CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS (*) DENOTE SUCH OMISSIONS.
Exhibit
2.1
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
by
and among
GSI
COMMERCE, INC.,
DOLPHIN
ACQUISITION CORPORATION,
E-DIALOG,
INC.
and
ONELIBERTY
VENTURES 2000, L.P.,
AS
STOCKHOLDERS' REPRESENTATIVE
Dated
as of January 23, 2008
|
TABLE
OF CONTENTS
|
||
|
ARTICLE
I
|
||
|
THE
MERGER
|
||
|
Section
1.1
|
The
Merger.
|
1
|
|
Section
1.2
|
Closing.
|
1
|
|
Section
1.3
|
Effective
Time.
|
2
|
|
Section
1.4
|
Effects
of the Merger.
|
2
|
|
Section
1.5
|
Certificate
of Incorporation; Bylaws.
|
2
|
|
Section
1.6
|
Directors
and Officers.
|
2
|
|
Section
1.7
|
Additional
Actions.
|
2
|
|
ARTICLE
II
|
||
|
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATION;
DELIVERY OF CONSIDERATION
|
||
|
Section
2.1
|
Certain
Definitions.
|
3
|
|
Section
2.2
|
Effect
on Capital Stock.
|
7
|
|
Section
2.3
|
Dissenting
Holders.
|
9
|
|
Section
2.4
|
Options
and Unvested Restricted Shares.
|
10
|
|
Section
2.5
|
Warrants.
|
11
|
|
Section
2.6
|
Escrow.
|
12
|
|
Section
2.7
|
Disbursement.
|
13
|
|
Section
2.8
|
Withholding
Rights.
|
16
|
|
Section
2.9
|
Unclaimed
Amounts.
|
16
|
|
Section
2.10
|
Earnout.
|
16
|
|
ARTICLE
III
|
||
|
REPRESENTATIONS
AND WARRANTIES OF COMPANY
|
||
|
Section
3.1
|
Organization
and Qualification; Subsidiaries.
|
20
|
|
Section
3.2
|
Capital
Structure.
|
21
|
|
Section
3.3
|
Authority
Relative to this Agreement; Board Recommendation.
|
23
|
|
Section
3.4
|
Consents
and Approvals; No Violations.
|
24
|
|
Section
3.5
|
Financial
Statements.
|
24
|
|
Section
3.6
|
Absence
of Changes.
|
25
|
|
Section
3.7
|
Absence
of Undisclosed Liabilities.
|
25
|
|
Section
3.8
|
No
Default.
|
26
|
|
Section
3.9
|
Litigation.
|
26
|
|
Section
3.10
|
Compliance
with Applicable Law.
|
27
|
i
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
Section
3.11
|
Personnel.
|
27
|
|
Section
3.12
|
Employee
Benefit Plans; Labor Matters.
|
28
|
|
Section
3.13
|
Environmental
Laws and Regulations.
|
30
|
|
Section
3.14
|
Taxes.
|
32
|
|
Section
3.15
|
Intellectual
Property.
|
35
|
|
Section
3.16
|
Property
and Sufficiency.
|
38
|
|
Section
3.17
|
Contracts.
|
39
|
|
Section
3.18
|
Insurance.
|
41
|
|
Section
3.19
|
Books
and Records.
|
41
|
|
Section
3.20
|
Brokers
and Finders; Existing Discussions.
|
42
|
|
Section
3.21
|
Banking
Relationships.
|
42
|
|
Section
3.22
|
Vote
Required.
|
42
|
|
Section
3.23
|
Anti-Takeover
Statute Not Applicable.
|
42
|
|
Section
3.24
|
Certain
Relationships and Related Transactions.
|
43
|
|
Section
3.25
|
Accounts
Receivable.
|
43
|
|
Section
3.26
|
Customers.
|
43
|
|
Section
3.27
|
Disclosures.
|
43
|
|
Section
3.28
|
No
Other Representations or Warranties
|
43
|
|
ARTICLE
IV
|
||
|
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION SUB
|
||
|
Section
4.1
|
Organization
and Qualification.
|
44
|
|
Section
4.2
|
Authority
Relative to this Agreement.
|
44
|
|
Section
4.3
|
No
Violations.
|
44
|
|
Section
4.4
|
Brokers
and Finders.
|
45
|
|
Section
4.5
|
Ownership
and Activities of Acquisition Sub.
|
45
|
|
Section
4.6
|
Reliance
by Parent and Acquisition Sub.
|
45
|
|
ARTICLE
V
|
||
|
COVENANTS
OF COMPANY
|
||
|
Section
5.1
|
Conduct
of Business Prior to Closing.
|
46
|
|
Section
5.2
|
Exclusivity;
Acquisition Proposals.
|
49
|
|
Section
5.3
|
Breach
of Representations and Warranties; Notification; Access to
Information.
|
51
|
|
Section
5.4
|
Stockholder
Approval; Notice to Holders of Company Stock.
|
52
|
ii
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
ARTICLE
VI
|
||
|
COVENANTS
OF PARENT
|
||
|
ARTICLE
VII
|
||
|
ADDITIONAL
AGREEMENTS
|
||
|
Section
7.1
|
Confidentiality.
|
53
|
|
Section
7.2
|
Legal
Conditions to the Merger.
|
54
|
|
Section
7.3
|
HSR
Act Filings.
|
54
|
|
Section
7.4
|
Expenses.
|
55
|
|
Section
7.5
|
Public
Announcements.
|
55
|
|
Section
7.6
|
Employee
Matters.
|
56
|
|
Section
7.7
|
Tax
Matters.
|
56
|
|
Section
7.8
|
Pre-Closing
Deliveries.
|
59
|
|
Section
7.9
|
Officer
and Director Indemnification.
|
60
|
|
ARTICLE
VIII
|
||
|
CONDITIONS
PRECEDENT
|
||
|
Section
8.1
|
Conditions
to Each Party’s Obligation to Effect the Merger.
|
60
|
|
Section
8.2
|
Conditions
of Obligations of Parent and Acquisition Sub.
|
60
|
|
Section
8.3
|
Conditions
of Obligation of Company.
|
63
|
|
ARTICLE
IX
|
||
|
INDEMNIFICATION
|
||
|
Section
9.1
|
Indemnification
Relating to Agreement.
|
64
|
|
Section
9.2
|
Third
Party Claims.
|
65
|
|
Section
9.3
|
Binding
Effect.
|
67
|
|
Section
9.4
|
Limitations.
|
67
|
|
Section
9.5
|
Time
Limit.
|
68
|
|
Section
9.6
|
Contribution.
|
69
|
|
Section
9.7
|
Exclusive
Remedy.
|
69
|
|
Section
9.8
|
Investigation;
No Company Recourse.
|
69
|
iii
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
ARTICLE
X
|
||
|
TERMINATION,
AMENDMENT AND WAIVER
|
||
|
Section
10.1
|
Termination.
|
70
|
|
Section
10.2
|
Effect
of Termination.
|
71
|
|
ARTICLE
XI
|
||
|
GENERAL
PROVISIONS
|
||
|
Section
11.1
|
Notices.
|
71
|
|
Section
11.2
|
Interpretation.
|
72
|
|
Section
11.3
|
Counterparts.
|
73
|
|
Section
11.4
|
Miscellaneous.
|
73
|
|
Section
11.5
|
No
Joint Venture.
|
73
|
|
Section
11.6
|
Governing
Law.
|
73
|
|
Section
11.7
|
Amendment.
|
73
|
|
Section
11.8
|
Extension,
Waiver.
|
73
|
|
Section
11.9
|
Successors
and Assigns.
|
74
|
|
Section
11.10
|
Severability.
|
74
|
|
Section
11.11
|
Submission
to Jurisdiction.
|
74
|
|
Section
11.12
|
Waiver
of Jury Trial.
|
74
|
|
Section
11.13
|
Stockholders’
Representative.
|
74
|
Exhibits
|
Exhibit
A
|
Form
of Escrow Agreement
|
|
Exhibit
B
|
Form
of Stockholders’ Written Consent
|
|
Exhibit
C
|
Form
of Approval Certificate
|
|
Exhibit
D
|
Form
of Employment Agreement
|
Pursuant
to Item 601(b)(2) of Regulation S-K, certain schedules and exhibits to this
Agreement have not been filed with this exhibit. The exhibits contain
forms of agreements referenced in the Agreement and the schedules contain
various items relating to the business being acquired. The Registrant
agrees to furnish supplementally any omitted schedule or exhibit to the SEC
upon
request.
iv
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
Index
of Defined Terms
|
|
|
“Accountant”
|
Section
2.10(b)
|
|
“Acquisition
Proposal”
|
Section
5.2(c)
|
|
“Acquisition
Sub”
|
Introductory
Paragraph
|
|
“Additional
Holders”
|
Section
11.13
|
|
“affiliate”
|
Section
2.1
|
|
“Aggregate
Allocable Portion of the Escrow Amount”
|
Section
2.2(a)(iii)(C)
|
|
“Aggregate
Share Number”
|
Section
2.1
|
|
“Agreement”
|
Introductory
Paragraph
|
|
“Antitrust
Laws”
|
Section
7.3(b)
|
|
“Approval
Certificate”
|
Section
5.4(a)
|
|
“associate”
|
Section
3.17(e)
|
|
“Authorized
Representatives”
|
Section
7.1
|
|
“Balance
Sheet”
|
Section
3.5(a)
|
|
“business
day”
|
Section
2.1
|
|
“Certificate
of Merger”
|
Section
1.3
|
|
“Change
in Control Payments”
|
Section
2.1
|
|
“Change
of Recommendation”
|
Section
5.2(b)
|
|
“Closing
Date”
|
Section
1.2
|
|
“Closing”
|
Section
1.2
|
|
“Code”
|
Section
2.8
|
|
“Common
Option”
|
Section
2.1
|
|
“Company”
|
Introductory
Paragraph
|
|
“Company
Certificate of Incorporation”
|
Section
2.1
|
|
“Company
Common Stock”
|
Section
2.1
|
|
“Company
Disclosure Schedule”
|
Section
2.1
|
|
“Company
Intellectual Property”
|
Section
3.15(a)(ii)
|
|
“Company
Material Adverse Effect”
|
Section
3.1(b)
|
|
“Company
Permits”
|
Section
3.10(a)
|
|
“Company
Preferred Stock”
|
Section
2.1
|
|
“Company
Product”
|
Section
3.15(a)(iv)
|
|
“Company
Registered Intellectual Property Rights”
|
Section
3.15(b)
|
|
“Company
Securities”
|
Section
3.2(a)
|
|
“Company
Securityholders”
|
Section
2.1
|
|
“Company
Stock”
|
Section
2.1
|
|
“Company
Stockholders”
|
Section
2.1
|
|
“Company
Triggering Event”
|
Section
10.1
|
|
“Confidential
Information”
|
Section
7.1
|
|
“Contract”
|
Section
3.17
|
|
“Controls”
|
Section
3.5(b)
|
|
“Copyrights”
|
Section
3.15(a)(i)
|
|
“Damages”
|
Section
2.3(d)
|
v
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
Index
of Defined Terms
|
|
|
“default”
|
Section
3.17
|
|
“Derived”
|
Section
2.10(a)
|
|
“DGCL”
|
Section
1.3
|
|
“Disputed
Taxes”
|
Section
7.7(c)(iii)
|
|
“Disclosing
Party”
|
Section
7.1
|
|
“Dissenting
Shares”
|
Section
2.3(a)
|
|
“Earnout
Base Share Number”
|
Section
2.10(a)
|
|
“Earnout
Eligible Holder”
|
Section
2.10(a)
|
|
“Earnout
Eligible Share Number”
|
Section
2.10(a)
|
|
“Effective
Time”
|
Section
1.3
|
|
“Employee
Plans”
|
Section
3.12(a)
|
|
“Employment
Agreements”
|
Section
8.2(g)
|
|
“Environmental
Claim”
|
Section
3.13(d)
|
|
“Environmental
Laws”
|
Section
3.13(d)
|
|
“ERISA
Affiliate”
|
Section
3.12(a)
|
|
“ERISA”
|
Section
3.12(a)
|
|
“Escrow
Agent”
|
Section
2.6
|
|
“Escrow
Agreement”
|
Section
2.6
|
|
“Escrow
Amount”
|
Section
2.1
|
|
“Escrow
Funds”
|
Section
2.6
|
|
“Fair
Market Value”
|
Section
2.10(a)
|
|
“Financial
Statements”
|
Section
3.5(a)
|
|
“Foreign
Benefit Plan”
|
Section
3.12(l)
|
|
“GAAP”
|
Section
3.5(a)
|
|
“Government
Consent”
|
Section
3.4
|
|
“Governmental
Entity”
|
Section
3.4
|
|
“HSR
Act”
|
Section
3.4
|
|
“Indebtedness”
|
Section
3.7
|
|
“Indemnified
Persons”
|
Section
11.13(d)
|
|
“Indemnitee”
|
Section
9.2(a)
|
|
“Indemnitor”
|
Section
9.2(a)
|
|
“Intellectual
Property Rights”
|
Section
3.15(a)(i)
|
|
“Intellectual
Property”
|
Section
3.15(a)(i)
|
|
“Knowledge”
or “know”
|
Section
2.1
|
|
“Leased
Property”
|
Section
3.16(b)
|
|
“Leases”
|
Section
3.16(b)
|
|
“Legal
Requirement”
|
Section
2.1
|
|
“Liability”
|
Section
9.1(a)
|
|
“Lien”
|
Section
3.2 (b)
|
|
“Majority
Interest”
|
Section
11.13
|
|
“Market
Disruption Event”
|
Section
2.1
|
|
“Mass
Layoff”
|
Section
3.11(b)
|
|
“Materials
of Environmental Concern”
|
Section
3.13(d)
|
vi
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
Index
of Defined Terms
|
|
|
“Merger
Consideration”
|
Section
2.1
|
|
“Merger”
|
Section
1.1
|
|
“Multiemployer
Plan”
|
Section
3.12 (c)
|
|
“NASDAQ”
|
Section
2.4(c)
|
|
“Net
Revenue Amount”
|
Section
2.10(a)
|
|
“Objection
Notice”
|
Section
2.10(b)
|
|
“Option
Plan”
|
Section
2.1
|
|
“Option”
|
Section
2.1
|
|
“Outside
Date”
|
Section
10.1(c)
|
|
“Owned
Property”
|
Section
3.16(a)
|
|
“Parent”
|
Introductory
Paragraph
|
|
“Parent
Common Stock”
|
Section
2.4(c)
|
|
“Parent
Indemnifiable Amounts”
|
Section
9.1(a)
|
|
“Parent
Indemnified Parties”
|
Section
9.1(a)
|
|
“Parent
Material Adverse Effect”
|
Section
4.1
|
|
“Parent
Restricted Share Units”
|
Section
2.4(c)
|
|
“Parent
Threshold Amount”
|
Section
9.4(a)
|
|
“Patents”
|
Section
3.15(a)(i)
|
|
“Paying
Agent”
|
Section
2.7(a)
|
|
“PBGC”
|
Section
3.12(c)
|
|
“Pension”
|
Section
3.12(a)
|
|
“Per
Share Common Consideration”
|
Section
2.1
|
|
“Per
Share Earnout Amount”
|
Section
2.10(a)
|
|
“Per
Share Preferred Consideration”
|
Section
2.1
|
|
“Person”
|
Section
2.1
|
|
“Plant
Closing”
|
Section
3.11(b)
|
|
“Preference
Amount”
|
Section
2.1
|
|
“Preference
Payment”
|
Section
2.1
|
|
“Preferred
Option”
|
Section
2.1
|
|
“Preferred
Warrant”
|
Section
2.1
|
|
“Preferred
Warrant Payment”
|
Section
2.5(a)
|
|
“PTO”
|
Section
3.15(b)
|
|
“Qualified”
|
Section
3.12(f)
|
|
“Registered
Intellectual Property Rights”
|
Section
3.15(a)(iii)
|
|
“Related
Party”
|
Section
3.17(e)
|
|
“Representatives”
|
Section
5.2(a)
|
|
“Requisite
Stockholder Approval”
|
Section
3.22
|
|
“Response
Period”
|
Section
2.10(b)
|
|
“Restricted
Transaction”
|
Section
5.2(a)
|
|
“Retained
Liability”
|
Section
9.1(a)
|
|
“Revenue
Statement”
|
Section
2.10(b)
|
|
“Securityholder
Merger Payment”
|
Section
2.7(b)(ii)
|
|
“Series
A Preferred Stock”
|
Section
3.2(a)
|
vii
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
|
Index
of Defined Terms
|
|
|
“Series
B Preferred Stock”
|
Section
3.2(a)
|
|
“Series
C Preferred Stock”
|
Section
3.2(a)
|
|
“Series
C-1 Preferred Stock”
|
Section
3.2(a)
|
|
“Significant
Customer”
|
Section
3.26
|
|
“Specified
Accounting Principles”
|
Section
2.10(a)
|
|
“Stockholder
Indemnifiable Amounts”
|
Section
9.1(b)
|
|
“Stockholder
Merger Payment”
|
Section
2.7(b)
|
|
“Stockholder
Threshold Amount”
|
Section
9.5(b)
|
|
“Stockholders’
Representative”
|
Section
11.13
|
|
“Stockholders’
Representative Expense Fund”
|
Section
2.1
|
|
“Stockholders’
Written Consents”
|
Section
5.4(a)
|
|
“Straddle
Period”
|
Section
7.7(a)(i)
|
|
“subsidiary”
or “subsidiaries”
|
Section
2.1
|
|
“Superior
Proposal”
|
Section
5.2(c)
|
|
“Surviving
Corporation”
|
Section
1.1
|
|
“Tax
or “Taxes”
|
Section
3.14(a)(i)
|
|
“Tax
Return”
|
Section
3.14(a)(ii)
|
|
“Taxing
Authority”
|
Section
3.14(a)(iii)
|
|
“Third
Party Claim”
|
Section
9.2(a)
|
|
“Threats”
|
Section
3.15(l)
|
|
“Total
Cash Consideration”
|
Section
2.1
|
|
“Total
Common Consideration”
|
Section
2.1
|
|
“Total
Company Stockholder Consideration”
|
Section
2.1
|
|
“Total
Earnout Amount”
|
Section
2.10(a)
|
|
“Trade
Secrets”
|
Section
3.15(a)(i)
|
|
“Trademarks”
|
Section
3.15(a)(i)
|
|
“Trading
Day”
|
Section
2.1
|
|
“Transaction
Expenses”
|
Section
2.1
|
|
“Transfer
Taxes”
|
Section
7.7(a)(ii)
|
|
“Treasury
Regulations”
|
Section
3.14(a)(iv)
|
|
“Unvested
Option”
|
Section
2.4(a)
|
|
“Unvested
Restricted Share”
|
Section
2.4(a)
|
|
“URLs”
|
Section
3.15(a)(i)
|
|
“Vested
Option Payment”
|
Section
2.4(b)
|
|
“Vested
Option”
|
Section
2.4(a)
|
|
“Violate”
|
Section
3.4
|
|
“Volume
Weighted Average Price”
|
Section
2.1
|
|
“Voting
and Support Agreement”
|
Recitals
|
|
“WARN”
|
Section
3.11(b)
|
viii
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this
“Agreement”), dated as of January 23, 2008, by and among GSI Commerce,
Inc., a Delaware corporation (“Parent”), Dolphin Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of Parent (“Acquisition
Sub”), E-Dialog, Inc., a Delaware corporation (“Company”), and,
solely for purposes of Section 2.10, Section 7.7, Article IX and Section
11.13,
the Stockholders’ Representative (as defined in Section 11.13).
WITNESSETH:
WHEREAS,
the boards of directors of
Parent, Acquisition Sub and Company have approved, and deem it advisable
and in
the best interests of their respective share holders to consummate, the
acquisition of Company by Parent and Acquisition Sub upon the terms and subject
to the conditions set forth herein; and
WHEREAS,
concurrently with the
execution of this Agreement, and as a condition and inducement to Parent’s
willingness to enter into this Agreement, certain stockholders of Company
are
executing and delivering a Voting and Support Agreement (the “Voting and
Support Agreement”), whereby, among other things, such stockholders have
agreed to vote their shares of Company Stock in favor of adoption of this
Agreement;
NOW,
THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereby agree as
follows:
ARTICLE
I
THE
MERGER
Section
1.1 The
Merger. Upon the terms and subject to the provisions of this
Agreement and the applicable provisions of Delaware law, Acquisition Sub
will be
merged with and into Company, the separate corporate existence of Acquisition
Sub shall cease, and Company shall continue as the surviving corporation
(the
“Merger”). Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the “Surviving
Corporation.”
Section
1.2 Closing. The
closing (the “Closing”) of the Merger will take place at 10:00 a.m. on a
date to be specified by the parties, which shall be no later than the two
(2)
business days after satisfaction or waiver of the conditions set forth in
Article VIII (the “Closing Date”), at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
unless another time, date or place is agreed to in writing by the parties
hereto.
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
Section
1.3 Effective
Time. Subject
to the provisions of this Agreement, as soon as practicable on the Closing
Date,
Company, Parent and Acquisition Sub will cause a certificate of merger
(“Certificate of Merger”) to be executed and, as soon as practicable
thereafter, filed with the Secretary of State of the State of Delaware, as
provided in the Delaware General Corporation Law (the
“DGCL”). The Merger shall become effective at such time as
such filing is made with the Secretary of State of the State of Delaware
or at
such later time as is provided in the Certificate of Merger (the date and
time
of such effectiveness, being the “Effective Time”).
Section
1.4 Effects
of the Merger. At
the Effective Time, the effect of the Merger shall be as provided in this
Agreement, the Certificate of Merger and the applicable provisions of Delaware
Law, including Section 259 of the DGCL.
Section
1.5 Certificate
of Incorporation; Bylaws.
(a) Certificate
of Incorporation. At the Effective Time, the certificate of
incorporation of Acquisition Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation (except that the certificate of incorporation shall be changed
to
the name of Company) until thereafter amended as provided therein or in
accordance with applicable law.
(b) Bylaws. At
the Effective Time, the bylaws of Company shall be amended and restated in
their
entirety to be identical to the bylaws of Acquisition Sub as in effect
immediately prior to the Effective Time (except that the name of Surviving
Corporation as stated on the face of the bylaws shall be changed to the name
of
Company), until thereafter amended in accordance with applicable law, the
certificate of incorporation of the Surviving Corporation and the bylaws
of the
Surviving Corporation.
Section
1.6 Directors
and Officers. From
and after the Effective Time, the directors of Acquisition Sub immediately
prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, and the officers of Company at the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law, the certificate of incorporation of the Surviving
Corporation and the bylaws of the Surviving Corporation, or their earlier
death,
resignation or removal.
Section
1.7 Additional
Actions. If,
at any time after the Effective Time, the Surviving Corporation shall consider
or be advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of Acquisition Sub
or
2
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
Company
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the
name
and on behalf of Acquisition Sub or Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf
of
Acquisition Sub or Company, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE
II
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATION;
DELIVERY
OF CONSIDERATION
Section
2.1 Certain
Definitions. For
purposes of this Agreement, the following terms shall have the following
meanings:
“affiliate”
has
the
meaning set forth in Rule 12b-2 promulgated under the Securities Exchange
Act of
1934, as amended.
“business
day” means any day
other than a Saturday, Sunday, or a day on which banking institutions in
New
York, New York are permitted or obligated by law to be closed for regular
banking business.
“Change
in Control Payments”
means any severance, retention, bonus or other similar payment by Company
or any
of its subsidiaries to any Person under any Contract (as defined in Section
3.17) or Employee Plan (as defined in Section 3.12) to the extent any such
payment will become payable as a result of Company entering into this Agreement
or the consummation of any of the transactions contemplated hereby (either
alone
or in combination with another event), all of which payments are listed on
Section 2.1(a) of the Company Disclosure Schedule (as defined below);
provided, however, that Company shall update such calculation two
(2) business days prior to the expected Closing Date to give effect to any
changes in such calculations as a result of the passage of time between the
date
hereof and the Effective Time and the final determination of the amounts
and
matters that are relevant components of such calculation. For the
avoidance of doubt, “Change in Control Payments” shall not include payments
resulting from, or withholding or other taxes payable in respect of such
payments, the vesting of, or the acceleration of the vesting schedule of,
any
Options under any Employee Plan or Contract other than as expressly noted
on
Schedule 2.1(a).
“Common
Option” means any option
(including, other than for purposes of Section 2.4, commitments to grant
options) to acquire shares of Company Common Stock, including options granted
under the Option Plan.
3
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
“Company
Certificate of
Incorporation” means the Sixth Amended and Restated Certificate of
Incorporation of Company, as currently in effect and as it may be further
amended from time to time after the date hereof.
“Company
Common Stock” means the
common stock, par value $.01 per share, of Company.
“Company
Disclosure Schedule”
means the Company disclosure schedule supplied by Company to
Parent.
“Company
Preferred Stock” means
the Series A Preferred Stock (as defined in Section 3.2), Series B Preferred
Stock (as defined in Section 3.2), Series C Preferred Stock (as defined in
Section 3.2) and Series C-1 Preferred Stock (as defined in Section 3.2) of
Company.
“Company
Securityholders” means
the holders of Company Securities (as defined in Section 3.2) issued and
outstanding as of immediately prior to the Effective Time.
“Company
Stock” means the
Company Common Stock and the Company Preferred Stock.
“Company
Stockholders” means the
holders of Company Stock issued and outstanding as of immediately prior to
the
Effective Time.
“Escrow
Amount” means Seventeen
Million Five Hundred Thousand Dollars ($17,500,000).
