EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GO2NET, INC.,
FY ACQUISITION CORP.,
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
AND
THE SOLE SHAREHOLDER OF ▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
DATED OCTOBER 22, 1999
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TABLE OF CONTENTS
ARTICLE I.........................................................................1
1.1 THE MERGER...............................................................1
1.2 EFFECTIVE TIME...........................................................2
1.3 EFFECT OF THE MERGER.....................................................2
1.4 CERTIFICATE OF INCORPORATION; BY-LAWS....................................2
1.5 DIRECTORS AND OFFICERS...................................................2
1.6 ADDITIONAL ACTIONS.......................................................2
ARTICLE II........................................................................3
2.1 MERGER CONSIDERATION.....................................................3
2.2 CONVERSION OF SHARES.....................................................3
2.3 EXCHANGE OF CERTIFICATES.................................................4
2.4 NO FRACTIONAL SECURITIES.................................................5
2.5 COMPANY CAPITAL STOCK BOOKS..............................................5
2.6 NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK.............................5
2.7 ADJUSTMENT EVENT.........................................................5
2.8 ESCROW...................................................................5
ARTICLE III.......................................................................6
3.1 CORPORATE ORGANIZATION...................................................6
3.2 AUTHORIZATION............................................................6
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS....................................7
3.4 CAPITALIZATION...........................................................7
3.5 FINANCIAL STATEMENTS; BUSINESS INFORMATION...............................8
3.6 ABSENCE OF UNDISCLOSED LIABILITIES.......................................9
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.....................................9
3.8 LEGAL PROCEEDINGS, ETC..................................................10
3.9 TAXES...................................................................10
3.10 TITLE TO PROPERTIES AND RELATED MATTERS................................11
3.11 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS; EMPLOYEE RESTRICTIONS.......13
3.12 CONTRACTS..............................................................15
3.13 EMPLOYEES; EMPLOYEE BENEFITS...........................................16
3.14 COMPLIANCE WITH APPLICABLE LAW.........................................18
3.15 ABILITY TO CONDUCT THE BUSINESS........................................19
3.16 MAJOR CUSTOMERS........................................................19
3.17 CONSULTANTS, SALES REPRESENTATIVES AND OTHER AGENTS....................19
3.18 ACCOUNTS RECEIVABLE....................................................19
3.19 INSURANCE..............................................................20
3.20 BANK ACCOUNTS; POWERS OF ATTORNEY......................................20
3.21 MINUTE BOOKS, ETC......................................................20
3.22 RELATED PERSON INDEBTEDNESS AND CONTRACTS..............................20
3.23 BROKERS; PAYMENTS......................................................20
3.24 COMPANY ACTION.........................................................21
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3.25 YEAR 2000 MATTERS......................................................21
3.26 DISCLOSURE.............................................................21
ARTICLE IV.......................................................................21
4.1 AUTHORIZATION; ETC......................................................21
4.2 PARENT COMMON STOCK.....................................................22
ARTICLE V........................................................................24
5.1 CORPORATE ORGANIZATION..................................................24
5.2 AUTHORIZATION...........................................................25
5.3 CONSENTS AND APPROVALS; NO VIOLATIONS...................................25
5.4 CAPITALIZATION..........................................................26
5.5 SEC REPORTS AND FINANCIAL STATEMENTS....................................27
5.6 LITIGATION..............................................................27
5.7 COMPLIANCE WITH APPLICABLE LAW..........................................28
5.8 BROKERS; PAYMENTS.......................................................28
5.9 DISCLOSURE..............................................................28
5.10 VALIDITY OF SHARES.....................................................28
ARTICLE VI.......................................................................29
6.1 CONDUCT OF BUSINESS OF THE COMPANY......................................29
6.2 CONDUCT OF BUSINESS OF ACQUISITION CORP.................................30
6.3 OTHER NEGOTIATIONS......................................................30
ARTICLE VII......................................................................31
7.1 ACCESS TO PROPERTIES AND RECORDS........................................31
7.2 TRANSFER OF INTERESTS...................................................31
7.3 REASONABLE EFFORTS; ETC.................................................31
7.4 MATERIAL EVENTS.........................................................31
7.5 FEES AND EXPENSES.......................................................32
7.6 NASDAQ NATIONAL MARKET LISTING..........................................32
7.7 SUPPLEMENTS TO DISCLOSURE SCHEDULES.....................................32
ARTICLE VIII.....................................................................32
ARTICLE IX.......................................................................33
9.1 REPRESENTATIONS AND WARRANTIES TRUE.....................................33
9.2 PERFORMANCE.............................................................33
9.3 ABSENCE OF LITIGATION...................................................33
9.4 CONSENTS................................................................34
9.5 ADDITIONAL AGREEMENTS...................................................34
9.6 DELIVERY OF CERTIFICATES FOR CANCELLATION...............................34
9.7 APPROVAL................................................................34
9.8 MERGER FILINGS..........................................................34
9.9 PAYMENT OF INDEBTEDNESS.................................................34
9.10 DUE DILIGENCE..........................................................35
9.11 CONTRACTS/LIENS........................................................35
9.12 CONTRIBUTION OF ASSETS.................................................35
9.13 OPINION OF STEEL ▇▇▇▇▇▇ ▇▇▇▇▇..........................................35
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9.14 SUPPORTING DOCUMENTS...................................................35
ARTICLE X........................................................................35
10.1 REPRESENTATIONS AND WARRANTIES TRUE....................................36
10.2 PERFORMANCE............................................................36
10.3 ABSENCE OF LITIGATION..................................................36
10.4 CONSENTS...............................................................36
10.5 ADDITIONAL AGREEMENTS..................................................36
10.6 MERGER FILINGS.........................................................37
10.7 CASH AND SHARES OF PARENT COMMON STOCK; ESCROW DEPOSIT.................37
10.8 OPINION OF ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.................................37
10.9 SUPPORTING DOCUMENTS...................................................38
10.10 CANCELLATION OF NOTE...................................................38
ARTICLE XI.......................................................................38
11.1 TERMINATION............................................................38
11.2 EFFECT OF TERMINATION..................................................39
ARTICLE XII......................................................................39
12.1 INDEMNITY OBLIGATIONS..................................................39
12.2 NOTIFICATION OF CLAIMS.................................................40
12.3 DURATION...............................................................41
12.4 ESCROW.................................................................41
12.5 NO CONTRIBUTION........................................................42
ARTICLE XIII.....................................................................42
13.1 REGISTRABLE SHARES.....................................................42
13.2 REQUIRED REGISTRATION..................................................42
13.3 EFFECTIVENESS; SUSPENSION RIGHT........................................43
13.4 EXPENSES...............................................................43
13.5 INDEMNIFICATION........................................................43
13.6 PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.............46
13.7 TRANSFERABILITY OF REGISTRATION RIGHTS.................................46
ARTICLE XIV......................................................................47
14.1 AMENDMENT..............................................................47
14.2 WAIVER OF COMPLIANCE...................................................47
14.3 NOTICES................................................................47
14.4 ASSIGNMENT.............................................................48
14.5 NO THIRD PARTY BENEFICIARIES...........................................48
14.6 PUBLIC ANNOUNCEMENTS...................................................48
14.7 COUNTERPARTS...........................................................49
14.8 HEADINGS...............................................................49
14.9 ENTIRE AGREEMENT.......................................................49
14.10 GOVERNING LAW..........................................................49
ARTICLE XV.......................................................................49
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 22, 1999 by and among
Go2Net, Inc., a corporation organized under the laws of the State of Delaware
(the "PARENT"), FY Acquisition Corp., a corporation organized under the laws of
the State of Delaware and a wholly-owned subsidiary of the Parent ("ACQUISITION
CORP."), ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc., a corporation organized under the laws of the
State of Florida (the "COMPANY"), and the person owning all of the issued and
outstanding shares of capital stock of the Company (the "SHAREHOLDER")
identified on the signature pages hereto.
WHEREAS, the respective Boards of Directors of the Parent, Acquisition
Corp., the Company and the Shareholder have approved the merger of the Company
with and into Acquisition Corp. (the "MERGER"), pursuant to which the Company
will be the surviving corporation and the Shareholder immediately prior to such
merger will be entitled to receive the consideration provided for in this
Agreement, all upon the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, the Shareholder has signed this Agreement and written
consents approving this Agreement, the Merger and the other transactions
contemplated hereby; and
WHEREAS, for Federal income tax purposes, it is intended that this
Agreement will qualify as a plan of reorganization, and that the Merger will be
treated as a reorganization governed by Section 368(a) of the Internal Revenue
Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement, the Delaware
General Corporation Law (the "DGCL") and the Florida Business Corporation Act
("FBCA"), the Acquisition Corp. shall be merged with and into the Company, the
separate corporate existence of the Acquisition Corp. shall cease, and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Article XI and subject to the satisfaction or waiver of the conditions set forth
in Articles IX and X, the consummation of the Merger (the "CLOSING") will take
place as promptly as practicable (and in any event within
two (2) business days) after satisfaction or waiver of the conditions set forth
in Articles IX and X, at the offices of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A
Professional Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, unless
another date, time or place is agreed to in writing by the Company and the
Parent. The date of such Closing is referred to herein as the "CLOSING DATE."
1.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Articles IX and X, the parties hereto
shall cause the Merger to be consummated by filing an agreement or certificate
of merger as contemplated by the DGCL and an articles of merger as contemplated
by the FBCA, each in the form of EXHIBIT A hereto (the "MERGER FILINGS"),
together with any required related certificates, 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 and with the Department of State of
the State of Florida, in such form as required by, and executed in accordance
with the relevant provisions of, the FBCA (the time of such filing being the
"EFFECTIVE TIME").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Merger Filings and the
applicable provisions of the DGCL and FBCA. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Acquisition Corp.
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Acquisition Corp. shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) CERTIFICATE OF INCORPORATION. Unless otherwise determined
by the Parent prior to the Effective Time, at the Effective Time, the Articles
of Incorporation of the Company., as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with the FBCA.
(b) BY-LAWS. Unless otherwise determined by the Parent prior
to the Effective Time, the By-Laws of Acquisition Corp., as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with the FBCA, the Articles
of Incorporation of the Surviving Corporation and such By-Laws.
1.5 DIRECTORS AND OFFICERS. The directors of Acquisition Corp.
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Acquisition Corp. immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights,
properties or assets of Acquisition Corp. or the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or otherwise to carry out
the purposes of this Agreement, the Surviving Corporation and its proper
officers and directors shall be authorized to execute and deliver, in the name
and on behalf of Acquisition Corp. or the Company, all such deeds, bills of
sale, assignments and assurances and to do, in the name and on behalf of
Acquisition Corp. or the Company, all such other acts and things necessary or
desirable to vest, perfect or confirm any and all right, title or interest in,
to or under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out the purposes of this Agreement.
ARTICLE II
CONSIDERATION; CONVERSION OF SHARES
2.1 MERGER CONSIDERATION. The consideration payable in the Merger to
holders of shares of the Company's capital stock ("COMPANY CAPITAL STOCK"),
shall consist of shares of (a) the Common Stock, $.01 par value per share, of
the Parent ("PARENT COMMON STOCK"), and (b) cash, such shares of Parent Common
Stock and cash to be issuable at the Closing in accordance with the terms of
this Agreement. Such shares of Parent Common Stock issuable and cash payable at
the Closing as provided herein shall in the aggregate be referred to as the
"MERGER CONSIDERATION."
2.2 CONVERSION OF SHARES.
(a) CONVERSION OF SHARES. Each share of Company Capital Stock
issued and outstanding as of the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
converted into (A) an amount in cash equal to the quotient obtained by dividing
(x) $1,000,000 (i) less the amount equal to the unpaid principal and unpaid
accrued interest and expenses under the promissory note (the "Note") made by the
Company in favor of the Parent dated September 22, 1999 in an aggregate amount
of $15,000, and (ii) adjusted by one-half of the amount paid by the Company to
the law firm of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Green, P.C. pursuant to Section
9.9, by (y) the total number of Fully Diluted Shares (as herein defined) as of
the Effective Time and (B) that number of shares of Parent Common Stock as shall
be obtained by dividing (i) the number of shares obtained by dividing
$18,500,000 by the Closing Market Price (as hereinafter defined) by (ii) the
total number of Fully Diluted Shares (as herein defined). Such resulting
quotients are collectively referred to herein as the "EXCHANGE RATIO." "FULLY
DILUTED SHARES" shall be equal to the total number of outstanding shares of
Company Capital Stock, immediately prior to the Effective Time, calculated on a
fully diluted, fully converted basis as though all convertible debt, membership
interests and equity securities and options (whether vested or unvested) and
warrants had been converted or exercised. The aggregate number of shares of
Parent Common Stock issued pursuant to this Section 2.2(a) shall be referred to
in this Agreement as the "MERGER SHARES." For purposes of this Agreement, the
term "CLOSING MARKET PRICE" shall mean the average of the closing prices for
shares of Parent Common Stock on The Nasdaq National Market for each of the five
trading days ending immediately prior to the Effective Time.
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SCHEDULE 2.2 attached hereto sets forth, with respect to the Merger
Consideration, (i) the Closing Market Price, (ii) the Exchange Ratio, (iii) the
aggregate number of Merger Shares, and (iv) the aggregate cash payment to be
paid in connection with the Merger.
(b) ACQUISITION CORP. SHARES. Each share of common stock, par
value $0.01 per share, of Acquisition Corp. issued and outstanding at the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, automatically be converted into one fully paid and
nonassessable share of common stock of the Surviving Corporation, as such shares
of common stock are constituted immediately following the Effective Time.
2.3 EXCHANGE OF CERTIFICATES.
(a) At the Closing, certificates (the "CERTIFICATES")
representing all of the issued and outstanding shares of Company Capital Stock
shall be surrendered for cancellation and termination in the Merger. At the
Effective Time, each Certificate shall be canceled in exchange for the amount in
cash and a certificate representing the number of whole shares of Parent Common
Stock (other than the Escrow Deposit, as defined below) into which the Company
Capital Stock evidenced by the Certificates so surrendered shall have been
converted pursuant to Section 2.2(a) of this Agreement. Such certificates
representing shares of Parent Common Stock will be delivered to the Shareholder
within ten (10) business days after the Closing. The cash component of the
Merger Consideration shall, at Closing, be wired to an account designated by the
Shareholder for further distribution to the Shareholder, less any expenses
allocated to the Shareholder pursuant to Section 7.5. Until surrendered, each
outstanding Certificate which prior to the Effective Time represented shares of
Company Capital Stock shall be deemed for all corporate purposes to evidence
ownership of (A) the number of whole shares of Parent Common Stock into which
the shares of Company Capital Stock have been converted and (B) the amount of
cash issuable upon conversion of such shares of Company Capital Stock, but shall
have no other rights. From and after the Effective Time, the holders of shares
of Company Capital Stock shall cease to have any rights in respect of such
shares and their rights shall be solely in respect of the amount of cash and
Parent Common Stock into which such shares of Company Capital Stock have been
converted.
