CONFORMED COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
AMERICA ONLINE, INC.,
MQ ACQUISITION, INC.
and
▇▇▇▇▇▇▇▇.▇▇▇, INC.
Dated as of December 21, 1999
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER 2
1.1 The Merger 2
1.2 Effective Time 2
1.3 Effect of the Merger 2
1.4 Certification of Incorporation; Bylaws 2
1.5 Directors and Officers 2
1.6 Conversion of Company Common Stock, Etc 3
1.7 Cancellation of Treasury Stock and Parent-Owned Stock 3
1.8 Stock Options and Warrants 3
1.9 Capital Stock of Merger Sub 4
1.10 Adjustments to Exchange Ratio 4
1.11 Fractional Shares 4
1.12 Further Ownership Rights in Company Common Stock 6
1.13 Closing 6
1.14 Lost, Stolen or Destroyed Certificates 7
1.15 Tax Consequences 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1 Organization and Qualification; Subsidiaries 7
2.2 Certificate of Incorporation and Bylaws 8
2.3 Capitalization 8
2.4 Authority; Enforceability 10
2.5 Required Vote 10
2.6 No Conflict; Required Filings and Consents 11
2.7 Material Agreements 12
2.8 Compliance 14
2.9 SEC Filings; Financial Statements 14
2.10 Absence of Certain Changes or Events 15
2.11 No Undisclosed Liabilities 15
2.12 Absence of Litigation 15
2.13 Employee Benefit Plans 16
2.14 Employment and Labor Matters 18
2.15 Registration Statement; Proxy Statement/Prospectus 19
2.16 Absence of Restrictions on Business Activities 20
2.17 Title to Assets; Leases 20
2.18 Taxes 21
2.19 Environmental Matters 23
2.20 Intellectual Property 24
2.21 Year 2000 Compliance and Security 26
2.22 Insurance 27
2.23 No Restrictions on the Merger; Takeover Statutes 27
2.24 Pooling; Tax Matters 28
2.25 Brokers 28
2.26 Certain Business Practices 28
2.27 Interested Party Transactions 29
2.28 Opinion of Financial Advisor 29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 29
3.1 Organization and Qualification 29
3.2 Capitalization 30
3.3 Authority; Enforceability 30
3.4 No Conflict; Required Filings and Consents 30
3.5 SEC Filings; Financial Statements 31
3.6 Absence of Litigation 31
3.7 Registration Statement; Proxy Statement/Prospectus 32
3.8 Pooling; Tax Matters 32
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER 32
4.1 Conduct of Business by the Company Pending the Merger 32
4.2 Solicitation of Other Proposals 35
ARTICLE V ADDITIONAL AGREEMENTS 37
5.1 Registration Statement; Proxy Statement/Prospectus 37
5.2 Meeting of Company's Stockholders 38
5.3 Access to Information; Confidentiality 39
5.4 Reasonable Best Efforts; Further Assurances 40
5.5 Stock Options and Stock Plan; Options 41
5.6 Employee Benefits 42
5.7 Pooling; Reorganization 43
5.8 Notification of Certain Matters 44
5.9 Listing on the New York Stock Exchange 45
5.10 Public Announcements 45
5.11 Takeover Laws 45
5.12 Accountant's Letters 45
5.13 Indemnification; Directors and Officer Insurance 46
5.14 Stockholders Agreement 46
5.15 Option Agreement 47
5.16 Release Agreements 47
5.17 Optionholder Letters 47
ARTICLE VI CONDITIONS OF MERGER 47
6.1 Conditions to Obligation of Each Party to Effect the Merger 47
6.2 Additional Conditions to Obligations of Parent and
Merger Sub 48
6.3 Additional Conditions to Obligations of the Company 50
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 50
7.1 Termination 50
7.2 Effect of Termination 52
7.3 Fees and Expenses 52
7.4 Amendment 53
7.5 Waiver 53
ARTICLE VIII GENERAL PROVISIONS 54
8.1 Survival of Representations and Warranties 54
8.2 Notices 54
8.3 Disclosure Schedules 55
8.4 Certain Definitions 55
8.5 Interpretation 58
8.6 Severability 59
8.7 Entire Agreement 59
8.8 Assignment 59
8.9 Parties in Interest 59
8.10 Failure or Indulgence Not Waiver; Remedies Cumulative 59
8.11 Governing Law; Enforcement 59
8.12 Counterparts 60
EXHIBITS
EXHIBIT A - Form of Stockholders Agreement
EXHIBIT B - Form of Stock Option Agreement
EXHIBIT C - Form of Company Affiliate Pooling Agreement
EXHIBIT D - Form of Release Agreement
Index of Defined Terms
Acquisition Proposal 4.2(a)
Affiliate 8.4(a)
Agreement Preamble
Approvals 2.1(a)
Balance Sheet 8.4(b)
Beneficial owner 8.4(c)
Blue Sky Laws 2.6(b)
Business Day 8.4(d)
Certificate of Merger 1.2
Certificates 1.12(c)
Closing 1.14
Closing Date 1.14
COBRA Coverage 2.13(d)
Code Recitals
Company Preamble
Company Affiliate Pooling Agreement 5.7(b)
Company Common Stock 1.6(a)
Company Disclosure Schedule 8.4(e)
Company Employee 5.6(a)
Company Financial Advisors 2.25
Company Preferred Stock 2.3(a)
Company Representatives 4.2(a)
Company SEC Reports 2.9(a)
Company Stipulated Expenses 7.3(d)
Company Stockholders' Meeting 2.15
Company's Accountants 2.24(c)
Company's D&O Insurance 5.13(b)
Confidentiality Agreement 5.3(b)
Contract 8.4(f)
Control 8.4(g)
Court 8.4(h)
Determination Date 1.6(b)
DGCL Recitals
Effective Time 1.2
Employee Plans 2.13(a)
Environmental Laws 2.19(c)
Environmental Permits 2.19(c)
Environmental Report 2.19(c)
ERISA 2.13(a)
ERISA Affiliate 2.13(a)
Exchange Act 2.6(b)
Exchange Agent 8.4(i)
Exchange Ratio 1.6(a)
Foreign Competition Laws 8.4(j)
GAAP 2.9(b)
Governmental Authority 8.4(k)
HSR Act 2.6(b)
Infringe 2.20(f)
Intellectual Property 8.4(l)
IRS 2.13(b)
Knowledge 8.4(m)
Law 8.4(n)
License Agreements 2.20(c)
Lien 8.4(o)
Litigation 8.4(p)
Material Adverse Effect 8.4(q)
Material Agreements 2.7(a)
Material Subsidiary 4.2(c)
Materials of Environmental Concern 2.19(c)
Maximum Premium 5.13(b)
Merger Recitals Merger Consideration 1.6(a)
Merger Sub Preamble
Merger Sub Common Stock 1.9
NYSE 1.6(b)
Option Agreement Recitals
Option Plans 1.8(a)
Order 8.4(r)
Outstanding Employee Options 2.3(a)
Parent Preamble
Parent Affiliate Pooling Agreement 5.7(d)
Parent Common Stock 1.6(a)
Parent Representatives 5.3(a)
Parent Right 1.6(b)
Parent Rights Agreement 1.6(b)
Parent SEC Reports 3.5(a)
Parent Stipulated Expenses 7.3(c)
Parent's Accountants 5.7(c)
Person 8.4(s)
Proxy Statement 2.15
Purchase Plan 2.3(a)
Real Property 2.17(b)
Registration Statement 2.15
Regulation 8.4(t)
Related Agreements 6.2(f)
Release Agreements 5.16
SEC 2.9(a)
Securities Act 2.6(b)
Stockholders Agreement Recitals
Software 8.4(u)
Stock-Based Rights 2.3(c)
Subsidiaries 8.4(v)
Subsidiary 8.4(v)
Superior Proposal 4.2(c)
Surviving Corporation 1.1
Systems 2.21(a)
Tax 2.18
Tax Returns 2.18
Taxes 2.18
Termination Fee 7.3(b)
WARN Act 2.14(b)
Year 2000 Compliant 2.21(a)
1995 Plan 1.8(a)
1999 Plan 1.8(a)
401(k) Plan 5.6(c)
AGREEMENT AND PLAN OF MERGER, dated as of December 21, 1999
(the "Agreement") among AMERICA ONLINE, INC., a Delaware corporation ("Parent"),
MQ ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and ANATOLIA, INC., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is in the best interests of their
respective Stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "Merger") of Merger Sub with and into the Company, in accordance with the
General Corporation Law of the State of Delaware (the "DGCL") and subject to the
conditions set forth herein, which Merger will result in, among other things,
the Company becoming a wholly owned subsidiary of Parent;
WHEREAS, as a condition to the willingness of, and an
inducement to, Parent and Merger Sub to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement, certain
holders of Company Common Stock (as defined herein), are entering into an
agreement dated as of the date hereof (the "Stockholders Agreement") in the form
of Exhibit A attached hereto, providing for certain actions relating to the
transactions contemplated by this Agreement;
WHEREAS, as a condition to the willingness of, and an
inducement to, Parent and Merger Sub to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement, the Company
is entering into a Stock Option Agreement dated as of the date hereof (the
"Option Agreement") in the form of Exhibit B attached hereto, granting Parent an
irrevocable option to purchase up to that number of shares of Company Common
Stock as shall represent 10% (by voting power) of the total outstanding Company
Common Stock, on the terms and subject to the conditions set forth therein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, for accounting purposes, it is intended that the
Merger shall qualify for "pooling-of-interests" treatment.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements herein contained,
and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the DGCL,
(a) Merger Sub shall be merged with and into the Company, (b) the separate
corporate existence of Merger Sub shall cease, and (c) the Company shall, as the
surviving corporation in the Merger, continue its existence under Delaware law
as a wholly owned subsidiary of Parent. The Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Effective Time. As promptly as practicable after the
satisfaction or, to the extent permitted hereunder, waiver of the conditions set
forth in Article VI, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as required by and
executed in accordance with the relevant provisions of the DGCL (the date and
time of such filing, or such later date and time as may be specified in the
Certificate of Merger by mutual agreement of Parent, Merger Sub and the Company,
being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL, including
Section 259 thereof. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the assets, property, rights,
privileges, immunities, powers and franchises of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Merger Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
1.4 Certification of Incorporation; Bylaws. Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time and
without any further action on the part of the parties hereto, (a) the
Certificate of Incorporation of Merger Sub shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the DGCL; provided that Article First of the Certificate of Incorporation of
Merger Sub shall be amended to read in its entirety as follows: "The name of the
corporation is "▇▇▇▇▇▇▇▇.▇▇▇, Inc." and (b) the Bylaws of Merger Sub shall be
the Bylaws of the Surviving Corporation until thereafter amended as provided by
the DGCL.
1.5 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and the Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation.
1.6 Conversion of Company Common Stock, Etc. At the Effective Time,
by virtue of the Merger and without any action on the part of the parties hereto
or the holders of the following securities:
(a) Subject to the provisions of this Article I, each share of
Common Stock, par value $.001 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of the Company Common Stock to be canceled pursuant to Section
1.7 and subject to Section 1.10 and Section 1.1) will be converted automatically
into the right to receive 0.31558 of a fully paid and nonassessable share (the
"Exchange Ratio") of the Common Stock, par value $0.01 per share (the "Parent
Common Stock"), of Parent (and a related portion of a Parent Right in accordance
with Section 1.6(b) hereof)(the "Merger Consideration").
(b) Each share of the Parent Common Stock to be issued upon
conversion of the Company Common Stock in accordance with Section 1.6(a) shall
include the corresponding percentage of a right (a "Parent Right") to purchase
shares of Series A-1 Junior Participating Preferred Stock, $.01 par value, of
Parent pursuant to the Rights Agreement dated as of May 12, 1998, as amended
(the "Parent Rights Agreement"), between Parent and BankBoston, N.A., as Rights
Agent. Prior to the Distribution Date (as defined in the Parent Rights
Agreement), all references in this Agreement to the Parent Common Stock shall be
deemed to include Parent Rights.
(c) Each share of the Company Common Stock issued and
outstanding immediately prior to the Effective Time shall automatically be
redeemed and canceled and shall cease to exist, and each holder of a certificate
representing any such Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration and any
cash in lieu of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 1.12 hereof, without interest.
1.7 Cancellation of Treasury Stock and Parent-Owned Stock.
(a) Each share of the Company Common Stock held in the treasury
of the Company, if any, and each share of Company Common Stock, if any, owned by
Parent or Merger Sub, in each case immediately prior to the Effective Time,
shall be canceled and extinguished without any conversion thereof and no payment
or distribution shall be made with respect thereto.
1.8 Stock Options and Warrants.
(a) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the Company's 1995 Stock Option Plan, as
amended (the "1995 Plan"), the Company's 1999 Stock Plan, as amended (the "1999
Plan" and, together with the 1995 Plan, the "Option Plans") by virtue of the
Merger and without any action on the part of the holder thereof, shall be
assumed by Parent in accordance with Section 5.5.
(b) The Company and its Board of Directors shall promptly take
all actions necessary to ensure that following the Effective Time no holder of
any options or other rights pursuant to, nor any participant in or party to, the
Option Plans or any other Employee Plan (as defined herein) or other plan,
program, arrangement, agreement or other commitment providing for the issuance
or grant of any interest in respect of the capital stock of the Company or any
Subsidiary of the Company will have any rights thereunder to acquire equity
securities, or any right to payment in respect of the equity securities, of
Parent, the Company, or the Surviving Corporation or any of their Subsidiaries,
except as provided herein.
1.9 Capital Stock of Merger Sub. Each share of Common Stock, par
value $0.01 per share, of Merger Sub (the "Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be automatically
converted into one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation and shall thereafter constitute all of the
issued and outstanding capital stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any shares of Merger Sub
Common Stock shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
1.10 Adjustments to Exchange Ratio. Without limiting any other
provision of this Agreement, the Exchange Ratio shall be adjusted to reflect
fully the effect of any stock split, reverse split, stock dividend (including
any dividend or distribution of securities convertible into Parent Common Stock
or Company Common Stock), reorganization, recapitalization or other like change
with respect to Parent Common Stock or Company Common Stock occurring after the
date hereof and prior to the Effective Time.
1.11 Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights of a Stockholder of Parent. In lieu thereof, each holder of shares of
Company Common Stock exchanged pursuant to Section 1.6 or of options or warrants
exchanged pursuant to Section 1.8(b) who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock to have been otherwise received by such holder)
shall receive from Parent an amount of cash (rounded down to the nearest whole
cent and without interest) equal to the product of such fractional part of a
share of Parent Common Stock multiplied by the average closing price per share
of Parent Common Stock (rounded to the nearest cent) on the New York Stock
Exchange, Inc. (the "NYSE") (as reported in the Wall Street Journal, or, if not
reported therein, any other authoritative source selected by Parent) for the 20
trading days ending on the third trading day immediately prior to (and excluding
the date of) the Effective Time.
1.12 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as the Exchange Agent in the Merger.
(b) Parent to Provide Common Stock. When and as needed, Parent
shall make available to the Exchange Agent for exchange in accordance with this
Article I, through such reasonable procedures as Parent may adopt, sufficient
shares of Parent Common Stock to be exchanged pursuant to Section 1.6.
(c) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") that represented as of the
Effective Time outstanding shares of Company Common Stock to be exchanged
pursuant to Section 1.6, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares of
Parent Common Stock and payment in lieu of fractional shares which such holder
has the right to receive pursuant to Sections 1.6 and 1.11, after giving effect
to any required (as defined herein) Tax withholdings, and the Certificate so
surrendered shall forthwith be canceled. At any time following 6 months after
the Effective Time, all or any number of shares of Parent Common Stock (and any
or all cash payable in lieu of fractional shares of Parent Common Stock)
deposited with or made available to the Exchange Agent pursuant to Section
1.12(b), which remain undistributed to the holders of the Certificates
representing shares of Company Common Stock, shall be delivered to Parent upon
demand, and thereafter such holders of unexchanged shares of Company Common
Stock shall be entitled to look only to Parent (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the shares of Parent Common Stock for payment upon due surrender of their
Certificates.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to shares of Parent Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with respect to
the whole shares of Parent Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time and payable between the Effective Time and the time of
such surrender with respect to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than the name in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that (i) the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange will have paid any transfer or other Taxes
required by reason of the issuance of a certificate for shares of Parent Common
Stock in a name other than the name of the registered holder of the Certificate
surrendered or (ii) established to the satisfaction of Parent, or any agent
designated by Parent, that such Tax has been paid or is not applicable.
