EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
CMGI, INC.,
ARTICHOKE CORP.
and
ADFORCE, INC.
Dated as of September 20, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I - THE MERGER 2
1.1 Effective Time of the Merger 2
1.2 Closing 2
1.3 Effects of the Merger 2
1.4 Directors and Officers 2
ARTICLE II - CONVERSION OF SECURITIES 3
2.1 Conversion of Capital Stock 3
2.2 Exchange of Certificates 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
3.1 Organization, Standing and Power; Subsidiaries 8
3.2 Capitalization 9
3.3 Authority; No Conflict; Required Filings and
Consents 10
3.4 SEC Filings; Financial Statements 12
3.5 No Undisclosed Liabilities 12
3.6 Absence of Certain Changes or Events 13
3.7 Taxes 13
3.8 Owned and Leased Real Properties 15
3.9 Intellectual Property 15
3.10 Agreements, Contracts and Commitments 16
3.11 Litigation 17
3.12 Environmental Matters 17
3.13 Employee Benefit Plans 18
3.14 Compliance With Laws 20
3.15 Permits 20
3.16 Registration Statement; Proxy Statement/Prospectus 21
3.17 Labor Matters 21
3.18 Insurance 21
3.19 Business Activity Restrictions 22
3.20 Year 2000 Compliance 22
3.21 Assets 23
3.22 Customers 24
3.23 Accounts Receivable 24
3.24 No Existing Discussions 24
3.25 Opinion of Financial Advisor 24
3.26 Section 203 of the DGCL Not Applicable 24
3.27 Tax Matters 24
3.28 Transactions with Affiliate 24
3.29 Brokers; Schedule of Fees and Expenses 25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER AND
THE TRANSITORY SUBSIDIARY 25
4.1 Organization, Standing and Power 25
4.2 Capitalization 26
4.3 Authority; No Conflict; Required Filings
and Consents 26
4.4 SEC Filings; Financial Statements 27
4.5 Absence of Certain Changes or Events 28
4.6 Tax Matters 28
4.7 Litigation 28
4.8 Registration Statement; Proxy Statement/Prospectus 29
4.9 Operations of the Transitory Subsidiary 29
ARTICLE V - CONDUCT OF BUSINESS 29
5.1 Covenants of the Company 29
5.2 Cooperation 33
5.3 Confidentiality 33
ARTICLE VI - ADDITIONAL AGREEMENTS 33
6.1 No Solicitation 33
6.2 Proxy Statement/Prospectus; Registration
Statement 35
6.3 Nasdaq Quotation 36
6.4 Access to Information 36
6.5 Stockholders Meeting 36
6.6 Legal Conditions to the Merger 37
6.7 Public Disclosure 39
6.8 Tax-Free Reorganization 39
6.9 Affiliate Agreements 39
6.10 Nasdaq National Market Listing 40
6.11 Company Stock Plans and the Company Warrants 40
6.12 Stockholder Litigation 41
6.13 Indemnification 42
6.14 Notification of Certain Matters 42
6.15 Employees 42
ARTICLE VII - CONDITIONS TO MERGER 43
7.1 Conditions to Each Party's Obligation To
Effect the Merger 43
7.2 Additional Conditions to Obligations of the
Buyer and the Transitory Subsidiary 43
7.3 Additional Conditions to Obligations of the
Company 45
ARTICLE VIII - TERMINATION AND AMENDMENT 46
8.1 Termination 46
8.2 Effect of Termination 47
8.3 Fees and Expenses 47
8.4 Amendment 49
8.5 Extension; Waiver 49
ARTICLE IX - MISCELLANEOUS 50
9.1 Nonsurvival of Representations and Warranties 50
9.2 Notices 50
9.3 Entire Agreement. 51
9.4 No Third Party Beneficiaries 51
9.5 Assignment 51
9.6 Severability 52
9.7 Counterparts and Signature 52
9.8 Interpretation 52
9.9 Governing Law 52
9.10 Remedies 53
9.11 Waiver of Jury Trial 53
EXHIBITS
Exhibit A-1 Form of Employee Lock-Up Agreement
Exhibit A-2 Form of Stockholder Lock-Up Agreement
Exhibit B Form of Stockholder Agreement
Exhibit C Form of Company Affiliate Letter
TABLES OF DEFINED TERMS
Cross Reference
Terms in Agreement
Acquisition Proposal Section 6.1(a)
Affiliate Section 6.9
Affiliate Agreement Section 6.9
Agreement Preamble
Alternative Transaction Section 8.3(g)
Antitrust Laws Section 6.6(b)
Antitrust Order Section 6.6(b)
Buyer Preamble
Buyer Balance Sheet Section 4.4(b)
Buyer Common Stock Section 2.1(c)
Buyer Disclosure Schedule Article IV
Buyer Material Adverse Effect Section 4.1
Buyer Preferred Stock Section 4.2
Buyer SEC Reports Section 4.4(a)
Certificates Section 2.2(b)
Closing Section 1.2
Closing Date Section 1.2
Code Preamble
Company Preamble
Company Balance Sheet Section 3.4(b)
Company Common Stock Section 2.1(b)
Company Disclosure Schedule Article III
Company Employee Plans Section 3.13(a)
Company Intellectual Property Rights Section 3.9(a)
Company Leases Section 3.8(b)
Company Material Adverse Effect Section 3.1
Company Material Contracts Section 3.10
Company Meeting Section 3.16
Company Permits Section 3.15
Company Preferred Stock Section 3.2(a)
Company SEC Reports Section 3.4(a)
Company Stock Options Section 3.2(b)
Company Stock Plans Section 3.2(b)
Company Voting Proposal Section 6.5(a)
Company Warrants Section 3.2(b)
Confidentiality Agreement Section 5.3
Constituent Corporations Section 1.3
DGCL Section 1.1
Effective Time Section 1.1
Employee Benefit Plans Section 3.13(a)
Environmental Law Section 3.12(b)
ERISA Affiliate Section 3.13(a)
ERISA Section 3.13(a)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Exchange Act Section 3.3(c)
Exchange Ratio Section 2.1(c)
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.12(c)
HSR Act Section 3.3(c)
Indemnified Parties Section 6.13
Insurance Policies Section 3.18
Liens Section 3.22
Lock-Up Agreement Preamble
Merger Preamble
Outside Date Section 8.1(b)
Proxy Statement Section 3.16
Registration Statement Section 3.16
Rule 145 Section 6.10
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Stockholder Agreements Preamble
Subsidiary Section 3.1
Superior Proposal Section 6.1(a)
Surviving Corporation Section 1.3
Tax Returns Section 3.7(a)
Taxes Section 3.7(a)
Third Party Section 8.3(g)
Topping Fee Section 8.3(c)
Topping Transaction Section 8.3(c)
Transitory Subsidiary Preamble
Year 2000 Compliant Section 3.20
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 20, 1999, is by and among CMGI, Inc., a Delaware corporation (the
"Buyer"), Artichoke Corp., a Delaware corporation and a wholly owned subsidiary
of Buyer (the "Transitory Subsidiary"), and AdForce, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of the Buyer and the Company deem it
advisable and in the best interests of each corporation and its respective
stockholders that the Buyer and the Company combine in order to advance the
long-term business interests of the Buyer and the Company;
WHEREAS, the combination of the Buyer and the Company shall be effected
by the terms of this Agreement through a merger of the Transitory Subsidiary
into the Company, as a result of which the stockholders of the Company will
become stockholders of the Buyer (the "Merger");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Buyer's willingness to enter into this
Agreement, certain employees and stockholders of the Company have entered into
Stock Lock-Up Agreements dated as of the date of this Agreement and attached
hereto as EXHIBIT A-1 and A-2, respectively (collectively, the "Lock-Up
Agreements"), pursuant to which such parties have agreed to certain restrictions
relating to the disposition of Buyer Common Stock following the Effective Time
(as defined in Section 1.1) under certain circumstances;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the Buyer's willingness to enter into this
Agreement, the stockholders of the Company specified in Section 6.5(c) of this
Agreement have entered into a Stockholder Agreement dated as of the date of this
Agreement in the form attached as EXHIBIT B (the "Stockholder Agreement"),
pursuant to which such stockholders agreed to give the Buyer a proxy to vote all
of the shares of capital stock of the Company that such stockholders own; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
Buyer, the Transitory Subsidiary and the Company agree as follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER . Subject to the provisions of this
Agreement, prior to the Closing (as defined in Section 1.2), the Buyer shall
prepare, and on the Closing Date (as defined in Section 1.2) or as soon as
practicable thereafter the Buyer shall cause to be filed with the Secretary of
State of the State of Delaware, a certificate of merger (the "Certificate of
Merger") in such form as is required by, and executed by the Surviving
Corporation (as defined in Section 1.3) in accordance with, the relevant
provisions of the Delaware General Corporation Law ("DGCL") and shall make all
other filings or recordings required under the DGCL. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such later time as is established by the
Buyer and the Company and set forth in the Certificate of Merger (the "Effective
Time").
1.2 CLOSING . The closing of the Merger (the "Closing") shall take
place at 10:00 a.m., Boston time, on a date to be specified by the Buyer and the
Company (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than delivery of items to be delivered at the Closing), at the offices of
Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
unless another date, place or time is agreed to in writing by the Buyer and
the Company.
1.3 EFFECTS OF THE MERGER . At the Effective Time (i) the separate
existence of the Transitory Subsidiary shall cease and the Transitory Subsidiary
shall be merged with and into the Company (the Transitory Subsidiary and the
Company are sometimes referred to below as the "Constituent Corporations" and
the Company following the Merger is sometimes referred to below as the
"Surviving Corporation"), (ii) the Certificate of Incorporation of the Company
shall be amended so that Article FOURTH of such Certificate of Incorporation
reads in its entirety as follows: "The total number of shares of all classes of
stock which the Corporation shall have authority to issue is 1,000, all of which
shall consist of common stock, $.01 par value per share," and, as so amended,
such Certificate of Incorporation shall be the Certificate of Incorporation of
the Surviving Corporation, and (iii) the By-laws of the Transitory Subsidiary as
in effect immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation. The Merger shall have the effects set forth in Section
259 of the DGCL.
1.4 DIRECTORS AND OFFICERS . The directors and officers of the
Transitory Subsidiary immediately prior to the Effective Time shall be the
initial directors and officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK . As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
the capital stock of the Company or capital stock of the Transitory Subsidiary:
(a) CAPITAL STOCK OF THE TRANSITORY SUBSIDIARY. Each issued
and outstanding share of the capital stock of the Transitory Subsidiary shall be
converted into and become one fully paid and nonassessable share of common
stock, $.01 par value per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All
shares of common stock, $.001 par value per share, of the Company ("Company
Common Stock") that are owned by the Company as treasury stock or by any wholly
owned Subsidiary (as defined in Section 3.1) of the Company and any shares of
Company Common Stock owned by the Buyer, the Transitory Subsidiary or any other
wholly owned Subsidiary of the Buyer shall be cancelled and retired and shall
cease to exist and no stock of the Buyer or other consideration shall be
delivered in exchange therefor.
(c) EXCHANGE RATIO FOR COMPANY COMMON STOCK. Subject to
Section 2.2, each share of Company Common Stock (other than shares to be
cancelled in accordance with Section 2.1(b)) issued and outstanding immediately
before the Effective Time, and all rights in respect thereof, shall be
automatically converted into 0.262 shares (the "Exchange Ratio ") of common
stock, $.01 par value per share, of the Buyer ("Buyer Common Stock"). 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 shares of Buyer Common Stock and any cash in lieu of
fractional shares of Buyer Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.2,
without interest.
(d) 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
Buyer Common Stock or Company Common Stock), reorganization, recapitalization or
other like change with respect to Buyer Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
(e) UNVESTED STOCK. At the Effective Time, any unvested shares
of Company Common Stock awarded to employees, directors or consultants pursuant
to any of the Company's plans or arrangements and
outstanding immediately prior to the Effective Time shall be converted to
unvested shares of Buyer Common Stock in accordance with the Exchange Ratio
and shall remain subject to the same terms, restrictions and vesting schedule
as in effect immediately prior to the Effective Time, except to the extent by
their terms such unvested shares of Company Common Stock vest at the
Effective Time and copies of the relevant agreements governing such vesting
had been provided to Buyer. All outstanding rights which the Company may
hold immediately prior to the Effective Time to repurchase unvested shares of
Company Common Stock shall be assigned to the Buyer in the Merger and shall
thereafter be exercisable by the Buyer upon the same terms and conditions in
effect immediately prior to the Effective Time, except that the shares
purchasable pursuant to such rights and the purchase price payable per share
shall be adjusted to reflect the Exchange Ratio.
(f) TREATMENT OF COMPANY OPTIONS AND COMPANY WARRANTS.
Outstanding Company Options and Company Warrants (in each case as defined in
Section 3.2(b)) shall be treated following the Effective Time in the manner set
forth in Section 6.11.