(b) If any cash is to be paid and any shares of Parent Common
Stock are to be issued in the name of a person other than the person in whose
name the Certificate(s) surrendered in exchange therefor is registered, it shall
be a condition to the issuance of such shares that (i) the Certificate(s) so
surrendered shall be transferable and shall be properly assigned, endorsed or
accompanied by appropriate stock powers, (ii) such transfer shall otherwise be
proper and (iii) the person requesting such transfer shall pay Parent, or its
exchange agent, any transfer or other taxes payable by reason of the foregoing
or establish to the reasonable satisfaction of Parent that such taxes have been
paid or are not required to be paid. Notwithstanding the foregoing, neither
Parent nor the Company shall be liable to a holder of shares of Company Capital
Stock for cash and shares of Parent issuable to such holder pursuant to the
provisions of Section 2.2(a) of this Agreement that are delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
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(c) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, Parent shall issue in
exchange for such lost, stolen or destroyed Certificate the cash and shares of
Parent Common Stock issuable in exchange therefor pursuant to the provisions of
Section 2.2(a) of this Agreement. The Board of Directors of Parent may in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to provide to Parent, at
Parent's option, either a performance bond or an indemnity agreement against any
claim that may be made against Parent with respect to the Certificate alleged to
have been lost, stolen or destroyed.
2.4 NO FRACTIONAL SECURITIES. No fractional shares of Parent Common
Stock shall be issuable by the Parent upon the conversion of shares of Company
Capital Stock in the Merger pursuant to Section 2.2(a) hereof. In lieu of any
such fractional shares, each holder of Company Capital Stock who would otherwise
have been entitled to receive a fraction of a share of Parent Common Stock shall
be entitled to receive instead an amount in cash equal to such fraction
multiplied by the Closing Market Price.
2.5 COMPANY CAPITAL STOCK BOOKS. At the Effective Time, the Company
Capital Stock transfer books of the Company shall be closed, and there shall be
no further registration of transfers of Company Capital Stock thereafter on the
records of the Company.
2.6 NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. The amount of cash
and the Merger Shares delivered upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates for shares of Company Capital Stock are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
2.7 ADJUSTMENT EVENT. If, between the date hereof and the Effective
Time, the issued and outstanding shares of Parent Common Stock shall have been
combined, split, reclassified or otherwise changed into a different number of
shares or a different class of shares, an appropriate adjustment to the Exchange
Ratio shall be made to fully reflect such change in such manner as is reasonably
and mutually acceptable to the Parent and the Shareholder.
2.8 ESCROW. At the Effective Time, Parent will deposit in escrow on
behalf of the holders of Company Capital Stock certificates representing Merger
Shares with a value based upon the Closing Market Price equal to ten percent
(10%) of the Merger Consideration (which shall reduce the Merger Shares issuable
to such holders of Company Capital Stock under Section 2.2(a)) allocated among
the holders of Company Capital Stock based on the number of shares of Company
Capital Stock held at the Effective Time (the shares represented by such
certificates collectively referred to herein as the "ESCROW DEPOSIT"). The
Escrow Deposit shall be held as
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security for the indemnification obligations under Article XII pursuant to the
provisions of an Escrow Agreement (the "ESCROW AGREEMENT") in the form of
EXHIBIT B attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder jointly and severally represent and
warrant to the Parent and Acquisition Corp. as set forth below, subject to the
exceptions set forth in the disclosure schedules attached hereto (the
"DISCLOSURE SCHEDULES"), the section numbers and letters of which correspond to
the section and subsection numbers and letters of this Agreement.
3.1 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. The Company has no Subsidiaries (as that term is hereinafter defined).
The Company has all requisite corporate power and authority to own, operate and
lease the properties and assets it now owns, operates and leases and to carry on
its business as presently conducted. The Company is duly qualified to transact
business as a foreign corporation and is in good standing in the jurisdictions
set forth in SCHEDULE 3.1, which are the only jurisdictions where such
qualification is required by reason of the nature of the properties and assets
currently owned, operated or leased by it or the business currently conducted by
it, except for such jurisdictions where the failure to be so qualified would not
have a Company Material Adverse Effect (as defined below). The Company has
previously delivered to the Parent complete and correct copies of its Articles
of Incorporation (certified by the secretary of state of the jurisdiction in
which it was formed as of a recent date) and its By-Laws (certified by the
Secretary of the Company as of a recent date). Except as set forth in SCHEDULE
3.1, neither the Company's Certificate of Incorporation nor its By-Laws have
been amended since the date of certification thereof, nor has any action been
taken for the purpose of effecting any amendment of such instrument. The term
"COMPANY MATERIAL ADVERSE EFFECT" means, for purposes of this Agreement, any
change, event or effect that is, or that would be, materially adverse to the
business, operations, assets, liabilities, financial condition or results of
operations of the Company.
3.2 AUTHORIZATION. The Company has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Shareholder and the Board of Directors of the Company, and no other
proceeding on the part of the Company is necessary to approve and authorize the
execution and delivery of this Agreement or (subject to the filing of the
Certificate of Merger pursuant to the DGCL and the Articles of Merger pursuant
to the FBCA) the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding agreement of the Company, enforceable in accordance with
its terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
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enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in law
or in equity.
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Subject to (a) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
(b) the filing of the Articles of Merger with the Secretary of State of the
State of Florida and (c) compliance with applicable federal and state securities
laws, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not: (i) violate or conflict with any
provision of the Articles of Incorporation or By-Laws of the Company, (ii)
breach, violate or constitute an event of default (or an event which with the
lapse of time or the giving of notice or both would constitute an event of
default) under, give rise to any right of termination, cancellation,
modification or acceleration under, or require any consent or the giving of any
notice under, any note, bond, indenture, mortgage, security agreement, lease,
license, franchise, permit, agreement or other instrument or obligation to which
the Company is a party, or by which the Company or any of its properties or
assets may be bound, or result in the creation of any lien, claim or encumbrance
or other right of any third party of any kind whatsoever upon the properties or
assets of the Company pursuant to the terms of any such instrument or
obligation, other than any breach, violation, default, termination,
cancellation, modification or acceleration which would not have a Company
Material Adverse Effect, (iii) violate or conflict with any law, statute,
ordinance, code, rule, regulation, judgment, order, writ, injunction, decree or
other instrument of any Federal, state, local or foreign court or governmental
or regulatory body, agency or authority applicable to the Company or by which
any of its properties or assets may be bound except for such violations and
conflicts which would not have a Company Material Adverse Effect or (iv)
require, on the part of the Company, any filing or registration with, or permit,
license, exemption, consent, authorization or approval of, or the giving of any
notice to, any governmental or regulatory body, agency or authority, other than
any filing, registration, permit, license, exemption, consent, authorization,
approval or notice which if not obtained would not have a Company Material
Adverse Effect.
3.4 CAPITALIZATION.
(a) The authorized capital stock of the Company consist of
10,000 shares of common stock, $1.00 par value per share (the "COMMON STOCK") of
which 100 shares of Common Stock are issued. SCHEDULE 3.4(A) sets forth a
complete and correct list of the record and beneficial ownership of the issued
and outstanding Company Capital Stock. All of the issued and outstanding shares
of Company Capital Stock are duly authorized and validly issued and are fully
paid and nonassessable, and were not issued in violation of any preemptive
rights or Federal or state securities laws. Except as disclosed in SCHEDULE
3.4(A) hereto, the Company has never repurchased or redeemed any shares of
Company Capital Stock, and there are no amounts owed or which may be owed to any
person by the Company as a result of any repurchase or redemption of shares of
Company Capital Stock. Except as disclosed in SCHEDULE 3.4(A) hereto, there are
no agreements, arrangements or understandings to which the Company is a party or
by which it is bound to redeem or repurchase any shares of Company Capital
Stock. Except as disclosed on SCHEDULE 3.4(A), there are no outstanding options,
warrants or other rights to
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purchase, or any securities convertible into or exchangeable for, shares of
Company Capital Stock, and there are no agreements, arrangements or
understandings (written or oral) to which the Company is a party or by which it
is bound pursuant to which the Company is or may be required to issue additional
shares of Company Capital Stock.
(b) Except as disclosed on SCHEDULE 3.4(B), the Company does
not own, directly or indirectly, any equity securities, or options, warrants or
other rights to acquire equity securities, or securities convertible into or
exchangeable for equity securities, of any other corporation, or any partnership
interest in any general or limited partnership or unincorporated joint venture
(a "SUBSIDIARY").
3.5 FINANCIAL STATEMENTS; BUSINESS INFORMATION. (a) Attached hereto as
SCHEDULE 3.5(A) are (i) the balance sheets of the Company as of December 31,
1998 and the statements of income for the fiscal period then ended, and (ii) the
balance sheets of the Company as of September 30, 1999 and the statements of
income of the Company for the nine (9) months then ended (hereinafter
collectively referred to as the "FINANCIAL STATEMENTS"). The Financial
Statements (i) have been prepared from the books and records of the Company,
(ii) have been prepared in accordance with generally accepted accounting
principles consistently applied during the periods covered thereby, and (iii)
present fairly in all material respects the financial condition and results of
operations of the Company as at the dates, and for the periods, stated therein
(except as may be indicated therein or in the notes or schedules thereto),
except that the interim Financial Statements are subject to normal year-end
adjustments and any other adjustments described therein or in the notes and
schedules thereto which will not be individually or in the aggregate material in
amount or effect. The Financial Statements have been prepared in manner such
that all business-related expenses (and no non-business expenses or expenses of
a personal nature) of the Company have been charged against the operations of
the Company and all of the non-business, personal expenses incurred by the
Company have charged been charged against the Shareholder's capital account.
(b) The Company and Shareholder have delivered to Parent the
log files attached hereto as SCHEDULE 3.5(B) (the "Logs"). The Logs are true and
correct in all material respects and the Company and Shareholder acknowledge
that the Parent has relied upon the Logs to calculate certain statistics
regarding the Company's business which should be true and correct in all
material respects (aside from any error in calculation on the part of the
Company) as of the dates stated in the Schedule. Without limiting the
materiality of any other representations, warranties and covenants of the
Company and the Shareholder contained herein, the Company and the Shareholder
specifically acknowledge that the accuracy of such statistics is material to the
Parent's decision to enter into the transactions contemplated by this Agreement
and to issue the Merger Shares and to pay the cash portion of the Merger
Consideration. The Company has generated at least 11,000,000 page views as
measured by ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. for the month of September 1999.
-8-
(c) As of the Closing Date, except as provided in SCHEDULE
3.5(C), the Company shall have no outstanding indebtedness other than accounts
payable incurred in the ordinary course of business.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except (i) as set forth on
SCHEDULE 3.6, (ii) as set forth or reserved against in the balance sheet of the
Company dated as of September 30, 1999, included in the Financial Statements
(the "BALANCE SHEET") and (iii) for obligations and liabilities incurred since
September 30, 1999 in the ordinary course of business, which do not individually
or in the aggregate exceed $5,000, the Company does not have any material
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise. As of September 30, 1999, there were no expenses of a personal
nature, not related to the business of the Company, charged to the operations of
the Company and no non-business purchases or purchases of a personal nature
since September 30, 1999 will be charged to the operations of the Company and
all such expenses or purchases of a personal, non-business nature have been or
will be charged against the Shareholders' capital account.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 3.7, since September 30, 1999, the Company has carried on its business
in all material respects in the ordinary course and consistent with past
practice. Except as set forth on SCHEDULE 3.7 hereto, since September 30, 1999,
the Company has not: (i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) except in the ordinary course of
business and consistent with past practice; (ii) experienced any Company
Material Adverse Effect; (iii) made any change in accounting principal or
practice or in its method of applying any such principal or practice, (iv)
suffered any material damage, destruction or loss, whether or not covered by
insurance, affecting its properties, assets or business; (v) mortgaged, pledged
or subjected to any lien, charge or other encumbrance, or granted to third
parties any rights in, any of its material assets, tangible or intangible; (vi)
sold or transferred any of its assets, except in the ordinary course of business
and consistent with past practice, or canceled or compromised any debts or
waived any claims or rights of a material nature; (vii) issued any additional
Company Capital Stock or any rights, options or warrants to purchase, or
securities convertible into or exchangeable for, Company Capital Stock; (viii)
declared or paid any dividends on or made any distributions (however
characterized) in respect of Company Capital Stock; (ix) repurchased or redeemed
any Company Capital Stock; (x) granted any general or specific increase in the
compensation payable or to become payable to any of its Employees (as that term
is hereinafter defined) or any bonus or service award or other like benefit, or
instituted, increased, augmented or improved any Benefit Plan (as that term is
hereinafter defined); or (xi) entered into any agreement to do any of the
foregoing.
3.8 LEGAL PROCEEDINGS, ETC. Except as set forth in SCHEDULE 3.8, there
are no suits, actions, claims, proceedings (including, without limitation,
arbitral or administrative proceedings) or investigations pending or, to the
knowledge of the Company or its Shareholder, threatened against the Company or
its properties, assets or business or, to the knowledge of the Company or its
Shareholder, pending or threatened against any of the officers, directors,
employees, agents or consultants of the Company in connection with the business
of the
-9-
Company. There are no such suits, actions, claims, proceedings or investigations
pending against the Company, or, to the knowledge of the Company or its
Shareholder, threatened against the Company challenging the validity or
propriety of the transactions contemplated by this Agreement. There is no
judgment, order, injunction, decree or award (whether issued by a court, an
arbitrator or an administrative agency) to which the Company is a party, or
involving the Company's properties, assets or business, which is unsatisfied or
which requires continuing compliance therewith by the Company.
3.9 TAXES.
(a) Except as set forth in SCHEDULE 3.9, the Company has duly
and timely filed, all Tax returns and other filings in respect of Taxes (as that
term is hereinafter defined) required to be filed by it prior to the date
hereof, and has in a timely manner paid all Taxes which are (or will be) due for
all periods ending on or before the date hereof, whether or not shown on such
returns, except to the extent the Company has established adequate reserves on
the Balance Sheet for such Taxes. All such Tax returns have been accurately and
completely prepared in all material respects in compliance with all laws, rules
and regulations. The Company and the Shareholder acknowledge that the
Shareholder hereby waive and agree that he does not have any present or future
claims against the Company for any past, present or future Tax payments.
(b) Except as set forth in SCHEDULE 3.9 hereto, there are no
actions or proceedings currently pending or, to the knowledge of the Company or
its Shareholder, threatened against the Company by any governmental authority
for the assessment or collection of Taxes, no claim for the assessment or
collection of Taxes has been asserted in writing against the Company, and there
are no matters under discussion by the Company with any governmental authority
regarding claims for the assessment or collection of Taxes. Any Taxes that have
been claimed or imposed as a result of any examinations of any Tax return of the
Company by any governmental authority are being contested in good faith and have
been disclosed in writing to the Parent. Except as set forth in SCHEDULE 3.9,
there are no agreements or applications by the Company for an extension of time
for the assessment or payment of any Taxes nor any waiver of the statute of
limitations in respect of Taxes. There are no Tax liens on any of the assets of
the Company, except for liens for Taxes not yet due or payable. Except as set
forth in SCHEDULE 3.9, to the best knowledge of the Company, no written claim
has been received from any taxing authority in a jurisdiction in which the
Company does not file Tax returns that it is or may be subject to taxation by
that jurisdiction.
