AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
DOUBLECLICK INC.,
ATLANTA MERGER CORP.
and
ABACUS DIRECT CORPORATION
Dated as of June 13, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................2
SECTION 1.01 Certain Defined Terms....................................2
ARTICLE II THE MERGER..........................................................6
SECTION 2.01 The Merger..............................................6
SECTION 2.02 Closing.................................................6
SECTION 2.03 Effective Time..........................................6
SECTION 2.04 Effect of the Merger....................................6
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation.......................7
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.................7
SECTION 3.01 Conversion of Shares....................................7
SECTION 3.02 Exchange of Shares Other than Treasury Shares...........8
SECTION 3.03 Stock Transfer Books...................................10
SECTION 3.04 No Fractional Share Certificates.......................10
SECTION 3.05 Options to Purchase Company Common Stock...............11
SECTION 3.06 Unvested Stock.........................................11
SECTION 3.07 Certain Adjustments....................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY..........................12
SECTION 4.01 Organization and Qualification; Subsidiaries...........12
SECTION 4.02 Certificate of Incorporation and Bylaws................13
SECTION 4.03 Capitalization.........................................13
SECTION 4.04 Authority Relative to This Agreement...................14
SECTION 4.05 No Conflict; Required Filings and Consents.............14
SECTION 4.06 Permits; Compliance with Laws..........................15
SECTION 4.07 SEC Filings; Financial Statements......................15
SECTION 4.08 Absence of Certain Changes or Events...................16
SECTION 4.09 Employee Benefit Plans; Labor Matters..................17
SECTION 4.10 Pooling; Certain Tax Matters...........................20
SECTION 4.11 Contracts..............................................20
SECTION 4.12 Litigation.............................................20
SECTION 4.13 Environmental Matters..................................20
SECTION 4.14 Intellectual Property..................................21
SECTION 4.15 Taxes..................................................24
SECTION 4.16 Insurance..............................................25
SECTION 4.17 Properties.............................................25
SECTION 4.18 Affiliates.............................................26
i.
Page
----
SECTION 4.19 Opinion of Financial Advisor...........................26
SECTION 4.20 Brokers................................................26
SECTION 4.21 Certain Business Practices.............................26
SECTION 4.22 Section 203 of the DGCL Not Applicable.................26
SECTION 4.23 Business Activity Restriction..........................27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT............................27
SECTION 5.01 Organization and Qualification; Subsidiaries...........27
SECTION 5.02 Certificate of Incorporation and Bylaws................28
SECTION 5.03 Capitalization.........................................28
SECTION 5.04 Authority Relative to this Agreement...................28
SECTION 5.05 No Conflict; Required Filings and Consents.............29
SECTION 5.06 SEC Filings; Financial Statements......................29
SECTION 5.07 Pooling; Certain Tax Matters...........................30
SECTION 5.08 Opinion of Financial Advisor...........................30
SECTION 5.09 Brokers................................................30
SECTION 5.10 Affiliates.............................................31
SECTION 5.11 No Parent Material Adverse Effect......................31
ARTICLE VI COVENANTS..........................................................31
SECTION 6.01 Conduct of Business by Company Pending the Closing.....31
SECTION 6.02 Notices of Certain Events..............................33
SECTION 6.03 Access to Information; Confidentiality.................34
SECTION 6.04 No Solicitation of Transactions........................34
SECTION 6.05 Tax-Free Transaction; Pooling..........................35
SECTION 6.06 Control of Operations..................................35
SECTION 6.07 Further Action; Consents; Filings......................36
SECTION 6.08 Additional Reports.....................................36
SECTION 6.09 Tax Information........................................37
SECTION 6.10 Conduct of Business by Parent..........................37
ARTICLE VII ADDITIONAL AGREEMENTS.............................................37
SECTION 7.01 Registration Statement; Joint Proxy Statement..........37
SECTION 7.02 Stockholders' Meetings.................................39
SECTION 7.03 Affiliates.............................................40
SECTION 7.04 Directors' and Officers' Indemnification and Insurance.40
SECTION 7.05 No Shelf Registration..................................41
SECTION 7.06 Public Announcements...................................41
SECTION 7.07 NNM Listing............................................42
SECTION 7.08 Blue Sky...............................................42
SECTION 7.09 Employee Benefit Matters...............................42
ii
Page
----
ARTICLE VIII CONDITIONS TO THE MERGER.........................................42
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger..................................42
SECTION 8.02 Conditions to the Obligations of Company...............43
SECTION 8.03 Conditions to the Obligations of Parent................44
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..................................45
SECTION 9.01 Termination............................................45
SECTION 9.02 Effect of Termination..................................46
SECTION 9.03 Amendment..............................................46
SECTION 9.04 Waiver.................................................47
SECTION 9.05 Termination Fee; Expenses..............................47
ARTICLE X GENERAL PROVISIONS..................................................48
SECTION 10.01 Non-Survival of Representations and Warranties.........48
SECTION 10.02 Notices................................................49
SECTION 10.03 Severability...........................................50
SECTION 10.04 Assignment; Binding Effect; Benefit....................50
SECTION 10.05 Incorporation of Exhibits..............................51
SECTION 10.06 Governing Law..........................................51
SECTION 10.07 Waiver of Jury Trial...................................51
SECTION 10.08 Headings; Interpretation...............................51
SECTION 10.09 Counterparts...........................................52
SECTION 10.10 Entire Agreement.......................................52
ANNEXES
ANNEX A Form of Stockholder Agreement
ANNEX B Form of Option Agreement
ANNEX C Form of Company Affiliate Agreement
ANNEX D Form of Parent Affiliate Agreement
ANNEX E Form of Employment Agreement
iii
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of June
13, 1999 (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), among DOUBLECLICK INC., a Delaware corporation ("Parent"), ABACUS
DIRECT CORPORATION, a Delaware corporation ("Company"), and ATLANTA MERGER
CORP., a Delaware corporation and a direct wholly owned subsidiary of Parent
("Merger Sub"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have
determined that it is advisable and in the best interests of their respective
companies and stockholders to enter into a business combination by means of the
merger of Merger Sub with and into Company (the "Merger") and have approved and
adopted this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of
Company have entered into a stockholder agreement (each, a "Stockholder
Agreement") in the form attached hereto as Annex A;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Company has entered into an
option agreement (the "Option Agreement") in the form attached hereto as Annex
B;
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Parent will acquire all of the common stock of Company
through the merger of Merger Sub with and into Company;
WHEREAS, for financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests" under United States
generally accepted accounting principles ("U. S. GAAP") and the accounting
standards of the United States Securities and Exchange Commission (the "SEC");
and
WHEREAS, for United States Federal income tax purposes, it is
intended that the Merger shall qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (together with
the rules and regulations promulgated thereunder, the "Code"), and that this
Agreement shall be, and hereby is, adopted as a plan of reorganization for
purposes of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
2
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms
Unless the context otherwise requires, the following terms, when
used in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Affiliate" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"Blue Sky Laws" shall mean state securities or "blue sky" laws.
"Business day" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"Company Disclosure Schedule" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"Company Intellectual Property" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress, Internet
domain names, copyrights (whether or not registered) and any renewal rights
therefor, sui generis database rights, statistical models, technology,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, databases, technical
documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that were material to
Company's business or are currently used in Company's business in any product,
technology or process (i) currently being or formerly manufactured, published or
marketed by Company or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by Company.
"Company Material Adverse Effect" shall mean any change in or effect
on the business of Company and the Company Subsidiaries that, individually or in
the aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Company and the
Company Subsidiaries, taken as a whole, except to the extent that any such
change in or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which Company operates (provided
that such changes do not affect Company in a materially disproportionate
manner), (ii) changes in trading prices for the Company's capital
3
stock, and (iii) any litigation or loss of customers or revenues that Company
successfully bears the burden of proving arose from Company entering into this
Agreement.
"Company Stock Plans" shall mean Company's 1999 Stock Incentive
Plan, Amended and Restated 1996 Stock Incentive Plan, and Amended and Restated
1989 Stock Option Plan.
"Competing Transaction" shall mean any of the following involving
Company or Parent, as the case may be (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 20% or more of the assets of such party and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions;
(iii) any license, joint venture or other arrangement pursuant
to which Company provides or permits access to all or a majority of its
data (on a value basis) to a third party, a primary purpose of which party
is targeted Internet, Web, e-mail or interactive television advertising;
(iv) any tender offer or exchange offer for 20% or more of the
outstanding voting securities of such party or the filing of a
registration statement under the Securities Act in connection therewith;
(v) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed that
beneficially owns or has the right to acquire beneficial ownership of, 20%
or more of the outstanding voting securities of such party;
(vi) any solicitation in opposition to the approval of this
Agreement by the stockholders of such party; or
(vii) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
For the purpose of Section 9.05(b)(ii)(B) and Section 9.05(c), each reference to
"20%" shall be deemed to be "30%."
"Confidentiality Agreements" shall mean the confidentiality
agreements, each dated April 21, 1999, between Parent and Company.
"$" shall mean United States Dollars.
4
"Environmental Law" shall mean any Law and any enforceable judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material, as in effect as
of the date hereof.
"Environmental Permit" shall mean any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Expenses" shall mean, with respect to any party hereto, all
documented out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and the
consummation of the Merger, the preparation, printing, filing and mailing of the
Registration Statement and the Joint Proxy Statement, the solicitation of
stockholder approvals, the filing of HSR Act notice, if any, and all other
matters related to the transactions contemplated hereby and the closing of the
Merger.
"Governmental Entity" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"Hazardous Material" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical,
material or substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"IRS" shall mean the United States Internal Revenue Service.
5
"Law" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"Parent Disclosure Schedule" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"Parent Material Adverse Effect" shall mean any change in or effect
on the business of Parent and the Parent Subsidiaries that, individually or in
the aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent that any such change
in or effect results from (i) changes in general economic conditions or changes
affecting the industry generally in which Parent operates (provided that such
changes do not affect Parent in a materially disproportionate manner) and (ii)
any litigation or loss of customers or revenues that Parent successfully bears
the burden of proving arose from Parent entering into this Agreement; provided,
however, that in no event shall a decrease in the trading price of Parent Common
Stock or litigation relating thereto be considered a Parent Material Adverse
Effect.
"Parent Stock Plans" shall mean Parent's 1999 Non-Officer Stock
Option/Stock Issuance Plan, 1997 Stock Incentive Plan, as amended, and 1996
Stock Option Plan.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"subsidiary" shall mean, with respect to any person, any
corporation, partnership, limited partnership, limited liability company,
limited liability partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary of such
person) owns, directly or indirectly, a majority of the stock or other equity
interests, the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
"Tax" shall mean (i) any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges; (ii) any liability for the payment of any amounts of the type
described in (i)
6
as a result of being a member of an affiliated, combined, consolidated or
unitary group for any taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any Person or as a result of an express or
implied obligation to indemnify any person.
"Tax Return" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time (as defined in
Section 2.03), Merger Sub shall be merged with and into Company. As a result of
the Merger, the separate corporate existence of Merger Sub shall cease and
Company shall continue as the surviving corporation of the Merger as a wholly
owned subsidiary of Parent (the "Surviving Corporation").
SECTION 2.02 Closing
Unless this Agreement shall have been terminated and the Merger
herein contemplated shall have been abandoned pursuant to Section 9.01 and
subject to the satisfaction or waiver of the conditions set forth in Article
VIII, the consummation of the Merger shall take place as promptly as practicable
(and in any event within three business days) after satisfaction or waiver of
the conditions set forth in Article VIII, at a closing (the "Closing") to be
held at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, unless another date, time or place is agreed to by Parent and
Company.
SECTION 2.03 Effective Time
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware in such form as
required by, and executed in accordance with the relevant provisions of, the
DGCL (the date and time of such filing, or such later date and time as may be
set forth therein, being the "Effective Time").
SECTION 2.04 Effect of the Merger
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and Merger Sub shall vest in
Company as the Surviving Corporation, and all debts,
7
liabilities and duties of Company and Merger Sub shall become the debts,
liabilities and duties of Company as the Surviving Corporation.
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation
Unless otherwise agreed by Parent and Company before the Effective
Time, at the Effective Time:
(a) the Certificate of Incorporation and the Bylaws of Merger Sub in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation, until thereafter
amended as provided by Law and such Certificate of Incorporation or Bylaws;
provided, however, that Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is Abacus Direct Corporation" and the bylaws shall be amended to
reflect such name change;
(b) the officers of Merger Sub immediately prior to the Effective
Time shall serve in their respective offices of the Surviving Corporation from
and after the Effective Time, in each case until their successors are elected or
appointed and qualified or until their resignation or removal; and
(c) the directors of Merger Sub immediately prior to the Effective
Time shall serve as the directors of the Surviving Corporation from and after
the Effective Time, in each case until their successors are elected or appointed
and qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares
At the Effective Time, by virtue of the Merger, and without any
action on the part of Parent, Merger Sub, Company or the holders of any of the
following securities:
(a) each share of Common Stock, $.001 par value, of Company
("Company Common Stock") issued and outstanding immediately before the Effective
Time (excluding those held in the treasury of Company and those owned by any
wholly owned subsidiary of Company) and all rights in respect thereof, shall,
forthwith cease to exist and be converted into and become exchangeable for 1.05
shares (the "Exchange Ratio") of common stock, $.001 par value, of Parent
("Parent Common Stock");
(b) each share of Company Common Stock held in the treasury of
Company or owned by any wholly owned subsidiary of Company immediately prior to
the Effective Time shall be canceled and retired and no shares of stock or other
securities of Parent, the Surviving
8
Corporation or any other corporation shall be issuable, and no payment or other
consideration shall be made, with respect thereto; and
(c) each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
SECTION 3.02 Exchange of Shares Other than Treasury Shares
(a) Exchange Agent. Prior to the Effective Time, Parent shall enter
into an agreement with a bank or trust company to act as exchange agent for the
Merger (the "Exchange Agent") as may be designated by Parent and such agreement
and the Exchange Agent shall be reasonably acceptable to Company.
(b) Parent to Provide Common Stock and Cash. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holder of Company Common Stock: (i) Certificates of Parent Common
Stock ("Parent Certificates") representing the number of whole shares of Parent
Common Stock issuable pursuant to Section 3.01(a) in exchange for shares of
Company Common Stock outstanding immediately prior to the Effective Time; (ii)
sufficient funds to permit payment in lieu of fractional shares pursuant to
Section 3.04 and (iii) any dividends or distributions to which holders of shares
of Company Common Stock may be entitled pursuant to Section 3.07.
(c) Exchange Procedures. The Exchange Agent shall mail to each
holder of record of certificates of Company Common Stock ("Company
Certificates"), whose shares were converted into the right to receive shares of
Parent Common Stock (and cash in lieu of fractional shares pursuant to Section
3.04) promptly after the Effective Time (and in any event no later than three
business days after the Effective Time): (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon receipt of the Company Certificates
by the Exchange Agent, and shall be in such form and have such other provisions
as Parent may reasonably specify); and (ii) instructions for use in effecting
the surrender of the Company Certificates in exchange for Parent Certificates
(and cash in lieu of fractional shares). Upon surrender of a Company Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may be reasonably required by
the Exchange Agent, the holder of such Company Certificate shall be entitled to
receive in exchange therefor a Parent Certificate representing the number of
whole shares of Parent Common Stock that such holder has the right to receive
pursuant to this Article III and payment of cash in lieu of fractional shares
which such holder has the right to receive pursuant to Section 3.04, and the
Company Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Company Certificate that, prior to the Effective
Time, represented shares of Company Common Stock will be deemed from and after
the Effective Time, for all corporate purposes other than the payment of
dividends and distributions, to evidence the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an
9
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 3.04. Notwithstanding any other provision of this Agreement, no
interest will be paid or will accrue on any cash payable to holders of Company
Certificates pursuant to the provisions of this Article III.
(d) Lost, Stolen or Destroyed Company Certificates. In the event any
Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, a Parent Certificate representing such shares of Parent Common Stock
(and cash in lieu of fractional shares) as may be required pursuant to this
Article III; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Company Certificates to indemnify Parent against any claim
that may be made against Parent, the Surviving Corporation or the Exchange Agent
with respect to the Company Certificates alleged to have been lost, stolen or
destroyed.
(e) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of Parent Common Stock represented
thereby until the holder of record of such Company Certificate shall surrender
such Company Certificate. Subject to the effect of applicable escheat or similar
laws, following surrender of any such Company Certificate, there shall be paid
to the record holder of the Parent Certificates issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable (but for the provisions of this Section 3.02(e)) with
respect to such shares of Parent Common Stock.
(f) Transfer of Ownership. If any Parent Certificate is to be issued
in a name other than that in which the Company Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance thereof
that the Company Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a Parent Certificate for
shares of Parent Common Stock in any name other than that of the registered
holder of the Company Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(g) Termination of Exchange Agent Funding. Any portion of funds
(including any interest earned thereon) or Parent Certificates held by the
Exchange Agent which have not been delivered to holders of Company Certificates
pursuant to this Article III within six months after the Effective Time shall
promptly be paid or delivered, as appropriate, to Parent, and thereafter holders
of Company Certificates who have not theretofore complied with the exchange
procedures outlined in and contemplated by this Section 3.02 shall thereafter
look only to Parent (subject to abandoned property, escheat and similar laws)
only as general creditors thereof for their claim for shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent
10
Common Stock and any dividends or distributions (with a record date after the
Effective Time) with respect to Parent Common Stock to which they are entitled.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person in respect of any shares of Parent Common
Stock or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
SECTION 3.03 Stock Transfer Books
(a) At the Effective Time, the stock transfer books of Company shall
each be closed, and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of any such stock
transfer books. In the event of a transfer of ownership of shares of Company
Common Stock that is not registered in the stock transfer records of Company at
the Effective Time, a certificate or certificates representing the number of
full shares of Parent Common Stock into which such shares of Company Common
Stock shall have been converted shall be issued to the transferee together with
a cash payment in lieu of fractional shares, if any, in accordance with Section
3.04 hereof, and a cash payment in the amount of dividends, if any, in
accordance with Section 3.02(e) hereof, if the certificate or certificates
representing such shares of Company Common Stock is or are surrendered as
provided in Section 3.02(c) hereof, accompanied by all documents required to
evidence and effect such transfer and by evidence of payment of any applicable
stock transfer tax.
(b) Notwithstanding anything to the contrary herein, certificates
surrendered for exchange by any person constituting an affiliate of Company
shall not be exchanged until Parent shall have received from such person an
affiliate letter as provided in Section 7.03.