“Knowledge”
of
or other
derivations of “know” in this Agreement with respect to a party mean the
knowledge of the executive officers of such party, after the exercise of
reasonable inquiry and investigation by such executive officers.
“Legal
Requirement” means any
United States federal, state, municipal or local or foreign order, judgment,
writ, injunction, decree, law, statute, standard ordinance, code, resolution,
promulgation, rule, regulation or any similar provision having the force
or
effect of law.
“Market
Disruption Event” means
the occurrence or existence for more than one continuous half hour period
in the
aggregate on any scheduled Trading Day for Parent Common Stock of any suspension
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by NASDAQ or otherwise) in Parent Common Stock or in any
options, contracts or future contracts relating to such Parent Common Stock,
and
such suspension or limitation occurs or exists at any time before 1:00 p.m.
(New
York City time) on such day.
4
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
“Merger
Consideration” means
with respect to a share of Company Common Stock, the Per Share Common
Consideration, and with respect to a share of Company Preferred Stock, the
Per
Share Preferred Consideration.
“Option”
means any Common Option or Preferred Option.
“Option
Plan” means the eDialog,
Inc. Amended and Restated 1998 Stock Option Plan.
“Per
Share Common Consideration”
means an amount equal to the quotient obtained by dividing (a) the Total
Common
Consideration (as defined below) by (b) the sum of (i) the number of shares
of
Company Common Stock issued and outstanding as of immediately prior to the
Effective Time plus (ii) the number of shares of Company Common Stock subject
to
Options as of immediately prior to the Effective Time plus (iii) the number
of
shares of Company Common Stock into which the Company Preferred Stock subject
to
Options as of immediately prior to the Effective Time, assuming such Options
were exercised immediately prior to the Effective Time, would be converted
were
such shares of Company Preferred Stock converted into shares of Company Common
Stock pursuant to Section 4.7 of the Company Certificate of Incorporation
plus (iv) the number of shares of Company Common Stock into which all shares
of
Company Preferred Stock issued and outstanding as of immediately prior to
the
Effective Time would be converted were such shares of Company Preferred Stock
converted into shares of Company Common Stock pursuant to Section 4.7 of
the
Company Certificate of Incorporation plus (v) the number of shares of Company
Common Stock into which the Company Preferred Stock subject to Preferred
Warrants as of immediately prior to the Effective Time, assuming such Preferred
Warrants were exercised immediately prior to the Effective Time, would be
converted were such shares of Company Preferred Stock converted into shares
of
Company Common Stock pursuant to Section 4.7 of the Company Certificate of
Incorporation (such sum, the “Aggregate Share Number”).
“Per
Share Preferred
Consideration” means an amount equal to the consideration into which each
share of Company Preferred Stock is converted upon the Merger in accordance
with
Section 4.3 of the Company Certificate of Incorporation, which is the sum
of (a)
the applicable Preference Payment, if any, plus (b) the applicable Per Share
Common Consideration for each share of Company Common Stock into which such
share of Company Preferred Stock is convertible pursuant to the Company
Certificate of Incorporation.
“Person”
means
an individual,
corporation, partnership, association, limited liability company, trust,
estate,
organization, or other entity.
“Preference
Amount” means an
amount equal to the aggregate amount of all Preference Payments, if any,
payable
upon the Merger to holders of Company Preferred Stock issued and outstanding
as
of immediately prior to the Effective Time.
5
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
“Preference
Payment” means an
amount payable to holders of the Company Preferred Stock outstanding immediately
prior to the Effective Time pursuant to Section 4.3.1 of the Company Certificate
of Incorporation equal to (a) $0.90 per share of Series A Preferred Stock
plus
all accrued and unpaid dividends with respect to such share, (b) $1.00 per
share
of Series B Preferred Stock plus all accrued and unpaid dividends with respect
to such share, (c) $0.59 per share of Series C Preferred Stock plus all accrued
and unpaid dividends with respect to such share and (d) $0.59 per share of
Series C-1 Preferred Stock plus all accrued and unpaid dividends with respect
to
such share.
“Preferred
Option” means any
option (including, other than for purposes of Section 2.4, commitments to
grant
options) to acquire shares of Company Preferred Stock, including options
granted
under the Option Plan, but excluding the Preferred Warrants.
“Preferred
Warrants” shall mean
any warrants to acquire shares of Preferred Stock.
“Stockholders’
Representative
Expense Fund” shall mean an amount equal to Two Hundred Fifty Thousand
Dollars ($250,000).
“subsidiary”
or
“subsidiaries” means with respect to any Person, any entity or
entities of which securities or other ownership interests having voting power
sufficient to elect a majority of its board of directors or other governing
body
are at any time directly or indirectly owned by such Person.
“Total
Cash Consideration” means
an amount equal to (a) the sum of One Hundred Fifty Seven Million Dollars
($157,000,000) minus (b) the sum of (i) the amount of the Change in Control
Payments plus (ii) the amount of Transaction Expenses.
“Total
Common Consideration”
means an amount equal to (a) Total Cash Consideration minus (b) the Preference
Amount, if any.
“Total
Company Stockholder
Consideration” means the aggregate consideration payable with respect to
shares of Company Stock pursuant to Section 2.2(a).
“Trading
Day” means any day on
which (i) there is no Market Disruption Event and (ii) NASDAQ is open for
trading. A “Trading Day” only includes those days that have a
scheduled closing time of 4:00 p.m. (New York City time).
“Transaction
Expenses” means any
and all legal, accounting, consulting, investment banking, financial advisory,
brokerage and other fees and expenses incurred by Company or any other Person
(for which Company may pay or reimburse others or may otherwise be obligated
to
pay or reimburse others or may be or may become liable), including the
Stockholders’ Representative Expense Fund, that become payable as a result of
the negotiation, execution and performance of this Agreement or the consummation
of the Merger or any of the transactions contemplated hereby, including,
without
limitation, any fees and expenses associated with obtaining necessary or
6
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
appropriate
waivers, consents or approvals of any Governmental Entity or third parties
on
behalf of Company, but excluding the Change in Control Payments, all of which
fees and expenses are listed on Section 2.1(b) of the Company Disclosure
Schedule opposite the names of the Persons incurring or who have incurred,
as
applicable, such fees and expenses, respectively; provided,
however, that Company shall update such calculation two (2) business
days
prior to the expected Closing Date to give effect to any changes in such
calculations as a result of the passage of time between the date hereof and
the
Effective Time and the final determination of the amounts and matters that
are
relevant components of such calculation.
Section
2.2 Effect
on Capital Stock. At
the Effective Time and upon the terms and subject to the conditions of this
Agreement, by virtue of the Merger and without any action on the part of
Parent,
Acquisition Sub, Company or any Company Securityholder:
(a) Conversion
of Securities.
(i) Except
as otherwise provided in Section 2.2(b) each share of Company Stock issued
and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares (as defined below)), shall be converted as follows:
(A) each
share of Company Preferred Stock issued and outstanding immediately prior
to the
Effective Time shall be converted into the right to receive, subject to Sections
2.6 and 2.7, the applicable Per Share Preferred Consideration (with the
aggregate Merger Consideration payable to each Company Stockholder rounded
up to
the nearest cent), payable to the holder thereof, without interest, upon
the
surrender of the certificate representing such share in accordance with the
terms hereof and in the manner provided herein; and
(B) each
share of Company Common Stock issued and outstanding immediately prior to
the
Effective Time (other than Unvested Restricted Shares) shall be converted
into
the right to receive, subject to Sections 2.6 and 2.7, the Per Share Common
Consideration (with the aggregate Merger Consideration payable to each Company
Stockholder rounded up to the nearest cent), payable to the holder thereof,
without interest, upon the surrender of the certificate representing such
share
in accordance with the terms hereof and in the manner provided
herein.
(ii) From
and after the Effective Time, each such converted share of Company Stock
shall
no longer be outstanding and shall be automatically cancelled and retired
and
shall cease to exist, and each holder of a certificate formerly representing
each such share shall cease to have any rights with respect thereto, except
the
right to receive (subject to the terms of this Agreement) the portion of
the
Total Cash Consideration payable with respect to such Company Stockholder
with
respect to such share, if any, without interest, upon the surrender of such
certificate in accordance with the terms hereof and in the manner provided
herein, or the right, if any, to receive payment from the
7
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
Surviving
Corporation of the “fair value” or “fair market value” of such Dissenting Shares
as determined in accordance with the applicable provisions of the
DGCL.
(iii) Section
2.2(a)(iii) of the Company Disclosure Schedule sets forth the following
information with respect to each holder of Company Stock:
(A) the
Company Stock held by such holder;
(B) the
aggregate Merger Consideration to be paid to such holder, if any, in accordance
with the terms hereof and in the manner provided herein in respect of all
of the
shares of Company Common Stock and shares of Company Preferred Stock owned
by
such holder as of the date hereof and immediately prior to the Effective
Time,
subject to withholding for Taxes as described in Section 2.8; provided,
however, that Company shall update such calculation two (2) Business
Days
prior to the expected Closing Date to give effect to any changes in such
calculation required as a result of the passage of time between the date
hereof
and the Effective Time and the final determination of the amounts and matters
that are relevant components of such calculation, including the Total Cash
Consideration;
(C) that
pro rata portion of such holder’s aggregate Merger Consideration to be delivered
to the Escrow Agent (as defined in Section 2.6) pursuant to Section 2.6 as
part
of the Escrow Amount (such amount, with respect to each such holder, the
“Aggregate Allocable Portion of the Escrow Amount”); provided,
however, that Company shall update such calculation two
(2) business days
prior to the expected Closing Date to give effect to any changes in such
calculation required as a result of the passage of time between the date
hereof
and the Effective Time and the final determination of the amounts and matters
that are relevant components of such calculation, including the Total Cash
Consideration; and
(D) the
mailing address of such holder.
(b) Cancellation. Each
share of Company Stock owned by Parent, Acquisition Sub or any direct or
indirect wholly owned subsidiary of Parent immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of
the
holder thereof, cease to be outstanding, be canceled and retired without
payment
of any consideration therefor and cease to exist. For the avoidance
of doubt, and notwithstanding anything in this Agreement to the contrary,
each
share of Company Stock owned by Company as treasury stock or owned by a direct
or indirect subsidiary of Company immediately prior to the Effective Time
shall
remain outstanding, but shall not be converted into the Merger
Consideration.
(c) Capital
Stock of Acquisition Sub. Each share of common
stock of Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become, and shall represent, one
fully paid and nonassessable share of
8
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
common
stock of the Surviving Corporation with the same rights, powers and privileges
as the shares so converted and shall constitute the only outstanding shares
of
capital stock of the Surviving Corporation.
Section
2.3 Dissenting
Holders.
(a) Notwithstanding
anything in this Agreement to the contrary, any shares of Company Stock
outstanding immediately prior to the Effective Time eligible under the DGCL
to
exercise appraisal or dissenters’ rights and held by a holder, if any, who has
not voted in favor of the Merger or consented thereto in writing and who
has
exercised and perfected appraisal or dissenters’ rights for such shares in
accordance with Section 262 of the DGCL and has not effectively withdrawn
or
lost such appraisal or dissenters’ rights (collectively, the “Dissenting
Shares”) shall not be converted into or represent the right to consideration
for Company Stock set forth in Section 2.2(a), and the holder or holders
of such
shares shall be entitled only to such rights as may be granted to such holder
or
holders in Section 262 of the DGCL.
(b) Notwithstanding
the provisions of Section 2.3(a), if any holder of Dissenting Shares shall
effectively withdraw or lose (through failure to perfect or otherwise) such
holder’s appraisal rights and dissenters’ rights under Section 262 of the DGCL,
then, as of the later of the Effective Time and the occurrence of such event,
such holder’s shares shall automatically be converted into and represent only
the right to receive the consideration for such shares set forth in Section
2.2(a), without interest, less the Aggregate Allocable Portion of the Escrow
Amount, as set forth in Section 2.2(a)(iii) of the Disclosure Schedule, upon
surrender of the certificate representing such shares.
(c) Company
shall (i) comply with the requirements of Section 262 of the DGCL, (ii) give
Parent prompt notice of any written demand received by Company pursuant to
Section 262 of the DGCL, and of withdrawals of such demands, and provide
copies
of any documents or instruments served pursuant to the DGCL and received
by
Company and (iii) give Parent the opportunity to participate in all negotiations
and proceedings with respect to any such demands. Company shall not
make any payment or settlement offer prior to the Effective Time with respect
to
any such demand unless Parent shall have consented in writing to such payment
or
settlement offer.
(d) Any
amount paid by Parent, Company or the Surviving Corporation to any Person
with
respect to Dissenting Shares pursuant to Section 262 of the DGCL in excess
of
the amount that would otherwise be payable pursuant to Section 2.2(a) for
each
such Dissenting Share (such amount, unless determined in a final, non-appealable
judgment of a court, being subject to the written approval of the
Representative, which approval shall not be unreasonably withheld, conditioned
or delayed), and all interest, costs, expenses and fees as incurred by Company,
Parent or the Surviving Corporation in connection with the exercise of all
rights under Section 262 of the DGCL, shall constitute “Damages” for
purposes of this Agreement, and Parent and the Surviving Corporation, as
the
case may be, shall be entitled to recover such Damages solely from the Escrow
Funds to the extent available therefor.
9
CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
(*)
DENOTE
SUCH OMISSIONS.
Section
2.4 Options
and Unvested Restricted Shares.
(a) Definitions. For
the purposes of this Agreement, a “Vested Option” is the portion of an
Option granted under the Option Plan that is exercisable to acquire shares
of
Company Common Stock or Company Preferred Stock, as applicable, as of
immediately prior to the Effective Time (but after giving effect to any
acceleration of such Options triggered by the transactions contemplated by
this
Agreement). An “Unvested Option” is the portion of an Option
granted under the Option Plan that is not exercisable to acquire shares of
Company Common Stock or Company Preferred Stock, as applicable, as of
immediately prior to the Effective Time (but after giving effect to any
acceleration of such Options triggered by the transactions contemplated by
this
Agreement). An “Unvested Restricted Share” is an unvested
restricted share of Company Common Stock.
(b) Vested
Options. Company shall take all necessary and appropriate action
so that all of the Vested Options shall, at the Effective Time, be terminated
and converted into the right to receive, subject to the terms and conditions
of
this Agreement (except as otherwise provided in an Employment Agreement between
the Option holder and Company to be effective at the Effective Time), an
amount
equal to the product of (i) the excess, if any, of the, with respect to Common
Options, Per Share Common Consideration or, with respect to Preferred Options,
Per Share Preferred Consideration over the per share exercise price of the
Vested Option, and (ii) the number of shares of Company Common Stock or Company
Preferred Stock, as applicable, subject to the Vested Options (the “Vested
Option Payment”), which payments will be subject to applicable Tax
withholding.
(c) Unvested
Option and Unvested Restricted Share
Conversion. Company shall take all necessary and
appropriate action so that each of the Unvested Options and Unvested Restricted
Shares shall be cancelled in exchange for a number of restricted share units
(“Parent Restricted Share Units”) to acquire Parent common stock
(“Parent Common Stock”), with a fair market value, as of the Effective
Time (except as otherwise provided in an Employment Agreement between the
Option
holder or Unvested Restricted Share holder and Company to be effective at
the
Effective Time), equal to the product of:
(i) with
respect to Unvested Options, (1) the excess of the Per Share Common
Consideration (or, in the case of the Preferred Options, the Per Share Preferred
Consideration) over the per share exercise price applicable to the Unvested
Option and (2) the number of shares of Company Common Stock subject to such
Unvested Option, rounded to the nearest whole share. Unvested Options
with respect to which the Per Share Common Consideration (or, in the case
of the
Preferred Options, the Per Share Preferred Consideration) does not exceed
the
per share exercise price applicable to the Unvested Option shall be cancelled
without consideration as of the Effective Time; and
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(ii) with
respect to Unvested Restricted Shares, (1) the Per Share Common Consideration
and (2) the number of Unvested Restricted Shares, rounded to the nearest
whole
share.
For
purposes of this Section 2.4(c), the fair market value of such Parent Restricted
Share Units as of the Effective Time shall be the average of the closing
prices
of Parent Common Stock on The NASDAQ Stock Market LLC (the “NASDAQ”) for
the five (5) Trading Days ending on (and inclusive of) the Trading Day that
is
two (2) Trading Days prior to the Closing Date. Such Parent
Restricted Share Units shall have the same vesting schedule as the Unvested
Options for which such Restricted Share Units were exchanged and continuous
employment with Company will be credited to the optionee or Unvested Restricted
Share holder, as applicable, for purposes of determining the vesting of such
Parent Restricted Share Units after the Effective Time.
(d) Section
2.4(d) of the Company Disclosure Schedule sets forth the following information
with respect to each holder of Options and each holder of Unvested Restricted
Shares:
(i) the
Vested Options, if any, the Unvested Options, if any, and the Unvested
Restricted Shares, if any, held by such holder;
(ii) the
aggregate Vested Option Payment to be paid to such holder, if any, and the
aggregate number of Parent Restricted Share Units to be issued to such holder,
if any, in accordance with the terms hereof and in the manner provided herein
in
respect of all of the Options and Unvested Restricted Shares owned by such
holder immediately prior to the Effective Time, subject to withholding for
Taxes
as described in Section 2.8; provided, however, that Company shall
update such calculation two (2) business days prior to the expected Closing
Date
to give effect to any changes in such calculation required as a result of
the
passage of time between the date hereof and the Effective Time and the final
determination of the amounts and matters that are relevant components of
such
calculation, including the Total Cash Consideration;
(iii) the
mailing address of such holder.
Section
2.5 Warrants.
(a) Each
Preferred Warrant outstanding immediately prior to the Effective Time shall,
at
the Effective Time, be terminated and converted into the right to receive,
subject to the terms and conditions of this Agreement, an amount equal to
the
product of (i) the excess, if any, of the applicable Per Share Preferred
Consideration over the per share exercise price of such Preferred Warrant,
and
(ii) the number of shares of Company Preferred Stock subject to such Preferred
Warrant (the “Preferred Warrant Payment”). The cash payment
described in this Section 2.5(a) shall be subject to the applicable Tax
withholding.
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(b) Section
2.5(b) of the Company Disclosure Schedule sets forth the following information
with respect to each holder of Preferred Warrants:
(i) the
Preferred Warrants held by such holder;
(ii) the
aggregate Preferred Warrant Payment to be paid to such holder, if any, in
accordance with the terms hereof and in the manner provided herein in respect
of
all of the Preferred Warrants owned by such holder as of the date hereof
and
immediately prior to the Effective Time, subject to withholding for Taxes
as
described in Section 2.8; provided, however, that Company shall
update such calculation two (2) business days prior to the expected Closing
Date
to give effect to any changes in such calculation required as a result of
the
passage of time between the date hereof and the Effective Time and the final
determination of the amounts and matters that are relevant components of
such
calculation, including the Total Cash Consideration; and
(iii) the
mailing address of such holder.
Section
2.6 Escrow. At
the Effective Time, cash in an amount equal to the Escrow Amount shall be
delivered or caused to be delivered by Parent to LaSalle Bank National
Association, as escrow agent (the “Escrow Agent”), pursuant to the
provisions of the escrow agreement in substantially the form attached as
Exhibit A hereto, subject to any amendments to such form requested by the
Escrow Agent and mutually agreed to by Parent and the Stockholders’
Representative (the “Escrow Agreement”). The Escrow Agreement
shall be entered into prior to the Effective Time, by and among Parent, the
Stockholders’ Representative, on behalf of the holders of Company Stock, and the
Escrow Agent, and shall provide Parent with recourse against amounts held
in
escrow by the Escrow Agent with respect to Damages and the Company Stockholders’
indemnification obligations under Article IX, subject to the terms and
conditions set forth in the Escrow Agreement and in Article IX of this Agreement
(the “Escrow Funds”). The Escrow Amount (or any portion
thereof) shall be distributed to the Company Stockholders, and Parent at
the
times, and upon the terms and conditions, set forth in the Escrow Agreement;
provided, however, that, to the extent permitted by applicable law and to
the
extent provided in the Escrow Agreement, the Escrow Funds shall be considered
assets of Parent solely for income Tax purposes. The terms and
provisions of the Escrow Agreement and the transactions contemplated thereby
are
specific terms of the Merger, and the approval and adoption of this Agreement
and approval of the Merger by the holders of Company Stock shall constitute
approval by such holders, as to the specific terms of the Merger, and the
irrevocable agreement of Company Stockholders to be bound by and comply with,
the Escrow Agreement and all of the arrangements and provisions of this
Agreement relating thereto, including, without limitation, the deposit of
the
Escrow Amount into escrow, the obligations with respect to Damages, the
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indemnification
obligations set forth in Article IX hereof and the appointment and sole
authority to act on behalf of the Company Stockholders of the Stockholders’
Representative, as provided for herein and in the Escrow
Agreement. The release of the Escrow Funds (or any portion thereof)
will occur on the fifteen (15) month anniversary of the Closing, and will
be
subject to the terms hereof and of the Escrow Agreement.
Section
2.7 Disbursement.
(a) Paying
Agent. At the Effective Time, Parent or Acquisition Sub shall
deposit, or cause to be deposited, with LaSalle Bank National Association
(the
“Paying Agent”) for the benefit of the Company Securityholders cash in an
amount equal to (i) the Total Company Stockholder Consideration minus the
Escrow
Amount plus (ii) the aggregate amount of Vested Option Payments plus (iii)
the
aggregate amount of Preferred Warrant Payments. Such funds shall be
invested as directed by Parent or the Surviving Corporation pending payment
thereof by the Paying Agent to the Company Securityholders. Earnings
from such investments shall be the sole and exclusive property of the Surviving
Corporation, and no part of such earnings shall accrue to the benefit of
the
Company Securityholders. At the Effective Time, Parent shall deposit,
or cause to be deposited, cash in an amount equal to the aggregate Transaction
Expenses listed on Schedule 2.1(b) and shall direct that the Paying Agent
pay
the respective amounts to the Persons indicated on such schedule as soon
as
practicable, but in no event later than two (2) business days following the
Effective Time.
(b) Surrender
Procedures.
(i) As
soon as reasonably practicable after the Effective Time, but no later than
two
(2) business days thereafter, Parent shall instruct the Paying Agent to mail
to
each Company Stockholder (i) a letter of transmittal in substantially the
form
previously agreed between Parent and Company and (ii) instructions for use
in
effecting the surrender of certificate(s) formerly representing all of the
shares of Company Stock held by such Company Stockholder in exchange for
such
Company Stockholder’s Stockholder Merger Payment (as defined
below). The payment of the appropriate Stockholder Merger Payment to
any Company Stockholder listed in Section 2.2(a)(iii) of the Company Disclosure
Schedule is conditioned upon the due execution and delivery of such letter
of
transmittal. After the Effective Time, within five (5) business days
after receipt by the Paying Agent of certificate(s), properly endorsed or
otherwise in proper form for transfer, formerly representing all the shares
of
Company Stock held by any Company Stockholder for cancellation, together
with
such duly executed letter of transmittal, the Paying Agent shall, in exchange
therefor and in reliance on the representations and warranties herein, pay
to
such Company Stockholder an amount equal to such Company Stockholder’s aggregate
Merger Consideration, as set forth in Section 2.2(a)(iii) of the Company
Disclosure Schedule, less such Company Stockholder’s Aggregate Allocable Portion
of the Escrow
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Amount,
as
set forth in Section 2.2(a)(iii) of the Company Disclosure Schedule (such
amount, with respect to each such Company Stockholder, being
the “Stockholder Merger Payment”), but without interest, and
the certificate(s) so surrendered shall forthwith be canceled. If
payment of any portion of the applicable Stockholder Merger Payment is to
be
made to a Person other than the Person in whose name the surrendered
certificate(s) are registered, it shall be a condition of payment that the
Person requesting such payment (A) shall have paid any Transfer Taxes and
other
Taxes required by reason of the payment of those amounts to a Person other
than
the registered holder of the certificate(s) surrendered, and shall have
established to the satisfaction of the Surviving Corporation that such Taxes
have been paid, or (B) shall have established to the satisfaction of the
Surviving Corporation that such Taxes are not applicable. From and
after the Effective Time, until surrendered as contemplated by this Section
2.7(b), each certificate formerly representing shares of Company Stock shall
be
deemed to represent for all purposes only the right to receive the applicable
Merger Consideration, if any, in respect of such shares of Company Stock
formerly represented thereby in accordance with the terms hereof and in the
manner provided herein.
(ii) As
soon as reasonably practicable after the Effective Time, but no later than
two
(2) business days thereafter, Parent shall instruct the Paying Agent to mail
to
each Company Securityholder who is a holder of Vested Options or Preferred
Warrants as of the Effective Time (i) a letter of transmittal in substantially
the form previously agreed between Parent and Company and (ii) instructions
for
use in effecting the surrender of all rights in and to the Company Securities
held by such Company Securityholder in exchange for the applicable
Securityholder Merger Payment (as defined below). The receipt of the
appropriate Securityholder Merger Payment by any such Company Securityholder
is
conditioned upon the execution and delivery of such transmittal
letter. After the Effective Time, within five (5) business days after
receipt by the Paying Agent of such letter of transmittal, duly executed,
the
Paying Agent shall, in exchange therefor and in reliance on the representations
and warranties herein, pay to such Company Securityholder an amount equal
to
such Company Securityholder’s aggregate Vested Option Payment as set forth in
Section 2.4(d)(ii), if any, plus such Company Securityholder’s Preferred Warrant
Payment as set forth in Section 2.5(b)(ii), if any, of the Company Disclosure
Schedule (such amount, with respect to each such Company Securityholder,
being
the “Securityholder Merger Payment”), but without
interest.
