EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETCENTIVES INC.,
ARACHNID ACQUISITION CORPORATION
AND
MAXMILES, INC.
January 31, 2000
TABLE OF CONTENTS
Page
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SECTION ONE 1
1. The Merger......................................................... 1
1.1 The Merger.................................................. 1
1.2 Closing; Effective Time..................................... 1
1.3 Effect of the Merger........................................ 2
1.4 Certificate of Incorporation; Bylaws........................ 2
1.5 Directors and Officers...................................... 2
1.6 Effect on Capital Stock..................................... 2
1.7 Surrender of Certificates................................... 5
1.8 No Further Ownership Rights in Target Capital Stock......... 6
1.9 Tax and Accounting Consequences............................. 7
1.10 Taking of Necessary Action; Further Action.................. 7
1.11 Withholding................................................. 7
1.12 Lost, Stolen or Destroyed Certificates...................... 7
SECTION TWO 7
2. Representations and Warranties of Target........................... 7
2.1 Organization Standing and Power; Subsidiaries............... 8
2.2 Certificate of Incorporation and Bylaws..................... 8
2.3 Capital Structure........................................... 8
2.4 Authority................................................... 9
2.5 No Conflicts; Required Filings and Consents................. 9
2.6 Financial Statements........................................ 10
2.7 Absence of Undisclosed Liabilities.......................... 10
2.8 Absence of Certain Changes.................................. 11
2.9 Litigation.................................................. 12
2.10 Restrictions on Business Activities......................... 12
2.11 Permits..................................................... 13
2.12 Title to Property........................................... 13
2.13 Intellectual Property....................................... 14
2.14 Environmental Matters....................................... 15
2.15 Taxes....................................................... 16
2.16 Employee Benefit Plans...................................... 18
2.17 Certain Agreements Affected by the Merger................... 19
2.18 Employee Matters............................................ 20
2.19 Material Contracts.......................................... 20
2.20 Interested Party Transactions............................... 21
2.21 Insurance................................................... 22
2.22 Compliance With Laws........................................ 22
2.23 Minute Books................................................ 22
2.24 Complete Copies of Materials................................ 22
2.25 Brokers' and Finders' Fees.................................. 22
2.26 Vote Required............................................... 22
TABLE OF CONTENTS
(continued)
Page
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2.27 Board Approval.............................................. 22
2.28 Accounts Receivable......................................... 22
2.29 Customers and Suppliers..................................... 23
2.30 Third Party Consents........................................ 23
2.31 Representations Complete.................................... 23
SECTION THREE 23
3. Representations and Warranties of Acquiror and Merger Sub......... 23
3.1 Organization, Standing and Power............................ 24
3.2 Authority................................................... 24
3.3 No Conflict; Required Filings and Consents.................. 24
3.4 Acquiror Common Stock....................................... 25
3.5 SEC Documents; Financial Statements......................... 25
3.6 Litigation.................................................. 25
SECTION FOUR 26
4. Additional Agreements............................................. 26
4.1 Best Efforts and Further Assurances......................... 26
4.2 Consents; Cooperation....................................... 26
4.3 Public Disclosure........................................... 27
4.4 State Statutes.............................................. 27
4.5 Blue Sky Laws............................................... 27
4.6 Maintenance of Target Indemnification Obligations........... 27
4.7 Filing of Form S-8.......................................... 28
SECTION FIVE 28
5. Actions to be Taken at the Effective Time......................... 28
5.1 Certificates of Acquiror, Merger Sub and Target............. 28
5.2 Legal Opinions.............................................. 29
5.3 Good Standing............................................... 29
5.4 Escrow Agreement............................................ 29
5.5 Third Party Consents........................................ 30
5.6 Resignation of Directors and Officers....................... 30
5.7 Employment Agreement........................................ 30
5.8 Stock Restriction Agreement................................. 30
5.9 Registration Rights......................................... 30
SECTION SIX 30
6. Escrow and Indemnification........................................ 30
6.1 Survival of Representations and Warranties.................. 30
6.2 Escrow Fund................................................. 31
6.3 Indemnification............................................. 31
6.4 Damages Threshold........................................... 32
6.5 Escrow Period............................................... 32
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TABLE OF CONTENTS
(continued)
Page
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6.6 Distributions; Voting....................................... 32
6.7 Method of Asserting Claims.................................. 33
6.8 Representative of the Stockholders; Power of Attorney....... 33
6.9 Adjustment to Escrow........................................ 33
SECTION SEVEN 34
7. General Provisions................................................ 34
7.1 Expenses.................................................... 34
7.2 Notices..................................................... 34
7.3 Interpretation.............................................. 35
7.4 Counterparts................................................ 35
7.5 Entire Agreement; Nonassignability; Parties in Interest..... 35
7.6 Severability................................................ 35
7.7 Remedies Cumulative......................................... 36
7.8 Governing Law............................................... 36
7.9 Rules of Construction....................................... 36
7.10 Amendments and Waivers...................................... 36
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AGREEMENT AND PLAN OF REORGANIZATION
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This Agreement and Plan of Reorganization (the "Agreement") is made and
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entered into as of January 31, 2000, by and among Netcentives Inc., a Delaware
corporation ("Acquiror"), Arachnid Acquisition Corporation, a Delaware
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corporation ("Merger Sub") and wholly owned subsidiary of Acquiror, and
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MaxMiles, Inc., a Delaware corporation ("Target").
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RECITALS
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A. The Boards of Directors of Target, Acquiror and Merger Sub believe it
is in the best interests of their respective companies and the stockholders of
their respective companies that Target and Merger Sub combine into a single
company through the merger of Merger Sub and Target (the "Merger") and, in
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furtherance thereof, have approved the Merger. Pursuant to the Merger, among
other things, the outstanding shares of capital stock of Target (the "Target
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Capital Stock") shall be converted into shares of the Common Stock of Acquiror
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(the "Acquiror Common Stock"), at the rates set forth herein.
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B. Target, Acquiror and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
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reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code.
AGREEMENT
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The parties hereby agree as follows:
SECTION ONE
1. The Merger.
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1.1 The Merger At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement, the Certificate
of Merger attached hereto as Exhibit A (the "Certificate of Merger") and the
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applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
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Merger Sub shall be merged with and into Target, the separate corporate
existence of Merger Sub shall cease and Target shall continue as the surviving
corporation of the Merger. Target, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
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1.2 Closing; Effective Time. The closing of the transactions
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contemplated by this Agreement (the "Closing") shall take place concurrently
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with the execution of this Agreement by the parties hereto (the "Closing Date").
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As soon as practicable following Closing, the parties shall cause the Merger to
be consummated by filing the Certificate of Merger with the Secretary of State
of the State of Delaware, in accordance with the relevant provisions of Delaware
Law (the time of such filing being the "Effective Time"). The Closing shall take
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place at the offices of
Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, or at such other
location as the parties agree.
1.3 Effect of the Merger. At the Effective Time, the effect of the
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Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. At the Effective Time, all the property,
rights, privileges, powers and franchises of Target and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Target and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation,
provided, however, that the name of the Surviving Corporation will be "MaxMiles,
Inc.".
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
1.5 Directors and Officers. At the Effective Time, the directors of
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Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and the officers of Merger Sub immediately prior to the
Effective Time, shall be the officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any
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action on the part of Merger Sub, Target or any of their respective
stockholders, the following shall occur at the Effective Time:
(a) Conversion of Target Capital Stock. Each of the issued and
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outstanding shares of Common Stock, par value $0.01 per share, and Preferred
Stock, par value $0.01 per share, of Target (the "Target Common Stock" and
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"Target Preferred Stock," respectively) issued and outstanding immediately prior
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to the Effective Time (other than shares to be cancelled pursuant to Section
1.6(b) and shares, if any, held by persons who have not voted such shares for
approval of the Merger and with respect to which such persons shall become
entitled to exercise dissenters' rights in accordance with Section 262 of
Delaware Law ("Dissenting Shares")) shall be converted into the right to receive
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that fraction of Acquiror Common Stock as shall equal the Stock Exchange Ratio
(as defined below) (the "Merger Consideration"). All shares of Target Capital
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Stock, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Target Capital Stock shall cease to
have any
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rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 1.7, without interest.
(b) Cancellation of Target Capital Stock Owned by Acquiror or Target.
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At the Effective Time, all shares of Target Capital Stock that are owned by
Target as treasury stock, each share of Target Capital Stock owned by Acquiror
or any direct or indirect wholly owned subsidiary of Acquiror or of Target
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof.
(c) Target Stock Options and Warrants.
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(i) All options to purchase Target Common Stock (the "Target Options")
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issued and outstanding (whether or not exercisable, whether or not vested, and
whether or not performance-based) under the Target 1998 Key Employee Stock
Option Plan, as amended (the "Target Stock Option Plan"), shall remain
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outstanding following the Effective Time. Schedule 1.6(c) hereto sets forth a
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true and complete list as of the date of this Agreement of all holders of
outstanding options under the Target Stock Option Plan, including the number of
shares of Target Capital Stock subject to each such option, the exercise or
vesting schedule, the exercise price per share and the term of each such option.
(ii) At the Effective Time, the Target Options shall, by virtue of the
Merger and without any further action on the part of the Company or the holder
thereof, be assumed by Acquiror in accordance with this Section 1.6(c). Each
such Target Option so assumed by Acquiror under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the Target
Stock Option Plan immediately prior to the Effective Time, except that (i) such
Target Option will be exercisable for that number of whole shares of Acquiror
Common Stock equal to the product of the number of shares of Target Common Stock
that were issuable upon exercise of such Target Option immediately prior to the
Effective Time multiplied by the Stock Exchange Ratio, rounded down to the
nearest whole number of shares of Acquiror Common Stock and (ii) the per share
exercise price for the shares of Acquiror Common Stock issuable upon exercise of
such assumed option will be equal to the quotient determined by dividing the
exercise price per share of Target Common Stock at which such Target Option was
exercisable immediately prior to the Effective Time by the Stock Exchange Ratio,
rounded up to the nearest whole cent.
