Exhibit 10
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AGREEMENT AND PLAN OF MERGER
among
FLIPSIDE, INC.
FLIPSIDE ACQUISITION CORPORATION
and
UPROAR INC.
Dated as of February 5, 2001
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of February 5, 2001, is made and entered into among Flipside, Inc., a
Delaware corporation ("Purchaser"), Flipside Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Purchaser ("Merger
Sub"), and Uproar Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the boards of directors of Purchaser, Merger Sub and
the Company each have determined that it would be advisable and is in the
best interests of their respective companies and stockholders for Purchaser
to acquire the Company on the terms and subject to the conditions set forth
herein; and
WHEREAS, to effectuate the acquisition, Purchaser and the
Company each desire that Purchaser cause Merger Sub to commence a cash
tender offer to purchase all, and in any event not less than a majority on
a Fully Diluted Basis (as defined below), of the outstanding shares of
common stock, par value $0.01 per share (the "Common Stock"), of the
Company on the terms and subject to the conditions set forth in this
Agreement, including Exhibit A hereto; and
WHEREAS, concurrently with the execution hereof and as a
condition and inducement to each of Merger Sub's and Purchaser's
willingness to enter into this Agreement, Merger Sub and Purchaser are
entering into Tender and Stockholder Support Agreements (the "Tender
Agreements") with certain stockholders of the Company (each a "Significant
Stockholder") under which each Significant Stockholder is, among other
things, agreeing to tender all of such Significant Stockholder's shares of
Common Stock in the Offer upon the terms and conditions set forth therein;
and
WHEREAS, upon consummation of the tender offer, and as soon as
may be permitted thereafter, Merger Sub shall be merged with and into the
Company in accordance with this Agreement and the relevant provisions of
the DGCL (as defined below) and the surviving corporation in the merger
shall be the Company; and
WHEREAS, the board of directors of the Company (the "Board of
Directors" or the "Board") has approved this Agreement and the transactions
contemplated hereby, including the tender offer and the merger, and has
resolved to recommend (subject to the limitations contained herein) that
the Company's stockholders accept the tender offer and tender their shares
of Common Stock pursuant thereto; and
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection
herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE OFFER
1.1 The Offer.
(a) Subject to the provisions of this Agreement and this Agreement
not having been terminated in accordance with Article 10 hereof, as
promptly as practicable but in any event within ten business days after the
date hereof, Merger Sub shall commence, within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder, an offer to purchase
(the "Offer") all, and in any event not less than a majority on a fully
diluted basis (assuming the exercise of all Options (as defined in Section
5.2(d)) that are then exercisable and any other rights to acquire shares of
Common Stock on the date of purchase (a "Fully Diluted Basis"), of the
outstanding shares of Common Stock at a price of $3.00 per share of Common
Stock, net to the seller in cash, without interest (such price or any
higher price paid pursuant to the Offer, the "Offer Consideration").
Notwithstanding the foregoing, if between the date of this Agreement and
the closing of the Offer the outstanding shares of Common Stock shall have
been changed into a different number of shares or a different class by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Offer
Consideration shall be correspondingly adjusted on a per-share basis to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. The obligation
of Purchaser and Merger Sub to commence the Offer and accept for payment,
and pay for, any shares of Common Stock tendered pursuant to the Offer
shall be subject to the conditions set forth in Exhibit A hereto and to the
terms and conditions of this Agreement. Subject to the provisions of this
Agreement, the Offer shall expire 20 business days after the date of its
commencement, unless this Agreement is terminated in accordance with
Article 10, in which case the Offer (whether or not previously extended in
accordance with the terms hereof) shall expire on such date of termination.
(b) Purchaser and Merger Sub expressly reserve the right, in their
sole discretion, to modify the terms of the Offer and to waive any
condition of the Offer, except that, without the prior written consent of
the Company, Merger Sub shall not (and Purchaser shall cause Merger Sub not
to) (i) waive the Minimum Condition (as defined in Exhibit A), (ii) reduce
the number of shares of Common Stock subject to the Offer, (iii) reduce the
price per share of Common Stock to be paid pursuant to the Offer, (iv)
except as set forth below, extend the Offer, (v) change the form of
consideration payable in the Offer, (vi) except as set forth herein, amend
or modify any term or condition of the Offer (including the conditions set
forth on Exhibit A) in any manner adverse to the holders of Common Stock or
(vii) impose additional conditions to the Offer other than such conditions
required by applicable law. So long as this Agreement is in effect and the
conditions to the Offer set forth in Exhibit A have not been satisfied or
waived, Merger Sub may, without the consent of the Company, extend the
expiration date of the Offer for one or more periods of up to ten
additional business days each (but in no event shall Merger Sub be
permitted to extend the expiration date of the Offer beyond the sixtieth
business day after the date of this Agreement (the "Outside Date")). So
long as this Agreement is in effect and the conditions to the Offer have
been satisfied or waived and shall not apply to any extension, Merger Sub
may, without the consent of the Company, provide for one or more subsequent
offering periods in accordance with Rule 14d-11 under the Exchange Act, if
(i) the number of shares of Common Stock that have been validly tendered
and not withdrawn represent less than 90% of the issued and outstanding
shares of the Common Stock on a Fully Diluted Basis and (ii) Merger Sub
shall accept and promptly pay for all shares of Common Stock validly
tendered and not withdrawn; provided, however, that no such subsequent
offering periods shall exceed, in the aggregate, twenty business days.
Notwithstanding the foregoing, Merger Sub may, without the consent of the
Company, extend the Offer (beyond the Outside Date, if necessary) (i) for
any period required by any rule, regulation, interpretation or position of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer and (ii) for one or more periods of up to ten
additional business days due to the failure to satisfy the condition to the
Offer relating to the expiration or termination of the waiting period under
the HSR Act (as defined below). It is agreed that the conditions set forth
in Exhibit A are for the sole benefit of Merger Sub and Purchaser and may
be asserted by Merger Sub or Purchaser, or may be waived in whole or in
part by Merger Sub or Purchaser, in their sole discretion. The failure by
Merger Sub or Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time. Subject to the
terms and conditions of the Offer and this Agreement and to the provisions
of Rule 14d-11 under the Exchange Act, Merger Sub shall accept for payment
and pay for, in accordance with the terms of the Offer, all shares of
Common Stock validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after the expiration of the Offer.
(c) Purchaser shall provide or cause to be provided to Merger Sub on
a timely basis the funds necessary to purchase any shares of Common Stock
that Merger Sub becomes obligated to purchase pursuant to the Offer and
shall be liable on a direct and primary basis for the performance by Merger
Sub or the Surviving Corporation (as defined in Section 2.1), as the case
may be, of its obligations under this Agreement with respect to the payment
of the Offer Consideration, the Option Consideration (as defined in Section
5.2(d)) and the Merger Consideration (as defined in Section 5.2(b)). Merger
Sub may, at any time, transfer or assign to one or more corporations
directly or indirectly wholly-owned by Purchaser the right to purchase all
or any portion of the shares tendered pursuant to the Offer, provided that
any such transfer or assignment shall not prejudice the rights of tendering
stockholders to receive payment for shares of Common Stock properly
tendered and accepted for payment.
1.2 Actions by Purchaser and Merger Sub. As soon as reasonably
practicable following execution of this Agreement, but in no event later
than ten business days from the date hereof, Purchaser and Merger Sub shall
file with the SEC a Tender Offer Statement on Schedule TO with respect to
the Offer, which shall contain (including as an exhibit) or incorporate by
reference an offer to purchase and a related letter of transmittal and any
other ancillary documents pursuant to which the Offer shall be made (such
Tender Offer Statement on Schedule TO and the documents therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). The Company and its counsel shall be given
a reasonable opportunity to review and comment upon the Offer Documents
prior to the filing thereof with the SEC. The Company shall promptly supply
to Purchaser and Merger Sub in writing, for inclusion in the Offer
Documents, all information concerning the Company or any of its affiliates
required by law, rule or regulation to be included in the Offer Documents.
The Offer Documents shall comply as to form in all material respects with
the requirements of the Exchange Act, and, on the date filed with the SEC
and on the date first published, sent or given to the Company's
stockholders, the Offer Documents shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except
that no representation is made by Purchaser or Merger Sub with respect to
information supplied in writing by the Company for inclusion in the Offer
Documents. Each of Purchaser, Merger Sub and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if
and to the extent such information shall have become false or misleading in
any material respect, and each of Purchaser, Merger Sub and the Company
further agrees to take all steps necessary to cause the Offer Documents as
so corrected to be filed with the SEC and to be disseminated to holders of
shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws. Purchaser and Merger Sub agree to
provide the Company and its counsel with any comments Purchaser, Merger Sub
or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after receipt of such comments.
1.3 Actions by the Company.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors at a meeting duly
called and held has duly adopted resolutions (i) approving this Agreement,
the Offer and the Merger (as defined in Section 2.1), determining that the
Merger is advisable and that the terms of the Offer and Merger are fair to,
and in the best interests of, the Company's stockholders and recommending
that the Company's stockholders accept the Offer and tender all of their
shares of Common Stock to Merger Sub and approve this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, (ii)
taking all action necessary to render Section 203 of the Delaware General
Corporation Law, as amended (the "DGCL"), inapplicable to the Offer, the
Merger, this Agreement, the Tender Agreements and any of the transactions
contemplated hereby and thereby and (iii) electing, to the extent permitted
by law, not to be subject to any "moratorium," "control share acquisition,"
"business combination," "fair price" or other form of corporate
anti-takeover laws and regulations of any jurisdiction that may purport to
be applicable to this Agreement or the Tender Agreements. The Company
further represents and warrants that the Board of Directors has received
the oral opinion (which opinion will be confirmed by delivery of a written
opinion) of Xxxxxxx Xxxxx Xxxxxx Inc. (the "Financial Advisor") to the
effect that, as of the date of this Agreement, the consideration to be
received in the Offer and the Merger by the holders of shares of Common
Stock (other than Purchaser and its affiliates) is fair, from a financial
point of view, to such holders (the "Fairness Opinion"). Subject to the
last sentence of this Section 1.3(a), the Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board of
Directors described in the first sentence of this Section 1.3(a). The
Company hereby represents and warrants that it has been authorized by the
Financial Advisor to permit the inclusion in its entirety of the Fairness
Opinion (and, subject to prior review and consent by the Financial Advisor,
references thereto) in the Offer to Purchase, the Schedule 14D-9 (as
defined in Section 1.3(b)) and the Proxy Statement (as defined in Section
8.2(b)), if applicable. The Company has been advised by each of its
directors and executive officers who owns shares of Common Stock that such
person intends to tender all shares of Common Stock owned by such person
pursuant to the Offer. The Board of Directors shall not withdraw, modify or
amend its recommendations described above in a manner adverse to Purchaser
(or announce publicly its intention to do so), except that the Board shall
be permitted to withdraw, amend or modify its recommendation (or publicly
announce its intention to do so) of this Agreement or the Merger in a
manner adverse to Purchaser or approve or recommend or enter into an
agreement with respect to a Superior Proposal (as defined in Section 8.9)
in accordance and full compliance with the terms of Section 8.9 and Section
10.1(h).
(b) The Company shall file with the SEC, concurrently with the filing
of the Offer Documents with the SEC, a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9,
as amended or supplemented from time to time, the "Schedule 14D-9")
containing the recommendations described in the first sentence of Section
1.3(a) (subject to the last sentence of Section 1.3(a)) and shall mail the
Schedule 14D-9 to the stockholders of the Company. To the extent
practicable, the Company shall cooperate with Purchaser in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer
Documents to the Company's stockholders. Purchaser and its counsel shall be
given a reasonable opportunity to review and comment upon the Schedule
14D-9 prior to the filing thereof with the SEC. The Schedule 14D-9 shall
comply as to form in all material respects with the requirements of the
Exchange Act and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with
respect to information supplied by Purchaser or Merger Sub for inclusion in
the Schedule 14D-9. Each of the Company, Purchaser and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent such information shall have become false or
misleading in any material respect, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to the holders of shares of Common
Stock, in each case as and to the extent required by applicable federal
securities laws. The Company agrees to provide Purchaser and Merger Sub and
their counsel in writing with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) To the extent required by applicable federal securities law, each
party hereto shall file all written communications, that are made public or
otherwise supplied to third parties, with the SEC on or prior to the date
the communication is first used. All such communications shall comply as to
form and content, including bearing the appropriate legends, in all
material respects with the applicable provisions of the federal securities
laws. Each party agrees that, prior to any such filing or use of written
communications, such party will provide the other party and their counsel
the reasonable opportunity to review and comment on such communications and
filings.
