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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
TERRA NETWORKS, S.A.
AND
LYCOS, INC.
DATED AS OF MAY 16, 2000
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
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ARTICLE I
THE REINCORPORATION MERGER
1.1 The Reincorporation Merger.................................. 1
1.2 Reincorporation Effective Time.............................. 1
1.3 Effects of the Reincorporation Merger....................... 1
1.4 Conversion of Lycos Common Stock............................ 1
1.5 Options..................................................... 2
1.6 Articles of Incorporation................................... 2
1.7 ByLaws...................................................... 2
1.8 Tax and Accounting Consequences............................. 2
1.9 Board of Directors; Management.............................. 3
ARTICLE II
THE SHARE EXCHANGE
2.1 The Share Exchange.......................................... 3
2.2 Exchange Effective Time..................................... 3
2.3 Effects of the Share Exchange............................... 3
2.4 Conversion of Lycos Virginia Common Stock................... 3
2.5 Terra Capital Stock......................................... 4
2.6 Options..................................................... 4
2.7 Tax and Accounting Consequences............................. 5
ARTICLE III
EXCHANGE OF SHARES
3.1 Terra to Make Shares Available.............................. 5
3.2 Exchange of Shares.......................................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LYCOS
4.1 Corporate Organization...................................... 7
4.2 Capitalization.............................................. 7
4.3 Authority; No Violation..................................... 8
4.4 Consents and Approvals...................................... 9
4.5 SEC Reports and Financial Statements........................ 9
4.6 Broker's Fees............................................... 10
4.7 Absence of Certain Changes or Events........................ 10
4.8 Legal Proceedings........................................... 11
4.9 Taxes and Tax Returns....................................... 11
4.10 Employees................................................... 12
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4.11 Compliance with Applicable Law.............................. 13
4.12 Certain Contracts........................................... 13
4.13 Environmental Liability..................................... 14
4.14 State Takeover Laws......................................... 14
4.15 Intellectual Property; Proprietary Rights; Employee
Restrictions.............................................. 14
4.16 Insurance................................................... 15
4.17 Opinions.................................................... 15
4.18 Lycos Information........................................... 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TERRA
5.1 Corporate Organization...................................... 16
5.2 Capitalization.............................................. 16
5.3 Authority; No Violation..................................... 17
5.4 Consents and Approvals...................................... 18
5.5 SEC Reports and Financial Statements........................ 18
5.6 Broker's Fees............................................... 19
5.7 Absence of Certain Changes or Events........................ 19
5.8 Legal Proceedings........................................... 20
5.9 Taxes and Tax Returns....................................... 20
5.10 Employees................................................... 20
5.11 Compliance with Applicable Law.............................. 21
5.12 Certain Contracts........................................... 21
5.13 Environmental Liability..................................... 21
5.14 Intellectual Property; Proprietary Rights; Employee
Restrictions.............................................. 22
5.15 Insurance................................................... 23
5.16 Opinions.................................................... 23
5.17 Terra Information........................................... 23
5.18 Telefonica Ownership........................................ 23
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Businesses Prior to the Effective Time........... 23
6.2 Lycos Forbearances.......................................... 24
6.3 Terra Forbearances.......................................... 25
6.4 Taxes....................................................... 26
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters.......................................... 26
7.2 Access to Information....................................... 27
7.3 Shareholder and Terra Board Approvals....................... 28
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7.4 Affiliates.................................................. 28
7.5 Stock Exchange Listing...................................... 28
7.6 Employee Benefit Plans...................................... 29
7.7 Indemnification; Directors' and Officers' Insurance......... 29
7.8 Additional Agreements....................................... 30
7.9 Advice of Changes........................................... 30
7.10 Exemption from Liability Under Section 16(b)................ 30
7.11 Reasonable Best Efforts..................................... 30
7.12 Acquisition Proposals....................................... 31
7.13 Board of Directors.......................................... 31
7.14 Capital Increase............................................ 31
7.15 Transfer Taxes.............................................. 31
7.16 Lycos Virginia.............................................. 32
7.17 Employee Stock Purchase Plan................................ 32
7.18 State Takeover Laws......................................... 32
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the
Reincorporation Merger and the Share Exchange............. 32
8.2 Conditions to Obligations of Lycos.......................... 33
8.3 Conditions to Obligations of Terra.......................... 34
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination................................................. 34
9.2 Effect of Termination....................................... 35
9.3 Amendment................................................... 36
9.4 Extension; Waiver........................................... 36
ARTICLE X
GENERAL PROVISIONS
10.1 Closing..................................................... 37
10.2 Nonsurvival of Representations, Warranties and Agreements... 37
10.3 Expenses.................................................... 37
10.4 Notices..................................................... 37
10.5 Interpretation.............................................. 38
10.6 Counterparts................................................ 38
10.7 Entire Agreement............................................ 38
10.8 Governing Law............................................... 38
10.9 Publicity................................................... 38
10.10 Assignment; Third Party Beneficiaries....................... 39
10.11 Submission to Jurisdiction; Waivers; Consent to Service of
Process................................................... 39
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10.12 Enforcement of Agreement.................................... 39
10.13 Waiver of Jury Trial........................................ 39
Exhibit 6.5 -- Form of Affiliate Letter Addressed To ▇▇▇▇▇
▇▇
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INDEX OF DEFINED TERMS
SECTION PAGE NO.
