Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
by and among
OPENTV CORP.,
ACTV MERGER SUB, INC.
and
ACTV, INC.
Dated as of September 26, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND CONSTRUCTION............................................................................1
1.1 Certain Definitions....................................................................................1
1.2 Additional Definitions.................................................................................8
1.3 Terms Generally.......................................................................................10
ARTICLE II THE MERGER AND RELATED MATTERS........................................................................11
2.1 The Merger............................................................................................11
2.2 Closing...............................................................................................12
2.3 Conversion of Securities..............................................................................12
2.4 Exchange of Shares....................................................................................13
2.5 Dissenting Shares.....................................................................................16
2.6 Changes in Class A Parent Stock.......................................................................16
ARTICLE III CERTAIN ACTIONS......................................................................................16
3.1 Stockholders Meetings.................................................................................16
3.2 Proxy Statements and Other Commission Filings.........................................................17
3.3 Identification of Rule 145 Affiliates.................................................................19
3.4 State Takeover Statutes...............................................................................19
3.5 Reasonable Best Efforts...............................................................................19
3.6 Employee Matters......................................................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................21
4.1 Organization and Qualification........................................................................21
4.2 Authorization and Validity of Agreement...............................................................21
4.3 Capitalization........................................................................................22
4.4 Reports and Financial Statements......................................................................24
4.5 No Approvals or Notices Required; No Conflict with Instruments........................................25
4.6 Subsidiaries and Affiliates; Investment Securities....................................................26
4.7 Absence of Certain Changes or Events..................................................................29
4.8 Registration Statement; Proxy Statements..............................................................29
4.9 Legal Proceedings.....................................................................................30
4.10 Licenses; Compliance with Regulatory Requirements.....................................................30
4.11 Brokers or Finders....................................................................................31
4.12 Tax Matters...........................................................................................32
4.13 Employee Matters......................................................................................34
4.14 Fairness Opinion......................................................................................36
4.15 Recommendation of the Company Board...................................................................36
4.16 Vote Required.........................................................................................36
4.17 Patents, Trademarks and Other Rights..................................................................36
4.18 Certain Agreements, Affiliate Transactions and Insurance..............................................42
4.19 No Investment Company.................................................................................44
4.20 Takeover Statutes.....................................................................................44
4.21 Rights Agreement......................................................................................45
4.22 Provided Information..................................................................................45
4.23 Documents Delivered...................................................................................45
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT...............................................................45
5.1 Organization and Qualification........................................................................45
5.2 Authorization and Validity of Agreement...............................................................46
5.3 Capitalization........................................................................................46
5.4 No Approvals or Notices Required; No Conflict with Instruments........................................47
5.5 Registration Statement; Parent Proxy Statement........................................................48
5.6 Report and Financial Statements.......................................................................48
5.7 Absence of Certain Changes or Events..................................................................48
5.8 Brokers or Finders....................................................................................48
5.9 Recommendation of the Parent Board....................................................................49
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS...................................................................49
6.1 Access to Information Concerning Properties and Records...............................................49
6.2 Confidentiality.......................................................................................49
6.3 Public Announcements..................................................................................50
6.4 Conduct of the Company's Business Pending the Effective Time..........................................51
6.5 No Solicitation.......................................................................................54
6.6 Expenses..............................................................................................56
6.7 Actions by Merger Sub.................................................................................56
6.8 Listing...............................................................................................56
6.9 Defense of Litigation.................................................................................57
6.10 Indemnification of Directors and Officers.............................................................57
6.11 Parent Warrant........................................................................................58
6.12 Liability Insurance...................................................................................58
6.13 Actions With Respect to MOSI..........................................................................59
ARTICLE VII CONDITIONS PRECEDENT.................................................................................59
7.1 Conditions Precedent to the Obligations of Parent, Merger Sub and the Company.........................59
7.2 Conditions Precedent to the Obligations of Parent and Merger Sub......................................60
7.3 Conditions Precedent to the Obligations of the Company................................................62
ARTICLE VIII TERMINATION.........................................................................................63
8.1 Termination by Mutual Consent.........................................................................63
8.2 Termination by Either Parent or the Company...........................................................63
8.3 Termination by the Company............................................................................63
8.4 Termination by Parent.................................................................................64
8.5 Effect of Termination and Abandonment.................................................................64
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ARTICLE IX MISCELLANEOUS.........................................................................................66
9.1 No Waiver or Survival of Representations, Warranties, Covenants and Agreements........................66
9.2 Notices...............................................................................................66
9.3 Entire Agreement......................................................................................67
9.4 Assignment; Binding Effect; Benefit...................................................................67
9.5 Amendment.............................................................................................67
9.6 Extension; Waiver.....................................................................................68
9.7 Headings..............................................................................................68
9.8 Counterparts..........................................................................................68
9.9 Governing Law and Venue; Waiver of Jury Trial.........................................................68
9.10 Joint Participation in Drafting this Agreement........................................................69
9.11 Severability..........................................................................................69
9.12 Enforcement...........................................................................................69
EXHIBITS
Exhibit 2.1(a) Form of Certificate of Merger
Exhibit 3.3 Form of Affiliate Agreement
Exhibit 6.13 MOSI Agreement
Exhibit 7.2(j) Employment Agreement Matters
SCHEDULES
Company Disclosure Letter
Parent Disclosure Schedule
6.13 MOSI Agreement Signatories
7.2(c) Certain Officers
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of this
26th day of September, 2002, by and among OpenTV Corp., a company organized
under the laws of the British Virgin Islands ("Parent"), ACTV Merger Sub, Inc.,
a Delaware corporation ("Merger Sub") and ACTV, Inc., a Delaware corporation
(the "Company").
WHEREAS, the parties are entering into this Agreement to provide for
the terms and conditions upon which the Company will be acquired by Parent by
means of a merger of Merger Sub, a newly formed, direct wholly owned Subsidiary
of Parent, with and into the Company (the "Merger"); and
WHEREAS, pursuant and subject to the terms and conditions of this
Agreement, in the Merger, all of the issued and outstanding shares of the Common
Stock, par value $0.10 per share, of the Company ("Company Common Stock"), will
be converted into the right to receive $1.65 per share, payable in a number of
shares of the Class A Ordinary Shares, no par value, of Parent ("Class A Parent
Stock") determined as provided herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings unless the context otherwise requires:
"ADCO" shall mean Digital ADCO, Inc., a Delaware corporation.
"Adjusted Class A Parent Stock Value" shall mean the greater
of (i) the Floor Value and (ii) the average of the last sale prices (or, if on
any day no sale price is reported, the average of the high bid and low ask
prices on such day) of a share of Class A Parent Stock on the Relevant Market on
each of the five consecutive trading days immediately preceding the third
trading day prior to the Closing Date; provided; however that the Adjusted Class
A Parent Stock Value shall in no event exceed the Ceiling Value.
An "Affiliate" of any Person shall mean any other Person
which, directly or indirectly, controls or is controlled by or is under common
control with such Person. A Person shall be deemed to "control," be "controlled
by" or be "under common control with" any other Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of the
management or policies of such Person whether through the ownership of voting
securities or partnership interests, by contract or otherwise. Notwithstanding
the foregoing, for purposes of this Agreement, neither the Company nor any of
its Affiliates shall be deemed to be an Affiliate of Parent, any Controlling
Party of Parent or any of their respective Affiliates, and none of Parent, any
Controlling Party of Parent nor any of their respective Affiliates shall be
deemed to be an Affiliate of the Company or any of its other Affiliates.
"Agreement" shall mean this Agreement and Plan of Merger,
including all Exhibits and Schedules hereto.
"Alternative Proposal" shall mean (A) any proposal (whether or
not in writing and whether or not delivered to the Company's stockholders
generally), other than as contemplated by this Agreement or otherwise proposed
by Parent or its Affiliates, regarding (i) a merger, consolidation, tender
offer, share exchange or other business combination or similar transaction
involving the Company or any of its Subsidiaries, (ii) the issuance by the
Company or any of its Subsidiaries of any equity interest in or any voting
securities of the Company or such Subsidiary which constitutes 10% or more of
the total of such equity interests or voting securities of the Company or such
Subsidiary, (iii) the acquisition in any manner, directly or indirectly, of 10%
or more of the assets of the Company or any of its Subsidiaries, (iv) the
acquisition by any Person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of,
10% or more of the then outstanding shares of capital stock of the Company (or,
in the case of an arbitrage or similar investor with no intention of acquiring a
controlling interest in the Company, 15% or more), (v) any transaction the
effect of which would be reasonably likely to prohibit, restrict or delay the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or (vi) an Intellectual Property Transaction; or (B) the occurrence of
any of the transactions described in clauses (i) - (vi) of (A) above or any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
"Ceiling Value" shall mean $6.05, subject to Section 2.06.
"Change of Control" shall mean any (i) change in the direct or
indirect record or beneficial ownership of any of the equity securities of the
Company or any of its Subsidiaries, (ii) merger, consolidation, statutory share
exchange or other transaction involving the Company or any of its Subsidiaries
or (iii) change in the composition of the board of directors or other governing
body of the Company or any of its Subsidiaries.
"Change of Control Covenant" shall mean any covenant,
agreement or other provision pursuant to which the occurrence or existence of a
Change of Control would result in a violation or breach of, constitute (with or
without due notice or lapse of time or both) or permit any Person to declare a
default or event of default under, give rise to any right of termination,
cancellation, amendment, acceleration, repurchase, prepayment or repayment or to
increased payments under, give rise to or accelerate any material obligation
(including any obligation to, or to offer to, repurchase, prepay, repay or make
increased payments) or result in the loss or modification of any material right
or benefit under, or result in any Restriction or give any Person the right to
obtain any Restriction on any capital stock or other securities or ownership
interests pursuant to, or result in any Lien or give any Person the right to
obtain any Lien on any material asset pursuant to, any Contract to which the
Company or any of its Subsidiaries is or becomes a party or to which the Company
or any of its Subsidiaries or any of their respective assets are or become
subject or bound.
2
"Class A Parent Stock Value" shall mean the average of the
last sale prices (or, if on any day no sale price is reported, the average of
the quoted high bid and low ask prices on such day) of a share of Class A Parent
Stock on the Relevant Market on each of the five consecutive trading days
immediately preceding the third trading day prior to the Closing Date.
"Class B Parent Stock" shall mean the Class B Ordinary Shares,
no par value, of Parent.
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing occurs
pursuant to Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the Securities and Exchange Commission
and the staff of the Securities and Exchange Commission.
"Company Disclosure Letter" shall mean the disclosure letter,
dated as of the date of this Agreement, delivered by the Company to Parent.
"Company Material Adverse Effect" shall mean (A) a Material
Adverse Effect (i) on the Company and its Subsidiaries taken as a whole, (ii) on
MOSI, (iii) on ADCO, or (iv) following the Merger, on the Surviving Entity and
its Subsidiaries taken as a whole, on Parent and its Subsidiaries taken as a
whole, or on a Controlling Party of Parent and its Subsidiaries (including
Parent but excluding the Surviving Entity and its Subsidiaries) taken as a
whole, or (B) a material adverse effect on the ability of the Company to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement; it being acknowledged that any adverse effect of $1,500,000 or more
on the Company or any of its Subsidiaries shall in any event be deemed a Company
Material Adverse Effect.
"Company Plan Stock Option" shall mean any outstanding option
to purchase shares of Company Common Stock issued by the Company pursuant to the
Company Stock Plans.
"Company Stock Plans" shall mean the following: (i) the ACTV,
Inc. 2001 Stock Incentive Plan, (ii) the ACTV, Inc. 2000 Stock Incentive Plan,
(iii) ACTV, Inc. 1999 Stock Incentive Plan, (iv) the ACTV, Inc. 1998 Stock
Option Plan, (v) the ACTV, Inc. 1996 Stock Option Plan, (vi) the 1989 ACTV, Inc.
Employees' Incentive Stock Option Plan or (vii) the 1989 ACTV, Inc. Employees'
Nonqualified Stock Option Plan.
"Contract" shall mean any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization, license, contract,
instrument, employee benefit plan or practice, or other agreement, obligation,
commitment, arrangement or concession of any nature whatsoever, oral or written.
3
"Control" (including the terms "controlling," "controlled by"
and "under common control with") shall have the meaning given to such term in
Rule 405 under the Securities Act.
A "Controlling Party" of any Person shall mean any other
Person which, directly or indirectly, Controls such Person.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Effective Time" shall mean the time when the Merger of Merger
Sub with and into the Company becomes effective under applicable law as provided
in Section 2.1(a).
An "Equity Affiliate" of any Person shall mean any other
Person in which the first Person directly or indirectly through a Subsidiary
owns an investment accounted for by the equity method within the meaning of
GAAP.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
and the rules and regulations thereunder.
"Floor Value" shall mean $2.25, subject to Section 2.6.
"GAAP" shall mean generally accepted accounting principles as
accepted by the accounting profession in the United States as in effect from
time to time.
"Governmental Entity" shall mean any court, arbitrator,
administrative or other governmental department, agency, commission, authority
or instrumentality, domestic or foreign.
"Xxxx-Xxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, and the rules and regulations thereunder.
"HyperTV" shall mean HyperTV Networks, Inc., a Delaware
corporation.
"Indebtedness" shall mean, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person (excluding intercompany accounts between the Company and any wholly owned
Subsidiary of the Company or between wholly owned Subsidiaries of the Company)
(A) for borrowed money, (B) evidenced by notes, bonds, debentures or other
similar instruments (whether or not negotiable), (C) for reimbursement of
amounts drawn under letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (D) issued or assumed as the
deferred purchase price of property or services (excluding accounts payable) or
(E) relating to a capitalized lease obligation and all debt attributable to
sale/leaseback transactions of such Person; and (ii) every liability of others
of the kind described in the preceding clause (i) that such Person has
guaranteed or which is otherwise its legal liability.
4
"Intellectual Property" shall mean all domestic or foreign
rights in, to and concerning: (i) inventions and discoveries (whether patented,
patentable or unpatentable and whether or not reduced to practice), including
ideas, research and techniques, technical designs, and specifications (written
or otherwise), improvements, modifications, adaptations, and derivations
thereto, and patents, patent applications, inventor's certificates, and patent
disclosures, together with divisions, continuations, continuations-in-part,
revisions, reissuances and reexaminations thereof; (ii) trademarks, service
marks, brand names, certification marks, collective marks, d/b/a's, trade dress,
logos, symbols, trade names, assumed names, fictitious names, corporate names
and other indications or indicia of origin, including translations, adaptations,
derivations, modifications, combinations and renewals thereof; (iii) published
and unpublished works of authorship, whether copyrightable or not (including
databases and other compilations of data or information), copyrights therein and
thereto, moral rights, and rights equivalent thereto, including but not limited
to, the rights of attribution, assignation and integrity; (iv) trade secrets,
confidential and/or proprietary information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, schematics, designs, discoveries,
drawings, prototypes, specifications, hardware configurations, customer and
supplier lists, financial information, pricing and cost information, financial
projections, and business and marketing methods plans and proposals),
collectively "Trade Secrets"; (v) computer software, including programs,
applications, source and object code, data bases, data, models, algorithms,
flowcharts, tables and documentation related to the foregoing; (vi) other
similar tangible or intangible intellectual property or proprietary rights,
information and technology and copies and tangible embodiments thereof (in
whatever form or medium); (vii) all applications to register, registrations,
restorations, reversions and renewals or extensions of the foregoing; (viii)
internet domain names; and (ix) all the goodwill associated with each of the
foregoing and symbolized thereby; and (x) all other intellectual property or
proprietary rights and claims or causes of action arising out of or related to
any infringement, misappropriation or other violation of any of the foregoing,
including rights to recover for past, present and future violations thereof.
"Intellectual Property Transaction" shall mean the grant of
(i) a license, sublicense, cross-license or grant-back to any Person engaged in
the interactive television business (including any hardware, software or
middleware provider) of any material Intellectual Property of the Company or any
of its Subsidiaries (other than grants of nonexclusive licenses of the Company's
eSchool Online applications in the ordinary course of business), (ii) an
assignment, an exclusive license, cross-license, sublicense or grant-back of any
of the Intellectual Property of the Company or any of its Subsidiaries (other
than any grant-back to Wolzien required to be made pursuant to the Wolzien
Agreement) or (iii) a covenant not-to-xxx, covenant-not-to-assert, release of
claims or similar release to any Person regarding any Intellectual Property of
the Company or any of its Subsidiaries.
"Legal Proceeding" shall mean any private or governmental
action, suit, complaint, arbitration, mediation, legal or administrative
proceeding or investigation.
"Lien" shall mean any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest,
assignment, deposit arrangement, encumbrance, restriction, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
5
"Material Adverse Effect" on any Person shall mean any
circumstance, change or effect that is or could reasonably be expected to be
materially adverse to the business, assets, liabilities, obligations, financial
condition, results of operations or prospects of such Person.
"Merger" shall have the meaning specified in the preamble
hereto.
"MOSI" shall mean Media Online Services, Inc., a Delaware
corporation.
"Parent Disclosure Schedule" shall mean the disclosure
schedule, dated as of the date of this Agreement, delivered by Parent to the
Company.
"Parent Preference Stock" shall mean the Series C Preference
Shares, no par value, of Parent.
"Parent SEC Reports" shall mean all reports, schedules,
statements and other documents (including exhibits and all other information
incorporated therein) filed by Parent with the Commission on or before the date
of this Agreement.
"Permitted Encumbrances" shall mean the following Liens with
respect to the properties and assets of the Company: (i) Liens for taxes,
assessments or other governmental charges or levies not at the time delinquent
or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on the Company's books; (ii) Liens of carriers,
warehousemen, mechanics, materialmen and landlords incurred in the ordinary
course of business for sums not overdue or being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on the Company's books; (iii) Liens incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of tenders, statutory obligations, leases and contracts
(other than for borrowed money) entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds; (iv) Liens on property
acquired or held by the Company in the ordinary course of business to secure the
purchase price of such property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such property not exceeding $50,000
individually, or $250,000 in the aggregate; and (v) easements, restrictions and
other minor defects of title which are not, in the aggregate, material and which
do not, individually or in the aggregate, materially and adversely affect the
value of or the Company's use or occupancy of the property affected thereby.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust, unincorporated organization, association, or
joint venture or a government, agency, political subdivision, or instrumentality
thereof.
6
"Relevant Market" shall mean the Nasdaq Stock Market (or, if
the Class A Parent Stock is not traded on the Nasdaq Stock Market, such other
securities exchange or national market system on which such stock is traded).
"Restriction", with respect to any capital stock or other
security, shall mean any voting or other trust or agreement, option, warrant,
escrow arrangement, proxy, buy-sell agreement, power of attorney or other
Contract, or any law, rule, regulation, order, judgment or decree which,
conditionally or unconditionally: (i) grants to any Person the right to purchase
or otherwise acquire, or obligates any Person to purchase or sell or otherwise
acquire, dispose of or issue, or otherwise results in or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may result in, any Person acquiring, (A) any of such capital stock or other
security; (B) any of the proceeds of, or any distributions paid or which are or
may become payable with respect to, any of such capital stock or other security;
or (C) any interest in such capital stock or other security or any such proceeds
or distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien affecting such capital stock or other
security, proceeds or distributions.
"Rights" shall mean any rights issued under the Rights
Agreement.
"Rights Agreement" shall mean the Preferred Stock Rights
Agreement, dated August 10, 2000, between the Company and Continental Stock
Transfer & Trust Company, as amended through the date hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"Significant Party" shall mean those Persons listed on Section
1.1 of the Company Disclosure Letter and any Affiliate of any such Person.
"Significant Party Contract" shall mean any Contract between
the Company and/or any of its Subsidiaries on the one hand, and any Significant
Party, on the other hand.
"Significant Stockholder" shall mean any Person known to the
Company to be the beneficial owner of 5% or more of the outstanding shares of
Company Common Stock other than Parent or any of its Affiliates.
"Specified Contract" shall mean (i) any Significant Party
Contract, (ii) any Company Investment Agreement, and (iii) any Contract of the
type described in clauses (iv) and (v) of Section 4.17(a), clauses (vi), (ix),
(x) and (xii) of Section 4.18(a) or in Section 4.18(b).
7
"Subsidiary," when used with respect to any Person, shall mean
any corporation or other organization, whether incorporated or unincorporated,
of which such Person or any other Subsidiary of such Person is a general partner
or at least 50% of the securities or other interests having by their terms
ordinary voting power to elect at least 50% of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person, by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries. For purposes of this Agreement, MOSI, ADCO, and their respective
Subsidiaries shall each be deemed Subsidiaries of the Company regardless of
whether they would otherwise be considered a Subsidiary of the Company under
this definition.
"Surviving Entity" shall mean the Company as the surviving
entity in the Merger as provided in Section 2.1(a).
"Tax" or "Taxes" shall mean (i) any and all federal, state,
local and foreign taxes and other assessments, governmental charges, duties,
fees, levies, impositions and liabilities in the nature of a tax, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes and (ii) all interest,
penalties and additions imposed with respect to such amounts in clause (i).
"Tax Return" shall mean a report, return or other information
required to be supplied to or filed with a Governmental Entity with respect to
any Tax including an information return, claim for refund, amended Tax return or
declaration of estimated Tax.
"Treasury Regulations" shall mean the regulations promulgated
under the Code in effect on the date hereof and the corresponding sections of
any regulations subsequently issued that amend or supersede such regulations.
"Wholly Owned Subsidiary" shall mean, as to any Person, a
Subsidiary of such person 100% of the equity and voting interest in which is
owned, directly or indirectly, by such Person.