2.2 EXCHANGE OF CERTIFICATES . The procedures for exchanging
outstanding shares of Company Common Stock for Buyer Common Stock pursuant to
the Merger are as follows:
(a) EXCHANGE AGENT. As of the Effective Time, the Buyer shall
deposit with a bank or trust company designated by the Buyer (the "Exchange
Agent"), for the benefit of the holders of shares of the Company Common Stock,
for exchange in accordance with this Section 2.2, through the Exchange Agent,
(i) certificates representing the shares of Buyer Common Stock (such shares of
Buyer Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 2.1 in exchange for outstanding shares of the Company Common Stock,
(ii) cash in an amount sufficient to make payments required pursuant to Section
2.2(e), and (iii) any dividends or distributions to which holders of
Certificates (as defined below) may be entitled pursuant to Section 2.2(c)
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of the Company Common Stock (the "Certificates")
whose shares were converted pursuant to Section 2.1 into the right to receive
shares of Buyer Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Buyer may reasonably
specify) and (ii) instructions for effecting the surrender of the Certificates
in exchange for certificates representing shares of Buyer Common Stock (plus
cash in lieu of fractional shares, if any, of Buyer Common Stock and any
dividends or distributions as provided below). Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by the Buyer, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Buyer Common
Stock which such holder has the right to receive pursuant to the provisions of
this Article II plus cash in lieu of fractional shares pursuant to
Section 2.2(e) and any dividends or distributions pursuant to Section 2.2(c),
and the Certificate so surrendered shall immediately be cancelled. In the event
of a transfer of ownership of Company Common Stock which is not registered in
the transfer records of the Company, a certificate representing the proper
number of shares of Buyer Common Stock plus cash in lieu of fractional shares
pursuant to Section 2.2(e) and any dividends or distributions pursuant to
Section 2.2(c) may be issued and paid to a person other than the person in whose
name the Certificate so surrender is registered, if such Certificate is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the certificate
representing shares of Buyer Common Stock plus cash in lieu of fractional shares
pursuant to Section 2.2(e) and any dividends or distributions pursuant to
Section 2.2(c) as contemplated by this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Buyer Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Buyer Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e) until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be issued and paid
to the record holder of the Certificate, (i) certificates representing whole
shares of Buyer Common Stock issued in exchange therefor, without interest,
(ii) at the time of such surrender, the amount of any cash payable in lieu of
a fractional share of Buyer Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time previously paid with respect to
such whole shares of Buyer Common Stock, and (iii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Buyer Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Buyer Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash or other
distributions paid pursuant to Sections 2.2(c) or 2.2(e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and from and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the 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 or the Exchange Agent
for any reason, they shall be cancelled and exchanged as provided in this
Article II.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing
fractional shares of Buyer Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of the Buyer.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Buyer Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Buyer Common Stock multiplied by the average of the last reported
sales prices of the Buyer Common Stock on the Nasdaq National Market during the
ten (10) consecutive trading days ending on and including the last trading day
prior to the Effective Time.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for 180
days after the Effective Time shall be delivered to the Buyer, upon demand, and
any holder of Company Common Stock who has not previously complied with this
Section 2.2 shall thereafter look only to the Buyer for payment of its claim for
Buyer Common Stock, any cash in lieu of fractional shares of Buyer Common Stock
and any dividends or distributions with respect to Buyer Common Stock.
(g) NO LIABILITY. To the extent permitted by applicable law,
none of the Buyer, the Transitory Subsidiary, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any holder of shares of
Company Common Stock or Buyer Common Stock, as the case may be, for such shares
(or dividends or distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which any shares of
Buyer Common Stock, and any cash payable to the holder of such Certificate
pursuant to this Article II or any dividends or distributions payable to the
holder of such Certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.3(c))), any such shares of
Buyer Common Stock or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) WITHHOLDING RIGHTS. Each of the Buyer and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any other applicable provision
of law. To the extent that amounts are so withheld
by the Surviving Corporation or the Buyer, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation or the
Buyer, as the case may be.
(i) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Buyer Common Stock
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer and the Transitory
Subsidiary that the statements contained in this Article III are true and
correct, except as set forth herein or in the disclosure letter delivered by the
Company to the Buyer on or before the date of this Agreement (the "Company
Disclosure Schedule"). The Company Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article III and the disclosure in any paragraph shall qualify other
paragraphs in this Article III only to the extent that it is reasonably apparent
from a reading of such disclosure that it also qualifies or applies to such
other paragraphs.
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES .
(a) Each of the Company and its Subsidiaries (as defined below)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as now being conducted and as proposed to be conducted, and is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to be so qualified, individually or in
the aggregate, would be reasonably likely to have a Company Material Adverse
Effect. "Company Material Adverse Effect" shall mean a material adverse effect
on the business, properties, financial condition, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole, or a material
adverse effect on the ability of the Company to consummate the transactions
contemplated by this Agreement, excluding any material adverse effect (a)
arising or resulting, directly or indirectly, from general industry, economic or
stock market conditions, (b) demonstrably shown to have been proximately caused
by the public announcement of, and the response or reaction of current or
prospective customers, vendors, licensors, investors or employees of such entity
or group of entities to, this Agreement or any of the transactions contemplated
by this Agreement or (c) as otherwise specifically provided in Section 3.1(a) of
the Company Disclosure Schedule.
(b) Except as set forth in the Company SEC Reports (as defined
in Section 3.4) filed prior to the date of this Agreement, neither the Company
nor any of its Subsidiaries directly or indirectly owns any equity, membership,
partnership or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity, membership, partnership or similar
interest in, any corporation, partnership, joint venture, limited liability
company or other business association or entity, whether incorporated or
unincorporated. As used in this Agreement, the word "Subsidiary" means, with
respect to a party, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner (excluding partnerships, the general partnership interests
of which held by such party and/or one or more of its Subsidiaries do not have a
majority of the voting interest in such partnership), (ii) such party and/or one
or more of its Subsidiaries holds voting power to elect a majority of the board
of directors or other governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or indirectly, owns or
controls more than 50% of the equity, membership, partnership or similar
interests.
(c) The Company has delivered to the Buyer complete and
accurate copies of the Certificate of Incorporation and By-laws of the Company
and of the charter, by-laws or other organization documents of each Subsidiary
of the Company.
3.2 CAPITALIZATION .
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, $.001 par value per share ("Company Preferred Stock"). As of the close
of business on the date of this Agreement, (i) 19,993,774 shares of Company
Common Stock were issued and outstanding, (ii) no shares of Company Common Stock
were held in the treasury of the Company or by Subsidiaries of the Company, and
(iii) no shares of the Company Preferred Stock were issued and outstanding.
(b) Section 3.2(b) of Company Disclosure Schedule lists the
number of shares of Company Common Stock reserved for future issuance pursuant
to stock options granted and outstanding as of the date of this Agreement and
the plans under which such options were granted (collectively, the "Company
Stock Plans") and sets forth a complete and accurate list of all holders of
outstanding options to purchase shares of Company Common Stock (such outstanding
options, the "Company Stock Options"), indicating the number of shares of
Company Common Stock subject to each Company Stock Option, and the exercise
price, the date of grant, vesting schedule and the expiration date thereof.
Section 3.2 of the Company Disclosure Schedule shows the number of shares of
Company Common Stock reserved for future issuance pursuant to warrants or other
outstanding rights to purchase shares of Company Common Stock outstanding as of
the date of this Agreement (such outstanding warrants or other rights, the
"Company Warrants") and the agreement or other document under which such Company
Warrants were granted and sets forth a complete and accurate list of all holders
of Company Warrants indicating the number and
type of shares of Company Common Stock subject to each Company Warrant, and
the exercise price, the date of grant and the expiration date thereof.
Except (x) as set forth in this Section 3.2, and (y) as reserved for future
grants under Company Stock Plans, (i) there are no equity securities of any
class of the Company or any of its Subsidiaries, or any security exchangeable
into or exercisable for such equity securities, issued, reserved for issuance
or outstanding and (ii) there are no options, warrants, equity securities,
calls, rights, commitments or agreements 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 obligating the Company or any of its
Subsidiaries to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or any security or rights convertible into
or exchangeable or exercisable for any such shares, or obligating the Company
or any of its Subsidiaries to grant, extend, accelerate the vesting of,
otherwise modify or amend or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Neither the Company nor any
of its Subsidiaries has issued and outstanding any stock appreciation rights,
phantom stock, performance based rights or similar rights or obligations. To
the knowledge of the Company, other than the Stockholders Agreements, there
are no agreements or understandings with respect to the voting (including
voting trusts and proxies) or sale or transfer (including agreements imposing
transfer restrictions) of any shares of capital stock of the Company or any
of its Subsidiaries.
(c) All outstanding shares of Company Common Stock are, and all
shares of Company Common Stock subject to issuance as specified above, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company's
Certificate of Incorporation or By-laws or any agreement to which the Company is
a party or is otherwise bound. There are no obligations, contingent or
otherwise, of Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of the Company Common Stock or the capital stock of
the Company or any of its Subsidiaries or to provide funds to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in the Company or any Subsidiary of the Company or any other entity, other than
guarantees of bank obligations of Subsidiaries of the Company entered into in
the ordinary course of business.
(d) All of the outstanding shares of capital stock of each of
the Company's Subsidiaries are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights and all such shares (other than
directors' qualifying shares in the case of non-U.S. Subsidiaries, all of which
the Company has the power to cause to be transferred for no or nominal
consideration to the Buyer or the Buyer's designee) are owned, of record and
beneficially, by the Company or another Subsidiary of the Company free and clear
of all security interests, liens, claims, pledges, agreements, limitations in
the Company's voting rights, charges or other encumbrances of any nature.
(e) No consent of the holders of Company Stock Options is
required in connection with the conversion of such options contemplated by
Section 6.11.
3.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement by the Company
have been duly authorized by all necessary corporate action on the part of the
Company, subject only to the approval of the Merger by the Company's
stockholders under the DGCL. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company
does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or By-laws of the Company or
the charter, by-laws, or other organizational document of any Subsidiary of the
Company, (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right
of termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract or other agreement, instrument or obligation 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, or (iii) subject to
compliance with the requirements specified in clauses (i), (ii), (iii), (iv)
and (v) of Section 3.3(c), conflict with or violate any permit, concession,
franchise, license, judgment, injunction, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of its or their properties or assets, except in the case
of (ii) and (iii) for any such conflicts, violations, breaches, defaults,
terminations, cancellations or accelerations which, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect.
(c) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing with, any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity") is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation of the transactions contemplated by this Agreement, except for
(i) the filing of a pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
of the Certificate of Merger with the Delaware Secretary of State, (iii) the
filing of the Proxy Statement (as defined in Section 3.16 below) with the
Securities and Exchange Commission (the "SEC") in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iv) the filing of such
reports or schedules under Section 13 of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and (v)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable state securities laws.
(d) The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock on the record date for the Company
Meeting (as defined below) is the only vote of the holders of any class or
series of the Company's capital stock or other securities necessary to approve
the Merger. There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote.
3.4 SEC FILINGS; FINANCIAL STATEMENTS .
(a) The Company has filed and made available to the Buyer all
forms, reports and other documents required to be filed by the Company with the
SEC since May 7, 1999. All such required forms, reports and other documents
(including those that the Company may file after the date hereof until the
Closing) are referred to herein as the "Company SEC Reports." The Company SEC
Reports (i) were or will be filed on a timely basis, (ii) were or will be
prepared in compliance in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports, and (iii) did not or will not
at the time they were or are filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated in such Company SEC
Reports or necessary in order to make the statements in such Company SEC
Reports, in the light of the circumstances under which they were made, not
misleading. No Subsidiary of the Company is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes and schedules) contained or to be contained in
the Company SEC Reports (i) complied or will comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) were or will be prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly
presented or will fairly present the consolidated financial position of Company
and its Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, consistent with the books
and records of the Company and its Subsidiaries, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not
expected to be material in amount. The unaudited balance sheet of the
Company as of June 30, 1999 is referred to herein as the "Company Balance
Sheet."
3.5 NO UNDISCLOSED LIABILITIES . Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, and except for normal or
recurring liabilities incurred since the date of the Company Balance Sheet in
the ordinary course of business consistent with past practices, the Company and
its Subsidiaries do not have any liabilities, either accrued, contingent or
otherwise (whether or not required to be reflected in financial statements in
accordance with generally accepted accounting principles), and whether due or to
become due, which, individually or in the aggregate, are reasonably likely to
have a Company Material Adverse Effect.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS . Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, since the date of
the Company Balance Sheet, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been (i) any event,
change or development in the business, properties, financial condition, results
of operations or prospects of the Company and its Subsidiaries, taken as a
whole, which, individually or in the aggregate, has had, or is reasonably likely
to have, a Company Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to the Company or any of its
Subsidiaries which, individually or in the aggregate, has had, or is reasonably
likely to have, a Company Material Adverse Effect; or (iii) any other action or
event that would have required the consent of the Buyer pursuant to Section 5.1
of this Agreement had such action or event occurred after the date of this
Agreement.
3.7 TAXES .
(a) The Company and each of its Subsidiaries has filed all Tax
Returns (as defined below) that it was required to file, and all such Tax
Returns were correct and complete except for any errors or omissions which are
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. The Company and each of its Subsidiaries has paid on a
timely basis all Taxes (as defined below) that are shown to be due on any such
Tax Returns. The unpaid Taxes of the Company and its Subsidiaries for Tax
periods through the date of the Company Balance Sheet do not materially exceed
the accruals and reserves for Taxes set forth on the Company Balance Sheet
exclusive of any accruals and reserves for "deferred taxes" or similar items
that reflect timing differences between Tax and financial accounting principles.
All Taxes that the Company or any of its Subsidiaries is or was required by law
to withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity. For purposes of
this Agreement, (i) "Taxes" means all taxes, charges, fees, levies or other
similar assessments or liabilities, including income, gross receipts, ad
valorem, premium, value-added, excise, real property, personal property, sales,
use, services, transfer, withholding, employment, payroll and franchise taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof and (ii) "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries since inception. The federal income Tax Returns of the Company and
each of its Subsidiaries have been audited by the Internal Revenue Service or
are closed by the applicable statute of limitations for all taxable years
through the taxable year specified in Section 3.7(b) of the Company Disclosure
Schedule. The Company has made available to the Buyer correct and complete
copies of all other Tax Returns of the Company and its Subsidiaries together
with all related examination reports and statements of deficiency for all
periods from and after January 1, 1997. No examination or audit of any Tax
Return of the Company or any of its Subsidiaries by any Governmental Entity is
currently in progress or, to the knowledge of the Company, threatened or
contemplated. Neither the Company nor any of its Subsidiaries has been informed
by any Governmental Entity that the Governmental Entity believes that the
Company or any of its Subsidiaries was required to file any Tax Return that was
not filed. Neither the Company nor any of its Subsidiaries has waived any
statute of limitations with respect to Taxes or agreed to an extension of time
with respect to a Tax assessment or deficiency.