(c) For purposes of this Agreement, the terms "TAX" and
"TAXES" shall mean and include any and all United States, state, local, foreign
or other income, sales, use, withholding, employment, payroll, social security,
property taxes and all other taxes of any kind, deficiencies, fees or other
governmental charges, including, without limitation, any installment payment for
taxes and contributions or other amounts determined with respect to compensation
paid to directors, officers, employees or independent contractors from time to
time imposed by or required to be paid to any governmental authority (including
penalties and additions to tax thereon, penalties for failure to file a return
or report, and interest on any of the foregoing).
-10-
(d) The Company has been taxable as a S corporation for state,
federal and local income tax purposes at all times since its incorporation.
(e) The Company is not and has never been a party to or bound
by any tax indemnity agreement, tax sharing agreement, tax allocation agreement
or similar agreement or arrangement and the Company does not have any liability
for Taxes of any person (other than the Company) under Treasury Regulation
1.1502-6 (or any similar provision of state, local or foreign law).
(f) The Company has withheld all amounts from its employees
and other persons required to be withheld under the tax, social security,
unemployment and other withholding provisions of all federal, state, local and
foreign laws except where the taxes in question are subject to challenge by the
Company in an appropriate proceeding and adequate reserves therefor have been
provided by the Company and the Company's Financial Statements.
(g) Neither the assets of the Company nor any interests in the
Company constitute a "United States real property interest" within the meaning
of Section 897(c) of the Internal Revenue Code of 1986, as amended (the "Code").
(h) The Shareholder is a U.S. resident for federal income tax
purposes.
(i) Except as set forth in SCHEDULE 3.9, there are no
accounting method changes or proposed or threatened accounting method changes of
the Company, nor any other item, that could give rise to an adjustment under
Section 481 of the Code for periods after the Closing Date, and the Company will
not be required to make any such Section 481 adjustment as a result of the
transaction contemplated by this Agreement.
(j) Except as set forth in SCHEDULE 3.9, no power of attorney
has been granted by the Company and is currently in force with respect to any
matter relating to Taxes.
3.10 TITLE TO PROPERTIES AND RELATED MATTERS. (a) Except as set forth
on SCHEDULE 3.10(A), the Company has good and valid title to all personal
property, tangible or intangible, which the Company purports to own, including
the properties reflected on the Balance Sheet or acquired after the date thereof
(other than properties and assets sold or otherwise disposed of in the ordinary
course of business and consistent with past practice since September 30, 1999,
free and clear of any claims, liens, pledges, security interests or encumbrances
of any kind whatsoever (other than (i) purchase money security interests and
common law vendor's liens, in each case for goods purchased on open account in
the ordinary course of business and having a fair market value of less than
$5,000 in each individual case), (ii) liens for Taxes not yet due and payable,
and (iii) such imperfections of title and encumbrances, if any, that are not
material in character, amount or extent and that do not materially detract from
the value, or materially interfere with the use of, the property subject thereto
or affected thereby. Collectively, such property and the Intellectual Property
Rights disclosed on SCHEDULE 3.11 constitute all property, tangible or
intangible, necessary to conduct the Company's business as presently conducted.
-11-
(b) The Company does not own any real property or any interest
in real property, except as set forth in SCHEDULE 3.10(B).
(c) SCHEDULE 3.10(C) sets forth a list, which is correct and
complete in all material respects, of all equipment, machinery, instruments,
vehicles, furniture, fixtures and other items of personal property currently
owned or leased by the Company with a book value as of September 30, 1999, in
each case of $5,000 or more. All such personal property is in suitable operating
condition (ordinary wear and tear excepted) and is physically located in or
about one of the Company's places of business and is owned by the Company or is
leased by the Company under one of the leases set forth in SCHEDULE 3.10(D).
Except as disclosed in SCHEDULE 3.10(C), none of such personal property is
subject to any agreement or commitment for its use by any person other than the
Company. The maintenance and operation of such personal property has been in
material conformance with all applicable laws and regulations except for such
non-conformance as would not have a Company Material Adverse Effect. Except as
set forth on SCHEDULE 3.10(C), there are no assets leased by the Company or
required for the operation of the Company that are owned, directly or
indirectly, by any Related Person (as that term is hereinafter defined in
Section 3.22).
(d) SCHEDULE 3.10(D) sets forth a complete and correct list of
all real property and personal property leases to which the Company is a party.
The Company has previously delivered to the Parent complete and correct copies
of each lease (and any amendments or supplements thereto) listed in SCHEDULE
3.10(D). Except as set forth in SCHEDULE 3.10(D), (i) each such lease is valid
and binding, and in full force and effect; except to the extent that applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights may affect such validity or enforceability,
(ii) neither the Company nor (to the knowledge of the Company or the
Shareholder) any other party is in default under any such lease, and no event
has occurred which constitutes, or with the lapse of time or the giving of
notice or both would constitute, a default by the Company or (to the knowledge
of the Company or the Shareholder) a default by any other party under such
lease; (iii) to the knowledge of the Company or the Shareholder, there are no
disputes or disagreements between the Company and any other party with respect
to any such lease; and (iv) except as set forth on SCHEDULE 3.10(D), there is no
requirement under any such lease that the Company either obtain the lessor's
consent to, or notify the lessor of, the consummation of the transactions
contemplated by this Agreement.
(e) The Company owns all of the assets used by it in
connection with its business. Prior to the Effective Time, the Shareholder shall
contribute and shall cause its wholly-owned subsidiaries other than the Company
to contribute all of their respective assets relating to and used in connection
with the business of the Company, to the Company. As of the Closing Date, the
wholly-owned subsidiaries of Shareholder other than the Company hold no assets
and the Shareholder shall remain liable for, and indemnify the Parent,
Acquisition Corp. and the Company against, liabilities arising therefrom or in
connection therewith.
3.11 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS; EMPLOYEE RESTRICTIONS.
(a) Set forth on Schedule 3.11 is a list of all registered copyrights, copyright
registrations and copyright
-12-
applications, trademark registrations and applications for registration, patents
and patent applications, trademarks, service marks, trade names and Internet
domain names, including without limitation, "▇▇▇▇▇▇▇▇▇▇.▇▇▇" and
"▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇", that are used by the Company in the Company's business as
presently conducted. The items listed on Schedule 3.11, together with all other
intellectual property rights owned by the Company and used in connection with
its business and (i) all licenses, assignments and releases of intellectual
property rights of others in material works embodied in the Company's products,
(ii) any and all intellectual property rights, licenses, databases, computer
programs and other computer software user interfaces, know-how, trade secrets,
customer lists, proprietary technology, processes and formulae, source code,
object code, algorithms, architecture, structure, display screens, layouts,
development tools, instructions, templates and marketing materials created by or
on behalf of the Company, and (iii) inventions, trade dress, logos and designs
created by or on behalf of the Company are referred to as "Intellectual Property
Rights." All Intellectual Property Rights purported to be owned by the Company
which were developed, worked on or otherwise held by any employee, officer,
consultant or otherwise are owned free and clear by the Company by operation of
law or have been validly assigned to the Company. True and correct copies of all
such licenses, assignments and releases of Intellectual Property Rights have
been provided to Parent prior to the date hereof, all of which are valid and
binding agreements of the parties thereto, enforceable in accordance with their
terms. All services provided to the Company by non-employees in respect of the
creation, modification or improvement of any Intellectual Property Rights of the
Company (including, without limitation, software, hardware, copyrightable works
and the like) have been performed pursuant to agreements with the Company that
assign to the Company ownership of such Intellectual Property Rights, each of
which is a valid and binding agreement of the parties thereto, enforceable in
accordance with its terms. The Intellectual Property Rights are sufficient in
all material respects to carry on the business of the Company as presently
conducted. The Company has exclusive ownership of or license to use all
Intellectual Property Rights identified in SCHEDULE 3.11 as owned or licensed by
the Company or has obtained any licenses, releases or assignments reasonably
necessary to use all third parties' Intellectual Property Rights in works
embodied in the Company's products. The present business activities or products
of the Company do not infringe any Intellectual Property Rights of others.
Except as set forth in SCHEDULE 3.11, the Company has not received any notice or
other claim from any person asserting that any of the Company's present
activities infringe in any material respect or may infringe any Intellectual
Property Rights of such person.
The Company has the right to use all trade secrets, data, customer
lists, log files, hardware designs, programming processes, software and other
information required for or incident to its products or its business (including,
without limitation, the operation of its web sites) as presently conducted in
any material respect and has no reason to believe that any of such information
that is provided to the Company by third parties will not continue to be
provided to the Company on the same terms and conditions as currently exist. The
Company has taken all reasonable measures to protect and preserve the security
and confidentiality of its trade secrets and other confidential information. To
the knowledge of the Company and the Shareholder, all trade secrets and other
confidential information of the Company are not part of the public domain or
knowledge, nor, to the knowledge of the Company and the Shareholder, have they
-13-
been misappropriated by any person having an obligation to maintain such trade
secrets or other confidential information in confidence for the Company. To the
knowledge of the Company and the Shareholder, no employee or consultant of the
Company has used any trade secrets or other confidential information of any
other person in the course of their work for the Company.
The Company is the exclusive owner of all right, title and interest in
its Intellectual Property Rights as purported to be owned by the Company, and to
the Company's and the Shareholder's knowledge, such Intellectual Property Rights
are valid and in full force and effect. No university, government agency
(whether federal or state) or other organization which sponsored research and
development conducted by the Company has any claim of right to or ownership of
or other encumbrance upon the Intellectual Property Rights of the Company. The
Company is not aware of any infringement by others of its copyrights or other
Intellectual Property Rights in any of its products, technology or services, or
any violation of the confidentiality of any of its proprietary information. To
the Company's and the Shareholder's knowledge, the Company is not making
unlawful use of any confidential information or trade secrets of any past or
present employees of the Company.
Except as set forth in SCHEDULE 3.11, neither the Company, the
Shareholder, nor, to the knowledge of the Company and the Shareholder, any of
the Company's employees, have any agreements or arrangements with current or
former employers of the Shareholder or employees relating to (i) confidential
information or trade secrets of such employers, or (ii) the assignment of rights
by such Shareholder or employees to any inventions, know-how or intellectual
property of any kind. The Company and the Shareholder have previously delivered
to Parent true and correct copies of each agreement listed on SCHEDULE 3.11.
Neither the Shareholder nor, to the knowledge of the Company and the
Shareholder, is any Company employee bound by any consulting agreement relating
to confidential information or trade secrets of another entity that are being
violated by such persons.
(b) All information and content of the Company's World Wide
Web sites (other than information provided by users, customers and advertisers)
is accurate and complete in all material respects, except as set forth on
SCHEDULE 3.11(B). The Company has all franchises, permits, licenses and other
rights and privileges reasonably necessary to permit it to own its property and
to conduct its business as it is presently conducted other than franchises,
permits, licenses and other rights and privileges which if not held by the
Company would not have a Company Material Adverse Effect or result in a fine or
penalty in excess of $5,000 individually or in the aggregate.
(c) All Intellectual Property Rights used by the Company in
connection with its business, including all object and source code, created or
developed by Shareholder are the sole and absolute property of the Company. No
third party has any claim of right to or ownership of or other encumbrance upon
such Intellectual Property Rights developed by Shareholder
-14-
3.12 CONTRACTS. (a) Except as set forth in SCHEDULE 3.12(A),
the Company is not a party to, or subject to:
(i) any contract, arrangement or understanding, or
series of related contracts, arrangements or understandings, which involves
annual expenditures or receipts by the Company of more than $1,000;
(ii) any note, indenture, credit facility, mortgage,
security agreement or other contract, arrangement or understanding relating to
or evidencing indebtedness for money borrowed or a security interest or mortgage
in the assets of the Company;
(iii) any guaranty issued by the Company;
(iv) any contract, arrangement or understanding
relating to the acquisition, issuance or transfer of any securities;
(v) any contract, arrangement or understanding
relating to the acquisition, transfer, distribution, use, development, sharing
or license of any technology or Intellectual Property Rights, other than
licenses granted in the ordinary course of business with a term of less than one
year;
(vi) any contract, arrangement or understanding
granting to any person the right to use any property or property right of the
Company other than licenses granted in the ordinary course of business with a
term of less than one year;
(vii) any contract, arrangement or understanding
restricting the Company's right to (A) engage in any business activity or
compete with any business, or (B) develop or distribute any technology;
(viii) any contract, arrangement or understanding
relating to the employment of, or the performance of services of, any employee,
consultant or independent contractor and pursuant to which the Company is
required to pay more than $1,000 per year;
(ix) any contract, arrangement or understanding with
a Related Person (as that term is hereinafter defined); or
(x) any outstanding offer, commitment or obligation
to enter into any contract or arrangement of the nature described in subsections
(i) through (ix) of this subsection 3.12(a).
(b) The Company has previously made available for inspection
and copying to the Parent complete and correct copies (or, in the case of oral
contracts, a complete and correct description) of each contract (and any
amendments or supplements thereto) listed on SCHEDULE 3.12(A). Except as set
forth in SCHEDULE 3.12(B), (i) each contract listed in SCHEDULE 3.12(A) is in
full force and effect; (ii) neither the Company nor (to the knowledge of the
Company or the
-15-
Shareholder) any other party is in default under any material contract, and no
event has occurred which constitutes, or with the lapse of time or the giving of
notice or both would constitute, a default by the Company or (to the knowledge
of the Company or the Shareholder) a default by any other party under such
contract; (iii) to the best knowledge of the Company or the Shareholder, there
are no disputes or disagreements between the Company and any other party with
respect to any material contract; and (iv) each other party to each material
contract has consented or been given notice (or prior to the Closing shall have
consented or been given notice), where such consent or the giving of such notice
is necessary, sufficient that such contract shall remain in full force and
effect following the consummation of the transactions contemplated by this
Agreement without modification in the rights or obligations of the Company
thereunder.
(c) Except as set forth and described in SCHEDULE 3.12(C), the
Company has not issued any warranty or any agreement or commitment to indemnify
any person other than in the ordinary course of business.
3.13 EMPLOYEES; EMPLOYEE BENEFITS.
(a) SCHEDULE 3.13(A) sets forth the names of all current
employees of the Company (the "Employees") and such Employee's job title, the
location of employment of such Employee, such Employee's current salary, the
amount of any bonuses or other compensation paid since December 31, 1998 to such
Employee, the date of employment of such Employee and the accrued vacation time
of such Employee. SCHEDULE 3.13(A) hereto sets forth a true and correct
statement of the liability, if any, of the Company for accrued but unused sick
pay. Except as set forth on SCHEDULE 3.13(A), there are no outstanding loans
from the Company to any officer, director, employee, agent or consultant of the
Company, or to any other Related Person. SCHEDULE 3.13(A) hereto sets forth a
complete and correct description of all severance policies of the Company.