1.2 Additional Definitions. The following additional terms have
the meaning ascribed thereto in the Section indicated below next to such term:
Defined Term Section
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20-F 5.6
ACTV Entertainment 4.6(h)
AdVision 4.6(h)
Agreement Preamble
B2 Option 4.6(f)
Certificates 2.4(b)
Certificate of Merger 2.1(a)
Claim 6.10(a)
Class A Parent Stock Recitals
Company Preamble
Company Board 3.1
Company Bylaws 3.1
Company Charter 3.1
Company Common Stock Recitals
8
Defined Term Section
------------ -------
Company Investment 4.6(a)
Company Investment Agreements 4.6(a)
Company Non-Plan Stock Option 4.3(a)
Company Plans 4.13(a)
Company Plan Stock Option 2.3(b)
Company Preferred Stock 4.3(a)
Company Preliminary Proxy Statement 3.2(b)
Company Proxy Statement 4.8
Company SEC Reports 4.4
Company Special Meeting 3.1
Company Stock Option 4.3(a)
Confidential Information 6.2
Contract Consent 4.5(c)
Contract Notice 4.5(c)
Convertible Securities 4.3(c)
Disclosing Party 6.2
Dissenting Shares 2.5
Environmental Laws 4.10(b)
ERISA 3.6
ERISA Affiliate 4.13(a)
Excess Shares 2.4(f)
Exchange Agent 2.4(a)
Exchange Agent Agreement 2.4(a)
Exchange Ratio 2.3(a)(i)
Fairness Opinion 4.14
Governmental Consent 4.5(b)
Governmental Filing 4.5(b)
Indemnified Liabilities 6.10(a)
Indemnified Parties 6.10(a)
Injunction 3.5
Intellocity 4.6(h)
Investment Security 4.6(e)
Issuance 3.1(b)
Licenses 4.10(a)
Local Approvals 4.5(b)
Material Contract 4.18(a)
Merger Recitals
Merger Consideration 2.3(a)(i)
Merger Proposal 3.1
Merger Sub Preamble
MFN Beneficiary 6.4(d)
MOSI Agreement 6.13
MOSI Investment Agreements 4.6(g)
nCUBE 4.6(h)
nCUBE Ownership Interest 4.6(h)
9
Defined Term Section
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Parachute Gross-Up Payment 4.13(l)
Parent Preamble
Parent Board 3.1(b)
Parent Expenses 8.5
Parent Material Adverse Effect 5.1
Parent Plans 3.6
Parent Preliminary Proxy Statement 3.2(a)
Parent Proxy Statement 4.8
Parent Stockholder Meeting 3.1(b)
Permits 4.10(a)
Reasonable Actions 4.17(c)(i)(x)
Receiving Party 6.2
Registration Statement 3.2(c)
Representatives 6.2
Rule 145 Agreement 3.3
Section 262 2.5
Substitute Option 2.3(b)
Superior Proposal 6.5
Termination Date 8.2
Termination Fee 8.5(b)
Violation 4.5(d)
Voting Debt 4.3(b)
Warrants 4.3(a)
Xxxxx 4.6(g)
Wolzien 4.6(f)
Wolzien Agreement 4.17(i)
1.3 Terms Generally. The definitions set forth or referenced in
Sections 1.1 and 1.2 shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The words "herein", "hereof" and "hereunder" and
words of similar import refer to this Agreement (including the Exhibits and
Schedules) in its entirety and not to any part hereof unless the context shall
otherwise require. As used herein, the phrase "to the Company's knowledge", or
any similar phrase or term relating to the knowledge of the Company means the
actual knowledge, after reasonable inquiry, of any of the officers or directors
of the Company. "Reasonable inquiry" shall mean communication by any of the
officers or directors of the Company to the officers and field personnel of the
Company and its Subsidiaries with direct responsibility for the matter in
question and to counsel with respect to matters involving questions of law,
requesting such individual to review specified provisions of this Agreement and
to advise such person of any matter relevant to the specified representation,
warranty or provision. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references to any agreement or
other instrument or statute or regulation are to it as amended and supplemented
from time to time (and, in the case of a statute or regulation, to any successor
provisions). Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a business day, then such action or notice shall be deferred until,
or may be taken or given on, the next business day. References to the term
"business day" shall mean any day that is not a Saturday, Sunday or day on which
banks in New York, New York are authorized or required by law to close.
References to the term "trading day" shall mean, with respect to any security, a
day on which the principal United States or foreign securities exchange on which
such security is listed or admitted to trading, or the Nasdaq Stock Market if
such security is not listed or admitted to trading on any such securities
exchange, as applicable, is open for the transaction of business (unless such
trading shall have been suspended for the entire day) or, if the applicable
security is not listed or admitted to trading on any United States or foreign
securities exchange or the Nasdaq Stock Market, any business day.
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ARTICLE II
THE MERGER AND RELATED MATTERS
2.1 The Merger.
(a) Merger; Effective Time. At the Effective Time and
subject to and upon the terms and conditions of this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, merge with and into the Company in
accordance with the provisions of the DGCL, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the Surviving Entity.
The Effective Time shall occur upon the filing with the Secretary of State of
the State of Delaware of a Certificate of Merger (the "Certificate of Merger")
substantially in the form of Exhibit 2.1(a) and executed in accordance with the
applicable provisions of the DGCL, or at such later time as may be agreed to by
Parent and the Company and specified in the Certificate of Merger. Provided that
this Agreement has not been terminated pursuant to Article VIII, the parties
will cause the Certificate of Merger to be filed as soon as practicable after
the Closing.
(b) Effects of the Merger. The Merger shall have the
effect set forth in Sections 259 and 261 of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Entity. If, at any time after the Effective Time, the Surviving Entity
considers or is advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm (of record or otherwise) in the Surviving Entity its right, title or
interest in, to or under any of the rights, properties, or assets of either the
Company or Merger Sub, or otherwise to carry out the intent and purposes of this
Agreement, the officers and directors of the Surviving Entity will be authorized
to execute and deliver, in the name and on behalf of each of the Company and
Merger Sub, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of the Company and Merger Sub,
all such other actions and things as the Board of Directors of the Surviving
Entity may determine to be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Entity or otherwise to carry out the intent and
purposes of this Agreement.
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(c) Certificate of Incorporation and Bylaws of Surviving
Entity. At the Effective Time, the Company Charter shall be amended pursuant to
the Certificate of Merger to be identical to the Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time, except that
Article FIRST thereof shall read as follows: "The name of the Corporation (which
is hereinafter called the "Corporation") is ACTV, Inc." Such Company Charter as
so amended shall be the Certificate of Incorporation of the Surviving Entity
until thereafter duly amended or restated in accordance with the terms thereof
and the DGCL. At the Effective Time, the Company Bylaws shall be amended to be
identical to the bylaws of Merger Sub in effect immediately prior to the
Effective Time and, in such amended form, shall be the Bylaws of the Surviving
Entity until thereafter duly amended or restated in accordance with the terms
thereof, the terms of the Certificate of Incorporation of the Surviving Entity
and the DGCL.
(d) Directors and Officers of Surviving Entity. At the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Entity and all such directors will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Entity, or as otherwise provided by
applicable law. At the Effective Time, the officers of Merger Sub immediately
prior to the Effective Time shall be the officers of the Surviving Entity and
all such officers will hold office until their respective successors are duly
appointed and qualify in the manner provided in the Bylaws of the Surviving
Entity, or as otherwise provided by applicable law.
2.2 Closing. The Closing shall take place (i) at 10:00 a.m. (New
York time) at the offices of Xxxxx Xxxxx L.L.P., 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, on the third business day following the date on which Parent
provides the Company with written notice that the last of the conditions set
forth in Article VII (other than the filing of the Certificate of Merger and
other than any such conditions which by their terms are not capable of being
satisfied until the Closing Date) is satisfied or, if permissible, waived, or
(ii) on such other date and at such other time or place as is mutually agreed by
Parent and the Company.
2.3 Conversion of Securities.
(a) Conversion of Company Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of any of their respective securities:
(i) Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than the
Dissenting Shares, if any, and the shares to be cancelled in accordance with
Section 2.3(a)(iii)), including any Rights with respect thereto, shall be
converted into and represent the right to receive, and shall be exchangeable
for, a number (or fractional number) of shares of Class A Parent Stock equal to
the Exchange Ratio (the "Merger Consideration"). The "Exchange Ratio" means that
fraction of a share of Class A Parent Stock equal to the quotient (rounded, if
necessary, to the nearest one hundred thousandth) derived by dividing $1.65 by
the Adjusted Class A Parent Stock Value; provided, however, that the Exchange
Ratio shall be subject to adjustment pursuant to Section 8.3(c).
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(ii) Subject to Section 2.5, all shares of
Company Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration to be issued
pursuant to this Section 2.3(a) (and any cash in lieu of a fractional share and
any dividends or other distributions payable pursuant to Sections 2.4(f) and
2.4(g) with respect thereto) upon the surrender of such certificate in
accordance with Section 2.4, without interest.
(iii) Each share of Company Common Stock that
immediately prior to the Effective Time is held by the Company as a treasury
share shall be cancelled and retired without payment of any consideration
therefor and without any conversion thereof into the Merger Consideration.
(b) Treatment of Company Stock Options. Each Company
Stock Option shall be deemed to constitute an option to purchase, on the same
terms, conditions and restrictions as were applicable under such Company Stock
Option (including the vesting schedule) without any change thereto (including
any acceleration of vesting except as otherwise required by the terms of the
agreements listed in Section 2.3(b) of the Company Disclosure Letter) resulting
from the Merger, that number of shares of Class A Parent Stock which is equal to
the number of shares of Company Common Stock that were subject to such Company
Stock Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number (after taking into account all
Company Stock Options held by the holder of such Company Stock Option), at an
exercise price per share of Class A Parent Stock equal to the amount determined
by dividing the exercise price per share of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by the Exchange
Ratio, and rounding the resulting number up to the nearest whole cent.
(c) Conversion of Merger Sub Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of any of their respective securities,
each share of capital stock of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into one share of the common stock of the
Surviving Entity and the shares of common stock of the Surviving Entity so
issued in such conversion shall constitute the only outstanding shares of
capital stock of the Surviving Entity and the Surviving Entity shall be a wholly
owned subsidiary of Parent.
2.4 Exchange of Shares.
(a) Appointment of Exchange Agent. On or before the
Closing Date, Parent shall enter into an agreement (the "Exchange Agent
Agreement") with an exchange agent selected by Parent and reasonably acceptable
to the Company (the "Exchange Agent"), authorizing such Exchange Agent to act as
Exchange Agent hereunder.
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(b) Letter of Transmittal. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented issued and outstanding shares of Company Common Stock
(the "Certificates") whose shares were converted into the right to receive the
Merger Consideration: (i) a notice of the effectiveness of the Merger and (ii) a
letter of transmittal (which shall state 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) with instructions for use in effecting the
surrender and exchange of the Certificates. Such notice, letter of transmittal
and instructions shall contain such provisions and be in such form as Parent and
the Company reasonably specify.
(c) Exchange Procedure. Promptly following the surrender,
in accordance with such instructions, of a Certificate to the Exchange Agent (or
such other agent or agents as may be appointed by the Exchange Agent or Parent
pursuant to the Exchange Agent Agreement), together with such letter of
transmittal (duly executed) and any other documents required by such
instructions or letter of transmittal, the Exchange Agent shall, subject to
Section 2.4(d), cause to be distributed to the Person in whose name such
Certificate shall have been issued (i) a certificate registered in the name of
such Person representing the number of whole shares of Class A Parent Stock into
which the shares of Company Common Stock previously represented by the
surrendered Certificate shall have been converted at the Effective Time pursuant
to this Article II and (ii) payment (which shall be made by check) of any cash
payable in lieu of fractional shares of Class A Parent Stock pursuant to Section
2.4(f). Each Certificate so surrendered shall be cancelled.
(d) Unregistered Transfers of Company Common Stock. If
the Merger Consideration (or any portion thereof) is to be delivered to a Person
other than the Person in whose name the Certificate surrendered in exchange
therefor is registered in the transfer records of the Company, it shall be a
condition to the payment of such Merger Consideration (and the cash in lieu of
fractional shares of Class A Parent Stock to which such Person is entitled
pursuant to Section 2.4(f)) that (i) the Certificate representing such Company
Common Stock surrendered to the Exchange Agent in accordance with Section 2.4(c)
is properly endorsed for transfer or is accompanied by appropriate and properly
endorsed stock powers and is otherwise in proper form for transfer, (ii) the
Person requesting such transfer pays to the Exchange Agent any transfer or other
taxes payable by reason of such transfer or establishes to the satisfaction of
the Exchange Agent that such taxes have been paid or are not required to be paid
and (iii) such Person establishes to the satisfaction of Parent that such
transfer would not violate applicable Federal or state securities laws or any
restrictive legend on the Certificate.
(e) Lost, Stolen or Destroyed 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 satisfactory to Parent and complying with any other
reasonable requirements imposed by Parent, the Exchange Agent will cause to be
delivered to such Person in respect of such lost, stolen or destroyed
Certificate the Merger Consideration (and any cash in lieu of fractional shares
of Class A Parent Stock to which such Person is entitled pursuant to Section
2.4(f)) in respect thereof as determined in accordance with this Article II.
Parent may, in its discretion, require the owner of such lost, stolen or
destroyed Certificate to give Parent a bond in such reasonable sum as it may
direct as indemnity against any claim that may be made against Parent or the
Surviving Entity with respect to the Certificate alleged to have been lost,
stolen or destroyed.
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(f) No Fractional Shares of Merger Consideration. No
certificates or scrip representing fractional shares of Class A Parent Stock
shall be issued in the Merger and no dividend or other distribution with respect
to Class A Parent Stock shall have any effect on any such fractional share, and
such fractional share will not entitle the owner thereof to vote or to any other
rights of a stockholder of Parent. In lieu of such fractional share, any holder
of Company Common Stock who would otherwise be entitled to a fractional share of
Class A Parent Stock will, upon surrender of his Certificate to the Exchange
Agent as described in Section 2.4(c), be entitled to receive an amount in cash
(without interest) equal to, at the sole election of Parent, either (A) the
amount determined by multiplying such fraction by the Class A Parent Stock
Value, or (B) such holder's proportionate interest in the proceeds from the sale
or sales in the open market by the Exchange Agent, on behalf of all such
holders, of the aggregate fractional shares of Class A Parent Stock that, but
for this Section 2.4(f), would be issuable in the Merger. In the event that
Parent elects to determine the amount of cash payable in lieu of fractional
shares of Class A Parent Stock in accordance with clause (B) of the immediately
preceding sentence, then as soon as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (i) the number of full shares
of Class A Parent Stock required to effect the delivery of the aggregate Merger
Consideration payable pursuant to Section 2.3(a)(i) over (ii) the aggregate
number of full shares of Class A Parent Stock to be distributed to holders of
Company Common Stock hereunder (such excess being herein called the "Excess
Shares"). The Exchange Agent, as agent for the former holders of Company Common
Stock, shall then sell the Excess Shares at the prevailing prices on the
Relevant Market. The sales of the Excess Shares by the Exchange Agent shall be
executed on the Relevant Market through one or more member firms of the Relevant
Market and shall be executed in round lots to the extent practicable. All
commissions, transfer taxes and other out-of-pocket transaction costs, if any,
including the expenses and compensation, if any, of the Exchange Agent, incurred
in connection with such sale of Excess Shares, shall be deducted from the
proceeds otherwise distributable to the former holders of Company Common Stock.
As soon as practicable after the determination of the amount of cash to be paid
to former holders of Company Common Stock in lieu of any fractional interests,
the Exchange Agent shall make available in accordance with this Agreement such
amounts to such former holders.
(g) No Dividends on Merger Consideration Before Surrender
of Certificates. No dividends or other distributions declared with respect to
Class A Parent 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
Class A Parent Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate as provided herein. Following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Class A Parent Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions, if any, with a record date after the
Effective Time that shall have become payable with respect to such whole shares
of Class A Parent Stock between the Effective Time and the time of such
surrender, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, if any, with a record date after the Effective Time but
prior to surrender and with a payment date subsequent to surrender payable with
respect to such whole shares of Class A Parent Stock.
15
(h) No Further Ownership Rights in Company Common Stock.
The Merger Consideration issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any cash in
lieu of fractional shares of Class A Parent Stock paid pursuant to Section
2.4(f)) shall be deemed to have been issued and paid in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Entity of the shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. Subject to Section 2.4(i), if, after the Effective
Time, Certificates are presented to the Surviving Entity for any reason, they
shall be canceled and exchanged as provided in, an in accordance with, this
Article II.
(i) Abandoned Property Laws. Payment or delivery of the
Merger Consideration shall be subject to applicable abandoned property, escheat
and similar laws and neither Parent nor the Surviving Entity shall be liable to
any holder of shares of Company Common Stock or Class A Parent Stock for any
Merger Consideration (and for any dividends or distributions with respect
thereto or for any cash in lieu of fractional shares) that may be delivered to
any public official pursuant to any such abandoned property, escheat or similar
law.
2.5 Dissenting Shares. Notwithstanding anything to the contrary in
this Agreement, if appraisal rights are available to holders of the Company
Common Stock pursuant to Section 262 of the DGCL ("Section 262"), each
outstanding share of Company Common Stock, the holder of which has demanded and
perfected his demand for appraisal of the fair value of such shares in
accordance with Section 262 and has not effectively withdrawn or lost his right
to such appraisal (the "Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration, but the holder thereof
shall be entitled only to such rights as are granted by Section 262. The Company
shall give Parent prompt notice upon receipt of any such written demands for
appraisal of the fair value of shares of Company Common Stock and of withdrawals
of such demands and any other instruments provided to the Company pursuant to
Section 262.
2.6 Changes in Class A Parent Stock. If at any time after the date
hereof and prior to the Effective Time, the Class A Parent Stock shall be
recapitalized or reclassified or Parent shall effect any stock dividend, stock
split or reverse stock split of Class A Parent Stock, or shall otherwise effect
any transaction that changes the shares of Class A Parent Stock into any other
securities (including securities of another corporation), or shall make any
other dividend (other than cash dividends) or distribution on the shares of
Class A Parent Stock, then the Floor Value and the Ceiling Value will, as
appropriate, be adjusted to reflect such event.
ARTICLE III
CERTAIN ACTIONS
3.1 Stockholders Meetings.
(a) Company Stockholder Meeting. The Company and its
Board of Directors (the "Company Board") shall take all action necessary in
accordance with applicable law and the Company's Restated Certificate of
Incorporation (the "Company Charter") and Bylaws (the "Company Bylaws") to duly
call and hold, as soon as reasonably practicable after the date hereof, a
meeting of the Company's stockholders (the "Company Special Meeting") for the
purpose of considering and voting upon the approval and adoption of this
Agreement and the Merger contemplated hereby (the "Merger Proposal"). The only
matters the Company shall propose to be acted on by the Company's stockholders
at the Company Special Meeting shall be the Merger Proposal and related matters
incidental to the consummation of the Merger. Subject to Section 6.5, the
Company Board will recommend that the Company's stockholders vote in favor of
approval and adoption of the Merger Proposal and the Company will use its
reasonable best efforts to solicit from its stockholders proxies in favor of
such approval and adoption and take all other action necessary or advisable to
secure the vote or consent of stockholders of the Company required by the DGCL,
the Company Charter or otherwise to effect the Merger. The Company shall not
require any vote greater than a majority of the votes entitled to be cast by the
holders of the issued and outstanding shares of Company Common Stock for
approval of the Merger Proposal. Unless this Agreement is previously terminated
in accordance with Article VIII, the Company shall submit the Merger Proposal to
a vote of its stockholders at the Company Special Meeting even if the Company
Board determines at any time after the date hereof that the Merger is no longer
advisable and withdraws its recommendation that the Company's stockholders
approve the Merger Proposal.
16
(b) Parent Stockholder Meeting. Parent will, either at
its 2002 annual meeting of stockholders or, at its option, at a special meeting
of its stockholders, which in either case will be held as soon as reasonably
practicable after the date hereof, propose for approval by Parent's stockholders
(i) the issuance of the shares of Class A Parent Stock in connection with the
Merger (the "Issuance"), and (ii) if and to the extent deemed necessary or
advisable by Parent's Board of Directors (the "Parent Board"), any other
actions, transactions or matters whether or not related to this Agreement or any
of the transactions contemplated hereby. Subject to the fiduciary duties of
Parent's directors under applicable law as determined by a majority of such
directors with the advice of legal counsel, the Parent Board will recommend that
Parent's stockholders vote in favor of approval of the Issuance at such meeting
(the "Parent Stockholder Meeting"), and Parent will use reasonable best efforts
to solicit from its stockholders proxies in favor of such approval.
3.2 Proxy Statements and Other Commission Filings.
(a) Parent Preliminary Proxy Statement. Parent shall (i)
as soon as reasonably practicable, file with the Commission a preliminary form
(the "Parent Preliminary Proxy Statement") of the Parent Proxy Statement (as
defined in Section 4.8), (ii) use its reasonable best efforts to promptly
respond to the comments of the Commission thereon, and (iii) use its reasonable
best efforts to cause the Parent Proxy Statement to be filed with the Commission
as soon as reasonably practicable after the Parent Preliminary Proxy Statement,
as it may be amended, is cleared by the Commission. Subject to the fiduciary
duties of Parent's directors under applicable law as determined by a majority of
such directors with the advice of legal counsel, the Parent Proxy Statement
shall include the recommendation of the Parent Board in favor of approval and
adoption of the Issuance. To the extent that the Parent Preliminary Proxy
Statement or any amendment thereto includes a description of the Company, Parent
will provide the Company with the opportunity to review and comment on such
description prior to the filing of the Parent Preliminary Proxy Statement or
such amendment, as the case may be, and will consider in good faith such
comments as the Company may have with respect thereto.
