EXHIBIT 2.1
Confidential
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AGREEMENT AND PLAN OF MERGER
AMONG
AMERICA ONLINE, INC.,
MF ACQUISITION CORPORATION
AND
MOVIEFONE, INC.
DATED AS OF FEBRUARY 1, 1999
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PAGE
ARTICLE I THE MERGER.................................................
1.1 The Merger....................................................
1.2 Effective Time................................................
1.3 Effect of the Merger..........................................
1.4 Certificate of Incorporation; By-Laws.........................
1.5 Directors and Officers........................................
1.6 Conversion of Company Common Stock; Etc.......................
1.7 Cancellation of Treasury Stock and Parent-Owned Stock.........
1.8 Stock Options.................................................
1.9 Capital Stock of Merger Sub...................................
1.10 Adjustments to Exchange Ratio.................................
1.11 Fractional Shares.............................................
1.12 Surrender of Certificates.....................................
(a) Exchange Agent....................................
(b) Parent to Provide Common Stock....................
(c) Exchange Procedures...............................
(d) Distributions With Respect to Unexchanged
Shares............................................
(e) Transfers of Ownership............................
(f) No Liability......................................
(g) Withholding of Tax................................
1.13 Further Ownership Rights in Company Common Stock..............
1.14 Closing.......................................................
1.15 Lost, Stolen or Destroyed Certificates........................
1.16 Tax Consequences..............................................
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............
2.1 Organization and Qualification; Subsidiaries..................
2.2 Certificate of Incorporation and By-Laws......................
2.3 Capitalization................................................
2.4 Authority Relative to this Agreement..........................
2.5 No Conflict; Required Filings and Consents....................
2.6 Material Agreements; Compliance; Permits......................
2.7 SEC Filings; Financial Statements.............................
2.8 Absence of Certain Changes or Events..........................
2.9 No Undisclosed Liabilities....................................
2.10 Absence of Litigation.........................................
2.11 Employee Benefit Plans........................................
2.12 Labor Matters.................................................
2.13 Registration Statement; Proxy Statement/Prospectus............
2.14 Restrictions on Business Activities...........................
2.15 Title to Property.............................................
2.16 Taxes.........................................................
2.17 Environmental Matters.........................................
2.18 Brokers.......................................................
2.19 Intellectual Property.........................................
2.20 Insurance.....................................................
2.21 No Restrictions on the Merger.................................
2.22 Pooling; Tax Matters..........................................
2.23 Affiliates....................................................
2.24 Certain Business Practices....................................
2.25 Interested Party Transactions.................................
2.26 Interest Rate and Foreign Exchange Contracts..................
2.27 Opinion of Financial Advisor..................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....
3.1 Organization and Qualification, Subsidiaries..................
3.2 Capitalization................................................
3.3 Authorization of Agreement....................................
3.4 Approvals.....................................................
3.5 No Violation..................................................
3.6 Reports.......................................................
3.7 Absence of Certain Changes or Events..........................
3.8 Registration Statement; Proxy Statement/Prospectus............
3.9 Pooling; Tax Matters..........................................
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.....................
4.1 Conduct of Business by the Company Pending the Merger.........
4.2 Solicitation of Other Proposals...............................
4.3 Insurance.....................................................
4.4 Y2K Compliance................................................
ARTICLE V ADDITIONAL AGREEMENTS......................................
5.1 Proxy Statement/Prospectus; Registration Statement............
5.2 Meeting of Company Stockholders...............................
5.3 Access to Information; Confidentiality........................
5.4 Reasonable Efforts............................................
5.5 Stock Options.................................................
5.6 Employee Benefits.............................................
(a) Participation in Employee Benefits of Parent......
(b) Benefit Plans.....................................
(c) Service Credit....................................
(d) Compensation Contracts............................
(e) Falconwood Plan...................................
(f) Certain Notices...................................
5.7 Pooling; Tax-Free Reorganization..............................
5.8 Notification of Certain Matters...............................
5.9 Listing on the New York Stock Exchange........................
5.10 Public Announcements..........................................
5.11 Takeover Laws.................................................
5.12 Accountant's Letters..........................................
5.13 Stop Transfer.................................................
5.14 Indemnification of Directors and Officers.....................
5.15 Plan Funding Status...........................................
.
5.16 Software Documentation........................................
5.17 Subsidiary Investments........................................
5.18 Legends, Instructions to Transfer Agent.......................
5.19 Maintenance of Designation....................................
5.20 Amendment of Registration Rights Agreement....................
5.21 Company Release...............................................
5.22 Waiver of Bonus...............................................
5.23 All Reasonable Efforts and Further Assurances.................
ARTICLE VI CONDITIONS OF MERGER.......................................
6.1 Conditions to Obligation of Each Party to Effect the Merger...
(a) Effectiveness of the Registration Statement.......
(b) Stockholder Approval..............................
(c) New York Stock Exchange Listing...................
(d) No Injunctions or Restraints; Illegality..........
(e) Regulatory Approvals..............................
6.2 Additional Conditions to Obligations of Parent and Merger Sub.
(a) Representations and Warranties....................
(b) Agreements and Covenants..........................
(c) Consents Obtained.................................
(d) Pooling of Interests..............................
(e) Related Agreements................................
(f) Falconwood Termination Agreement..................
(g) Tax Opinion.......................................
(h) Xxxxxxx/Falconwood Release........................
6.3 Additional Conditions to Obligations of the Company...........
(a) Representations and Warranties....................
(b) Agreements and Covenants..........................
(c) Consents Obtained.................................
(d) Tax Opinion.......................................
ARTICLE VII RELATED AGREEMENTS.........................................
7.1 Related Agreements............................................
(a) Affiliate Agreements..............................
(b) Employee Offer Letters............................
(c) Release Agreements................................
(d) Assignment Agreements.............................
(e) Stockholders Agreement............................
(f) Option Agreement..................................
(g) Falconwood Agreement..............................
(h) Non-Competition Agreements........................
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................
8.2 Effect of Termination.........................................
8.3 Fees and Expenses.............................................
8.4 Amendment.....................................................
8.5 Waiver........................................................
ARTICLE IX GENERAL PROVISIONS.........................................
9.1 Survival of Representations and Warranties....................
9.2 Notices.......................................................
9.3 Disclosure Schedules..........................................
9.4 Certain Definitions...........................................
9.5 Interpretation................................................
9.6 Severability..................................................
9.7 Entire Agreement..............................................
9.8 Assignment....................................................
9.9 Parties in Interest...........................................
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.........
9.11 Governing Law.................................................
9.12 Counterparts..................................................
GLOSSARY OF TERMS
Acquisition Proposal....................................................4.2(a)
Affiliate Agreement.....................................................7.1(a)
Affiliates...............................................................10.4a
Agreement..............................................................Caption
Assignment Agreement......................................................7.1d
Average Parent Trading Price..............................................1.6d
Award....................................................................2.10b
Balance Sheet............................................................10.4b
beneficial owner.........................................................10.4c
Blue Sky Laws.............................................................2.5b
Business Day..............................................................1.14
Certificate of Merger......................................................1.2
Certificates.............................................................1.12c
Class A Company Common Stock..............................................1.6a
Class B Company Common Stock..............................................1.6a
Closing...................................................................1.14
Closing Date..............................................................1.14
COBRA.....................................................................5.6c
Code........................................................................50
Company................................................................Caption
Company Approvals.........................................................2.1a
Company Common Stock......................................................1.6a
Company Disclosure Schedule...........................................Preamble
Company Option............................................................5.5a
Company Preferred Stock.................................................2.3(a)
Company SEC Reports.......................................................2.7a
Company Stipulated Expenses.......................................8.3(d). 9.3c
Company Stockholders' Meeting.............................................2.13
Compensation Contracts..................................................5.6(d)
Confidentiality Agreement.................................................5.3b
control..................................................................10.4c
Court....................................................................10.4d
Delaware Law..........................................................Preamble
Effective Time.............................................................1.2
Employee Plans...........................................................2.11a
Employment Agreements.....................................................7.1b
ERISA....................................................................2.11a
ERISA Affiliate........................................................2.11(a)
Exchange Act..............................................................2.5b
Exchange Agent...........................................................1.12a
Exchange Ratio............................................................1.6a
Falconwood Agreement....................................................7.1(h)
Falconwood Plan.........................................................5.6(d)
Falconwood Termination Agreement........................................5.6(e)
GAAP......................................................................2.7b
Governmental Authority...................................................10.4e
HSR Act...................................................................2.5b
Intellectual Property....................................................10.4f
IRS......................................................................2.11b
Xxxxxxx/Falconwood Release..............................................6.2(h)
Knowledge........................................................9.4(i). 10.4g
Law......................................................................10.4h
License Agreements.......................................................2.19b
Lien................................................................51. 9.4(k)
Litigation...............................................................10.4i
Material Adverse Effect..................................................10.4j
Material Agreements.......................................................2.6a
Material Subsidiary.......................................................4.2c
Merger................................................................Preamble
Merger Shares............................................................10.4k
Merger Sub.............................................................Caption
Non-Competition Agreement...............................................7.1(i)
OHS.......................................................................1.14
Option Agreement......................................................Preamble
Order....................................................................10.4l
Other Matters..........................................................2.19(i)
Parent.................................................................Caption
Parent Approvals...........................................................3.1
Parent Benefit Plan.....................................................5.6(b)
Parent Benefit Plans....................................................5.6(b)
Parent Common Stock.......................................................1.6a
Parent Rights.............................................................1.6b
Parent Rights Agreement...................................................1.6b
Parent SEC Reports........................................................3.6a
Parent Series A-1 Preferred Stock.........................................1.6b
Person...................................................................10.4m
Plan......................................................................1.8a
Pooling...................................................................2.22
Proxy Statement...........................................................2.13
Registerable Securities.................................................2.3(e)
Registration Rights Agreement...........................................2.3(e)
Registration Statement....................................................5.1b
Related Agreements.........................................................7.1
Release Agreements........................................................7.1c
Representation Letters..................................................5.7(c)
Rollover Notice...........................................................5.6c
SEC.......................................................................2.7a
Securities Act............................................................2.5b
Software.................................................................2.19e
Stockholders Agreement................................................Preamble
Subsidiaries.............................................................10.4n
Subsidiary...............................................................10.4n
Superior Proposal.......................................................4.2(c)
Surviving Corporation......................................................1.1
Tax.......................................................................2.16
Tax Returns...............................................................2.16
Taxes.....................................................................2.16
Termination Fee......................................................9.3b(iii)
Trade Secrets...........................................................9.4(h)
Trademarks..............................................................9.4(h)
WARN Act............................................................5.6c. 2.12
Y2K compliance.............................................................4.4
AGREEMENT AND PLAN OF MERGER,
dated as of February 1, 1999 (the
"Agreement") among AMERICA ONLINE,
INC., a Delaware corporation
("Parent"), MF ACQUISITION CORPORATION,
a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger
Sub"), and MOVIEFONE, INC., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the
Merger (the "Merger") of Merger Sub with and into the Company, in
accordance with the General Corporation Law of the State of Delaware
("Delaware Law") and upon the terms and subject to the conditions set forth
herein, which Merger will result in, among other things, the Company
becoming a wholly owned subsidiary of Parent;
WHEREAS, as a condition to the willingness of, and an
inducement to, Parent and Merger Sub to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement certain
stockholders of the Company are entering into an agreement dated as of the
date hereof (the "Stockholders Agreement") in the form of EXHIBIT A
attached hereto, providing for certain actions relating to the transactions
contemplated by this Agreement;
WHEREAS, as a condition to the willingness of, and an
inducement to, Parent and Merger Sub to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement the
Company is entering into a Stock Option Agreement dated as of the date
hereof (the "Option Agreement") in the form of EXHIBIT B attached hereto,
granting Parent an irrevocable option to purchase 6,186,762 shares of the
Class A Company Common Stock, on the terms and subject to the conditions
set forth therein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Code; and
WHEREAS, for accounting purposes, it is intended that the
Merger qualify for "pooling-of-interests" treatment.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements herein
contained, and intending to be legally bound hereby, Parent, Merger Sub and
the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and Delaware
Law, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation. The Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the parties hereto
shall cause the Merger to be consummated by filing a Certificate of Merger
substantially in the form of EXHIBIT C (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, executed in accordance
with the relevant provisions of Delaware Law (the date and time of such
filing, or such later date and time as may be specified in the Certificate
of Merger by mutual agreement of Parent, Merger Sub and the Company, being
the "Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 CERTIFICATE OF INCORPORATION; BY-LAWS. Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time the
Certificate of Incorporation of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation; except that Article First of the Certificate
of Incorporation of Merger Sub shall be amended to read as follows: "The
name of the Corporation is MovieFone, Inc." The By-laws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the By-laws of
the Surviving Corporation until thereafter amended as provided by Delaware
Law, the Certificate of Incorporation of the Surviving Corporation and such
By-laws.
1.5 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of
the Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws. Prior to the
Effective Time, the Company shall deliver to Parent evidence satisfactory
to Parent of the resignations of all directors of the Company to be
effective as of such Effective Time.
1.6 CONVERSION OF COMPANY COMMON STOCK; ETC. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof:
(a) Subject to the provisions of this Article I, each
share of Class A common stock, par value $.01 per share, of the Company
("Class A Company Common Stock") and each share of Class B common stock,
par value $.01 per share, of the Company ("Class B Company Common Stock",
and together with the Class A Company Common Stock, the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Common Stock to be cancelled pursuant to
Section 1.7) will be converted into the right to receive that fraction
(expressed as a decimal) of a share of common stock, par value $0.01 per
share, of Parent ("Parent Common Stock") (and related fraction of a Parent
Right in accordance with Section 1.6(b) hereof), that is equal to the
"Exchange Ratio," which shall be determined in the manner provided below.
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Shares and any cash
in lieu of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 1.12, without interest.
(b) Each share of Parent Common Stock to be issued upon
conversion of shares of Company Common Stock in accordance with Section
1.6(a) shall include the corresponding percentage of a right (the "Parent
Rights") to purchase shares of Series A-1 Junior Participating Preferred
Stock, $.01 par value (the "Parent Series A-1 Preferred Stock"), of Parent
pursuant to the Rights Agreement dated as of May 12, 1998, as amended (the
"Parent Rights Agreement"), between Parent and Bank Boston, N.A., as Rights
Agent. Prior to the Distribution Date (as defined in the Parent Rights
Agreement), all references in this Agreement to the Merger Shares shall be
deemed to include the Parent Rights.
(c) For purposes of this Agreement, the "Exchange Ratio"
shall be calculated as follows:
(i) if the Average Parent Trading Price (as defined
below) is at least equal to $129.49 but not greater than $175.19, then the
Exchange Ratio shall equal the quotient of (A) $29.25 divided by (B) the
Average Parent Trading Price, calculated to the nearest ten thousandth
(i.e., four decimal places (.xxxx)); or
(ii) if the Average Parent Trading Price is less than
$129.49 or greater than $175.19, then the Exchange Ratio shall equal the
quotient of (A) $29.25 divided by (B) (x) $129.49 if the Average Parent
Trading Price is less than $129.49 or (y) $175.19, if the Average Parent
Trading Price is greater than $175.19, calculated to the nearest ten
thousandth (i.e., four decimal places (.xxxx)).