Complete and correct copies of all written agreements with Employees and all
employment policies, and all amendments and supplements thereto, have previously
been delivered or made available to the Parent, and a list of all such
agreements and policies is set forth on SCHEDULE 3.13(A). None of the Employees
has, to the knowledge of the Company or the Shareholder, indicated a desire to
terminate his or her employment, or any intention to terminate his or her
employment upon a sale of, or business combination relating to, the Company or
in connection with the transactions contemplated by this Agreement. Except as
set forth on SCHEDULE 3.13(A), since December 31, 1998, the Company has not (i)
increased the salary or other compensation payable or to become payable to or
for the benefit of any of the Employees, (ii) increased the term or tenure of
employment for any Employee, except in the ordinary course of business
consistent with past practice, (iii) increased the amounts payable to any of the
Employees upon the termination of any such person's employment or (iv) adopted,
increased, augmented or improved benefits granted to or for the benefit of any
of the Employees under any Benefit Plan.
(b) Except as disclosed on SCHEDULE 3.13(B), the Company has
complied in all material respects with Title VII of the Civil Rights Act of
1964, as amended, the Age
-16-
Discrimination in Employment Act, as amended, the Fair Labor Standards Act, as
amended, the Immigration Reform and Control Act of 1986, and all applicable
laws, rules and regulations governing payment of minimum wages and overtime
rates, the withholding and payment of taxes from compensation, discriminatory
practices with respect to employment and discharge, or otherwise relating to the
conduct of employers with respect to Employees or potential employees, and there
have been no claims made or, to the knowledge of the Company or the Shareholder,
threatened thereunder against the Company arising out of, relating to or
alleging any violation of any of the foregoing. Except as disclosed in SCHEDULE
3.13(B), there are no material controversies, strikes, work stoppages, picketing
or disputes pending or, to the knowledge of the Company or the Shareholder,
threatened between the Company and any of the Employees or former Employees; no
labor union or other collective bargaining unit represents or has ever
represented any of the Employees, including any "leased employees" (within the
meaning of Section 414(n) of the Code); no organizational effort by any labor
union or other collective bargaining unit currently is under way or, to the best
knowledge of the Company or the Shareholder, threatened with respect to any
Employees; and the consent of no labor union or other collective bargaining unit
is required to consummate the transactions contemplated by this Agreement.
(c) SCHEDULE 3.13(C) sets forth a list of each material
defined benefit and defined contribution plan, stock ownership plan, employment
or consulting agreement, executive compensation plan, bonus plan, incentive
compensation plan or arrangement, deferred compensation agreement or
arrangement, agreement with respect to temporary employees or "leased employees"
(within the meaning of Section 414(n) of the Code), vacation pay, sickness,
disability or death benefit plan (whether provided through insurance, on a
funded or unfunded basis or otherwise), employee stock option, stock
appreciation rights or stock purchase plan, severance pay plan, cafeteria plan,
arrangement or practice, employee relations policy, practice or arrangement, and
each other employee benefit plan, program or arrangement, including, without
limitation, each "employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
has been maintained by the Company for the benefit of or relating to any of the
Employees or to any former Employees or their dependents, survivors or
beneficiaries, whether or not legally binding, whether written or oral or
whether express or implied, all of which are hereinafter referred to as the
"BENEFIT PLANS."
(d) Except as set forth on SCHEDULE 3.13(D), each Benefit Plan
which is an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) or other form of retirement plan intended to meet the requirements of
Section 401(a) of the Code meets such requirements; the trust, if any, forming
part of such plan is exempt from U.S. federal income tax under Section 501(a) of
the Code; a favorable determination letter has been issued by the Internal
Revenue Service (the "IRS") with respect to each plan and trust and each
amendment thereto; and nothing has occurred since the date of such determination
letter that would adversely affect the qualification of such plan. No Benefit
Plan is an "employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
that at any time prior to the Closing was not exempt from the annual reporting
requirement set forth in Section 104(a) of ERISA. No Benefit Plan is a
"voluntary
-17-
employees beneficiary association" (within the meaning of section 501(c)(9) of
the Code) and there have been no other "welfare benefit funds" (within the
meaning of Section 419 of the Code) relating to Employees or Former Employees.
No event or condition exists with respect to any Benefit Plan that could subject
the Company to any material Tax under Section 4980B of the Code, or other
applicable law. With respect to each Benefit Plan, the Company has heretofore
delivered or made available to the Parent complete and correct copies of the
following documents, where applicable and to the extent available: (i) the most
recent annual report (Form 5500 series), together with schedules, as required,
filed with the IRS, and any financial statements and opinion required by Section
103(a)(3) of ERISA, (ii) the most recent determination letter issued by the IRS,
(iii) the most recent summary plan description and all modifications, as well as
all other descriptions distributed to Employees or set forth in any manuals or
other documents, (iv) the text of the Benefit Plan and of any trust, insurance
or annuity contracts maintained in connection therewith and (v) the most recent
actuarial report, if any, relating to the Benefit Plan.
(e) There is no agreement, plan or arrangement covering any
employee or independent contractor or former employee or independent contractor
of the Company that considered individually or considered collectively with any
other such agreement, plan or arrangement, will, or could reasonably be expected
to, give rise directly or indirectly to the payment of any amount as a result of
the Merger that would not be deductible pursuant to Section 280G of the Code or
that would be subject to an excise tax under Section 4999 of the Code.
3.14 COMPLIANCE WITH APPLICABLE LAW. The Company is not in violation in
any material respect of any applicable safety, health, environmental or other
law, statute, ordinance, code, rule, regulation, judgment, order, injunction,
writ or decree of any Federal, state, local or foreign court or governmental or
regulatory body, agency or authority having, asserting or claiming jurisdiction
over it or over any part of its business, operations, properties or assets,
except for any violation that would not have a Company Material Adverse Effect
or resulting fine or penalty in excess of $10,000 individually or in the
aggregate. The Company has not received any notice alleging any such violation,
nor to the knowledge of the Company or the Shareholder, is there any inquiry,
investigation or proceedings relating thereto.
3.15 ABILITY TO CONDUCT THE BUSINESS. There is no agreement,
arrangement or understanding, nor any judgment, order, writ, injunction or
decree of any court or governmental or regulatory body, agency or authority
applicable to the Company or to which the Company is a party or by which it (or
any of its properties or assets) is bound, that will prevent the use by the
Surviving Corporation, after the Effective Time, of the properties and assets
owned by, the business conducted by or the services rendered by the Company on
the date hereof, in each case on substantially the same basis as the same are
used, owned, conducted or rendered on the date hereof. The Company has in force,
and is in compliance with, in all material respects, all material governmental
permits, licenses, exemptions, consents, authorizations and approvals used in or
required for the conduct of their business as presently conducted, all of which
shall continue in full force and effect, without requirement of any filing or
the giving of any notice and
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without modification thereof, following the consummation of the transactions
contemplated hereby. The Company has not received any notice of, and to the
knowledge of the Company or the Shareholder, there are no inquiries, proceedings
or investigations relating to or which could result in the revocation or
modification of any such permit, license, exemption, consent, authorization or
approval.
3.16 MAJOR CUSTOMERS. SCHEDULE 3.16 sets forth a complete and correct
list of the ten largest customers of the Company, in terms of revenue recognized
in respect of such customers during the nine months ended September 30, 1999,
showing the amount of revenue recognized for each such customer during such
period. Except as set forth and described in SCHEDULE 3.16, to the knowledge of
the Company or the Shareholder, the Company has not received any notice or other
communication (written or oral) from any of the customers listed in SCHEDULE
3.16 hereto terminating or reducing in any material respect, or setting forth an
intention to terminate or materially reduce in the future, or otherwise
reflecting a material adverse change in, the business relationship between such
customer and the Company.
3.17 CONSULTANTS, SALES REPRESENTATIVES AND OTHER AGENTS. SCHEDULE 3.17
hereto sets forth a complete and correct list of the names and addresses of each
consultant, sales representative or other agent (other than any such person
performing solely clerical functions) currently engaged by the Company who is
not an employee of the Company, the commission rates or other compensation
applicable with respect to each such person and the amount of commissions or
other compensation earned by each such person for the nine (9) months ended
September 30, 1999. Complete and correct copies of all current agreements
between the Company and any such person have previously been delivered or made
available by the Company to the Parent.
3.18 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
reflected on the Balance Sheet (i) arose from bona fide transactions in the
ordinary course of business and consistent with past practice, and (ii) except
as set forth on SCHEDULE 3.18, are owned by the Company free and clear of any
security interest, lien, encumbrance, or claims, and (iii) are accurately and
fairly reflected on the Balance Sheet, or, with respect to accounts receivable
of the Company created after September 30, 1999, are accurately and fairly
reflected in the books and records of the Company. The reserves for bad debts
reflected on the balance sheet were calculated in accordance with generally
accepted accounting principles consistent with past practice and are adequate.
3.19 INSURANCE. SCHEDULE 3.19 hereto is a true and complete list of all
insurance policies carried by the Company with respect to its business, together
with, in respect of each such policy, the name of the insurer, the number of the
policy, the annual policy premium payable therefor, the limits of coverage, the
deductible amount (if any), the expiration date thereof and each pending claim
thereunder. Complete and correct copies of each certificate of insurance have
previously been delivered or made available by the Company to the Parent. All
such policies are in full force and effect. All premiums due thereon have been
paid in a timely manner.
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3.20 BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.20 sets forth a
complete and correct list showing:
(i) all bank accounts of the Company, together with,
with respect to each such account, the account number, the names of all
signatories thereof, the authorized powers of each such signatory and the
approximate balance thereof on the date of this Agreement; and
(ii) the names of all persons holding powers of
attorney from the Company and a summary statement of the terms thereof.
3.21 MINUTE BOOKS, ETC. The minute books, records of Company Capital
Stock and other corporate records of the Company are complete and correct in all
material respects. The minute books of the Company contain accurate and
materially complete records of all meetings or written consents to action of the
Shareholder of the Company and accurately reflect all corporate actions of the
Company which are required by law to be passed upon by the Shareholder of the
Company.
3.22 RELATED PERSON INDEBTEDNESS AND CONTRACTS. SCHEDULE 3.22 sets
forth a complete and correct summary of all contracts, commitments, arrangements
and understandings not described elsewhere in this Agreement between the Company
and any of the following (collectively, "RELATED PERSONS"): (i) the Shareholder;
(ii) the spouses and children of any of the Shareholder (collectively, "NEAR
RELATIVES"); (iii) any trust for the benefit of any of the Shareholder or any of
his near relatives; or (iv) any corporation, partnership, joint venture or other
entity or enterprise owned or controlled by any of the Shareholder or by any of
their respective near relatives. All amounts contributed by the Shareholder to
the Company have been treated as contributions to Company equity and have not
been treated as, nor do they constitute, indebtedness of the Company to its
Shareholder.
3.23 BROKERS; PAYMENTS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company or
the Shareholder. The Company has suspended or terminated, and has the legal
right to terminate or suspend, all negotiations and discussions of Acquisition
Transactions (as defined in Section 6.3) with parties other than Parent. No
valid claim exists against the Company or, based on any action by the Company,
against the Surviving Corporation or the Parent for payment of any "topping,"
"break-up" or "bust-up" fee or any similar compensation or payment arrangement
as a result of the transactions contemplated hereby.
3.24 COMPANY ACTION. The Shareholder of the Company, by written consent
or at a meeting duly called and held, has (i) determined that the Merger is fair
and in the best interests of the Company and its Shareholder and (ii) approved
the Merger and this Agreement in accordance with the provisions of the DGCL and
the FBCA.
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3.25 YEAR 2000 MATTERS. The management information systems (including
all computer hardware and software owned, licensed or otherwise used by the
Company) will not perform materially differently and experience any material
malfunctions or usage problems due to the change in the calendar year from 1999
to the year 2000, and with respect to any computer hardware or software licensed
or otherwise used by the Company which are supplied by third parties, the
foregoing representation is limited to the Company's knowledge of the
capabilities of such hardware and software.
3.26 DISCLOSURE. No representation or warranty by the Company or the
Shareholder contained in this Agreement and no statement contained, when
considered together as a whole, in any of the Disclosure Schedules delivered or
to be delivered pursuant to this Agreement by the Company contains or will
contain, when taken as a whole, any untrue statement of a material fact or omits
or will omit to state any material fact necessary to make the statements
contained therein, in light of the circumstances under which they are made, not
misleading.
3.27 TAX MATTERS. Neither the Company nor any of its affiliates, has
taken or agreed to take any action that (without regard to any action taken or
agreed to be taken by the Parent or Acquisition Corp.) would prevent the Merger
from qualifying as a reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
4.1 AUTHORIZATION; ETC. The Shareholder represents and warrants to the
Parent and Acquisition Corp. as follows:
(i) The Shareholder is the sole and exclusive record
and beneficial owner of the Company Capital Stock of the Company set forth
opposite his or her name in SCHEDULE 3.4(A) hereto, free and clear of any
claims, liens, pledges, options, rights of first refusal or other encumbrances
or restrictions of any nature whatsoever (other than restrictions on transfer
imposed under applicable securities laws), and, except as set forth on SCHEDULE
3.4(B) hereto, there are no agreements, arrangements or understandings to which
the Shareholder is a party (other than this Agreement) involving the purchase,
sale or other acquisition or disposition of the Company Capital Stock owned by
the Shareholder;
(ii) the Shareholder shall (A) concurrently with the
Shareholder's execution and delivery of this Agreement, execute and deliver to
Parent a written consent in which the Shareholder voted all Company Capital
Stock owned by the Shareholder in favor of the Merger and the adoption of this
Agreement by the Company, (B) at the Effective Time, deliver or cause to be
delivered to the Parent certificates representing all Company Capital Stock
owned by the Shareholder, each such certificate to be duly endorsed for transfer
and free and clear of any claims, liens, pledges, options, rights of first
refusal or other encumbrances or
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restrictions of any nature whatsoever (other than restrictions imposed under
applicable securities laws);
(iii) the Shareholder has all necessary legal
capacity, right, power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby, and this Agreement
constitutes a valid and binding obligation of the Shareholder enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors, rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in law or in equity; and
(iv) the execution and delivery of this Agreement by
the Shareholder and the consummation of the transactions contemplated hereby
will not (A) violate or conflict with any provision of any partnership agreement
or other constitutional documents of the Shareholder that is constituted as a
general or limited partnership, (B) breach, violate or constitute an event of
default (or an event which with the lapse of time or the giving of notice or
both would constitute an event of default) under, give rise to any right of
termination, cancellation, modification or acceleration under or require any
consent or the giving of any notice under, any note, bond, indenture, mortgage,
security agreement, lease, license, franchise, permit, agreement or other
instrument or obligation to which the Shareholder is a party, or by which the
Shareholder or the Company Capital Stock held by the Shareholder may be bound,
or result in the creation of any material lien, claim or encumbrance or other
right of any third party of any kind whatsoever upon the properties or assets of
the Shareholder pursuant to the terms of any such instrument or obligation,
which breach, violation or event of default would have a material adverse effect
on the Shareholder's ability to perform the Shareholder's obligations hereunder,
or (C) to the Shareholder's knowledge, violate or conflict with any law,
statute, ordinance, code, rule, regulation, judgment, order, writ, injunction,
decree or other instrument of any court or governmental or regulatory body,
agency or authority applicable to the Shareholder or by which such the Company
Capital Stock held by the Shareholder may be bound.