17
(b) The Company Preliminary Proxy Statement. The Company
shall, as soon as reasonably practicable, prepare a preliminary form ("the
Company Preliminary Proxy Statement") of the Company Proxy Statement (as defined
in Section 4.8). The Company shall (i) file the Company Preliminary Proxy
Statement with the Commission promptly after it has been prepared in a form
reasonably satisfactory to the Company and Parent, and (ii) use its reasonable
best efforts to promptly respond to the comments of the Commission thereon in a
manner reasonably satisfactory to the Company and Parent. The Company shall
promptly prepare any amendments to the Company Preliminary Proxy Statement
required in response to the Commission's comments or which either the Company or
Parent, with the advice of counsel, deems necessary or advisable, and the
Company shall use its reasonable best efforts to cause the Company Proxy
Statement to be filed with the Commission as soon as reasonably practicable
after the Company Preliminary Proxy Statement, as so amended, is cleared by the
Commission. The Company Proxy Statement shall include the recommendation of the
Company Board in favor of approval and adoption of the Merger Proposal, except
to the extent the Company Board shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger as permitted by Section 6.5.
(c) Registration Statement. As soon as reasonably
practicable after the Company Preliminary Proxy Statement is cleared by the
Commission, Parent shall file with the Commission the Registration Statement on
Form S-4 (the "Registration Statement"), containing the Company Proxy Statement
as the prospectus registering under the Securities Act the issuance of the
shares of Class A Parent Stock in connection with the Merger. Parent shall use
its reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act as soon as reasonably practicable after such
filing and to continue to be effective as of the Effective Time. Parent also
shall use its reasonable best efforts to take any reasonable action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified, subjecting itself to taxation in any jurisdiction in which it is not
now so subject, giving any consent to general service of process in any
jurisdiction in which it is not now subject to such service or changing in any
respect its authorized or outstanding capital stock or the composition of its
assets) required to be taken under any applicable state securities or blue sky
laws in connection with the issuance of the Class A Parent Stock in connection
with the Merger. The Company authorizes Parent to utilize in the Registration
Statement the information concerning the Company and its Subsidiaries contained
in the Company Proxy Statement.
(d) Commission Comments; Amendments and Supplements. Each
of the parties shall notify the other party promptly after the receipt by such
first party of any comments of the Commission on, or of any request by the
Commission for amendments or supplements to, the Company Preliminary Proxy
Statement, the Company Proxy Statement, the Parent Preliminary Proxy Statement
or the Parent Proxy Statement (to the extent, in the case of the Parent
Preliminary Proxy Statement and the Parent Proxy Statement, such comments relate
to the description of the Company), or the Registration Statement. Each of the
parties shall supply the other party with copies of all correspondence between
such party or any of its representatives and the Commission with respect to any
of the foregoing filings (to the extent, in the case of the Parent Preliminary
Proxy Statement and the Parent Proxy Statement, that such correspondence relates
to the description of the Company). If at any time prior to the Parent
Stockholder Meeting any event shall occur relating to the Company or any of the
Company's Subsidiaries or any of their respective officers, directors, partners
or Affiliates which should be described in an amendment or supplement to the
Parent Proxy Statement, the Company shall inform Parent promptly after becoming
aware of such event. If at any time prior to the Effective Time, any event shall
occur relating to the Company or any of the Company's Subsidiaries or any of
their respective officers, directors, partners or Affiliates which should be
described in an amendment or supplement to the Company Proxy Statement or the
Registration Statement, the Company shall inform Parent promptly after becoming
aware of such event. If at any time prior to the Company Stockholder Meeting,
any event shall occur relating to Parent or any of its Subsidiaries or any of
their respective officers, directors, partners or Affiliates which should be
described in an amendment or supplement to the Company Proxy Statement, Parent
shall inform the Company promptly after becoming aware of such event. Whenever
Parent and the Company learn of the occurrence of any event which should be
described in an amendment of, or a supplement to, the Parent Proxy Statement,
the Company Proxy Statement or the Registration Statement, the parties shall
cooperate to promptly cause such amendment or supplement to be prepared, filed
with and cleared by the Commission and, if required by applicable law,
disseminated to the persons and in the manner required.
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3.3 Identification of Rule 145 Affiliates. Within 30 days after
the execution of this Agreement, the Company shall deliver to Parent a letter
identifying all Persons who the Company knows are or who the Company has reason
to believe may be, as of the date of the Company Special Meeting, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act. The Company
shall use its reasonable best efforts to cause each Person who is identified as
an "affiliate" in the letter referred to above to deliver to Parent, on or prior
to the Closing Date, a written agreement, in substantially the form annexed
hereto as Exhibit 3.3 (each a "Rule 145 Agreement").
3.4 State Takeover Statutes. Upon the request of Parent, the
Company will take all reasonable steps to (i) exempt the Merger from the
requirements of any applicable state takeover law and (ii) assist in any
challenge by Parent to the validity or applicability to the Merger of any state
takeover law.
3.5 Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement and applicable law, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement as
soon as reasonably practicable, including such actions or things as any other
party hereto may reasonably request in order to cause any of the conditions to
such other party's obligation to consummate such transactions specified in
Article VII to be fully satisfied or to determine whether such conditions have
been satisfied. Without limiting the generality of the foregoing, the parties
shall (and shall cause their respective directors, officers and Subsidiaries,
and use their reasonable best efforts to cause their respective Affiliates,
employees, agents, attorneys, accountants and representatives, to) consult and
fully cooperate with and provide reasonable assistance to each other in (i) the
preparation and filing with the Commission of the Registration Statement, the
Company Preliminary Proxy Statement, the Parent Preliminary Proxy Statement, the
Company Proxy Statement, the Parent Proxy Statement and any necessary amendments
or supplements to any of the foregoing; (ii) seeking to have each such
preliminary proxy statement cleared, and the Registration Statement declared
effective, by the Commission as soon as reasonably practicable after filing;
(iii) subject to the third sentence of Section 3.2(c), taking such actions as
may reasonably be required under applicable state securities or blue sky laws in
connection with the issuance of the Stock Merger Consideration; (iv) using all
reasonable best efforts to obtain all necessary consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications, or other
permissions or actions by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to, any Governmental
Entity or other Person; (v) filing all pre-merger notification and report forms
required under the Xxxx-Xxxxx Act and responding to any requests for additional
information made by any Governmental Entity pursuant to the Xxxx-Xxxxx Act; (vi)
using all reasonable best efforts to cause to be lifted any permanent or
preliminary injunction or restraining order or other similar order issued or
entered by any court or Governmental Entity (an "Injunction") of any type
referred to in Section 7.1(e), or to cause to be rescinded or rendered
inapplicable any statute, rule or regulation of any type referred to in Section
7.2(d); (vii) providing all such information about such party, its Subsidiaries
and its officers, directors, partners and Affiliates to, and making all
applications and filings with, any Governmental Entity or other Person as may be
necessary or reasonably requested in connection with any of the foregoing; and
(viii) in general, consummating and making effective the transactions
contemplated hereby; provided, however, that in order to obtain any consent,
approval, waiver, license, permit, authorization, registration, qualification,
or other permission or action or the lifting of any Injunction, or causing to be
rescinded or rendered inapplicable any statute, rule or regulation, referred to
in clause (iv) or (vi) of this sentence, (A) no party shall be required to pay
any consideration (other than customary filing and similar fees), to divest
itself of any of, or otherwise rearrange the composition of, its assets or to
agree to any of the foregoing or any other condition or requirement that is
materially adverse or burdensome; (B) none of Parent, its Controlling Parties
nor their respective Affiliates shall be required to take any action pursuant to
the foregoing if the taking of such action is reasonably likely to result in the
imposition of a condition or restriction of the type referred to in Section
7.2(d); and (C) without the Parent's prior written consent, the Company shall
not, and shall not permit any of its Subsidiaries to, amend any License or
Contract, pay any consideration or make any agreement or reach any understanding
or arrangement other than in the ordinary course of business consistent with
prior practice. Subject to applicable laws relating to the exchange of
information, prior to making any application to or filing with any Governmental
Entity or other Person in connection with this Agreement, each party shall
provide the other party with drafts thereof and afford the other party a
reasonable opportunity to comment on such drafts.
19
3.6 Employee Matters. Subject to the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA") and the Code, neither Parent
nor the Surviving Entity shall be required to maintain any Company Plan after
the Effective Time. The Company shall terminate the ACTV, Inc. 401(k) Plan prior
to the Effective Time. To the extent the Surviving Entity elects to terminate a
Company Plan after the Effective Time, each employee of the Surviving Entity at
such time who was an employee of the Company immediately prior to the Effective
Time and entitled to participate in such terminated Company Plan (i) shall be
entitled to participate in the equivalent "employee benefit plan", as defined in
Section 3(3) of ERISA, maintained by Parent (the "Parent Plans") to the same
extent as similarly situated employees of Parent, (ii) shall receive credit for
such employee's past service with the Company as of the Effective Time for
purposes of determining eligibility, participation and vesting (but not for
purposes of benefit accrual) under the Parent Plans to the extent such service
was credited under the Company Plans on the Closing Date, and (iii) shall not be
subject to any waiting periods or limitations on benefits for pre-existing
conditions under the Parent Plans, including any group health and disability
plans, except to the extent such employees were subject to such limitations
under the Company Plans, provided, however, that in the case of any Parent Plans
that are welfare plans that require a waiting period until the first day of a
calendar month, such employees shall continue to participate in a comparable
Company Plan until such waiting period has expired.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
4.1 Organization and Qualification. The Company (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, (b) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and (c) is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of its activities makes such
qualification necessary, except, in the case of clause (c), in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing has not had and is not reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect. The Company has delivered to
Parent true and complete copies of the Company Charter and Company Bylaws in
effect on the date hereof. No corporate action has been taken with respect to
any amendment to the Company Charter or the Company Bylaws (except for any such
amendments that have become effective and are reflected in the copies of the
Company Charter and the Company Bylaws delivered by the Company to Parent as
described in the preceding sentence) and no such corporate action is currently
proposed. The Company's minute books, true and complete copies of which have
been delivered to Parent, contain the minutes (or draft copies of the minutes)
of all meetings of directors and stockholders of the Company since January 1,
2000 and such minutes accurately and fairly reflect in all material respects the
actions taken at such meetings.
4.2 Authorization and Validity of Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the approval of its stockholders specified in Section 4.16,
to perform its obligations hereunder and consummate the Merger and the other
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions contemplated hereby have been duly and validly authorized
by the Company Board and by all other necessary corporate action on the part of
the Company, subject, in the case of the consummation by the Company of the
Merger, to the approval of the Company's stockholders described in the previous
sentence. This Agreement has been duly executed and delivered by the Company and
is a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
21
4.3 Capitalization.
(a) As of the date hereof, the authorized capital stock
of the Company consists solely of (i) 200,000,000 shares of Company Common Stock
and (ii) 1,000,000 shares of preferred stock, par value $0.10 per share (the
"Company Preferred Stock") 120,000 of which are designated as Series A Preferred
Stock and 6,110 of which are designated as Series B Preferred Stock. As of the
close of business on September 23, 2002, (i) 55,931,181 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Common Stock were
issued and held by the Company or by Subsidiaries of the Company, (iii) no
shares of Company Preferred Stock were issued and outstanding or issued and held
by the Company or by any Subsidiary of the Company, (iv) 3,424,249 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
Company Plan Stock Options, (v) 4,197,723 shares were reserved for issuance upon
exercise of Company Plan Stock Options available for grant under the Company
Stock Plans, (vi) 6,712,460 shares of Company Common Stock were reserved for
issuance upon exercise of the options to purchase shares of Company Common Stock
described in Section 4.3(c) of the Company Disclosure Letter (other than the
Company Plan Stock Options) (the "Company Non-Plan Stock Options," and together
with the Company Plan Stock Options, the "Company Stock Options") and (vii)
75,000 shares were reserved for issuance upon exercise of the warrants to
purchase shares of Company Common Stock described in Section 4.3(c) of the
Company Disclosure Letter (the "Warrants"). Except as set forth in the preceding
sentence, at the close of business on September 23, 2002, no shares of capital
stock or other securities or other equity interests of the Company and no
phantom shares, phantom equity interests, or stock or equity appreciation rights
relating to the Company or any of its divisions or Subsidiaries were issued,
reserved for issuance or outstanding. Since the close of business on September
23, 2002, no shares of capital stock or other securities or other equity
interests of the Company and no phantom shares, phantom equity interests, or
stock or equity appreciation rights relating to the Company or any of its
divisions or Subsidiaries have been issued other than shares of Company Common
Stock issued upon exercise of Company Stock Options and Warrants outstanding at
the close of business on September 23, 2002 referred to in clauses (iv), (vi)
and (vii) of the second preceding sentence in accordance with the their terms.
All outstanding shares of Company Common Stock are, and all shares of Company
Common Stock which may be issued upon the exercise of Company Stock Options or
Warrants will be, when issued, duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights. All outstanding shares of
Company Common Stock, Company Stock Options and Warrants were issued, and all
shares of Company Common Stock which may be issued upon the exercise of Company
Stock Options or Warrants will be issued, when issued, in compliance with all
applicable state and federal laws concerning the offer, sale and issuance of
such securities.
(b) There are no issued or outstanding bonds, debentures,
notes or other Indebtedness of the Company or any of its Subsidiaries that have
the right to vote (or that are convertible into other securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt").
Other than as described in Section 4.3(b) of the Company Disclosure Letter and
ordinary course payments or commissions to sales representatives of the Company
based upon revenues generated by them without augmentation as a result of the
transactions contemplated by this Agreement, there are no Contracts pursuant to
which any Person is or may (contingently or otherwise) be entitled to receive
any payment based on the revenues, earnings or financial performance of the
Company or any of its Subsidiaries or assets or calculated in accordance
therewith.
22
(c) Except as described on Section 4.3(c) of the Company
Disclosure Letter, there are no, and immediately after the Effective Time there
will be no, outstanding or authorized subscriptions, options, warrants,
securities, calls, rights, commitments or any other Contracts of any character
to or by which the Company or any of its Subsidiaries is a party or is bound
that, directly or indirectly, obligate the Company or any of its Subsidiaries
(contingently or otherwise) to issue, deliver or sell or cause to be issued,
delivered or sold any shares of Company Common Stock or any Company Preferred
Stock or other capital stock, securities, equity interests or Voting Debt of the
Company or any Subsidiary of the Company, any securities convertible into, or
exercisable or exchangeable for, or evidencing the right (contingent or
otherwise) to subscribe for any such shares, securities, interests or Voting
Debt, or any phantom shares, phantom equity interests or stock or equity
appreciation rights, or obligating the Company or any of its Subsidiaries to
grant, extend or enter into any such subscription, option, warrant, security,
call, right or Contract (collectively, "Convertible Securities"). Section 4.3(c)
of the Company Disclosure Letter sets forth with respect to each outstanding
Company Stock Option and Warrant (i) the name of the Person that holds such
Company Stock Option or Warrant, (ii) the total number of shares of Company
Common Stock issuable upon exercise of such Company Stock Option or Warrant
(assuming that all conditions to the exercise thereof, including the passage of
time, had been met), (iii) if such Company Stock Option is a Company Plan Stock
Option, the Company Stock Plan pursuant to which such Company Plan Stock Option
was issued, (iv) the total number of shares of Company Common Stock issuable
upon exercise of such Company Stock Option or Warrant as of the date of this
Agreement, (v) the schedule upon which such Company Stock Option or Warrant
becomes exercisable (to the extent such Company Plan Stock Option or Warrant is
not exercisable in full as of the date of this Agreement), and a description of
any conditions to such exercise, (vi) the expiration date of such Company Stock
Option or Warrant, (vii) the per share exercise price of such Company Stock
Option or Warrant, (viii) whether such Company Stock Option or Warrant shall
terminate in connection with the consummation of the Merger and (ix) with
respect to each Company Stock Option or Warrant that does not terminate in
connection with the consummation of the Merger, (A) a description of the kind
and amount of shares of stock, other securities, money or property the holder of
such Company Stock Option or Warrant is entitled to receive upon the exercise of
such Company Stock Option or Warrant and payment of the exercise price thereof
after consummation of the Merger, (B) the per share exercise price of such
Company Stock Option or Warrant after consummation of the Merger and (C) other
than as provided in clauses (ix)(A) and (B) of this sentence, any changes to the
material terms and conditions of such Company Stock Option or Warrant resulting
from the consummation of the Merger (whether alone or in conjunction with other
actions) including any acceleration of vesting of any Company Stock Option.
There are no outstanding options to purchase Company Common Stock issued
pursuant to the ACTV, Inc. 2001 Stock Inventive Plan or the 1989 ACTV, Inc.
Employees' Incentive Stock Option Plan. Neither the Company nor any Subsidiary
thereof is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock. The Company has
delivered to Parent true and complete copies of the Warrants and the Company
Stock Options which copies (together, in the case of the Company Stock Options,
with the provisions of the applicable Company Stock Plans) represent the
complete terms, conditions, provisions, obligations and undertakings of the
Company with respect to all the Warrants and the Company Stock Options.
23
(d) Except as described on Section 4.3(d) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has adopted,
authorized or assumed any plans, arrangements or practices for the benefit of
its officers, employees or directors that require or permit the issuance, sale,
purchase or grant of any capital stock, securities or other equity interests or
Voting Debt of the Company or any Subsidiary of the Company, any phantom shares,
phantom equity interests or stock or equity appreciation rights or any
Convertible Securities.
4.4 Reports and Financial Statements. The Company (i) has
heretofore delivered to Parent true and complete copies of all reports,
registration statements, definitive proxy statements and other documents
(including exhibits and in each case together with all amendments thereto) filed
by the Company with the Commission from December 31, 2000 to the date of this
Agreement, and (ii) agrees to timely file, and to make available to Parent
promptly after the filing thereof true and complete copies of, all reports,
registration statements and other documents (including exhibits and in each case
together with all amendments thereto) required to be filed by the Company with
the Commission after the date hereof and prior to the Closing Date (such
reports, registration statements, definitive proxy statements and other
documents, together with any amendments thereto, are collectively referred to as
the "Company SEC Reports"). The Company SEC Reports filed with the Commission
constitute, and the Company SEC Reports to be made after the date hereof and on
or before the Closing Date will constitute, all of the documents (other than
preliminary materials) that the Company was or will be required to file with the
Commission from December 31, 2000, to the date hereof and the Closing Date,
respectively. As of their respective dates, each of the Company SEC Reports
complied and, in the case of Company SEC Reports filed after the date hereof and
prior to the Closing Date will comply, in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations promulgated under each of the Securities Act and the Exchange
Act. As of their respective dates, none of the Company SEC Reports filed with
the Commission contained, and none of the Company SEC Reports filed with the
Commission after the date hereof shall contain, any untrue statement of a
material fact or omitted, or will omit, to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were or are made, not misleading. When filed with
the Commission, the financial statements included in the Company SEC Reports
complied, and the financial statements included in any Company SEC Reports filed
with the Commission after the date hereof will comply, as to form in all
material respects with the applicable rules and regulations of the Commission
and were, or will have been, prepared in accordance with GAAP, consistently
applied (except as may be indicated therein or in the notes or schedules
thereto). Such financial statements fairly present, or will fairly present, the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended, subject, in the case
of unaudited interim financial statements, to normal, recurring year-end audit
adjustments. Except as and to the extent reflected or reserved against in the
financial statements included in the Company's quarterly report on Form 10-Q for
the quarter ended June 30, 2002 or as disclosed therein or in Section 4.4 of the
Company Disclosure Letter, none of the Company or any of its Subsidiaries, or to
its knowledge, any of its Equity Affiliates, had as of such date any actual or
potential liability or obligation of any kind, whether accrued, absolute,
contingent, unliquidated or other, or whether due or to become due (including
any liability for breach of contract, breach of warranty, torts, infringements,
claims or lawsuits), that individually or in the aggregate was (or may be)
material to the business, assets, financial condition, results of operations or
prospects of the Company and its Subsidiaries taken as a whole or that exceeds
$50,000 individually, or $250,000 in the aggregate or that individually is
required by the applicable rules and regulations of the Commission and GAAP to
be disclosed, reflected or reserved against in financial statements (including
the notes thereto). Since June 30, 2002, none of the Company, any Subsidiary of
the Company, or to the Company's knowledge any Equity Affiliate of the Company
has incurred any such actual or potential liability or obligation. Except as set
forth on Section 4.4 of the Company Disclosure Letter, neither the Company nor
any of its Subsidiaries has guaranteed or otherwise agreed to become responsible
for any Indebtedness of any other Person.
