1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
DOUBLECLICK INC.,
ATLANTA MERGER CORP.
AND
ABACUS DIRECT CORPORATION
DATED AS OF JUNE 13, 1999
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS ........................................................2
SECTION 1.01 Certain Defined Terms ..................................2
ARTICLE II THE MERGER ........................................................6
SECTION 2.01 The Merger .............................................6
SECTION 2.02 Closing ................................................7
SECTION 2.03 Effective Time .........................................7
SECTION 2.04 Effect of the Merger ...................................7
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation ......................7
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES ...............8
SECTION 3.01 Conversion of Shares ...................................8
SECTION 3.02 Exchange of Shares Other than Treasury Shares ..........8
SECTION 3.03 Stock Transfer Books ..................................11
SECTION 3.04 No Fractional Share Certificates ......................11
SECTION 3.05 Options to Purchase Company Common Stock ..............11
SECTION 3.06 Unvested Stock ........................................13
SECTION 3.07 Certain Adjustments ...................................13
i
3
Page
----
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY ........................13
SECTION 4.01 Organization and Qualification; Subsidiaries ..........14
SECTION 4.02 Certificate of Incorporation and Bylaws ...............14
SECTION 4.03 Capitalization ........................................15
SECTION 4.04 Authority Relative to This Agreement ..................16
SECTION 4.05 No Conflict; Required Filings and Consents ............16
SECTION 4.06 Permits; Compliance with Laws .........................17
SECTION 4.07 SEC Filings; Financial Statements .....................18
SECTION 4.08 Absence of Certain Changes or Events ..................19
SECTION 4.09 Employee Benefit Plans; Labor Matters .................20
SECTION 4.10 Pooling; Certain Tax Matters ..........................24
SECTION 4.11 Contracts .............................................24
SECTION 4.12 Litigation ............................................25
SECTION 4.13 Environmental Matters .................................25
SECTION 4.14 Intellectual Property .................................25
SECTION 4.15 Taxes .................................................29
4
Page
----
SECTION 4.16 Insurance .............................................31
SECTION 4.17 Properties ............................................31
SECTION 4.18 Affiliates ............................................31
SECTION 4.19 Opinion of Financial Advisor ..........................32
SECTION 4.20 Brokers ...............................................32
SECTION 4.21 Certain Business Practices ............................32
SECTION 4.22 Section 203 of the DGCL Not Applicable ................32
SECTION 4.23 Business Activity Restriction .........................33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT ..........................33
SECTION 5.01 Organization and Qualification; Subsidiaries ..........33
SECTION 5.02 Certificate of Incorporation and Bylaws ...............34
SECTION 5.03 Capitalization ........................................34
SECTION 5.04 Authority Relative to this Agreement ..................35
SECTION 5.05 No Conflict; Required Filings and Consents ............35
SECTION 5.06 SEC Filings; Financial Statements .....................36
SECTION 5.07 Pooling; Certain Tax Matters ..........................37
5
Page
----
SECTION 5.08 Opinion of Financial Advisor ..........................37
SECTION 5.09 Brokers ...............................................38
SECTION 5.10 Affiliates ............................................38
SECTION 5.11 No Parent Material Adverse Effect .....................38
ARTICLE VI COVENANTS ........................................................38
SECTION 6.01 Conduct of Business by Company Pending the Closing ....38
SECTION 6.02 Notices of Certain Events .............................41
SECTION 6.03 Access to Information; Confidentiality ................41
SECTION 6.04 No Solicitation of Transactions .......................42
SECTION 6.05 Tax-Free Transaction; Pooling .........................43
SECTION 6.06 Control of Operations .................................43
SECTION 6.07 Further Action; Consents; Filings .....................43
SECTION 6.08 Additional Reports ....................................44
SECTION 6.09 Tax Information .......................................44
SECTION 6.10 Conduct of Business by Parent..........................44
6
Page
----
ARTICLE VII ADDITIONAL AGREEMENTS ...........................................45
SECTION 7.01 Registration Statement; Joint Proxy Statement .........45
SECTION 7.02 Stockholders' Meetings ................................48
SECTION 7.03 Affiliates ............................................49
SECTION 7.04 Directors' and Officers' Indemnification and
Insurance .............................................49
SECTION 7.05 No Shelf Registration .................................50
SECTION 7.06 Public Announcements ..................................51
SECTION 7.07 NNM Listing ...........................................51
SECTION 7.08 Blue Sky ..............................................51
SECTION 7.09 Employee Benefit Matters ..............................51
ARTICLE VIII CONDITIONS TO THE MERGER .......................................51
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger .................................51
SECTION 8.02 Conditions to the Obligations of Company ..............52
SECTION 8.03 Conditions to the Obligations of Parent ...............53
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER ................................54
SECTION 9.01 Termination ...........................................54
7
Page
----
SECTION 9.02 Effect of Termination .................................56
SECTION 9.03 Amendment .............................................56
SECTION 9.04 Waiver ................................................56
SECTION 9.05 Termination Fee; Expenses .............................56
ARTICLE X GENERAL PROVISIONS ................................................59
SECTION 10.01 Non-Survival of Representations and Warranties .......59
SECTION 10.02 Notices ..............................................59
SECTION 10.03 Severability .........................................60
SECTION 10.04 Assignment; Binding Effect; Benefit ..................61
SECTION 10.05 Incorporation of Exhibits ............................61
SECTION 10.06 Governing Law ........................................61
SECTION 10.07 Waiver of Jury Trial .................................61
SECTION 10.08 Headings; Interpretation .............................62
SECTION 10.09 Counterparts .........................................62
SECTION 10.10 Entire Agreement .....................................62
8
ANNEXES
Page
----
ANNEX A Form of Stockholder Agreement
ANNEX B Form of Option Agreement
ANNEX C Form of Company Affiliate Agreement
ANNEX D Form of Parent Affiliate Agreement
ANNEX E Form of Employment Agreement
9
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of June 13,
1999 (as amended, supplemented or otherwise modified from time to time, this
"AGREEMENT"), among DOUBLECLICK INC., a Delaware corporation ("Parent"), ABACUS
DIRECT CORPORATION, a Delaware corporation ("COMPANY"), and ATLANTA MERGER
CORP., a Delaware corporation and a direct wholly owned subsidiary of Parent
("MERGER SUB"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have determined
that it is advisable and in the best interests of their respective companies and
stockholders to enter into a business combination by means of the merger of
Merger Sub with and into Company (the "MERGER") and have approved and adopted
this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of
Company have entered into a stockholder agreement (each, a "STOCKHOLDER
AGREEMENT") in the form attached hereto as Annex A;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Company has entered into an
option agreement (the "OPTION AGREEMENT") in the form attached hereto as Annex
B;
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Parent will acquire all of the common stock of Company through the
merger of Merger Sub with and into Company;
WHEREAS, for financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests" under United States
generally accepted accounting principles ("U. S. GAAP") and the accounting
standards of the United States Securities and Exchange Commission (the "SEC");
and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "CODE"), and that this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code;
10
2
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms
Unless the context otherwise requires, the following terms, when used
in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"AFFILIATE" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY INTELLECTUAL PROPERTY" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress, Internet
domain names, copyrights (whether or not registered) and any renewal rights
therefor, sui generis database rights, statistical models, technology,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, databases, technical
documentation of such software programs ("TECHNICAL DOCUMENTATION"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that were material to
Company's business or are currently used in Company's business in any product,
technology or process (i) currently being or formerly manufactured, published or
marketed by Company or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by Company.
11
3
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect on
the business of Company and the Company Subsidiaries that, individually or in
the aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Company and the
Company Subsidiaries, taken as a whole, except to the extent that any such
change in or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which Company operates (provided
that such changes do not affect Company in a materially disproportionate
manner), (ii) changes in trading prices for the Company's capital stock, and
(iii) any litigation or loss of customers or revenues that Company successfully
bears the burden of proving arose from Company entering into this Agreement.
"COMPANY STOCK PLANS" shall mean Company's 1999 Stock Incentive Plan,
Amended and Restated 1996 Stock Incentive Plan, and Amended and Restated 1989
Stock Option Plan.
"COMPETING TRANSACTION" shall mean any of the following involving
Company or Parent, as the case may be (other than the Merger):
any merger, consolidation, share exchange, business
combination or other similar transaction;
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of such party and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions;
any license, joint venture or other arrangement pursuant to
which Company provides or permits access to all or a majority of its data
(on a value basis) to a third party, a primary purpose of which party is
targeted Internet, Web, e-mail or interactive television advertising;
any tender offer or exchange offer for 20% or more of the
outstanding voting securities of such party or the filing of a registration
statement under the Securities Act in connection therewith;
any person having acquired beneficial ownership or the right
to acquire beneficial ownership of, or any "group" (as such term is defined
under Section 13(d) of the Exchange Act) having been formed that
beneficially owns or has the right to acquire beneficial ownership of, 20%
or more of the outstanding voting securities of such party;
any solicitation in opposition to the approval of this
Agreement by the stockholders of such party; or
12
4
any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
For the purpose of Section 9.05(b)(ii)(B) and Section 9.05(c), each reference to
"20%" shall be deemed to be "30%."
"CONFIDENTIALITY AGREEMENTS" shall mean the confidentiality agreements,
each dated April 21, 1999, between Parent and Company.
"$" shall mean United States Dollars.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all documented
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by such party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Merger, the preparation, printing, filing and mailing of the Registration
Statement and the Joint Proxy Statement, the solicitation of stockholder
approvals, the filing of HSR Act notice, if any, and all other matters related
to the transactions contemplated hereby and the closing of the Merger.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
13
5
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect on
the business of Parent and the Parent Subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent that any such change
in or effect results from (i) changes in general economic conditions or changes
affecting the industry generally in which Parent operates (provided that such
changes do not affect Parent in a materially disproportionate manner) and (ii)
any litigation or loss of customers or revenues that Parent successfully bears
the burden of proving arose from Parent entering into this Agreement; provided,
however, that in no event shall a decrease in the trading price of Parent Common
Stock or litigation relating thereto be considered a Parent Material Adverse
Effect.
"PARENT STOCK PLANS" shall mean Parent's 1999 Non-Officer Stock
Option/Stock Issuance Plan, 1997 Stock Incentive Plan, as amended, and 1996
Stock Option Plan.
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint
14
6
venture or other legal entity of which such person (either alone or through or
together with any other subsidiary of such person) owns, directly or indirectly,
a majority of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges; (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, combined, consolidated or
unitary group for any taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any Person or as a result of an express or
implied obligation to indemnify any person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time (as defined in
Section 2.03), Merger Sub shall be merged with and into Company. As a result of
the Merger, the separate corporate existence of Merger Sub shall cease and
Company shall continue as the surviving corporation of the Merger as a wholly
owned subsidiary of Parent (the "SURVIVING CORPORATION").
15
7
SECTION 2.02 Closing
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to Section 9.01 and subject to
the satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VIII, at a closing (the "CLOSING") to be held at
the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is agreed to by Parent and
Company.
SECTION 2.03 Effective Time
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing a certificate of merger (the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware in such form as
required by, and executed in accordance with the relevant provisions of, the
DGCL (the date and time of such filing, or such later date and time as may be
set forth therein, being the "EFFECTIVE TIME").
SECTION 2.04 Effect of the Merger
At the Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and Merger Sub shall vest in
Company as the Surviving Corporation, and all debts, liabilities and duties of
Company and Merger Sub shall become the debts, liabilities and duties of Company
as the Surviving Corporation.
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and Officers of
Surviving Corporation
Unless otherwise agreed by Parent and Company before the Effective
Time, at the Effective Time:
(a) The Certificate of Incorporation and the Bylaws of Merger Sub in effect
immediately prior to the effective time shall be the Certificate of
Incorporation and the Bylaws of the surviving corporation, until thereafter
amended as provided by law and such certificate of incorporation or bylaws;
provided, however, that Article I of the Certificate of Incorporation of the
surviving corporation shall be amended to read as follows: "The name of the
corporation is Abacus Direct Corporation" and the bylaws shall be amended to
reflect such name change;
(b) The officers of merger sub immediately prior to the effective time shall
serve in their respective offices of the surviving corporation from and after
the effective time, in each case
16
8
until their successors are elected or appointed and qualified or until their
resignation or removal; and
(c) The directors of merger sub immediately prior to the effective time shall
serve as the directors of the surviving corporation from and after the
effective time, in each case until their successors are elected or appointed
and qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares
At the Effective Time, by virtue of the Merger, and without any action
on the part of Parent, Merger Sub, Company or the holders of any of the
following securities:
(a) Each share of common stock, $.001 par value, of company ("Company Common
Stock") issued and outstanding immediately before the effective time (excluding
those held in the treasury of company and those owned by any wholly owned
subsidiary of company) and all rights in respect thereof, shall, forthwith cease
to exist and be converted into and become exchangeable for 1.05 shares (the
"Exchange Ratio") of common stock, $.001 par value, of parent ("Parent Common
Stock");
(b) Each share of company common stock held in the treasury of company or owned
by any wholly owned subsidiary of company immediately prior to the effective
time shall be canceled and retired and no shares of stock or other securities of
parent, the surviving corporation or any other corporation shall be issuable,
and no payment or other consideration shall be made, with respect thereto; and
(c) Each issued and outstanding share of capital stock of merger sub shall be
converted into and become one fully paid and nonassessable share of common stock
of the surviving corporation.
SECTION 3.02 Exchange of Shares Other than Treasury Shares
(a) Exchange Agent. Prior to the effective time, parent shall enter into an
agreement with a bank or trust company to act as exchange agent for the merger
(the "Exchange Agent") as may be designated by parent and such agreement and the
exchange agent shall be reasonably acceptable to company.
17
9
(b) Parent to provide common stock and cash. Promptly after the effective time,
parent shall make available to the exchange agent for the benefit of the holder
of company common stock: (i) certificates of parent common stock ("Parent
Certificates") representing the number of whole shares of parent common stock
issuable pursuant to section 3.01(a) in exchange for shares of company common
stock outstanding immediately prior to the effective time; (ii) sufficient funds
to permit payment in lieu of fractional shares pursuant to section 3.04 and
(iii) any dividends or distributions to which holders of shares of company
common stock may be entitled pursuant to section 3.07.
(c) Exchange Procedures. The exchange agent shall mail to each holder of record
of certificates of company common stock ("Company Certificates"), whose shares
were converted into the right to receive shares of parent common stock (and cash
in lieu of fractional shares pursuant to section 3.04) promptly after the
effective time (and in any event no later than three business days after the
effective time): (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the company certificates shall
pass, only upon receipt of the company certificates by the exchange agent, and
shall be in such form and have such other provisions as parent may reasonably
specify); and (ii) instructions for use in effecting the surrender of the
company certificates in exchange for parent certificates (and cash in lieu of
fractional shares). Upon surrender of a company certificate for cancellation to
the exchange agent or to such other agent or agents as may be appointed by
parent, together with such letter of transmittal, duly completed and validly
executed, and such other documents as may be reasonably required by the exchange
agent, the holder of such company certificate shall be entitled to receive in
exchange therefor a parent certificate representing the number of whole shares
of parent common stock that such holder has the right to receive pursuant to
this Article III and payment of cash in lieu of fractional shares which such
holder has the right to receive pursuant to section 3.04, and the company
certificate so surrendered shall forthwith be canceled. until so surrendered,
each outstanding company certificate that, prior to the effective time,
represented shares of company common stock will be deemed from and after the
effective time, for all corporate purposes other than the payment of dividends
and distributions, to evidence the ownership of the number of full shares of
parent common stock into which such shares of company common 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 3.04.
