
related to mortgage broker operations conducted by the Company, WW or any
Subsidiary prior to the Closing ("Broker Liabilities"), and Stockholder
agrees to indemnify Parent for any such Broker Liabilities.
5.26 Qualifications to Do Business. Until the Effective Time, the
Company and WW, as applicable, shall, and the Stockholder shall cause the
Company and WW to, cause the Company, WW and the Subsidiaries to be
qualified to do business in all jurisdictions where such entities are
required to be so qualified.
5.27 Bifurcated Contracts. From and after the Effective Time,
Parent and the Company, on the one hand, and Stockholder, on the other
hand, shall cooperate to perform, or, in the case of Stockholder to cause
its subsidiaries to cooperate with Parent and the Company to perform, the
obligations of the Company or the subsidiaries of Parent, as the case may
be, with respect to contracts numbers 52, 113, 138, 173, 199 and 217 on
Exhibit 2.12(a) of the Stockholder Disclosure Letter (the "Bifurcated
Contracts"). Parent shall collect all funds under the Bifurcated Contracts
and shall cause a portion of the net proceeds derived from the Bifurcated
Contracts which corresponds to the relative proportion and value of the
services to be performed by the Stockholder and its subsidiaries under the
Bifurcated Contracts to be remitted to Stockholder as soon as reasonably
practicable after receipt of the funds representing such revenues by the
Company or Parent. Neither Parent nor the Company nor any of their
affiliates shall enter into any amendments, renewals, extensions, or in any
way extend the Bifurcated Contracts in a manner that would extend the
obligations of Stockholder and its subsidiaries under the Bifurcated
Contracts past their respective current terms.
5.28 Transfer of Ownership in Move. com U.K. Prior to the Closing,
Stockholder shall cause all shares of Xxxx.xxx U.K. not owned by the
Company to be transferred to the Company (without payment or additional
consideration on the part of Parent, the Company, WW or any Subsidiary
other than the entering into of this Agreement and the transactions
contemplated hereby) such that, as of the Effective Time, the Company is
the sole and exclusive owner of all shares or interest in Xxxx.xxx U.K. and
there are no options or other preemptive rights to purchase any shares or
interests of Xxxx.xxx U.K. outstanding; provided, however, that so long as
all agreements effecting such transfer are executed by all parties thereto
and delivered to Parent at the Closing and the only remaining action
required to be taken to effect such transfer is the filing by the Company
of such executed agreements with the relevant Governmental Entity, this
covenant shall be deemed satisfied as of the Closing. Parent agrees that,
after the Effective Time, it will transfer one percent (1%) of the
outstanding shares of Xxxx.xxx U.K. to a trust or similar entity
established and controlled by Parent in its discretion, the beneficiaries
of which trust or similar entity shall be those estate agents of the
HomeSale Network in the United Kingdom, from time to time, who have
uploaded all of their respective real estate listings to xxx.xxxx.xxx.xx.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Mergers.
The respective obligations of each party to this Agreement to effect the
Mergers shall be subject to the satisfaction at or prior to the Closing of
the following conditions:
(a) Stockholder Approval. The stockholders of Parent shall have
approved the issuance of Parent Common Stock in connection with the Mergers
in accordance with the rules and regulations of the Nasdaq Stock Market.
(b) No Injunctions or Restraints; Illegality; HSR Act. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of either
of the Mergers shall be in effect. All waiting periods, if any, under the
HSR Act relating to the transactions contemplated hereby will have expired
or terminated early and all material foreign antitrust approvals required
to be obtained prior to the Mergers in connection with the transactions
contemplated hereby shall have been obtained.
6.2 Additional Conditions to Obligations of the Stockholder. The
obligations of the Stockholder to consummate the Mergers and the
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, by the Stockholder:
(a) Representations and Warranties. The representations and
warranties of Parent, Metal Merger Sub and WW Merger Sub contained in this
Agreement shall have been true and correct in all material respects on and
as of the date hereof, except for those representations and warranties
which address matters only as of a particular date (which shall be true and
correct in all material respects as of such date), and notwithstanding the
failure of the representations and warranties set forth in Sections 3.4,
3.5, 3.7, 3.10 and 3.12 of this Agreement to be true and correct in all
material respects, this condition shall be deemed satisfied unless the
failure of such representations and warranties to be true and correct in
all material respects constitutes a Material Adverse Effect on Parent, as
defined in Section 10.2 hereof). The Stockholder shall have received a
certificate to such effect signed by an officer of Parent, on behalf of
Parent.
(b) Agreements and Covenants. Parent, Metal Merger Sub and WW
Merger Sub shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, and the
Stockholder shall have received a certificate to such effect signed by an
officer of Parent on behalf of Parent.
(c) Material Adverse Effect. Since the date hereof and until the
expiration or termination of any applicable waiting periods under the HSR
Act for the transactions contemplated hereby, there has not been any
Material Adverse Effect (as defined in Section 10.2 hereof) on Parent.
(d) Stockholder Agreement. Parent shall have executed and
delivered the Stockholder Agreement in the form attached hereto as Exhibit
B.
(e) Registration Rights Agreement. Parent shall have executed and
delivered the Registration Rights Agreement in the form attached hereto as
Exhibit C.
(f) Tax Opinion of Skadden. The Stockholder shall have received
the opinion of Skadden, in form and substance reasonably satisfactory to
it, dated as of the Closing Date, on the basis of the facts,
representations and assumptions set forth in such opinion and certificates
obtained from officers of Parent, Metal Merger Sub or WW Merger Sub, as
applicable, and the Stockholder, all of which are consistent with the state
of facts existing as of the Effective Time, to the effect that, for U.S.
federal income tax purposes, the Metal Merger and the WW Merger, in each
case, will qualify as a reorganization within the meaning of Section 368(a)
of the Code; provided, however, under all circumstances it is agreed that
the condition set forth in this Section 6.2(g) shall be deemed to be
satisfied even if such tax opinion of Skadden shall not have been delivered
unless the sole reason that such opinion has not been delivered is because
of a Change in Law (as defined below) that precludes the delivery of such
an opinion. In rendering the opinion described above, Skadden shall rely
upon the certificates and representations referred to in Section 6.2(h)
hereof. For purposes of this Section 6.2(h), "Change in Law" shall mean a
change after the execution of this Agreement in a statute, regulation,
judicial authority, administrative interpretation or other authority that
would prevent Skadden from issuing the opinion set forth in this Section
6.2(g).
(g) Tax Certificates. Officers of Parent, Metal Merger Sub and WW
Merger Sub shall have executed and delivered to Skadden certificates
substantially in the forms attached hereto as Exhibit F-2(a) and (b)
contemporaneously with the execution of this Agreement and at the Effective
Time.