24
4.5 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by the Company of this Agreement do not,
and the performance by the Company of its obligations hereunder and the
consummation by the Company of the Merger and the other transactions
contemplated hereby will not:
(a) assuming approval and adoption of the Merger Proposal
by the Company's stockholders as contemplated by Section 4.16, conflict with or
violate the Company Charter or Company Bylaws or the charter, bylaws or similar
organizational documents of any Subsidiary of the Company, or to the knowledge
of the Company, any Equity Affiliate of the Company;
(b) require any consent, approval, order or authorization
of or other action by any Governmental Entity (a "Governmental Consent") or any
registration, qualification, declaration or filing with or notice to any
Governmental Entity (a "Governmental Filing"), in each case on the part of the
Company or any Subsidiary of the Company, or to the knowledge of the Company,
any Equity Affiliate of the Company, except for (A) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (B) the Governmental Consents and
Governmental Filings with foreign, state and local Governmental Entities
described on Section 4.5(b) of the Company Disclosure Letter (the "Local
Approvals"), (C) the Governmental Filings required to be made pursuant to the
pre-merger notification requirements of the Xxxx-Xxxxx Act, (D) the filing with
the Commission of (1) the Company Preliminary Proxy Statement and the Company
Proxy Statement as contemplated by Section 3.2(b) and (2) such reports under
Sections 13(a), 13(d) or 15(d) of the Exchange Act as may be required in
connection with this Agreement or the transactions contemplated hereby and (E)
such other Governmental Consents and Governmental Filings the absence or
omission of which will not, either individually or in the aggregate, have a
Company Material Adverse Effect;
(c) except as described on Section 4.5(c) of the Company
Disclosure Letter, require, on the part of the Company or any Subsidiary of the
Company, or to the knowledge of the Company, any Equity Affiliate of the
Company, any consent by or approval or authorization of (a "Contract Consent")
or notice to (a "Contract Notice") any other Person (other than a Governmental
Entity), whether under any License or other Contract or otherwise, except for
such Contract Consents and Contract Notices the absence or omission of which
will not, either individually or in the aggregate, have a Company Material
Adverse Effect;
25
(d) assuming that the Contract Consents and Contract
Notices described in Section 4.5(c) of the Company Disclosure Letter are
obtained and given, conflict with or result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation, suspension, modification or
acceleration of any obligation or any increase in any payment required by, or
the impairment, loss or forfeiture of any material benefit, rights or privileges
under, or the creation of a Lien or Restriction on any properties or assets
pursuant to (any such conflict, violation, breach, default, right of
termination, cancellation or acceleration, loss or creation, a "Violation"), any
Contract to which the Company or any Subsidiary of the Company, or to the
knowledge of the Company, any Equity Affiliate of the Company, is a party, by
which the Company, any Subsidiary of the Company, or to the knowledge of the
Company, any Equity Affiliate of the Company, or any of their respective assets
or properties is bound or affected or pursuant to which the Company or any
Subsidiary of the Company, or to the knowledge of the Company, any Equity
Affiliate of the Company, is entitled to any rights or benefits (including
Licenses)), except for such Violations that will not, individually or in the
aggregate, have a Company Material Adverse Effect; or
(e) assuming approval and adoption of the Merger Proposal
by the Company's stockholders as described in Section 4.16 and assuming that the
Governmental Consents and Governmental Filings specified in clause (b) of this
Section 4.5 are obtained, made and given, result in a Violation of, under or
pursuant to any law, rule, regulation, order, judgment or decree applicable to
the Company or any Subsidiary of the Company, or to the knowledge of the
Company, any Equity Affiliate of the Company, or by which any of their
respective properties or assets are bound, except for such Violations that will
not, individually or in the aggregate, have a Company Material Adverse Effect.
4.6 Subsidiaries and Affiliates; Investment Securities.
(a) Section 4.6(a) of the Company Disclosure Letter (i)
lists each direct and indirect Subsidiary and Equity Affiliate of the Company,
(ii) lists the jurisdiction of organization of each direct and indirect
Subsidiary and Equity Affiliate of the Company, (iii) describes the number and
type of the authorized and outstanding equity interests or securities of each
direct and indirect Subsidiary and Equity Affiliate of the Company, (iv)
describes the number and type of the equity interests or securities, including
interests or securities convertible into or exchangeable or exercisable for any
equity interest or security, in each such Subsidiary and Equity Affiliate owned
directly or indirectly by the Company (each a "Company Investment") and (v)
lists all material Contracts to which the Company or any of its Subsidiaries are
parties or by which their respective assets or properties are bound evidencing
such equity interests or securities, pursuant to which such equity interests or
securities are held, evidencing Restrictions affecting such equity interests or
securities or entered into in connection with the acquisition of such equity
interests or securities (the "Company Investment Agreements"). True and complete
copies of the Company Investment Agreements have been delivered to Parent. With
respect to each Company Investment Agreement that is not in English, the Company
has provided to Parent a true and complete translation of such Company
Investment Agreement into English. The Company or the applicable Subsidiary
thereof has good and valid title to the Company Investments, free and clear of
any Liens and not subject to any Restrictions, other than as described in
Section 4.6(a) of the Company Disclosure Letter or as may have been created by
this Agreement and except for restrictions on transfer under federal or state
securities laws. The shares of capital stock of each corporate Subsidiary of the
Company are validly issued, fully paid and non-assessable. Except as set forth
on Section 4.6(a) of the Company Disclosure Letter, there are not, and
immediately after the Effective Time, there will not be, any outstanding or
authorized subscriptions, options, warrants, securities, calls, rights,
commitments or other Contracts of any character to or by which the Company or
any of its Subsidiaries is a party or by which any of their respective
properties or assets are bound that, directly or indirectly, (x) call for or
relate to the sale, pledge, transfer or other disposition by the Company or any
Subsidiary of the Company of any shares of capital stock, any partnership or
other equity interests or any Voting Debt of any Subsidiary of the Company or
any Equity Affiliate of the Company or (y) relate to the voting or control of
such capital stock, partnership or other equity interests or Voting Debt.
Assuming the due execution and delivery by each of the other parties thereto
that is not the Company or a Subsidiary of the Company, each Company Investment
Agreement constitutes the legal, valid and binding obligation of the Company or
the applicable Subsidiary thereof that is a party to such Company Investment
Agreement. Except as set forth in Section 4.6(a) of the Company Disclosure
Letter, there is no Legal Proceeding pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries relating to any of
such Company Investments or Company Investment Agreements. Except as set forth
on Section 4.6(a) of the Company Disclosure Letter, none of the Company or any
of its Subsidiaries has any obligation to contribute any additional capital to,
or acquire any additional interest in, any Subsidiary or Equity Affiliate of the
Company.
26
(b) Each of the Company's Subsidiaries and Equity
Affiliates (i) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite
corporate, partnership or limited liability company power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (iii) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of its activities makes such qualification necessary,
except, in the case of clause (iii), in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing has not had and is not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
(c) The Company has delivered to Parent true and complete
copies of (i) the certificate of incorporation and bylaws (or similar
organizational documents) as in effect on the date hereof of each Subsidiary and
Equity Affiliate of the Company and (ii) the minute books of each Subsidiary and
Equity Affiliate of the Company, which contain the minutes (or draft copies of
the minutes) of all meetings of directors (or similar governing body) and
stockholders (or other equity holders) of each such Subsidiary and Equity
Affiliate of the Company since January 1, 2000 and such minutes accurately and
fairly reflect in all material respects the actions taken at such meetings.
(d) The assets owned or leased by the Company and its
Subsidiaries are suitable and adequate for the conduct of their respective
businesses as presently conducted and as proposed to be conducted and the
Company or the applicable Subsidiary thereof has good and valid title to or
valid leasehold or other contractual interests in all such assets that are
material to its business free and clear of all Liens other than Permitted
Encumbrances and not subject to any Restrictions other than Liens or
Restrictions the existence of which has not had and is not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
27
(e) Section 4.6(e) of the Company Disclosure Letter sets
forth a complete and accurate list of each capital, participating, equity or
other interest owned of record or beneficially by the Company in any
corporation, partnership, joint venture or other Person, other than the
Subsidiaries or Equity Affiliates of the Company (each, an "Investment Security"
and collectively, the "Investment Securities"). Section 4.6(e) of the Company
Disclosure Letter includes, with respect to each Investment Security, the name
of the corporation, partnership, joint venture or other Person in respect of
which such Investment Security relates, the amount and nature of such interest,
and a description of the material terms of any Liens and Restrictions with
respect to such Investment Securities.
(f) The Company has good and valid title to, and full
rights of ownership of, the option (the "B2 Option") to purchase shares of Class
B2 common stock of MOSI granted to Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxx,
Xxxxx Xxxxxx and Xxxxx Liga on April 7, 1999, free and clear of any Liens and
not subject to any Restrictions, other than as may have been created by this
Agreement and except for any restrictions on transfer under federal or state
securities laws. The B2 Option is currently exercisable by the Company on the
same terms and under the same circumstances as the option to purchase shares of
Class B1 common stock of MOSI granted to Xxxxxx X. Xxxxxxx ("Wolzien") on April
7, 1999. The shares of Class B2 common stock of MOSI issuable to the Company
upon exercise of the B2 Option will be, when issued, duly authorized, validly
issued fully paid and non-assessable and not subject to preemptive rights or
Restrictions. Notwithstanding the prior conversion, exercise or exchange of any
outstanding Convertible Securities with respect to MOSI, upon the exercise of
the B2 Option by the Company, the Company shall Control MOSI.
(g) Other than as described on Section 4.6(g) of the
Company Disclosure Letter (the items listed on such Section of the Company
Disclosure Letter, collectively, the "MOSI Investment Agreements"), there are no
Contracts to which the Company or any of its Subsidiaries are parties or by
which their respective assets or properties are bound evidencing equity
interests or securities of MOSI, pursuant to which such equity interests or
securities of MOSI are held or entered into (or agreed to be entered into) in
connection with the acquisition of such equity interests or securities of MOSI,
including any Class B common stock of MOSI that may be acquired upon exercise of
the B2 Option. True and complete copies of the MOSI Investment Agreements have
been delivered to Parent. The Company and its Subsidiaries and, to the knowledge
of the Company, each other Person that is a party thereto are in compliance with
the terms of each of the MOSI Investment Agreements and no Person has made any
allegation that any Person is in breach or default of any of the MOSI Investment
Agreements. There is no Legal Proceeding pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries relating to the equity
interests or securities of MOSI or any of the MOSI Investment Agreements.
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(h) ACTV Entertainment, Inc., a Delaware corporation and
a wholly-owned subsidiary of the Company ("ACTV Entertainment"), has good and
valid title to membership interests representing 95.1% of the equity and voting
power of AdVision, LLC, a Delaware limited liability company ("AdVision"), free
and clear of any Liens and not subject to any Restrictions, other than as may
have been created by this Agreement and except for restrictions on transfer
under federal or state securities laws. On July 31, 2002, ACTV Entertainment
acquired a membership interest (the "nCube Ownership Interest")representing
44.1% of the equity and voting power of AdVision from nCUBE Corporation, a
Delaware corporation ("nCube"), pursuant to the Intellocity - nCUBE Settlement
Agreement, dated as of July 31, 2002, between Intellocity USA, Inc., a Delaware
corporation ("Intellocity"), and nCUBE (the "Settlement Agreement"). The Company
has delivered a true and correct copy of the Settlement Agreement to Parent.
Neither the Company, ACTV Entertainment or Intellocity nor any Affiliate of any
of the foregoing paid or delivered any consideration to nCUBE or any other
Person for the conveyance of the nCUBE Ownership Interest other than the
agreement that the conveyance of the nCUBE Ownership Interest to ACTV
Entertainment constituted payment and satisfaction in full of the Outstanding
Invoices (as defined in the Settlement Agreement), as contemplated by the
Settlement Agreement. Xxxxxx Xxxxx ("Xxxxx") validly consented to the conveyance
of the nCUBE Ownership Interest to ACTV Entertainment for all purposes
(including for all purposes of the limited liability company operating agreement
of AdVision) and validly waived any rights to which Xxxxx may have been
entitled, including rights of first refusal and co-sale rights, and the Company
has delivered to Parent a true and correct copy of Xxxxx'x consent to such
conveyance and waiver of such rights. Such consent and waiver by Xxxxx has not
been withdrawn or modified in any respect.
4.7 Absence of Certain Changes or Events. Except as otherwise
disclosed in the Company SEC Reports filed and delivered to Parent prior to the
date of this Agreement or as set forth on Section 4.7 of the Company Disclosure
Letter, since December 31, 2001, (a) there has not been any change, and no event
has occurred and no condition exists, that individually or together with all
other such changes, events and conditions, has had or is reasonably likely to
have a Company Material Adverse Effect and (b) no action has been taken by the
Company or any Subsidiary of the Company that, if Section 6.4 of this Agreement
had then been in effect, would have been prohibited by such Section without the
consent or approval of Parent, and no Contract to take any such action was
entered into during such period.
4.8 Registration Statement; Proxy Statements. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in, and that is included or incorporated
by reference in, (a) the Registration Statement (or any amendment or supplement
thereto) filed or to be filed by Parent with the Commission under the Securities
Act in connection with the issuance of the Merger Consideration, (b) the proxy
statement to be mailed to the Company's stockholders in connection with the
Company Special Meeting (the "Company Proxy Statement") or any amendment or
supplement thereto, (c) the proxy statement to be mailed to Parent's
stockholders in connection with the Parent Stockholder Meeting (the "Parent
Proxy Statement") or any amendment or supplement thereto, or (d) any documents
filed or to be filed with the Commission or any other Governmental Entity in
connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, and, in the case of the Registration Statement
or any amendment or supplement thereto, when the same becomes effective, at the
time of the stockholder vote taken at the Company Special Meeting or at the
Effective Time, and, in the case of the Company Proxy Statement or any amendment
or supplement thereto, at the time of mailing of the Company Proxy Statement to
the Company's stockholders or at the time of the Company Special Meeting or any
other meeting of the Company's stockholders to be held in connection with the
Merger, and, in the case of the Parent Proxy Statement or any amendment or
supplement thereto, at the time of the Parent Stockholder Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or necessary to correct any statement in any earlier communication.
For this purpose, any such information included or incorporated by reference in
any such document will be deemed to have been supplied by or on behalf of the
Company for such purpose if such document was available for review by the
Company a reasonable time before such document was filed (but the foregoing
shall not be the exclusive manner in which it may be established that such
information was so supplied). The Registration Statement (to the extent the
Company Proxy Statement constitutes the prospectus thereunder), the Company
Proxy Statement and the furnishing thereof by the Company will comply in all
respects with the applicable requirements of the Securities Act, the Exchange
Act and the DGCL.
29
4.9 Legal Proceedings. Except as set forth on Section 4.9 of the
Company Disclosure Letter, there is no (a) Legal Proceeding pending or, to the
knowledge of the Company, threatened, against, involving or affecting the
Company, any Subsidiary of the Company or any Equity Affiliate of the Company or
any of its or their respective assets or rights, (b) judgment, decree,
Injunction, rule, or order of any Governmental Entity applicable to the Company
or any Subsidiary of the Company, or to the knowledge of the Company, any Equity
Affiliate of the Company that has had or is reasonably likely to have, either
individually or in the aggregate, a Company Material Adverse Effect, (c) Legal
Proceeding pending or, to the knowledge of the Company, threatened, against the
Company, any Subsidiary of the Company or any Equity Affiliate of the Company
that seeks to restrain, enjoin or delay the consummation of the Merger or any of
the other transactions contemplated by this Agreement or that seeks damages in
connection therewith, or (d) Injunction of any type referred to in Section
7.1(e).
4.10 Licenses; Compliance with Regulatory Requirements.
(a) The Company and its Subsidiaries, and to the
knowledge of the Company, its Equity Affiliates hold all licenses, franchises,
ordinances, authorizations, permits, certificates, variances, exemptions,
concessions, leases, rights of way, easements, instruments, orders and
approvals, domestic or foreign (collectively, the "Licenses"), required for or
which are material to the ownership of the assets and the operation of the
businesses of the Company or any of its Subsidiaries, except for those Licenses
which the failure to hold has not had and is not reasonably likely to have,
either individually or in the aggregate, a Company Material Adverse Effect. The
Company and each of its Subsidiaries, and to the knowledge of the Company, each
of its Equity Affiliates, are in compliance with, and have conducted their
respective businesses so as to comply with, the terms of their respective
Licenses and with all applicable laws, rules, regulations, ordinances and codes
(domestic or foreign), except where the failure so to comply has not had and is
not reasonably likely to have, either individually or in the aggregate, a
Company Material Adverse Effect. Without limiting the generality of the
foregoing, the Company and its Subsidiaries, and to the knowledge of the
Company, its Equity Affiliates (i) have all Licenses of foreign, state and local
Governmental Entities required for the operation of the facilities being
operated on the date hereof by the Company or any of its Subsidiaries or Equity
Affiliates (the "Permits"), (ii) have duly and currently filed all reports and
other information required to be filed with any Governmental Entity in
connection with such Permits and (iii) are not in violation of any of such
Permits, other than the lack of Permits, delays in filing reports or possible
violations that have not had and, are not reasonably likely to have, a Company
Material Adverse Effect.
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(b) Except as set forth in Section 4.10(b) of the Company
Disclosure Letter, (i) the Company and its Subsidiaries and to the knowledge of
the Company, its Equity Affiliates, and the operation of their respective
businesses, equipment and other assets and the facilities owned or leased by
them are in compliance in all material respects with all applicable
Environmental Laws, (ii) the Company and its Subsidiaries and to the knowledge
of the Company, its Equity Affiliates, hold all Licenses required under
Environmental Laws necessary to enable them to own, lease or otherwise hold
their assets and to carry on their businesses as presently conducted, (iii)
there are no investigations, administrative proceedings, judicial actions,
orders, claims or notices that are pending, anticipated or threatened against
the Company or any of its Subsidiaries or to the knowledge of the Company, its
Equity Affiliates, relating to or arising under any Environmental Laws, (iv)
there is no ongoing remediation of or other response activity to address
contamination or any other adverse environmental or indoor air quality condition
and no condition that would be reasonably expected to give rise to a requirement
under applicable Environmental Laws to conduct such remediation or response
activities, and no Governmental Entity has proposed or threatened any such
remediation or response, at any real property currently or formerly leased or
owned by the Company or any of its Subsidiaries or to the knowledge of the
Company, any of its Equity Affiliates, or resulting from any activity of the
Company or any of its Subsidiaries or to the knowledge of the Company, any of
its Equity Affiliates, (v) neither the Company nor any of its Subsidiaries nor
to the knowledge of the Company, any of its Equity Affiliates, has received any
notice alleging a violation of or liability of the Company or any of its
Subsidiaries or any of its Equity Affiliates, under any Environmental Laws, and
(vi) neither the Company nor any of its Subsidiaries nor to the knowledge of the
Company, any of its Equity Affiliates, have contractually agreed to assume or
provide an indemnity for environmental liabilities of any third party. For
purposes of this Agreement, the term "Environmental Laws" means any federal,
state, local or foreign law, statute, rule or regulation or the common law
relating to the environment, the management of hazardous or toxic substances,
the protection of natural resources or wildlife, or occupational or public
health and safety, including the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and the federal Occupational
Safety and Health Act of 1970, as amended, and any state or foreign law
counterpart.
4.11 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other Person is or will be entitled, by reason of any
agreement, act or statement by the Company or any of its Subsidiaries or their
respective directors, officers, employees or Affiliates, to any financial
advisory, broker's, finder's or similar fee or commission, to reimbursement of
expenses or to indemnification or contribution in connection with any of the
transactions contemplated by this Agreement, except Friedman, Billings, Xxxxxx &
Co., Inc., whose fees and expenses will not exceed $800,000 and whose fees,
expenses and claims for indemnification and contribution will be paid by the
Company in accordance with the Company's agreement with such firm (copies of
which have been delivered by the Company to Parent prior to the date of this
Agreement), and the Company agrees to indemnify and hold Parent, Merger Sub and
their respective Controlling Parties harmless from and against any and all
claims, liabilities or obligations with respect to any other such fees,
commissions, expenses or claims for indemnification or contribution asserted by
any Person on the basis of any act or statement made or alleged to have been
made by the Company or any of its Subsidiaries, directors, officers, employees
or Affiliates.
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4.12 Tax Matters. Except as set forth on Section 4.12 of the
Company Disclosure Letter:
(a) The Company and each of its Subsidiaries have timely
filed all Tax Returns that they were required to file. All such Tax Returns were
correct and complete in all respects. All Taxes owed by the Company and each of
its Subsidiaries (whether or not shown on any Tax Return) have been timely paid.
A reserve, which the Company reasonably believes to be adequate, has been set up
for the payment of all such Taxes anticipated to be payable by the Company and
each of its Subsidiaries in respect of periods through the date hereof. Neither
the Company nor any of its Subsidiaries is currently the beneficiary of any
extension of time within which to file any Tax Return.
(b) No claim has ever been made by an authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
(c) There are no Liens or security interests on any of
the assets or properties of the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(d) The Company and its Subsidiaries have withheld and
paid over to the relevant taxing authority all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder, or other third party.
(e) None of the Tax Returns filed by the Company or any
of its Subsidiaries has been or is currently being examined by the Internal
Revenue Service or relevant state, local or foreign taxing authorities. There
are no examinations or other administrative or court proceedings relating to
Taxes of the Company or any of its Subsidiaries in progress or pending, nor has
the Company or any of its Subsidiaries received any notice or report asserting a
Tax deficiency with respect to the Company or any of its Subsidiaries. There are
no current or threatened actions, suits, proceedings, investigations, audits or
claims relating to or asserted for Taxes of the Company or any of its
Subsidiaries.
(f) All deficiencies or assessments asserted against the
Company or any of its Subsidiaries by any taxing authority have been paid or
fully and finally settled and, to the knowledge of the Company, no issue
previously raised in writing by any such taxing authority reasonably could be
expected to result in a material assessment for any taxable period (or portion
of a period) beginning on or after the Closing Date.
32
(g) The Company and its Subsidiaries have not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(h) Neither the Company nor any of its Subsidiaries (A)
has filed a consent under Section 341(f) of the Code concerning collapsible
corporations, or (B) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method.
(i) There is no contract, agreement, plan or arrangement
to which the Company or any of its Subsidiaries is a party covering any
employee, former employee, officer, director, shareholder or contract worker of
the Company or any of its Subsidiaries, which, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G or 162(m) of the Code.
(j) Neither the Company nor any of its Subsidiaries (A)
is or has been a member of an affiliated group (within the meaning of Section
1504 of the Code) filing a consolidated federal income Tax Return other than an
affiliated group the common parent of which is the Company, (B) is or has been a
member of any affiliated, combined, consolidated, unitary, or similar group for
state, local or foreign Tax purposes other than a group the common parent of
which is the Company, (C) is or has been a party to any Tax allocation or Tax
sharing agreement, or (D) has any liability for the Taxes of any Person (other
than any of the Company and its Subsidiaries) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by Contract, or otherwise.
(k) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (x) in the two (2) years prior to the date of this Agreement or (y) in
a distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement.
(l) Neither the Company nor any of its Subsidiaries has
requested a ruling from, or entered into a closing agreement with, the Internal
Revenue Service or any other taxing authority which will have an effect on the
Surviving Entity or any of its Subsidiaries in any taxable period ending after
the Closing Date.
(m) None of the assets of the Company or any of its
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code, "tax-exempt bond financed property" within the meaning of
Section 168(g)(5) of the Code, or may be treated as owned by any other Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986.