(d) In connection with the Offer, the Company shall cause its
transfer agent to furnish promptly to Merger Sub mailing labels containing
the names and addresses of the record holders of Common Stock as of a
recent date and of those persons becoming record holders subsequent to such
date, and to furnish copies of other information in the Company's
possession or control regarding the non-objecting beneficial owners of
Common Stock, and shall furnish to Merger Sub such information and
assistance (including updated lists of stockholders, security position
listings and computer files) as Merger Sub may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to
consummate the Offer and the Merger, Purchaser and Merger Sub and each of
their affiliates and associates shall hold in confidence the information
contained in any of such labels, lists and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, shall promptly deliver to the Company all copies
of such information then in their possession or under their control.
1.4 Directors.
(a) Upon the acceptance for payment of, and payment by Merger Sub in
accordance with the Offer for, at least a majority of the issued and
outstanding shares of Common Stock on a Fully Diluted Basis pursuant to the
Offer, Purchaser shall be entitled to designate such number of directors on
the Board, rounded up to the next whole number, as will give Purchaser
representation on the Board of Directors equal to the product of (i) the
number of authorized directors on the Board of Directors (giving effect to
the directors elected pursuant to this Section 1.4) and (ii) the percentage
that the number of shares of Common Stock purchased by Merger Sub or
Purchaser or any affiliate thereof bears to the aggregate number of shares
of Common Stock outstanding (the "Percentage"), and the Company shall, upon
the election and request by Purchaser, secure the resignations of such
number of directors as is necessary to enable Purchaser's designees to be
elected to the Board of Directors and shall cause Purchaser's designees to
be so elected. At the request of Purchaser, the Company will cause such
individuals designated by Purchaser to constitute the same Percentage of
(i) each committee of the Board, (ii) the board of directors of each
Subsidiary (as defined in Section 11.8) of the Company and (iii) the
committees of each such board of directors. The Company's obligations to
seek to appoint designees to the Board of Directors and the committees
thereof shall be subject to Section 14(f) of the Exchange Act. The Company
shall promptly take all appropriate action necessary to effect any such
election and shall, subject to the next succeeding sentence, include in the
Schedule 14D-9 the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. Purchaser will supply to the
Company in writing and be solely responsible for any information with
respect to itself and its nominees, directors and affiliates required by
Section 14(f) and Rule 14f-1. Notwithstanding the foregoing, the parties
hereto shall use their respective reasonable efforts to ensure that at
least two of the members of the Board of Directors shall at all times prior
to the Effective Time be Continuing Directors (as defined in Section
1.4(b)).
(b) After the time that Purchaser's designees constitute at least a
majority of the Board of Directors and until the Effective Time (as defined
in Section 2.3), any (i) amendment or termination of this Agreement by or
on behalf of the Company, (ii) exercise or waiver of any of the Company's
rights or remedies hereunder, or (iii) extension of time for the
performance or waiver of any of the obligations or other acts of Purchaser
or Merger Sub hereunder, shall require the approval of at least a majority
of the then-serving directors, if any, who are not designees of Purchaser
(the "Continuing Directors"), except to the extent that applicable law
requires that such action be acted upon by the full Board of Directors, in
which case such action will require the concurrence of both a majority of
the Board of Directors and a majority of the Continuing Directors.
ARTICLE 2
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and into
the Company in accordance with this Agreement and the applicable provisions
of the DGCL, and the separate corporate existence of Merger Sub shall
thereupon cease (the "Merger"). The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation").
2.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at
the offices of Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 at 10:00 a.m., local time, as soon as practicable
following the satisfaction (or waiver if permissible) of the conditions set
forth in Article 9. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
2.3 Effective Time. If all the conditions to the Merger set forth in
Article 9 shall have been fulfilled or waived in accordance herewith and
this Agreement shall not have been terminated as provided in Article 10,
the parties hereto shall cause a certificate of merger meeting the
requirements of Section 251 of the DGCL and any other appropriate documents
to be properly executed and filed in accordance with such Section 251 on
the Closing Date (or on such other date as Purchaser and the Company may
agree). The Merger shall become effective at the time of filing of the
certificate of merger with the Secretary of State of the State of Delaware
in accordance with the DGCL or at such later time that the parties hereto
shall have agreed upon and designated in such filing as the effective time
of the Merger (the "Effective Time").
2.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all property of the Company and Merger Sub shall vest in the Surviving
Corporation, and all liabilities and obligations of the Company and Merger
Sub shall become liabilities and obligations of the Surviving Corporation.
ARTICLE 3
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1 Certificate of Incorporation. At the Effective Time, the
certificate of incorporation of the Company in effect immediately prior to
the Effective Time shall be the certificate of incorporation of the
Surviving Corporation, until duly amended in accordance with applicable law
and the terms thereof.
3.2 Bylaws. At the Effective Time, the bylaws of Merger Sub in
effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation, until duly amended in accordance with applicable
law, the terms thereof and the Surviving Corporation's certificate of
incorporation, except that the name shall be changed to "Uproar Inc."
ARTICLE 4
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of
the Effective Time and until their successors are duly appointed or elected
in accordance with applicable law and the Surviving Corporation's
certificate of incorporation and bylaws.
4.2 Officers. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's certificate
of incorporation and bylaws.
ARTICLE 5
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1 Merger Sub Stock. At the Effective Time, each share of common
stock, par value $0.01 per share, of Merger Sub outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation.
5.2 Company Securities.
(a) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time that is owned by the Company or any Subsidiary
of the Company or by Purchaser, Merger Sub or any other Subsidiary of
Purchaser shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Common Stock to be
canceled and retired in accordance with Section 5.2(a) and any Dissenting
Common Stock (as defined in Section 5.2(c)) shall be converted into the
right to receive the Offer Consideration, payable in cash to the holder
thereof, without any interest thereon (the "Merger Consideration"), in
accordance with Section 5.3. As of the Effective Time, all such shares of
Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist and each holder of a
Certificate (as defined below) which immediately prior to the Effective
Time represented any such shares of Common Stock shall cease to have any
rights with respect thereto, except the right to receive, upon surrender of
such Certificates as provided in Section 5.3, the Merger Consideration.
Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding shares of Common Stock shall have been
changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Merger Consideration shall be
correspondingly adjusted on a per-share basis to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(c) Notwithstanding any provision of this Agreement to the contrary,
if required by the DGCL but only to the extent required thereby, shares of
Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are held by holders of such shares of Common Stock
who have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL (the "Dissenting Common Stock")
will not be exchangeable for the right to receive the Merger Consideration,
and holders of such shares of Dissenting Common Stock will be entitled to
receive payment of the appraised value of such shares of Common Stock in
accordance with the provisions of such Section 262 unless and until such
holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any
such holder fails to perfect or effectively withdraws or loses such right,
such shares of Common Stock will thereupon be treated as if they had been
converted into and become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without any interest thereon.
The Company will promptly give Purchaser notice of any demands received by
the Company for appraisals of shares of Common Stock. The Company shall
not, except with the prior written consent of Purchaser, make any payment
with respect to any demands for appraisal or settle any such demands.
(d) Subject to Section 5.3, at the Effective Time, each holder of a
then-outstanding option to purchase shares of Common Stock under any plan,
program or arrangement of the Company or its Subsidiaries (collectively,
the "Stock Option Plans") (true and correct copies of which have been
provided to Purchaser by the Company), whether or not such options are then
exercisable (individually, an "Option" and collectively, the "Options"),
shall, in settlement thereof, receive for each share of Common Stock
issuable upon exercise of such Option the right to receive an amount
(subject to any applicable withholding tax) in cash equal to the difference
between the Merger Consideration and the per share exercise price of such
Option to the extent such difference is a positive number (such amount
being hereinafter referred to as the "Option Consideration"). Payment for
Options shall be made by the Company, subject to the terms and conditions
of this Agreement, as soon as practicable after consummation of the Merger.
At the Effective Time, each Option shall be deemed canceled and the holder
thereof shall have no further rights with respect thereto. In addition, any
such Options which are not exercisable at the Effective Time shall be
deemed canceled and each holder thereof shall have no further rights with
respect thereto. The surrender of an Option to the Company in exchange for
the Option Consideration shall be deemed a release of any and all rights
the holder had or may have had in respect of such Option. All amounts
payable pursuant to this Section 5.2(d) shall be subject to any required
withholding of taxes and shall be paid without interest.
(e) The Surviving Corporation's obligation to make the cash payment
described in Section 5.2(d): (i) shall be subject to obtaining from
optionees any necessary consents to the cancellation of the applicable
Options, and agreements from such optionees releasing any and all rights
such optionees may have in respect of the applicable Options; and (ii)
shall not require any action that violates any of the Stock Option Plans.
Except as otherwise may be agreed to by the parties, the Company shall take
all necessary action prior to the consummation of the Offer to assure that
(x) the Stock Option Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
the Company or any Subsidiary thereof shall be canceled as of the Effective
Time and (y) at and after the Effective Time no participant in the Stock
Option Plans or other plans, programs or arrangements shall have any right
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof and that all such plans will be
terminated.
5.3 Exchange of Certificates Representing Shares of Common Stock.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial
bank or trust company, which shall be reasonably satisfactory to the
Company, to act as paying agent hereunder (the "Paying Agent") for payment
of the Merger Consideration upon surrender of a certificate or certificates
(each, a "Certificate") representing shares of Common Stock. Prior to or
concurrently with the Effective Time, Purchaser shall cause Merger Sub or
the Surviving Corporation, as the case may be, to provide the Paying Agent
with cash in an amount necessary to pay for all the shares of Common Stock
pursuant to Section 5.2(b). Such amounts shall hereinafter be referred to
as the "Exchange Fund."
(b) Promptly after the Effective Time, Purchaser shall cause the
Paying Agent to mail to each holder of record of shares of Common Stock (i)
a letter of transmittal that shall specify that delivery shall be effected,
and risk of loss and title to Certificates shall pass, only upon delivery
of the Certificates to the Paying Agent, which letter shall be in such form
and have such other provisions as Purchaser may reasonably specify and (ii)
instructions for effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate to the Paying
Agent together with such letter of transmittal, duly executed and completed
in accordance with the instructions thereto, and such other documents as
may reasonably be required by the Paying Agent, the holder of such
Certificate shall promptly receive in exchange therefor the amount of cash
into which shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 5.2, and the
shares represented by the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or will accrue on the cash payable upon
surrender of any Certificate. In the event of a transfer of ownership of
Common Stock that is not registered in the transfer records of the Company,
payment may be made with respect to such Common Stock to such a transferee
if the Certificate representing such shares of Common Stock is presented to
the Paying Agent, accompanied by all documents reasonably required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) As of the Effective Time, all shares of Common Stock (other than
shares of Common Stock to be canceled and retired in accordance with
Section 5.2(a) and any shares of Dissenting Common Stock) issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of any such shares shall cease to have any rights
with respect thereto or arising therefrom (including, without limitation,
the right to vote), except the right to receive the Merger Consideration,
without interest, upon surrender of the Certificate representing such
shares in accordance with Section 5.3(b), and until so surrendered, the
Certificate representing such shares shall represent for all purposes only
the right to receive the Merger Consideration, without interest. The Merger
Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Section 5.3 shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of Common
Stock theretofore represented by such Certificates.
(d) At or after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged as provided in this Article 5.
(e) The Paying Agent shall invest the Exchange Fund, as directed by
Purchaser, in (i) direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest,
(iii) commercial paper rated the highest quality by either Xxxxx'x
Investors Services, Inc. or Standard & Poor's Corporation or (iv)
certificates of deposit, bank repurchase agreements or bankers' acceptances
of commercial banks with capital exceeding $500 million. Any net earnings
with respect to the Exchange Fund shall be the property of and paid over to
Purchaser as and when requested by Purchaser; provided, however, that any
such investment or any such payment of earnings may not delay the receipt
by holders of Certificates of any Merger Consideration.
(f) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all
such funds) that remains unclaimed by the former stockholders of the
Company one year after the Effective Time shall be delivered to the
Surviving Corporation. Any holders of Certificates who have not theretofore
complied with this Article 5 shall thereafter look only to the Surviving
Corporation for payment of any Merger Consideration that may be payable in
respect of each share of Common Stock such stockholder holds as determined
pursuant to this Agreement, without any interest thereon.
(g) None of Purchaser, the Company, the Surviving Corporation, the
Paying Agent or any other person shall be liable to any former holder of
shares of Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(h) If any Certificate is lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect thereof pursuant to this Agreement.
(i) Except as otherwise provided herein or in the letter of
transmittal referred to in Section 5.3(b), Purchaser shall pay all charges
and expenses (but excluding income, withholding and any stock transfer
taxes), including those of the Paying Agent, in connection with the
exchange of the Merger Consideration for Certificates.
(j) Purchaser shall be entitled to deduct and withhold, or cause to
be deducted or withheld, from the consideration otherwise payable pursuant
to this Agreement to any holder of shares of Common Stock or Options such
amounts as are required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of applicable state, local or foreign tax
law. To the extent that amounts are so deducted and withheld, such deducted
and withheld amounts shall be treated for all purposes of this Agreement as
having been paid to such holders in respect of which such deduction and
withholding was made.