(d) As used in this Agreement, the term "Average Parent
Trading Price" shall mean the average closing price per share of Parent
Common Stock on the New York Stock Exchange (as reported in The Wall Street
Journal, or, if not reported therein, any other authoritative source) for
the twenty (20) consecutive trading days ending two (2) trading days
preceding the Effective Time.
1.7 CANCELLATION OF TREASURY STOCK AND PARENT-OWNED Stock. Each share
of Company Common Stock held in the treasury of the Company and each share
of Company Common Stock owned by Merger Sub, Parent or any direct or
indirect wholly owned subsidiary of Parent or the Company immediately prior
to the Effective Time shall be cancelled and extinguished without any
conversion thereof.
1.8 STOCK OPTIONS.
(a) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the MovieFone, Inc. 1994 Stock Option
Plan (the "Plan"), by virtue of the Merger and without any action on the
part of the holder thereof, shall be assumed by Parent in accordance with
Section 5.5.
(b) The Company shall promptly take all actions necessary to
ensure that following the Effective Time no holder of any options or rights
pursuant to, nor any participant in, the Plan or any other plan, program or
arrangement providing for the issuance or grant of any interest in respect
of the capital stock of the Company or any Subsidiary of the Company will
have any right thereunder to acquire equity securities of the Company, any
such Subsidiary or the Surviving Corporation.
1.9 CAPITAL STOCK OF MERGER SUB. Each share of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation. Each stock certificate
of Merger Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the Surviving
Corporation.
1.10 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to
Parent Common Stock or Company Common Stock occurring after the date hereof
and prior to the Effective Time.
1.11 FRACTIONAL SHARES. No fraction of a share of Parent Common Stock
will be issued, but in lieu thereof each holder of shares of Company Common
Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of
cash (rounded to the nearest whole cent) equal to the product of such
fraction multiplied by the Average Trading Price.
1.12 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent
shall designate a bank or trust company (which shall be reasonably
acceptable to the Company) to act as exchange agent (the "Exchange Agent")
in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
Effective Time, Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article I, through such reasonable procedures as
Parent and the Exchange Agent may adopt, certificates representing the
shares of Parent Common Stock issuable pursuant to Section 1.6 in exchange
for outstanding shares of Company Common Stock, together with cash in an
amount sufficient to pay any dividends or distributions with respect
thereto with a record date after the Effective Time, and any cash payable
in lieu of any fractional Parent Common Stock.
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
the Surviving Corporation shall cause to be mailed to each holder of record
of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock whose shares were converted into the right to receive shares
of Parent Common Stock pursuant to Section 1.6, a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a 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 in accordance with the instructions thereto,
the holder of such Certificate shall be entitled to receive in exchange
therefor (i) a certificate representing the number of whole shares of
Parent Common Stock, (ii) payment in cash in lieu of fractional shares
which such holder has the right to receive pursuant to Section 1.11 and
(iii) the amount of any dividends or other distributions which such holder
has the right to receive pursuant to Section 1.12(d), and the Certificate
so surrendered shall forthwith be cancelled. Until so surrendered, each
outstanding 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, 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 1.11. Any portion of the
shares of Parent Common Stock or cash deposited with the Exchange Agent
pursuant to Section 1.12(b) which remains undistributed to the holders of
the Certificates representing shares of Company Common Stock for six (6)
months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of shares of Company Common Stock who have not theretofore
complied with this Article I shall thereafter look only to Parent and only
as general creditors thereof for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock to which
such holders may be entitled.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate.
Subject to applicable Law, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates representing
whole shares of Parent Common Stock issued in exchange therefor, without
interest, at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name
other than that of the registered holder of the 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.
(f) NO LIABILITY. Notwithstanding anything to the contrary
in this Section 1.12(f), none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to a holder of shares of
Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) WITHHOLDING OF TAX. Parent or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Company Common Stock
such amounts as Parent (or any Affiliate thereof) or the Exchange Agent are
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts will be treated from all purposes of this Agreement as
having been paid to the former holder of the Company Common Stock in
respect of whom such deduction and withholding were made by Parent or the
Exchange Agent.
1.13 FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms of this Article I
(including any cash paid in respect thereof) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged
as provided in this Article I.
1.14 CLOSING. Unless this Agreement shall have been terminated and
the transactions contemplated by this Agreement abandoned pursuant to the
provisions of Article VIII, and subject to the provisions of Article VI,
the closing of the Merger (the "Closing") will take place at 10:00 a.m.
(New York time) on a date (the "Closing Date") to be mutually agreed upon
by the parties hereto, which date shall be not later than the third
Business Day after all the conditions set forth in Article VI shall have
been satisfied (or waived in accordance with Section 8.5, to the extent the
same may be waived), unless another time and/or date is agreed to in
writing by the parties. The Closing shall take place at the offices of
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP ("OHS"), 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another place is agreed to in writing by the parties. As
used herein, the term "Business Day" shall mean any day other than a
Saturday, Sunday or day on which banks are permitted to close in the State
of New York or in the State of Delaware.
1.15 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of Company Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common
Stock and cash for fractional shares, if any, as may be required pursuant
to Section 1.11; 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 Certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.16 TAX CONSEQUENCES. For federal income tax purposes, the parties
intend that the Merger be treated as a reorganization within the meaning of
Section 368(a) of the Code, and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for purposes of Section 368 of
the Code. The parties shall not take a position on any Tax Return
inconsistent with this Section 1.16.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Sub, except as disclosed in the disclosure schedule dated the date hereof,
certified by the Chief Executive Officer of the Company and delivered by
the Company to Parent and Merger Sub simultaneously herewith (which
disclosure schedule shall contain specific references to the
representations and warranties to which the disclosures contained therein
relate) (the "Company Disclosure Schedule") as follows:
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation or organization and
has all the requisite corporate power and authority, and is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders ("Company Approvals")
necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing
or to have such power, authority and Company Approvals would not, either
individually or in the aggregate, have a Material Adverse Effect. Each of
the Company and each of its Subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect.
(b) A true and complete list of all of the Company's
Subsidiaries, together with the jurisdiction of incorporation of each
Subsidiary, is set forth in Section 2.1(b) of the Company Disclosure
Schedule. Except as set forth in Section 2.1(b) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary directly or indirectly
owns any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, directly or indirectly, any equity or
similar interest in, any Person.
2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and By-laws, or equivalent organizational
documents, as amended or restated to the date hereof, of the Company and
each of its Subsidiaries. Such Certificate of Incorporation, By-laws and
equivalent organizational documents of the Company and each of its
Subsidiaries are in full force and effect.
2.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Class A Company Common Stock, 10,000,000 shares of
Class B Company Common Stock and 5,000,000 shares of preferred stock, par
value $0.01 per share (the "Company Preferred Stock"). As of the date
hereof, (i) 5,333,185 shares of Class A Company Common Stock and (ii)
7,080,053 shares of Class B Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights of any
Person, and (iii) no shares of Company Preferred Stock were issued or
outstanding; (iv) 421,900 shares of Company Common Stock were held in the
treasury of the Company; (v) no shares of Company Common Stock were held by
Subsidiaries of the Company; (vi) 1,400,000 shares of Class A Company
Common Stock were duly reserved for future issuance pursuant to employee
stock options granted pursuant to the Plan; and (vii) 7,080,053 shares of
Class A Company Common Stock were duly reserved for future issuance upon
conversion of shares of Class B Company Common Stock pursuant to the
Certificate of Incorporation of the Company. Except as set forth in the
immediately preceding sentence, the Company has no shares of capital stock
issued and outstanding or reserved for issuance. The rights and privileges
of the Class B Company Common Stock are set forth in the Certificate of
Incorporation of the Company, except such rights and privileges, if any, as
may be conferred under Delaware Law. As of the date hereof, the Class A
Company Common Stock is a designated security of the Nasdaq National
Market, and the Company and the Class A Company Common Stock satisfy the
criteria required to be satisfied in order to maintain the Class A Company
Common Stock as such a designated security and the Company has no Knowledge
of any basis for the termination of such designation or the taking of any
action by another Person for the purpose of terminating such designation.
(b) Except as described in Section 2.3(a) of the Company
Disclosure Schedule, there are no options, warrants or other rights, calls,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any of its Subsidiaries
or obligating the Company or any of its Subsidiaries or which any thereof
is bound to issue or sell any shares of capital stock of or other equity
interests in, or any securities convertible into or exercisable or
exchangeable for, or representing the right to purchase or otherwise
receive, directly or indirectly, any such capital stock or other equity
interest, or other arrangement to acquire, at any time or under any
circumstance, capital stock of or other equity interest in the Company or
any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant any lien on any shares of capital stock of, or other
equity interests in, the Company or any its subsidiaries. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such Subsidiary or any
other entity. Except as described in Section 2.3(a) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each
of the Company's direct and indirect Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights of any Person or entity and
all such shares are owned by the Company free and clear of all security
interests, liens, claims, pledges, restrictions, agreements, limitations in
the Company's voting rights, charges or other encumbrances of any nature
whatsoever. Except as disclosed in Section 2.3 of the Company Disclosure
Schedule, no holder of Company securities has any contractual right to
include any such securities in any registration statement proposed to be
filed by Parent under the Securities Act. Each of the Stockholders (as
defined in the Stockholders Agreement) is the record owner of the number of
shares of Company Common Stock set forth opposite its name on Schedule A of
the Stockholders Agreement. The Company has no Knowledge that any of such
Stockholders has appointed or granted any proxy with respect to any of the
shares of Company Common Stock owned by it, which appointment or grant
remains effective.
(c) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound with respect to the voting of any shares of capital
stock of the Company or any of its Subsidiaries.
(d) As promptly as practicable after the execution and
delivery of this Agreement and the Related Agreements, the Company shall
deliver instructions to the transfer agent for the Company Common Stock for
the purposes of effectuating the restrictions on transfer contemplated by
the Related Agreements and ensuring that the legends contemplated
thereunder are placed on certificates for Company Common Stock contemplated
by the Related Agreements.
(e) Reference is made to the Registration Rights Agreement
dated as of May 20, 1994 (the "Registration Rights Agreement"), among the
Company and the parties thereto. No shares of capital stock or other
securities that would constitute "Registerable Securities" (as defined in
the Registration Rights Agreement) have been issued by the Company in a
private placement or other transaction exempt from the registration
requirements of the Securities Act to any of the other parties to the
Registration Rights Agreement (other than the Company) since the date of
the Registration Rights Agreement.
(f) The Company's Form S-8 on file with the SEC with
respect to the Plan and all Company Options thereunder is currently and
through the Effective Time will remain, effective.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this
Agreement and the Option Agreement and to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Company of this Agreement and
the Option Agreement, the performance of its obligations hereunder and
thereunder, and the consummation by the Company of the transactions
contemplated hereby, have been duly and validly authorized by all corporate
action and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority (by voting power)
of the outstanding shares of Company Common Stock in accordance with
Delaware Law and the Company's Certificate of Incorporation and By-laws).
This Agreement and the Option Agreement have been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery thereof by Parent and Merger Sub, constitutes a legal, valid
and binding obligation of the Company.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery by the Company of this
Agreement and the Option Agreement do not, and the performance of this
Agreement and the Option Agreement will not, conflict with or violate the
Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company or any of its Subsidiaries or subject to Section
2.5(b), conflict with or violate any Law in each case applicable to the
Company or any of its Subsidiaries or by which its or any of their
respective properties is bound or affected, or result in any breach or
violation of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give rise to any loss of
any material right or benefit under, or increase any obligation of the
Company under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or its or any of their
respective properties is bound or affected, except (i) as contemplated by
Section 2.6 hereof or (ii) for any such conflicts, breaches, violations,
defaults or other occurrences that would not (A) in the aggregate, have a
Material Adverse Effect or (B) prevent or materially impair or delay the
consummation of the Merger. The Board of Directors of the Company has
directed that this Agreement be submitted to the stockholders of the
Company for their approval and adoption. The affirmative approval and
adoption, by vote or written consent, of the holders of Company Common
Stock representing a majority of the votes that may be cast by the holders
of all outstanding Company Common Stock (voting as a single class) is the
only vote of the holders of any class or series of capital stock of the
Company necessary to adopt this Agreement and approve the Merger. Prior to
the execution and delivery of this Agreement, the Board of Directors of the
Company has taken all requisite action to cause this Agreement and the
transactions contemplated hereby to be exempt from the provisions of
Section 203 of Delaware Law.
(b) The execution and delivery by the Company of this
Agreement and the Option Agreement does not, and the performance by the
Company of this Agreement and the Option Agreement by the Company shall
not, require the Company or any of its Subsidiaries to (i) except as set
forth in Section 2.5 of the Company Disclosure Schedule, obtain any consent
or waiver of any Person or the consent, approval, authorization, license,
waiver, qualification, order or permit of any Court or Governmental
Authority required under any Law, Regulation or Order applicable to the
Company or any of its Subsidiaries, (ii) observe any waiting period imposed
by, or (iii) make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except for (A) compliance with
applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), state securities laws ("Blue Sky Laws") or the
pre-Merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) the filing and
recordation of appropriate Merger or other documents as required by
Delaware Law, (C) the filing of appropriate Merger or other documents as
required by the National Association of Securities Dealers, Inc. and the
Nasdaq National Market or (D) where the failure to obtain such consents,
approvals, authorizations, licenses, waivers, qualifications, orders or
permits, or to make such filings or notifications, would not (1) have, in
the aggregate, a Material Adverse Effect or (2) prevent or materially
impair or delay the consummation of the Merger.
2.6 MATERIAL AGREEMENTS; COMPLIANCE; PERMITS.
(a) Section 2.6(a) of the Company Disclosure Schedule sets
forth a true and complete list, as of the date hereof, of all contracts,
agreements and instruments to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may
be bound which is material to the Company and/or its Subsidiaries and all
agreements pursuant to which the Company or any subsidiary has granted
exclusive rights or have terms of one year or longer (collectively, the
"Material Agreements"). Each such Material Agreement is in full force and
effect, is a valid and binding obligation of the Company or such Subsidiary
and, to the Knowledge of the Company, of each other party thereto, and is
enforceable against the Company or such Subsidiary in accordance with its
terms and, to the Knowledge of the Company, enforceable against each other
party thereto, in each case except that the enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar law now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law), and
there has not occurred any default by the Company, or to the Knowledge of
the Company, by any party thereto which remains unremedied as of the date
hereof, in each case except as would not reasonably be expected to have a
Material Adverse Effect. No condition exists or event has occurred which
(whether with or without notice or lapse of time or both, or the happening
or occurrence of any other event) would constitute a default by the Company
or any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto under, or result in a right of termination of, any Material
Contract, except as would not reasonably be expected to have a Material
Adverse Effect.