(iii) Except as set forth on Schedule 1.6(c), Target has not taken,
and shall not take, any action that would result in the accelerated vesting,
exercisability or payment of Target Options as a consequence of the execution
of, or consummation of the transactions contemplated by, this Agreement.
(iv) It is the intention of the parties that the Target Options
assumed by Acquiror qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent such Target Options
qualified as incentive stock options prior to the Effective Time. As soon as
practicable after the Effective Time, Acquiror will issue to each person who,
immediately prior to the Effective Time was a holder of a Target Option
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under the Target Stock Option Plan, a written document evidencing the foregoing
assumption of such option by Acquiror.
(d) Capital Stock of Merger Sub. At the Effective Time, each share of
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Common Stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
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immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of Common Stock of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the Surviving Corporation.
(e) Dissenters' Rights. Any Dissenting Shares shall not be converted
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into Acquiror Common Stock but shall instead be converted into the right to
receive such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to Delaware Law. Target agrees that, except with the
prior written consent of Acquiror, or as required under Delaware Law, it will
not voluntarily make any payment with respect to, or settle or offer to settle,
any such purchase demand. Each holder of Dissenting Shares who, pursuant to the
provisions of Delaware Law, becomes entitled to payment of the fair value for
shares of Target Capital Stock shall receive payment therefor (but only after
such value shall have been agreed upon or finally determined pursuant to such
provisions). If, after the Effective Time, any Dissenting Shares shall lose
their status as Dissenting Shares, Acquiror shall issue and deliver, upon
surrender by such holder of certificate or certificates representing shares of
Target Capital Stock, the number of shares of Acquiror Common Stock to which
such holder would otherwise be entitled under this Section 1.6 and the
Certificate of Merger less the number of shares allocable to such holder, if
any, that have been deposited in the Escrow Fund (as defined below) in respect
of such shares of Acquiror Common Stock pursuant to Section 6 below.
(f) Fractional Shares. No fraction of a share of Acquiror Common
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Stock will be issued, but in lieu thereof each holder of shares of Target
Capital Stock who would otherwise be entitled to a fraction of a share of
Acquiror Common Stock (after aggregating all fractional shares of Acquiror
Common Stock to be received by such holder) shall receive from Acquiror an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) the average closing price of a share of
Acquiror Common Stock for the five (5) most recent days that Acquiror Common
Stock has traded ending on the trading day immediately prior to the Effective
Time, as reported on the Nasdaq Stock Market (the "Closing Price").
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(g) Definitions. For purposes of this Agreement, the terms set
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forth below shall be defined as follows:
(i) The "Stock Exchange Ratio" shall be equal to the quotient obtained
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by dividing (A) 175,000 shares of Acquiror Common Stock (the "Total Acquiror
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Shares") by (B) the Target Fully Diluted Shares Outstanding.
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(ii) The "Target Fully Diluted Shares Outstanding" shall equal the sum
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of (1) the total number of shares of Target Common Stock issued and outstanding
as of the Effective Time, (2) the total number of shares of Target Preferred
Stock issued and
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outstanding as of the Effective Time, plus (3) the maximum number of shares of
Target Common Stock issuable upon exercise or conversion of all outstanding
options and securities exercisable for or convertible into Target Common Stock
as of the Effective Time.
1.7 Surrender of Certificates.
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(a) Exchange Agent. American Stock Transfer and Trust shall act as
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exchange agent (the "Exchange Agent") in the Merger.
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(b) Acquiror to Provide Common Stock and Cash. Promptly after the
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Effective Time, Acquiror shall make available to the Exchange Agent for exchange
in accordance with this Section 1, through such reasonable procedures as
Acquiror may adopt, (i) the shares of Acquiror Common Stock issuable pursuant to
Section 1.6(a) less the number of shares of Acquiror Common Stock to be
deposited into an escrow fund (the "Escrow Fund") pursuant to the requirements
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of Section 6 and (ii) cash in an amount sufficient to permit payment of cash in
lieu of fractional shares pursuant to Section 1.6(f).
(c) Exchange Procedures. Within ten business days after the Effective
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Time, the Surviving Corporation shall cause to be mailed to each holder of
record of a certificate or certificates (the "Certificates") which immediately
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prior to the Effective Time represented outstanding shares of Target Capital
Stock, whose shares were converted into the right to receive shares of Acquiror
Common Stock (and cash in lieu of fractional shares) pursuant to Section 1.6,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
receipt of the Certificates by the Exchange Agent, and shall be in such form and
have such other provisions as Acquiror may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Acquiror Common Stock (and cash in lieu
of fractional shares). Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Acquiror,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Acquiror Common Stock less the number of shares of
Acquiror Common Stock to be deposited in the Escrow Fund on such holder's behalf
pursuant to Section 6 below, if any, and payment in lieu of fractional shares
which such holder has the right to receive pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be cancelled. Until so surrendered,
each Certificate will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the ownership of the number of full shares of
Acquiror Common Stock into which such shares of Target Capital Stock shall have
been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6. As soon as
practicable after the Effective Time, and subject to and in accordance with the
provisions of Section 6 below, Acquiror shall cause to be deposited with the
Escrow Agent (as defined in Section 6 below) a certificate or certificates
representing 17,500 shares of Acquiror Common Stock which shall be registered in
the name of the Escrow Agent as nominee for the holders of Certificates
cancelled pursuant to this Section 1.7 (the "Initial Escrow Shares"). Such
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shares shall be beneficially owned by such holders and shall be held in escrow
and shall be available to compensate Acquiror for certain damages as provided in
Section 6 below. To the
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extent not used for such purposes, such shares shall be released, all as
provided in Section 6 below.
(d) No Liability. Notwithstanding anything to the contrary in this
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Section 1.7, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Dissenting Shares. The provisions of this Section 1.7 shall also
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apply to Dissenting Shares that lose their status as such, except that the
obligations of Acquiror under this Section 1.7 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 number of shares of Acquiror Common Stock to
which such holder is entitled pursuant to Section 1.6 hereof.
(f) Distributions With Respect to Unexchanged Shares. No dividends or
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other distributions with respect to Acquiror Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Acquiror Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
payable (but for the provisions of this Section 1.7(f)) with respect to such
shares of Acquiror Common Stock.
(g) Transfers of Ownership. If any certificate for shares of Acquiror
----------------------
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of such
issuance that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Acquiror or any agent designated by it any transfer
or other taxes required by reason of the issuance of a certificate for shares of
Acquiror Common Stock in any name other than that of the registered holder of
the Certificate surrendered, or established to the satisfaction of Acquiror or
any agent designated by it that such tax has been paid or is not payable.
1.8 No Further Ownership Rights in Target Capital Stock. All shares
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of Acquiror Common Stock issued upon the surrender for exchange of shares of
Target Capital Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Target Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Target Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Section 1.
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1.9 Tax and Accounting Consequences. It is intended by the parties
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that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code.
1.10 Taking of Necessary Action; Further Action. If at any time
------------------------------------------
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Target and Merger Sub, the officers and directors of
Target and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
1.11 Withholding. Each of the Surviving Corporation and Acquiror
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shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Target Capital
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code or any provision of applicable state,
local or foreign tax laws. To the extent that amounts are so withheld by the
Surviving Corporation or Acquiror, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to such
holder in respect of which such deduction and withholding was made by the
Surviving Corporation or Acquiror, as the case may be.
1.12 Lost, Stolen or Destroyed Certificates. In the event any
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Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Acquiror Common Stock (and cash in lieu of fractional shares) as may be required
pursuant to Section 1.6; provided, however, that Acquiror may, in its reasonable
discretion and as a condition precedent to such issuance, require the owner of
such lost, stolen or destroyed Certificates to deliver a bond in such sum as
Acquiror may reasonably direct as indemnity against any claim that may be made
against Acquiror, the Surviving Corporation or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
SECTION TWO
2. Representations and Warranties of Target.
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In this Agreement, any reference to a "Material Adverse Effect" with
-----------------------
respect to any entity or group of entities means any event, change or effect
that, when taken individually or together with all other related adverse changes
and effects, is or is reasonably likely to be materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, business
(as currently conducted or as presently contemplated it will be conducted),
operations, or results of operations of such entity and its subsidiaries, taken
as a whole, or to prevent or materially delay consummation of the Merger or
otherwise to prevent such entity and its subsidiaries from performing their
obligations under this Agreement.
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In this Agreement, any reference to a party's "knowledge" means such
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party's actual knowledge after due and diligent inquiry of officers, directors
and other employees of such party reasonably believed to have knowledge of the
matter in questions.
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Target to Acquiror immediately prior to the execution
and delivery of this Agreement and referring to the representations and
warranties in this Agreement (the "Target Disclosure Schedule"), Target
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represents and warrants to Acquiror and Merger Sub as follows:
2.1 Organization; Subsidiaries. Target is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Target has the requisite corporate power and
authority and all necessary government approvals to own, lease and operate its
properties and to carry on its business as now being conducted and as proposed
to be conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on Target. Target is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a Material
Adverse Effect on Target. Target has no subsidiaries and except as set forth in
Section 2.1 of the Target Disclosure Schedule, Target does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity.
2.2 Certificate of Incorporation and Bylaws. Target has delivered a
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true and correct copy of the Certificate of Incorporation and Bylaws of Target,
and a true and correct copy of the Certificate of Designation of the Series A
Preferred Stock of Target, each as amended to date, to Acquiror. Target is not
in violation of any of the provisions of its Certificate of Incorporation or
Bylaws or equivalent organizational documents.