5.4 Merger Without Meeting of Stockholders. Notwithstanding the
foregoing, if Merger Sub, together with any other direct or indirect
subsidiary of Purchaser, shall own at least 90% of the outstanding shares
of Common Stock upon consummation of the Offer, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable, and in any event within ten business
days, after the expiration of the Offer without a meeting of stockholders
of the Company, in accordance with Section 253 of the DGCL.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections of the disclosure
schedules, dated the date hereof, delivered by the Company to Purchaser
(the "Company Disclosure Schedules"), or as specifically contemplated by
this Agreement, the Company hereby represents and warrants to Purchaser and
Merger Sub as follows:
6.1 Existence; Good Standing; Corporate Authority. Each of the
Company and its Subsidiaries is (a) duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and (b) is
duly licensed or qualified to do business as a foreign corporation and is
in good standing under the laws of any other state of the United States or
the laws of any foreign jurisdiction, if applicable, in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary, except where the failure to be
so qualified or to be in good standing would not reasonably be expected to
(i) materially adversely affect the assets, liabilities, business, results
of operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole or (ii) materially adversely affect or delay
the ability of the Company on the one hand, or Merger Sub and Purchaser on
the other, to consummate the transactions contemplated by this Agreement
(either of the foregoing clauses (i) or (ii) being a "Material Adverse
Effect"; provided, however, that the following are deemed not to constitute
a Material Adverse Effect: (w) decline in the revenues, website traffic,
pricing of advertising and market share of the Company due to reasons
beyond the Company's control, (x) conditions affecting the U.S. economy, as
a whole, (y) conditions affecting the internet game or software industries,
as a whole and (z) actions and events permitted under this Agreement). Each
of the Company and its Subsidiaries has all requisite corporate power and
authority to own, operate and lease its properties and assets and carry on
its business as now conducted except where the failure to have such power
and authority would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. The Company has heretofore made
available to Purchaser true and correct copies of the certificate of
incorporation and bylaws or other governing instruments of the Company and
each of its Subsidiaries as currently in effect.
6.2 Authorization, Validity and Effect of Agreements. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby or
executed in connection herewith to which it is a party (the "Ancillary
Documents") and subject, if required under applicable law with respect to
the consummation of the Merger, to the approval of holders of the Common
Stock, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Ancillary Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by
the Board of Directors, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement and the Ancillary
Documents or to consummate the transactions contemplated hereby and thereby
(other than the adoption of this Agreement by the holders of the Common
Stock if required by applicable law). This Agreement has been, and any
Ancillary Document at the time of execution will have been, duly and
validly executed and delivered by the Company, and (assuming this Agreement
and such Ancillary Documents each constitute a valid and binding obligation
of Purchaser and Merger Sub) this Agreement constitutes, and each such
Ancillary Document at the time of execution will constitute, the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting the rights of creditors and to general principles
of equity.
6.3 Compliance with Laws. Neither the Company nor any of its
Subsidiaries is or has been in violation of any foreign, federal, state or
local law, statute, ordinance, rule, regulation, order, judgment, ruling or
decree of any foreign, federal, state or local judicial, legislative,
executive, administrative or regulatory body or authority or any court,
arbitration, board or tribunal ("Governmental Entity") applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets, except for violations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. As of
the date hereof, to the Company's knowledge, no investigation or claim by
any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened.
6.4 Capitalization. The authorized capital stock of the Company
consists of 112,000,000 shares of Common Stock and 48,000,000 shares of
preferred stock. As of February 2, 2001, 46,112,442 shares of Common Stock
were issued and outstanding, (b) no shares of preferred stock were issued
and outstanding, (c) Options to purchase an aggregate of 9,820,733 shares
of Common Stock were outstanding, (d) no shares of Common Stock were held
by the Company in its treasury and (e) no shares of Common Stock were held
by the Company's Subsidiaries. The Company has no outstanding bonds,
debentures, notes or other obligations entitling the holders thereof to
vote (or that are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter. Since
January 31, 2001, the Company (i) has not issued any shares of Common Stock
other than upon the exercise of Options, (ii) has granted no Options to
purchase shares of Common Stock under the Stock Option Plans and (iii) has
not split, combined, converted or reclassified any of its shares of capital
stock. All issued and outstanding shares of Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of any
adverse claims, taxes, preemptive rights, liens, security interests or
other encumbrances, and issued in compliance with applicable federal, state
and foreign security laws. Except as set forth in this Section 6.4, there
are no other shares of capital stock or voting securities of the Company,
and no existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments that obligate the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock of, or equity interests in, the Company or any of its
Subsidiaries. There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company and there are no performance awards
outstanding under the Stock Option Plans or any other outstanding
stock-related awards. There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries or, to the
knowledge of the Company, any of the Company's directors or executive
officers is a party with respect to the voting of capital stock of the
Company or any of its Subsidiaries.
6.5 Subsidiaries. (a) The Company owns directly, or indirectly
through a Subsidiary, all the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect
directors or others performing similar functions with respect to such
Subsidiary) of each of the Company's Subsidiaries, and (b) each of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect directors or others performing
similar functions with respect to such Subsidiary) of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is owned directly or indirectly by the Company free and
clear of all liens, pledges, security interests, claims, restrictions,
preemptive rights or other encumbrances ("Encumbrances").
6.6 No Violation. Neither the execution and delivery by the Company
of this Agreement or any of the Ancillary Documents nor the consummation by
the Company of the transactions contemplated hereby or thereby will: (a)
violate, conflict with or result in a breach of any provisions of the
certificate of incorporation or bylaws of the Company; (b) violate,
conflict with, result in a breach of any provision of, constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, result in the termination or give rise to a right of
termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment, penalty or other
obligations pursuant to, result in the creation of any Encumbrance upon any
of the properties owned or used by the Company or its Subsidiaries under,
or result in there being declared void, voidable, or without further
binding effect, any of the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, lease, license, contract
or other obligation (financial or otherwise) (each, a "Contract" and,
collectively, "Contracts") to which the Company or any of its Subsidiaries
is a party, or by which the Company or any of its Subsidiaries or any of
their respective properties is bound, except for any such breach, default
or right with respect to which requisite waivers or consents have been, or
prior to the Effective Time will be, obtained, or any of the foregoing
matters that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; (c) require any consent, approval
or authorization of, license, permit or waiver by, or declaration, filing
or registration (collectively, "Consents") with, any Governmental Entity,
including any such Consent under the laws of any foreign jurisdiction,
other than (i) the filings provided for in Section 2.3 and the filings
required under the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"), and state securities or "Blue Sky" laws and the
rules and regulations promulgated thereunder, and (ii) the filing required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and any other applicable law governing antitrust or
competition matters, and any Consents required or permitted to be obtained
pursuant to the laws of any foreign jurisdiction relating to antitrust
matters or competition ("Foreign Antitrust Laws") (collectively, "Other
Antitrust Filings and Consents", together with the other filings described
in clauses (i) and (ii) above, "Regulatory Filings"), except for those
Consents the failure of which to obtain or make would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect; (d) violate any laws applicable to the Company or any of its
Subsidiaries, except for violations that could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; or
(e) subject the Company or (by reason of the Company's participation
therein) the Offer or the Merger to any "moratorium," "control share
acquisition," "business combination," "fair price" or other form of
corporate anti-takeover laws and regulations.
6.7 Company Reports; Offer Documents.
(a) The Company has previously made available to Purchaser and Merger
Sub true and complete copies of all reports, schedules, forms, registration
statements and other documents required to be filed by it with the SEC
prior to the date hereof (collectively, including all exhibits thereto, the
"Company Reports"). The Company has complied in all material respects with
its SEC filing obligations under the Exchange Act and the Securities Act.
Except as disclosed in a subsequent Company Report, there has not occurred
any event or circumstance that, but for the passage of time, would be
required to be disclosed in a Company Report. Each Company Report was
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as applicable, and did not, as of the date of effectiveness
in the case of a registration statement, the date of mailing in the case of
a proxy statement and the date of filing in the case of other Company
Reports, except as set forth in or amended by a subsequent Company Report,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except as set forth in or amended by a subsequent Company
Report, the financial statements and related schedules and notes thereto of
the Company contained in the Company Reports (or incorporated therein by
reference) and the unaudited financial statements as most recently reviewed
by the Company's auditors, including the notes thereto, for the fiscal year
ended December 31, 2000, (true and correct copies of which have been
provided to Purchaser) (the "Financial Statements")were prepared in
accordance with generally accepted accounting principles (except in the
case of interim unaudited financial statements) applied on a consistent
basis except as noted therein, and fairly present in all material respects
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended, subject in the case
of unaudited financial statements to normal year-end audit adjustments,
and, except as set forth in or amended by a subsequent Company Report, such
financial statements complied as to form as of their respective dates in
all material respects with applicable rules and regulations of the SEC.
(b) None of the Schedule 14D-9, any information statement filed by
the Company in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "Information Statement"), any schedule required to be
filed by the Company with the SEC or any amendment or supplement thereto,
at the respective times such documents are filed with the SEC and first
published, sent or given to the Company's stockholders, will contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading except that no representation is made by the Company with
respect to information supplied by Purchaser or Merger Sub for inclusion in
the Schedule 14D-9 or Information Statement or any amendment or supplement
to such information supplied by Purchaser or Merger Sub. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents will, at the date of
filing with the SEC, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If, at any time prior to the
Effective Time, the Company shall obtain knowledge of any facts with
respect to itself, any of its officers or directors or any of its
Subsidiaries that would require the supplement or amendment to any of the
foregoing documents in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or to
comply with applicable laws, such amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the
stockholders of the Company, and in the event Purchaser shall advise the
Company as to its obtaining knowledge of any facts that would make it
necessary to supplement or amend any of the foregoing documents, the
Company shall promptly amend or supplement such document, and such
amendment or supplement shall be promptly filed with the SEC, and as
required by law disseminated to the stockholders of the Company.
6.8 Absence of Certain Changes. During the period from December 31,
2000, to and including the date of this Agreement, the Company and its
Subsidiaries have conducted their business in the ordinary course of such
business consistent with past practices, and there have not been (a) any
events or states of fact that has or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (b) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock; (c) any repurchase, redemption or any
other acquisition by the Company or its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership
interests in, the Company or its Subsidiaries; (d) any material change in
accounting principles, practices or methods; (e) any entry into any
employment agreement with, or any increase in the rate or terms (including,
without limitation, any acceleration of the right to receive payment) of
compensation payable or to become payable by the Company or any of its
Subsidiaries to, their respective directors, officers or employees, except
for regularly scheduled employee raises in the ordinary course of business
consistent with the Company's past practices or raises that, in the case of
executive officers, have been approved by the compensation committee of the
Board of Directors prior to the date hereof in the ordinary course of
business consistent with the committee's past practices; (f) any increase
in the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of any bonus, insurance, pension or other
employee benefit plan or arrangement covering any such directors, officers
or employees, except, in the case of employees, increases occurring in the
ordinary course of business consistent with the Company's past practices;
(g) any revaluation by the Company or any of its Subsidiaries of any
material amount of their assets, taken as a whole, including, without
limitation, write-downs of inventory or write-offs of accounts receivable
other than in the ordinary course of business consistent with past
practices; (h) any material adverse change in the business relationship
with any material customer, distributor or supplier of the Company or its
Subsidiaries; or (i) any action of the type described in Sections 8.1(a) or
8.1(b) that had such action been taken after the date of this Agreement
would be in violation of any such Section.