(h) Commercial Agreements. Parent shall have executed and
delivered each of the Commercial Agreements in the forms attached hereto as
Exhibits A-1 through A-10, each of which agreements shall be in full force
and effect.
6.3 Additional Conditions to the Obligations of Parent, Metal
Merger Sub and WW Merger Sub. The obligations of Parent, Metal Merger Sub
and WW Merger Sub to consummate the Mergers and the 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 Parent:
(a) Representations and Warranties. The representations and
warranties of the Company, WW and the Stockholder contained in this
Agreement shall have been true and correct in all material respects on and
as of the date hereof, except for those representations and warranties
which address matters only as of a particular date (which shall be true and
correct in all material respects as of such date), and notwithstanding the
failure of the representations and warranties set forth in Sections 2.6,
2.10(a), (b), (c), 2.14, 2.16, 2.18, 2.21 and 2.25 of this Agreement to be
true and correct in all material respects, this condition shall be deemed
satisfied unless the failure of such representations and warranties to be
true and correct in all material respects constitutes a Business Adverse
Effect, as defined in Section 10.2 hereof. Parent, Metal Merger Sub and WW
Merger Sub shall have received a certificate to such effect signed by the
chief executive officer and chief financial officer of the Stockholder.
(b) Agreements and Covenants. The Company, WW and the Stockholder
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by each of them on or prior to the Effective Time, and
Parent, Metal Merger Sub and WW Merger Sub shall have received a
certificate to such effect signed by the chief executive officer and chief
financial officer of the Company, WW and the Stockholder, on behalf of the
Company, WW and the Stockholder, respectively.
(c) Material Adverse Effect. Since June 30, 2000 and until the
expiration or termination of any applicable waiting periods under the HSR
Act for the transactions contemplated hereby, there shall not have been any
Material Adverse Effect (as defined in Section 10.2 hereof) on the Company,
WW or any of their respective Subsidiaries or the Business (taken as a
whole).
(d) Stockholder Agreement. The Stockholder shall have executed and
delivered the Stockholder Agreement in the form attached hereto as Exhibit
B, which agreement shall be in full force and effect.
(e) Commercial Agreements. All parties to the Commercial
Agreements other than Parent shall have executed and delivered to Parent
each of the Commercial Agreements in the forms attached hereto as Exhibits
A-1 through A-10, each of which agreements shall be in full force and
effect.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and Warranties. Except as
otherwise provided in Section 9.6(c) of this Agreement, all of the
representations and warranties of the Stockholder and Parent, in this
Agreement or in any certificate, instrument or other document delivered
pursuant to this Agreement (each as modified by the Stockholder Disclosure
Letter or the Parent Disclosure Letter, as the case may be) shall survive
the Mergers and continue until 5:00 p.m., Pacific Time, on the date which
is twelve (12) months following the Closing Date; provided, however, that
the representations and warranties of the Stockholder contained in Sections
2.2 and 2.18 hereof shall survive indefinitely (subject to any applicable
statute of limitations); provided, further, that the representations and
warranties of the Stockholder contained in Section 2.11(d) and the second
and third sentences of Section 2.10(d) hereof shall survive until 5:00
p.m., Pacific Time, on the date which is thirty-six (36) months following
the Closing Date (the end date of such survival, as applicable, (or an
indefinite period in the case of Sections 2.2 and 2.18) is hereinafter
referred to as the "Expiration Date").
7.2 Indemnification
(a) In addition to the matters set forth in Article IX hereof,
until the Expiration Date, the Stockholder agrees to indemnify and hold
Parent and its officers, directors and affiliates harmless against all
claims, losses, liabilities, damages, costs and expenses, including
reasonable attorneys' fees (hereinafter individually a "Loss" and
collectively "Losses"), incurred by Parent or its officers, directors, or
affiliates: (i) as a result of any inaccuracy or breach of a representation
or warranty of the Stockholder contained in this Agreement or any
certificate, instrument or other document delivered pursuant to this
Agreement; (ii) except as set forth in Section 7.3 below, relating to any
liability, obligation, judgment, penalty, fine, cost or expense, of any
kind or nature, or the duty to indemnify, defend or reimburse any Person
with respect to: (1) the presence on or before the Closing Date of any
Hazardous Materials in the soil, groundwater, surface water, air or
building materials of any Business Facility ("Pre-Existing Contamination");
(2) the migration at any time prior to or after the Closing Date of
Pre-Existing Contamination to any other real property, or the soil,
groundwater, surface water, air or building materials thereof; (3) any
Hazardous Materials Activity conducted on any Business Facility prior to
the Closing Date or otherwise occurring prior to the Closing Date in
connection with or to benefit the Business ("Pre-Closing Hazardous
Materials Activities"); (4) the exposure of any person to Pre-Existing
Contamination or to Hazardous Materials in the course of or as a
consequence of any Pre-Closing Hazardous Materials Activities, without
regard to whether any health effect of the exposure has been manifested as
of the Closing Date; (5) the violation of any Environmental Laws by the
Company, WW or any Subsidiary or its agents, employees, predecessors in
interest, contractors, invitees or licensees prior to the Closing Date or
in connection with any Pre-Closing Hazardous Materials Activities prior to
the Closing Date; (6) any actions or proceedings brought or threatened by
any third party with respect to any of the foregoing; and (7) any of the
foregoing to the extent they continue after the Closing Date (collectively,
"Seller's Retained Environmental Liabilities"); (iii) relating to or
arising out of Parent's assumption of Continuing Employee Options and
Additional Options under this Agreement or failure of Parent to assume any
options, rights or other securities of the Stockholder, the Company or any
of their respective affiliates in connection with the transactions
contemplated by this Agreement, provided that this indemnity in clause
(iii) shall not apply to: (w) Parent's failure to issue Parent Common Stock
in accordance with the Option Exchange Ratio upon the due exercise of such
Continuing Employee Options and Additional Options held by Continuing
Employees and assumed by Parent pursuant to Section 1.6(b)(iii)of this
Agreement, (x) Parent's other obligations under the Option Plans with
respect to the Continuing Employee Options or the agreements governing such
Continuing Employee Options by virtue of such assumption, (y) any actions
taken by Parent after the Closing with respect to the termination of
employment of any Continuing Employee who holds a Continuing Employee
Option, or (z) any misstatement or omission in any Registration Statement
on Form S-8 or prospectus or similar securities law document prepared by
Parent and distributed to its employees with respect to the Continuing
Employee Options; or (iv) Broker Liabilities. Notwithstanding the
foregoing, there shall be no right to indemnification pursuant to this
Article VII unless and until an Indemnification Certificate (as defined
below) identifying aggregate Losses in excess of $5,000,000 (the "Threshold
Amount") has been delivered to Stockholder, in which event Parent shall be
entitled to recover all such amounts in excess of the Threshold Amount;
provided, however, that such Threshold Amount shall not apply to any
indemnification pursuant to Section 7.2(a)(i) above with respect to any
inaccuracy or breach of a representation or warranty contained in Section