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Acquisition Proposal........................................ 7.12 38
Agreement................................................... Recitals 1
Authorized Agent............................................ 10.11(c) 48
Board Reports............................................... 7.1(b) 32
CERCLA...................................................... 4.13 17
Closing..................................................... 10.1 45
Closing Date................................................ 10.1 40
Code........................................................ Recitals 1
Commercial Registry......................................... 2.3 4
Confidentiality Agreement................................... 7.2(b) 34
Depositary.................................................. 3.1 6
Depositary Agreement........................................ 2.4 5
DGCL........................................................ 1.1 1
ERISA....................................................... 4.10(a) 15
ESPP........................................................ 7.17 39
Exchange Act................................................ 4.5(b) 12
Exchange Agent.............................................. 3.1 6
Exchange Effective Time..................................... 2.2 4
Exchange Fund............................................... 3.1 6
Exchange Ratio.............................................. 2.4 4
F-4......................................................... 4.4 11
Governmental Entity......................................... 4.4 11
HRS Act..................................................... 4.4 11
IRS......................................................... 4.9(a) 14
Liens....................................................... 4.2(b) 6
Lycos....................................................... Recitals 1
Lycos 1999 10-K............................................. 4.5(b) 12
Lycos Benefit Plans......................................... 4.10(a) 15
Lycos Board................................................. Recitals 1
Lycos Capital Stock......................................... 4.2(a) 9
Lycos Common Certificate.................................... 1.4(b) 2
Lycos Common Stock.......................................... 1.4(a) 2
Lycos Contract.............................................. 4.12(a) 17
Lycos Disclosure Schedule................................... 4.1 8
Lycos DRIP.................................................. 4.2(a) 19
Lycos Employees............................................. 7.6(a) 35
Lycos ERISA Affiliate....................................... 4.10(a) 15
Lycos ESPP.................................................. 4.2(a) 16
Lycos Insiders.............................................. 7.10 37
Lycos Preferred Stock....................................... 4.2(a) 9
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SECTION PAGE NO.
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Lycos Rights................................................ 4.2(a) 9
Lycos SEC Reports........................................... 4.5(a) 12
Lycos Stock Plans........................................... 4.2(a) 10
Lycos Stockholder Approval.................................. 4.3(a) 10
Lycos Stockholder Meeting................................... 7.3(a) 34
Lycos Virginia.............................................. Recitals 1
Lycos Virginia Articles..................................... 1.6 3
Lycos Virginia By-Laws...................................... 1.7 3
Lycos Virginia Certificate.................................. 2.1 4
Lycos Virginia Common Certificates.......................... 1.4(b) 2
Lycos Virginia Common Stock................................. 1.4(a) 2
Material Adverse Effect..................................... 4.1(a) 9
New Benefit Plans........................................... 7.6(a) 31
Nasdaq...................................................... 5.4 22
NSEC........................................................ 5.4 22
Prospectus.................................................. 5.4 22
Proxy Statement............................................. 4.4 11
Reincorporation Effective Time.............................. 1.2 2
Reincorporation Merger...................................... Recitals 1
Representatives............................................. 7.12 34
Requisite Regulatory Approvals.............................. 8.1(c) 35
Restraints.................................................. 8.1(e) 40
SCL......................................................... 2.1 4
SCME........................................................ 2.4(a) 4
Section 16 Information...................................... 7.10 37
Securities Act.............................................. 4.5(a) 12
Share Exchange.............................................. Recitals 1
Shareholder Transfer Tax.................................... 7.15 35
Spanish GAAP................................................ 5.5(b) 23
Subsidiary.................................................. 4.1(a) 9
Surviving Corporation....................................... 1.1 1
Tax......................................................... 4.9(c) 14
Taxes....................................................... 4.9(c) 14
Termination Fee............................................. 9.2(b) 38
Terra....................................................... Recitals 1
Terra ADSs.................................................. 2.4 4
Terra Articles.............................................. 5.1(a) 20
Terra Average Price......................................... 2.4(a) 4
Terra Board................................................. Recitals 1
Terra By-Laws............................................... 5.1(a) 20
Terra Capital Stock......................................... 5.2(a) 20
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SECTION PAGE NO.