(b) As of the date hereof, Section 2.6(b) of the Company
Disclosure Schedule sets forth a list, true and correct in all material
respects, of the number of theatre screens in respect of the teleticketing
agreements listed in Section 2.6(a) of the Company Disclosure Schedule.
(c) Section 2.6(a) of the Company Disclosure Schedule sets
forth a list, complete in all material respects, of all teleticketing,
sponsorship, three-digit code and online agreements as of the date hereof.
(d) Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which its or any of their respective properties is bound
or affected, or any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or its or any of their respective
properties is bound or affected, except for any such conflicts, defaults or
violations which would not, individually and in the aggregate, have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
in violation of any of the provisions of its Certificate of Incorporation
or By-laws or equivalent organizational documents.
(e) The Company and its Subsidiaries are in compliance with
the terms of the Company Approvals, except where the failure to so comply
would not, individually and in the aggregate, have a Material Adverse
Effect.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Except as set forth in Section 2.7(a) of the Company
Disclosure Schedule, the Company has timely filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission
("SEC") since December 31, 1995 (collectively, the "Company SEC Reports")
required to be filed by it pursuant to the federal securities Laws and the
SEC rules and Regulations promulgated thereunder. The Company SEC Reports
were prepared in accordance, and complied as of their respective filing
dates in all material respects, with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder and did not at the
time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) 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 therein, in
the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Company SEC Reports (i) complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, (ii) were prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis throughout the periods involved (except as may be expressly described
in the notes thereto) and (iii) fairly present the consolidated financial
position of the Company and its Subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial
statements included in the Company's Form 10-Q reports were or are subject
to normal and recurring year-end adjustments that are neither individually
or in the aggregate material.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in Section 2.8(a) of the Company
Disclosure Schedule, since September 30, 1998, the Company and its
Subsidiaries have conducted their businesses only in the ordinary and usual
course and in a manner consistent with past practice and, since such date,
there has not been any change, event, development or circumstance affecting
the Company or any of its Subsidiaries which, individually or in the
aggregate, has or is reasonably likely to have a Material Adverse Effect.
(b) Except as set forth in Section 2.8(b) of the Company
Disclosure Schedule, during the period from September 30, 1998 to the date
of this Agreement, except as disclosed in Section 2.8(b) of the Company
Disclosure Schedule or as may have been disclosed in the Company's SEC
Reports, there has not been any change by the Company in its accounting
methods, principles or practices, any revaluation by the Company of any of
its assets, including, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business,
and there has not been any other action or event, and neither the Company
nor any of its Subsidiaries has agreed in writing or otherwise to take any
other action, that would have required the consent of Parent pursuant to
Section 4.1 had such action or event occurred after the date of this
Agreement and prior to the Effective Time, or any condition, event or
occurrence which could reasonably be expected to prevent or materially
impair or delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
2.9 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (absolute,
accrued, fixed, contingent or otherwise), and to the Knowledge of the
Company there is no existing fact, condition or circumstance which could
reasonably be expected to result in such liabilities or obligations, which,
in each case, could reasonably be expected to have a Material Adverse
Effect, except liabilities or obligations (i) reflected in the Company SEC
Reports or (ii) incurred in the ordinary course of business consistent with
past practice since September 30, 1998 and not required under GAAP to be
reflected on a consolidated balance sheet of the Company.
2.10 ABSENCE OF LITIGATION.
(a) Except as described in Section 2.10 of the Company
Disclosure Schedule, there are no claims, actions, suits, or proceedings
or, to the Knowledge of the Company, investigations, pending on the date
hereof on behalf of or pending against or, and to the Knowledge of the
Company, no claims, actions, suits, proceedings or investigations,
threatened against the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, except for such claims, actions, suits,
proceedings or investigations that would not, if adversely determined, have
or be reasonably expected to have, individually and in the aggregate, a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate has, or which, insofar as reasonably can
be foreseen, in the future would have a Material Adverse Effect or would
prevent the Company from consummating the transactions contemplated by this
Agreement.
(b) The arbitration award in favor of the Company in the
action entitled Promofone, Inc. et. al. v. Pacer/CATS Corporation (the
"Award"), providing for monetary damages and certain injunctive relief in
favor of the Company, (a true and correct description of which action and
the status thereof is set forth in the Company's Form 10-Q for the quarter
ended September 30, 1998), is the subject of a valid, binding and
enforceable judgment of the Supreme Court of the State of New York
confirming the Award, and the Company has taken no action or failed to take
any action and, to the Knowledge of the Company, there is no other fact or
circumstance, that could reasonably be expected to impair or otherwise
prejudice its ability to collect the full amount of the monetary damages or
enforce to the full extent thereof the injunctive relief, in each case
provided for by the Award.
2.11 EMPLOYEE BENEFIT PLANS.
(a) Section 2.11(a) of the Company Disclosure Schedule
contains a list of all employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe
or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee of
the Company, or a Subsidiary thereof maintained, contributed to or
participated in by the Company or any trade or business (whether or not
incorporated) which is a member of a controlled group or which is under
common control with the Company (an "ERISA Affiliate") within the meaning
of Section 414 of the Code, or any Subsidiary of the Company (together, the
"Employee Plans"). The Company has delivered or made available to Parent
correct and complete copies of (a) the plan documents and summary plan
descriptions, (b) the most recent determination letter received from the
IRS, (c) the most recent Form 5500 Annual Report, (d) the most recent
accounting statement and actuarial valuation, and (e) all related
agreements, insurance contracts and other agreements which implement each
such Employee Plan.
(b) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule, none of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any Person; there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Employee Plan,
which could result in any material liability of the Company or any of its
Subsidiaries; all Employee Plans are in compliance in all material respects
with the requirements prescribed by any and all statutes (including ERISA
and the Code), orders, or governmental rules and regulations currently in
effect with respect thereto (including all applicable requirements for
notification, reporting and disclosure to participants or the Department of
Labor, Internal Revenue Service or Secretary of the Treasury), and the
Company and each of its Subsidiaries and ERISA Affiliates have performed
all material obligations required to be performed by them under, are not in
any material respect in default under or violation of, and have no
Knowledge of any default or violation by any other party to, any of the
Employee Plans; each Employee Plan intended to qualify under Section 401(a)
of the Code and each corresponding trust exempt under Section 501 of the
Code has received a favorable determination letter from the Internal
Revenue Service (the "IRS"), and nothing has occurred which may reasonably
be expected to cause the loss of such qualification or exemption; all
contributions required to be made to any Employee Plan pursuant to Section
412 of the Code, the terms of the Employee Plan or any collective
bargaining agreement, have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Employee Plan
for the current plan years; no Employee Plan is a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) and neither the Company nor
any Subsidiary or ERISA Affiliate has contributed to or had an obligation
to contribute to any multiemployer plan during the five year period ending
on the date hereof; and no Employee Plan is a "single-employer plan under
multiple controlled groups" as described in Section 4063 of ERISA.
(c) With respect to each Employee Plan that is an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA) and
subject to Title IV of ERISA, other than a multiemployer plan or a "single
employer plan" under multiple controlled groups, (i) no notice of intent to
terminate any such plan has been filed and no amendment to treat any such
plan as terminated has been adopted; (ii) the PBGC has not instituted
proceedings to terminate any such plan; (iii) no other event or condition
has occurred which could reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination, or the appointment of a trustee
to administer, any such plan; (iv) no accumulated funding deficiency,
whether or not waived, exists with respect to any such plan, and no
condition has occurred or exists which by the passage of time would be
expected to result in an accumulated funding deficiency as of the last day
of the current plan year of any such plan; (v) all required premium
payments to the PBGC have been paid when due; (vi) no reportable event (as
described in Section 4043 of ERISA) has occurred with respect to any such
plan (excluding events for which the 30-day notice has been waived); (vii)
no amendment with respect to which security is required under Section 307
of ERISA has been made or is reasonably expected to be made; and (viii) all
costs of any such plan have been provided for on the basis of consistent
methods in accordance with sound actuarial assumptions and practices. Since
the last valuation date of each such plan, there has been no amendment or
change to such plan that would materially increase the amount of benefits
thereunder and, to the Knowledge of the Company, there has been no event or
occurrence that would cause the excess of assets over benefit liabilities
as listed to be reduced or the amount by which benefit liabilities exceed
assets as listed to be increased.
(d) Section 2.11(d) of the Company Disclosure Schedule sets
forth a list of each current or former employee, officer, director or
investor of the Company or any of its Subsidiaries who holds, as of the
date of this Agreement, any option, warrant or other right to purchase
Company Common Stock or Company Preferred Stock, if any, together with the
number of shares of Company Common Stock or Company Preferred Stock, if
any, subject to such option, warrant or right, the date of grant or
issuance of such option, warrant or right, the extent to which such option,
warrant or right is vested and/or exercisable, the exercise price of such
option, warrant or right, whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code,
and the expiration date of each such option, warrant and right. Section
2.11(e) of the Company Disclosure Schedule also sets forth the total number
of such options, warrants and rights. True and complete copies of each
agreement (including all amendments and modifications thereto) between the
Company and each holder of such options, warrants and rights relating to
the same have been furnished to Parent and are listed on Section 2.11(e) of
the Company Disclosure Schedule.
2.12 LABOR MATTERS. Except as set forth in Section 2.12 of the
Company Disclosure Schedule, there are no controversies pending or, to the
Knowledge of the Company, threatened, between the Company or any of its
Subsidiaries and any of their respective employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect;
neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its Subsidiaries nor to the Knowledge of
the Company are there any activities or proceedings of any labor union to
organize any such employees; and, the Company has no Knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any employees of the Company or any of its Subsidiaries
which have had a Material Adverse Effect. The Company does not have nor at
the Effective Time will the Company have any obligation under the Worker
Adjustment and Retraining Notification Act (the "WARN Act").
2.13 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Company for inclusion in the Registration
Statement will not at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective, 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 were made, not
misleading. The information supplied by the Company for inclusion in the
proxy statement/prospectus to be sent to the stockholders of the Company in
connection with the meeting of the Company's stockholders to consider the
Merger (the "Company Stockholders' Meeting") (such proxy
statement/prospectus, as amended or supplemented, is referred to herein as
the "Proxy Statement") will not, on the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to Company
stockholders, at the time of the Company Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact
necessary in order to make the statements made therein not false or
misleading in light of the circumstances under which they were made, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. If at
any time prior to the Effective Time any event relating to the Company or
any of its respective Affiliates, officers or directors should be
discovered by the Company which should be set forth in an amendment to the
Registration Statement or an amendment or supplement to the Proxy
Statement, the Company shall promptly inform Parent and Merger Sub.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub
which is contained in any of the foregoing documents. The Proxy Statement
shall comply in all material respects as to form and substance with the
requirements of the Exchange Act and the Regulations promulgated
thereunder.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
Section 2.14 of the Company Disclosure Schedule, there is no Material
Agreement, judgment, injunction, order or decree binding upon the Company
or any of its Subsidiaries or any of their properties which has had or
could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted or as proposed to be conducted by the
Company.
2.15 TITLE TO PROPERTY. Except as described in Section 2.15 of the
Company Disclosure Schedule, the Company owns no real property. Section
2.15 of the Company Disclosure Statement sets forth a true and complete
list of all real property leased by the Company or any of its Subsidiaries,
and the aggregate monthly rental or other fee payable under such lease as
of the date hereof. Except as described in Section 2.15 of the Company
Disclosure Schedule, the Company and each of its Subsidiaries have good and
valid title to, or a valid leasehold interest in all of their properties
and assets necessary to conduct the business as presently conducted,
including properties and assets reflected on the September 30, 1998 balance
sheet of the Company included in the Company's Form 10-Q for the quarter
ended September 30, 1998, free and clear of all liens, charges and
encumbrances, except liens for Taxes not yet due and payable or are being
contested in good faith by appropriate proceedings (and such amount is
adequately provided for in accordance with GAAP) and such liens or other
imperfections of title, if any, as do not materially detract from the value
of or interfere with the present use of the property affected thereby or
which, individually or in the aggregate, would not have a Material Adverse
Effect; and all leases pursuant to which the Company or any of its
Subsidiaries lease from others real or personal property are in good
standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event
of default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which the Company or such
subsidiary has not taken adequate steps to prevent such a default from
occurring), except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default would
not have a Material Adverse Effect.
2.16 TAXES. For purposes of this Agreement, "Tax" or "Taxes" shall
mean taxes and governmental impositions of any kind in the nature of (or
similar to) taxes, payable to any federal, state, local or foreign taxing
authority, including income, franchise, profits, gross receipts, ad
valorem, custom duties, alternative or add-on minimum taxes, estimated,
environmental, disability, registration, value added, sales, use, service,
real or personal property, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest,
penalties and additions to tax imposed with respect thereto; and "Tax
Returns" shall mean returns, reports and information statements, including
any schedule or attachment thereto, with respect to Taxes required to be
filed with the Internal Revenue Service or any other governmental or taxing
authority or agency, domestic or foreign, including consolidated, combined
and unitary tax returns. Except as set forth in Section 2.16 of the Company
Disclosure Schedule and, for all subsections of this Section 2.16 except
for subsections (d), (f) and (h), except as would not, individually or in
the aggregate, have a Material Adverse Effect:
(a) All federal, state, local and foreign Tax Returns
required to be filed (taking into account extensions) by or on behalf of
the Company, each of its Subsidiaries, and each affiliated, combined,
consolidated or unitary group of which the Company or any of its
Subsidiaries is or has been a member have been timely filed, and all such
Tax Returns are true, complete and correct.
(b) All Taxes payable by or with respect to the Company and
each of its Subsidiaries have been timely paid, or are adequately reserved
for (rather than reserves for deferred Taxes established to reflect timing
differences between book and Tax treatment) in accordance with GAAP on the
respective company's Balance Sheet. Neither the Company nor any of its
Subsidiaries has incurred a Tax liability from the date of the latest
Balance Sheet other than a Tax liability in the ordinary course of
business.
(c) Neither the Company nor any of its Subsidiaries has
granted in writing any waiver of any federal, state, local or foreign
statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax. No deficiencies for any Taxes have been
asserted or assessed in writing (or to the Knowledge of the Company,
orally) against the Company or any of its Subsidiaries that are not
adequately reserved for in accordance with GAAP on the respective company's
Balance Sheet.
(d) Neither the Company nor any of its
Subsidiaries has made an election under Section 341(f) of the Code.
(e) The Company and its Subsidiaries have not made any
payments, are not obligated to make any payments, and are not a party to
any agreements that under any circumstances could obligate any of them to
make any payments that will not be deductible under Section 280G of the
Code.
(f) All stockholders who beneficially own Class B Company
Common Stock with a fair market value greater than the fair market value of
5% of the outstanding Class A Company Common Stock are United States
persons (within the meaning of Section 7701 (a)(30) of the Code).