4.2 PARENT COMMON STOCK.
The Shareholder acknowledges, represents and warrants to the Parent and
Acquisition Corp. as follows:
(i) The Shareholder understands that the shares of
Parent Common Stock to be issued to the Shareholder in the Merger will not have
been registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or any state securities law by reason of specific exemptions under the
provisions thereof which depend in part upon the other representations and
warranties made by the Shareholder in this Agreement. The Shareholder
understands that the Parent is relying, in part, upon the Shareholder's
representation and warranties contained in this Section 4.2 for the purpose of
determining whether this transaction meets the requirements for such exemptions.
-22-
(ii) The Shareholder has such knowledge, skill and
experience in business, financial and investment matters so that the Shareholder
is capable of evaluating the merits and risks of an investment in the Parent
Common Stock pursuant to the transactions contemplated by this Agreement or to
the extent that the Shareholder has deemed it appropriate to do so, the
Shareholder has relied upon appropriate professional advice regarding the tax,
legal and financial merits and consequences of an investment in Parent Common
Stock pursuant to the transactions contemplated by this Agreement.
(iii) The Shareholder has made, either alone or
together with the Shareholder's advisors, such independent investigation of the
Parent, its management and related matters as the Shareholder deems to be, or
such advisors have advised to be, necessary or advisable in connection with an
investment in the Parent Common Stock through the transactions contemplated by
this Agreement; and the Shareholder and his advisors have received all
information and data that the Shareholder and his advisors believe to be
necessary in order to reach an informed decision as to the advisability of an
investment in the Parent Common Stock pursuant to the transactions contemplated
by this Agreement.
(iv) The Shareholder has reviewed the Shareholder's
financial condition and commitments, alone and together with the Shareholder's
advisors, and, based on such review, the Shareholder is satisfied that (A) the
Shareholder has adequate means of providing for the Shareholder's financial
needs and possible contingencies and has assets or sources of income which,
taken together, are more than sufficient so that he could bear the risk of loss
of the Shareholder's entire investment in the Parent Common Stock, (B) the
Shareholder has no present or contemplated future need to dispose of all or any
portion of the Parent Common Stock to satisfy any existing or contemplated
undertaking, need or indebtedness, and (C) the Shareholder is capable of bearing
the economic risk of an investment in the Parent Common Stock for the indefinite
future. The Shareholder shall furnish any additional information about the
Shareholder reasonably requested by the Parent to assure the compliance of this
transaction with applicable federal and state securities laws.
(v) The Shareholder understands that the shares of
the Parent Common Stock to be received by the Shareholder in the transactions
contemplated hereby will be "restricted securities" under applicable federal
securities laws and that the Securities Act and the rules of the Securities and
Exchange Commission (the "SEC") promulgated thereunder provide in substance that
the Shareholder may dispose of such shares only pursuant to an effective
registration statement under the Securities Act or an exemption from
registration if available. The Shareholder further understands that, except as
provided in Article XIII, the Parent has no obligation or intention to register
the sale of any of the shares of the Parent Common stock to be received by the
Shareholder in the transactions contemplated hereby, or take any other action so
as to permit sales pursuant to, the Securities Act. Accordingly, except as
provided in Article XIII, the Shareholder understands that the Shareholder may
dispose of such shares only in transactions which are of a type exempt from
registration under the Securities Act, including (without limitation) a "private
placement," in which event the transferee will acquire such shares as
"restricted securities" and subject to the same limitations as in the hands of
the Shareholder.
-23-
The Shareholder further understands that applicable state securities laws may
impose additional constraints upon the sale of securities. As a consequence, the
Shareholder understands that the Shareholder may have to bear the economic risk
of an investment in the Parent Common Stock to be received by the Shareholder
pursuant to the transactions contemplated hereby for an indefinite period of
time.
(vi) Except as provided in Article XIII, the
Shareholder is acquiring shares of the Parent Common Stock pursuant to the
transactions contemplated hereby for investment only and not with a view to or
intention of or in connection with any resale or distribution of such shares or
any interest therein.
(vii) The certificate(s) evidencing the shares of
the Parent Common Stock to be issued pursuant to the transactions contemplated
hereby shall bear the following legend:
"The shares represented 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
transferred in the absence of such registration
or an exemption therefrom under the Securities
Act of 1933, as amended, and applicable state
securities laws."
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION CORP.
The Parent and Acquisition Corp. jointly and severally represent and
warrant to the Company that:
5.1 CORPORATE ORGANIZATION. Each of the Parent and Acquisition Corp. is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Parent and Acquisition Corp. has all
requisite corporate power and authority to own, operate and lease the properties
and assets it now owns, operates and leases and to carry on its business as
presently conducted. The Parent and Acquisition Corp. are each duly qualified to
transact business as a foreign corporation and are each in good standing in all
jurisdictions where such qualification is required by reason of the nature of
the properties and assets currently owned, operated or leased by the Parent or
Acquisition Corp. or the business currently conducted by them, except for such
jurisdictions where the failure to be so qualified would not have a Go2Net
Material Adverse Effect (as defined below). Acquisition Corp. is a corporation
newly formed by Parent and has not conducted any business other than as
expressly set forth in or contemplated by this Agreement. The Parent has
previously delivered to the Company complete and correct copies of (i) its
Certificate of Incorporation (certified by the Secretary of State of Delaware as
of a recent date) and its By-Laws (certified by the Secretary of the Parent as
of a recent date) and (ii) the Certificate of Incorporation of Acquisition Corp.
and all amendments thereto to the date hereof (certified by the Secretary of
State of the State of
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Delaware as of a recent date) and the By-Laws of Acquisition Corp. (certified by
the secretary of Acquisition Corp. as of a recent date). Neither the Certificate
of Incorporation nor the By-Laws of the Parent or Acquisition Corp. has been
amended since the respective dates of certification thereof, nor has any action
been taken for the purpose of effecting any amendment of such instruments. The
term "GO2NET MATERIAL ADVERSE EFFECT" means for purposes of this Agreement, any
change, event or effect that is, or would be, materially adverse to the
business, operation, assets, liabilities, financial condition or results of
operations of the Parent and its subsidiaries (including Acquisition Corp.),
taken as a whole.
5.2 AUTHORIZATION. Each of the Parent and Acquisition Corp. has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly approved by the Boards of Directors of the Parent and Acquisition
Corp. and by the Parent as the sole stockholder of Acquisition Corp., and no
other corporate proceedings on the part of the Parent or Acquisition Corp. are
necessary to approve and authorize the execution and delivery of this Agreement
or (subject to the filing of the Certificate of Merger pursuant to the DGCL and
the filing of the Articles of Merger pursuant to the FBCA) the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Parent and Acquisition Corp. and constitutes the valid and
binding agreement of the Parent and Acquisition Corp., enforceable in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or in law).
5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Subject to (a) the filing of
Certificate of Merger with the Secretary of State of the State of Delaware, (b)
the filing of the Articles of Merger with the Department of State of the State
of Florida and (c) compliance with applicable federal and state securities laws,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not: (i) violate or conflict with any
provisions of the Certificate of Incorporation or By-Laws of the Parent or
Acquisition Corp.; (ii) breach, violate or constitute an event of default (or an
event which with the lapse of time or the giving of notice or both would
constitute an event of default) under, give rise to any right of termination,
cancellation, modification or acceleration under, or require any consent or the
giving of any notice under, any note, bond, indenture, mortgage, security
agreement, lease, license, franchise, permit, agreement or other instrument or
obligation to which the Parent or Acquisition Corp. are parties, or by which any
of them or any of their respective properties or assets may be bound, or result
in the creation of any lien, claim or encumbrance of any kind whatsoever upon
the properties or assets of the Parent or Acquisition Corp. pursuant to the
terms of any such instrument or obligation, other than any breach, violation,
default, termination, cancellation, modification or acceleration which would not
have a Go2Net Material Adverse Effect; (iii) violate or conflict with any law,
statute, ordinance, code, rule, regulation, judgment, order, writ, injunction or
decree or other instrument of any Federal, state, local or foreign court or
governmental or regulatory body, agency or authority applicable to the Parent or
Acquisition
-25-
Corp. or by which any of their respective properties or assets may be bound,
except for such violations or conflicts which would not have a Go2Net Material
Adverse Effect; or (iv) require, on the part of the Parent or Acquisition Corp.,
any filing or registration with, or permit, license, exemption, consent,
authorization or approval of, or the giving of any notice to, any governmental
or regulatory body, agency or authority other than any filing, registration,
permit, license, exemption, consent, authorization, approval or notice which if
not obtained or made would not have a Go2Net Material Adverse Effect.
5.4 CAPITALIZATION. (a) The authorized capital stock of the Parent
consists of 499,000,000 shares of Parent Common Stock, of which 29,654,033
shares are issued and outstanding as of September 30, 1999 and 1,000,000 shares
of Preferred Stock, of which 300,000 shares are designated Series A Convertible
Preferred Stock and of which 300,000 shares are issued and outstanding as of
September 30, 1999. All of the issued and outstanding shares of Parent Common
Stock are duly authorized, validly issued, fully paid and nonassessable, and
none of such shares has been issued in violation of any applicable preemptive
rights. There are no agreements or commitments to which the Parent is a party or
by which it is bound for the redemption or repurchase of any shares of its
capital stock. Except for options issued under the Parent's employee stock
option plans, including those assumed in connection with prior acquisition
transactions (collectively, the "STOCK OPTION PLANS"), there are no outstanding
options, warrants or other rights to purchase, or securities convertible into or
exchangeable for, shares of the capital stock of the Parent, and (except as
contemplated by this Agreement and except with respect to options issued under
the Stock Option Plans) there are no agreements or commitments to which the
Parent is a party or by which it is bound pursuant to which the Parent is or may
become obligated to issue additional shares of its capital stock.
(b) The authorized capital stock of Acquisition Corp. consists
of 1,000 shares of common stock, par value $0.01 per share, of which 100 shares
are issued and outstanding, all of which shares are owned beneficially and of
record by the Parent. There are no outstanding options, warrants or other rights
to purchase, or securities convertible into or exchangeable for, shares of the
capital stock of Acquisition Corp., and there are no agreements or commitments
to which Acquisition Corp. is a party or by which it is bound pursuant to which
Acquisition Corp. is or may become obligated to issue additional shares of its
capital stock.
5.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Parent has heretofore
delivered or made available to the Company complete and correct copies of all
reports and other filings filed by the Parent with the SEC pursuant to the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations thereunder (the "ACTS") since and including the filing date of the
Registration Statement with respect to the Parent's initial public offering
(such reports and other filings collectively referred to herein as the "SEC
FILINGS"). The SEC Filings constitute all of the documents required to be filed
by the Parent under the Securities Act and Exchange Act since such date. All
documents required to be filed as exhibits to the SEC Filings have been so
filed, and all contracts so filed as exhibits are in full force and effect,
except those which are expired in accordance with their terms, and neither
Parent nor any of its subsidiaries is in default
-26-
thereunder. As of their respective dates, the SEC Filings did 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. The audited financial
statements of the Parent included in the SEC Filings comply in all material
respects with the published rules and regulations of the SEC with respect
thereto, and such audited financial statements (i) were prepared from the books
and records of the Parent, (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and (iii) present fairly
the financial position of the Parent as at the dates thereof and the results of
operations and cash flows (or changes in financial position, for the fiscal year
ended September 30, 1998 and earlier years) for the periods then ended. The
unaudited financial statements included in the SEC Filings comply in all
material respects with the published rules and regulations of the SEC with
respect thereto; and such unaudited financial statements (i) were prepared from
the books and records of the Parent, (ii) were prepared in accordance with
generally accepted accounting principles, except as otherwise permitted under
the Exchange Act and the rules and regulations thereunder, on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto) and
(iii) present fairly the financial position of the Parent as at the dates
thereof and the results of operations and cash flows (or changes in financial
condition) for the periods then ended, subject to normal year-end adjustments
and any other adjustments described therein or in the notes or schedules
thereto. The foregoing representations and warranties in this Section 5.5 shall
also be deemed to be made with respect to all filings made with the SEC on or
before the Effective Time.
5.6 LITIGATION. There are no suits, actions, claims, proceedings
(including, without limitation, arbitral or administrative proceedings) or
investigations pending or, to the knowledge of the Parent and Acquisition Corp.,
threatened against the Parent, Acquisition Corp. or their respective properties,
assets or business or, to the knowledge of the Parent and Acquisition Corp.,
pending or threatened against any of their respective officers, directors,
employees, agents or consultants in connection with their respective businesses.
There are no such suits, actions, claims, proceedings or investigations pending,
or, to the knowledge of the Parent and Acquisition Corp., threatened challenging
the validity or propriety of the transactions contemplated by this Agreement.
There is no judgment, order, injunction, decree or award (whether issued by a
court, an arbitrator or an administrative agency) to which either the Parent or
Acquisition Corp. is a party, or involving the Parent's or Acquisition Corp.'s
respective properties, assets or business, which is unsatisfied or which
requires continuing compliance therewith by the Parent or Acquisition Corp.
5.7 COMPLIANCE WITH APPLICABLE LAW. Neither the Parent nor the
Acquisition Corp. is in violation of any applicable safety, health,
environmental or other law, statute, ordinance, code, rule, regulation,
judgment, order, injunction, writ or decree of any Federal, state, local or
foreign court or governmental or regulatory body, agency or authority having,
asserting or claiming jurisdiction over it or over any part of its business,
operations, properties or assets, except where any such violation would not have
a Go2Net Material Adverse Effect. Neither the Parent nor the
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Acquisition Corp has received any notice alleging any such violation, nor to the
knowledge of the Parent, is there any inquiry, investigation or proceedings
relating thereto.
5.8 BROKERS; PAYMENTS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Parent or
Acquisition Corp.
5.9 DISCLOSURE. No representation or warranty by the Parent or
Acquisition Corp. contained in this Agreement and no statement contained in any
of the Disclosure Schedules delivered or to be delivered pursuant to this
Agreement by Parent or Acquisition Corp. contains or will contain, when
considered together as a whole, any untrue statement of a material fact or omits
or will omit to state any material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
5.10 VALIDITY OF SHARES. Assuming the accuracy of the representations
contained in Article IV, the shares of Parent Common Stock to be issued in
connection with the Merger will, when issued in accordance with this Agreement,
be duly authorized, validly issued, fully paid and nonassessable, will not be
subject to any preemptive or other statutory right of stockholders, will be
issued in compliance with applicable U.S. Federal and state securities laws and
will be free of any liens or encumbrances.