(c) Change
in Control Payments. At the Effective Time, the Surviving
Corporation shall, and Parent shall cause to the Surviving Corporation to,
pay
(or cause to be paid) amounts in cash equal to the respective Change in Control
Payments listed on Schedule 2.1(a) to the respective Persons indicated on
such
schedule as soon as practicable, but in no event later than two (2) business
days following the Effective Time.
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(d) Transfer
Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of Company shall be closed, and
thereafter there shall be no further registration of transfers of the shares
of
Company Stock on the records of Company until reopened by the Surviving
Corporation. From and after the Effective Time, the holders of
certificates formerly evidencing ownership of the shares of Company Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares, except as otherwise provided for herein
or
by applicable Legal Requirements. After the Effective Time, the
Surviving Corporation or the Paying Agent shall cancel and exchange, as provided
in this Article II, any presented certificate representing shares of Company
Stock outstanding immediately prior to the Effective Time.
(e) Termination
of Fund; No Liability. At any time following six (6) months after
the Effective Time, the Surviving Corporation shall be entitled to require
the
Paying Agent to deliver to it any funds (including, without limitation, any
earnings received with respect thereto) that had been made available to the
Paying Agent and that have not been disbursed to Company Securityholders
and
thereafter such Company Securityholders shall be entitled to look only to
the
Surviving Corporation (subject to abandoned property, escheat or other similar
Legal Requirements) and only as general creditors thereof with respect to
the
applicable merger payment, upon and subject to delivery of the duly executed
applicable letter of transmittal and, with respect to any Company Stockholder,
upon due surrender of their certificates formerly representing shares of
Company
Stock, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be liable
to
any holder of a certificate formerly representing shares of Company Stock
for
any amounts delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Legal Requirement.
(f) Lost,
Stolen or Destroyed Certificates. In the event any certificate(s)
which formerly represented shares of Company Stock shall have been lost,
stolen
or destroyed, upon the making and delivery of an affidavit of that fact by
the
Company Stockholder thereof in form reasonably satisfactory to Parent, Parent
shall instruct the Paying Agent to pay such Company Stockholder such Company
Stockholder’s Stockholder Merger Payment as provided in this Article II;
provided, however, that Parent may, in its sole discretion and as
a condition precedent to issuing such instruction to the Paying Agent, require
the owner of such lost, stolen or destroyed certificate(s) to deliver an
agreement of indemnification in form reasonably satisfactory to Parent and
a
bond in such sum as Parent may reasonably direct as indemnity, against any
claim
that may be made against Parent, the Surviving Corporation or the Paying
Agent
with respect to the certificate(s) alleged to have been lost, stolen or
destroyed.
(g) Dissenting
Shares. The provisions of this Section 2.7 shall also apply to
Dissenting Shares that lose their status as such, except that the obligations
of
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Parent
under this Section 2.7 shall commence on the date of loss of such status
and the
holder of such shares shall be entitled to receive in exchange for such shares
the applicable aggregate Merger Consideration less the Aggregate Allocable
Portion of the Escrow Amount, as set forth in Section 2.2(a)(iii) of the
Company
Disclosure Schedule, in accordance with the terms hereof and in the manner
provided herein.
Section
2.8 Withholding
Rights. Each
of Parent, the Surviving Corporation, the Paying Agent and the Escrow Agent
shall be entitled to deduct and withhold from any consideration otherwise
payable pursuant to this Agreement to any Company Securityholder, such amounts
as may be required to be deducted and withheld with respect to the making
of
such payment under the Internal Revenue Code of 1986, as amended (the
“Code”), or any other Legal Requirement. To the extent that
amounts are so deducted or withheld by Parent, the Surviving Corporation,
the
Paying Agent or the Escrow Agent, such deducted or withheld amounts shall
be
treated for all purposes of this Agreement as having been paid to the Company
Securityholder in respect of which such deduction or withholding was
made.
Section
2.9 Unclaimed
Amounts. Any
amounts remaining unclaimed by Company Securityholders two years after the
Effective Time (or such earlier date, immediately prior to such time when
the
amounts would otherwise escheat to or become the property of any Governmental
Entity (as defined in Section 3.4)) shall become, to the extent permitted
by
applicable Legal Requirements, the property of Parent, free and clear of
any
claims or interest of any Person previously entitled thereto.
Section
2.10 Earnout.
(a) For
purposes of this Section 2.10, the following terms shall have the following
meanings:
“Derived”
means,
with respect to
any Company Securities, the shares of Company Common Stock derived from such
Company Securities, assuming, as applicable, the exercise of such Company
Securities in accordance with their respective terms and conversion of such
Company Securities pursuant to Section 4.7 of the Company Certificate of
Incorporation.
“Earnout
Base Share Number”
means the Aggregate Share Number minus the number of shares of Company
Common
Stock Derived from Unvested Options or Unvested Restricted Shares outstanding
as
of immediately prior to the Effective Time.
“Earnout
Eligible Holder” means
each Company Securityholder who held of record any Company Securities as
of
immediately prior to the Effective Time, the shares of Company Common Stock
Derived from which are included in the Earnout Eligible Share Number, and
such
Person’s successors and permitted assigns, if any.
“Earnout
Eligible Share Number”
means the Earnout Base Share Number minus the number of shares of Company
Common
Stock Derived from Company Securities in
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respect
of which a Stockholder Merger Payment or Securityholder Merger Payment, as
applicable, has not been made to a Company Securityholder as a result of
such
Company Securityholder’s failure to satisfy the applicable conditions precedent
set forth in Section 2.7.
“Fair
Market Value” means the
most favorable price that would be paid by any customer of the Surviving
Corporation for the same or substantially similar services.
“Net
Revenue Amount” means the
consolidated net revenue of the Surviving Corporation and its controlled
affiliates for fiscal year 2008, which revenue is determined in accordance
with
Specified Accounting Principles and which revenue includes, without limitation,
revenue resulting from services, if any, provided by the Surviving Corporation
to Parent or any affiliates of Parent (other than any controlled affiliates
of
the Surviving Corporation) that is calculated based on the Fair Market Value
of
such services; provided, however, that the Net Revenue Amount
shall not include revenue resulting from inter-company transactions among
the
Surviving Corporation and any of its controlled affiliates other than such
services.
“Per
Share Earnout Amount” means
an amount equal to the quotient obtained by dividing (i) the Total Earnout
Amount by (ii) the Earnout Base Share Number.
“Specified
Accounting
Principles” means United States generally accepted accounting principles as
applied by Company in connection with the preparation by Company of Company’s
United States generally accepted accounting principles-based audited
consolidated balance sheet and related consolidated statement of operations,
statement of stockholders’ deficit and statement of cash flows for
the period ended December 31, 2006 (such financial statements being referred
to
as the “Baseline Financial Statements” and such accounting principles as
so applied being referred to as the “Baseline Accounting
Principles”):
(i) the
Baseline Accounting Principles may be modified by Parent (after consultation
with its outside auditors and the chief executive officer of the Surviving
Corporation) to the extent that: (A) a modification to the Baseline Accounting
Principles is required by United States generally accepted accounting principles
as such generally accepted accounting principles may exist from time to time
from the Effective Time until the end of fiscal year 2008; or (B) Company
incorrectly applied United States generally accepted accounting principles
in
connection with the preparation by Company of the Baseline Financial Statements;
and
(ii) if
any transaction occurs after the preparation of the Baseline Financial
Statements and there is no accounting principle that was applied by Company
in
connection with the preparation of the Baseline Financial Statements that
properly would apply to such transaction, then United States generally accepted
accounting principles in effect as of the time of the occurrence of such
transaction shall be applied by Parent (consistent with Parent’s application of
such principles across its business generally (taking into account any
differences between the nature of Parent’s business and the
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nature
of Company’s business) and which treatment shall be finally determined by
Parent, acting reasonably after consultation with its outside auditors and
the
chief executive officer of the Surviving Corporation) with respect to such
transaction.
“Total
Earnout Amount” means
Seven Hundred Fifty Thousand Dollars ($750,000).
(b) As
soon as practicable after January 3, 2009 and, in any event, no later than
February 27, 2009, the Surviving Corporation shall prepare and deliver to
the
Stockholders’ Representative a statement (a “Revenue Statement”)
certified by Parent’s chief financial officer, setting forth in reasonable
detail the Surviving Corporation’s calculation of the Net Revenue
Amount. In the event that the Stockholders’ Representative objects to the
Net Revenue Amount set forth in the Revenue Statement, then within twenty
(20)
days after the delivery to the Stockholders’ Representative of the Revenue
Statement (the “Response Period”), the Stockholders’ Representative shall
deliver to Parent (with a copy to the Surviving Corporation) a written
notice (an “Objection Notice”) describing in reasonable detail the
Stockholders’ Representative’s objections to the Revenue Statement and setting
forth the Net Revenue Amount determined by the Stockholders’ Representative to
be correct. If the Stockholders’ Representative does not deliver an
Objection Notice to Parent during the Response Period, then the Surviving
Corporation’s calculation of the Net Revenue Amount shall be binding and
conclusive on Parent, any and all Earnout Eligible
Holders and the Stockholders’ Representative.
In
the event the Stockholders’
Representative delivers to Parent an Objection Notice within the Response
Period, Parent and the Stockholders’ Representative shall in good faith
negotiate to settle such disputed amount. If no resolution is reached
within twenty (20) days after delivery of the Objection Notice to Parent,
then
the dispute shall be finally settled by an independent nationally recognized
accounting firm (the “Accountant”) jointly engaged by Parent and the
Stockholders’ Representative. Parent, the Surviving Corporation and
the Stockholders’ Representative shall promptly provide to the Accountant such
information as the Accountant may reasonably request in connection with its
determination. The determination by the Accountant of: the Net
Revenue Amount shall be binding and conclusive on Parent, the Surviving
Corporation, any and all Earnout Eligible Holders and the Stockholders’
Representative. Parent and the Stockholders’ Representative shall
each pay fifty percent (50%) of the fees and expenses of the Accountant for
its
services under this Section 2.10(b). Parent and the Stockholders’
Representative agree that the procedure set forth in this Section 2.10(b)
for
resolving disputes shall be the sole and exclusive method for resolving any
such
disputes; provided that this provision shall not prohibit either Parent or
the
Stockholders’ Representative from instituting litigation to enforce any ruling
of the Accountant.
(c) If
the Net Revenue Amount set forth in the Revenue Statement or determined pursuant
to the dispute resolution procedure under Section 2.10(b) equals
or exceeds *********************************, subject to Section 2.9,
each Earnout Eligible Holder shall be entitled to receive from the Surviving
Corporation an amount in
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cash
equal to the product of (x) the number of shares of Company Common Stock
Derived
from Company Securities in respect of which such Person became an Earnout
Eligible Holder and (y) the Per Share Earnout Amount.
(d) If
the Net Revenue Amount set forth in the Revenue Statement or determined pursuant
to the dispute resolution procedure under Section 2.10(b) equals or exceeds
*********************************, within ten (10) business days after the
Net
Revenue Amount becomes binding and conclusive pursuant to Section 2.10(b),
the
Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, distribute to the Stockholders’ Representative for distribution to the then
Earnout Eligible Holders the aggregate portion of the Total Earnout Amount
to
which such Earnout Eligible Holders are entitled pursuant to Section
2.10(c).
(e) (i)
prior to the Effective Time, Company shall and (ii) without the prior written
consent of the Stockholders’ Representative, during the period of time from the
Effective Time through the date the Net Revenue Amount becomes binding and
conclusive in accordance with Section 2.10(b), the Surviving Corporation
shall,
and Parent shall use commercially reasonable efforts to cause the Surviving
Corporation to:
(i) not
take any action to (or permit any of its Authorized Representatives to), or
fail to take any action if such failure would, intentionally prejudice the
preparation of the Revenue Statement or the determination of the Net Revenue
Amount as provided in this Section 2.10; and
(ii) afford
to the Stockholders’ Representative and any accountants, counsel or financial
advisers retained by the Stockholders’ Representative reasonable access during
normal business hours to the books and records and employees of the Surviving
Corporation to the extent relevant to the calculation of the Net Revenue
Amount.
(f) (i)
(A) Company shall not (or permit any of its Authorized Representatives to)
and
(B) during the period of time from the Effective Time through the end of
the
fiscal year 2008, neither Parent nor any of its affiliates shall (or permit
any
of its Authorized Representatives to), without the consent of the Stockholders’
Representative, intentionally operate the business of Company (and, from
the
Effective Time, the Surviving Corporation) and its controlled affiliates
in a
manner that would, or would reasonably be expected to, obstruct, prevent
or
otherwise adversely affect the ability of the Stockholders’ Representative to
determine the Net Revenue Amount in respect of fiscal year 2008 or (ii)
during the period of time from the Effective Time through the end of the
fiscal
year 2008, neither Parent nor any of its affiliates shall (or permit any
of its
Authorized Representatives to), without the consent of the Stockholders’
Representative, directly or indirectly sell or transfer (in a single
transaction or through a series of related transactions) to any third party
(other than a direct or indirect wholly owned subsidiary of Company (and,
from
the Effective Time, the Surviving Corporation) (disregarding directors’
qualifying shares and similar arrangements for purposes of
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determining
whether a subsidiary is wholly owned by Company or the Surviving Corporation,
as
the case may be, for this purpose) of: (A) securities representing greater
than
fifty percent (50%) of the outstanding voting power, or economic interest
in,
Company or the Surviving Corporation, as the case may be, (whether by way
of a
sale of securities, merger or otherwise); or (B) all or substantially all
of the
assets of Company or the Surviving Corporation, as the case may be, and its
controlled affiliates, taken as a whole (it being understood that a sale
of the
outstanding securities of a wholly owned subsidiary held by Company or the
Surviving Corporation, as the case may be, (disregarding directors’ qualifying
shares and similar arrangements for purposes of determining whether a subsidiary
is wholly owned by Company or the Surviving Corporation, as the case may
be, for
this purpose) shall constitute a sale of all or substantially all of the
assets
of such subsidiary).
(g) Each
of Parent and the Stockholders’ Representative hereby agree that Parent may in
its sole discretion, upon ten (10) business days written notice to the
Stockholders’ Representative, terminate the obligations of Parent and its
affiliates under Sections 2.10(e) and (f) in exchange for payment of the
Total
Earnout Amount (or applicable portion thereof) pursuant to and in accordance
with Section 2.10(c) and Section 2.10(d) as if the Net Revenue Amount threshold
had been satisfied and had become binding and conclusive pursuant to Section
2.10(b) on the date of the Stockholders’ Representative’s receipt of such
notice.
(h) The
interests, if any, of any Company Securityholder in such Company
Securityholder’s portion of the Total Earnout Amount pursuant to this Section
2.10 shall not be assignable or transferable, except by operation of law
(it
being understood that any attempted assignment or transfer in violation of
this
Section 2.10(g) shall be null and void).
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF COMPANY
Company
represents and warrants to
Parent and Acquisition Sub as follows:
Section
3.1 Organization
and Qualification; Subsidiaries.
(a) Section
3.1(a) of the Company Disclosure Schedule contains a complete and accurate
list
of each subsidiary of Company as of the date hereof and its respective
jurisdiction of incorporation or organization, as the case may be and the
capitalization of each such subsidiary. Each of Company and its
subsidiaries is duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted. Company has
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heretofore
delivered to Parent accurate and complete copies of the certificates of
incorporation and bylaws (or similar governing documents), as currently in
effect, of each of Company and its subsidiaries. The respective
articles of incorporation and bylaws or other organizational documents of
the
subsidiaries of Company do not contain any provision limiting or otherwise
restricting the ability of Company to control such
subsidiaries. Company does not own or control, directly or
indirectly, any equity or similar interest in, or any interest convertible
into
or exchangeable or exercisable for any equity or similar interest in, or
have
any commitment or obligation to invest in, purchase any securities or
obligations of, fund, guarantee, contribute or maintain the capital of or
otherwise financially support any corporation, partnership, joint venture
or
other business association or entity other than the subsidiaries of Company
identified on Section 3.1(a) of the Company Disclosure Schedule.
(b) Each
of Company and its subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned,
leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where
the
failure to be so duly qualified or licensed and in good standing has not
had and
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect. The term “Company
Material Adverse Effect” means (a) a material adverse effect on the
business, capitalization, operations, assets (whether tangible or intangible),
customer relationships (with respect to customer relationships, taken as
a
whole), results of operations, prospects or condition (financial or otherwise)
of Company and its subsidiaries, taken as whole, other than any events, changes,
developments or occurrences to the extent arising out of (i) conditions
generally affecting industries in which Company operates, which do not have
a
materially disproportionate effect (relative to other industry participants)
on
Company and its subsidiaries taken as a whole, (ii) the entering into or
the
public announcement or disclosure of this Agreement or the transactions
contemplated hereby by reason of the disclosure of the identity of Parent,
(iii)
effects arising from changes in laws or accounting principles, (iv) effects
arising from actions taken by Company or any of its subsidiaries that were
consented to in writing by Parent in accordance with Section 5.1(b), or (v)
any
breach of this Agreement by Parent or Acquisition Sub, or (b) any circumstance,
condition, change, development or effect that may prevent, materially delay
or
impair the ability of Company to consummate the transactions contemplated
hereby.
Section
3.2 Capital
Structure.
(a) The
authorized capital stock of Company consists of (i) 81,624,037 shares of
stock
consisting of 58,128,650 shares of Company Common Stock, of which 21,733,475
shares are issued and outstanding and of which 36,395,175 shares are held
in
Company’s treasury, and (ii) 23,495,387 shares of preferred stock, par value
$0.01 per share, 7,805,556 of which have been designated “Series A Convertible
Preferred Stock” (“Series A Preferred Stock”), all of which are issued
and outstanding; 10,500,000 of which have been designated “Series B Convertible
Preferred Stock” (“Series B Preferred Stock”), all of which are issued
and outstanding; 3,389,831 of which have been
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designated
“Series C Convertible Preferred Stock” (“Series C Preferred Stock”), all
of which are issued and outstanding and 1,800,000 of which have been designated
“Series C-1 Convertible Preferred Stock” (“Series C-1 Preferred Stock”),
none of which are issued and outstanding. Except as set forth above
and other than the Options and the Preferred Warrants, there are outstanding
(i)
no shares of capital stock or other voting securities of Company, (ii) no
stock
appreciation rights, phantom stock units, restricted stock grants, contingent
stock grants or Employee Plans which grant awards of any of the foregoing,
and
no other outstanding contractual rights to which Company is a party the value
of
which is based on the value of Company Common Stock, (iii) no bonds, debentures,
notes or other indebtedness of Company or any subsidiary having the right
to
vote (or convertible into, or exchangeable for, securities having the right
to
vote) on any matters on which stockholders of Company may vote, (iv) no
securities of Company or its subsidiaries convertible into or exchangeable
for
shares of capital stock or voting securities of Company, (v) no options or
other
rights to acquire from Company or its subsidiaries and, no obligations of
Company or its subsidiaries to issue any capital stock, voting securities
or
securities convertible into or exchangeable for capital stock or voting
securities of Company and (iv) no equity equivalent interests in the ownership
or earnings of Company or its subsidiaries (collectively, “Company
Securities”). Section 3.2(a) of the Company Disclosure Schedule
is a true, complete and correct list of all of the securityholders of Company,
including, without limitation, all holders of Company Stock or other Company
Securities (including Options and Preferred Warrants) held by each
securityholder of Company as of the date of this Agreement and indicating,
with
respect to each Option and Preferred Warrant then outstanding, the exercise
price, the number of shares of Company Common Stock or Company Preferred
Stock
into which each such Option or Preferred Warrant is exercisable, and the
expiration date of such Option or Preferred Warrant, including the extent
to
which any vesting had occurred as of the date of this Agreement and the extent
to which the vesting of such Option or Preferred Warrant (as applicable)
will be
accelerated automatically by the consummation of the transactions contemplated
by this Agreement or by the termination of employment or engagement or change
in
position of any holder thereof following or in connection with the consummation
of the Merger by reason of the terms of any agreement between Company and
any
Person. There are no outstanding obligations of Company or its
subsidiaries to repurchase redeem or otherwise acquire any Company
Securities. Except as set forth on Section 3.2(a) of the Company
Disclosure Schedule, there are no stockholder agreements, voting trusts or
other
agreements or understandings to which Company is a party or by which it is
bound
relating to the voting or registration of any shares of capital stock of
Company. To the Knowledge of Company or any of its subsidiaries,
there are no irrevocable proxies and no voting agreements with respect to
any
shares of capital stock or the other voting securities of
Company. There are no agreements requiring Company to contribute to
the capital of, or lend or advance funds to, any subsidiaries of
Company. There are no accrued and unpaid dividends with respect to
any outstanding shares of Company Stock. The information set forth in
Sections 2.1(a), 2.1(b), 2.2(a)(iii), 2.4(d), 2.5(b) and 3.2(a) of the Company
Disclosure Schedule, including the portion of the Total Cash Consideration
to be
delivered to each Company Securityholder and the Escrow Agent for the account
of
each Company Stockholder, is true, complete and accurate as of the date hereof,
and the information in such Sections of
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the
Company Disclosure Schedule updated by Company pursuant to the terms of this
Agreement will be true, complete and accurate as of the Effective Time, and
the
calculations performed to compute such information are, and will be, accurate
and in accordance with the terms of this Agreement, Company’s certificate of
incorporation and bylaws (as then in effect) and all other agreements and
instruments among Company and the Company Securityholders. Other than
in connection with any conversion of shares of Company Stock, Options or
Preferred Warrants pursuant to Article II, no Person has any agreement with
Company to acquire any Merger consideration.
(b) All
of the outstanding capital stock of Company’s subsidiaries (other than
director’s qualifying shares in the case of foreign subsidiaries, each of which
is set forth on section 3.2(b) of the Company Disclosure Schedule) is owned
by
Company, or one of its subsidiaries, directly or indirectly, free and clear
of
any Lien or any other material limitation or restriction (including any
restriction on the right to vote or sell the same except as may be provided
as a
matter of law). There are no securities of Company or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire
from
Company or its subsidiaries and no other contract, understanding, arrangement
or
obligation (whether or not contingent) providing for, the issuance or sale,
directly or indirectly, by Company or any of its subsidiaries of any capital
stock or other ownership interests in or any other securities of any subsidiary
of Company. There are no outstanding contractual obligations of Company or
its subsidiaries to repurchase redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of
Company. For purposes of this Agreement, “Lien” means any mortgage, lien,
pledge, conditional sale agreement, default of title, easement, encroachment,
encumbrance, hypothecation, reservation, restriction, security interest,
title
retention or other security arrangement, or any adverse right or interest,
charge or claim of any nature whatsoever of, on, or with respect to, any
asset,
property or property interest.
(c) All
Company Stock, Options, and any other Company Securities outstanding have
been
offered, issued, and sold by Company in compliance with applicable federal
and
state securities laws.
(d) To
the Knowledge of Company or any of its subsidiaries, no stockholder of Company
has granted options or other rights to purchase any Company Stock, Options
or
any other Company Securities from such stockholder.
Section
3.3 Authority
Relative to this Agreement; Board Recommendation.
(a) Company
Authority. Company has all requisite corporate power and
authority to execute and deliver this Agreement, and, subject to approval
of the
holders of Company Stock, to consummate the transactions contemplated hereby,
including the Merger. The execution and delivery by Company of this
Agreement and the performance of Company’s obligations hereunder have been duly
and validly authorized by all necessary corporate action on the part of Company,
subject only to approval of the Merger and this Agreement by the holders
of
Company Stock. This
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Agreement
has been duly executed and delivered by Company and, assuming this
Agreement has been duly authorized, executed and delivered by Parent and
Acquisition Sub, constitutes a valid and binding obligation of Company
enforceable in accordance with its terms.
(b) Board
Recommendation. Company’s board of directors has unanimously
(i) determined that this Agreement and the transactions contemplated
hereby, including the Merger, are advisable and in the best interests of
Company
and its stockholders, (ii) approved and adopted this Agreement and the
transactions contemplated hereby, including the Merger, and (iii) subject
to the other terms and conditions of this Agreement, resolved to recommend
the
Merger and approval and adoption of this Agreement and each of the transactions
contemplated hereby by the holders of Company Stock, and none of such actions
by
Company’s board of directors has been amended, rescinded, or
modified.
Section
3.4 Consents
and Approvals; No Violations. Except
as set forth on Section 3.4 of the Company Disclosure Schedule, the execution
and delivery of this Agreement by Company does not, and the consummation
by
Company of the transactions contemplated hereby will not, (a) conflict with
or
result in any violation of, or default (with or without notice or lapse of
time,
or both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation or to loss of a material benefit under, or
the
creation of a lien, pledge, security interest, charge, or other encumbrance
on
assets under (“Violate”) any provision of the Company Certificate of
Incorporation or bylaws of Company or the comparable governing instruments
of
any subsidiary of Company or (b) materially Violate any material loan or
credit
agreement, note, bond, mortgage, indenture, contract, lease, or other material
agreement or instrument, permit, concession, franchise, license or material
Legal Requirement applicable to Company or its properties or
assets. No consent, approval, order, or authorization of, or
registration, declaration, or filing with or exemption by (each a “Government
Consent”) any court, administrative agency, or
commission or other governmental authority or instrumentality, whether domestic
or foreign (each a “Governmental Entity”) is required by or with respect
to Company in connection with the execution and delivery of this Agreement
or
the consummation by Company of the transactions contemplated by this Agreement,
except for (x) the filing of a premerger notification report and all other
required documents by Parent and Company, and the expiration or termination
of
all applicable waiting periods, under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) and any similar
required foreign antitrust filings (if applicable) and (y) the filing of
the
Certificate of Merger in accordance with the DGCL.