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Terra Common Stock.......................................... 1.4(a) 2
Terra Contract.............................................. 5.12(a) 26
Terra Disclosure Schedule................................... Article V 19
Terra Employment Benefit Plans.............................. 5.10 25
Terra Registration Statement................................ 5.5(b) 23
Terra Rights................................................ 5.2(a) 20
Terra Rights Agreement...................................... 1.4(a) 3
Terra SEC Reports........................................... 5.5(a) 22
Terra Shareholder Approval.................................. 5.3(c) 34
Terra Shares................................................ 5.2(a) 20
Terra Stock Plans........................................... 5.2(a) 20
Transfer Tax................................................ 7.15 39
VSCA........................................................ Recitals 1
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of May 16, 2000 (this
"AGREEMENT"), by and between Terra Networks, S.A., a company organized under the
laws of the Kingdom of Spain ("TERRA"), and Lycos, Inc., a Delaware corporation
("LYCOS").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of each of Terra (the "TERRA BOARD") and
Lycos (the "LYCOS BOARD") have approved the strategic business combination
transaction provided for herein in which Lycos will, subject to the terms and
conditions set forth herein, merge with and into a newly formed, wholly owned
subsidiary of Lycos incorporated in Virginia ("LYCOS VIRGINIA"), with Lycos
Virginia surviving such merger (the "REINCORPORATION MERGER"), which shall be
immediately followed by a statutory share exchange pursuant to the Virginia
Stock Corporation Act (the "VSCA") such that Lycos will become a wholly owned
subsidiary of Terra (the "SHARE EXCHANGE" and, together with the Reincorporation
Merger, the "REORGANIZATION");
WHEREAS, it is the intent of the parties hereto that, for U.S. federal
income tax purposes, each of the Reincorporation Merger and the Share Exchange
shall constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and that this Agreement
shall constitute a "plan of reorganization" for the purposes of Sections 354 and
361 of the Code;
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Share Exchange result in no gain recognition to the shareholders of Lycos
Virginia pursuant to Section 367(a) of the Code; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Reorganization and also to prescribe certain
conditions to the Reorganization;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE REINCORPORATION MERGER
1.1 The Reincorporation Merger. Subject to the terms and conditions of
this Agreement, in accordance with the General Corporation Law of Delaware (the
"DGCL") and the VSCA, at the Reincorporation Effective Time (as defined in
Section 1.2), Lycos shall merge with and into Lycos Virginia. Lycos Virginia
shall be the surviving corporation (the "SURVIVING CORPORATION") in the
Reincorporation Merger and shall continue its corporate existence under the laws
of the Commonwealth of Virginia. Upon consummation of the Reincorporation
Merger, the separate corporate existence of Lycos shall terminate.
1.2 Reincorporation Effective Time. The Reincorporation Merger shall
become effective in accordance with the Plan of Merger set forth in Annex B
hereto on the Closing Date (as defined in Section 10.1) at the time that is
specified in the certificate of merger relating to the Reincorporation Merger
issued by the Virginia State Corporation Commission (the "REINCORPORATION
EFFECTIVE TIME").
1.3 Effects of the Reincorporation Merger. At and after the
Reincorporation Effective Time, the Reincorporation Merger shall have the
effects set forth in the DGCL and the VSCA.