(n) Neither the Company nor any of its Subsidiaries has
participated in a corporate tax shelter within the meaning of Treasury
Regulations Section 1.6011-4T or participated in a transaction that it has
disclosed pursuant to IRS Announcement 2002-2, 2002-2 I.R.B. 304. The Company
and its Subsidiaries have disclosed on their U.S. federal Tax Returns all
positions taken therein that are likely to give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code.
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(o) There are no material "deferred intercompany
transactions" or "intercompany transactions" between the Company and any of its
Subsidiaries (or any of their respective predecessors), the gain or loss in
which has not yet been taken into account under the consolidated return Treasury
Regulations currently or previously in effect.
4.13 Employee Matters.
(a) Section 4.13(a) of the Company Disclosure Letter
contains a true and complete list of all: (i) employee benefit plans (as defined
in Section 3(3) of ERISA), including retirement, pension, profit sharing,
savings, deferred compensation, supplemental retirement, hospitalization,
medical, dental, vision care, disability, life, accident or other insurance
plans, programs or arrangements, (ii) stock option, stock purchase, phantom
stock or stock appreciation right, plans, programs or arrangements, (iii)
severance, termination pay or supplemental unemployment benefits plans, programs
or arrangements, and (iv) bonus or incentive plans, programs or arrangements
(including fringe benefit plans or arrangements) sponsored, maintained or
contributed to or required to be contributed to at any time by the Company or by
any trade or business, whether or not incorporated ("ERISA Affiliate"), that
together with the Company would be deemed a "controlled group" within the
meaning of Section 4001 of ERISA or section 414 of the Code, for the benefit of
any employee or former employee of the Company, including any such type of plan
established, maintained, sponsored or contributed to under the laws of any
foreign country (the "Company Plans"). The Company has heretofore delivered to
Parent true and complete copies of (i) each Company Plan and, if the Company
Plan is funded through a trust or any third party funding vehicle, a copy of the
trust or other funding document, (ii) the most recent determination letter
issued by the IRS with respect to each Company Plan for which such a letter has
been obtained, (iii) annual reports on Form 5500 required to be filed with any
Governmental Entity for each Company Plan for the three most recent plan years
and all required actuarial reports for the last three plan years of each Company
Plan.
(b) No Company Plan is subject to Title IV of ERISA or
section 412 of the Code and neither the Company nor any ERISA Affiliate made, or
was required to make, contributions to any employee benefit plan subject to
Title IV of ERISA or section 412 of the Code during the six year period ending
on the Effective Time.
(c) Neither the Company nor any ERISA Affiliate maintains
or has an obligation to contribute to or has within the past six years
maintained or had an obligation to contribute to a "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
(d) Each Company Plan that utilizes a funding vehicle
described in Section 501(c)(9) of the Code or is subject to the provisions of
Section 505 of the Code has been the subject of a notification by the IRS that
such funding vehicle (i) qualifies for tax-exempt status under Section 501(c)(9)
of the Code and (ii) complies with Section 505 of the Code, except for those
Company Plans listed on Section 4.13(d) of the Company Disclosure Letter which
the IRS does not as a matter of policy issue such notification with respect to
that particular type of plan. Each such Company Plan satisfies, where
appropriate, the requirements of Sections 501(c)(9) and 505 of the Code.
34
(e) There has been no event or circumstance which has
resulted in any liability being asserted by any Company Plan, the Pension
Benefit Guaranty Corporation or any other Person or entity under Title IV of
ERISA or section 412 of the Code against the Company or any ERISA Affiliate and
there has not been any event or circumstance which could reasonably be expected
to result in such liability.
(f) Neither the Company nor any Subsidiary of the Company
is a party to or bound by the terms of any collective bargaining agreement. The
Company and each of its Subsidiaries is in compliance in all material respects
with all applicable laws respecting the employment and employment practices,
terms and conditions of employment and wage and hours of its employees and is
not engaged in any unfair labor practice. There is no labor strike or labor
disturbance pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary of the Company, and during the past five years neither
the Company nor any Subsidiary of the Company has experienced a work stoppage.
(g) Each Company Plan has been operated and administered
in accordance with its terms and applicable law, including Section 406 of ERISA
and Section 4975 of the Code.
(h) Each Company Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the Code.
(i) No Company Plan provides welfare benefits, including death or medical
benefits, with respect to current or former employees or consultants of the
Company or any Subsidiary of the Company beyond their retirement or other
termination of service (other than coverage mandated by applicable law).
(j) There are no pending, threatened or anticipated
claims by or on behalf of any Company Plan, by any employee or beneficiary
covered under any such Company Plan with respect to such Company Plan, or
otherwise involving any such Company Plan (other than routine claims for
benefits).
(k) Section 4.13(k) of the Company Disclosure Letter sets
forth a true and complete list as of the date hereof of each of the following
agreements, arrangements and commitments to which the Company or any of its
Subsidiaries is a party or by which any of them may be bound (true and complete
copies of which have been delivered to Parent): (i) each employment, consulting,
agency or commission agreement not terminable without liability to the Company
or any of its Subsidiaries upon 60 days' or less prior notice to the employee,
consultant or agent; (ii) each agreement with any employee of the Company or any
Subsidiary of the Company the benefits of which are contingent, or the terms of
which are materially altered, upon the consummation of the transactions
contemplated by this Agreement (whether alone or in conjunction with other
actions); (iii) each agreement with respect to any employee of the Company or
any Subsidiary of the Company providing any term of employment or compensation
guarantee extending for a period longer than one year; and (iv) each other
agreement or Company 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 (whether alone or in
conjunction with other actions) 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.
35
(l) Except as set forth in Section 4.13(l) of the Company
Disclosure Letter, (i) no employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any Company Plan as a result of the
consummation of the transactions contemplated by this Agreement (whether alone
or in conjunction with other actions), (ii) no amount payable, or economic
benefit provided, by the Company or any of its Subsidiaries (including any
acceleration of the time of payment or vesting of any benefit) as a result of
the consummation of the transactions contemplated by this Agreement (whether
alone or in conjunction with other actions) could be considered an "excess
parachute payment" under Section 280G of the Code, (iii) no Person is entitled
to receive any additional payment from the Company, any of its Subsidiaries or
any other Person (a "Parachute Gross-Up Payment") in the event that the excise
tax of Section 4999 of the Code is imposed on such Person, and (iv) neither the
Company nor any of its Subsidiaries has granted to any Person any right to
receive any Parachute Gross-Up Payment.
4.14 Fairness Opinion. The Company Board has received the opinion
of Friedman, Billings, Xxxxxx & Co., Inc. to the effect that, as of the date
hereof, the Merger Consideration is fair, from a financial point of view, to the
holders of the Company Common Stock (the "Fairness Opinion"). The Company has
delivered to Parent a true and complete copy of the executed Fairness Opinion.
The Company will include an executed copy of the Fairness Opinion in or as an
annex to the Company Proxy Statement.
4.15 Recommendation of the Company Board. The Company Board, by
vote at a meeting duly called and held, has approved this Agreement, determined
that the Merger is fair to and in the best interests of the Company's
stockholders and has adopted resolutions recommending approval and adoption of
this Agreement and the Merger contemplated hereby by the stockholders of the
Company.
4.16 Vote Required. The only vote of stockholders of the Company
required under the DGCL, the Nasdaq National Market requirements, the Company
Charter, the Company Bylaws or otherwise in order to consummate the transactions
contemplated by this Agreement, including the Merger, is the affirmative vote of
a majority of the total number of votes entitled to be cast by the holders of
the issued and outstanding shares of Company Common Stock voting as a single
class, and no other vote or approval of or other action by the holders of any
capital stock of the Company is required for such approval and adoption.
4.17 Patents, Trademarks and Other Rights.
(a) List of Patents, Trademarks and Similar Rights.
Sections 4.17(a)(i)-(vi) of the Company Disclosure Letter set forth complete and
accurate lists and status of:
(i) all foreign and domestic Intellectual
Property registrations and issued or granted patents, or if a registration or
patent has not been issued or granted, all pending and abandoned applications
for patents, and all applications to register trademarks, trade names, service
marks, copyrights and domain names, and all extensions, renewals, restorations,
revivals, resuscitations, continuations, continuations-in-part, divisionals,
reissues, and reexaminations thereof, as well as all invention disclosure
records for which the Company or its Subsidiaries has not filed for patent
protection, which the Company and/or any of its Subsidiaries own or in which the
Company or any of its Subsidiaries claim or can claim ownership;
36
(ii) all products, including computer software or
technology, commercially sold or licensed by the Company or its Subsidiaries and
all types of services commercially provided by the Company or its Subsidiaries;
(iii) any material computer software and
applications in development by or owned by the Company or its Subsidiaries;
(iv) in the case of Intellectual Property not
owned by the Company or its Subsidiaries, all agreements under which any
Intellectual Property is licensed or sublicensed by the Company or any of its
Subsidiaries from others or otherwise permitted by other Persons to use,
indicating the parties to each such agreement, other than retail "shrinkwrap" or
generally available retail types of licenses;
(v) all agreements pursuant to which the Company
or any of its Subsidiaries has granted, or has an obligation to grant, any
rights in, to or concerning any patents or other material Intellectual Property,
including agreements that singularly provide or that contain one or more
provisions providing with respect to Intellectual Property, assignments,
covenants-not-to-xxx or assert, licenses (exclusive or nonexclusive) or
sublicenses, releases, grant-backs, cross-licenses, confidentiality or escrow
arrangements, indemnification, and all settlement, consent or coexistent
agreements involving Intellectual Property; and
(vi) all other Intellectual Property (not
identified pursuant to clauses (i)-(v) above) that is material to the business
and operations of the Company and/or its Subsidiaries.
(b) Free Title and Liens. The Company or its Subsidiaries
own exclusively all the Intellectual Property identified and indicated in
Sections 4.17(a)(i), (ii), (iii) and (vi) of the Company Disclosure Letter.
Except as set forth in Section 4.17(b)(i)-(iii) of the Company Disclosure
Letter:
(i) with respect to the Intellectual Property
(other than patents, patent applications, or invention disclosure records) owned
by the Company or its Subsidiaries, the Company or the appropriate Subsidiary
thereof has good and valid title thereto free and clear of all Liens, or
exclusive licenses or cross-licenses or escrow arrangements, or covenants
not-to-xxx or, or any obligations to impose or enter into any of the foregoing;
(ii) with respect to the patents, patent
applications and invention disclosure records owned by the Company or its
Subsidiaries, the Company or the appropriate Subsidiary thereof has good and
valid title thereto free and clear of (w) any obligations to license (exclusive
or nonexclusive), cross-license or sublicense, escrow or assign, or any
obligations to grant a covenant-not-to-xxx or assert; (x) any Liens or
restrictions on title; or (y) any license (exclusive or nonexclusive),
sublicense, cross-license, assignment or escrow arrangements or covenants
not-to-xxx or assert; and
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(iii) with respect to all Intellectual Property
held by the Company or any of its Subsidiaries under license or sublicense,
other than retail or generally available licenses, the Company or the
appropriate Subsidiary thereof has the right to use such Intellectual Property
in the manner and subject to limitations on the scope of such use as set forth
in such licenses or sublicenses, free from any Lien and not subject to any
restrictions, other than as set forth in such license or sublicense agreement.
(c) Protection of Intellectual Property. Except as set
forth in Sections 4.17(c)(i)-(iv) of the Company Disclosure Letter:
(i) (x) the Company or the appropriate
Subsidiary thereof has taken actions that in its reasonable business judgment,
consistent with industry standards, are appropriate ("Reasonable Actions") to
protect and police its Intellectual Property, including filing the necessary
documents (including submission to the appropriate patent office or compliance
with, as appropriate, the following: full and timely payment of filing and
similar fees during prosecution; issue or registration fees; maintenance fees;
compliance with "small entity" requirements; compliance with inventorship
requirements; compliance with oath/declaration execution requirements; and
compliance with assignment execution and recording requirements) with the United
States Patent and Trademark Office, or such other filing offices, domestic or
foreign, and duly registering with or causing the respective Intellectual
Property to be issued by such filing offices; and (y) to the extent necessary to
protect its interest therein (including affording itself of the maximum remedies
available under law), the Intellectual Property of the Company and its
Subsidiaries has been used with all patent, trademark, copyright and other
Intellectual Property notices, markings and legends prescribed by law;
(ii) (x) with respect to its Intellectual
Property rights that have been applied for or filed with the relevant
Governmental Entities, or that have been registered, granted or issued by such
relevant Governmental Entities, the Company or the appropriate Subsidiary
thereof has protected and maintained, respectively, such Intellectual Property
rights under applicable laws, and such applications, filings, registrations,
grants, issuances, and other actions remain valid, in full force and effect,
and, to the extent registered, granted or issued, fully enforceable by the
Company or the appropriate Subsidiary thereof; (y) none of the material
Intellectual Property rights owned by the Company or any of its Subsidiaries or,
to the knowledge of the Company, licensed to any of them has expired, been
abandoned or fallen into the public domain, has been canceled or adjudicated
invalid (except with respect to patent applications that have been rejected by a
Governmental Entity in the ordinary course of the patent application process and
are listed on Section 4.17(c)(ii)(x) of the Company Disclosure Letter), or is
subject to any outstanding order, judgment or decree restricting its use or
adversely affecting the Company's or its Subsidiaries rights thereto; and (z)
the status and content of the Intellectual Property identified in Section
4.17(a)(i) of the Company Disclosure Letter is accurate and complete;
38
(iii) there are no allegations by any
non-Governmental Entity third party to indicate that such Intellectual Property
rights owned by the Company or any of its Subsidiaries that have been granted or
applied for or filed with the relevant Governmental Entities and that have not
been registered, granted or issued by such relevant Governmental Entities, are
not entitled to registration, grant or issuance by the relevant Governmental
Entities; and
(iv) the Company and its Subsidiaries have
complied with, are complying with and will comply with: (1) their duty of
disclosure before the United States Patent and Trademark Office, as defined by
the relevant rules and regulations governing such duty, in connection with the
prosecution of pending United States patent applications (including both patent
applications pending as of the Closing Date and patent applications issued as
patents as of the Closing Date); and (2) any comparable duty of disclosure
before other patent offices in countries other than the United States, if any,
in connection with the prosecution of patent applications in those countries.
(d) Intellectual Property from Employees and Others.
(i) Except as described in Section 4.17(d)(i) of
the Company Disclosure Letter, the employment policy of the Company and the
employment policies of the Subsidiaries thereof require, and at all times in the
past have required, that the entire right, title and interest of any and all
Intellectual Property conceived, created, invented, authored or developed or
caused to be reduced to practice by any employee of the Company or of any of its
Subsidiaries during the term of, and that relates to, such employee's employment
with the Company or such Subsidiary shall immediately and exclusively vest in
the Company or the appropriate Subsidiary thereof, and the Company and its
Subsidiaries have taken Reasonable Actions to generally enforce such employment
policies.
(ii) Except as described in Section 4.17(d)(ii)
of the Company Disclosure Letter, true and complete copies of the Company's
employment policy, the employment policies of each of the Subsidiaries thereof
and all past and current forms of employment agreements implementing this policy
used by the Company or any of its Subsidiaries is attached to Section
4.17(d)(ii) of the Company Disclosure Letter.
(iii) Except for those employees identified in
Section 4.17(d)(iii) of the Company Disclosure Letter, every current and past
employee of the Company or any of its Subsidiaries and every individual named or
identified as an inventor on any patent applications filed by or to be filed or
on behalf of the Company and/or its Subsidiaries (including issued patents,
pending patent applications and invention disclosures), has executed an
agreement that sets forth therein a covenant and assignment implementing the
policy set forth in clause (d)(i) above.
(iv) Except as described in Section 4.17(d)(iv)
of the Company Disclosure Letter, the Company and its Subsidiaries have a policy
(a true and complete copy of which is attached to Section 4.17(d)(iv) of the
Company Disclosure Letter) to obtain, and have obtained, from all technical
consultants and technical contractors, including all individuals named or
identified as inventors on any patent applications filed or to be filed by or on
behalf of the Company and/or its Subsidiaries (including issued patents, pending
patent applications and invention disclosures), who contribute, will in the
future contribute or have contributed to the creation or the development of
Intellectual Property for the Company or any of its Subsidiaries valid written
assignments to the Company or one or more of its Subsidiaries of such
consultant's or contractor's rights to any such contribution that the Company or
its Subsidiaries do not, or will not, own by operation of Law and the Company
and its Subsidiaries have generally enforced such policy.
39
(v) None of the individuals identified in
Sections 4.17(d)(iii) and (iv) of the Company Disclosure Letter and none of the
technical consultants or technical contractors who have not provided the Company
with a valid written assignment to such consultant's or contractor's rights as
described in Section 4.17(d)(iv) has either generated or retained any
Intellectual Property listed in Section 4.17(a) of the Company Disclosure
Letter.
(vi) For those patents, patent applications,
invention disclosure records and copyrightable materials listed in Section
4.17(a)(i) of the Company Disclosure Letter that do not identify the Company as
the assignee, the Company has obtained, or the Company shall procure prior to
Closing without providing any additional compensation, obligation or
consideration unless with prior written approval from Parent, the necessary
agreements and/or assignments to vest complete title to such patents, patent
applications, invention disclosure records, and copyrightable materials in the
Company.
(e) Trade Secrets. The Company and its Subsidiaries have
taken all reasonable steps to protect and preserve the secrecy, confidentiality
and value of all of their Trade Secrets and there are no unauthorized uses,
disclosures or misappropriations of any Trade Secret.
(f) Intellectual Property Infringement. Except as set
forth in Section 4.17(f) of the Company Disclosure Letter:
(i) the Company's and its Subsidiaries'
activities (including the granting of any licenses or sublicenses), products and
services have not, as presently conducted do not, and as presently contemplated
to be conducted in the future will not, infringe upon or otherwise
misappropriate or violate, any Intellectual Property rights of any other Person;
(ii) there are no claims or suits pending, no
notice (formal or informal) provided, no legal proceedings or claims threatened,
including any indemnification or contribution claims, in each instance, either
currently pending or asserted in the past, and, to the knowledge of the Company,
no basis for any such claim, suit or proceeding:
(x) alleging that the Company or any of
its Subsidiaries or any of their respective activities, products or services, or
the practice of the inventions defined by their issued patents, infringe upon,
violate or otherwise constitute an unauthorized use of any other Person's
Intellectual Property;
(y) challenging the Company's or any of
its Subsidiaries' ownership of, right to use, or the validity or enforceability
or effectiveness of any Intellectual Property it owns or in which it claims
ownership, including the Intellectual Property listed in Section 4.17(a) of the
Company Disclosure Letter; or
40
(z) contending, with respect to any
agreement entered into by the Company or any of its Subsidiaries, that the
Company or any of its Subsidiaries has breached or violated such agreement, that
any Intellectual Property licensed to or used by the Company or any Subsidiaries
under such agreements has been violated or is invalid, unenforceable,
unpatentable, unregisterable or cancelable, or violates, infringes or
misappropriates any other Person's Intellectual Property, that a party to such
agreement intends to cancel, terminate or fail to renew such agreement, or that
there exists an event, condition or occurrence that, with the giving of notice
or lapse of time, or both, would constitute a breach or default by any party to
such agreement;
(iii) none of the Company or any of its
Subsidiaries has filed a claim against, provided notice to or taken any other
action against any Person claiming the infringement, violation, or unauthorized
use by any Person of any Intellectual Property owned by or licensed to the
Company or any of its Subsidiaries and, to the knowledge of the Company, no
Person is infringing, violating or misappropriating any such Intellectual
Property;
(iv) the execution and delivery of this Agreement
by the Company does not, and the consummation of the Merger and the other
transactions contemplated by this Agreement will not, result in the loss of the
Company's or its Subsidiary's rights in any Intellectual Property; and
(v) None of the licenses or sublicenses granted
by the Company or any of its Subsidiaries (including MOSI and HyperTV) to
Livewire LLC, a Delaware limited liability company, infringe upon or otherwise
violate, any Intellectual Property rights of Wolzien or any other rights Wolzien
may have with respect to the Company or any of its Subsidiaries (including MOSI
and HyperTV).
(g) No Waiver of Privilege. The Company and its
Subsidiaries have taken Reasonable Actions to maintain any attorney-client
privilege or other legal privilege with respect to oral and written
communications relating to Intellectual Property and legal claims and defenses
related thereto.
(h) Adequacy of Rights. The Company and its Subsidiaries
own or otherwise hold sufficient rights to all Intellectual Property necessary
to carry on their respective business and all such rights shall survive the
execution, consummation and performance of this Agreement unchanged in any
respect.
(i) Wolzien Patent Improvements. Section 4.17(i) of the
Company Disclosure Letter sets forth (a) a complete and accurate list of each
Wolzien Patent Improvement (as such term is defined in the Asset Purchase
Agreement (the "Wolzien Agreement"), dated April 7, 1999, between MOSI, Wolzien,
HyperTV, and the Company, as amended on April 8, 2000) which has been disclosed
by Wolzien to MOSI, (b) the date upon which each such disclosure occurred, (c)
whether MOSI made an election to file a patent application with respect to each
such Wolzien Patent Improvement, (d) the date of any such election, (e) if such
election was made, the date upon which a patent application was filed with
respect to such Wolzien Patent Improvement and (f) the status of any such patent
application. With respect to each Wolzien Patent Improvement set forth in
Section 4.17(i) of the Company Disclosure Letter, the Company and MOSI have
taken Reasonable Actions to determine whether MOSI should elect to file a patent
application for such Wolzien Patent Improvement. Wolzien has not exercised his
option (or indicated any inclination to exercise his option) to prepare and file
a patent application in his own name and title with respect to any Wolzien
Patent Improvements for which MOSI has not prepared and filed a patent
application within the ninety (90) day period after which such Wolzien Patent
Improvement had been disclosed to MOSI pursuant to the Wolzien Agreement.