5.11 TAX MATTERS. Neither Parent nor Acquisition Corp. has taken or
agreed to take any action that (without regard to any action taken or agreed to
be taken by the Company or any of its affiliates) would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended.
ARTICLE VI
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period commencing on
the date hereof and continuing until the Effective Time, the Company and the
Shareholder agrees that the Company, except as otherwise expressly contemplated
by this Agreement or agreed to in writing by the Parent:
(a) will carry on its business only in the ordinary course and
consistent with past practice;
(b) will not declare or pay any dividend on or make any other
distribution (however characterized) in respect of shares of its capital stock;
(c) will not, directly or indirectly, redeem or repurchase, or
agree to redeem or repurchase, any shares of its capital stock;
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(d) will not amend its Certificate of Incorporation or
By-Laws;
(e) will not issue, or agree to issue, any shares of its
capital stock, or any options, warrants or other rights to acquire shares of its
capital stock, or any securities convertible into or exchangeable for shares of
its capital stock;
(f) will not combine, split or otherwise reclassify any shares
of its capital stock;
(g) will not form a Subsidiary;
(h) will use its commercially reasonable best efforts to
preserve intact its present business organization, keep available the services
of its officers and key employees and preserve its relationships with clients
and others having business dealings with it to the end that its goodwill and
ongoing business shall not be materially impaired at the Effective Time;
(i) will not (i) make any capital expenditures individually in
excess of $4,000 or in the aggregate in excess of $8,000, (ii) enter into any
license, distribution, OEM, reseller, joint venture or other similar agreement,
(iii) enter into or terminate any lease of, or purchase or sell, any real
property, (iv) enter into any leases of personal property involving individually
in excess of $4,000 annually or in the aggregate in excess of $8,000 annually,
(v) incur or guarantee any additional indebtedness for borrowed money, (vi)
create or permit to become effective any security interest, mortgage, lien,
charge or other encumbrance on its properties or assets, or (vii) enter into any
agreement to do any of the foregoing;
(j) will not adopt or amend any Benefit Plan for the benefit
of Employees, or increase the salary or other compensation (including, without
limitation, bonuses or severance compensation) payable or to become payable to
its Employees or accelerate, amend or change the period of exercisability or the
vesting schedule of options granted under any stock option plan or agreements
except as specifically required by the terms of such plans or agreements, or
enter into any agreement to do any of the foregoing;
(k) will not accelerate receivables or delay payables;
(l) will promptly advise the Parent of the commencement of, or
threat of (to the extent that such threat comes to the knowledge of the Company
or the Shareholder) any claim, action, suit, proceeding or investigation
against, relating to or involving the Company or any of its officers, employees,
agents or consultants in connection with their businesses or the transactions
contemplated hereby that could reasonably be expected to have a Company Material
Adverse Effect;
(m) will use its commercially reasonable efforts to maintain
in full force and effect all insurance policies maintained by the Company on the
date hereof;
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(n) will not enter into any agreement to dissolve, merge,
consolidate or, except in the ordinary course, sell any material assets of the
Company, or acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets in excess of $1,000 in the aggregate; and
(o) will not change the Company's method of accounting and
will not make any Tax elections that would adversely affect Parent or its
subsidiaries without the consent of Parent.
6.2 CONDUCT OF BUSINESS OF ACQUISITION CORP. During the period
commencing on the date hereof and continuing until the Effective Time,
Acquisition Corp. shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
6.3 OTHER NEGOTIATIONS. Neither the Company nor any of the
Shareholder will (nor will they permit any of their respective officers,
directors, employees, agents, partners and affiliates on their behalf to) take
any action to solicit, initiate, seek, encourage or support any inquiry,
proposal or offer from, furnish any information to, or participate in any
discussions or negotiations with, any corporation, partnership, person or other
entity or group (other than Parent) regarding any acquisition of the Company,
any merger or consolidation with or involving the Company, or any acquisition of
any material portion of the stock or assets of the Company, or any equity or
debt financing of the Company or any material license of Intellectual Property
Rights (any of the foregoing being referred to in this Agreement as an
"ACQUISITION TRANSACTION") or enter into an agreement concerning any Acquisition
Transaction with any party other than Parent. If between the date of this
Agreement and the termination of this Agreement pursuant to Article XI, the
Company receives from a third party any offer to negotiate or consummate an
Acquisition Transaction, the Company shall (i) notify Parent immediately (orally
and in writing) of such offer, including the identity of such party and the
terms of any proposal therein, and (ii) notify such third party of the Company's
obligations under this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 ACCESS TO PROPERTIES AND RECORDS. The Company and the Parent will
provide each other and their respective accountants, counsel and other
authorized advisors, with reasonable access, during business hours, to their
premises and properties and their books and records (including, without
limitation, contracts, leases, insurance policies, litigation files, minute
books, accounts, working papers and tax returns filed and in preparation) and
will cause its officers to furnish to each other and their respective authorized
advisors such additional financial, tax and operating data and other information
pertaining to their respective businesses as the Company or the Parent, as the
case may be, shall from time to time reasonably request. All of such data and
information shall be kept confidential by Parent, Acquisition Corp., the Company
and the
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Shareholder until the Merger is consummated. If the Merger is not consummated,
Parent, Acquisition Corp., the Company and the Shareholder will keep and
maintain in strict confidence all information concerning the business and assets
of the other party and not use such information for any purpose and shall, upon
request, return all such information to the requesting party.
7.2 TRANSFER OF INTERESTS. The Shareholder agrees that he (i) shall not
dispose of or in any way encumber his Company Capital Stock prior to the
consummation of the transactions contemplated hereby, (ii) shall use his best
efforts to cause, and take no action inconsistent with, the approval and
consummation of said transactions and (iii) at the Closing shall surrender the
certificates representing all shares of Company Capital Stock owned by him, duly
endorsed for transfer.
7.3 REASONABLE EFFORTS; ETC. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use his/its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including obtaining any consents, authorizations, exemptions and approvals from,
and making all filings with, any governmental or regulatory authority, agency or
body which are necessary in connection with the transactions contemplated by
this Agreement.
7.4 MATERIAL EVENTS. At all times prior to the Effective Time, each
party shall promptly notify the others in writing of the occurrence of any event
which will or may result in the failure to satisfy any of the conditions
specified in Article IX or Article X hereof.
7.5 FEES AND EXPENSES. Each of the Parent, Acquisition Corp., and the
Shareholder on the behalf of the Company shall bear and pay all of their own
fees, costs and expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of their
respective counsel, accountants, brokers and financial advisors, except that if
the Merger is consummated, then the Shareholder shall be responsible for all
such fees, costs and expenses incurred by the Company in connection with this
Agreement and the transactions contemplated hereby in excess of $25,000 and such
fees, costs and expenses shall be deemed expenses of the Shareholder and paid by
the Shareholder on the Closing Date and the Parent shall be responsible for up
to a maximum of $25,000 of the fees, costs and expenses incurred by the
Company's counsel.
7.6 NASDAQ NATIONAL MARKET LISTING. Parent shall cause the Merger
Shares to be authorized for listing on The Nasdaq National Market.
7.7 SUPPLEMENTS TO DISCLOSURE SCHEDULES. From time to time prior to the
Effective Time, the Company shall supplement or amend the Disclosure Schedules
with respect to any matter hereafter arising that, if existing or occurring at
or prior to the date of this Agreement, would have been required to be set forth
or described in the Disclosure Schedules or that is necessary to correct any
information in the Disclosure Schedules or in any representation and
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warranty of the Company that has been rendered inaccurate thereby. The
Disclosure Schedules delivered by the Company shall be deemed to include only
that information contained therein on the date of this Agreement and shall be
deemed to exclude any information contained in any subsequent supplement or
amendment thereto.
ARTICLE VIII
COVENANTS OF SHAREHOLDER
The Shareholder hereby agrees that for a period of two (2) years after
the Closing Date, he will not, directly or indirectly, alone or as a partner,
officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or business organization, engage in any business
activity, or have a financial interest in any business activity (excepting only
the ownership of not more than 5% of the outstanding securities of any class of
any entity listed on an exchange or regularly traded in the over-the-counter
market), which is directly or indirectly in competition with the products or
services being developed (and known to the Shareholder), marketed, sold or
otherwise provided by the Company, or which is directly or indirectly
detrimental to the Company's business as of the Closing Date ("COMPETITIVE
ACTIVITY"). The Shareholder further agrees that, for a period of two (2) years
from after the Closing Date, he will not in any capacity, either separately,
jointly or in association with others, directly or indirectly, solicit or
contact in connection with, or in furtherance of, a Competitive Activity any of
the Company's employees, consultants, agents, suppliers, customers or prospects
that were such with respect to the Company at any time during the one year
immediately preceding the date hereof or that become such with respect to the
Company at any time during the one year immediately following the date hereof.
The Shareholder's obligations under this Article VIII shall survive the
termination or cessation of his employment with the Company and shall not be
limited by Article XII hereof.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
THE PARENT AND ACQUISITION CORP.
The obligation of the Parent and Acquisition Corp. to consummate the
transactions contemplated hereby shall be subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any of which may
be waived in writing by the Parent and Acquisition Corp. in their sole
discretion):
9.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Company and the Shareholder which are contained in this
Agreement, or contained in any Schedule, certificate or instrument delivered or
to be delivered pursuant to this Agreement, shall be true and correct in all
material respects at and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date, and at the Closing the
Company shall have delivered to the Parent and Acquisition Corp. a certificate
(signed on behalf of the Company by the President of the Company) to that effect
with respect to all such
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representations and warranties made by the Company, and the Shareholder shall
have executed and delivered to the Parent and Acquisition Corp. a certificate to
that effect with respect to all such representations and warranties made by the
Shareholder.
9.2 PERFORMANCE. The Company and the Shareholder shall have performed
and complied in all material respects with all of the obligations under this
Agreement which are required to be performed or complied with by them on or
prior to the Closing Date, and at the Closing the Company shall have delivered
to the Parent and Acquisition Corp. a certificate (duly executed on behalf of
the Company by the President and the Chief Financial Officer of the Company) to
that effect with respect to all such obligations required to have been performed
or complied with by the Company on or before the Closing Date, and the
Shareholder shall have executed and delivered to the Parent and Acquisition
Corp. a certificate to that effect with respect to all such obligations required
to have been performed or complied with by the Shareholder on or before the
Closing Date.
9.3 ABSENCE OF LITIGATION. No statute, rule or regulation shall have
been enacted or promulgated, and no order, decree, writ or injunction shall have
been issued and shall remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated hereby, and no
action, suit or proceeding before any court or governmental or regulatory body,
agency or authority shall have been instituted by any person (or instituted or
threatened by any governmental or regulatory body, agency or authority), and no
investigation by any governmental or regulatory body, agency or authority shall
have been commenced with respect to the transactions contemplated hereby or with
respect to the Company which would have a material adverse effect on the
transactions contemplated hereby or have a Company Material Adverse Effect.
9.4 CONSENTS. All approvals, consents, waivers and authorizations
required to be obtained by the Company or the Shareholder in connection with the
Merger and the other transactions contemplated by this Agreement (including
those identified on SCHEDULE 3.3) shall have been obtained and shall be in full
force and effect.
9.5 ADDITIONAL AGREEMENTS. The Company or the Shareholder, whichever is
applicable, shall have executed and delivered the following agreements:
(i) Employment Offer letters, in a form satisfactory to
Parent, executed by the Shareholder with the Parent;
(ii) Confidentiality Agreements, in a form satisfactory to
Parent, executed by the Shareholder;
(iii) the Escrow Agreement annexed as EXHIBIT B hereto, duly
executed by the Shareholder and the Escrow Agent; and
(iv) a FIRPTA Certificate, duly executed by the Shareholder.
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9.6 DELIVERY OF CERTIFICATES FOR CANCELLATION. The certificates
representing all of the issued and outstanding shares of Company Capital Stock
as of the Closing Date, duly endorsed in blank, shall have been surrendered for
cancellation.
9.7 APPROVAL. The holders of 100% of the issued and outstanding shares
of Company Capital Stock shall have voted in favor of the approval of the Merger
and the transactions contemplated hereby.
9.8 MERGER FILINGS. The Company shall have executed and delivered to
the Parent counterparts of the Certificate of Merger to be filed with the
Secretary of State of the State of Delaware and the Articles of Merger to be
filed with the Department of State of the State of Florida in connection with
the Merger.
9.9 PAYMENT OF INDEBTEDNESS. At or prior to the Effective Time, the
Company shall have paid in full all outstanding indebtedness such that at the
Closing, the Company shall not have any outstanding indebtedness other than
accounts payable incurred in the ordinary course of business; this shall include
the payment of $33,000 in legal fees owed by the Company in connection with the
transaction with ▇▇▇▇▇▇▇▇.▇▇▇ Transaction to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Green,
P.C. The Company shall deliver a letter from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Green,
P.C. certifying the payment of all amounts owed to the firm by the Company and
releasing the Company from any further obligations.
9.10 DUE DILIGENCE. Parent shall have completed its investigation of
the Company and its business and all legal and other due diligence to its
satisfaction, in its sole discretion.
9.11 CONTRACTS/LIENS . The Company shall have terminated the License
Agreement with the Shareholder and the Lease Agreement with Atlas Data Systems,
Inc. dated January 19, 1999. The Company shall have delivered an executed UCC-3
Termination Statement to Parent for filing terminating the lien and releasing
the security interest held by Atlas Data Systems, Inc. prior to the Closing. The
Company shall provide written notice of the proposed Merger to Discover / NOVUS
in connection with the Discover Novus Network Merchant Services Agreement.
9.12 CONTRIBUTION OF ASSETS. The Shareholder shall contribute to the
Company, prior to the Closing Date, all of the intellectual property licensed to
the Company by the Shareholder and all assets owned by Shareholder or by other
entities owned by Shareholder which are used in connection with the business of
the Company pursuant to a Contribution Agreement in substantially the form
attached hereto as EXHIBIT C.
9.13 OPINION OF STEEL ▇▇▇▇▇▇ ▇▇▇▇▇. The Company shall have delivered to
Parent an opinion of Steel ▇▇▇▇▇▇ ▇▇▇▇▇, special counsel to the Company in
substantially the form annexed as EXHIBIT D hereto.
9.14 SUPPORTING DOCUMENTS. The Company shall have delivered to the
Parent a certificate (a) of the Secretary of State of Florida dated as of the
Closing Date, certifying as to
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the corporate legal existence and good standing of the Company, and (b) of the
Secretary of the Company, dated the Closing Date, certifying on behalf of the
Company (i) that attached hereto is a true and complete copy of the Articles of
Incorporation of the Company, certified by the Secretary of State of the State
of Florida, (ii) that attached thereto is a true and complete copy of the
By-Laws of such Company as in effect on the date of such certification; (iii)
that attached thereto is a true and complete copy of all resolutions adopted by
the Shareholder of such Company authorizing the execution, delivery and
performance of this Agreement and the consummation of the Merger; and (iv) to
the incumbency and specimen signature of each officer of the Company executing
on behalf of such company this Agreement and the other agreements related
hereto.