6.9 Taxes. The Company and each of its Subsidiaries have timely filed
and will have timely filed on or prior to the Effective Time all income and
other material Tax Returns (as hereinafter defined) required to be filed by
any of them. All such Tax Returns are true, correct and complete in all
material respects. All material Taxes (as hereinafter defined) of the
Company and its Subsidiaries have been paid or will have been paid on or
before the Effective Time, or adequate reserves (in conformity with
generally accepted accounting principles applied on a consistent basis and
consistent with such entity's past custom and practice) have been
established therefor, except for those Taxes being contested in good faith
and for which adequate reserves have been established in the Financial
Statements in accordance with generally accepted accounting principles
applied on a consistent basis and consistent with such entity's past custom
and practice. No deficiencies for Taxes of the Company or any of its
Subsidiaries have been claimed, proposed or assessed in writing by any
taxing or other governmental authority that are not being contested in good
faith by the Company or a Subsidiary and for which adequate reserves have
not been established in the Financial Statements in accordance with
generally accepted accounting principles applied on a consistent basis and
consistent with past practice. The Company has not received written notice
of any pending audits, investigations or claims for or relating to any
liability in respect of Taxes of the Company or its Subsidiaries. No such
audit, investigation or claim of which the Company has received notice is
currently ongoing, and there are no ongoing negotiations with any taxing or
governmental authority with respect to Taxes of the Company and its
Subsidiaries. No extension of a statute of limitations relating to Taxes is
in effect with respect to the Company or any of its Subsidiaries. The
Company and each Subsidiary have withheld and paid over to the relevant
taxing authority all material Taxes required to have been withheld and paid
in connection with payments to employees, independent contractors,
creditors, stockholders or other third parties. The Company and its
Subsidiaries are not parties to or bound by any tax sharing, tax indemnity
or tax allocation agreement or other similar arrangement with any other
person or entity. There are no liens for Taxes (other than for Taxes not
yet due) upon the assets of the Company or any of its Subsidiaries. The
Company and its Subsidiaries have never been members of an affiliated group
of corporations within the meaning of Section 1504 of the Code, with the
exception of the common group for which the Company is the common parent,
nor has the Company or any of its Subsidiaries, or any predecessor or
affiliate of any of them, become liable (whether by contract, as transferee
or successor, by law or otherwise) for the Taxes of any other person or
entity under Treasury Regulation Section 1.1502-6 or any similar provision
of state, local or foreign law. The Company and its Subsidiaries have not
been "United States real property holding corporations" within the meaning
of Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. For purposes of this Agreement, (i)
"Tax" (and, with correlative meaning, "Taxes") means any federal, state,
local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding, alternative
or added minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty or other additions
to Tax, imposed by any Governmental Entity and (ii) "Tax Return" means any
return, report or similar statement required to be filed with respect to
any Tax (including any attached schedules), including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
6.10 Employee Benefit Plans.
(a) All material employee benefit plans (including without limitation
all "employee benefit plans" as defined in Section 3(3) of ERISA) which
cover or have covered employees, former employees or directors of the
Company or any of its ERISA Affiliates (as hereinafter defined) or any
person treated by the Company or an ERISA Affiliate as an independent
contractor for tax purposes ("Independent Contractor") and all other plans,
policies, arrangements and agreements providing material compensation,
severance or other benefits to any current or former employee, director or
Independent Contractor of the Company or any of its Subsidiaries (the
"Company Benefit Plans") are listed on Schedule 6.10 attached hereto, and
copies of all such Company Benefit Plans and all Benefit Plan Related
Documents (as hereinafter defined) have previously been made available to
Purchaser for review. To the extent applicable, the Company Benefit Plans
comply in all material respects with the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code and
any other applicable law. None of any Company Benefit Plan, or any officer,
employee, former employee or director of the Company, any Subsidiary or any
ERISA Affiliate, or the Company or any of its Subsidiaries or ERISA
Affiliates has incurred any material liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA or has engaged in any
transaction that is reasonably likely to result in any such liability or
penalty.
(b) Neither the Company nor any ERISA Affiliate has ever (i)
maintained any Company Benefit Plan which has been subject to Title IV of
ERISA, (ii) been required to contribute to, or otherwise incurred any
liability in connection with, any "multiemployer plan" as defined in
Section 4001(a)(3) or Section 3(37) of ERISA, (iii) except to the extent
reflected in the Financial Statements, provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by Part 6 of Subtitle B of Title I of ERISA), or
(iv) maintained any Company Benefit Plan or other contract that
individually or collectively provides for the payment by the Company or any
of its Subsidiaries of any amount that is or could be an "excess parachute
payment" pursuant to Section 280G of the Code or that is not or would not
be deductible under Section 162(a)(1) of the Code or Section 404 of the
Code.
(c) Neither the execution and delivery of this Agreement or the
Ancillary Documents by the Company nor the consummation of the transactions
contemplated hereby or any related transactions will result in the
acceleration or creation of any rights of any person to benefits under any
Company Benefit Plan (including, without limitation, the acceleration of
the vesting or exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or vesting
of any benefits under any pension plan or the acceleration or creation of
any rights under any severance, parachute or change in control agreement).
(d) There is no action, order, writ, injunction, judgment or decree
outstanding or claim (other than routine claims for benefits), suit,
litigation, proceeding, arbitral action, governmental audit or, to the
knowledge of the Company, investigation relating to or seeking benefits
under any Company Benefit Plan that is pending, threatened or anticipated
against the Company, any of its Subsidiaries, any ERISA Affiliate or any
Company Benefit Plan. Neither the Company, any of its Subsidiaries nor any
ERISA Affiliate has any announced plan or legally binding commitment to
create any additional employee benefit plans or agreements of the Company
or any ERISA Affiliate or to amend or modify any existing Company Benefit
Plan.
(e) No event has occurred in connection with which the Company, any
of its Subsidiaries, any ERISA Affiliate or any Company Benefit Plan,
directly or indirectly, could be subject to any material liability (i)
under any statute, regulation or governmental order relating to any Company
Benefit Plan or (ii) pursuant to any obligation of the Company or any ERISA
Affiliate to indemnify any person against liability incurred under any such
statute, regulation or order as they relate to the Company Benefit Plans.
(f) For purposes of this Agreement, "ERISA Affiliate" means any
business or entity that is a member of the same "controlled group of
corporations," under "common control" or an "affiliated service group" with
an entity within the meanings of Sections 414(b), (c) or (m) of the Code,
or required to be aggregated with the entity under Section 414(o) of the
Code, or is under "common control" with the entity, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed
under any of the foregoing Sections. For purposes of this Agreement,
"Benefit Plan Related Documents" means (i) each Company Benefit Plan (and,
if applicable, related trust agreements) which covers or has covered
current or former employees, directors or Independent Contractors of the
Company or any ERISA Affiliate and all amendments thereto, all material
written interpretations or descriptions thereof which have been distributed
to employees of the Company or its ERISA Affiliates and all annuity
contracts or other funding instruments with respect to a Company Benefit
Plan, (ii) the most recent determination or opinion letter issued by the
Internal Revenue Service as to qualification under Section 401(a) of the
Code, or analogous ruling, if any, required under foreign law for each
applicable Company Benefit Plan, and (iii) for the three most recent plan
years, Annual Reports on Form 5500 Series (or analogous periodic report, if
any, required under foreign law) required to be filed with any governmental
agency for each applicable Company Benefit Plan.
6.11 Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm that may result in the
obligation of Purchaser or Merger Sub or the Company to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that the Company has retained the
Financial Advisor, the arrangements with which have been disclosed in
writing to Purchaser prior to the date hereof.
6.12 Licenses and Permits. The Company and its Subsidiaries have all
necessary licenses, permits, certificates, approvals and authorizations
(collectively, "Permits") required to lawfully conduct their respective
businesses as presently conducted, except for those Permits the lack of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and no Permit is subject to any
outstanding order, decree, judgment or stipulation that would be likely to
affect such Permit, where the effect of the foregoing would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
6.13 Environmental Matters. Except for any matters that, individually
or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect, (a) the Company and each of its Subsidiaries has been and
are now in compliance with all Environmental Laws in effect on the date
hereof; (b) the Company and each of its Subsidiaries have obtained, and are
in full compliance with, all material Permits required by applicable laws
for the use, storage, treatment, transportation, release, emission and
disposal of raw materials, byproducts, wastes and other substances used or
produced by or otherwise relating to the operations of any of them; (c) to
the Company's knowledge, there is not now and has not been any Hazardous
Substance used, generated, treated, stored, transported, disposed of,
released, handled or otherwise existing on, under, about, or emanating
from, or to, any property owned, leased or operated by the Company or any
of its Subsidiaries which could impose liability or responsibility on the
Company or any of its Subsidiaries; (d) neither the Company nor any of its
Subsidiaries has received any written notice from any Governmental Entity
or third party of alleged actual or potential responsibility for, or any
inquiry or investigation regarding, any release or threatened release of
Hazardous Substances or alleged violation of, or non-compliance with, any
Environmental Law, nor are the Company and its Subsidiaries aware of any
information which might form the basis of any such notice; and (e) to the
knowledge of the Company, there is no site to which the Company or any of
its Subsidiaries have transported or arranged for the transport of
Hazardous Substances that is the subject of any environmental action. As
used in this Agreement, the term "Environmental Laws" means foreign,
federal, state or local laws, statutes, ordinances, regulations, rules,
judgments, court orders, permits and licenses that are applicable to the
Company and in effect on the date of this Agreement and (i) regulate or
relate to the protection or clean up of the environment; the use,
treatment, storage, transportation, handling, disposal or release of
Hazardous Substances, the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural
resources; or the health and safety of persons or property, including
without limitation protection of the health and safety of employees; or
(ii) impose liability or responsibility with respect to any of the
foregoing. As used in this Agreement, the term "Hazardous Substances" means
any pollutant, chemical, substance and any toxic, infectious, carcinogenic,
reactive, corrosive, ignitable or flammable chemical, or chemical compound,
or hazardous substance, material or waste, whether solid, liquid or gas,
that is subject to regulation, control or remediation under any
Environmental Laws.
6.14 Title to Assets.
(a) Except as set forth in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended December
31, 2000 included in the Financial Statements (the "2000 Balance Sheet"),
the Company and each of its Subsidiaries have good and marketable title to
all of their real and personal properties and assets reflected on the 2000
Balance Sheet or acquired after December 31, 2000 (other than assets
disposed of since December 31, 2000 in the ordinary course of business
consistent with past practice), in each case free and clear of all title
defects and Encumbrances, except for (i) Encumbrances that secure
indebtedness that is properly reflected in the 2000 Balance Sheet or in any
subsequently filed Company Report; (ii) liens for Taxes accrued but not yet
payable; (iii) liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after December 31, 2000,
provided that the obligations secured by such liens are not delinquent; and
(iv) such title defects or Encumbrances, if any, as individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. The Company and each of its Subsidiaries either own, or have valid
leasehold interests in, all properties and assets used by them in the
conduct of their business except where the absence of such ownership or
leasehold interest would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries owns any real property.
(b) Neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any person to sell or otherwise
dispose (except in the ordinary course of business consistent with past
practice) of any of its assets with an individual value of $50,000 or an
aggregate value in excess of $500,000.
6.15 Leased Properties. Except as would not reasonably be expected
to have a Material Adverse Effect: the Company has received no notice of
any intention by any lessor under a lease to which the Company or any of
its Subsidiaries is a party (a "Lease") to cancel or terminate the same
(nor has the Company canceled or terminated any Lease), nor has the Company
vacated all or any portion of such leased properties; neither the Company
nor any of its Subsidiaries is in default under any Lease; except as set
forth in Schedule 6.15 attached hereto (i) no Lease has been modified,
altered or amended in any respect, except as previously provided to
Purchaser, (ii) no lessor has the right to cancel or terminate its Lease
and (iii) the Company has no interest in any real property other than the
leasehold possessory interest set forth in such Lease; and each of the
Leases is valid and subsisting and in full force and effect in accordance
with its terms and constitutes the legal, valid, binding and enforceable
obligation of the lessee thereunder, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting the rights of creditors and to
general principles of equity.
6.16 Labor and Employment Matters. Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining
agreement or other Contract or understanding with a labor union or labor
organization. Except for such matters that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, there
is no (a) unfair labor practice, labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its
Subsidiaries relating to their business, (b) to the knowledge of the
Company, activity or proceeding by a labor union or representative thereof
to organize any employees of the Company or any of its Subsidiaries or (c)
lockout, strike, slowdown, work stoppage or, to the knowledge of the
Company, threat thereof by or with respect to such employees.
6.17 Intellectual Property.
(a) Schedule 6.17 of the Company Disclosure Schedules sets forth a
true and complete list and description of (i) all United States and foreign
patents, patent applications, trademarks, trademark registrations and
applications, trade names, service marks, registered copyrights and
applications therefor and trade secrets owned by the Company and its
Subsidiaries (the "Intellectual Property Rights") and (ii) all United
States and foreign patents, patents applications, trademarks, trademark
registrations and applications, trade names, service marks, registered
copyrights and applications therefor and trade secrets licensed to the
Company or any of its Subsidiaries (the "Licensed Rights").
(b) To the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy) would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect:
(i) (A) the Intellectual Property Rights are free and clear of
any Encumbrances, are not subject to any license (royalty bearing or
royalty free) and are not subject to any other arrangement requiring
any payment to any person or the obligation to grant rights to any
person in exchange; (B) to the knowledge of the Company, the Licensed
Rights are free and clear of any Encumbrances, royalties or other
obligations; and (C) the Intellectual Property Rights and the
Licensed Rights are all the material intellectual property rights
necessary to the conduct of the business of each of the Company and
its Subsidiaries as presently conducted.
(ii) The validity of the Intellectual Property Rights and title
thereto, and, to the knowledge of the Company, the validity of the
Licensed Rights, (A) have not been challenged in any prior
litigation; (B) are not being challenged in any pending litigation;
and (C), to the knowledge of the Company, are not the subject or
subjects of any threatened or proposed litigation and is not involved
in any interference, reissue, challenge, reexamination, invalidation,
opposition proceeding or cancellation.
(iii) The business of the Company and its Subsidiaries, as
presently conducted, does not conflict with and, to the Company's
knowledge, has not been alleged to conflict with any patents,
trademarks, trade names, service marks, copyrights or other
intellectual property rights of others.
(iv) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of any of the Intellectual
Property Rights or any of the Licensed Rights.