(c) Neither the Company nor any of its Subsidiaries: (i) is a
"consenting corporation" within the meaning of Section 341(f) of the Code, and
none of the assets of the Company or its Subsidiaries are subject to an election
under Section 341(f) of the Code; (ii) has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Code; (iii)
has made any payments, is obligated to make any payments, or is a party to any
agreement that could obligate it to make any payments that may be treated as an
"excess parachute payment" under Section 280G of the Code; (iv) has any actual
or potential liability for any Taxes of any person (other than the Company and
its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of law in any jurisdiction), or as a transferee or successor, by
contract, or otherwise; or (v) is or has been required to make a basis reduction
pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury Regulation
Section 1.337(d)-2(b).
(d) None of the assets of the Company or any of its
Subsidiaries: (i) is property that is required to be treated as being owned by
any other person pursuant to the provisions of former Section 168(f)(8) of the
Code; (ii) is "tax-exempt use property" within the meaning of Section 168(h) of
the Code; or (iii) directly or indirectly secures any debt the interest on which
is tax exempt under Section 103(a) of the Code.
(e) Neither the Company nor any of its Subsidiaries has
undergone, or will undergo as a result of the transactions contemplated by the
Agreement, a change in its method of accounting resulting in an adjustment to
its taxable income pursuant to Section 481(h) of the Code.
(f) No state or federal "net operating loss" of the Company
determined as of the Closing Date is subject to limitation on its use pursuant
to Section 382 of the Code or comparable provisions of state law as a result of
any "ownership change" within the meaning of Section 382(g) of the Code or
comparable provisions of any state law occurring prior to the Closing Date.
(g) Neither the Company nor any of its Subsidiaries (i) is or
has ever been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns, other than
a group of which only the Company and its Subsidiaries are or were members or
(ii) is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement.
3.8 OWNED AND LEASED REAL PROPERTIES .
(a) The Company does not and has never owned any real property.
(b) The Company has provided to the Buyer a complete and
accurate list of all real property leased by the Company or its Subsidiaries
(collectively "Company Leases") and the location of the premises. The Company
is not in default under any of the Company Leases. Each of the Company Leases
is in full force and effect and will not cease to be in full force and effect as
a result of the transactions contemplated by this Agreement.
3.9 INTELLECTUAL PROPERTY .
(a) The Company and its Subsidiaries exclusively own, or are
licensed or otherwise possess legally enforceable rights to use, all patents,
trademarks, trade names, domain names, service marks and copyrights, any
applications for and registrations of such patents, trademarks, trade names,
domain names, service marks and copyrights, and all processes, formulae,
methods, schematics, technology, know-how, computer software programs or
applications and tangible or intangible proprietary information or material that
are used or necessary to conduct the business of the Company and its
Subsidiaries as currently conducted (the "Company Intellectual Property
Rights"), except where the failure to so own, be so licensed or otherwise so
possess would not result in a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement and
consummation of the Merger will not result in the breach of, or create on behalf
of any third party the right to terminate or modify, any material license,
sublicense or other agreement relating to the Company Intellectual Property
Rights, or any license, sublicense and other agreement as to which the Company
or any of its Subsidiaries is a party and pursuant to which the Company or any
of its Subsidiaries is authorized to use any third party patents, trademarks,
copyrights or trade secrets (the "Company Third Party Intellectual Property
Rights"), including software that is used in the manufacture of, incorporated
in, or forms a part of any product or service sold by or expected to be sold by
a Company or any of its Subsidiaries.
(c) All patents, registered trademarks, service marks and
copyrights which are held by the Company or any of its Subsidiaries and which
are material to the business of the Company and its Subsidiaries, taken as a
whole, are valid and subsisting. The Company and its Subsidiaries have taken
reasonable measures to protect the proprietary nature of the Company
Intellectual Property Rights that are material to the business of the Company
and its Subsidiaries, taken as a whole, and to maintain in confidence all trade
secrets and confidential information owned or used by the Company or any of its
Subsidiaries and that are material to the business of the Company and its
Subsidiaries, taken as a whole. To the knowledge of the executive officers of
the Company, after reasonable inquiry, no other person or entity is infringing,
violating or misappropriating any of the Company Intellectual Property Rights.
None of the activities or business previously or currently conducted by the
Company or any of the Subsidiaries infringes, violates or constitutes a
misappropriation of, any patents, trademarks, trade names, service marks and
copyrights, any applications for and registrations of such patents, trademarks,
trade names, service marks and copyrights, and all processes, formulae, methods,
schematics, technology, know-how, computer software programs or applications and
tangible or intangible proprietary information or material of any other person
or entity, except where such infringement, violation or misappropriation would
not result in a Company Material Adverse Effect. Neither the Company nor any of
its Subsidiaries has received any complaint, claim or notice alleging any such
infringement, violation or misappropriation.
3.10 AGREEMENTS, CONTRACTS AND COMMITMENTS .
(a) There are no contracts or agreements that are material
contracts (as defined in Item 601(b)(10) of Regulation S-K) with respect to the
Company and its Subsidiaries (the "Company Material Contracts"), other than the
Company Material Contracts identified on the exhibit indices of the Company SEC
Reports filed prior to the date of this Agreement. Each Company Material
Contract has not been terminated or expired by its terms and is in full force
and effect. Neither the Company nor any of its Subsidiaries is in violation of
or in default under (nor does there exist any condition which, upon the passage
of time or the giving of notice or both, would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or other contract, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults which, individually or in the
aggregate, have not resulted in, and are not reasonably likely to result in, a
Company Material Adverse Effect.
(b) Section 3.10(b) of the Company Disclosure Schedule sets
forth a complete list of each contract or agreement to which the Company or any
of its Subsidiaries is a party or bound with any Affiliate of the Company (other
than any Subsidiary which is a direct or indirect wholly owned Subsidiary of the
Company).
3.11 LITIGATION . Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, there is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries which,
individually or in the aggregate, has had, or is reasonably likely to have, a
Company Material Adverse Effect. There are no judgments, orders or decrees
outstanding against the Company.
3.12 ENVIRONMENTAL MATTERS .
(a) Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement and except for such matters which, individually or
in the aggregate, have not had, and are not reasonably likely to have a Company
Material Adverse Effect: (i) the Company and each of its Subsidiaries has
complied with, and is not in violation of, any applicable Environmental Laws (as
defined in Section 3.12(b)); (ii) the properties currently owned or operated by
the Company and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined in Section 3.12(c));
(iii) the properties formerly owned or operated by the Company or any of its
Subsidiaries were not contaminated with Hazardous Substances prior to or
during the period of ownership or operation by the Company or any of its
Subsidiaries; (iv) neither the Company nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on the
property of any third party; (v) neither the Company nor any of its
Subsidiaries have released any Hazardous Substance to the environment; (vi)
neither the Company nor any of its Subsidiaries has received any notice,
demand, letter, claim or request for information alleging that the Company or
any of its Subsidiaries may be in violation of, liable under or have
obligations under any Environmental Law; (vii) neither the Company nor any of
its Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are
no circumstances or conditions involving the Company or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, obligations, investigations, costs or restrictions on the
ownership, use or transfer of any property of the Company or any of its
Subsidiaries pursuant to any Environmental Law.
(b) For purposes of this Agreement, "Environmental Law" means
any law, regulation, order, decree, permit, authorization, opinion, common law
or agency requirement of any jurisdiction relating to: (A) the protection,
investigation or restoration of the environment, human health and safety, or
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) For purposes of this Agreement, "Hazardous Substance"
means any substance that is: (A) listed, classified, regulated or which falls
within the definition of a "hazardous substance" or "hazardous material"
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is the subject of regulatory action by any Governmental
Entity pursuant to any Environmental Law.
(d) Section 3.12(d) of the Company Disclosure Schedule sets
forth a complete and accurate list of all documents (whether in hard copy or
electronic form) that contain any environmental reports, investigations and
audits relating to premises currently or previously owned or operated by the
Company or any of its Subsidiaries (whether conducted by or on behalf of the
Company or one of its Subsidiaries or a third party, and whether done at the
initiative of the Company or one of its Subsidiaries or directed by a
Governmental Entity or other third party) which were issued or conducted during
the past five years and which the Company has possession of or access to. A
complete and accurate copy of each such document has been provided to the Buyer.
3.13 EMPLOYEE BENEFIT PLANS .
(a) Section 3.13(a) of the Company Disclosure Schedule sets
forth a complete and accurate list of all Employee Benefit Plans (as defined
below) maintained, or contributed to, by the Company, any Subsidiary of the
Company or any ERISA Affiliate (as defined below) (together, the "Company
Employee Plans"). For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Employee Benefit Plan" means any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA), any "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and any other
material written or oral plan, agreement or arrangement involving direct or
indirect compensation, including insurance coverage, severance benefits,
disability benefits, deferred compensation, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation; (ii) "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended; and (iii) "ERISA Affiliate"
means any entity which is, or at any applicable time was, a member of (1) a
controlled group of corporations (as defined in Section 414(b) of the Code), (2)
a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (3) an affiliated service group (as defined under
Section 414(m) of the e code or the regulations under Section 414(o) of the
Code), any of which includes or included the Company or a Subsidiary.
(b) With respect to each Company Employee Plan, the Company has
furnished to the Buyer, a complete and accurate copy of (i) such Company
Employee Plan (or a written summary of any unwritten plan), (ii) the most recent
annual report (Form 5500) filed with the IRS and (iii) each trust agreement,
group annuity
contract and summary plan description, if any, relating to such Company
Employee Plan.
(c) Each Company Employee Plan has been administered in all
material respects in accordance with its terms and each of the Company, the
Company's Subsidiaries and their ERISA Affiliates has in all material respects
met its obligations with respect to such Company Employee Plan and has made all
required contributions thereto (or reserved for such contributions on the
Company Balance Sheet). With respect to the Company Employee Plans, no event
has occurred, and to the knowledge of the Company, there exists no condition or
set of circumstances in connection with which the Company or any of its
Subsidiaries could be subject to any liability under ERISA, the Code or any
other applicable law which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect.
(d) With respect to the Company Employee Plans, there are no
funded benefit obligations for which contributions have not been made or
properly accrued and there are no unfunded benefit obligations which have not
been accounted for by reserves, or otherwise properly footnoted in accordance
with generally accepted accounting principles, on the financial statements of
the Company.
(e) All the Company Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Company Benefit Plans
are qualified and the plans and trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended or operated since
the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost.
(f) Neither the Company, any Subsidiary of the Company nor any
ERISA Affiliate has (i) ever maintained a Company Employee Plan which was ever
subject to Section 412 of the Code or Title IV of ERISA or (ii) ever been
obligated to contribute to a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA). No Company Benefit Plan is funded by, associated with or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
(g) Each Company Benefit Plan is amendable and terminable
unilaterally by the Company at any time without liability to the Company as a
result thereof and no Company Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Company Benefit Plan.
(h) Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, neither the Company nor any of its Subsidiaries
is a party to any oral or written (i) agreement with any stockholders, director,
executive officer or other key employee of the Company or any of its
Subsidiaries (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
or any of its Subsidiaries of the nature of any of the transactions contemplated
by this Agreement, (B) providing any term of employment or compensation
guarantee or (C) providing severance benefits or other benefits after the
termination of employment of such director, executive officer or key employee;
(ii) agreement, plan or arrangement under which any person may receive payments
from the Company or any of its Subsidiaries that may be subject to the tax
imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (iii) agreement
or plan binding the Company or any of its Subsidiaries, including any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan or severance benefit plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
3.14 COMPLIANCE WITH LAWS . The Company and each of its Subsidiaries
has complied with, is not in violation of, and has not received any notice
alleging any violation with respect to, any applicable provisions of any
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its properties
or assets, except for failures to comply or violations which, individually or
in the aggregate, have not had, and are not reasonably likely to have, a
Company Material Adverse Effect.
3.15 PERMITS . The Company and each of its Subsidiaries have all
permits, licenses and franchises from Governmental Entities required to conduct
their businesses as now being conducted or as presently contemplated to be
conducted (the "Company Permits"), except for such permits, licenses and
franchises the absence of which, individually or in the aggregate, have not
resulted in, and are not reasonably likely to result in, a Company Material
Adverse Effect. The Company and its Subsidiaries are in compliance, in all
material respects, with the terms of the Company Permits.
3.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS . The
information to be supplied by the Company for inclusion in the registration
statement on Form S-4 pursuant to which shares of Buyer Common Stock issued in
the Merger will be registered under the Securities Act (the "Registration
Statement"), shall not at the time the Registration Statement 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 in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information to be supplied by the Company for inclusion in the proxy
statement/prospectus (the "Proxy Statement") to be sent to the stockholders of
the Company in connection with the meeting of the Company's stockholders to
consider this Agreement and the Merger (the "Company Meeting") shall not, on the
date the Proxy Statement is first mailed to stockholders of the Company, at the
time of the Company 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 omit to state
any material fact necessary in order to make the statements made in the Proxy
Statement 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 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 Affiliates, officers or directors should be discovered
by the Company which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, the Company shall promptly
inform the Buyer.
3.17 LABOR MATTERS . Neither the Company nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. Neither the Company nor any of its Subsidiaries is the subject of
any proceeding asserting that the Company or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization, nor is there pending or, to the knowledge
of the Company, threatened, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries.