(g) Other than with respect to its Subsidiaries, the Company
is not and has never been a member of an affiliated, consolidated, combined
or unitary group, and neither the Company nor any of its Subsidiaries is a
party to any Tax allocation or sharing agreement (other than any agreement
between or among the Company and its Subsidiaries) or has a liability for
Taxes with respect to the acquisition of assets, however effected, of
PromoFone, Inc. Teleticketing Services, Inc. and Teleticketing Company, L.P.
(h) Section 2.16 of the Company Disclosure Schedule sets
forth the tax years and any Tax Returns currently under examination by any
Governmental Authority with respect to the Company or any of its
Subsidiaries. The U.S. federal income Tax Returns of the Company and each
of its Subsidiaries consolidated in such Tax Returns through December 31,
1994 have closed by virtue of the applicable statute of limitations.
(i) The Company and each of its Subsidiaries have complied
with all applicable Laws relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441, 1442 and 3406 of the Code or similar provisions under any foreign
Laws) and have, within the time and in the manner required by Law, withheld
from employee wages and paid over to the proper Governmental Authorities
all amounts required to be so withheld and paid over under all applicable
Laws.
2.17 ENVIRONMENTAL MATTERS. The Company currently is and, to its
Knowledge, always has been in material compliance with all Federal, state
and local laws, ordinances, regulations and orders relating to the
protection of the environment applicable to its properties, facilities or
operations.
2.18 BROKERS. Except as set forth in Section 2.18 of the Company
Disclosure Schedule, no, broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent
a complete and correct copy of all agreements between the Company and
investment bankers set forth in Section 2.18 of the Company Disclosure
Schedule pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
2.19 INTELLECTUAL PROPERTY.
(a) Section 2.19(a) of the Company Disclosure Schedule sets
forth, for the Intellectual Property owned by the Company or its
Subsidiaries, a complete and accurate list of all United States and foreign
(a) patents and patent applications; (b) Trademark registrations (including
Internet domain registrations) and applications and material unregistered
Trademarks; (c) copyright registrations and applications, and material
unregistered copyrights, indicating for each, the applicable jurisdiction,
registration number (or application number), and date issued (or date
filed).
(b) Section 2.19(b) of the Company Disclosure Schedule sets
forth a complete and accurate list of all written and material oral license
agreements granting any right to use or practice any rights under any
Intellectual Property, whether the Company or any of its Subsidiaries is
the licensee or licensor thereunder, and any assignments, consents,
forbearances to xxx, judgments, Orders, settlements or similar obligations
relating to any Intellectual Property to which the Company or any of its
Subsidiaries is a party or otherwise bound (other than off-the-shelf
software applications programs having an acquisition price of less than
$5,000) (collectively, the "License Agreements"), indicating for each the
title, the parties, date executed, whether or not it is exclusive and the
Intellectual Property covered thereby. The License Agreements are valid and
binding obligations of Company or its Subsidiaries, enforceable in
accordance with their terms, and there exists no event or condition which
will result in a material violation or breach of, or constitute (with or
without due notice or lapse of time or both) a material default by the
Company or its Subsidiaries under any such License Agreement.
(c) No royalties, honoraria or other fees are payable to any
third parties for the use of or right to use any Intellectual Property
except pursuant to the License Agreements set forth in Section 2.19(c) of
the Company Disclosure Schedule.
(d) Except as has not had, nor is not reasonably likely to
have, a Material Adverse Effect, and except as set forth in Section 2.19(d)
of the Company Disclosure Schedule:
(i) the Company or its Subsidiaries exclusively own,
free and clear of all Liens, all owned Intellectual Property, and have a
valid, enforceable right to use all of the licensed Intellectual Property;
(ii) the Company has taken reasonable steps
to protect the Intellectual Property;
(iii) the conduct of the Company's and its
Subsidiaries' businesses as currently conducted or planned to be conducted
does not infringe upon any Intellectual Property rights (other than
patents) of or controlled by any third party nor, to the Knowledge of the
Company, infringe any patent owned by or controlled by any third party;
(iv) except as set forth on Section 2.19(d)(iv) of the
Company Disclosure Schedule, there is no Litigation pending, or to the
Company's Knowledge, threatened (A) alleging that the Company's activities
or the conduct of its businesses or that of any of its Subsidiaries
infringes upon, violates, or constitutes the unauthorized use of the
Intellectual Property rights of any third party or (B) challenging the
ownership, use, validity or enforceability of any Intellectual Property;
(v) to the Knowledge of the Company, no third party is
misappropriating, infringing, diluting, or violating any Intellectual
Property owned by the Company or any of its Subsidiaries and, except as set
forth on Section 2.19(d)(v) of the Company Disclosure Schedule, no such
claims have been brought against any third party by the Company or any of
its Subsidiaries; and
(vi) the consummation of the transactions contemplated
hereby will not result in the loss or impairment of the Company's or any of
its Subsidiaries' right to own or use any of the Intellectual Property, nor
will they require the consent of any Governmental Authority or third party
in respect of any such Intellectual Property.
(e) Section 2.19(e)(i) of the Company Disclosure Schedule
lists all Software material (either singly or in the aggregate) to the
business of the Company (other than off-the-shelf software applications
programs having an acquisition price of less than $5,000) which are owned,
licensed to or by the Company or any of its Subsidiaries, leased to or by
the Company or any of its Subsidiaries, or otherwise used by the Company or
any of its Subsidiaries, and identifies which Software is owned, licensed,
leased or otherwise used, as the case may be. Section 2.19(e)(ii) of the
Company Disclosure Schedule lists all Software sold, licensed, leased or
otherwise distributed by the Company or any of its Subsidiaries to any
third party, and identifies which Software is sold, licensed, leased, or
otherwise distributed as the case may be. The Software set forth in Section
2.19(e)(i)-(ii) of the Company Disclosure Schedule which the Company or any
of its Subsidiaries purports to own that is or could reasonably be expected
to be, either individually or in the aggregate, material to the conduct of
the business of the Company, was either developed (i) by employees of
Company or any of its Subsidiaries within the scope of their employment;
(ii) by independent contractors who have assigned their rights to Company
or any of its Subsidiaries pursuant to enforceable written agreements; or
(iii) has otherwise been rightfully assigned. Neither Pacer/Cats,
Falconwood nor any Subsidiaries or Affiliates thereof have a right or
license to use the Software other than as listed in Section 2.19(e)(ii) of
the Company Disclosure Schedule. For purposes of this Section 2.19(e),
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether
in source code or object code, (ii) databases and compilations, including
any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, (iv) the
technology supporting any Internet site(s) operated by or on behalf of
Company or any of its Subsidiaries, and (v) all documentation, including
user manuals and training materials, relating to any of the foregoing.
(f) All Trademarks material to the conduct of the business
of the Company have been in continuous use by the Company or its
Subsidiaries. To the Knowledge of the Company and its Subsidiaries, there
has been no prior use of such Trademarks by any third party which would
confer upon said third party superior rights in such Trademarks; and the
registered Trademarks have been continuously used in the form appearing in,
and in connection with the goods and services listed in, their respective
registration certificates or identified in their respective pending
applications.
(g) The Company has taken reasonable steps in accordance
with normal industry practice to protect the Company's rights in Trade
Secrets of the Company. Without limiting the foregoing, the Company has and
enforces a policy of requiring each employee, consultant and contractor to
execute proprietary information, confidentiality and assignment agreements
substantially consistent with the Company's standard forms thereof
(complete and current copies of which have been delivered to the Parent).
Except under confidentiality obligations, there has been no material
disclosure of any Company or Subsidiary confidential information or Trade
Secrets.
(h) All Software owned by the Company or any of its
Subsidiaries, and all Software licensed from third parties by the Company
or any of its Subsidiaries, is free from any significant software defect or
programming or documentation error, operates and runs in a reasonable and
efficient business manner, to the Knowledge of the Company conforms to the
specifications thereof, if applicable and, with respect to the Software
owned by the Company or any of its Subsidiaries, the applications can be
compiled from their associated source code without undue burden, if the
failure to be able to do or the existence of which could reasonably be
expected to have a Material Adverse Effect. The Company has or at the
Effective Time will have all material documentation relating to use,
maintenance and operation of the Software used in the conduct of business
of the Company.
(i) Except as set forth in Section 2.19(i) of the Company
Disclosure Schedule, the disclosure under the heading "Other Matters"
contained in the Company's Quarterly Report on Form 10-Q for the period
ending September 30, 1998 is accurate and in compliance with applicable Law
in all material respects.
(j) For purposes of this Section 2.19, Material Adverse
Effect shall include a material adverse effect on the proprietary software
and system of the Company known as MARS.
2.20 INSURANCE. Section 2.20 of the Company Disclosure Schedule sets
forth a true and complete list of all material insurance policies and
fidelity bonds covering the assets, business, equipment, properties,
operations, employees, officers and directors of the Company and its
Subsidiaries. There is no claim by the Company or any of its Subsidiaries
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or
bonds, other than any claim which will not have a Material Adverse Effect.
All premiums currently due and payable under all such policies and bonds
have been paid and the Company and its Subsidiaries are otherwise in full
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). Except as set
forth in Section 2.20 of the Company Disclosure Schedule, to the Knowledge
of the Company, such policies of insurance and bonds are of the type and in
amounts customarily carried by Persons conducting businesses similar to
those of the Company and its Subsidiaries and amounts reasonable in light
of the assets of the Company and its Subsidiaries. To the Knowledge of the
Company as of the date hereof, there is not any threatened termination of
or material premium increase with respect to any of such policies or bonds.
2.21 NO RESTRICTIONS ON THE MERGER. The Board of Directors of the
Company has, prior to the date hereof, approved the execution and delivery
by the Company of this Agreement and the Option Agreement and the entry by
certain stockholders of the Company into the Stockholders Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement, the Option Agreement and the Stockholders Agreement. Together
with the corporate proceedings referred to in Section 2.4, such approval is
sufficient to render inapplicable to this Agreement, the Option Agreement
and the Stockholders Agreement and the transactions contemplated hereby and
thereby, including the Merger, the provisions of Section 203 of the
Delaware Law. No provision of the Certificate of Incorporation, By-laws or
other governing instruments of the Company or any of its Subsidiaries (i)
restricts or impairs the ability of Parent to vote or otherwise exercise
the rights of a stockholder with respect to securities of the Company or
the Surviving Corporation that may be acquired or controlled by Parent or
(ii) except for the Plan, entitles any Person to acquire securities of the
Company or the Surviving Corporation on a basis which will not be available
to Parent after the Effective Time, as a result of the consummation of the
transactions contemplated by this Agreement, the Stockholders Agreement or
the Option Agreement or the acquisition of securities of the Company or the
Surviving Corporation by Parent or Merger Sub.
2.22 POOLING; TAX MATTERS. To the Knowledge of the Company, neither
the Company nor any of its Affiliates has taken or agreed to take any
action or failed to take any action that would prevent the Merger from
being treated for financial accounting purposes as a "pooling of interests"
in accordance with GAAP and the Regulations and interpretations of the SEC
(a "Pooling"). To the Knowledge of the Company, neither the Company nor any
of its Affiliates has taken or agreed to take any action, failed to take
any action or knows of any fact, agreement, plan or other agreement that is
reasonably likely to prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
2.23 AFFILIATES. Section 2.23 of the Company Disclosure Schedule
contains a true and complete list of all Persons who, to the Knowledge of
the Company, may be deemed to be Affiliates of the Company, excluding all
its Subsidiaries but including all directors and executive officers of the
Company.
2.24 CERTAIN BUSINESS PRACTICES. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries nor any director, officer,
employee or agent of the Company or any of its Subsidiaries has in any
material respect (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity,
(ii) made any unlawful payment to any foreign or domestic government
official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) consummated any transaction, made any payment,
entered into any agreement or arrangement or taken any other action in
violation of Section 1128B(b) of the Social Security Act, as amended, or
(iv) made any other unlawful payment.
2.25 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
Company SEC Reports and Section 2.25 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is indebted to any
director, officer, employee or agent of the Company or any of its
Subsidiaries (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such Person is indebted to the
Company or any of its Subsidiaries (other than in respect of loans or
advances in the ordinary course of business to employees in excess of
$5,000 per employee or $100,000 in the aggregate), and there have been no
other transactions of the type required to be disclosed pursuant to Items
402 and 404 of Regulation S-K under the Securities Act and the Exchange Act
since January 1, 1996.
2.26 INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS. Neither the
Company nor its Subsidiary is currently a party to or currently engaged in,
or is party to a current agreement or has agreed to enter into, any
interest rate swaps, caps, floors or option agreements or any other
interest rate risk management arrangement or foreign exchange contracts.
2.27 OPINION OF FINANCIAL ADVISOR. The Company has been advised by
its financial advisor, SalomonSmithBarney, substantially to the effect
that, in its opinion, as of the date hereof, the consideration to be
received by the stockholders of the Company in the Merger is fair to such
stockholders of the Company from a financial point of view, a copy of which
has been provided to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company that:
3.1 ORGANIZATION AND QUALIFICATION, SUBSIDIARIES.
(a) Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has all the
requisite corporate power and authority, and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Parent Approvals") necessary to own,
lease and operate its respective properties and to carry on its business as
it is now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority and Parent
Approvals would not, individually or in the aggregate, have a Material
Adverse Effect. Each of Parent and Merger Sub is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect.
(b) Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated hereby and has engaged in no other
business other than incident to its creation and this Agreement and the
transactions contemplated hereby.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Parent consists of (i) 1,800,000,000 shares of Parent Common Stock
of which, as of November 17, 1998, 459,333,610 shares were issued and
outstanding, and (ii) 5,000,000 shares of preferred stock, par value $.01
per share, of which none are issued or outstanding. All of the outstanding
shares of Parent Common Stock are, and all shares to be issued as part of
the Merger Consideration will be, when issued in accordance with the terms
hereof, duly authorized, validly issued, fully paid and nonassessable.
3.3 AUTHORIZATION OF AGREEMENT. Each of Parent and Merger Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered
by it at the Closing, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by each of Parent and Merger Sub of this Agreement
and each instrument required hereby to be executed and delivered by the
Parent and Merger Sub at the Closing and the performance of their
respective obligations hereunder and thereunder have been duly and validly
authorized by the Board of Directors of each of Parent and Merger Sub and
by Parent as the sole stockholder of Merger Sub. Except for filing of the
Certificate of Merger, no other corporate proceedings on the part of Parent
or Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms.