9.15 FONTANA AGREEMENT The Company shall have obtained from Fontana
Creating Solutions a release of all ownership rights to the "freeyellow" logo
designed by Fontana Creating Solutions.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY AND THE SHAREHOLDER
The obligation of the Company and the Shareholder to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or prior to the Closing Date of each of the following
conditions (any of which may be waived in writing by the Company and the
Shareholder in their sole discretion):
10.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of each of the Parent and Acquisition Corp. contained in this
Agreement, or contained in any Schedule, certificate or other instrument or
document delivered or to be delivered pursuant to this Agreement, shall be true
and correct in all material respects at and as of the Closing Date as though
such representations and warranties were made on and as of the Closing Date, and
at the Closing each of the Parent and Acquisition Corp. shall have delivered to
the Company and the Shareholder a certificate (signed on its behalf by its
President or its Chief Financial Officer) to that effect with respect to all
such representations and warranties made by such entity.
10.2 PERFORMANCE. Each of the Parent and Acquisition Corp. shall have
performed and complied in all material respects with all of the obligations
under this Agreement which are required to be performed or complied with by them
on or prior to the Closing Date, and at the Closing each of the Parent and
Acquisition Corp. shall have delivered to the Company and the Shareholder a
certificate, signed on its behalf by its President or its Chief Financial
Officer, to that effect with respect to all such obligations required to have
been performed or complied with by such entity on or before the Closing Date.
10.3 ABSENCE OF LITIGATION. No statute, rule or regulation shall have
been enacted or promulgated, and no order, decree, writ or injunction shall have
been issued and shall remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains,
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enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby, and no action, suit or proceeding before any court or governmental or
regulatory body, agency or authority shall have been instituted by any person
(or instituted or threatened by any governmental or regulatory body, agency or
authority) and no investigation by any governmental or regulatory body, agency
or authority shall have been commenced with respect to the transactions
contemplated hereby or with respect to the Parent or Acquisition Corp. which
would have a material adverse effect on the transactions contemplated hereby or
on the business of the Parent and Acquisition Corp. taken as a whole.
10.4 CONSENTS. All approvals, consents, waivers and authorizations
required to be obtained by Parent or Acquisition Corp. in connection with the
Merger and the other transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
10.5 ADDITIONAL AGREEMENTS. The Parent shall have executed and
delivered (and shall have agreed to cause the Surviving Corporation to execute
and deliver immediately following the Effective Time, as applicable)
counterparts of the following agreements;
(i) the Employment Offer Letters referred to in Section 9.5(i)
hereof;
(ii) the Confidentiality Agreements referred to in Section
9.5(ii) hereof; and
(iii) the Escrow Agreement referred to in Section 9.5(iii)
hereof, together with counterparts signed by the Escrow Agent.
10.6 MERGER FILINGS. The Acquisition Corp. shall have executed and
delivered to the Company counterparts of the Articles of Merger to be filed with
the Department of State of the State of Florida in connection with the Merger.
10.7 CASH AND SHARES OF PARENT COMMON STOCK; ESCROW DEPOSIT.
(a) At the Closing the Parent shall deliver to the Shareholder
the cash portion of the Merger Consideration by wire transfer of immediately
available funds and, within ten (10) days after the Closing Date, shares of
Parent Common Stock issuable to the Shareholder pursuant to Section 2.2(a)
hereof, as provided in Section 2.3 hereof.
(b) As soon as practicable after the Closing and in any event
within ten (10) days after the Closing, Parent shall deliver to the Escrow Agent
the shares of Parent Common Stock constituting the Escrow Deposit pursuant to
Section 2.8.
10.8 OPINION OF ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇. Parent shall have
delivered to the Company an opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A
Professional Corporation, counsel to the Parent and Acquisition Corp., in
substantially the form annexed as EXHIBIT E hereto.
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10.9 SUPPORTING DOCUMENTS.
(a) The Parent shall have delivered to the Company a
certificate (a) of the Secretary of State of Delaware dated as of the Closing
Date certifying as to the corporate legal existence and good standing of the
Parent and (b) of an executive officer of the Parent, dated the Closing Date,
certifying on behalf of the Parent (i) that attached hereto is a true and
complete copy of the Certificate of Incorporation of such Parent certified by
the Secretary of State of the State of Delaware and in effect on the date of
such certification; (ii) that attached thereto is a true and complete copy of
the By-Laws of such Parent as in effect on the date of such certification; (iii)
that attached thereto is a true and complete copy of all resolutions adopted by
the Board of Directors of such Parent authorizing the execution, delivery and
performance of this Agreement and the consummation of the Merger; and (iv) to
the incumbency and specimen signature of each officer of the Parent executing on
behalf of such Parent this Agreement and the other agreements related hereto.
(b) Acquisition Corp. shall have delivered to the Company a
certificate (a) of the Secretary of State of Delaware dated as of the Closing
Date certifying as to the corporate legal existence and good standing of the
Acquisition Corp. and (b) of the Secretary of Acquisition Corp., dated the
Closing Date, certifying on behalf of Acquisition Corp. (i) that attached hereto
is a true and complete copy of the Certificate of Incorporation of such Parent
certified by the Secretary of State of the State of Delaware and in effect on
the date of such certification; (ii) that attached thereto is a true and
complete copy of the By-Laws of such Acquisition Corp. as in effect on the date
of such certification; (iii) that attached thereto is a true and complete copy
of all resolutions adopted by the Board of Directors and stockholders of such
Acquisition Corp. authorizing the execution, delivery and performance of this
Agreement and the consummation of the Merger; and (iv) to the incumbency and
specimen signature of each officer of Acquisition Corp. executing on behalf of
such Acquisition Corp. this Agreement and the other agreements related hereto.
10.10 CANCELLATION OF NOTE. The Parent shall have delivered the
cancelled Note in connection with the Closing.
ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by the mutual written consent of the Company and the
Parent;
(b) by either the Company or the Parent
(i) if any court or governmental or regulatory
agency, authority or body shall have enacted, promulgated or issued any statute,
rule, regulation, ruling, writ or
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injunction, or taken any other action, restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and all appeals and means of
appeal therefrom have been exhausted; or
(ii) if the Effective Time shall not have occurred on
or before October 22, 1999; provided, however, that the right to terminate this
Agreement pursuant to this Section 11.1(b)(ii) shall not be available to any
party whose (or whose affiliate(s)') breach of any representation or warranty or
failure to perform or comply with any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; or
(c) by the Company, if any of the conditions specified in
Article X have not been met or waived prior to such time as such condition can
no longer be satisfied; or
(d) by the Parent, if any of the conditions specified in
Article IX shall not have been met or waived prior to such time as such
condition can no longer be satisfied.
11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the parties hereto or (in the case of the
Company, the Parent and Acquisition Corp.) their respective officers or
directors, except for Sections 7.5 and 14.6, and the last two sentences of
Section 7.1, which shall remain in full force and effect, and except that
nothing herein shall relieve any party from liability for a breach of this
Agreement prior to the termination hereof.
ARTICLE XII
INDEMNIFICATION; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
12.1 INDEMNITY OBLIGATIONS. (a) Subject to Sections 12.3 and 12.4
hereof, the Shareholder by approval of the Merger hereby agrees to indemnify and
hold the Parent harmless from, and to reimburse the Parent for, any Losses (as
that term is hereinafter defined) arising out of, based upon or resulting from
(i) any inaccuracy in or breach of any representation or warranty of the Company
and the Shareholder set forth in Article III of this Agreement or any Schedule
or certificate delivered by the Company pursuant hereto; (ii) any breach or
nonfulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Company (which covenants, agreements or undertakings were
to be performed or complied with on or prior to the consummation of the Merger)
which are contained in this Agreement; (iii) any claims arising prior to the
Closing which otherwise would have been covered by fire, property, casualty or
liability insurance if the Company had such insurance in place for all periods
prior to the Closing, (iv) any claims arising for Taxes otherwise due prior to
the Closing; (v) any claims for amounts in excess of the $12,200 owed under the
Atlantic Colocation Agreement dated as April 9, 1999 with respect to the dispute
referenced on Schedule 3.10(d) attached hereto; or (vi) any claims arising out
of or relating to liabilities other entities owned by Shareholder. For purposes
of this Agreement, the term "LOSSES" shall mean any and all losses, damages,
deficiencies,
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liabilities, obligations, actions, claims, suits, proceedings, demands,
assessments, judgments, recoveries, fees, costs and expenses (including, without
limitation, all out-of-pocket expenses, reasonable investigation expenses and
reasonable fees and disbursements of accountants and counsel) of any nature
whatsoever, net of insurance proceeds actually realized by Parent.
(b) Subject to Sections 12.3 and 12.4 hereof, the Shareholder
by approval of the Merger hereby agrees to indemnify and hold the Parent
harmless from, and to reimburse the Parent for, any Losses arising out of, based
upon or resulting from (i) any inaccuracy in or breach of any representation or
warranty of the Shareholder set forth Article IV of this Agreement, or any
Schedule or certificate delivered by the Shareholder pursuant hereto or thereto;
or (ii) any breach or nonfulfillment of, or any failure to perform, any of the
covenants, agreements or undertakings of the Shareholder (which covenants,
agreements or undertakings were to be performed or complied with on or prior to
the consummation of the Merger) which are contained in this Agreement, or any
Schedule or certificate delivered by the Shareholder pursuant hereto or thereto.
12.2 NOTIFICATION OF CLAIMS.
(a) Subject to the provisions of Section 12.3 below, in the
event of the occurrence of an event pursuant to which the Parent shall seek
indemnity pursuant to Section 12.1, the Parent shall provide the Shareholder
with prompt written notice (a "Claim Notice") of such event and shall otherwise
promptly make available to the Shareholder, all relevant information which is
material to the claim and which is in the possession of the indemnified party.
Parent's failure to give a timely Claims Notice or to promptly furnish the
Shareholder with any relevant data and documents in connection with any
Third-Party Claim (as that term is hereinafter defined) shall not constitute a
defense (in part or in whole) to any claim for indemnification by such party,
except and only to the extent that such failure shall result in any prejudice to
the indemnified party.
(b) The Shareholder shall have the right to elect to join in,
and in such event to conduct and control, through counsel of its choosing
reasonably acceptable to Parent, the defense, settlement, adjustment or
compromise of any claim of any third party (a "THIRD PARTY CLAIM") for which
indemnification will be sought by the Parent. The expense of any such defense,
settlement, adjustment or compromise, including such counsel, shall be borne by
the Shareholder with respect to indemnification sought pursuant to Section 12.1;
provided such expenses shall be paid from amounts held in escrow for
indemnification sought pursuant to Section 12.1. Unless the Shareholder elects
to assume such defense, settlement, adjustment or compromise, Parent shall have
the right to settle any such Third Party Claim; PROVIDED, HOWEVER, that Parent
may not effect the settlement, adjustment or compromise of any such Third Party
Claim without the written consent of the Shareholder which consent shall not be
unreasonably withheld. In the event that the Shareholder has consented in
writing to any such settlement, adjustment or compromise, the Shareholder shall
have no power or authority to object to the amount of any claim by Parent
against the escrow for indemnity with respect to such settlement, adjustment or
compromise. The Shareholder shall have the right to settle, adjust, or
compromise
-39-
any Third Party Claim, the defense of which is controlled by the Shareholder
using amounts held in escrow; PROVIDED, HOWEVER, that, unless the settlement,
adjustment or compromise involves no more than the payment of an amount that is
less than the amount of funds then remaining in the escrow and provides for the
unconditional release of Parent, the Company and their respective affiliates,
the Shareholder may not effect the settlement, adjustment, compromise or
satisfaction of any such Third Party Claim without the written consent of the
Parent, which consent shall not be unreasonably withheld. In connection with any
Third Party Claim, the indemnified party, or the indemnifying party if it has
assumed the defense of such claim pursuant to the foregoing, shall diligently
pursue the defense of such Third Party Claim.
12.3 DURATION. All representations and warranties set forth in this
Agreement and any Schedules or certificates delivered pursuant hereto or
thereto, and all covenants, agreements and undertakings of the parties contained
in or made pursuant to this Agreement and any Schedules or certificates
delivered pursuant hereto or thereto, and the rights of the parties to seek
indemnification with respect thereto, shall survive the Closing but, except in
respect of any claims for indemnification as to which a Claim Notice shall have
been duly given prior to the Escrow Release Date (as defined below), all
representations, warranties, covenants, agreements and undertakings of the
Company and the Shareholder contained in this Agreement or any certificate or
Schedule delivered pursuant hereto or thereto shall expire on the first
anniversary of the Closing Date (the "ESCROW RELEASE DATE"). Notwithstanding the
foregoing, (i) obligations provided in Section 13.5, arising from the breaches
of the representations and warranties set forth in Sections 3.4, 3.11 and 3.9
and Article IV and arising from fraud shall each survive the Closing Date
indefinitely, and (ii) obligations provided in Article VIII shall survive the
Closing Date for a period of two (2) years.
12.4 ESCROW. At the Effective Time, the Escrow Deposit shall be
delivered by Parent to the Escrow Agent, to be held for a period ending on the
Escrow Release Date, provided, however, that the one half of the Escrow Deposit
representing five percent (5%) of the Merger Consideration shall be released to
the Shareholder on the six (6) month anniversary of the Closing Date if no Claim
Notice has been delivered prior to that time, except the Escrow Deposit may be
withheld after the Escrow Release Date to satisfy claims for indemnification
which are the subject to a Claims Notice delivered prior to the Escrow Release
Date. The Escrow Deposit shall be held and disbursed by the Escrow Agent in
accordance with an Escrow Agreement in the form attached hereto as EXHIBIT B.
For the purpose of any claim against the Escrow Deposit hereunder, the value per
share of shares retained in the Escrow Deposit shall be deemed to be the Closing
Market Price. Except with respect to claims based on the obligations provided in
Articles IV and VIII and Sections 3.4, 3.9, 3.11 and 13.5 and for fraud
committed by the Company or the Shareholder, which are not limited in amount, if
the Closing occurs, Parent and Acquisition Corp. agree that the Parent's right
to indemnification pursuant to this Article 12 shall constitute Parent's and
Acquisition Corp.'s sole and exclusive remedy and recourse against the
Shareholder for Losses attributable to any inaccuracy or breach of any
representation or warranty, or any breach or nonfulfillment of or any failure to
perform the covenants, agreements or undertakings, of the Company or the
Shareholder which is contained in this Agreement or the Letters of Transmittal
or any Schedule or certificate delivered pursuant the Closing.
-40-
Notwithstanding anything herein to the contrary, the Shareholder shall have no
liability for indemnification pursuant to this Article XII until the aggregate
Losses to the Parent exceed $25,000, at which point the Shareholder shall be
liable for the full amount of such Losses to the Parent. Except (i) with respect
to claims based on fraud committed by the Company or the Shareholder or (ii)
Losses arising under Articles IV or VIII or Sections 3.4, 3.9, 3.11 or 13.5, the
maximum liability of the Shareholder shall be limited to the Escrow Deposit.