SECTION 3.04 No Fractional Share Certificates
No scrip or fractional share Parent Certificate shall be issued upon
the surrender for exchange of Company Certificates, and an outstanding
fractional share interest shall not entitle the owner thereof to vote, to
receive dividends or to any rights of a stockholder of Parent or of Surviving
Corporation with respect to such fractional share interest. As promptly as
practicable following the Effective Time, Parent shall deposit with the Exchange
Agent an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (i) the fractional share interest to which such holder would
otherwise be entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (ii) the closing price for a
share of Parent Common Stock on the Nasdaq National Market (the "NNM") on the
last business day prior to the Effective Time. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts, net of any required withholding Taxes, to
such holders of Company Common Stock, subject to and in accordance with the
terms of Section 3.02 hereof.
11
SECTION 3.05 Options to Purchase Company Common Stock
At the Effective Time, each option or warrant granted by Company to
purchase shares of Company Common Stock ("Company Stock Options"), which is
outstanding and unexercised immediately prior to the Effective Time, and the
Company Stock Plans shall be assumed by Parent, and the Company Stock Options
shall be converted into an option or warrant, as the case may be, to purchase
shares of Parent Common Stock in such number and at such exercise price as
provided below and otherwise having the same terms and conditions as in effect
immediately prior to the Effective Time (except to the extent that such terms,
conditions and restrictions may be altered in accordance with their terms as a
result of the Merger contemplated hereby and except that all references in each
such Company Stock Option to Company shall be deemed to refer to Parent):
(a) the number of shares of Parent Common Stock to be subject to the
new option or warrant, as the case may be, shall be equal to the product of (x)
the number of shares of Company Common Stock subject to the original Company
Stock Option immediately prior to the Effective Time and (y) the Exchange Ratio;
(b) the exercise price per share of Parent Common Stock under the
new option or warrant shall be equal to (x) the exercise price per share of
Company Common Stock in effect under the original Company Stock Option
immediately prior to the Effective Time divided by (y) the Exchange Ratio; and
(c) in effecting such assumption and conversion, the aggregate
number of shares of Parent Common Stock to be subject to each assumed Company
Stock Option will be rounded down, if necessary, to the next whole share and the
aggregate exercise price shall be rounded up, if necessary, to the next whole
cent (for the purpose of providing that the intrinsic value of such Company
Stock Options shall be preserved at the Effective Time).
The adjustments provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code so as to retain their character as incentive stock options. The assumption
of the outstanding Company Stock Options in the Merger and their conversion into
options for Parent Common Stock will not result in any accelerated vesting of
those options or the shares purchasable thereunder other than as contemplated in
presently existing agreements to which the Company is a party, copies of which
agreements have been provided to Parent, and the vesting schedule in effect for
each Company Stock Option immediately prior to the Effective Time shall remain
in full force after the assumption thereof by Parent.
SECTION 3.06 Unvested Stock
At the Effective Time, any unvested shares of Company Common Stock
awarded to employees, directors or consultants pursuant to any of the Company's
plans or arrangements and outstanding immediately prior to the Effective Time
shall be converted into unvested shares of Parent Common Stock in accordance
with the Exchange Ratio and shall remain subject to the
12
same terms, restrictions and vesting schedule as in effect immediately prior to
the Effective Time, except to the extent by their terms such unvested shares of
Company Common Stock vest at the Effective Time and copies of the relevant
agreements governing such vesting have been provided to Parent. All outstanding
rights which Company may hold immediately prior to the Effective Time to
repurchase unvested shares of Company Common Stock shall be assigned to the
Parent in the Merger and shall thereafter be exercisable by Parent upon the same
terms and conditions in effect immediately prior to the Effective Time, except
that the shares purchasable pursuant to such rights and the purchase price
payable per share shall be adjusted to reflect the Exchange Ratio.
SECTION 3.07 Certain Adjustments
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or the number of shares of Company Common Stock on a
fully diluted basis is in excess of that specified in Section 4.03 and disclosed
in Section 4.03 of the Company Disclosure Schedule (regardless of whether such
excess is a result of an additional issuance of capital stock or a correction to
such Sections), then the Exchange Ratio established pursuant to the provisions
of Section 3.01 shall be adjusted accordingly to provide to each of Parent, on
the one hand, and the holders of Company Common Stock in the aggregate, on the
other hand, the same economic effect as contemplated by this Agreement prior to
such reclassification, recapitalization, split-up, combination, exchange,
dividend or increase.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the Company Disclosure Schedule,
all such exceptions to be referenced to a specific representation set forth in
this Article IV or to otherwise be clearly applicable to representations hereof
not specifically referenced, that:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Company and each directly and indirectly owned subsidiary of
Company (the "Company Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Company
and each Company Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary.
13
(b) Section 4.01 of the Company Disclosure Schedule sets forth, as
of the date of this Agreement, a true and complete list of each Company
Subsidiary, together with (i) the jurisdiction of incorporation or organization
of each Company Subsidiary and the percentage of each Company Subsidiary's
outstanding capital stock or other equity interests owned by Company or another
Company Subsidiary and (ii) an indication of whether each Company Subsidiary is
a "Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 4.01 of the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity.
SECTION 4.02 Certificate of Incorporation and Bylaws
The copies of Company's certificate of incorporation and bylaws
previously provided to Parent by Company are true, complete and correct copies
thereof. Such certificate of incorporation and bylaws are in full force and
effect. Company is not in violation of any of the provisions of its certificate
of incorporation or bylaws.
SECTION 4.03 Capitalization
The authorized capital stock of Company consists of 25,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock ("Company
Preferred Stock"). As of the date hereof, (i) 9,877,521 shares of Company Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of Company, (iii) no shares of Company Common Stock are held by Company
Subsidiaries, (iv) 2,151,298 shares of Company Common Stock are reserved for
future issuance pursuant to Company Stock Options, of which 1,820,523 and
330,775 shares of Company Common Stock are reserved for future issuance pursuant
to unvested, outstanding and vested, outstanding, unexercised Company Stock
Options, respectively, and (v) no shares of Company Preferred Stock are
outstanding. The name of each holder of a Company Stock Option, the grant date
of each Company Stock Option, and the number of shares of Company Common Stock
for which each Company Stock Option is exercisable and the exercise price of
each Company Stock Option are set forth in Section 4.03 of the Company
Disclosure Schedule. Except for shares of Company Common Stock issuable pursuant
to Company Stock Plans, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating Company or
any Company Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, Company or any Company Subsidiary. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance prior to the
Effective Time on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding contractual obligations of Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of any Company Subsidiary. Each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by Company or another Company Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
14
agreements, limitations on Company's or such other Company Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. There are no
material outstanding contractual obligations of Company or any Company
Subsidiary to provide funds to, or make any material investment (in the form of
a loan, capital contribution or otherwise) in, any Company Subsidiary or any
other person.
SECTION 4.04 Authority Relative to This Agreement
Company has all necessary corporate power and authority to execute
and deliver this Agreement and the Option Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Option
Agreement by Company and the consummation by Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement and the Option Agreement or to
consummate the transactions contemplated hereby and thereby (other than, with
respect to the Merger, the approval of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote with
respect thereto at the Company Stockholders' Meeting (as defined in Section
7.01), and the filing and recordation of the Certificate of Merger as required
by the DGCL). This Agreement and the Option Agreement have been duly executed
and delivered by Company and, assuming the due authorization, execution and
delivery by the other parties hereto and thereto, constitute legal, valid and
binding obligations of Company, enforceable against Company in accordance with
their terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of remedies (whether in a proceeding at law or
in equity).
SECTION 4.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement and the Option
Agreement by Company do not, and the performance by Company of its obligations
hereunder and thereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the certificate of incorporation or
bylaws of Company or any equivalent organizational documents of any Company
Subsidiary, (ii) assuming that all filings and notifications described in
Section 4.05(b) have been made, conflict with or violate any Law applicable to
Company or any Company Subsidiary or by which any property or asset of Company
or any Company Subsidiary is bound or affected or (iii) result in any material
breach of or constitute a material default (or an event which with the giving of
notice or lapse of time or both could reasonably be expected to become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any material property or asset of Company or any Company
Subsidiary pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) Except as may arise solely by virtue of the nature of Parent's
business, the execution and delivery of this Agreement by Company do not, and
the performance by Company
15
of its obligations hereunder and the consummation of the Merger will not,
require any consent, approval, authorization or permit of, or filing by Company
with or notification by Company to, any Governmental Entity, except pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the rules and regulations of the NNM, state takeover laws, the premerger
notification requirements of the HSR Act, and the filing and recordation of the
Certificate of Merger as required by the DGCL.
SECTION 4.06 Permits; Compliance with Laws
Company and the Company Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders of
any Governmental Entity materially necessary for Company or any Company
Subsidiary to own, lease and operate its properties or to offer or perform its
services or to develop, produce, store, distribute and market its products or
otherwise to carry on its business as it is now being conducted (collectively,
the "Company Permits"), and, as of the date of this Agreement, none of the
Company Permits has been suspended or cancelled nor is any such suspension or
cancellation pending or, to the knowledge of Company, threatened. Neither
Company nor any Company Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to Company or any Company Subsidiary or by
which any property or asset of Company or any Company Subsidiary is bound or
affected or (ii) any material Company Permits. Section 4.06 of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of Company,
threatened against Company or any Company Subsidiary that could reasonably be
expected to result in the suspension or cancellation of any other material
Company Permit. Since January 1, 1997, neither Company nor any Company
Subsidiary has received from any Governmental Entity any written notification
with respect to possible material conflicts, defaults or violations of Laws.
SECTION 4.07 SEC Filings; Financial Statements
(a) Company has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NNM since November
1, 1996 (collectively, together with any such forms, reports, statements and
documents Company may file subsequent to the date hereof until the Closing, the
"Company Reports") and (B) with any other Governmental Entities. Each Company
Report (i) was prepared in accordance with the requirements of the Securities
Act, the Exchange Act or the rules and regulations of the NNM, as the case may
be, in substantially all respects and (ii) did not at the time it was filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each form, report, statement and document referred to in clause (B)
of this paragraph was prepared in all material respects in accordance with the
requirements of applicable Law. No Company Subsidiary is subject to the periodic
reporting requirements of the Exchange Act or required to file any form, report
or other document with the SEC, the NNM, any other stock exchange or any other
comparable Governmental Entity.
16
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company Reports was prepared in
accordance with U.S. GAAP (except as may be permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of Company and the
consolidated Company Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring
immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as reported
in the Company Reports, including the notes thereto, none of Company or any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for immaterial liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December 31,
1998.
SECTION 4.08 Absence of Certain Changes or Events
Since December 31, 1998, Company and the Company Subsidiaries have
conducted their businesses in all material respects only in the ordinary course
consistent with past practice and, since such date, there has not been (i) any
material changes in or effect on the business, assets, liabilities, financial
condition or results of operations of Company or the Company Subsidiaries, (ii)
any event (other than events within the scope of Section 4.10) that could
reasonably be expected to prevent or materially delay the performance of
Company's obligations pursuant to this Agreement and the consummation of the
Merger by Company, (iii) any material change by Company in its accounting
methods, principles or practices, (iv) any declaration, setting aside or payment
of any dividend or distribution in respect of the shares of Company Common Stock
or any redemption, purchase or other acquisition of any of Company's securities,
(v) except for changes in the ordinary course of business consistent with past
practice that only affect non-officer employees of the Company, any increase in
the compensation or benefits or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any employees, officers,
consultants or directors of Company or any Company Subsidiary, (vi) any issuance
or sale of any stock, notes, bonds or other securities other than pursuant to
the exercise of outstanding securities, or entering into any agreement with
respect thereto, or the issuances of options under the Company Stock Plans,
(vii) any amendment to the Company's certificate of incorporation or bylaws,
(viii) other than in the ordinary course of business consistent with past
practice, any (x) purchase, sale, assignment or transfer of any material assets,
(y) mortgage, pledge or existence of any lien, encumbrance or charge on any
material assets or properties, tangible or intangible except for liens for Taxes
not yet delinquent, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities
17
and obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting the business or properties of
Company or any Company Subsidiary, or (xi) any entering into any transaction of
a material nature other than in the ordinary course of business, consistent with
past practice.
SECTION 4.09 Employee Benefit Plans; Labor Matters
(a) The Company Disclosure Schedule lists each employee benefit
fund, plan, program, arrangement and contract (including, without limitation,
any "pension" plan, fund or program, as defined in Section 3(2) of ERISA, and
any "employee benefit plan", as defined in Section 3(3) of ERISA and any plan,
program, arrangement or contract providing for severance; medical, dental or
vision benefits; life insurance or death benefits; disability benefits, sick pay
or other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits) ("Benefit Plans"), maintained,
sponsored or contributed to or required to be contributed to by Company or any
Company Subsidiary (the "Company Benefit Plans"). With respect to each Company
Benefit Plan, Company has delivered or made available to Parent a true, complete
and correct copy of (i) such Company Benefit Plan (of, if not written, a written
summary of its material terms) and the most recent summary plan description, if
any, related to such Company Benefit Plan, (ii) each trust agreement or other
funding arrangement relating to such Company Benefit Plan, (iii) the most recent
annual report (Form 5500) filed with the IRS with respect to such Company
Benefit Plan (and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Company Benefit Plan), (iv) the
most recent actuarial report or financial statement relating to such Company
Benefit Plan and (v) the most recent determination letter, if any, issued by the
IRS with respect to such Company Benefit Plan and any pending request for such a
determination letter. Neither Company nor any Company Subsidiary nor, to the
knowledge of Company, any other person or entity, has any express commitment,
whether legally enforceable or not, to modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or termination
required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable laws, including ERISA
and the Code, and contributions required to be made under the terms of any of
the Company Benefit Plans as of the date of this Agreement have been timely made
or, if not yet due, have been properly reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company Reports prior to
the date of this Agreement. With respect to the Company Benefit Plans, to
Company's knowledge, no event has occurred and, to the knowledge of Company,
there exists no condition or set of circumstances in connection with which
Company or any Company Subsidiary could be subject to any material liability
(other than for routine benefit liabilities) under the terms of, or with respect
to, such Company Benefit Plans, ERISA, the Code or any other applicable Law.
18
(c) Company on behalf of itself and each Company ERISA Affiliate (as
defined below) hereby represents that: (i) each Company Benefit Plan which is
intended to qualify under Section 401(a), Section 401(k), Section 401(m) or
Section 4975(e)(6) of the Code has received a favorable determination letter
from the IRS as to its qualified status, and each trust established in
connection with any Company which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received an opinion letter from
the IRS that it is so exempt or application for same is pending that is timely
filed with the IRS, and to Company's knowledge no fact or event has occurred
that is reasonably likely to materially adversely affect the qualified status of
any such Company Benefit Plan or the exempt status of any such trust; (ii) to
Company's reasonable knowledge there has been no prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code and other than a
transaction that is exempt under a statutory or administrative exemption) with
respect to any Company Plan that could result in liability to the Company or a
Company Subsidiary and (iii) each Company Benefit Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without liability (other than (A) liability for ordinary
administrative expenses typically incurred in a termination event or (B) if the
Company Benefit Plan is pension benefit plan subject to Part 2 of Title I of
ERISA, liability for the accrued benefits as of the date of such termination (if
and to the extent required by ERISA)) to the extent that either there are
sufficient assets set aside in a trust or insurance contract to satisfy such
liability or such liability is reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the Company Reports prior to the
date of this Agreement. No suit, administrative proceeding, action or other
litigation has been brought, or to the knowledge of Company is threatened,
against or with respect to any such Company Benefit Plan, including any audit or
inquiry by the Internal Revenue Service or United States Department of Labor
(other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title IV of
ERISA and neither the Company, any Company Subsidiary nor any other trade or
business (whether or not incorporated) that is under "common control" with
Company or a Company Subsidiary (within the meaning of ERISA Section 4001) or
with respect to which Company or any Company Subsidiary could otherwise incur
liability under Title IV of ERISA (a "Company ERISA Affiliate") has sponsored or
contributed to or been required to contribute to a multiemployer pension plan or
other pension plan subject to Title IV of ERISA. No material liability under
Title IV of ERISA has been incurred by Company, any Company Subsidiary or any
Company ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to Company or any Company Subsidiary of
incurring or being subject (whether primarily, jointly or secondarily) to a
material liability thereunder. None of the assets of Company or any Company
Subsidiary is, or may reasonably be expected to become, the subject of any lien
arising under ERISA or Section 412(n) of the Code.
(e) With respect to each Benefit Plan required to be set forth in
the Disclosure Schedule that is subject to Title IV or Part 3 of Title I of
ERISA or Section 412 of the Code, (i) no reportable event (within the meaning of
Section 4043 of ERISA, other than an event that is not required to be reported
before or within 30 days of such event) has occurred or is expected to occur,
(ii) there was not an accumulated funding deficiency (within the meaning of
Section 302
19
of ERISA or Section 412 of the Code), whether or not waived, as of the most
recently ended plan year of such Benefit Plan; and (iii) there is no "unfunded
benefit liability" (within the meaning of Section 4001(a)(18) of ERISA).
(f) Company has made available to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
agreements of Company and each Company Subsidiary, (ii) all severance plans,
agreements, programs and policies of Company and each Company Subsidiary with or
relating to their respective employees, directors or consultants, and (iii) all
plans, programs, agreements and other arrangements of Company and each Company
Subsidiary with or relating to their respective employees, directors or
consultants which contain "change of control" provisions. No payment or benefit
which may be required to be made by Company or any Company Subsidiary or which
otherwise may be required to be made under the terms of any Company Benefit Plan
or other arrangement will constitute a parachute payment under Code Section
280(G)(1), and the consummation of the transactions contemplated by this
Agreement will not, alone or in conjunction with any other possible event
(including termination of employment), (i) entitle any current or former
employee or other service provider of Company or any Company Subsidiary to
severance benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), except as expressly provided by this Agreement, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider.
(g) Neither Company nor any Company Subsidiary is a party to, or has
any obligations under or with respect to, any collective bargaining or other
labor union contract applicable to persons employed by Company or any Company
Subsidiary and no collective bargaining agreement is being negotiated by Company
or any Company Subsidiary or any person or entity that may obligate the Company
or any Company Subsidiary thereunder. As of the date of this Agreement, there is
no labor dispute, strike, union organizing activity or work stoppage against
Company or any Company Subsidiary pending or, to the knowledge of Company,
threatened which may substantially interfere with the respective business
activities of Company or any Company Subsidiary. As of the date of this
Agreement, to the knowledge of Company, none of Company, any Company Subsidiary,
or any of their respective representatives or employees has committed any unfair
labor practice in connection with the operation of the respective businesses of
Company or any Company Subsidiary, and there is no charge or complaint filed
against Company or any Company Subsidiary by or with the National Labor
Relations Board or any comparable Governmental Entity pending or threatened in
writing.
(h) Except as required by Law, no Company Benefit Plan provides any
of the following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To Company's knowledge, Company and the
Company ERISA Affiliates are in compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and the
regulations (including proposed regulations) thereunder and (ii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996,
as amended, and the regulations (including the proposed regulations) thereunder.