3.4 APPROVALS. Except as required under Parent's Senior Secured
Revolving Line of Credit facility effective November 25, 1997 with Chase
Manhattan Bank N.A. and Dai-Ichi Kangyo as co-agent, the execution and
delivery by Parent and Merger Sub of this Agreement do not, and the
performance by Parent and Merger Sub of this Agreement shall not, require
Parent or Merger Sub to (i) obtain any consent, approval, authorization,
license, waiver, qualification, order or permit of, (ii) observe any
waiting period imposed by or (iii) require the Company to make any filing
with or notification to, any governmental or regulatory authority, domestic
or foreign, except (A) for compliance with applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws or the pre-Merger
notification requirements of the HSR Act, (B) for the filing and
recordation of appropriate Merger or other documents as required by
Delaware Law, (C) for the filing of appropriate Merger or other documents
as required by the New York Stock Exchange, or (D) where the failure to
obtain such consents, approvals, authorizations, licenses, waivers,
qualifications, orders or permits, or to make such filings or
notifications, would not (1) have, in the aggregate, a Material Adverse
Effect or (2) prevent or materially impair or delay the consummation of the
Merger.
3.5 NO VIOLATION. Parent and Merger Sub are not in, and the execution
and delivery by Parent and Merger Sub of this Agreement does not, and the
performance of this Agreement by Parent or Merger Sub will not, conflict
with or violate the Certificate of Incorporation or By-laws of Parent or
Merger Sub, conflict with or violate any Law, in each case applicable to
Parent or Merger Sub or by which its or any of their respective properties
is bound or affected, or result in any breach or violation of or constitute
a default (or an event that with notice or lapse of time or both would
become a default) under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Parent or Merger Sub is a party or by which Parent
or Merger Sub or any of their respective properties is bound or affected,
except, for any such conflicts, breaches, violations, defaults or other
occurrences that would not (1) have, in the aggregate, a Material Adverse
Effect or (2) prevent or materially impair or delay the ability of the
Parent or Merger Sub to perform their respective obligations hereunder.
3.6 REPORTS.
(a) Parent has timely filed all forms, reports and documents
required to be filed with the SEC since January 1, 1997 (collectively, the
"Parent SEC Reports") required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations promulgated thereunder.
The Parent SEC Reports were prepared in accordance, and complied as of
their respective filing dates in all material respects, with the
requirements of the Exchange Act and the rules and Regulations promulgated
thereunder and did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) 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 therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Parent SEC Reports (i) complied in all material respects with applicable
accounting requirements and the published rules and Regulations of the SEC
with respect thereto, (ii) were prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis throughout the periods involved (except as
may be expressly described in the notes thereto) and (iii) fairly presents
the consolidated financial position of the Parent as at the respective
dates thereof and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements included in the Company's Form 10-Q reports were or are subject
to normal and recurring year-end adjustments that have not been and are not
expected to be material in amount to the Parent.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998,
there has not occurred any event, development or change which, individually
or in the aggregate, has resulted in or could reasonably be expected to
result in a Material Adverse Effect.
3.8 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by Parent for inclusion in the Registration Statement
shall not, at the time the Registration Statement (including any amendments
or supplements thereto) is declared effective by the SEC, 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 were made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to the
Company's stockholders, at the time of Company Stockholders' Meeting and at
the Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not false or misleading; or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. The
Registration Statement will comply as to form in all material respects with
the provisions of the Securities Act. Notwithstanding the foregoing, Parent
makes no representation, warranty or covenant with respect to any
information supplied by the Company which is contained in any of the
foregoing documents.
3.9 POOLING; TAX MATTERS. To the Knowledge of Parent, neither Parent
nor any of its Affiliates has taken or agreed to take any action or failed
to take any action that would prevent the Merger from being treated as a
Pooling. To the Knowledge of Parent, neither Parent nor any of its
Affiliates has taken or agreed to take any action, failed to take any
action, or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE Merger. The
Company covenants and agrees that, between the date of this Agreement and
the Effective Time, except as expressly required or permitted by this
Agreement or unless Parent shall otherwise agree in writing, the Company
shall conduct and shall cause the businesses of its Subsidiaries to be
conducted, only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use its commercially
reasonable efforts to preserve intact the business organization of the
Company and its Subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its Subsidiaries, to
maintain in effect Material Agreements and to preserve the present
relationships of the Company and its Subsidiaries with theatres/exhibitors,
movie studios, advertisers, sponsors, customers, suppliers and other
Persons with which the Company or any of its Subsidiaries has business
relations. By way of amplification and not limitation, except as
contemplated by this Agreement, neither the Company nor any of its
Subsidiaries shall, between the date of this Agreement and the Effective
Time, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change the Certificate of
Incorporation or By-laws or equivalent organizational document of the
Company or any of its Subsidiaries or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of the Company or any of its Subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest of the Company, any of its
Subsidiaries or Affiliates (except for the issuance of shares of Company
Common Stock issuable pursuant to employee stock options granted prior to
the date hereof under the Plan, which options are outstanding on the date
hereof), or any assets of the Company or any of its Subsidiaries (except
for sales, transfers or other disposition of assets in the ordinary course
of business and in a manner consistent with past practice);
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock (except that a wholly owned
Subsidiary of the Company may declare and pay a dividend to its parent)
split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or amend the terms of,
repurchase, redeem or otherwise acquire, or permit any Subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its Subsidiaries;
(d) sell, transfer, license, sublicense or otherwise dispose
of any Intellectual Property rights, or amend or modify in any material way
any existing agreements with respect to any Intellectual Property rights
(except in the ordinary course of business in a manner consistent with past
practice);
(e) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, limited liability company, partnership,
joint venture or other business organization or division thereof; incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of the Company's Subsidiaries
entered into in the ordinary course of business) or endorse or otherwise as
an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except in the ordinary course of business
consistent with past practice and as otherwise permitted under any loan or
credit agreement to which the Company is a party; authorize any capital
expenditures which are, in the aggregate, in excess of $1,500,000 for the
Company and its Subsidiaries taken as a whole; or enter into or amend in
any material respect any contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 4.1(e);
(f) (i) except as set forth in Section 4.1(f) of the Company
Disclosure Schedule, increase the compensation payable or to become payable
to its officers or employees, except for increases in salary or wages of
employees of the Company or its Subsidiaries who are not officers of the
Company in accordance with past practices, or grant any severance or
termination pay or stock options to, or enter into any employment or
severance agreement with any director, officer or other employee of the
Company or any of its Subsidiaries, or establish, adopt, enter into or
amend any collective bargaining, bonus (except for such bonuses expected to
be awarded to employees of the Company in respect of 1998 performance as
identified in Section 4.1(f) of the Company Disclosure Schedule), 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 current or former directors, officers or employees unless required
by Law; or (ii) pay to any officer or director any special performance
bonus payable as a result of any action taken by such officer or director
in connection with any Litigation.
(g) change, other than in the ordinary course of business
and in a manner consistent with past practice or GAAP (none of which
changes shall be unreasonable or unusual), any accounting policies or
procedures (including procedures with respect to reserves, revenue
recognition, payments of accounts payable and collection of accounts
receivable) unless required by Law;
(h) create, incur, suffer to exist or assume any material
Lien on any of their material assets;
(i) other than in the ordinary course of business consistent
with past practice or as set forth in Section 4.1(i) of the Company
Disclosure Schedule, (A) enter into any Material Agreement, (B) modify,
amend or transfer in any material respect or terminate any Material
Agreement to which the Company or any of its Subsidiaries is a party or
waive, release or assign any material rights or claims thereunder or (C)
enter into or extend any lease with respect to real property with any third
party requiring annual payments in excess of $50,000;
(j) make any material tax election not consistent with past
practice or settle or compromise any material federal, state, local or
foreign income tax liability or agree to an extension of a statute of
limitations with respect to a material amount of Taxes;
(k) (i) settle any Litigation for an amount in excess of
$100,000 or settle any Litigation disclosed on Section 2.10 of the Company
Disclosure Schedule or (ii) waive, assign or release any material rights or
claims except in the ordinary course of business consistent with past
practice; or
(l) authorize, recommend, propose or announce an intention
to do any of the foregoing, or agree or enter into any contract to do any
of the foregoing.
4.2 SOLICITATION OF OTHER PROPOSALS.
(a) From the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, the Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any of its or their respective
officers, directors, employees, representatives agents or Affiliates,
directly or indirectly, to (i) solicit, initiate or knowingly encourage or
take any action to facilitate or encourage any inquiries or the making of
any proposal that constitutes, an Acquisition Proposal or (ii) participate
or engage in discussions or negotiations with, or provide any information
to, any Person (including any "person" as defined in Section 13(d)(3) of
the Exchange Act) concerning an Acquisition Proposal or which might
reasonably be expected to result in an Acquisition Proposal. For purposes
of this Agreement, the term "Acquisition Proposal" shall mean any inquiry,
proposal or offer from any person (other than Parent, Merger Sub or any of
their Affiliates) relating to any merger, consolidation, recapitalization,
liquidation or other direct or indirect business combination, involving the
Company or any Material Subsidiary or the issuance or acquisition of shares
of capital stock or other equity securities of the Company or any Material
Subsidiary representing 20% or more (by voting power) of the outstanding
capital stock of the Company or such Material Subsidiary (except for the
issuance of shares of Company Common Stock pursuant to employee stock
options granted under the Plan and outstanding on the date of this
Agreement or the issuance of the Option to Parent) or any tender or
exchange offer that if consummated would result in any Person, together
with all Affiliates thereof, beneficially owning shares of capital stock or
other equity securities of the Company or any Material Subsidiary
representing 20% or more (by voting power) of the outstanding capital stock
of the Company or such Material Subsidiary, or the acquisition, license,
purchase or other disposition of a substantial portion of the technology,
business or assets of the Company or any Material Subsidiary outside the
ordinary course of business or inconsistent with past practice, or any
other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the consummation of the
transactions contemplated hereby or which would reasonably be expected to
dilute materially the benefits to Parent or its Affiliates of the
transactions contemplated hereby. The Company shall immediately cease and
cause to be terminated and shall cause its Affiliates and Subsidiaries and
its or their respective officers, directors, employees, representatives or
agents, to terminate all existing discussions or negotiations with any
Persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, an Acquisition Proposal.
(b) Notwithstanding the foregoing, the Company may
participate in discussions or negotiations with, or furnish information
with respect to the Company pursuant to a confidentiality agreement
substantially similar to that then in effect between the Company and
Parent, to any Person if and only if such Person has submitted an
unsolicited written Acquisition Proposal (under circumstances in which the
Company has complied with its obligations under Section 4.2(a)) to the
Board of Directors of the Company and such Board of Directors (i) believes
in good faith based on such matters as it deems relevant, including the
advice of the Company's financial advisor, that such Acquisition Proposal
is a Superior Proposal and (ii) receives the advice of outside counsel to
the Company that is reasonably competent to render such advice, to the
effect that taking such action is required to satisfy the fiduciary duties
of such Board under applicable Law and (iii) determines in good faith that
taking such action is required to satisfy the fiduciary duties of the Board
under applicable Law.
(c) Except as set forth in the following sentence, neither
the Board of Directors of the Company nor any committee thereof shall (i)
(1) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal other than the Merger, (2) withdraw or modify or
propose to withdraw or modify in a manner adverse to Parent or Merger Sub
its approval or recommendation of the Merger, this Agreement or the
transactions contemplated hereby, (3) fail to mail the Proxy Statement to
the Company's stockholders when the Proxy Statement shall be available for
mailing or fail to include therein such approval and recommendation, (4)
upon a request by Parent (which request is reasonable under the facts and
circumstances) to reaffirm the approval or recommendation of this Agreement
or the Merger, fail to do so as promptly as practicable but in no event
later than five (5) calendar days after such request is made or (5) resolve
or announce its intention to do any of the foregoing; or (ii) resolve to
authorize the Company to, and (regardless of whether such authorization is
given) the Company shall not, enter into an agreement or contract or an
agreement in principle, letter of intent or similar document or
understanding with any person (other than Parent, Merger Sub or any of
their Affiliates) relating to an Acquisition Proposal other than the
Merger. The immediately preceding sentence notwithstanding, in the event
that prior to the Effective Time the Board of Directors of the Company
receives a Superior Proposal, the Board of Directors of the Company may
take, and the Company may take upon the express authorization of such
Board, any action referred to in such sentence (x) if such Board of
Directors receives the advice of outside counsel to the Company that is
reasonably competent to render such advice to the effect that, and after
receipt of and having taken into account such advice, such Board determines
in its good faith judgment that, taking such action is required to satisfy
the fiduciary duties of such Board under applicable Law; (y) if such Board
furnishes Parent two (2) business days' prior written notice of the taking
of such action (which notice shall include a description of the material
terms and conditions of the Superior Proposal, identify the person making
the same and specify the date and time for the expiration of the two (2)
day period required by this provision); and (z) simultaneously with the
taking of such action the Company pays to Parent the Termination Fee
referred to in Section 8.3. For purposes of this Agreement, (A) "Material
Subsidiary" means any Subsidiary of the Company whose consolidated,
revenues, net income or assets constitute 10% or more of the revenues, net
income or assets of the Company and its Subsidiaries taken as a whole and
(B) the term "Superior Proposal" means any bona fide Acquisition Proposal
to effect a merger, consolidation or sale of all or substantially all of
the assets or capital stock of the Company which is on terms which the
Board of Directors of the Company determines by a majority vote of its
directors in its good faith judgment (based on the written opinion, with
only customary qualifications, of a financial advisor of nationally
recognized reputation that the consideration provided in such Acquisition
Proposal likely exceeds the value of the consideration provided for in the
Merger (or words to such effect), after taking into account all relevant
factors, including, any conditions to such Acquisition Proposal, the timing
of the closing thereof, the risk of nonconsummation, the ability of the
person making the Acquisition Proposal to finance the transaction
contemplated thereby and any required governmental or other consents,
filings and approvals) to be more favorable to the Company's stockholders
than the Merger (or any revised proposal made by Parent) and for which
financing, to the extent required, is then fully committed to the Person
making such Acquisition Proposal.
(d) In addition to the obligations of the Company set forth
in this Section 4.2, the Company shall immediately advise Parent orally and
in writing of any request for information with respect to any Acquisition
Proposal, or any inquiry with respect to or which could result in an
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person making the
same. The Company shall inform Parent on a prompt and current basis of the
status and content of any discussions regarding any Acquisition Proposal
with a third party and as promptly as practicable of any change in the
price, structure or form of the consideration or material terms of and
conditions regarding the Acquisition Proposal or of any other developments
or circumstances which could reasonably be expected to culminate in the
taking of any of the actions referred to in Section 4.2(c). Nothing
contained in this Section 4.2(d) shall prevent the Board of Directors of
the Company from complying with Rule 14d-9 and Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer by a third party
or from making such disclosure as may be required by applicable Law.
4.3 INSURANCE. During the period beginning on the date of this
Agreement and ending at the Effective Time, the Company shall, and shall
cause its Subsidiaries to, use commercially reasonable efforts to maintain
in full force and effect all self-insurance or insurance, as the case may
be, currently in effect.