(f) No Liability. Notwithstanding anything to the contrary in
this Agreement, none of the Exchange Agent, Parent, the Merger Sub or the
Surviving Corporation shall be liable to a holder of a Certificate for any
Parent Common Stock (and any cash payable for fractional shares of Parent Common
Stock or any other amount due, if any) that was properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(g) Withholding of Tax. Parent or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent (or any Affiliate thereof) or the Exchange Agent shall determine in good
faith they are required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of federal, state, local or
foreign Tax Law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Stock in
respect of whom such deduction and withholding were made by Parent.
1.13 Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Company Common
Stock in accordance with the terms of this Article I (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Company Common Stock. At the Effective Time, the stock
transfer books of the Company shall be closed, and thereafter there shall be no
further registration of transfers of shares of Company Common Stock on the
records of the Surviving Corporation. From and after the Effective Time, the
holders of Certificates evidencing ownership of shares of Company Common Stock
outstanding shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided for herein. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
1.14 Closing. Unless this Agreement shall have been terminated and
the transactions contemplated by this Agreement abandoned pursuant to the
provisions of Article VII, and subject to the provisions of Article VI, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. (Eastern
time) on a date (the "Closing Date") to be mutually agreed upon by the parties,
which date shall be not later than the third Business Day after all the
conditions set forth in Article VI shall have been satisfied (or waived in
accordance with Section 7.5, to the extent the same may be waived), unless
another time and/or date is agreed by the parties hereto. The Closing shall take
place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ or such other place as the parties hereto otherwise agree.
1.15 Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing Company Common Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock and cash for fractional
shares, if any, as may be required pursuant to Section 1.11; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.16 Tax Consequences. For federal income tax purposes, the parties
intend that the Merger be treated as a reorganization within the meaning of
Section 368(a) of the Code, and that this Agreement shall be, and is hereby,
adopted as a plan of reorganization for purposes of Section 368 of the Code. The
parties shall not take a position on any Tax Return (as defined herein)
inconsistent with this Section 1.16.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
as follows:
2.1 Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly
existing and in good standing under Delaware law and has all the requisite
corporate power and authority, and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, waivers, qualifications,
certificates, Orders (as defined herein) and approvals (collectively,
"Approvals") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, except for such Approvals, the
failure of the Company to be in possession of could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Each Subsidiary of the Company is a legal entity, duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has all the
requisite power and authority, and is in possession of all Approvals necessary
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so qualified could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) Section 2.1(c) of the Company Disclosure Schedule sets
forth, as of the date hereof, a true and complete list of all of the Company's
directly and indirectly owned Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity or other interest owned
by the Company or another Subsidiary of the Company. Except as set forth in
Section 2.1(c) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, directly or indirectly, any
equity or similar interest in, any Person.
2.2 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished to Parent a true and complete copy of each of its and each
of its Subsidiaries' Certificate of Incorporation and Bylaws or equivalent
organizational documents, as amended or restated to the date hereof. Such
Certificate of Incorporation and Bylaws and equivalent organizational documents
of the Company and each of its Subsidiaries are in full force and effect, and no
other organizational documents are applicable to or binding upon the Company or
its Subsidiaries.
2.3 Capitalization.
(a) The authorized capital of the Company consists of
105,000,000 shares, divided into 100,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $.01 per share (the "Company
Preferred Stock"). As of December 20, 1999, (i) 35,716,607 shares of Company
Common Stock were issued and outstanding; (ii) no shares of Company Preferred
Stock were issued or outstanding; (iii) no shares of Company Common Stock were
held in the treasury of the Company; (iv) no shares of Company Common Stock were
held by any Subsidiary of the Company; (v) 5,863,086 shares of Company Common
Stock were duly reserved for future issuance pursuant to employee stock options
granted pursuant to the Option Plans (the "Outstanding Employee Options"); (vi)
1,755,000 shares of Company Common Stock were duly reserved for future issuance
pursuant to the Purchase Plan; and (vii) 3,571,661 shares of Company Common
Stock were reserved for issuance pursuant to the Option Agreement. None of the
outstanding shares of Company Common Stock are subject to, nor were they issued
in violation of any, purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right. Except as set forth
above and in Section 2.3(a) of the Company Disclosure Schedule, as of the date
hereof, no shares of voting or non-voting capital stock, other equity interests,
or other voting securities of the Company were issued, reserved for issuance or
outstanding. Except as described in Section 2.3(a) of the Company Disclosure
Schedule, all outstanding options to purchase Company Common Stock were granted
under Company's Option Plans and the Option Agreement. Section 2.3(a) of the
Company Disclosure Schedule lists all outstanding options and warrants to
purchase Company Common Stock, the record holder thereof and the exercise prices
thereof. No payroll deductions have been made and no amounts are held in any
participant accounts under the Company's Employee Stock Purchase Plan (the
"Purchase Plan"), no Company Common Stock or options to purchase Company Common
Stock have been granted under the Purchase Plan and the Purchase Plan is not in
effect. All outstanding shares of capital stock of the Company are, and all
shares which may be issued upon the exercise of stock options and warrants will
be, and all shares which may be issued pursuant to the Option Agreement will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to any kind of preemptive (or similar) rights. There are no bonds,
debentures, notes or other indebtedness of the Company with voting rights (or
convertible into, or exchangeable for, securities with voting rights) on any
matters on which Stockholders of the Company may vote.
(b) Section 2.3(b) of the Company Disclosure Schedule sets forth
the number of authorized and outstanding shares of capital stock, and ownership
thereof, of each of the Company's Subsidiaries. All of the outstanding shares of
capital stock of each of the Company's Subsidiaries have been duly authorized,
validly issued, fully paid and nonassessable, are not subject to, and were not
issued in violation of, any preemptive (or similar) rights, and are owned, of
record and beneficially, by the Company or one of its direct or indirect
Subsidiaries, free and clear of all Liens whatsoever. Except as set forth in
Section 2.3(b) of the Company Disclosure Schedule, there are no restrictions of
any kind which prevent the payment of dividends by any of the Company's
Subsidiaries, and neither the Company nor any of its Subsidiaries is subject to
any obligation or requirement to provide funds for or to make any investment (in
the form of a loan or capital contribution) to or in any Person.
(c) Except as described in Section 2.3(c) of the Company
Disclosure Schedule, as of the date hereof, there are no outstanding securities,
options, warrants, calls, rights, convertible or exchangeable securities,
commitments, agreements, arrangements or undertakings of any kind (contingent or
otherwise) to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock (or options or warrants
to acquire any such shares) of the Company or its Subsidiaries. Except as
described in Section 2.3(c) of the Company Disclosure Schedule, as of the date
hereof, there are no stock-appreciation rights, stock-based performance units,
"phantom" stock rights or other agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any Person is or may be
entitled to receive any payment or other value based on the revenues, earnings
or financial performance, stock price performance or other attribute of the
Company or any of its Subsidiaries or assets or calculated in accordance
therewith (other than ordinary course payments or commissions to sales
representatives of the Company based upon revenues generated by them without
augmentation as a result of the transactions contemplated hereby) (collectively,
"Stock-Based Rights") or to cause the Company or any of its Subsidiaries to file
a registration statement under the Securities Act, or which otherwise relate to
the registration of any securities of the Company. Except as set forth in
Section 2.3(c) of the Company Disclosure Schedule or the Stockholders Agreement,
there are no voting trusts, proxies or other agreements, commitments or
understandings of any character to which the Company or any of its Subsidiaries
or, to the Knowledge (as defined herein) of the Company, any of the Company's
Stockholders is a party or by which any of them is bound with respect to the
issuance, holding, acquisition, voting or disposition of any shares of capital
stock of the Company or any of its Subsidiaries.
2.4 Authority; Enforceability. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, each
Related Agreement (as defined herein) to which it is a party and each instrument
required to be executed and delivered by it at the Closing, and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and each Related Agreement to which it is a party, the
performance of its obligations hereunder and thereunder, and the consummation by
the Company of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or any Related Agreement to which it is a party or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval and authorization of this Agreement by votes of the holders of a
majority of the outstanding Company Common Stock in accordance with Delaware law
and the Company's Certificate of Incorporation and Bylaws) herein or therein.
Each of this Agreement and Related Agreements to which it is a party has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
2.5 Required Vote. As of the date hereof and, except as permitted by
Section 4.2(c), as of the Effective Time, the Board of Directors of the Company
has, at a meeting duly called and held, (i) approved and declared advisable this
Agreement and each Related Agreement to which it is a party, (ii) determined
that the transactions contemplated hereby and thereby are advisable, fair to and
in the best interests of the holders of Company Common Stock, (iii) resolved to
recommend adoption of this Agreement, the Merger, the Related Agreements to
which it is a party and the other transactions contemplated hereby and thereby
to the Stockholders of the Company and (iv) directed that this Agreement be
submitted to the Stockholders of the Company for their approval and
authorization. The affirmative vote of a majority of all outstanding shares of
Company Common Stock is the only vote of the holders of any class or series of
capital stock of the Company necessary to approve and authorize this Agreement,
the Merger, the Related Agreements and the other transactions contemplated
hereby and thereby. As of December 20, 1999, the holders of the Company Common
Stock that are parties to the Stockholders Agreement own (beneficially and of
record) and have the right to vote, in the aggregate, approximately 75.0% of the
total issued and outstanding Company Common Stock.
2.6 No Conflict; Required Filings and Consents.
(a) The execution and delivery by the Company of this Agreement,
the Related Agreements to which it is a party or any instrument required by this
Agreement to be executed and delivered by the Company or any of its Subsidiaries
at the Closing do not, and the performance of this Agreement, the Related
Agreement to which it is a party or any instrument required by this Agreement to
be executed and delivered by the Company or any of its Subsidiaries at the
Closing, shall not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any of its Subsidiaries, (ii) conflict with or violate any Law or Order in each
case applicable to the Company or any of its Subsidiaries or by which its or any
of their respective properties or assets is bound or affected, or (iii) result
in any breach or violation of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair the
Company's or any of its Subsidiaries' rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of the Company or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, Contract, permit, franchise or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or its or any of
their respective properties or assets is bound or affected, except (A) as set
forth in Section 2.6(a) of the Company Disclosure Schedule or (B) in the case of
clause (ii) or (iii) above, for any such conflicts, breaches, violations,
defaults or other occurrences that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The execution and delivery by the Company of this Agreement,
the Related Agreements to which it is a party or any instrument required by this
Agreement to be executed and delivered by the Company or any of its Subsidiaries
at the Closing do not, and the performance of this Agreement, any Related
Agreement to which it is a party and any instrument required by this Agreement
to be executed and delivered by the Company or any of its Subsidiaries at the
Closing, shall not, require the Company or any of its Subsidiaries to, except as
set forth in Section 2.6(b) of the Company Disclosure Schedule, obtain any
Approval of any Person or Approval of, observe any waiting period imposed by, or
make any filing with or notification to, any Governmental Authority, domestic or
foreign, except for (A) compliance with applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), state securities laws
("Blue Sky Laws"), the pre-Merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or Foreign Competition Laws, (B) the filing of the Certificate of Merger
in accordance with Delaware law or (C) where the failure to obtain such
Approvals, or to make such filings or notifications, could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
2.7 Material Agreements.
(a) Section 2.7(a) of the Company Disclosure Schedule sets forth
a true and complete list, and if oral, an accurate and complete summary, of all
material Contracts to which the Company or any of its Subsidiaries is a party or
by which any of them or their properties or assets are bound as of the date
hereof (collectively, "Material Agreements"), including the following
agreements:
(i) employment Contracts with officers of the Company and
other Contracts with current or former officers, directors or Stockholders of
the Company, and all severance, change in control (except pursuant to the Option
Plans) or similar Contracts with any current or former Stockholders, directors,
officers, employees or agents of the Company that will result in any obligation
(absolute or contingent) of the Company or any of its Subsidiaries to make any
payment to any current or former Stockholders, directors, officers, employees or
agents of the Company following either the consummation of the transactions
contemplated hereby, termination of employment (or the relevant relationship),
or both;
(ii) labor Contracts (if any);
(iii) Contracts involving annual revenues, expenditures or
liabilities in excess of $250,000 per annum which are not cancelable (without
material penalty, cost or other liability) within 60 days;
(iv) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments and Contracts providing for the
borrowing or lending of money, whether as borrower, lender or guarantor, in each
case, relating to indebtedness or obligations in excess of $100,000;
(v) Contracts containing a covenant limiting the freedom of
the Company or any of its Subsidiaries (or which purport to limit the freedom of
Parent) to engage in any line of business or compete with any Person or operate
at any location in the world;
(vi) joint venture or partnership agreements or joint
development, distribution or similar agreements pursuant to which any third
party is entitled or obligated to develop or distribute any products on behalf
of the Company or any of its Subsidiaries or pursuant to which the Company or
any of its Subsidiaries is entitled or obligated to develop or distribute any
products on behalf of any third party;
(vii) Contracts for the acquisition, directly or indirectly
(by merger or otherwise) of material assets (whether tangible or intangible) or
the capital stock of another Person;
(viii) Contracts involving the issuance or repurchase of any
capital stock of the Company or any of its Subsidiaries (including newly formed
Subsidiaries), other than, with respect to the issuance of Company Common Stock,
the options or warrants listed in Section 2.3(a) of the Company Disclosure
Schedule
(ix) Contracts under which the Company or any of its
Subsidiaries has granted or received exclusive rights;
(x) any interest rate swaps, caps, floors or option
agreements or any other interest rate risk management arrangement or foreign
exchange Contracts; and
(xi) Contracts for the license or supply of any geographic or
similar data to the Company or any of its Subsidiaries.
True and complete copies of all written Material Agreements have been delivered
or been made available to Parent by the Company. Section 2.7(a) of the Company
Disclosure Schedule sets forth a true and complete list of all Contracts that
would purport to bind Parent or any of its Affiliates (other than the Company or
its Subsidiaries) following the consummation of the Merger.
(b) Other than Material Agreements that have terminated or
expired in accordance with their terms, each Material Agreement is in full force
and effect, is a valid and binding obligation of the Company or such Subsidiary
and of each other party thereto and is enforceable, in accordance with its
terms, against the Company or such Subsidiary and against each other party
thereto, in each case except that the enforcement thereof may be limited by (A)
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws affecting creditors' rights generally, (B)
general principles of equity (whether in a proceeding in equity or at law) and
(C) an implied covenant of good faith and fair dealing, and such Material
Agreements will continue to be valid, binding and enforceable in accordance with
their respective terms and in full force and effect immediately following the
consummation of the transactions contemplated hereby, with no material
alteration or acceleration or increase in fees or liabilities. Neither the
Company nor any of its Subsidiaries is or alleged to be and, to the best
Knowledge of the Company, no other party is or alleged to be in default under,
or in breach or violation of, any Material Agreement and, to the best Knowledge
of the Company, no event has occurred which, with the giving of notice or
passage of time or both, would constitute such a default, breach or violation.
The designation or definition of Material Agreements for purposes of this
Section 2.7 and the disclosures made pursuant thereto will not be construed or
utilized to expand, limit or define the terms "material" and "Material Adverse
Effect" as otherwise referenced and used in this Agreement.
2.8 Compliance. The Company and each of its Subsidiaries are in
compliance with, and are not in default or violation of, (i) the Certificate of
Incorporation and Bylaws of the Company or the equivalent organizational
documents of such Subsidiary, (ii) any Law or Order or by which any of their
respective assets or properties are bound or affected and (iii) the terms of all
notes, bonds, mortgages, indentures, Contracts, permits, franchises and other
instruments or obligations to which any of them are a party or by which any of
them or any of their respective assets or properties are bound or affected,
except, in the case of clauses (ii) and (iii), for any such failures of
compliance, defaults and violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
and its Subsidiaries are in compliance with the terms of all Approvals, except
where the failure to so comply could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Section 2.8 of the Company Disclosure Schedule or as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received notice of any
revocation or modification of any federal, state, local or foreign Governmental
Authority, any Approval of any federal, state, local or foreign Governmental
Authority that is material to the Company or any of its Subsidiaries.