20
SECTION 4.10 Pooling; Certain Tax Matters
To Company's knowledge, neither Company nor any of its affiliates
has taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected (based on the advice of
PricewaterhouseCoopers) to prevent the Merger from being treated for accounting
purposes as a "pooling of interests" in accordance with U.S. GAAP and the
accounting standards of the SEC. Neither Company, nor to Company's knowledge,
any of its affiliates, has taken or agreed to take any action (other than
actions contemplated by this Agreement) that could be expected to prevent the
Merger from constituting a "reorganization" under Section 368 of the Code.
Company is not aware of any agreement or plan to which Company or any of its
affiliates is a party or other circumstances relating to Company or any of its
affiliates that could reasonably be expected to prevent the Merger from being so
treated as a "pooling of interests" or from so qualifying as a reorganization
under Section 368 of the Code.
SECTION 4.11 Contracts
Section 4.11 of the Company Disclosure Schedule sets forth a list of
each contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Company and Company
Subsidiaries, taken as a whole (each, a "Material Contract"). Neither Company
nor any Company Subsidiary is in material violation of or in default under (nor
does there exist any condition which with the passage of time or the giving of
notice could reasonably be expected to cause such a material violation of or
material default under) any Material Contract. Each Material Contract is in full
force and effect and is a legal, valid and binding obligation of Company or a
Company Subsidiary and, to the knowledge of Company, each of the other parties
thereto, enforceable in accordance with its terms.
SECTION 4.12 Litigation
There is no material suit, claim, action, proceeding or
investigation pending or, to the knowledge of Company, threatened against
Company or any Company Subsidiary, and, to the knowledge of Company, there are
no existing facts or circumstances that could reasonably be expected to result
in such a suit, claim, action, proceeding or investigation. Company is not aware
of any facts or circumstances which could reasonably be expected to result in
the denial of insurance coverage under policies issued to Company and Company
Subsidiaries in respect of such material suits, claims, actions, proceedings and
investigations. Neither Company nor any Company Subsidiary is subject to any
material outstanding order, writ, injunction or decree or any material
outstanding order, writ, injunction or decree.
SECTION 4.13 Environmental Matters
To Company's knowledge, (i) Company and the Company Subsidiaries are
in material compliance with all applicable Environmental Laws and all Company
Permits required by Environmental Laws; (ii) all past noncompliance of Company
or any Company Subsidiary with Environmental Laws or Environmental Permits has
been resolved without any pending, ongoing or future material obligation, cost
or liability; and (iii) neither Company nor any Company Subsidiary has released
a Hazardous Material at, or transported a Hazardous Material
21
to or from, any real property currently or formerly owned, leased or occupied by
Company or any Company Subsidiary, in violation of any Environmental Law.
SECTION 4.14 Intellectual Property
(a) Section 4.14(a) of the Company Disclosure Schedule contains a
true and complete list of Company's patents, patent applications, registered
trademarks, trademark applications, trade names, registered service marks,
service xxxx applications, Internet domain names, Internet domain name
applications, copyright registrations and applications and other filings and
formal actions made or taken pursuant to Federal, state, local and foreign laws
by Company to protect its interests in Company Intellectual Property, and
includes details of all due dates for further filings, maintenance, payments or
other actions falling due in respect of Company Intellectual Property within
twelve (12) months of the Effective Time. All of Company's patents, patent
applications, registered trademarks, and trademark applications, and registered
copyrights remain in good standing with all fees and filings due as of the date
hereof. The Company has previously provided Purchaser with a list of all other
trademarks and service marks which are material to the Company's business.
(b) Company has made all registrations that Company (including any
of its subsidiaries) is required to have made in relation to the processing of
data, and is in good standing with respect to such registrations with all fees
due as of the Effective Time duly made.
(c) Company Intellectual Property contains only those items and
rights which are: (i) owned by Company; (ii) in the public domain; or (iii)
rightfully used by Company pursuant to a valid and enforceable license or other
agreement (the "Company Licensed Intellectual Property"), the parties, date,
term and subject matter of each such license or other agreement (each, a
"License Agreement") being set forth on Section 4.14(c) of the Company
Disclosure Schedule. Company has all rights in Company Intellectual Property
necessary to carry out Company's current activities and, to the knowledge of the
Company, the Company's future activities to the extent such future activities
are already planned, including without limitation, to the extent required to
carry out such activities, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to Company Licensed Intellectual Property, assign and sell, Company
Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Intellectual
Property, product, work, technology or process as now used or offered or
proposed for use, licensing or sale by Company does not infringe on any patent,
design right, trademark, trade name, service xxxx, trade dress, Internet domain
name, copyright, database, statistical model, technology, invention, supplier
list, trade secret, know-how, computer software program or application of any
person, anywhere in the World. The Company has not received notice of any claims
(i) challenging the validity, effectiveness or, other than with respect to
Company Licensed Intellectual Property, ownership by Company of any Company
Intellectual Property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any product,
work, technology or
22
process as now used or offered or proposed for use, licensing, sublicensing or
sale by Company or its agents or use by its customers infringes or will infringe
on any intellectual property or other proprietary or personal right of any
person. To the knowledge of Company, no such claims have been threatened by any
person, nor are there any valid grounds for any bona fide claim of any such
kind. All of the rights within Company Intellectual Property are enforceable and
subsisting. To the knowledge of Company, there is no unauthorized use,
infringement or misappropriation of any Company Intellectual Property by any
third party, employee or former employee.
(e) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of Company Intellectual Property on behalf of Company, have executed
nondisclosure agreements and either (i) have been a party to an enforceable
"work-for-hire" arrangement or agreements with Company in accordance with
applicable national and state law that has accorded Company full, effective,
exclusive and original ownership of all tangible and intangible property thereby
arising, or (ii) have executed appropriate instruments of assignment in favor of
Company as assignee that have conveyed to Company effective and exclusive
ownership of all tangible and intangible property thereby arising.
(f) Company is not, nor as a result of the execution or delivery of
this Agreement, or performance of Company's obligations hereunder, will Company
be, in violation of any material license, sublicense, agreement or instrument to
which Company is a party or otherwise bound, nor will execution or delivery of
this Agreement, or performance of Company's obligations hereunder, cause the
diminution, termination or forfeiture of any Company Intellectual Property.
(g) Section 4.14(g) of the Company Disclosure Schedule contains a
true and complete list of all software programs which are owned by the Company
(the "Company Software Programs"). Company owns full and unencumbered right and
good, valid and marketable title to such the Company Software Programs free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind.
(h) The source code and system documentation relating to the Company
Software Programs have been maintained in strict confidence and (i) have been
disclosed by Company only to those of its employees who have a "need to know"
the contents thereof in connection with the performance of their duties to
Company and who have executed nondisclosure agreements with Company; and (ii)
have been disclosed to only those third parties who have executed nondisclosure
agreements with Company.
(i) Company has taken all reasonable steps, in accordance with
normal industry practice, to preserve and maintain complete notes and records
relating to Company Intellectual Property to cause the same to be readily
identified and available.
23
(j) Section 4.14(j) of the Company Disclosure Schedule sets forth a
description, and the current status, of Company's Year 2000 compliance program
and its anticipated completion date. Upon completion of the Company's Year 2000
compliance program, the Company Software Programs shall (i) have been designed
to ensure year 2000 compatibility, which includes, but is not limited to, date
data century recognition, and calculations that accommodate same century and
multi-century formulas and date values; (ii) operate in accordance with their
specifications prior to, during and after the calendar year 2000 AD; and (iii)
not end abnormally or provide invalid or incorrect results as a result of date
data, specifically including date data which represents or references different
centuries or more than one century.
(k) Company Intellectual Property is free and clear of any and all
mortgages, pledges, liens, security interests, conditional sale agreements,
encumbrances or charges of any kind.
(l) Except as set forth in the Company Disclosure Schedule, Company
(including its subsidiaries) does not owe any royalties or other payments to
third parties in respect of Company Intellectual Property. All royalties or
other payments set forth in the Company Disclosure Schedule that have accrued
prior to the Effective Time have been paid.
(m) Company's (including its subsidiaries) statistical models have
not been disclosed to any third party at any time other than to third parties
who have executed nondisclosure agreements with Company.
(n) To the knowledge of the Company and other than as disclosed on
the Company Disclosure Schedule, all Company "Alliance members" are in
compliance with the terms of their respective agreement with Company.
(o) It is the Company's practice to scan the Company Intellectual
Property with a commercially available virus scan software. To the Company's
knowledge, the Company Software Programs and other Company Intellectual Property
contain no "viruses." For the purposes of this Agreement, "virus" means any
computer code intentionally designed to disrupt, disable or harm in any manner
the operation of any software or hardware. None of the foregoing contains any
worm, bomb, backdoor, clock, timer, or other disabling device code, design or
routine which causes the software to be erased, inoperable, or otherwise
incapable of being used, either automatically or upon command by any party.
(p) Company has implemented all reasonable steps which are known in
the information systems industry and which are generally known as best practices
in the physical and electronic protection of its information assets from
unauthorized disclosure, use or modification. Company has previously disclosed
to Parent whether, to its knowledge, there have been breaches of security, known
consequences, and the steps Company has taken to remedy any such breaches.
(q) Company has conducted its business and has collected, maintained
and used its data at all times materially in accordance with (i) accepted
industry practice and the standards
24
promulgated by the Direct Marketing Association; and (ii) all applicable Laws,
including but not limited to those affecting privacy issues.
SECTION 4.15 Taxes
(a) Company and each of Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been a member, have properly completed and timely
filed all Tax Returns required to be filed by them and have paid all Taxes shown
thereon to be due. Company has provided adequate accruals in accordance with
generally accepted accounting principles in its latest financial statements
included in the Company Reports for any Taxes that have not been paid, whether
or not shown as being due on any Tax Returns. Company and the Company
Subsidiaries have no material liability for unpaid Taxes accruing after the date
of the Company's latest financial statements included in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien against
the property of Company or any Company Subsidiary or is being asserted against
Company or any Company Subsidiary other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Company or any Company Subsidiary
being conducted by a Tax Authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company or any Company
Subsidiary and currently in effect, and (iv) no agreement, contract or
arrangement to which Company or any Company Subsidiary is a party that may
result in the payment of any amount that would not be deductible by reason of
Section 280G or Section 404 of the Code.
(c) There has been no change in ownership of Company or any Company
Subsidiaries that has caused the utilization of any losses of such entities to
be limited pursuant to Section 382 of the Code, and any loss carryovers
reflected on the latest financial statements included in the Company Reports are
properly computed and reflected.
(d) Company and the Company Subsidiaries have not been and will not
be required to include any material adjustment in Taxable income for any Tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
(e) Neither Company nor any Company Subsidiary has filed or will
file any consent to have the provisions of paragraph 341(f)(2) of the Code (or
comparable provisions of any state Tax laws) apply to Company or any Company
Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Company or any Company Subsidiary
have any liability or potential liability to another party under any such
agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
25
(h) Neither Company nor any Company Subsidiary has ever been a
member of a consolidated, combined or unitary group of which Company was not the
ultimate parent corporation.
(i) Company and each Company Subsidiary has in its possession
receipts for any Taxes paid to foreign Tax authorities. Neither Company nor any
Company Subsidiary has ever been a "personal holding company" within the meaning
of Section 542 of the Code or a "United Sates real property holding corporation"
within the meaning of Section 897 of the Code.
SECTION 4.16 Insurance
Company and each Company Subsidiary is presently insured, and during
each of the past three calendar years has been insured, against such risks, as
to the Company's knowledge, that companies engaged in a similar business would,
in accordance with good business practice, customarily be insured. The policies
of fire, theft, liability and other insurance maintained with respect to the
assets or businesses of Company and Company Subsidiaries provide, to the
Company's knowledge, adequate coverage against loss. Company has heretofore made
available to Parent a complete and correct list as of the date hereof of all
insurance policies maintained by Company or the Company Subsidiaries, and has
made available to Parent complete and correct copies of all such policies,
together with all riders and amendments thereto. All such policies are in full
force and effect and all premiums due thereon have been paid to the date hereof.
Company and the Company Subsidiaries have complied in all material respects with
the terms of such policies.
SECTION 4.17 Properties
Company and the Company Subsidiaries have good title, free and clear
of all material mortgages, liens, pledges, charges or other encumbrances to all
their material tangible properties and assets, real, personal or mixed,
reflected in the Company's consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as being owned by Company and the Company Subsidiaries as of the date
thereof, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements and (iii) liens arising in the ordinary course of business after the
date of such financial statements. All buildings, and all fixtures, equipment
and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Company or any Company
Subsidiary are held under valid instruments enforceable in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general principles
of equity (whether applied in a proceeding in law or equity). Substantially all
of Company's and the Company Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
26
SECTION 4.18 Affiliates
Section 4.18 of the Company Disclosure Schedule sets forth the name
of each person who is, in Company's reasonable judgment, an affiliate (as such
term is used in Rule 145 under the Securities Act or under applicable SEC
accounting releases with respect to pooling of interests accounting treatment)
of Company.
SECTION 4.19 Opinion of Financial Advisor
BancBoston Xxxxxxxxx Xxxxxxxx Inc. ("Xxxxxxxxx Xxxxxxxx") has
delivered to the board of directors of Company its written opinion to the effect
that, as of the date hereof, the Exchange Ratio is fair to the holders of shares
of Company Common Stock from a financial point of view (the "BRS Fairness
Opinion").
SECTION 4.20 Brokers
No broker, finder or investment banker (other than Xxxxxxxxx
Xxxxxxxx) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Company. Company has heretofore made available to Parent true, complete and
correct copies of all agreements between Company and Xxxxxxxxx Xxxxxxxx pursuant
to which such firm would be entitled to any payment relating to the Merger.
SECTION 4.21 Certain Business Practices
Neither Company nor any Company Subsidiary nor any directors,
officers, agents or employees of Company or any Company Subsidiary (in their
capacities as such) has (i) used any funds of the Company for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity or (ii) made any unlawful payment by the Company to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
SECTION 4.22 Section 203 of the DGCL Not Applicable
The Board of Directors of Company has approved the Merger, this
Agreement, the Option Agreement and the Stockholder Agreements, and such
approval is sufficient to render inapplicable to the Merger, this Agreement, the
Option Agreement and the Stockholder Agreements and the transactions
contemplated by this Agreement, the Option Agreement and the Stockholder
Agreements the provisions of Section 203 of the DGCL. To Company's knowledge, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement, the Option Agreement, the
Stockholders Agreements or the transactions contemplated by this Agreement, the
Option Agreement and the Stockholders Agreements.
27
SECTION 4.23 Business Activity Restriction
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Company or any subsidiary of
Company is a party or subject to that has or could reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by Company.
Company has not entered into any agreement under which Company is restricted in
any material respect from selling, licensing or otherwise distributing any of
its technology or products to, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market or line of business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company, subject to the
exceptions specifically disclosed in the Parent Disclosure Schedule, all such
exceptions to be referenced to a specific representation set forth in this
Article V or to otherwise be clearly applicable to representations hereof not
specifically referenced, that:
SECTION 5.01 Organization and Qualification; Subsidiaries
(a) Parent and each directly and indirectly owned subsidiary of
Parent (the "Parent Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted. Parent, and each Parent Subsidiary is duly
qualified or licensed to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary.
(b) Section 5.01 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Parent Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Parent Subsidiary and the percentage of each Parent Subsidiary's outstanding
capital stock or other equity interests owned by Parent or another Parent
Subsidiary and (ii) an indication of whether each Parent Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Neither Parent nor any Parent Subsidiary owns an equity interest in any
partnership or joint venture arrangement or other business entity that is
material to the business, assets, liabilities, financial condition or results of
operations of Parent and the Parent Subsidiaries, taken as a whole.
28
SECTION 5.02 Certificate of Incorporation and Bylaws
The copies of each of Parent's and Merger Subs' certificate of
incorporation and bylaws previously provided to Company by Parent are true,
complete and correct copies thereof. Such certificates of incorporation and
bylaws are in full force and effect.
SECTION 5.03 Capitalization
The authorized capital stock of Parent consists of 400,000,000
shares of Parent Common Stock and 5,000,000 shares of preferred stock. As of
June 4, 1999 (which numbers are not materially different on the date hereof) (i)
39,703,267 shares of Parent Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of Parent
Common Stock are held in the treasury of the Company, (iii) no shares of Parent
Common Stock are held by the Parent Subsidiaries, (iv) 5,455,188 shares of
Parent Common Stock are reserved for future issuance pursuant to outstanding
options and warrants to purchase Parent Common Stock ("Parent Stock Option"),
and (v) no shares of Parent preferred stock are issued and outstanding. Except
for the shares of Parent Common Stock issuable pursuant to the Parent Stock
Plans, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character to which Parent is a party or by which Parent is
bound relating to the issued or unissued capital stock of Parent or any Parent
Subsidiary or obligating Parent or any Parent Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, Parent or any Parent
Subsidiary. All shares of Parent Common Stock subject to issuance as aforesaid,
upon issuance prior to the Effective Time on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or any capital stock of
any Parent Subsidiary. Each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Parent or another Parent Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. There
are no material outstanding contractual obligations of Parent or any Parent
Subsidiary to provide funds to, or make any material investment (in the form of
a loan, capital contribution or otherwise) in, any Parent Subsidiary or any
other person.
SECTION 5.04 Authority Relative to this Agreement
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate such transactions (other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding shares of Parent
29
Common Stock present at the Parent Shareholders' Meeting and the consent of
Parent as sole stockholder of Merger Sub). This Agreement has been duly executed
and delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitutes a legal, valid and
binding obligation of each of Parent and Merger Sub enforceable against Parent
and Merger Sub in accordance with its terms.
SECTION 5.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i) conflict
with or violate any provision of the articles of incorporation or bylaws of
Parent or any equivalent organizational documents of any Parent Subsidiary, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 5.05(b) have been obtained and all filings and notifications described
in Section 5.05(b) have been made, conflict with or violate any Law applicable
to Parent or any other Parent Subsidiary or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected or (iii) result in any
material breach of or constitute a material default (or an event which with the
giving of notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any material property or asset of Parent or any Parent Subsidiary
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation.
(b) Except as may arise solely from the nature of Company's
business, the execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, require any consent,
approval, authorization or permit of, or filing by Parent with or notification
by Parent to, any Governmental Entity, except pursuant to applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the rules
and regulations of the NNM, state takeover laws, the premerger notification
requirements of the HSR Act, if any, and the filing and recordation of the
Certificate of Merger as required by the DGCL.
SECTION 5.06 SEC Filings; Financial Statements
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NNM since March 1,
1998 (collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Closing, the
"Parent Reports") and (B) with any other Governmental Entities. Each Parent
Report (i) was prepared in accordance with the requirements of the Securities
Act, the Exchange Act or the NNM, as the case may be, substantially in all
respects and (ii) did not at the time it was filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each form,
report, statement and document referred to in clause (B) of this paragraph was
prepared in all material respects in accordance with the requirements of
applicable Law. No Parent Subsidiary is subject
30
to the periodic reporting requirements of the Exchange Act or required to file
any form, report or other document with the SEC, the NNM, any other stock
exchange or any other comparable Governmental Entity.