4.4 Y2K COMPLIANCE. During the period beginning on the date of this
Agreement and ending at the Effective Time, the Company shall use
commercially reasonable efforts to take or cause to be taken such actions
in respect of "Y2K compliance" as are necessary to prevent a significant
disruption in the Company's business or services.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practicable following the date of this
Agreement, the Company shall prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement
and (i) obtain and furnish the information required to be included by the
SEC in the Proxy Statement and, after consultation with Parent, respond
promptly to any comments made by the SEC with respect to the Proxy
Statement to be mailed to its stockholders at the earliest practicable date
after the Registration Statement is declared effective by the SEC, provided
that no amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (ii) use its
reasonable best efforts to obtain the necessary approvals of the Merger and
this Agreement by its stockholders.
(b) Parent shall prepare and file with the SEC a
Registration Statement on Form S-4 (the "Registration Statement"), in which
the Proxy Statement shall be included as a prospectus, and shall use all
reasonable efforts to have the Registration Statement declared effective by
the SEC as promptly as practicable. Parent shall obtain and furnish the
information required to be included in the Registration Statement and,
after consultation with the Company, respond promptly to any comments made
by the SEC with respect to the Registration Statement and cause the
prospectus included therein, including any amendment or supplement thereto,
to be mailed to the Company's stockholders at the earliest practicable date
after the Registration Statement is declared effective by the SEC. Parent
shall also take any action required to be taken under Blue Sky or other
securities laws or New York Stock Exchange rules and regulations in
connection with the issuance of Parent Common Stock in the Merger.
(c) The Proxy Statement shall include the recommendation of
the Board of Directors of the Company in favor of approval and adoption of
this Agreement and the Merger except to the extent that the Company shall
have withdrawn or modified its approval or recommendation of the Agreement
or the Merger as permitted by Section 4.2(c). The Company shall not amend
or supplement the Proxy Statement without the consent of Parent and its
counsel unless required to do so by applicable Law.
(d) Parent and the Company shall make all necessary filings
with respect to the Merger under the Securities Act and the Exchange Act
and the rules and regulations thereunder and under applicable Blue Sky or
similar securities laws, rules and regulations, and shall use all
reasonable efforts to obtain required approvals and clearances with respect
thereto.
5.2 MEETING OF COMPANY STOCKHOLDERS. The Company shall promptly after
the date hereof take all action necessary in accordance with Delaware Law
and its Certificate of Incorporation and By-laws to convene the Company
Stockholders' Meeting as soon as practicable following the date upon which
the Registration Statement becomes effective. Once the Company Stockholders
Meeting has been called and noticed, the Company shall not postpone or
adjourn (other than for the absence of a quorum) the Company Stockholders'
Meeting without the consent of Parent. Except as may be otherwise required
for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders imposed by Law as advised by outside legal counsel,
the Board of Directors of the Company shall declare that this Agreement is
advisable and recommend that the Agreement and the transactions
contemplated hereby be approved and adopted by the stockholders of the
Company and include in the Registration Statement and Proxy Statement a
copy of such recommendations; provided, however, that the Board of
Directors of the Company shall submit this Agreement to the Company's
stockholders whether or not the Board of Directors of the Company
determines at any time subsequent to declaring its advisability that this
Agreement is no longer advisable and recommends that the stockholders of
the Company reject it. Unless the Board of Directors of the Company has
withdrawn its recommendation of this Agreement in compliance with Section
4.2(c), the Company shall use its best efforts to solicit from stockholders
of the Company proxies in favor of the Merger and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by Delaware Law to effect the Merger.
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Upon reasonable notice the Company and Parent shall each
(and shall cause each of their respective Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
other, reasonable access, during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during
such period, each of the Company and Parent shall (and shall cause each of
their respective Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each party shall make available to the
other party the appropriate individuals for discussion of such party's
business, properties and personnel as the other party may reasonably
request. No investigation pursuant to this Section 5.3(a) shall affect any
representations or warranties of the parties herein or the conditions to
the obligations of the parties hereto.
(b) Each party shall keep all information obtained pursuant
to Section 5.3(a) confidential in accordance with the terms of the
confidentiality agreement, dated January 7, 1999 (collectively, the
"Confidentiality Agreement"), between Parent and the Company. Anything
contained in the Confidentiality Agreement to the contrary notwithstanding,
the Company and Parent hereby agree that each such party may issue press
release(s) or make other public announcements in accordance with Section
5.10.
5.4 REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, each party hereto shall use its reasonable efforts to
take, or cause to be taken, all actions, and do, or cause to be done, and
to assist and cooperate with the other party or parties in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other
transactions contemplated hereby and by the Stockholders Agreement. The
Company and Parent shall use their reasonable efforts to (i) obtain all
licenses, permits, consents, waivers, approvals, authorizations,
qualifications or orders (including all United States and foreign
governmental and regulatory rulings and approvals), and the Company and
Parent shall make all filings (including, without limitation, all filings
with United States and foreign governmental or regulatory agencies) under
applicable Law required in connection with the authorization, execution and
delivery of this Agreement by the Company and Parent and the consummation
by them of the transactions contemplated hereby, including the Merger (in
connection with which Parent and the Company will cooperate with each other
in connection with the making of all such filings, including providing
copies of all such documents to the nonfiling party and its advisors prior
to filings and, if requested, will accept all reasonable additions,
deletions or changes suggested in connection therewith) and (ii) to furnish
all information required for any application or other filing to be made
pursuant to any applicable Law or any applicable Regulations of any
Governmental Authority (including all information required to be included
in the Proxy Statement or the Registration Statement) in connection with
the transactions contemplated by this Agreement; provided, however, that
neither Parent nor any of its Affiliates shall be under any obligation to
(x) make proposals, execute or carry out agreements or submit to Orders
providing for the sale or other disposition or holding separate (through
the establishment of a trust or otherwise) of any assets or categories of
assets of Parent, any of its Affiliates, the Company or the holding
separate of the shares of Company Common Stock or imposing or seeking to
impose any limitation on the ability of Parent or any of its Subsidiaries
or Affiliates to conduct their business or own such assets or to acquire,
hold or exercise full rights of ownership of the shares Company Common
Stock or (y) otherwise take any step to avoid or eliminate any impediment
which may be asserted under any Law governing competition, monopolies or
restrictive trade practices which, in the reasonable judgment of Parent,
might result in a limitation of the benefit expected to be derived by
Parent as a result of the transactions contemplated hereby or might
adversely affect the Company or Parent or any of Parent's Affiliates.
Neither party hereto will take any action which to its Knowledge will
result in any of the representations or warranties made by such party
pursuant to Articles II or III, as the case may be, becoming untrue or
inaccurate in any material respect.
(b) The Company and Parent shall cooperate with one another:
(i) in connection with the preparation of
the Registration Statement and the Proxy Statement;
(ii) in connection with the preparation of
any filing required by the HSR Act;
(iii) in determining whether any action by or in
respect of, or filing with, any governmental authority, agency or official,
or other third party, is required, or any actions, licenses, permits,
consents, waivers, approvals, authorizations, qualifications or orders are
required to be obtained from parties in connection with the consummation of
the transactions contemplated hereby; and
(iv) in seeking any actions, licenses, permits,
consents, waivers, approvals, authorizations, qualifications or orders, or
making any filings, furnishing information required in connection therewith
or with the Registration Statement or the Proxy Statement and seeking
timely to obtain any such actions, licenses, permits, consents, waivers,
approvals, authorizations, qualifications or orders, or making any filings;
and
(v) in order to facilitate the achievement of the
benefits reasonably anticipated from the Merger.
(c) The Company shall use all reasonable efforts to cause
its Affiliates and other Persons to transfer and assign all rights
necessary for the Company to continue to conduct its business consistent
with historical operations and as currently conducted pursuant to
documentation and in a manner reasonably acceptable to Parent.
5.5 STOCK OPTIONS.
(a) At the Effective Time, each outstanding stock option to
purchase shares of Company Common Stock (each a "Company Option") under the
Plan, whether vested or unvested, will be assumed by Parent. Each Company
Option so assumed by Parent under this Agreement shall continue to have,
and be subject to, the same terms and conditions set forth in the Plan
immediately prior to the Effective Time (and after giving effect to the
transactions contemplated hereby), except that such Company Option will be
exercisable for that number of whole shares of Parent Common Stock equal to
the product of the number of shares of Company Common Stock that were
purchasable under such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounded down to the nearest whole
number of shares of Parent Common Stock and the per share exercise price
for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, and rounding the resulting exercise price up to the nearest
whole cent.
(b) Parent shall reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Company Options
assumed by Parent under this Agreement. Parent will file as soon as
practicable after the Effective Date a registration statement on Form S-8
under the Securities Act covering the shares of Parent Common Stock
issuable upon the exercise of the Company Options assumed by Parent
pursuant to Section 5.5(a), and will use its reasonable efforts to cause
such registration statement to become effective on or about the Effective
Time or soon as thereafter as practicable and to maintain such registration
in effect until the exercise or expiration of such assumed Company Options.
5.6 EMPLOYEE BENEFITS.
(a) PARTICIPATION IN EMPLOYEE BENEFITS OF Parent. After the
Effective Time and on a schedule determined by Parent in connection with
its integration of its business with that of the Company, the employees of
the Company shall be eligible to participate in the employee benefit plans
of Parent to the same extent as any similarly situated and geographically
located employees of Parent.
(b) BENEFIT PLANS. As of the Effective time, Parent shall
(or shall cause the Surviving Corporation to) either continue the existing
Employee Plans or provide (or cause the Surviving Corporation to provide)
benefits to employees and former employees of the Company and its
Subsidiaries that are no less favorable in the aggregate to such employees
than those provided under the "Parent Benefit Plans" (as defined below) (as
they may be amended from time to time) to similarly situated employees of
Parent and its Subsidiaries. "Parent Benefit Plan" means any employee
benefit plan, arrangement, practice, contract or agreement of any type
(including but not limited to a plan described in Section 3(3) of ERISA),
maintained by Parent or its Subsidiaries.
(c) SERVICE CREDIT. With respect to any Employee Plan which
is an "employee benefit plan" as defined in Section 3(3) of ERISA, for
purposes of determining eligibility to participate, vesting, entitlement to
benefits, including for severance benefits, vacation entitlement and
service awards, service with the Company or any Subsidiary shall be treated
as service with Parent or its Subsidiaries; provided, however, that such
service shall not be recognized to the extent that such recognition would
result in a duplication of benefits. Such service also shall apply for
purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations.
Company employees shall be given credit for amounts paid under a
corresponding benefit plan during the same period for purposes of applying
deductibles, copayments and out-of-pocket maximums as though such amounts
had been paid in accordance with the terms and conditions of the Parent
Benefit Plan.
(d) COMPENSATION CONTRACTS. Parent shall, or shall cause the
Surviving Corporation to, assume and honor the obligations of the Company
and its Subsidiaries under all employment, severance, consulting and other
compensation contracts, arrangements, commitments or understandings
("Compensation Contracts"), in accordance with their terms, as disclosed in
Section 5.6 of the Company Disclosure Schedule, each as amended to the date
hereof or as contemplated hereby. Parent hereby acknowledges that the
Merger will constitute a "Change in Control" for purposes of all
Compensation Contracts and Employee Plans, if applicable. The provisions of
this Section 5.6(d) are intended to be for the benefit of, and shall be
enforceable by, each person who is a party to, a participant in or a
beneficiary of any Employee Plan, contract, arrangement, commitment or
understanding referred to in Section 5.6(d).
(e) FALCONWOOD PLAN. As of Closing, the Company shall (i)
cause all employees of the Company to be one-hundred percent (100%) vested
in their accrued benefit under The Falconwood Group Defined Benefit Pension
Plan (the "Falconwood Plan"), (ii) enter into an agreement in the form set
forth in EXHIBIT D attached hereto (the "Falconwood Termination
Agreement"), and cause the other parties to enter into such agreement, and
take or cause to be taken such actions as are necessary to effectuate its
withdrawal from the Falconwood Plan as a participating employer, and (iii)
take or cause to be taken such actions as are necessary, including amending
the Falconwood Plan if needed, to insure that the consummation of the
transactions contemplated by this Agreement will result, for purposes of
the Plan, in a termination of employment by the employees of the Company,
thereby entitling employees of the Company to an immediate distribution of
their accrued benefits under the Falconwood Plan as of Closing.
(f) CERTAIN NOTICES. For notices and payments related to
events occurring prior to the Closing Date, the Company shall cause
Falconwood to be responsible for any notices required to be given to
employees of the Company pursuant to the WARN Act, Section 4980B of the
Code ("COBRA") and/or Section 402(f) of the Code ("Rollover Notice"), and
for any payments or benefits required pursuant to such laws or on account
of violation of any requirement of such laws.
5.7 POOLING; TAX-FREE REORGANIZATION .
(a) The Company will not Knowingly take, or Knowingly permit
any controlled Affiliate of the Company to take, any actions that could
prevent the Merger from being treated as a Pooling, it being understood and
agreed that if Deloitte & Touche LLP, the Company's independent
accountants, advises the Company that an action would not prevent the
Merger from being so treated, such action will be conclusively deemed not
to constitute a breach of this Section 5.7.
(b) None of Parent, Merger Sub and the Company shall take or
agree to take any action or fail to take any action, except as expressly
provided in this Agreement, that is likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; provided, however, that any such actions, or any such failures to
take any action, with respect to or in connection with the Parent Rights
Agreement (other than an amendment to such agreement) shall not constitute
a breach of this covenant.
(c) Parent and the Company shall cooperate and use their
best efforts in obtaining the tax opinions of SASM&F, counsel to the
Company, and OHS, counsel to Parent. In connection therewith, the Company,
Parent and Merger Sub shall deliver to SASM&F and OHS representation
letters (the "Representation Letters"), dated as of the Closing Date, in
form and substance substantially identical to those agreed upon
concurrently herewith by the Company, Parent and Merger Sub, on which
SASM&F and OHS shall be entitled to rely in rendering their respective
opinions pursuant to Sections 6.2(g) and 6.3(d); provided, however, that
the failure of the Company, Parent or Merger Sub to make any statement in a
Representation Letter because of an event, or a change in facts or law, in
either case outside of such party's control, shall not constitute a breach
of this covenant. Parent and the Company shall, and shall cause their
respective subsidiaries to, take the position for all tax and accounting
purposes that the Merger qualifies as a reorganization within the meaning
of Section 368(a) of the Code.
5.8 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which
results in any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect (or, in the case of any
representation or warranty qualified by its terms by materiality or
Material Adverse Effect, then untrue or inaccurate in any respect) and any
failure of the Company, Parent or Merger Sub, as the case may be, to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.8 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
(b) Between the date hereof and the Effective Time, each of
the Company and Parent will 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 Authority in connection
with the Merger, (iii) any Litigation, relating to or involving or
otherwise affecting the Company, Parent or their Subsidiaries that relates
to the consummation of the Merger, (iv) the occurrence of a default or
event that, with notice or lapse of time or both, will become a default
under any contract which is material to Parent or any Material Contract of
the Company, and (v) any change that is reasonably likely to have a
Material Adverse Effect on the Company or Parent or is likely to delay or
impede the ability of either Parent or the Company to consummate the
transactions contemplated by this Agreement or to fulfill their respective
obligations set forth herein.