2.9 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, schedules,
statements and documents required to be filed with the Securities and Exchange
Commission ("SEC") since January 1, 1999 (collectively, the "Company SEC
Reports") pursuant to the federal securities Laws and the Regulations of the SEC
promulgated thereunder, and all Company SEC Reports have been filed in all
material respects on a timely basis. The Company SEC Reports were prepared in
accordance, and complied as of their respective filing dates in all material
respects, with the requirements of the Exchange Act and the Securities Act and
the Regulations promulgated thereunder and did not at the time they were filed
(or if amended or superseded by a filing prior to the date hereof, then on the
date of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. None of the Company's Subsidiaries has filed, or is
obligated to file, any forms, reports, schedules, statements or other documents
with the SEC.
(b) Each of the audited and unaudited consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Company SEC Reports (i) complied in all material respects with applicable
accounting requirements and the published Regulations of the SEC with respect
thereto, (ii) were prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis throughout the periods
involved and (iii) fairly present the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements included in the Company's
Form 10-Q reports were or are subject to normal and recurring year-end
adjustments that have not been and are not expected to be material to the
Company.
2.10 Absence of Certain Changes or Events.
(a) Except as described in Section 2.10(a) of the Company
Disclosure Schedule, since December 31, 1998, the Company and its Subsidiaries
have conducted their, businesses only in the ordinary and usual course and in a
manner consistent with past practice, and, since such date, there has not been
any change, development, circumstance, condition, event, occurrence, damage,
destruction or loss that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as described in Section 2.10(b) of the Company
Disclosure Schedule, during the period from December 31, 1998 to the date
hereof, (i) there has not been any change by the Company in its accounting
methods, principles or practices, any revaluation by the Company of any of its
assets, including, writing down the value of inventory or writing off notes or
accounts receivable, and (ii) there has not been any action or event, and
neither the Company nor any of its Subsidiaries has agreed in writing or
otherwise to take any action, that would have required the consent of Parent
pursuant to Section 4.1 had such action or event occurred or been taken after
the date hereof and prior to the Effective Time.
2.11 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether absolute,
accrued, fixed, contingent or otherwise), and there is no existing fact,
condition or circumstance which could reasonably be expected to result in such
liabilities or obligations, except liabilities or obligations (i) reflected in
the Company SEC Reports filed and publicly available prior to the date hereof,
(ii) disclosed in Section 2.11 of the Company Disclosure Schedule, or (iii)
incurred in the ordinary course of business which do not have, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
2.12 Absence of Litigation.
Except as described in Section 2.12 of the Company Disclosure
Schedule or expressly described in the Company SEC Reports filed and publicly
available prior to the date hereof, there is no Litigation pending on behalf of
or against or, to the Knowledge of the Company, threatened against the Company,
any of its Subsidiaries, or any of their respective properties or rights, before
or subject to any Court or Governmental Authority which if adversely determined
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
subject to any outstanding Litigation or Order which, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect.
2.13 Employee Benefit Plans.
(a) Section 2.13(a) of the Company Disclosure Schedule describes
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including without
limitation multiemployer plans within the meaning of Section 3(37) of ERISA, and
all bonus, stock option, stock purchase, stock appreciation rights, incentive,
deferred compensation, retirement or supplemental retirement, severance, golden
parachute, vacation, cafeteria, dependent care, medical care, employee
assistance program, education or tuition assistance programs, insurance and
other similar fringe or employee benefit plans, programs or arrangements, and
any employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any present or former employee or
director of the Company or any of its Subsidiaries, which is or has been entered
into, contributed to, established by, participated in and/or maintained by the
Company, any trade or business (whether or not incorporated) which is a member
of a controlled group or which is under common control with the Company (an
"ERISA Affiliate") within the meaning of Section 414 of the Code, or any
Subsidiary of the Company, whether or not such plan is terminated (together, the
"Employee Plans"). The Company has provided to Parent correct and complete
copies of (where applicable) (a) all plan documents, summary plan descriptions,
summaries of material modifications, amendments, and resolutions related to such
plans (b) the most recent determination letters received from the IRS, (c) the
three most recent Form 5500 Annual Reports, (d) the most recent audited
financial statement and actuarial valuation, and (e) all related agreements,
insurance Contracts and other Contracts which implement each such Employee Plan.
Except with regard to outstanding options, there are no restrictions on the
ability of the sponsor of each Employee Plan (which is currently the Company or
a Subsidiary of the Company) to amend or terminate any Employee Plan, and each
Employee Plan may be transferred by the Company or any of its Subsidiaries to
Parent or the Merger Sub, as the case may be.
(b)There has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Employee Plan; there are no claims pending (other than routine claims for
benefits) or threatened against any Employee Plan or against the assets of any
Employee Plan, nor are there any current or threatened Liens on the assets of
any Employee Plan; all Employee Plans conform to, and in their operation and
administration are in all material respects in compliance with, the terms
thereof and requirements prescribed by any and all statutes (including ERISA and
the Code), orders, and governmental Regulations currently in effect with respect
thereto (including all applicable requirements for notification, reporting and
disclosure to participants of the Department of Labor, Internal Revenue Service
or Secretary of the Treasury); the Company and each of its Subsidiaries and
ERISA Affiliates have performed in all material respects all obligations
required to be performed by them under each Employee Plan and are not in default
under or violation of, and have no Knowledge of any default or violation by any
other Person with respect to, any of the Employee Plans; each Employee Plan
intended to qualify under Section 401(a) of the Code is so qualified, and each
corresponding trust is exempt under Section 501 of the Code has received or is
the subject of a favorable determination or opinion letter from the Internal
Revenue Service (the "IRS"), and nothing has occurred which may be expected to
cause the loss of such qualification or exemption; all contributions required to
be made to any Employee Plan pursuant to Section 412 of the Code or otherwise,
the terms of the Employee Plan or any collective bargaining agreement, have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each Employee Plan for the current plan years; the transactions
contemplated herein will not directly or indirectly result in an increase of
benefits, acceleration of vesting or acceleration of timing for payment of any
benefit to any participant or beneficiary, except as disclosed in Section
2.13(b) of the Company Disclosure Schedule; the computer systems used in the
operation and administration of all Employees Plans, including those operated by
all third party service providers, to the Knowledge of the Company, are Year
2000 Compliant (as defined herein); and each Employee Plan, if any, which is
maintained outside of the United States has been operated in all material
respects in conformance with the applicable Laws relating to such plans in the
jurisdictions in which such Employee Plan is present or operates and, to the
extent relevant, the United States.
(c) No Employee Plan is an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, and
neither the Company nor any Subsidiary or ERISA Affiliate has ever partially or
fully withdrawn from any such plan. No Employee Plan is a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) or "single-employer plan under
multiple controlled groups" as described in Section 4063 of ERISA, and neither
the Company nor any Subsidiary or ERISA Affiliate has ever contributed to or had
an obligation to contribute, or incurred any liability in respect of a
contribution, to any multiemployer plan.
(d) Each Employee Plan that is a "group health plan" (within the
meaning of Code Section 5000(b)(1)) has been operated in compliance in all
material respects with the group health plan continuation coverage requirements
of Section 4980B of the Code and Sections 601 through 608 of ERISA ("COBRA
Coverage"), Section 4980D of the Code and Sections 701 through 707 of ERISA,
Title XXII of the Public Health Service Act and the provisions of the Social
Security Act, to the extent such requirements are applicable. Except as
disclosed in Section 2.13(d) of the Company Disclosure Schedule, no Employee
Plan or written or oral agreement exists which obligates the Company to provide
health care coverage, medical, surgical, hospitalization, death or similar
benefits (whether or not insured) to any employee or former employee of the
Company or any of its Subsidiaries following such employee's or former
employee's termination of employment with the Company or any Subsidiary, other
than COBRA Coverage.
(e) Section 2.13(e) of the Company Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer,
director and investor of the Company or any of its Subsidiaries who holds, as of
the date hereof, any option, warrant or other right to purchase Company Common
Stock or Company Preferred Stock, if any, together with the number of shares of
Company Common Stock or Company Preferred Stock, if any, subject to such option,
warrant or right, the date of grant or issuance of such option, warrant or
right, the extent to which such option, warrant or right is vested and/or
exercisable, the exercise price of such option, warrant or right, whether such
option is intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code, and the expiration date of each such option, warrant
and right. Section 2.13(e) of the Company Disclosure Schedule also sets forth
the total number of such options, warrants and rights. True and complete copies
of each agreement (including all amendments and modifications thereto) between
the Company and each holder of such options, warrants and rights relating to the
same have been furnished to Parent.
(f) Except as set forth in Schedule 2.13(f) of the Company
Disclosure Schedule, (i) no event has occurred and no condition exists that
would subject the Company or any of its Subsidiaries, either directly or by
reason of its affiliation with any ERISA Affiliate, to any Tax, fine, Lien,
penalty or other liability imposed by ERISA; (ii) for each Employee Plan with
respect to which a Form 5500 has been filed, no material change has occurred
with respect to the matters covered by the most recent Form since the date
thereof; (iii) no "reportable event" (as such term is defined in Section 4043 of
ERISA) has occurred with respect to any Employee Plan; and (iv) all awards,
grants or bonuses made pursuant to any Employee Plan have been, or will be,
fully deductible by the Company or its Subsidiaries notwithstanding the
provisions of Sections 162(m) and 280G of the Code and the Regulations
promulgated thereunder.
2.14 Employment and Labor Matters.
(a) Section 2.14(a) of the Company Disclosure Schedule
identifies all employees and consultants employed or engaged by the Company with
an annual base salary or compensation rate of $100,000 or higher and sets forth
each such individual's rate of pay or annual compensation, job title and date of
hire. Except as set forth in Section 2.14(a) of the Company Disclosure Schedule,
there are no employment, consulting, collective bargaining, severance pay,
continuation pay, termination or indemnification agreements or other similar
Contracts of any nature (whether in writing or not) between the Company or any
Subsidiary and any current or former Stockholder, officer, director, employee,
consultant, labor organization or other representative of any of the Company's
or Subsidiary's employees, nor is any such Contract presently being negotiated.
Except as set forth in Section 2.14(a) of the Company Disclosure Schedule, no
individual will accrue or receive additional benefits, service or accelerated
rights to payments under any Employee Plan or any of the agreements set forth in
Section 2.14(a) of the Company Disclosure Schedule, including the right to
receive any parachute payment, as defined in Section 280G of the Code, or become
entitled to severance, termination allowance or similar payments as a result of
the transaction contemplated herein or in the Option Agreement that could result
in the payment of any such benefits or payments. Neither the Company nor any
Subsidiary is delinquent in payments to any of its employees or consultants for
any wages, salaries, commissions, bonuses, benefits or other compensation for
any services or otherwise arising under any policy, practice, agreement, plan,
program or Law. Except as set forth in Section 2.14(a) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is liable for any severance pay
or other payments to any employee or former employee arising from the
termination of employment, nor will the Company or any Subsidiary have any
liability under any benefit or severance policy, practice, agreement, plan, or
program which exists or arises, or may be deemed to exist or arise, under any
applicable Law or otherwise, as a result of or in connection with the
transactions contemplated hereunder or as a result of the termination by the
Company or any Subsidiary of any persons employed by the Company or any
Subsidiary on or prior to the Effective Time. None of the Company's or any
Subsidiary's employment policies or practices is currently being audited or
investigated by any Governmental Authority or Court. There is no pending or, to
the Knowledge of the Company, threatened Litigation, unfair labor practice
charge, or other charge or inquiry against the Company or any Subsidiary brought
by or on behalf of any employee, prospective employee, former employee, retiree,
labor organization or other representative of the Company's or Subsidiary's
employee, or other individual or any Governmental Authority with respect to
employment practices brought by or before any Court or Governmental Authority.
(b) Except as set forth in Section 2.14(b) of the Company
Disclosure Schedule, there are no controversies pending or threatened, between
the Company or any of its Subsidiaries and any of their respective employees;
neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or other labor union Contract applicable to Persons
employed by the Company or its Subsidiaries nor are there any activities or
proceedings of any labor union to organize any such employees of the Company or
any of its Subsidiaries; during the past five years there have been no strikes,
slowdowns, work stoppages, disputes, lockouts, or threats thereof, by or with
respect to any employees of the Company or any of its Subsidiaries. Except as
set forth in Section 2.14(b) of the Company Disclosure Schedule, there are no
grievances pending or, to the Knowledge of the Company or any Subsidiary,
threatened, which, if adversely decided, could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is a party to,
or otherwise bound by, any consent decree with, or citation or other Order by,
any Governmental Authority relating to employees or employment practices. The
Company and each of its Subsidiaries are in compliance in all material respects
with all applicable Laws, Contracts, and policies relating to employment,
employment practices, wages, hours, and terms and conditions of employment,
including the obligations of the Worker Adjustment and Retraining Notification
Act of 1988, as amended ("WARN"), and all other notification and bargaining
obligations arising under any collective bargaining agreement, by Law or
otherwise. Neither the Company nor any Subsidiary of the Company has effectuated
a "plant closing" or "mass layoff" as those terms are defined in WARN, affecting
in whole or in part any site of employment, facility, operating unit or employee
of the Company, without complying with all provisions of WARN or implemented any
early retirement, separation or window program within the past five years, nor
has the Company or any Subsidiary planned or announced any such action or
program for the future.
2.15 Registration Statement; Proxy Statement/Prospectus. None of the
information supplied by the Company for inclusion in the registration statement
on Form S-4, or any amendment or supplement thereto, pursuant to which the
shares of Parent Common Stock to be issued in the Merger will be registered with
the SEC (including any amendments or supplements, the "Registration Statement")
shall, at the time such document is filed, at the time amended or supplemented
and at the time the Registration Statement is declared effective by the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied by the Company for inclusion in the
proxy statement/prospectus to be sent to the Stockholders of the Company in
connection with the meeting of the Stockholders of the Company to consider the
Merger and vote on a proposal to adopt the Merger Agreement (the "Company
Stockholders' Meeting") (such proxy statement/prospectus, as amended or
supplemented, is referred to herein as the "Proxy Statement") shall, on the date
the Proxy Statement is first mailed to the Stockholders of the Company, at the
time of the Company Stockholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or misleading or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the Company Stockholders' Meeting which
has become false or misleading. If at any time prior to the Effective Time any
event relating to the Company or any of its respective Affiliates, officers or
directors should be discovered by the Company which should be set forth in an
amendment or supplement to the Registration Statement or an amendment or
supplement to the Proxy Statement, the Company shall promptly inform Parent and
Merger Sub. The Proxy Statement shall comply in all material respects as to form
and substance with the requirements of the Exchange Act and the Regulations
promulgated thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Sub which is contained in the Registration Statement or Proxy Statement.
2.16 Absence of Restrictions on Business Activities. Except as set
forth in Section 2.16 of the Company Disclosure Schedule, there is no agreement
or Order binding upon the Company or any of its Subsidiaries or any of their
assets or properties which has had or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Company or any of its Subsidiaries or the conduct of business by the Company or
any of its Subsidiaries as currently conducted or as proposed to be conducted by
the Company or any of its Subsidiaries. Except as set forth in Section 2.16 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is subject to any non-competition, non-solicitation or similar restriction on
their respective businesses.
2.17 Title to Assets; Leases.
(a) Except as described in Section 2.17(a) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries has good and
marketable title to all of their real or personal properties (whether owned or
leased) and assets, free and clear of all Liens.
(b) Section 2.17(b) of the Company Disclosure Schedule contains
a list of all of the real property and interests in real property owned by the
Company or any of its Subsidiaries and all leases of real property to which the
Company or any Subsidiary is a party or by which any of them holds a leasehold
interest (collectively, "Real Property"). Except as set forth in Section 2.17(b)
of the Company Disclosure Schedule, (i) each Real Property lease to which the
Company or any of its Subsidiaries is a party is in full force and effect in
accordance with its terms, (ii) all rents and additional rents due to date from
the Company or a Subsidiary on each such lease have been paid, (iii) neither the
Company nor any Subsidiary has received written notice that it is in material
default thereunder, and (iv) there exists no default by the Company or any
Subsidiary under such lease. There are no leases, subleases, licenses,
concessions or any other agreements or commitments to which the Company or a
Subsidiary is a party granting to any Person other than the Company or a
Subsidiary any right to possession, use occupancy or enjoyment of any of the
Real Property or any portion thereof. None of the Company nor any of its
Subsidiaries is obligated under or bound by any option, right or first refusal,
purchase Contract, or other Contract to sell or otherwise dispose of any Real
Property or any other interest in any Real Property.