1.4 Conversion of Lycos Common Stock. (a) At the Reincorporation
Effective Time, by virtue of the Reincorporation Merger and without any action
on the part of Lycos, Lycos Virginia or any holder of common stock, par value
$0.01 per share, of Lycos ("LYCOS COMMON STOCK"), each
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share of Lycos Common Stock issued and outstanding immediately prior to the
Reincorporation Effective Time shall be converted into one share of common
stock, par value $0.01 per share, of Lycos Virginia ("LYCOS VIRGINIA COMMON
STOCK").
(b) All of the shares of Lycos Common Stock converted into shares of Lycos
Virginia Common Stock pursuant to Section 1.4(a) shall no longer be outstanding
and shall automatically be canceled and shall cease to exist as of the
Reincorporation Effective Time, and each certificate previously representing any
such shares ("LYCOS COMMON CERTIFICATE") shall thereafter represent, without the
requirement of any exchange thereof, that number of shares of Lycos Virginia
Common Stock into which such shares of Lycos Common Stock represented by such
Lycos Common Certificate have been converted pursuant to Section 1.4(a) (such
certificates following the Reincorporation Merger, the "LYCOS VIRGINIA COMMON
CERTIFICATES").
1.5 Options. Lycos and Lycos Virginia shall take all requisite action
such that, at the Reincorporation Effective Time, each option granted by Lycos
to purchase shares of Lycos Common Stock that is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
Lycos Common Stock and shall be converted automatically into an option to
purchase a number of shares of Lycos Virginia Common Stock equal to the number
of shares of Lycos Common Stock subject to such option immediately prior to the
Reincorporation Effective Time at an exercise price per share of Lycos Virginia
Common Stock equal to the exercise price per share of Lycos Common Stock in
effect immediately prior to the Reincorporation Effective Time and otherwise
subject to the terms of the Lycos Stock Plans (as defined in Section 4.2) under
which such options were issued and the agreements evidencing grants thereunder
(including accelerated vesting provisions under such agreements evidencing
grants thereunder or under any employment agreements between employees of Lycos
and Lycos). The adjustment provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the Code. The duration and other terms of the new option shall be the same as
the original option except that all references to Lycos shall be deemed to be
references to Lycos Virginia. Notwithstanding anything to the contrary herein,
each option granted by Lycos to a non-employee director prior to the
Reincorporation Effective Time shall be fully vested, to the extent not already
vested, as of the Reincorporation Effective Time.
1.6 Articles of Incorporation. Subject to the terms and conditions of
this Agreement, at the Reincorporation Effective Time, the Articles of
Incorporation of Lycos Virginia (the "LYCOS VIRGINIA ARTICLES") in effect
immediately prior to the Reincorporation Merger shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law (it being understood and agreed that the Lycos
Virginia Articles shall be substantially consistent with the Restated
Certificate of Incorporation of Lycos as in effect immediately prior to the
Reincorporation Effective Time with such changes as are required by the VSCA and
otherwise as proposed by Terra and not reasonably objected to by Lycos). The
Lycos Virginia Articles shall provide that authorization of a share exchange
pursuant to Section 13.1-718 of the VSCA shall require the approval of a
majority of all of the votes entitled to be cast on such matter by holders of
Lycos Virginia Common Stock.
1.7 ByLaws. Subject to the terms and conditions of this Agreement, at the
Reincorporation Effective Time, the Bylaws of Lycos Virginia (the "LYCOS
VIRGINIA BY-LAWS") in effect immediately prior to the Reincorporation Merger
shall be the Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law (it being understood and agreed that the Lycos
Virginia By-Laws shall be substantially consistent with the Restated By-Laws of
Lycos as in effect immediately prior to the Reincorporation Effective Time with
such changes as are required by the VSCA and otherwise as proposed by Terra and
not reasonably objected to by Lycos).
1.8 Tax and Accounting Consequences. It is intended that the
Reincorporation Merger shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code and that this
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Agreement shall constitute a "plan of reorganization" for the purposes of
Sections 354 and 361 of the Code.
1.9 Board of Directors; Management. The directors and officers of Lycos
immediately prior to the Reincorporation Effective Time shall be the directors
and officers of Lycos Virginia, each to hold office in accordance with the Lycos
Virginia Articles until their respective successors are duly elected or
appointed and qualified.