41
(j) Prior Agreements. To the knowledge of the Company, no
current or former employee is or was a party to any confidentiality agreement or
agreement not to compete which restricts or forbids, or restricted or forbade,
during any time of such employee's employment by the Company or any of its
Subsidiaries, such employee's performance of the business of the Company or any
of its Subsidiaries or any activity such employee was hired to perform.
4.18 Certain Agreements, Affiliate Transactions and Insurance.
(a) Section 4.18(a) of the Company Disclosure Letter
lists or describes each Contract to which the Company or any of its Subsidiaries
is a party, or by which any of their respective assets are subject or bound, of
the following nature (each Contract listed or required to be listed on Section
4.18(a) of the Company Disclosure Letter, along with each Contract listed or
described, or required to be listed or described, on Sections 4.3(c), 4.3(d),
4.6(a), 4.17(a)(iv), 4.17(a)(v), 4.18(b) or 4.18(c) of the Company Disclosure
Letter, a "Material Contract"):
(i) Contracts that are required to be filed with
the Commission pursuant to the Exchange Act as an exhibit to the Company's
Annual Report on Form 10-K;
(ii) Contracts that were entered into outside the
ordinary course of business and pursuant to which any obligations or liabilities
(whether absolute, contingent or otherwise) remain outstanding;
(iii) employment, bonus or consulting agreements
involving potential payments in excess of $50,000 over any period of 12 months
or more;
(iv) Contracts evidencing or securing
Indebtedness of the Company or any of its Subsidiaries (other than trade
accounts arising in the ordinary course of business that do not exceed $10,000
individually or $250,000 in the aggregate);
(v) Contracts in which the Company or any of its
Subsidiaries has guaranteed the obligations of any Person;
(vi) Contracts that may require the Company or
any of its Subsidiaries to indemnify any other Person;
(vii) any Contract involving the potential payment
(A) by the Company or any of its Subsidiaries of $50,000 or more or (B) to the
Company or any of its Subsidiaries of an amount that is reasonably likely to be
$50,000 or more, in each case including agreements with television networks
(including broadcast and cable networks), cable and direct broadcast system
operators, manufacturers of televisions and set-top boxes and advertisers;
42
(viii) Contracts that contain any "most favored
nations" provisions, as such term is commonly understood in the cable television
and satellite television industries;
(ix) Contracts that guarantee any Person a
particular amount of payment from the Company or any of the Company's
Subsidiaries irrespective of such Person's performance of any of its obligations
under such Contract;
(x) Contracts between the Company or any of its
Subsidiaries, on the one hand, and any director, officer or Significant
Stockholder of the Company or any of its Subsidiaries or Equity Affiliates, on
the other hand;
(xi) Contracts between the Company or any of its
Subsidiaries, on the one hand, and any Significant Party, on the other hand;
(xii) Contracts that contain a Change of Control
Covenant; and
(xiii) Contracts giving any Person the right
(contingent or otherwise) to require the Company or any of its Subsidiaries to
register under the Securities Act any securities or to participate in any
registration of such securities.
Except as set forth in Section 4.18(a) of the Company Disclosure Letter, each
Material Contract is in full force and effect and is valid and enforceable in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies and except that employees' covenants not to
compete may not be enforceable in accordance with their terms in California and
certain other jurisdictions), and the Company or the applicable Subsidiary of
the Company, as the case may be, has taken all actions necessary to comply in
all material respects with such Material Contract and is not in breach or
violation of or default under (with or without notice or lapse of time or both)
of any such Material Contract. To the knowledge of the Company, except as set
forth in Section 4.18(a) of the Company Disclosure Letter, all parties to the
Material Contracts other than the Company and its Subsidiaries have complied in
all material respects with the provisions thereof and no party is in breach or
violation of, or in default (with or without notice or lapse of time, or both)
under, such Material Contracts. The Company has not received notice of any
actual or threatened termination, cancellation or limitation to, and there has
not been any other adverse development in respect of, any of the Material
Contracts. The Company has delivered to Parent a true and correct copy of each
Material Contract that is in writing, and a description of all material terms of
each Material Contract or arrangement that is not in writing, listed or
described or required to be listed or described on Section 4.18(a) of the
Company Disclosure Letter.
43
(b) Except as set forth in Section 4.18(b) of the Company
Disclosure Letter, (i) there is no Contract or any judgment, injunction, order
or decree binding upon the Company or any of its Subsidiaries that has or would
reasonably be likely to have the effect of prohibiting or materially restricting
or limiting the ability of the Company to conduct its business as the same is
currently conducted or contemplated to be conducted and (ii) none of the Company
or any of the Company's Subsidiaries is a party to, and none of their respective
assets is bound by, any Contract or any judgement, injunction, order or decree
that, after the consummation of the transactions contemplated by this Agreement,
would be or would purport to be binding upon Parent, a Controlling Party of
Parent or any Affiliate of a Controlling Party of Parent (other than the
Surviving Entity and the Surviving Entity's Subsidiaries) or any Contract or any
judgement, injunction, order or decree in respect of which any act or omission
of Parent, a Controlling Party of Parent or any Affiliate of a Controlling Party
of Parent (other than the Surviving Entity and the Surviving Entity's
Subsidiaries) would result in a breach or violation thereof or, in the case of
any Contract, constitute (with or without notice or lapse of time or both) a
default or event of default thereunder, or give rise to any right of
termination, cancellation, amendment, acceleration, repurchase, prepayment or
repayment or to increased payments thereunder, or give rise to or accelerate any
material obligation or result in the loss or modification of any material rights
or benefits thereunder or result in any Lien or Restriction on any of the
material assets of the Surviving Entity or any of its Subsidiaries. The Company
has delivered to Parent a true and correct copy of each Contract that is in
writing, a description of all material terms of each Contract or arrangement
that is not in writing, and a true and correct copy of each judgment,
injunction, order or decree, listed or described, or required to be listed or
described, on Section 4.18(b) of the Company Disclosure Letter.
(c) Section 4.18(c) of the Company Disclosure Letter
lists or describes all transactions and Contracts between the Company or any of
its Subsidiaries, on the one hand, and any director, executive officer or
Significant Stockholder of the Company or any of its Subsidiaries or Equity
Affiliates, on the other hand. The Company has delivered to Parent a true and
correct copy of each Contract and arrangement that is in writing, and a
description of all material terms of each transaction and each Contract that is
not in writing, listed or described, or required to be listed or described, on
Section 4.18(c) of the Company Disclosure Letter.
(d) Section 4.18(d) of the Company Disclosure Letter sets
forth all directors' and officers', errors and omissions, fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries. Such policies are with reputable insurance carriers, provide
adequate coverage for all normal risks incident to the business of the Company
and its Subsidiaries and their respective properties and assets, and are in
character and amount at least equivalent to that carried by Persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect. The Company has delivered to Parent true and complete copies of each
policy set forth, or required to be set forth, on Section 4.18(d) of the Company
Disclosure Letter.
4.19 No Investment Company. The Company is not an "investment
company" subject to the registration requirements of, or regulation as an
investment company under, the Investment Company Act of 1940, as amended.
44
4.20 Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including Section 203 of the DGCL) or any anti-takeover provision in the
Company Charter or Company Bylaws is, or at the Effective Time will be,
applicable to the Company, the Company Common Stock, the Merger or the other
transactions contemplated by this Agreement. The Company Board has taken all
action so that none of Parent, any Controlling Party of Parent or any Affiliates
of a Controlling Party of Parent will be prohibited from entering into a
"business combination" with the Company as an "interested stockholder" (in each
case as such term is used in Section 203 of the DGCL) as a result of the
execution of this Agreement, or the consummation of the transactions
contemplated hereby.
4.21 Rights Agreement. The Company and the Company Board have taken
all action necessary to render the Rights Agreement inapplicable to the Merger
and the other transactions contemplated by this Agreement.
4.22 Provided Information. All written information (excluding
financial projections) concerning the Company and its Subsidiaries that has been
prepared by or on behalf of the Company, its Subsidiaries or any of their
respective officers or authorized representatives and that has been provided to
Parent, any of its Affiliates or any of their respective authorized
representatives in connection with the Merger, was, at the time made available,
correct in all material respects and did not, at the time made available,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements are made. All financial
projections concerning the Company and its Subsidiaries, whether oral or
written, that have been prepared or made by or on behalf of the Company, its
Subsidiaries or any of their respective officers or authorized representatives,
and that have been provided to Parent, any of its Affiliates or any of their
respective authorized representatives in connections with the Merger or that
have been made public since January 1, 2002 by or on behalf of the Company, its
Subsidiaries or any of their respective officers or authorized representatives,
(a) have been reasonably prepared or made on a basis reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance of the Company and its Subsidiaries and (b) are
the same financial projections used by the Company for internal planning
purposes. The Company has no knowledge that the future financial performance of
the Company is unlikely to be consistent in all material respects with such
financial projections.
4.23 Documents Delivered. All documents which have been or shall be
delivered to Parent by or on behalf of the Company pursuant to this Agreement or
in connection with the transactions contemplated hereby (including all documents
and agreements referenced in the Company Disclosure Letter or provided to Parent
in connection with its due diligence investigation of the Company) are or when
so delivered shall be correct, current and complete copies of the originals
thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as
follows:
5.1 Organization and Qualification. Each of Parent and Merger Sub
(a) is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated, (b) has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and (c) is duly qualified or
licensed and is in good standing to do business in each jurisdiction in which
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except, in the case of clause (c), in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing has not had and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent and its Subsidiaries taken as
a whole or a material adverse effect on the ability of Parent and Merger Sub to
perform their obligations under, and to consummate the transactions contemplated
by this Agreement (collectively, a "Parent Material Adverse Effect"). Parent has
made available to the Company a true and complete copy of Merger Sub's
certificate of incorporation and bylaws, each as amended to the date hereof.
45
5.2 Authorization and Validity of Agreement. Each of Parent and
Merger Sub has all requisite corporate power and authority to enter into this
Agreement and subject to obtaining the approval of Parent's stockholders
contemplated by Section 3.2 and the satisfaction of the conditions set forth in
Section 7.1(b), to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated hereby. The execution, delivery
and performance by Parent and Merger Sub of this Agreement and the consummation
by each of Parent and Merger Sub of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent and Merger Sub, subject to the approval
of Parent's stockholders described in the previous sentence. This Agreement has
been duly executed and delivered by Parent and Merger Sub and is a legal, valid
and binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
5.3 Capitalization.
(a) As of the date hereof, the authorized capital stock
of Parent consists solely of (i) 500,000,000 shares of Class A Parent Stock,
(ii) 200,000,000 shares of Class B Parent Stock and (iii) 500,000,000 shares of
Parent Preference Stock. As of the close of business on August 31, 2002,
40,893,099 shares of Class A Parent Stock, 30,631,746 shares of Class B Parent
Stock and no shares of Parent Preference Stock were issued and outstanding. All
such shares were validly issued, fully paid and nonassessable. As of the close
of business on March 31, 2002, there were outstanding Warrants and employee
stock options exercisable for an aggregate of 8,075,642 shares of Class A Parent
Stock. Each share of Class B Parent Stock is convertible, at any time, into one
share of Class A Parent Stock. The shares of Class A Parent Stock to be issued
in the Merger will, when issued, be validly issued, fully paid and
nonassessable, and no stockholder of Parent will have any preemptive right of
subscription or purchase in respect thereof. All other material aspects of
Parent's capitalization have been disclosed in the Parent SEC Reports.
(b) The authorized capital stock of Merger Sub consists
of 1,000 shares of Common Stock, par value $0.01 per share, all of which shares
are validly issued and outstanding. All of the issued and outstanding capital
stock of Merger Sub is, and at the Effective Time will be, owned by Parent, and
there are (i) no other shares of capital stock or voting securities of Merger
Sub, (ii) no securities of Merger Sub convertible into or exchangeable for
shares of capital stock or voting securities of Merger Sub and (iii) no options
or other rights to acquire from Merger Sub, and no obligations of Merger Sub to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Merger Sub. Merger Sub
has not conducted any business prior to the date hereof and has no, and prior to
the Effective Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this Agreement
and the Merger and the other transactions contemplated by this Agreement.
46
5.4 No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby will not:
(a) conflict with or violate the memorandum of
association or articles of association of Parent or the certificate of
incorporation or bylaws of Merger Sub;
(b) except as disclosed in Section 5.4(b) of the Parent
Disclosure Schedule, require any Governmental Consent or Governmental Filing, in
each case on the part of Parent or any Subsidiary of Parent, except for (i) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, (ii) the Governmental Consents and Governmental Filings with foreign,
state and local Governmental Entities described on Section 5.4(b) of the Parent
Disclosure Schedule, (iii) the Governmental Filings required to be made pursuant
to the pre-merger notification requirements of the Xxxx-Xxxxx Act, (iv) the
filing with the Commission, and the effectiveness, of the Registration Statement
as contemplated by Section 3.2(c), (v) the filing with the Commission of the
Parent Proxy Statement and such reports and other documents under Sections
13(a), 13(d), 15(d) or 16 of the Exchange Act as may be required in connection
with this Agreement or the transactions contemplated hereby and (vi) such other
Governmental Consents and Governmental Filings the absence or omission of which
will not, either individually or in the aggregate, have a Parent Material
Adverse Effect;
(c) require, on the part of Parent or any Subsidiary of
Parent, any Contract Consent by, or Contract Notice to, any other Person (other
than a Governmental Entity), under any License or other Contract, except for
such Contract Consents and Contract Notices the absence or omission of which
will not, either individually or in the aggregate, have a Parent Material
Adverse Effect;
(d) give rise to any Violation of any Contract to which
Parent or any Subsidiary of Parent is a party, by which Parent, any Subsidiary
of Parent or any of their respective assets or properties is bound or affected
or pursuant to which Parent or any Subsidiary of Parent is entitled to any
rights or benefits, except for such Violations that will not, individually or in
the aggregate, have a Parent Material Adverse Effect; or
(e) assuming that the Governmental Consents and
Governmental Filings specified in clause (b) of this Section 5.4 are obtained,
made and given, result in a Violation of, under or pursuant to any law, rule,
regulation, order, judgment or decree applicable to Parent or any Subsidiary of
Parent or by which any of their respective properties or assets are bound,
except for such Violations that will not, individually or in the aggregate, have
a Parent Material Adverse Effect.
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5.5 Registration Statement; Parent Proxy Statement. None of the
information concerning Parent or any of its Subsidiaries supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by reference in,
and that is included or incorporated by reference in, (i) the Registration
Statement or any amendment or supplement thereto filed or to be filed by Parent
with the Commission under the Securities Act in connection with the issuance of
the Merger Consideration, (ii) the Company Proxy Statement or any amendment or
supplement thereto, or (iii) any documents filed or to be filed with the
Commission or any other Governmental Entity in connection with the transactions
contemplated hereby, will, at the respective times such documents are filed,
and, in the case of the Registration Statement or any amendment or supplement
thereto, when the same becomes effective and at the Effective Time, and, in the
case of the Company Proxy Statement or any amendment or supplement thereto, at
the time of mailing to the Company's stockholders or at the time of the Company
Special Meeting, be false or misleading with respect to any material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading or necessary to correct any statement in any
earlier communication. The Registration Statement, including any amendments or
supplements thereto, will comply as to form in all material respects with the
provisions of the Securities Act (except that no representation is made as to
the form of the Company Proxy Statement to the extent it constitutes the
prospectus thereunder).
5.6 Report and Financial Statements. Except as set forth on
Section 5.6 of the Parent Disclosure Schedule, Parent's Annual Report on Form
20-F for the fiscal year ended December 31, 2001 (the "20-F") at the time filed,
complied in all material respects with the applicable requirements of Form 20-F
under the Exchange Act, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements (including the notes thereto) of Parent and its Subsidiaries included
in the 20-F, at the time filed, fairly presented in all material respects the
consolidated financial position of Parent and its consolidated Subsidiaries as
at the dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended.
5.7 Absence of Certain Changes or Events. Except as disclosed in
the earnings releases issued by the Parent for the quarterly periods ended March
31, 2002 and June 30, 2002, since the date of the most recent audited financial
statements included in the Parent SEC Reports, there has not been, as of the
date of this Agreement, (a) any change in the financial condition, results of
operations, business, assets or liabilities of Parent and its Subsidiaries that,
individually or in the aggregate has had or is reasonably likely to have a
Parent Material Adverse Effect or (b) any change by Parent in its accounting
principles, practices or methods except as required by GAAP.
48
5.8 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other Person is or will be entitled, by reason of any
agreement, act or statement by Parent or any of its Subsidiaries or their
respective directors, officers, employees or Affiliates, to any financial
advisory, broker's, finder's or similar fee or commission, to reimbursement of
expenses or to indemnification or contribution in connection with any of the
transactions contemplated by this Agreement.
5.9 Recommendation of the Parent Board. The Parent Board, by vote
at a meeting duly called and held, has approved the Issuance and has adopted
resolutions recommending approval of the Issuance by the stockholders of Parent.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Access to Information Concerning Properties and Records.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, upon
reasonable notice, the Company will (and will use reasonable efforts to cause
each of its Subsidiaries to) afford to the officers, employees, counsel,
accountants and other authorized representatives of Parent reasonable access
during normal business hours to all its properties, personnel, books and records
and furnish promptly to such Persons such financial and operating data and other
information concerning its business, properties, personnel and affairs as such
Persons will from time to time reasonably request and instruct the officers,
directors, employees, counsel and financial advisors of the Company to discuss
the business operations, affairs and assets of the Company and otherwise fully
cooperate with the other party in its investigation of the business of the
Company. Parent agrees that it will not, and will cause its officers, employees,
counsel, accountants and other authorized representatives not to, use any
information obtained pursuant to this Section 6.1 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement.
6.2 Confidentiality. Unless otherwise agreed to in writing by the
party disclosing (or whose Representatives disclosed) the same (a "disclosing
party"), each party (a "receiving party") will, and will cause its Affiliates,
directors, officers, employees, agents and controlling Persons (such Affiliates
and other Persons with respect to any party being collectively referred to as
such party's "Representatives") to, (i) keep all Confidential Information (as
defined below) of the disclosing party in strict confidence and not disclose or
reveal any such Confidential Information to any Person other than those
Representatives of the receiving party who are participating in effecting the
transactions contemplated hereby or who otherwise need to know such Confidential
Information, (ii) use such Confidential Information only in connection with
consummating the transactions contemplated hereby and enforcing the receiving
party's rights hereunder, and (iii) not use Confidential Information in any
manner detrimental to the disclosing party. In the event that a receiving party
is requested pursuant to, or required by, applicable law or regulation or by
legal process to disclose any Confidential Information of the disclosing party,
the receiving party will provide the disclosing party with prompt notice of such
request(s) to enable the disclosing party to seek an appropriate protective
order. A party's obligations hereunder with respect to Confidential Information
that (i) is disclosed to a third party with the disclosing party's written
approval, (ii) is required to be produced under order of a court of competent
jurisdiction or other similar requirements of a governmental agency, or (iii) is
required to be disclosed by applicable law or regulation, will, subject in the
case of clauses (ii) and (iii) above to the receiving party's compliance with
the preceding sentence, cease to the extent of the disclosure so consented to or
required, except to the extent otherwise provided by the terms of such consent
or covered by a protective order. If a receiving party uses a degree of care to
prevent disclosure of the Confidential Information that is at least as great as
the care it normally takes to preserve its own information of a similar nature,
it will not be liable for any disclosure that occurs despite the exercise of
that degree of care, and in no event will a receiving party be liable for any
indirect, punitive, special or consequential damages. In the event this
Agreement is terminated, each party will, if so requested by the other party,
promptly return or destroy all of the Confidential Information of such other
party, including all copies, reproductions, summaries, analyses or extracts
thereof or based thereon in the possession of the receiving party or its
Representatives; provided, however, that the receiving party will not be
required to return or cause to be returned summaries, analyses or extracts
prepared by it or its Representatives, but will destroy (or cause to be
destroyed) the same upon request of the disclosing party.
49
For purposes of this Section 6.2, "Confidential Information"
of a party means all confidential or proprietary information about such party
that is furnished by it or its Representatives to the other party or the other
party's Representatives, regardless of the manner in which it is furnished.
"Confidential Information" does not include, however, information which (a) has
been or in the future is published or is now or in the future is otherwise in
the public domain through no fault of the receiving party or its
Representatives, (b) was available to the receiving party or its Representatives
on a non-confidential basis prior to its disclosure by the disclosing party, (c)
becomes available to the receiving party or its Representatives on a
non-confidential basis from a Person other than the disclosing party or its
Representatives who is not otherwise bound by a confidentiality agreement with
the disclosing party or its Representatives, or is not otherwise prohibited from
transmitting the information to the receiving party or its Representatives, or
(d) is independently developed by the receiving party or its Representatives
through Persons who have not had, either directly or indirectly, access to or
knowledge of such information. Nothing contained in this Section 6.2 shall be
construed to limit a receiving party's right to independently develop or acquire
products without use of the disclosing party's Confidential Information.
Further, a receiving party shall be free to use for any purpose the residuals
resulting from access to or work with such Confidential Information, provided
that such receiving party shall maintain the confidentiality of the Confidential
Information as provided herein. The term "residuals" means information in
non-tangible form, which may be retained without extraordinary effort by persons
who have had access to the Confidential Information in the normal course of
their use or review of Confidential Information pursuant to this letter,
including ideas, concepts, know-how or techniques contained therein. Neither the
Company nor Parent shall have any obligation to limit or restrict the assignment
of such persons or to pay royalties for any work resulting from the use of
residuals.
6.3 Public Announcements. Unless otherwise required by applicable
law or by obligations pursuant to any listing agreement with or rules of any
securities exchange, the National Association of Securities Dealers, Inc. or the
Nasdaq Stock Market, each party shall use commercially reasonable efforts to
consult with, and use commercially reasonable efforts to accommodate the
comments of the other parties before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions
contemplated hereby. Notwithstanding the preceding sentence, upon execution of
this Agreement and upon the Closing, the Company and Parent will consult with
each other with respect to the issuance of a joint press release with respect to
this Agreement and the transactions contemplated hereby.