2.2, 2.4, the second and third sentences of 2.10(d), 2.11(d) or 2.18 or
pursuant to Section 7.2(a)(ii), (iii) or (iv) above. In no event shall the
Stockholder's aggregate obligation to indemnify Parent under this Section
7.2(a) exceed an amount of cash or Parent Common Stock equal to the value
of fifty percent (50%) of the Total Consideration (based on the valuation
of the Parent Common Stock at the Parent Closing Price) (the "Limit") ;
provided, however, that such Limit shall not apply to any indemnification
pursuant to Section 7.2(a)(i) above with respect to any inaccuracy or
breach of a representation or warranty contained in Section 2.2, the second
and third sentences of 2.10(d), 2.11(d) or 2.18 or pursuant to Section
7.2(a)(ii), (iii) or (iv) above. The amount of any Losses shall be reduced
by the amount of any Tax Benefit Actually Realized by Parent, WW, the
Company or their respective subsidiaries or affiliates relating thereto and
any amount received by Parent with respect thereto under any insurance
coverage (net of any reasonably expected premium adjustments). If Parent
actually receives an amount under insurance coverage with respect to Losses
at any time subsequent to any indemnification provided by the Stockholder
pursuant to this Section 7.2, then Parent shall promptly reimburse the
Stockholder for any payment made by the Stockholder to Parent in connection
with providing the indemnification for a particular matter up to such
amount received by Parent with respect to that matter, provided, however,
that Parent may retain an amount from proceeds received under insurance
coverage or from such other party with respect to Losses to the extent that
the Stockholder has not indemnified Parent for the full amount of its
claim. Stockholder shall not have any right of contribution from the
Company or WW or any of their respective Subsidiaries with respect to any
Loss claimed by an Indemnified Party after the Effective Time.
(b) Claims. Upon receipt by the Stockholder at any time on or
before the last day of the Indemnification Period of a certificate signed
by any officer of Parent (an "Officer's Certificate"): (A) stating that
Parent has paid or properly accrued or reasonably anticipates that it will
have to pay or accrue Losses, 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 or
covenant to which such item is related, the Stockholder shall, subject to
the provisions of Section 7.2(c) hereof, deliver to Parent, as promptly as
practicable, funds in an amount equal to such Losses. The Stockholder
shall, at its sole discretion, pay all claims for indemnification hereunder
in (i) cash or (ii) shares of Parent Common Stock; provided, however that
all claims for indemnification pursuant to Section 7.2(a)(i) (with respect
to breaches or inaccuracies of the representations and warranties set forth
in Section 2.18) or Section 7.2(a)(ii) above shall be paid in cash only. In
the event the Stockholder determines to pay any claim, in whole or in part,
in shares of Parent Common Stock, the Stockholder shall transfer to Parent
the number of shares of Parent Common Stock having an aggregate value
(based on the valuation of each share at 97% of the Parent Closing Price
(adjusted for splits, combinations and the like)) equal to the Losses with
respect to such claim.
(c) Objections to Claims. No such payment or delivery may be
required pursuant to Section 7.2(b) above if the Stockholder shall object
in a written statement to the claim made in the Officer's Certificate with
thirty (30) days of delivery of such Officer's Certificate, and such
statement shall have been delivered to Parent prior to the expiration of
such thirty (30)-day period.
(d) Resolution of Conflicts.
(i) In case the Stockholder shall so object in writing to any
claim or claims made in any Officer's Certificate, the Stockholder and
Parent shall attempt in good faith to agree upon the rights of the
respective Parties with respect to each of such claims. If the Stockholder
and Parent should so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties and Stockholder shall deliver to
Parent, as promptly as practicable, an amount equal to such Losses in cash
or shares of Parent Common Stock.
(ii) If no such agreement can be reached after good faith
negotiation and prior to sixty (60) days after delivery of an Officer's
Certificate, either of Parent or the Stockholder may demand arbitration of
the matter unless the amount of the Loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until
such amount is ascertained or both parties agree to arbitration, and in
either such event the matter shall be settled by arbitration conducted by
one arbitrator mutually agreeable to Parent and the Stockholder. In the
event that, within thirty (30) days after submission of any dispute to
arbitration, Parent and the Stockholder cannot mutually agree on one
arbitrator, then, within fifteen (15) days after the end of such thirty
(30) day period, Parent and the Stockholder shall each select one
arbitrator within ten (10) additional days. The two arbitrators so selected
shall select a third arbitrator. If the Stockholder does not select an
arbitrator during this fifteen (15) day period, then the parties agree that
the arbitration will be conducted by one arbitrator selected by Parent.
(iii) Any such arbitration shall be held under the expedited rules
then in effect of the American Arbitration Association. The arbitrator(s)
shall determine how all expenses relating to the arbitration shall be paid,
including without limitation, the respective expenses of each party, the
fees of each arbitrator and the administrative fee of the American
Arbitration Association. The arbitrator or arbitrators, as the case may be,
shall set a limited time period and establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrator or majority of the three
arbitrators, as the case may be, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrator or
a majority of the three arbitrators, as the case may be, shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the extent as a
competent court of law or equity, should the arbitrators or a majority of
the three arbitrators, as the case may be, determine that discovery was
sought without substantial justification or that discovery was refused or
objected to without substantial justification. The decision of the
arbitrator or a majority of the three arbitrators, as the case may be, as
to the validity and amount of any claim in such Officer's Certificate shall
be final, binding, and conclusive upon the parties to this Agreement. Such
decision shall be written and shall be supported by written findings of
fact and conclusions which shall set forth the award, judgment, decree or
order awarded by the arbitrator(s). Within five (5) days of a decision of
the arbitrator(s) requiring payment by one party to another, such party
shall make the payment to such other party.
(iv) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
(e) Third-Party Claims. In the event Parent becomes aware of a
third-party claim which Parent believes may result in a demand for
indemnification, Parent shall notify the Stockholder of such claim, and the
Stockholder, shall be entitled, at its expense, to participate in any
defense of such claim. Parent shall have the right in its sole discretion
to settle any such claim; provided, however, that except with the consent
of the Stockholder, no settlement of any such claim with third-party
claimants shall alone be determinative of the amount of any claim for
indemnification if the settlement is unreasonable. Any dispute as to the
reasonableness of such settlement shall be resolved pursuant to the terms
of Section 7.2(d) above. To the extent that such settlement is determined
after such dispute resolution to be unreasonable, then the arbitrator(s)
shall determine the amount, if any, that Stockholder shall be required to
indemnify Parent in respect of such settled claim. In the event that the
Stockholder has consented to any such settlement, the Stockholder shall
have no power or authority to object under any provision of this Article
VII to the amount of any claim by Parent for indemnification with respect
to such settlement.