3.18 INSURANCE . Each of the Company and its Subsidiaries maintains
insurance policies (the "Insurance Policies") with reputable insurance carriers
against all risks of a character and in such amounts as are usually insured
against by similarly situated companies in the same or similar businesses. Each
Insurance Policy is in full force and effect and is valid, outstanding and
enforceable, and all premiums due thereon have been paid in full. None of the
Insurance Policies will terminate or lapse (or be affected in any other
materially adverse manner) by reason of the transactions contemplated by this
Agreement. The Company and its Subsidiaries have complied in all material
respects with the provisions of each Insurance Policy under which it is the
insured party. No insurer under any Insurance Policy has canceled or generally
disclaimed liability under any such policy or indicated any intent to do so or
not to renew any such policy. All material claims under the Insurance Policies
have been filed in a timely fashion.
3.19 BUSINESS ACTIVITY RESTRICTIONS . There is no non-competition or
other similar agreement, commitment, judgment, injunction, order to create to
which the Company or any Subsidiary of the Company is a party or subject to that
has or could reasonably be expected to have the effect of prohibiting or
impairing the conduct of the business by the Company in any material respect.
The Company has not entered into any agreement under which it is restricted in
any material respect from selling, licensing or otherwise distributing any of
its technology or products, or providing services to, customers or potential
customers or any class of customers, in any
geographic area, during any period of time or any segment of the market or
line of business.
3.20 YEAR 2000 COMPLIANCE.
(a) The Company has conducted "year 2000" audits with respect
to (i) all of the Company's internal systems used in the business or operations
of the Company, including, without limitation, computer hardware systems,
software applications, firmware, equipment firmware and other embedded systems,
and (ii) the software, hardware, firmware and other technology which constitute
part of the products and services marketed or sold by the Company or licensed by
the Company to third parties. The Company has obtained "year 2000" certificates
with respect to all material third-party systems used in connection with the
business or operations of the Company.
(b) All of (i) the Company's material internal systems used in
the business or operations of the Company, including, without limitation,
computer hardware systems, software applications, firmware, equipment containing
embedded microchips and other embedded systems, and (ii) the software, hardware,
firmware and other technology which constitute a material part of the products
and services marketed or sold by the Company or licensed by the Company to third
parties are Year 2000 Compliant in all material respects.
(c) The Company has no knowledge of any failure to be Year 2000
Complaint of any material third-party system used in connection with the
business or operations of the Company.
(d) For purposes of this Agreement, "Year 2000 Compliant" means
that the applicable system or item:
(i) will accurately receive, record, store, provide,
recognize and process all date and time data from, during, into and between the
twentieth and twenty-first centuries, the years 1999 and 2000 and all leap
years;
(ii) will accurately perform all date-dependent
calculations and operations (including, without limitation, mathematical
operations, sorting, comparing and reporting) from, during, into and between the
twentieth and twenty-first centuries, the years 1999 and 2000 and all leap
years; and
(iii) will not malfunction, cease to function or provide
invalid or incorrect results as a result of (x) the change of years from 1999 to
2000 or from 2000 to 2001, (y) date data, including date data which represents
or references different centuries, different dates during 1999 and 2000, or more
than one century or (z) the occurrence of any particular date;
in each case without human intervention, other than original data entry;
provided, in each case, that all applications, hardware and other systems used
in conjunction with such system or item which are not owned or licensed by the
Company correctly exchange date data with or provide data to such system or
item.
(e) The Company has not provided any guarantee or warranty for
any product sold or licensed, or service provided, by the Company to the effect
that such product or service (i) complies with or accounts for the fact of the
arrival of the year 2000, (ii) will not be adversely affected with respect to
functionality, interoperability, performance or volume capacity (including,
without limitation, the processing and reporting of data) by virtue of the
arrival of the year 2000 or (iii) is otherwise Year 2000 Compliant.
3.21 ASSETS . Each of the Company and its Subsidiaries owns or leases
all tangible assets necessary for the conduct of its businesses as presently
conducted and as presently proposed to be conducted. All of such tangible
assets which are owned, are owned free and clear of all mortgages, security
interest, pledges, liens and encumbrances ("Liens") except for (i) Liens which
are disclosed in the Company SEC Reports filed prior to the date of this
Agreement and (ii) other Liens which, individually and in the aggregate, do not
materially interfere with the ability of the Company and its Subsidiaries to
conduct their business as currently conducted and as presently proposed to be
conducted and have not resulted in, and are not reasonably likely to result in,
a Company Material
Adverse Effect. The tangible assets of the Company and its Subsidiaries,
taken as a whole, are free from material defects, have been maintained in
accordance with normal industry practice, are in good operating condition and
repair (subject to normal wear and tear) and are suitable for the purpose for
which they are presently used.
3.22 CUSTOMERS . No customer of the Company or any of its Subsidiaries
that represented 5% or more of the Company's consolidated revenues in the fiscal
year ended December 31, 1998 or in the six-month period ended June 30, 1999 has
indicated to the Company or any of its Subsidiaries that it will stop, or
decrease the rate of, buying products or services from the Company or any of its
Subsidiaries.
3.23 ACCOUNTS RECEIVABLE . All material accounts receivable of the
Company reflected on the Company Balance Sheet are valid receivables, arose from
bona fide sales of goods and services in the ordinary course of business, and
are not subject to any setoffs or counterclaims.
3.24 NO EXISTING DISCUSSIONS . As of the date of this Agreement,
neither the Company nor any of its Subsidiaries is engaged, directly or
indirectly, in any discussions or negotiations with any other party with respect
to an Acquisition Proposal (as defined in Section 6.1).
3.25 OPINION OF FINANCIAL ADVISOR . The financial advisor of the
Company, Xxxxxxxxx & Xxxxx LLC, has delivered to the Company an opinion dated
the date of this Agreement to the effect, as of such date, that the Exchange
Ratio is fair to the holders of the Company Common Stock from a financial point
of view, a signed copy of which opinion has been delivered to the Buyer.
3.26 SECTION 203 OF THE DGCL NOT APPLICABLE . The Board of Directors
of the Company has taken all actions necessary so that the restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement, the Stockholder Agreements or the consummation of the Merger
or the other transactions contemplated by this Agreement or the Stockholder
Agreements.
3.27 TAX MATTERS . To the Company's knowledge, after consulting with
its independent auditors, neither the Company nor any of its Affiliates has
taken or agreed to take any action which would prevent the Merger from
constituting a transaction qualifying as a reorganization under Section 368(a)
of the Code.
3.28 TRANSACTIONS WITH AFFILIATE s. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has entered into any transaction with any director,
officer or other Affiliate (as defined in Section 6.9) of the Company or any of
its Subsidiaries or any transaction that would be subject to proxy statement
disclosure pursuant to Item 404 of Regulation S-K.
3.29 BROKERS; SCHEDULE OF FEES AND EXPENSES .
(a) No agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with any of the
transactions contemplated by this Agreement, except Xxxxxxxxx & Xxxxx LLC, whose
fees and expense will be paid by the Company. The Company has delivered to the
Buyer a complete and accurate copy of all agreements pursuant to which Xxxxxxxxx
& Xxxxx LLC is entitled to any fees and expenses in connection with any of the
transactions contemplated by this Agreement.
(b) Section 3.29(b) of the Company Disclosure Schedule sets
forth a complete and accurate list of the estimated fees and expenses incurred
and to be incurred by the Company and any of its Subsidiaries in connection with
this Agreement and the transactions contemplated by this Agreement (including
the fees and expenses of Xxxxxxxxx & Xxxxx LLC and of the Company's legal
counsel and accountants).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND
THE TRANSITORY SUBSIDIARY
The Buyer and the Transitory Subsidiary represent and warrant to the
Company that the statements contained in this Article IV are true and correct,
except as set forth herein or in the disclosure letter delivered by the Buyer to
the Company on or before the date of this Agreement (the "Buyer Disclosure
Schedule"). The Buyer Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this
Article IV and the disclosure in any paragraph shall qualify other paragraphs in
this Article IV only to the extent that it is reasonably apparent from a reading
of such document that it also qualifies or applies to such other paragraphs.
4.1 ORGANIZATION, STANDING AND POWER . Each of the Buyer and the
Transitory Subsidiary and the Buyer's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified, individually or in
the aggregate, would be reasonably likely to have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects of the Buyer and its Subsidiaries, taken as a whole, or to have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement, excluding any material adverse
effect (a) arising or resulting, directly or indirectly, from general industry,
economic or stock market conditions, (b) demonstrably shown to have been
proximately caused by the public announcement of, and the response or reaction
of customers, vendors, licensors, investors or employees of such entity or group
of entities to, this Agreement or any of the transactions contemplated by this
Agreement or (c) as otherwise specifically provided in Section 4.1 of the Buyer
Disclosure Schedule (a "Buyer Material Adverse Effect").
4.2 CAPITALIZATION . The authorized capital stock of the Buyer
consists of 400,000,000 shares of Buyer Common Stock and 5,000,000 shares of
preferred stock, $.01 par value per share (the "Buyer Preferred Stock"), of
which (i) 250 shares are designated Series A Preferred Stock, (ii) 50,000 shares
are designated Series B Preferred Stock, (iii) 375,000 shares have been
designated as Series C Preferred Stock and (iv) 18,090.45 shares have been
designated as Series D Preferred Stock. As of the close of business on
August 26, 1999, 95,584,120 shares of Buyer Common Stock were issued and
outstanding, and (i) no shares of Series A Preferred Stock, (ii) 35,000 shares
of Series B Preferred Stock (convertible into an aggregate of 1,378,756 shares
of Buyer Common Stock), (iii) 375,000 shares of Series C Preferred Stock
(convertible into an aggregate of 3,126,755 shares of Buyer Common Stock), and
(iv) no shares of Series D Preferred Stock were issued and outstanding.
Following August 26, 1999, the Buyer issued an aggregate of 18,994,975 shares of
Buyer Common Stock and 18,090.45 shares of Series D Preferred Stock,
(convertible into an aggregate of 1,809,045 shares of Buyer Common Stock). All
outstanding shares of Buyer Common Stock are, and all shares of Buyer Common
Stock subject to issuance upon conversion of outstanding shares of Buyer
Preferred Stock will be, upon issuance, duly authorized, validly issued, fully
paid and nonassessable. All of the shares of Buyer Common Stock issuable in
connection with the Merger, when issued in accordance with this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable.
4.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS .
(a) Each of the Buyer and the Transitory Subsidiary has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement by the Buyer and the Transitory Subsidiary have been duly
authorized by all necessary corporate action on the part of each of the Buyer
and the Transitory Subsidiary (including the approval of the Merger by the Buyer
as the sole stockholder of the Transitory Subsidiary). This Agreement has been
duly executed and delivered by each of the Buyer and the Transitory Subsidiary
and constitutes the valid and binding obligation of each of the Buyer and the
Transitory Subsidiary, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement by each of the
Buyer and the Transitory Subsidiary does not, and the consummation of the
transactions contemplated by this Agreement will not, (i) conflict
with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or By-laws of the Buyer or the Transitory
Subsidiary, (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract or other agreement, instrument
or obligation to which the Buyer or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (iii)
subject to compliance with the requirements specified in clauses (i), (ii),
(iii), (iv), (v) and (vi) of Section 4.3(c), conflict with or violate any
permit, concession, franchise, license, judgment, injunction, order, decree,
statute, law, ordinance, rule or regulation applicable to the Buyer or any of
its Subsidiaries or any of its or their properties or assets, except in the
case of (ii) and (iii) for any such conflicts, violations, breaches,
defaults, terminations, cancellations or accelerations which, individually or
in the aggregate, are not reasonably likely to have a Buyer Material Adverse
Effect.
(c) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing with, any
Governmental Entity is required by or with respect to the Buyer or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Buyer or Transitory Subsidiary or the consummation of the transactions
contemplated by this Agreement, except for (i) the filing of a pre-merger
notification report under the HSR Act, (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State, (iii) the filing of the
Registration Statement with the SEC in accordance with the Securities Act, (iv)
the filings of such reports or schedules under Section 13 of the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and (vi) the filing with the Nasdaq National Market of a
Notification Form for Listing of Additional Shares with respect to the Buyer
Common Stock issuable in connection with the Merger.
4.4 SEC FILINGS; FINANCIAL STATEMENTS .
(a) The Buyer has filed and made available to the Company all
forms, reports and other documents required to be filed by the Buyer with the
SEC since January 1, 1998. All such required forms, reports and other documents
(including those that the Buyer may file after the date hereof until the
Closing) are referred to herein as the "Buyer SEC Reports." The Buyer SEC
Reports (i) were or will be filed on a timely basis, (ii) were or will be
prepared in compliance in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Buyer SEC Reports, and
(iii) did not or will not at the time they were or are filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Buyer SEC Reports or necessary in order to make the statements in
such Buyer SEC Reports, 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 and schedules) contained or to be contained in
the Buyer SEC Reports (i) complied or will comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) were or will be prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly
presented or will fairly present the consolidated financial position of the
Buyer and its Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, consistent with the books
and records of the Buyer and its Subsidiaries, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of the Buyer as of April 30, 1999 is referred to herein
as the "Buyer Balance Sheet."
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS . Except as disclosed in the
Buyer SEC Reports filed prior to the date of this Agreement, since the date of
the Buyer Balance Sheet, there has not been any event, change or development in
the business, properties, financial condition, results of operations or
prospects of the Buyer and its
Subsidiaries, taken as a whole, which has had, or is reasonably likely to
have, a Buyer Material Adverse Effect.