(b) Except as is provided in the Parent Reports, each of the
consolidated financial statements (including, in each case, any notes thereto)
contained in the Parent Reports was prepared in accordance with U.S. GAAP
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of Parent and the consolidated
Parent Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and the Parent Subsidiaries as reported in
the Parent Reports, including the notes thereto, none of Parent or any Parent
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1998 that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.07 Pooling; Certain Tax Matters
To Parent's knowledge, neither Parent nor any of its affiliates has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could reasonably be expected (based on the advice of
PricewaterhouseCoopers) to prevent the Merger from being treated for accounting
purposes as a "pooling of interests" in accordance with U.S. GAAP and the
accounting standards of the SEC. Neither Parent, nor to Parent's knowledge, any
of its affiliates, has taken or agreed to take any action (other than actions
contemplated by this Agreement) that could be expected to prevent the Merger
from constituting a "reorganization" under Section 368 of the Code. Parent is
not aware of any agreement, plan or other circumstance that could reasonably be
expected to prevent the Merger from being so treated as a "pooling of interests"
or from so qualifying as a reorganization under Section 368 of the Code.
SECTION 5.08 Opinion of Financial Advisor
Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Sachs") has delivered to the board of
directors of Parent its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to Parent.
SECTION 5.09 Brokers
No broker, finder or investment banker (other than Xxxxxxx Xxxxx) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent. Parent
has heretofore made available to Company
31
true, complete and correct copies of all agreements between Parent and Xxxxxxx
Sachs pursuant to which such firm would be entitled to any payment relating to
the Merger.
SECTION 5.10 Affiliates
Section 5.10 of the Parent Disclosure Schedule sets forth the name
of each person who is, in Parent's reasonable judgment, an affiliate (under
applicable SEC accounting releases with respect to pooling of interests
accounting treatment) of Parent.
SECTION 5.11 No Parent Material Adverse Effect
Since December 31, 1998, there has been no Parent Material Adverse
Effect.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending the Closing
Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, and except as a
result of entering into this Agreement (x) the respective businesses of Company
and the Company Subsidiaries shall be conducted only in, and Company and the
Company Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice and (y) Company shall use all reasonable
efforts to keep available the services of such of the current officers,
significant employees and consultants of Company and the Company Subsidiaries
and to preserve the current relationships of Company and the Company
Subsidiaries with such of the corporate partners, customers, suppliers and other
persons with which Company or any Company Subsidiary has significant business
relations in order to preserve substantially intact its business organization.
By way of amplification and not limitation, neither Company nor any Company
Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of Parent and except as a result of entering into this
Agreement:
(a) amend or otherwise change its certificate of incorporation or
bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any shares
of capital stock of Company or any Company Subsidiary of any class, or
securities convertible into or exchangeable or exercisable for any shares of
such capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of
32
Company or any Company Subsidiary, other than (A) the issuance of shares of
Company Common Stock pursuant to the exercise of stock options theretofore
outstanding as of the date of this Agreement or (B) the issuance of options to
purchase up to 250,000 shares of Company Common Stock under the Company's 1999
Stock Incentive Plan, 200,000 shares of which may be issued to newly hired
management employees and 50,000 shares of which may be issued to existing
non-executive employees, or (ii) any property or assets of Company or any
Company Subsidiary except entering into alliance agreements or providing
products and services in the ordinary course of business consistent with past
practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person (other than Company and
Company Subsidiaries) for borrowed money or make any loans or advances, other
than routine employee loans to employees other than Company officers (not to
exceed $1,000 to any individual), material to the business, assets, liabilities,
financial condition or results of operations of Company and the Company
Subsidiaries, taken as a whole, other than in the ordinary course of business
consistent with past practice; (iii) terminate, cancel or request any material
change in, or agree to any material change in, any Company Material Contract or
other License Agreement; (iv) make or authorize any capital expenditure, other
than capital expenditures in the ordinary course of business consistent with
past practice that have been budgeted for fiscal year 1999 and disclosed in
writing to Parent and that are not, in the aggregate, in excess of $3,000,000
for Company and the Company Subsidiaries taken as a whole; or (v) enter into or
amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except that any Company Subsidiary may pay dividends or
make other distributions to Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(f) amend or change the period (or permit any acceleration,
amendment or change unless required pursuant to the terms of existing agreements
of Company previously provided to Parent) of exercisability of options granted
under the Company Stock Plans or authorize cash payments in exchange for any
Company Stock Options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire, or
permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of
its securities or any securities of any Company Subsidiary or propose to do any
of the foregoing;
33
(h) other than in the ordinary course of business consistent with
past practices or pursuant to existing agreements of Company previously provided
to Parent increase the compensation payable or to become payable to its
directors, officers, consultants or employees, grant any rights to severance or
termination pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Company that would be triggered by
the Merger with, any director, officer, consultant or other employee of Company
or any Company Subsidiary who is not currently entitled to such benefits from
the Merger, establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer, consultant or employee of Company or any Company
Subsidiary, except to the extent required by applicable Law or the terms of a
collective bargaining agreement, or enter into or amend any contract, agreement,
commitment or arrangement between Company or any Company Subsidiary and any of
Company's directors, officers, consultants or employees;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against on
the consolidated balance sheet of Company and the consolidated the Company
Subsidiaries dated as of March 31, 1999 included in Company's quarterly report
on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to
the extent reflected or to the extent of such reserves or incurred in the
ordinary course of business since March 31, 1999;
(j) make any change with respect to Company's accounting policies,
principles, methods or procedures, including, without limitation, revenue
recognition policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of Company contained
in this Agreement untrue or incorrect in any material respect or result in any
of the conditions to the Merger set forth herein not being satisfied.
SECTION 6.02 Notices of Certain Events
Each of Parent and Company shall give prompt notice to the other of
(i) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the Merger; (ii) any
notice or other communication from any Governmental Entity in connection with
the Merger; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting Parent or the Parent Subsidiaries or Company or the Company
34
Subsidiaries, respectively, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Parent Material Contract
or Company Material Contract, respectively; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect, respectively, or to delay or impede the ability of
either Parent or Company, respectively, to perform their respective obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Parent or Company or any of the Parent
Subsidiaries or the Company Subsidiaries is a party or pursuant to applicable
Law or the regulations or requirements of any stock exchange or other regulatory
organization with whose rules a party hereto is required to comply, from the
date of this Agreement to the Effective Time, Parent and Company shall (and
shall cause the Parent Subsidiaries and Company Subsidiaries, respectively, to)
(i) provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively,
"Representatives")) access at reasonable times upon prior notice to its and its
subsidiaries' officers, employees, agents, properties, offices and other
facilities and to the books and records thereof, and (ii) furnish promptly such
information concerning its and its subsidiaries' business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request. All such investigations and access shall
be conducted in a manner as not to interfere unreasonably with the business
operations of the Company. No investigation conducted pursuant to this Section
6.03 shall affect or be deemed to modify any representation or warranty made in
this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreements with respect to the information disclosed
pursuant to this Section 6.03 or pursuant to the Confidentiality Agreements.
SECTION 6.04 No Solicitation of Transactions
Until this Agreement has been terminated as provided herein, Company
shall not, directly or indirectly, and shall cause its Representatives not to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing nonpublic information), any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of Company's Representatives or subsidiaries, or any
Representative retained by Company's subsidiaries, to take any such action;
provided, however, that nothing contained in this Section 6.04 shall prohibit
the board of directors of Company (i) from complying with Rule 14d-9 or 14e-2(a)
promulgated under the
35
Exchange Act with regard to a tender or exchange offer not made in violation of
this Section 6.04 or (ii) prior to receipt of the approval by the stockholders
of Company of this Agreement and the Merger from providing information (subject
to a confidentiality agreement at least as restrictive as the Confidentiality
Agreements) in connection with, and negotiating, another unsolicited, bona fide
written proposal regarding a Competing Transaction that (x) Company's board of
directors shall have concluded in good faith, after considering applicable state
law, on the basis of advice of independent outside counsel that such action is
necessary to prevent Company's board of directors from violating its fiduciary
duties to Company's stockholders under applicable law, (y) if any cash
consideration is involved, shall not be subject to any financing contingency,
and with respect to which Company's board of directors shall have determined
(based upon the advice of Company's independent financial advisors) in the
exercise of its fiduciary duties to Company's stockholders that the acquiring
party is capable of consummating such Competing Transaction on the terms
proposed, and (z) Company's board of directors shall have determined in the
exercise of its fiduciary duties to Company's stockholders that such Competing
Transaction provides greater value to the stockholders of Company than the
Merger (based upon the written opinion of Company's independent financial
advisors that such Competing Transaction is superior from a financial point of
view) (any such Competing Transaction being referred to herein as a "Superior
Proposal"). Any violation of the restrictions set forth in this Section 6.04 by
any Representative of Company or any of its Subsidiaries, whether or not such
Person is purporting to act on behalf of Company or otherwise, shall be deemed
to be a breach of this Section 6.04 by Company. Company shall notify Parent
promptly if any proposal or offer, or any inquiry or contact with any person
with respect thereto, regarding a Competing Transaction is made, such notice to
include the identity of the person making such proposal, offer, inquiry or
contact, and the terms of such Competing Transaction, and shall keep Parent
apprised, on a current basis, of the status of such Competing Transaction and of
any modifications to the terms thereof. Company immediately shall cease and
cause to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party.
SECTION 6.05 Tax-Free Transaction; Pooling
From and after the date of this Agreement, each party hereto shall
use all reasonable efforts to cause the Merger to qualify, and shall not
knowingly take any actions or cause any actions to be taken which could
reasonably be expected to prevent the Merger from (a) qualifying as a
"reorganization" under Section 368(a) of the Code or (b) being treated for
financial accounting purposes as a "pooling of interests" in accordance with
U.S. GAAP and the accounting standards of the SEC.
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to the Effective Time,
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
36
SECTION 6.07 Further Action; Consents; Filings
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger, (ii) obtain from Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent or Company or any of their respective
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and (iii) make all necessary
filings, and thereafter make any other required or appropriate submissions, with
respect to this Agreement and the Merger required under (A) the rules and
regulations of the NNM, (B) the Securities Act, the Exchange Act and any other
applicable Federal or state securities Laws, (C) the HSR Act, if any, and (D)
any other applicable Law. The parties hereto shall cooperate and consult with
each other in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling parties and their
advisors prior to filing, and none of the parties shall file any such document
if any of the other parties shall have reasonably objected to the filing of such
document. No party shall consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the consummation of the
Merger at the behest of any Governmental Entity without the consent and
agreement of the other parties hereto, which consent shall not be unreasonably
withheld or delayed.
(b) Each of company and Parent will give (or will cause their
respective subsidiaries to give) any notices to third persons, and use, and
cause their respective subsidiaries to use, reasonable efforts to obtain any
consents from third persons necessary, proper or advisable (as determined in
good faith by Parent with respect to such notices or consents to be delivered or
obtained by Company) to consummate the transactions contemplated by this
Agreement.
SECTION 6.08 Additional Reports
Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 4.07 and 5.06, which it files with
the SEC on or after the date hereof, and Company and Parent, as the case may be,
covenant and warrant that as of the respective dates thereof, such reports will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present in all material
respects the financial position of Company and its consolidated subsidiaries or
Parent and its consolidated subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information including therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and U.S. GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
37
SECTION 6.09 Tax Information
Company shall provide the following information to Parent not later
than four weeks after the date of this Agreement: (i) a complete list of the
types of Tax Returns being filed by Company and each Company Subsidiary in each
taxing jurisdiction, (ii) a list of all closed years with respect to each such
type of Tax Return filed in each jurisdiction, and (iii) a list of any deferred
intercompany gain with respect to transactions to which Company or any Company
Subsidiary has been a party. Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of Company's and
Company Subsidiaries' Tax Returns and other records and workpapers relating to
Taxes.
SECTION 6.10 Conduct of Business by Parent.
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, Parent shall not knowingly take any action a principal
purpose of which is, and the reasonably likely result of which would be, a
material delay in or interference with the consummation of the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Joint Proxy Statement
(a) As promptly as practicable after the execution of this
Agreement, Parent and Company shall jointly prepare and shall file with the SEC
a document or documents that will constitute (i) the prospectus forming part of
the registration statement on Form S-4 of Parent (together with all amendments
thereto, the "Registration Statement"), in connection with the registration
under the Securities Act of Parent Common Stock to be issued to Company's
stockholders pursuant to the Merger and (ii) the joint proxy statement with
respect to the Merger relating to the special meetings of Company's stockholders
to be held to consider approval of this Agreement and the Merger (the "Company
Stockholders' Meeting") and of Parent's stockholders to be held to consider
approval of the issuance of Parent Common Stock (the "Share Issuance") to
Company's stockholders pursuant to the Merger (the "Parent Stockholders'
Meeting") (together with any amendments thereto, the "Joint Proxy Statement").
Copies of the Joint Proxy Statement shall be provided to the NNM in accordance
with its rules. Each of the parties hereto shall use all reasonable efforts to
cause the Registration Statement to become effective as promptly as practicable
after the date hereof, and, prior to the effective date of the Registration
Statement, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common Stock
pursuant to the Merger. Parent or Company, as the case may be, shall furnish all
information concerning Parent or Company as the other party may reasonably
request in connection with such actions and the preparation of the Registration
Statement and the Joint Proxy Statement. As promptly as practicable after the
effective date of the Registration Statement, the Joint Proxy Statement shall
38
be mailed to the stockholders of Company and of Parent. Each of the parties
hereto shall cause the Joint Proxy Statement to comply as to form and substance
as to such party in all material respects with the applicable requirements of
(i) the Exchange Act, (ii) the Securities Act, (iii) the rules and regulations
of the NNM.
(b) The Joint Proxy Statement shall include (i) the approval of the
Merger and the recommendation of the board of directors of Company to Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger, subject to the right of the board of directors of the Company to
withdraw its recommendation and recommend a Superior Proposal in compliance with
Section 6.04 of this Agreement, and (ii) the opinion of Xxxxxxxxx Xxxxxxxx
referred to in Section 4.19; provided, however, that the board of directors of
Company shall submit this Agreement to Company's stockholders whether or not at
any time subsequent to the date hereof such board determines that it can no
longer make such recommendation. The Joint Proxy Statement shall include (A) the
approval of the Share Issuance and the recommendation of the board of directors
of Parent to Parent's stockholders that they vote in favor of approval of the
Share Issuance, and (B) the opinion of Xxxxxxx Sachs referred to in Section
5.08.
(c) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement shall be made without the approval of Parent and Company,
which approval shall not be unreasonably withheld or delayed. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Joint Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, at the
date it or any amendments or supplements thereto are mailed to stockholders of
Parent and Company, at the time of the Company Stockholders' Meeting, at the
time of the Parent Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or any Company
Subsidiary, or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to the
Registration Statement or the Joint Proxy Statement, Company shall promptly
inform Parent. All documents that Company is responsible for filing with the SEC
in connection with the Merger will comply as to form in all material respects
with the applicable requirements of the rules and regulations of the Securities
Act and the Exchange Act.
39
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, at the
date it or any amendments or supplements thereto are mailed to stockholders of
Parent and Company, at the time of Company Stockholders' meeting, at the time of
the Parent Shareholders' Meeting and at the Effective Time and (B) in the case
of the Registration Statement, when it becomes effective under the Securities
Act and at the Effective Time, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to Parent or any Parent Subsidiary, or their
respective officers or directors, should be discovered by Parent that should be
set forth in an amendment or a supplement to the Registration Statement or the
Joint Proxy Statement, Parent shall promptly inform Company. All documents that
Parent is responsible for filing with the SEC in connection with the Merger will
comply as to form in all material respects with the applicable requirements of
the rules and regulations of the Securities Act and the Exchange Act.
SECTION 7.02 Stockholders' Meetings
Company shall call and hold the Company Stockholders' Meeting and
Parent shall call and hold the Parent Stockholders' Meeting as promptly as
practicable after the date hereof for the purpose of voting upon the approval of
this Agreement and the Merger or the Share Issuance, as the case may be,
pursuant to the Joint Proxy Statement, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Stockholders' Meeting on the same day and as soon as practicable after the date
on which the Registration Statement becomes effective. Nothing herein shall
prevent the Company or the Parent from adjourning or postponing the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, as the case may be,
if there are insufficient shares of Company Common Stock or Parent Common Stock,
as the case may be, necessary to conduct business at their respective meetings
of the stockholders. Unless Company's board of directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 6.04,
Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement and shall take all other action necessary or advisable
to secure the vote or consent of stockholders required by the DGCL or applicable
other stock exchange requirements to obtain such approval. Parent shall use all
reasonable efforts to solicit from its stockholders proxies in favor of the
Share Issuance pursuant to the Joint Proxy Statement and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by the DGCL or applicable stock exchange requirements to obtain such
approval. Each of the parties hereto shall take all other action necessary or,
in the opinion of the other parties hereto, advisable to promptly and
expeditiously secure any vote or consent of stockholders required by applicable
Law and such party's certificate of incorporation and bylaws to effect the
Merger. Company shall call and hold the Company Stockholders' Meeting for the
purpose of voting upon the approval of this Agreement and the Merger whether or
not Company's board of directors at any time subsequent to the date
40
hereof determines that this Agreement is no longer advisable or recommends that
Company's stockholders reject it.
SECTION 7.03 Affiliates
(a) Company will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex C hereto from (i) each person
identified in Section 4.18 of the Company Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any person
who, to the knowledge of Company, may be deemed to have become an affiliate of
Company after the date of this Agreement and prior to the Effective Time as soon
as practicable after attaining such status. The foregoing notwithstanding,
Parent shall be entitled to place legends as specified in the Affiliate
Agreement on the certificates evidencing any of the Parent Common Stock to be
received by (i) any affiliate of Company or (ii) any person Parent reasonably
identifies (by written notice to Company) as being a person who is an
"affiliate" within the meaning of Rule 145 promulgated under the Securities Act,
and to issue appropriate stop transfer instructions to the transfer agent for
such Parent Common Stock, consistent with the terms of the Affiliate Agreement,
regardless of whether such person has executed Affiliate Agreement and
regardless of whether such person's name and address appear on Section 4.18 of
the Company Disclosure Schedule.
(b) Parent will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex D hereto from (i) each person
identified in Section 5.10 of the Parent Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any person
who, to the knowledge of Parent, is an affiliate of Parent after the date of
this Agreement and prior to the Effective Time as soon as practicable after
attaining such status.