(f) Sole Remedy. Parent's rights to indemnification as provided
for in Section 7.2 for a breach of representations or warranties contained
in this Agreement shall constitute Parent's sole remedy for such a breach
and the Stockholder shall have no other liability or damages to the other
party resulting from the breach; provided, however, that nothing contained
herein shall prevent Parent from pursuing remedies, including equitable
remedies, as may be available to it under applicable law or equitable
principles in the event of the Stockholder's failure to comply with its
indemnification obligations hereunder or in the event of a claim of fraud
by Parent against the Stockholder.
7.3 Further Conditions on Environmental Indemnity.
(a) Stockholder's indemnification obligations under Section
7.2(a)(i) with respect to a breach of the representations and warranties
contained in Section 2.18, and Stockholder's indemnification obligations
set forth in Section 7.2(a)(ii) (collectively "Stockholder's Environmental
Indemnity") shall be subject to the following limitations: (i)
Stockholder's Environmental Indemnity for violations of Environmental Laws
occurring in the course of ongoing operation of the Business, which
violations continue after the Closing Date, shall not apply to any such
violations to the extent they arise either from a change in operations of
the Business after the Closing Date or from the continuation of the
operations as they existed prior to the Closing Date for a period
continuing beyond that date which is one year following the Closing Date;
(ii) Stockholder shall not be liable for any diminution in property value
of any real property owned by the Company as of the Closing Date; (iii) to
the extent Stockholder's Environmental Indemnity applies to Cleanup,
Stockholder's Environmental Indemnity shall only apply to Cleanup to the
extent such Cleanup is required by a Governmental Entity under applicable
Environmental Laws in effect and enforceable as of the Closing Date or is
required to be undertaken under any applicable Environmental Laws in effect
and enforceable as of the Closing Date; (iv) Stockholder's Environmental
Indemnity shall not apply to that portion of the cost of a Cleanup to the
extent (but only to the extent) that the Cleanup is not conducted using
Cost-Effective Methods; (v) Stockholder's Environmental Indemnity shall not
apply to costs to the extent such costs result from the application of more
stringent Environmental Laws as a result of the change in use of a Business
Facility to a use other than industrial, commercial or retail where such
change in use results from the voluntary actions of Parent or its
subsidiaries; and (vi) Stockholder's Environmental Indemnity shall not
apply to any Cleanup costs to the extent caused by the exacerbation or
worsening (excluding the mere discovery of contamination) of Pre-Existing
Contamination as a result of the acts of Parent, its subsidiaries,
employees or agents or the acts of any third parties on any property owned
by Parent or its affiliates.
(b) Parent or its affiliate shall promptly notify Stockholder in
writing in the event of the discovery of Pre-Existing Contamination subject
to Stockholder's Environmental Indemnity ("Contamination Notice");
provided, however, that a failure to so notify Stockholder shall not limit
Stockholder's indemnification obligations hereunder except to the extent
that Stockholder is prejudiced thereby. Such notice shall reasonably
identify the location and information on the impacted media and the basis
upon which the claimant seeks indemnification. For claims relating to
Cleanup within the scope of this Section 7.3, the Stockholder shall have
the right to assume responsibility for managing the Cleanup and related
matters thereto, by providing notice to the Parent within sixty (60) days
following receipt of the Contamination Notice. If the Stockholder assumes
responsibility for management of a Cleanup under this subsection, the
Stockholder shall perform such Cleanup using Cost-Effective Methods in
compliance with all applicable legal requirements and in accordance with
plans approved by Parent or its affiliate, and utilizing a consultant
approved by Parent or its affiliate, which approvals shall not be
unreasonably withheld. Where the Stockholder has assumed responsibility for
management of a Cleanup under this subparagraph (b), the Parent or its
affiliate shall have the right, at its sole cost and expense, to: (i)
review and approve (which approval shall not be unreasonably withheld) all
draft plans and reports, as well as correspondence to any Governmental
Entity regarding the Cleanup, and (ii) participate in activities related to
the Cleanup, including, but not limited to, participation in meetings with
respect to the determination of applicable Remediation Standards or methods
for conducting the Cleanup.
(c) As used in this Section 7.3, the following terms have the
meanings set forth below.
(i) "Business Facility" means any property that is or at any time
has been owned, operated, occupied, controlled or leased by the Company, WW
or any Subsidiary in connection with the operation of the Business.
(ii) "Remediation Standard" means a numerical standard that
defines the concentrations of Hazardous Materials that may be permitted to
remain in any environmental media after an investigation, remediation or
containment of a release of Hazardous Materials.
(iii) "Cleanup" means any Loss related to investigation,
feasibility study, remediation, treatment, removal, transport, disposal,
characterization, sampling, health assessment, risk assessment,
encapsulation, monitoring, study, report, assessment or analysis with
respect to any Pre-Existing Contamination.