2.3 Capital Structure. The authorized capital stock of Target
-----------------
consists of 1,500,000 shares of Common Stock and 500,000 shares of Preferred
Stock, 250,000 of which have been designated as Series A Preferred Stock (the
"Series A Preferred") of which there were issued and outstanding as of the close
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of business on January 10, 2000, 199,419 shares of Common Stock, 199,997.70
shares of Series A Preferred Stock (the "Series A Preferred"). There are no
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other outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting
securities other than pursuant to the exercise of options outstanding as of such
date under the Target Stock Option Plan. All outstanding shares of Target
Capital Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof, and are not subject to
preemptive rights or rights of first refusal created by statute, the Certificate
of Incorporation or Bylaws of Target or any agreement to which Target is a party
or by which it is bound. All outstanding shares of Target Common Stock and
Series A Preferred were issued in compliance with all applicable federal and
state securities laws. As of the close of business on January 10, 2000, Target
has reserved 60,000
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shares of Common Stock for issuance to employees, directors and consultants
pursuant to the Target Stock Option Plan, of which none have been issued
pursuant to option exercises or direct stock purchases and 57,224 shares are
subject to outstanding, unexercised options. Schedule 1.6(c) of this Agreement
sets forth the number of outstanding Target Options and all other rights to
acquire shares of Target Common Stock pursuant to the Target Stock Option Plan
and the applicable exercise prices. Except (i) for the Target Options, (ii) for
the rights created pursuant to this Agreement and as disclosed in Section 2.3 of
the Target Disclosure Schedule, and (iii) for Target's right to repurchase any
unvested shares under the Target Stock Option Plan, there are no options,
warrants, calls, rights, commitments, agreements or arrangements of any
character to which Target is a party or by which Target is bound relating to the
issued or unissued capital stock of Target or obligating Target to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of Target or obligating
Target to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. Except as set forth in Section 2.3 of the Target Disclosure
Schedule, there are no contracts, commitments or agreements relating to voting,
purchase or sale of Target's capital stock (i) between or among Target and any
of its stockholders and (ii) to the best of Target's knowledge, between or among
any of Target's stockholders. The terms of the Target Stock Option Plan permit
the assumption or substitution of options to purchase Acquiror Common Stock as
provided in this Agreement, with the approval of the Board of Directors of
Target, without the consent or approval of the holders of such securities, the
Target stockholders, or otherwise. True and complete copies of all agreements
and instruments relating to or issued under the Target Stock Option Plan have
been made available to Acquiror and such agreements and instruments have not
been amended, modified or supplemented, and there are no agreements to amend,
modify or supplement such agreements or instruments in any case from the form
made available to Acquiror.
2.4 Authority. Target has all requisite corporate power and
---------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Target. Target's Board of
Directors and stockholders have unanimously approved the Merger and this
Agreement. This Agreement has been duly executed and delivered by Target and
assuming due authorization, execution and delivery by Parent and Merger Sub,
constitutes the valid and binding obligation of Target enforceable against
Target in accordance with its terms, (except to the extent that enforcement may
be affected by laws relating to bankruptcy, reorganization, insolvency and
creditors' rights and by the availability of injunctive relief, specific
performance and other equitable remedies).
2.5 No Conflicts; Required Filings and Consents.
-------------------------------------------
(a) Except as set forth on Section 2.5 of the Target Disclosure
Schedule, the execution and delivery of this Agreement by Target does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Target, as amended, including
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certificates of designation or other documents defining the rights and
preferences of the Target Capital Stock, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Target or any Subsidiary or any of their properties or
assets.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
-------------------
required by or with respect to Target or any Subsidiary in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger as
provided in Section 1.2 and by Delaware Law, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under the Securities Exchange Act of 1934, as amended (the "Exchange
--------
Act"), the Securities Act of 1933, as amended (the "Securities Act"), applicable
--- --------------
state securities laws and the securities laws of any foreign country; (iii) such
filings as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended ("HSR"); and (iv) such other consents, authorizations,
---
filings, approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on Target and would not prevent, or materially
alter or delay any of the transactions contemplated by this Agreement.
2.6 Financial Statements. Section 2.6 of the Target Disclosure
--------------------
Schedule includes a true, correct and complete copy of Target's unaudited
financial statements for each of the fiscal years ended December 31, 1997, 1998
and 1999, respectively, (collectively, the "Financial Statements"). The
--------------------
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP"), except that the Financial Statements do not have
----
notes thereto, applied on a consistent basis throughout the periods indicated
and with each other. The Financial Statements fairly present in all material
respects the financial condition and operating results of Target as of the
dates, and for the periods, indicated therein, subject to normal year-end audit
adjustments. Target maintains and will continue to maintain a standard system
of accounting established and administered in accordance with GAAP.
2.7 Absence of Undisclosed Liabilities. Except as set forth in
----------------------------------
Section 2.7 of the Target Disclosure Schedule, Target has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet for the period ended December 31, 1999 (the "Target Balance
--------------
Sheet"), (ii) those incurred in the ordinary course of business and not required
-----
to be set forth in the Target Balance Sheet under generally accepted accounting
principles, (iii) those incurred in the ordinary course of business since the
date of the Target Balance Sheet and consistent with past practice, and (iv)
those incurred in connection with the execution of this Agreement.
2.8 Absence of Certain Changes. Except as set forth in Section 2.8
--------------------------
of the Target Disclosure Schedule, since December 31, 1999 ( the "Target Balance
--------------
Sheet Date") there has not been, occurred or arisen any:
----------
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(a) transaction by Target except in the ordinary course of business
as conducted on that date and consistent with past practices (other than the
negotiation of the Merger and the execution of any documents in connection
therewith, including a letter of intent and term sheet);
(b) amendments or changes to the Certificate of Incorporation or
Bylaws of Target;
(c) capital expenditure or commitment by Target, in any individual
amount exceeding $10,000, or in the aggregate, exceeding $25,000;
(d) destruction of, damage to, or loss of any assets (including,
without limitation, intangible assets), business or customer of Target or any
Subsidiary (whether or not covered by insurance) which would constitute a
Material Adverse Effect;
(e) claim of wrongful discharge or other unlawful labor practice
or action;
(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in making
or reversing accruals) by Target or any revaluation by Target of any of its
assets;
(g) declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of Target, or any direct or
indirect redemption, purchase or other acquisition by Target of any of its
capital stock, except repurchases of Target Common Stock from terminated Target
employees at the original per share purchase price of such shares;
(h) increase in the salary or other compensation payable or to become
payable by Target to any officers, directors, employees or advisors of Target,
except in the ordinary course of business consistent with past practice, or the
declaration, payment, or commitment or obligation of any kind for the payment by
Target of a bonus or other additional salary or compensation to any such person
except as otherwise contemplated by this Agreement, or other than as set forth
in Section 2.16 below, the establishment of any bonus, insurance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation, the granting of stock options, stock appreciation rights,
performance awards), stock purchase or other employee benefit plan;
(i) sale, lease, license of other disposition of any of the assets or
properties of Target, except in the ordinary course of business and not in
excess of $10,000 in the aggregate;
(j) termination or material amendment of any Material Contract (as
defined below), to which Target is a party or by which it is bound;
(k) loan by Target to any person or entity, or guaranty by Target of
any loan, except for (x) travel or similar advances made to employees in
connection with their
-11-
employment duties in the ordinary course of business, consistent with past
practices and (y) trade payables not in excess of $10,000 in the aggregate and
in the ordinary course of business, consistent with past practices;
(l) waiver or release of any right or claim of Target, including any
write-off or other compromise of any account receivable of Target, in excess of
$10,000 in the aggregate;
(m) issuance or sale by Target of any of its shares of capital stock,
or securities exchangeable, convertible or exercisable therefor, or of any other
of its securities;
(n) material change in pricing or royalties set or charged by Target
to its customers or licensees or, in pricing or royalties set or charged by
persons who have licensed Intellectual Property to Target;
(o) event or condition of any character that has or could reasonably
be expected to have a Material Adverse Effect on the Company; or
(p) agreement by Target, or any officer or employee of either on
behalf of such entity to do any of the things described in the preceding clauses
(a) through (r) (other than negotiations with Acquiror and its representatives
regarding the transactions contemplated by this Agreement).
2.9 Litigation. There is no private or governmental action, suit,
----------
proceeding, claim, arbitration or, to the knowledge of Target, investigation
pending before any agency, court or tribunal, foreign or domestic, or, to the
knowledge of Target, threatened against Target or any of their respective
properties or any of their respective officers or directors (in their capacities
as such) that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on Target. There is no judgment, decree or order
against Target or, to the best knowledge of Target, any of their respective
directors or officers (in their capacities as such), that could reasonably be
expected to have a Material Adverse Effect on Target. All litigation to which
Target is a party (or, to the knowledge of Target, threatened to become a party)
is set forth in Section 2.9 of the Target Disclosure Schedule.
2.10 Restrictions on Business Activities. Except as set forth in
-----------------------------------
Section 2.10 of the Target Disclosure Schedule, there is no agreement, judgment,
injunction, order or decree binding upon Target which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any current
business practice or future business practice (as presently contemplated by
Target) of Target, any acquisition of property by Target or the overall conduct
of business by Target as currently conducted or as proposed to be conducted by
Target. Except as set forth in Section 2.10 of the Target Disclosure Schedule,
Target has not entered into any agreement under which Target is restricted from
selling, licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
-12-
2.11 Permits. Target is in possession of all franchises, grants,
-------
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders necessary for Target, to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Target Authorizations") and no suspension or cancellation of any Target
---------------------
Authorization is pending or, to the best of Target's knowledge, threatened,
except where the failure to have, or the suspension or cancellation of, any
Target Authorization would not have a Material Adverse Effect on Target. To
Target's knowledge, Target is not in conflict with, or in default or violation
of, (i) any laws applicable to Target or by which any property or asset of
Target is bound or affected, (ii) any Target Authorization, except for any such
conflict, default or violation that would not, individually or in the aggregate,
have a Material Adverse Effect on Target.
2.12 Title to Property.
-----------------
(a) Target has good and marketable title to all of its properties,
interests in properties and assets, real and personal, reflected in the Target
Balance Sheet or acquired after the Target Balance Sheet Date (except
properties, interests in properties and assets sold or otherwise disposed of
since the Target Balance Sheet Date in the ordinary course of business), or with
respect to leased properties and assets, valid leasehold interests in, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current taxes not yet due and payable, (ii)
such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties, and (iii) liens securing debt which is reflected on
the Target Balance Sheet. The property and equipment of Target that are used in
the operation of its business are in good operating condition and repair,
ordinary wear and tear excepted. All properties used in the operations of
Target are reflected in the Target Balance Sheet to the extent United States
GAAP requires the same to be reflected. Section 2.12(a) of the Target
Disclosure Schedule sets forth a true, correct and complete list of all real
property owned or leased by Target, the name of the lessor, the date of the
lease and each amendment thereto and the aggregate annual rental and other fees
payable under such lease. Such leases are in good standing are valid and
effective in accordance with their respective terms and Target has received no
notice under any such leases regarding any existing default by Target or event
of default by Target (or event which with notice or lapse of time, or both,
would constitute a default by Target).