2.18 Taxes. For purposes of this Agreement, "Tax" or "Taxes" shall
mean taxes and governmental impositions of any kind in the nature of (or similar
to) taxes, payable to any federal, state, local or foreign taxing authority,
including those on or measured by or referred to as income, franchise, profits,
gross receipts, capital ad valorem, custom duties, alternative or add-on minimum
taxes, estimated, environmental, disability, registration, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements, including any schedule or
attachment thereto, with respect to Taxes required to be filed with the Internal
Revenue Service or any other governmental or taxing authority or agency,
domestic or foreign, including consolidated, combined and unitary tax returns.
Except as set forth in Section 2.18 of the Company Disclosure Schedule:
(a) All material Tax Returns required to be filed by or on
behalf of the Company, each of its Subsidiaries, and each affiliated, combined,
consolidated or unitary group of which the Company or any of its Subsidiaries is
a member have been timely filed, and all such Tax Returns are true, complete and
correct in all material respects.
(b) All material Taxes payable by or with respect to the Company
and each of its Subsidiaries (whether or not shown on any Tax Return) have been
timely paid, and adequate reserves (other than a reserve for deferred Taxes
established to reflect timing differences between book and Tax treatment) in
accordance with GAAP are provided on the respective company's Balance Sheet for
any material Taxes not yet due. All assessments for material Taxes due and owing
by or with respect to the Company and each of its Subsidiaries with respect to
completed and settled examinations or concluded litigation have been paid.
Neither the Company nor any of its Subsidiaries has incurred a Tax liability
from the date of the latest Balance Sheet other than a Tax liability in the
ordinary course of business.
(c) No action, suit, proceeding, investigation, claim or audit
has formally commenced and no written notice has been given that such audit or
other proceeding is pending or threatened with respect to the Company or any of
its Subsidiaries or any group of corporations of which any of the Company and
its Subsidiaries has been a member in respect of any Taxes, and all deficiencies
proposed as a result of such actions, suits, proceedings, investigations, claims
or audits have been paid, reserved against or settled.
(d) Except as set forth in Section 2.18(d) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
requested, or been granted any waiver of any federal, state, local or foreign
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax. No extension or waiver of time within which to file any
Tax Return of, or applicable to, the Company or any of its Subsidiaries has been
granted or requested which has not since expired.
(e) Except as set forth in Section 2.18(d) of the Company
Disclosure Schedule, other than with respect to its Subsidiaries, the Company is
not and has never been (nor does the Company have any liability for unpaid Taxes
because it once was) a member of an affiliated, consolidated, combined or
unitary group, and neither the Company nor any of its Subsidiaries is a party to
any Tax allocation or sharing agreement or is liable for the Taxes of any other
person under Treasury Regulations ss.1.1502-6 (or any similar provision of
state, local or foreign law), as transferee or successor, by Contract, or
otherwise.
(f) Except as disclosed in Section 2.18(f) of the Company
Disclosure Schedule, the Company and its Subsidiaries have not made any
payments, are not obligated to make any payments, and are not a party to any
agreements that under any circumstances could obligate any of them to make any
payments, that will not be deductible under Section 280G of the Code.
(g) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(h) The Company and each of its Subsidiaries have complied with
all applicable Laws relating to the payment and withholding of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections 1441, 1442 and
3406 of the Code or similar provisions under any foreign Laws) and have, within
the time and in the manner required by Law, withheld from employee wages and
paid over to the proper Governmental Authorities all amounts required to be so
withheld and paid over under all applicable Laws.
(i) Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(j) None of the Company and its Subsidiaries will be required to
include any material amount in taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of a change in the method of
accounting for a taxable period ending prior to the Closing Date, any "closing
agreement" as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign Tax Laws) entered into prior to the Closing
Date, any sale reported on the installment method that occurred prior to the
Closing Date, or any taxable income attributable to any amount that is
economically accrued prior to the Closing Date.
2.19 Environmental Matters.
(a) Except as described on Section 2.19 of the Company
Disclosure Schedule, and except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: (i) the Company and
each of its Subsidiaries complies and have complied, during all applicable
statute of limitations periods, with all applicable Environmental Laws, and
possess and comply, and have possessed and complied during all applicable
statute of limitations periods, with all Environmental Permits; (ii) to the
Knowledge of the Company, there are and have been no Materials of Environmental
Concern or other conditions at any property owned, operated, or otherwise used
by the Company now or in the past, or at any other location (including without
limitation any facility to which Materials of Environmental Concern from the
Company or any of its Subsidiaries), that are in circumstances that could
reasonably be expected to give rise to any liability of the Company or any of
its Subsidiaries, or result in costs to the Company or any of its Subsidiaries
arising out of any Environmental Law; (iii) no Litigation (including, to the
Knowledge of the Company, any notice of violation or alleged violation), under
any Environmental Law or with respect to any Materials of Environmental Concern
to which the Company or any of its Subsidiaries is, or to the Knowledge of the
Company will be, named as a party, or affecting their business, is pending or,
to the Knowledge of the Company, threatened; nor is the Company or any of its
Subsidiaries the subject of any investigation or the recipient of any request
for information in connection with any such Litigation or potential Litigation;
(iv) there are no Orders or agreements under any Environmental Law or with
respect to any Materials of Environmental Concern to which the Company or any of
its Subsidiaries is a party or affecting their business; (v) to the Knowledge of
the Company, there are no events, conditions, circumstances, practices, plans,
or legal requirements (in effect or reasonably anticipated), that could be
expected to prevent the Company from, or materially increase the burden on the
Company of: (A) complying with applicable Environmental Laws, or (B) obtaining,
renewing, or complying with all Environmental Permits; and (vi) to the Knowledge
of the Company, each of the foregoing representations and warranties is true and
correct with respect to any entity for which the Company or any of its
Subsidiaries has assumed or retained liability, whether by Contract or operation
of Law.
(b) The Company has furnished to Parent true and complete copies
of all Environmental Reports in the possession or control of the Company or any
of its Subsidiaries.
(c) For purposes of this Agreement, the terms below are defined
as follows:
"Environmental Laws" shall mean any and all Laws, Orders,
guidelines, codes, or other legally enforceable requirement
(including, without limitation, common law) of any foreign
government, the United States, or any state, local, municipal or
other Governmental Authority, regulating, relating to or imposing
liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety.
"Environmental Permits" shall mean any and all permits,
licenses, registrations, notifications, exemptions and any other
Approvals required of the Company under any Environmental Law.
"Environmental Report" shall mean any report, study, assessment,
audit, or other similar document that addresses any issue of actual
or potential noncompliance with, actual or potential liability under
or cost arising out of, or actual or potential impact on business in
connection with, any Environmental Law or any proposed or
anticipated change in or addition to Environmental Law, that may in
any way affect the Company or any entity for which it may be liable
or any Subsidiary.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other
substances of any kind, whether or not any such substance is defined
as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental
Law.
2.20 Intellectual Property.
(a) Section 2.20(a) of the Company Disclosure Schedule sets
forth, for the Intellectual Property owned by the Company or its Subsidiaries, a
complete and accurate list of all United States and foreign patent, copyright,
trademark, service ▇▇▇▇, trade dress, domain name and other registrations, and
applications, indicating for each, the applicable jurisdiction, registration
number (or application number), and date issued or filed, and all material
unregistered Intellectual Property.
(b) All registered Intellectual Property of the Company and its
Subsidiaries is currently in compliance in all material respects with all legal
requirements (including timely filings, proofs and payments of fees), to the
Knowledge of the Company, is valid and enforceable, and is not subject to any
filings, fees or other actions falling due within 90 days after the Effective
Time. No registered Intellectual Property of the Company or its Subsidiaries has
been or is now involved in any cancellation, dispute or Litigation, and, to the
Knowledge of the Company and its Subsidiaries, no such action is threatened. No
patent of the Company or its Subsidiaries has been or is now involved in any
interference, reissue, re-examination or opposition proceeding.
(c) Section 2.20(c) of the Company Disclosure Schedule sets
forth a complete and accurate list of all licenses, sublicenses, consent,
royalty or other agreements concerning Intellectual Property to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than (i) Contracts disclosed pursuant to Section 2.7(a)(iii) and
2.7(a)(xi) and (ii) generally commercially available, non-custom, off-the-shelf
software application programs having a retail acquisition price of less than
$10,000) (collectively, "License Agreements"). All of the Company's License
Agreements are valid and binding obligations of Company or its Subsidiaries that
are parties thereto, enforceable in accordance with their terms, and there
exists no event or condition which will result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default by
the Company or any of its Subsidiaries under any such License Agreement, except
for violations, breaches, or defaults which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(d) The Company and its Subsidiaries own or have the valid right
to use all of the Intellectual Property necessary for the conduct of the
Company's and each of its Subsidiaries' business as currently conducted or
contemplated to be conducted and for the ownership, maintenance and operation of
the Company's and its Subsidiaries' properties and assets. No royalties,
honoraria or other fees are payable by the Company or its Subsidiaries to any
third parties for the use of or right to use any Intellectual Property, except
as set forth in Section 2.20(d) of the Company Disclosure Schedule.
(e) The Company and its Subsidiaries exclusively own, free and
clear of all Liens or obligations to license all their owned Intellectual
Property, and the Company and its Subsidiaries have executed all necessary
agreements and performed all necessary due diligence to make the foregoing
statement. The Company and its Subsidiaries have a valid, enforceable and,
subject to obtaining required consents, transferable right to use all their
licensed Intellectual Property. Except as disclosed in Section 2.20(e) of the
Company Disclosure Schedule, the Company and its Subsidiaries have the right to
use all owned and licensed Intellectual Property in all jurisdictions in which
they conduct or propose to conduct their businesses.
(f) The Company and each of its Subsidiaries have taken all
reasonable steps to maintain, police and protect the Intellectual Property which
it owns, including the proper policing activities and the execution of
appropriate confidentiality agreements and intellectual property assignments and
releases. Except as disclosed in Section 2.20(f) of the Company Disclosure
Schedule, (i) the conduct of the Company's and its Subsidiaries' businesses as
currently conducted or planned to be conducted does not infringe or otherwise
impair or conflict with ("Infringe") any Intellectual Property rights (other
than patents) of any third party, and the Intellectual Property rights of the
Company and its Subsidiaries is not being Infringed by any third party (ii) to
the Knowledge of the Company, the conduct of the Company's and its Subsidiaries'
businesses as currently conducted or planned to be conducted does not Infringe
any patent rights of any third party, and, to the Knowledge of the Company, the
patent rights of the Company and its Subsidiaries are not being Infringed by any
third party and (iii) there is no Litigation or Order pending or outstanding, to
the Knowledge of the Company, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property of the Company and its Subsidiaries, and, to the Knowledge
of the Company, there is no valid basis for the same.
(g) Except as set forth in Section 2.20(g) of the Company
Disclosure Schedule, the consummation of the transactions contemplated hereby
will not result in the alteration, loss or impairment of the validity,
enforceability or the Company's or any of its Subsidiaries' right to own or use
any of the Intellectual Property, nor will such transactions require the
Approval of any Governmental Authority or third party in respect of any
Intellectual Property.
(h) Section 2.20(h) of the Company Disclosure Schedule lists all
Software (i) (other than generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $10,000) which are owned, licensed to or by the Company or any of its
Subsidiaries, leased to or by the Company or any of its Subsidiaries, or
otherwise used by the Company or any of its Subsidiaries, and identifies which
Software is owned, licensed, leased or otherwise used, as the case may be and
(ii) which are sold, licensed, leased or otherwise distributed by the Company or
any of its Subsidiaries to any third party, and identifies which Software is
sold, licensed, leased, or otherwise distributed as the case may be. All
Software owned by the Company or any of its Subsidiaries, and all Software
licensed from third parties by the Company or any of its Subsidiaries, (i) is
free from any material defect, bug, virus, or programming, design or
documentation error, (ii) operates and runs in a reasonable and efficient
business manner, and (iii) conforms in all material respects to the
specifications and purposes thereof.
(i) The Company and its Subsidiaries have taken all reasonable
steps to protect the Company's and its Subsidiaries' rights in their
confidential information and trade secrets. Without limiting the foregoing, the
Company and its Subsidiaries require each employee, consultant and contractor to
execute and, except as disclosed in Section 2.20(i) of the Company Disclosure
Schedule, each employee, consultant and contractor has executed, appropriate
agreements that are substantially consistent with the Company's standard forms
thereof (true and complete copies of which have been delivered to Parent).
Except under confidentiality obligations, there has been no material disclosure
of any of the Company's or its Subsidiaries' confidential information or trade
secrets to any third party.
2.21 Year 2000 Compliance and Security.
(a) The Company's and its Subsidiaries' products, Software,
services, servers, systems and other computer and telecom assets and equipment
("Systems") when used in accordance with their associated documentation will at
all times (i) record, store, process, calculate and present calendar dates
falling before, on and after (and if applicable, spans of time including)
January 1, 2000, and (ii) create, calculate, recognize, accept, display, store,
retrieve, access, compare, sort, manipulate, or process any information
dependent on or relating to dates on or after January 1, 2000 or otherwise
provide use of dates or date-dependent or date-related data, including, but not
limited to, century recognition, day-of-the week recognition, leap years, date
values and interfaces of date functionalities, without loss of accuracy,
functionality, data integrity and performance and (iii) respond to two-digit
input in a way that resolves ambiguity as to century in a disclosed, defined and
pre-determined manner (the foregoing ability, "Year 2000 Compliant"). The
Company and its Subsidiaries have taken reasonable steps to ensure that its
Systems will lose no functionality with respect to the introduction of records
containing dates falling on or after January 1, 2000. All of the Company's and
all of its Subsidiaries' Systems which are material to the operation of the
business of the Company and its Subsidiaries are Year 2000 Compliant.
(b) The Company and its Subsidiaries have taken and take all
reasonable actions to maintain, protect and police the integrity and security of
their Systems, including the protection and policing against all unauthorized
use of, access to, or "hacking" into the Systems, or the introduction into the
Systems of viruses or other unauthorized, damaging or corrupting elements.
2.22 Insurance. Section 2.22 of the Company Disclosure Schedule sets
forth a true and complete list of all material insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its Subsidiaries. There is
no claim by the Company or any of its Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums payable under all
such policies and bonds have been paid and the Company and its Subsidiaries are
otherwise in full compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage), and the
Company shall, and shall cause its Subsidiaries to, maintain in full force and
effect all such insurance during the period from the date hereof through the
Closing Date. Such policies of insurance and bonds are of the type and in
amounts customarily carried by Persons conducting businesses similar to those of
the Company and its Subsidiaries and reasonable in light of the assets of the
Company and its Subsidiaries. To the Knowledge of the Company, there is not any
threatened termination of or material premium increase with respect to any of
such policies or bonds.
2.23 No Restrictions on the Merger; Takeover Statutes. The Board of
Directors of the Company has, prior to the date hereof, approved this Agreement
and the Merger and the other transactions contemplated hereby and such approval
is sufficient to render inapplicable to this Agreement, the Merger and any other
transactions contemplated hereby, the restrictions on business combinations of
Section 203 of the DGCL. No Delaware law or other takeover statute or similar
Law and no provision of the Certificate of Incorporation or Bylaws, or other
organizational documents or governing instruments of the Company or any of its
Subsidiaries or any Material Agreement to which any of them is a party (a) would
or would purport to impose restrictions which might adversely affect or delay
the consummation of the transactions contemplated by this Agreement, the
Stockholders Agreement or the Option Agreement, or (b) as a result of the
consummation of the transactions contemplated by this Agreement, the
Stockholders Agreement or the Option Agreement or the acquisition of securities
of the Company or the Surviving Corporation by Parent or Merger Sub (i) would or
would purport to restrict or impair the ability of Parent to vote or otherwise
exercise the rights of a Stockholder with respect to securities of the Company
or any of its Subsidiaries that may be acquired or controlled by Parent or (ii)
would or would purport to entitle any Person to acquire securities of the
Company.
2.24 Pooling; Tax Matters.
(a) The Company intends that the Merger be accounted for under
the "pooling of interests" method under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the Regulations of the SEC.