(iv) "Cost-Effective Methods" means the most cost-effective
approach to remediation that is consistent with applicable Environmental
Laws or the requirements of a Governmental Entity; provided, however, that
Cost-Effective Methods shall not include those that (1) result in the
interruption of Parent or its affiliates' business operations on a Business
Facility periodically or for a period of more than twenty-four hours; (2)
result in the imposition of a deed restriction or other restriction or
limitation on the use or development of any property other than a Business
Facility, or result in the imposition of a deed restriction or other
restriction or limitation on the development of a Business Facility (or any
portion thereof) for industrial, retail or commercial purposes; or (3)
result in the diminution of the value of a Business Facility or any other
property.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Except as provided in Section 8.2 below, this
Agreement may be terminated and the Mergers abandoned at any time prior to
the Effective Time:
(a) by mutual consent of the Stockholder and Parent;
(b) by Parent or the Stockholder if: (i) the Effective Time has
not occurred prior to 5:00 p.m. Pacific Standard Time on April 2, 2001 (the
"End Date"); provided that the End Date may be extended by any party for a
period of thirty (30) days if such party reasonably believes that the
expiration or termination of the waiting period under the HSR Act is likely
to be obtained during such 30-day extension; (ii) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Mergers; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to
the Mergers by any governmental entity that would make consummation of the
Mergers illegal;
(c) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Mergers, by any Governmental Entity, which would: (i)
prohibit Parent's, the Company's or WW's ownership or operation of all or
any portion of the Business or (ii) compel Parent, the Company or WW to
dispose of or hold separate all or a portion of the business or assets of
the Company, WW or Parent as a result of the Mergers;
(d) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company or the Stockholder set
forth in this Agreement, such that the conditions set forth in Section
6.2(a) or Section 6.2(b) hereof would not be satisfied as of the time of
such breach or as of the date hereof, as applicable, provided, that if such
inaccuracy in the Stockholder representations and warranties or breach by
the Company or the Stockholder is curable by the Stockholder through the
exercise of its commercially reasonable efforts, then Parent may not
terminate this Agreement under this Section 8.1(d) prior to 30 days
following the date of the notice to the Stockholder of the breach, provided
the Stockholder continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Parent may not terminate this
Agreement pursuant to this Section 8.1(d) if it shall have be in material
breach of this Agreement or if such breach by the Company or the
Stockholder is cured prior to 30 days following notice to Parent or the
Stockholder of the breach, provided, however, no cure period shall be
required for a breach which by its nature cannot be cured);
(e) by the Stockholder, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, such that the conditions set forth in Section 6.3(a) or Section
6.3(b) hereof would not be satisfied as of the time of such breach or as of
the date hereof, as applicable, provided, that if such inaccuracy in
Parent's representations and warranties or breach by Parent is curable by
Parent through the exercise of its commercially reasonable efforts, then
the Stockholder may not terminate this Agreement under this Section 8.1(e)
prior to 30 days following the date of the notice to Parent of the breach,
provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that the Stockholder may not
terminate this Agreement pursuant to this Section 8.1(e) if it shall be in
material breach of this Agreement or if such breach by Parent is cured
prior to 30 days following notice to Parent of the breach, provided,
however, no cure period shall be required for a breach which by its nature
cannot be cured);
(f) by Parent, if prior to the expiration or termination of any
applicable waiting periods under the HSR Act, there has been any Material
Adverse Effect on the Company, any of its Subsidiaries or the Business
(taken as a whole).
(g) by the Stockholder, if prior to the expiration or termination
of any applicable waiting periods under the HSR Act, there has been any
Material Adverse Effect on Parent.
(h) by either the Stockholder or Parent if the required approval
of the stockholders of Parent contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at a
meeting of the stockholders of Parent duly convened therefor or at any
adjournment thereof.
Where action is taken to terminate this Agreement pursuant to this
Section 8.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent,
Metal Merger Sub, WW Merger Sub, the Company, WW, CMS or the Stockholder,
or their respective officers, directors or stockholders, provided that each
party shall remain liable for any knowing or willful breaches of this
Agreement prior to its termination; and provided further that, the
provisions of Section 5.5, Section 5.6, Section 5.18 and Article VIII of
this Agreement shall remain in full force and effect and survive any
termination of this Agreement.
8.3 Termination Fee. In the event that this Agreement is
terminated pursuant to Section 8.1(h), then Parent shall promptly remit to
the Stockholder payment in the amount of $50,000,000 (the "Termination
Fee"); provided, however, that the Termination Fee shall not be paid to the
Stockholder if the Stockholder (a) fails to vote all of the shares of
Parent Common Stock it holds either beneficially or has the right to vote
by proxy in favor of approval of the issuance of Parent Common Stock
pursuant to this Agreement (the "Proposal") at the meeting of stockholders,
or (b) otherwise takes action to cause stockholder approval of the Proposal
not to be obtained.
8.4 Amendment. 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.
8.5 Extension; Waiver. At any time prior to the Effective Time,
Parent, Metal Merger Sub and WW Merger Sub, on the one hand, and the
Stockholder, WW and the Company, on the other, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations
of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in
any document delivered pursuant hereto, and (iii) waive compliance with any
of the agreements 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 IX
TAX MATTERS
9.1 Indemnity
(a) The Stockholder agrees to indemnify and hold harmless Parent,
WW, the Company and each Subsidiary against the following Taxes (net of any
Tax Benefit Actually Realized, as hereinafter defined, by Parent, WW, the
Company or their respective Subsidiaries and affiliates as a result of the
payment or accrual of any of the following) and against any loss, damage,
liability or expense, including reasonable fees for attorneys and other
outside consultants with respect to matters not controlled by the
Stockholder, incurred in contesting or otherwise in connection with any
such Taxes: (i) Taxes imposed on the Company, WW or any Subsidiary with
respect to taxable periods ending on or before the Closing Date; (ii) with
respect to taxable periods beginning before the Closing Date and ending
after the Closing Date, Taxes imposed on the Company, WW or any Subsidiary
which are allocable, pursuant to Section 9.1(b) hereof, to the portion of
such period ending on the Closing Date; (iii) Taxes imposed on any member
of any affiliated group with which any of the Company, WW and any
Subsidiary file or have filed a Return on a consolidated or combined basis
for a taxable period ending on or before the Closing Date; and (iv) Taxes
imposed on Parent or the Company, WW or any Subsidiary as a result of any
breach of warranty or misrepresentation under Section 2.8 hereof; provided,
however, that the Stockholder shall not be liable for and shall not
indemnify the Parent, the Company, WW or any Subsidiary for (I) any Taxes
resulting from transactions or actions taken by the Company, WW or any
Subsidiary on the Closing Date (other than transactions contemplated by
this Agreement) that are properly allocable to the portion of the Closing
Date after the Closing except for transactions or actions undertaken in the
ordinary course of business; or (II) any Transfer Taxes for which Parent is
liable pursuant to Section 9.5 (Taxes referred to in this proviso are
referred to hereinafter as "Excluded Taxes"). Parent shall indemnify and
hold harmless the Stockholder (net of any Tax Benefit Actually Realized by
the Stockholder or its affiliates as a result of the payment or accrual
thereof) for (i) Taxes (including Excluded Taxes) and any loss, damage,
liability or expense, including reasonable fees for attorneys and other
outside consultants ("Tax Related Losses") of Parent, the Company, WW or
any Subsidiary not allocated to the Stockholder pursuant to the first
sentence of this Section 9.1(a) and (ii) any Taxes or Tax Related Losses
attributable to any breach by Parent, Metal Merger Sub or WW Merger Sub, or
following the Effective Time, the Company or WW, of Section 5.21(a) hereof.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the
Closing Date, the portion of any such Tax that is allocable to the portion
of the period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than Transfer Taxes covered by Section 9.5 hereof),
deemed equal to the amount which would be payable if the taxable year ended
with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis with respect
to the assets of the Company, WW or any Subsidiary, or otherwise measured
by the level of any item, deemed to be the amount of such Taxes for the
entire period (or, in the case of such Taxes determined on an arrears
basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of calendar
days in the period ending on the Closing Date and the denominator of which
is the number of calendar days in the entire period.