Notwithstanding any other provision of this agreement, no interest will be paid
or will accrue on any cash payable to holders of company certificates pursuant
to the provisions of this Article III.
18
10
(d) Lost, stolen or destroyed company certificates. In the event any company
certificates shall have been lost, stolen or destroyed, the exchange agent
shall issue in exchange for such lost, stolen or destroyed company
certificates, upon the making of an affidavit of that fact by the holder
thereof, a parent certificate representing such shares of parent common stock
(and cash in lieu of fractional shares) as may be required pursuant to this
Article III; provided, however, that parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed company certificates to indemnify parent against any claim
that may be made against parent, the surviving corporation or the exchange
agent with respect to the company certificates alleged to have been lost,
stolen or destroyed.
(e) Distributions with respect to unexchanged shares. No dividends or other
distributions with respect to parent common stock with a record date after the
effective time will be paid to the holder of any unsurrendered company
certificate with respect to the shares of parent common stock represented
thereby until the holder of record of such company certificate shall surrender
such company certificate. Subject to the effect of applicable escheat or
similar laws, following surrender of any such company certificate, there shall
be paid to the record holder of the parent certificates 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 theretofore payable (but for the provisions of this section 3.02(e)) with
respect to such shares of parent common stock.
(f) Transfer of Ownership. If any parent certificate is to be issued in a name
other than that in which the company certificate surrendered in exchange
therefor is registered, it will be a condition of the issuance thereof that the
company 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 parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a parent certificate for shares of parent
common stock in any name other than that of the registered holder of the
company certificate surrendered, or established to the satisfaction of parent
or any agent designated by it that such tax has been paid or is not payable.
(g) Termination of Exchange Agent Funding. Any portion of funds (including any
interest earned thereon) or parent certificates held by the exchange agent
which have not been delivered to holders of company certificates pursuant to
this article iii within six months after the effective time shall promptly be
paid or delivered, as appropriate, to parent, and thereafter holders of company
certificates who have not theretofore complied with the exchange procedures
outlined in and contemplated by this section 3.02 shall thereafter look only to
parent (subject to abandoned property, escheat and similar laws) only as
general creditors thereof for their claim for shares of parent common stock,
any cash in lieu of fractional shares of parent common stock and any dividends
or distributions (with a record date after the effective time) with respect to
parent common stock to which they are entitled.
19
11
(h) No Liability. Notwithstanding anything to the contrary in this section
3.02, none of the exchange agent, the surviving corporation or any party hereto
shall be liable to any person in respect of any shares of parent common stock
or cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
SECTION 3.03 Stock Transfer Books
(a) At the effective time, the stock transfer books of company shall each be
closed, and there shall be no further registration of transfers of shares of
company common stock thereafter on the records of any such stock transfer
books. In the event of a transfer of ownership of shares of company common
stock that is not registered in the stock transfer records of company at the
effective time, a certificate or certificates representing the number of full
shares of parent common stock into which such shares of company common stock
shall have been converted shall be issued to the transferee together with a
cash payment in lieu of fractional shares, if any, in accordance with section
3.04 hereof, and a cash payment in the amount of dividends, if any, in
accordance with section 3.02(e) hereof, if the certificate or certificates
representing such shares of company common stock is or are surrendered as
provided in section 3.02(c) hereof, accompanied by all documents required to
evidence and effect such transfer and by evidence of payment of any applicable
stock transfer tax.
(b) Notwithstanding anything to the contrary herein, certificates surrendered
for exchange by any person constituting an affiliate of company shall not be
exchanged until parent shall have received from such person an affiliate letter
as provided in section 7.03.
SECTION 3.04 No Fractional Share Certificates
No scrip or fractional share Parent Certificate shall be issued upon
the surrender for exchange of Company Certificates, and an outstanding
fractional share interest shall not entitle the owner thereof to vote, to
receive dividends or to any rights of a stockholder of Parent or of Surviving
Corporation with respect to such fractional share interest. As promptly as
practicable following the Effective Time, Parent shall deposit with the Exchange
Agent an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (i) the fractional share interest to which such holder would
otherwise be entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (ii) the closing price for a
share of Parent Common Stock on the Nasdaq National Market (the "NNM") on the
last business day prior to the Effective Time. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts, net of any required withholding Taxes, to
such holders of Company Common Stock, subject to and in accordance with the
terms of Section 3.02 hereof.
20
12
SECTION 3.05 Options to Purchase Company Common Stock
At the Effective Time, each option or warrant granted by Company to
purchase shares of Company Common Stock ("COMPANY STOCK OPTIONS"), which is
outstanding and unexercised immediately prior to the Effective Time, and the
Company Stock Plans shall be assumed by Parent, and the Company Stock Options
shall be converted into an option or warrant, as the case may be, to purchase
shares of Parent Common Stock in such number and at such exercise price as
provided below and otherwise having the same terms and conditions as in effect
immediately prior to the Effective Time (except to the extent that such terms,
conditions and restrictions may be altered in accordance with their terms as a
result of the Merger contemplated hereby and except that all references in each
such Company Stock Option to Company shall be deemed to refer to Parent):
(a) The number of shares of parent common stock to be subject to the new option
or warrant, as the case may be, shall be equal to the product of (x) the number
of shares of company common stock subject to the original company stock option
immediately prior to the effective time and (y) the exchange ratio;
(b) The exercise price per share of parent common stock under the new option or
warrant shall be equal to (x) the exercise price per share of company common
stock in effect under the original company stock option immediately prior to
the effective time divided by (y) the exchange ratio; and
(c) In effecting such assumption and conversion, the aggregate number of shares
of parent common stock to be subject to each assumed company stock option will
be rounded down, if necessary, to the next whole share and the aggregate
exercise price shall be rounded up, if necessary, to the next whole cent (for
the purpose of providing that the intrinsic value of such company stock options
shall be preserved at the effective time).
The adjustments provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code so as to retain their character as incentive stock options. The assumption
of the outstanding Company Stock Options in the Merger and their conversion into
options for Parent Common Stock will not result in any accelerated vesting of
those options or the shares purchasable thereunder other than as contemplated in
presently existing agreements to which the Company is a party, copies of which
agreements have been provided to Parent, and the vesting schedule in effect for
each Company Stock Option immediately prior to the Effective Time shall remain
in full force after the assumption thereof by Parent.
21
13
SECTION 3.06 Unvested Stock
At the Effective Time, any unvested shares of Company Common Stock
awarded to employees, directors or consultants pursuant to any of the Company's
plans or arrangements and outstanding immediately prior to the Effective Time
shall be converted into unvested shares of Parent Common Stock in accordance
with the Exchange Ratio and shall remain subject to the same terms, restrictions
and vesting schedule as in effect immediately prior to the Effective Time,
except to the extent by their terms such unvested shares of Company Common Stock
vest at the Effective Time and copies of the relevant agreements governing such
vesting have been provided to Parent. All outstanding rights which Company may
hold immediately prior to the Effective Time to repurchase unvested shares of
Company Common Stock shall be assigned to the Parent in the Merger and shall
thereafter be exercisable by Parent upon the same terms and conditions in effect
immediately prior to the Effective Time, except that the shares purchasable
pursuant to such rights and the purchase price payable per share shall be
adjusted to reflect the Exchange Ratio.
SECTION 3.07 Certain Adjustments
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or the number of shares of Company Common Stock on a
fully diluted basis is in excess of that specified in Section 4.03 and disclosed
in Section 4.03 of the Company Disclosure Schedule (regardless of whether such
excess is a result of an additional issuance of capital stock or a correction to
such Sections), then the Exchange Ratio established pursuant to the provisions
of Section 3.01 shall be adjusted accordingly to provide to each of Parent, on
the one hand, and the holders of Company Common Stock in the aggregate, on the
other hand, the same economic effect as contemplated by this Agreement prior to
such reclassification, recapitalization, split-up, combination, exchange,
dividend or increase.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the Company Disclosure Schedule,
all such exceptions to be referenced to a specific representation set forth in
this Article IV or to otherwise be clearly applicable to representations hereof
not specifically referenced, that:
22
14
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Company and each directly and indirectly owned subsidiary of company (the
"company subsidiaries") has been duly organized and is validly existing and in
good standing (to the extent applicable) under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Company and each company
subsidiary is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), 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.
(b) Section 4.01 of the company disclosure schedule sets forth, as of the date
of this agreement, a true and complete list of each company subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
company subsidiary and the percentage of each company subsidiary's outstanding
capital stock or other equity interests owned by company or another company
subsidiary and (ii) an indication of whether each company subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the exchange act.
Except as set forth in section 4.01 of the company disclosure schedule, neither
company nor any company subsidiary owns an equity interest in any partnership
or joint venture arrangement or other business entity.
SECTION 4.02 Certificate of Incorporation and Bylaws
The copies of Company's certificate of incorporation and bylaws
previously provided to Parent by Company are true, complete and correct copies
thereof. Such certificate of incorporation and bylaws are in full force and
effect. Company is not in violation of any of the provisions of its certificate
of incorporation or bylaws.
23
15
SECTION 4.03 Capitalization
The authorized capital stock of Company consists of 25,000,000 shares
of Company Common Stock and 1,000,000 shares of preferred stock ("COMPANY
PREFERRED STOCK"). As of the date hereof, (i) 9,877,521 shares of Company Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of Company, (iii) no shares of Company Common Stock are held by Company
Subsidiaries, (iv) 2,151,298 shares of Company Common Stock are reserved for
future issuance pursuant to Company Stock Options, of which 1,820,523 and
330,775 shares of Company Common Stock are reserved for future issuance pursuant
to unvested, outstanding and vested, outstanding, unexercised Company Stock
Options, respectively, and (v) no shares of Company Preferred Stock are
outstanding. The name of each holder of a Company Stock Option, the grant date
of each Company Stock Option, and the number of shares of Company Common Stock
for which each Company Stock Option is exercisable and the exercise price of
each Company Stock Option are set forth in Section 4.03 of the Company
Disclosure Schedule. Except for shares of Company Common Stock issuable pursuant
to Company Stock Plans, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating Company or
any Company Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, Company or any Company Subsidiary. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance prior to the
Effective Time on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding contractual obligations of Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of any Company Subsidiary. Each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by Company or another Company Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Company's or such other Company Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever. There are no material
outstanding contractual obligations of Company or any Company Subsidiary to
provide funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any other
person.
24
16
SECTION 4.04 Authority Relative to This Agreement
Company has all necessary corporate power and authority to execute and
deliver this Agreement and the Option Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Option
Agreement by Company and the consummation by Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement and the Option Agreement or to
consummate the transactions contemplated hereby and thereby (other than, with
respect to the Merger, the approval of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote with
respect thereto at the Company Stockholders' Meeting (as defined in Section
7.01), and the filing and recordation of the Certificate of Merger as required
by the DGCL). This Agreement and the Option Agreement have been duly executed
and delivered by Company and, assuming the due authorization, execution and
delivery by the other parties hereto and thereto, constitute legal, valid and
binding obligations of Company, enforceable against Company in accordance with
their terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of remedies (whether in a proceeding at law or
in equity).
SECTION 4.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this agreement and the option agreement by
company do not, and the performance by company of its obligations hereunder and
thereunder and the consummation of the merger will not, (i) conflict with or
violate any provision of the certificate of incorporation or bylaws of company
or any equivalent organizational documents of any company subsidiary, (ii)
assuming that all filings and notifications described in section 4.05(b) have
been made, conflict with or violate any law applicable to company or any
company subsidiary or by which any property or asset of company or any company
subsidiary is bound or affected or (iii) result in any material breach of or
constitute a material default (or an event which with the giving of notice or
lapse of time or both could reasonably be expected to become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any material property or asset of company or any company subsidiary pursuant
to, any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation.
25
17
(b) Except as may arise solely by virtue of the nature of parent's business,
the execution and delivery of this agreement by company do not, and the
performance by company of its obligations hereunder and the consummation of the
merger will not, require any consent, approval, authorization or permit of, or
filing by company with or notification by company to, any governmental entity,
except pursuant to applicable requirements of the exchange act, the securities
act, blue sky laws, the rules and regulations of the NNM, state takeover laws,
the premerger notification requirements of the HSR Act, and the filing and
recordation of the certificate of merger as required by the DGCL.
SECTION 4.06 Permits; Compliance with Laws
Company and the Company Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders of
any Governmental Entity materially necessary for Company or any Company
Subsidiary to own, lease and operate its properties or to offer or perform its
services or to develop, produce, store, distribute and market its products or
otherwise to carry on its business as it is now being conducted (collectively,
the "COMPANY PERMITS"), and, as of the date of this Agreement, none of the
Company Permits has been suspended or cancelled nor is any such suspension or
cancellation pending or, to the knowledge of Company, threatened. Neither
Company nor any Company Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to Company or any Company Subsidiary or by
which any property or asset of Company or any Company Subsidiary is bound or
affected or (ii) any material Company Permits. Section 4.06 of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of Company,
threatened against Company or any Company Subsidiary that could reasonably be
expected to result in the suspension or cancellation of any other material
Company Permit. Since January 1, 1997, neither Company nor any Company
Subsidiary has received from any Governmental Entity any written notification
with respect to possible material conflicts, defaults or violations of Laws.
26
18
SECTION 4.07 SEC Filings; Financial Statements
(a) Company has timely filed all forms, reports, statements and documents
required to be filed by it (a) with the SEC and the NNM since November 1, 1996
(collectively, together with any such forms, reports, statements and documents
company may file subsequent to the date hereof until the closing, the "Company
Reports") and (b) with any other governmental entities. Each company report (i)
was prepared in accordance with the requirements of the securities act, the
exchange act or the rules and regulations of the NNM, as the case may be, in
substantially all respects and (ii) did not at the time it was filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each form, report, statement and document referred to in clause (b)
of this paragraph was prepared in all material respects in accordance with the
requirements of applicable law. no company subsidiary is subject to the
periodic reporting requirements of the exchange act or required to file any
form, report or other document with the SEC, the NNM, any other stock exchange
or any other comparable governmental entity.
(b) Each of the consolidated financial statements (including, in each case, any
notes thereto) contained in the company reports was prepared in accordance with
U.S. GAAP (except as may be permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of company and the consolidated
company subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of company and the company subsidiaries as reported
in the company reports, including the notes thereto, none of company or any
company subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for immaterial liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December 31,
1998.