(b) Section 2.12(b) of the Target Disclosure Schedule also sets forth
a true, correct and complete list of all equipment valued in excess of $1000
(the "Equipment") owned or leased by Target and its Subsidiaries, and such
---------
Equipment is, taken as a whole, (i) reasonably adequate for the conduct of
Target's business, consistent with its past practice, and (ii) in good operating
condition (except for ordinary wear and tear).
2.13 Intellectual Property.
---------------------
(a) Target is the sole and exclusive owner of (free and clear of any
liens, except as set forth on Section 2.13 of the Target Disclosure Schedule),
or is licensed or otherwise possess legally enforceable rights to use, all
patents, patent rights, trademarks,
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trademark rights, trade names, trade name rights, service marks, copyrights, and
any applications for any of the foregoing, maskworks, net lists, schematics,
industrial models, inventions, technology, know-how, trade secrets, inventory,
ideas, algorithms, processes, computer software programs or applications (in
both source code and object code form), and tangible or intangible proprietary
information or material ("Intellectual Property") that are used or proposed to
---------------------
be used in the business of Target as currently conducted or as proposed to be
conducted by Target, except to the extent that the failure to have such rights
have not had and could not reasonably be expected to have a Material Adverse
Effect on Target.
(b) Section 2.13 of the Target Disclosure Schedule lists (i) all
patents and patent applications and all registered and unregistered trademarks,
trade names and service marks, registered and unregistered copyrights, and
maskworks, owned by Target and included in the Intellectual Property, including
the jurisdictions in which each such Intellectual Property right has been issued
or registered or in which any application for such issuance and registration has
been filed, (ii) all licenses, sublicenses and other agreements as to which
Target is a party and pursuant to which any person is authorized to use any
Intellectual Property, and (iii) all licenses, sublicenses and other agreements
as to which Target is a party and pursuant to which Target is authorized to use
any third party patents, trademarks or copyrights, including software ("Third
-----
Party Intellectual Property Rights") which are incorporated in, are, or form a
----------------------------------
part of any Target product that is material to its business. Target is not in
violation of any license, sublicense or agreement described in Section 2.13 of
the Target Disclosure Schedule.
(c) Except as set forth in Section 2.13(c) of the Target Disclosure
Schedule, to Target's knowledge, there is no material unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property rights
of Target, any trade secret material to Target or any Intellectual Property
right of any third party to the extent licensed by or through Target, by any
third party, including any employee or former employee of Target. Except as set
forth in Section 2.13(c) of the Target Disclosure Schedule, Target has not
entered into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification provisions
contained in purchase orders arising in the ordinary course of business.
(d) All patents, registered trademarks, service marks and copyrights
held by Target are valid and existing and there is no assertion or claim (or
basis therefor) challenging the validity of any Intellectual Property of Target.
Neither the conduct of the business of Target as currently conducted or
contemplated nor the manufacture, sale, licensing or use of any of the products
of Target as now manufactured, sold or licensed or used, infringes on any
license, trademark, trademark right, trade name, trade name right, patent,
patent right, industrial model, invention, service xxxx or copyright of any
third party that, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on Target. All registered trademarks, service marks
and copyrights held by Target are valid and existing. To Target's knowledge, no
third party is challenging the ownership by Target, or the validity or
effectiveness of, any of the Intellectual Property. Target has not brought any
action, suit or proceeding for infringement of Intellectual Property or breach
of any license or agreement involving Intellectual Property against any third
party. There are no pending, or to the best of Target's knowledge, threatened
interference, re-examinations, oppositions or nullities involving any patents,
patent
-14-
rights or applications therefor of Target, except such as may have been
commenced by Target. There is no breach or violation of, actual loss of, or to
Target's knowledge threatened loss of, rights under any license agreement to
which Target is a party.
(e) Target has secured valid written assignments from all consultants
and employees who contributed to the creation or development of Intellectual
Property of the rights to such contributions that Target does not already own by
operation of law.
(f) Target has taken all necessary and appropriate steps to protect
and preserve the confidentiality of all Intellectual Property not otherwise
protected by patents, patent applications or copyright ("Confidential
------------
Information"). Target has a policy requiring each employee, consultant and
-----------
independent contractor to execute proprietary information and confidentiality
agreements substantially in Target's standard forms and all current and former
employees, consultant and independent contractors of Target have executed such
an agreement. All use, disclosure or appropriation of Confidential Information
owned by Target by or to a third party has been pursuant to the terms of a
written agreement between Target and such third party. All use, disclosure or
appropriation of Confidential Information not owned by Target has been pursuant
to the terms of a written agreement between Target and the owner of such
Confidential Information, or is otherwise lawful.
2.14 Environmental Matters.
---------------------
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal,
-----------------------------
state or local laws, ordinances, codes, regulations, rules, policies and orders,
as each may be amended from time to time, that are intended to assure the
protection of the environment, or that classify, regulate, call for the
remediation of, require reporting with respect to, or list or define air, water,
groundwater, solid waste, hazardous or toxic substances, materials, wastes,
pollutants or contaminants; which regulate the manufacture, handling, transport,
use, treatment, storage or disposal of Hazardous Materials or materials
containing Hazardous Materials; or which are intended to assure the protection,
safety and good health of employees, workers or other persons, including the
public.
(ii) "Hazardous Materials" shall mean any toxic or hazardous
-------------------
substance, material or waste or any pollutant or contaminant, or infectious or
radioactive substance or material, including without limitation, those
substances, materials and wastes defined in or regulated under any Environmental
and Safety Laws; petroleum and petroleum products including crude oil and any
fractions thereof; natural gas, synthetic gas, and any mixtures thereof; radon;
asbestos; and any other pollutant or contaminant
(b) Target has complied with and is in compliance, in all material
respects, with all applicable Environmental Laws, which compliance includes, but
is not limited to, the possession by the Target of all material permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof and (ii) Target has not
received written notice of, or, to the knowledge of Target, is the
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subject of, any material action, cause of action, claim, investigation, demand
or notice by any person or entity alleging liability under or non-compliance
with any Environmental Law.
2.15 Taxes.
-----
(a) For purposes of this Section 2.15 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however denominated,
-----
including any interest, penalties or other additions to tax that may become
payable in respect thereof, (A) imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal,
state and foreign income taxes), payroll and employee withholding taxes,
unemployment insurance contributions, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
withholding taxes, business license taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
(B) any liability for the payment of amounts referred to in (A) as a result of
being a member of any affiliated, consolidated, combined or unitary group, or
(C) any liability for amounts referred to in (A) or (B) as a result of any
obligations to indemnify another person.
(ii) The term "Returns" shall mean all reports, estimates,
-------
declarations of estimated tax, information statements and returns required to be
filed in connection with any Taxes, including information returns with respect
to backup withholding and other payments to third parties.
(b) All Returns required to be filed by or on behalf of Target have
been duly filed on a timely basis and such Returns are true, complete and
correct. All Taxes shown to be payable on such Returns or on subsequent
assessments with respect thereto, and all payments of estimated Taxes required
to be made by or on behalf of Target under Section 6655 of the Code or
comparable provisions of state, local or foreign law, have been paid in full on
a timely basis, and no other Taxes are payable by Target with respect to items
or periods covered by such Returns (whether or not shown on or reportable on
such Returns). Target has withheld and paid over all Taxes required to have
been withheld and paid over, and complied with all information reporting and
backup withholding in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. There are no liens on
any of the assets of Target with respect to Taxes, other than liens for Taxes
not yet due and payable or for Taxes that Target is contesting in good faith
through appropriate proceedings. Target has not been at any time a member of an
affiliated group of corporations filing consolidated, combined or unitary income
or franchise tax returns for a period for which the statute of limitations for
any Tax potentially applicable as a result of such membership has not expired.
-16-
(c) The amount of Target's liabilities for unpaid Taxes for all
periods through the date of the Financial Statements do not, in the aggregate,
exceed the amount of the current liability accruals for Taxes reflected on the
Financial Statements, and the Financial Statements properly accrue in accordance
with GAAP all liabilities for Taxes of Target payable after the date of the
Financial Statements attributable to transactions and events occurring prior to
such date. No liability for Taxes of Target has been incurred (or prior to
Closing will be incurred) since the Target Balance Sheet Date other than in the
ordinary course of business.
(d) Acquiror has been furnished by Target true and complete copies of
all federal, state and foreign income or franchise tax returns and state sales
and use tax Returns for or including Target for all periods since Target's
inception.
(e) No audit of the Returns of or including Target by a government or
taxing authority is in process, threatened or, to Target's knowledge, pending
(either in writing or orally, formally or informally). No deficiencies exist or
have been asserted (either in writing or orally, formally or informally) or are
expected to be asserted with respect to Taxes of Target, and Target has not
received notice (either in writing or orally, formally or informally) nor does
it expect to receive notice that it has not filed a Return or paid Taxes
required to be filed or paid. Target is not a party to any action or proceeding
for assessment or collection of Taxes, nor has such event been asserted or
threatened (either in writing or orally, formally or informally) against Target
or any of its assets. No waiver or extension of any statute of limitations is
in effect with respect to Taxes or Returns of Target. Target has disclosed on
its federal and state income and franchise tax returns all positions taken
therein that could give rise to a substantial understatement penalty within the
meaning of Code Section 6662 or comparable provisions of applicable state tax
laws.
(f) Target is not (nor has it ever been) a party to any tax
sharing agreement.