SECTION 7.04 Directors' and Officers' Indemnification and Insurance
(a) Parent and the Merger Sub agree that all rights to
indemnification, advancement of expenses, exculpation, limitation of liability
and any and all similar rights now existing in favor of each present and former
director, officer, employee and agent of Company and each Company Subsidiary
(collectively, the "Indemnified Parties") as provided in the Company's present
charter or by-laws in effect on the date hereof, shall survive the Merger and
shall continue in full force and effect for a period of six years from the
Effective Time, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at any time
prior to the Effective Time were directors, officers, employees or agents of the
Company, unless such modification shall be required by law, and Parent agrees to
cause the Surviving Corporation to comply with its obligations thereunder;
provided, however, that in the event any claim or claims are asserted or made
within such six-year period, all rights to indemnification in respect to any
such claim or claims shall continue until the disposition of any and all such
claims.
41
(b) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or Surviving Corporation or entity
of such consolidation or merger or (ii) transfers a material amount of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guaranty the
indemnification obligations referred to in this Section 7.04 or will make or
cause to be made proper provision so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, assume the
indemnification obligations described herein for the benefit of the Indemnified
Parties and have substantially equal financial ability as the Company
(immediately prior to the Effective Time) to satisfy the obligations of the
parties pursuant to this Section 7.04 as a condition to such merger,
consolidation or transfer becoming effective.
(c) The provisions of this Section 7.04 are (i) intended to be for
the benefit of, and will be enforceable by, each of the Indemnified Parties and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
(d) For a period of six years after the Effective Time, Parent shall
maintain in effect the directors' and officers' liability insurance policies
maintained by Company or, if not available, directors' and officers' liability
insurance policies covering the directors and officers of the Company (and their
respective heirs and executors, if such coverage may be obtained at no
additional cost) as of the date hereof, with coverages and other terms
substantially as favorable to such directors and officers as is currently in
effect; provided, however, that in no event shall Parent be required to expend
in any one year in excess of 150% of the annual premium currently paid by
Company for such coverage, which current premium amount is set forth in Section
7.04 of the Company Disclosure Schedule, and if the premium for such coverage
exceeds such amount, Parent shall purchase a policy with the greatest coverage
available for such 150% of the annual premium.
SECTION 7.05 No Shelf Registration
Parent shall not be required to amend or maintain the effectiveness
of the Registration Statement for the purpose of permitting resale of the shares
of Parent Common Stock received pursuant hereto by the persons who may be deemed
to be "affiliates" of Company within the meaning of Rule 145 promulgated under
the Securities Act.
SECTION 7.06 Public Announcements
The initial press release concerning the Merger shall be a joint
press release and, thereafter, Parent and Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement without the prior written approval of
the other, except to the extent required by applicable Law or the requirements
of the rules and regulations of the NNM, in which case the issuing party shall
use all reasonable efforts
42
to consult with the other party before issuing any such release or making any
such public statement.
SECTION 7.07 NNM Listing
Prior to the Effective Time, Parent shall file with the NNM a
Notification Form for Listing of Additional Shares with respect to the Parent
Common Stock issued or issuable in connection with the Merger.
SECTION 7.08 Blue Sky
Parent shall use all reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under Blue Sky Laws
to permit the distribution of the shares of Parent Common Stock to be issued in
accordance with the provisions of this Agreement.
SECTION 7.09 Employee Benefit Matters
At Parent's request, Company shall take all action necessary to
terminate, or cause to terminate, immediately before the Effective Time, any
Company Benefit Plan that is a 401(k) plan or other defined contribution
retirement plan.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) the Registration Statement shall have been declared effective by
the SEC under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC and not
concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly approved by
the requisite vote of stockholders of Company in accordance with the DGCL and by
the requisite vote of the stockholders of Parent in accordance with the rules of
the NNM;
(c) no court of competent jurisdiction shall have issued or entered
any order, writ, injunction or decree, and no other Governmental Entity shall
have issued any order, which is then in effect and has the effect of making the
Merger illegal or otherwise prohibiting its consummation;
43
(d) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act or any other applicable
competition, merger control or similar Law shall have expired or been
terminated;
(e) all consents, approvals and authorizations legally required to
be obtained to consummate the Merger shall have been obtained from all
Governmental Entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in a Parent
Material Adverse Effect or a Company Material Adverse Effect; and
(f) The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on the NNM, subject to notice of
issuance.
SECTION 8.02 Conditions to the Obligations of Company
The obligations of Company to consummate the Merger, or to permit
the consummation of the Merger are subject to the satisfaction or, if permitted
by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained
in this Agreement shall be true, complete and correct in all respects both when
made and on and as of the Effective Time as if made at and as of the Effective
Time (other than representations and warranties which address matters only as of
a certain date which shall be so true, complete and correct as of such certain
date), except for any failures to be true, complete and correct which do not, in
the aggregate, have a Parent Material Adverse Effect, and Company shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent to such effect;
(b) Parent shall have performed or complied in all material respects
with all covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time and Company shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of Parent
to that effect; and
(c) Xxxx Xxxxxxx, P.C., special counsel to Company, or such other
law firm or professional services firm reasonably acceptable to Parent
(including any "Big 5" accounting firm) shall have issued its opinion, such
opinion dated on the date of the Closing, addressed to Company, and reasonably
satisfactory to it, based upon customary representations of Company and Parent
and customary assumptions, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, which opinion
shall not have been withdrawn or modified in any material respect; provided,
however, that if such firm does not render such opinion, this condition shall
nonetheless be deemed satisfied if such opinion, dated as of the date of the
Closing, is rendered to Company by Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to
Parent.
44
SECTION 8.03 Conditions to the Obligations of Parent
The obligations of Parent to consummate the Merger are subject to
the satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company contained
in this Agreement shall be true, complete and correct in all respects both when
made and on and as of the Effective Time as if made at and as of the Effective
Time (other than representations and warranties which address matters only as of
a certain date which shall be so true, complete and correct as of such certain
date), except for any failures to be true, complete and correct which do not, in
the aggregate, have a Company Material Adverse Effect, and Parent shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Company to such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Parent shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Company to that effect;
(c) Xxxxxxx, Phleger & Xxxxxxxx LLP, special counsel to Parent,
shall have issued its opinion, such opinion dated on the date of the Closing,
addressed to Parent, and reasonably satisfactory to it, based upon customary
representations of Company and Parent and customary assumptions, to the effect
that the Merger will constitute a "reorganization" within the meaning of Section
368(a) of the Code, which opinion shall not have been withdrawn or modified in
any material respect;
(d) Parent shall have been advised in writing by
PricewaterhouseCoopers LLP - New York, NY as of the date upon which the
Effective Time is to occur, in a form and in substance reasonably acceptable to
Parent, that the Merger can properly be accounted for as a "pooling of
interests" business combination in accordance with U.S. GAAP and the accounting
standards of the SEC; Company shall have been advised in writing by
PricewaterhouseCoopers LLP - Broomfield, CO as of the date upon which the
Effective Time is to occur that such firm concurs with the management of the
Company that no conditions exist that would preclude Company from being a party
to a merger for which the pooling of interests method of accounting would be
available;
(e) There shall have been no Company Material Adverse Effect since
the date of this Agreement;
(f) All consents of third parties required pursuant to the terms of
any Material Contract as a result of the Merger shall have been obtained; and
(g) the employees of Company set forth on Schedule 8.03(g) shall
have accepted employment with Parent and shall have entered into employment and
non-competition agreements substantially in the form attached hereto as Annex E.
45
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite adoption and
approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall not
have occurred on or before December 31, 1999; provided, however, that the right
to terminate this Agreement under this Section 9.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement shall
have principally caused, or resulted in, the failure of the Effective Time to
occur on or before such date;
(c) by either Parent or Company, if any Governmental Order, writ,
injunction or decree preventing the consummation of the Merger shall have been
entered by any court of competent jurisdiction and shall have become final and
nonappealable;
(d) by Parent, if (i) the board of directors of Company withdraws,
modifies or changes its recommendation of this Agreement or the Merger in a
manner adverse to Parent or its stockholders, (ii) the board of directors of
Company shall have recommended to the stockholders of Company a Competing
Transaction, (iii) the Company fails to comply in all material respects with
Section 6.04, (iv) a Competing Transaction shall have been announced or
otherwise publicly known and the board of directors of Company shall have (A)
failed to recommend against acceptance of such by its stockholders (including by
taking no position, or indicating its inability to take a position, with respect
to the acceptance by its stockholders of a Competing Transaction involving a
tender offer or exchange offer), (B) failed to reconfirm its approval and
recommendation of this Agreement and the transactions contemplated hereby within
5 business days after Parent requests in writing that such recommendation be
reconfirmed or (C) determined that such Competing Transaction was a Superior
Proposal and takes any of the actions allowed by clause (ii) of Section 6.04, or
(v) the board of directors of Company resolves to take any of the actions
described above;
(e) by Parent or Company, if (i) this Agreement and the Merger shall
fail to receive the requisite votes for approval at the Company Stockholders'
Meeting or any adjournment or postponement thereof or (ii) if the Share Issuance
shall fail to receive the requisite votes for approval at the Parent
Shareholders' Meeting or any adjournment or postponement thereof;
(f) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or
46
warranty of Company shall have become untrue, incomplete or incorrect, in either
case such that the conditions set forth in Section 8.03 would not be satisfied
(a "Terminating Company Breach"); provided, however, that if such Terminating
Company Breach is curable by Company through the exercise of its reasonable
efforts within 20 days and for so long as Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this Section
9.01(f); and provided, further that the preceding proviso shall not in any event
be deemed to extend any date set forth in paragraph (b) of this Section 9.01; or
(g) by Company, upon breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, incomplete or
incorrect, in either case such that the conditions set forth in Section 8.02
would not be satisfied (a "Terminating Parent Breach"); provided, however, that
if such Terminating Parent Breach is curable by Parent through the exercise of
its reasonable efforts within 20 days and for so long as Parent continues to
exercise such reasonable efforts, Company may not terminate this Agreement under
this Section 9.01(g); and provided, further that the preceding proviso shall not
in any event be deemed to extend any date set forth in paragraph (b) of this
Section 9.01.
(h) The right of any party hereto to terminate this Agreement
pursuant to this Section 9.01 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution of
this Agreement.
SECTION 9.02 Effect of Termination
Except as provided in Section 9.05, in the event of termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part of any party
hereto or any of its affiliates or any of its or their officers or directors,
and all rights and obligations of each party hereto shall cease; provided,
however, that nothing herein shall relieve any party hereto from liability for
the willful or intentional breach of any of its representations and warranties
or the willful or intentional breach of any of its covenants or agreements set
forth in this Agreement. No termination of this Agreement shall affect the
obligation of the parties contained in the Confidentiality Agreements, which
shall survive termination of this Agreement and remain in full force and effect
in accordance with their terms.
SECTION 9.03 Amendment
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the approval of this Agreement by
the stockholders of Company, no amendment may be made that changes the amount or
type of consideration into which Company common stock will be converted pursuant
to this Agreement. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
47
SECTION 9.04 Waiver
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 9.05 Termination Fee; Expenses
(a) Except as set forth in this Section 9.05, all Expenses incurred
in connection with this Agreement and the Merger shall be paid by the party
incurring such Expenses, whether or not the Merger is consummated, except that
Parent and Company each shall pay one-half of all Expenses (other than
attorney's and accountant's fees and expenses) incurred solely for printing,
filing (with the SEC) and mailing the Registration Statement and the Joint Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Registration Statement and the Joint Proxy Statement.
(b) In the event that (i) Parent shall terminate this Agreement
pursuant to Section 9.01(d) (other than under the circumstances described in
Section 9.05(d)), or (ii) this Agreement shall be terminated (x) pursuant to
Section 9.01(b) or (y) pursuant to Section 9.01(e)(i) as a result of the failure
to obtain the requisite approval of the Company stockholders and, in the case of
either (x) or (y), (A) at or prior to such termination, there shall exist or
have been proposed a Competing Transaction with respect to Company and (B)
within 12 months after such termination, Company shall enter into a definitive
agreement with respect to any Competing Transaction or any Competing Transaction
involving Company shall be consummated, then, in the case of (i), promptly after
such termination, or in the case of (ii), concurrently with the consummation of
such Competing Transaction, Company shall (subject to Section 9.05(e)) pay to
Parent an amount in cash equal to $30 million (the "Termination Fee") plus
Parent's Expenses.
(c) In the event that Parent shall terminate this Agreement pursuant
to Section 9.01(f), then Company shall promptly reimburse Parent for Parent's
Expenses, and if, within twelve months of such termination of this Agreement,
Company shall enter into a definitive agreement with respect to any Competing
Transaction or any Competing Transaction involving Company shall be consummated
concurrently with the consummation of such Competing Transaction, then Company
shall (subject to Section 9.05(e)) pay to Parent an amount in cash equal to the
Termination Fee.
(d) In the event that Parent shall terminate this Agreement pursuant
to Section 9.01(d)(i) and (A) prior to such termination there shall have not
existed or have been proposed a Competing Transaction with respect to Company
and (B) Xxxxxxxxx Xxxxxxxx has withdrawn the BRS Fairness Opinion, then within
30 days after such termination, Company shall pay to Parent an amount equal to
the Termination Fee plus Parent's Expenses; provided, however, that no more
48
than $5,000,000 of the Termination Fee need be paid in cash, any non-cash
portion of the Termination Fee to be paid by means of the issue by Company to
Parent of that number of shares of Company Common Stock (the "Termination
Shares") equal to the quotient of the amount of such non-cash portion and
$93.25. Parent and Company agree that the provisions of Section 8 of the Option
Agreement shall be applicable to the Termination Shares as if they were issued
to Parent pursuant thereto.
(e) In the event the Termination Fee is payable pursuant to Section
9.05(b)(ii) or Section 9.05 (c) as a result of the impending consummation of a
Competing Transaction solely described by clause (iii) of the definition of such
term, then Company need not pay the Termination Fee (or, in the case of Section
9.05(b)(ii), reimburse Parent's Expenses) if Company offers Parent, at Company's
sole discretion, either(i) the right to also enter into a license, joint venture
or other arrangement with Company on the same terms and conditions as such
Competing Transaction, subject only to terms and conditions that may be
necessary to prevent Parent from having access to data of the party with which
Company is consummating such Competing Transaction (the "JV Party") (in which
case similar terms preventing the JV Party from having access to Parent's data
must be imposed on the JV Party as part of the Competing Transaction) or (ii) a
right of first refusal to enter into a license, joint venture or other
arrangement with Company, to the exclusion of the JV Party, on the same terms
and conditions as such Competing Transaction, either of which rights must be
available for exercise by Parent for at least 15 Business days.
(f) Parent and Company agree that the agreements contained in
Section 9.05(b), Section 9.05(c), Section 9.05(d) or Section 9.05(e) above are
an integral part of the transaction contemplated by this Agreement and
constitute liquidated damages and not a penalty. Accordingly, if Company fails
to pay to Parent any amounts due under Section 9.05(b), Section 9.05(c), Section
9.05(d) or Section 9.05(e), Company shall pay interest on such amounts at the
prime rate of Citibank, N.A. in effect on the date such payment was required to
be made.
(g) In the event that Company shall terminate this Agreement
pursuant to Section 9.01(g), then Parent shall promptly reimburse Company for
Company's Expenses.
(h) Neither Company nor Parent shall be entitled to reimbursement
for its Expenses hereunder in excess of $2,500,000 in the aggregate.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties
The representations and warranties in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. This Section 10.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
49
SECTION 10.02 Notices
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
(a) if to Company:
Abacus Direct Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: W. Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
50
(b) if to Parent or Merger Sub:
DoubleClick Inc.
00 Xxxxxxx Xxxxxx, 00 Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxx, General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
and
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 10.03 Severability
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.04 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
parties hereto. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything contained
in this Agreement to the contrary, other than Section 7.04, nothing in this
Agreement, expressed or
51
implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights or remedies under
or by reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits
The Parent Disclosure Schedule, the Company Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part of this Agreement for all purposes as if fully set forth
herein.
SECTION 10.06 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE OTHER THAN CONFLICT OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES
HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH
OF THE PARTIES HERETO WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(III) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 10.07 Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT
CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 Headings; Interpretation
The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
52
SECTION 10.09 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Entire Agreement
This Agreement (including the Exhibits, the Parent Disclosure
Schedule and the Company Disclosure Schedule) and the Confidentiality Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
DOUBLECLICK INC.
By: /s/ Xxxxx X. X'Xxxxxx
---------------------------------------
Name: Xxxxx X. X'Xxxxxx
Title: Chief Executive Officer
ABACUS DIRECT CORPORATION
By: /s/ M. Xxxxxxx Xxxxx
---------------------------------------
Name: M. Xxxxxxx Xxxxx
Title: Chief Executive Officer
ATLANTA MERGER CORP.
By: /s/ Xxxxx X. X'Xxxxxx
---------------------------------------
Name: Xxxxx X. X'Xxxxxx
Title: Chief Executive Officer
ANNEX A
FORM OF STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (this "Agreement") is made and entered
into as of June 13, 1999 between DoubleClick, Inc., a Delaware corporation
("Parent"), and the undersigned stockholder ("Stockholder") of Abacus Direct
Corporation, a Delaware corporation ("Company"). Capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
Merger Agreement described below.
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger and
Reorganization dated as of June 13, 1999 by and among Parent, Atlanta Merger
Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub") and Company (such agreement as it may be amended is hereinafter referred
to as the "Merger Agreement"). Parent has agreed to acquire the outstanding
securities of Company pursuant to a statutory merger of Merger Sub with and into
Company (the "Merger"), in which each outstanding share of capital stock of
Company (the "Company Capital Stock") will be converted into shares of common
stock of Parent (the "Parent Shares") at the exchange rate set forth in the
Merger Agreement (the "Transaction");
WHEREAS, in order to induce Parent to enter into the Merger
Agreement and consummate the Transaction, Company has agreed to use its
reasonable best efforts to cause each stockholder of Company who is an affiliate
of Company to execute and deliver to Parent a Stockholder Agreement upon the
terms set forth herein; and
WHEREAS, Stockholder is or may become the registered and beneficial
owner (within the meaning of Rule 13d-3 of the Exchange Act) of capital stock of
Company (the "Shares").
NOW, THEREFORE, the parties agree as follows:
1. Transfer and Encumbrance. Stockholder is the beneficial owner of
the Shares. The Shares constitute the only shares of capital stock and voting
securities of Company beneficially owned by Stockholder. To Stockholder's
knowledge, the Shares are, and will be at all times up until the Expiration
Date, free and clear of any liens, claims, options, charges or other
encumbrances except as disclosed on the signature page hereto. Stockholder's
principal residence or place of business is accurately set forth on the
signature page hereto.
1.2 New Shares. Stockholder agrees that any shares of capital stock
or voting securities of Company that Stockholder purchases or with respect to
which Stockholder otherwise acquires beneficial ownership after the date of this
Agreement and prior to the Expiration Date ("New Shares") shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares.