Section
3.5 Financial
Statements.
(a) The
following financial statements (collectively, the “Financial Statements”)
have been provided to Parent: (i) the audited consolidated balance
sheets of Company as of December 31, 2005 and December 31, 2006 and the related
consolidated statements of operations, stockholders’ deficit and cash flows for
the fiscal years then ended, including the notes thereto, (ii) the unaudited
consolidated balance sheet of
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Company
as of September 30, 2007 (the “Balance Sheet”) and related statements of
operations, stockholders’ deficit and cash flows for the nine-month period then
ended and (iii) the monthly consolidated balance sheets of Company as of
October
31, 2007 and November 30, 2007. In the case of clauses (i) and (ii),
the Financial Statements have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”), consistently applied
throughout the periods presented without modification of the accounting
principles used in the preparation thereof throughout the periods presented
(subject in the case of unaudited statements, to normal year-end adjustments
and
the absence of footnotes) and, in the case of clause (iii), the Financial
Statements have been relied upon by management and prepared consistent with
past
practice of Company. The Financial Statements are complete and
correct, are in accordance with the books and records of Company and present
fairly, in all material respects, the financial consolidated condition and
results of operations of Company and its subsidiaries as of the dates and
for
the periods indicated.
(b) To
the Knowledge of Company or any of its subsidiaries, Company has in place
systems and processes (including the maintenance of proper books and records)
that are customary for a company at the same stage of development as Company
sufficient to (i) provide reasonable assurances regarding the reliability
of the
Financial Statements and (ii) in a timely manner accumulate and communicate
to
Company’s principal executive officer and principal financial officer the type
of information that would be required to be disclosed in the Financial
Statements (such systems and processes are herein referred to as the
“Controls”). None of Company, its key employees, nor, to the
Knowledge of the Company or any of its subsidiaries, Company’s independent
auditors has identified or been made aware of any complaint, allegation,
deficiency, assertion or claim, whether written or oral, regarding the Controls
or the Financial Statements. To the Knowledge of Company or any of
its subsidiaries, there have been no instances of fraud, whether or not
material, that occurred during any period covered by the Financial
Statements. Company has in place a revenue recognition policy
consistent with GAAP.
Section
3.6 Absence
of Changes. Except
as set forth in Section 3.6 to the Company Disclosure Schedule, (i) since
December 31, 2006, there have been no events, changes or effects with respect
to
Company or its subsidiaries that has had or would reasonably be expected
to
have, either individually or in the aggregate, a Company Material Adverse
Effect, and (ii) since September 30, 2007, there have been no events, changes
or
effects with respect to Company or its subsidiaries that would not have been
permitted without the consent of Parent under Section 5.1(b) had they occurred
after the execution of this Agreement.
Section
3.7 Absence
of Undisclosed Liabilities. Except
as set forth in Section 3.7 to the Company Disclosure Schedule, Company and
its
subsidiaries do not have any Indebtedness or other liabilities or obligations
(whether known, unknown, mature, unmature, absolute or contingent) which
are of
a nature required by GAAP to be reflected in a balance sheet or the notes
thereto or are of a nature not required by GAAP to be
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reflected
in a balance sheet because the amount of loss with respect to such contingent
liability cannot be reasonably estimated, except for (a) liabilities and
obligations shown on the Balance Sheet, (b) liabilities and obligations which
have arisen since the date of the Balance Sheet in the ordinary course of
business and which are, in nature and amount, consistent with those incurred
historically and are not material to Company, individually or in the
aggregate. For purposes of this Agreement, “Indebtedness”
shall include all liabilities and obligations, including any applicable
penalties (including with respect to any prepayment thereof), interest and
premiums, (i) for borrowed money, (ii) evidenced by notes, bonds, debentures
or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables incurred in the ordinary course of business),
(iv)
under capital leases, (v) with respect to letters of credit, (vi) in the
nature
of guarantees of the obligations described in clauses (i) through (v) above
of
any other Person, or (vii) in the nature of obligations of the type referred
to
in clauses (i) through (vi) of any other Person secured by any Lien on any
asset
of Company or any of its subsidiaries.
Section
3.8 No
Default. None
of Company or its subsidiaries is in breach, default or violation (and no
event
has occurred which with notice or the lapse of time or both would constitute
a
breach default or violation) of any term, condition or provision of (a) with
respect to Company, the Company Certificate of Incorporation or, with respect
to
any subsidiary of the Company, such subsidiary’s certificate of incorporation
(or similar governing document), (b) its bylaws (or similar governing document),
(c) any Contract or Company Permit (as defined in Section 3.10) or (d) any
Legal
Requirement applicable to Company or any of its subsidiaries or any of their
respective properties or assets except, in the case of (c) or (d), for
violations, breaches or defaults that have not had and would not reasonably
be
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect or prevent or significantly delay consummation of the
transactions contemplated hereby.
Section
3.9 Litigation. Except
as set forth in Section 3.9 of the Company Disclosure Schedule, there is
no
suit, claim, action, proceeding or investigation pending or, to the Knowledge
of
Company or any of its subsidiaries, threatened against Company or any of
its
subsidiaries or any of their respective properties or assets before any
Governmental Entity or arbitrator which would be
reasonably expected to result in material costs, losses,
fines, penalties, settlements, awards, royalties, lost business
opportunities or other damages to Company, if determined adversely, or result
in
an injunction preventing Company from offering any current or presently
contemplated products or services, or affect the validity, enforceability
or
ability to use or own any Company Intellectual Property or
would reasonably be expected to prevent or significantly delay the consummation
of the transactions contemplated by this Agreement. None of Company
or its subsidiaries is subject to any outstanding order, writ, injunction
or
decree of any Governmental Entity that has had or would reasonably be expected
to have, either individually or in the aggregate, a Company Material Adverse
Effect or would reasonably be expected to prevent or significantly delay
the
consummation of the transactions contemplated hereby.
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Section
3.10 Compliance
with Applicable Law.
(a) Company
and its subsidiaries hold all material permits, licenses, variances, exemptions,
orders and approvals from all Governmental Entities necessary for the lawful
conduct of their respective businesses as presently conducted (the “Company
Permits”) all of which are valid and in full force and effect in all
material respects, subject to any conditions imposed by any such authority,
and
no notice of revocation has been received or is pending or, to the Knowledge
of
Company or any of its subsidiaries, threatened, in respect thereof, and,
to the
Knowledge of Company or any of its subsidiaries, no event has occurred which
permits, or upon the giving of notice or passage of time or both would permit,
revocation, non-renewal, modification, suspension, limitation or termination
of
any Company Permit that currently is in effect. Neither Company nor
any of its subsidiaries has any reason to believe that any Governmental Entity
is considering limiting, suspending, revoking or refusing to grant or renew
any
Company Permit. Company and its subsidiaries are in compliance with
the terms of the Company Permits except where the failure so to comply has
not
had and would not reasonably be expected to have, either individually or
in the
aggregate, a Company Material Adverse Effect or prevent or significantly
delay
the consummation of the transactions contemplated hereby.
(b) The
businesses of Company and its subsidiaries are not being conducted in violation
of any Legal Requirement, except that no representation or warranty is made
in
this Section 3.10 with respect to Environmental Laws (as defined in Section
3.13
below) and except for violations or possible violations which has not had
and
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect. Neither Company nor any
of its subsidiaries has any reason to believe that any Governmental Entity
is
investigating Company or any of its subsidiaries other than ordinary course
background checks and administrative reviews or an ordinary course review
of the
transactions contemplated hereby. To the Knowledge of Company or any
of its subsidiaries, no investigation or review by any Governmental Entity
with
respect to Company or its subsidiaries is pending or threatened nor to the
Knowledge of Company or any of its subsidiaries has any Governmental Entity
indicated an intention to conduct the same, other than such investigations
or
reviews as have not had and would not reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.11 Personnel.
(a) Section
3.11(a) of the Company Disclosure Schedule sets forth a list of all employees,
consultants or independent contractors of Company or any of its subsidiaries
as
of the date hereof, including, as of such date, their title, then current
base
salary or other compensation rate as well as any bonus paid or payable for
the
fiscal year ended December 31, 2007 or any accrued and unpaid bonus scheduled
for or paid or agreed to be paid for any future period.
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(b) Company
and its subsidiaries are in compliance with all material Legal Requirements
relating to the employment of labor, including all such material Legal
Requirements relating to wages, hours, WARN and any similar state or local
“mass
layoff” or “plant closing” Legal Requirement, collective bargaining,
discrimination, civil rights, safety and health, workers’ compensation and the
collection and payment of withholding and/or social security taxes and any
similar tax. There has been no “mass layoff” or “plant closing” (as
defined by WARN) with respect to Company within the six (6) months prior
to
Closing. “WARN” means the Worker Adjustment and Retraining
Notification Act of 1988, as amended.
(c) Neither
Company nor any of its subsidiaries is subject to any collective bargaining
agreement or other labor union contract, and no employee of Company or any
subsidiary of Company is represented by a labor union. There is not
pending or, to the Knowledge of Company or any of its subsidiaries, threatened,
any picketing, strike, labor dispute, slowdown, lockout, walkout, work stoppage
or other similar labor trouble involving employees of Company or any of its
subsidiaries, and no union organizing activities are taking place or have
taken
place with respect to such employees. To the Knowledge of
Company or any of its subsidiaries, there are no material activities or
proceedings of any labor union to organize any employees of Company or its
subsidiaries.
(d) To
the Knowledge of Company or any of its subsidiaries, none of Company’s or any of
its subsidiaries’ officers or key employees or key independent contractors
intend to terminate his or her relationship with Company for any reason,
including, without limitation, as a result of the transactions contemplated
hereby.
Section
3.12 Employee
Benefit Plans; Labor Matters.
(a) Section
3.12(a) of the Company Disclosure Schedule contains a true and complete list
of
each material deferred compensation and each incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement
or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other “welfare” plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)); each profit-sharing, stock bonus or
other “pension” plan, fund or program (within the meaning of section 3(2) of
ERISA); each material employment, termination or severance agreement; and
each
other material employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required
to be
contributed to by Company or by any trade or business, whether or not
incorporated (an “ERISA Affiliate”), that together with Company would be
deemed a “single employer” within the meaning of section 4001(b) of ERISA, or to
which Company or an ERISA Affiliate is party, whether written or oral, for
the
benefit of any employee or former employee of Company or any subsidiary (the
“Employee Plans”). Neither Company, any subsidiary nor
any ERISA Affiliate has any binding commitment to create any additional employee
benefit plan which, if created, would
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constitute
an Employee Plan, or modify or change any existing Employee Plan that would
affect any employee or former employee of Company or any
subsidiary.
(b) With
respect to each Employee Plan, Company has heretofore made available to Parent
true and complete copies of the Employee Plan and any amendments thereto
(or if
the Employee Plan is not a written Employee Plan, a description of the material
terms thereof), any related trust or other funding vehicle, any summaries
required under ERISA or the Code, the most recent determination or opinion
letter received from the Internal Revenue Service with respect to each Employee
Plan intended to qualify under section 401 of the Code and the three most
recent
Form 5500 filed with respect to any such plan.
(c) None
of the Employee Plans is a “multiemployer plan,” as such term is defined in
Section 3(37) of ERISA, and no Employee Plan is subject to 302 or Title IV
of
ERISA or Section 412 of the Code. No liability under Title IV or
section 302 of ERISA has been incurred by Company or any ERISA Affiliate
that
has not been satisfied in full, and no condition exists that presents a material
risk to Company or any ERISA Affiliate of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation
(“PBGC”) (which premiums have been paid when due). No Employee
Plan is a defined benefit plan covering employees in the United
Kingdom.
(d) Neither
Company nor any subsidiary, any Employee Plan, any trust created thereunder,
nor
any trustee or administrator thereof has engaged in a transaction in connection
with which Company or any subsidiary, any Employee Plan, any such trust,
or any
trustee or administrator thereof, or any party dealing with any Employee
Plan or
any such trust could be subject to either a civil penalty assessed pursuant
to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975
or 4976
of the Code.
(e) Except
as set forth in the Company Disclosure Schedule, each Employee Plan has been
operated and administered in all material respects in accordance with its
terms
and applicable law, including but not limited to ERISA and the
Code. Each Employee Plan has been operated in good faith compliance
with the requirements of Section 409A of the Code to the extent
applicable.
(f) Each
Employee Plan intended to be “qualified” within the meaning of section 401(a) of
the Code has received a determination that it is so qualified as to form,
and no
event has occurred which could reasonably be expected to result in the loss
of
such qualifications.
(g) No
Employee Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of Company
or any subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law,
(ii)
death benefits under any “pension plan,” or (iii) benefits described in Part b
of Subtitle B of Title I of ERISA or the full cost of which is borne by the
current or former employee (or his beneficiary).
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SUCH OMISSIONS.
(h) Except
as set forth in the Company Disclosure Schedule, no amounts payable under
the
Employee Plans will fail to be deductible for federal income tax purposes
by
virtue of section 280G of the Code.
(i) Except
as set forth in the Company Disclosure Schedule, neither the negotiation
and
execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement will, either alone or in combination with
another
event in any material respect (measured individually or in the aggregate),
(i)
entitle any current or former employee or officer of Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time
of
payment or vesting, or increase the amount of compensation due any such employee
or officer, except as otherwise provided in this Agreement.
(j) There
are no pending, or to the Knowledge of Company or any of its subsidiaries,
threatened or anticipated claims by or on behalf of any Employee Plan, by
any
employee or beneficiary covered under any such Employee Plan, or otherwise
involving any such Employee Plan (other than routine claims for
benefits).
(k) There
are no material controversies pending or, to the Knowledge of Company or
any of
its subsidiaries, threatened between Company or any of its subsidiaries and
any
of their respective employees.
(l) With
respect to each Employee Plan that is subject to the law of any jurisdiction
outside the United States (each, a “Foreign Benefit Plan”) in all
material respects: (1) all employer and employee contributions to each Foreign
Benefit Plan required by law or by the terms of such Foreign Benefit Plan
have
been timely made, or, if applicable, accrued, in accordance with applicable
accounting practices; (2) the fair market value of the assets of each funded
Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit
Plan
funded through insurance or the book reserve established for any Foreign
Benefit
Plan, together with any accrued contributions, is sufficient to procure or
provide for the accrued benefit obligations, as of the Effective Time, with
respect to all current and former participants in such plan according to
the
actuarial assumptions and valuations most recently used to determine employer
contributions to such Foreign Benefit Plan and no transaction contemplated
by
this Agreement shall cause such assets or insurance obligations to be less
than
such benefit obligations; and (3) each Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing with
applicable governmental authorities.
Section
3.13 Environmental
Laws and Regulations.
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SUCH OMISSIONS.
(a) Company
and each of its subsidiaries is in material compliance with all applicable
Environmental Laws, which compliance includes, but is not limited to, the
possession by Company and its subsidiaries of all material permits and other
governmental authorizations required under applicable Environmental Laws,
and
material compliance with the terms and conditions thereof. Neither
Company nor any of its subsidiaries has received any communication (written
or
oral), whether from a Governmental Entity, citizens group, employee or
otherwise, that alleges that Company or any of its subsidiaries is not in
such
material compliance, and, to the Knowledge of Company or any of its
subsidiaries, there are no circumstances that may prevent or interfere with
such
material compliance in the future. All permits and other governmental
authorizations currently held by Company or any of its subsidiaries pursuant
to
the Environmental Laws are identified in Section 3.13 of the Company Disclosure
Schedule.
(b) There
is no Environmental Claim pending or, to the Knowledge of Company or any
of its
subsidiaries, threatened against Company or any of its subsidiaries or, to
the
Knowledge of Company or any of its subsidiaries, against any person or entity
whose liability for any Environmental Claim Company or any of its subsidiaries
has or may have retained or assumed either contractually or by operation
of
law.
(c) To
the Knowledge of Company or any of its subsidiaries, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence
or
disposal of any Material of Environmental Concern that could form the basis
of
any Environmental Claim against Company or any of its subsidiaries or, to
the
Knowledge of Company or any of its subsidiaries, against any person or entity
whose liability for any Environmental Claim Company or any of its subsidiaries
has or may have retained or assumed either contractually or by operation
of
law.
(d) Without
in any way limiting the generality of the foregoing, (i) all on-site and
off-site locations where Company or any of its subsidiaries has stored, disposed
or arranged for the disposal of Materials of Environmental Concern are
identified in Section 3.13 of the Company Disclosure Schedule, (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on property owned, operated, or leased by Company or any of its subsidiaries
are
identified in Section 3.13 of the Company Disclosure Schedule, (iii) to the
Knowledge of Company or any of its subsidiaries, there is no asbestos contained
in or forming part of any building, building component, structure or office
space owned or leased by Company or any of its subsidiaries, (iv) except
as set
forth in Section 3.13 of the Company Disclosure Schedule, to the Knowledge
of
Company or any of its subsidiaries, no polychlorinated biphenyls (PCB's)
are
used or stored at any property owned or leased by Company or any of its
subsidiaries, (v) except as set forth in Section 3.13 of the Company Disclosure
Schedule, all underground storage tanks owned, operated, or leased by Company
or
any of its subsidiaries and which are subject to regulation under the federal
Resource Conservation and Recovery Act (or equivalent state or local law
regulating underground storage tanks) meet the technical standards prescribed
at
Title 40 Code of Federal Regulations Part 280 which became effective December
22, 1998 (or any applicable state or local law
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SUCH OMISSIONS.
requirements
which are more stringent than such technical standards or which became effective
before such date), and (vi) all properties formerly owned or operated by
Company, or any subsidiary, affiliate, or predecessor thereof are identified
in
Section 3.13 of the Company Disclosure Schedule.
For
purposes of this Agreement, the following terms shall have the following
meanings:
“Environmental
Claim” means any claim, action, cause of action, investigation or notice
(written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or release into the environment, of any Material of
Environmental Concern at any location currently or heretofore owned, leased
or
otherwise used by Company or any of its subsidiaries or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
“Environmental
Laws” means all Legal Requirements relating to pollution or protection of
human health, safety, or the environment (including, without limitation,
ambient
air, surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental
Concern.
“Materials
of Environmental Concern” means chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, radioactive materials, asbestos,
petroleum and petroleum products.
Section
3.14 Taxes.
(a) For
purposes of this Agreement:
(i) “Tax”
or “Taxes” means any and all taxes, including any interest, penalties, or
other additions to tax that may become payable in respect thereof, imposed
by
any Taxing Authority, which taxes shall include, without limiting the generality
of the foregoing, all income taxes, profits taxes, taxes on gains, alternative
minimum taxes, estimated taxes, payroll taxes, employee withholding taxes,
unemployment insurance taxes, social security taxes, welfare taxes, disability
taxes, severance taxes, taxes on stock, sales taxes, use taxes, ad valorem
taxes, value added taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real or personal property taxes,
stamp
taxes, environmental taxes, transfer taxes, windfall profits taxes, net worth
taxes, and other taxes, duties, levies, customs, tariffs, imposts, assessments
and charges of the same or of a similar nature to any of the
foregoing;
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(ii) “Tax
Return” means any and all returns, reports, information returns,
declarations, statements, certificates, schedules, claims for refund, or
other
similar returns with respect to any Tax which are filed or required to be
filed
with any Taxing Authority in connection with the determination, assessment,
collection, payment or administration of any Tax, including any and all
attachments, amendments and supplements thereto;
(iii) “Taxing
Authority” means any and all federal, state, local and non-U.S. governments,
agencies, and political subdivisions of any such government having jurisdiction
over the assessment, determination, collection, imposition or administration
of
any Tax; and
(iv) “Treasury
Regulations” means the regulations promulgated under the Code.
(b) (i)
All Tax Returns required to be filed by or with respect to Company or any
of its
subsidiaries have been or, solely with respect to Tax Returns referred to
in
Sections 7.7(b) and (c)(i), will be, timely filed, (ii) such Tax Returns
are or
will be true, correct, and complete in all material respects (without regard
to
net operating loss carryovers, credit carryovers, tax basis or any other
tax
attribute of Company or its subsidiaries), and (iii) all Taxes shown as due
on
such Tax Returns have been or will be timely paid.
(c) No
Person, in writing, has extended or waived the application of any statute
of
limitations of any jurisdiction regarding the assessment or collection of
any
Tax of or with respect to Company or any of its subsidiaries, which is still
outstanding, and no written power of attorney has been granted by or with
respect to Company or any of its subsidiaries with regard to any matters
relating to Taxes, which is still outstanding.
(d) None
of Company nor any of its subsidiaries has received written notice of any
audits, claims, assessments, levies, administrative or judicial proceedings
related to Taxes, which are currently pending, nor are any of Company or
any of
its subsidiaries currently contesting any Taxes.
(e) Since
January 1, 2004, none of Company nor any of its subsidiaries has received
written notice from any Taxing Authority in any jurisdiction where such entity
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Section 3.14(e) of the Company Disclosure Schedule
lists all jurisdictions in which Tax Returns are required to be filed, or
Taxes
required to be paid, by Company or any of its subsidiaries.
(f) There
are no liens for Taxes on any assets of Company or any of its subsidiaries
except for Taxes not yet due and payable.
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(g) Company
and each of its subsidiaries has withheld and paid all material Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any
employee, independent contractor, creditor, member or other third
party.
(h) Since
December 31, 2006, no Person has (i) changed any Tax accounting methods of
Company or any of its subsidiaries except as required by any Legal Requirement,
(ii) revoked or amended or, except in accordance with or consistent with
past
practice, made any material Tax election of or with respect to Company or
any of its subsidiaries, (iii) filed any material amended Tax Return or material
claim for refund of or with respect to Company or any of its subsidiaries,
or
(iv) settled or compromised any material Tax liability or refund of or with
respect to Company or any of its subsidiaries.
(i) Neither
Company nor any of its subsidiaries (i) has been a member of any affiliated,
consolidated, combined or unitary group for any Tax purposes other than one
in
which Company is the common parent or (ii) except as set forth in Section
3.14(i) of the Company Disclosure Schedule, has any material liability arising
from the application of Treasury Regulations Section 1.1502-6 or any analogous
provision of state, local or non-U.S. law, or as a transferee or
successor.
(j) Neither
Company nor any of its subsidiaries has participated in any (i) “tax
shelter” within the meaning of Section 6111 of the Code (as in effect prior to
the enactment of P.L. 108-357)(or any comparable laws of any state, local
or
non-U.S. jurisdiction) or (ii) “reportable transaction” within the meaning of
Treasury Regulations Section 1.6011-4 (as in effect at the relevant time)
(or
any comparable laws of any state, local or non-U.S. jurisdiction).
(k) No
Tax liability has been incurred by or with respect to Company or any of its
subsidiaries since December 31, 2006, except for Taxes incurred in the ordinary
course of business (other than as contemplated by this Agreement or attributable
to an action of Parent or Acquisition Sub).
(l) The
Tax Returns of or with respect to Company and each of its subsidiaries for
all
taxable years and periods ending prior to January 1, 2003 (i) have been examined
and the taxable years or periods closed by the relevant Taxing Authority,
and no
adjustments to such Tax Returns were made, or (ii) have not been examined
but
the statute of limitations with respect to all such Tax Returns have expired,
except to the extent of any carryforwards or carrybacks of net operating
losses
or tax credits.
(m) Company
and each of its subsidiaries has made available to Parent and Acquisition
Sub
true and complete copies of all material Tax Returns for each of the taxable
years and periods ending on or after January 1, 2004.
(n) All
material written communications to or from any Taxing Authority have been
delivered to Parent and Acquisition Sub for inspection. No written
ruling has been received from any Taxing Authority by or with respect to
Company
or
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any
of its subsidiaries. No closing agreement pursuant to Section 7121 of
the Code (or any similar provision of state, local or non-U.S. law) has been
entered into by or with respect to Company or any of its
subsidiaries.
(o) Section
3.1(a) of the Company Disclosure Schedule sets forth the respective entity
classifications, and the applicable dates for such classifications, of Company
and each of its subsidiaries for U.S. federal and state Tax
purposes.
Section
Section 3.15 Intellectual
Property.
(a) For
the purposes of this Agreement, the following terms have the meanings set
forth
below:
(i) “Intellectual
Property Rights” means any and all worldwide rights in, arising from or
associated with the following, whether protected, created or arising under
the
laws (whether common law or statutory) of the United States or any other
jurisdiction or under any international convention: (A) all patents and
applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, substitutions, continuations and continuations-in-part
thereof, and equivalent or similar rights anywhere in the world in inventions
and discoveries including, without limitation, invention disclosures
(collectively, “Patents”); (B) all trade secrets and other proprietary
information which derives independent economic value from not being generally
known to the public (collectively, “Trade Secrets”); (C) all copyrights,
copyrights registrations and applications therefor (collectively,
“Copyrights”); (D) all uniform resource locators, e-mail and other
internet addresses and domain names and applications and registrations therefor
(collectively, “URLs”); (E) all trade names, corporate names, logos,
trademarks, service marks and trademark and service xxxx registrations and
applications therefor and all goodwill associated therewith (collectively,
“Trademarks”); and (F) any similar, corresponding or equivalent rights to
any of the foregoing anywhere in the world.
(ii) “Company
Intellectual Property” means all Intellectual Property Rights owned by the
Company, including Registered Intellectual Property Rights.