SECTION 4.08 Absence of Certain Changes or Events
Since December 31, 1998, Company and the Company Subsidiaries have
conducted their businesses in all material respects only in the ordinary course
consistent with past practice and, since such date, there has not been (i) any
material changes in or effect on the business, assets, liabilities, financial
condition or results of operations of Company or the Company Subsidiaries, (ii)
any event (other than events within the scope of Section 4.10) that could
reasonably be expected to prevent or materially delay the performance of
Company's
27
19
obligations pursuant to this Agreement and the consummation of the Merger by
Company, (iii) any material change by Company in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Company Common Stock or
any redemption, purchase or other acquisition of any of Company's securities,
(v) except for changes in the ordinary course of business consistent with past
practice that only affect non-officer employees of the Company, any increase in
the compensation or benefits or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any employees, officers,
consultants or directors of Company or any Company Subsidiary, (vi) any
issuance or sale of any stock, notes, bonds or other securities other than
pursuant to the exercise of outstanding securities, or entering into any
agreement with respect thereto, or the issuances of options under the Company
Stock Plans, (vii) any amendment to the Company's certificate of incorporation
or bylaws, (viii) other than in the ordinary course of business consistent with
past practice, any (x) purchase, sale, assignment or transfer of any material
assets, (y) mortgage, pledge or existence of any lien, encumbrance or charge on
any material assets or properties, tangible or intangible except for liens for
Taxes not yet delinquent, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss,
whether or not covered by insurance, materially affecting the business or
properties of Company or any Company Subsidiary, or (xi) any entering into any
transaction of a material nature other than in the ordinary course of business,
consistent with past practice.
28
20
SECTION 4.09 Employee Benefit Plans; Labor Matters
(a) The company disclosure schedule lists each employee benefit fund, plan,
program, arrangement and contract (including, without limitation, any "Pension"
plan, fund or program, as defined in section 3(2) of ERISA, and any "Employee
Benefit Plan", as defined in section 3(3) of ERISA and any plan, program,
arrangement or contract providing for severance; medical, dental or vision
benefits; life insurance or death benefits; disability benefits, sick pay or
other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits) ("Benefit Plans"), maintained,
sponsored or contributed to or required to be contributed to by company or any
company subsidiary (the "Company Benefit Plans"). With respect to each company
benefit plan, company has delivered or made available to parent a true,
complete and correct copy of (i) such company benefit plan (of, if not written,
a written summary of its material terms) and the most recent summary plan
description, if any, related to such company benefit plan, (ii) each trust
agreement or other funding arrangement relating to such company benefit plan,
(iii) the most recent annual report (Form 5500) filed with the IRS with respect
to such company benefit plan (and, if the most recent annual report is a Form
5500R, the most recent Form 5500C filed with respect to such company benefit
plan), (iv) the most recent actuarial report or financial statement relating to
such company benefit plan and (v) the most recent determination letter, if any,
issued by the IRS with respect to such company benefit plan and any pending
request for such a determination letter. Neither company nor any company
subsidiary nor, to the knowledge of company, any other person or entity, has
any express commitment, whether legally enforceable or not, to modify, change
or terminate any company benefit plan, other than with respect to a
modification, change or termination required by ERISA or the code.
29
21
(b) Each company benefit plan has been administered in all material respects in
accordance with its terms and all applicable laws, including ERISA and the
code, and contributions required to be made under the terms of any of the
company benefit plans as of the date of this agreement have been timely made
or, if not yet due, have been properly reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the company
reports prior to the date of this agreement. With respect to the company
benefit plans, to company's knowledge, no event has occurred and, to the
knowledge of company, there exists no condition or set of circumstances in
connection with which company or any company subsidiary could be subject to any
material liability (other than for routine benefit liabilities) under the terms
of, or with respect to, such company benefit plans, ERISA, the code or any
other applicable law.
(c) Company on behalf of itself and each company ERISA affiliate (as defined
below) hereby represents that: (i) each company benefit plan which is intended
to qualify under section 401(a), section 401(k), section 401(m) or section
4975(e)(6) of the code has received a favorable determination letter from the
IRS as to its qualified status, and each trust established in connection with
any company which is intended to be exempt from federal income taxation under
section 501(a) of the code has received an opinion letter from the IRS that it
is so exempt or application for same is pending that is timely filed with the
IRS, and to company's knowledge no fact or event has occurred that is
reasonably likely to materially adversely affect the qualified status of any
such company benefit plan or the exempt status of any such trust; (ii) to
company's reasonable knowledge there has been no prohibited transaction (within
the meaning of section 406 of ERISA or section 4975 of the code and other than
a transaction that is exempt under a statutory or administrative exemption)
with respect to any company plan that could result in liability to the company
or a company subsidiary and (iii) each company benefit plan can be amended,
terminated or otherwise discontinued after the effective time in accordance
with its terms, without liability (other than (a) liability for ordinary
administrative expenses typically incurred in a termination event or (b) if the
company benefit plan is pension benefit plan subject to Part 2 of Title I of
ERISA, liability for the accrued benefits as of the date of such termination
(if and to the extent required by ERISA)) to the extent that either there are
sufficient assets set aside in a trust or insurance contract to satisfy such
liability or such liability is reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the company reports prior
to the date of this agreement. no suit, administrative proceeding, action or
other litigation has been brought, or to the knowledge of company is
threatened, against or with respect to any such company benefit plan, including
any audit or inquiry by the internal revenue service or united states
department of labor (other than routine benefits claims).
30
22
(d) No company benefit plan is a multiemployer pension plan (as defined in
section 3(37) of ERISA) or other pension plan subject to Title IV of ERISA and
neither the company, any company subsidiary nor any other trade or business
(whether or not incorporated) that is under "Common Control" with company or a
company subsidiary (within the meaning of ERISA section 4001) or with respect
to which company or any company subsidiary could otherwise incur liability
under Title IV of ERISA (a "Company ERISA Affiliate") has sponsored or
contributed to or been required to contribute to a multiemployer pension plan
or other pension plan subject to Title IV of ERISA. No material liability under
title iv of ERISA has been incurred by company, any company subsidiary or any
Company ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to company or any company subsidiary of
incurring or being subject (whether primarily, jointly or secondarily) to a
material liability thereunder. None of the assets of company or any company
subsidiary is, or may reasonably be expected to become, the subject of any lien
arising under ERISA or section 412(n) of the code.
(e) With respect to each benefit plan required to be set forth in the
disclosure schedule that is subject to Title IV or Part 3 of Title I of ERISA
or section 412 of the code, (i) no reportable event (within the meaning of
section 4043 of ERISA, other than an event that is not required to be reported
before or within 30 days of such event) has occurred or is expected to occur,
(ii) there was not an accumulated funding deficiency (within the meaning of
section 302 of ERISA or section 412 of the code), whether or not waived, as of
the most recently ended plan year of such benefit plan; and (iii) there is no
"Unfunded Benefit Liability" (within the meaning of section 4001(a)(18) of
ERISA).
31
23
(f) Company has made available to parent true, complete and correct copies of
(i) all employment agreements with officers and all consulting agreements of
company and each company subsidiary, (ii) all severance plans, agreements,
programs and policies of company and each company subsidiary with or relating
to their respective employees, directors or consultants, and (iii) all plans,
programs, agreements and other arrangements of company and each company
subsidiary with or relating to their respective employees, directors or
consultants which contain "Change of Control" provisions. No payment or benefit
which may be required to be made by company or any company subsidiary or which
otherwise may be required to be made under the terms of any company benefit
plan or other arrangement will constitute a parachute payment under code
section 280(G)(1), and the consummation of the transactions contemplated by
this agreement will not, alone or in conjunction with any other possible event
(including termination of employment), (i) entitle any current or former
employee or other service provider of company or any company subsidiary to
severance benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), except as expressly provided by this agreement,
or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider.
(g) Neither company nor any company subsidiary is a party to, or has any
obligations under or with respect to, any collective bargaining or other labor
union contract applicable to persons employed by company or any company
subsidiary and no collective bargaining agreement is being negotiated by
company or any company subsidiary or any person or entity that may obligate the
company or any company subsidiary thereunder. As of the date of this agreement,
there is no labor dispute, strike, union organizing activity or work stoppage
against company or any company subsidiary pending or, to the knowledge of
company, threatened which may substantially interfere with the respective
business activities of company or any company subsidiary. As of the date of
this agreement, to the knowledge of company, none of company, any company
subsidiary, or any of their respective representatives or employees has
committed any unfair labor practice in connection with the operation of the
respective businesses of company or any company subsidiary, and there is no
charge or complaint filed against company or any company subsidiary by or with
the national labor relations board or any comparable governmental entity
pending or threatened in writing.
32
24
(h) Except as required by law, no company benefit plan provides any of the
following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To company's knowledge, company and the
company ERISA affiliates are in compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the consolidated
omnibus budget reconciliation act of 1985, as amended ("Cobra") and the
regulations (including proposed regulations) thereunder and (ii) the applicable
requirements of the health insurance portability and accountability act of
1996, as amended, and the regulations (including the proposed regulations)
thereunder.
SECTION 4.10 Pooling; Certain Tax Matters
To Company's knowledge, neither Company nor any of its affiliates has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected (based on the advice of
PricewaterhouseCoopers) to prevent the Merger from being treated for accounting
purposes as a "pooling of interests" in accordance with U.S. GAAP and the
accounting standards of the SEC. Neither Company, nor to Company's knowledge,
any of its affiliates, has taken or agreed to take any action (other than
actions contemplated by this Agreement) that could be expected to prevent the
Merger from constituting a "reorganization" under Section 368 of the Code.
Company is not aware of any agreement or plan to which Company or any of its
affiliates is a party or other circumstances relating to Company or any of its
affiliates that could reasonably be expected to prevent the Merger from being so
treated as a "pooling of interests" or from so qualifying as a reorganization
under Section 368 of the Code.
SECTION 4.11 Contracts
Section 4.11 of the Company Disclosure Schedule sets forth a list of
each contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Company and Company
Subsidiaries, taken as a whole (each, a "MATERIAL CONTRACT"). Neither Company
nor any Company Subsidiary is in material violation of or in default under (nor
does there exist any condition which with the passage of time or the giving of
notice could reasonably be expected to cause such a material violation of or
material default under) any Material Contract. Each Material Contract is in full
force and effect and is a legal, valid and binding obligation of Company or a
Company Subsidiary and, to the knowledge of Company, each of the other parties
thereto, enforceable in accordance with its terms.
33
25
SECTION 4.12 Litigation
There is no material suit, claim, action, proceeding or investigation
pending or, to the knowledge of Company, threatened against Company or any
Company Subsidiary, and, to the knowledge of Company, there are no existing
facts or circumstances that could reasonably be expected to result in such a
suit, claim, action, proceeding or investigation. Company is not aware of any
facts or circumstances which could reasonably be expected to result in the
denial of insurance coverage under policies issued to Company and Company
Subsidiaries in respect of such material suits, claims, actions, proceedings and
investigations. Neither Company nor any Company Subsidiary is subject to any
material outstanding order, writ, injunction or decree or any material
outstanding order, writ, injunction or decree.
SECTION 4.13 Environmental Matters
To Company's knowledge, (i) Company and the Company Subsidiaries are in
material compliance with all applicable Environmental Laws and all Company
Permits required by Environmental Laws; (ii) all past noncompliance of Company
or any Company Subsidiary with Environmental Laws or Environmental Permits has
been resolved without any pending, ongoing or future material obligation, cost
or liability; and (iii) neither Company nor any Company Subsidiary has released
a Hazardous Material at, or transported a Hazardous Material to or from, any
real property currently or formerly owned, leased or occupied by Company or any
Company Subsidiary, in violation of any Environmental Law.
SECTION 4.14 Intellectual Property
(a) Section 4.14(a) of the company disclosure schedule contains a true and
complete list of company's patents, patent applications, registered trademarks,
trademark applications, trade names, registered service marks, service xxxx
applications, internet domain names, internet domain name applications,
copyright registrations and applications and other filings and formal actions
made or taken pursuant to federal, state, local and foreign laws by company to
protect its interests in company intellectual property, and includes details of
all due dates for further filings, maintenance, payments or other actions
falling due in respect of company intellectual property within twelve (12)
months of the effective time. All of company's patents, patent applications,
registered trademarks, and trademark applications, and registered copyrights
remain in good standing with all fees and filings due as of the date hereof.
The company has previously provided purchaser with a list of all other
trademarks and service marks which are material to the company's business.
34
26
(b) Company has made all registrations that Company (including any of its
subsidiaries) is required to have made in relation to the processing of data,
and is in good standing with respect to such registrations with all fees due as
of the effective time duly made.
(c) Company intellectual property contains only those items and rights which
are: (i) owned by Company; (ii) in the public domain; or (iii) rightfully used
by company pursuant to a valid and enforceable license or other agreement (the
"Company licensed intellectual property"), the parties, date, term and subject
matter of each such license or other agreement (each, a "license agreement")
being set forth on Section 4.14(c) of the Company Disclosure Schedule. Company
has all rights in Company intellectual property necessary to carry out
Company's current activities and, to the knowledge of the Company, the
Company's future activities to the extent such future activities are already
planned, including without limitation, to the extent required to carry out such
activities, rights to make, use, reproduce, modify, adopt, create derivative
works based on, translate, distribute (directly and indirectly), transmit,
display and perform publicly, license, rent and lease and, other than with
respect to company licensed intellectual property, assign and sell, Company
intellectual property.
35
27
(d) The reproduction, manufacturing, distribution, licensing, sublicensing,
sale or any other exercise of rights in any Company intellectual property,
product, work, technology or process as now used or offered or proposed for
use, licensing or sale by Company does not infringe on any patent, design
right, trademark, trade name, service xxxx, trade dress, internet domain name,
copyright, database, statistical model, technology, invention, supplier list,
trade secret, know-how, computer software program or application of any person,
anywhere in the world. The Company has not received notice of any claims (i)
challenging the validity, effectiveness or, other than with respect to Company
licensed intellectual property, ownership by Company of any Company
intellectual property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any product,
work, technology or process as now used or offered or proposed for use,
licensing, sublicensing or sale by Company or its agents or use by its
customers infringes or will infringe on any intellectual property or other
proprietary or personal right of any person. To the knowledge of Company, no
such claims have been threatened by any person, nor are there any valid grounds
for any bona fide claim of any such kind. All of the rights within Company
intellectual property are enforceable and subsisting. to the knowledge of
Company, there is no unauthorized use, infringement or misappropriation of any
Company intellectual property by any third party, employee or former employee.
(e) All personnel, including employees, agents, consultants and contractors,
who have contributed to or participated in the conception and development of
Company intellectual property on behalf of Company, have executed nondisclosure
agreements and either (i) have been a party to an enforceable "work-for-hire"
arrangement or agreements with Company in accordance with applicable national
and state law that has accorded Company full, effective, exclusive and original
ownership of all tangible and intangible property thereby arising, or (ii) have
executed appropriate instruments of assignment in favor of Company as assignee
that have conveyed to Company effective and exclusive ownership of all tangible
and intangible property thereby arising.
(f) Company is not, nor as a result of the execution or delivery of this
agreement, or performance of Company's obligations hereunder, will Company be,
in violation of any material license, sublicense, agreement or instrument to
which Company is a party or otherwise bound, nor will execution or delivery of
this agreement, or performance of Company's obligations hereunder, cause the
diminution, termination or forfeiture of any Company intellectual property.
(g) Section 4.14(g) of the Company disclosure schedule contains a true and
complete list of all software programs which are owned by the Company (the
"Company software programs"). Company owns full and unencumbered right and
good, valid and marketable title to such the Company software programs free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind.