(b) To the Knowledge of the Company, neither the Company nor any
of its Affiliates has taken or agreed to take any action, failed to take any
action or is aware of any fact or circumstance that would prevent (i) the Merger
from being treated for financial accounting purposes as a "pooling of interests"
in accordance with GAAP and the Regulations of the SEC or (ii) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
(c) The Company has no knowledge of any reason why it may not
receive a letter from Ernst & Young LLP (the "Company's Accountants") dated as
of the Closing Date and addressed to the Company in which the Company's
Accountants will concur with the Company management's conclusion that no
conditions exist related to the Company that would preclude Parent from
accounting for the Merger as a "pooling of interests."
(d) Section 2.24(d) of the Company Disclosure Schedule contains
a true and complete list of all Persons who, to the Knowledge of the Company,
may be deemed to be Affiliates of the Company, excluding all of its Subsidiaries
but including all directors and executive officers of the Company.
2.25 Brokers. No broker, financial advisor, finder or investment
banker or other Person is entitled to any broker's, financial advisor's,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company, except for BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. (the "Company
Financial Advisors"). Section 2.25 of the Company Disclosure Schedule sets
forth, and the Company has heretofore furnished to Parent a true and complete
copy of, all agreements between the Company and the Company Financial Advisors
pursuant to which such Person would be entitled to any payment relating to the
transactions contemplated hereunder.
2.26 Certain Business Practices. As of the date hereof, neither the
Company nor any of its Subsidiaries nor any director, officer, employee or agent
of the Company or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
2.27 Interested Party Transactions. Except as disclosed in Section
2.27 of the Company Disclosure Schedule, (i) there are no existing, and since
January 1, 1999 there has been no Contract, transaction, indebtedness or other
arrangement, or any related series thereof, between the Company and any of its
Subsidiaries, on the one hand, and any of the directors, officers, Stockholders
or other Affiliates of the Company and its Subsidiaries, or any of their
respective Affiliates or family members, on the other (except for amounts due as
normal salaries and bonuses and in reimbursement of ordinary expenses), and (ii)
except for the Outstanding Employee Options, at the Closing, all such Contracts,
transactions, indebtedness and other arrangements shall be terminated (except
for amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses).
2.28 Opinion of Financial Advisor. The Company has received the
written opinion of the Company Financial Advisors to the effect that, in its
opinion, as of the date hereof, the exchange ratio to be used in the Merger is
fair to such Stockholders of the Company from a financial point of view, and the
Company has provided copies of such opinion to Parent.
2.29 Disclaimer of Other Representation and Warranties. The Company
does not make, and has not made, any representations or warranties relating to
the Company or in connection with the transactions contemplated hereby other
than those expressly set forth in this Article II. No person has been authorized
by the Company to make any representation or warranty relating to the Company or
any Subsidiary, the businesses of the Company or otherwise in connection with
the transactions contemplated hereby except as set forth in this Article II and
in the Option Agreement and, if made, such representation or warranty must not
be relied upon as having been authorized by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Company as follows:
3.1 Organization and Qualification. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware. Parent has all the requisite corporate power and authority,
and is in possession of all Approvals necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so qualified, existing and in good standing or to have
such power, authority and Approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each of Parent and
Merger Sub is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Merger Sub is a newly-formed single purpose entity which has
been formed solely for the purposes of the Merger and will not carry on any
business or engage in any activities other than those reasonably related to the
Merger.
3.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of
Parent consists of (i) 6,000,000,000 shares of Parent Common Stock of which, as
of December 21, 1999, approximately 2,270,342,472 shares were issued and
outstanding, and (ii) 5,000,000 shares of preferred stock, par value $.01 per
share, including 500,000 reserved for issuance under the Parent Rights
Agreement, of which none are issued or outstanding. All of the outstanding
shares of Parent Common Stock are, and all shares to be issued as part of the
Merger Consideration will be, when issued in accordance with the terms hereof,
duly authorized, validly issued, fully paid and nonassessable.
(b) As of the date hereof, the authorized capital stock of
Merger Sub consists of 1,000 shares of Merger Sub Common Stock, of which 1,000
shares of Merger Sub Common Stock are outstanding. All of the outstanding shares
of Merger Sub Common Stock are owned by Parent.
3.3 Authority; Enforceability. Each of Parent and Merger Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and each instrument required hereby to be executed and delivered by it at the
Closing, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
each of Parent and Merger Sub of this Agreement and each instrument required
hereby to be executed and delivered by Parent and Merger Sub at the Closing and
the performance of their respective obligations hereunder and thereunder have
been duly and validly authorized by the Board of Directors of each of Parent and
Merger Sub and by Parent as the sole Stockholder of Merger Sub. Except for
filing of the Certificate of Merger, no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid and
binding obligation of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms.
3.4 No Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the performance of this Agreement by Parent or Merger Sub
shall not, (i) conflict with or violate the Certificate of Incorporation or
Bylaws of Parent or the Certificate of Incorporation or Bylaws of Merger Sub, or
(ii) conflict with or violate any Law or Order in each case applicable to Parent
or Merger Sub or by which its or any of their respective properties is bound or
affected, except in the case of clause (ii) above, for any such conflicts or
violations that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the performance by Parent and Merger Sub of this Agreement
shall not, require Parent or Merger Sub to obtain the Approval of, observe any
waiting period imposed by, or make any filing with or notification to, any
Governmental Authority, domestic or foreign, except for (A) compliance with
applicable requirements of the Securities Act, the Exchange Act, Blue Sky Laws,
or the pre-Merger notification requirements of the HSR Act or Foreign
Competition Laws, (B) the filing of the Certificate of Merger in accordance with
Delaware law, (C) the filing of a listing application or other documents as
required by the NYSE or (D) where the failure to obtain such Approvals, or to
make such filings or notifications, would not individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.5 SEC Filings; Financial Statements.
(a) Parent has filed all reports and documents required to be
filed with the SEC since January 1, 1999 (collectively, the "Parent SEC
Reports") pursuant to the federal securities Laws and Regulations of the SEC
promulgated thereunder, and all Parent SEC Reports have been filed in all
material respects on a timely basis. The Parent SEC Reports were prepared in
accordance, and complied as of their respective filing dates in all material
respects, with the requirements of the Exchange Act and the Regulations
promulgated thereunder and did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Parent SEC Reports (i)
complied in all material respects with applicable accounting requirements and
the published Regulations of the SEC with respect thereto, (ii) were prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis throughout the periods
involved (except as may be expressly described in the notes thereto) and (iii)
fairly presents the consolidated financial position of Parent as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements included in the Company's Form 10-Q reports were or are subject to
normal and recurring year-end adjustments that have not been and are not
expected to be material in amount to Parent.
3.6 Absence of Litigation. Except as described in Section 3.6 of the
Parent Disclosure Schedule or expressly described in the Parent SEC Reports
filed and publicly available prior to the date hereof, there is no Litigation
pending on behalf of or against or, to the Knowledge of Parent, threatened
against Parent, any of its Subsidiaries, or any of their respective properties
or rights, before or subject to any Court or Governmental Authority which if
adversely determined would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Neither Parent nor any of its
Subsidiaries is subject to any outstanding Litigation or Order which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
3.7 Registration Statement; Proxy Statement/Prospectus. None of the
information supplied by Parent for inclusion in the Registration Statement
shall, at the time such document is filed, at the time amended or supplemented,
or at the time the Registration Statement is declared effective by the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied by Parent for inclusion in the
Proxy Statement shall, on the date the Proxy Statement is first mailed to the
Stockholders of the Company, at the time of Company Stockholders' Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading. The Registration Statement will comply as to form in
all material respects with the provisions of the Securities Act. Notwithstanding
the foregoing, Parent makes no representation, warranty or covenant with respect
to any information supplied by the Company which is contained in the
Registration Statement or Proxy Statement.
3.8 Pooling; Tax Matters. To the Knowledge of Parent, neither Parent
and Merger Sub nor any of their Affiliates has taken or agreed to take any
action or failed to take any action that would prevent (a) the Merger from being
treated for financial accounting purposes as a "pooling of interests" in
accordance with GAAP and the Regulations of the SEC or (b) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date hereof and the Effective
Time, except as expressly required or permitted by this Agreement or unless
Parent shall otherwise agree in writing in advance, the Company shall conduct
and shall cause the businesses of each of its Subsidiaries to be conducted only
in, and the Company and its Subsidiaries shall not take any action except in,
the ordinary course of business and in a manner consistent with past practice
and in compliance with applicable laws. The Company shall use its reasonable
best efforts to preserve intact the business organization and assets of the
Company and each of its Subsidiaries, and to operate, and cause each of its
Subsidiaries to operate, according to plans and budgets provided to Parent, to
keep available the services of the present officers, employees and consultants
of the Company and each of its Subsidiaries, to maintain in effect Material
Agreements and to preserve the present relationships of the Company and each of
its Subsidiaries with advertisers, sponsors, customers, licensees, suppliers and
other Persons with which the Company or any of its Subsidiaries has business
relations. By way of amplification and not limitation, neither the Company nor
any of its Subsidiaries shall, between the date hereof and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) amend or otherwise change the Certificate of Incorporation
or Bylaws or equivalent organizational document of the Company or any of its
Subsidiaries or alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of the Company or
any of its Subsidiaries;
(b) issue, grant, sell, transfer, deliver, pledge, promise,
dispose of or encumber, or authorize the issuance, grant, sale, transfer,
deliverance, pledge, promise, disposition or encumbrance of, any shares of
capital stock of any class (common or preferred), or any options, warrants,
convertible or exchangeable securities or other rights of any kind to acquire
any shares of capital stock or any other ownership interest or Stock-Based
Rights of the Company or any of its Subsidiaries (except for the issuance of
Company Common Stock issuable pursuant to the Outstanding Employee Options);
adopt, ratify or effectuate a Stockholders' rights plan or agreement; or redeem,
purchase or otherwise acquire, directly or indirectly, any of the capital stock
of the Company or interest in or securities of any Subsidiary;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock (except that a wholly owned Subsidiary of the Company
may declare and pay a dividend to its parent); split, combine or reclassify any
of its capital stock, or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of its capital stock;
or amend the terms of, repurchase, redeem or otherwise acquire, or permit any
Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or
any securities of its Subsidiaries; or propose to do any of the foregoing;
(d) sell, transfer, deliver, lease, license, sublicense,
mortgage, pledge, encumber or otherwise dispose of (in whole or in part), or
create, incur, assume or subject any Lien on, any of the assets of the Company
or any of its Subsidiaries (including any Intellectual Property), except for the
sale of goods, licenses of Intellectual Property involving annual revenue,
payments or liabilities of less than $100,000 or having a term of less than one
year, and dispositions of other immaterial assets, in any case, in the ordinary
course of business and in a manner consistent with past practice;
(e) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) or organize any corporation, limited liability company,
partnership, joint venture, trust or other entity or any business organization
or division thereof; incur any indebtedness for borrowed money or issue any debt
securities or any warrants or rights to acquire any debt security or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans, advances or enter into any
financial commitments; or authorize or make any capital expenditures which are,
in the aggregate, in excess of $1,000,000 for the Company and its Subsidiaries
taken as a whole;
(f) hire or terminate any employee or consultant, except in the
ordinary course of business consistent with past practice; increase the
compensation or fringe benefits (including, without limitation, bonus) payable
or to become payable to its officers or employees, except for increases in
salary or wages of employees of the Company or its Subsidiaries who are not
officers of the Company in the ordinary course of business consistent with past
practice, or loan or advance any money or other asset or property to, or grant
any bonus, severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Company
or any of its Subsidiaries, or establish, adopt, enter into, terminate or amend
any Employee Plan or any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, stock purchase, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees;
(g) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of accounts
payable and collection of accounts receivable) unless required by a change in
Law or GAAP used by it;
(h) (v) other than in the ordinary course consistent with past
practice, enter into any agreement that if entered into prior to the date hereof
would be a Material Agreement set forth in Section 2.7(a) of the Company
Disclosure Schedule; (w) modify, amend in any material respect, transfer or
terminate any Material Agreement or waive, release or assign any rights or
claims thereto or thereunder; (x) enter into or extend any lease with respect to
Real Property with any third party; (y) modify, amend or transfer in any way or
terminate any License Agreement, standstill or confidentiality agreement with
any third party, or waive, release or assign any rights or claims thereto or
thereunder; or (z) enter into, modify or amend any Contract to provide exclusive
rights or obligations;
(i) make any material Tax election other than an election in the
ordinary course of business consistent with the past practices of the Company or
settle or compromise any federal, state, local or foreign income tax liability
or agree to an extension of a statute of limitations;
(j) pay, discharge, satisfy or settle any Litigation or waive,
assign or release any material rights or claims except, in the case of
Litigation, any Litigation which settlement would not: (A) impose any injunctive
or similar Order on the Company or any of its Subsidiaries or restrict in any
way the business of the Company or any of its Subsidiaries or (B) exceed
$500,000 in cost or value to the Company or any of its Subsidiaries. The Company
and its Subsidiaries shall not pay, discharge or satisfy any liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except in the ordinary course of business consistent with past
practice in an amount or value not exceeding $100,000 in any instance or series
of related instances or $500,000 in the aggregate or in accordance with their
terms as in effect as of the date hereof;
(k) engage in, enter into or amend any Contract, transaction,
indebtedness or other arrangement with, directly or indirectly, any of the
directors, officers, Stockholders or other Affiliates of the Company and its
Subsidiaries, or any of their respective Affiliates or family members, except
for (i) amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses and (ii) those items existing as of the date hereof and listed
in Section 4.1(k) of the Company Disclosure Schedule;
(l) fail to maintain in full force and effect all self-insurance
and insurance, as the case may be, currently in effect;
(m) take any action that (without regard to any action taken, or
agreed to be taken, by Parent or any of its Affiliates) would prevent (i) Parent
from accounting for the business combination to be effected by the Merger as a
"pooling of interests" or (ii) the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code; or
(n) authorize, recommend, propose or announce an intention to do
any of the foregoing, or agree or enter into or amend any Contract or
arrangement to do any of the foregoing.
4.2 Solicitation of Other Proposals.
(a) From the date hereof until the earlier of the Effective Time
or the termination of this Agreement in accordance with its terms, the Company
shall not, nor shall it permit any of its Affiliates or Subsidiaries to, nor
shall it authorize or permit any of its or their respective Stockholders,
directors, officers, employees, representatives or agents (collectively, the
"Company Representatives"), to directly or indirectly, (i) solicit, facilitate,
initiate, entertain, encourage or take any action to solicit, facilitate,
initiate, entertain or encourage, any inquiries or communications or the making
of any proposal or offer that constitutes or may constitute an Acquisition
Proposal (as defined herein) or (ii) participate or engage in any discussions or
negotiations with, or provide any information to or take any other action with
the intent to facilitate the efforts of, any Person concerning any possible
Acquisition Proposal or any inquiry or communication which might reasonably be
expected to result in an Acquisition Proposal. For purposes of this Agreement,
the term "Acquisition Proposal" shall mean any inquiry, proposal or offer from
any person (other than Parent, Merger Sub or any of their Affiliates) relating
to any merger, consolidation, recapitalization, liquidation or other direct or
indirect business combination, involving the Company or any Material Subsidiary
(as defined herein) or the issuance or acquisition of shares of capital stock or
other equity securities of the Company or any Material Subsidiary representing
20% or more of the outstanding capital stock of the Company or such Material
Subsidiary or any tender or exchange offer that if consummated would result in
any Person, together with all Affiliates thereof, beneficially owning shares of
capital stock or other equity securities of the Company or any Material
Subsidiary representing 20% or more of the outstanding capital stock of the
Company or such Material Subsidiary, or the sale, lease, exchange, license
(whether exclusive or not), or other disposition of any significant portion of
the Intellectual Property or any significant portion of the business or other
assets of the Company or any Material Subsidiary, or any other transaction, the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the consummation of the transactions contemplated
hereby or which would reasonably be expected to diminish significantly the
benefits to Parent or its Affiliates of the transactions contemplated hereby.
The Company shall immediately cease and cause to be terminated, and shall cause
its Subsidiaries and all Company Representatives to immediately terminate and
cause to be terminated, all existing discussions or negotiations with any
Persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, an Acquisition Proposal. The Company shall promptly notify
each Company Representative of its obligations under this Section 4.2. Without
limiting the foregoing, it is agreed that any violation of the restrictions set
forth above by any Affiliate or Subsidiary of the Company or any Company
Representative, whether or not such Person is purporting to act on behalf of the
Company, shall be deemed to be a breach of this Section 4.2(a) by the Company.