4.6 TAX MATTERS . To the Buyer's knowledge, after consulting with its
independent auditors, neither the Buyer nor any of its Affiliates has taken or
agreed to take any action which would prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
4.7 LITIGATION . Except as disclosed in the Buyer SEC Reports filed
prior to the date of this Agreement, there is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the knowledge of the Buyer,
threatened against or affecting the Buyer or any of its Subsidiaries which,
individually or in the aggregate, has had, or is reasonably likely to have, a
Buyer Material Adverse Effect. There are no judgments, orders or decrees
outstanding against the Buyer.
4.8 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS . The
information in the Registration Statement (except for information supplied by
the Company for inclusion in the Registration Statement, as to which the Buyer
makes no representation and which shall not constitute part of the Buyer SEC
Report for purposes of this Agreement) shall not at the time the Registration
Statement 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 in the
Registration Statement or necessary in order to make the statements in the
Registration Statement, in light of the circumstances under which they were
made, not misleading. The information to be supplied by the Buyer for inclusion
in the Proxy Statement to be sent to the stockholders of the Company in
connection with the Company Meeting shall not, on the date the Proxy Statement
is first mailed to stockholders of the Company, at the time of the Company
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 omit to state any material fact
necessary in order to make the statements made in the Proxy Statement 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 Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to the Buyer or any of its
Affiliates, officers or directors should be discovered by the Buyer which should
be set forth in an amendment to the Registration Statement or supplement to the
Proxy Statement, the Buyer shall promptly inform the Company.
4.9 OPERATIONS OF THE TRANSITORY SUBSIDIARY . The Transitory
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business activities and
has conducted its operations only as contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
5.1 COVENANTS OF THE COMPANY . Except as expressly provided herein or
in Section 5.1 of the Company Disclosure Schedule, or as consented to in writing
by the Buyer, from and after the date of this Agreement until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, act and
carry on its business in the usual, regular and ordinary course in substantially
the same manner as previously conducted, pay its debts and Taxes and perform its
other obligations when due (subject to good faith disputes over such debts,
Taxes or obligations), and use reasonable efforts, consistent with past
practices, to maintain and preserve its and each Subsidiary's business
organization, assets and properties, keep available the services of its present
officers and employees and preserve its advantageous business relationships with
customers, suppliers, distributors and others having business dealings with it
for the purpose of not having its goodwill and ongoing business materially
impaired at the Effective Time. Without limiting the generality of the
foregoing, from and after the date of this Agreement until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, do any of the following without the prior written
consent of the Buyer:
(a) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether
in cash, securities or other property) in respect of, any of its capital
stock (other than dividends and distributions by a direct or indirect wholly
owned subsidiary of the company to its parent); (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution of shares of
its capital stock; or (C) purchase, redeem or otherwise acquire any shares of
its capital stock or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (except for
repurchases of unvested shares at cost upon termination of employment or
services);
(b) issue, deliver, sell, grant, pledge or otherwise dispose of
or encumber any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities (other than the issuance of shares of Company Common
Stock upon the exercise of Company Options or Company Warrants outstanding on
the date of this Agreement in accordance with their present terms and granting
of options to new hires in the ordinary course of business consistent with past
practice for a number of shares of Company Common Stock equal to 60,000
multiplied by the number of full months (with each such month commencing on the
20th day of each calendar month) between the date hereof and the Closing
("Permitted New Options"));
(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents, except as expressly provided by
this Agreement;
(d) acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets or any stock of, or by any other
manner, any business or any corporation, partnership, joint venture, limited
liability company, association or other business organization or division
thereof or (B) any assets that are material, in the aggregate, to the Company
and the Subsidiaries, taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(e) except in the ordinary course of business consistent with
past practice, sell, lease, license, pledge, or otherwise dispose of or encumber
any properties or assets of the Company or of any of its Subsidiaries;
(f) whether or not in the ordinary course of business or
consistent with past practice, sell or dispose of any assets material to the
Company and its Subsidiaries, taken as a whole (including any accounts, leases,
contracts or intellectual property or any assets or the stock of any
Subsidiaries, but excluding the sale of products and services in the ordinary
course of business consistent with past practice);
(g) adopt or implement any stockholder rights plan;
(h) except as permitted by Section 6.1, enter into an agreement
with respect to any merger, consolidation, liquidation or business combination,
or any acquisition or disposition of all or substantially all of the assets or
securities of the Company or any of its Subsidiaries;
(i) (A) other than indebtedness to fund expenditures permitted
by subsection (j) below, incur or suffer to exist any indebtedness for borrowed
money other than such indebtedness which existed as of June 30, 1999 as
reflected on the Company Balance Sheet or guarantee any such indebtedness of
another person, (B) issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, or (C) make any loans, advances (other than routine advances to
employees of the company in the ordinary course of business consistent with post
practice) or capital contributions to, or investment in, any other person;
(j) make any capital expenditures or expenditures with respect
to property, plant or equipment in excess of $5,000,000 in the aggregate for the
Company and its Subsidiaries, taken as a whole;
(k) make any changes in accounting methods, principles or
practices, except insofar as may have been required by a change in generally
accepted accounting principles or, except as so required, change any
assumption underlying, or method of calculating, any bad debt, contingency or
other reserve;
(l) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Company SEC Reports filed prior to the
date of this Agreement (to the extent so reflected or reserved against) or
incurred thereafter in the ordinary course of business consistent with past
practice, or (B) waive any material benefits of any confidentiality, standstill
or similar agreements to which the Company or any of its Subsidiaries is a
party;
(m) modify, amend or terminate any material contract or
agreement to which the Company or any of its Subsidiaries is party, or knowingly
waive, release or assign any material rights or claims (including any write-off
or other compromise of any accounts receivable of the Company of any of its
Subsidiaries);
(n) (A) except in the ordinary course of business consistent
with past practice enter into any material contract or agreement or (B) license
any material intellectual property rights to or from any third party;
(o) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof, (A) adopt, enter
into, terminate or amend any employment, severance or similar agreement or
benefit plan for the benefit or welfare of any current or former director,
officer or employee or any collective bargaining agreement, (B) increase in any
material respect the compensation or fringe benefits of, or pay any bonus to,
any director, officer or key employee, (C) accelerate the payment, right to
payment or vesting of any compensation or benefits, including any outstanding
options or restricted stock awards, (D) pay any material benefit not provided
for as of the date of this Agreement under any benefit plan, (E) grant any
awards under any bonus, incentive, performance or other compensation plan or
arrangement or benefit plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any benefit plans
or agreements or awards made thereunder), or (F) take any action other than in
the ordinary course of business consistent with past practice to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or benefit plan, except for the grant
of Permitted Options;
(p) make or rescind any Tax election, settle or compromise any
Tax liability or amend any Tax return in any material respect;
(q) initiate, compromise or settle any material litigation
or arbitration proceeding;
(r) close any facility or office;
(s) invest funds in debt securities or other instruments
maturing more than 90 days after the date of investment;
(t) fail to pay accounts payable and other obligations in the
ordinary course of business consistent with past practice; or
(u) authorize any of, or commit or agree, in writing or
otherwise, to take any of, the foregoing actions or any action which would make
any representation or warranty in Article III untrue or incorrect in any
material respect, or would materially impair or prevent the occurrence of any
conditions Article VII hereof.
5.2 COOPERATION . Subject to compliance with applicable law, from and
after the date of this Agreement and continuing until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company and each of its Subsidiaries shall make its officers available
to confer on a regular and frequent basis with one or more representatives of
the Buyer to report on the general status of ongoing operations and shall
promptly provide the Buyer or its counsel with copies of all filings made by
such party with any
Governmental Entity in connection with this Agreement, the Merger and the
transactions contemplated hereby.
5.3 CONFIDENTIALITY . The parties acknowledge that the Buyer and the
Company have previously executed a Mutual Confidentiality Agreement, dated
September 10, 1999 (the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms,
except as expressly modified herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 NO SOLICITATION .
(a) From and after the date of this Agreement until the earlier
of the termination of this Agreement in accordance with its terms or the
Effective Time, the Company and its Subsidiaries shall not, directly or
indirectly, through any officer, director, employee, financial advisor,
representative or agent (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, tender offer, sale of shares of capital stock (excluding
sales pursuant to existing Company Stock Options, the Company Warrants and
grants and exercises of Permitted New Options) or similar transaction involving
the Company or any of its Subsidiaries, other than the transactions contemplated
by this Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; PROVIDED, HOWEVER, that, if the Company has not breached
this Section 6.1, nothing contained in this Agreement shall prevent the Company
or its Board of Directors, from:
(A) furnishing non-public information to, or entering
into discussions or negotiations with, any person or entity in connection with a
bona fide written Acquisition Proposal that is made by such person or entity
after the date of this Agreement and that has not been solicited on or after the
date of the Agreement or recommending any such unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that
(1) the Board of Directors of the Company
believes in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and would, if consummated, result in a transaction more favorable than
the transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a "Superior
Proposal") and the Company's Board of Directors determines in good faith after
consultation with outside legal counsel that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law,
(2) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such person
or entity, such Board of Directors receives from such person or entity an
executed confidentiality agreement with terms no less favorable to such party
than those contained in the Confidentiality Agreement, and
(3) prior to recommending a Superior Proposal,
the Company shall provide the Buyer with at least five business days' prior
notice of its proposal to do so, during which time the Buyer may make, and in
such event the Company shall consider, a counterproposal to such Superior
Proposal, and the Company shall itself and shall cause its financial and legal
advisors to negotiate on its behalf with the Buyer with respect to the terms and
conditions of such counterproposal during such five-day period; or
(B) complying with Rule 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal.
(b) The Company will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore of
the nature described in Section 6.1(a) and will use reasonable efforts to obtain
the return of any confidential information furnished to any such parties.
(c) The Company shall notify the Buyer immediately (but in any
event, within 24 hours) after receipt by the Company (or its advisors) of any
Acquisition Proposal or any request for nonpublic information in connection with
an Acquisition Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company that it is considering
making, or has made, an Acquisition Proposal. Such notice shall be made orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact. The
Company shall continue to keep the Buyer informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or
negotiated.
(d) Nothing in this Section 6.1 shall (i) permit the Company to
terminate this Agreement (except as specifically provided in Section 8.1
hereof), (ii) permit the Company to enter into any agreement with respect to an
Acquisition Proposal during the term of this Agreement (it being agreed that
during the term of this Agreement, the Company shall not enter into any
agreement with any person that provides for, or in any way facilitates, an
Acquisition Proposal (other than a confidentiality agreement of the type
referred to in Section 6.1(a) above)) or (iii) affect any other obligation of
the Company under this Agreement.
6.2 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT .
(a) As promptly as practical after the execution of this
Agreement, the Buyer and the Company shall prepare and the Company shall file
with the SEC the Proxy Statement, and the Buyer shall prepare and file with the
SEC the Registration Statement, in which the Proxy Statement will be included as
a prospectus, provided that the Buyer may delay the filing of the Registration
Statement until approval of the Proxy Statement by the SEC. The Buyer and the
Company shall use all reasonable efforts to cause the Registration Statement to
become effective as soon after such filing as practicable. Each of the Buyer
and the Company will respond to any comments of the SEC and will use all
reasonable efforts to have the Proxy Statement cleared by the SEC and the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filings and the Company will cause the Proxy Statement
and the prospectus contained within the Registration Statement to be mailed to
its stockholders at the earliest practicable time after both the Proxy Statement
is cleared by the SEC and the Registration Statement is declared effective under
the Securities Act. Each of the Buyer and the Company will notify the other
promptly upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Registration
Statement, the Proxy Statement or any filing pursuant to Section 6.2(b) or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any filing pursuant to Section 6.2(b). Each of the Buyer and the
Company will cause all documents that it is responsible for filing with the SEC
or other regulatory authorities under this Section 6.2 to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement, the Registration
Statement or any filing pursuant to Section 6.2(b), the Buyer or the Company, as
the case may be, will promptly inform the other of such occurrence and cooperate
in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company, such amendment or supplement.
(b) The Buyer and the Company shall make all necessary filings
with respect to the Merger under the Securities Act, the Exchange Act,
applicable state blue sky laws and the rules and regulations thereunder.
6.3 NASDAQ QUOTATION . The Company agrees to use its best efforts to
continue the quotation of the Company Common Stock on the Nasdaq National Market
during the term of this Agreement.
6.4 ACCESS TO INFORMATION . The Company shall (and shall cause each
of its Subsidiaries to) afford to
the Buyer's officers, employees, accountants, counsel and other
representatives, reasonable access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to the Buyer
(a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other
information concerning its business, properties, assets and personnel as the
Buyer may reasonably request. Unless otherwise required by law, the Buyer
will hold any such information which is nonpublic in confidence in accordance
with the Confidentiality Agreement. No information or knowledge obtained in
any investigation pursuant to this Section or otherwise shall affect or be
deemed to modify any representation or warranty contained in this Agreement
or the conditions to the obligations of the parties to consummate the Merger.
6.5 STOCKHOLDERS MEETING .
(a) The Company, acting through its Board of Directors, shall,
subject to and according to applicable law and its Certificate of Incorporation
and By-laws, promptly and duly call, give notice of, convene and hold as soon as
practicable following the date on which the Registration Statement becomes
effective the Company Meeting for the purpose of voting to approve and adopt
this Agreement and the Merger (the "Company Voting Proposal"). The Board of
Directors of the Company shall (i) recommend approval and adoption of the
Company Voting Proposal by the stockholders of the Company and include in the
Proxy Statement such recommendation and (ii) take all action that is both
reasonable and lawful to solicit and obtain such approval; provided, however,
that in response to an Acquisition Proposal the Board of Directors of the
Company may withdraw such recommendation if (but only if) (i) the Board of
Directors of the Company has received a Superior Proposal, (ii) such Board of
Directors after consultation with outside legal counsel determines that it is
required, in order to comply with its fiduciary duties under applicable law, to
recommend such Superior Proposal to the stockholders of the Company and (iii)
the Company has complied with the provisions of Section 6.1.