36
28
(h) The source code and system documentation relating to the Company software
programs have been maintained in strict confidence and (i) have been disclosed
by Company only to those of its employees who have a "need to know" the
contents thereof in connection with the performance of their duties to Company
and who have executed nondisclosure agreements with Company; and (ii) have been
disclosed to only those third parties who have executed nondisclosure
agreements with Company.
(i) Company has taken all reasonable steps, in accordance with normal industry
practice, to preserve and maintain complete notes and records relating to
Company intellectual property to cause the same to be readily identified and
available.
(j) Section 4.14(j) of the Company disclosure schedule sets forth a
description, and the current status, of Company's year 2000 compliance program
and its anticipated completion date. upon completion of the Company's year 2000
compliance program, the Company software programs shall (i) have been designed
to ensure year 2000 compatibility, which includes, but is not limited to, date
data century recognition, and calculations that accommodate same century and
multi-century formulas and date values; (ii) operate in accordance with their
specifications prior to, during and after the calendar year 2000 ad; and (iii)
not end abnormally or provide invalid or incorrect results as a result of date
data, specifically including date data which represents or references different
centuries or more than one century.
(k) Company intellectual property is free and clear of any and all mortgages,
pledges, liens, security interests, conditional sale agreements, encumbrances
or charges of any kind.
(l) Except as set forth in the Company disclosure schedule, Company (including
its subsidiaries) does not owe any royalties or other payments to third parties
in respect of Company intellectual property. All royalties or other payments
set forth in the Company disclosure schedule that have accrued prior to the
effective time have been paid.
(m) Company's (including its subsidiaries) statistical models have not been
disclosed to any third party at any time other than to third parties who have
executed nondisclosure agreements with Company.
37
29
(n) To the knowledge of the Company and other than as disclosed on the Company
disclosure schedule, all Company "alliance members" are in compliance with the
terms of their respective agreement with Company.
(o) It is the Company's practice to scan the Company intellectual property with
a commercially available virus scan software. to the Company's knowledge, the
Company software programs and other Company intellectual property contain no
"viruses." For the purposes of this agreement, "virus" means any computer code
intentionally designed to disrupt, disable or harm in any manner the operation
of any software or hardware. None of the foregoing contains any worm, bomb,
backdoor, clock, timer, or other disabling device code, design or routine which
causes the software to be erased, inoperable, or otherwise incapable of being
used, either automatically or upon command by any party.
(p) Company has implemented all reasonable steps which are known in the
information systems industry and which are generally known as best practices in
the physical and electronic protection of its information assets from
unauthorized disclosure, use or modification. Company has previously disclosed
to parent whether, to its knowledge, there have been breaches of security,
known consequences, and the steps Company has taken to remedy any such
breaches.
(q) Company has conducted its business and has collected, maintained and used
its data at all times materially in accordance with (i) accepted industry
practice and the standards promulgated by the direct marketing association; and
(ii) all applicable laws, including but not limited to those affecting privacy
issues.
SECTION 4.15 Taxes
(a) Company and each of Company subsidiaries, and any consolidated, combined,
unitary or aggregate group for tax purposes of which Company or any Company
subsidiary is or has been a member, have properly completed and timely filed
all tax returns required to be filed by them and have paid all taxes shown
thereon to be due. Company has provided adequate accruals in accordance with
generally accepted accounting principles in its latest financial statements
included in the Company reports for any taxes that have not been paid, whether
or not shown as being due on any tax returns. Company and the Company
subsidiaries have no material liability for unpaid taxes accruing after the
date of the Company's latest financial statements included in the Company
reports.
38
30
(b) There is (i) no material claim for taxes that is a lien against the
property of Company or any Company subsidiary or is being asserted against
Company or any Company subsidiary other than liens for taxes not yet due and
payable, (ii) no audit of any tax return of Company or any Company subsidiary
being conducted by a tax authority; (iii) no extension of the statute of
limitations on the assessment of any taxes granted by Company or any Company
subsidiary and currently in effect, and (iv) no agreement, contract or
arrangement to which Company or any Company subsidiary is a party that may
result in the payment of any amount that would not be deductible by reason of
Section 280g or Section 404 of the Code.
(c) There has been no change in ownership of Company or any Company
subsidiaries that has caused the utilization of any losses of such entities to
be limited pursuant to Section 382 of the Code, and any loss carryovers
reflected on the latest financial statements included in the Company reports
are properly computed and reflected.
(d) Company and the Company subsidiaries have not been and will not be required
to include any material adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263a of the Code or any comparable
provision under state or foreign tax laws as a result of transactions, events
or accounting methods employed prior to the merger.
(e) Neither Company nor any Company subsidiary has filed or will file any
consent to have the provisions of paragraph 341(f)(2) of the Code (or
comparable provisions of any state tax laws) apply to Company or any Company
subsidiary.
(f) Neither Company nor any Company subsidiary is a party to any tax sharing or
tax allocation agreement nor does Company or any Company subsidiary have any
liability or potential liability to another party under any such agreement.
(g) Neither Company nor any Company subsidiary has filed any disclosures under
Section 6662 or comparable provisions of state, local or foreign law to prevent
the imposition of penalties with respect to any tax reporting position taken on
any tax return.
(h) Neither Company nor any Company subsidiary has ever been a member of a
consolidated, combined or unitary group of which Company was not the ultimate
parent corporation.
(i) Company and each Company subsidiary has in its possession receipts for any
taxes paid to foreign tax authorities. neither Company nor any Company
subsidiary has ever been a "personal holding company" within the meaning of
Section 542 of the Code or a "United States Real Property Holding Corporation"
within the meaning of Section 897 of the Code.
39
31
SECTION 4.16 Insurance
Company and each Company Subsidiary is presently insured, and during
each of the past three calendar years has been insured, against such risks, as
to the Company's knowledge, that companies engaged in a similar business would,
in accordance with good business practice, customarily be insured. The policies
of fire, theft, liability and other insurance maintained with respect to the
assets or businesses of Company and Company Subsidiaries provide, to the
Company's knowledge, adequate coverage against loss. Company has heretofore made
available to Parent a complete and correct list as of the date hereof of all
insurance policies maintained by Company or the Company Subsidiaries, and has
made available to Parent complete and correct copies of all such policies,
together with all riders and amendments thereto. All such policies are in full
force and effect and all premiums due thereon have been paid to the date hereof.
Company and the Company Subsidiaries have complied in all material respects with
the terms of such policies.
SECTION 4.17 Properties
Company and the Company Subsidiaries have good title, free and clear of
all material mortgages, liens, pledges, charges or other encumbrances to all
their material tangible properties and assets, real, personal or mixed,
reflected in the Company's consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as being owned by Company and the Company Subsidiaries as of the date
thereof, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements and (iii) liens arising in the ordinary course of business after the
date of such financial statements. All buildings, and all fixtures, equipment
and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Company or any Company
Subsidiary are held under valid instruments enforceable in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general principles
of equity (whether applied in a proceeding in law or equity). Substantially all
of Company's and the Company Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 4.18 Affiliates
Section 4.18 of the Company Disclosure Schedule sets forth the name of
each person who is, in Company's reasonable judgment, an affiliate (as such term
is used in Rule 145 under the Securities Act or under applicable SEC accounting
releases with respect to pooling of interests accounting treatment) of Company.
40
32
SECTION 4.19 Opinion of Financial Advisor
BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("XXXXXXXXX XXXXXXXX") has delivered
to the board of directors of Company its written opinion to the effect that, as
of the date hereof, the Exchange Ratio is fair to the holders of shares of
Company Common Stock from a financial point of view (the "BRS FAIRNESS
OPINION").
SECTION 4.20 Brokers
No broker, finder or investment banker (other than Xxxxxxxxx Xxxxxxxx)
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Company. Company
has heretofore made available to Parent true, complete and correct copies of all
agreements between Company and Xxxxxxxxx Xxxxxxxx pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 4.21 Certain Business Practices
Neither Company nor any Company Subsidiary nor any directors, officers,
agents or employees of Company or any Company Subsidiary (in their capacities as
such) has (i) used any funds of the Company for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or (ii)
made any unlawful payment by the Company to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
or violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
SECTION 4.22 Section 203 of the DGCL Not Applicable
The Board of Directors of Company has approved the Merger, this
Agreement, the Option Agreement and the Stockholder Agreements, and such
approval is sufficient to render inapplicable to the Merger, this Agreement, the
Option Agreement and the Stockholder Agreements and the transactions
contemplated by this Agreement, the Option Agreement and the Stockholder
Agreements the provisions of Section 203 of the DGCL. To Company's knowledge, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement, the Option Agreement, the
Stockholders Agreements or the transactions contemplated by this Agreement, the
Option Agreement and the Stockholders Agreements.
41
33
SECTION 4.23 Business Activity Restriction
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Company or any subsidiary of
Company is a party or subject to that has or could reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by Company.
Company has not entered into any agreement under which Company is restricted in
any material respect from selling, licensing or otherwise distributing any of
its technology or products to, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market or line of business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company, subject to the
exceptions specifically disclosed in the parent disclosure schedule, all such
exceptions to be referenced to a specific representation set forth in this
article v or to otherwise be clearly applicable to representations hereof not
specifically referenced, that:
SECTION 5.01 Organization and Qualification; Subsidiaries
(a) Parent and each directly and indirectly owned subsidiary of Parent (the
"Parent Subsidiaries") has been duly organized and is validly existing and in
good standing (to the extent applicable) under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted. Parent, and each Parent Subsidiary is duly qualified or
licensed to do business, and is in good standing (to the extent applicable), 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.
42
34
(b) Section 5.01 of the Parent disclosure schedule sets forth, as of the date
of this agreement, a true and complete list of each Parent Subsidiary, together
with (i) the jurisdiction of incorporation or organization of each Parent
Subsidiary and the percentage of each Parent Subsidiary's outstanding capital
stock or other equity interests owned by Parent or another Parent Subsidiary
and (ii) an indication of whether each Parent Subsidiary is a "Significant
Subsidiary" as defined in Regulation S-X under the Exchange Act. Neither Parent
nor any Parent Subsidiary owns an equity interest in any partnership or joint
venture arrangement or other business entity that is material to the business,
assets, liabilities, financial condition or results of operations of Parent and
the Parent Subsidiaries, taken as a whole.
SECTION 5.02 Certificate of Incorporation and Bylaws
The copies of each of Parent's and Merger Subs' certificate
of incorporation and bylaws previously provided to Company by Parent are true,
complete and correct copies thereof. Such certificates of incorporation and
bylaws are in full force and effect.
SECTION 5.03 Capitalization
The authorized capital stock of Parent consists of 400,000,000 shares
of Parent common stock and 5,000,000 shares of preferred stock. As of June 4,
1999 (which numbers are not materially different on the date hereof) (i)
39,703,267 shares of Parent common stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of Parent
common stock are held in the treasury of the Company, (iii) no shares of Parent
common stock are held by the Parent Subsidiaries, (iv) 5,455,188 shares of
Parent common stock are reserved for future issuance pursuant to outstanding
options and warrants to purchase Parent common stock ("Parent Stock Option"),
and (v) no shares of Parent preferred stock are issued and outstanding. Except
for the shares of Parent common stock issuable pursuant to the Parent stock
plans, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character to which Parent is a party or by which Parent is
bound relating to the issued or unissued capital stock of Parent or any Parent
subsidiary or obligating Parent or any Parent Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, Parent or any Parent
Subsidiary. All shares of Parent common stock subject to issuance as aforesaid,
upon issuance prior to the effective time on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any shares of Parent common stock or any capital stock of
any Parent Subsidiary. Each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Parent or another Parent Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. There
are no material outstanding contractual
43
35
obligations of Parent or any Parent Subsidiary to provide funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any Parent Subsidiary or any other person.
SECTION 5.04 Authority Relative to this Agreement
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate such transactions (other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding shares of Parent Common Stock present at the Parent Shareholders'
Meeting and the consent of Parent as sole stockholder of Merger Sub). This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due authorization, execution and delivery by Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 5.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this agreement by parent and merger sub does
not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the merger will not, (i) conflict with or
violate any provision of the articles of incorporation or bylaws of Parent or
any equivalent organizational documents of any Parent Subsidiary, (ii) assuming
that all consents, approvals, authorizations and permits described in Section
5.05(b) have been obtained and all filings and notifications described in
Section 5.05(b) have been made, conflict with or violate any law applicable to
Parent or any other Parent Subsidiary or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected or (iii) result in any
material breach of or constitute a material default (or an event which with the
giving of notice or lapse of time or both could reasonably be expected to
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any material property or asset of Parent or any Parent
Subsidiary pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
44
36
(b) Except as may arise solely from the nature of Company's business, the
execution and delivery of this agreement by Parent and Merger Sub does not, and
the performance by Parent and Merger Sub of their obligations hereunder and the
consummation of the merger will not, require any consent, approval,
authorization or permit of, or filing by Parent with or notification by Parent
to, any governmental entity, except pursuant to applicable requirements of the
exchange act, the securities act, blue sky laws, the rules and regulations of
the NNM, state takeover laws, the premerger notification requirements of the
HSR Act, if any, and the filing and recordation of the certificate of merger as
required by the DGCL .
SECTION 5.06 SEC Filings; Financial Statements
(a) Parent has timely filed all forms, reports, statements and documents
required to be filed by it (a) with the SEC and the NNM since March 1, 1998
(collectively, together with any such forms, reports, statements and documents
Parent may file subsequent to the date hereof until the closing, the "Parent
Reports") and (b) with any other governmental entities. Each Parent Report (i)
was prepared in accordance with the requirements of the Securities Act, the
Exchange Act or the NNM, as the case may be, substantially in all respects and
(ii) did not at the time it was filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each form, report,
statement and document referred to in clause (b) of this paragraph was prepared
in all material respects in accordance with the requirements of applicable law.
No Parent Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the NNM, any other stock exchange or any other comparable governmental
entity.
45
37
(b) Except as is provided in the Parent Reports, each of the consolidated
financial statements (including, in each case, any notes thereto) contained in
the Parent Reports was prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each presented fairly, in all material respects, the
consolidated financial position of Parent and the consolidated Parent
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and the Parent Subsidiaries as reported in
the Parent Reports, including the notes thereto, none of Parent or any Parent
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1998 that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Parent material adverse effect.
SECTION 5.07 Pooling; Certain Tax Matters
To Parent's knowledge, neither Parent nor any of its affiliates has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could reasonably be expected (based on the advice of
PricewaterhouseCoopers) to prevent the Merger from being treated for accounting
purposes as a "pooling of interests" in accordance with U.S. GAAP and the
accounting standards of the SEC. Neither Parent, nor to Parent's knowledge, any
of its affiliates, has taken or agreed to take any action (other than actions
contemplated by this Agreement) that could be expected to prevent the Merger
from constituting a "reorganization" under Section 368 of the Code. Parent is
not aware of any agreement, plan or other circumstance that could reasonably be
expected to prevent the Merger from being so treated as a "pooling of interests"
or from so qualifying as a reorganization under Section 368 of the Code.
SECTION 5.08 Opinion of Financial Advisor
Xxxxxxx, Xxxxx & Co. ("XXXXXXX SACHS") has delivered to the board of
directors of Parent its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to Parent.