(b) Notwithstanding the foregoing, the Company may participate
in discussions or negotiations with, or furnish information with respect to the
Company pursuant to a confidentiality agreement with terms no less favorable to
the Company than those in effect between the Company and Parent to, any Person
if and only if (x) such Person has submitted an unsolicited bona fide written
Acquisition Proposal to the Company's Board of Directors, (y) neither the
Company nor any of the Company Representatives shall have violated Section
4.2(a) and (z) the Board of Directors of the Company (i) determines by a
majority vote in its good faith judgment, after consultation with outside
counsel, that taking such action is required to satisfy the fiduciary duties of
such Board under applicable Law and (ii) provides prior written notice to Parent
of its decision to so participate or furnish.
(c) Except as set forth in the following sentence, neither the
Board of Directors of the Company nor any committee thereof shall (1) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal other
than the Merger, (2) withdraw or modify or propose to withdraw or modify in a
manner adverse to Parent or Merger Sub its approval or recommendation of the
Merger, this Agreement or the transactions contemplated hereby, (3) upon a
request by Parent to reaffirm its approval or recommendation of this Agreement
or the Merger, fail to do so within two Business Days after such request is
made, (4) approve, enter, or permit or cause the Company or any Material
Subsidiary to enter, into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal, or (5) resolve or announce its intention to do any of the foregoing.
The immediately preceding sentence notwithstanding, in the event that prior to
the Company Stockholders' Meeting the Board of Directors of the Company receives
a Superior Proposal (as defined herein), the Board of Directors of the Company
may (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent or Merger Sub its approval or recommendation of the Merger,
this Agreement or the transactions contemplated hereby, (ii) fail to reaffirm
its approval or recommendation of this Agreement or the Merger within two
Business Days after a request by Parent to do so, or (iii) resolve or announce
its intention to do any of the actions set forth in the preceding clauses (i) or
(ii), if (x) after consultation with outside counsel, such Board determines by a
majority vote of directors in their good faith judgment that taking such action
is required to satisfy the fiduciary duties of such Board under applicable Law
and (y) the Company furnishes Parent two Business Days' prior written notice of
the taking of such action (which notice shall include a description of the
material terms and conditions of the Superior Proposal and identify the person
making the same). For purposes of this Agreement, (A) "Material Subsidiary"
means any Subsidiary of the Company whose consolidated revenues, net income or
assets constitute 20% or more of the revenues, net income or assets of the
Company and its Subsidiaries taken as a whole, and (B) the term "Superior
Proposal" means any bona fide Acquisition Proposal to effect a merger,
consolidation or sale of all or substantially all of the assets or capital stock
of the Company which is on terms which the Board of Directors of the Company
determines by a majority vote of its directors in their good faith judgment
(based on the written opinion, with only customary qualifications, of a
financial advisor of nationally recognized reputation that the consideration
provided in such Acquisition Proposal likely exceeds the value of the
consideration provided for in the Merger), after taking into account all
relevant factors, including any conditions to such Acquisition Proposal, the
form of consideration contemplated by such Acquisition Proposal, the timing of
the closing thereof, the risk of nonconsummation, the ability of the Person
making the Acquisition Proposal to finance the transactions contemplated thereby
and any required filings or Approvals, to be more favorable to the Stockholders
of the Company than the Merger (or any revised proposal made by Parent).
(d) In addition to the other obligations of the Company set
forth in this Section 4.2, the Company shall immediately advise Parent orally
and in writing of any request for information with respect to any Acquisition
Proposal, or any inquiry with respect to or which could result in an Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the Person making the same. The Company
shall inform Parent on a prompt and current basis of the status and content of
any discussions regarding any Acquisition Proposal with a third party and as
promptly as practicable of any change in the price, structure or form of the
consideration or material terms of and conditions regarding any Acquisition
Proposal or of any other developments or circumstances which could reasonably be
expected to culminate in the taking of any of the actions referred to in Section
4.2(c). Nothing contained in this Section 4.2(d) shall prevent the Board of
Directors of the Company from complying with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Registration Statement; Proxy Statement/Prospectus.
(a) The Company shall, promptly following the date hereof,
prepare and file with the SEC a Proxy Statement relating to the Merger and this
Agreement, obtain and furnish the information required to be included by the SEC
in the Proxy Statement and respond promptly to any comments made by the SEC with
respect to the Proxy Statement, and cause the Proxy Statement and the prospectus
to be included in the Registration Statement, including any amendment or
supplement thereto, to be mailed to its Stockholders at the earliest practicable
date after the Registration Statement is declared effective by the SEC. The
Company shall use all reasonable efforts to obtain the necessary approval of the
Merger and this Agreement by its Stockholders. Unless the Company shall have
taken action permitted by the second sentence of Section 4.2(c), the Company
shall not file with or supplementally provide to the SEC or mail to its
Stockholders the Proxy Statement or any amendment or supplement thereto without
Parent's prior consent, which consent shall not be unreasonably withheld or
delayed. The Company shall allow Parent's full participation in the preparation
of the Proxy Statement and any amendment or supplement thereto and shall consult
with Parent and its advisors concerning any comments from the SEC with respect
thereto.
(b) Parent shall prepare and file with the SEC a Registration
Statement on Form S-4, in which the Proxy Statement shall be included as a
prospectus, and the parties hereto shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as practicable
after such filing. Parent shall obtain and furnish the information required to
be included in the Registration Statement and, after consultation with the
Company, respond promptly to any comments made by the SEC with respect to the
Registration Statement.
(c) The Proxy Statement shall include the recommendation of the
Board of Directors of the Company in favor of approval and adoption of this
Agreement and the Merger, except to the extent that the Company shall have
withdrawn or modified its recommendation of this Agreement or the Merger as
permitted by Section 4.2(c).
(d) Parent and the Company shall, as promptly as practicable,
make all necessary filings with respect to the Merger under the Securities Act
and the Exchange Act and the Regulations thereunder and under applicable Blue
Sky or similar securities Laws, and shall use all reasonable efforts to obtain
required Approvals with respect thereto.
(e) Each party hereto agrees to furnish all information
concerning itself as may be reasonably required to prepare the Proxy Statement
or Registration Statement or to make such filings pursuant to Section 5.1(d).
Each party hereto agrees to correct any information provided by it for use in
the Proxy Statement or Registration Statement that has become false or
misleading in any material respect.
5.2 Meeting of Company's Stockholders. The Company shall promptly
after the date hereof take all action necessary in accordance with the DGCL and
its Certificate of Incorporation and Bylaws to duly call, give notice of and
(unless Parent requests otherwise) hold the Company Stockholders Meeting as soon
as practicable following the date upon which the Registration Statement becomes
effective and shall consult with Parent in connection therewith. Once the
Company Stockholders' Meeting has been called and noticed, the Company shall not
postpone or adjourn (other than for the absence of a quorum and then only to a
future date specified by Parent) the Company Stockholders' Meeting without the
consent of Parent. The Board of Directors of the Company has declared that this
Agreement is advisable and, subject to Section 4.2(c), shall recommend that this
Agreement and the transactions contemplated hereby be approved and authorized by
the Stockholders of the Company and include in the Registration Statement and
Proxy Statement a copy of such recommendations; provided, however, that the
Board of Directors of the Company shall submit this Agreement to the
Stockholders of the Company whether or not the Board of Directors of the Company
at any time subsequent to making such declaration takes any action permitted by
Section 4.2(c). The Company shall solicit from its Stockholders proxies in favor
of the Merger and shall take all other action necessary or advisable to secure
the vote or consent of its Stockholders to authorize and approve the Merger.
Without limiting the generality of the foregoing, (i) the Company agrees that
its obligation to duly call, give notice of, convene and hold the Company
Stockholders' Meeting as required by this Section 5.2, shall not be affected by
the withdrawal, amendment or modification of the Board of Directors'
recommendation of approval and adoption of this Agreement and the transactions
contemplated hereby, and (ii) the Company agrees that its obligations under this
Section 5.2 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
5.3 Access to Information; Confidentiality.
(a) Upon reasonable notice, the Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives and agents of Parent (collectively "Parent
Representatives"), reasonable access, during the period prior to the Effective
Time, to all its properties, books, Contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to the other all information concerning its business,
properties, books, Contracts, commitments, record and personnel as Parent may
reasonably request. The Company shall (and shall cause each of its Subsidiaries
to) make available to the other party the appropriate individuals for discussion
of such entity's business, properties and personnel as Parent or the Parent
Representatives may reasonably request. No investigation pursuant to this
Section 5.3(a) shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
(b) Parent shall keep all information obtained pursuant to
Section 5.3(a) confidential in accordance with the terms of the Confidential
Non-Disclosure Agreement, dated October 5, 1999 (the "Confidentiality
Agreement"), between Parent and the Company. Anything contained in the
Confidentiality Agreement to the contrary notwithstanding, the Company and
Parent hereby agree that each such party may issue press release(s) or make
other public announcements in accordance with Section 5.10.
5.4 Reasonable Best Efforts; Further Assurances.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each party hereto shall use its reasonable best efforts to take,
or cause to be taken, all actions, and do, or cause to be done, and to assist
and cooperate with the other party or parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated hereby,
and by the Related Agreements. The Company and Parent shall use its reasonable
best efforts to (i) as promptly as practicable, obtain all Approvals (including
those referred to in Sections 2.6(a) and 2.6(b) and Sections 2.6(a) and 2.6(b)
of the Company Disclosure Schedule), and the Company and Parent shall make all
filings under applicable Law required in connection with the authorization,
execution and delivery of this Agreement and the Option Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby
and thereby, including the Merger (in connection with which Parent and the
Company will cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filings and, if requested, will accept all
reasonable additions, deletions or changes suggested in connection therewith);
(ii) furnish all information required for any application or other filing to be
made pursuant to the DGCL or any other Law or any applicable Regulations of any
Governmental Authority (including all information required to be included in the
Proxy Statement or the Registration Statement) in connection with the
transactions contemplated by this Agreement and the Related Agreements; and
(iii) lift, rescind or mitigate the effects of any injunction or other Order
adversely affecting the ability of any party hereto to consummate the
transactions contemplated hereby and thereby and to prevent, with respect to any
threatened or such injunction or other Order, the issuance or entry thereof,
provided, however, that neither Parent nor any of its Affiliates shall be under
any obligation to (x) make proposals, execute or carry out agreements or submit
to Orders providing for the sale or other disposition or holding separate
(through the establishment of a trust or otherwise) of any assets or categories
of assets of Parent, any of its Affiliates, including its Subsidiaries, the
Company or the holding separate of the Company Common Stock or imposing or
seeking to impose any limitation on the ability of Parent or any of its
Affiliates, including its Subsidiaries, to conduct their business or own such
assets or to acquire, hold or exercise full rights of ownership of Company
Common Stock, or (y) otherwise take any step to avoid or eliminate any
impediment which may be asserted under any Law governing competition, monopolies
or restrictive trade practices which, in the reasonable judgment of Parent,
might result in a limitation of the benefit expected to be derived by Parent as
a result of the transactions contemplated hereby or might adversely affect the
Company or Parent or any of Parent's Affiliates, including its Subsidiaries.
Neither party hereto will take any action which results in any of the
representations or warranties made by such party pursuant to Articles II or III,
as the case may be, becoming untrue or inaccurate in any material respect.
(b) The parties hereto shall use their reasonable best efforts
to satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them, and to cause the
transactions contemplated by this Agreement to be consummated. Each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby. In furtherance of the
foregoing, Parent shall use its reasonable best efforts to assist the Company in
satisfying the condition set forth in Section 6.2(g), including reasonably
responding to Company requests in connection with its efforts to retain the
employees identified in Section 6.2(g) of the Parent Disclosure Schedule and to
satisfy such condition; provided, however, that Parent shall not be obligated to
pay or promise any monies or additional compensation pursuant to this sentence.
(c) The Company and Parent shall cooperate with one another:
(i) in connection with the preparation of the Registration
Statement and the Proxy Statement;
(ii) in connection with the preparation of any filing
required by the HSR Act or any Foreign Competition Laws;
(iii) in determining whether any action by or in respect of,
or filing with, any Governmental Authority or other third party, is required, or
any Approvals are required to be obtained from parties in connection with the
consummation of the transactions contemplated hereby;
(iv) in seeking any Approvals or making any filings,
including furnishing information required in connection therewith or with the
Registration Statement or the Proxy Statement, and seeking timely to obtain any
such Approvals, or making any filings;
(v) in connection with the listing on the NYSE of the Parent
Common Stock to be issued in the Merger; and
(vi) in order to facilitate the achievement of the benefits
reasonably anticipated from the Merger.
(d) The Company shall use its reasonable best efforts to cause
its Affiliates and other Persons to transfer and assign all rights necessary for
the Company to continue to conduct its business consistent with historical
operations and as currently conducted, pursuant to documentation and in a manner
reasonably acceptable to Parent.
5.5 Stock Options and Stock Plan; Options.
(a) At the Effective Time, each Outstanding Employee Option,
whether vested or unvested, will be assumed by Parent. Each such Outstanding
Employee Option so assumed by Parent under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the Option
Plans, option agreements thereunder and other relevant documentation immediately
prior to the Effective Time, except that such Outstanding Employee Option will
be exercisable solely for that number of whole shares of Parent Common Stock
equal to the product of the number of shares of Company Common Stock that were
purchasable under such Outstanding Employee Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock, and the per-share exercise price
for the shares of Parent Common Stock issuable upon exercise of such assumed
Outstanding Employee Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Outstanding
Employee Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, and rounding the resulting exercise price up to the nearest
whole cent.
(b) Parent shall reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Outstanding Employee
Options assumed by Parent under this Agreement. Parent shall file as soon as
practicable after the Effective Date a registration statement on Form S-8 under
the Securities Act covering the shares of Parent Common Stock issuable upon the
exercise of the Outstanding Employee Options assumed by Parent pursuant to
Section 5.5(a), and shall use its reasonable efforts to cause such registration
statement to become effective as soon thereafter as practicable and to maintain
such registration in effect until the exercise or expiration of such assumed
Outstanding Employee Options.
(c) The vesting of each Outstanding Employee Option shall not
accelerate as a result of, or in connection with, the transactions contemplated
hereby, except to the extent required by the existing terms of the 1995 Plan or
option agreement pursuant to which it was granted. In addition, the Company
shall ensure that no discretion is exercised by the Board of Directors or any
committee thereof or any other body or Person so as to cause the vesting of any
Outstanding Employee Option or any other warrant or right to acquire shares of
Company Common Stock to accelerate.
(d) On and after the date hereof, the Company shall ensure that
no offerings are made with respect to the Purchase Plan, that no employee
payroll deductions are allowed under the Purchase Plan, and that no options to
purchase Company Common Stock shall be granted (or to be granted) under the
Purchase Plan.
5.6 Employee Benefits.
(a) Parent agrees that individuals who are employed by the
Company or any Subsidiary of the Company immediately prior to the Effective Time
shall become employees of the Surviving Corporation or one of its Subsidiaries
upon the Effective Time (each such employee, a "Company Employee"); provided,
however, that this Section 5.6(a) shall not be construed to limit the ability of
the Company or any of its Subsidiaries to terminate the employment of any
Company Employee at any time.
(b) After the Effective Time and on a schedule determined by
Parent in connection with its integration of its business with that of the
Company, the Company Employees shall be eligible to participate in the employee
benefit plans of Parent to the same extent as any similarly situated and
geographically located employee of Parent. The Company Employees will be allowed
credit for their service with the Company and its Subsidiaries for purposes of
vesting, calculating the number of vacation days to which such employees are
entitled, subject to a maximum of five incremental days of vacation, and
participation only (and not for entitlement (except as provided with respect to
vacation) or benefit accrual purposes), with respect to the employee benefit
plans in which such Company Employees are allowed by Parent to participate
following the Effective Time.