ARTICLE II
THE SHARE EXCHANGE
2.1 The Share Exchange. Subject to the terms and conditions of this
Agreement, in accordance with the VSCA and the Spanish Corporation Law of 1989
(Texto Refundido de ▇▇ ▇▇▇ de Sociedades Anonimas) (the "SCL"), at the Exchange
Effective Time, pursuant to the provisions of Section 13.1-172 of the VSCA,
Lycos Virginia shall become a wholly owned subsidiary of Terra through the
exchange of each outstanding Tiger Share (as defined in Section 5.2) (such
shares to be issued in the form of Terra ADSs (as defined in Section 2.4) except
as otherwise provided in Section 2.4) determined in accordance with Section
2.4(a). The separate corporate existence of each of Lycos Virginia and Terra
shall continue following the Share Exchange.
2.2 Exchange Effective Time. The Share Exchange shall become effective
(the "EXCHANGE EFFECTIVE TIME") in accordance with the Plan of Share Exchange
set forth in Annex A hereto on the Closing Date at the time that is specified in
the certificate of share exchange relating to the Share Exchange issued by the
Virginia State Corporation Commission and that Terra receives the Lycos Virginia
Certificate in exchange for the Terra Shares being issued pursuant to Section
2.3(a). As used in this Agreement, "LYCOS VIRGINIA CERTIFICATE" shall mean the
certificate representing the shares of Lycos Virginia Common Stock being
received by Terra pursuant to the terms hereof.
2.3 Effects of the Share Exchange. At and after the Exchange Effective
Time, the Share Exchange shall have the effects set forth in the VSCA. The Share
Exchange shall be effected in accordance with Articles 153(a) and 155 of the SCL
by the Terra Board's execution of the approval of the shareholders of Terra to
increase the share capital of Terra against a contribution in kind (Aumento con
aportaciones no dinerarias) and shall be registered pursuant to the Deed of
Capital Increase with the Commercial Registry (Registro Mercantil) for the
Province of Madrid (the "COMMERCIAL REGISTRY"). The Deed of Capital Increase
shall be delivered to the Settlement and Clearing System, for the new shares to
be registered in the name of the Depositary (as defined below), and to the
Spanish Stock Exchange, for the admission authorization of the Terra Shares to
be listed.
2.4 Conversion of Lycos Virginia Common Stock. Subject to Section 3.2(e),
at the Exchange Effective Time, by virtue of the Share Exchange and without any
action on the part of Lycos Virginia or any holder of Lycos Virginia Common
Stock, each share of Lycos Virginia Common Stock issued and outstanding
immediately prior to the Exchange Effective Time shall be exchanged for that
number of shares of Terra Capital Stock (as defined in Section 5.2) determined
by dividing (i) $97.55 by (ii) the average closing price (rounded to the nearest
thousandth of a dollar, or if there shall not be a nearest thousandth, the next
higher thousandth) of Terra Shares (the "TERRA AVERAGE PRICE") on the Continuous
Market Exchange (Systema de Interconexion Bursatil-▇▇▇▇▇▇▇ Continuo) (the
"SCME") for the ten full SCME trading days ending on the tenth SCME trading day
prior to the Closing Date (excluding the Closing Date), each closing price
expressed in U.S. dollars using the noon buying rate of Euros for U.S. dollars
as reported by the U.S. Federal Reserve as of each day on which such average
closing price is measured (such quotient, as it may be adjusted as provided
herein, the "EXCHANGE RATIO"); provided, however, that if the Terra Average
Price is equal to or greater than $68.06, the Exchange Ratio shall be 1.433, and
if the Terra Average Price is equal to or less than $45.37, the Exchange Ratio
as shall be 2.150. The Terra Shares to be issued in exchange
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for the shares of Lycos Virginia Common Stock exchanged hereunder shall be
registered in the name of the Depositary by the Settlement and Clearing System
and then delivered (x) in the form of American depositary shares representing
Terra Shares ("TERRA ADSS"), and such Terra ADSs shall be issued in accordance
with the Depositary Agreement, dated as of November 15, 1999, by and between
Terra, Citibank, N.A., as depositary, and the holders of Terra ADSs (as such
agreement may be amended to deposit the Terra Shares being issued pursuant
hereto and to deliver the Terra ADSs being delivered hereto) or a depositary
agreement to be entered into after the date of this Agreement in form and
substance not reasonably objected to by Lycos (the "DEPOSITARY AGREEMENT") or
(y) if and to the extent elected by any holder in the manner provided in Section
3.2(b), in the form of Terra Shares, in account entry form, rather than Terra
ADSs. Following the Exchange Effective Time, each Lycos Virginia Common
Certificate exchanged for Terra Shares pursuant to this Section 2.4 shall cease
to represent shares of Lycos Virginia Common Stock and shall thereafter
represent only the right to receive (i) a receipt issued in accordance with the
Depositary Agreement representing the number of whole Terra ADSs or such number
of Terra Shares in account entry form and (ii) cash in lieu of fractional Terra
ADSs or Terra Shares, in each case, into which the shares of Lycos Virginia
Common Stock represented by such Lycos Virginia Common Certificate have been
converted pursuant to this Section 2.4 and Section 3.2(e), respectively.