(c) Each of the 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, all reasonable efforts
to obtain any consents from third Persons (i) necessary, proper or
advisable to consummate the transactions contemplated by this Agreement,
(ii) otherwise required under any contracts, licenses, leases or other
agreements in connection with the consummation of the transactions
contemplated hereby or (iii) required to prevent a Material Adverse Effect
on the Company or Parent from occurring prior to or after the Effective
Time. If any party shall fail to obtain any such consent from a third
Person, such party will use all reasonable efforts, and will take any such
actions reasonably requested by the other parties, to limit the adverse
effect upon the Company and Parent, their respective Subsidiaries, and
their respective businesses resulting, or which would result after the
Effective Time, from the failure to obtain such consent.
5.9 LISTING ON THE NEW YORK STOCK EXCHANGE. Parent shall use its
reasonable efforts to cause the Parent Common Stock to be issued in the
Merger to be approved for listing on the New York Stock Exchange, subject
to official notice of issuance, prior to the Effective Time.
5.10 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult with
each other before issuing any press release or other public announcement
with respect to the Merger or this Agreement and shall not issue any such
press release prior to such consultation, except as may be required by law
or any listing agreement related to the trading of the shares of either
party on any national securities exchange or national automated quotation
system, in which case the party proposing to issue such press release or
make such public announcement shall use reasonable efforts to consult in
good faith with the other party before issuing any such press release or
making any such public announcement.
5.11 TAKEOVER LAWS. If any "fair price," "moratorium," "control share
acquisition," "shareholder protection" or other form of antitakeover
statute, regulation or charter provision or contract is or shall become
applicable to the Merger or the transactions contemplated hereby or by the
Stockholders Agreement, the Company and the Board of Directors of the
Company shall grant such approvals and take such actions as are necessary
under such laws and provisions so that the transactions contemplated hereby
and thereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize
the effects of such statute, regulation, provision or contract on the
transactions contemplated hereby or thereby. The Company shall not take,
and shall not permit any of its controlled Affiliates to take, any action
which would require or permit, or could reasonably be expected to require
or permit, the Company or any other Person or entity to treat Parent or
Merger Sub, acting pursuant to and as permitted by this Agreement or the
Stockholders Agreement, as an "interested stockholder" or "related person"
with whom the Company is prevented for any period of time pursuant to
Section 203 of the Delaware Law from engaging in any "business combination"
or taking any action (including any charter or by-law amendment) that has
the effect of rendering any such statutes applicable to Parent or any of
its Subsidiaries.
5.12 ACCOUNTANT'S LETTERS. Upon reasonable notice from the other, the
Company or Parent shall cause their respective independent public
accountants to deliver to Parent or the Company, as the case may be, a
letter covering such matters as are requested by Parent or the Company, as
the case may be, and as are customarily addressed in accountant's "comfort"
letters in connection with registration statements similar to Form S-4.
5.13 STOP TRANSFER. The Company acknowledges and agrees to be bound
by and comply with the provisions of Section 2.1 of the Stockholders
Agreement as if a party thereto with respect to transfers of record of
ownership of shares of the Company Common Stock, and agrees to notify the
transfer agent for any shares of Company Common Stock and provide such
documentation and do such other things as may be necessary to effectuate
the provisions of such Stockholders Agreement.
5.14 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Parent and Mergers
Sub agree that all rights to indemnification, (if any) for acts or
omissions occurring prior to the Effective time now existing in favor of
the current or former directors or officers of the Company and its
Subsidiaries as provided in their respective certificates of incorporation
or by-laws (or comparable charter or organizational documents) shall
survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of not less than six years from
the Effective Time.
5.15 PLAN FUNDING STATUS. The Company shall deliver to Parent's
actuary such information prior to the Closing Date as the actuary deems
necessary to accurately evaluate the funding status of Falconwood Plan.
5.16 SOFTWARE DOCUMENTATION. The Company shall deliver to Parent at
or prior to the Effective Time copies of all material documentation
relating to the use, maintenance and operation of the Software.
5.17 SUBSIDIARY INVESTMENTS. MF Investments, Corp. shall not make any
investments in or purchase, directly or indirectly, any equity or debt
(other than U.S. governmental obligations) or similar interest in or any
interest convertible into or exercisable or exchangeable for, directly or
indirectly, any equity or debt (other than U.S. governmental obligations)
or similar interest in any Person.
5.18 LEGENDS, INSTRUCTIONS TO TRANSFER AGENT. The Company will (i)
issue or implement all the stop transfer instructions contemplated by the
Related Agreements and (ii) ensure that the legends contemplated thereby
are placed on certificates for Company Common Stock as contemplated by the
Related Agreements, subject to the holders of such certificates complying
with their obligations thereunder.
5.19 MAINTENANCE OF DESIGNATION. The Company will use reasonable
efforts to maintain the Class A Company Common Stock as a designated
security of the Nasdaq National Market, and will notify Parent promptly if
it determines that the Class A Company Common Stock no longer satisfies the
criteria required to be satisfied in order to maintain the Class A Common
Stock as such a designated security or if it receives any written notice
that a proceeding for termination of such designation is contemplated.
5.20 AMENDMENT OF REGISTRATION RIGHTS AGREEMENT. The Company will,
and will use its best efforts to cause the holders of a
majority-in-interest of the holders of Registrable Shares (as defined in
the Registration Rights Agreement) to enter into an Amendment to the
Registration Rights Agreement in substantially the form of EXHIBIT E
attached hereto.
5.21 COMPANY RELEASE. Contingent upon the execution and delivery to
Parent and Merger Sub of the Xxxxxxx/Falconwood Release, immediately prior
to the Effective Time, the Company shall execute and deliver to Xx. Xxxxx
X. Xxxxxxx and the Falconwood Corporation a release in the form of EXHIBIT
F attached hereto.
5.22 WAIVER OF BONUS. The Company shall use its best efforts to
obtain a waiver from any officer or director of the Company with respect to
any special performance bonus authorized but not paid by the Company prior
to the date hereof which bonus arises in connection with action taken in
respect of Litigation.
5.23 ALL REASONABLE EFFORTS AND FURTHER ASSURANCES. Each of the
parties to this Agreement shall use all reasonable efforts to effectuate
the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to Closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, shall execute
and deliver such other instruments and do and perform such other acts and
things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
ARTICLE VI
CONDITIONS OF MERGER
6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION Statement. The
Registration Statement shall have been declared effective by the SEC under
the Securities Act; no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC; and no
proceedings for that purpose; and no similar proceeding in respect of the
Proxy Statement shall have been initiated or, to the Knowledge of Parent or
the Company, threatened by the SEC;
(b) STOCKHOLDER APPROVAL. This Agreement and
the Merger shall have been approved and adopted by the requisite
vote of the stockholders of the Company;
(c) NEW YORK STOCK EXCHANGE LISTING. The shares of Parent
Common Stock issuable to the Company's stockholders pursuant to this
Agreement shall have been authorized for listing on the New York Stock
Exchange upon official notice of issuance.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No Court or
Governmental Authority having jurisdiction over the Company, Acquiror or
Merger Sub shall have enacted, issued, promulgated, enforced or entered any
Law, Regulation or order (whether temporary, preliminary or permanent)
which is then in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger substantially
on the terms contemplated by this Agreement.
(e) REGULATORY APPROVALS. All approvals and consents of
applicable Governmental Authorities required to consummate the Merger shall
have been received the failure to obtain which would prevent the
consummation of the Merger or have a Material Adverse Effect on the Company
or the Parent, and the waiting period under the HSR Act and Foreign
Competition Laws shall have expired or been terminated
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (a) The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Time, except
for changes contemplated by this Agreement (together with the Company
Disclosure Schedule) (except for those (x) representations and warranties
that are qualified by materiality or Material Adverse Effect, in which case
such representations and warranties shall be true and correct in all
respects and (y) representations and warranties which address matters only
as of a particular date or only with respect to a specific period (which
shall be true and correct in all material respects as of such date or with
respect to such period)), with the same force and effect as if made on and
as of the Effective Time, and the Parent and Merger Sub shall have received
a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of the Company and of each of the Subsidiaries.
(b) AGREEMENTS AND COVENANTS. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or prior to the Effective Time. Parent and Merger Sub shall have
received a certificate to such effect signed by the President and Chief
Executive Officer of the Company.
(c) CONSENTS OBTAINED. Parent shall have received evidence,
in form and substance reasonably satisfactory to it, that consents or
waivers with respect to those contracts and agreements have been obtained
the failure to obtain which either individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the Company or
prevent the consummation of the Merger.
(d) POOLING OF INTERESTS. Parent shall have received a
written opinion from Ernst & Young, Parent's independent public
accountants, in form and substance reasonably satisfactory to Parent, dated
as of the Closing Date, that the Merger, can properly be accounted for as a
Pooling.
(e) RELATED AGREEMENTS. Each of the Related Agreements shall
be in full force and effect as of the Effective Time and become effective
in accordance with the respective terms thereof and the actions required to
be taken thereunder by the parties thereto immediately prior to the
Effective Time shall have been taken, except (i) in the event of an
impossibility of performance under any such Related Agreements by virtue of
the death, disability or incapacity of any natural person who is a party to
any Related Agreement prior to the Effective Time unless, when taken
together, all such impossibilities of performance shall have a Material
Adverse Effect, (ii) the failure of Employment Agreements with respect to
any individuals other than Messrs. Jarecki, Leatherman, Xxxxxxx and
Xxxxxxxx to be in full force and effect at the Effective Time as aforesaid
shall not, in and of itself, be deemed to constitute non-satisfaction of
the condition contained in this Section 6.2(e).
(f) FALCONWOOD TERMINATION AGREEMENT. The Falconwood
Termination Agreement shall have been executed and delivered by the parties
thereto and be in full force and effect as of the Effective Time.
(g) TAX OPINION. Parent shall have received an opinion from
OHS, tax counsel to Parent, in form and substance reasonably satisfactory
to Parent, dated as of the Closing Date, on the basis of facts,
representations and assumptions set forth in such opinion and the
Representation Letters, all of which are consistent with the state of facts
existing as of the Effective Time, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Code.
(h) XXXXXXX/FALCONWOOD RELEASE. Contingent upon the
execution and delivery by the Company of the release described in Section
5.21, each of Xx. Xxxxx X. Xxxxxxx and The Falconwood Corporation shall
have executed and delivered a release in the form of EXHIBIT G attached
hereto (the "Xxxxxxx/Falconwood Release").
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be
true and correct in all material respects on and as of the Effective Time,
except for changes contemplated by this Agreement, (except for those (x)
representations and warranties that are qualified by materiality or
Material Adverse Effect, in which case such representations and warranties
shall be true and correct in all respects and (y) representations and
warranties which address matters only as of a particular date or only with
respect to a specific period (which shall be true and correct in all
material respects as of such date or with respect to such period)), with
the same force and effect as if made on and as of the Effective Time, and
the Company shall have received a certificate to such effect signed by the
Chief Financial Officer of Parent, with respect to Parent and the President
of Merger Sub, with respect to the Merger Sub.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received
a certificate to such effect signed by Chief Financial Officer of Parent,
with respect to Parent and the President of Merger Sub, with respect to the
Merger Sub.
(c) CONSENTS OBTAINED. The Company shall have received
evidence, in form and substance reasonably satisfactory to it, that
consents or waivers to those contracts or agreements have been obtained,
the failure to obtain which would prevent the consummation of the Merger.
(d) TAX OPINION. The Company shall have received an opinion
from SASM&F, tax counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated as of the Closing Date, on the basis of
facts, representations and assumptions set forth in such opinion and the
Representation Letters, all of which are consistent with the state of facts
existing as of the Effective Time, to the effect that (i) the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Code and (ii) no gain or loss will be recognized by the stockholders of the
Company upon the exchange of their shares of Company Common Stock pursuant
to the Merger, except with respect to cash, if any, received in lieu of
fractional shares of Parent Common Stock.
ARTICLE VII
RELATED AGREEMENTS
7.1 RELATED AGREEMENTS. Simultaneously with the execution and
delivery of this Agreement, the following parties are executing and
delivering the following agreements, being hereinafter referred to as the
"Related Agreements"), each dated as of the date hereof:
(a) AFFILIATE AGREEMENTS. Each of the Persons identified on
Schedule 7.1(a) attached hereto is entering into an Affiliate Agreement
with Parent, effective as of the Effective Time (the "Affiliate
Agreement"), in the form of EXHIBIT H attached hereto.
(b) EMPLOYEE OFFER LETTERS. (i) Each of the Persons
identified on Schedule 7.1(b) attached hereto is entering into an
employment agreement with Parent, effective as of the Effective Time, in
substantially the form of EXHIBIT I attached hereto (the "Employment
Agreements") and (ii) J. Xxxxxxx Xxxxxxxxxx is executing a personal
services agreement with Parent, effective as of the Effective Time, in the
form of EXHIBIT J attached hereto.
(c) RELEASE AGREEMENTS. Each of the Persons identified on
Schedule 7.1(c) is entering into a Release Agreement, in the form of
EXHIBIT K attached hereto (the "Release Agreements").
(d) ASSIGNMENT AGREEMENTS. Each of the Persons identified on
Schedule 7.1(d) is entering into an Assignment Agreement, , in the form of
EXHIBIT L attached hereto (the "Assignment Agreements").
(e) STOCKHOLDERS AGREEMENT. Each of the stockholders of the
Company identified on Schedule 7.1(e) is entering into the Stockholders
Agreement with Parent.
(f) OPTION AGREEMENT. The Company is entering into the
Option Agreement with Parent.
(g) FALCONWOOD AGREEMENT. Parent and the Falconwood Plan
Trustees (as defined in the Falconwood Agreement) are entering into an
agreement, in the form of EXHIBIT M attached hereto (the "Falconwood
Agreement").
(h) NON-COMPETITION AGREEMENTS. The Company, the Parent and
each stockholder of the Company identified on Schedule 7.1(h) is entering
into a Non-Competition Agreement, in the form of EXHIBIT N attached hereto
(the "Non-Competition Agreement").