(b) The Company shall call and hold the Company Meeting for
the purpose of voting upon the approval of this Agreement and the Merger whether
its Board of Directors at any time subsequent to the date hereof determines that
this Agreement is no longer advisable or recommends that the Company's
stockholders reject it.
(c) The stockholders listed on Section 6.5(c) of the Buyer
Disclosure Schedule have each executed and delivered a Stockholder Agreement to
the Buyer concurrently with the signing of this Agreement.
(d) The employees of the Company designated on Section 6.5(d)
of the Company Disclosure Schedule have each executed and delivered to the Buyer
an Employee Lock-Up Agreement and a Non-Compete Agreement in a form agreed upon
by the Buyer and the Company. The stockholders of the Company designated on
Section 6.5(d) of the Company Disclosure Schedule have each executed and
delivered a Stockholder Lock-Up Agreement to the Buyer.
6.6 LEGAL CONDITIONS TO THE MERGER.
(a) Subject to the terms hereof, the Company and the Buyer
shall each use its reasonable efforts to (i) take, or cause to be taken, all
actions, and do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by the Company or the Buyer or any of their Subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, (iii) as promptly as
practicable, make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Securities Act and the Exchange Act, and any other applicable federal or
state securities laws, (B) the HSR Act and any related governmental request
thereunder, and (C) any other applicable law and (iv) execute or deliver any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. The Company and the
Buyer shall cooperate with each other
in connection with the making of all such filings, including providing copies
of all such documents to the non-filing party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The Company and the Buyer shall
use their respective reasonable efforts to furnish to each other all
information required for any application or other filing to be made pursuant
to the rules and regulations of any applicable law (including all information
required to be included in the Proxy Statement and the Registration
Statement) in connection with the transactions contemplated by this
Agreement.
(b) Subject to the terms hereof, the Buyer and the Company
agree, and shall cause each of their respective Subsidiaries, to cooperate and
to use their respective reasonable efforts to obtain any government clearances
or approvals required for Closing under the HSR Act, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as
amended, and any other federal, state or foreign law or, regulation or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively "Antitrust Laws"), to respond
to any government requests for information under any Antitrust Law, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Antitrust Order") that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement under any Antitrust Law. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Law.
The Buyer shall be entitled to direct any proceedings or negotiations with any
Governmental Entity relating to any of the foregoing, provided that it shall
afford the Company a reasonable opportunity to participate therein.
Notwithstanding anything to the contrary in this Section, neither the Buyer nor
any of its Subsidiaries shall be required to (i) divest any of their respective
businesses, product lines or assets, or to take or agree to take any other
action or agree to any limitation, that could reasonably be expected to have a
material adverse effect on the Buyer or on the Buyer combined with the Company
after the Effective Time or (ii) take any action under this Section if the
United States Department of Justice or the United States Federal Trade
Commission formally authorizes its staff to seek a preliminary injunction or
restraining order to enjoin consummation of the Merger.
(c) Each of the Company and the Buyer shall give (or shall
cause their respective Subsidiaries to give) any notices to third parties, and
use, and cause their respective Subsidiaries to use, their reasonable efforts to
obtain any third party consents related to or required in connection with the
Merger that are (A) necessary to consummate the transactions contemplated
hereby, (B) disclosed or required to be disclosed in the Company Disclosure
Schedule or the Buyer Disclosure Schedule, as the case may be, or (C) required
to prevent a Company Material Adverse Effect or a Buyer Material Adverse Effect
from occurring prior to or after the Effective Time.
6.7 PUBLIC DISCLOSURE . The Buyer and the Company shall issue a joint
press release announcing the Merger promptly following the execution of this
Agreement and each shall use its reasonable efforts to consult with the other
before issuing any other press release or otherwise making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to using such efforts, except as
may be required by law.
6.8 TAX-FREE REORGANIZATION . The Buyer and the Company shall each
use its reasonable efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code. The parties hereto hereby
adopt this Agreement as a plan of reorganization.
6.9 AFFILIATE AGREEMENTS . Upon the execution of this Agreement, the
Company will provide the Buyer with a list of those persons who are, in the
Company's reasonable judgment, "affiliates" of the Company, within the meaning
of Rule 145 (each such person who is an "affiliate" of the Company within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). The Company shall provide to the Buyer such
information and documents as the Buyer shall reasonably request for purposes of
reviewing such list and shall notify the Buyer in writing regarding any change
in the identity of its Affiliates prior to the Closing Date. The Company shall
use its reasonable efforts to deliver or cause to be delivered to the Buyer
prior to the
mailing of the Proxy Statement from each of its Affiliates, an executed
Affiliate Agreement, in substantially the form appended hereto as EXHIBIT C
(the "Affiliate Agreement"). The Buyer shall be entitled to place
appropriate legends on the certificates evidencing any shares of Buyer Common
Stock to be received by Rule 145 Affiliates of the Company pursuant to the
terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for the Buyer Common Stock (provided that such legends
or stop transfer instructions shall be removed, two years after the Effective
Date, upon the request of any stockholder that is not then an Affiliate of
the Buyer).
6.10 NASDAQ NATIONAL MARKET LISTING . The Buyer shall use its best
efforts to cause the shares of Buyer Common Stock issued pursuant to Section
2.1(c) and upon exercise of Company Stock Options and Company Warrants assumed
pursuant to Section 6.11 to be quoted on the Nasdaq National Market or listed on
such securities exchange on which the Buyer Common Stock is then listed.
6.11 COMPANY STOCK PLANS AND THE COMPANY WARRANTS .
(a) At the Effective Time, each outstanding Company Stock
Option, whether vested or unvested, shall be assumed by Buyer and deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under the Company Stock Option immediately prior to the Effective
Time (including, if applicable, status as an "incentive stock option" under the
Code), the same number of shares of Buyer Common Stock as the holder of the
Company Stock Option would have been entitled to receive pursuant to the Merger
had such holder exercised such option in full immediately prior to the Effective
Time (rounded down to the nearest whole number), at a price per share (rounded
up to the nearest whole cent) equal to (y) the aggregate exercise price for the
shares of Company Common Stock purchasable pursuant to the Company Stock Option
immediately prior to the Effective Time divided by (z) the number of full shares
of Buyer Common Stock deemed purchasable pursuant to the Company Stock Option in
accordance with the foregoing. Continuous employment with Company or its
subsidiaries shall be credited to the optionee for purposes of determining the
vesting of all assumed Company Options after the Effective Time.
(b) As soon as practicable after the Effective Time, the Buyer
shall deliver to the participants in the Company Stock Plans appropriate notice
setting forth such participants' rights pursuant thereto and the grants pursuant
to the Company Stock Plans shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section after giving
effect to the Merger).
(c) The Buyer shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Buyer Common Stock for
delivery upon exercise of the Company Stock Options assumed in accordance with
this Section. As soon as practicable after the Effective Time, the Buyer shall
file a registration statement on Form S-8 (or any successor form) with respect
to the shares of Buyer Common Stock subject to such options and shall use its
best efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(d) The Board of Directors of the Company shall, prior to or as
of the Effective Time, take all necessary actions, pursuant to and in accordance
with the terms of Company Stock Plans and the instruments evidencing the Company
Stock Options, to provide for the conversion of the Company Stock Options into
options to acquire Buyer Common Stock in accordance with this Section 6.11.
(e) Each outstanding purchase right under the Company's 1999
Employee Stock Purchase Plan (the "ESPP") (each an "Assumed Purchase Right")
shall be assumed by Buyer. Each Assumed Purchase Right shall continue to have,
and be subject to, the terms and conditions set forth in the Company ESPP and
the documents governing the Assumed Purchase Rights, except that the number of
shares of Buyer Common Stock issuable upon exercise thereof shall equal the
number of shares of Company Common Stock otherwise issuable upon exercise
thereof multiplied by the Exchange Ratio and the purchase price of such shares
of Buyer Common Stock on the Purchase Date (as defined in the ESPP) shall be the
lower of (i) the quotient determined by dividing eighty-five (85%) of the fair
market value per share of the Company Common Stock on the Offering Date for such
Purchase Period by the Exchange Ratio or (ii) eighty-five (85%) of the fair
market value per share of the Buyer
Common Stock on the applicable Purchase Date (with the number of shares
rounded down to the nearest whole share and the purchase price rounded up to
the nearest whole cent). The Assumed Purchase Rights shall be exercised on
the applicable Purchase Date, and each participant shall, accordingly, be
issued shares of Buyer Common Stock at such time. The Company ESPP and all
outstanding purchase rights thereunder shall terminate on the last day of any
Offering Period in effect on the date hereof, and no additional purchase
rights shall be granted and no additional Offering Periods shall commence
following the date hereof. Buyer agrees that from and after the Effective
Time, employees of Company may participate in Buyer's employee stock purchase
plan, subject to the terms and conditions of such plan if they are not
participating in the ESPP on such date. Capitalized terms in this Section
6.14 if not otherwise defined in this Agreement, have the meanings ascribed
to them in the Company ESPP.
(f) At the Effective Time, each outstanding Company Warrant shall be
assumed by Buyer and deemed to constitute a warrant to acquire, on the same
terms and conditions as where applicable under the Company Warrant immediately
prior to the Effective Time, the same number of shares of Buyer Common Stock as
the holder of the Company Warrant would have been entitled to receive pursuant
to the Merger had such holder exercised such warrant in full immediately prior
to the Effective Time (rounded down to the nearest whole number), at a price per
share (rounded up to the nearest whole cent) equal to (y) the aggregate warrant
exercise price for the shares of Company Common Stock purchasable pursuant to
the Company Warrant immediately prior to the Effective Time, divided by (z) the
number of full shares of Buyer Common Stock deemed purchasable pursuant to the
Company Warrant in accordance with the forgoing.
6.12 STOCKHOLDER LITIGATION . Until the earlier of the termination of
this Agreement in accordance with its terms or the Effective Time, the Company
shall give the Buyer the opportunity to participate at its expense in the
defense or settlement of any stockholder litigation against the Company or its
Board of Directors relating to this Agreement or any of the transactions
contemplated by this Agreement, and shall not settle any such litigation without
the Buyer's prior written consent, which will not be unreasonably withheld or
delayed.
6.13 INDEMNIFICATION . From and after the Effective Time, the Buyer
shall, to the fullest extent permitted by law, cause the Surviving Corporation,
for a period of six years from the Effective Time, to honor all of the Company's
obligations to indemnify and hold harmless each present and former director and
officer of the Company (the "Indemnified Parties"), against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the extent that such
obligations to indemnify and hold harmless exist on the date of this Agreement.
6.14 NOTIFICATION OF CERTAIN MATTERS . The Buyer will give prompt
notice to the Company, and the Company will give prompt notice to the Buyer, of
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause (a) (i) any representation or
warranty of such party contained in this Agreement that is qualified as to
materiality to be untrue or inaccurate in any respect or (ii) any other
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect, in each case at any time from and
after the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, or (b) any
material failure of the Buyer and the Transitory Subsidiary or the Company, as
the case may be, or of any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement. Notwithstanding the above, the
delivery of any notice pursuant to this Section will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice or
the conditions to such party's obligation to consummate the Merger.
6.15 EMPLOYEES . The Buyer will have no obligation to retain any
employee or group of employees of the Company following the Effective Time. As
soon as practicable after the execution of this Agreement, the Company and the
Buyer shall confer and work together in good faith to agree upon mutually
acceptable employee benefit and compensation arrangements (and terminate Company
employee plans immediately prior to the Effective Time, if appropriate) so as to
provide benefits to Company employees initially upon the Merger which are
generally equivalent to those being provided to employees of Company immediately
preceding the Effective Time, as well as
to determine appropriate termination benefits for Company employees generally
and certain members of Company management in particular, in addition to any
and all severance, separation, retention and salary continuation plans,
programs or arrangements disclosed on the Company Disclosure Schedule.
Continuous employment with the Company or its subsidiaries shall be credited
to Company employees who become Buyer employees for all purposes of
eligibility and vesting of benefits, but not for purposes of accrual of
benefits. Following the Effective Time, Buyer will enforce, and cause the
Company to enforce, the terms of the Retention and Severance Plan (as defined
in the Company Disclosure Schedule).
ARTICLE VII
CONDITIONS TO MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER . The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Company Voting Proposal shall
have been approved and adopted at the Company Meeting, at which a quorum is
present, by the affirmative vote of the holders of a majority of the shares of
the Company Common Stock outstanding on the record date for the Company Meeting.
(b) HSR ACT. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(c) GOVERNMENTAL APPROVALS. Other than the filings provided
for by Section 1.1, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity, the failure of which to file, obtain or occur is reasonably
likely to have a Buyer Material Adverse Effect or a Company Material Adverse
Effect shall have been filed, been obtained or occurred.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order.
(e) NO INJUNCTIONS. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
order, executive order, stay, decree, judgment or injunction (each an "Order")
or statute, rule or regulation which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE
TRANSITORY SUBSIDIARY . The obligations of the Buyer and the Transitory
Subsidiary to effect the Merger are subject to the satisfaction of each of the
following additional conditions, any of which may be waived in writing
exclusively by the Buyer and the Transitory Subsidiary:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
(i) as of the date of this Agreement (except to the extent such representations
and warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date) and
(ii) as of the Closing Date as though made on and as of the Closing Date (except
(x) to the extent such representations and warranties are specifically made as
of a particular date, in which case such representations and warranties shall be
true and correct as of such date, (y) for changes contemplated by this Agreement
and (z) where the failures to be true and correct (without regard to any
materiality, Company Material Adverse Effect or knowledge qualifications
contained therein), individually or in the aggregate, have not had, and are not
reasonably likely to have, a Company Material Adverse Effect); and the Buyer
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date; and the
Buyer shall have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company to such
effect.