46
38
SECTION 5.09 Brokers
No broker, finder or investment banker (other than Xxxxxxx Xxxxx) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent. Parent
has heretofore made available to Company true, complete and correct copies of
all agreements between Parent and Xxxxxxx Sachs pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 5.10 Affiliates
Section 5.10 of the Parent Disclosure Schedule sets forth the name of
each person who is, in Parent's reasonable judgment, an affiliate (under
applicable SEC accounting releases with respect to pooling of interests
accounting treatment) of Parent.
SECTION 5.11 No Parent Material Adverse Effect
Since December 31, 1998, there has been no Parent Material Adverse
Effect.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending the Closing
Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, and except as a
result of entering into this Agreement (x) the respective businesses of Company
and the Company Subsidiaries shall be conducted only in, and Company and the
Company Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice and (y) Company shall use all reasonable
efforts to keep available the services of such of the current officers,
significant employees and consultants of Company and the Company Subsidiaries
and to preserve the current relationships of Company and the Company
Subsidiaries with such of the corporate partners, customers, suppliers and other
persons with which Company or any Company Subsidiary has significant business
relations in order to preserve substantially intact its business organization.
By way of amplification and not limitation, neither Company nor any Company
Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of Parent and except as a result of entering into this
Agreement:
(a) Amend or otherwise change its certificate of incorporation or bylaws or
equivalent organizational documents;
47
39
(b) Issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee
or encumber, or authorize the issuance, sale, pledge, disposition, grant,
transfer, lease, license or encumbrance of, (i) any shares of capital stock of
Company or any Company Subsidiary of any class, or securities convertible into
or exchangeable or exercisable for any shares of such capital stock, or any
options, warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of Company or any Company Subsidiary, other than (a) the
issuance of shares of Company common stock pursuant to the exercise of stock
options theretofore outstanding as of the date of this agreement or (b) the
issuance of options to purchase up to 250,000 shares of Company common stock
under the Company's 1999 stock incentive plan, 200,000 shares of which may be
issued to newly hired management employees and 50,000 shares of which may be
issued to existing non-executive employees, or (ii) any property or assets of
Company or any Company Subsidiary except entering into alliance agreements or
providing products and services in the ordinary course of business consistent
with past practice;
(c) (i) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any corporation, partnership,
other business organization or person or any division thereof; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person (other than Company and Company subsidiaries) for
borrowed money or make any loans or advances, other than routine employee loans
to employees other than Company officers (not to exceed $1,000 to any
individual), material to the business, assets, liabilities, financial condition
or results of operations of Company and the Company subsidiaries, taken as a
whole, other than in the ordinary course of business consistent with past
practice; (iii) terminate, cancel or request any material change in, or agree
to any material change in, any Company material contract or other license
agreement; (iv) make or authorize any capital expenditure, other than capital
expenditures in the ordinary course of business consistent with past practice
that have been budgeted for fiscal year 1999 and disclosed in writing to Parent
and that are not, in the aggregate, in excess of $3,000,000 for Company and the
Company subsidiaries taken as a whole; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital
stock, except that any Company Subsidiary may pay dividends or make other
distributions to Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
48
40
(f) amend or change the period (or permit any acceleration, amendment or change
unless required pursuant to the terms of existing agreements of Company
previously provided to Parent) of exercisability of options granted under the
Company stock plans or authorize cash payments in exchange for any Company
stock options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any
Company subsidiary to repurchase, redeem or otherwise acquire, any of its
securities or any securities of any Company subsidiary or propose to do any of
the foregoing;
(h) other than in the ordinary course of business consistent with past
practices or pursuant to existing agreements of Company previously provided to
Parent increase the compensation payable or to become payable to its directors,
officers, consultants or employees, grant any rights to severance or
termination pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Company that would be triggered
by the merger with, any director, officer, consultant or other employee of
Company or any Company subsidiary who is not currently entitled to such
benefits from the merger, establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer, consultant or employee of
Company or any Company subsidiary, except to the extent required by applicable
law or the terms of a collective bargaining agreement, or enter into or amend
any contract, agreement, commitment or arrangement between Company or any
Company subsidiary and any of Company's directors, officers, consultants or
employees;
(i) pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against on
the consolidated balance sheet of Company and the consolidated the Company
subsidiaries dated as of March 31, 1999 included in Company's quarterly report
on Form 10-Q for the period then ended (the "Company balance sheet") and only
to the extent reflected or to the extent of such reserves or incurred in the
ordinary course of business since March 31, 1999;
(j) make any change with respect to Company's accounting policies, principles,
methods or procedures, including, without limitation, revenue recognition
policies, other than as required by U.S. GAAP;
(k) make any material tax election or settle or compromise any material tax
liability; or
(l) authorize or enter into any formal or informal agreement or otherwise make
any commitment to do any of the foregoing or to take any action which would
make any of the representations or warranties of Company contained in this
agreement untrue or incorrect in
49
41
any material respect or result in any of the conditions to the merger set forth
herein not being satisfied.
SECTION 6.02 Notices of Certain Events
Each of Parent and Company shall give prompt notice to the other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with the Merger; (ii) any notice
or other communication from any Governmental Entity in connection with the
Merger; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting Parent or the Parent Subsidiaries or Company or the Company
Subsidiaries, respectively, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Parent Material Contract
or Company Material Contract, respectively; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect, respectively, or to delay or impede the ability of
either Parent or Company, respectively, to perform their respective obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or Company or any of the Parent
subsidiaries or the Company subsidiaries is a party or pursuant to applicable
law or the regulations or requirements of any stock exchange or other
regulatory organization with whose rules a party hereto is required to comply,
from the date of this agreement to the effective time, Parent and Company shall
(and shall cause the Parent subsidiaries and Company subsidiaries,
respectively, to) (i) provide to the other (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, "representatives")) access at reasonable times
upon prior notice to its and its subsidiaries' officers, employees, agents,
properties, offices and other facilities and to the books and records thereof,
and (ii) furnish promptly such information concerning its and its subsidiaries'
business, properties, contracts, assets, liabilities and personnel as the other
party or its representatives may reasonably request. All such investigations
and access shall be conducted in a manner as not to interfere unreasonably with
the business operations of the Company. no investigation conducted pursuant to
this Section 6.03 shall affect or be deemed to modify any representation or
warranty made in this agreement.
50
42
(b) The parties hereto shall comply with, and shall cause their respective
representatives to comply with, all of their respective obligations under the
confidentiality agreements with respect to the information disclosed pursuant
to this Section 6.03 or pursuant to the confidentiality agreements.
SECTION 6.04 No Solicitation of Transactions
Until this Agreement has been terminated as provided herein, Company
shall not, directly or indirectly, and shall cause its Representatives not to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing nonpublic information), any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of Company's Representatives or subsidiaries, or any
Representative retained by Company's subsidiaries, to take any such action;
provided, however, that nothing contained in this Section 6.04 shall prohibit
the board of directors of Company (i) from complying with Rule 14d-9 or 14e-2(a)
promulgated under the Exchange Act with regard to a tender or exchange offer not
made in violation of this Section 6.04 or (ii) prior to receipt of the approval
by the stockholders of Company of this Agreement and the Merger from providing
information (subject to a confidentiality agreement at least as restrictive as
the Confidentiality Agreements) in connection with, and negotiating, another
unsolicited, bona fide written proposal regarding a Competing Transaction that
(x) Company's board of directors shall have concluded in good faith, after
considering applicable state law, on the basis of advice of independent outside
counsel that such action is necessary to prevent Company's board of directors
from violating its fiduciary duties to Company's stockholders under applicable
law, (y) if any cash consideration is involved, shall not be subject to any
financing contingency, and with respect to which Company's board of directors
shall have determined (based upon the advice of Company's independent financial
advisors) in the exercise of its fiduciary duties to Company's stockholders that
the acquiring party is capable of consummating such Competing Transaction on the
terms proposed, and (z) Company's board of directors shall have determined in
the exercise of its fiduciary duties to Company's stockholders that such
Competing Transaction provides greater value to the stockholders of Company than
the Merger (based upon the written opinion of Company's independent financial
advisors that such Competing Transaction is superior from a financial point of
view) (any such Competing Transaction being referred to herein as a "SUPERIOR
PROPOSAL"). Any violation of the restrictions set forth in this Section 6.04 by
any Representative of Company or any of its Subsidiaries, whether or not such
Person is purporting to act on behalf of Company or otherwise, shall be deemed
to be a breach of this Section 6.04 by Company. Company shall notify Parent
promptly if any proposal or offer, or any inquiry or contact with any person
with respect thereto, regarding a Competing Transaction is made, such notice to
include the identity of the person making such proposal, offer, inquiry or
contact, and the terms of such Competing Transaction, and shall keep Parent
apprised, on a current basis, of the status of such Competing Transaction
51
43
and of any modifications to the terms thereof. Company immediately shall cease
and cause to be terminated all existing discussions or negotiations with any
parties conducted heretofore with respect to a Competing Transaction. Company
shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
SECTION 6.05 Tax-Free Transaction; Pooling
From and after the date of this Agreement, each party hereto shall use
all reasonable efforts to cause the Merger to qualify, and shall not knowingly
take any actions or cause any actions to be taken which could reasonably be
expected to prevent the Merger from (a) qualifying as a "reorganization" under
Section 368(a) of the Code or (b) being treated for financial accounting
purposes as a "pooling of interests" in accordance with U.S. GAAP and the
accounting standards of the SEC.
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to the Effective Time,
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
SECTION 6.07 Further Action; Consents; Filings
(a) Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under applicable law or otherwise to consummate and make effective
the merger, (ii) obtain from governmental entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained
or made by Parent or Company or any of their respective subsidiaries in
connection with the authorization, execution and delivery of this agreement and
the consummation of the merger and (iii) make all necessary filings, and
thereafter make any other required or appropriate submissions, with respect to
this agreement and the merger required under (a) the rules and regulations of
the NNM, (b) the Securities Act, the Exchange Act and any other applicable
federal or state securities laws, (c) the HSR Act, if any, and (d) any other
applicable law. The parties hereto shall cooperate and consult with each other
in connection with the making of all such filings, including by providing
copies of all such documents to the nonfiling parties and their advisors prior
to filing, and none of the parties shall file any such document if any of the
other parties shall have reasonably objected to the filing of such document. no
party shall consent to any voluntary extension of any statutory deadline or
waiting period or to any voluntary delay of the consummation of the merger at
the behest of any governmental entity without the consent and agreement of the
other parties hereto, which consent shall not be unreasonably withheld or
delayed.
52
44
(b) EACH OF COMPANY AND PARENT WILL GIVE (OR WILL CAUSE THEIR RESPECTIVE
SUBSIDIARIES TO GIVE) ANY NOTICES TO THIRD PERSONS, AND USE, AND CAUSE THEIR
RESPECTIVE SUBSIDIARIES TO USE, REASONABLE EFFORTS TO OBTAIN ANY CONSENTS FROM
THIRD PERSONS NECESSARY, PROPER OR ADVISABLE (AS DETERMINED IN GOOD FAITH BY
PARENT WITH RESPECT TO SUCH NOTICES OR CONSENTS TO BE DELIVERED OR OBTAINED BY
COMPANY) TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
SECTION 6.08 Additional Reports
Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 4.07 and 5.06, which it files with
the SEC on or after the date hereof, and Company and Parent, as the case may be,
covenant and warrant that as of the respective dates thereof, such reports will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present in all material
respects the financial position of Company and its consolidated subsidiaries or
Parent and its consolidated subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information including therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and U.S. GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
SECTION 6.09 Tax Information
Company shall provide the following information to Parent not later
than four weeks after the date of this Agreement: (i) a complete list of the
types of Tax Returns being filed by Company and each Company Subsidiary in each
taxing jurisdiction, (ii) a list of all closed years with respect to each such
type of Tax Return filed in each jurisdiction, and (iii) a list of any deferred
intercompany gain with respect to transactions to which Company or any Company
Subsidiary has been a party. Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of Company's and
Company Subsidiaries' Tax Returns and other records and workpapers relating to
Taxes.
SECTION 6.10 Conduct of Business by Parent.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not knowingly take any action a principal purpose
of which is, and the reasonably likely result of which would be, a material
delay in or interference with the consummation of the Merger.
53
45
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Joint Proxy Statement
(a) AS PROMPTLY AS PRACTICABLE AFTER THE EXECUTION OF THIS AGREEMENT, PARENT AND
COMPANY SHALL JOINTLY PREPARE AND SHALL FILE WITH THE SEC A DOCUMENT OR
DOCUMENTS THAT WILL CONSTITUTE (i) THE PROSPECTUS FORMING PART OF THE
REGISTRATION STATEMENT ON FORM S-4 OF PARENT (TOGETHER WITH ALL AMENDMENTS
THERETO, THE "REGISTRATION STATEMENT"), IN CONNECTION WITH THE REGISTRATION
UNDER THE SECURITIES ACT OF PARENT COMMON STOCK TO BE ISSUED TO COMPANY'S
STOCKHOLDERS PURSUANT TO THE MERGER AND (ii) THE JOINT PROXY STATEMENT WITH
RESPECT TO THE MERGER RELATING TO THE SPECIAL MEETINGS OF COMPANY'S STOCKHOLDERS
TO BE HELD TO CONSIDER APPROVAL OF THIS AGREEMENT AND THE MERGER (THE "COMPANY
STOCKHOLDERS' MEETING") AND OF PARENT'S STOCKHOLDERS TO BE HELD TO CONSIDER
APPROVAL OF THE ISSUANCE OF PARENT COMMON STOCK (THE "SHARE ISSUANCE") TO
COMPANY'S STOCKHOLDERS PURSUANT TO THE MERGER (THE "PARENT STOCKHOLDERS'
MEETING") (TOGETHER WITH ANY AMENDMENTS THERETO, THE "JOINT PROXY STATEMENT").
COPIES OF THE JOINT PROXY STATEMENT SHALL BE PROVIDED TO THE NNM IN ACCORDANCE
WITH ITS RULES. EACH OF THE PARTIES HERETO SHALL USE ALL REASONABLE EFFORTS TO
CAUSE THE REGISTRATION STATEMENT TO BECOME EFFECTIVE AS PROMPTLY AS PRACTICABLE
AFTER THE DATE HEREOF, AND, PRIOR TO THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT, THE PARTIES HERETO SHALL TAKE ALL ACTION REQUIRED UNDER ANY
APPLICABLE LAWS IN CONNECTION WITH THE ISSUANCE OF SHARES OF PARENT COMMON STOCK
PURSUANT TO THE MERGER. PARENT OR COMPANY, AS THE CASE MAY BE, SHALL FURNISH ALL
INFORMATION CONCERNING PARENT OR COMPANY AS THE OTHER PARTY MAY REASONABLY
REQUEST IN CONNECTION WITH SUCH ACTIONS AND THE PREPARATION OF THE REGISTRATION
STATEMENT AND THE JOINT PROXY STATEMENT. AS PROMPTLY AS PRACTICABLE AFTER THE
EFFECTIVE DATE OF THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT SHALL BE
MAILED TO THE STOCKHOLDERS OF COMPANY AND OF PARENT. EACH OF THE PARTIES HERETO
SHALL CAUSE THE JOINT PROXY STATEMENT TO COMPLY AS TO FORM AND SUBSTANCE AS TO
SUCH PARTY IN ALL MATERIAL RESPECTS WITH THE APPLICABLE REQUIREMENTS OF (i) THE
EXCHANGE ACT, (ii) THE SECURITIES ACT, (iii) THE RULES AND REGULATIONS OF THE
NNM.