(c) To the extent permitted or required by law or administrative
practice, (A) the taxable year of the Company, WW and any Subsidiary which
includes the Closing Date shall be treated as closing on (and including)
the Closing Date and, notwithstanding the foregoing, (B) all transactions
not in the ordinary course of business occurring after the Closing (other
than transactions contemplated by this Agreement) shall be reported on
Parent's consolidated United States federal income Tax Return to the extent
permitted by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) and shall
be similarly reported on other Tax Returns of the Parent or its affiliates
to the extent permitted by law.
9.2 Returns and Payments
(a) From the date of this Agreement through and after the Closing
Date, the Stockholder shall prepare and file or otherwise furnish in proper
form to the appropriate Governmental Authority (or cause to be prepared and
filed or so furnished) in a timely manner all Returns relating to the
Company, WW and the Subsidiaries that are due on or before or relate to any
taxable period ending on or before the Closing Date (and Parent shall do
the same with respect to any taxable period ending after the Closing Date);
provided, however, that to the extent the Stockholder cannot file such
Returns under applicable law, the Stockholder shall deliver (or cause to be
delivered), within 20 days before the due date (including extensions) for
the filing of such Returns, to Parent all such Returns, and Parent shall
sign and file or cause to be signed and filed such Returns no later than
such due date. Any such Return that is prepared by the Stockholder shall be
prepared in accordance with past practice to the extent permitted by
applicable law. Any Return required to be filed by Parent relating to any
taxable year or period beginning on or before and ending after the Closing
Date (the "Straddle Period") shall be submitted (with copies of any
relevant schedules, work papers and other documentation then available) to
the Stockholder for the Stockholder's approval not less than 30 days prior
to the due date for the filing of such Return, which approval shall not be
unreasonably withheld. Such Returns shall be prepared in accordance with
past practice of the Company or WW (or the Subsidiaries), if any, to the
extent permissible under applicable law.
(b) The Stockholder shall pay or cause to be paid when due and
payable all Taxes with respect to the Company, WW and the Subsidiaries for
any taxable period ending on or before the Closing Date or otherwise
described in Section 9.1(a)(i) through (iv) (except for Excluded Taxes) and
Parent shall so pay or cause to be paid (i) Taxes for any taxable period
ending after the Closing Date (subject to its right of indemnification from
the Stockholder for Taxes attributable to the pre-closing portion of any
Straddle Period pursuant to Section 9.1(a)(ii) and Section 9.1(b) hereof)
and (ii) Excluded Taxes.
(c) The Stockholder may amend any Return of the Company, WW or any
Subsidiary filed or required to be filed for any taxable years or periods
ending on or before the Closing Date, provided that any such amendment
shall not adversely affect any of Parent, the Company, WW or their
respective subsidiaries.
(d) Neither Parent nor any affiliate of Parent shall (or shall
cause or permit the Company, WW or any of their respective Subsidiaries to)
amend, refile or otherwise modify any Return relating in whole or in part
to the Company, WW or any Subsidiary with respect to any taxable year or
period ending on or before the Closing Date (or with respect to any
Straddle Period) without the prior written consent of the Stockholder,
which consent may be withheld by Stockholder in its sole discretion,
subject to and in compliance with applicable law.
9.3 Refunds. Any Tax refund (including any interest with respect
thereto) relating to the Company, WW or any Subsidiary for any taxable
period prior to the Closing Date shall be the property of the Stockholder,
and if received by Parent or the Company, WW or any of their respective
Subsidiaries shall be paid over promptly to the Stockholder.
Notwithstanding the foregoing sentence, any Tax refund (or equivalent
benefit to the Stockholder through a reduction in Tax liability) for a
period before the Closing Date arising out of the carryback of a loss or
credit incurred by the Company, WW or any Subsidiary in a taxable year
beginning after the Closing Date shall be the property of Parent and, if
received by the Stockholder, shall be paid over promptly to Parent. For
purposes of this Section 9.3, where it is necessary to apportion a refund
or credit between Parent and the Stockholder for a Straddle Period, such
refund or credit shall be apportioned between the period deemed to end at
the close of the Closing Date, and the period deemed to begin at the
beginning of the day following the Closing Date on the basis of an interim
closing of the books, except that refunds or credits of Taxes imposed on a
periodic basis (e.g., real property Taxes) shall be allocated on a daily
basis. In addition, Parent shall cooperate, and cause the Company, WW and
any Subsidiary to cooperate, in obtaining any refund that the Stockholder
reasonably believes should be available, including through the filing of
appropriate forms with the applicable taxing authorities.
9.4 Contests
(a) After the Closing, Parent shall promptly notify the
Stockholder in writing of any written notice of any pending or threatened
audits, notice of deficiency, proposed adjustment, assessment, examination
or other administrative or court proceeding, suit, dispute or other claim
(a "Tax Claim") of Parent or of any of the Company, WW and the Subsidiaries
which, if determined adversely to the taxpayer, would be grounds for
indemnification under this Article IX; provided, however, that a failure to
give such notice will not affect Parent's right to indemnification under
this Article IX except to the extent, if any, that, but for such failure,
the Stockholder could have avoided all or a portion of the Tax liability in
question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing Date,
the Stockholder shall have the right at its expense to participate in and
control the conduct of such audit or proceeding; Parent also may
participate in any such audit or proceeding and, if the Stockholder does
not assume the defense of any such audit or proceeding, Parent may defend
the same in such manner as it may deem appropriate, including, but not
limited to, settling such audit or proceeding after giving ten days' prior
written notice to the Stockholder setting forth the terms and conditions of
settlement. In the event that issues relating to a potential adjustment for
which the Stockholder would be liable are required to be dealt with in the
same proceeding as separate issues relating to a potential adjustment for
which Parent would be liable, Parent shall have the right, at its expense,
to control the audit or proceeding with respect to the latter issues.
(c) With respect to any Tax Claim related to a Straddle Period for
which both the Stockholder and Parent or the Company, WW or any Subsidiary
could be liable, each party may participate in the audit or proceeding, and
(ii) the audit or proceeding shall be controlled by that party which would
bear the burden of the greater portion of the sum of the adjustment based
on the principles set forth in Section 9.1(b) hereof.