(g) Target is not, nor has it been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Target
is not a "consenting corporation" under Section 341(f) of the Code. Target has
not entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense to
Target pursuant to Section 280G of the Code or an excise tax to the recipient of
such payment pursuant to Section 4999 of the Code. Target has not agreed to,
nor is it required to make, other than by reason of the Merger, any adjustment
under Code Section 481(a) by reason of, a change in accounting method, and
Target will not otherwise have any income reportable for a period ending after
the Closing Date attributable to a transaction or other event (e.g., an
installment sale) occurring prior to the Closing Date with respect to which
Target received the economic benefit prior to the Closing Date. Target is not
and has not been, a "reporting corporation" subject to the information reporting
and record maintenance requirements of Section 6038A and the regulations
thereunder.
(h) The Target Disclosure Schedule, including Section 2.15, contains
accurate and complete information regarding Target's net operating losses for
federal and each
-17-
state tax purposes. Target has no net operating losses and credit carryovers or
other tax attributes currently subject to limitation under Sections 382, 383, or
384 of the Code.
2.16 Employee Benefit Plans.
----------------------
(a) Schedule 2.16 lists, with respect to Target, any trade or business
(whether or not incorporated) which is treated as a single employer with Target
(an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of
---------------
the Code, (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), (ii)
-----
each loan to a non-officer employee in excess of $10,000, loans to officers and
directors and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements, (iii) all contracts and agreements
relating to employment that provide for annual compensation in excess of $80,000
and all severance agreements, with any of the directors, officers or employees
of Target (other than, in each case, any such contract or agreement that is
terminable by Target at will or without penalty or other adverse consequence),
(iv) all bonus, pension, profit sharing, savings, deferred compensation or
incentive plans, programs or arrangements, (v) other fringe or employee benefit
plans, programs or arrangements that apply to senior management of Target and
that do not generally apply to all employees, and (vi) any current or former
employment or executive compensation or severance agreements, written or
otherwise, as to which unsatisfied obligations of Target of greater than $10,000
remain for the benefit of, or relating to, any present or former employee,
consultant or director of Target or any Subsidiary (together, the "Target
------
Employee Plans").
--------------
(b) Target has furnished to Acquiror a copy of each of the Target
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any material
employee communications relating thereto) and has, with respect to each Target
Employee Plan which is subject to ERISA reporting requirements, provided copies
of the Form 5500 reports filed for the last three plan years. None of the
Target Employee Plans are intended to be qualified under Section 401(a) of the
Code.
(c) None of the Target Employee Plans promises or provides retiree
medical or other retiree welfare or life insurance benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Target Employee
Plan, which could reasonably be expected to have, in the aggregate, a Material
Adverse Effect; (iii) each Target Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not have, in the aggregate, a Material Adverse Effect, and
Target and each Subsidiary or ERISA Affiliate have performed all obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any material default or
violation by any other party to, any of the Target Employee Plans. With
respect to each Target Employee Plan subject to ERISA as an employee welfare
benefit plan within the meaning of Section 3(1) of
-18-
ERISA, Target has prepared in good faith and timely filed all requisite
governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Target Employee Plan. No suit, administrative proceeding, action or other
litigation has been brought, or to the best knowledge of Target is threatened,
against or with respect to any such Target Employee Plan, including any audit or
inquiry by the IRS or United States Department of Labor. Neither Target nor any
Subsidiary or other ERISA Affiliate is a party to, or has made any contribution
to or otherwise incurred any obligation under, any "multiemployer plan" as
defined in Section 3(37) of ERISA.
(d) With respect to each Target Employee Plan, Target has complied
with (i) the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") or any similar
-----
state law and the proposed regulations thereunder and (ii) the applicable
requirements of the Family Leave Act of 1993 or any similar state law and the
regulations thereunder, except to the extent that such failure to comply would
not, in the aggregate, have a Material Adverse Effect.
(e) Except as set forth in Section 2.16 of the Target Disclosure
Schedule, each of the Target Employee Plans can be terminated by Target within a
period of 30 days following the Effective Time, without payment of any
additional material amounts or the additional vesting or acceleration of any
such benefits.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Target or other ERISA Affiliate
relating to, or change in participation or coverage under, any Target Employee
Plan which would materially increase the expense of maintaining such Plan above
the level of expense incurred with respect to that Plan for the most recent
fiscal year included in Target's Financial Statements.
2.17 Certain Agreements Affected by the Merger. Neither the
-----------------------------------------
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) except as set forth in Section 2.17 of
the Target Disclosure Schedule, result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of Target, (ii) materially
increase any benefits otherwise payable by Target, or (iii) except as set forth
in Section 2.17 of the Target Disclosure Schedule, result in the acceleration of
the time of payment or vesting of any such benefits.
2.18 Employee Matters. Target is in compliance in all material
----------------
respects with all currently applicable federal, state, local and foreign laws
and regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. There
are no pending claims against Target under any workers compensation plan or
policy or for long term disability. There are no controversies pending or, to
the knowledge of Target, threatened, between Target and any of their respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect on Target. Target is not a party to any collective
bargaining agreement or other labor unions contract nor does Target
-19-
know of any activities or proceedings of any labor union or other group to
organize any such employees. No Target employee is currently on a leave of
absence (whether or not paid) with guaranteed reinstatement pursuant to contract
or applicable law, and no Target employee has requested such a leave to commence
following the date hereof.
2.19 Material Contracts.
------------------
(a) Subsections (i) through (ix) of Section 2.19(a) of the Target
Disclosure Schedule contain a list of all contracts and agreements to which
Target is a party and that are material to the business, results of operations,
or condition (financial or otherwise), of Target taken as a whole (such
contracts, agreements and arrangements as are required to be set forth in
Section 2.19(a) of the Target Disclosure Schedule being referred to herein
collectively as the "Material Contracts"). Material Contracts shall include,
------------------
without limitation, the following and shall be categorized in the Target
Disclosure Schedule as follows:
(i) each contract and agreement (other than routine purchase orders
and pricing quotes in the ordinary course of business covering a period of less
than 1 year) for the purchase of inventory, spare parts, other materials or
personal property with any supplier or for the furnishing of services to Target
under the terms of which Target: (A) paid or otherwise gave consideration of
more than $25,000 in the aggregate during the calendar year ended December 31,
1999, (B) is likely to pay or otherwise give consideration of more than $25,000
in the aggregate during the calendar year ended December 31, 2000, (C) is likely
to pay or otherwise give consideration of more than $25,000 in the aggregate
over the remaining term of such contract, or (D) cannot be cancelled by Target
without penalty or further payment of less than $25,000;
(ii) each customer contract and agreement (other than routine purchase
orders, pricing quotes with open acceptance and other tender bids, in each case,
entered into in the ordinary course of business and covering a period of less
than one year) to which Target is a party which (A) involved consideration of
more than $25,000 in the aggregate during the calendar year ended December 31,
1999, (B) is likely to involve consideration of more than $25,000 in the
aggregate during the calendar year ended December 31, 2000, (C) is likely to
involve consideration of more than $25,000 in the aggregate over the remaining
term of the contract, or (D) cannot be cancelled by Target without penalty or
further payment of less than $25,000;
(iii) (A) all distributor, manufacturer's representative, broker,
franchise, agency and dealer contracts and agreements to which Target is a party
(specifying on a matrix, in the case of distributor agreements, the name of the
distributor, product, territory, termination date and exclusivity provisions)
and (B) all sales promotion, market research, marketing and advertising
contracts and agreements to which Target is a party which: (1) involved
consideration of more than $25,000 in the aggregate during the calendar year
ended December 31, 1999, (2) are likely to involve consideration of more than
$25,000 in the aggregate during the calendar year ended December 31, 2000, or
(3) are likely to involve consideration of more than $25,000 in the aggregate
over the remaining term of the contract;
-20-
(iv) all management contracts with independent contractors or
consultants (or similar arrangements) to which Target is a party and which (A)
involved consideration or more than $25,000 in the aggregate during the calendar
year ended December 31, 1999, (B) are likely to involve consideration of more
than $25,000 in the aggregate during the calendar year ended December 31, 2000,
or (C) are likely to involve consideration of more than $25,000 in the aggregate
over the remaining term of the contract;
(v) all contracts and agreements (excluding routine checking account
overdraft agreements involving xxxxx cash amounts) under which Target has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness or under which Target has imposed (or may impose) a
security interest or lien on any of its assets, whether tangible or intangible,
to secure indebtedness;
(vi) all contracts and agreements between or among Target, on the one
hand, and any affiliate of Target (other than a wholly owned subsidiary), on the
other hand; and
(vii) all other contracts or agreements (A) which are material to
Target or the conduct of its businesses, (B) the absence of which would have a
Material Adverse Effect on Target, or (C) which are believed by Target to be of
unique value even though not material to the business of Target.
(b) Except as set forth on Section 2.19(b) of the Target Disclosure
Schedule, and except as would not, individually or in the aggregate, have a
Material Adverse Effect on Target, each Material Contract is a legal, valid and
binding agreement, and none of the Material Contracts is in default by its terms
or has been cancelled by the other party; Target is not in receipt of any claim
of default under any such agreement; and Target does not anticipate any
termination or change to, or receipt of a proposal with respect to, any such
agreement as a result of the Merger or otherwise. Target has furnished Acquiror
with true and complete copies of all such agreements together with all
amendments, waivers or other changes thereto.
2.20 Interested Party Transactions. Target is not indebted to any
-----------------------------
director, officer, employee or agent of Target (except for amounts due as normal
salaries and bonuses and in reimbursement of ordinary expenses), and no such
person is indebted to Target.
2.21 Insurance. Target has policies of insurance and bonds of the
---------
type and in amounts customarily carried by persons conducting businesses or
owning assets similar to those of Target. There is no material claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid and Target is
otherwise in compliance with the terms of such policies and bonds. Target has
no knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
2.22 Compliance With Laws. Target has complied with, is not in
--------------------
violation of, and have not received any notices of violation with respect to,
any material federal, state, local or foreign statute, law or regulation with
respect to the conduct of its business, or the ownership or
-21-
operation of its business, except for such violations or failures to comply as
could not reasonably be expected to have a Material Adverse Effect on Target.