(iii) “Registered
Intellectual Property Rights” means all United States and foreign: (1)
Patents; (2) Trademarks; (3) Copyrights; (4) URL registrations; and (5) any
other Intellectual Property Right, in each case that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with or recorded by any state, government or other public legal authority
at any time.
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(iv) “Company
Product” means any product or service offering of Company being marketed,
sold, licensed or distributed by Company as of the date of this Agreement or
from the date of this Agreement through and including the Effective
Time.
(b) Section
3.15(b) of the Company Disclosure Schedule lists all Registered Intellectual
Property Rights owned by Company as of the date hereof (the “Company
Registered Intellectual Property Rights”), the record owner of such Company
Registered Intellectual Property Rights and the jurisdictions in which each
of
the Company Registered Intellectual Property Rights has been issued or
registered or in which any such application for issuance or registration
has
been filed. Section 3.15(b) of the Company Disclosure Schedule also
lists any proceedings or actions before any Governmental Entity (including
the
United States Patent and Trademark Office or equivalent authority anywhere
in
the world) or arbitrator related to any Company Registered Intellectual Property
Right or any other Company Intellectual Property.
(c) Company
and its subsidiaries have no Knowledge of any facts or circumstances that
would
render any Company Registered Intellectual Property Right invalid or
unenforceable.
(d) To
the Knowledge of Company or any of its subsidiaries, each Company Registered
Intellectual Property Right is valid and subsisting, all necessary registration,
maintenance and renewal fees currently due in connection with such Company
Registered Intellectual Property Rights have been paid and all necessary
documents and certificates in connection with such Company Registered
Intellectual Property Rights 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 Company
Registered Intellectual Property Rights. In each case in which
Company has acquired ownership of any Company Intellectual Property Rights
that
are material to the business of Company and its subsidiaries from any Person,
Company has obtained a valid and enforceable written assignment sufficient
to
irrevocably transfer all such Company Intellectual Property Rights to
Company.
(e) All
Company Intellectual Property and software that is material to the business
of
Company and its subsidiaries will be fully transferable, alienable or licensable
to the Surviving Entity and/or Parent by Company without restriction and
without
payment of any kind to any third party.
(f) The
Company Intellectual Property is owned by the Company free and clear of any
Liens, other than non-exclusive licenses.
(g) Company
owns, or has acquired the necessary licenses to use, all Intellectual Property
Rights and software that are material to the operation or conduct of its
business.
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(h) Except
as set forth on Section 3.15(h) of the Company Disclosure Schedule, Company
has
not received, at any time during the three (3) year period preceding the
date
hereof, written notice from any Person directing Company to review or consider
the applicability of such Person’s Intellectual Property Rights to the business
and/or Intellectual Property Rights of Company or any of its subsidiaries
or
claiming that the operation of the business of Company or any of its
subsidiaries or any act, product, technology or service of Company or any
of its
subsidiaries infringes or misappropriates any Intellectual Property Right
of any
Person.
(i) To
the Knowledge of Company or any of its subsidiaries, no Person is infringing
or
misappropriating any Company Intellectual Property.
(j) To
the Knowledge of the Company or any of its subsidiaries, no Company Intellectual
Property is subject to any proceeding or outstanding Order that restricts
and/or
conditions in any manner the use, transfer or licensing thereof by Company
or
which would reasonably be expected to materially adversely affect the validity,
use or enforceability of such Company Intellectual Property.
(k) The
Company and its subsidiaries have complied with all applicable laws and their
customers’ respective internal privacy policies and guidelines relating to
privacy, data protection, and the collection and use of personal information
collected, used, or held for use by the Company and its subsidiaries in the
conduct of their business.
(l) With
respect to software used in the business of Company and its subsidiaries,
neither Company nor any of its subsidiaries has experienced any material
defects
in such software, including any material error or omission in the processing
of
any transactions other than defects which have been corrected, or any disabling
codes or instructions and any “back door,” “time bomb,” “Trojan horse,” “worm,”
“drop dead device,” “virus” or other software or hardware (collectively
“Threats”) that could permit unauthorized access or the unauthorized
disruption, impairment, disablement or erasure of such information technology
systems (or all parts thereof) or data or other software of
users. Company and its subsidiaries use industry best practices for
protecting personally identifiable information, and detecting and correcting
Threats, and Company has established and at all times maintained appropriate
administrative, technical, and physical safeguards to ensure the integrity,
confidentiality, availability of the Company’s information technology systems
and the data stored on such systems. There have been no unauthorized
intrusions or breaches of the security of the information technology systems
of
Company and its subsidiaries, nor have there been any unauthorized uses or
disclosures of data (including personally identifiable information) stored
on
such systems. No software owned by Company or any of its subsidiaries
is subject to the terms of any “open source” or other similar license that
provides for the source code of such software to be publicly distributed
or
dedicated to the public.
(m) To
the Knowledge of the Company or any of its subsidiaries, neither this Agreement
nor the transactions contemplated by this Agreement, including
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any
assignment to Parent by operation of law as a result of the Merger of any
Contracts to which Company is a party, will result in: (i) Parent,
any of its affiliates or Company granting to any third party any incremental
right to or with respect to or non-assertion under any Company Intellectual
Property owned by, or licensed to, any of them, (ii) Parent, any of Parent’s
affiliates, Company, the Surviving Corporation or any of the respective
controlled affiliates of Company or the Surviving Corporation, being bound
by,
or subject to, any incremental non-compete or other incremental material
restriction on the operation or scope of their respective businesses, (iii)
Parent, any of Parent’s affiliates, Company, the Surviving Corporation or any of
the respective controlled affiliates of Company or the Surviving Corporation
being obligated to pay any incremental royalties or other material amounts,
or
offer any incremental discounts, to any third party or (iv) Company attempting
to procure from Parent or any of its affiliates a license grant or covenant
not
to assert under any Contract. As used in this section, an
“incremental” right, non-compete, restriction, royalty or discount refers to a
right, non-compete, restriction, royalty or discount, as applicable, in excess,
whether in terms of contractual term, contractual rate or scope, of those
that
would have been required to be offered or granted, as applicable, had the
parties to this Agreement not entered into this Agreement or consummated
the
transactions contemplated hereby.
(n) Company
has taken commercially reasonable steps to protect its rights in Trade Secrets
of Company. Each employee and consultant of Company who in the normal
course of such employee’s duties is involved in the creation of Company
Intellectual Property has entered into one or more Contracts with Company,
or
otherwise has a legal duty, sufficient to vest title in Company of all
Intellectual Property Rights created by such employee or consultant in the
scope
of his or her employment or consultancy, as the case may be, with
Company.
Section
3.16 Property
and Sufficiency.
(a) Company
and each of its subsidiaries has good, valid and marketable fee title to
all of
the real property and assets which it purports to own (the “Owned
Property”). Each Owned Property is sufficiently free of all Liens
except for those matters set forth on Section 3.16(a) of the Company Disclosure
Schedule or which would not, individually, or in the aggregate, have a Company
Material Adverse Effect. The Owned Property and the Leased Property
(as defined below) constitute all such property necessary to permit Company
and
each of its subsidiaries to conduct, and continue to conduct, its business
as
currently conducted in all material respects and the consummation of the
transactions contemplated hereby will not alter or impair such ability in
any
material respect.
(b) Section
3.16(b) of the Company Disclosure Schedule contains an accurate and complete
description of all leases (the “Leases”) pursuant to which Company and
each of its subsidiaries leases real or personal property (the “Leased
Property”). Company and each of its subsidiaries holds good and valid
leasehold title to all of the Leased Property. All of the Leases are
valid, binding and enforceable in accordance with their terms, and are in
full
force and effect subject to applicable
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bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and subject, as to enforceability, to general
principles of equity; there are no existing defaults by Company or any of
its
subsidiaries thereunder; to the Knowledge of Company or any of its subsidiaries,
no event of default has occurred which (whether with or without notice, lapse
of
time or the happening or occurrence of any other event) would constitute
a
default thereunder; and, except for the Leases listed in Section 3.4 of the
Company Disclosure Schedule, all lessors under such Leases have consented
(where
such consent is necessary) to the consummation of the transactions contemplated
herein without requiring modification in the rights or obligations of the
lessee
under such Leases. Company or its subsidiaries have delivered true,
correct and complete copies of all of the Leases.
(c) Company
has all material certificates of occupancy and Company Permits of any
Governmental Entity necessary or useful for the current use and operation
of
each Leased Property, and Company has fully complied with all material
conditions of the Company Permits applicable to them. No default or
violation, or event that with the lapse of time or giving of notice or both
would become a default or violation, has occurred in the due observance of
any
Company Permit.
(d) Company
does not own, hold, nor is it obligated under or is a party to, any option,
right of first refusal or other contractual right to purchase, acquire, sell,
assign or dispose of any real estate or any portion thereof or interest
therein.
Section
3.17 Contracts. Except
as set forth on Section 3.17 in the Company Disclosure Schedule, neither
Company
nor any of its subsidiaries is a party to, subject to or otherwise bound
by:
(a) any
Contract or series of related Contracts which requires by their terms aggregate
future expenditures by Company or such subsidiary in excess of $100,000 or
which
might result in payments to Company or such subsidiary in excess of
$100,000 or is otherwise material to the business of
Company and its subsidiaries;
(b) any
Contract for the purchase or sale of any commodity, product, material, supplies,
equipment or other personal property, other than purchase or sale orders
entered
into in the ordinary course of business, consistent with past
practices;
(c) any
distributor, reseller manufacturer’s representative, sales representative or
similar Contract under which Company or such subsidiary does not have the
right
to terminate without penalty on less than thirty (30) days’ notice;
(d) any
Contract pursuant to which Intellectual Property is licensed to or from Company
other than Contracts licensing the right to use off-the-shelf or other readily
commercially available third party software, which is not licensed pursuant
to a
written agreement, but is executed by the licensee, such as by click-wrap
or
shrink-wrap license;
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(*)
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(e) any
Contract with any current or former stockholder, employee, officer or director
of Company, or any “affiliate” or “associate” of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
or
(with respect to such persons that are natural persons) any member of his
or her
immediate family (any of the foregoing, a “Related Party”), including,
without limitation, any Contract providing for the furnishing of services
by,
rental of real or personal property from, or otherwise requiring payments
to, or
from, any Related Party, other than employment agreements with the employees
of
Company listed in Section 3.11(a) of the Company Disclosure
Schedule;
(f) any
Contract under which Company is restricted from carrying on any business
or
other services or competing with any Person anywhere in the world, or restricted
from soliciting or hiring any person with respect to employment, or which
would
so restrict Company or any successor in interest after the Closing
Date;
(g) any
loan agreement, indenture, note, bond, debenture or any other document or
Contract evidencing Indebtedness or a Security Interest to any Person, or
any
commitment to provide any of the foregoing, or any agreement of guaranty,
indemnification or other similar commitment with respect to the obligations
or
liabilities of any other Person;
(h) any
Contract for the disposition of any of Company’s or such subsidiary’s assets or
business (whether by merger, sale of stock, sale of assets or
otherwise);
(i) any
Contract for the acquisition of the business or capital stock of another
party
(whether by merger, sale of stock, sale of assets or otherwise);
(j) any
Contract concerning a partnership, joint venture, joint development or other
similar arrangement with one or more Persons;
(k) any
hedging, futures, options or other derivative Contract;
(l) any
Contract creating any obligation with respect to the payment of any severance,
retention, bonus or other similar payment to any Person, one condition to
the
payment or acceleration of which is Company entering into this Agreement
or the
consummation of any of the transactions contemplated hereby; or
(m) any
other agreement (or group of related Contracts) to the extent not otherwise
disclosed in the Company Disclosure Schedule, the performance of which involves
or may involve consideration paid by Company to any counterparty thereto
in
excess of $100,000 in any one-year period.
Each
Contract disclosed in Section 3.17
of the Company Disclosure Schedule, each Lease and each other Contract to
which
Company is a party or otherwise bound relating to any Intellectual Property
that
is material to the business of Company and its subsidiaries is a valid and
binding agreement of Company or any of its
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subsidiaries
party thereto and is in full force and effect in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and
similar laws affecting creditors’ rights and remedies generally and subject, as
to enforceability, to general principles of equity; and neither Company nor,
to
the Knowledge of Company or any of its subsidiaries, any other party thereto
is
in default or breach in any material respect under the terms of any of the
foregoing Contracts (a “default” being defined for purposes hereof as an actual
default or event of default or the existence of any fact or circumstance
which
would, upon receipt of notice or passage of time, constitute a default or
right
of termination), nor, other than with respect to the Contracts disclosed
in
Section 3.4 of the Company Disclosure Schedule, will the consummation of
the
transactions contemplated by this Agreement give rise to any such default
or
breach. No party to any of the foregoing Contracts has exercised any
termination rights with respect thereto, and no party has given notice of
any
significant dispute with respect to any of the foregoing
Contract. Copies, which are true and complete in all material
respects, of each of the Contracts described in this paragraph have been
delivered to Parent.
As
used in this Agreement, a “Contract”
shall mean any agreement, understanding, contract, deed, mortgage, lease,
sublease, license, sublicense, instrument, commitment, promise, undertaking
or
other binding arrangement, whether written or, to the Knowledge of Company
or
any of its subsidiaries, oral.
Section
3.18 Insurance. Section
3.18 of the Company Disclosure Schedule contains a complete and correct list
as
of the date hereof of all insurance policies maintained by or on behalf of
Company and its subsidiaries. Such list includes the type of policy,
form of coverage, policy number and insurer, coverage dates, named insured,
limit of liability and premium and deductible amounts. Copies, which
are true and complete in all material respects, of each listed policy have
been
furnished to Parent. Such policies are in full force and effect, all
premiums due thereon have been paid and Company has complied in all material
respects with the provisions of such policies. Company has not
received any notices from any issuer of any of their insurance policies
canceling or amending any policies listed in Section 3.18 of the Company
Disclosure Schedule, increasing any deductibles or retained amounts thereunder,
or increasing premiums payable thereunder. There is no claim by
Company pending under any of such policies as to which coverage has been
denied
or disputed by the underwriters or in respect of which the underwriters have
reserved their rights. Neither Company nor any affiliate thereof has
ever maintained, established, sponsored, participated in or contributed to
any
self-insurance plan.
Section
3.19 Books
and Records. The
minute books of Company and each of its subsidiaries contain complete and
accurate records of all meetings and other corporate actions of their respective
stockholders and the board of directors and committees thereof. The
stock records of Company and each of its subsidiaries are correct and complete
and reflect all issuances, transfers, repurchases and cancellations of shares
of
capital stock of Company and such subsidiary, respectively. Company
has furnished to Parent copies, which are true and complete in all material
respects, of (a) the Company Certificate of Incorporation, the certificate
of
incorporation (or similar governing document) of each
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subsidiary
of the Company and the bylaws (or similar governing document) of the Company
and
each of its subsidiaries, (b) all minute books (containing the records of
meetings of stockholders, the board of directors and any committees of the
board
of directors) of Company and each of its subsidiaries, (c) all stock certificate
and stock record books of Company and each of its subsidiaries and (d) any
similar records or documents of Company and each of its
subsidiaries. Company does not have any prior names, and since the
date of its incorporation has not conducted business under any name other
than
the current name of Company.
Section
3.20 Brokers
and Finders; Existing Discussions. All
negotiations relating to this Agreement, the Paying Agent Agreement and the
Escrow Agreement and the transactions contemplated hereby and thereby have
been
carried on without the intervention of any Person acting on behalf of Company
or
any of its affiliates, the Stockholders’ Representative or the holders of
Company Securities in such manner as to give rise to any valid claim against
Company, Parent or Acquisition Sub for any investment banker, brokerage or
finder’s commission, fee or similar compensation, except for Xxxxxxxxx &
Company, Inc. Company is not engaged, directly or indirectly, in any
discussions or negotiations with any other party with respect to any proposal
to
acquire Company, any material portion of its assets or securities or any
other
substantially similar proposal.
Section
3.21 Banking
Relationships. Section
3.21 of the Company Disclosure Schedule sets forth a list, which is true
and
complete in all material respects, of the name and location of each bank,
brokerage or investment firm, savings and loan or similar financial institution
in which Company or any of its subsidiaries has an account or safe deposit
box
or other arrangement, the account or other identifying numbers thereof and
the
names of all Persons authorized to draw on or who have access to such account
or
safe deposit box or such other arrangement. There are no outstanding
powers of attorney executed by or on behalf of Company or any of its
subsidiaries.
Section
3.22 Vote
Required. The
affirmative vote of (a) the holders of a majority of the outstanding shares
of
the Company Preferred Stock (other than Series C-1 Preferred Stock) (on an
as
converted basis and voting together as a single class) and (b) the holders
of a
majority of the outstanding Company Common Stock and the Company Preferred
Stock
(other than Series C-1 Preferred Stock) (on an as converted basis and voting
together as a single class) are the only votes of the holders of any Company
Securityholders necessary to approve and adopt this Agreement and the
transactions contemplated hereby (collectively, the “Requisite Stockholder
Approval”).
Section
3.23 Anti-Takeover
Statute Not Applicable. No
“business combination,” “fair price,” “moratorium,” “control share acquisition”
or other similar anti-takeover statute or regulation or any anti-takeover
provision in the Company Certificate of Incorporation or the Company’s bylaws is
applicable to Company, any shares of Company Stock or other Company Securities,
this Agreement, the Merger or any of the other transactions contemplated
by this
Agreement.
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Section
3.24 Certain
Relationships and Related Transactions. Except
as disclosed in Section 3.24 of the Company Disclosure Schedule, (a) no Related
Party is indebted in an amount greater than $1,000 to Company or any of its
subsidiaries, (b) no Related Party owns any asset used in, or necessary to,
the
business of Company and its subsidiaries, (c) there is no transaction involving
Company or any of its subsidiaries of the nature described in Item 404 of
Regulation S-K under the Securities Act of 1933, as amended, and (d) no Related
Party owns any direct or indirect interest in, or controls or is a director,
officer, employee or partner of, or consultant to, a competitor of Company
or
any of its subsidiaries.
Section
3.25 Accounts
Receivable. All
of the accounts receivable of the Company or any of its subsidiaries, whether
reflected on the Balance Sheet or arising since the date of the Balance Sheet,
(i) have arisen from bona fide transactions in the ordinary course of business
consistent with past practices and (ii) are valid and
genuine. Company has made adequate reserves in respect of such
accounts receivable in conformity with GAAP.
Section
3.26 Customers. Section
3.26 of the Company Disclosure Schedule lists each customer who, in either
2006
or year-to-date 2007, was a source of revenues in an amount in excess of
$100,000 recognized under GAAP for Company and its subsidiaries during such
period (each, a “Significant Customer”). Neither Company nor
any of its subsidiaries has any outstanding dispute that has been communicated,
in writing or, to the Knowledge of Company or any of its subsidiaries, orally,
concerning its business operations or services, with any Significant
Customer. Neither Company nor any of its subsidiaries has received
any written or, to the Knowledge of Company or any of its subsidiaries, oral
notice from any Significant Customer that such customer intends to terminate
or
materially modify existing agreements with Company or any of its
subsidiaries. To the Knowledge of Company or any of its subsidiaries,
there are no facts or circumstances that would give rise to the ability of
any
Significant Customer to terminate or materially modify its existing agreements
with Company or any of its subsidiaries.
Section
3.27 Disclosures. To
the Knowledge of Company or any of its subsidiaries, neither this Agreement,
the
Company Disclosure Schedule, any Exhibit or Schedule hereto or thereto, contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein, in light of
the
circumstances under which they were made and taken as a whole, not
misleading.
Section
3.28 No
Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, Company
makes no express or implied representation or warranty with respect to Company,
its business or the transactions contemplated by this Agreement, and Company
disclaims any other representations or warranties, whether made by Company
or
any of its affiliates, officers, directors, employees, agents or
Representatives. Except for the representations and warranties
contained in this Article III, Company and the Company Stockholders hereby
disclaim all liability and responsibility for any representation, warranty,
projection,
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forecast,
statement, or information made, communicated, or furnished (orally or in
writing) to Parent, Acquisition Sub, or their respective affiliates or
representatives by Company (including, without limitation, any opinion,
information, projection, or advice that may have been or may be provided
to
Parent by any director, officer, employee, agent, consultant or representative
of Company or any of its affiliates or representatives).
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent
and Acquisition Sub represent
and warrant to Company as follows:
Section
4.1 Organization
and Qualification. Each
of Parent and Acquisition Sub is duly organized, validly existing and in
good
standing under the laws of its respective jurisdiction of incorporation and
has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being
conducted. Each of Parent and Acquisition Sub is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good
standing would not reasonably be expected, individually or in the aggregate,
to
have a Parent Material Adverse Effect. The term “Parent Material
Adverse Effect” means any material adverse effect on the ability of Parent
and Acquisition Sub to consummate the transactions contemplated hereby, other
than any events, changes, developments or occurrences to the extent arising
out
of conditions generally affecting industries in which Parent operates, which
do
not have a materially disproportionate effect (relative to other industry
participants) on Parent and its subsidiaries taken as a whole.
Section
4.2 Authority
Relative to this Agreement. Each
of Parent and Acquisition Sub has all requisite corporate power and authority
to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereby, including the Merger. The execution and delivery
by Parent and Acquisition Sub of this Agreement and the performance of Parent’s
and Acquisition Sub’s respective obligations hereunder have been duly and
validly authorized by the respective boards of directors of Parent and
Acquisition Sub and no other proceedings on the part of either Parent or
Acquisition Sub are necessary to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed
and delivered by each of Parent and Acquisition Sub and, assuming due
authorization, execution and delivery of this Agreement by Company, constitutes
a valid and binding obligation of each of Parent and Acquisition Sub enforceable
in accordance with its terms.
Section
4.3 No
Violations. The
execution and delivery of this Agreement by Parent and Acquisition Sub does
not,
and the execution and delivery of the Escrow Agreement by Parent, the compliance
with the provisions of this Agreement by Parent and Acquisition Sub and the
provisions of the Escrow Agreement by Parent and the
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consummation
by Parent or Acquisition Sub, as applicable, of the transactions contemplated
hereby or thereby, will not (i) Violate any provision of the certificate
of
incorporation or bylaws of Parent, each as amended to date and currently
in
effect, or any provision of the certificate of incorporation or bylaws of
Acquisition Sub, each as amended to date and currently in effect, or (ii)
materially Violate any Legal Requirement applicable to Parent or Acquisition
Sub
or any of their respective properties or assets.
Section
4.4 Brokers
and Finders. All
negotiations relating to this Agreement, the Paying Agent Agreement and the
Escrow Agreement and the transactions contemplated hereby and thereby have
been
carried on without the intervention of any Person acting on behalf of Parent
or
Acquisition Sub in such manner as to give rise to any valid claim against
Company, Parent or Acquisition Sub for any investment banker, brokerage or
finder’s commission, fee or similar compensation, except for Xxxxxxx &
Company LLC.
Section
4.5 Ownership
and Activities of Acquisition Sub. Parent
owns all of the issued and outstanding shares of capital stock of Acquisition
Sub. As of the date hereof and as of the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation
or
organization and the transactions contemplated by this Agreement and except
for
this Agreement and any other agreements or arrangements contemplated hereby
or
thereby, Acquisition Sub has not and at the Effective Time will not have
entered
into any agreements or arrangements with any Person that would interfere
with
the transactions contemplated by this Agreement.
Section
4.6 Reliance
by Parent and Acquisition Sub. Each
of Parent and Acquisition Sub acknowledges that, except for the representations
and warranties contained in Article III, neither Company nor any other Person
has made, and neither Parent nor Acquisition Sub has relied on, any other
express or implied representation or warranty by or on behalf of
Company. Each of Parent and Acquisition Sub acknowledge that neither
Company nor any other Person, directly or indirectly, has made, and neither
Parent nor Acquisition Sub has relied on, any representation or warranty
regarding the pro-forma financial information, financial projections or other
forward-looking statements of Company, and each of Parent and Acquisition
Sub
will make no claim with respect thereto.
ARTICLE
V
COVENANTS
OF COMPANY
All
references in the subsections of this Article V to “Company” include Company’s
subsidiaries except to the extent specifically excluded or except as otherwise
clearly required by the context. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Company agrees (except as expressly
contemplated by this Agreement or with Parent’s prior written consent)
that:
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Section
5.1 Conduct
of Business Prior to Closing.
(a) Ordinary
Course. Company will carry on its business in the ordinary course
consistent with past practice, will continue to observe its obligations to
comply with the requirements of all applicable laws and regulations, and
will
use commercially reasonable efforts to: preserve intact its present business
organization, keep available the services of its present officers, consultants,
and employees and preserve intact or improve relationships with licensors,
licensees, customers, suppliers, contractors, distributors, and others having
business relationships with it.