(c) If requested by Parent in writing prior to the Effective
Time, the Company shall cause to be adopted prior to the Effective Time
resolutions of the Company's Board of Directors to cease all contributions to
the Anatolia Retirement Savings Plan (the "401(k) Plan"), and to terminate the
401(k) Plan, immediately prior to the Effective Time. Such resolutions shall
provide (to the extent required under Section 411 of the Code) that all
participants shall be fully vested in their account balances under the 401(k)
Plan. Such resolutions shall also authorize distributions of 401(k) Plan
balances to participants (to the extent permitted under Section 401(k) (10) of
the Code) as soon as practicable following the Company's receipt from the
Internal Revenue Service of a favorable determination letter regarding the
tax-qualified status of the 401(k) Plan following its termination. The Company
shall deliver to parent an executed copy of such resolutions as soon as
practicable following their adoption by Company's Board of Directors and shall
fully comply with such resolutions.
5.7 Pooling; Reorganization.
(a) The Company shall not knowingly take, or knowingly permit
any controlled Affiliate of the Company to take, any action that could prevent
the Merger from being treated (i) for financial accounting purposes as a
"pooling of interests" under GAAP; it being understood and agreed that if the
Company's Accountants advise the Company in writing that such an action would
not prevent the Merger from being so treated, such action will be conclusively
deemed not to constitute a breach of this Section 5.7 or (ii) as a
"reorganization withing the meaning of Section 368 of the Code.
(b) The Company shall use its reasonable best efforts to obtain
an executed affiliate pooling agreement substantially in the form attached
hereto as Exhibit C (each, a "Company Affiliate Pooling Agreement") from each of
the Persons identified in Section 2.24(d) of the Company Disclosure Schedule
concurrently with the execution of this Agreement and thereafter from any other
person who may be deemed an affiliate of the Company regarding compliance with
Rule 145 under the Securities Act and the requirements for accounting treatment
of the Merger as a "pooling of interests."
(c) Parent shall not knowingly take or knowingly permit any
controlled Affiliate of Parent to take, any action that could prevent the Merger
from being treated (i) for financial accounting purposes as a "pooling of
interests" under GAAP; it being understood and agreed that if Ernst & Young LLP,
Parent's independent accountants ("Parent's Accountants"), advises Parent in
writing that such an action would not prevent the Merger from being so treated,
such action will be conclusively deemed not to constitute a breach of this
Section 5.7; or (ii) as a "reorganization" within the meaning of Section 368 of
the Code.
(d) Parent shall use its reasonable efforts to obtain an
executed affiliate pooling agreement containing substantially the substance of
the second and third paragraphs of the Company Affiliate Pooling Agreement from
each of the Persons identified in Section 5.7(d) of the Parent Disclosure
Schedule regarding compliance with the requirements for accounting treatment of
the Merger as a "pooling of interests."
5.8 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which results in any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect (or, in the case of any representation or
warranty qualified by its terms by materiality or Material Adverse Effect, then
untrue or inaccurate in any respect) and any failure of the Company, Parent or
Merger Sub, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to
the other of (i) any notice or other communication from any Person alleging that
the Approval of such Person is or may be required in connection with the Merger
or the Related Agreements, (ii) any notice or other communication from any
Governmental Authority in connection with the Merger or the Related Agreements,
(iii) any Litigation, relating to or involving or otherwise affecting the
Company or its Subsidiaries or Parent that relates to the Merger or the Related
Agreements; (iv) the occurrence of a default or event that, with notice or lapse
of time or both, will become a default under any Material Agreement of the
Company; and (v) any change that could reasonably be expected to have a Material
Adverse Effect on the Company or Parent or is likely to delay or impede the
ability of either Parent or the Company to consummate the transactions
contemplated by this Agreement or the Related Agreements or to fulfill their
respective obligations set forth herein or therein.
(c) Each of the Company parties or and Parent shall give (or
shall cause their respective Subsidiaries to give) any notices to third Persons,
and use, and cause their respective Subsidiaries to use, its reasonable best
efforts to obtain any consents from third Persons (i) necessary, proper or
advisable to consummate the transactions contemplated by this Agreement, (ii)
otherwise required under any Contracts in connection with the consummation of
the transactions contemplated hereby or (iii) required to prevent a Material
Adverse Effect on the Company or Parent from occurring. If any party shall fail
to obtain any such consent from a third Person, such party shall use its
reasonable best efforts, and will take any such actions reasonably requested by
the other parties, to limit the adverse effect upon the Company and Parent,
their respective Subsidiaries, and their respective businesses resulting, or
which would result after the Effective Time, from the failure to obtain such
consent.
5.9 Listing on the New York Stock Exchange. Parent shall use its
reasonable best efforts to cause the Parent Common Stock to be issued in the
Merger and pursuant to Parent's options to be issued pursuant to Section 5.5 to
be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Effective Time.
5.10 Public Announcements. Parent and the Company shall consult with
and obtain the approval of the other party before issuing any press release or
other public announcement with respect to the Merger or this Agreement and shall
not issue any such press release prior to such consultation and approval, except
as may be required by Law or any listing agreement related to the trading of the
shares of either party on any national securities exchange or national automated
quotation system, in which case the party proposing to issue such press release
or make such public announcement shall use its reasonable best efforts to
consult in good faith with the other party before issuing any such press release
or making any such public announcement.
5.11 Takeover Laws. If any form of anti-takeover statute, Regulation
or charter provision or Contract is or shall become applicable to the Merger or
the transactions contemplated hereby or by the Related Agreements, the Company
and the Board of Directors of the Company shall grant such Approvals and take
such actions as are necessary under such Laws and provisions so that the
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such Law, provision or Contract on the
transactions contemplated hereby or thereby.
5.12 Accountant's Letters.
(a) The Company shall use its reasonable best efforts to cause
to be delivered to Parent a "comfort" letter of the Company's Accountants, dated
a date within two business days before the date on which the Registration
Statement shall become effective and addressed to Parent and the Company, in
form and substance reasonably satisfactory and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company a "comfort" letter of Parent's Accountants dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Parent and the Company, in form and
substance reasonably satisfactory and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
5.13 Indemnification; Directors and Officer Insurance.
(a) All rights to indemnification, advancement of Litigation
expenses and limitation of personal liability existing in favor of the directors
and officers of the Company and its Subsidiaries under the provisions existing
on the date hereof in their respective certificates of incorporation, bylaws or
similar organizational documents, as well as related director indemnification
agreements in accordance with their terms in existence on the date hereof,
shall, with respect to any matter existing or occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement),
survive the Effective Time for a period of not less than six years.
(b) Parent shall cause to be maintained for a period of six
years from the Effective Time the Company's current directors and officers
insurance policy (the "Company's D&O Insurance") to the extent that it provides
coverage for events occurring prior to the Effective Time for all Persons who
are directors and officers of the Company on the date of this Agreement, so long
as the annual premium therefor would not be in excess of 150% of the last annual
premium paid prior to the date of this Agreement (such amount, the "Maximum
Premium"). Upon request by Parent, the Company shall use its reasonable best
efforts to extend coverage under the Company's D&O Insurance by obtaining a
three-year "tail" policy (provided, that the lump sum payment to purchase such
coverage does not exceed three times the Maximum Premium) and such "tail" policy
shall satisfy Parent's obligations under this Section 5.13(b). Parent's
obligations under this Section 5.13(b) shall also be satisfied if Parent's
directors and officers insurance provides (or is amended to provide)
substantially similar coverage for events occurring prior to the Effective Time
for Persons who are directors and officers of the Company on the date of this
Agreement. If the Company's existing directors and officers insurance expires,
is terminated or canceled during such three-year period or a "tail" policy
cannot be purchased on the terms set forth above and Parent cannot or determines
not to satisfy its obligations under this Section 5.13(b) pursuant to the
preceding sentence, Parent shall use its reasonable best efforts to cause to be
obtained as much directors and officers insurance as can be obtained for the
remainder of such period for an annualized premium not in excess of the Maximum
Premium, on terms and conditions no less advantageous than the Company's D&O
Insurance. The Company represents to Parent that the last annual premium paid
prior to the date of this Agreement is not greater than $500,000.
(c) The provisions of this Section 5.13 are intended to be for
the benefit of, and shall be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such Person.
5.14 Stockholders Agreement. The Company shall use its reasonable
best efforts, on behalf of Parent and pursuant to the request of Parent, to
cause each Stockholder of the Company named on the signature pages to the
Stockholders Agreement to execute and deliver to Parent, concurrently with the
execution of this Agreement, and to comply with, the Stockholders Agreement. The
Company acknowledges and agrees to be bound by and comply with the provisions of
Section 3.1(a) and (b) of the Stockholders Agreement as if a party thereto with
respect to transfers of record of ownership of shares of the Company Common
Stock, and agrees to notify the transfer agent for any Company Common Stock and
provide such documentation and do such other things as may be necessary to
effectuate the provisions of such Stockholders Agreement.
5.15 Option Agreement. Contemporaneously with the execution and
delivery of this Agreement, the Company shall deliver to Parent an executed
version of the Option Agreement. The Company agrees to fully perform to the
fullest extent permitted under applicable Law its obligations under the Option
Agreement.
5.16 Release Agreements. The Company shall use its reasonable best
efforts, on behalf of Parent and pursuant to the request of Parent, to cause
each of the Persons identified in Section 5.16 of the Parent Disclosure Schedule
to execute and deliver to Parent, and to comply with, a release agreement in the
form of Exhibit D attached hereto (the "Release Agreements") prior to the
Effective Time, providing for, among other things, release of the Company,
Parent and the Surviving Corporation and their respective Affiliates from any
and all claims, known and unknown, that such Person has or may have against such
Persons through the Effective Time.
5.17 Optionholder Letters. The Company shall use its reasonable best
efforts to cause each of the Persons identified in Section 5.17 of the Parent
Disclosure Schedule to execute and deliver a written acknowledgment, in form and
substance satisfactory to Parent, acknowledging that the options to purchase
Company Common Stock issued to such Person were issued at the times and in the
amounts set forth below such Persons name in such Section 5.17, notwithstanding
anything contained in the option agreements relating to such options or
contained in the Company's or such Person's records.
ARTICLE VI
CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective; no stop order
suspending the effectiveness of the Registration Statement or the use of the
Proxy Statement shall have been issued by the SEC, and no proceedings for that
purpose shall have been initiated or, to the Knowledge of Parent or the Company,
threatened by the SEC.
(b) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the Stockholders of the
Company in accordance with the DGCL and the Certificate of Incorporation and
Bylaws of the Company;
(c) New York Stock Exchange Listing. The shares of Parent Common
Stock issuable to the Stockholders of the Company pursuant to this Agreement
shall have been approved for listing on the NYSE subject to official notice of
issuance.
(d) HSR Act and Foreign Competition Laws. All applicable waiting
periods or approvals under the HSR Act and Foreign Competition Laws shall have
expired or been terminated or received.
(e) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other Order (whether
temporary, preliminary or permanent) issued by any Court of competent
jurisdiction or other legal restraint or prohibition shall be in effect which
prevents the consummation of the Merger on substantially the same terms and
conferring on Parent substantially all the rights and benefits as contemplated
herein, nor shall any proceeding brought by any Governmental Authority, domestic
or foreign, seeking any of the foregoing be pending, and there shall not be any
action taken, or any Law or Order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger on
substantially the same terms and conferring on Parent substantially all the
rights and benefits as contemplated herein illegal.
(f) Tax Opinions. Parent and the Company shall have received
written opinions of, respectively, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇, in form and substance reasonably satisfactory to them to the effect that
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code. The issuance of each of such opinions shall be conditioned on the
receipt by such tax counsel of representation letters from each of Parent,
Merger Sub and the Company. The specific provisions of each such representation
letter shall be in form and substance reasonably satisfactory to such tax
counsel, and each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
material respect.
6.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in this Agreement and the Related
Agreements, other than the representations and warranties of the Company set
forth in Section 2.3(a), shall be true and correct on and as of the Effective
Time, with the same force and effect as if made on and as of the Effective Time
(other than representations and warranties which address matters only as of a
particular date, in which case such representations and warranties shall be true
and correct, on and as of such particular date), except for any failure of such
representations and warranties to be true and correct which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and (ii) the representations and warranties of the Company as set
forth in Section 2.3(a) shall be true and correct in all material respects on
the date of this Agreement and shall be true and correct in all material
respects on and as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time (other than representations and warranties
which address matters only as of a particular date, in which case such
representations and warranties shall be true and correct, on and as of such
particular date); provided, however, for purposes of this Section 6.2(a), the
representations and warranties of the Company shall be construed as if they did
not contain any qualification that refers to a Material Adverse Effect or
materiality; and Parent and Merger Sub shall have received a certificate to such
effect signed by the Chief Executive Officer and Chief Financial Officer of the
Company.
(b) Agreements and Covenants. The Company shall have performed
or complied with all agreements and covenants required by this Agreement and the
Related Agreements to be performed or complied with by it on or prior to the
Effective Time, except for any failure to perform or comply with such agreements
and covenants which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and Parent and Merger Sub shall have
received a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of the Company.
(c) Third Party Consents. Parent shall have received evidence,
in form and substance reasonably satisfactory to it, that those Approvals of
Governmental Authorities and other third parties set forth in Section 2.6(a) or
(b) of the Company Disclosure Schedule (or not described in Section 2.6(a) or
(b) of the Company Disclosure Schedule but required to be so described) have
been obtained, except where failure to have been so obtained, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(d) Letter from Parent's Accountants; Pooling of Interests.
Parent shall have received a letter from Parent's Accountants in form and
substance reasonably satisfactory to Parent, dated the Closing Date, concurring
with management's conclusions that the transactions contemplated by this
Agreement, including the Merger, will qualify as a "pooling of interests"
business combination in accordance with GAAP and the criteria of Accounting
Principles Board Opinion No. 16 and the Regulations of the SEC.
(e) Company Affiliate Pooling Agreements. Each of the Persons
identified in Section 2.24(d) of the Company Disclosure Schedule shall have
executed and delivered Company Affiliate Pooling Agreement with Parent which
shall be in full force and effect.
(f) Related Agreements. Each of the Stockholders Agreement, the
Option Agreement and Releases with each of the Persons identified in Section
2.24(d) of the Company Disclosure Schedule and Section 6.2(g) of the Parent
Disclosure Schedule (collectively, the "Related Agreements") shall be in full
force and effect as of the Effective Time and become effective in accordance
with the respective terms thereof and the actions required to be taken
thereunder by the parties thereto prior to the Effective Time shall have been
taken, and each Person who or which is required or contemplated by the parties
hereto to be a party to any Related Agreement who or which did not theretofore
enter into such Related Agreement shall execute and deliver such Related
Agreement, except actions required under the Stockholders Agreement or the
Release Agreements which, individually or in the aggregate, would not reasonably
be expected to have a material adverse effect on or materially impede the
ability of the parties to consummate the Merger as contemplated herein.
(g) Employment Agreements. The employment agreements or
employment offer letters, dated as of the date hereof (i) between the Company
and each of the individuals identified in Section 6.2(g)(i) of the Parent
Disclosure Schedule, (ii) between the Company and at least two of the three
individuals identified in Section 6.2(g)(ii) of the Parent Disclosure Schedule
and (iii) between the Company and at least one of the three individuals
identified in Section 6.2(g)(iii) of the Parent Disclosure Schedule shall be in
full force and effect and shall not have been anticipatorially breached or
repudiated by the individuals party thereto.