2.23 Minute Books. The minute books of Target and its Subsidiaries
------------
made available to Acquiror contain a complete summary of all meetings of
directors and stockholders or actions by written consent since the time of
incorporation of Target through the date of this Agreement, and reflect all
transactions referred to in such minutes accurately in all material respects.
2.24 Complete Copies of Materials. Target has delivered or made
----------------------------
available true and copies of each document which has been requested by Acquiror
or its counsel in connection with their legal and accounting review of Target
and its Subsidiaries.
2.25 Brokers' and Finders' Fees. Target has not incurred, nor will
--------------------------
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transactions contemplated hereby.
2.26 Vote Required. The affirmative vote of the holders of a
-------------
majority of the shares of Target Common Stock and the holders of two-thirds of
the Series A Preferred Stock outstanding prior to the Merger is the only vote of
the holders of any of Target's Capital Stock necessary to approve this Agreement
and the transactions contemplated hereby, pursuant to Target's Certificate of
Incorporation and Certificate of Designation and Delaware Law.
2.27 Board Approval. The Board of Directors of Target has
--------------
unanimously (i) approved this Agreement and the Merger, (ii) determined that the
Merger is in the best interests of the stockholders of Target and is on terms
that are fair to such stockholders (iii) recommended that the stockholders of
Target approve this Agreement and the Merger.
2.28 Accounts Receivable.
-------------------
(a) Except as disclosed in Section 2.27(a) of the Target Disclosure
Schedule, Target has made available to Acquiror a list of all accounts
receivable of Target reflected on the Financial Statements ("Accounts
--------
Receivable") along with a range of days elapsed since invoice.
----------
(b) Except as disclosed in Section 2.27(b) of the Target Disclosure
Schedule, all Accounts Receivable of Target arose in the ordinary course of
business, are carried at values determined in accordance with GAAP consistently
applied. No person has any lien on any of such Accounts Receivable and no
request or agreement for deduction or discount has been made with respect to any
of such Accounts Receivable.
2.29 Customers and Suppliers. As of the date hereof, no customer
-----------------------
which individually accounted for more than 10% of Target's gross revenues during
the 12-month period preceding the date hereof, and no material supplier of
Target, has cancelled or otherwise terminated, or made any written threat to
Target to cancel or otherwise terminate its relationship with Target, or has at
any time on or after the Target Balance Sheet Date decreased materially its
-22-
services or supplies to Target in the case of any such supplier, or its usage of
the services or products of Target in the case of such customer, and to Target's
knowledge, no such supplier or customer intends to cancel or otherwise terminate
its relationship with Target or to decrease materially its services or supplies
to Target or its usage of the services or products of Target, as the case may
be. Target has not knowingly breached, so as to provide a benefit to Target
that was not intended by the parties, any agreement with, or engaged in any
fraudulent conduct with respect to, any customer or supplier of Target.
2.30 Third Party Consents. Except as set forth in Section 2.30 of
--------------------
the Target Disclosure Schedule, no consent or approval is needed from any third
party in order to effect the Merger, this Agreement or any of the transactions
contemplated hereby.
2.31 Representations Complete. None of the representations or
------------------------
warranties made by Target herein or in any Schedule hereto, including the Target
Disclosure Schedule or certificate furnished by Target pursuant to this
Agreement, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading. There is no fact which has not
been disclosed to Acquiror of which Target is aware and which materially
adversely affects or could reasonably be anticipated to result in a Material
Adverse Effect, which when viewed in light of all other facts would be a
material omission.
SECTION THREE
3. Representations and Warranties of Acquiror and Merger Sub.
---------------------------------------------------------
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Acquiror to Target prior to the execution and
delivery of this Agreement and referring to the representations and warranties
in this Agreement (the "Acquiror Disclosure Schedule"), Acquiror and Merger Sub
----------------------------
hereby jointly and severally represent and warrant to Target as follows:
3.1 Organization, Standing and Power. Each of Acquiror and Merger
--------------------------------
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Acquiror and Merger Sub
has the requisite corporate power and authority and all necessary government
approvals to own, lease and operate its properties and to carry on its business
as now being conducted and as proposed to be conducted and is duly qualified to
do business or licensed as a foreign corporation to do business and is in good
standing in each jurisdiction in which the failure to be so qualified and in
good standing would have a Material Adverse Effect on Acquiror. Acquiror has
delivered a true and correct copy of the Certificate of Incorporation and Bylaws
or other charter documents, as applicable, of Acquiror and Merger Sub, each as
amended to date, to Target. Neither Acquiror nor any of its subsidiaries
-23-
is in violation of any material provisions of its Certificate of Incorporation
or Bylaws or equivalent organizational documents.
3.2 Authority. Acquiror and Merger Sub have all requisite corporate
---------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Acquiror and Merger
Sub. This Agreement has been duly executed and delivered by Acquiror and Merger
Sub and constitutes the valid and binding obligations of Acquiror and Merger
Sub, enforceable against Acquiror and Merger Sub in accordance with its terms.
3.3 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Acquiror or Merger Sub, as
amended, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Acquiror or Merger Sub or their properties or assets.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Acquiror or Merger Sub in connection with the execution and delivery
of this Agreement by Acquiror and Merger Sub or the consummation by Acquiror and
Merger Sub of the transactions contemplated hereby, except for (i) the filing of
appropriate merger documents as required by Delaware Law, (ii) the filing of a
Form 8-K with the SEC and National Association of Securities Dealers ("NASD")
----
within 15 days after the Closing Date, (iii) any filings as may be required
under applicable state securities laws and the securities laws of any foreign
country, (iv) such filings as may be required under HSR, and (v) the filing with
the Nasdaq National Market of a Notification Form for Listing of Additional
Shares with respect to the shares of Acquiror Common Stock issuable upon
conversion of the Target Capital Stock in the Merger and upon exercise of the
options under the Target Stock Option Plan assumed by Acquiror, and (vi) such
other consents, authorizations, filings, approvals and registrations which, if
not obtained or made, would not have a Material Adverse Effect on Acquiror and
would not prevent, materially alter or delay any the transactions contemplated
by this Agreement.
3.4 Acquiror Common Stock. The shares of Acquiror Common Stock to be
---------------------
issued to the stockholders of Target pursuant to the Merger and this Agreement
are duly authorized and, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable. The issuance
of Acquiror Common Stock pursuant to the Merger will transfer to the
stockholders of Target valid title to such shares of Acquiror Common Stock, free
and clear of all liens, encumbrances, security interests, charges, restrictions
or other similar encumbrances or defects in title.
-24-
3.5 SEC Documents; Financial Statements.
-----------------------------------
(a) Acquiror has filed all forms, reports and documents required to be
filed by Acquiror with the SEC since October 13, 1999 (collectively, the
"Acquiror SEC Documents"). As of their respective filing dates, the Acquiror SEC
-----------------------
Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the Acquiror SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed Acquiror SEC Document.
(b) The financial statements of Acquiror, including the notes thereto,
included in the Acquiror SEC Documents (the "Acquiror Financial Statements")
-----------------------------
were complete and correct in all material respects as of their respective filing
dates, complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their respective dates, and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements, included in Quarterly
Reports on Forms 10-Q as permitted by Form 10-Q of the SEC). The Acquiror
Financial Statements fairly present the consolidated financial condition and
operating results of Acquiror and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in Acquiror
accounting policies except as described in the notes to the Acquiror Financial
Statements.
3.6 Litigation. There is no action, suit, proceeding or
----------
investigation pending or, to the Company's knowledge, currently threatened
against the Company that might result, either individually or in the aggregate,
in any Material Adverse Effect on the assets, condition or affairs of the
Company. There is no action, suit proceeding or investigation by the Company
currently pending or which the Company intends to initiate
-25-
SECTION FOUR
4. Additional Agreements.
---------------------
4.1 Best Efforts and Further Assurances. Each of the parties to this
-----------------------------------
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby. Each party hereto, at the reasonable request of another party hereto,
shall execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
4.2 Consents; Cooperation.
---------------------
(a) Each of Acquiror, Target and Stockholders' Representative shall
use its reasonable best efforts to promptly (i) obtain from any Governmental
Entity any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Acquiror or Target or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereunder,
including those required under HSR, and (ii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under the Securities Act and the Exchange Act and any
other applicable federal, state or foreign securities laws.
(b) Each of Acquiror, Target and Stockholders' Representative shall
give or cause to be given any required notices to third parties, and use its
reasonable best efforts to obtain all consents, waivers and approvals from third
parties (i) necessary, proper or advisable to consummate the transactions
contemplated hereunder, (ii) disclosed or required to be disclosed in the Target
Disclosure Schedule or the Acquiror Disclosure Schedule, or (iii) required to
prevent a Material Adverse Effect on Target or Acquiror from occurring after the
Effective Time. In the event that Acquiror or Target shall fail to obtain any
third party consent, waiver or approval described in this Section 4.2(b), it, or
in the case of the Target, the Stockholders' Representative, shall use its
reasonable best efforts, and shall take any such actions reasonably requested by
the other party, to minimize any adverse effect upon Acquiror and Target, their
respective subsidiaries and their respective businesses resulting (or which
could reasonably be expected to result after the Effective Time) from the
failure to obtain such consent, waiver or approval.
(c) Each of Acquiror, Target and Stockholders' Representative will,
and will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or
-26-
other person, required to be obtained or made in connection with the taking of
any action contemplated by this Agreement.
4.3 Public Disclosure. Unless otherwise permitted by this Agreement,
-----------------
Acquiror and Target shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.
4.4 State Statutes. If any state takeover law shall become
--------------
applicable to the transactions contemplated by this Agreement, Acquiror and its
Board of Directors or Target and its Board of Directors, as the case may be,
shall use their reasonable best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
4.5 Blue Sky Laws. Acquiror shall take such steps as may be
-------------
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Acquiror Common Stock in connection
with the Merger. Target shall use its reasonable efforts to assist Acquiror as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Acquiror
Common Stock in connection with the Merger.