A-1
2. Agreement to Vote Shares. Prior to the Expiration Date, at every
meeting of the stockholders of Company at which any of the following is
considered or voted upon, and at every adjournment thereof, and on every action
or approval by written resolution of the stockholders of Company with respect to
any of the following, Stockholder shall vote the Shares and any New Shares in
favor of approval and adoption of the Merger Agreement and of the Transaction.
3. Irrevocable Proxy. Stockholder hereby agrees to timely deliver to
Parent a duly executed proxy in the form attached hereto as Exhibit I (the
"Proxy"), such Proxy to cover the Shares and all New Shares in respect of which
Stockholder is entitled to vote at each meeting of the stockholders of Company
(including, without limitation, each written consent in lieu of a meeting). In
the event that Stockholder is unable to provide any such Proxy in a timely
manner, Stockholder hereby grants Parent a power of attorney to execute and
deliver such Proxy for and on behalf of Stockholder, such power of attorney,
which being coupled with an interest, shall survive any death, disability,
bankruptcy, or any other such impediment of Stockholder. Upon the execution of
this Agreement by Stockholder, Stockholder hereby revokes any and all prior
proxies or powers of attorney given by Stockholder with respect to the Shares
and agrees not to grant any subsequent proxies or powers of attorney with
respect to the Shares until after the Expiration Date.
4. Representations, Warranties and Covenants of Stockholder.
Stockholder hereby represents, warrants and covenants to Parent as follows:
(a) Stockholder has full power and legal capacity to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Stockholder and constitutes the valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance with
its terms except as may be limited by (i) the effect of bankruptcy, insolvency,
conservatorship, arrangement, moratorium or other laws affecting or relating to
the rights of creditors generally, or (ii) the rules governing the availability
of specific performance, injunctive relief or other equitable remedies and
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. To Stockholder's knowledge, the execution and delivery of
this Agreement by Stockholder does not, and the performance of Stockholder's
obligations hereunder will not, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any right to terminate, amend, accelerate or cancel any
right or obligation under, or result in the creation of any lien or encumbrance
on any Shares or New Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Stockholder is a party or by which Stockholder or the Shares
or New Shares are or will be bound or affected.
(b) Until the Expiration Date, Stockholder will not (and will use
Stockholder's reasonable best efforts to cause Company, its affiliates,
officers, directors and employees and any investment banker, attorney,
accountant or other agent retained by Stockholder, Company or any of the same,
not to, except to the extent otherwise permitted under Section 6.04 of the
Merger Agreement): (i) initiate or solicit, directly or indirectly, any
proposal, plan or offer to acquire all or any material part of the business or
properties or capital stock of
A-2
Company, whether by merger, purchase of assets, tender offer or otherwise, or to
liquidate Company or otherwise distribute to the stockholders of Company all or
any substantial part of the business, properties or capital stock of Company
(each, an "Acquisition Proposal"); (ii) initiate, directly or indirectly, any
contact with any person in an effort to or with a view towards soliciting any
Acquisition Proposal; (iii) furnish information concerning Company's business,
properties or assets to any corporation, partnership, person or other entity or
group (other than Parent, or any associate, agent or representative of Parent)
under any circumstances that could reasonably be expected to relate to an actual
or potential Acquisition Proposal; or (iv) negotiate or enter into discussions
or an agreement, directly or indirectly, with any entity or group with respect
of any potential Acquisition Proposal. In the event Stockholder shall receive or
become aware of any Acquisition Proposal subsequent to the date hereof,
Stockholder shall promptly inform Parent as to any such matter and the details
thereof to the extent possible without breaching any other agreement to which
such Stockholder is a party or violating its fiduciary duties. Notwithstanding
the foregoing, the provisions of this Section 4(b) shall not be operative for
any non-executive director of Company for so long as such director serves on
Company's board of directors.
(c) Stockholder understands and agrees that if Stockholder attempts
to transfer, vote or provide any other person with the authority to vote any of
the Shares other than in compliance with this Agreement, Company shall not, and
Stockholder hereby unconditionally and irrevocably instructs Company to not,
permit any such transfer on its books and records, issue a new certificate
representing any of the Shares or record such vote unless and until Stockholder
shall have complied with the terms of this Agreement.
5. Additional Documents. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, reasonably
necessary and desirable, to carry out the purpose and intent of this Agreement.
6. Termination. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
7. Miscellaneous.
7.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without the prior written consent of the other. This Agreement is
intended to bind Stockholder solely as a securityholder of Company only with
respect to the specific matters set forth herein.
A-3
7.3 Amendment and Modification. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
7.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity and Stockholder hereby waives any and all defenses which could
exist in its favor in connection with such enforcement and waives any
requirement for the security or posting of any bond in connection with such
enforcement.
7.5 Notices. All notices, requests, demands or other communications
that are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given if delivered by hand
or mailed by registered or certified mail, postage prepaid, or sent by facsimile
transmission, as follows:
(a) If to Stockholder, at the address set forth below Stockholder's
signature at the end hereof.
(b) if to Parent, to:
DoubleClick Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
A-4
or to such other address as any party hereto or any Indemnified Person may
designate for itself by notice given as herein provided.
9.6 Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with the internal laws of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
9.7 Entire Agreement. This Agreement and the Proxy contain the
entire understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
9.8 Counterpart. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
A-5
IN WITNESS WHEREOF, the parties have caused this Stockholder
Agreement to be executed as of the date first above written.
DOUBLECLICK INC. STOCKHOLDER
By:_______________________________ _____________________________________
Name:_____________________________ (Signature)
Title:____________________________
_____________________________________
(Signature of Spouse)
_____________________________________
(Print Name of Stockholder)
_____________________________________
(Print Xxxxxx Xxxxxxx)
_____________________________________
(Print City, State and Zip)
_____________________________________
(Print Telephone Number)
_____________________________________
(Social Security or Tax I.D. Number)
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
EXHIBIT I
IRREVOCABLE PROXY
TO VOTE STOCK OF
ABACUS DIRECT CORPORATION
The undersigned stockholder of Abacus Direct Corporation, a Delaware
corporation ("Company"), hereby irrevocably (to the full extent permitted by the
Delaware General Corporation Law) appoints the members of the Board of Directors
of DoubleClick Inc., a Delaware corporation ("Parent"), and each of them, or any
other designee of Parent, as the sole and exclusive attorneys and proxies of the
undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to all of the shares of capital stock of
Company that now are or hereafter may be beneficially owned by the undersigned,
and any and all other shares or securities of Company issued or issuable in
respect thereof on or after the date hereof (collectively, the "Shares") in
accordance with the terms of this Irrevocable Proxy. Upon the undersigned's
execution of this Irrevocable Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the Expiration Date (as defined below).
This Irrevocable Proxy is irrevocable (to the extent provided in the
Delaware General Corporation Law), is coupled with an interest, including, but
not limited to, that certain Company Affiliate Agreement dated as of even date
herewith by and among Parent, and the undersigned, and is granted in
consideration of Parent entering into that certain Agreement and Plan of Merger
and Reorganization (the "Merger Agreement") by and among Parent and Atlanta
Merger Corp., a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and Company which Merger Agreement provides for the merger of
Merger Sub with and into Company (the "Merger"). As used herein, the term
"Expiration Date" shall mean the earlier to occur of (i) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Merger Agreement, and (ii) the date of termination of the Merger Agreement.
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting and other similar rights of the undersigned with respect to
the Shares (including, without limitation, the power to execute and deliver
written consents pursuant to the Delaware General Corporation Law), at every
annual, special or adjourned meeting of the stockholders of Company and in every
written consent in lieu of such meeting:
A-1
in favor of approval and adoption of the Merger Agreement and of the
transaction contemplated thereby.
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The undersigned
stockholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
This Irrevocable Proxy is coupled with an interest as aforesaid and
is irrevocable.
Dated: June 13, 1999
________________________________________
(Signature of Stockholder)
________________________________________
(Print Name of Stockholder)
Shares beneficially owned:
__________ shares of Company Common Stock
SIGNATURE PAGE TO IRREVOCABLE PROXY
ANNEX B
FORM OF OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of June 13, 1999,
by and between, DoubleClick Inc., a Delaware corporation ("Parent"), and Abacus
Direct Corporation, a Delaware corporation ("Company"). Capitalized terms used
herein but not defined herein shall have the meanings set forth in the Merger
Agreement referred to below.
WHEREAS, concurrently with the execution and delivery of this
Agreement, Company, Parent and Atlanta Merger Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), are entering into an Agreement
and Plan of Merger and Reorganization, dated as of the date hereof (the "Merger
Agreement"), pursuant to which, among other things, upon the terms and subject
to the conditions thereof, Merger Sub will be merged with and into Company (the
"Merger"), with Company continuing as the surviving corporation; and
WHEREAS, as a condition and inducement to Parent's willingness to
enter into the Merger Agreement, Parent has required that Company agree, and
Company has agreed, to grant to Parent an option to purchase certain newly
issued shares of Company's Common Stock, par value $.001 per share ("Company
Common Stock"), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Grant of Option. Company hereby grants to Parent an irrevocable
option (the "Company Option") to purchase up to 1,974,516 shares (the "Company
Shares") of Company Common Stock in the manner set forth below at a price (the
"Exercise Price") of $93.25 per Company Share, payable in cash; provided,
however, that the number of shares issuable to Parent pursuant hereto and
pursuant to Section 9.05(e) of the Merger Agreement shall not exceed 19.99% of
the outstanding shares of Company Common Stock.
2. Exercise of Option. (a) The Company Option may be exercised by
Parent, in whole or in part at any time or from time to time after (i) the
termination of the Merger Agreement under the conditions described in Section
9.05(b)(i) or 9.05(d) of the Merger Agreement and (ii) immediately prior to the
occurrence of any event causing the Termination Fee to become payable pursuant
to Section 9.05(b)(ii) or Section 9.05 (c) of the Merger Agreement. In the event
Parent wishes to exercise the Company Option, Parent shall deliver to Company a
written notice (an "Exercise Notice") specifying the total number of Company
Shares it wishes to purchase; provided that, if prior notification to or
approval of any regulatory or antitrust agency is required in connection with
such purchase, Parent shall promptly file the required notice or application for
approval, shall promptly notify Company of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
B-1
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Each closing of a
purchase of Company Shares (an "Option Closing") shall occur at a place, on a
date and at a time designated by Parent in an Exercise Notice delivered at least
three business days prior to the date of the Option Closing. The Company Option
shall terminate upon the earlier of: (w) the Effective Time; (x) the termination
of the Merger Agreement pursuant to Section 9.01 thereof (other than a
termination in connection with which Parent is or may be entitled to any
payments as specified in Section 9.05(b), 9.05(c) or 9.05 (d) thereof); (y) 90
days following any termination of the Merger Agreement in connection with which
Parent is entitled to a payment as specified in Section 9.05(b)(i) or 9.05(d)
thereof (or if, at the expiration of such 90 day period, the Company Option
cannot be exercised by reason of any applicable judgment, decree, order, law or
regulation, twenty (20) business days after such impediment to exercise shall
have been removed or shall have become final and not subject to appeal); or (z)
90 days following the occurrence of any event in connection with which Parent
has become entitled to payment of the Termination Fee pursuant to Section
9.05(b)(ii) of the Merger Agreement (or (I) if, at the expiration of such 90 day
period, the Company Option cannot be exercised by reason of any applicable
judgment, decree, order, law or regulation, twenty (20) business days after such
impediment to exercise shall have been removed or shall have become final and
not subject to appeal and (II) at the expiration of the 12-month period
following termination of the Merger Agreement described in Section 9.05(b)(ii)
or 9.05(c) if the event described therein has not occurred).
(b) Notwithstanding any other provision of this Agreement or the
Merger Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed in the aggregate $50,000,000 and, if it otherwise would exceed
such amount Parent, in its sole discretion, shall either (i) reduce the number
of Company Shares subject to the Company Option, (ii) pay cash to Company, (iii)
receive a smaller Termination Fee (as defined in Section 9.05(b)of the Merger
Agreement), (iv) deliver to Company for cancellation Company Shares previously
purchased by Parent or (v) any combination thereof, so that Parent's actually
realized Total Profit shall not exceed in the aggregate $50,000,000 after taking
into account the foregoing actions.
(c) As used herein, the term "Total Profit" shall mean the sum of
(i) (x)the amount (before taxes but net of reasonable and customary commissions
paid or payable in connection with such transaction) received by Parent pursuant
to the sale of Company Shares less (y) Parent's purchase price for such Company
Shares, (ii) any amounts (before taxes but net of reasonable and customary
commissions paid or payable in connection with such transaction) received by
Parent on the transfer of the Company Option (or any portion thereof) to any
unaffiliated Person(s) (if permitted hereunder) or to Company and (iii) the
amount received by Parent pursuant to Section 9.05(b), 9.05(c) and 9.05(d) of
the Merger Agreement.
3. Conditions to Closing. The obligation of Company to issue the
Company Shares to Parent hereunder is subject to the conditions that (i) all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, any Governmental Entity or Regulatory Entity if any, required
in connection with the issuance of the Company Shares hereunder shall have been
obtained or made, as the case may be; and (ii) no preliminary or permanent
injunction or other order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect.
B-2
4. Closing. At each Option Closing, (a) Company will deliver to
Parent a certificate or certificates in definitive form representing the number
of Company Shares designated by Parent in its Exercise Notice, such certificate
or certificates to be registered in the name of Parent or its designee and to
bear the legend set forth in Section 10, and (b) Parent will deliver to Company
the aggregate Exercise Price for the Company Shares so designated by wire
transfer of immediately available funds or certified check or bank check. At any
Option Closing at which Parent is exercising the Company Option in part, Parent
shall present and surrender this Agreement to Company, and Company shall deliver
to Parent an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the remaining balance of the shares of Company
Common Stock purchasable hereunder.
5. Representations and Warranties of Company. Company represents and
warrants to Parent that (a) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
Company and the consummation by Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Company and other than obtaining shareholder approval, no other corporate
proceedings on the part of Company are necessary to authorize this Agreement or
any of the transactions contemplated hereby, (c) this Agreement has been duly
executed and delivered by Company and constitutes a valid and binding obligation
of Company, enforceable against Company in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally and general principles of equity, (d) Company has taken all action
necessary to authorize and reserve for issuance and to permit it to issue, upon
exercise of the Company Option, and at all times from the date hereof through
the expiration of the Company Option will have reserved, that number of unissued
Company Shares that are subject to the Company Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, (e) upon delivery of the Company
Shares to Parent upon the exercise of the Company Option, Parent will acquire
the Company Shares free and clear of all liens, claims, charges, encumbrances
and security interests of any nature whatsoever except those imposed by Parent,
(f) except as described in Section 4.05 of the Merger Agreement and of the
Company Disclosure Schedule, the execution and delivery of this Agreement by
Company does not, and the performance of this Agreement by Company will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a benefit under,
or the creation of a lien, pledge, security interest or other encumbrance on
assets pursuant to (any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation"), (A) any
provision of the Amended and Restated Certificate of Incorporation or By-laws,
each as amended, of Company or (B) any provisions of any material mortgage,
indenture, lease, contract or other agreement, instrument, permit, concession,
franchise, or license or (C) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Company or its properties or assets,
except in the case of clauses (B) and (C) immediately above, for violations
which would not, individually or in the aggregate, have a Company Material
Adverse Effect and (g) except as described in Section 4.05 of the Merger
Agreement and of the Company Disclosure Schedule, the execution and delivery of
this Agreement by Company does not, and the performance of this Agreement by
Company
B-3
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity or Regulatory Entity.
6. Representations and Warranties of Parent. Parent represents and
warrants to Company that (a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
Parent and the consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or any of the transactions contemplated hereby, (c)
this Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding obligation of Parent, enforceable against Parent in accordance
with its terms, except as such enforceability may be limited by bankruptcy and
other laws affecting the rights and remedies of creditors generally and general
principles of equity, (d) assuming that the consents, approvals, authorizations,
permits, filings and notifications referred to in subsection (e) are obtained or
made, as applicable, the execution and delivery of this Agreement by Parent does
not, and the performance of this Agreement by Parent will not, result in any
Violation pursuant to, (A) any provision of the Certificate of Incorporation or
By-laws, each as amended, of Parent, (B) any provisions of any material
mortgage, indenture, lease, contract or other agreement, instrument, permit,
concession, franchise, or license or (C) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or its properties or
assets, except in the case of each of clauses (B) and (C) immediately, above,
for Violations which would not, individually or in the aggregate, have a Parent
Material Adverse Effect, (e) except as described in Section 5.05 of the Merger
Agreement and Section 3(a) of this Agreement, and except as may be required
under the Exchange Act, the execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity or Regulatory Entity, (f) any Company Shares
acquired upon exercise of the Company Option will not be, and the Company Option
is not being, acquired by Parent with a view to the public distribution thereof
and Parent will not sell or otherwise dispose of such shares in violation of
applicable law or this Agreement, (g) the Company Option and any Company Shares
acquired upon exercise of the Company Option are being acquired for the account
of Parent, (h) it is an "accredited investor" as defined in Regulation D under
the Securities Act, and (i) it understands that the Company Shares may not be
sold unless such sale is registered under the Securities Act or an exemption
from such registration is available.
7. Put.
(a) Exercise. At any time during which the Company Option is
exercisable hereunder (the "Repurchase Period"), upon demand by Parent, Parent
shall have the right to sell to Company (or any successor entity thereof) and
Company (or such successor entity) shall be obligated to repurchase from Parent
(the "Put"), all or any portion of the Company Option, to the extent not
previously exercised, at the price set forth in subparagraph (i) below, and/or
all or any portion of the Company Shares purchased by Parent pursuant thereto,
at a price set forth in subparagraph (ii) below:
(i) the difference between the "Market/Tender Offer Price" for
shares of Company Common Stock as of the date (the "Notice Date") notice
of exercise of the
B-4
Put is given to the other party (defined as the greater of (A) the price
per share offered as of the Notice Date pursuant to any tender or exchange
offer or other Takeover Proposal which was made prior to the Notice Date
and not terminated or withdrawn as of the Notice Date (the "Tender Price")
or (B) the average of the closing prices of shares of Company Common Stock
on the Nasdaq National Market for the ten (10) trading days immediately
preceding the Notice Date (the "Market Price")), and the Exercise Price,
multiplied by the number of Company Shares purchasable pursuant to the
Company Option (or portion thereof with respect to which Parent is
exercising its rights under this Section 7), but only if the Market/Tender
Offer Price is greater than the Exercise Price;
(ii) the Exercise Price paid by Parent for the Company Shares
acquired pursuant to the Company Option plus the difference between the
Market/Tender Offer Price and the Exercise Price, but only if the
Market/Tender Offer Price is greater than the Exercise Price, multiplied
by the number of Company Shares so purchased;
(b) Payment and Redelivery of Company Option or Shares. In the event
Parent exercises its rights under this Section 7, Company shall, within ten
business days of the Notice Date, pay the required amount (the "Repurchase
Price") to Parent in immediately available funds and Parent shall surrender to
Company the Company Option or the certificates evidencing the Company Shares
purchased by Parent pursuant thereto, and Parent shall represent and warrant
that it owns such shares and that such shares are then free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever, other
than any of the same created by Company or its affiliates.