(v) The Company does not know of any unauthorized use by others
of any of the Intellectual Property Rights or the Licensed Rights
material to the business of the Company and its Subsidiaries as
presently conducted.
(c) Each of the Company and its Subsidiaries owns, or possesses valid
license rights to, all computer software programs that are material to the
conduct of the business of the Company and its Subsidiaries, except to the
extent that the failure thereof would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
infringement suits, actions or proceedings pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary with respect
to any software owned or licensed by the Company or any Subsidiary.
6.18 Material Agreements. Except as listed in the exhibit index to
the Company's Registration Statement on Form S-1, declared effective on
March 16, 2000 or any subsequently filed Company Report and except for
agreements made for the purpose of completing the transactions contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is a
party to, or bound by, any Material Agreement of any kind to be performed
in whole or in part after the Effective Time. The term "Material Agreement"
shall mean any agreement to which the Company or any of its Subsidiaries is
a party and (i) is outside of the ordinary course of business of the
Company or its Subsidiaries, (ii) a customer of the Company or one of its
Subsidiaries is a party and either (1) involves the payment or receipt by
the Company or any of its Subsidiaries, subsequent to the date of this
Agreement, of more than $250,000 or (2) is not terminable without penalty
by the Company or such Subsidiary party thereto on fewer than 365 days'
notice or (iii) except for customer contracts, either (A) involves the
payment or receipt by the Company or any of its Subsidiaries, subsequent to
the date of this Agreement, of more than $200,000 or (B) is not terminable
without penalty by the Company or such Subsidiary party thereto on fewer
than 180 days' notice. Except for any such breaches or defaults that would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, neither the Company nor any of its Subsidiaries is
in breach or default under, and there are no facts which with notice or the
passage of time would cause the Company to be in breach or default under,
or give rise to any right of termination, amendment, cancellation or
acceleration of other parties under, whether as a result of the
consummation of the transactions contemplated hereby or otherwise, any
Material Agreement.
6.19 No Undisclosed Liabilities. Except as disclosed in the Financial
Statements or Company Reports filed and publicly available prior to the
date of this Agreement and except for liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 2000,
the Company and its Subsidiaries do not have any indebtedness or
liabilities of any kind (whether accrued, absolute, contingent or
otherwise) (a) required by GAAP to be reflected on a consolidated balance
sheet of the Company and its consolidated Subsidiaries or in the notes,
exhibits or schedules thereto or (b) which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
6.20 Litigation. Except as described in the Company Reports, there is
no action, suit or proceeding, claim, arbitration or investigation pending
or, to the knowledge of the Company, threatened against the Company or any
of its Subsidiaries, that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as
disclosed in the Company Reports, there is no judgment, order, injunction
or decree of any Governmental Entity outstanding against the Company or any
of its Subsidiaries that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
6.21 Insurance. Schedule 6.21 lists all of the Company's insurance
policies relating to the assets, business, operations, employees, officers
or directors of the Company and its Subsidiaries. Such insurance policies
are in full force and effect. There are no material claims by the Company
or any Subsidiary pending under any of such policies as to which coverage
has been questioned, denied or disputed by the underwriter of such policies
or in respect of which such underwriters have reserved their rights.
6.22 Affiliate Transactions. Except as disclosed with reasonable
specificity in the Company Reports filed prior to the date of this
Agreement, there are no material contracts, commitments, agreements,
arrangements or other transactions between the Company or any of its
Subsidiaries, on the one hand, and any (i) present or former officer or
director of the Company or any of its Subsidiaries or any of their
immediate family members (including their spouses), (ii) record or
beneficial owner of five percent or more of the voting securities of the
Company or (iii) affiliate of any such officer, director, family member or
beneficial owner, on the other hand.
6.23 Opinion of Financial Advisor. The Board of Directors has
received the Fairness Opinion. A complete and correct originally executed
copy of the Fairness Opinion will be delivered by the Company to Purchaser
for informational purposes only. The Company has been authorized by the
Financial Advisor to permit the inclusion of the Fairness Opinion (and,
subject to prior review and consent by the Financial Advisor, references
thereto) in the Offer to Purchase and in the Schedule 14D-9 and the Proxy
Statement, if applicable.
6.24 Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock is the only vote of the holders
of any class or series of the capital stock of the Company which may be
necessary to approve this Agreement and the transactions contemplated
hereby.
6.25 DGCL Section 203; State Takeover Statutes. On or prior to the
date hereof, the Board of Directors has approved this Agreement, the Tender
Agreements, the Offer, the Merger and the other transactions contemplated
hereby and such approval is sufficient to render inapplicable to this
Agreement, the Tender Agreements, the Offer, the Merger and any of such
other transactions contemplated hereby, the restrictions on "business
combinations" set forth in Section 203 of the DGCL. No other state takeover
statute or similar statute or regulation applies or purports to apply to
the Offer, the Merger, this Agreement or any of the transactions
contemplated by this Agreement or the Tender Agreements and no provision of
the Company's organizational documents or the organizational documents of
any of the Company's Subsidiaries would, directly or indirectly, restrict
or impair the ability of Purchaser or Merger Sub and its affiliates and
associates to vote, or otherwise to exercise the rights of a stockholder
with respect to, shares of capital stock of the Company and its
Subsidiaries that may be acquired or controlled by Purchaser or Merger Sub
and its affiliates and associates.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the corresponding sections of the disclosure
schedules, dated the date hereof, delivered by Purchaser and Merger Sub to
the Company (the "Purchaser Disclosure Schedules"), Purchaser and Merger
Sub hereby represent and warrant to the Company as follows:
7.1 Existence; Good Standing; Corporate Authority. Each of Purchaser
and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has
all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted, except where the
failure to have such power and authority would not materially adversely
affect or delay the ability of Purchaser or Merger Sub to consummate the
transactions contemplated by this Agreement.
7.2 Authorization, Validity and Effect of Agreements. Each of
Purchaser and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and the Ancillary Documents and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Documents and the
consummation by Purchaser and Merger Sub of the transactions contemplated
hereby and thereby have been duly and validly authorized by the respective
boards of directors of Purchaser and Merger Sub and by Purchaser as the
sole stockholder of Merger Sub and no other corporate proceedings on the
part of Purchaser or Merger Sub are necessary to authorize this Agreement
and the Ancillary Documents or to consummate the transactions contemplated
hereby and thereby. This Agreement has been, and any Ancillary Documents at
the time of execution will have been, duly and validly executed and
delivered by Purchaser and Merger Sub, and (assuming this Agreement and
such Ancillary Documents each constitutes a valid and binding obligation of
the Company) this Agreement constitutes, and such Ancillary Agreements at
the time of execution will constitute, the valid and binding obligations of
each of Purchaser and Merger Sub, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting the rights of creditors and to general principles
of equity.
7.3 Offer Documents. None of the Offer Documents, any schedule
required to be filed by Purchaser or Merger Sub with the SEC or any
amendment or supplement thereto will contain, at the respective times such
documents are filed with the SEC or first published, sent or given to the
Company's stockholders, any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading, except that no
representation is made by Purchaser or Merger Sub with respect to
information supplied by the Company for inclusion in the Offer Documents,
any schedule required to be filed with the SEC or any amendment or
supplement thereto. None of the information supplied by Purchaser or Merger
Sub for inclusion or incorporation by reference in the Schedule 14D-9 will,
at the date of filing with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If at any
time prior to the Effective Time either Purchaser or Merger Sub shall
obtain knowledge of any facts with respect to itself, any of its officers
or directors or any of its Subsidiaries that would require the supplement
or amendment to any of the foregoing documents in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with applicable laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company, and in the event the
Company shall advise Purchaser or Merger Sub as to its obtaining knowledge
of any facts that would make it necessary to supplement or amend any of the
foregoing documents, Purchaser or Merger Sub shall promptly amend or
supplement such document, and such amendment or supplement shall be
promptly filed with the SEC, and as required by law disseminated to the
stockholders of the Company.
7.4 No Violation. Neither the execution and delivery by Purchaser
and Merger Sub of this Agreement or any of the Ancillary Documents nor the
consummation by them of the transactions contemplated hereby or thereby
will: (a) violate, conflict with or result in a breach of any provisions of
the certificate of incorporation or bylaws of Purchaser or Merger Sub; (b)
violate, conflict with, result in a breach of any provision of, constitute
a default (or an event that, with notice or lapse of time or both, would
constitute a default) under, result in the termination or give rise to a
right of termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment, penalty or other
obligations pursuant to, result in the creation of any Encumbrance upon any
of the properties owned or used by Purchaser or Merger Sub or any of their
respective Subsidiaries under, or result in there being declared void,
voidable, or without further binding effect, any of the terms, conditions
or provisions of any Contract to which Purchaser or Merger Sub or any of
their respective Subsidiaries is a party, or by which Purchaser or Merger
Sub or any of their respective Subsidiaries or any of their respective
properties is bound, except for any such breach, default or right with
respect to which requisite waivers or consents have been, or prior to the
Effective Time will be, obtained, or any of the foregoing matters that
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect; (c) require any Consents of any Governmental
Entity, including any such Consent under the laws of any foreign
jurisdiction, other than Regulatory Filings, except for those Consents the
failure of which to obtain or make would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; (d)
violate any laws applicable to Purchaser or Merger Sub or any of their
respective Subsidiaries, except for violations that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect; or (e) subject Purchaser or Merger Sub or (by reason of Purchaser's
or Merger Sub's participation therein) the Offer or the Merger to any
"moratorium," "control share acquisition," "business combination," "fair
price" or other form of corporate anti-takeover laws and regulations.
7.5 Financing. At the expiration of the Offer and at the Effective
Time (so long as all applicable conditions have been satisfied), Purchaser
and/or Merger Sub will have available all the funds necessary to purchase
all the shares of the Common Stock pursuant to the Offer and the Merger and
to pay all fees and expenses payable by the Purchaser or Merger Sub related
to the transactions contemplated by this Agreement. Purchaser has delivered
to the Company true and correct copies of that certain firm commitment
letter addressed to Purchaser from Vivendi Universal, S.A. ("Vivendi"),
dated as of February 5, 2001, as well as evidence satisfactory to the
Company that Purchaser has sufficient net cash which, when added to the
amounts to be obtained under such commitment letter, will constitute
sufficient funds to make all of the payments referred to in the previous
sentence. Purchaser has been advised by Vivendi that Vivendi knows of no
fact or circumstance that is reasonably likely to result in any of the
conditions to funding in such firm commitment letter not being satisfied,
and Purchaser and Merger Sub know of no such fact or circumstance.
Purchaser and Merger Sub covenant and agree that, upon the Company's
request, Purchaser and Merger Sub shall provide the Company with
information regarding the status of such financing.
7.6 Purchaser-Owned Shares of Common Stock. As of the date of this
Agreement, neither Purchaser, Merger Sub nor their respective Subsidiaries
own any shares of Common Stock.
7.7 Interim Operations of Merger Sub. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
7.8 Litigation. There is no action, suit or proceeding, claim,
arbitration or investigation pending or, to the knowledge of Purchaser or
Merger Sub, threatened against Purchaser or any subsidiary thereof
(including Merger Sub) that would materially adversely affect or delay the
ability of Purchaser or Merger Sub to consummate the transactions
contemplated by this Agreement.
ARTICLE 8
COVENANTS
8.1 Interim Operations.
(a) From and after the date of this Agreement until the time
Purchaser's designees constitute a majority of the Board in accordance with
Section 1.4 hereof, unless Purchaser has consented in writing thereto, the
Company shall, and shall cause each of its Subsidiaries to, (i) conduct its
operations according to its usual, regular and ordinary course of business
consistent with past practice; (ii) use its reasonable best efforts to
preserve intact their business organizations, maintain in effect all
existing material qualifications, licenses, permits, approvals and other
authorizations referred to in Sections 6.1 and 6.12, keep available the
services of their officers and key employees and maintain satisfactory
relationships with those persons having business relationships with them;
(iii) promptly upon the discovery thereof notify Purchaser of the existence
of any breach of any representation or warranty contained herein or the
occurrence of any event that would cause any representation or warranty
contained herein no longer to be true and correct (or, in the case of any
representation or warranty that makes no reference to Material Adverse
Effect, to no longer be true and correct in any material respect); (iv)
promptly deliver to Purchaser true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement; and (v) maintain its books of account and records in its usual,
regular and ordinary manner, consistent with its past practices.