(d) If as a result of any Tax Claim or amended Tax Return, there
is any change after the Closing Date in an item of income, gain, loss,
deduction or credit that results in an increase in a Tax liability for
which the Stockholder would otherwise be liable pursuant to Section 9.1(a),
and such change results in a decrease in the Tax liability of Parent or any
affiliate or successor thereof for any taxable year or period beginning
after the Closing Date or for the portion of any Straddle Period beginning
after the Closing Date, the Stockholder shall not be liable pursuant to
Section 9.1(a) with respect to such increase to the extent of such
decrease. If as a result of any Tax Claim or amended Tax Return, there is
any change after the Closing Date in an item of income, gain, loss,
deduction or credit that results in an increase in a Tax liability for
which Parent would otherwise be liable pursuant to Section 9.1(a), and such
change results in a decrease in the Tax liability of the Stockholder or any
affiliate or successor thereof for any taxable year or period ending on or
before the Closing Date or for the portion of any Straddle Period ending on
the Closing Date (other than by reason of a carryback of losses or
deductions), Parent shall not be liable pursuant to Section 9.1(a) with
respect to such increase to the extent of such decrease.
(e) Neither Parent nor the Stockholder shall enter into any
compromise or agree to settle any Tax Claim which would adversely affect
the other party for such year or a subsequent year without the written
consent of the other party, which consent may not be unreasonably withheld.
Parent and the Stockholder agree to cooperate, and Parent agrees to cause
the Company, WW and any Subsidiary to cooperate, in the defense against or
compromise of any Tax Claim.
9.5 Conveyance Taxes. The Stockholder and Parent shall each pay
one-half of any real property transfer or gains, sales, use, transfer,
value added, stock transfer, and stamp taxes, any transfer, recording,
registration, and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement, other than
transfers of assets contemplated by Section 5.14 hereof ("Transfer Taxes").
Notwithstanding Section 9.2, which shall not apply to Returns relating to
Transfer Taxes, any Returns that must be filed in connection with Transfer
Taxes shall be prepared and filed when due by the party primarily or
customarily responsible under the applicable local law for filing such
Returns, and such party will use its reasonable efforts to provide such
Returns to the other party at least 10 days prior to the due date of such
Returns.
9.6 Miscellaneous
(a) Except as otherwise required by applicable law, the
Stockholder and Parent agree to treat all payments made by either of them
to or for the benefit of the other (including any payments to the Company,
WW or any Subsidiary) under this Article IX and under other indemnity
provisions of this Agreement as adjustments to the Purchase Price for Tax
purposes.
(b) Any tax sharing agreement, arrangement or policy (whether
written or oral) between the Stockholder and the Company, WW or any
Subsidiary shall be terminated immediately prior to the Closing.
(c) Notwithstanding any provision in this Agreement to the
contrary, the obligations of the Stockholder to indemnify and hold harmless
Parent, the Company, WW and any Subsidiary pursuant to this Article IX, and
the representations and warranties contained in Section 2.8 hereof shall
terminate at the close of business on the 30th day following the expiration
of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or
extension thereof). The obligations of Parent to indemnify and hold
harmless the Stockholder pursuant to this Article IX shall terminate at the
close of business on the 30th day following the expiration of the
applicable statute of limitations with respect to the Tax liabilities in
question (giving effect to any waiver, mitigation or extension thereof).
(d) Resolution of All Tax-Related Disputes. In the event that the
Stockholder and Parent cannot agree on the calculation of any amount
relating to Taxes or the interpretation or application of any provision of
this Agreement relating to Taxes, such dispute shall be resolved by a
nationally recognized accounting firm mutually agreeable to each of the
Stockholder and Parent, whose decision shall be final and binding upon all
persons involved and whose expenses shall be shared equally by the
Stockholder and Parent.
(e) Notwithstanding anything to the contrary contained in this
Agreement, all matters relating to Taxes shall be governed by this Article
IX. In the event of a conflict between the provisions of this Article IX
and the any other section of this Agreement, this Article IX shall govern
and control.
(f) "Tax Benefits" shall mean the sum of the amount by which the
actual Tax liability (after giving effect to any alternative minimum or
similar Tax) of a corporation to the appropriate taxing authority is
reduced (including, without limitation, by or as a result of a deduction,
increase in basis, entitlement to refund, credit or otherwise, whether
available in the current taxable year, as an adjustment to the taxable
income in any other taxable year or as a carryforward or carryback, as
applicable) plus any interest (on an after-Tax basis) from such government
or jurisdiction relating to such Tax liability. For purposes of this
Agreement, a Tax Benefit shall be deemed to have been "Actually Realized"
at the time any refund of Taxes is actually received or applied against
other Taxes due, or at the time of the filing of a Tax Return (including
any Tax Return relating to estimated Taxes) on which a loss, deduction or
credit or increase in basis is applied to reduce the amount of Taxes which
would otherwise be payable. In accordance with the provisions of this
paragraph (f), Parent and the Stockholder agree that for purposes of this
Agreement, where a Tax Benefit may be realized that may result in the
payment to, or reduce a payment by, the other party hereto, each party will
as promptly as practicable take or cause its affiliates to take such
reasonable or appropriate steps (including, without limitation, the filing
of an amended Tax Return or claim for refund) to obtain at the earliest
possible time any such reasonable available Tax Benefit.
(g) For purposes of any Tax Benefit Actually Realized determined
under Section 9.6(f) of this Agreement, no later than 90 days after the
filing of a Tax Return for any taxable period that includes a date upon
which any amount was paid or accrued by Parent, the Company, WW or their
respective Subsidiaries or affiliates, on the one hand, or the Stockholder
or its affiliates, on the other hand (each an "Indemnified Party"), in
respect of a claim for which the Stockholder is required to indemnify
Parent or Parent is required to indemnify Stockholder, as the case may be,
pursuant to this Agreement (the "Indemnifying Party"), Parent shall provide
Stockholder or Stockholder shall provide Parent, as appropriate, a detailed
statement (the "Tax Benefit Statement") specifying the amount, if any, of
any Tax Benefit that was Actually Realized by the Indemnified Parties for
such Tax period. To the extent that any deductions or other Tax items
(including basis) that could give rise to a Tax reduction or savings do not
result in the actual realization of such a Tax reduction or savings in the
year described in the previous sentence, this Section 9.6(g) shall apply to
each subsequent taxable period of the Indemnified Parties until either such
Tax savings are Actually Realized (resulting in a Tax Benefit) or the
losses or other carryforwards to which such deductions or other Tax items
(including basis) gave rise expire unused, if applicable. For each relevant
taxable period, the Indemnifying Party shall be provided with full access
to the non-proprietary work papers and other materials and information of
the Indemnified Parties' accountants in connection with the review of the
Tax Benefit Statement. If the Indemnifying Party disagrees in any respect
with the computation of the amount of the Tax Benefit Actually Realized set
forth in the Tax Benefit Statement, the Indemnifying Party may, on or prior
to 45 days after the receipt of the Tax Benefit Statement, deliver a notice
to the Indemnified Parties setting forth in reasonable detail the basis for
the Indemnifying Party's disagreement therewith ("Tax Benefit Dispute
Notice"). If no Tax Benefit Dispute Notice is received by the Indemnified
Parties on or prior to the 45th day after the Indemnifying Party's receipt
of the Tax Benefit Statement from Parent, the Tax Benefit Statement shall
be deemed accepted by the Indemnifying Party.