4.6 Maintenance of Target Indemnification Obligations.
-------------------------------------------------
(a) Subject to and following the Effective Time, the Surviving
Corporation shall indemnify and hold harmless the Indemnified Target Parties (as
defined below) to the extent provided in the Bylaws or Certificate of
Incorporation of Target, in each case as in effect as of the date of this
Agreement. The Surviving Corporation shall, and Acquiror shall cause the
Surviving Corporation to, keep in effect such provisions, which shall not be
amended except as required by applicable law or to make changes permitted by
Delaware Law that would enlarge the rights to indemnification available to the
Indemnified Target Parties and changes to provide for exculpation of director
and officer liability to the fullest extent permitted by Delaware Law. For
purposes of this Section 4.10, "Indemnified Target Parties" shall mean the
--------------------------
individuals who were officers, directors, employees and agents of Target on or
prior to the Effective Time.
(b) Subject to and following the Effective Time, the Surviving
Corporation shall be obligated to pay the reasonable expenses, including
reasonable attorney's fees, that may be incurred by any Indemnified Target Party
in enforcing the rights provided in this Section 4.10 and shall make any
advances of such expenses to the Indemnified Target Party that would be
available under the Bylaws or Certificate of Incorporation of Target (in each
case as in effect as of the date of this Agreement) with regard to the
advancement of indemnifiable expenses,
-27-
subject to the undertaking of such party to repay such advances in the event
that it is ultimately determined that such party is not entitled to
indemnification.
(c) The provisions of this Section 4.10 shall be in addition to any
other rights available to the Indemnified Target Parties, shall survive the
Effective Time of the Merger, and are expressly intended for the benefit of the
Indemnified Target Parties.
4.7 Filing of Form S-8. As soon as practicable following the
------------------
Effective Time, Acquiror shall file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of Acquiror
Common Stock subject to Target Options assumed by Acquiror pursuant to Section
1.6(c) and shall use its reasonable efforts to maintain the effectiveness of
such registration statement (and maintain the current status of the prospectus
or prospectuses contained therein) for so long as such Target Options remain
outstanding.
4.8 Release of Guaranty. As soon as practicable following the
-------------------
Effective Time, Acquiror shall use its commercially reasonable best efforts to
cause the release of and, if required, pay all amounts due under the Commercial
Guaranty dated December 23, 1999, made by Xxx Xxxxxxx in favor of Hinsdale Bank
and Trust Co. with respect to Target's $100,000 line of credit.
SECTION FIVE
------------
5. Actions to be Taken at the Effective Time.
-----------------------------------------
At the Effective Time the Acquiror, Merger Sub and Target shall
undertake to complete the following actions any of which may be waived in
writing by the party whose obligations hereunder are subject to such condition
hereto:
5.1 Certificates of Acquiror, Merger Sub and Target.
-----------------------------------------------
(a) Certificate of Secretary of Acquiror. Target shall have been
------------------------------------
provided with a certificate executed by the Secretary or Assistant Secretary of
Acquiror certifying:
(i) Resolutions duly adopted by the Board of Directors of Acquiror
authorizing the execution of this Agreement and the execution, performance and
delivery of all agreements, documents and transactions contemplated hereby; and
(ii) the incumbency of the officers of Acquiror executing this
Agreement and all agreements and documents contemplated hereby.
(b) Certificate of Secretary of Merger Sub. Target shall have been
--------------------------------------
provided with a certificate executed by the Secretary or Assistant Secretary of
Merger Sub certifying:
(i) Resolutions duly adopted by the Sole Director and the sole
stockholder of Merger Sub authorizing the execution of this Agreement and the
execution,
-28-
performance and delivery of all agreements, documents and transactions
contemplated hereby; and
(ii) the incumbency of the officers of Merger Sub executing this
Agreement and all agreements and documents contemplated hereby.
(c) Certificate of Secretary of Target. Acquiror and Merger Sub shall
----------------------------------
have been provided with a certificate executed by the Secretary of Target
certifying:
(i) Resolutions duly adopted by the Board of Directors and the
stockholders of Target authorizing the execution of this Agreement and the
execution, performance and delivery of all agreements, documents and
transactions contemplated hereby;
(ii) The Certificate of Incorporation and Bylaws of Target, as in
effect immediately prior to the Effective Time, including all amendments
thereto; and
(iii) the incumbency of the officers of Target executing this
Agreement and all agreements and documents contemplated hereby.
5.2 Legal Opinions.
--------------
(a) Target shall have received a legal opinion from Acquiror's legal
counsel substantially in the form of Exhibit F hereto.
---------
(b) Acquiror shall have received a legal opinion from Target's
legal counsel, in substantially the form of Exhibit G.
---------
5.3 Good Standing.
-------------
(a) Target shall have received a certificate or certificates of the
Secretary of State of the State of Delaware and any applicable franchise tax
authority of such state, certifying as of a date no more than 3 business days
prior to the Effective Time that each of Acquiror and Merger Sub has filed all
required reports, paid all required fees and taxes and is, as of such date, in
good standing and authorized to transact business as a domestic corporation.
(b) Acquiror shall have received a certificate or certificates of the
Secretary of State of the State of Delaware and any applicable franchise tax
authority of such state, certifying as of a date no more than 3 business days
prior to the Effective Time that Target has filed all required reports, paid all
required fees and taxes and is, as of such date, in good standing and authorized
to transact business as a domestic corporation.
5.4 Escrow Agreement. Acquiror, Target, Escrow Agent and the
----------------
Stockholders' Representative shall enter into an Escrow Agreement in
substantially the form attached hereto as Exhibit B.
---------
5.5 Third Party Consents. Acquiror shall have been furnished with
--------------------
evidence satisfactory to it that Target has obtained those consents, waivers,
approvals or authorizations of
-29-
those Governmental Entities and third parties whose consent or approval are
required in connection with the Merger.
5.6 FIRPTA Certificate. Target shall provide Acquiror with a
------------------
properly executed FIRPTA Notification Letter and a form of notice to the
Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) along with written authorization for Acquiror
to deliver such notice form to the Internal Revenue Service on behalf of Target
upon the Closing of the Merger, as set forth in Section 4.5 above.
5.7 Resignation of Directors and Officers. Acquiror shall have
-------------------------------------
received resignations from each of the directors and officers of Target in
office immediately prior to the Effective Time, which resignations in each case
shall be effective as of the Effective Time.
5.8 Employment Agreement. Xxxx Xxxxxxx shall have executed the
--------------------
Employment Agreement substantially in the form attached hereto as Exhibit C.
---------
5.9 Stock Restriction Agreement. Xxxx Xxxxxxx shall have executed
---------------------------
the Stock Restriction Agreement substantially in the form attached hereto as
Exhibit D.
---------
5.10 Registration Rights. Acquiror shall grant the registration
-------------------
rights set forth in the Registration Rights Agreement attached as Exhibit E
---------
hereto to all holders of Acquiror Common Stock issued as a result of the merger;
provided that in the event that there is then in effect a registration statement
on Form S-8 pursuant to Section 4.8 above, the shares of Target Common Stock
covered by such registration statement on Form S-8 shall not be entitled to the
registration rights granted under this paragraph.
5.11 Option Assumption and Waiver Letters. All employees of Target
------------------------------------
who shall continue as employees of Acquiror or of the Surviving Corporation
subsequent to the Effective Time, shall have executed the Option Assumption and
Waiver Letter in substantially the form attached hereto as Exhibit H.
---------
SECTION SIX
6. Escrow and Indemnification.
--------------------------
6.1 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the consummation of the Merger and continue until (i)
for those matters relating to Taxes, until such date which is 30 days after the
expiration of all applicable statutes of limitations relating to such Taxes or
(ii) for all other matters, the one year anniversary of the Effective Time (the
"Indemnity Termination Date"); provided that if any claims for indemnification
--------------------------
have been asserted with respect to any such representations and warranties prior
to the Indemnity Termination Date, the representations and warranties on which
any such claims are based shall continue in effect until final resolution of any
claims. All covenants to be performed after the Effective Time shall continue
indefinitely until so performed.
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6.2 Escrow Fund. As soon as practicable after the Effective Time,
-----------
the Initial Escrow Shares (and, together with the New Shares (as defined in
Section 6.6(a)), the "Escrow Shares") shall, without any act of any stockholder
-------------
of Target, be registered in the name of, and be deposited with, American Stock
Transfer and Trust (or other institution selected by Acquiror) as escrow agent
(the "Escrow Agent") in the Escrow Fund, and to be governed by the terms set
------------
forth herein and in the Escrow Agreement attached hereto as Exhibit B (the
---------
"Escrow Agreement"). Those Escrowed Shares shall be drawn exclusively from
-----------------
certain shareholders of Target, specifically from members of the Board of
Directors of Target as set forth in Schedule 6.3(a). In the event that any
Damages (as defined below) arise, the Escrow Fund shall be available to
compensate the Indemnified Persons (as defined below) pursuant to the
indemnification obligations of the Indemnifying Stockholders (as defined below)
pursuant to Section 6.3 and in accordance with the Escrow Agreement.
6.3 Indemnification.
---------------
(a) Indemnified Damages. Subject to the limitations set forth in this
-------------------
Section 6, from and after the Effective Time, the former stockholders of Target
listed on Schedule 6.3(a) (the "Indemnifying Stockholders") shall protect,
-------------------------
defend, indemnify and hold harmless Acquiror and the Surviving Corporation and
their respective affiliates, officers, directors, employees, representatives and
agents (Acquiror, Surviving Corporation and each of the foregoing persons or
entities is hereinafter referred to individually as an "Indemnified Person" and
------------------
collectively as "Indemnified Persons") from and against any and all losses,
-------------------
costs, damages, liabilities, fees (including without limitation attorneys' fees)
and expenses (collectively, the "Damages"), (a) that any of the Indemnified
-------
Persons incurs by reason of or in connection with any claim, demand, action or
cause of action alleging misrepresentation, breach of, or default in connection
with, any of the representations, warranties, covenants or agreements of Target
contained in this Agreement, including any exhibits or schedules attached
hereto, and the Certificate of Merger, which becomes known to Acquiror prior to
the Indemnity Termination Date, or (b) as a result of any legal, brokers or
finders fees incurred by Target in connection with this transaction in excess of
$50,000 in the aggregate, which became known to Acquiror prior to the Indemnity
Termination Date. Damages in each case shall be net of the amount of any
insurance proceeds and indemnity and contribution actually recovered by Acquiror
or the Surviving Corporation.