(c) Payment Restrictions. To the extent that Company is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Company Option and /or Shares in full, Company
shall immediately so notify Parent and thereafter deliver or cause to be
delivered, from time to time, to Parent the portion of the Repurchase Price that
it is no longer prohibited from delivering, within five business days after the
date on which Company is no longer so prohibited; provided that, if Company at
any time after delivery of a notice of repurchase pursuant to Section 7(a) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to Parent the Repurchase Price in full
(and Company hereby undertakes to use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), Parent may
revoke its notice of the Put whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Company shall promptly (1) deliver
to Parent that portion of the Repurchase Price that Company is not prohibited
from delivering and (2) deliver to Parent as appropriate, (A) a new Agreement
evidencing the right of Parent to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Repurchase Price less
the portion thereof theretofore delivered to Parent and the denominator of which
is the Repurchase Price, and/or (B) to Parent, a certificate for the Company
Shares it is then so prohibited from repurchasing.
8. Registration Rights.
B-5
(a) Following any exercise of the Company Option, Parent may by
written notice (the "Registration Notice") to Company request Company to
register under the Securities Act all or any part of the shares of Company
Common Stock acquired pursuant to this Agreement, including any voting
securities issued by way of dividend, distribution or otherwise in respect
thereof (the "Restricted Shares"), beneficially owned by Parent (the
"Registrable Securities") in order to permit the sale or other distribution of
such Registrable Securities, including pursuant to a firm commitment
underwritten public offering; provided, however, that any such Registration
Notice must relate to a number of shares equal to at least 4% of the outstanding
shares of Company Common Stock and that any rights to require registration
hereunder shall terminate with respect to any Shares that may be sold in any
90-day period pursuant to Rule 144 under the Securities Act. The Registration
Notice shall include a certificate executed by Parent and its proposed managing
underwriter, which underwriter shall be an investment banking firm of nationally
recognized standing and reasonably acceptable to Company (the "Manager"),
stating that Manager in good faith believes that, based on the then prevailing
market conditions, it will be able to sell the Registrable Securities at a per
share price equal to at least 70% of the Fair Market Value of such shares. For
purposes of this Section 8, the term "Fair Market Value" shall mean the per
share average of the closing sale prices of Company's Common Stock on the Nasdaq
National Market for the twenty (20) trading days immediately preceding the date
of the Registration Notice.
(b) Company shall use commercially reasonable efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
unpurchased Registrable Securities; provided, however, that (i) Parent shall not
be entitled to more than two effective registration statements hereunder and
(ii) Company will not be required to file any such registration statement during
any period of time (not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and (C) below) when (A)
Company is in possession of material non-public information which it reasonably
believes would be detrimental to be disclosed at such time and, based on
consultation with counsel to Company, such information would have to be
disclosed if a registration statement were filed at that time; (B) Company is
required under the Securities Act to include audited financial statements for
any period in such registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) Company
determines, in its reasonable good faith judgment, that such registration would
interfere with any financing, acquisition or other material transaction
involving Company or any of its affiliates. If consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 180 days after the filing with the SEC of the initial registration
statement, then such registration shall not be taken into account as an
effective registration for purposes of clause (i) above. Company shall use
commercially reasonable efforts to cause any Registrable Securities registered
pursuant to this Section 8 to be qualified for sale under the securities or Blue
Sky laws of such jurisdictions as Parent may reasonably request and shall
continue such registration or qualification in effect in such jurisdiction;
provided, however, that Company shall not be required to qualify to do business
in, or consent to general service of process in, any jurisdiction by reason of
this provision.
(c) The registration rights set forth in this Section 8 are subject
to the condition that Parent shall provide Company with such information with
respect to Parent's Registrable Securities, the plans for the distribution
thereof, and such other information with
B-6
respect to Parent as, in the reasonable judgment of counsel for Company, is
necessary to enable Company to include in such registration statement all
material facts required to be disclosed with respect to a registration
thereunder.
(d) If Company securities of the same type as the Registrable
Securities are then authorized for quotation or trading or listing on the New
York Stock Exchange, the Nasdaq National Market, or any other securities
exchange or automated quotations system, Company, upon the request of Parent,
shall promptly file an application, if required, to authorize for quotation,
trading or listing the shares of Registrable Securities on such exchange or
system and will use its reasonable best efforts to obtain approval, if required,
of such quotation, trading or listing as soon as practicable.
(e) A registration effected under this Section 8 shall be effected
at Company's expense, except for underwriting discounts and commissions and fees
and expenses of counsel to Parent, and Company shall provide to the underwriters
such documentation (including certificates, opinions of counsel and "comfort"
letters from auditors) as are customary in connection with underwritten public
offerings as such underwriters may reasonably require. In connection with any
such registration, the parties agree (i) to indemnify each other and the
underwriters in the customary manner and (ii) to enter into an underwriting
agreement in form and substance customary for transactions of the type
contemplated hereby with the Manager and the other underwriters participating in
such offering.
9. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in Company Common Stock by reason of
stock dividends, splits, mergers (other than the Merger), recapitalizations,
combinations, exchange of shares or the like, the type and number of shares or
securities subject to the Company Option, and the Exercise Price per share,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Parent shall receive, upon
exercise of the Company Option, the number and class of shares or other
securities or property that Parent would have received in respect of the Company
Common Stock if the Company Option had been exercised immediately prior to such
event or the record date therefor, as applicable. If additional shares of
Company Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this Section 9(a)), the
number of shares of Company Common Stock subject to the Company Option will be
adjusted so that it equals 19.99% of the number of shares of Company Common
Stock then issued and outstanding, without giving effect to any shares subject
to or issued pursuant to the Company Option.
(b) In the event that Company shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Parent or any of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Parent or one of
its subsidiaries, to merge into Company and Company shall be the continuing or
surviving corporation, but, in connection with such merger, the then-outstanding
shares of Company Common Stock shall be changed into or exchanged for stock or
other securities of Company or any other person or cash or any other property or
the outstanding shares of Company Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than
B-7
Parent or any of its Subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, Parent shall receive for each Company Share with respect to which the
Company Option has not been exercised an amount of consideration in the form of
and equal to the per share amount of consideration that would be received by the
holder of one share of Company Common Stock less the Exercise Price (and, in the
event of an election or similar arrangement with respect to the type of
consideration to be received by the holders of Company Common Stock, subject to
the foregoing, proper provision shall be made so that the holder of the Company
Option would have the same election or similar rights as would the holder of the
number of shares of Company Common Stock for which the Company Option is then
exercisable).
10. Restrictive Legends. Each certificate representing shares of
Company Common Stock issued to Parent hereunder shall, to the extent applicable,
include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF JUNE 13, 1999,
A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
11. Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor the rights or the
obligations of either party hereto are assignable, except by operation of law,
or with the written consent of the other party. Nothing contained in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted assigns any rights or remedies
of any nature whatsoever by reason of this Agreement. Any Restricted Shares sold
by Parent in compliance with the provisions of Section 8 shall, upon
consummation of such sale, be free of the restrictions imposed with respect to
such shares by this Agreement, and any transferee of such shares shall not be
entitled to the rights of Parent. Certificates representing shares sold in a
registered public offering pursuant to Section 8 shall not be required to bear
the legend set forth in Section 10.
12. Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action should be brought in equity to enforce the provisions of
this Agreement, neither party will allege, and each party hereby waives the
defense, that there is an adequate remedy at law.
13. Entire Agreement. This Agreement and the Merger Agreement
(including the Company Disclosure Schedule and the Parent Disclosure Schedule
relating thereto)
B-8
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.
14. Further Assurance. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery of an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
16. Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder.
B. if to Parent or Merger Sub, to:
DoubleClick Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
B-9
and
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
C. if to Company, to:
Abacus Direct Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: W. Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State without regard to any
applicable conflicts of law rules.
18. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
20. Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
21. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
B-10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
DOUBLECLICK INC.
By:______________________________________
Name:
Title:
ABACUS DIRECT CORPORATION
By:______________________________________
Name:
Title:
SIGNATURE PAGE TO OPTION AGREEMENT
ANNEX C
FORM OF COMPANY AFFILIATE AGREEMENT
June 13, 1999
DoubleClick Inc.
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization, dated as of June 13, 1999 (the "Merger Agreement"), by and among
DoubleClick Inc., a Delaware corporation ("Parent"), Atlanta Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
Abacus Direct Corporation, a Delaware corporation ("Company"), Parent has agreed
to acquire Company through the merger of Merger Sub with and into Company (the
"Transaction").
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be (but does not hereby admit to be) an "affiliate"
of Company, as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "SEC") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and/or (ii)
used in and for purposes of Accounting Series Releases 130, 135 and 146 and
Staff Accounting Bulletin Two, as amended, of the SEC.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, other stockholders of
Parent, Merger Sub, Company and their respective counsel and accounting firms.
Except to the extent written notification to the contrary is received by Parent
from the undersigned prior to the consummation of the Transaction, the
representations and warranties contained herein shall be accurate at all times
from the date hereof through the Effective Time (as defined in the Merger
Agreement).
C-1
The undersigned hereby represents and warrants to and agrees with
Parent that in the event the undersigned receives any shares of Parent Common
Stock as a result of the Transaction:
1. The undersigned has power and authority to execute and deliver
this letter agreement and to make the representations and warranties set forth
herein and to perform [its] [his] [her] obligations hereunder;
2. The undersigned has carefully read this letter agreement and the
Merger Agreement and, to the extent the undersigned felt necessary, discussed
the requirements of such documents and other applicable limitations upon [its]
[his] [her] ability to sell, transfer, pledge or otherwise dispose of Parent
Common Stock with [its] [his] [her] counsel or counsel for the Company;
3. The undersigned is the owner of the number of shares of Parent
Common Stock (the "Shares") set forth below, and did not acquire any of the
Shares in contemplation of the Transaction.
4. The undersigned will not make any sale, transfer, pledge or other
disposition of Parent Common Stock (i) in violation of the Securities Act or the
Rules and Regulations or (ii) to a transferee that has not agreed in writing to
be bound hereby;
5. The undersigned has been advised that the issuance of Parent
Common Stock to the undersigned in connection with the Transaction has been or
will be registered with the Commission under the Securities Act on a
Registration Statement on Form S-4. However, the undersigned has also been
advised that, since at the time the Transaction was or will be submitted for a
vote of the stockholders of the Company the undersigned may be deemed to be or
have been an affiliate of the Company and the distribution by the undersigned of
any Parent Common Stock has not been registered under the Securities Act, the
undersigned may not sell, transfer, or otherwise dispose of Parent Common Stock
issued to [it] [him] [her] in the Transaction unless (i) such sale, transfer, or
other disposition has been registered under the Securities Act, (ii) such sale,
transfer, or other disposition is made in conformity with the volume and other
limitations of Rule 145 or (iii) in the opinion of counsel reasonably acceptable
to Parent, such sale, transfer, or other disposition is otherwise exempt from
registration under the Securities Act;
6. The undersigned understands that, except as provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
or other disposition of Parent Common Stock by the undersigned or on [its] [his]
[her] behalf under the Securities Act or to take any other action necessary in
order to make compliance with an exemption from such registration available;
7. The undersigned also understands that Parent may impose stop
transfer instructions or elect to not permit the transfer of shares of Parent
Common Stock or the issuance of a new certificate representing such shares
unless and until such a transfer can be made without adversely affecting the
ability of Parent or the surviving corporation to account for the business
combination to be effected by the Transaction as a pooling of interests, and
that there will be
C-2
placed on the certificates for Parent Common Stock issued to [it] [him] [her],
or any substitutions therefor, a legend stating in substance:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SECURITIES EVIDENCED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT DATED JUNE 13, 1999 BETWEEN THE REGISTERED HOLDER
HEREOF AND PARENT, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF PARENT;
8. The undersigned also understands that, unless the sale, transfer,
or other disposition by [it] [him] [her] of Parent Common Stock issued to [it]
[him] [her] has been registered under the Securities Act or is a sale made in
conformity with the provisions of Rule 145, Parent reserves the right to put the
following legend on the certificates issued to any transferee of the
undersigned:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
APPLIES, AND WERE NOT ACQUIRED BY THE HOLDER WITH A VIEW TO
TRANSFER, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF,
UNLESS SUCH SALE, TRANSFER, OR OTHER DISPOSAL IS MADE IN CONNECTION
WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES
LAWS";
9. Any other provisions of this letter agreement to the contrary
notwithstanding, except as set forth below, during the 30-day period immediately
preceding the Effective Time, the undersigned has not engaged and will not
engage, and after the Effective Time until such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q, or 8-K, or any other public filing or announcement which
includes such combined results of operations (the period commencing 30 days
prior to the Effective Time and ending on the date
C-3
of the publication of the post-Transaction financial results is referred to
herein as the "Pooling Period"), the undersigned will not engage, in any sale,
transfer, or other disposition of, or reduce the undersigned's risk in respect
of, any of the following:
a. any shares of Parent Common Stock which the
undersigned may acquire in connection with the Transaction, or any
securities which may be paid as a dividend or otherwise distributed
thereon or with respect thereto or issued or delivered in exchange or
substitution therefore (all such shares and other securities being
referred to herein, collectively, as "Restricted Securities"), or any
option, right or other interest with respect to any Restricted Securities;
b. the shares of Company Common Stock and options or
warrants to purchase Company Common Stock beneficially owned by the
undersigned; or
c. any shares of Company Common Stock or any other
equity securities of the Company which the undersigned purchases or
otherwise acquires after the execution of this letter agreement;
10. As promptly as practicable after the Effective Time, Parent will
publish results covering at least 30 days of combined operations of the Company
and Parent in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q, 8-K, or any other public filing or announcement which includes such
combined results of operations; provided, however, that Parent will under no
circumstance be obligated to publish such results earlier than that time at
which Parent publishes results for its first full fiscal quarter during which
such 30 days of combined operations occurs.
11. This Parent Affiliate Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the Sate of
Delaware without giving effect to the principles of conflicts of laws thereof
and may be executed in counterparts.
(Signature Page Follows)
C-4
Very truly yours,
____________________________________________
____________________________________________
(print name)
Number of Shares beneficially owned as of
the date hereof:
____________________________________________
Accepted as of June 13, 1999
DOUBLECLICK INC.
By:_______________________________
Name:_____________________________
Title:____________________________
SIGNATURE PAGE TO COMPANY AFFILIATE AGREEMENT
ANNEX D
FORM OF PARENT AFFILIATE AGREEMENT
June 13, 1999
DoubleClick Inc.
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization, dated as of June 13, 1999 (the "Merger Agreement"), by and among
DoubleClick Inc., a Delaware corporation ("Parent"), Atlanta Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
Abacus Direct Corporation, a Delaware corporation ("Company"), Parent has agreed
to acquire Company through the merger of Merger Sub with and into Company (the
"Transaction").
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be (but does not hereby admit to be) an "affiliate"
of Parent, as the term "affiliate" is used in and for purposes of Accounting
Series Releases 130, 135 and 146 and Staff Accounting Bulletin Two, as amended,
of the SEC.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, other stockholders of
Parent, Merger Sub, Company and their respective counsel and accounting firms.
Except to the extent written notification to the contrary is received by Parent
from the undersigned prior to the consummation of the Transaction, the
representations and warranties contained herein shall be accurate at all times
from the date hereof through the Effective Time (as defined in the Merger
Agreement).
The undersigned represents and warrants to, and agrees with, Parent
that:
1. The undersigned has full power and legal capacity to execute and
deliver this Parent Affiliate Agreement and to make the representations and
warranties herein and to perform his, her or its obligations hereunder.
2. The undersigned has carefully read this Parent Affiliate
Agreement and the Merger Agreement and discussed their requirements and other
applicable limitations upon the ability of the undersigned to sell, transfer or
otherwise dispose of shares of Parent's common
D-1
stock, par value $.001 per share ("Parent Common Stock"), to the extent the
undersigned felt necessary, with counsel for the undersigned or counsel for
Parent.
3. The undersigned is the owner of the number of shares of Parent
Common Stock (the "Shares") set forth below, and did not acquire any of the
Shares in contemplation of the Transaction.
4. During the period commencing 30 days prior to the closing of the
Transaction and ending at such time as results covering at least 30 days of
combined operations of Company and Parent have been published by Parent, in the
form of a quarterly earnings report, an effective registration statement filed
with the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K or any other public
filing or announcement that includes such combined results of operations (the
date of which is referred to herein as the "Financial Results Publication
Date"), the undersigned has not and will not sell, transfer or otherwise dispose
of, or offer or agree to sell, transfer or otherwise dispose of, or in any other
way reduce the risk of the undersigned's ownership of or investment in, any
shares of Parent Common Stock which the undersigned currently owns or purchases
or otherwise acquires after the execution of this Parent Affiliate Agreement but
before the Financial Results Publication Date, or any securities which may be
paid as a dividend or otherwise distributed thereon or with respect thereto or
issued or delivered in exchange or substitution therefor (all such shares and
other securities being referred to herein, collectively, as "Restricted
Securities"), or any option, right or other interest with respect to any
Restricted Securities.
5. This Parent Affiliate Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the Sate of
Delaware without giving effect to the principles of conflicts of laws thereof
and may be executed in counterparts.
(Signature Page Follows)
D-2
Very truly yours,
____________________________________________
____________________________________________
(print name)
Number of Shares beneficially owned as of
the date hereof:
____________________________________________
Accepted as of June 13, 1999
DOUBLECLICK INC.
By:_______________________________
Name:_____________________________
Title:____________________________
SIGNATURE PAGE TO COMPANY AFFILIATE AGREEMENT
ANNEX E
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of __________, _____ (the "Agreement")
by and between DOUBLECLICK INC., a Delaware corporation with principal offices
located at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("DoubleClick"), and ABACUS
DIRECT CORPORATION, a Delaware corporation (the "Corporation"), and __________
having an address at ________________________________ ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has been employed by the Corporation as its
_____________ pursuant to an employment agreement dated ____________, as amended
(the "199_Agreement"); and
WHEREAS, the Corporation has entered into an Agreement and Plan of
Merger and Reorganization dated as of June 13, 1999 with DoubleClick and Atlanta
Merger Corp. the "Merger Agreement") whereby the Corporation shall become a
wholly-owned subsidiary of DoubleClick (the "Merger"); and
WHEREAS, the Executive's continuing services are necessary to
maintain the value of the Corporation after the Merger; and
WHEREAS, this Agreement shall supersede and replace the 199_
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Corporation and Executive hereby agree as follows:
1. Employment.
(a) Subject to the terms and conditions set forth in this Agreement,
the Corporation offers and the Executive hereby accepts employment, effective as
of the Effective Time of the Merger (the "Commencement Date").