6.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct on and as of the Effective Time (other than representations and
warranties which address matters only as of a particular date, in which case
such representations and warranties shall be true and correct on and as of such
particular date), except for any failure of such representations and warranties
to be true and correct which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of
Parent or Merger Sub to consummate the Merger; provided, however, for purposes
of this Section 6.3(a), the representations and warranties of Parent and Merger
Sub shall be construed as if they did not contain any qualification that refers
to a Material Adverse Effect or materiality; and the Company shall have received
a certificate to such effect signed by the Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Effective
Time, except for any failure to perform or comply with such agreements and
covenants which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of Parent or Merger
Sub to consummate the Merger, and the Company shall have received a certificate
to such effect signed by the Chief Financial Officer of Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the Stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) By either Parent or the Company if the Merger shall not have
been consummated on or before June 30, 2000; provided, however, that if the
Merger shall not have been consummated solely due to the waiting period (or any
extension thereof) or approvals under the HSR Act or any Foreign Competition
Laws not having expired or been terminated or received, then such date shall be
extended to September 30, 2000; and provided, further, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date;
(c) By either Parent or the Company, if a Court or Governmental
Authority shall have issued an Order or taken any other action, in each case
which has become final and non-appealable and which restrains, enjoins or
otherwise prohibits the Merger;
(d) By either Parent or the Company, if, at the Company
Stockholders' Meeting (including any adjournment or postponement thereof), the
requisite vote of the Stockholders of the Company to approve and adopt this
Agreement and to consummate the Merger shall not have been obtained;
(e) By Parent, if the Board of Directors of the Company or any
committee thereof shall have (i) approved or recommended, or proposed to approve
or recommend, any Acquisition Proposal other than the Merger, (ii) failed to
present and recommend the approval and adoption of this Agreement and the Merger
to the Stockholders of the Company, or withdrawn or modified, or proposed to
withdraw or modify, in a manner adverse to Parent or Merger Sub, its
recommendation or approval of the Merger, this Agreement or the transactions
contemplated hereby, (iii) failed to mail the Proxy Statement to the
Stockholders of the Company when the Proxy Statement was available for mailing
or failed to include therein such approval and recommendation (including the
recommendation that the Stockholders of the Company vote in favor of the
adoption of the Merger Agreement), (iv) upon a request by Parent to publicly
reaffirm the approval and recommendation of the Merger, this Agreement and the
transactions contemplated hereby, failed to do so within two Business Days after
such request is made, (v) entered, or caused the Company or any Material
Subsidiary to enter, into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal, (vi) taken any other action prohibited by Section 4.2, (vii)
materially breached the Option Agreement or (viii) resolved or announced its
intention to do any of the foregoing;
(f) By Parent, if any Person (other than Parent or an Affiliate
of Parent) acquires beneficial ownership of or the right to acquire 20% or more
of the outstanding shares of capital stock or other equity interests of the
Company or any Material Subsidiary;
(g) By Parent, if neither Parent nor Merger Sub is in material
breach of its obligations under this Agreement, and if (i) at any time that any
of the representations and warranties of the Company herein become untrue or
inaccurate such that Section 6.2(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(g)) or (ii)
there has been a breach on the part of the Company of any of its covenants or
agreements contained in this Agreement such that Section 6.2(b) would not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(g)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within 30 days after notice to the Company;
(h) By the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of Parent or Merger Sub herein become untrue or
inaccurate such that Section 6.3(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(h)) or (ii)
there has been a breach on the part of Parent or Merger Sub of any of their
respective covenants or agreements contained in this Agreement such that Section
6.3(b) would not be satisfied (treating such time as if it were the Effective
Time for purposes of this Section 7.1(g)), and such breach (if curable) has not
been cured within 30 days after notice to Parent; or
(i) By Parent, if any of the Stockholders of the Company that is
a party to the Stockholders Agreement shall have breached or failed to perform
in any material respect any representation, warranty, covenant or agreement
contained therein, that, individually or in the aggregate, would reasonably be
expected to have a material adverse effect on or materially impede the ability
of the parties to consummate the Merger as contemplated herein.
7.2 Effect of Termination. Except as provided in this Section 7.2,
in the event of the termination of this Agreement pursuant to Section 7.1, this
Agreement (other than this Section 7.2 and Sections 2.25, 5.3(b), 5.10, 7.3 and
Article VIII, which shall survive such termination) will forthwith become void,
and there will be no liability on the part of Parent, Merger Sub or the Company
or any of their respective officers or directors to the other and all rights and
obligations of any party hereto will cease, except that nothing herein will
relieve any party from liability for any breach, prior to termination of this
Agreement in accordance with its terms, of any representation, warranty,
covenant or agreement contained in this Agreement.
7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' fees, incurred
in relation to the printing and filing of the Proxy Statement (including any
preliminary materials related thereto), the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto and
all filing fees payable in connection with filings made under the HSR Act or
Foreign Competition Laws.
(b) In the event that Parent terminates this Agreement pursuant
to Section 7.1(d), Section 7.1(e), Section 7.1(f), 7.1(i) or 7.1(g) (due to a
willful breach of any covenant or agreement contained herein by the Company),
then the Company shall pay to Parent, simultaneously with such termination of
this Agreement, a fee in cash equal to $34,600,000 (the "Termination Fee") plus
the amount of Parent Stipulated Expenses (as defined below), which Termination
Fee and Parent Stipulated Expenses shall be payable by wire transfer of
immediately available funds to an account specified by Parent.
(c) If this Agreement is terminated pursuant to Section 7.1(g),
then the Company shall reimburse Parent for all Parent Stipulated Expenses not
later than two Business Days after the date of such termination. As used in this
Agreement, the term "Parent Stipulated Expenses" shall mean those fees and
expenses actually incurred by Parent in connection with this Agreement, the
Related Agreements and the transactions contemplated hereby and thereby,
including fees and expenses of counsel, investment bankers, accountants,
experts, consultants and other Parent Representatives; provided that such amount
shall not exceed $2.5 million.
(d) If this Agreement is terminated pursuant to Section 7.1(h),
then Parent shall reimburse the Company for all Company Stipulated Expenses not
later than two Business Days after the date of such termination. As used in this
Agreement, the term "Company Stipulated Expenses" shall mean those fees and
expenses actually incurred by the Company in connection with this Agreement, the
Related Agreements and the transactions contemplated hereby and thereby,
including fees and expenses of counsel, investment bankers, accountants,
experts, consultants and other Company Representatives; provided that such
amount shall not exceed $2.5 million.
(e) Nothing in this Section 7.3 shall be deemed to be exclusive
of any other rights or remedies any party may have hereunder or under any
Related Agreement or at law or in equity for any breach of this Agreement or any
of the Related Agreements.
7.4 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of the
Merger by the Stockholders of the Company, no amendment may be made which would
reduce the amount or change the type of consideration into which each share of
Company Common Stock shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by all of
the parties hereto.
7.5 Waiver. At any time prior to the Effective Time, any party
hereto may extend the time for the performance of any of the obligations or
other acts required hereunder, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. The representations,
warranties and agreements of each party hereto will remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
other party hereto, any Person controlling any such party or any of their
officers, directors, representatives or agents whether prior to or after the
execution of this Agreement. The representations and warranties in this
Agreement will terminate at the Effective Time.
8.2 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by nationally recognized overnight courier or by registered
or certified mail, postage prepaid, return receipt requested, or by electronic
mail, with a copy thereof to be delivered or sent as provided above or by
facsimile or telecopier, as follows:
(a) If to Parent or Merger Sub:
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President-Business Affairs
With copies to:
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel; and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
(b) If to the Company:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
and Chief Executive Officer
With copies to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (i) in the case of personal
delivery, nationally recognized overnight courier or registered or certified
mail, on the date of such delivery and (ii) in the case of facsimile or
telecopier or electronic mail, upon confirmed receipt.
8.3 Disclosure Schedules. The Company Disclosure Schedule and the
Parent Disclosure Schedule each shall be divided into sections corresponding to
the sections and subsections of this Agreement. Disclosure of any fact or item
in any section of a party's Disclosure Schedule (unless expressly referenced
with specificity therein) shall not, should the existence of the fact or item or
its contents be relevant to any other section of the Disclosure Schedule, be
deemed to be disclosed with respect to such other section.
8.4 Certain Definitions. For purposes of this Agreement, the term:
(a) "Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person, including, with respect to the
Company, any corporation, partnership, limited liability company or joint
venture in which the Company (either alone, or through or together with any
other Subsidiary) has, directly or indirectly, an interest of 10% or more.
(b) "Balance Sheet" means the balance sheet of the Company
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999.
(c) "beneficial owner" (including the terms "beneficial
ownership" and "to beneficially own") with respect to a Person's ownership of
any securities means such Person or any of such Person's Affiliates or
associates (as defined in Rule 12b-2 under the Exchange Act) is deemed to
beneficially own, directly or indirectly, within the meaning of Rule 13d-3 under
the Exchange Act.
(d) "Business Day" means any day other than a Saturday, Sunday
or day on which banks are permitted to close in the State of New York.
(e) "Company Disclosure Schedule" means a schedule of even date
herewith delivered by the Company to Parent concurrently with the execution of
this Agreement, which, among other things, will identify exceptions and other
matters with respect to the representations, warranties and covenants of the
Company contained in certain specific sections and subsections.
(f) "Contract" means any contract, plan, undertaking,
understanding, agreement, license, lease, note, mortgage or other binding
commitment, whether written or oral.
(g) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock, as trustee or executor, by Contract or
credit arrangement or otherwise.
(h) "Court" means any court or arbitration tribunal of the
United States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
(i) "Exchange Agent" means any bank or trust company organized
under the Laws of the United States or any of the states thereof and having a
net worth in excess of $100 million designated and appointed to act as the
exchange agent in the Merger.
(j) "Foreign Competition Laws" means any foreign statutes,
rules, Regulations, Orders, administrative and judicial directives, and other
foreign Laws, that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, lessening of competition
or restraint of trade.
(k) "Governmental Authority" means any governmental agency or
authority of the United States, any domestic state, or any foreign country, and
any political subdivision or agency thereof, and includes any authority having
governmental or quasi-governmental powers, including any administrative agency
or commission.
(l) "Intellectual Property" means all United States and foreign
intellectual property, including all worldwide trademarks, service marks, trade
names, URLs and Internet domain names, designs, slogans, logos, trade dress,
together with all goodwill related to the foregoing; patents, copyrights,
Software, technology, trade secrets and other confidential information, customer
lists, know-how, processes, formulae, algorithms, models, user interfaces,
inventions, advertising and promotional materials, and all registrations,
applications, recordings, renewals, continuations, continuations-in-part,
divisions, reissues, reexaminations, foreign counterparts, and other legal
protections and rights related to the foregoing.
(m) "Knowledge" means (i) in the case an individual, knowledge
of a particular fact or other matter if (A) such individual is actually aware of
such fact or other matter, or (B) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonable investigation concerning the existence of such fact or
other matter, and (ii) in the case of an entity (other than an individual) such
entity will be deemed to have "Knowledge" of a particular fact or other matter
if any individual who is serving, or has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge (as contemplated by clause (a) of
this Section 8.4(m)) of such fact or other matter.
(n) "Law" means all laws, statutes, ordinances and Regulations
of any Governmental Agency including all decisions of Courts having the effect
of law in each such jurisdiction.
(o) "Lien" means any mortgage, pledge, security interest, attachment,
encumbrance, lien (statutory or otherwise), license, claim, option, conditional
sale agreement, right of first refusal, first offer, termination, participation
or purchase or charge of any kind (including any agreement to give any of the
foregoing); provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes, which are not yet due and payable or are being
contested in good faith by appropriate proceedings, (ii) statutory or common law
liens to secure landlords, lessors or renters under leases or rental agreements
confined to the premises rented, (iii) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance,
old age pension or other social security programs mandated under applicable
Laws, (iv) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, to secure claims for labor, materials or supplies and
other like liens, and (v) restrictions on transfer of securities imposed by
applicable state and federal securities Laws.
(p) "Litigation" means any claim, suit, action, arbitration,
cause of action, claim, complaint, criminal prosecution, investigation, demand
letter, or proceeding, whether at law or at equity, before or by any Court or
Governmental Authority, any arbitrator or other tribunal.
(q) "Material Adverse Effect" means any fact, event, change,
development, circumstance or effect (i) that, when such term is used in relation
to the Company, (A) is materially adverse to the business, condition (financial
or otherwise), results of operations, assets, liabilities, properties or
prospects of the Company and its Subsidiaries, taken as a whole, or (B) would
materially impair or delay the ability of the Company to perform its obligations
hereunder or under the Option Agreement, including the consummation of the
Merger, or (ii) that, when such term is used in relation to Parent or Merger
Sub, (A) is materially adverse to the business, condition (financial or
otherwise), results of operations, assets, liabilities, properties or prospects
of Parent and its Subsidiaries, taken as a whole, or (B) would materially impair
or delay the ability of the Parent or Merger Sub to perform its obligations
hereunder, including the consummation of the Merger.
(r) "Order" means any judgment, order, writ, injunction, ruling
or decree of, or any settlement under the jurisdiction of, any Court or
Governmental Authority.
(s) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
(t) "Regulation" means any rule or regulation of any
Governmental Authority having the effect ---------- of Law.
(u) "Software" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable, on paper or otherwise, (iii) descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, (iv) the technology supporting, and the contents and audiovisual
displays of any Internet site(s) operated by or on behalf of Company or any of
its Subsidiaries, and (v) all documentation and other works of authorship,
including user manuals and training materials, relating to any of the foregoing.
(v) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other Person means any corporation, partnership,
joint venture, limited liability company or other legal entity of which the
Company, the Surviving Corporation, Parent or such other Person, as the case may
be, owns, directly or indirectly, greater than 50% of the stock or other equity
interests the holder of which is generally entitled to vote as a general partner
or for the election of the board of directors or other governing body of a
corporation, partnership, joint venture, limited liability company or other
legal entity.
8.5 Interpretation. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.6 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.7 Entire Agreement. This Agreement and the Related Agreements
(including all exhibits and schedules hereto and thereto) and other documents
and instruments delivered in connection herewith constitute the entire agreement
and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.
8.8 Assignment. This Agreement shall not be assigned by operation of
Law or otherwise, except that Parent and Merger Sub may assign all or any of
their rights hereunder to any Affiliate, provided, that no such assignment shall
relieve the assigning party of its obligations hereunder.
8.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except as set forth in
Section 5.13, nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor will any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
8.11 Governing Law; Enforcement. This Agreement and the rights and
duties of the parties hereunder shall be governed by, and construed in
accordance with, the Law of the State of New York. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement or any Related Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement or any Related Agreement and to enforce specifically the terms
and provisions of this Agreement or any Related Agreement in the Federal
District Court for the Southern District of New York, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto, (a) consents to submit itself to the personal
jurisdiction of the Federal District Court for the Southern District of New York
in the event any dispute arises out of this Agreement or any Related Agreement
or any transaction contemplated hereby or thereby, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to this Agreement or any Related Agreement or any transaction
contemplated hereby or thereby in the Federal District Court for the Southern
District of New York and (d) waives any right to trial by jury with respect to
any action related to or arising out of this Agreement or Related Agreement or
any transaction contemplated hereby or thereby.
8.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
AMERICA ONLINE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President - Business Affairs
MQ ACQUISITION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman; CEO
LIST OF SCHEDULES TO MERGER AGREEMENT
Section 2.1(c) Subsidiaries and other equity interests
Section 2.3(a) Shares Reserved got Future Issuance; Arrangements Concerning
Company Stock
Section 2.3(b) Authorizing and outstanding stock
Section 2.3(c) Outstanding option, warrants calls, rights
Section 2.6(a) Consents
Section 2.6(b) Required filings
Section 2.7(a) Material Agreements
Section 2.8 Compliance
Section 2.10(a) Changes and certain other events since December 31, 1998
Section 2.10(b) Accounting changes
Section 2.11 Liabilities
Section 2.12 Litigation
Section 2.13(a) Compliance with ERISA
Section 2.13(b) Acceleration of benefits
Section 2.13(d) COBRA
Section 2.13(e) Company affiliates holding options, warrants or other rights to
purchase Stock
Section 2.14(a) Employee compensation information
Section 2.14(b) Labor Matters
Section 2.16 Restrictions on Business Activities
Section 2.17(a) Title to assets
Section 2.17(b) Real Property
Section 2.18 Certain Tax Matters
Section 2.18(d) Tax waivers
Section 2.18(f) Tax payments
Section 2.19 Environmental Matters
Section 2.20(a) Intellectual Property
Section 2.20 (c)Intellectual Property License Agreements
Section 2.20(d) Royalties
Section 2.20(e) Use of Intellectual Property
Section 2.20(f) Infringements
Section 2.20(g) Alteration, loss or impairment of intellectual property
Section 2.20(h) Software
Section 2.20(i) Confidentiality Agreements
Section 2.22 Insurance Policies
Section 2.24(d) Affiliates
Section 2.25 Brokers
Section 2.27 Interested Party Transactions
Section 3.6 Absence of Litigation
Section 4.1(k) Compensation Increases and Bonuses.
Schedule 5.7(d) Persons entering into Affiliate Agreements
Schedule 5.16 Persons/entities entering into Releases
Schedule 5.17 Stockholders entering into a Stockholders Agreement with Parent
Schedule 6.2(g) Persons entering into Employment Agreements
All of the schedules have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The Company hereby agrees to furnish supplementally a copy of
any omitted schedule to the Securities and Exchange Commission upon request.