(b) Without
limiting Section 5.1(a), except as approved by Parent in writing, with such
approval not to be unreasonably withheld or
delayed, Company will not:
(i) grant
any severance or termination pay to any officer, director, or employee of
Company, other than to the extent required by any Legal Requirement, or to
the
extent required by Company’s existing severance plans and agreements as
disclosed in the Company Disclosure Schedule;
(ii) transfer
to any third Person ownership of, or, except in the ordinary course of business
consistent with past practice, (A) grant a material license of Company
Intellectual Property or (B) let lapse any Company Intellectual
Property;
(iii) declare,
set aside, or pay any dividend or other distribution with respect to any
shares
of capital stock of Company, or repurchase, redeem, or acquire any outstanding
shares of capital stock or other equity securities of, or other ownership
interests in, Company, or effect any stock split (forward or reverse) or
otherwise change its capitalization or capital structure in any manner from
the
way it existed on the date hereof;
(iv) split,
combine, or reclassify any class of capital stock of Company;
(v) amend
any provision of the certificate of incorporation or bylaws of Company, or
any
term of any outstanding security issued by Company;
(vi) incur,
assume, or guarantee any Indebtedness for borrowed money;
(vii) change
any method of financial or Tax accounting or accounting practice by Company,
except for any such change required by reason of applicable law or by reason
of
a change in GAAP;
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(viii) commence
a lawsuit other than, following consultation with Parent prior to filing,
for
the routine collection of bills;
(ix) extend
an offer of employment to a candidate for an officer position or any position
with annual compensation in excess of $150,000 without prior consultation
with
Parent;
(x) grant
or issue or accelerate the vesting of any capital stock, securities convertible
into capital stock of Company, restricted stock, restricted stock units,
stock
appreciation rights, stock options, warrants, or other equity
rights;
(xi) adopt
or pay, accelerate, or accrue salary or other payments or benefits or promise
or
make discretionary employer contributions to, under, or with respect to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, group insurance, severance pay, retirement, or other employee
benefit plan, agreement, or arrangement, or any employment or consulting
agreement with or for the benefit of any Company director, officer, employee,
agent, or consultant, whether past or present, or amend or terminate any
such
existing Employee Plan, agreement, or arrangement, in each case other than
(A)
in the ordinary course of business consistent with past practice or as required
by law or (B) payment of the amounts listed in Section 5.1(b)(xi) of the
Company
Disclosure Schedule;
(xii) assign,
transfer, of dispose of, or license assets of Company, grant any license
of any
assets of Company, or acquire or dispose of capital stock of any third party
or
merge or consolidate with any third party in each case other than in the
ordinary course of business consistent with past practice;
(xiii) enter
into any joint venture, partnership, limited liability company, or operating
agreement with any Person;
(xiv) breach,
modify, amend, or terminate any of Company’s Contracts, or waive, release, or
assign any rights or claims under any of Company’s Contracts, except as
expressly required by this Agreement or except in the ordinary course of
business consistent with past practice;
(xv) settle,
compromise, or otherwise terminate any litigation, claim, investigation,
or
other settlement negotiation except in the ordinary course of business
consistent with past practice;
(xvi) fail
to keep in full force insurance policies covering Company’s properties and
assets under substantially similar terms and conditions as Company’s current
policies;
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(xvii) enter
into any Contract or any other contract that would require Company to expend
a
sum in excess of $100,000;
(xviii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization (other than the
Merger);
(xix) acquire
or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or a portion of the assets of, or by any other manner,
any
Person, or otherwise acquire or agree to acquire any assets, except such
asset
acquisitions in the ordinary course of business consistent with past
practice;
(xx) (A)
increase the compensation of or enter into any employment contract, (B) except
as set forth on Section 5.1(b)(xi) of the Company Disclosure Schedule, (C)
pay
any special bonus or special remuneration to any director, officer, consultant,
or employee, or (D) increase the benefits (including rights to severance
or
indemnification) of its directors, officers, consultants, or employees other
than increases as required by law, or (E) make any change in its existing
borrowing or lending arrangements for or on behalf of any of such Persons
under
an employee benefit plan or otherwise;
(xxi) pay
or make any accrual or arrangement for payment of any pension, retirement
allowance, or other employee benefit under any existing plan, agreement,
or
arrangement to any officer, director, or employee or pay or agree to pay
or make
any accrual or arrangement for payment to any officers, directors, or employees
of Company or any amount relating to unused vacation days, other than in
the
ordinary course of business consistent with past practice or as required
by any
Legal Requirement;
(xxii) except
as required or permitted under this Agreement, knowingly take any action
that
would or is reasonably likely to (A) make any representation or warranty
of
Company contained in this Agreement inaccurate, (B) result in any of the
conditions to the Merger in Article VIII not being satisfied, or (C) impair
the
ability of Company to consummate the Merger in accordance with the terms
of this
Agreement;
(xxiii) make
capital expenditures individually or in the aggregate other than as set forth
on
Section 5.1(b)(xxiii) of the Company Disclosure Schedule;
(xxiv) (A)
other than as set forth on Section 5.1(b)(xi) of the Company Disclosure
Schedule, make any payment or (b) other than any Employment Agreement, enter
into any Contract with any Related Party;
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(xxv) (A)
revoke or amend or, except in accordance with or consistent with past practice,
make any Tax election of or with respect to Company or any of its subsidiaries,
(B) file any material amended Tax Return or material claim for refund of
or with
respect to Company or any of its subsidiaries, (C) enter into any closing
agreement affecting any Tax liability or refund of or with respect to Company
or
any of its subsidiaries, (D) settle or compromise any material Tax liability
or
material refund of or with respect to Company or any of its subsidiaries,
or (E)
extend or waive the application of any statute of limitations regarding the
assessment or collection of any Tax of or with respect to Company or any
of its
subsidiaries;
(xxvi) except
in the ordinary course of business, take, or cause or permit any other Person
to
take, nor will any holder of Company Stock take, or cause or permit any other
Person to take, any action which could reasonably be expected to (A) materially
increase the Surviving Corporation's (or any of its subsidiary's) liability
for
Taxes or (B) result in, or change the character of, any material amount of
income or gain (including any subpart F income) that the Surviving Corporation
(or any of its subsidiaries) must report on any Tax Return; or
(xxvii) authorize,
commit, or agree to take any of the foregoing actions.
Section
5.2 Exclusivity;
Acquisition Proposals.
(a) Unless
and until this Agreement has been terminated by either party in accordance
with
Section 10.1, Company agrees that it will not (and will cause its officers,
directors, agents, employees, or affiliates, or any investment banker, financial
advisor, attorney, accountant, or other advisor, agent, or representative
(collectively, “Representatives”)) take or cause or permit any Person to
take, directly or indirectly, any of the following actions with any party
other
than Parent and its designees: (i) solicit, encourage, initiate, or
participate in any negotiations, inquiries, or discussions with respect to
any
offer or proposal to acquire all or any significant part of Company, its
business, assets, or capital shares, whether by merger, consolidation, other
business combination, purchase of capital stock, purchase of assets, license
(but excluding non-exclusive licenses entered into in the ordinary course
of
business consistent with past practice), lease, tender or exchange offer,
or
otherwise (each of the foregoing, a “Restricted Transaction”); (ii)
disclose, in connection with a Restricted Transaction, any nonpublic information
to any Person other than Parent or its Representatives concerning Company’s
business or properties or afford to any Person other than Parent or its
Representatives access to its properties, books, or records, except as required
by law or in accordance with a governmental request for information; (iii)
enter
into or execute any
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agreement
relating to a Restricted Transaction; or (iv) make or authorize any public
statement, recommendation, or solicitation in support of any Restricted
Transaction or any offer or proposal relating to a Restricted Transaction
other
than with respect to the Merger. If Company or any of its
Representatives is contacted by any third party expressing an interest in
discussing a Restricted Transaction, Company will promptly, but in no event
later than twenty-four (24) hours following Company’s knowledge of such contact,
notify Parent in writing of such contact and the identity of the party so
contacting Company and any information conveyed to Company by such third
party
in connection with such contact or relating to such Restricted Transaction,
and
will promptly, but in no event later than twenty-four (24) hours, advise
Parent
of any material modification or proposed modification thereto; provided,
however, before Requisite Stockholder Approval, in each case, if
and to
the extent that (a) Company’s board of directors determines in good faith by
resolution duly adopted, after consultation with Company’s outside legal counsel
and Company’s financial advisor, that such Restricted Transaction is, or could
reasonably be expected to lead to, a Superior Proposal (as defined hereafter),
and (b) Company’s board of directors determines in good faith by resolution duly
adopted, and in the opinion of Company’s outside legal counsel, that the failure
to participate in such discussions, disclose such nonpublic information,
provide
such access to its properties, books, or records, enter into any agreement
relating to such Restricted Transaction, or make or authorize any public
statement relating to any Restricted Transaction or any offer or proposal
relating to a Restricted Transaction would be inconsistent with the fiduciary
duties of Company’s board of directors under applicable law, then Company may
participate in discussions regarding such Restricted Transaction, provide
non-public information with respect to Company, afford access to the properties,
books, or records of Company, enter into any agreement relating to such
Restricted Transaction, or make or authorize any public statement relating
to
any Restricted Transaction or any offer or proposal relating to a Restricted
Transaction, as applicable.
(b) Neither
the board of directors of Company nor any committee thereof will directly
or
indirectly (i) (A) withdraw (or amend or modify in a manner adverse to Parent),
or publicly propose to withdraw (or amend or modify in a manner adverse to
Parent), the approval, recommendation, or declaration of advisability by
the
board of directors of Company or any such committee thereof of this Agreement,
the Merger, or the transactions contemplated hereby, or (B) recommend, adopt,
or
approve, or propose publicly to recommend, adopt, or approve, any Acquisition
Proposal (any action described in this clause (i) being referred to as a
“Change of Recommendation”) or (ii) approve or recommend, or publicly
propose to approve or recommend, or allow Company or any subsidiary of Company
to execute or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement, or other similar
agreement, arrangement, or understanding (A) constituting or related to,
or that
is intended to or could reasonably be expected to lead to, any Acquisition
Proposal or (B) requiring it to abandon, terminate, or fail to consummate
the
Merger or any other transaction contemplated by this
Agreement. Despite the foregoing, until Requisite Stockholder
Approval is obtained, and subject to Company’s compliance at all times with the
other provisions of this Section 5.2, the board of directors of Company may
make
a
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Change
of Recommendation if such board of directors determines in good faith by
resolution duly adopted, after consultation with outside legal counsel, that
it
is required to do so in order to comply with its fiduciary duties to the
stockholders of Company under applicable law. Company will provide
Parent with forty-eight (48) hours’ prior notice of any meeting of Company’s
board of directors at which the board of directors is reasonably expected
to
take action with respect to any Acquisition Proposal or Change of
Recommendation.
(c) “Acquisition
Proposal” means any inquiry, proposal, or offer from any Person relating to,
or that could reasonably be expected to, lead to a Restricted
Transaction. For purposes of this Agreement, “Superior
Proposal” means any unsolicited proposal made by a third party to acquire,
directly or indirectly, substantially all of the equity securities of Company
entitled to vote generally in the election of directors or substantially
all of
the assets of Company, on terms which Company’s board of directors reasonably
believes (after consultation with a financial advisor of nationally recognized
reputation) to be more favorable to its stockholders than the Merger and
the
transactions contemplated hereby.
Section
5.3 Breach
of Representations and Warranties; Notification; Access to
Information.
(a) From
the date hereof to the earlier of the Effective Time or the termination of
this
Agreement in accordance with Section 10.1, Company will (i) confer with Parent
and its respective Representatives, at such times as they may reasonably
request, about operational and integration matters to the extent permitted
by
law, and (ii) in the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event that would
cause or constitute a breach of any of the representations and warranties
in
Article III, give written notice thereof to Parent and use commercially
reasonable efforts to promptly remedy any such material breach or
inaccuracy. Without limiting the generality of the foregoing, Company
will promptly notify Parent of (i) any discussions or actions (of any type,
preliminary or otherwise) relating to bankruptcy of Company, (ii) any
complaints, investigations, or hearings (or communications indicating that
any
complaints, investigations, or hearings may be contemplated) of any Governmental
Entity (for which Company has received written or oral notice), (iii) any
loss
of or damage to any material property owned by Company, (iv) any change in
material existing relationships with outside third parties (for which Company
has received written or oral notice), (v) the institution or threat of any
litigation that could affect Company, (vi) the failure of Company to comply
with
or satisfy any covenant, condition, or agreement to be complied with or
satisfied by it in accordance with this Agreement, or (vii) any other matter
that has resulted or would reasonably be expected to result, individually
or in
the aggregate, in a Company Material Adverse Effect.
(b) Company
will, subject to applicable law, afford Parent and its respective
Representatives reasonable access during normal business hours during the
period
prior to the Effective Time to (i) Company’s properties, books, contracts,
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commitments,
communications (including e-mail), and records, and (ii) all other information
concerning the business, properties, and personnel of Company, as Parent
may
reasonably request that is necessary to complete the transactions contemplated
hereby and prepare for an orderly transition of operations after the Effective
Time. Company agrees to provide to Parent and its Representatives
copies of monthly internal financial statements within ten (10) business
days of
completion of such month. No information or knowledge obtained in any
investigation in accordance with this Section 5.3 or otherwise will affect
or be
deemed to modify any representation or warranty in this Agreement or the
conditions to the obligations of Parent to consummate the
Merger. Company will permit Parent’s Representatives to meet with the
officers of Company responsible for the financial statements and internal
controls of Company and its subsidiaries to discuss such matters as Parent
may
deem reasonably necessary or appropriate to satisfy its obligations under
Section 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 and any rules and
regulations relating thereto.
Section
5.4 Stockholder
Approval; Notice to Holders of Company Stock.
(a) As
expeditiously as possible following the execution of this Agreement and in
any
event within two (2) days after the execution of this
Agreement, Company shall secure and cause to be filed with Company the
irrevocable consents in the form set forth on Exhibit B (the
“Stockholders’ Written Consents”) necessary to secure the
Requisite Stockholder Approval from holders of at least eighty percent (80%)
of
the shares of Company Stock (on an as converted basis), which holders are
entitled to vote for approval and adoption of this Agreement. As soon
as practicable after receipt of such Stockholders’ Written Consents, Company
will provide Parent with a certificate executed on behalf of Company by its
Secretary or another officer and certifying that the Requisite Stockholder
Approval from such percentage of holders of Company Stock has been obtained
in
accordance with the DGCL, the Company Certificate of Incorporation and
Company’s bylaws, the other agreements of instruments governing such
securities and other applicable Legal Requirements in the form set forth
on
Exhibit C (the “Approval Certificate”). If such
Stockholders’ Written Consents are not delivered to Parent within two (2) days
after the execution of this Agreement, Parent shall have the right to terminate
this Agreement as set forth in Section 10.1(e).
(b) As
expeditiously as possible following the receipt by Company of the Requisite
Stockholder Approval, Company shall take all actions necessary to comply,
and
shall comply in all respects, with Section 228 and Section 262 of the DGCL.
Company shall provide Parent with an opportunity to review any information
statement distributed to holders of Company Stock in compliance with Section
228
and 262 of the DGCL prior to such distribution.
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ARTICLE
VI
COVENANTS
OF PARENT
During
the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Parent agrees (except as expressly contemplated by
this
Agreement or with Company’s prior written consent) that, in the event of, and
promptly after becoming aware of, the occurrence of or the pending or threatened
occurrence of any event that would cause or constitute a breach of any of
the
representations and warranties set forth in Article IV, Parent will give
written
notice thereof to Company and will use commercially reasonable efforts to
prevent or promptly remedy such breach or inaccuracy.
ARTICLE
VII
ADDITIONAL
AGREEMENTS
In
addition to the foregoing, Parent,
Acquisition Sub and Company each agree to take the following actions after
the
execution of this Agreement.
Section
7.1 Confidentiality.
Each
of Parent, Acquisition Sub and Company agrees, as set forth below, with respect
to all proprietary or confidential information exchanged in connection with
this
Agreement and the transactions contemplated hereby (collectively,
"Confidential Information"), to treat as confidential all such
Confidential Information, together with any analyses, studies or other documents
or records prepared by such Person, such Person’s controlled affiliates, or any
representative or other Person acting on behalf of such Person (collectively,
"Authorized Representatives"), which contain or otherwise reflect or are
generated from Confidential Information, and will not, and will not permit
any
of its Authorized Representatives to, disclose any Confidential Information,
provided that Parent, Acquisition Sub or Company (or their respective
Authorized Representatives) (each, a “Disclosing Person”) may disclose
any such information: (a) as has become generally available to the public
unless
such Confidential Information was placed into the public domain or became
known
to such Disclosing Person in violation of this Section 7.1; (b) as permitted
by
Section 7.5, (c) as may be required or appropriate in any report, statement
or
testimony submitted to any Governmental Entity having or claiming to have
jurisdiction over such Disclosing Person (or such Disclosing Person’s Authorized
Representative) but only that portion of the data and information which,
in the
opinion of counsel for such Disclosing Person or such Disclosing Person’s
Authorized Representative is required or would be required to be furnished
to
avoid liability for contempt or the imposition of any other material judicial
or
governmental penalty or censure; (d) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation;
or (e)
as to which Parent, Acquisition Sub and Company may have consented in
writing.
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Section
7.2 Legal
Conditions to the Merger. Upon
the terms and subject to the conditions set forth herein, each of Parent
and
Company agrees to use commercially reasonable efforts to take, or cause to
be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to
consummate and make effective, in the most expeditious manner practicable,
the
Merger and the other transactions contemplated by this Agreement, including,
without limitation, using commercially reasonable efforts to accomplish the
following: (i) the taking of commercially reasonable acts necessary to cause
the
conditions precedent set forth in Article VIII to be satisfied; (ii) obtaining
or making all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with any Governmental Entity and the
taking of commercially reasonable steps as may be necessary to avoid any
action
by any Governmental Entity; (iii) the obtaining of all consents, approvals
or
waivers from third parties, including, without limitation, all applicable
consents under the Company’s Contracts with respect to software (provided, that
the parties will discuss in good faith procedures to pursue third party consents
with respect to the Merger); (iv) the defending of any actions challenging
this
Agreement or the consummation of the transactions contemplated hereby; and
(v)
the execution or delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of,
this
Agreement.
Section
7.3 HSR
Act Filings.
(a) Filings
and Cooperation. Each of Parent, Acquisition Sub and Company will
take all reasonable steps to: (i) promptly, but in any event no later than
three
(3) business days after the date of this Agreement, make or cause to be made
the
filings required of such party or any of its affiliates or subsidiaries under
the HSR Act with respect to the Merger and the transactions contemplated
hereby
(and request early termination therein). Each of Parent, Acquisition
Sub and Company will take all reasonable steps to: (i) promptly make or cause
to
be made any other filings with all foreign Governmental Entities in any
jurisdiction in which the parties believe it is necessary or advisable; (ii)
comply in a timely manner with any request under any Antitrust Laws (as defined
in Section 7.3(b)) for additional information, documents, or other material
received by such party or any of its affiliates or subsidiaries from the
Federal
Trade Commission or the Department of Justice or other Governmental Entity
in
respect of filings under any Antitrust Laws (including any filings made prior
to
the date hereof); and (iii) subject to Section 7.3(b), cooperate with the
other
party in connection with any such filing and in connection with resolving
any
investigation or other inquiry of any such agency or other Governmental Entity
under any Antitrust Laws with respect to any such filing, the Merger, or
the
transactions contemplated hereby. With regard to any communication
with any Governmental Entity regarding such filings, each party will inform
the
other party: (i) prior to delivering any material communication to a
Governmental Entity, (ii) promptly after receiving any material communication
from a Governmental Entity, and (iii) prior to entering into any proposed
understanding, undertaking, or agreement with any Governmental Entity regarding
any such filings, the Merger, or the transactions contemplated
hereby. Neither party will participate in any meeting with any Governmental
Entity in respect of any such filings, investigation, or
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other
inquiry without giving the other party prior notice of the meeting and, to
the
extent permitted by such Governmental Entity, the opportunity to attend and
participate; provided, however, that nothing herein
will preclude Parent or Company from participating in discussions with a
Governmental Entity without participation by Company or Parent, as applicable,
where the discussions are initiated by the Governmental Entity, or where
the
subject matter in the reasonable judgment of Parent or Company, as applicable,
cannot be effectively discussed in the presence of the other party.
(b) Objections. Each
of Parent and Company will take commercially reasonable steps to resolve
such
objections, if any, as may be asserted by any Governmental Entity with respect
to the Merger or the Transactions under the HSR Act, the Xxxxxxx Antitrust
Act
of 1890, as amended, the Xxxxxxx Antitrust Act of 1914, as amended, the Federal
Trade Commission Act of 1914, as amended, and any other federal, state, or
foreign statutes, rules, regulations, orders, or decrees that are designed
to
prohibit, restrict, or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, “Antitrust
Laws”). Each of Parent and Company will take such commercially
reasonable action as may be required to cause the expiration or termination
of
the notice periods under the HSR Act or other Antitrust Laws with respect
to the
Merger and the transactions contemplated hereby as promptly as practicable
after
the execution of this Agreement. Despite anything to the contrary in
this Agreement, (i) neither Parent nor any of its subsidiaries will be required
to divest any of their respective businesses, product lines, or assets, or
to
take or agree to take any other action or agree to any limitation that would
have a Parent Material Adverse Effect or a material adverse effect on the
business of Parent, either on a stand-alone basis or as combined with the
business of the Surviving Corporation after the Closing, (ii) neither Company
nor its subsidiaries will be required to divest any of their respective
businesses, product lines, or assets, or to take or agree to take any other
action or agree to any limitation that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, provided
that this clause (ii) will not be read to apply to actions acceptable to
Parent
which are required to be taken after the Closing, and (iii) without the prior
written consent of Parent, neither Company nor its subsidiaries shall divest
or
agree to divest any business, product line, or asset, or take or agree to
take
any other action or agree to any limitation that would reasonably be expected
to
have, individually or in the aggregate, a Company Material Adverse
Effect.
Section
7.4 Expenses. Subject
to the deduction from the total Merger consideration for Transaction Expenses
and Change in Control Payments, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby will be paid
by the
party incurring such expense.
Section
7.5 Public
Announcements. The
initial press release regarding the Transactions will be a joint press release
to be mutually agreed upon between Parent and Company. Following the initial
press release and prior to Closing, neither Parent nor Company will make
any
public announcement concerning this Agreement or the transactions contemplated
hereby without the prior written consent of the other
party.
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Nothing
in this Agreement will prevent Parent or Company at any time from furnishing
any
information to or making any filing with any Governmental Entity or from
issuing
any release, each as required by law or the rules of NASDAQ, in which
circumstance Parent or Company, as applicable, will make commercially reasonable
efforts to consult with the other party in advance to the extent practicable
and
in any event will notify the other party as soon as
practicable. Company will not make any communication to customers
without first consulting with and receiving the consent of Parent.
Section
7.6 Employee
Matters.
(a) Parent
will provide or cause to be provided, to each person who after Closing remains
an employee of Company or becomes an employee of Parent, employee benefit
programs that are, in the aggregate, at least substantially comparable to
those
provided to such employee immediately prior to the Closing. For
purposes of clarification, nothing in this Agreement will be deemed to amend
or
limit Parent’s right to change its employee benefit programs.
(b) Company
will cooperate with Parent to develop appropriate communications to Company
employees regarding the Transactions and a transition plan in contemplation
of
Closing, including delivering other notices to employees as requested by
Parent.
(c) At
Parent’s request and immediately prior to the Effective Time (but subject to the
occurrence of the Effective Time), Company will terminate or cause to be
terminated any or all of the Employee Plans set forth in Section 3.12 of
the
Company Disclosure Schedule that are intended to be qualified within the
meaning
of Code Section 401(a), with such termination to be effective immediately
prior
to the Effective Time; provided that such termination will be contingent
upon
consummation of the Merger. If Parent requests Company to terminate
Company’s 401(k) plan pursuant to the preceding sentence, Parent shall establish
or make available a replacement 401(k) plan to which any distributions from
the
terminated plan can be rolled over.
Section
7.7 Tax
Matters.
(a) For
purposes of this Agreement:
(i) “Straddle
Period” means a taxable year or period beginning on or before, and ending
after, the Closing Date; and
(ii) “Transfer
Taxes” means any and all transfer Taxes (excluding Taxes measured in whole
or in part by net income), including sales, use, excise, stock, conveyance,
gross receipts, registration, business and occupation, securities transactions,
real estate, stamp, documentary, notarial, filing, recording, permit, license,
authorization and similar Taxes, fees, duties, levies, customs, tariffs,
imposts, assessments, obligations and charges.
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(b) Transfer
Taxes. All Transfer Taxes, if any, arising out of or in
connection with the transactions contemplated by this Agreement shall be
borne
50% by Parent and 50% by the Company Stockholders and, with respect to the
Company Stockholders, notwithstanding anything to the contrary in Section
9.4 or
9.7, solely from the Escrow Funds to the extent available therefor.
(c) Tax
Returns.
(i) Company
shall prepare and timely file, or cause to be prepared and timely filed,
when
due all Tax Returns that are required to be filed by or with respect to Company
or any of its subsidiaries on or prior to the Closing Date, and Company shall
timely remit, or cause to be timely remitted, any Taxes due in respect of
such
Tax Returns. All such Tax Returns shall be prepared in a manner
consistent with past practice, except as otherwise required by
law. Notwithstanding anything in this Agreement to the contrary, no
Company Stockholder (other than an officer or other individual Representative
of
the Surviving Corporation, in his or her capacity as such) shall file any
Tax
Return after the Closing Date of Company or any of its subsidiaries, without
first obtaining Parent’s written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).