50
6.4 Conduct of the Company's Business Pending the Effective Time.
Except as set forth on Section 6.4 of the Company Disclosure Letter, the Company
will, and will cause each of its Subsidiaries to, except as permitted, required
or specifically contemplated by this Agreement, including Section 6.5 hereof, or
consented to or approved in writing by Parent, during the period commencing on
the date hereof and ending at the Effective Time:
(a) conduct its business only in, and not take any action
except in, the ordinary and usual course of its business and consistent with
past practices;
(b) use reasonable best efforts to preserve intact its
business organization, to preserve its Licenses in full force and effect, to
maintain its Intellectual Property (including the payment of any administrative
fees), to keep available the services of its present officers and key employees,
and to preserve the goodwill of those having business relationships with it;
(c) not (i) make or permit any change or amendments in
its certificate or articles of incorporation, bylaws or similar organizational
documents; (ii) issue, grant, sell or deliver any shares of its capital stock or
any of its other equity interests or securities (other than shares of Company
Common Stock issued upon the exercise of any Company Stock Options outstanding
on the date hereof or Warrants outstanding on the date hereof), any Convertible
Securities or any phantom shares, phantom equity interests or stock or equity
appreciation rights; (iii) split, combine or reclassify the outstanding shares
of its capital stock or any of its other outstanding equity interests or
securities or issue any capital stock or other equity interests or securities in
exchange for any such shares or interests; (iv) redeem, purchase or otherwise
acquire, directly or indirectly, any shares of capital stock or any equity
interests, other securities, Convertible Securities or phantom shares, phantom
equity interests or stock or equity appreciation rights of the Company or any
Subsidiary of the Company; (v) amend or modify, or accelerate, amend or change
the period of exercisability or vesting of, any outstanding Company Stock
Options, Warrants or other Convertible Securities, or adopt, authorize or amend
any other stock or equity appreciation rights, restricted stock or equity, stock
or equity purchase, stock or equity bonus, option or similar plan, arrangement
or agreement (including any Company Stock Plan); (vi) make any changes in its
equity capital structure; (vii) declare, set aside, pay or make any dividend or
other distribution or payment (whether in cash, property or securities) with
respect to its capital stock or other securities, except for dividends by a
Subsidiary of the Company paid ratably to its stockholders or the partners
thereof, as the case may be (provided in the case of any non-Wholly Owned
Subsidiary of the Company that the other stockholders of or partners in such
Subsidiary are not officers, directors, employees or Affiliates of the Company
or of any of its Subsidiaries); (viii) sell, transfer or otherwise dispose of,
or pledge any Investment Security or any stock, equity or partnership interest
owned by it in any Subsidiary or Equity Affiliate of the Company; or (ix) enter
into or assume any Contract with respect to any of the foregoing;
51
(d) not (i) modify or change in any material respect any
License, any Material Contract or any other Contract that is material to the
business of the Company, other than in the ordinary course of business
consistent with past practice; (ii) modify or change in any respect any of the
Specified Contracts; (iii) terminate any License, Material Contract or any other
Contract that is material to the business of the Company, (iv) offer to enter
into, assume or enter into, a Contract with any Person where the terms and
provisions so offered, or the terms and provisions of the Contract to be entered
into or assumed would give any other Person (an "MFN Beneficiary") the right to
require at any time that the terms and conditions of such MFN Beneficiary's
Contract with the Company or any of its Subsidiaries be adjusted, changed or
modified (including retroactively) in any manner based upon the terms and
provisions in the first Person's Contract or that such Contract be terminated;
(v) hire any new employee, replace any existing employee, enter into any new
employment, consulting, contractor, agency or commission agreement, make any
amendment or modification to any such existing agreement or grant any increases
in compensation, other than the regular annual salary increases required to be
made pursuant to the terms of existing employment agreements with employees of
the Company or its Subsidiaries who are not directors or officers of the
Company; (vi) establish, amend or modify any employee benefit plan of any kind
referred to in Section 4.13(a), except to the extent required by any applicable
law, the existing terms of any such plan or the provisions of this Agreement;
(vii) except as set forth in Section 6.12, modify, amend, renew or enter into
any directors' and officers' insurance policy with respect to the Company or any
of its Subsidiaries; (viii) provide security for any of its outstanding
unsecured Indebtedness, provide additional security for any of its outstanding
secured Indebtedness or grant, create or suffer to exist any Lien on or with
respect to any assets or rights of the Company or any Subsidiary of the Company,
except in any such case for Permitted Encumbrances; (ix) pay, discharge or
satisfy claims, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than any payment, discharge or satisfaction in the ordinary
course of business consistent with past practice; (x) cancel or forgive any
Indebtedness or waive any claims or rights of substantial value; (xi) make or
authorize any capital expenditures other than in the ordinary course of business
in amounts of more than $25,000 individually or $100,000 in the aggregate; (xii)
accelerate the payment of, or otherwise prepay, any existing outstanding
Indebtedness; (xiii) other than as otherwise permitted by this Agreement and, in
the case of transactions between the Company and any of its Wholly Owned
Subsidiaries or between Wholly Owned Subsidiaries of the Company, other than the
normal cash management practices (including reimbursement of business expenses)
of the Company and its Subsidiaries conducted in the ordinary and usual course
of their business and consistent with past practice, make any advance or loan to
or engage in any transaction with any Significant Stockholder or director,
former director, officer, former officer, partner, Affiliate or Equity Affiliate
of the Company or any of its Subsidiaries not required by the terms of an
existing Contract described in Section 4.18 of the Company Disclosure Letter;
(xiv) guarantee or otherwise become responsible for any Indebtedness of any
other Person; (xv) settle or compromise any claims, litigation or arbitration;
(xvi) enter into or assume any Contract that would be a Specified Contract, or
amend any term of any existing Contract in a manner that would cause it to
become a Specified Contract; or (xvii) enter into or assume any Contract with
respect to any of the foregoing;
(e) not acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to otherwise acquire any assets
that are material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole;
52
(f) not sell, lease or encumber or otherwise voluntarily
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets that are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole;
(g) not incur any amount of Indebtedness or assume or
enter into any Contract to do so;
(h) not (i) modify or change in any respect, or terminate
any agreement related to material Intellectual Property; (ii) provide, or enter
into any Contract that provides, or amend, modify or change any existing
Contract to provide (A) any assignment, grant-backs, cross-license, of, or
covenant not-to-xxx, covenant not to assert or grant of release regarding, any
Intellectual Property, (B) the granting or licensing to any other Persons of (1)
any exclusive right (within any geographic area or line of products or services
or field of use) to use any of the Company's or its Subsidiaries' owned or
licensed Intellectual Property or (2) any right (within any geographic area or
line of products or services or field of use) to use any of the Company's or its
Subsidiaries' material owned or licensed Intellectual Property, (C) any Person
with "most favored nations" (as such term is customarily understood in the cable
television and satellite television industries) terms and conditions, (D) that
the Company or any of its Subsidiaries would be required to exclusively use the
products or services provided by another party (or an Affiliate thereof) or a
specified third party (or refrain from using the products and services of any
Person other than such other party or such specified other Person) within any
geographic area or line of products or services or field of use, (E) that the
Company or any of its Subsidiaries will not xxx or otherwise institute legal
action against any other Person for any reason, (F) any agreements with third
parties for the exchange and/or protection of confidential information, (G)
rights or obligations that are binding upon, or purport to be binding upon, any
Person (other than any Subsidiary of the Company) that is not a party to such
Contract (H) any provisions requiring the Company or any of its Subsidiaries to
indemnify any Person; (I) that the Company or any of its Subsidiaries guarantee
any Person a particular amount of payment from the Company or any of its
Subsidiaries irrespective of such Person's performance of any of its
obligations; or (J) a Change of Control Covenant with respect to the Company or
its Subsidiaries; (iii) terminate or modify or change in any material respect
any agreement setting forth a covenant or assignment implementing the policies
described in Section 4.17(d); (iv) xxx or otherwise institute legal action
(including by the assertion of a counterclaim) against any Person for any
reason; or (v) solicit, initiate or encourage inquiries or submission of
proposals or offers from any Person relating to, or enter into or assume any
Contract with respect to, any of the foregoing;
(i) not (i) make, revoke or amend any Tax election, (ii)
make any material change in any accounting, financial reporting or Tax practice
or policy, (iii) execute any waiver of restrictions on assessment or collection
of any Tax, (iv) enter into or amend any agreement or settlement with any Tax
authority, (v) change the Company's auditors or (vi) permit any insurance policy
naming it as a beneficiary or loss-payable payee to be cancelled or terminated,
except, in the case of clause (v), in the ordinary course of business consistent
with past practice;
(j) not take any action that would cause its
representations and warranties contained in Section 4.1 to be untrue in any
respect or, except as otherwise contemplated by this Agreement, make any changes
to the corporate structure of the Company and its Subsidiaries (including the
structure of the ownership by the Company of the direct and indirect interests
in its Subsidiaries and of the ownership by the Company and its Subsidiaries of
their respective businesses and assets);
53
(k) not make any capital contribution to any Person other
than as required pursuant to the terms of a Company Investment Agreement listed
on Section 4.6(a) of the Company Disclosure Letter as such terms are in effect
on the date hereof, or acquire any securities or other debt or equity interests
in any other Person or enter into or assume any Contract with respect to the
foregoing;
(l) not revalue any of its assets, including writing down
the value of any assets or writing off any notes or accounts receivable, except
as required by GAAP;
(m) prepare budgets, forecasts, and other internal
management reports in a manner and at times consistent with the Company's past
practice; and
(n) give prompt notice in writing to Parent of (i) any
information that indicates that any of the Company's representations or
warranties contained herein were not true and correct as of the date hereof or
will not be true and correct as of the Effective Time (except for changes
permitted or contemplated by this Agreement), (ii) the occurrence of any event
that will result, or has a reasonable prospect of resulting, in the failure of
any condition specified in Article VII hereof to be satisfied, (iii) any notice
or other communication from a third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement or that such transactions otherwise may violate
the rights of or confer remedies upon such third party and (iv) any notice of,
or other communication relating to, any litigation referred to in Section 6.9 or
any order or judgment entered or rendered therein.
6.5 No Solicitation.
(a) From and after the date hereof until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, the Company agrees that it shall not, nor shall it permit any of its
Subsidiaries or Affiliates to, nor shall it authorize or permit any officer,
director, employee, agent or representative (including any investment banker,
attorney, accountant or other adviser) of the Company or any of its Subsidiaries
to, directly or indirectly, or otherwise (i) solicit, initiate, encourage or
otherwise facilitate any inquiries or the submission of any proposals or offers
from any Person that relates to any Alternative Proposal, (ii) participate in
any discussions or negotiations regarding any Alternative Proposal, (iii)
cooperate with, or furnish or cause to be furnished any non-public information
concerning the business or assets of the Company or any of its Subsidiaries, to
any Person in connection with any Alternative Proposal, (iv) approve, recommend
or permit the Company or any Subsidiary to enter into an agreement or
understanding with any Person relating to any Alternative Proposal, (v) amend or
grant any waiver or release of any standstill agreement or (vi) vote for,
execute a written consent (or equivalent instrument) in favor of, or otherwise
approve or enter into any agreements or understandings with respect to any of
the foregoing; provided, however, that nothing contained in this Section 6.5
shall prevent the Company or the Company Board from (A) complying with Rule
14e-2 and Rule 14d-9 promulgated under the Exchange Act with regard to an
Alternative Proposal by means of a tender offer; or (B) recommending an
Alternative Proposal to the stockholders of the Company if (x) the Company Board
determines in good faith by a majority vote that such Alternative Proposal is a
Superior Proposal (as defined below) and that on the basis of written advice of
the Company's outside legal counsel, it must recommend such Superior Proposal to
the stockholders of the Company in order to comply with its fiduciary duties
under applicable law, and (y) the Company has complied with paragraphs (b), (c),
(d) and (e) of this Section 6.5. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.5.
54
(b) The restrictions set forth in Section 6.5(a) shall
not prevent the Company Board (or any officer, director or employee of, or any
investment banker, attorney, accountant or other advisor, representative or
agent, of the Company) in the exercise of and as required by its fiduciary
duties under applicable law as determined by the Company Board in good faith
(after consultation with and not inconsistent with the written advice of the
Company's outside legal counsel) from engaging in discussions or negotiations
with (but not directly or indirectly soliciting or initiating such discussions
or negotiations or directly or indirectly encouraging inquiries or the making of
any Alternative Proposal), and furnishing information concerning the Company and
its business and assets to, a Person who makes a written, unsolicited, bona fide
Alternative Proposal (except that for purposes of this Section 6.5(b), to
constitute an Alternative Proposal such proposal, (w) if relating to the
issuance by the Company or any of its Subsidiaries of any equity interest in or
any voting securities of the Company or such Subsidiary, must contemplate the
issuance of more than 50% rather than 10% or more, of the total of such equity
interests or voting securities, (x) if relating to the acquisition in any manner
of any assets of the Company or its Subsidiaries, must contemplate the
acquisition of more than 50%, rather than 10% or more, of the total of such
assets, (y) if relating to the acquisition by any Person in any manner of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) which beneficially owns, or has the right
to acquire beneficial ownership of, outstanding shares of capital stock of the
Company, must contemplate the acquisition of more than 50%, rather than 10% or
more, of the then outstanding shares of capital stock of the Company and (z) may
not be an Alternative Proposal with respect to an Intellectual Property
Transaction) that, (A) after taking into consideration the strategic benefits to
the Company of the Merger (after consultation with its financial advisor), is
financially superior to the Merger, as determined in good faith by a majority of
the Company Board after consultation with, and the receipt of a written opinion
from, the Company's financial advisors, which shall be of national reputation,
(B) will constitute a transaction for which financing, to the extent required,
is then committed or which, in the good faith judgment of a majority of the
Company Board, is reasonably capable of being obtained and (C) if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the transaction and the Person making the proposal, as
determined in the good faith judgment of a majority of the Company Board (after
consultation with its outside legal counsel)(any such Alternative Proposal
satisfying clauses (A),(B) and (C) above is herein referred to as a "Superior
Proposal"); provided, that in advance of the taking of any such actions by the
Company, Parent shall have been notified in writing of such Superior Proposal
and given a copy of such Superior Proposal.
55
(c) The Company shall provide Parent (for at least five
business days following the receipt of such notice) an opportunity to propose an
amendment to this Agreement to provide for terms and conditions no less
favorable than the Superior Proposal in which event the Company shall cause its
respective financial and legal advisors to negotiate in good faith with Parent
for a reasonable period of time after the Company Board determines that the
terms and conditions proposed by Parent are no less favorable than the Superior
Proposal, to make such adjustments to the terms and conditions of this Agreement
as would enable the Company to proceed with the transactions contemplated
hereby. The provisions of this paragraph shall apply to successive Superior
Proposals (provided that each such Superior Proposal shall meet the then
applicable requirements thereof, based upon the terms of this Agreement in
effect on the date hereof or as such terms shall be modified, amended or
superseded).
(d) The Company shall promptly advise Parent orally and
in writing of any request for information or of any Alternative Proposal, or any
inquiry, offer or proposal with respect to or which could lead to any
Alternative Proposal (whether made directly to the Company or one of its
advisers), the material terms and conditions of such request, Alternative
Proposal or inquiry, offer or proposal, and the identity of the Person making
any such request, Alternative Proposal or inquiry, offer or proposal. The
Company shall keep Parent fully informed of the status and details of any such
request, Alternative Proposal or inquiry, offer or proposal.
(e) Notwithstanding Section 6.5(b), the Company shall not
provide any non-public information to a third party unless the Company provides
such non-public information pursuant to a non-disclosure agreement with terms
regarding the protection of confidential information at least as restrictive as
such terms set forth in Section 6.2.
(f) The Company shall immediately cease and cause to be
terminated any existing discussion or negotiations with any Persons (other than
Parent) conducted prior to the date of this Agreement with respect to any of the
foregoing and will exercise its rights under any confidentiality agreements with
any such Persons to require the return or destruction of confidential
information provided by the Company or its representatives to any such Persons.
6.6 Expenses. Except as otherwise provided in this Agreement,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby will be
paid by the party incurring such cost or expense, except that the Commission
filing fee for the Company Proxy Statement, the Parent Proxy Statement, the
Registration Statement (and any amendment or supplement thereto) and any
prospectus included in the Registration Statement (and any amendment or
supplement thereto) and the fee for filing under the Xxxx-Xxxxx Act will be
borne one-half by Parent and one-half by the Company.
6.7 Actions by Merger Sub. In its capacity as the sole stockholder
of Merger Sub, Parent will cause Merger Sub to approve and adopt the Merger
Proposal and to take all corporate action necessary on its part to consummate
the Merger and the transactions contemplated hereby
6.8 Listing. Each party hereto agrees to take all action
reasonably necessary to cause the shares of Class A Parent Stock to be issued in
the Merger to be authorized for listing or otherwise eligible for trading on the
Relevant Market, subject to official notice of issuance.
56
6.9 Defense of Litigation. Each of the parties agrees to
vigorously defend against all actions, suits or proceedings in which such party
is named as a defendant which seek to enjoin, restrain or prohibit the
transactions contemplated hereby or seek damages with respect to such
transactions. The Company will not settle any such action, suit or proceeding or
fail to perfect on a timely basis any right to appeal any judgment rendered or
order entered against the Company therein without the consent of Parent. Each of
the parties further agrees to use its reasonable efforts to cause each of its
Affiliates, directors and officers to vigorously defend any action, suit or
proceeding in which such Affiliate, director or officer is named as a defendant
and which seeks any such relief to comply with this Section to the same extent
as if such Person were a party hereto.
6.10 Indemnification of Directors and Officers.
(a) From and after the Effective Time, the Surviving
Entity will indemnify, defend and hold harmless the present and former officers
and directors of the Company (when acting in such capacity) (each, an
"Indemnified Party" and together, the "Indemnified Parties") (and will also,
subject to Section 6.10(b), advance expenses as incurred to the fullest extent
permitted under the DGCL, provided that the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Person is not entitled to indemnification), against all losses, costs,
expenses, claims, damages, judgments or liabilities incurred in connection with,
any claim, action, suit, proceeding or investigation based in whole or in part
on the fact that the Indemnified Party is or was an officer or director of the
Company pertaining to any matter existing or occurring before or at the
Effective Time and whether asserted or claimed before, at or after, the
Effective Time (the "Indemnified Liabilities") to the fullest extent permitted
under the DGCL; provided, however, that such indemnification will be provided
only to the extent any directors' and officers' liability insurance policy of
the Company or its Subsidiaries does not provide coverage and actual payment
thereunder with respect to the matters that would otherwise be subject to
indemnification hereunder (it being understood that the Surviving Entity shall,
subject to Section 6.10(b), advance expenses on a current basis as provided in
this paragraph (a) notwithstanding such insurance coverage to the extent that
payments thereunder have not yet been made, in which case the Surviving Entity
shall be entitled to repayment of such advances from the proceeds of such
insurance coverage). Parent and Merger Sub agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a "Claim"), existing in favor of the
Indemnified Parties as provided in the Company Charter or Company Bylaws or
pursuant to other agreements, or certificates of incorporation or bylaws or
similar documents of any Subsidiaries of the Company, as in effect as of the
date hereof, with respect to matters occurring through the Effective Time, will
survive the Merger and will continue in full force and effect for a period of
not less than six years after the Effective Time.
57
(b) If any Claim relating hereto or to the transactions
contemplated by this Agreement is commenced before the Effective Time, the
Company and the Surviving Entity agree to cooperate and use their respective
reasonable efforts to vigorously defend against and respond thereto. Any
Indemnified Party wishing to claim indemnification under paragraph (a) of this
Section 6.10, upon learning of any such claim, action, suit, proceeding or
investigation (whether arising before, at or after the Effective Time), will
promptly notify the Surviving Entity thereof, whereupon the Surviving Entity
will have the right, from and after the Effective Time, to assume from such
Indemnified Party and control the defense thereof on behalf of such Indemnified
Party, and upon such assumption, the Surviving Entity will not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof. Notwithstanding the foregoing, if counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Surviving Entity and the Indemnified Parties, the
Indemnified Parties may retain separate counsel and the Surviving Entity will
pay or cause to be paid all reasonable fees and expenses of such counsel;
provided, however, that the Surviving Entity will not be obligated pursuant to
this Section 6.10(b) to pay for more than one firm or counsel (or in the event
that the independent directors of the Company make a good faith determination
that they require independent counsel, two firms or counsel) to represent all
Indemnified Parties in any jurisdiction and (ii) the Indemnified Parties will
cooperate in the defense of such matter. The Surviving Entity will not be liable
for any settlement effected without its prior written consent (which consent
will not be unreasonably withheld or delayed). Notwithstanding anything to the
contrary contained in this Section 6.10, the Surviving Entity shall not have any
obligation hereunder to any Indemnified Party if and when a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in a manner
contemplated hereby is prohibited by applicable law.
(c) This Section 6.10 is intended to benefit the
Indemnified Parties and will be enforceable by each Indemnified Party, his or
her heirs and representatives and will be binding on all successors and assigns
of the Surviving Entity.
6.11 Parent Warrant. In the event that the Company is required to
pay the Termination Fee pursuant to the terms of Section 8.5(b), then, effective
upon the date such Termination Fee shall become payable or such termination
shall become effective, as applicable, the Company shall issue to Parent
warrants to purchase a number of shares of Company Common Stock equal to 3.99%
of the outstanding shares of Company Common Stock on the date such warrants are
issued (determined on a fully-diluted basis, including after giving effect to
the exercise of such warrants) for an exercise price of $1.40 per share, which
warrants shall be exercisable for a period of three (3) years from the date of
issue and shall contain such terms and provisions (including anti-dilution
provisions) as are customarily found in warrants issued by publicly-traded
companies.