(b) The Corporation hereby employs Executive as ____________
reporting directly to __________, or his successor. Executive shall be
responsible for _______________, and shall have various management
responsibilities and duties consistent with his executive position and of such
nature as are usually associated with his office as may be designated from time
to time by the Board of Directors of the Corporation.
(c) Executive shall faithfully and diligently discharge his duties
hereunder and use his best efforts to implement the policies established by the
Board of Directors of the Corporation. Executive agrees to devote substantially
all of his time and attention to the rendering of services hereunder.
2. Compensation.
(a) During the Term of Executive's employment hereunder, the
Corporation shall cause Executive to receive a base annual salary in the amount
of ____________ Dollars ($_______). Such base salary, as from time to time
increased, is hereafter referred to as the "Base Salary". The Base Salary shall
be payable in accordance with the present payroll practices of the Corporation.
In addition, Executive may receive such additional compensation (in the form of
bonuses, etc.) that the Corporation's Board of Directors (the "Board") shall, in
the exercise of its good faith and reasonable discretion, determine.
(b) In addition to the salary described in Section 2(a) above, for
each fiscal or partial fiscal year of the Corporation during the Term hereof,
Executive shall be eligible to receive incentive compensation and sales
commissions as may be established by the Board of Directors of the Corporation
predicated upon successful accomplishment of annual business related performance
goals for the Corporation.
(c) The parties intend that, on or about the Effective Time,
DoubleClick shall grant Executive stock options pursuant to its 1997 Stock
Incentive Plan, as amended, under terms and at a level reasonable in light of
Executive's duties and responsibilities and comparable with existing
arrangements with his peer executives at the Corporation and DoubleClick
3. Benefits, Etc. Executive shall be entitled to receive such fringe
benefits normally provided by the Corporation to executives in his position
(including disability coverage, vacation, sick leave, medical and dental
insurance, life insurance, participation in the Corporation's 401(k) Plan,
incentive compensation plans and other benefits generally available to senior
executives of the Corporation at any time during the term of this Agreement).
4. Term. Subject to earlier termination as hereinafter provided, the
original term of this Agreement shall commence on the Commencement Date and
shall continue in effect for a one (1) year period ending on the first
anniversary of the Commencement Date. The parties intend to negotiate in good
faith towards an agreement regarding terms and conditions of Executive's
employment with the Corporation continuing after the Term, it being anticipated
that Executive shall be offered employment terms consistent with DoubleClick's
policies and practices applicable to its executives.
5. Termination by The Corporation. The Corporation shall have the
right to terminate this Agreement for "Disability", "Cause" or without "Cause".
(a) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
with the Corporation on a full-time basis for three (3) consecutive months or an
aggregate of one hundred twenty (120) days in any twelve (12) month period, and
within thirty (30) days after written notice of termination is given, Executive
shall not have returned to the full time performance of Executive's duties, the
Corporation may terminate Executive's employment by reason of his "Disability."
2
(b) Cause. Termination by the Corporation of Executive' s employment
for "Cause" shall mean termination as a result of: (i) breach by Executive of
any material provision of this Agreement; (ii) gross negligence or willful
misconduct of Executive in connection with the performance of his duties under
this Agreement, or Executive's willful refusal to perform any of his material
duties or responsibilities required pursuant to this Agreement; (iii)
Executive's misappropriation for personal use of assets or business
opportunities of the Corporation; (iv) Executive's embezzlement of the Company's
funds or property, or fraud on the part of Executive; or (v) Executive's
conviction of any Felony.
6. Termination by Executive. (a) Executive shall be entitled to terminate
his employment (i) in the event that the Corporation materially breaches any of
its obligations hereunder and such breach continues for thirty (30) days after
the Corporation receives written notice from Executive of such breach or (b) if
there is a "change in control" of the Corporation.
For purposes of this Agreement, a "change in control" of the
Corporation shall be deemed to have occurred if (a) any "Person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation representing forty percent (40%) or more of the combined voting
power of the Corporation's then outstanding securities; or (b) the Board of
Directors of the Corporation shall approve a sale of all or substantially all
the assets of the Corporation unless the Executive is a member of the Board of
Directors who affirmatively votes in favor of such sale transaction giving rise
to the "change in control".
In the event that Executive becomes entitled to terminate his
employment hereunder by reason of the occurrence of a "change in control" of the
Corporation or for any reason other than a "change in control", Executive shall
be entitled to terminate his employment immediately after the occurrence of the
event giving rise to such right, which right shall continue for a period of four
(4) months from the date of such occurrence. The Merger shall be considered a
"change in control" for purposes of this paragraph and paragraph 9 only if
DoubleClick breaches its obligations under Section 2(c) above.
7. Notice of Termination. Any purported termination by the Corporation or
by Executive shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 13 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
8. Date of Termination, Etc. "Date of Termination" shall mean (a) if
Executive's employment is terminated by the Corporation for Cause, the date
specified in the Notice of Termination, which date shall be no earlier than the
date of such Notice; (b) if Executive's employment is terminated by the
Corporation for Disability, thirty (30) days after Notice of Termination is
given (provided that Executive shall not have returned to the performance of his
duties an a full-time basis during such thirty (30) day period); (c) if
Executive's employment is terminated by the Corporation without Cause, the date
specified in the Notice of Termination, which date shall be no earlier than the
date that such notice is deemed given; (d) if Executive's
3
employment is terminated by Executive for any of the reasons specified in
Section 6, such date as Executive shall specify in Executive's Notice of
Termination, which date shall be no less than thirty (30) days after such Notice
of Termination is given.
9. Compensation Upon Termination, During Disability, Death or in the Event
of a Change in Control.
(a) In addition to any benefits to which Executive is entitled under any
insurance program or pension or benefit plan then in effect, or any stock plan
or restricted stock agreement, in lieu of all other payments of salary or other
compensation to which Executive would otherwise be entitled hereunder, Executive
shall be entitled to the following (and, if terminated for any reason
whatsoever, shall in no event be entitled to receive salary for the balance of
the remaining Term):
(i) If Executive's employment shall be terminated for Cause,
the Corporation shall pay his full Base Salary through the
Date of Termination at the rate in effect at the time Notice
of Termination is given and the Corporation shall have no
further obligations to Executive under this Agreement unless
it shall be finally determined by a court of competent
jurisdiction that such purported termination for Cause was not
justified or was inappropriate in the circumstances.
(ii) If Executive's employment with the Corporation shall be
terminated other than in anticipation of or in connection with
a "change in control" (A) by the Corporation without Cause,
(B) by Executive for any of the reasons specified in clause
(a) of the first paragraph of Section 6 hereof, or (C) at the
expiration of this Agreement by virtue of it not being
renewed, in lieu of any further salary payments to Executive
for periods subsequent to the Date of Termination (including
any payments relating to any bonus or incentive compensation),
Executive shall be entitled to receive a severance payment in
an amount equal to twelve (12) months of the Base Salary then
in effect and incentive compensation, if earned, on a pro-rata
basis, which severance shall be paid either in accordance with
the Corporation's customary payroll practices or in a lump
sum, upon expiration of such term, as Executive may elect,
subject, in either case, to normal payroll deductions.
(iii) If Executive's employment with the Corporation shall be
terminated by Executive or by the Corporation upon or within
four (4) months following a "change in control" pursuant to
clause (b) of the first paragraph of Section 6 hereof, then
Executive shall be entitled to the benefits provided below:
(A) the Corporation shall pay Executive his full
Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination
is given;
4
(B) In lieu of any further salary payments to
Executive for periods subsequent to the Date of
Termination (including any payments relating to
any bonus or incentive compensation), the
Corporation shall pay, as severance pay to
Executive, not later than the fifth (5th) day
following the Date of Termination, a lump-sum
severance payment in an amount equal to ______
months of the Base Salary then in effect.
(b) For a twelve (12) month period after such termination, other
than for Cause, the Corporation shall arrange to provide Executive and, to the
extent practicable, his family with life, disability and health insurance
benefits substantially similar to those which Executive is receiving immediately
prior to the Notice of Termination.
10. Intellectual Property Rights. All rights in inventions, designs and
intellectual property (including, without limitation, in patents, copyrights,
trade marks, registered designs, design rights and know-how) to which Executive
may become entitled by reason of activities in the course of Executive's
employment shall vest automatically in the Corporation and Executive shall, at
the request and expense of the Corporation, provide the corporation with all
information, drawings and documents requested by the corporation and execute
such documents and do such things as may be required by the Corporation to
evidence such vesting. The provisions of this Section 10 shall survive the
termination of this Agreement.
11. Non-Competition and Non-Disclosure. The parties hereto each
acknowledge and agree that, concurrently with this Agreement, they enter into a
Non-competition and Non-disclosure Agreement ("Non-Disclosure Agreement") and
that such Non-Disclosure and Non-Competition Agreement shall remain in full
force and effect throughout the Term hereof and shall survive the termination of
this Agreement. A copy of the Non-Disclosure Agreement is attached hereto as
Exhibit A. Executive acknowledges that the provisions of the Non-Disclosure
Agreement are fair and reasonable and necessary to protect the good will and
interest of the Corporation and its subsidiaries and shall constitute separate
and severable undertakings given for the benefit of each of the Corporation and
each subsidiary and may be enforced by the Corporation on behalf of any of them.
12. Successors; Binding Agreement.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to expressly
assume and agree to perform this Agreement in the manner and to the same extent
that the Corporation would be required to perform it if no such succession had
taken place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement, and for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "the Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets, as
aforesaid, which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
5
(b) This Agreement shall inure to the benefit of and be enforceable
by the Corporation, its successors and assigns, and by Executive, his personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die all Base Salary and
incentive compensation earned by Executive prior to his death, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
his devisee, legatee or other designee or, if there is no such designee, to
Executive's estate.
13. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand, telecopied (receipt
acknowledged) or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Corporation
shall be directed to the attention of the Board with a copy to the Secretary of
the Corporation and to DoubleClick, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
14. Miscellaneous. All terms in this Agreement not specifically defined
herein shall be defined as in the Merger Agreement. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to, in writing, and signed by Executive and such officer
of the Corporation as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. Each party acknowledges that the services to be
rendered under this Agreement are unique and of extraordinary character, and in
the event of a breach by either party of any of the terms of this Agreement, the
other party shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either at law or in equity,
to obtain damages for any breach of the terms and provisions hereunder, to
enforce specific performance by the breaching party of its obligations hereunder
and to enjoin the breaching party from acting in violation of this Agreement.
Such remedies are in addition to those otherwise available at law or in equity
to the Corporation. The validity, interpretation, construction and performance
of this Agreement shall be governed by the internal laws of the State of New
York (other than the choice of law principles thereof).
15. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
17. Prior Agreement. Upon the effectiveness of this Agreement, all prior
agreements, including, but not limited to, the 199_ Agreement, between Executive
and the Corporation will be terminated and of no further force and effect.
6
IN WITNESS WHEREOF, the undersigned have executed and delivered this Employment
Agreement on the date first above written.
DOUBLECLICK INC.
By:_________________________________________
Name:
Title:
ABACUS DIRECT CORPORATION
By:_________________________________________
Name:
Title:
EXECUTIVE
By:_________________________________________
Name: _________________
7
EXHIBIT A
ABACUS DIRECT CORPORATION
Non-Competition and Non-disclosure Agreement
This agreement is made this _____ day of __________, 1999, by and between
Abacus Direct Corporation and its parents, subsidiaries and affiliates,
including, but not limited to, DoubleClick Inc. ("DoubleClick") (hereafter
referred to collectively as the "Corporation, and individually as "entities" of
the Corporation); and __________ (hereafter "Executive").
WITNESSETH:
WHEREAS, the parties hereto acknowledge that as between them, the
Proprietary Information (as defined below) is important, material and will
affect the successful conduct of the business and operations of the Corporation.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties hereto agree as follows:
Definitions
1. The term "Proprietary Information" shall mean (i) trade secrets,
including, but not limited to, all Corporation-owned designs, formulae,
drawings, diagrams and client data employed by the Corporation in developing
databases by consolidating unaffiliated direct mail response lists, contributed
by the list owners, into one or more master files to be used in developing
software or software algorithms for the purpose of predicting the relative
performance of various segments of said types of master files in the direct mail
applications of its clients and the fulfilling of said segments for its clients;
(ii) the names of any customers, the Corporation's marketing strategies, the
names of its vendors and suppliers, the costs of materials and labor, the prices
obtained for services sold (including the methods used in price determination,
manufacturing and sales costs),
lists or other written records used in the Corporation's business, compensation
paid to employees and consultants and other terms of employment, production
operation techniques or any other confidential information of, about or
pertaining to the business of the Corporation, or any of the Corporation's
entities, individually or in any combination, including, but not limited to,
information regarding DoubleClick network affiliates or advertisers, DART
technology or services, and closed loop marketing solutions, and (iii) all
Proprietary Information listed in (i) and (ii) above as well as any tangible
material that embodies such Proprietary Information such as notebooks, drawings,
documents, memoranda, reports, files, samples, books, computer programs,
correspondence, lists or other written and graphic records that affect or relate
to the business of the Corporation, and (iv) all Proprietary Information listed
in (i), (ii) and (iii) of the Corporation's clients or customers obtained by
Executive during his association with the Corporation. Said Proprietary
Information shall cease to be considered proprietary should it become public
knowledge or contain only information available in the public domain other than
through a breach of this Agreement.
Covenant Not to Compete
2. Executive agrees that he will not, during the course of his employment
by or service to the Corporation, (including any current or future employment of
him by the Corporation) and for a period of one (1) year commencing upon the
expiration of his service or employment, individually or on behalf of persons
not now parties to this Agreement, or as a partner, stockholder, director,
officer, principal, agent, employee, or in any other capacity or relationship:
(i) engage in any business or employment for, or aid, consult or endeavor to
assist any business or legal entity that competes with any of the products or
services offered or planned by the Corporation, or any of the Corporation's
entities, including, but not limited to, any business or legal entity engaged in
developing databases by consolidating unaffiliated direct mail
9
response lists, contributed by the list owners, into one or more master files to
be used in developing software or software algorithms for the purpose of
predicting the relative performance of various segments of said types of master
files in the direct mail applications of its clients and the fulfilling of said
segments for its clients, or any business or legal entity engaged in providing
Internet advertising products, services or solutions, and excluding from said
businesses or legal entities list maintenance, list marketing, list brokerage
and general direct marketing analysis and consulting. Together the business and
operations set forth above are hereafter known as the Business of the
Corporation. The Corporation and Executive acknowledge the reasonableness of the
world wide geographic area and duration of time which are part of said covenant.
Non-solicitation of Customers
3. Unless waived in writing by the Corporation, Executive further agrees
that he will not, during the course of his service to or employment by the
Corporation and for one (1) year thereafter, solicit the trade or patronage of
any of the customers or known prospective customers of the Corporation, or any
of its entities, or of anyone who has heretofore traded and dealt with the
Corporation, or any of its entities, regardless of the location of such
customers or prospective customers, if such trade or patronage relates to the
Proprietary Information or Business of the Corporation as defined above and
excluding list maintenance list marketing, list brokerage and general direct
marketing analysis and consulting. For the purposes of this paragraph,
"customers" includes, without limitation, DoubleClick network affiliates and
advertisers.
Non-solicitation of other Employees and/or Consultants
4. Executive agrees that he will not, during the Course of his service to
the Corporation (including any current or future employment of him by the
Corporation) and for a period of one (1) year commencing upon the expiration of
his service or employment,
10
individually or on behalf of persons not now parties to this Agreement, aid or
endeavor to solicit or induce any other employee, employees, consultant and/or
consultants of the Corporation, or any of its entities, to leave their
employment with the Corporation in order to accept a position of any kind with
any other person, firm, partnership or corporation.
Non-disclosure/Non-use
5. Executive agrees that he will not, without the written consent of the
Chief Executive Officer of DoubleClick, during the course of his service to the
Corporation (including any current or future employment of him by the
Corporation) or thereafter, (i) divulge, disclose or communicate to any person,
firm, corporation or other entity, the Proprietary Information or (ii) use any
of the Proprietary Information.
Assignment
6. Executive acknowledges that certain Business of the Corporation and
Proprietary Information are unique to the Corporation and are of such nature to
give the Corporation a distinct competitive advantage. Executive therefore
agrees that all results of his work specifically for the Corporation shall be
the exclusive property of the Corporation.
Breach of Covenants
7. In the event suit is instituted to enforce any provision of this
Agreement, the prevailing party shall be entitled to costs thereof including
court costs and reasonable attorney's fees. The provisions of paragraphs 1
through 7, inclusive, shall survive the termination of this Agreement except in
those cases excepted in the provisions of this Agreement.
Necessary and Reasonable Covenants
8. (a) Executive acknowledges and agrees that as a founder and major
shareholder of Atlanta Corporation he has gained and will gain access to the
Proprietary Information, including DoubleClick's Proprietary Information, and
has discovered and will
11
discover opportunities which comprise a set of skills and information
specifically suited to the operation of an entity engaged in the same business
as the Corporation, and its entities, including, without limitation,
DoubleClick, and that use of such skills and experience for any other directly
competing entity could destroy or damage the Business of the Corporation.
(b) Executive further acknowledges that his knowledge of the
Proprietary Information would cause him, if he were employed by, an agent for,
or a consultant to any other entity engaged in the same business as the
Corporation for the purpose of functioning in the same business as the
Corporation, to inherently make decisions, form judgments and take actions that
would use the Proprietary Information.
(c) Executive further acknowledges that the market for the
Corporation's goods and services has no geographic limitations since such goods
and services may be used throughout the world and that, under such
circumstances, it is reasonable, fair and appropriate that the covenant not to
compete have no territorial limitations.
(d) Executive acknowledges that the time period restrictions
contained herein are fair, equitable and reasonable periods of time under the
circumstances.
Waiver of Breach
9. The waiver by either party of any breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by the other party.
Binding Effect
10. This Agreement is binding upon, and inures to the benefit of, the
parties hereto and their successors, heirs, legal representatives and assigns,
but neither this Agreement nor any rights hereunder may be assigned by either
party without the prior written consent of the other party.
12
Amendments
11. No amendment or supplement to this Agreement shall be made except in a
writing executed by both parties.
No Rule of Strict Construction
12. The language contained herein shall be deemed to be that approved by
all parties hereto and no rule of strict construction shall be applied against
any party hereto.
Invalidity or Unenforceability of any Provision
13. The provisions of this Agreement are severable, and should any of its
provisions, clauses, or portions thereof be deemed invalid and of no force and
effect, then only that provision, clause, or portion thereof shall fail and the
remainder of this Agreement shall be in full force and effect.
Governing Law
14. This Agreement shall be governed by the laws of New York (except as to
choice of law) both as to interpretation and performance.
13
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
ABACUS DIRECT CORPORATION
By:_________________________________________
Name:
Title:
By:_________________________________________
_____________
14