54
46
(b) THE JOINT PROXY STATEMENT SHALL INCLUDE (i) THE APPROVAL OF THE MERGER AND
THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF COMPANY TO COMPANY'S
STOCKHOLDERS THAT THEY VOTE IN FAVOR OF APPROVAL OF THIS AGREEMENT AND THE
MERGER, SUBJECT TO THE RIGHT OF THE BOARD OF DIRECTORS OF THE COMPANY TO
WITHDRAW ITS RECOMMENDATION AND RECOMMEND A SUPERIOR PROPOSAL IN COMPLIANCE WITH
SECTION 6.04 OF THIS AGREEMENT, AND (ii) THE OPINION OF XXXXXXXXX XXXXXXXX
REFERRED TO IN SECTION 4.19; PROVIDED, HOWEVER, THAT THE BOARD OF DIRECTORS OF
COMPANY SHALL SUBMIT THIS AGREEMENT TO COMPANY'S STOCKHOLDERS WHETHER OR NOT AT
ANY TIME SUBSEQUENT TO THE DATE HEREOF SUCH BOARD DETERMINES THAT IT CAN NO
LONGER MAKE SUCH RECOMMENDATION. THE JOINT PROXY STATEMENT SHALL INCLUDE (A) THE
APPROVAL OF THE SHARE ISSUANCE AND THE RECOMMENDATION OF THE BOARD OF DIRECTORS
OF PARENT TO PARENT'S STOCKHOLDERS THAT THEY VOTE IN FAVOR OF APPROVAL OF THE
SHARE ISSUANCE, AND (B) THE OPINION OF XXXXXXX SACHS REFERRED TO IN SECTION
5.08.
(c) NO AMENDMENT OR SUPPLEMENT TO THE JOINT PROXY STATEMENT OR THE REGISTRATION
STATEMENT SHALL BE MADE WITHOUT THE APPROVAL OF PARENT AND COMPANY, WHICH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED. EACH OF THE PARTIES
HERETO SHALL ADVISE THE OTHER PARTIES HERETO, PROMPTLY AFTER IT RECEIVES NOTICE
THEREOF, OF THE TIME WHEN THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE OR ANY
SUPPLEMENT OR AMENDMENT HAS BEEN FILED, OF THE ISSUANCE OF ANY STOP ORDER, OF
THE SUSPENSION OF THE QUALIFICATION OF THE PARENT COMMON STOCK ISSUABLE IN
CONNECTION WITH THE MERGER FOR OFFERING OR SALE IN ANY JURISDICTION, OR OF ANY
REQUEST BY THE SEC FOR AMENDMENT OF THE JOINT PROXY STATEMENT OR THE
REGISTRATION STATEMENT OR COMMENTS THEREON AND RESPONSES THERETO OR REQUESTS BY
THE SEC FOR ADDITIONAL INFORMATION.
55
47
(d) NONE OF THE INFORMATION SUPPLIED BY COMPANY FOR INCLUSION OR INCORPORATION
BY REFERENCE IN THE REGISTRATION STATEMENT OR THE JOINT PROXY STATEMENT SHALL,
AT THE RESPECTIVE TIMES FILED WITH THE SEC OR OTHER REGULATORY AGENCY AND, IN
ADDITION, (A) IN THE CASE OF THE JOINT PROXY STATEMENT, AT THE DATE IT OR ANY
AMENDMENTS OR SUPPLEMENTS THERETO ARE MAILED TO STOCKHOLDERS OF PARENT AND
COMPANY, AT THE TIME OF THE COMPANY STOCKHOLDERS' MEETING, AT THE TIME OF THE
PARENT SHAREHOLDERS' MEETING AND AT THE EFFECTIVE TIME AND (B) IN THE CASE OF
THE REGISTRATION STATEMENT, WHEN IT BECOMES EFFECTIVE UNDER THE SECURITIES ACT
AND AT THE EFFECTIVE TIME, CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMIT TO STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN
ORDER TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY ARE MADE, NOT MISLEADING. IF AT ANY TIME PRIOR TO THE EFFECTIVE TIME ANY
EVENT OR CIRCUMSTANCE RELATING TO COMPANY OR ANY COMPANY SUBSIDIARY, OR THEIR
RESPECTIVE OFFICERS OR DIRECTORS, SHOULD BE DISCOVERED BY COMPANY THAT SHOULD BE
SET FORTH IN AN AMENDMENT OR A SUPPLEMENT TO THE REGISTRATION STATEMENT OR THE
JOINT PROXY STATEMENT, COMPANY SHALL PROMPTLY INFORM PARENT. ALL DOCUMENTS THAT
COMPANY IS RESPONSIBLE FOR FILING WITH THE SEC IN CONNECTION WITH THE MERGER
WILL COMPLY AS TO FORM IN ALL MATERIAL RESPECTS WITH THE APPLICABLE REQUIREMENTS
OF THE RULES AND REGULATIONS OF THE SECURITIES ACT AND THE EXCHANGE ACT.
(e) NONE OF THE INFORMATION SUPPLIED BY PARENT FOR INCLUSION OR INCORPORATION BY
REFERENCE IN THE REGISTRATION STATEMENT OR THE JOINT PROXY STATEMENT SHALL, AT
THE RESPECTIVE TIMES FILED WITH THE SEC OR OTHER REGULATORY AGENCY AND, IN
ADDITION, (A) IN THE CASE OF THE JOINT PROXY STATEMENT, AT THE DATE IT OR ANY
AMENDMENTS OR SUPPLEMENTS THERETO ARE MAILED TO STOCKHOLDERS OF PARENT AND
COMPANY, AT THE TIME OF COMPANY STOCKHOLDERS' MEETING, AT THE TIME OF THE PARENT
SHAREHOLDERS' MEETING AND AT THE EFFECTIVE TIME AND (B) IN THE CASE OF THE
REGISTRATION STATEMENT, WHEN IT BECOMES EFFECTIVE UNDER THE SECURITIES ACT AND
AT THE EFFECTIVE TIME, CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT
TO STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER
TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY
ARE MADE, NOT MISLEADING. IF, AT ANY TIME PRIOR TO THE EFFECTIVE TIME, ANY EVENT
OR CIRCUMSTANCE RELATING TO PARENT OR ANY PARENT SUBSIDIARY, OR THEIRRESPECTIVE
OFFICERS OR DIRECTORS, SHOULD BE DISCOVERED BY PARENT THAT SHOULD BE SET FORTH
IN AN AMENDMENT OR A SUPPLEMENT TO THE REGISTRATION STATEMENT OR THE JOINT PROXY
STATEMENT, PARENT SHALL PROMPTLY INFORM COMPANY. ALL DOCUMENTS THAT PARENT IS
RESPONSIBLE FOR FILING WITH THE SEC IN CONNECTION WITH THE MERGER WILL COMPLY AS
TO FORM IN ALL MATERIAL RESPECTS WITH THE APPLICABLE REQUIREMENTS OF THE RULES
AND REGULATIONS OF THE SECURITIES ACT AND THE EXCHANGE ACT.
56
48
SECTION 7.02 Stockholders' Meetings
Company shall call and hold the Company Stockholders' Meeting and
Parent shall call and hold the Parent Stockholders' Meeting as promptly as
practicable after the date hereof for the purpose of voting upon the approval of
this Agreement and the Merger or the Share Issuance, as the case may be,
pursuant to the Joint Proxy Statement, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Stockholders' Meeting on the same day and as soon as practicable after the date
on which the Registration Statement becomes effective. Nothing herein shall
prevent the Company or the Parent from adjourning or postponing the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, as the case may be,
if there are insufficient shares of Company Common Stock or Parent Common Stock,
as the case may be, necessary to conduct business at their respective meetings
of the stockholders. Unless Company's board of directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 6.04,
Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement and shall take all other action necessary or advisable
to secure the vote or consent of stockholders required by the DGCL or applicable
other stock exchange requirements to obtain such approval. Parent shall use all
reasonable efforts to solicit from its stockholders proxies in favor of the
Share Issuance pursuant to the Joint Proxy Statement and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by the DGCL or applicable stock exchange requirements to obtain such
approval. Each of the parties hereto shall take all other action necessary or,
in the opinion of the other parties hereto, advisable to promptly and
expeditiously secure any vote or consent of stockholders required by applicable
Law and such party's certificate of incorporation and bylaws to effect the
Merger. Company shall call and hold the Company Stockholders' Meeting for the
purpose of voting upon the approval of this Agreement and the Merger whether or
not Company's board of directors at any time subsequent to the date hereof
determines that this Agreement is no longer advisable or recommends that
Company's stockholders reject it.
57
49
SECTION 7.03 Affiliates
(a) COMPANY WILL USE REASONABLE EFFORTS TO OBTAIN AN EXECUTED LETTER AGREEMENT
SUBSTANTIALLY IN THE FORM OF ANNEX C HERETO FROM (i) EACH PERSON IDENTIFIED IN
SECTION 4.18 OF THE COMPANY DISCLOSURE SCHEDULE WITHIN 15 DAYS FOLLOWING THE
EXECUTION AND DELIVERY OF THIS AGREEMENT AND (ii) FROM ANY PERSON WHO, TO THE
KNOWLEDGE OF COMPANY, MAY BE DEEMED TO HAVE BECOME AN AFFILIATE OF COMPANY
AFTER THE DATE OF THIS AGREEMENT AND PRIOR TO THE EFFECTIVE TIME AS SOON AS
PRACTICABLE AFTER ATTAINING SUCH STATUS. THE FOREGOING NOTWITHSTANDING, PARENT
SHALL BE ENTITLED TO PLACE LEGENDS AS SPECIFIED IN THE AFFILIATE AGREEMENT ON
THE CERTIFICATES EVIDENCING ANY OF THE PARENT COMMON STOCK TO BE RECEIVED BY
(i) ANY AFFILIATE OF COMPANY OR (ii) ANY PERSON PARENT REASONABLY IDENTIFIES
(BY WRITTEN NOTICE TO COMPANY) AS BEING A PERSON WHO IS AN "AFFILIATE" WITHIN
THE MEANING OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT, AND TO ISSUE
APPROPRIATE STOP TRANSFER INSTRUCTIONS TO THE TRANSFER AGENT FOR SUCH PARENT
COMMON STOCK, CONSISTENT WITH THE TERMS OF THE AFFILIATE AGREEMENT, REGARDLESS
OF WHETHER SUCH PERSON HAS EXECUTED AFFILIATE AGREEMENT AND REGARDLESS OF
WHETHER SUCH PERSON'S NAME AND ADDRESS APPEAR ON SECTION 4.18 OF THE COMPANY
DISCLOSURE SCHEDULE.
(b) PARENT WILL USE REASONABLE EFFORTS TO OBTAIN AN EXECUTED LETTER AGREEMENT
SUBSTANTIALLY IN THE FORM OF ANNEX D HERETO FROM (i) EACH PERSON IDENTIFIED IN
SECTION 5.10 OF THE PARENT DISCLOSURE SCHEDULE WITHIN 15 DAYS FOLLOWING THE
EXECUTION AND DELIVERY OF THIS AGREEMENT AND (II) FROM ANY PERSON WHO, TO THE
KNOWLEDGE OF PARENT, IS AN AFFILIATE OF PARENT AFTER THE DATE OF THIS AGREEMENT
AND PRIOR TO THE EFFECTIVE TIME AS SOON AS PRACTICABLE AFTER ATTAINING SUCH
STATUS.
SECTION 7.04 Directors' and Officers' Indemnification and Insurance
(a) PARENT AND THE MERGER SUB AGREE THAT ALL RIGHTS TO INDEMNIFICATION,
ADVANCEMENT OF EXPENSES, EXCULPATION, LIMITATION OF LIABILITY AND ANY AND ALL
SIMILAR RIGHTS NOW EXISTING IN FAVOR OF EACH PRESENT AND FORMER DIRECTOR,
OFFICER, EMPLOYEE AND AGENT OF COMPANY AND EACH COMPANY SUBSIDIARY
(COLLECTIVELY, THE "INDEMNIFIED PARTIES") AS PROVIDED IN THE COMPANY'S PRESENT
CHARTER OR BY-LAWS IN EFFECT ON THE DATE HEREOF, SHALL SURVIVE THE MERGER AND
SHALL CONTINUE IN FULL FORCE AND EFFECT FOR A PERIOD OF SIX YEARS FROM THE
EFFECTIVE TIME, WHICH PROVISIONS SHALL NOT BE AMENDED, REPEALED OR OTHERWISE
MODIFIED FOR A PERIOD OF SIX YEARS FROM THE EFFECTIVE TIME IN ANY MANNER THAT
WOULD AFFECT ADVERSELY THE RIGHTS THEREUNDER OF INDIVIDUALS WHO AT ANY TIME
PRIOR TO THE EFFECTIVE TIME WERE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OF
THE COMPANY, UNLESS SUCH MODIFICATION SHALL BE REQUIRED BY LAW, AND PARENT
AGREES TO CAUSE THE SURVIVING CORPORATION TO COMPLY WITH ITS OBLIGATIONS
THEREUNDER; PROVIDED, HOWEVER, THAT IN THE EVENT ANY CLAIM OR CLAIMS ARE
ASSERTED OR MADE WITHIN SUCH SIX-YEAR PERIOD, ALL RIGHTS TO INDEMNIFICATION IN
RESPECT TO ANY SUCH CLAIM OR CLAIMS SHALL CONTINUE UNTIL THE DISPOSITION OF ANY
AND ALL SUCH CLAIMS.
58
50
(b) IN THE EVENT THE COMPANY OR THE SURVIVING CORPORATION OR ANY OF THEIR
RESPECTIVE SUCCESSORS OR ASSIGNS (i) CONSOLIDATES WITH OR MERGES INTO ANY OTHER
PERSON AND SHALL NOT BE THE CONTINUING OR SURVIVING CORPORATION OR ENTITY OF
SUCH CONSOLIDATION OR MERGER OR (ii) TRANSFERS A MATERIAL AMOUNT OF ITS
PROPERTIES AND ASSETS TO ANY PERSON IN A SINGLE TRANSACTION OR A SERIES OF
TRANSACTIONS, THEN, AND IN EACH SUCH CASE, PARENT WILL EITHER GUARANTY THE
INDEMNIFICATION OBLIGATIONS REFERRED TO IN THIS SECTION 7.04 OR WILL MAKE OR
CAUSE TO BE MADE PROPER PROVISION SO THAT THE SUCCESSORS AND ASSIGNS OF THE
COMPANY OR THE SURVIVING CORPORATION, AS THE CASE MAY BE, ASSUME THE
INDEMNIFICATION OBLIGATIONS DESCRIBED HEREIN FOR THE BENEFIT OF THE INDEMNIFIED
PARTIES AND HAVE SUBSTANTIALLY EQUAL FINANCIAL ABILITY AS THE COMPANY
(IMMEDIATELY PRIOR TO THE EFFECTIVE TIME) TO SATISFY THE OBLIGATIONS OF THE
PARTIES PURSUANT TO THIS SECTION 7.04 AS A CONDITION TO SUCH MERGER,
CONSOLIDATION OR TRANSFER BECOMING EFFECTIVE.