Certificates previously representing shares of Lycos Virginia Common Stock shall
be exchanged for receipts representing whole Terra ADSs or Terra Shares in
account entry form and cash in lieu of fractional Terra ADSs Terra Shares issued
and paid in consideration therefor upon the surrender of such Lycos Virginia
Common Certificates in accordance with Section 3.2, without any interest
thereon. If, prior to the Exchange Effective Time, the outstanding shares of
Terra Capital Stock, Lycos Common Stock or Lycos Virginia Common Stock shall
have been changed into or exchanged for a different number or kind of shares or
securities as a result of a merger, consolidation or other business combination,
of a reorganization, recapitalization or reclassification, or of a stock
dividend, stock split, reverse stock split or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Exchange Ratio to provide to the stockholders of Lycos the same economic effect,
including any premiums, as contemplated by this Agreement prior to such event.
2.5 Terra Capital Stock. At and after the Effective Time, each share of
Terra Capital Stock issued and outstanding immediately prior to the Closing Date
shall remain as issued and outstanding share of Terra Capital Stock and shall
not be affected by the Share Exchange.
2.6 Options. (a) At the Exchange Effective Time, each option granted by
Lycos Virginia to purchase shares of Lycos Virginia Common Stock that is
outstanding and unexercised immediately prior thereto shall cease to represent a
right to acquire shares of Lycos Virginia Common Stock and shall be converted
automatically into an option to purchase Terra ADSs in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of the Lycos Stock Plans and the agreements evidencing grants thereunder):
(b) The number of Terra ADSs to be subject to the new option shall be
equal to the product of the number of shares of Lycos Virginia Common Stock
subject to the original option and the Exchange Ratio, provided that any
fractional Terra ADS resulting from such multiplication shall be rounded to the
nearest whole share; and
(c) The exercise price per Terra ADS under the new option shall be equal
to the exercise price per share of Lycos Virginia Common Stock under the
original option divided by the Exchange Ratio, provided that such exercise price
shall be rounded to the nearest whole cent.
(d) The adjustment provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner that is consistent with Section 424(a) of
the Code. The duration and other terms of the new option shall be the same as
the original option, except that all references to Lycos or Lycos Virginia shall
be deemed to be references to Terra.
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2.7 Tax and Accounting Consequences. It is intended that the Share
Exchange shall constitute a "reorganization" within the meaning of Section
368(a) of the Code and not result in gain recognition to the shareholders of
Lycos Virginia pursuant to Section 367(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" for the purposes of Sections 354 and
361 of the Code.
ARTICLE III
EXCHANGE OF SHARES
3.1 Terra to Make Shares Available. Promptly following the Exchange
Effective Time, Terra shall provide (i) to Citibank, N.A., as depositary (or to
such other depositary as Terra may select and which shall not be reasonably
objected to by Lycos) (the "DEPOSITARY"), the Terra Shares being issued in the
form of Terra ADSs in accordance with this Article III and cash in lieu of any
fractional Terra Shares, and the Depositary shall deposit with a bank or trust
company appointed by Lycos (which shall pay all fees of such bank or trust
company) and not reasonably objected to by Terra (the "EXCHANGE AGENT"), for the
benefit of the holders of Lycos Virginia Common Certificates, for exchange in
accordance with this Article III, receipts representing the Terra ADSs, and cash
in lieu of any fractional Terra ADSs and (ii) to the Exchange Agent, the Terra
Shares being issued in account entry form in accordance with this Article III
and cash in lieu of any fractional Terra Shares, for the benefit of the holders
of Lycos Virginia Common Certificates, for exchange in accordance with this
Article III, the Terra Shares in account entry form and cash in lieu of any
fractional Terra Shares (such cash, receipts for Terra ADSs and Terra Shares in
account entry form, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "EXCHANGE FUND"), to be issued
pursuant to Section 2.3 and paid pursuant to Section 3.2(a) in exchange for
outstanding shares of Lycos Virginia Common Stock.