(ii) Parent
shall prepare and timely file, or cause to be prepared and timely filed,
when
due all Tax Returns that are required to be filed by or with respect to Company
or any of its subsidiaries after the Closing Date but which relate to taxable
years or periods, or portions thereof, beginning before the Closing Date
(provided, however, that Parent shall not amend any such
previously filed Tax Return, except as otherwise provided in this Section
7.7(c)(ii) or to the extent required by law). All such Tax Returns
shall be prepared in a manner consistent with past practice, except as otherwise
required by law. Not later than thirty (30) days prior to the due
date for filing of any such Tax Return (taking into account any extensions
thereof), Parent shall provide the Stockholders’ Representative with a copy of
such Tax Return for review and comment. Parent shall be entitled to
file any such Tax Return without regard to any comments provided to Parent
by
the Stockholders' Representative; provided, however, that if (A)
the Stockholders' Representative provides any written comment to Parent with
respect to any item on any such Tax Return at least fifteen (15) days prior
to
the due date for filing of such Tax Return (taking into account any extensions
thereof), (B) such comment is rejected by Parent, and (C) solely as a result,
the amount payable by the Stockholders' Representative pursuant to Section
7.7(c)(iii) is greater than the amount that would have been payable had such
item been reported as requested by the Stockholders' Representative, then
the
Stockholders' Representative may dispute the manner of reporting such
item. In the event of such a dispute, Parent and the Stockholders'
Representative shall
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submit
the item for resolution to an Accountant, jointly engaged by Parent and the
Stockholders’ Representative, which shall, within ten (10) days after
submission, determine and report to the parties on whether Parent’s manner of
reporting such item is consistent with past practice, except as otherwise
required by law. Such report shall be final, binding and conclusive
on the parties hereto. All costs and expenses of the Accountant
relating to the dispute shall be borne 50% by the Stockholders' Representative
and 50% by Parent. If the Accountant reports that Parent’s manner of
reporting such item is not consistent with past practice and is not otherwise
required by law, then Parent may, at its election, amend the applicable Tax
Return by reporting the item as originally requested by the Stockholders’
Representative. If the Accountant reports that Parent’s manner of
reporting such item is consistent with past practice or, if inconsistent
with
past practice, is otherwise required by law, then the Stockholders’
Representative shall immediately pay to Parent the amount of Disputed Taxes
(as
defined below) related to such item.
(iii) Upon
the written request of Parent setting forth in detail the computation of
the
amount owed, the Stockholders’ Representative shall pay to Parent, no later than
five (5) days prior to the due date for the applicable Tax Return, the Taxes
for
which the Company Stockholders are liable pursuant to this Section 7.7 but
which
are payable with any Tax Return to be filed by Parent pursuant to Section
7.7(c)(ii), except to the extent an amount of such Taxes is disputed pursuant
to
Section 7.7(c)(ii) (“Disputed Taxes”).
(iv) Neither
Parent nor Acquisition Sub shall make an election under Section 338 of the
Code
(or comparable provision of any state, local or foreign law) if such election
would increase Parent’s or Acquisition Sub’s claim for indemnification in
respect of Taxes under this Agreement.
(d) Computation
of Tax Liabilities. To the extent permitted or required by law or
administrative practice, the taxable year of Company and each of its
subsidiaries which includes the Closing Date shall be treated as closing
on (and
including) the Closing Date. Where it is necessary for purposes of
this Agreement to apportion between the Company Stockholders, on one hand,
and
Parent and the Surviving Corporation, on the other hand, the Taxes of or
with
respect to Company or any of its subsidiaries for a Straddle Period (which
is
not treated under the immediately preceding sentence as closing on the Closing
Date), such liability 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 Taxes (such as real or personal property Taxes) imposed
on a
periodic basis shall be allocated on a daily basis.
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(e) Assistance
and Cooperation. Parent and the Surviving Corporation, on the one
hand, and the Stockholders’ Representative, on the other, shall cooperate fully
to the extent reasonably requested by the other party, in connection with
any
Tax matters relating to Company or any of its subsidiaries (including by
the
provision of reasonably relevant records or information). The party
requesting such cooperation will pay the reasonable out-of-pocket expenses
of
the other party.
(f) Parent
shall promptly notify the Stockholders’ Representative in writing of the
commencement of any audit or examination of any Tax Return of the Company
for
any taxable year or period ending on or prior to the Closing Date and any
other
proposed change or adjustment, claim, dispute, arbitration or litigation
that,
if sustained, would reasonably be expected to give rise to a claim for
indemnification in respect of Taxes by Parent and the Surviving Corporation
under this Agreement (a “Tax Claim”). Such notice shall
describe the asserted Tax Claim in reasonable detail and shall include copies
of
any notices and other documents received from any Taxing Authority in respect
of
any such asserted Tax Claim. The Stockholders’ Representative shall
have the right to control any Tax Claims in the Tax audit or examination
stage; provided, however, that the Stockholders’
Representative shall inform Parent of the status and progress of such Tax
audit or examination and shall allow Parent and its representatives a reasonable
opportunity to review and comment on any legal submissions prior to submission
or other written legal responses in connection with such audit or examination;
provided further, however, that Parent will have the opportunity
to participate in any such audit or examination at its expense. If a
Tax Claim relating solely to a taxable year or period ending on or prior
to the
Closing Date is not settled at the Tax audit or examination stage, the
Stockholders’ Representative shall have the right to control any further contest
of such Tax Claim and, if it exercises such right, shall bear the expenses
relating thereto; provided, however, that Parent will have the
opportunity to participate in any such contest at its expense. The
Stockholders’ Representative may not settle any Tax Claim (either at the audit
or examination stage or thereafter) without first obtaining Parent’s written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed). Parent shall control any audit, examination or proceeding,
or portion thereof, that is not otherwise covered by this Section
7.7(f).
Section
7.8 Pre-Closing
Deliveries.
(a) Two
(2) business days prior to the expected Closing Date, Company shall provide
Parent with Company’s calculation (including reasonable detail thereof) of (i)
Transaction Expenses and (ii) Change in Control Payments.
(b) No
later than three (3) business days prior to the expected Closing Date, Company
shall provide Parent with an unaudited balance sheet of Company as of such
date
prepared in accordance with GAAP and on a basis consistent with the Financial
Statements.
(c) Not
later than five (5) days prior to the Closing Date, Company shall inform
Parent
(and supply reasonably requested supporting documentation) as to whether
the
stockholder approval referenced in Section 3.12(h) has been
obtained.
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(d) Prior
to the Closing, Company shall obtain a valid stockholder vote to exempt such
payments from the operation of Section 280G, or otherwise provide that no
payments are made that are subject to the limit on deductibility referenced
in
Section 3.12(h).
Section
Section 7.9 Officer
and Director Indemnification.
Parent agrees that all rights to indemnification and exculpation from liability
for acts or omissions occurring on or prior to the Closing Date now existing
on
the date hereof in favor of the current or former directors or officers
of
Company as provided under the Company Certificate of Incorporation and
Delaware
law, shall survive the Closing Date and shall continue in full force and
effect
in accordance with their respective terms for a period of six (6) years
after
the Closing Date; provided, however, that such rights shall not
include (i) rights arising under or subject to indemnification by stockholders
of Company (determined without consideration of any limitation on
indemnification by the stockholders) pursuant to this Agreement, (ii) rights
arising from, connected with or incidental to any act, conduct event or
omission
that constitutes fraud, intentional or willful misconduct, criminal misconduct
or gross negligence or (iii) rights arising under or with respect to actions
brought by or on behalf of Company or any stockholder of Company (in such
stockholder’s capacity as such).
ARTICLE
VIII
CONDITIONS
PRECEDENT
Section
8.1 Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligations of each party to consummate the Merger are subject
to the
satisfaction, or to the extent permitted by applicable law, the written waiver
at or prior to the Effective Time, of each of the following
conditions:
(a) Stockholder
Approval. This Agreement and the transactions contemplated hereby
have received the Requisite Stockholder Approval.
(b) HSR
Waiting Period. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated.
(c) No
Order. No Governmental Entity of competent jurisdiction will have
enacted, issued, promulgated, enforced, or entered any statute, rule,
regulation, executive order, decree, injunction, or other order (whether
temporary, preliminary, or permanent) that (i) is in effect, and (ii) has
the
effect of making the Merger illegal or otherwise prohibiting consummation
of the
Merger.
Section
8.2 Conditions
of Obligations of Parent and Acquisition Sub.
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The
obligations of Parent and Acquisition Sub to consummate the Merger are further
subject to the satisfaction or waiver at or prior to the Effective Time of
each
of the following conditions:
(a) Representations
and Warranties of Company. The representations and warranties of
Company in this Agreement will be true and correct in all respects on the
date
hereof and as of the Closing Date with the same force and effect as if made
on
the Closing Date (except (i) to the extent the failure of such representations
and warranties of Company to be true and correct has not resulted, individually
or in the aggregate, in a Company Material Adverse Effect and (ii) for those
representations and warranties which address matters only as of a particular
date will have been true and correct only on such date), it being understood
that, for purposes of determining the accuracy of such representations and
warranties, all “Material Adverse Effect” and materiality qualifications and
other qualifications based on the word “material” in such representations and
warranties will be disregarded. Parent and Acquisition Sub will have
received a certificate with respect to the foregoing, in form and substance
reasonably satisfactory to Parent, signed by the Chief Executive Officer
and the
Chief Financial Officer of Company.
(b) Performance
of Obligations of Company. Company will have performed in all
material respects all agreements and covenants required to be performed by
it
under this Agreement prior to the Closing Date. Parent will have
received a certificate to that effect, in form and substance reasonably
satisfactory to Parent, signed by the Chief Executive Officer and the Chief
Financial Officer of Company.
(c) No
Company Material Adverse Effect. From the date of this Agreement
until the Closing Date, there has been no change, event, circumstance or
development that resulted, individually or in the aggregate, in a Company
Material Adverse Effect, and Parent will have received a certificate to that
effect, in form and substance reasonably satisfactory to Parent, signed on
behalf of Company by the Chief Executive Officer and the Chief Financial
Officer
of Company.
(d) Legal
Action. There will not be pending any action, proceeding, or
other application brought by any Governmental Entity: (i) challenging or
seeking
to restrain or prohibit the consummation of the transactions contemplated
hereby, or seeking to obtain any material damages in connection therewith;
or
(ii) seeking to prohibit or impose any material limitations on Parent’s or
Surviving Corporation’s ownership or operation of all or any portion
of Company’s business or to compel Parent or Surviving Corporation to
dispose of or hold separate all or any material portion of the assets of
Company
as a result of the transactions contemplated hereby.
(e) Resignations. Except
as otherwise advised by Parent, Parent will have received the resignations
of
all of the directors of Company and any subsidiaries thereof (which
resignations, other than the right to serve as a director, will not impair
the
rights of any director).
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(f) Government
and Other Third Party Approvals. All consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Governmental Entity or other Person identified on Schedule
8.2(f) shall have been obtained or made, in a manner reasonably satisfactory
in
form and substance to Parent, and no such consent, approval, order or
authorization shall have been revoked.
(g) Employee
Matters. Each of the Persons listed on Schedule 8.2(g)
shall have executed employment agreements in substantially the form attached
hereto as Exhibit D (subject to changes as may be necessary to conform to
English law) (collectively, the “Employment Agreements”), which
Employment Agreements shall be in full force and effect as of the Effective
Time
and all employees of Company party to such Employment Agreements shall
be willing and able to perform in accordance with such Employment
Agreements.
(h) Deliveries. At
or prior to the Closing, Company shall deliver, or caused to be delivered,
to
Parent the following:
(i) evidence,
reasonably satisfactory to Parent, that Company has complied in all respects
with the requirements under Section 228 and 262 of the DGCL;
(ii) a
certificate of the Secretary of Company dated the Closing Date, in form and
substance reasonably satisfactory to Parent as to the Company Certificate
of
Incorporation and the Company’s bylaws and Company being in good standing
(including attaching the Company Certificate of Incorporation and the Company’s
bylaws and certificate of good standing dated not more than five (5) business
days prior to the Closing issued by the Secretary of State of the State of
Delaware)
(iii) a
certificate of the Chief Executive Officer and Chief Financial Officer of
Company dated the Closing Date, in form and substance reasonably satisfactory
to
Parent, as to (A) Company not having paid any Transaction Expenses and (B)
Company having taken all necessary and appropriate steps such that all Company
Securities, including Options, will be treated as set forth in Article
II;
(iv) evidence,
reasonably satisfactory to Parent, as to the termination of the Employee
Plans
in accordance with Section 7.6, without any obligations or liabilities
thereunder on the part of Company;
(v) the
Certificate of Merger, duly executed by Company;
(vi) Stockholders’
Written Consents necessary to secure the Requisite Stockholder Approval from
holders of at least eighty percent (80%) of the shares of Company Stock (on
an
as converted basis), duly executed and delivered by the holders of Company
Stock
that are parties thereto, and the duly executed Approval
Certificate;
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(vii) an
updated Section 3.2(a) of the Company Disclosure Schedule, current as of
the
Closing Date;
(viii) a
certificate duly executed by Company, in form and substance reasonably
satisfactory to Parent, stating that no interest in Company is a United States
real property interest within the meaning of Section 897 of the Code, which
certificate (and delivery thereof) will comply in all respects with the
requirements set forth in Treasury Regulations Section
1.1445-2(c)(3); and
(ix) the
legal opinion of Ropes & Xxxx LLP in the form previously agreed upon by
Parent and Company.
(i) Stock
Record Books. All stock record and minute books of
Company and its subsidiaries will be delivered to Parent or held at Company’s
headquarters for Parent to take possession of at Closing.
(j) Escrow
Agreement. The Stockholders’ Representative shall have executed
and delivered the Escrow Agreement.
Section
8.3 Conditions
of Obligation of Company.
The
obligation of Company to consummate the Merger is subject to the satisfaction,
or to the extent permitted by applicable law, the written waiver at or prior
to
the Effective Time of each of the following conditions:
(a) Representations
and Warranties of Parent and Acquisition Sub. The representations
and warranties of Parent and Acquisition Sub contained in this Agreement
will be
true and correct in all respects on the date hereof and as of the Closing
Date
with the same force and effect as if made on the Closing Date (except (i)
to the
extent the failure of such representations and warranties of Parent and
Acquisition Sub to be true and correct has not resulted, individually or
in the
aggregate, in a Parent Material Adverse Effect and (ii) for those
representations and warranties which address matters only as of a particular
date will have been true and correct only on such date) it being understood
that
for purposes of determining the accuracy of such representations and warranties,
all “Material Adverse Effect” and materiality qualifications and other
qualifications based on the word “material” in such representations and
warranties will be disregarded. Company will have received a
certificate with respect to the foregoing signed, with respect to the
representations and warranties of Parent, by an authorized officer of Parent
and
a certificate with respect to the foregoing signed, with respect to the
representations and warranties of Acquisition Sub, by an authorized officer
of
Acquisition Sub.
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(b) Performance
of Obligations of Parent and Acquisition Sub. Parent and
Acquisition Sub will have performed in all material respects all agreements
and
covenants required to be performed by them under this Agreement prior to
the
Closing Date, and Company will have received a certificate signed by an
authorized officer of Parent and Acquisition Sub to such effect.
(c) Escrow
Agreement. Parent shall have executed and delivered the Escrow
Agreement.
ARTICLE
IX
INDEMNIFICATION
Section
9.1 Indemnification
Relating to Agreement.
(a) Subject
to the limitations set forth in this Article IX, the holders of the Company
Stock, severally and not jointly, will defend, indemnify, and hold Parent
and
Surviving Corporation and their respective directors, officers, employees,
agents, representatives, successors and assigns (collectively, the “Parent
Indemnified Parties”) harmless from and against, and reimburse any Parent
Indemnified Party with respect to, any and all losses, damages, liabilities,
claims, judgments, settlements, fines, costs, and expenses (including attorneys’
fees) (“Parent Indemnifiable Amounts”) of every nature whatsoever
incurred by such Parent Indemnified Party by reason of or arising out of
or in
connection with (i) any breach, or any claim (including claims by parties
other
than Parent) that if true, would constitute a breach of any representation
or
warranty of Company in this Agreement (as modified by the Company Disclosure
Schedule as of the date hereof) other than *********************************,
(ii) from and after the Effective Time, any breach prior to the Effective
Time
of any agreement or covenant required by this Agreement to be performed by
Company, (iii) the amount of any additional Transaction Expenses and Change
in
Control Payments not deducted from the Total Cash Consideration on the Closing
Date, (iv) any liability for any Tax of or with respect to Company or any
of its
subsidiaries in excess of the amount, if any, reserved for such Tax on the
balance sheet delivered under Section 7.8(b) (which shall reflect the reserves
for Taxes on the Balance Sheet, adjusted solely for taxable income or loss
from
(A) ordinary course operations through the Closing Date and (B) transactions
contemplated by this Agreement, each in accordance with the past custom and
practice of Company and its subsidiaries, to the extent relevant), for (x)
any
taxable year or period that ends on or before the Closing Date or (y) with
respect to any Straddle Period, the portion of such Straddle Period deemed
to
end on and include the Closing Date, (v) any liability for U.K. income Taxes
(or
any income Taxes imposed by any political subdivision of the U.K.) of or
with
respect to Company or any of its subsidiaries imposed as a result of the
application of Section 482 of the Code, the Treasury Regulations promulgated
thereunder, or any similar provision of U.K. law (or the law of any political
subdivision of the U.K.), for (x) any taxable year or period that ends on
or
before the Closing Date or (y) with respect to any Straddle Period, the portion
of such Straddle Period deemed to end on and include the Closing Date, (vi)
any
liability for Taxes of any
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Person
(other than Parent or any of its subsidiaries) arising (A) from the application
of Treasury Regulations Section 1.1502-6 or any analogous provision of state,
local or non-U.S. law or (B) except to the extent reserved on the balance
sheet
delivered under Section 7.8(b) (which shall reflect the reserves on the Balance
Sheet, adjusted solely for the taxable income or loss from (1) ordinary course
operations through the Closing Date and (2) transactions contemplated by
this
Agreement, each in accordance with the past custom and practice of Company
and
its subsidiaries, to the extent relevant), under any material Tax allocation,
Tax sharing, Tax indemnity or similar agreement, arrangement or understanding,
or (vii) any Retained Liability (as defined below); in each case of (i) and
(ii)
above, without giving effect to any “materiality” limitations or references to
“Company Material Adverse Effect” or “material adverse effect” set
forth therein. “Retained Liability” means any Liability (other
than with respect to Taxes) described on Schedule
9.1(a). “Liability” means, with respect to any Person, any
liability or obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, accrued or unaccrued, disputed
or undisputed, liquidated or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested, executory, determined,
determinable or otherwise, and whether or not the same is required to be
accrued
on the financial statements of such Person.
(b) Subject
to the limitations set forth in this Article IX, Parent and the Surviving
Corporation jointly and severally will defend, indemnify, and hold the Company
Stockholders harmless from and against, and reimburse the Company Stockholders
with respect to, any and all losses, damages, liabilities, claims, judgments,
settlements, fines, costs, and expenses (including attorneys’ fees)
(“Stockholder Indemnifiable Amounts”) of every nature whatsoever incurred
by the Company Stockholders (in their capacities as holders of Company Stock)
by
reason of or arising out of or in connection with (i) any breach, or any
claim
(including claims by parties other than Company Stockholders) that if true,
would constitute a breach of any representation or warranty of Parent or
Acquisition Sub in this Agreement other than any non-Third Party Claim asserted
by any Company Stockholder (or the Stockholders’ Representative) to the extent
such claim lacks any legal or factual merit, or (ii) any breach of any agreement
or covenant required by this Agreement to be performed by Parent; in each
case of (i) and (ii) above, without giving effect to any “materiality”
limitation or reference to “Parent Material Adverse Effect” or “material adverse
effect” set forth therein.
Section
9.2 Third
Party Claims.
Except
with respect to claims in
respect of Taxes (which are governed solely and exclusively by Section
7.7(f)):
(a) Despite
anything to the contrary in this Agreement or in the Escrow Agreement, whenever
a party to this Agreement that may be entitled to indemnification under this
Article IX (“Indemnitee”) receives a written notice that a claim or
demand has been asserted or threatened by a third party (“Third Party
Claim”) for which the Indemnitee may seek indemnification hereunder, the
Indemnitee will notify
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the
party from which the Indemnitee is seeking indemnification (“Indemnitor”)
of such claim or demand and of the related facts within the Indemnitee’s
knowledge within a reasonable time after receiving such written notice;
provided, however, that no delay on the part of the Indemnitee in notifying
the
Indemnitor shall relieve the Indemnitor from any obligation hereunder except
to
the extent the Indemnitor is materially prejudiced thereby.
(b) Subject
to Section 9.2(c), the Indemnitor shall have the right, at its option, to
assume
the defense of any Third Party Claim with counsel of its own
choosing. If the Indemnitor elects to assume the defense of such
Third Party Claim as aforesaid, then:
(i) except
as set forth in Section 9.2(c), the Indemnitor shall not be required to pay
or
otherwise indemnify the Indemnitee for any attorneys’ fees incurred by the
Indemnitee in connection with such Third Party Claim following the Indemnitor’s
election to assume the defense of such Third Party Claim, unless (A) the
Indemnitee reasonably shall have concluded (upon advice of its counsel) that
there may be one or more legal defenses available to such Indemnitee or other
Indemnitees that are not available to the Indemnitor; or (B) the Indemnitee
reasonably shall have concluded (upon advice of its counsel) that, with respect
to such Third Party Claim, the Indemnitee and the Indemnitor may have different,
conflicting, or adverse legal positions or interests;
(ii) the
Indemnitee shall make available to the Indemnitor all personnel, books, records
and other documents of the Surviving Corporation and materials that are under
the direct or indirect control of the Indemnitee or any of the Indemnitee’s
agents and that the Indemnitor considers necessary or desirable for the defense
of such Third Party Claim;
(iii) the
Indemnitee shall otherwise cooperate as reasonably requested by the Indemnitor
in the defense of such Third Party Claim;
(iv) the
Indemnitee shall not admit any liability with respect to such Third Party
Claim;
and
(v) the
Indemnitor shall not, without the written consent of the Indemnitee, settle
or
compromise any pending or threatened Third Party Claim in respect of which
indemnification may be sought hereunder (whether or not the Indemnitee is
an
actual or potential party to such Third Party Claim) or consent to the entry
of
any judgment (A) which does not, to the extent that the Indemnitee or any
of its
affiliates may have any liability with respect to such Third Party Claim,
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the
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Indemnitee
of a written release of the Indemnitee and its affiliates from all liability
in
respect of such Third Party Claim, (B) which includes any statement as to
or an
admission of fact, culpability or a failure to act, by or on behalf of the
Indemnitee or any of its affiliates or (C) in any manner that involves any
injunctive or other equitable relief against the Indemnitee or any of its
affiliates or may materially and adversely affect the Indemnitee or any of
its
affiliates.
(c) If
the Indemnitor (i) elects not to assume the defense of or fails to confirm
its
obligation to indemnify for any such Third Party Claim, (ii) fails to commence
defending the Third Party Claim within ten (10) days after receiving notice
of
such Third Party Claim, or (iii) fails to defend diligently the action or
proceeding within ten (10) days after receiving notice of such failure from
the
Indemnitee, then the Indemnitee will have the right to conduct and control,
through counsel of its own choosing such Third Party Claim and the Indemnitor
shall be required to pay or otherwise indemnify the Indemnitee against any
attorneys’ fees incurred by the Indemnitee in connection with such Third Party
Claim; provided, however, that the Indemnitee shall not settle,
adjust or compromise such Third Party Claim, or admit any liability with
respect
to such Third Party Claim, without the prior written consent of the
Indemnitor. In the event the Indemnitee conducts and controls a Third
Party Claim, the Indemnitor will have the same obligations pursuant to Sections
9.2(b)(ii)-(iv) as the Indemnitee would have in a Third Party Claim controlled
by the Indemnitor.
(d) The
Stockholders’ Representative will act on behalf of the Company Stockholders with
respect to all matters hereunder, including with respect to the provision
or
receipt of any and all notices under this Section 9.2.
Section
9.3 Binding
Effect. The
indemnification provisions in this Article IX are an integral part of this
Agreement and Merger in the absence of which Parent would not have entered
into
this Agreement.
Section
9.4 Limitations.
(a) Except
as set forth in this Section 9.4(a), despite any other provision in this
Article
IX, with respect to indemnification under
*********************************, the Parent Indemnified
Parties will be entitled to indemnification thereunder only: (A) if the
aggregate Parent Indemnifiable Amounts exceeds $********** (the “Parent
Threshold Amount”), in which event the Parent Indemnified Parties will be
entitled to indemnification for all Parent Indemnifiable Amounts, including
all
Parent Indemnifiable Amounts used to reach the Parent Threshold
Amount and (B) to the extent that the aggregate Parent
Indemnifiable Amounts do not exceed the amount of available Escrow Funds;
provided, however, that clause (A) above shall not apply with
respect to indemnification under
*********************************. Notwithstanding the foregoing, the
limitations of this Section 9.4(a) do not apply to, and any calculation of
the
Parent Threshold Amount as it relates to other Parent Indemnifiable Amounts
will
not include, Parent Indemnifiable Amounts arising out of
*********************************.
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(b) Except
as set forth in this Section 9.4(b), despite any other provision in this
Article
IX, with respect to indemnification under ********** the holders of Company
Stock will be entitled to indemnification thereunder only if the aggregate
Stockholder Indemnifiable Amounts exceeds $********** (the
“Stockholder Threshold Amount”), in which event the holders of Company
Stock will be entitled to indemnification for all Stockholder Indemnifiable
Amounts, including all Stockholder Indemnifiable Amounts used to reach the
Stockholder Threshold Amount. Notwithstanding the foregoing, the
limitations of this Section 9.4(b) do not apply to, and any calculation of
the
Stockholder Threshold Amount as it relates to other Stockholder Indemnifiable
Amounts will not include, Stockholder Indemnifiable Amounts arising out of
*********************************.
(c) In
the event that Parent elects to make any claim under its then existing insurance
policies in respect of any Parent Indemnifiable Amounts, the amount of such
Parent Indemnifiable Amounts under this Article IX shall be reduced by the
amount of any insurance or other proceeds received by such Parent Indemnified
Parties pursuant to such claim net of any premium or other increase in the
cost of such policies as a direct result of such claim.