(c) THE PROVISIONS OF THIS SECTION 7.04 ARE (i) INTENDED TO BE FOR THE BENEFIT
OF, AND WILL BE ENFORCEABLE BY, EACH OF THE INDEMNIFIED PARTIES AND (ii) IN
ADDITION TO, AND NOT IN SUBSTITUTION FOR, ANY OTHER RIGHTS TO INDEMNIFICATION
OR CONTRIBUTION THAT ANY SUCH PERSON MAY HAVE BY CONTRACT OR OTHERWISE.
(d) FOR A PERIOD OF SIX YEARS AFTER THE EFFECTIVE TIME, PARENT SHALL MAINTAIN
IN EFFECT THE DIRECTORS' AND OFFICERS' LIABILITY INSURANCE POLICIES MAINTAINED
BY COMPANY OR, IF NOT AVAILABLE, DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
POLICIES COVERING THE DIRECTORS AND OFFICERS OF THE COMPANY (AND THEIR
RESPECTIVE HEIRS AND EXECUTORS, IF SUCH COVERAGE MAY BE OBTAINED AT NO
ADDITIONAL COST) AS OF THE DATE HEREOF, WITH COVERAGES AND OTHER TERMS
SUBSTANTIALLY AS FAVORABLE TO SUCH DIRECTORS AND OFFICERS AS IS CURRENTLY IN
EFFECT; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL PARENT BE REQUIRED TO EXPEND
IN ANY ONE YEAR IN EXCESS OF 150% OF THE ANNUAL PREMIUM CURRENTLY PAID BY
COMPANY FOR SUCH COVERAGE, WHICH CURRENT PREMIUM AMOUNT IS SET FORTH IN SECTION
7.04 OF THE COMPANY DISCLOSURE SCHEDULE, AND IF THE PREMIUM FOR SUCH COVERAGE
EXCEEDS SUCH AMOUNT, PARENT SHALL PURCHASE A POLICY WITH THE GREATEST COVERAGE
AVAILABLE FOR SUCH 150% OF THE ANNUAL PREMIUM.
SECTION 7.05 No Shelf Registration
Parent shall not be required to amend or maintain the effectiveness of
the Registration Statement for the purpose of permitting resale of the shares of
Parent Common Stock received pursuant hereto by the persons who may be deemed to
be "affiliates" of Company within the meaning of Rule 145 promulgated under the
Securities Act.
59
51
SECTION 7.06 Public Announcements
The initial press release concerning the Merger shall be a joint press
release and, thereafter, Parent and Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the Merger and shall not issue any such press release or
make any such public statement without the prior written approval of the other,
except to the extent required by applicable Law or the requirements of the rules
and regulations of the NNM, in which case the issuing party shall use all
reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
SECTION 7.07 NNM Listing
Prior to the Effective Time, Parent shall file with the NNM a
Notification Form for Listing of Additional Shares with respect to the Parent
Common Stock issued or issuable in connection with the Merger.
SECTION 7.08 Blue Sky
Parent shall use all reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under Blue Sky Laws
to permit the distribution of the shares of Parent Common Stock to be issued in
accordance with the provisions of this Agreement.
SECTION 7.09 Employee Benefit Matters
At Parent's request, Company shall take all action necessary to
terminate, or cause to terminate, immediately before the Effective Time, any
Company Benefit Plan that is a 401(k) plan or other defined contribution
retirement plan.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate the
Merger
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) THE REGISTRATION STATEMENT SHALL HAVE BEEN DECLARED EFFECTIVE BY THE SEC
UNDER THE SECURITIES ACT AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT
60
52
SHALL HAVE BEEN ISSUED BY THE SEC AND NO PROCEEDING FOR THAT PURPOSE SHALL HAVE
BEEN INITIATED BY THE SEC AND NOT CONCLUDED OR WITHDRAWN;
(b) THIS AGREEMENT AND THE MERGER SHALL HAVE BEEN DULY APPROVED BY THE
REQUISITE VOTE OF STOCKHOLDERS OF COMPANY IN ACCORDANCE WITH THE DGCL AND BY
THE REQUISITE VOTE OF THE STOCKHOLDERS OF PARENT IN ACCORDANCE WITH THE RULES
OF THE NNM;
(c) NO COURT OF COMPETENT JURISDICTION SHALL HAVE ISSUED OR ENTERED ANY ORDER,
WRIT, INJUNCTION OR DECREE, AND NO OTHER GOVERNMENTAL ENTITY SHALL HAVE ISSUED
ANY ORDER, WHICH IS THEN IN EFFECT AND HAS THE EFFECT OF MAKING THE MERGER
ILLEGAL OR OTHERWISE PROHIBITING ITS CONSUMMATION;
(d) ANY WAITING PERIOD (AND ANY EXTENSION THEREOF) APPLICABLE TO THE
CONSUMMATION OF THE MERGER UNDER THE HSR ACT OR ANY OTHER APPLICABLE
COMPETITION, MERGER CONTROL OR SIMILAR LAW SHALL HAVE EXPIRED OR BEEN
TERMINATED;
(e) ALL CONSENTS, APPROVALS AND AUTHORIZATIONS LEGALLY REQUIRED TO BE OBTAINED
TO CONSUMMATE THE MERGER SHALL HAVE BEEN OBTAINED FROM ALL GOVERNMENTAL
ENTITIES, EXCEPT WHERE THE FAILURE TO OBTAIN ANY SUCH CONSENT, APPROVAL OR
AUTHORIZATION COULD NOT REASONABLY BE EXPECTED TO RESULT IN A PARENT MATERIAL
ADVERSE EFFECT OR A COMPANY MATERIAL ADVERSE EFFECT; AND
(f) THE SHARES OF PARENT COMMON STOCK TO BE ISSUED IN THE MERGER SHALL HAVE
BEEN AUTHORIZED FOR LISTING ON THE NNM, SUBJECT TO NOTICE OF ISSUANCE.
SECTION 8.02 Conditions to the Obligations of Company
The obligations of Company to consummate the Merger, or to permit the
consummation of the Merger are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) EACH OF THE REPRESENTATIONS AND WARRANTIES OF PARENT CONTAINED IN THIS
AGREEMENT SHALL BE TRUE, COMPLETE AND CORRECT IN ALL RESPECTS BOTH WHEN MADE
AND ON AND AS OF THE EFFECTIVE TIME AS IF MADE AT AND AS OF THE EFFECTIVE TIME
(OTHER THAN REPRESENTATIONS AND WARRANTIES WHICH ADDRESS MATTERS ONLY AS OF A
CERTAIN DATE WHICH SHALL BE SO TRUE, COMPLETE AND CORRECT AS OF SUCH CERTAIN
DATE), EXCEPT FOR ANY FAILURES TO BE TRUE, COMPLETE AND CORRECT WHICH DO NOT,
IN THE AGGREGATE, HAVE A PARENT MATERIAL ADVERSE EFFECT, AND COMPANY SHALL HAVE
RECEIVED A CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER OF PARENT TO SUCH EFFECT;
(b) PARENT SHALL HAVE PERFORMED OR COMPLIED IN ALL MATERIAL RESPECTS WITH ALL
COVENANTS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED WITH BY IT ON
OR PRIOR TO THE EFFECTIVE TIME AND COMPANY SHALL HAVE RECEIVED A CERTIFICATE OF
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF PARENT TO THAT
EFFECT; AND
61
53
(c) XXXX XXXXXXX, P.C., SPECIAL COUNSEL TO COMPANY, OR SUCH OTHER LAW FIRM OR
PROFESSIONAL SERVICES FIRM REASONABLY ACCEPTABLE TO PARENT (INCLUDING ANY "BIG
5" ACCOUNTING FIRM) SHALL HAVE ISSUED ITS OPINION, SUCH OPINION DATED ON THE
DATE OF THE CLOSING, ADDRESSED TO COMPANY, AND REASONABLY SATISFACTORY TO IT,
BASED UPON CUSTOMARY REPRESENTATIONS OF COMPANY AND PARENT AND CUSTOMARY
ASSUMPTIONS, TO THE EFFECT THAT THE MERGER WILL CONSTITUTE A "REORGANIZATION"
WITHIN THE MEANING OF SECTION 368(a) OF THE CODE, WHICH OPINION SHALL NOT HAVE
BEEN WITHDRAWN OR MODIFIED IN ANY MATERIAL RESPECT; PROVIDED, HOWEVER, THAT IF
SUCH FIRM DOES NOT RENDER SUCH OPINION, THIS CONDITION SHALL NONETHELESS BE
DEEMED SATISFIED IF SUCH OPINION, DATED AS OF THE DATE OF THE CLOSING, IS
RENDERED TO COMPANY BY XXXXXXX, PHLEGER & XXXXXXXX LLP, COUNSEL TO PARENT.
SECTION 8.03 Conditions to the Obligations of Parent
The obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) EACH OF THE REPRESENTATIONS AND WARRANTIES OF COMPANY CONTAINED IN THIS
AGREEMENT SHALL BE TRUE, COMPLETE AND CORRECT IN ALL RESPECTS BOTH WHEN MADE
AND ON AND AS OF THE EFFECTIVE TIME AS IF MADE AT AND AS OF THE EFFECTIVE TIME
(OTHER THAN REPRESENTATIONS AND WARRANTIES WHICH ADDRESS MATTERS ONLY AS OF A
CERTAIN DATE WHICH SHALL BE SO TRUE, COMPLETE AND CORRECT AS OF SUCH CERTAIN
DATE), EXCEPT FOR ANY FAILURES TO BE TRUE, COMPLETE AND CORRECT WHICH DO NOT,
IN THE AGGREGATE, HAVE A COMPANY MATERIAL ADVERSE EFFECT, AND PARENT SHALL HAVE
RECEIVED A CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER OF COMPANY TO SUCH EFFECT;
(b) COMPANY SHALL HAVE PERFORMED OR COMPLIED IN ALL MATERIAL RESPECTS WITH ALL
COVENANTS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED WITH BY IT ON
OR PRIOR TO THE EFFECTIVE TIME AND PARENT SHALL HAVE RECEIVED A CERTIFICATE OF
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF COMPANY TO THAT
EFFECT;
(c) XXXXXXX, PHLEGER & XXXXXXXX LLP, SPECIAL COUNSEL TO PARENT, SHALL HAVE
ISSUED ITS OPINION, SUCH OPINION DATED ON THE DATE OF THE CLOSING, ADDRESSED TO
PARENT, AND REASONABLY SATISFACTORY TO IT, BASED UPON CUSTOMARY REPRESENTATIONS
OF COMPANY AND PARENT AND CUSTOMARY ASSUMPTIONS, TO THE EFFECT THAT THE MERGER
WILL CONSTITUTE A "REORGANIZATION" WITHIN THE MEANING OF SECTION 368(a) OF THE
CODE, WHICH OPINION SHALL NOT HAVE BEEN WITHDRAWN OR MODIFIED IN ANY MATERIAL
RESPECT;
(d) PARENT SHALL HAVE BEEN ADVISED IN WRITING BY PRICEWATERHOUSECOOPERS LLP -
NEW YORK, NY AS OF THE DATE UPON WHICH THE EFFECTIVE TIME IS TO OCCUR, IN A
FORM AND IN SUBSTANCE REASONABLY ACCEPTABLE TO PARENT, THAT THE MERGER CAN
PROPERLY BE ACCOUNTED FOR AS A "POOLING OF INTERESTS" BUSINESS COMBINATION IN
ACCORDANCE WITH U.S. GAAP AND THE ACCOUNTING
62
54
STANDARDS OF THE SEC; COMPANY SHALL HAVE BEEN ADVISED IN WRITING BY
PRICEWATERHOUSECOOPERS LLP - BROOMFIELD, CO AS OF THE DATE UPON WHICH THE
EFFECTIVE TIME IS TO OCCUR THAT SUCH FIRM CONCURS WITH THE MANAGEMENT OF THE
COMPANY THAT NO CONDITIONS EXIST THAT WOULD PRECLUDE COMPANY FROM BEING A PARTY
TO A MERGER FOR WHICH THE POOLING OF INTERESTS METHOD OF ACCOUNTING WOULD BE
AVAILABLE;
(e) THERE SHALL HAVE BEEN NO COMPANY MATERIAL ADVERSE EFFECT SINCE THE DATE OF
THIS AGREEMENT;
(f) ALL CONSENTS OF THIRD PARTIES REQUIRED PURSUANT TO THE TERMS OF ANY
MATERIAL CONTRACT AS A RESULT OF THE MERGER SHALL HAVE BEEN OBTAINED; AND
(g) THE EMPLOYEES OF COMPANY SET FORTH ON SCHEDULE 8.03(g) SHALL HAVE ACCEPTED
EMPLOYMENT WITH PARENT AND SHALL HAVE ENTERED INTO EMPLOYMENT AND
NON-COMPETITION AGREEMENTS SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS ANNEX E.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite adoption and
approval of this Agreement, as follows:
(a) BY MUTUAL WRITTEN CONSENT DULY AUTHORIZED BY THE BOARDS OF DIRECTORS OF EACH
OF PARENT AND COMPANY;
(b) BY EITHER PARENT OR COMPANY, IF THE EFFECTIVE TIME SHALL NOT HAVE OCCURRED
ON OR BEFORE DECEMBER 31, 1999; PROVIDED, HOWEVER, THAT THE RIGHT TO TERMINATE
THIS AGREEMENT UNDER THIS SECTION 9.01(b) SHALL NOT BE AVAILABLE TO ANY PARTY
WHOSE FAILURE TO FULFILL ANY OBLIGATION UNDER THIS AGREEMENT SHALL HAVE
PRINCIPALLY CAUSED, OR RESULTED IN, THE FAILURE OF THE EFFECTIVE TIME TO OCCUR
ON OR BEFORE SUCH DATE;
(c) BY EITHER PARENT OR COMPANY, IF ANY GOVERNMENTAL ORDER, WRIT, INJUNCTION OR
DECREE PREVENTING THE CONSUMMATION OF THE MERGER SHALL HAVE BEEN ENTERED BY ANY
COURT OF COMPETENT JURISDICTION AND SHALL HAVE BECOME FINAL AND NONAPPEALABLE;
(d) BY PARENT, IF (i) THE BOARD OF DIRECTORS OF COMPANY WITHDRAWS, MODIFIES OR
CHANGES ITS RECOMMENDATION OF THIS AGREEMENT OR THE MERGER IN A MANNER ADVERSE
TO PARENT OR ITS STOCKHOLDERS, (ii) THE BOARD OF DIRECTORS OF COMPANY SHALL
HAVE RECOMMENDED TO THE STOCKHOLDERS OF COMPANY A COMPETING TRANSACTION, (iii)
THE COMPANY FAILS TO COMPLY IN ALL
63
55
MATERIAL RESPECTS WITH SECTION 6.04, (iv) A COMPETING TRANSACTION SHALL HAVE
BEEN ANNOUNCED OR OTHERWISE PUBLICLY KNOWN AND THE BOARD OF DIRECTORS OF
COMPANY SHALL HAVE (A) FAILED TO RECOMMEND AGAINST ACCEPTANCE OF SUCH BY ITS
STOCKHOLDERS (INCLUDING BY TAKING NO POSITION, OR INDICATING ITS INABILITY TO
TAKE A POSITION, WITH RESPECT TO THE ACCEPTANCE BY ITS STOCKHOLDERS OF A
COMPETING TRANSACTION INVOLVING A TENDER OFFER OR EXCHANGE OFFER), (B) FAILED
TO RECONFIRM ITS APPROVAL AND RECOMMENDATION OF THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY WITHIN 5 BUSINESS DAYS AFTER PARENT REQUESTS
IN WRITING THAT SUCH RECOMMENDATION BE RECONFIRMED OR (C) DETERMINED THAT SUCH
COMPETING TRANSACTION WAS A SUPERIOR PROPOSAL AND TAKES ANY OF THE ACTIONS
ALLOWED BY CLAUSE (ii) OF SECTION 6.04, OR (v) THE BOARD OF DIRECTORS OF
COMPANY RESOLVES TO TAKE ANY OF THE ACTIONS DESCRIBED ABOVE;
(e) BY PARENT OR COMPANY, IF (i) THIS AGREEMENT AND THE MERGER SHALL FAIL TO
RECEIVE THE REQUISITE VOTES FOR APPROVAL AT THE COMPANY STOCKHOLDERS' MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF OR (ii) IF THE SHARE ISSUANCE SHALL
FAIL TO RECEIVE THE REQUISITE VOTES FOR APPROVAL AT THE PARENT SHAREHOLDERS'
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF;
(f) BY PARENT, UPON A BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR
AGREEMENT ON THE PART OF COMPANY SET FORTH IN THIS AGREEMENT, OR IF ANY
REPRESENTATION OR WARRANTY OF COMPANY SHALL HAVE BECOME UNTRUE, INCOMPLETE OR
INCORRECT, IN EITHER CASE SUCH THAT THE CONDITIONS SET FORTH IN SECTION 8.03
WOULD NOT BE SATISFIED (A "TERMINATING COMPANY BREACH"); PROVIDED, HOWEVER,
THAT IF SUCH TERMINATING COMPANY BREACH IS CURABLE BY COMPANY THROUGH THE
EXERCISE OF ITS REASONABLE EFFORTS WITHIN 20 DAYS AND FOR SO LONG AS COMPANY
CONTINUES TO EXERCISE SUCH REASONABLE EFFORTS, PARENT MAY NOT TERMINATE THIS
AGREEMENT UNDER THIS SECTION 9.01(f); AND PROVIDED, FURTHER THAT THE PRECEDING
PROVISO SHALL NOT IN ANY EVENT BE DEEMED TO EXTEND ANY DATE SET FORTH IN
PARAGRAPH (b) OF THIS SECTION 9.01; OR
(g) BY COMPANY, UPON BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR
AGREEMENT ON THE PART OF PARENT SET FORTH IN THIS AGREEMENT, OR IF ANY
REPRESENTATION OR WARRANTY OF PARENT SHALL HAVE BECOME UNTRUE, INCOMPLETE OR
INCORRECT, IN EITHER CASE SUCH THAT THE CONDITIONS SET FORTH IN SECTION 8.02
WOULD NOT BE SATISFIED (A "TERMINATING PARENT BREACH"); PROVIDED, HOWEVER, THAT
IF SUCH TERMINATING PARENT BREACH IS CURABLE BY PARENT THROUGH THE EXERCISE OF
ITS REASONABLE EFFORTS WITHIN 20 DAYS AND FOR SO LONG AS PARENT CONTINUES TO
EXERCISE SUCH REASONABLE EFFORTS, COMPANY MAY NOT TERMINATE THIS AGREEMENT
UNDER THIS SECTION 9.01(g); AND PROVIDED, FURTHER THAT THE PRECEDING PROVISO
SHALL NOT IN ANY EVENT BE DEEMED TO EXTEND ANY DATE SET FORTH IN PARAGRAPH (b)
OF THIS SECTION 9.01.