(c) TAX OPINION. The Buyer shall have received a written
opinion from Xxxx and Xxxx LLP, counsel to the Buyer, to the effect that the
Merger will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code; provided that
if Xxxx and Xxxx LLP does not render such opinion, this condition shall
nonetheless be deemed satisfied if Fenwick & West LLP renders such opinion to
the Buyer (it being agreed that the Buyer and the Company shall each provide
reasonable cooperation, including making reasonable representations, to Fenwick
& West LLP or Xxxx and Xxxx LLP, as the case may be, to enable them to render
such opinion).
(d) THIRD PARTY CONSENTS. The Company shall have obtained (i)
all consents and approvals of third parties referred to in Section 3.3(b) of the
Company Disclosure Schedule and (ii) any other consent or approval of any third
party (other than a Governmental Entity) the failure of which to obtain,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect.
(e) RESIGNATIONS. The Buyer shall have received copies of the
resignations, effective as of the Effective Time, of each director of the
Company.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY . The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer and the Transitory Subsidiary set forth in this
Agreement shall be true and correct (i) as of the date of this Agreement (except
to the extent such representations are specifically made as of a particular
date, in which case such representations and warranties shall be true and
correct as of such date) and (ii) as of the Closing Date as though made on and
as of the Closing Date (except (x) to the extent such representations and
warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date, (y)
for changes contemplated by this Agreement and (z) where the failures to be true
and correct (without regard to any materiality, Buyer Material Adverse Effect or
knowledge qualifications contained therein), individually or in the aggregate,
have not had, and are not reasonably likely to have, a Buyer Material Adverse
Effect); and the Company shall have received a certificate signed on behalf of
the Buyer by the chief executive officer or the chief financial officer of the
Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The Buyer and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of the Buyer by the chief executive officer or the chief financial
officer of the Buyer to such effect.
(c) TAX OPINION. The Company shall have received the opinion
of Fenwick & West LLP, counsel to the Company, to the effect that the Merger
will be treated for federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code; provided that if Fenwick &
West LLP does not render such opinion, this condition shall nonetheless be
deemed satisfied if Xxxx and Xxxx LLP renders such opinion to the Company (it
being agreed that the Buyer and the Company shall each provide reasonable
cooperation, including making reasonable representations, to Fenwick & West LLP
or Xxxx and Xxxx LLP, as the case may be, to enable them to render such
opinion).
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION . This Agreement may be terminated at any time prior
to the Effective Time (with respect to Sections 8.1(b) through 8.1(f), by
written notice by the terminating party to the other party), whether before or
after approval of the Merger by the stockholders of the Company:
(a) by mutual written consent of the Buyer and the Company; or
(b) by either the Buyer or the Company if the Merger shall not
have been consummated by April 30, 2000 (the "Outside Date") (provided that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been a principal cause of or resulted in the failure of the Merger
to occur on or before such date); or
(c) by either the Buyer or the Company if a Governmental Entity
of competent jurisdiction shall have issued a nonappealable final order, decree
or ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(d) by either the Buyer or the Company if at the Company
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of the Company in favor of the Company Voting Proposal shall not
have been obtained (provided that the right to terminate this Agreement under
this Section 8.1(d) shall not be available to any party seeking termination who
at the time is in breach of or has failed to fulfill its obligations under this
Agreement); or
(e) by the Buyer, if: (i) the Board of Directors of the Company
shall have failed to recommend approval of the Company Voting Proposal in the
Proxy Statement or shall have withdrawn or modified its recommendation of the
Company Voting Proposal; (ii) the Board of Directors of the Company fails to
reconfirm its recommendation of this Agreement or the Merger within five
business days after the Buyer requests in writing that the Board of Directors of
the Company do so; (iii) the Board of Directors of the Company shall have
approved or recommended to the stockholders of the Company an Alternative
Transaction (as defined in Section 8.3(g)); or (iv) a tender offer or exchange
offer for outstanding shares of the Company Common Stock is commenced (other
than by the Buyer or an Affiliate of the Buyer) and the Board of Directors of
the Company recommends that the stockholders of the Company tender their shares
in such tender or exchange offer or, within 10 days after such tender or
exchange offer, fails to recommend against acceptance of such offer or takes no
position with respect to the acceptance thereof; or (v) for any reason the
Company fails to call and hold the Company Meeting by the date which is one
business day prior to the Outside Date (other than by reason of the Registration
Statement not being declared effective by the SEC sufficiently in advance of the
Outside Date in order to permit the holding of the Company Meeting); or
(f) by either the Buyer or the Company, if there has been a
breach of any representation, warranty, covenant or agreement on the part of the
other party set forth in this Agreement, which breach (i) causes the conditions
set forth in Section 7.2(a) or 7.2(b) (in the case of termination by the Buyer)
or Section 7.3(a) or 7.3(b) (in the case of termination by the Company) not to
be satisfied, and (ii) shall not have been cured within 20 days following
receipt by the breaching party of written notice of such breach from the other
party.
8.2 EFFECT OF TERMINATION . In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of the Buyer, the
Company, the Transitory Subsidiary or their respective officers, directors,
stockholders or Affiliates, except as set forth in Sections 3.29, 5.3, 8.3 and
Article IX; provided that any such termination shall not relieve any party from
liability for any willful breach of this Agreement (which includes without
limitation the making of any representation or warranty by a party in this
Agreement that the party knew was not true and accurate when made), and Sections
3.29, 5.3, 8.3 and Article IX of this Agreement and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
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 fees and expenses, whether or not the Merger is
consummated; provided however, that the Company and the Buyer shall share
equally all fees and expenses, other than attorneys', accountants' and filing
fees, incurred with respect to the printing and filing of the Proxy Statement
(including any related preliminary materials) and the Registration Statement
and any amendments or supplements thereto.
(b) The Company shall pay the Buyer up to $500,000 as
reimbursement for expenses of the Buyer actually incurred relating to the
transactions contemplated by this Agreement prior to termination (including, but
not limited to, fees and expenses of the Buyer's counsel, accountants and
financial advisors, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by the Buyer pursuant to
(i) Section 8.1(b) as a result of the failure to satisfy the condition set forth
in Section 7.2(a); (ii) Section 8.1(e); or (iii) Section 8.1(f) or by the Buyer
or the Company pursuant to Section 8.1(d).
(c) The Company shall pay the Buyer a termination fee of
$15,000,000 (the "Termination Fee") upon the earliest to occur of the following
events:
(i) the termination of this Agreement by the Buyer
pursuant to Section 8.1(e); or
(ii) the termination of this Agreement by the Buyer
pursuant to Section 8.1(f) after a breach by the Company of this Agreement; or
(iii) the termination of the Agreement by the Buyer or the
Company pursuant to Section 8.1(d) as a result of the failure to receive the
requisite vote for approval of the Company Voting Proposal by the stockholders
of the Company at the Company Meeting.
If a Termination Fee is paid or payable by the Company and, within six
(6) months of the date of termination of this Agreement, an Alternative
Transaction is consummated or the Company enters into an agreement with respect
thereto (a "Topping Transaction"), then the Company shall pay to the Buyer upon
the closing of the Topping Transaction a fee (the "Topping Fee") equal to five
percent (5%) of the total consideration paid in the Topping Transaction less an
amount equal to any Termination Fee actually paid to Buyer. For purposes of
determining the Termination Fee, the value of any securities issued or issuable
as consideration in the Topping Transaction shall be measured by reference to
the closing price of such securities on the date of closing of the Topping
Transaction.
(d) The Buyer shall pay the Company up to $500,000 as
reimbursement for expenses of the Company actually incurred relating to the
transactions contemplated by this Agreement prior to termination (including, but
not limited to, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by the Company pursuant to (i)
Section 8.1(b) as a result of the failure to satisfy the condition set forth in
Section 7.3(a) or (ii) Section 8.1(f).
(e) The Buyer shall pay the Company a termination fee of
$15,000,000 upon the termination of this Agreement by the Company pursuant to
Section 8.1(f) after a breach by the Buyer of this Agreement.
(f) The expenses and fees, if applicable, payable pursuant to
Section 8.3(b), 8.3(c), 8.3(d) and 8.3(e) shall be paid within one business day
after demand therefor following the first to occur of the events giving rise to
the payment obligation described in Section 8.3(b), 8.3(c)(i), (ii) or (iii),
8.3(d) or 8.3(e). If one party fails to promptly pay to the other any expense
reimbursement or fee due hereunder, the defaulting party shall pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Fleet Bank, N.A. plus five percent per annum, compounded
quarterly, from the date such expense reimbursement or fee was required to be
paid.
(g) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any person (or group of persons)
other than the Buyer or its affiliates (a "Third Party"), acquires more than 20%
of the outstanding shares of the Company Common Stock pursuant to a tender offer
or exchange
offer or otherwise, (ii) a merger or other business combination involving the
Company pursuant to which any Third Party acquires more than 20% of the
outstanding shares of Company Common Stock or of the entity surviving such
merger or business combination, (iii) any other transaction pursuant to which
any Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of the Company, and the entity
surviving any merger or business combination including any of them) of the
Company having a fair market value equal to more than 20% of the fair market
value of all the assets of the Company immediately prior to such transaction,
or (iv) any public announcement by a Third Party of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
8.4 AMENDMENT . This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.5 EXTENSION; WAIVER . At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES . The respective
representations and warranties of the Company, the Buyer and the Transitory
Subsidiary contained in this Agreement or in any instrument delivered pursuant
to this Agreement shall expire with, and be terminated and extinguished upon,
the Effective Time.
9.2 NOTICES . All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered (i) four business days after being
sent by registered or certified mail, return receipt requested, postage prepaid,
or (ii) one business day after being sent for next business day delivery, fees
prepaid, via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
(a) if to the Buyer or Sub, to
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Telecopy: 000-000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to the Company, to
AdForce, Inc.
00000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Attn: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Any party may give any notice or other communication hereunder using any other
means (including personal delivery, messenger service, telecopy, telex, ordinary
mail or electronic mail), but no such notice or other communication shall be
deemed to have been duly given unless and until it actually is received by the
party for whom it is intended. Any party may change the address to which
notices and other communications hereunder are to be delivered by giving the
other parties notice in the manner herein set forth.
9.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto and the documents and instruments referred to herein that are to
be delivered at the Closing) constitutes the entire agreement among the parties
hereto and supersedes any prior understandings, agreements or representations by
or among the parties hereto, or any of them, written or oral, with respect to
the subject matter hereof; provided that the Confidentiality Agreement shall
remain in effect in accordance with its terms.
9.4 NO THIRD PARTY BENEFICIARIES . Except as provided in
Section 6.13, this Agreement is not intended, and shall not be deemed, to confer
any rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns, to create any agreement of
employment with any person or to otherwise create any third-party beneficiary
hereto.
9.5 ASSIGNMENT . Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, and any such assignment
without such prior written consent shall be null and void, except that the Buyer
and/or the Transitory Subsidiary may assign this Agreement to any direct or
indirect wholly owned Subsidiary of the Buyer without consent of the Company,
provided that the Buyer and/or the Transitory Subsidiary, as the case may be,
shall remain liable for all of its obligations under this Agreement. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors and permitted assigns.
9.6 SEVERABILITY . Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree hereto that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such court
does not exercise the power granted to it in the prior sentence, the parties
hereto agree to replace such invalid or unenforceable term or provision with a
valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
9.7 COUNTERPARTS AND SIGNATURE . This Agreement may be executed in
two or more counterparts, each
of which shall be deemed an original but all of which together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties hereto and delivered to
the other parties, it being understood that all parties need not sign the
same counterpart. This Agreement may be executed and delivered by facsimile
transmission.
9.8 INTERPRETATION . When reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or Section of this
Agreement, unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa. Any reference to
any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
9.9 GOVERNING LAW . This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdictions other than those of the State of Delaware.
9.10 REMEDIES . Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof this being in addition to any other remedy to
which they are entitled at law or in equity.
9.11 WAIVER OF JURY TRIAL . EACH OF THE BUYER, THE TRANSITORY
SUBSIDIARY AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE BUYER, THE TRANSITORY SUBSIDIARY OR
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the Buyer, the Transitory Subsidiary and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
CMGI, INC.
By: Xxxxxx X. Xxxxxxxx, III
Title: Chief Financial Officer
& Executive Vice President
ARTICHOKE CORP.
By: Xxxxxx X. Xxxxxxxx, III
Title: Chief Financial Officer
& Executive Vice President
ADFORCE, INC.
By: Xxxxxxx X. Xxxxxx
Title: Chairman and C.E.O.
EXHIBIT A-1
EMPLOYEE LOCK-UP AGREEMENT
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger dated as of
September __, 1999 (the "Agreement") between CMGI, Inc., a Delaware corporation
("Acquiror"), a subsidiary of Acquiror and AdForce, Inc., a Delaware corporation
(the "Company"), I will receive shares of common stock, $.01 par value per
share, of Acquiror (the "Shares"), in exchange for shares of common stock of the
Company owned by me.
In order to induce Acquiror to enter into the Agreement, I hereby agree as
follows:
1. I will not sell, offer to sell, contract to sell, sell any option or
contract for the sale or purchase of, lend, enter into any swap or other
arrangement that transfers to another any of the economic consequences of
ownership of, or otherwise dispose of (collectively, "Transfer"), any of the
Shares, except as follows:
(a) from and after the day that is one day after the date of the
Closing (as defined in the Agreement), I may Transfer one-sixth (1/6) of the
Shares; and
(b) from and after each monthly anniversary date of the Closing, I
may Transfer an additional one-sixth (1/6 ) of the Shares, so that all of the
Shares may be Transferred from and after the date that is five months after the
date of the Closing.