12.5 NO CONTRIBUTION. The Shareholder hereby waives, acknowledges and
agrees that the Shareholder shall not have and shall not exercise or assert (or
attempt to exercise or assert), any right of contribution or right of indemnity
against the Company or the Surviving Corporation in connection with any
indemnification payments which the Shareholder is required to make under this
Article XII.
ARTICLE XIII
REGISTRATION RIGHTS
13.1 REGISTRABLE SHARES. For purposes of this Agreement, "REGISTRABLE
SHARES" shall mean the shares of Parent Common Stock (or any acquiror of Parent)
issued in connection with the Merger; PROVIDED, HOWEVER, that a distribution of
shares of Parent Common Stock issued in the Merger without additional
consideration, to underlying beneficial owners (such as the general and limited
partners, Shareholder, stockholders or trust beneficiaries of the Shareholder)
shall not be deemed such a sale or transfer for purposes of this Article XIII
and such underlying beneficial owners shall be entitled to the same rights under
this Article XIII as the initial Shareholder from which the Registrable Shares
were received and shall be deemed a Shareholder for the purposes of this Article
XIII, including any additional securities of the Parent issued in respect of the
Parent Common Stock issued in connection with the Merger including by way of a
stock split, dividend or other recapitalization or exchange of securities with
or by the Parent.
13.2 REQUIRED REGISTRATION. Parent shall prepare and file with the SEC
as soon as practicable after the date hereof, but in no event later than thirty
(30) days after the Effective Time, a registration statement on Form S-3 (or
such successor or other appropriate form) under the Securities Act with respect
to the Registrable Shares issued as part of the Merger Consideration (the
"REGISTRATION STATEMENT") and to effect all such registrations, qualifications
and compliances (including, without limitation, obtaining appropriate
qualifications under applicable state securities or "BLUE SKY" laws and
compliance with any other applicable governmental requirements or regulations)
as the selling Shareholder may reasonably request and that would permit or
facilitate the sale of Registrable Shares (provided however that Parent shall
not be required in connection therewith to qualify to do business or to file a
general consent to service of process in any such state or jurisdiction).
13.3 EFFECTIVENESS; SUSPENSION RIGHT.
(a) Parent will use its best efforts to cause each
Registration Statement to become effective under the Securities Act (including
without limitation the filing of any
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amendments or other documents necessary for such effectiveness) and to maintain
the effectiveness of the Registration Statement and other applicable
registrations, qualifications and compliances until one year from the Closing
Date (the "REGISTRATION EFFECTIVE PERIOD"), and from time to time will amend or
supplement each Registration Statement and the prospectus contained therein as
and to the extent necessary to comply with the Securities Act, the Exchange Act
and any applicable state securities statute or regulation, subject to the
following limitations and qualifications.
(b) Following such date as each Registration Statement is
first declared effective, the Shareholder will be permitted to offer and sell
the Registrable Shares registered therein during the Registration Effective
Period in the manner described in the Registration Statement provided that the
Registration Statement remains effective and has not been suspended.
(c) Notwithstanding any other provision of this Article XIII,
Parent shall have the right at any time to require that the Shareholder suspend
further offers and sales of Registrable Shares pursuant to the Registration
Statement whenever, and for so long as, in the reasonable judgment of Parent
there is in existence material undisclosed information or events with respect to
Parent (the "SUSPENSION RIGHT"). In the event Parent exercises the Suspension
Right, such suspension will continue for the period of time reasonably necessary
for disclosure to occur at the earliest time that such disclosure would not have
a material adverse effect on Parent, as determined in good faith by Parent after
consultation with counsel, provided that the holders of Registrable Shares will
be afforded the right to effect open market offers and sales of Registrable
Shares for a minimum of ten (10) trading days during each calendar quarter;
provided, further, that any such suspension shall apply only for so long as
"affiliates" (as defined in Rule 501 under the Securities Act of 1933) of the
Parent are restricted from selling shares of Parent Common Stock. Parent will
promptly give the Shareholder written notice of any such suspension and will use
all reasonable efforts to minimize the length of the suspension.
13.4 EXPENSES. The costs and expenses to be borne by Parent for
purposes of this Article XIII shall include, without limitation, printing
expenses (including a reasonable number of prospectuses for circulation by the
selling Shareholder), legal fees and disbursements of counsel for Parent, "blue
sky" expenses, accounting fees and filing fees, but shall not include
underwriting commissions or similar charges, legal fees (if any) and
disbursements of counsel for the selling Shareholder.
13.5 INDEMNIFICATION.
(a) To the extent permitted by law, Parent will indemnify and
hold harmless the Shareholder, any underwriter (as defined in the Securities
Act) for the Shareholder, its officers, directors, stockholders or partners and
each person, if any, who controls the Shareholder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims,
-42-
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "VIOLATION"): (A) any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in the
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (B) the omission or
alleged omission to state or incorporate by reference therein a material fact
required to be stated or incorporated by reference therein, or necessary to make
the statements included or incorporated by reference therein not misleading, or
(C) any violation or alleged violation by Parent of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and
Parent will pay to each such Shareholder (and its officers, directors,
stockholders or partners), underwriter or controlling person, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 13.5(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of Parent (which
consent may not be unreasonably withheld); nor shall Parent be liable in any
such case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon (i) a Violation which occurs in reliance
upon and in conformity with written information furnished by the Shareholder
expressly for use in the Registration Statement, or (ii) a Violation that would
not have occurred if the Shareholder had delivered to the purchaser the version
of the Prospectus most recently provided by Parent to the Shareholder as of a
date prior to such sale.
(b) To the extent permitted by law, the selling Shareholder
will indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the Registration Statement, each person, if any, who
controls Parent within the meaning of the Securities Act, any underwriter, and
any controlling person of any such underwriter, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as, and only to the extent that, such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation (which includes without limitation the failure of the
Shareholder to comply with the prospectus delivery requirements under the
Securities Act, and the failure of the Shareholder to deliver the most current
prospectus provided by Parent prior to the date of such sale), in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Shareholder
expressly for use in the Registration Statement or such Violation is caused by
the Shareholder's failure to deliver to the purchaser of the Shareholder's
Registrable Shares a prospectus (or amendment or supplement thereto) that had
been made available to the Shareholder by Parent prior to the date of the sale;
and the Shareholder will pay any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Section 13.5(b) in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 13.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Shareholder, which consent shall
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not be unreasonably withheld. The aggregate indemnification and contribution
liability of the Shareholder under this Section 13.5(b) shall not exceed the net
proceeds received by the Shareholder in connection with sale of shares pursuant
to the Registration Statement.
(c) Each person entitled to indemnification under this Section
13.5 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim and any litigation resulting therefrom, provided that counsel for the
Indemnifying Party who conducts the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 13.5 unless the
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the defense of any such claim or litigation, shall (except with the consent of
each Indemnified Party) consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
(d) To the extent that the indemnification provided for in
this Section 13.5 is held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one had and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue of alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
13.6 PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.
(a) NOTICE AND APPROVAL. If the Shareholder shall propose to
sell (which may include an intent to sell over a specific period of time)
Registrable Shares pursuant to the Registration Statement, he shall notify
Parent of his intent to do so (including the proposed manner and timing of all
sales) at least one (1) full trading day prior to such sale, and the
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provision of such notice to Parent shall conclusively be deemed to reestablish
and reconfirm an agreement by the Shareholder to comply with the registration
provisions set forth in this Agreement. Unless otherwise specified in such
notice, such notice shall be deemed to constitute a representation that any
information previously supplied by the Shareholder expressly for inclusion in
the Registration Statement (as the same may have been superseded by subsequent
such information) is accurate as of the date of such notice. At any time within
such one (1) trading-day period, Parent may refuse to permit the Shareholder to
resell any Registrable Shares pursuant to the Registration Statement; provided,
however, that in order to exercise this right, Parent must deliver a certificate
in writing to the Shareholder to the effect that a delay in such sale is
necessary because a sale pursuant to the Registration Statement in its
then-current form without the addition of material, non-public information about
Parent, could constitute a violation of the federal securities laws.
Notwithstanding the foregoing, Parent will ensure that in any event the
Shareholder shall have at least ten (10) trading days (prorated for partial
quarters) available to sell Registrable Shares during each calendar quarter (or
portion thereof) from the date the Registration Statement is first declared
effective until the expiration of the applicable Registration Effective Period.
(b) DELIVERY OF PROSPECTUS. For any offer or sale of any of
the Registrable Shares by the Shareholder in a transaction that is not exempt
under the Securities Act, the Shareholder, in addition to complying with any
other federal securities laws, shall deliver a copy of the final prospectus (or
amendment of or supplement to such prospectus) of Parent covering the
Registrable Shares in the form furnished to the Shareholder by Parent to the
purchaser of any of the Registrable Shares on or before the settlement date for
the purchase of such Registrable Shares.
(c) COPIES OF PROSPECTUSES. Subject to the provisions of this
Section 13.6, when the Shareholder is entitled to sell and gives notice of its
intent to sell Registrable Shares pursuant to the Registration Statement, Parent
shall, within two (2) trading days following the request, furnish to the
Shareholder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Shares, such prospectus shall not as of the date
of delivery to the Shareholder include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statement therein not misleading or incomplete in the light of the
circumstances then existing.
13.7 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights under this
Article XIII are not transferable except (a) a transfer by will or intestacy,
(b) estate planning transfers consisting of gifts to the spouse or issue of the
transferee and transfers to trusts for the benefit of the spouse or issue of the
transferee, or (c) with the written consent of Parent.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 AMENDMENT. This Agreement may be amended by written agreement
between the Company and the Parent prior to the Effective Time.
14.2 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant or agreement contained herein may be waived only by a written notice
from the party or parties entitled to the benefits thereof. No failure by any
party hereto to exercise, and no delay in exercising, any right hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or future exercise of that right by that
party.
14.3 NOTICES. All notices and other communications hereunder shall be
deemed given if given in writing and delivered personally, by registered or
certified mail, return receipt requested, postage prepaid, or by overnight
courier to the party to receive the same at its respective address set forth
below (or at such other address as may from time to time be designated by such
party to the others in accordance with this Section 14.3):
(a) if to the Company or the Shareholder, to:
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
with copies to:
Steel ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(b) if to the Parent or Acquisition Corp., to:
Go2Net, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
with copies to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
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A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
All such notices and communications hereunder shall be deemed given
when received, as evidenced by the signed acknowledgment of receipt of the
person to whom such notice or communication shall have been personally
delivered, the acknowledgment of receipt returned to the sender by the
applicable postal authorities or the confirmation of delivery rendered by the
applicable overnight courier service.
14.4 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 (or, in the case of the Shareholder, his respective heirs,
administrators, executors and personal representatives) and permitted assigns.
Neither this Agreement nor any rights, duties or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
parties hereto, except that vested rights to receive payment or to initiate
legal action with respect to causes of action that have accrued hereunder shall
be assignable by devise, descent or operation of law.
14.5 NO THIRD PARTY BENEFICIARIES. Neither this Agreement or any
provision hereof nor any Schedule, certificate or other instrument delivered
pursuant hereto, nor any agreement to be entered into pursuant hereto or any
provision hereof, is intended to create any right, claim or remedy in favor of
any person or entity, other than the parties hereto and their respective
successors (or, in the case of the Shareholder, his respective heirs,
administrators, executors and personal representatives) and permitted assigns
and any other parties indemnified under Article XII.
14.6 PUBLIC ANNOUNCEMENTS. Promptly after the Effective Time, the
Parent and the Company shall issue a press release in such form as they shall
mutually agree. Other than as provided in the immediately preceding sentence,
none of the parties hereto shall, except as mutually agreed by the Parent and
the Company, or except as may be required by law or applicable regulatory
authority (including, without limitation, the rules applicable to Nasdaq
National Market companies), issue any reports, releases, announcements or other
statements to the public relating to the transactions contemplated hereby.
14.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.8 HEADINGS. The article and section headings contained in this
Agreement are solely for convenience of reference, are not part of the agreement
of the parties and shall not be used in construing this Agreement or in any way
affect the meaning or interpretation of this Agreement.
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14.9 ENTIRE AGREEMENT. This Agreement, and the Schedules, certificates
and other instruments and documents delivered pursuant hereto, together with the
other agreements referred to herein and to be entered into pursuant hereto,
embody the entire agreement of the parties hereto in respect of, and there are
no other agreements or understandings, written or oral, among the parties
relating to, the subject matter hereof, other than the Confidentiality
Agreements. This Agreement supersedes all prior agreements and understandings,
written or oral, between the parties with respect to such subject matter, other
than the Confidentiality Agreements.
14.10 GOVERNING LAW. The parties hereby agree that this Agreement, and
the respective rights, duties and obligations of the parties hereunder, shall be
governed by and construed in accordance with the General Corporation Law of the
State of Delaware as to matters within the scope thereof and, as to all other
matters, shall be governed by and construed with the laws of the State of
Washington, without giving effect to principles of conflicts of law thereunder.
Each of the parties hereby (i) irrevocably consents and agrees that any legal or
equitable action or proceeding arising under or in connection with this
Agreement shall be brought exclusively in the Federal or state courts sitting in
Seattle, Washington and any court to which an appeal may be taken in any such
litigation, and (ii) by execution and delivery of this Agreement, irrevocably
submits to and accepts, with respect to any such action or proceeding, for
itself and in respect of its properties and assets, generally and
unconditionally, the jurisdiction of the aforesaid courts, and irrevocably
waives any and all rights such party may now or hereafter have to object to such
jurisdiction.
ARTICLE XV
CERTAIN TAX MATTERS
POST-CLOSING MATTERS. The Parent and the Shareholder agree to join in
an election under Section 1362(e)(3) of the Code as of the Closing Date. The
Shareholder agrees to pay all Taxes due on the Company S short year as defined
at Section 1362(e)(1)(A) of the Code, including without limitation, any and all
entity-level taxes attributed to the Company or the Shareholder. The Shareholder
shall prepare and file on behalf of the Company, consistent with past practice,
all Tax Returns of the Company for Taxes which accrue on or before the Closing
Date and any Tax Return for any period ending on the Closing Date. Such Tax
Returns shall be subject to the review and approval of Parent, which approval
shall not be unreasonably withheld. Such Tax returns shall be provided to Parent
not less than fifteen (15) days prior to the due date, as extended.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
GO2NET, INC.
COUNTERPART SIGNATURE PAGE
TO AGREEMENT AND PLAN OF MERGER
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IN WITNESS WHEREOF, the Parent, Acquisition Corp., the Company and the
Company's Shareholder named below have caused this Agreement to be duly executed
and delivered as an instrument under seal as of the date first above written.
PARENT:
GO2NET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Operating Officer
ACQUISITION CORP.:
FY ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Secretary
THE COMPANY:
▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
-49-
GO2NET, INC.
COUNTERPART SIGNATURE PAGE
TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, the Parent, Acquisition Corp., and the Company's
Shareholder named below have caused this Agreement to be duly executed and
delivered as an instrument under seal as of the date first above written.
SHAREHOLDER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇, individually
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