(h) THE RIGHT OF ANY PARTY HERETO TO TERMINATE THIS AGREEMENT PURSUANT TO THIS
SECTION 9.01 WILL REMAIN OPERATIVE AND IN FULL FORCE AND EFFECT REGARDLESS OF
ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY PARTY HERETO, ANY PERSON
CONTROLLING ANY SUCH PARTY OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
REPRESENTATIVES OR AGENTS, WHETHER PRIOR TO OR AFTER THE EXECUTION OF THIS
AGREEMENT.
64
56
SECTION 9.02 Effect of Termination
Except as provided in Section 9.05, in the event of termination of this
Agreement pursuant to Section 9.01, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party hereto
or any of its affiliates or any of its or their officers or directors, and all
rights and obligations of each party hereto shall cease; provided, however, that
nothing herein shall relieve any party hereto from liability for the willful or
intentional breach of any of its representations and warranties or the willful
or intentional breach of any of its covenants or agreements set forth in this
Agreement. No termination of this Agreement shall affect the obligation of the
parties contained in the Confidentiality Agreements, which shall survive
termination of this Agreement and remain in full force and effect in accordance
with their terms.
SECTION 9.03 Amendment
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the approval of this Agreement by
the stockholders of Company, no amendment may be made that changes the amount or
type of consideration into which Company common stock will be converted pursuant
to this Agreement. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.04 Waiver
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 9.05 Termination Fee; Expenses
(a) EXCEPT AS SET FORTH IN THIS SECTION 9.05, ALL EXPENSES INCURRED IN
CONNECTION WITH THIS AGREEMENT AND THE MERGER SHALL BE PAID BY THE PARTY
INCURRING SUCH EXPENSES, WHETHER OR NOT THE MERGER IS CONSUMMATED, EXCEPT THAT
PARENT AND COMPANY EACH SHALL PAY ONE-HALF OF ALL EXPENSES (OTHER THAN
ATTORNEY'S AND ACCOUNTANT'S FEES AND EXPENSES) INCURRED SOLELY FOR PRINTING,
FILING (WITH THE SEC) AND MAILING THE REGISTRATION STATEMENT AND THE JOINT
PROXY STATEMENT AND ALL SEC AND OTHER REGULATORY FILING FEES INCURRED IN
CONNECTION WITH THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT.
65
57
(b) IN THE EVENT THAT (i) PARENT SHALL TERMINATE THIS AGREEMENT PURSUANT TO
SECTION 9.01(D) (OTHER THAN UNDER THE CIRCUMSTANCES DESCRIBED IN SECTION
9.05(d)), OR (ii) THIS AGREEMENT SHALL BE TERMINATED (x) PURSUANT TO SECTION
9.01(b) OR (y) PURSUANT TO SECTION 9.01(e)(i) AS A RESULT OF THE FAILURE TO
OBTAIN THE REQUISITE APPROVAL OF THE COMPANY STOCKHOLDERS AND, IN THE CASE OF
EITHER (x) OR (y), (A) AT OR PRIOR TO SUCH TERMINATION, THERE SHALL EXIST OR
HAVE BEEN PROPOSED A COMPETING TRANSACTION WITH RESPECT TO COMPANY AND (B)
WITHIN 12 MONTHS AFTER SUCH TERMINATION, COMPANY SHALL ENTER INTO A DEFINITIVE
AGREEMENT WITH RESPECT TO ANY COMPETING TRANSACTION OR ANY COMPETING
TRANSACTION INVOLVING COMPANY SHALL BE CONSUMMATED, THEN, IN THE CASE OF (i),
PROMPTLY AFTER SUCH TERMINATION, OR IN THE CASE OF (ii), CONCURRENTLY WITH THE
CONSUMMATION OF SUCH COMPETING TRANSACTION, COMPANY SHALL (SUBJECT TO SECTION
9.05(e)) PAY TO PARENT AN AMOUNT IN CASH EQUAL TO $30 MILLION (THE "TERMINATION
FEE") PLUS PARENT'S EXPENSES.
(c) IN THE EVENT THAT PARENT SHALL TERMINATE THIS AGREEMENT PURSUANT TO SECTION
9.01(f), THEN COMPANY SHALL PROMPTLY REIMBURSE PARENT FOR PARENT'S EXPENSES,
AND IF, WITHIN TWELVE MONTHS OF SUCH TERMINATION OF THIS AGREEMENT, COMPANY
SHALL ENTER INTO A DEFINITIVE AGREEMENT WITH RESPECT TO ANY COMPETING
TRANSACTION OR ANY COMPETING TRANSACTION INVOLVING COMPANY SHALL BE CONSUMMATED
CONCURRENTLY WITH THE CONSUMMATION OF SUCH COMPETING TRANSACTION, THEN COMPANY
SHALL (SUBJECT TO SECTION 9.05(e)) PAY TO PARENT AN AMOUNT IN CASH EQUAL TO THE
TERMINATION FEE.
66
58
(d) IN THE EVENT THAT PARENT SHALL TERMINATE THIS AGREEMENT PURSUANT TO SECTION
9.01(d)(i) AND (A) PRIOR TO SUCH TERMINATION THERE SHALL HAVE NOT EXISTED OR
HAVE BEEN PROPOSED A COMPETING TRANSACTION WITH RESPECT TO COMPANY AND (B)
XXXXXXXXX XXXXXXXX HAS WITHDRAWN THE BRS FAIRNESS OPINION, THEN WITHIN 30 DAYS
AFTER SUCH TERMINATION, COMPANY SHALL PAY TO PARENT AN AMOUNT EQUAL TO THE
TERMINATION FEE PLUS PARENT'S EXPENSES; PROVIDED, HOWEVER, THAT NO MORE THAN
$5,000,000 OF THE TERMINATION FEE NEED BE PAID IN CASH, ANY NON-CASH PORTION OF
THE TERMINATION FEE TO BE PAID BY MEANS OF THE ISSUE BY COMPANY TO PARENT OF
THAT NUMBER OF SHARES OF COMPANY COMMON STOCK (THE "TERMINATION SHARES") EQUAL
TO THE QUOTIENT OF THE AMOUNT OF SUCH NON-CASH PORTION AND $93.25. PARENT AND
COMPANY AGREE THAT THE PROVISIONS OF SECTION 8 OF THE OPTION AGREEMENT SHALL BE
APPLICABLE TO THE TERMINATION SHARES AS IF THEY WERE ISSUED TO PARENT PURSUANT
THERETO.
(e) IN THE EVENT THE TERMINATION FEE IS PAYABLE PURSUANT TO SECTION 9.05(b)(ii)
OR SECTION 9.05(c) AS A RESULT OF THE IMPENDING CONSUMMATION OF A COMPETING
TRANSACTION SOLELY DESCRIBED BY CLAUSE (iii) OF THE DEFINITION OF SUCH TERM,
THEN COMPANY NEED NOT PAY THE TERMINATION FEE (OR, IN THE CASE OF SECTION
9.05(b)(ii), REIMBURSE PARENT'S EXPENSES) IF COMPANY OFFERS PARENT, AT
COMPANY'S SOLE DISCRETION, EITHER(i) THE RIGHT TO ALSO ENTER INTO A LICENSE,
JOINT VENTURE OR OTHER ARRANGEMENT WITH COMPANY ON THE SAME TERMS AND
CONDITIONS AS SUCH COMPETING TRANSACTION, SUBJECT ONLY TO TERMS AND CONDITIONS
THAT MAY BE NECESSARY TO PREVENT PARENT FROM HAVING ACCESS TO DATA OF THE PARTY
WITH WHICH COMPANY IS CONSUMMATING SUCH COMPETING TRANSACTION (THE "JV PARTY")
(IN WHICH CASE SIMILAR TERMS PREVENTING THE JV PARTY FROM HAVING ACCESS TO
PARENT'S DATA MUST BE IMPOSED ON THE JV PARTY AS PART OF THE COMPETING
TRANSACTION) OR (ii) A RIGHT OF FIRST REFUSAL TO ENTER INTO A LICENSE, JOINT
VENTURE OR OTHER ARRANGEMENT WITH COMPANY, TO THE EXCLUSION OF THE JV PARTY, ON
THE SAME TERMS AND CONDITIONS AS SUCH COMPETING TRANSACTION, EITHER OF WHICH
RIGHTS MUST BE AVAILABLE FOR EXERCISE BY PARENT FOR AT LEAST 15 BUSINESS DAYS.
(f) PARENT AND COMPANY AGREE THAT THE AGREEMENTS CONTAINED IN SECTION 9.05(b),
SECTION 9.05(c), SECTION 9.05(d) OR SECTION 9.05(e) ABOVE ARE AN INTEGRAL PART
OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND CONSTITUTE LIQUIDATED
DAMAGES AND NOT A PENALTY. ACCORDINGLY, IF COMPANY FAILS TO PAY TO PARENT ANY
AMOUNTS DUE UNDER SECTION 9.05(b), SECTION 9.05(c), SECTION 9.05(d) OR SECTION
9.05(e), COMPANY SHALL PAY INTEREST ON SUCH AMOUNTS AT THE PRIME RATE OF
CITIBANK, N.A. IN EFFECT ON THE DATE SUCH PAYMENT WAS REQUIRED TO BE MADE.
(g) IN THE EVENT THAT COMPANY SHALL TERMINATE THIS AGREEMENT PURSUANT TO
SECTION 9.01(g), THEN PARENT SHALL PROMPTLY REIMBURSE COMPANY FOR COMPANY'S
EXPENSES.
67
59
(H) NEITHER COMPANY NOR PARENT SHALL BE ENTITLED TO REIMBURSEMENT FOR ITS
EXPENSES HEREUNDER IN EXCESS OF $2,500,000 IN THE AGGREGATE.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties
The representations and warranties in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be. This Section 10.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 Notices
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
if to Company:
Abacus Direct Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: W. Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
68
60
if to Parent or Merger Sub:
DoubleClick Inc.
00 Xxxxxxx Xxxxxx, 00 Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxx, General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
and
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 10.03 Severability
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
69
61
SECTION 10.04 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, other than Section 7.04, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns any rights or
remedies under or by reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits
The Parent Disclosure Schedule, the Company Disclosure Schedule and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth herein.
SECTION 10.06 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE OTHER THAN CONFLICT OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES
HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH
OF THE PARTIES HERETO WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(III) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 10.07 Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED
HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
70
62
SECTION 10.08 Headings; Interpretation
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 10.09 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Entire Agreement
This Agreement (including the Exhibits, the Parent Disclosure Schedule
and the Company Disclosure Schedule) and the Confidentiality Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
71
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
DOUBLECLICK INC.
By: /s/ Xxxxx X. X'Xxxxxx
-------------------------------------
Name: Xxxxx X. X'Xxxxxx
Title: Chief Executive Officer
ABACUS DIRECT CORPORATION
By: /s/ M. Xxxxxxx Xxxxx
-------------------------------------
Name: M. Xxxxxxx Xxxxx
Title: Chief Executive Officer
ATLANTA MERGER CORP.
By: /s/ Xxxxx X. X'Xxxxxx
-------------------------------------
Name: Xxxxx X. X'Xxxxxx
Title: Chief Executive Officer