3.2 Exchange of Shares. (a) As soon as practicable after the Exchange
Effective Time, and in no event later than five business days thereafter, the
Exchange Agent shall mail to each holder of record of one or more Lycos Virginia
Common Certificates (i) a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the Lycos Virginia
Common Certificates shall pass, only upon delivery of the Lycos Virginia Common
Certificates to the Exchange Agent), and which letter of transmittal shall
include a form of election by which each such holder may elect to receive all or
any part of the Terra ADSs to which such holder is entitled in the form of Terra
Shares in account entry form, rather than in the form of Terra ADSs (such Terra
Shares or Terra ADSs to be received by a holder pursuant to this Agreement being
referred to as "Terra Stock") and (ii) instructions for use in effecting the
surrender of the Lycos Virginia Common Certificates in exchange for receipts
representing the Terra ADSs or Terra Shares in account entry form and any cash
in lieu of fractional shares into which the shares of Lycos Virginia Common
Stock represented by such Lycos Virginia Common Certificate or Lycos Virginia
Common Certificates shall have been converted pursuant to this Agreement. Upon
proper surrender of a Lycos Virginia Common Certificate or Lycos Virginia Common
Certificates for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, the holder of such
Lycos Virginia Common Certificate or Lycos Virginia Common Certificates shall be
entitled to receive in exchange therefor, as applicable, (i) a receipt
representing that number of whole Terra ADSs or Terra Shares in account entry
form to which such holder of Lycos Virginia Common Stock shall have become
entitled pursuant to the provisions of Article II and (ii) a check representing
the amount of any cash in lieu of fractional shares that such holder has the
right to receive in respect of the Lycos Virginia Common Certificate or Lycos
Virginia Common Certificates surrendered pursuant to the provisions of this
Article III. No interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates. Upon proper surrender of a Lycos Virginia Common
Certificate or Lycos Virginia Common Certificates for exchange and cancellation
to the Exchange Agent, the Exchange Agent shall contribute such certificates to
Terra for Terra's Board of Directors to execute the Capital Increase
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against such contribution in kind. The Deed of Capital Increase shall be
registered pursuant to the Deed of Capital Increase with the Commercial Registry
and delivered to the Settlement and Clearing System, for the new shares to be
registered in the name of the Exchange Agent who will then issue Terra Stock.
(b) No dividends or other distributions declared with respect to Terra
Stock shall be paid to the holder of any unsurrendered Lycos Virginia Common
Certificate until the holder thereof shall surrender such Lycos Virginia Common
Certificate in accordance with this Article III. After the surrender of a Lycos
Virginia Common Certificate in accordance with this Article III, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, that theretofore had become payable
with respect to Terra Stock represented by such Certificate.
(c) If any receipt representing Terra ADSs or Terra Shares in account
entry form are to be issued in a name other than that in which the Lycos
Virginia Common Certificate or Lycos Virginia Common Certificates surrendered in
exchange therefor is or are registered, it shall be a condition of the issuance
thereof that the Lycos Virginia Common Certificate or Lycos Virginia Common
Certificates so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the issuance of a
receipt representing Terra ADSs or Terra Shares in account entry form in any
name other than that of the registered holder of the Lycos Virginia Common
Certificate or Lycos Virginia Common Certificates surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) After the Exchange Effective Time, there shall be no transfers on the
stock transfer books of Lycos Virginia of the shares of Lycos Virginia Common
Stock that were issued and outstanding immediately prior to the Exchange
Effective Time. If, after the Exchange Effective Time, Lycos Virginia Common
Certificate are presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for receipts representing Terra ADSs or Terra Shares in
account entry form as provided in this Article III.