(b) Except as disclosed in Schedule 8.1 of the Company Disclosure
Schedules, from and after the date of this Agreement until the time
Purchaser's designees constitute a majority of the Board in accordance with
Section 1.4 hereof, unless Purchaser has consented in writing thereto, the
Company shall not, and shall not permit any of its Subsidiaries to:
(i) amend its certificate of incorporation or bylaws or
comparable governing instruments;
(ii) issue, sell, pledge or register for issuance or sale any
shares of capital stock or other ownership interest in the Company
(other than issuances of Common Stock in respect of any exercise of
Options outstanding on the date hereof or in connection with the
acquisitions of xxxx.xxx, Inc. and Xxxxxxxxxxxxxxxxxx.xxx, Inc.) or
any of the Subsidiaries, or any securities convertible into or
exchangeable for any such shares or ownership interest, or any
rights, warrants or options to acquire or with respect to any such
shares of capital stock, or ownership interest, or convertible or
exchangeable securities or accelerate any right to convert or
exchange or acquire any securities of the Company or any of its
Subsidiaries for any such shares or ownership interest;
(iii) effect any stock split or conversion of any of its capital
stock or otherwise change its capitalization as it exists on the date
hereof, other than as set forth in this Agreement;
(iv) directly or indirectly redeem, purchase or otherwise acquire
any shares of its capital stock or capital stock of any of its
Subsidiaries, other than as set forth in this Agreement;
(v) declare or pay any dividends on or make other distributions
in respect of any of its capital stock;
(vi) sell, lease or otherwise dispose of any of its assets or
properties (including capital stock of any of its Subsidiaries),
mortgage, pledge or impose a lien or other encumbrance on any of its
material assets or property (including capital stock of any of its
Subsidiaries), except in the ordinary course of business;
(vii) acquire by merger, purchase or any other manner, any
business or entity or otherwise acquire any assets that are material
to the Company and its Subsidiaries taken as a whole, except for
purchases of inventory, supplies or capital expenditures in the
ordinary course of business consistent with past practice;
(viii) incur or assume any long-term or short-term debt, except
for working capital purposes in the ordinary course of business under
the Company's existing credit facilities and capital expenditures
made in accordance with the Company's previously adopted capital
budget, copies of which have been provided to Purchaser;
(ix) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other person except wholly owned Subsidiaries of the Company;
(x) make or forgive any loans, advances or capital contributions
to, or investments in, any other person;
(xi) enter into any new employment, severance, consulting or
salary continuation agreements with any newly hired employees other
than in the ordinary course of business or enter into any of the
foregoing with any existing officers, directors or employees or grant
any increases in compensation or benefits to any officers, directors
or employees except for regularly scheduled employee raises in the
ordinary course of business consistent with the Company's past
practices or raises that, in the case of executive officers, have
been approved by the compensation committee of the Board of Directors
prior to the date hereof in the ordinary course of business
consistent with the committee's past practices;
(xii) adopt or amend in any material respect (including any
increase in the payment to or benefits under) or terminate any
employee benefit plan or arrangement;
(xiii) make any material changes in the type or amount of their
insurance coverage or permit any material insurance policy naming the
Company or any Subsidiary as a beneficiary or a loss payee to be
canceled or terminated;
(xiv) except as may be required by law or generally accepted
accounting principles, change any material accounting principles or
practices used by the Company or its Subsidiaries;
(xv) take any action to cause the Common Stock to cease to be
traded on the Nasdaq National Market prior to the completion of the
Offer or the Merger;
(xvi) enter into any agreement providing for aggregate payments
by the Company in excess of $100,000, provided, however, that no
consent shall be required with respect to any agreement for the
purchase of media advertising providing for aggregate payments by the
Company of less than $250,000;
(xvii) make any change to the pricing structure of its
advertising inventory, except in the ordinary course of business,
consistent with past practice;
(xviii) enter into, terminate, fail to renew, or accelerate any
license, distributorship, dealer, sales representative, joint
venture, credit or other agreement if such action could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(xix) fail to operate, maintain, repair or otherwise preserve its
material assets and properties consistent with past practice;
(xx) fail to comply with all applicable filing, payment and
withholding obligations under all applicable federal, state, local or
foreign laws relating to Taxes except where such failure to comply
could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(xxi) make any material tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xxii) pay, discharge, settle or satisfy any claims, liabilities
or objections (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction of
the foregoing in the ordinary course of business consistent with past
practice, or, if not in the ordinary course of business, the payment,
discharge or satisfaction of the foregoing that, individually and in
the aggregate, does not exceed $250,000; or
(xxiii) agree in writing or otherwise to take any of the
foregoing actions.
(c) Liquidation or Dissolution. The Company shall not adopt a plan of
complete or partial dissolution or adopt resolutions providing for the
complete or partial liquidation, dissolution, consolidation, merger,
restructuring or recapitalization of the Company.
(d) Representations; Warranties and Conditions. The Company shall
not, and shall not permit its Subsidiaries to, take any action that does,
or could reasonably be expected to, result in (i) any of the
representations or warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations that are not so qualified becoming untrue in any material
respect or (iii) any of the conditions to the Merger not being satisfied.
8.2 Company Stockholder Approval; Proxy Statement.
(a) If approval or action in respect of the Merger by the
stockholders of the Company is required by applicable law, the Company,
through its Board of Directors, shall (i) call a meeting of its
stockholders (the "Stockholder Meeting") for the purpose of voting upon the
Merger, (ii) hold the Stockholder Meeting as soon as practicable following
the purchase of shares of Common Stock pursuant to the Offer and (iii)
unless the Board of Directors approves, recommends or enters into an
agreement with respect to a Superior Proposal in accordance with Section
8.9(b), recommend to its stockholders the approval of this Agreement and
the transactions contemplated hereby, including the Merger. The record date
for the Stockholder Meeting shall be a date subsequent to the date
Purchaser or Merger Sub becomes a record holder of Common Stock purchased
pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement (such proxy statement, and any amendments or
supplements thereto, the "Proxy Statement") or, if applicable, an
Information Statement with the SEC with respect to the Stockholder Meeting
and will use reasonable efforts to respond to any comments of the SEC or
its staff and to cause the Proxy Statement to be cleared by the SEC. The
Proxy Statement shall include the recommendation of the Board of Directors
that the stockholders of the Company vote in favor of approving the
agreement of merger (in accordance with Section 251 of the DGCL) contained
in this Agreement and the determination of the Board of Directors that this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are fair to, and in the best interests of, the stockholders of
the Company. The Company will notify Purchaser of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Purchaser with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger. The Company shall give Purchaser and its
counsel the reasonable opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Purchaser and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement
and all responses to requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC. Each of the
Company and Purchaser agrees to use its best efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of
and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the stockholders of the Company. If at any time prior to the
approval of this Agreement by the Company's stockholders there shall occur
any event that is required to be set forth in an amendment or supplement to
the Proxy Statement under applicable law, the Company will prepare and mail
to its stockholders such an amendment or supplement.
(c) The Company represents and warrants that any required Proxy
Statement will comply as to form in all material respects with the Exchange
Act and, at the respective times filed with the SEC and distributed to
stockholders of the Company, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to any
information included in the Proxy Statement that was provided by Purchaser
or Merger Sub. Purchaser represents and warrants that none of the
information supplied by Purchaser or Merger Sub for inclusion in the Proxy
Statement will, at the respective times filed with the SEC and distributed
to stockholders of the Company, and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) Subject to clause (iii) of Section 8.2(a), the Company shall use
its reasonable efforts to obtain the necessary approvals by its
stockholders of the Merger, this Agreement and the transactions
contemplated hereby.
(e) Purchaser agrees to cause all shares of Common Stock purchased by
Merger Sub pursuant to the Offer and all other shares of Common Stock owned
by Purchaser, Merger Sub or any other subsidiary or affiliate of Purchaser
to be voted in favor of the approval of the Merger.
8.3 Filings; Other Action. Subject to the terms and conditions herein
provided, the Company, Purchaser and Merger Sub shall: (a) as promptly as
practicable but in no event later than ten business days after the date
hereof, make their respective filings and thereafter make any other
required submissions under the HSR Act with respect to the Offer and, if
applicable, the Merger, and request early termination of the waiting period
under the HSR Act; (b) cooperate and consult with one another in, (i)
determining which Regulatory Filings are required or, in the case of Other
Antitrust Filings and Consents, permitted to be made prior to the Effective
Time with, and which Consents are required or, in the case of Other
Antitrust Filings and Consents, permitted to be obtained prior to the
Effective Time from Governmental Entities or other third parties in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and determining which
Consents are required to transfer to the Surviving Corporation any Permits
or registrations held on behalf of the Company or any of its Subsidiaries
by or in the name of distributors, brokers or sales agents; (ii) promptly
preparing all Regulatory Filings and all other filings, submissions and
presentations required or prudent to obtain all Consents, including by
providing to the other parties drafts of such material reasonably in
advance of the anticipated filing or submission dates; (iii) promptly
making all such Regulatory Filings and promptly seeking all such Consents;
(iv) defending against any lawsuit or proceeding, whether judicial or
administrative, challenging this Agreement or the consummation of any of
the transactions contemplated hereby; and (c) use their reasonable best
efforts to take, or cause to be taken, all other action and do, or cause to
be done, all other things necessary, proper or appropriate to consummate
and make effective the transactions contemplated by this Agreement
(including without limitation those actions described in the foregoing (ii)
through (iv)). Each of Purchaser and the Company shall use its reasonable
best efforts to contest any proceeding seeking a preliminary injunction or
other legal impediment to, and to resolve any objections as may be asserted
by any Governmental Entity with respect to, the Offer or the Merger under
the HSR Act or Foreign Antitrust Laws. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose
of this Agreement, the proper officers and directors of Purchaser and the
Surviving Corporation shall take all such necessary action.
8.4 Publicity. The initial press release relating to this Agreement
shall be a joint press release and thereafter the Company and Purchaser
shall consult with each other before issuing any press release or otherwise
making public statements with respect to the transactions contemplated
hereby and in making any filings with any Governmental Entity or with The
Nasdaq National Market with respect thereto.
8.5 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further
acts and execute such documents as may be reasonably required to effect the
Merger, including the execution of any deeds, bills of sale, assignments,
assurances and all such other acts and things necessary, desirable or
proper to carry out the purposes of this Agreement.
8.6 Insurance; Indemnity.
(a) For five years from the Effective Time, the Surviving Corporation
shall maintain in effect the Company's and its Subsidiaries' current
directors' and officers' liability insurance policies or replacement
policies providing at least equal coverage (the "Policies") covering those
persons who are currently covered by the Policies with respect to actions
or omissions occurring prior to the Effective Time; provided, however, that
in no event shall the Surviving Corporation be required to expend in any
one year an amount in excess of 150% of the annual premiums currently paid
by the Company and its Subsidiaries for such insurance coverage, and,
provided further, that if the annual premiums of such insurance coverage
exceed such amount, the Surviving Corporation shall be obligated to obtain
policies with the greatest coverage available for a cost not exceeding such
amount.
(b) The Surviving Corporation shall keep in effect in its bylaws
provisions for a period of not less than six years from the Effective Time
(or, in the case of matters occurring prior to the Effective Time that have
not been resolved prior to the sixth anniversary of the Effective Time,
until such matters are finally resolved) that provide for exculpation of
director and officer liability and indemnification (and advancement of
expenses related thereto) of the past and present officers and directors of
the Company and its Subsidiaries to the fullest extent permitted by the
DGCL, which provisions shall not be amended except as required by
applicable law or except to make changes permitted by law that would
enhance the rights of past or present officers and directors to
indemnification or advancement of expenses.
(c) From and after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless, to the fullest extent permitted under
applicable law, each person who is, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer,
director or similar person of the Company or any Subsidiary, against all
losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in
settlement (collectively, "Losses") in connection with any claims, actions,
suits, proceedings, arbitrations, investigations or audits (collectively,
"Litigation") arising before or after the Effective Time out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in
their capacities as such, which acts or omissions occurred prior to the
Effective Time. Without limiting the foregoing, the Surviving Corporation
shall periodically advance expenses as incurred with respect to the
foregoing to the fullest extent permitted under applicable law provided
that the person to whom the expenses are advanced provides an undertaking
to repay such advance if it is ultimately determined that such person is
not entitled to indemnification.
(d) If, after the Effective Time, Purchaser or the Surviving
Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties or
assets to any person, then, in each such case, proper provisions shall be
made so that successors and assigns of Purchaser or the Surviving
Corporation, as the case may be, shall assume such entity's obligations set
forth in this Section 8.6. The provisions of this Section 8.6 are intended
for the benefit of and shall be enforceable by each person who is now or
has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, an officer, director or similar person of the
Company or any of its Subsidiaries.
(e) If any Litigation described in Section 8.6(c) (each, an "Action")
arises or occurs, the Surviving Corporation shall control the defense of
such Action with counsel selected by the Surviving Corporation, provided
that the party seeking indemnification pursuant to Section 8.6(c) (each, an
"Indemnified Party"), shall be permitted to participate in the defense of
such Action through counsel selected by the Indemnified Party, at the
Indemnified Party's expense. Notwithstanding the foregoing, if there is any
actual or potential conflict between the Surviving Corporation and any
Indemnified Party or there are additional defenses available to any
Indemnified Party, such Indemnified Party shall be permitted to participate
in the defense of such Action with counsel selected by the Indemnified
Party, at the Surviving Corporation's expense; provided, however, that the
Surviving Corporation shall not be obligated to pay the fees and expenses
of more than one counsel for any Indemnified Party in any single Action.