(b) Exclusive Contractual Remedy and Limitations. Acquiror, the
--------------------------------------------
Indemnifying Stockholders and Target each acknowledge that Damages, if any,
would relate to unresolved contingencies existing at the Effective Time, which
if resolved at the Effective Time would have led to a reduction in the total
consideration Acquiror would have agreed to pay in connection with the Merger.
The maximum liability of any Indemnifying Stockholder for any breach of a
representation, warranty or covenant of Target shall be limited to the number of
Escrow Shares in the Escrow Fund attributable to such Indemnifying Stockholder
or, in the event the Escrow Shares have been distributed from the Escrow Fund,
an amount equal to the fair market value of the Escrow Shares in which such
Indemnifying Stockholder has an interest as of the date hereof (the "Initial
-------
Escrow Value") as determined by averaging the closing price for Acquiror Common
------------
Stock on the Nasdaq National Market for the five trading days immediately prior
to the date of this Agreement, regardless of any subsequent distribution of any
Escrow
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Shares; provided, however, that nothing herein shall limit the liability of any
officer, director or stockholder of the Target for such person's or entity's
fraud or intentional misrepresentation.
6.4 Damages Threshold. Notwithstanding the foregoing, no Indemnified
-----------------
Person may receive any compensation for Damages from an Indemnifying Stockholder
or the Escrow Fund unless and until a certificate signed by an officer of
Acquiror (an "Officer's Certificate") identifying Damages in the aggregate
---------------------
amount in excess of $10,000 has been delivered to the Escrow Agent (or to the
Stockholders' Representative if following the Escrow Period) and such amount is
determined pursuant to this Section 6 to be payable, in which case Acquiror
shall receive Escrow Shares (or cash if following the termination of the Escrow
Period), equal in value to the full amount of such Damages without deduction;
provided, however, that in no event shall Acquiror receive more than the number
of Escrow Shares in the Escrow Fund (or cash in an amount greater than the
Initial Escrow Value if after the termination of the Escrow Period). In
determining the amount of any Damages attributable to a breach, any materiality
standard contained in a representation, warranty or covenant of Acquiror shall
be disregarded.
6.5 Escrow Period. Subject to the following requirements, the Escrow
-------------
Fund shall remain in existence until the first anniversary of the Effective Time
(the "Escrow Period"). Upon the expiration of the Escrow Period, the Escrow
-------------
Fund shall terminate with respect to all Escrow Shares; provided, however, that
the number of Escrow Shares, which, in the reasonable judgment of Acquiror,
subject to the objection of the Stockholders' Representative (as defined in
Section 6.8 below) and the subsequent arbitration of the claim in the manner
provided in the Escrow Agreement, are necessary to satisfy any unsatisfied
claims specified in any Officer's Certificate delivered to the Escrow Agent
prior to the expiration of such Escrow Period with respect to facts and
circumstances existing on or prior to the termination of the Escrow Period shall
remain in the Escrow Fund (and the Escrow Fund shall remain in existence) until
such claims have been resolved. As soon as all such claims have been resolved,
the Escrow Agent shall deliver to the Indemnifying Stockholders all Escrow
Shares and other property remaining in the Escrow Fund and not required to
satisfy such claims. Deliveries of Escrow Shares to the Indemnifying
Stockholders pursuant to this Section 6.5 and the Escrow Agreement shall be made
in proportion to their respective original contributions to the Escrow Fund.
6.6 Distributions; Voting.
---------------------
(a) Any shares of Acquiror Common Stock or other equity securities
issued or distributed by Acquiror upon a stock split ("New Shares") in respect
----------
of the Escrow Shares that have not been released from the Escrow Fund shall be
added to the Escrow Fund and become a part thereof. When and if cash dividends
on Escrow Shares in the Escrow Fund shall be declared and paid, they shall be
retained in escrow pending final distribution of the Escrow Fund and will not be
immediately distributed to the beneficial owners of the Escrow Shares. Such
dividends will become part of the Escrow Fund and will be available to satisfy
Damages. The beneficial owners of the Escrow Shares shall pay any taxes on such
dividends.
(b) Each stockholder of Target shall have voting rights with respect
to that number of Escrow Shares contributed to the Escrow Fund on behalf of such
stockholder (and on any voting securities added to the Escrow Fund in respect of
such Escrow Shares) so long as
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such Escrow Shares or other voting securities are held in the Escrow Fund. As
the record holder of such shares, the Escrow Agent shall vote such shares in
accordance with the instructions of the stockholders of Target having the
beneficial interest therein and shall promptly deliver copies of all proxy
solicitation materials to such stockholders. Acquiror shall show the Acquiror
Common Stock contributed to the Escrow Fund as issued and outstanding on its
balance sheet.
6.7 Method of Asserting Claims. All claims for indemnification by
--------------------------
the Surviving Corporation or any other Indemnified Person pursuant to this
Section 6 shall be made in accordance with the provisions of the Escrow
Agreement, provided however, that all claims arising after the termination of
the Escrow Period will be finally settled by binding arbitration in San
Francisco, California in accordance with the rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply California law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any dispute.
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
6.8 Representative of the Stockholders; Power of Attorney. Xxxx
-----------------------------------------------------
Xxxxxxx shall be appointed as agent and attorney-in-fact (the "Stockholders'
-------------
Representative") for the Indemnifying Stockholders, to enter into and perform
--------------
the Escrow Agreement, to authorize delivery to Acquiror of Escrow Shares, or
other property from the Escrow Fund in satisfaction of claims by Acquiror or any
other Indemnified Person, to object to such deliveries, to agree to, negotiate,
enter into settlements and compromises of, and demand arbitration and comply
with orders of courts and awards of arbitrators with respect to such claims, and
to take all actions necessary or appropriate in the judgment of Stockholders'
Representative for the accomplishment of the foregoing. The Stockholders'
Representative shall act by vote or written action or consent of a majority of
the members of the Committee.
6.9 Adjustment to Escrow. In the event that Acquiror pays out any
--------------------
amounts to holders of Dissenting Shares with respect to such shares, the Escrow
Shares shall be automatically reduced by the number of Escrow Shares allocable
to such Dissenting Shares. Upon certification by the Acquiror to the Escrow
Agent of such event, the Escrow Shares and any New Shares with respect thereto
allocable to such Dissenting Shares shall be promptly returned to Acquiror.
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SECTION SEVEN
7. General Provisions.
------------------
7.1 Expenses. All costs and expenses incurred in connection with
--------
this Agreement and the transactions contemplated including, without limitation,
filing fees and the fees and expenses of advisors, accountants, legal counsel
and financial printers, shall be paid by the party incurring such expense.
7.2 Notices. Any notice required or permitted by this Agreement
-------
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile,
being deposited in the regular mail as certified or registered mail (airmail if
sent internationally) with postage prepaid, if such notice is addressed to the
party to be notified at such party's address or facsimile number as set forth
below, or as subsequently modified by written notice,
(a) if to Acquiror or Merger Sub, to:
Netcentives Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Target, to:
MaxMiles, Inc.
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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with copies to:
Xxxx Xxxxxxx
Allscripts
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx and Xxxxxxxxx
Attn: Xxxxx Xxxxxxxxx
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
7.3 Interpretation. When a reference is made in this Agreement
--------------
to Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to
this Agreement unless otherwise indicated. The words "include," "includes" and
------- --------
"including" when used herein shall be deemed in each case to be followed by the
---------
words "without limitation." The phrase "made available" in this Agreement shall
------------------ --------------
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
---
date of this Agreement," "the date hereof," and terms of similar import, unless
----------------------- ---------------
the context otherwise requires, shall be deemed to refer to January 31, 2000.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.5 Entire Agreement; Nonassignability; Parties in Interest.
-------------------------------------------------------
This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, the Schedules, including the Target Disclosure Schedule and the
Acquiror Disclosure Schedule (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder.
7.6 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith, in order to maintain the economic
position enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such
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provision were so excluded and (iii) the balance of the Agreement shall be
enforceable in accordance with its terms.
7.7 Remedies Cumulative. Except as otherwise provided herein,
-------------------
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
7.8 Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law. Each of
the parties to this Agreement consents to the exclusive jurisdiction and venue
of the courts of the state and federal courts of San Francisco County,
California.
7.9 Rules of Construction. The parties hereto agree that they
---------------------
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
7.10 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended or waived only with the written consent of the parties or their
respective successors and assigns. Any amendment or waiver effected in
accordance with this Section 7.10 shall be binding upon the parties and their
respective successors and assigns.
[Signature Page Follows]
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Target, Acquiror and Merger Sub have executed this Agreement as of the date
first written above.
TARGET
MaxMiles, Inc.
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------------
(Print)
Title: Chairman of the Board
---------------------------------
Address:
-------------------------------
ACQUIROR
Netcentives Inc.
By: /s/ X.X. Xxxxxxxxxx
-----------------------------------
Name: X.X. Xxxxxxxxxx
----------------------------------
(Print)
Title: EVP, Operations & CFO
---------------------------------
Address:-------------------------------
MERGER SUB:
Arachnid Acquisition Corp.
By: /s/ X.X. Xxxxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxxxx
----------------------------------
(Print)
Title: EVP, Operations & CFO
---------------------------------
Address:
-------------------------------
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EXHIBITS*
--------
Exhibit A - Certificate of Merger
Exhibit B - Escrow Agreement
Exhibit C - Employment Agreement
Exhibit D - Stock Restriction Agreement
Exhibit E - Registration Rights Agreement
Exhibit F - Legal Opinion from Acquiror's Counsel
Exhibit G - Legal Opinion from Target's Counsel
Exhibit H - Option Assumption and Waiver Letter
* The Registrant agrees to furnish supplementally a copy of any of the above
exhibits to the SEC upon request.
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