(d) The
parties hereby agree that any and all indemnity payments pursuant to this
Agreement shall, to the maximum extent permitted by applicable law, be treated
for all Tax purposes as an adjustment to the Total Cash
Consideration.
(e) Notwithstanding
anything herein to the contrary, the Parent Indemnifiable Amounts shall not
include any liability for Taxes (i) for taxable years or periods beginning
after
the Closing Date or, with respect to any Straddle Period, the portion of
such
Straddle Period beginning at the beginning of the day following the Closing
Date, or (ii) for any actions taken by Parent and Surviving Corporation and
their respective affiliates after the Effective Time (except for actions
required by law or permitted by Section 7.7(c)(ii)).
Section
9.5 Time
Limit.
(a) Each
of the representations and warranties set forth in this Agreement will survive
the Closing. Except as set forth in Section 9.5(b), no claims for
indemnification under ********************************* may be made
following the ********** anniversary of the Closing Date, except to the extent
that a claim has been asserted in writing prior to such expiration (in which
event the associated rights of indemnification shall survive with respect
to
such claim until such claim has been resolved).
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(b) Despite
Section 9.5(a), (i) no time limit will apply for indemnification arising
from
*********************************; and (ii) *********************************,
together with the associated rights of indemnification, will survive the
Closing
hereunder and continue in full force and effect; provided,
however, from and after the ********** anniversary of the Closing
Date,
Parent Indemnified Parties will have no right to indemnification under
*********************************.
(c) Each
of the covenants and agreements contained in this Agreement will survive
the
Closing and continue in full force and effect until performed in accordance
with
their terms.
Section
9.6 Contribution. Holders
of Company Stock will have no right of contribution, right of indemnity or
other
similar right or remedy from the Surviving Corporation for liabilities for
such
holders’ obligations under this Article IX.
Section
9.7 Exclusive
Remedy.
(a) With
the exception of claims based upon *********************************, from
and
after the Effective Time, resort to indemnification under this Article IX
will
be the sole and exclusive right and remedy of Parent and Surviving Corporation
for Parent Indemnifiable Amounts or other damages under this Agreement (it
being
understood that nothing in this Section 9.7 or elsewhere in this Agreement
will
affect Parent’s or Surviving Corporation’s rights to equitable remedies to the
extent available).
(b) With
the exception of claims based upon *********************************, from
and
after the Effective Time, resort to indemnification under this Article IX
will
be the exclusive right and remedy of the Company Stockholders for Stockholder
Indemnifiable Amounts or other damages under this Agreement (it being understood
that nothing in this Section 9.7 or elsewhere in this Agreement will affect
the
rights of holders of Company Stock to equitable remedies to the extent
available).
Section
9.8 Investigation;
No Company Recourse.
(a) The
right to indemnification or any other remedy based on representations,
warranties, covenants and agreements of Company or the Stockholders’
Representative in this Agreement, or any document, certificate or other
instrument required to be delivered by Company or Stockholders’ Representative
under this Agreement shall not be affected by any investigation conducted
by any
Parent Indemnified Party of any other Person at any time, or any knowledge
acquired (or capable of being acquired) by any Parent Indemnified Party or
any
other Person at any time, whether before or after the execution and delivery
of
this Agreement or the Effective Time, with respect to the accuracy or inaccuracy
of, or compliance with, any such representation, warranty, covenant or
agreement.
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(b) A
Company Stockholder shall have no right of contribution or other recourse
against Company, or any of its respective directors, officers, employees,
affiliates, agents, attorneys, representatives, assigns or successors, for
any
indemnification claims asserted by any Parent Indemnified Parties, it being
acknowledged and agreed that the representations, warranties, covenants and
agreements of Company are solely for the benefit of the Parent Indemnified
Parties, provided, however, that any Company Stockholder may
pursue claims against any director or officer of Company with respect to
which
such director or officer is not entitled to indemnification or other recourse
against any Parent Indemnified Party arising out of any right of such director
or officer now existing on the date hereof.
ARTICLE
X
TERMINATION,
AMENDMENT AND WAIVER
Section
10.1 Termination. Despite
anything in this Agreement to the contrary, this Agreement may be terminated
and
the Transactions abandoned at any time prior to the Effective Time:
(a) by
mutual written consent of Parent and Company, duly authorized by Parent and
by
the board of directors of Company;
(b) by
either Parent or Company (provided that the terminating party is not then
in
material breach of any representation, warranty, covenant, or agreement
contained in this Agreement) if (i) there has been a material breach by the
non-terminating party of any representation, warranty, covenant, or agreement
as
set forth in the Agreement that results in the closing conditions in Article
VIII in the terminating party’s favor not being capable of being met by the date
set forth in Section 10.1(c) below or (ii) if any representation or warranty
of
the non terminating party is or has been untrue or inaccurate such that,
in the
aggregate, such untruths or inaccuracies have resulted or would result in
a
Company Material Adverse Effect or a Parent Material Adverse Effect;
provided, however, that if in each case such breach is curable,
then this Agreement may not be terminated under this Section 10.1(b) until
the
earlier of (x) twenty (20) days after delivery of written notice of such
untruth
or inaccuracy or breach, or (y) the date on which the non-terminating party
ceases to exercise commercially reasonable efforts to cure such untruth or
inaccuracy or breach;
(c) by
either Parent or Company if the Merger has not been consummated prior to
March
31, 2008 (the “Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 10.1 will not be available
to any party whose action or failure to act has been the principal cause
of or
resulted in the failure of the Merger to have been consummated on or prior
to
such date and such action or failure to act constitutes a breach of this
Agreement;
(d) by
either Company or Parent if a Governmental Entity shall have issued or
enacted any Legal Requirement or taken any other action (including, without
limitation, the failure to have taken an action), in any case having the
effect
of permanently restraining, enjoining or otherwise prohibiting the Merger,
which
Legal Requirement is final and nonappealable, as applicable;
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(e)
by Parent, if the Stockholders’ Written Consents provided in
Section 5.4(a) have not been obtained and delivered to Parent within two
(2)
days of the execution of this Agreement in accordance with Section
5.4(a);
(f)
by Parent (at any time prior to the Requisite Stockholder Approval having
been
obtained) if a Company Triggering Event (as defined below) shall have occurred;
or
(g) by
Parent, if a Company Material Adverse Effect shall have occurred, or Parent
first becomes aware of a Company Material Adverse Effect, from the date
hereof.
For
purposes of this Agreement, a
“Company Triggering Event” shall be deemed to have occurred if: (i)
Company’s board of directors or any committee thereof shall for any reason have
failed to make or shall have withdrawn or shall have amended or modified
in a
manner adverse to Parent its recommendation to the holders of Company Stock
to
vote or execute a written consent in favor of the approval and adoption of
this
Agreement and the Merger, (ii) Company’s board of directors or any committee
thereof shall have approved or recommended any Restricted Transaction or
(iii)
the holders of Company Stock shall have approved or adopted a Restricted
Transaction.
Section
10.2 Effect
of Termination. In
the event of termination of this Agreement by either Company or Parent as
provided in Section 10.1, this Agreement will become void and have no effect,
and there will be no liability or obligation on the part of Parent, Acquisition
Sub, or Company, or their respective officers or directors, except that (i)
the
provisions of Sections 7.1 (Confidentiality), 7.5 (Public Announcements),
10.2
(Effect of Termination), 10.3 (Company Fees), 11.6 (Governing Law), 11.11
(Submission to Jurisdiction), 11.12 (Waiver of Jury Trial) and 11.13
(Stockholders’ Representative) will survive any such termination and
abandonment, and (ii) no party will be released or relieved from any liability
arising from the willful breach by such party of any of its representations,
warranties, covenants, or agreements as set forth in this
Agreement.
ARTICLE
XI
GENERAL
PROVISIONS
Section
11.1 Notices.
All
notices, requests, demands, or other communications required or permitted
to be
given under this Agreement will be in writing and deemed given
upon: (i) personal delivery, (ii) confirmed delivery by a standard
overnight courier or when delivered by hand, (iii) when mailed in the United
States by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such address for a party as
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will
be specified by notice given hereunder), or (iv) transmitter’s confirmation of a
receipt of a facsimile transmission:
(a) if
to Parent
or Acquisition Sub,
to:
GSI
Commerce, Inc.
000
Xxxxx Xxxxxx
Xxxx
xx Xxxxxxx, XX 00000
Attention: General
Counsel
Facsimile
No.: (000) 000-0000
With
a copy to
(which
shall not constitute
notice): Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxxxx
Facsimile
No.: (000)
000-0000
(b) if
to Company,
to: E-Dialog,
Inc.
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention: Xxxx
Xxxxx
Facsimile
No.: (000) 000-0000
With
a copy to
(which
shall not constitute
notice): Ropes &
Xxxx LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Attention: Xxxx
X. Xxxxxx
Facsimile
No.: (000) 000-0000
(c) if
to
Stockholders’ OneLiberty
Ventures 2000, L.P.
Representative
to: c/o
Flagship Ventures, Inc.
Xxx
Xxxxxxxx Xxxxx, 0xx
Xxxxx
Xxxxxxxxx,
XX 00000
Attention: Xxx
Xxxxxxxx
Facsimile
No.: (000) 000-0000
Section
11.2 Interpretation. The
words “include,” “includes,” and “including” when used in this Agreement will be
deemed in each case to be followed by the words “without
limitation.” The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in any way
the
meaning or interpretation of this Agreement. The respective parties
hereto and their attorneys have negotiated this Agreement and the language
hereof will not be construed for or against either party, as
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drafter. A
reference to a section, schedule, or an exhibit will mean a section in, or
schedule or exhibit to, this Agreement unless otherwise explicitly set
forth.
Section
11.3 Counterparts. This
Agreement may be executed (i) in one or more partially or fully executed
counterparts, each of which will be deemed an original and will bind the
signatory, but all of which together will constitute the same instrument,
and
(ii) by facsimile.
Section
11.4 Miscellaneous. This
Agreement and the documents referred to in this Agreement (i) constitute
the
entire agreement among the parties with respect to the subject matter hereof
and
supersede all prior agreements and understandings, both written and oral,
among
the parties with respect to the subject matter hereof; (ii) are not intended
to
confer upon any other Person any rights or remedies hereunder except as set
forth in Section 7.9; and (iii) will not be assigned by operation of law
or
otherwise except as otherwise specifically provided.
Section
11.5 No
Joint Venture. Nothing
in this Agreement will be deemed or construed as creating a joint venture
or
partnership between any of the parties hereto. No party is by virtue
of this Agreement authorized as an agent, employee, or legal representative
of
any other party. No party will have the power to control the
activities and operations of any other and their status is, and at all times,
will continue to be, that of independent contractors with respect to each
other. No party will have any power or authority to bind or commit
any other. No party will hold itself out as having any authority or
relationship in contravention of this Section 11.5.
Section
11.6 Governing
Law. This
Agreement will be governed in all respects, including validity, interpretation,
and effect, by the laws of the State of New York, regardless of the laws
that
might otherwise govern under applicable principles of conflicts of laws
thereof.
Section
11.7 Amendment. Except
as may otherwise be provided in this Agreement, any provision of this Agreement
may be amended or modified by the parties hereto prior to the Closing Date,
if
and only if such amendment or modification is in writing and signed on behalf
of
each of the parties hereto.
Xxxxxxx
00.0 Xxxxxxxxx,
Xxxxxx. At
any time prior to the Effective Time, any party hereto may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties in this Agreement or in
any
document delivered pursuant hereto made to such party, and (iii) waive
compliance with any of the agreements, covenants, or conditions in this
Agreement for the benefit of such party. Any agreement on the part of
a party hereto to any such extension or waiver will be valid only if set
forth
in an instrument in writing and signed by the party against whom the waiver
is
to be effective.
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SUCH OMISSIONS.
Section
11.9 Successors
and Assigns. This
Agreement may not be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties,
except that Acquisition Sub may assign, in its sole discretion and without
the
consent of any other party, any or all of its rights, interests, and obligations
hereunder to Parent or one or more direct or indirect wholly owned subsidiaries
of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties
hereto
and their respective successors and assigns.
Section
11.10 Severability. If
any term or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by any rule of law, or public policy, all other conditions
and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby are not affected in any manner materially adverse to any party
hereto. If the final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
parties hereto agree that the body making the determination of invalidity
or
unenforceability shall have the power to reduce the scope, duration or area
of
the term or provision, to delete specific words or phrases, or to replace
any
invalid or unenforceable term or provision with a term or provision that
is
valid and enforceable and that comes closest to expressing the intention
of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.
Section
11.11 Submission
to Jurisdiction. All
actions and proceedings arising out of or relating to this Agreement will
be
heard and determined exclusively in the United States District Court for
the
Southern District of New York. The parties hereto hereby (a) submit
to the exclusive jurisdiction of the United States District Court for the
Southern District of New York for the purpose of any action arising out of
or
relating to this Agreement brought by any party hereto, and (b) irrevocably
waive, and agree not to assert by way of motion, defense, or otherwise, in
any
such action, any claim that it is not subject personally to the jurisdiction
of
the above-named courts, that its property is exempt or immune from attachment
or
execution, that the action is brought in an inconvenient forum, that the
venue
of the action is improper, or that this Agreement or the transactions
contemplated hereby may not be enforced in or by any of the above-named
courts.
Section
11.12 Waiver
of Jury Trial. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
AND
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 THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF.
Section
11.13 Stockholders’
Representative.
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(a) (i)
The holders of Company Stock, by virtue of having approved and adopted this
Agreement by executing and delivering the Stockholders’ Written Consent and as
acknowledged and agreed in the respective letters of transmittal delivered
in
connection with the surrender of their respective share certificates, and
without any further act of any holder of Company Stock, and (ii) the holders
of
Company Securities (other than Company Stock, Unvested Options or Unvested
Restricted Shares) as of immediately prior to the Effective Time (the
“Additional Holders”), as acknowledged and agreed in the respective
letters of transmittal delivered in connection with the exchange of their
respective Company Securities, and without any further act of any Additional
Holder, will be deemed (a) to have constituted and appointed, effective as
of
the Effective Time, OneLiberty Ventures 2000, L.P. (together with its permitted
successors, the “Stockholders’ Representative”) as their true and lawful
agent, proxy and attorney-in-fact, to execute and deliver this Agreement
and,
with respect to the holders of Company Stock, the Escrow Agreement on their
behalf and to exercise all or any of the powers, authority and discretion
conferred on the Stockholders’ Representative under this Agreement (including,
without limitation, Section 2.10, Section 7.7, Article IX and this Section
11.13) or any other agreement or instrument entered into or delivered in
connection with the transactions contemplated hereby, including, without
limitation, with respect to the holders of Company Stock, the Escrow Agreement,
and to take all actions necessary or appropriate in the judgment of the
Stockholders’ Representative for the accomplishment of the foregoing, and (b) to
have irrevocably agreed to, and be bound by and comply with, all of the
obligations of holders of Company Stock and the Additional Holders set forth
herein (including, without limitation, Section 2.10, Section 7.7, Article
IX and
this Section 11.13) and in the Escrow Agreement.
(b) Without
limiting the generality of Section 11.13(a), the Stockholders’ Representative
shall have and may exercise all of the powers conferred upon the Stockholders’
Representative pursuant to this Agreement and, with respect to the holders
of
Company Stock, the Escrow Agreement, which shall include, without
limitation:
(i) with
respect to the holders of Company Stock, the power to execute as Stockholders’
Representative the Escrow Agreement and any other agreement or instrument
entered into or delivered in connection with the transactions contemplated
hereby;
(ii) the
power to give or receive any notice or instruction permitted or required
under
this Agreement or, with respect to the holders of Company Stock, the Escrow
Agreement, or any other agreement, document or instrument entered into or
executed in connection herewith or, with respect to the holders of Company
Stock, therewith, to be given or received by the Company Stockholders or
the
Additional Holders, as applicable, and each of them (other than notice for
service of process relating to any action before a court or other tribunal
of
competent jurisdiction, which notice must be given to each Company Stockholder
and Additional Holder individually, as applicable), and to take any and all
action for and on behalf of the Company Stockholders and Additional Holders,
and
each of them, under this Agreement, with respect to the Company Stockholders,
the Escrow Agreement or any other such agreement, document or
instrument;
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(iii) with
respect to the holders of Company Stock, the power to (A) contest, negotiate,
defend, compromise or settle any actions for which a Parent Indemnified Party
may be entitled to indemnification through counsel selected by the Stockholders’
Representative and solely at the cost, risk and expense of the Company
Stockholders, (B) authorize payment to any Parent Indemnified Party of any
of
the Escrow Funds, or any portion thereof, in satisfaction of any claims for
indemnification hereunder by any Parent Indemnified Party, (C) agree to,
negotiate, enter into settlements and compromises of, and demand arbitration
and
comply with orders of courts and awards of arbitrators with respect to such
claims, (D) resolve any claims for indemnification hereunder by any Parent
Indemnified Party;
(iv) take
any actions in connection with the resolution of any dispute relating hereto
or
to the transactions contemplated hereby by arbitration, settlement or
otherwise;
(v) take
or forego any or all actions permitted or required of any Company Stockholder
or
any Additional Holder or necessary in the judgment of the Stockholders’
Representative for the accomplishment of the foregoing and all of the other
terms, conditions and limitations of this Agreement and, with respect to
the
holders of Company Stock, the Escrow Agreement;
(vi) the
power to consult with legal counsel, independent public accountants and other
experts selected by it, solely at the cost and expense of the Company
Stockholders and, with respect to Section 2.10, the Additional
Holders;
(vii) the
power to review, negotiate and agree to and authorize any payments from the
Escrow Funds in satisfaction of any payment obligation, in each case, on
behalf
of the Company Stockholders, as contemplated thereunder;
(viii) the
power to waive any terms and conditions of this Agreement or, with respect
to
the Company Stockholders, the Escrow Agreement providing rights or benefits
to
the Company Stockholders or the Additional Holders, as applicable, (other
than
the payment of the merger payments in accordance with the terms hereof and
in
the manner provided herein); and
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(ix) the
power to take any actions in regard to such other matters as are reasonably
necessary for the consummation of the transactions contemplated hereby or
as the
Stockholders’ Representative reasonably believes are in the best interests of
the Company Stockholders and, with respect to Section 2.10, the Additional
Holders.
(c) The
Stockholders’ Representative represents and warrants to Parent and Acquisition
Sub that:
(i) the
Stockholders’ Representative has all necessary power and authority to execute
and deliver this Agreement and the Escrow Agreement and to carry out his,
her or
its obligations hereunder and thereunder;
(ii) this
Agreement has been duly executed and delivered by the Stockholders’
Representative and, assuming the due authorization, execution and delivery
of
this Agreement by Parent, Acquisition Sub and Company, constitutes the valid
and
legally binding obligation of the Stockholders’ Representative, enforceable
against the Stockholders’ Representative in accordance with its terms;
and
(iii) the
Escrow Agreement will be duly executed and delivered by the Stockholders’
Representative and, assuming the due authorization, execution and delivery
of
the Escrow Agreement by Parent and the Escrow Agent, constitute a legal,
valid
and binding obligation of the Stockholders’ Representative, enforceable against
the Stockholders’ Representative in accordance with its terms.
(d) Any
notice given to the Stockholders’ Representative will constitute notice to each
and all of the Company Stockholders and, with respect to
Section 2.10, the Additional Holders at the time notice is given to the
Stockholders’ Representative. Any action taken by, or notice or
instruction received from, the Stockholders’ Representative will be deemed to be
action by, or notice or instruction from, each and all of the Company
Stockholders and, with respect to Section 2.10, the Additional
Holders. Parent, Acquisition Sub, Company and the Surviving
Corporation may, and the Escrow Agent will, disregard any notice or instruction
received from any one or more individual Company Stockholders and, with respect
to Section 2.10, Additional Holders.
(e) The
Stockholders’ Representative hereby agrees to do such acts, and execute further
documents, as shall be necessary to carry out the provisions of this Agreement
and the Escrow Agreement.
(f) The
Stockholders’ Representative may be changed by the Company Stockholders and
Additional Holders from time to time upon not less than thirty (30) days’ prior
written notice to Parent, provided that a Majority Interest (as
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defined
below) agree to such removal of OneLiberty Ventures 2000, L.P. and any
successors thereto and to the identity of the substituted agent. A
Stockholders’ Representative may resign at any time upon giving at least thirty
(30) days’ written notice to the holders of interest in the Escrow Account and
the Additional Holders, except that no such resignation will become effective
until the appointment of a successor Stockholders’
Representative. Upon notice of resignation of a Stockholders’
Representative or a successor Stockholders’ Representative thereto, a Majority
Interest will agree on a successor Stockholders’ Representative thereto within
thirty (30) days after receiving such notice. If a Majority Interest
fails to agree upon a successor Stockholders’ Representative within such time,
the resigning Stockholders’ Representative will have the right to appoint a
successor Stockholders’ Representative, or if a Stockholders’ Representative is
not designated within forty-five (45) days after receipt of the initial notice,
Parent will designate a successor Stockholders’ Representative that is a Company
Stockholder or an affiliate thereof. Any successor Stockholders’
Representative will execute and deliver an instrument accepting such appointment
and, without further acts, will be vested with all the rights, powers, and
duties of the predecessor Stockholders’ Representative as if originally named as
Stockholders’ Representative, and thereafter the resigning Stockholders’
Representative will be discharged from any further duties and liability under
this Agreement. No bond will be required of any Stockholders’
Representative, and no Stockholders’ Representative will receive compensation
for his or her services. Notices or communications to or from the
Stockholders’ Representative will constitute notice to or from each of the
Company Stockholders and, with respect to Section 2.10, the Additional Holders
for all matters relating to this Agreement. For purposes of this
Section 11.13, “Majority Interest” means, collectively, the holders of a
majority interest in the Escrow Funds and the holders of a majority interest
in
the Total Earnout Amount (assuming payout of the Total Earnout Amount to
all
eligible holders).
(g) The
Stockholders’ Representative will not be liable for any act done or omitted
hereunder as the Stockholders’ Representative while acting in good
faith. Company Stockholders on whose behalf the Escrow Amount is
contributed will severally indemnify (in proportion to their relative interests
in the Escrow Amount) the Stockholders’ Representative and hold the
Stockholders’ Representative harmless against all loss, liability, or expense
incurred without bad faith or willful misconduct on the part of such
Stockholders’ Representative and arising out of or in connection with the
acceptance or administration of such Stockholders’ Representative’s duties
hereunder, including the reasonable fees and expenses of any legal counsel
retained by the Stockholders’ Representative. The Stockholders’
Representative will be entitled to the advance and reimbursement, from the
Stockholders’ Representative Expense Fund (or from the Escrow Funds in
accordance with the terms of the Escrow Agreement), of costs and expenses
incurred by or on behalf of the Stockholders’ Representative in the performance
of their duties hereunder, including the reasonable fees and expenses of
any
legal counsel retained by the Stockholders’ Representative. Upon
termination of the Stockholders’ Representative’s responsibilities hereunder,
the Stockholders’ Representative shall distribute the remaining portion of the
Stockholders’ Representative Expense Fund, if any, to the Company Stockholders
in proportion to each Company Stockholder’s Aggregate Allocable Portion of the
Escrow Amount.
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(h) A
decision, act, consent, or instruction of the Stockholders’ Representative
relating to this Agreement will constitute a decision of the Company
Stockholders and, with respect to Section 2.10, the Additional Holders and
will
be final, binding, and conclusive upon each such holder. Parent and
all other persons entitled to indemnification under the Escrow Agreement
or any
other document or agreement entered into in connection herewith or therewith
(the “Indemnified Persons”), may rely upon any such decision, act,
consent, or instruction of the Stockholders’ Representative as being the
decision, act, consent, or instruction of the Company Stockholders and, with
respect to Section 2.10, the Additional Holders. Parent and all other
Indemnified Persons are hereby relieved from any liability to any Person
for any
acts done by them in accordance with such decision, act, consent, or instruction
of the Stockholders’ Representative.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
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(*)
DENOTE
SUCH OMISSIONS.
IN
WITNESS WHEREOF, Parent, Acquisition
Sub, Company, and the Stockholders’ Representative have signed or caused their
respective duly authorized officers to sign this Agreement, all as of the
date
first written above.
|
GSI
COMMERCE, INC.
|
|
|
By:
/s/ Xxxxxxx X. Xxxx
|
|
|
Name: Xxxxxxx
X. Xxxx
|
|
|
Title:
Executive Vice President
|
|
DOLPHIN
ACQUISITION CORPORATION
|
|
|
By:
/s/ Xxxxxxx X. Xxxx
|
|
|
Name: Xxxxxxx
X. Xxxx
|
|
|
Title:
President
|
|
E-DIALOG,
INC.
|
|
|
By:
/s/ Xxxx Xxxxx
|
|
|
Name: Xxxx
Xxxxx
|
|
|
Title:
Chief Executive Officer
|
|
ONELIBERTY
VENTURES 2000, L.P., AS STOCKHOLDERS’ REPRESENTATIVE
(solely
for purposes of Section 2.10, Section 7.7, Article IX and Section
11.13)
|
|
|
By:
OneLiberty Partners 2000, LLC
its
General Partner
|
|
|
By:
/s/ Xxxxxxx Xxxxx
|
|
|
Name: Xxxxxxx
Xxxxx
|
|
|
Title:
Managing Member
|
[Signature Page to Agreement and Plan of Merger]