6.12 Liability Insurance. Within five days from the date of this
Agreement, the Company shall designate Xxxxx & XxxXxxxxx as its broker of record
for the purpose of securing for the Company a directors' and officers' liability
insurance policy providing up to $10 million of "A" side coverage only and a
three-year run off. If after 25 days from the date Xxxxx & McLennan is
designated as the Company's broker of record, if it is unable to secure such
coverage from one or more insurance carriers reasonably acceptable to Parent,
the Company shall have the right to purchase an extension of its existing
directors and officers liability insurance policy and a three-year run off from
any reputable carrier, provided that the monthly premium for the extension does
not exceed $100,000 and the premium for the three-year run off does not exceed
$835,000.
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6.13 Actions With Respect to MOSI. Promptly following the execution
and delivery of this Agreement, the Company shall, and shall cause its
Subsidiaries to and shall use its best commercially reasonable efforts to cause
the individuals specified on Schedule 6.13 to, execute and deliver to the
Company the agreement annexed hereto as Exhibit 6.13 (the "MOSI Agreement").
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions Precedent to the Obligations of Parent, Merger Sub
and the Company. The respective obligations of Parent, Merger Sub and the
Company to consummate the Merger are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions, any of which, to the
extent permitted by applicable law, may be waived by Parent, for Merger Sub (but
not for the Company), or by the Company for itself (but not for Parent or Merger
Sub):
(a) Approval of Stockholders. This Agreement shall have
been approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable law, the Company Charter and the Company
Bylaws. The Issuance shall have been approved by the requisite vote under the
rules of the Relevant Market by the stockholders of Parent.
(b) Registration. (i) the Registration Statement (as
amended or supplemented) shall have become effective under the Securities Act
and shall not be subject to any stop order, and no action, suit, proceeding or
investigation by the Commission seeking a stop order or to suspend the
effectiveness of the Registration Statement shall have been initiated and be
continuing, and (ii) Parent shall have received all state securities law or blue
sky permits and authorizations necessary to issue the Merger Consideration as
contemplated hereby and such permits and authorizations will be in full force
and effect.
(c) Xxxx-Xxxxx Act. The waiting period (and any extension
thereof) applicable to the transactions contemplated hereby under the Xxxx-Xxxxx
Act shall have expired or been terminated without litigation having been
commenced that is continuing, or threat of litigation having been made that
remains unresolved, by the United States Department of Justice or the United
States Federal Trade Commission.
(d) Nasdaq Listing. The shares of Class A Parent Stock to
be issued in the Merger will have been authorized for listing or otherwise
eligible for trading on the Relevant Market subject only to official notice of
issuance.
(e) Absence of Injunctions. No permanent or preliminary
Injunction or restraining order by any court or other Governmental Entity of
competent jurisdiction, or other legal restraint or prohibition, shall be in
effect preventing consummation of the transactions contemplated hereby as
provided herein, or permitting such consummation subject to any condition or
restriction that has had or would have a material adverse effect on the
transactions contemplated hereby or a Material Adverse Effect on Parent and its
Subsidiaries taken as a whole, any Controlling Party of Parent and its
Subsidiaries taken as a whole, or the Surviving Entity and its Subsidiaries
taken as a whole.
59
7.2 Conditions Precedent to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate the Merger are also
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, unless waived by Parent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Company contained in Sections 4.1 (other
than the last sentence), 4.2, 4.6(f), 4.6(g), 4.9, 4.15, 4.16, 4.17, 4.19, 4.20
and 4.21 shall be true and correct in all respects as of the date of this
Agreement and on and as of the Closing Date as though made on and as of the
Closing Date. Each other representation and warranty of the Company contained in
this Agreement shall, if specifically qualified by materiality, be true and
correct and, if not so qualified, be true and correct in all material respects
in each case as of the date of this Agreement and (except to the extent such
representation and warranty speaks as of a specified earlier date) on and as of
the Closing Date as though made on and as of the Closing Date.
(b) Performance of Agreements. The Company shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) Officers' Certificate. The Company shall have
delivered to Parent (i) a certificate, dated the Closing Date, signed on behalf
of the Company by the Chief Executive Officer, Chief Financial Officer and
General Counsel of the Company certifying as to the fulfillment of the
conditions specified in the first sentence of Section 7.1(a) and in Sections
7.2(a) and 7.2(b), (ii) certificates, dated the Closing Date, signed by and on
behalf of each of the individuals listed on Schedule 7.2(c), and (iii) a
certificate of the Secretary of the Company certifying, among other things, (A)
the incumbency of all officers of the Company having authority to execute and
deliver this Agreement and the agreements and documents contemplated hereby and
(B) the resolutions of the Company Board referred to in Section 4.15, any
subsequent resolutions of the Company Board with respect to the Merger and the
resolution of the Company's stockholders approving the Merger Proposal.
(d) No Adverse Enactments. There shall not have been any
statute, rule, regulation, order, judgment or decree proposed, enacted,
promulgated, entered, issued, enforced or deemed applicable by any foreign or
United States federal, state or local Governmental Entity, and there shall be no
action, suit or proceeding pending or threatened, which, in Parent's reasonable
judgment (i) makes or may make this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement illegal or imposes or may impose
material damages or penalties in connection therewith, (ii) requires or may
require Parent, any Controlling Party of Parent, the Surviving Entity or any of
their respective Subsidiaries to divest or hold separate any material portion of
the assets or business of Parent, any Controlling Party of Parent, the Surviving
Entity or any of their respective Subsidiaries, if the Merger is consummated,
(iii) imposes or may impose material limitations on the ability of Parent or any
Controlling Party of Parent to effectively exercise full rights of ownership of
shares of capital stock of the Surviving Entity (including the right to vote
such shares on all matters properly presented to the stockholders of the
Surviving Entity) or makes or may make the holding by Parent or any Controlling
Party of Parent of any such shares illegal or subject to any materially
burdensome requirement or condition, (iv) requires or may require Parent or any
Controlling Party of Parent or the Company or any of their respective
Subsidiaries or Affiliates to cease or refrain from engaging in any material
business, including any material business conducted by the Company or any of its
Subsidiaries, if the Merger is consummated, or (v) otherwise prohibits or
unreasonably delays, or may prohibit or unreasonably delay, the consummation of
the Merger or any of the other transactions contemplated by this Agreement or
increases in any material respect the liabilities or obligations of Parent
arising out of this Agreement, the Merger or any of the other transactions
contemplated by this Agreement.
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(e) Contract Consents and Notices. All Contract Consents
and Contract Notices which are referred to in Section 4.5 or otherwise required
in connection with the consummation of the transactions contemplated hereby and
which, if not obtained or given, would have, individually or in the aggregate, a
material adverse effect on the transactions contemplated hereby or a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole or the Surviving
Entity and its Subsidiaries taken as a whole, shall have been obtained and
given.
(f) No Material Adverse Change. Since the date hereof,
(A) nothing shall have occurred, and Parent shall not have become aware of any
circumstance, change or event having occurred prior to such date, which
individually or in the aggregate, has had or, in the reasonable judgment of
Parent, could be expected to have, a material adverse effect on (i) the
transactions contemplated hereby or Parent's liabilities or obligations with
respect to such transactions, or (ii) the business, assets, results of
operations, financial condition or prospects of the Company and its
Subsidiaries, taken as a whole, the Surviving Entity and its Subsidiaries, taken
as a whole, or Parent and its Subsidiaries, taken as a whole (including any
potential change or event disclosed on any Schedule (including the Company
Disclosure Letter) which, subsequent to the date hereof, actually occurs), and
(B) there shall not have occurred (i) any general suspension of trading in the
Company Common Stock on the Nasdaq Stock Market, (ii) any decline, measured from
the date hereof, in the Dow Xxxxx Industrial Average or the Nasdaq Composite
Index by an amount in excess of 15% or (iii) a declaration of a banking
moratorium or any general suspension of payments in respect of banks in the
United States.
(g) Receipt of Licenses, Permits and Consents. Other than
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and filings due after the Effective Time, all Local Approvals, and
all other Government Consents as are required in connection with the
consummation of the transactions contemplated hereby shall have been obtained
and shall be in full force and effect, all Governmental Filings as are required
in connection with the consummation of such transactions shall have been made,
and all waiting periods, if any, applicable to the consummation of such
transactions imposed by any Governmental Entity shall have expired, other than
those which, if not obtained, in force or effect, made or expired (as the case
may be) would not, either individually or in the aggregate, have a material
adverse effect on the transactions contemplated hereby or a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole, Parent and its
Subsidiaries taken as a whole, any Controlling Party of Parent and its
Subsidiaries taken as a whole or the Surviving Entity and its Subsidiaries taken
as a whole.
61
(h) Significant Party Contracts. Each of the Significant
Party Contracts shall be in full force and effect immediately prior to the
Effective Time and no party shall have taken any action (including the delivery
of notice), or threatened to take any action, to terminate, cancel, declare a
default or breach, or accelerate payments or performance obligations of the
Company or any of its Subsidiaries under, any Significant Party Contract, which
action (or notice) has not been withdrawn, rescinded or otherwise been legally
determined to be ineffective.
(i) Proceedings Satisfactory. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
hereby or incidental hereto and all other related legal matters shall have been
reasonably satisfactory to and approved by counsel for Parent and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as such counsel shall
have reasonably requested.
(j) Employment Agreements. Parent shall be satisfied that
each of the employment agreements listed on Exhibit 7.2(j) shall have been
amended in a manner consistent with the terms set forth on Exhibit 7.2(j) and
there shall have been no other modifications or amendments to such employment
agreements.
(k) MOSI Agreement. Each of the individuals listed on
Schedule 6.13 shall have entered into the MOSI Agreement and the MOSI Agreement
shall be in full force and effect at the Effective Time.
(l) Dissenting Shares. On the Closing Date, Dissenting
Shares shall not aggregate more than 2.5% of the outstanding shares of Company
Common Stock.
7.3 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to consummate the Merger is also subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by the Company:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Parent contained herein shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak of
a specified earlier date) on and as of the Closing Date, as though made on and
as of the Closing Date.
(b) Performance of Agreements. Each of Parent and Merger
Sub shall have performed in all material respects all obligations and
agreements, and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied with by them
prior to or on the Closing Date.
(c) Officers' Certificates. Parent shall have delivered
to the Company a certificate dated the Closing Date, signed by an officer of
Parent certifying as to the fulfillment of the conditions specified in the
second sentence of Section 7.1(a) and Sections 7.1(d), 7.3(a) and 7.3(b).
62
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 7.1(a), by mutual written consent of the Company and
Parent if the Boards of Directors of each so determines by the affirmative vote
of a majority of the members of its entire Board of Directors.
8.2 Termination by Either Parent or the Company. This Agreement
may be terminated (upon notice from the terminating parties to the other
parties) and the Merger may be abandoned at any time prior to the Effective Time
by either Parent or the Company if (i) the Merger shall not have been
consummated by January 15, 2003, whether such date is before or after the date
of approval by the stockholders of the Company (the "Termination Date"),
provided, that the right to terminate this Agreement pursuant to this clause (i)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement proximately contributed to the failure of the Merger to be
consummated by the Termination Date, and provided, further, that in the event
that the failure of the Merger to occur on or before January 15, 2003 is the
result of the failure of the conditions set forth in Sections 7.1(a), 7.1(b),
7.1(c) or 7.2(g) to be satisfied or waived prior to January 15, 2003, either
Parent or the Company may extend such date to February 15, 2003 (so long as the
party extending such date believes in good faith that such conditions are
capable of being satisfied by such date), (ii) the approval of (A) the Merger
Proposal by the stockholders of the Company shall not have been obtained at the
Company Special Meeting or at any duly held adjournment or postponement thereof,
or (B) the Issuance by the stockholders of Parent shall not have been obtained
at the Parent Special Meeting or any duly held adjournment or postponement
thereof, provided, that the right to terminate pursuant to this clause (ii)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement proximately contributed to the failure to obtain such
approval of the stockholders, or (iii) any order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after the approval by the
stockholders of the Company).
8.3 Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by action of the Company Board:
(a) if (i) the Company is not in breach of Section 6.5 or
in material breach of any of the other terms of this Agreement, (ii) the Company
Board authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement to such notice, (iii) Parent does not make, within
five business days of receipt of the Company's written notification of its
intention to enter into a binding agreement for a Superior Proposal, an offer
that the Company Board determines, in good faith after consultation with its
financial advisors, is no less favorable, from a financial point of view, to the
stockholders of the Company as the Superior Proposal, (iv) the Company pays to
Parent in immediately available funds the Termination Fee, and (v) the Company
issues to Parent the warrants described in Section 6.11. The Company agrees (x)
that it will not enter into a binding agreement referred to in clause (ii) above
until at least the sixth business day after it has provided the notice to Parent
required thereby and (y) to notify Parent promptly if its intention to enter
into a written agreement referred to in its notification shall change at any
time after giving such notification;
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(b) if Parent or Merger Sub breach or fail in any
material respect to perform or comply with any of their covenants and agreements
contained herein or breach any of their representations and warranties, in each
case that is not curable, such that the conditions set forth in Sections 7.3(a)
or 7.3(b) cannot be satisfied; or
(c) if the Class A Parent Stock Value shall be less than
$0.80 and the Company shall have provided written notice to Parent no later than
5:00 p.m. (New York City time) on the second business day preceding the Closing
Date of its election (which shall be irrevocable) to terminate this Agreement;
provided, however, that such termination shall not be effective, and the Closing
shall proceed as scheduled, if Parent notifies the Company in writing no later
than 5:00 p.m. (New York City time) on the last business day immediately
preceding the Closing Date of its election (which election Parent may make, or
decline to make, in its sole and absolute discretion) to increase the Exchange
Ratio to equal the quotient (rounded, if necessary, to the nearest one hundred
thousandth) obtained by dividing $0.584 by the Class A Parent Stock Value.
8.4 Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approvals by the stockholders of the Company and Parent
referred to in Section 7.1(a), by Parent if (a) the Company Board shall have
withdrawn or modified in a manner adverse to Parent its approval or
recommendation of this Agreement or failed to reconfirm its recommendation of
this Agreement within three business days after a written request by Parent to
do so, (b) the Company breaches or fails in any material respect to perform or
comply with any of its covenants or agreements contained herein (including any
failure to perform its obligations under Sections 3.1 and 3.2), or breaches any
of its representations and warranties, in each case that is not curable, such
that the conditions set forth in 7.2(a) or 7.2(b) cannot be satisfied, or (c)
the Company or any of the other Persons described in Section 6.5 as
Subsidiaries, Affiliates, officers, directors, employees, representatives or
agents of the Company shall take any of the actions that would be proscribed by
Section 6.5 but for the provisos contained in Section 6.5(a) allowing certain
actions to be taken pursuant to clause (A) or (B) of the provisos under the
conditions set forth therein.
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8.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement (other
than as set forth in Section 6.6, Section 6.11, this Section 8.5 and Article IX
each of which shall survive the termination of this Agreement) shall become void
and of no effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal and financial advisors or
other representatives); provided, however, except as otherwise provided herein,
(i) no such termination shall relieve any party hereto of any liability or
damages resulting from any willful or intentional breach of this Agreement, and
(ii) notwithstanding the terms of Section 6.6, in the event this Agreement is
terminated by either Parent or the Company pursuant to Section 8.2(ii)(A), the
Company shall reimburse Parent for all of its costs and expenses (including
legal, consulting and accounting fees and disbursements and the costs and
expenses incurred in connection with printing and mailing the Parent Proxy
Statement (and any amendment or supplement thereto), the Registration Statement
(and any amendment or supplement thereto) and any prospectus included in the
Registration Statement (and any amendment or supplement thereto) and the costs
of filing under the Xxxx-Xxxxx Act) incurred by Parent in connection with this
Agreement (the "Parent Expenses"); provided, the Company shall not be required
to reimburse Parent for any such Parent Expenses exceeding $1,500,000. The
Company shall promptly, but in no event later than two days after the date it
receives notice from Parent setting forth the amount of such costs and expenses,
pay such amount by wire transfer of same day funds to an account designated by
Parent. The Company acknowledges that the agreements contained in this Section
8.5(a) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 8.5(a), and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the Parent Expenses set
forth in this paragraph (a), the Company shall pay to Parent, in addition to the
Parent Expenses, the reasonable costs and expenses (including reasonable
attorneys' fees) in connection with such suit, together with interest on the
amount of the Parent Expenses at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.
(b) In the event that (x) an Alternative Proposal shall
have been made to the Company or its stockholders or any Person shall have
publicly announced an intention (whether or not conditional) to make an
Alternative Proposal with respect to the Company and thereafter this Agreement
is terminated by either Parent or the Company pursuant to Section 8.2(i) or
8.2(ii)(A) or (y) this Agreement is terminated (i) by the Company pursuant to
Section 8.3(a), or (ii) by Parent pursuant to Section 8.4, then the Company
shall promptly but in no event later than two days after the date of such
termination, pay Parent a termination fee of $5,000,000 in cash (the
"Termination Fee") by wire transfer of same day funds to an account designated
by Parent; provided, however, that no Termination Fee shall be payable to Parent
under clause (x) of this paragraph (b) unless at any time within 18 months
following such termination of this Agreement, a transaction that if proposed
prior to termination would have constituted an Alternative Proposal is
consummated, or the Company enters into a definitive agreement with another
Person (other than Parent) for such a transaction, in which case such
Termination Fee shall be payable within two days of the consummation of such
transaction or entering into such definitive agreement, as the case may be. The
Company acknowledges that the agreements contained in this Section 8.5(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 8.5(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a judgment against the Company for
the Termination Fee set forth in this paragraph (b), the Company shall pay to
Parent, in addition to the Termination Fee, the reasonable costs and expenses
(including reasonable attorneys' fees) in connection with such suit, together
with interest on the amount of the Termination Fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
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ARTICLE IX
MISCELLANEOUS
9.1 No Waiver or Survival of Representations, Warranties,
Covenants and Agreements. The respective representations and warranties of
Parent, Merger Sub and the Company contained herein or in any certificate or
other instrument delivered pursuant hereto prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party
hereto or any knowledge of any party (including any employee of any party) for
whose benefit such representations and warranties are made. All representations
and warranties made by each of the parties herein shall expire at the Effective
Time and shall thereafter be of no further force or effect. The respective
covenants and agreements of the parties contained herein which are to be
performed after the Closing shall survive the Effective Time and shall only
terminate in accordance their respective terms.
9.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
(by courier service or otherwise) or mailed, certified or registered mail with
postage prepaid, or sent by confirmed telecopier, as follows:
(a) If to Parent or Merger Sub:
OpenTV Corp.
000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Liberty Broadband Interactive Television, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx III
Facsimile: (000) 000-0000
with an additional copy to:
Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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(b) If to the Company:
ACTV, Inc.
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxx
Day X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Person or address as any party shall specify by notice in
writing to the other party. Any such notice shall be deemed to have been given
(a) upon actual delivery, if delivered by hand, (b) on the third (3rd) business
day following deposit of such notice, properly addressed with postage prepaid,
with the United States Postal Service if mailed by registered or certified mail,
return receipt requested, or (c) upon sending such notice, if sent via
facsimile, with confirmation of receipt, except that any notice of change of
address shall be effective only upon actual receipt thereof.
9.3 Entire Agreement. This Agreement (including the Schedules,
Annexes, Exhibits and other documents referred to herein) constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
9.4 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, benefits or obligations hereunder may be assigned by any
party (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except for the provisions of
Section 6.10 (which may be enforced by the Indemnified Parties), nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.5 Amendment. This Agreement may be amended by action of all the
parties, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval and adoption of this Agreement and the
Merger by the stockholders of the Company, but, after any such approval by the
stockholders of the Company, no amendment shall be made which by law requires
further approval by such stockholders of the Company without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
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9.6 Extension; Waiver. At any time prior to the Effective Time,
the parties, by action taken or authorized by each such party's Board of
Directors, may, to the extent legally allowed, (i) extend the time specified
herein for the performance of any of the obligations of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (iii) waive
compliance by the other party with any of the agreements or covenants of such
other party contained herein or (iv) waive any condition to such waiving party's
obligation to consummate the transactions contemplated hereby or to any of such
waiving party's other obligations hereunder. 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 by such party. Any such extension or waiver by any
party shall be binding on such party but not on the other party entitled to the
benefits of the provision of this Agreement affected unless such other party
also has agreed to such extension or waiver. No such waiver shall constitute a
waiver of, or estoppel with respect to, any subsequent or other breach or
failure to strictly comply with the provisions of this Agreement. The failure of
any party to insist on strict compliance with this Agreement or to assert any of
its rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies. Whenever this Agreement requires or permits
consent or approval by any party, such consent or approval shall be effective if
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 9.6.
9.7 Headings. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
9.9 Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to jurisdiction over the person of such parties and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.2 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
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(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.9
9.10 Joint Participation in Drafting this Agreement. The parties
acknowledge and confirm that each of their respective attorneys have
participated jointly in the drafting, review and revision of this Agreement and
that it has not been written solely by counsel for one party and that each party
has had the benefit of its independent legal counsel's advice with respect to
the terms and provisions hereof and its rights and obligations hereunder. Each
party hereto, therefore, stipulates and agrees that the rule of construction to
the effect that any ambiguities are to be or may be resolved against the
drafting party shall not be employed in the interpretation of this Agreement to
favor any party against another and that no party shall have the benefit of any
legal presumption or the detriment of any burden of proof by reason of any
ambiguity or uncertain meaning contained in this Agreement.
9.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provisions of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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9.12 Enforcement. The parties 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 seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Federal courts of the United
States located in the State of Delaware or in Delaware state court, this being
in addition to any other remedy to which they are entitled at law or in equity.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and Plan of Merger as of the date first above written.
OPENTV CORP.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
ACTV MERGER SUB, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title:
ACTV, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
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