2. I acknowledge that the Acquiror may impose stock transfer restrictions
on the Shares to enforce the provisions of this Agreement.
Very truly yours,
Signature
Print Name:
Date:
AGREED TO:
CMGI, Inc.
By:
EXHIBIT A-2
STOCKHOLDER LOCK-UP AGREEMENT
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger dated as of
September __, 1999 (the "Agreement") between CMGI, Inc., a Delaware corporation
("Acquiror"), a subsidiary of Acquiror and AdForce, Inc., a Delaware corporation
(the "Company"), the undersigned will receive shares of common stock, $.01 par
value per share, of Acquiror (the "Shares"), in exchange for shares of common
stock of the Company owned by the undersigned.
In order to induce Acquiror to enter into the Agreement, the undersigned
hereby agrees as follows:
1. Until the date that is five (5) months after the Closing (as defined
in the Agreement), the undersigned will not sell, offer to sell, contract to
sell, sell any option or contract for the sale or purchase of, lend, enter into
any swap or other arrangement that transfers to another any of the economic
consequences of ownership of, or otherwise dispose of (collectively, "transfer")
more than one-tenth (1/10) of the Shares in any one day. Notwithstanding the
foregoing, however, if the undersigned is a corporation, partnership or limited
liability company, the undersigned shall not be restricted from distributing any
or all of the Shares to its shareholders, partners or members and the subsequent
Transfers of Shares by such shareholders, partners or members shall not be
restricted
2. The undersigned acknowledges that the Acquiror may impose stock
transfer restrictions on the Shares to enforce the provisions of this Agreement.
Very truly yours,
Name of Stockholder
By:
Signature
Date:
AGREED TO:
CMGI, Inc.
By:
EXHIBIT B
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September __, 1999 (this "Agreement"),
by the stockholders listed on the signature page(s) hereto (collectively,
"Stockholders" and each individually, a "Stockholder") to and for the benefit of
CMGI, Inc., a Delaware corporation ("Acquiror"). Capitalized terms used and not
otherwise defined herein shall have the respective meanings assigned to them in
the Merger Agreement referred to below.
WHEREAS, as of the date hereof, the Stockholders collectively own of record
and beneficially shares of capital stock of AdForce, Inc., a Delaware
corporation (the "Company"), as set forth on Schedule I hereto (such shares or
any other voting or equity securities of the Company, hereafter acquired by any
Stockholder prior to the termination of this Agreement, being referred to herein
collectively as the "Shares");
WHEREAS, concurrently with the execution of this Agreement, Acquiror and
the Company are entering into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, a subsidiary of Buyer will be merged with and
into the Company, and the Company will be the surviving corporation (the
"Merger"); and
WHEREAS, as a condition to the willingness of the Company and Acquiror to
enter into the Merger Agreement, Acquiror has requested that the Stockholders
agree, and in order to induce Acquiror to enter into the Merger Agreement, the
Stockholders are willing to agree to vote in favor of adopting the Merger
Agreement and approving the Merger, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereby agree, severally and not jointly, as follows:
Section 1. VOTING OF SHARES. Each Stockholder covenants and agrees
that until the termination of this Agreement in accordance with the terms
hereof, at the Company Meeting or any other meeting of the stockholders of the
Company, however called, and in any action by written consent of the
stockholders of the Company, such Stockholder will vote, or cause to be voted,
all of his, her or its respective Shares (a) in favor of adoption of the Merger
Agreement and approval of the Merger contemplated by the Merger Agreement, as
the Merger Agreement may be modified or amended from time to time in a manner
not adverse to the Stockholders, and (b) against any other Alternative
Transaction. In addition, such Stockholder agrees that it will, upon request by
Acquiror, furnish written confirmation, in form and substance reasonably
acceptable to Acquiror, of such Stockholder's vote in favor of the Merger
Agreement and the Merger. Each Stockholder covenants and agrees to deliver to
Acquiror upon request prior to any vote contemplated by the first sentence of
this Section 1, a proxy substantially in the form attached hereto as ANNEX A (a
"Proxy"), which Proxy shall be irrevocable during the term of this Agreement to
the extent permitted under Delaware law, and Acquiror agrees to vote the Shares
subject to such Proxy in favor of the approval and adoption of the Merger
Agreement and the Merger. Each Stockholder acknowledges receipt and review of a
copy of the Merger Agreement. Each Stockholder acknowledges and agrees that the
Proxy, if and when given, shall be coupled with an interest, shall constitute,
among other things, an inducement for Acquiror to enter into the Merger
Agreement, shall be irrevocable and shall not be terminated by operation of law
or otherwise upon the occurrence of any event and that no subsequent proxies
with respect to such Shares shall be given (and if given shall not be
effective); provided however that any such proxy shall terminate automatically
and without further action on behalf of the Stockholders upon the termination of
this Agreement. In the event that a Stockholder does not provide the Proxy upon
request of Acquiror, such Stockholder hereby grants Buyer a power of attorney to
execute and deliver such Proxy for and on behalf of such Stockholder, which
power of attorney is coupled with an interest and shall survive any death,
disability, bankruptcy or any other such impediment of such Stockholder. Upon
the execution of this Agreement by each Stockholder, such Stockholder hereby
revokes any and all prior proxies or powers of attorney given by such
Stockholder with respect to the Shares.
Section 2. TRANSFER OF SHARES. Each Stockholder covenants and agrees
that such Stockholder will not directly or indirectly, (a) sell, assign,
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise by
operation of law), pledge, encumber or otherwise dispose of any of the Shares,
(b) deposit any of the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares or grant any proxy or power
of attorney with respect thereto which is inconsistent with this Agreement or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect sale, assignment, transfer (including by
merger, testamentary disposition, interspousal disposition pursuant to a
domestic relations proceeding or otherwise by operation of law) or other
disposition of any Shares (each such case, a "Transfer"), unless the transferee
to which any such Shares are or may be Transferred shall have executed a
counterpart of this Agreement and agreed in writing to hold such Shares subject
to all the terms and conditions of this Agreement.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder on its own behalf hereby severally represents and warrants to
Acquiror with respect to itself and its or her ownership of the Shares as
follows:
(a) OWNERSHIP OF SHARES. On the date hereof, the Shares held by such
Stockholder are owned beneficially by such Stockholder or its nominee. Such
Stockholder has sole voting power, without restrictions, with respect to all of
such Shares.
(b) POWER, BINDING AGREEMENT. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations, under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any material agreement to which such Stockholder is
a party, including, without limitation, any voting agreement, stockholders'
agreement, partnership agreement or voting trust. This Agreement has been duly
and validly executed and delivered by such Stockholder and constitutes a valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(c) NO CONFLICTS. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby by such Stockholder
will not, conflict with or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, any provision of any loan or credit agreement, note,
bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Stockholder or any of its
properties or assets, other than such conflicts, violations or defaults or
terminations, cancellations or accelerations which individually or in the
aggregate do not materially impair the ability of such Stockholder to perform
its obligations hereunder.
Section 4. NO SOLICITATION. Subject to the provisions of Section 7
below, prior to the termination of this Agreement in accordance with its terms,
each Stockholder agrees, in its individual capacity as a stockholder of the
Company that (i) it will not, nor will it authorize or permit any of its
employees, agents and representatives to, directly or indirectly, (a) initiate,
solicit or encourage any inquiries or the making of any Acquisition Proposal (as
defined in the Merger Agreement), (b) enter into any agreement with respect to
any Acquisition Proposal, or (c) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, and (ii) it will notify Acquiror as soon as possible if
any such inquiries or proposals are received by, any information or documents
is requested from, or any negotiations or discussions are sought to be
initiated or continued with, it or any of its affiliates in its individual
capacity.
Section 5. TERMINATION. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) or (ii) any termination of the Merger Agreement in accordance
with the terms thereof; PROVIDED that no such termination shall relieve any
party of liability for a willful breach hereof prior to termination.
Section 6. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 7. FIDUCIARY DUTIES. Each Stockholder is signing this
Agreement solely in such Stockholder's capacity as an owner of his, her or its
respective Shares, and nothing herein shall prohibit, prevent or preclude such
Stockholder from taking or not taking any action in his or her capacity as an
officer or director of the Company, to the extent permitted by the Merger
Agreement.
Section 8. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect thereto. This Agreement may not be amended, modified or rescinded except
by an instrument in writing signed by each of the parties hereto.
(b) 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. 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 to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent possible.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to the principles of conflicts
of law thereof.
(d) This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement w
be signed individually or by its respective duly authorized officer as of the
date first written above.
CMGI, INC.
By:
STOCKHOLDERS:
Print Name
(Signature)
ANNEX A
IRREVOCABLE PROXY
The undersigned stockholder of AdForce, Inc., a Delaware corporation
("Company"), hereby irrevocably (to the fullest extent permitted by the Delaware
General Corporation Law) appoints the members of the Board of Directors of CMGI,
Inc., a Delaware corporation ("Buyer"), and each of them, or any other designee
of Buyer, as the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to vote and exercise all
voting and related rights (to the fullest extent that the undersigned is
entitled to do so) with respect to all of the shares of capital stock of Company
that now are or hereafter may be beneficially owned by the undersigned, and any
and all other shares or securities of Company issued or issuable in respect
thereof on or after the date hereof (collectively, the "Shares") in accordance
with the terms of this Irrevocable Proxy. Upon the undersigned's execution of
this Irrevocable Proxy, any and all prior proxies given by the undersigned with
respect to any Shares are hereby revoked and the undersigned agrees not to grant
any subsequent proxies with respect to the Shares until after the Expiration
Date (as defined below).
This Irrevocable Proxy is irrevocable (to the extent provided in the
Delaware General Corporation Law), is coupled with an interest, including, but
not limited to, that certain Stockholder Agreement dated as of even date
herewith by and among Buyer and certain stockholders of the Company, including
the undersigned, and is granted in consideration of Buyer entering into that
certain Agreement and Plan of Merger (the "Merger Agreement") by and among
Buyer, a wholly owned subsidiary of Buyer ("Merger Sub"), and Company, which
Merger Agreement provides for the merger of Merger Sub with and into Company
(the "Merger"). As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions of the Merger Agreement, and (ii)
the date of termination of the Merger Agreement.
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting and other similar rights of the undersigned with respect to
the Shares (including, without limitation, the power to execute and deliver
written consents pursuant to the Delaware General Corporation Law), at every
annual, special or adjourned meeting of the stockholders of Company and in every
written consent in lieu of such meeting:
in favor of approval and adoption of the Merger Agreement and of the
transaction contemplated thereby.
The attorneys and proxies named above may not exercise this Irrevocable
Proxy on any other matter except as provided above. The undersigned stockholder
may vote the Shares on all other matters.
All authority herein conferred shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned.
This Irrevocable Proxy is coupled with an interest as aforesaid and is
irrevocable.
Signature
Print Name:
Shares beneficially owned:
__________ shares of Company Common Stock
EXHIBIT C
FORM OF COMPANY AFFILIATE LETTER
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of AdForce, Inc., a Delaware corporation (the "Company"), as
the term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule
145 of the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of Merger,
dated as of September 20, 1999 (the "Agreement"), between CMGI, Inc., a Delaware
corporation ("Acquiror"), a subsidiary of Acquiror ("Sub") and the Company, Sub
will be merged with and into the Company (the "Merger") and the Company will be
the surviving corporation.
As a result of the Merger, I may receive shares of common stock, par value
$.01 per share, of Acquiror (the "Acquiror Common Stock") in exchange for shares
owned by me of common stock of the Company ("Company Common Stock").
1. COMPLIANCE WITH THE ACT. I represent, warrant and covenant to
Acquiror that in the event I receive any Acquiror Common Stock as a result of
the Merger:
(a) I shall not make any sale, transfer or other disposition of the
Acquiror Common Stock in violation of the Act or the Rules and Regulations.
(b) I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Acquiror Common Stock to
the extent I felt necessary, with my counsel or counsel for the Company.
(c) I have been advised that the issuance of Acquiror Common Stock to
me pursuant to the Merger will be registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised
that, since at the time the Merger is submitted for a vote of the stockholders
of the Company, I may be deemed to have been an affiliate of the Company and the
distribution by me of the Acquiror Common Stock has not been registered under
the Act, I may not sell, transfer or otherwise dispose of the Acquiror Common
Stock issued to me in the Merger unless (i) such sale, transfer or other
disposition as been registered under the Act, (ii) such sale, transfer or
disposition is made in conformity with Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably undersigned
acquired the Acquiror Common Stock received in the Merger and the provisions of
Rule 145(d)(2) are then available to the undersigned,. (ii) two years shall have
elapsed from the date the undersigned acquired Acquiror Common Stock received in
the Merger and the provisions of Rule 145(d)(3) are then available to the
undersigned, or (iii) Acquiror has received either a broker's letter with
respect to the sale of the shares represented by such certificate(s) stating
that each of the requirements of Rule 145(d)(1) has been met, or a "no action"
letter obtained by the undersigned from the staff of the Commission, to the
effect that the restrictions imposed by Rule 145 under the Act no longer apply
to the undersigned.
2. CERTAIN TAX MATTERS. The undersigned does not intend to take a
position on any federal or state income tax return that is inconsistent with the
treatment of he Merger as a tax-free reorganization for federal or state income
tax purposes.
Very truly yours,
Signature
Print Name
Accepted this ___ day of
September ____, 1999 by
CMGI, INC.
By:
--------------------------------
Name:
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Title:
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