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) By mutual written consent duly authorized by
the Boards of Directors of Parent and the Company; or
(b) By either Parent or the Company if the Merger shall not
have been consummated by September 30, 1999; provided, however, that if the
Merger shall not have been consummated solely due to the waiting period (or
any extension thereof) under the HSR Act not having expired or been
terminated, then such date shall be extended to December 31, 1999; and
provided, further, that the right to terminate this Agreement under this
Section shall not be available to any party whose willful failure to
fulfill any material obligation under this Agreement has been the cause of,
or resulted in, the failure of the Merger to have been consummated on or
before such date; or
(c) By either Parent or the Company, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an Order, decree or ruling or taken any other
action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger and such Order, decree or
ruling has become final and nonappealable; or
(d) By either Parent or the Company, if, at the Company
Stockholders' Meeting (including any adjournment or postponement thereof),
the requisite vote of the stockholders of the Company shall not have been
obtained; or
(e) By Parent, if the Board of Directors of the Company or
any committee thereof shall have (i) failed to recommend approval and
adoption of this Agreement and the Merger by the Stockholders of the
Company, or withdrawn or modified, or proposed to withdraw or modify, in a
manner adverse to Parent or Merger Sub, its approval or recommendation of
the Merger, this Agreement or the transactions contemplated hereby, (ii)
engaged in discussions with a third party concerning an Acquisition
Proposal, (iii) failed to mail the Proxy Statement to its stockholders
within a reasonable period of time after the Proxy Statement shall be
available for mailing or failed to include therein such approval and
recommendation (including the recommendation that the stockholders of the
Company vote in favor of the Merger), (iv) made any recommendation with
respect to any Acquisition Proposal other than a recommendation to reject
such Acquisition Proposal, (v) upon a request by Parent, failed, as
required by Section 4.2(c)(i)(4), to reaffirm any such approval or
recommendation, (vi) taken any action prohibited by Section 4.2, (vii)
entered into a definitive or binding agreement with respect to a Superior
Proposal, (viii) breached the Option Agreement in any material respect or
(ix) resolved to or announced its intention to do any of the foregoing; or
(f) By Parent, if a third party acquires 33% or more of
outstanding shares of capital stock or other equity interests of the
Company or any Material Subsidiary; or
(g) By Parent, if neither Parent nor Merger Sub is in
material breach of its obligations under this Agreement, and (1) there has
been a breach by the Company of any of its representations and warranties
hereunder such that Section 6.2(a) will not be satisfied or (2) there has
been the willful breach on the part of the Company of any of its covenants
or agreements contained in this Agreement such that Section 6.2(a) will not
be satisfied, and, in both case (1) and case (2), such breach (if curable)
has not been cured within thirty (30) days after notice to the Company from
Parent; or
(h) By the Company, if it is not in material breach of its
obligations under this Agreement, and (1) if there has been a breach by
Parent or Merger Sub of any of their respective representations and
warranties hereunder such that Section 6.3(a) will not be satisfied or (2)
there has been the willful breach on the part of Parent or Merger Sub of
any of their respective covenants or agreements contained in this Agreement
such that Section 6.3(a) will not be satisfied, and, in both case (1) and
case (2), such breach (if curable) has not been cured within thirty (30)
days after notice to Parent and Merger Sub from the Company; or
(i) By Parent, if any of the stockholders who are parties to
the Stockholders Agreement shall have breached in any material respect any
representation, warranty, covenant or agreement thereof and such breach has
not been promptly cured after notice to any such stockholder; provided,
however, that such breach shall be of the kind that denies Parent the
material benefits contemplated by the Stockholders Agreement.
8.2 EFFECT OF TERMINATION. Except as provided in this Section 8.2, in
the event of the termination of this Agreement pursuant to Section 8.1,
this Agreement (other than the first sentence of Section 5.3(b), this
Section 8.2 and Section 8.3 and Article IX, which shall survive such
termination) will forthwith become void, and there will be no liability on
the part of the Parent, the Merger Sub or the Company or any of their
respective officers or directors to the other and all rights and
obligations of any party hereto will cease, except that nothing herein will
relieve any party from liability for any breach, prior to termination of
this Agreement in accordance with its terms, of any representation,
warranty, covenant or agreement contained in this Agreement.
8.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; provided, however, that Parent
and the Company shall share equally all fees and expenses, other than
attorneys' fees, incurred in relation to the printing and filing of the
Proxy Statement (including any preliminary materials related thereto), the
Registration Statement (including financial statements and exhibits) and
any amendments or supplements thereto and all filing fees payable in
connection with filings made under the HSR Act.
(b) In the event that:
(i) Parent terminates this Agreement pursuant to
Section 8.1(e) (other than 8.1(e)(ii)) or Section 8.1(f); or
(ii) Parent or the Company terminates this Agreement
pursuant to Section 8.1(d) hereof because of the failure to obtain the
required approval from the Company stockholders and either (x) at the time
of such termination or prior to the Company Stockholders' Meeting there
shall have been an Acquisition Proposal (whether or not such Acquisition
Proposal or any inquiry, announcement or agreement relating to such
Acquisition Proposal shall have been rejected or shall have been withdrawn
prior to the time of such termination or of the Company Stockholders'
Meeting) or (y) the Company shall have entered into a binding agreement in
connection with an Acquisition Proposal within twelve (12) months following
termination of this Agreement,
the Company shall pay to Parent, simultaneously with such termination of
this Agreement referred to in clauses (i) or (ii)(x) of this Section 8.3(b)
or at the time a binding agreement is entered into in connection with an
Acquisition Proposal as contemplated in clause (ii)(y) of this Section
8.3(b), a fee in cash equal to $12,000,000, plus the amount of Parent
Stipulated Expenses paid to Parent pursuant to Section 8.3(c) (the
"Termination Fee"), which amount shall be payable by wire transfer of
immediately available funds not later than two business days after the date
of such termination.
(c) If this Agreement is terminated pursuant to Sections
8.1(e), 8.1(f) or 8.1(g) and provided that (i) Parent is not then in breach
of its representations and warranties under this Agreement such that
Section 6.3(a) of this Agreement would not be satisfied or (ii) Parent is
not otherwise in material breach of its obligations under this Agreement
such that Section 6.3(b) will not be satisfied, then the Company shall
reimburse Parent, within three (3) business days of Parent's request
therefor, for all Parent Stipulated Expenses. As used in this Agreement,
the term "Parent Stipulated Expenses" shall mean those reasonable and
documented out-of-pocket fees and expenses actually incurred by Parent in
connection with this Agreement, the Stockholder Agreement and the
transactions contemplated hereby and thereby which do not exceed $2,500,000
in the aggregate.
(d) If this Agreement is terminated pursuant to Section
8.1(h) and provided that (i) the Company is not then in breach of its
representations and warranties under this Agreement such that Section
6.2(a) of this Agreement would not be satisfied or (ii) the Company is not
otherwise in material breach of its obligations under this Agreement such
that Section 6.2(b) will not be satisfied, then Parent shall reimburse the
Company, within three (3) business days of the Company's request therefor,
for all Company Stipulated Expenses. As used in this Agreement, the term
"Company Stipulated Expenses" shall mean those reasonable and documented
out-of-pocket fees and expenses actually incurred by the Company in
connection with this Agreement and the transactions contemplated hereby
which do not exceed $2,500,000 in the aggregate.
8.4 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 approval
of the Merger by the stockholders of the Company, no amendment may be made
which would reduce the amount or change the type of consideration into
which each share of Company Common Stock shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
8.5 WAIVER. At any time prior to the Effective Time, any party hereto
may extend the time for the performance of any of the obligations or other
acts required hereunder, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and waive compliance 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.
ARTICLE IX
GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Except as set forth in Section 9.1 (b) of this
Agreement, the representations, warranties and agreements of each party
hereto will remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
(b) The representations and warranties in this Agreement
will terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article VIII; provided, however, this Section 9.1(b)
shall in no way limit any covenant or agreement of the parties which by its
terms contemplates performance after the Effective Time or after the
termination of this Agreement pursuant to Article VIII.
9.2 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by nationally recognized overnight courier or by
registered or certified mail, postage prepaid, return receipt requested, or
by telecopier, with confirmation as provided above addressed as follows:
(a) If to Parent or Merger Sub:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx
Senior Vice President,
Business Development
With copies to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Telecopier:(000) 000-0000
Attention: General Counsel
and
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
(b) If to the Company:
MovieFone, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxxx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. All
such notices or communications shall be deemed to be received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally recognized overnight courier, on the next business day after the
date when sent (c) in the case of facsimile transmission or telecopier,
upon confirmed receipt, and (d) in the case of mailing, on the third
business day following the date on which the piece of mail containing such
communication was posted.
9.3 DISCLOSURE SCHEDULES. The Company Disclosure Schedule and the
Parent Disclosure Schedule each shall be divided into sections
corresponding to the sections and subsections of this Agreement. Disclosure
of any fact or item in any Section of a party's Disclosure Schedule shall
not, should the existence of the fact or item or its contents be relevant
to any other Section of the Disclosure Schedule, be deemed to be disclosed
with respect to such sections.
9.4 CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
(a) "Affiliates" means Persons that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person; including, without
limitation, any partnership or joint venture in which the Company (either
alone, or through or together with any other Subsidiary) has, directly or
indirectly, an interest of 5% or more;
(b) "Balance Sheet" means the balance sheet of the Company
contained in the Company's Form 10-Q for the quarter ended September 30,
1998.
(c) "beneficial owner" with respect to any shares of Company
Common Stock, means a Person who shall be deemed to be the beneficial owner
of such shares which such Person or any of its Affiliates or associates
beneficially owns, directly or indirectly, which such Person or any of its
Affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or the right to vote pursuant to any agreement, arrangement or
understanding or which are beneficially owned, directly or indirectly, by
any other Persons with whom such Person or any of its Affiliates or Person
with whom such Person or any of its Affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(d) "Code" means the U.S. Internal Revenue Code of 1986, as
amended.
(e) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(f) "Court" means any court or arbitration tribunal of the
United States, any domestic state, or any foreign country, and any
political subdivision thereof.
(g) "Governmental Authority" means any governmental agency
or authority (other than a Court) of the United States, any domestic state,
or any foreign country, and any political subdivision or agency thereof,
and includes any authority having governmental or quasi-governmental
powers.
(h) "Intellectual Property" means trademarks, service marks,
trade names, URLs and Internet domain names and applications therefor (and
all interest therein), designs, slogans and general intangibles of like
nature, together with all goodwill related to the foregoing (including any
registrations and applications for any of the foregoing) (collectively,
"Trademarks"); patents (including any registrations, continuations,
continuations in part, renewals and applications for any of the foregoing);
copyrights (including any registrations and applications for any of the
foregoing); computer programs and other computer software; databases;
technology, trade secrets and other confidential information, know-how,
proprietary technology, processes, formulae, algorithms, models, user
interfaces, customer lists, inventions, source codes and object codes and
methodologies, architecture, structure, display screens, layouts,
development tools, instructions, templates, marketing materials,
inventions, trade dress, logos and designs and all documentation and media
constituting, describing or relating to the foregoing (collectively, "Trade
Secrets"), used in or necessary for the conduct of Company's and each of
its Subsidiaries' business as currently conducted or contemplated to be
conducted.
(i) "Knowledge" means (i) in the case an individual,
knowledge of a particular fact or other matter if such individual is
actually aware of such fact or other matter, or (b) a prudent individual in
such individual's position could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonable (for an individual in such individual's position to undertake)
investigation concerning the existence of such fact or other matter and
(ii) in the case of an entity (other than an individual) such entity will
be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
(j) "Law" means all laws, statutes, ordinances
and Regulations of any Governmental Authority;
(k) "Lien" means any mortgage, pledge, security interest,
attachment, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing); provided, however, that the term
"Lien" shall not include (i) statutory liens for Taxes, which are not yet
due and payable or are being contested in good faith by appropriate
proceedings, (ii) statutory or common laws liens to secure landlords,
lessors or renters under leases or rental agreements confined to the
premises rented, (iii) deposits or pledges made in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old age
pension or other social security programs mandated under applicable Laws,
(iv) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, to secure claims for labor, materials or
supplies and other like liens, and (v) restrictions on transfer of
securities imposed by applicable state and federal securities Laws.
(l) "Litigation" means any suit, action, arbitration, cause
of action, claim, complaint, criminal prosecution, investigation,
governmental or other administrative proceeding, whether at law or at
equity, before or by any Court or Governmental Authority or before any
arbitrator;
(m) "Material Adverse Effect" means any fact, event, change,
circumstance or effect that is materially adverse to the business,
financial condition or results of operations of the (1) Company and its
Subsidiaries, taken as a whole when such term is used in relation to the
Company and/or the Subsidiaries or (2) the Parent and its Subsidiaries,
taken as a whole, when such term is used in relation to the Parent.
(n) "Merger Shares" means shares of Parent Common Stock
issued in exchange for shares of Company Common Stock pursuant to the
Merger in accordance with Article I of this Agreement.
(o) "Order" will mean any judgment, order or decree of any
Court or Governmental Authority.
(p) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act);
and
(q) "Subsidiary" or "Subsidiaries" of the Company, the
Surviving Corporation, Parent or any other Person means any corporation,
partnership, joint venture, limited liability company or other legal entity
of which the Company, the Surviving Corporation, Parent or such other
Person, as the case may be, (either alone or through or together with any
other Subsidiary) owns, directly or indirectly, more than 50% 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.
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The word "herein" and similar references mean, except where a
specific Section or Article reference is expressly indicated, the entire
Agreement rather than any specific Section or Article. The table of
contents and the headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
9.6 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 transactions contemplated hereby is not affected in
any manner 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 an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
9.7 ENTIRE AGREEMENT. This Agreement (including all exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality Agreement),
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other Person any rights or
remedies hereunder.
9.8 ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise, except that Parent and Merger Sub may assign all or any
of their rights hereunder to any Affiliate provided that no such assignment
shall relieve the assigning party of its obligations hereunder.
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement, other than Section (which is intended to be
for the benefit of the Indemnified Parties and may be enforced by such
Indemnified Parties).
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES Cumulative. No
failure or delay on the part of any party hereto in the exercise of any
right hereunder will impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty or agreement
herein, nor will any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive
to, and not exclusive of, any rights or remedies otherwise available.
9.11 GOVERNING LAW. This Agreement and the agreements, instruments
and documents contemplated hereby will be governed by and construed in
accordance with the Laws of the State of Delaware (exclusive of conflicts
of law principles). Courts within the State of Delaware will have
jurisdiction over any and all disputes between the parties hereto, whether
in law or equity, arising out of or relating to this Agreement and the
agreements, instruments and documents contemplated hereby. The parties
consent to and agree to submit to the jurisdiction of such Courts,
provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section 9.11 and shall not be deemed to be a
general submission to the jurisdiction of such Courts or in the State of
Delaware other than for such purpose. Each of the parties hereby waives,
and agrees not to assert in any such dispute, to the fullest extent
permitted by applicable Law, any claim (i) that such party is not
personally subject to the jurisdiction of such Courts, (ii) that such party
and such party's property is immune from any legal process issued by such
Courts or (iii) for forum non conveniens.
9.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank]
CONFIDENTIAL
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
AMERICA ONLINE, INC.
By___________________________________
Name: Xxxx X. Xxxxx
Title: Senior Vice President,
Business Development
MF ACQUISITION CORPORATION
By____________________________________
Name: Xxxx X. Xxxxx
Title: President
MOVIEFONE, INC.
By ___________________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