The Surviving Corporation shall not be liable for any settlement effected
without its written consent, which consent shall not unreasonably be
withheld.
8.7 Employee Benefit Plans.
(a) From and after the Effective Time, the Surviving Corporation and
its respective Subsidiaries will honor, in accordance with their terms, all
existing employment, change in control and severance agreements between the
Company or any of its Subsidiaries and any current or former officer,
director, consultant or employee of the Company or any of its Subsidiaries
("Covered Employees") to the extent in effect on, and disclosed to
Purchaser prior to, the date hereof and all benefits or other amounts
earned or accrued to the extent vested or that become vested in the
ordinary course through the Effective Time under all employee benefit plans
of the Company and any of its Subsidiaries, in each case to the extent in
effect on the date hereof.
(b) To the extent that Covered Employees are included in any benefit
plan of Purchaser or its subsidiaries, Purchaser agrees that the Covered
Employees shall receive credit under such plan for service prior to the
Effective Time with the Company and its Subsidiaries to the same extent
such service was counted under similar Company Benefit Plans for purposes
of eligibility, vesting and eligibility for retirement (but not for benefit
accrual). Purchaser's medical benefit plans for the Covered Employees
("Purchasers Medical Plans") shall not contain any "pre-existing
conditions" exclusions or limitations or "actively at work" requirements
which would cause any of the Covered Employees or their dependents to be
excluded from Purchaser's Medical Plans immediately after the Effective
Time if such exclusions, limitations or requirements did not exclude the
Covered Employees or their dependents from the Company's similar medical
benefit plans. In determining any deductible and maximum out-of-pocket
limitations under Purchaser's Medical Plans, Purchaser shall give effect to
claims incurred and amounts paid by, and amounts reimbursed to, the Covered
Employees with respect to similar plans maintained by the Company for the
benefit of the Covered Employees immediately prior to the Effective Time
(other than any flexible spending accounts).
(c) As soon as practicable after the date of this Agreement, the
Company will review the administration of the Company Benefit Plans and
will use its reasonable best efforts to maintain, to the extent applicable,
the qualified status of the Company Benefit Plans under Section 401(a) of
the Code.
8.8 Access to Information. The Company shall, and shall cause each
of its Subsidiaries to, afford to Purchaser and to the officers, employees,
accountants, counsel, financial advisors and other representatives of
Purchaser, reasonable access during normal business hours during the period
prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall, and shall cause its respective Subsidiaries to, furnish
promptly to Purchaser (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other
information concerning its business, properties and personnel as Purchaser
may reasonably request, in each case to the extent permitted by law.
8.9 No Solicitation.
(a) The Company shall not, and shall not authorize, permit or cause
any of its Subsidiaries or any of the officers and directors of it or its
Subsidiaries to, and shall not authorize, permit or direct its and its
Subsidiaries' employees, agents and representatives (including the
Financial Advisor or any investment banker, attorney or accountant retained
by it or any of its Subsidiaries) to, directly or indirectly, (i) initiate,
solicit, or otherwise encourage any inquiries or the making of any proposal
or offer with respect to a merger, reorganization, share exchange, tender
offer, consolidation or similar transaction involving, or any purchase of,
10% or more of the assets or any equity securities of the Company or any of
its Subsidiaries (any such proposal or offer being hereinafter referred to
as, an "Acquisition Proposal") or (ii) initiate or engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person or entity (other than
Purchaser, Merger Sub and their respective representatives) relating to an
Acquisition Proposal, whether made before or after the date of this
Agreement, or otherwise facilitate any effort or attempt (other than by
Purchaser or Merger Sub) to make or implement or consummate an Acquisition
Proposal.
(b) Notwithstanding clause (a) above, nothing contained in this
Agreement shall prevent the Company or its Board of Directors from (i)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal or (ii): (x) providing information in response to a
request therefor by a person or entity who has made an unsolicited bona
fide written Acquisition Proposal if the Board of Directors receives from
the person or entity so requesting such information an executed
confidentiality agreement on terms substantially equivalent to (but in no
event less favorable to the Company than) those contained in the letter
agreement dated December 20, 2000 between an affiliate of Purchaser and the
Company (the "Confidentiality Agreement"); (y) engaging in any negotiations
or discussions with any person or entity who has made an unsolicited bona
fide written Acquisition Proposal; or (z) recommending such an Acquisition
Proposal to the stockholders of the Company, if, and only to the extent
that, (i) in each such case referred to in clause (x), (y) or (z) above,
the Board of Directors of the Company determines in good faith (after
consultation with the Company's outside legal counsel and its financial
advisor) that such action is necessary in order for its members to comply
with their fiduciary duties under applicable law and (ii) in each case
referred to in clause (x), (y) or (z) above, the Board of Directors of the
Company determines in good faith (after consultation with the Company's
outside legal counsel and its financial advisor) that (A) if accepted, such
Acquisition Proposal is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person or entity making the proposal, and would provide for a higher per
share value to the stockholders of the Company, and (B) such Acquisition
Proposal is fully financed (or, based on a good faith determination of the
Board of Directors of the Company, is readily financeable) (any such
Acquisition Proposal meeting the foregoing conditions being referred to
herein as a "Superior Proposal"). The Company shall immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
The Company agrees that it will take the necessary steps to promptly inform
the individuals or entities referred to in the first sentence of Section
8.9(a) of the obligations undertaken in this paragraph and in the
Confidentiality Agreement. The Company also shall promptly request each
person or entity that has heretofore executed a confidentiality agreement
in connection with its consideration of an Acquisition Proposal to return
all confidential information heretofore furnished to such person or entity
by or on behalf of it or any of its Subsidiaries.
(c) The Company shall notify Purchaser immediately if any Acquisition
Proposal or inquiries regarding a potential Acquisition Proposal are
received by, any information with respect to an Acquisition Proposal or a
potential Acquisition Proposal is requested from, or any discussions or
negotiations with respect to an Acquisition Proposal or a potential
Acquisition Proposal are sought to be initiated or continued with, it or
any of its representatives indicating, in connection with such notice, the
name of the person or entity involved and the material terms and conditions
of any such Acquisition Proposal, and thereafter shall keep Purchaser
informed, on a current basis, of the status and terms of any such inquiries
or Acquisition Proposals and the status of any such negotiations or
discussions (which, in all cases, shall be permissible only in compliance
with the provisions of Section 8.9(b) above).
8.10 Option to Acquire Additional Shares.
(a) The Company hereby grants to Merger Sub an irrevocable option
(the "Purchaser Option") to purchase up to that number of newly issued
shares of Company Common Stock (the "Purchaser Option Shares") equal to the
number of shares of Common Stock that, when added to the number of shares
of Common Stock owned by Purchaser, Merger Sub and their affiliates
immediately following consummation of the Offer, shall constitute one share
more than 90% of the shares of Common Stock then outstanding on a Fully
Diluted Basis (after giving effect to the issuance of the Purchaser Option
Shares) for a consideration per Purchaser Option Share equal to the Offer
Consideration.
(b) Such Purchaser Option shall be exercisable only after the
purchase of and payment for shares of Common Stock pursuant to the Offer by
Purchaser or Merger Sub as a result of which Purchaser, Merger Sub and
their affiliates own beneficially at least 80% of the outstanding shares of
Common Stock. Such Purchaser Option shall not be exercisable if the number
of shares of Common Stock subject thereto exceeds the number of authorized
shares of Common Stock available for issuance.
(c) In the event Merger Sub wishes to exercise the Purchaser Option,
Purchaser shall give the Company one-day prior written notice specifying
the number of shares of Company Common Stock that are or will be owned by
Purchaser, Merger Sub and their affiliates immediately following
consummation of the Offer and specifying a place and a time (which may be
concurrent with the consummation of the Offer) for the closing of such
purchase. The Company shall, as soon as practicable following receipt of
such notice, deliver written notice to Purchaser specifying the number of
Purchaser Option Shares. At the closing of the purchase of the Purchaser
Option Shares, the portion of the purchase price owing upon exercise of
such Purchaser Option which equals the product of (x) the number of shares
of Common Stock purchased pursuant to such Purchaser Option, multiplied by
(y) the Offer Consideration, shall be paid to the Company in cash by wire
transfer or cashier's check.
ARTICLE 9
CONDITIONS
9.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject
to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(a) Merger Sub shall have accepted for payment and paid for all
shares of Common Stock validly tendered in the Offer and not withdrawn;
provided, however, that neither Purchaser nor Merger Sub may invoke this
condition if Merger Sub (or its assignee) shall have failed in violation of
the terms of this Agreement or the Offer to purchase shares so tendered and
not withdrawn.
(b) This Agreement shall have been adopted by the affirmative vote of
the holders of the requisite number of shares of capital stock of the
Company if such vote is required pursuant to Company's certificate of
incorporation, the DGCL or other applicable law; provided, however, that
neither Purchaser nor Merger Sub may invoke this condition if either of
them or any of their respective affiliates shall have failed to vote the
shares of Common Stock held by it in favor of this Agreement and the
Company may not invoke this condition if the Company shall have failed to
fulfill its obligations under Section 8.2.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing, restraining or restricting
the consummation of the Merger shall be in effect; provided, however, that
the party invoking this condition shall use its best efforts to have any
such order, injunction or restraint vacated.
(d) All necessary waiting periods under the HSR Act that are
applicable to the Merger shall have expired or been earlier terminated, and
all other necessary approvals from any other Governmental Entity that are
applicable to the Merger shall have been obtained.
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective
Time:
(a) by mutual written consent of the Company and Purchaser; or
(b) by the Company, if (i) Purchaser or Merger Sub shall have failed
to commence the Offer within ten business days after the date of this
Agreement, (ii) Purchaser or Merger Sub (or Merger Sub's assignee) shall
have failed to comply with its payment obligations under this Agreement
with respect to any shares of Common Stock accepted for payment pursuant to
the Offer, or (iii) any change to the Offer is made in contravention of the
provisions of Article 1; or
(c) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before
the date which is six months from the date of this Agreement
(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 or whose breach of any
representation or warranty in this Agreement has been the cause of or
resulted in the failure of the Effective Time to occur on or before
such date);
(ii) if, upon a vote at the Stockholder Meeting, or any
adjournment thereof, the adoption of this Agreement by the
stockholders of the Company required by the DGCL shall not have been
obtained (provided that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to Purchaser if
Purchaser, Merger Sub or any of their affiliates shall have failed to
vote the shares of Common Stock held by them in favor of adoption of
this Agreement, and shall not be available to the Company, if the
Company shall have failed to fulfill its obligations under Section
8.2);
(iii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or prohibited
or if any court of competent jurisdiction or other Governmental
Entity shall have issued an order, judgment, decree or ruling, or
taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, judgment, decree,
ruling or other action shall have become final and non-appealable; or
(iv) if the Offer terminates or expires without Merger Sub having
purchased any shares of Common Stock thereunder as a result of the
failure of any condition specified in Exhibit A (provided that the
right to terminate this Agreement pursuant to this clause (iv) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the failure
of any such condition); or
(d) by Purchaser, prior to the consummation of the Offer, if (i) the
Board of Directors of the Company withdraws, amends or modifies its
approval of this Agreement and the transactions contemplated hereby, or its
recommendation that the holders of the shares of Common Stock accept the
Offer and tender all of their shares of Common Stock to Merger Sub and
approve this Agreement and the transactions contemplated hereby (or, in
each case, publicly announces its intention to do so) in a manner adverse
to Purchaser or Merger Sub or (ii) the Company approves, recommends or
enters into an agreement with respect to, or consummates, an Acquisition
Proposal; or
(e) by Purchaser, if any of the conditions set forth in Exhibit A
shall have become forever incapable of fulfillment and shall not have been
waived by Purchaser; or
(f) by Purchaser, if the Company shall breach any of its
representations, warranties or obligations hereunder and such breach shall
not have been cured or waived and the Company shall not have provided
reasonable assurance that such breach will be cured at least two business
days prior to the consummation of the Offer and such breach shall not have
been cured by such time, but only if such breach, individually or together
with all other such breaches, would constitute failure of a condition
contained in Exhibit A as of the date of such termination; or
(g) by Purchaser, prior to the consummation of the Offer, if any of
the Tender Agreements shall not be in full force and effect or any
Significant Stockholders shall have breached in any material respect any
representation, warranty or covenant contained in such Significant
Stockholder's Tender Agreement.