(h) Payments. Parent shall pay all amounts for indemnification for
which it is liable pursuant to this Agreement in cash; provided, however,
that, if and to the extent any such cash payment (the "Excess Cash
Payment") would, in the opinion of Skadden, cause Skadden to no longer be
able to issue an opinion that each of the Mergers will qualify as a
reorganization pursuant to Section 368(a) of the Code, Parent shall use
commercially reasonable efforts to pay such Excess Cash Payment in Parent
Common Stock (valued in accordance with Section 7.2(b)); provided, further,
that in no event will Parent be obligated to pay such Excess Cash Payment
in Parent Common Stock unless, in the opinion of counsel to Parent, such
payment in Parent Common Stock would be exempt from registration under the
Securities Act.
ARTICLE IX
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with acknowledgment of
complete transmission) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to Parent, Metal Merger Sub or WW
Merger Sub, to:
Xxxxxxxxx.xxx, Inc.
000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and a copy to:
Fenwick & Xxxx
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
C. Xxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(ii) if to the Company, WW or Stockholder, to:
Cendant Corporation
0 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
10.2 Interpretation.
(a) The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation."
(b) As used herein, the term "Material Adverse Effect" shall mean
any change, event or effect that is materially adverse to the business,
assets (including intangible assets), financial condition, capitalization
or results of operations of an entity.
For purposes of Articles VI and VIII hereof with respect to a
Material Adverse Effect on the Company, WW or any Subsidiary (taken as a
whole):
(i) if there shall be any shortfall in revenue of the Company or
WW, such shortfall shall not be deemed in and of itself, a Material Adverse
Effect on the Company.
(ii) adverse changes in the economy generally, or in the real
estate, Internet or advertising industries shall not be taken into account
in determining a Material Adverse Effect on the Company, WW and any
Subsidiary (taken as a whole) (provided that such adverse changes do not
affect the Company or WW or any of the Subsidiaries, as applicable, in a
materially disproportionate manner);
(iii) adverse changes in stock market conditions shall not be
taken into account in determining a Material Adverse Effect on the Company,
WW and any Subsidiary (taken as a whole); or
(iv) the Company's or WW's loss of suppliers, customers or
employees shall not be taken into account in determining a Material Adverse
Effect on the Company, WW and any Subsidiary (taken as a whole) (provided
that this exception shall not apply (A) to the loss of customers or
suppliers caused by the Stockholder or its affiliates, including NRT
Incorporated ("NRT") or its controlled affiliates and, in the case of
customers only, subject to the exception same provision as set forth in
clause (b)(i) above, or (B) in the case of the Company's or WW's employees,
those employees hired by the Stockholder or its affiliates without the
prior written consent of Parent).
For purposes of Articles VI and VIII hereof with respect to a
Material Adverse Effect on Parent:
(i) if there shall be any shortfall in revenue of Parent, such
shortfall shall not be deemed in and of itself a Material Adverse Effect on
the Company;
(ii) adverse changes in the economy generally, or in the real
estate, Internet or advertising industries shall not be taken into account
in determining a Material Adverse Effect on Parent (provided that such
adverse changes do not affect Parent in a materially disproportionate
manner);
(iii) adverse changes in stock market conditions or price of
Parent Common Stock shall not be taken into account in determining a
Material Adverse Effect on Parent; or
(iv) Parent's loss of suppliers, customers or employees shall not
be taken into account in determining a Material Adverse Effect on Parent.
(c) As used herein, the term "Business Adverse Effect" shall mean
(i) a material impairment of Parent's ability to continue operating the
Business substantially as it was operated prior to the Closing; (ii) a
material impairment in Parent's ability to use the Intellectual Property
substantially as used by the Company or WW or any of the Subsidiaries prior
to the Closing; or (iii) any material liability that would be reasonably
likely to have a material adverse effect on the Company, WW or any of the
Subsidiaries taken as a whole.
(d) The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
10.4 Entire Agreement; Assignment. This Agreement, the
Stockholder Disclosure Letter and Exhibits hereto, the Mutual Disclosure
Agreement and the documents and instruments and other agreements among the
parties hereto referenced herein: (a) 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 Mergers; (b) are not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
permitted, except that Parent, Metal Merger Sub and WW Merger Sub may
assign their respective rights and delegate their respective obligations
hereunder to their respective affiliates (except that with respect to the
indemnification obligations of Stockholder set forth in Section 7.2(a)(ii),
Parent or its affiliate, as applicable, shall have the right to assign such
indemnities in whole or in part to any third party without the consent of
Stockholder).
10.5 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder
of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision
of this Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such
void or unenforceable provision.
10.6 Other Remedies . Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or
by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof. Each of the parties hereto agrees that process
may be served upon them in any manner authorized by the laws of the State
of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction
and such process.
10.8 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting
such agreement or document.
10.9 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, including Section 5.13 and Section 5.14 hereof.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions 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.
10.10 Attorney's Fees. If any action or other proceeding relating
to the enforcement of any provision of this Agreement is brought by any
party hereto, the prevailing party shall be entitled to recover reasonable
attorney's fees, costs and disbursements (in addition to any other relief
to which the prevailing party may be entitled).
10.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY FOR ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(Remainder of page intentionally left blank.)
IN WITNESS WHEREOF, Parent, Metal Merger Sub, WW Merger Sub, the
Company, WW, CMS and Stockholder, and have caused this Agreement to be
signed by their duly authorized respective officers, all as of the date
first written above.
XXXXXXXXX.XXX, INC. CENDANT CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx By: /s/ Xxxx X. Xxxx
_________________________ _________________________
Name:________________________ Name:_______________________
Title:_______________________ Title: _____________________
XXXX.XXX, INC. METAL ACQUISITION CORP.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxxx
__________________________ _________________________
Name:________________________ Name: ______________________
Title:_______________________ Title: _____________________
WELCOME WAGON INTERNATIONAL INC. WW ACQUISITION CORP.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxxx
___________________________ ________________________
Name: ________________________ Name: ______________________
Title:________________________ Title: _____________________
CENDANT MEMBERSHIP SERVICES, INC.
By: /s/ Xxxx X. Xxxx
_____________________________
Name: ___________________________
Title: __________________________
***REORGANIZATION AGREEMENT***