(h) by the Company, if the Company approves and enters into an
agreement providing for the Company to engage in a transaction pursuant to
a Superior Proposal; provided, however, that the right to terminate this
Agreement pursuant to this Section 10.1(h) shall not be available unless
(i) the Company has complied with all provisions of Section 8.9, including
the notice provisions therein, (ii) the Company has delivered to Purchaser
a written notice of the Company's intent to enter into an agreement to
effect a transaction pursuant to a Superior Proposal, (iii) five business
days have elapsed following delivery to Purchaser of such written notice by
the Company, (iv) during such five business day period the Company has
reasonably cooperated with Purchaser, including informing Purchaser of the
terms and conditions of the Acquisition Proposal and identifying the person
making the Acquisition Proposal, with the intent of enabling Purchaser to
agree to a modification of the terms and conditions of this Agreement so
the transactions contemplated hereby may be effected, and (v) at the end of
such five business day period the Board of Directors continues reasonably
to believe that the Acquisition Proposal constitutes a Superior Proposal;
provided further, however, that no termination shall be effective pursuant
to this Section 10.1(h) unless concurrently with such termination, a
Break-Up Fee is paid in full by the Company in accordance with Section
10.2; or
(i) by the Company, if Purchaser or Merger Sub shall materially
breach any of its representations, warranties or obligations hereunder and
such breach shall not have been cured or waived or Purchaser and Merger Sub
shall not have provided reasonable assurance that such breach will be cured
at least two business days prior to the consummation of the Offer, but only
if such breach, individually or together with all other such breaches, is
reasonably likely to materially and adversely affect Purchaser's or Merger
Sub's ability to consummate the Offer or the Merger.
10.2 Effect of Termination.
(a) If this Agreement is terminated and the Merger is abandoned
pursuant to Section 10.1, this Agreement, except for the provisions of
Sections 1.3(d), 8.4, 10.2 and Article 11, shall terminate, without any
liability (except as set forth below) on the part of any party or its
affiliates, directors, officers or stockholders. Notwithstanding the
foregoing, nothing herein shall relieve any party from liability for any
intentional breach of this Agreement.
(b) The Company shall pay Purchaser the Break-Up Fee in the event
that this Agreement is terminated by Purchaser pursuant to Section 10.1(d)
or by the Company pursuant to Section 10.1(h).
(c) If all of the following events have occurred:
(i) an Acquisition Proposal is commenced, publicly disclosed,
publicly proposed or otherwise communicated to the Company at any
time on or after the date of this Agreement and prior to the
consummation of the Offer and either Purchaser or the Company
terminates this Agreement pursuant to Section 10.1(c)(i) or Section
10.1(c)(iv) or Purchaser terminates this Agreement pursuant to
Sections 10.1(e), (f) or (g); and
(ii) thereafter, within 9 months of the date of termination of
this Agreement, the Company enters into a definitive agreement with
respect to, or consummates, any Acquisition Proposal,
then, the Company shall pay to Purchaser an amount equal to the Break-Up
Fee concurrently with the execution of the relevant definitive agreement.
(d) If this Agreement is terminated by Purchaser pursuant to Section
10.1(f), the Company shall reimburse Purchaser up to a maximum of
$1,000,000 for all expenses incurred by Purchaser in connection with the
negotiation, execution, delivery and performance of this Agreement by
Purchaser and Merger Sub.
(e) If this Agreement is terminated by the Company pursuant to
Section 10.1(i), Purchaser shall reimburse the Company up to a maximum of
$1,000,000 for all expenses incurred by the Company in connection with the
negotiation, execution, delivery and performance of this Agreement by the
Company.
(f) The "Break-Up Fee" shall be $5,650,000, provided that, such
amount will be reduced by any amounts paid by the Company to Purchaser
pursuant to Section 10.2(d) above. In the event that the Break-Up Fee shall
be payable under this Agreement, the Company shall pay the Break-Up Fee to
Purchaser by wire transfer of immediately available funds to an account
designated by Purchaser in accordance with the applicable provision of this
Agreement, and in any event by no later than the next business day
following termination of this Agreement.
10.3 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the boards of
directors of the Company and Purchaser at any time before or after approval
of this Agreement by the stockholders of the Company but, after any such
stockholder approval, no amendment shall be made that decreases the Merger
Consideration or that adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of all of the parties.
10.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the boards of directors
of the Company (subject to Section 1.4) and Purchaser, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party or (c) waive compliance with
any of the agreements or conditions contained herein except, after adoption
of this Agreement by the stockholders of the Company, for any waiver that
has the effect of decreasing the Merger Consideration or that adversely
affects the rights of the Company's stockholders hereunder without approval
of such stockholders. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. No delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party hereto
of any right, power or privilege hereunder operate as a waiver of any other
right, power or privilege hereunder, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or
remedies which the parties hereto may otherwise have at law or in equity.
The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE 11
GENERAL PROVISIONS
11.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
11.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with
proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
c/o Havas Interactive, Inc. 000 Xxxx 00xx Xxxxxx
00000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, Esq. Attention: Xxxxxxx X. Xxxx
Senior Vice President
and General Counsel
With a copy to: With a copy to:
Xxxxxx & Xxxxxxx Xxxxxxx Xxxx Slate
633 West Fifth Street, Suite 0000 Xxxxxxx & Xxxx XXX
Xxx Xxxxxxx, Xxxxxxxxxx 00000 4 Times Square
Facsimile: (000) 000-0000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq. Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the
date so telecommunicated, personally delivered or mailed.
11.3 Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties; provided, however, that either
Purchaser or Merger Sub (or both) may assign its rights hereunder
(including, without limitation, the right to make the Offer or to purchase
shares of Common Stock in the Offer) to a wholly owned Subsidiary of
Purchaser or Merger Sub but nothing shall relieve the assignor from its
obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Sections 8.6 and 8.7, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.4 Entire Agreement. This Agreement, the Disclosure Schedules, the
Purchaser Disclosure Schedules, the Exhibit hereto, the Ancillary Documents
and any other documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto.
11.5 Fees and Expenses. Whether or not the Offer or Merger is
consummated, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
11.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its
rules of conflict of laws. Each of the Company, Purchaser and Merger Sub
hereby irrevocably and unconditionally consents to submit to the
jurisdiction of the federal and state courts located in Los Angeles,
California, or New York, New York, any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto except in such
courts), waives any objection to the laying of venue of any such litigation
in such courts and agrees not to plead or claim in any such court that such
litigation brought therein has been brought in an inconvenient forum.
11.7 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
11.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships
and vice versa. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." As used in this Agreement, (a) the words
"Subsidiary," "affiliate" and "associate" shall have the meanings ascribed
thereto in Rule 12b-2 under the Exchange Act, (b) "business day" means any
day other than Saturday, Sunday or any other day on which banks in the City
of New York are required or permitted to close and (c) "knowledge" means
the actual knowledge of any executive officer of the Company or its
Subsidiaries (except the executive officers of the Company's Subsidiaries
in Hungary, Germany, Sweden and the United Kingdom) or Purchaser, as the
case may be.
11.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
11.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
was otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any federal or state court located in Los Angeles, California, or New York,
New York, this being in addition to any other remedy to which they are
entitled at law or in equity. The prevailing party in any judicial action
shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
11.11 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all, of the parties hereto.
11.12 Obligation of Purchaser. Whenever this Agreement requires
Merger Sub to take any action, such requirement shall be deemed to include
an undertaking on the part of Purchaser to cause Merger Sub to take such
action.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and
year first written above.
PURCHASER:
FLIPSIDE, INC.
By: /s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Chairman
MERGER SUB:
FLIPSIDE ACQUISITION CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Secretary
COMPANY:
UPROAR INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman and Chief
Executive Officer
EXHIBIT A
CONDITIONS OF THE OFFER
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to them in the Agreement and Plan of
Merger, dated as of February 5, 2001 (the "Merger Agreement"), among
Purchaser, Merger Sub and the Company.
Notwithstanding any other term of the Merger Agreement, Merger
Sub shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for
payment or paid for and may terminate or amend the Offer as to such shares
of Common Stock unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer 27,966,590 shares of Common
Stock (collectively, the "Minimum Condition") and (ii) any waiting period
under the HSR Act and any non-United States laws regulating competition,
antitrust, investment or exchange controls applicable to the purchase of
shares of Common Stock pursuant to the Offer shall have expired or been
terminated. Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement, Merger Sub shall not be required to accept for payment
or, subject as aforesaid, to pay for any shares of Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend
the Offer if at any time on or after the date of the Merger Agreement and
prior to the expiration of the Offer any of the following conditions exist
or shall occur and remain in effect:
(a) any United States or state Governmental Entity shall have
enacted, issued, promulgated, enforced, instituted or entered any
statute, rule, regulation, executive order, decree, injunction,
action, application or claim or other order that is in effect or
pending (a "Claim"), (i) challenging or prohibiting the acquisition
by Purchaser or Merger Sub of the shares of Common Stock pursuant to
the Merger Agreement, including the Offer or the Merger, (ii)
restraining or prohibiting the making or consummation of the Merger
Agreement, including the Offer or the Merger or the performance of
any of the other transactions contemplated by the Merger Agreement,
(iii) seeking to obtain from Purchaser or Merger Sub any damages that
arise out of the transactions contemplated by this Agreement and
could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect if such damages were assessed
against the Company, (iv) restraining or prohibiting, or limiting in
any material respect, the ownership or operation by Purchaser or
Merger Sub of any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole, (v) seeking to compel
Purchaser or Merger Sub to dispose of or forfeit material incidents
of control of all or any material portion of the business or assets
of the Company or any of its Subsidiaries, (vi) imposing limitations
on the ability of Purchaser, Merger Sub or any other Subsidiary of
Purchaser effectively to exercise full rights of ownership of the
shares of Common Stock, including, without limitation, the right to
vote any shares of Common Stock acquired or owned by Purchaser or
Merger Sub on all matters properly presented to the Company's
stockholders, or (vii) seeking to require divestiture by Merger Sub
or Purchaser of any shares of Common Stock; provided, however, that
in order to invoke this condition, the Purchaser and Merger Sub shall
have used commercially reasonable efforts to prevent such Claim or
ameliorate the effects thereof; and provided further, that, if the
Claim is a temporary restraining order or preliminary injunction of a
court of competent jurisdiction, the Purchaser may not, by virtue of
this condition alone, amend or terminate the Offer prior to the
expiration of the initial period of the Offer, but may only, prior to
such date extend the Offer and thereby postpone acceptance for
payment or purchase of shares of Common Stock; or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, promulgated, entered, enforced or deemed
applicable to the Offer, the Merger or the Merger Agreement, or any
other action shall have been taken by any government, Governmental
Entity or court, domestic or foreign, other than the routine
application to the Offer or the Merger of waiting periods under the
HSR Act or any non-United States laws regulating competition,
antitrust, investment or exchange controls, that has, or has a
substantial likelihood of resulting in, any of the consequences
referred to in paragraph (a) above; or
(c)(i) the representations and warranties made by the Company
in the Merger Agreement shall not be true and correct as of the date
of consummation of the Offer as though made on and as of that date
(other than representations and warranties made as of a specified
date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such specified
date) except for any breach or breaches that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect or (ii) the Company shall have breached or failed to
comply in any material respect with any of its obligations, covenants
or agreements under the Merger Agreement (other than those
obligations, covenants or agreements under Section 5.2(e), with
respect to which the Company shall have performed in all respects)
and, with respect to any such failure that can be remedied, the
failure is not remedied within 10 business days after Purchaser has
furnished the Company with written notice of such failure; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, any other national securities exchange or the Nasdaq
National Market which materially and adversely affects the extension
of credit in the United States, (ii) the declaration of a banking
moratorium or any mandatory suspension of payments in respect of
banks in the United States which materially and adversely affects the
extension of credit in the United States, (iii) a change in general
financial bank or capital market conditions which materially and
adversely affects the ability of financial institutions in the United
States to extend credit or syndicate loans, or (iv) in the case of
any of the foregoing existing on the date of the Agreement, a
material acceleration or worsening thereof; or
(e) the Company's Board of Directors shall have withdrawn or
modified in a manner adverse to Purchaser or Merger Sub (including by
amendment of the Schedule 14D-9) its approval of the Merger Agreement
and the transactions contemplated thereby, or its recommendation that
the holders of the shares of Common Stock accept the Offer and tender
all of their shares of Common Stock to Merger Sub and approve the
Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger, or shall have approved or recommended any
Acquisition Proposal or Superior Proposal; or
(f) the Company shall not have terminated the accrual of
benefits and amended the Aetna 401(k) Plan to preclude any
contributions to such plan in respect of periods following the
expiration of the Offer.
(g) the Merger Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Purchaser
and Merger Sub and may be asserted by Purchaser and Merger Sub regardless
of the circumstances (including any action or inaction by Purchaser) giving
rise to any such condition and, except for the Minimum Condition, may be
waived by Purchaser or Merger Sub, in whole or in part, at any time and
from time to time, in the sole discretion of Purchaser. The failure by
Purchaser or Merger Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of such right
with respect to any particular facts or circumstances shall not be deemed a
waiver with respect to any other facts or circumstances, and each such
right will be deemed an ongoing right which may be asserted at any time and
from time to time.
Should the Offer expire or be terminated without the purchase
of Common Stock thereunder, all tendered shares of Common Stock not
theretofore accepted for payment shall forthwith be returned by the Paying
Agent to the tendering stockholders.