(e) Notwithstanding anything to the contrary contained herein, no receipts
or scrip representing fractional Terra ADS or Terra Shares in account entry form
shall be issued upon the surrender for exchange of Lycos Virginia Common
Certificates, no dividend or distribution with respect to Terra Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a shareholder of Terra. In lieu of the issuance of any such fractional share,
Terra shall pay to each former shareholder of Lycos Virginia who otherwise would
be entitled to receive such fractional share an amount in cash determined by
multiplying (i) the Terra Average Price by (ii) the fraction of a Terra ADS or
Terra Share (rounded to the nearest thousandth when expressed in decimal form)
to which such holder would otherwise be entitled to receive pursuant to Section
2.3.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Lycos Virginia for 12 months after the Exchange Effective Time
shall be paid to Terra. Any former shareholders of Lycos Virginia who have not
theretofore complied with this Article III shall thereafter look only to Terra
for payment of the Terra Stock, cash in lieu of any fractional shares and any
unpaid dividends and distributions on the Terra Stock deliverable in respect of
each share of Lycos Virginia Common Stock, as the case may be, such shareholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of Lycos, Lycos Virginia,
Terra, the Exchange Agent or any other person shall be liable to any former
holder of shares of Lycos Virginia Common Stock for any amount delivered in good
faith to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(g) In the event any Lycos Virginia Common Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Lycos Virginia
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Common Certificate to be lost, stolen or destroyed and, if reasonably required
by Terra, the posting by such person of a bond in such amount as Terra may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Lycos Virginia Common Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Lycos
Virginia Common Certificate the receipt representing Terra ADSs or Terra Shares
in account entry form as provided pursuant to this Agreement and any cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LYCOS
Except as disclosed in the Lycos disclosure schedule delivered to Terra
concurrently herewith (the "LYCOS DISCLOSURE SCHEDULE"), Lycos hereby represents
and warrants to Terra as follows:
4.1 Corporate Organization. (a) Lycos is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Lycos has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not and would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect (as defined below) on Lycos. As used
in this Agreement, the term "MATERIAL ADVERSE EFFECT" means, with respect to
Lycos, Terra or the Surviving Corporation, as the case may be, a material
adverse effect on (i) the business, results of operations or financial condition
of such party and its Subsidiaries taken as a whole or (ii) the ability of such
party to timely consummate the transactions contemplated hereby; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of any change, event, occurrence, condition or effect relating to (a) the United
States, Spanish or global economy or securities markets in general, (b) the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby or the announcement thereof or (c) such party's industry in
general and not specifically relating to Lycos or Terra, as the case may be, or
its respective Subsidiaries (as defined below). As used in this Agreement, the
word "SUBSIDIARY," when used with respect to any party, means any corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes. True and complete copies of the Lycos Certificate
and the Lycos By-Laws, in each case, as in effect as of the date of this
Agreement, have previously been made available by Lycos to Terra.
(b) Each Lycos Subsidiary (i) is duly organized and validly existing under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Lycos and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 Capitalization. (a) The authorized capital stock of Lycos consists
of (i) 300,000,000 shares of Lycos Common Stock, of which, as of May 15, 2000,
112,192,815 shares were issued and outstanding and 2,024,799 shares were held in
treasury, and (ii) 5,000,000 shares of preferred stock, par value $0.01 per
share (the "LYCOS PREFERRED STOCK" and together with the Lycos Common Stock, the
"LYCOS CAPITAL STOCK"), of which no shares are issued or outstanding as of the
date of this Agreement. All of the issued and outstanding shares of Lycos Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
described in this Section 4.2(a) and except pursuant to the terms of options
issued pursuant to the Lycos Stock Plans (as defined below), Lycos does not have
and is not bound by any
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outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Lycos
Capital Stock or any other equity securities of Lycos or any securities
representing the right to purchase or otherwise receive any shares of Lycos
Capital Stock (collectively, the "LYCOS RIGHTS"). As of the date of this
Agreement Lycos had outstanding warrants providing for the issuance of 18,000
shares of Lycos Common Stock. As of May 15, 2000, no shares of Lycos Capital
Stock were reserved for issuance, except for 913,595 shares of Lycos Common
Stock reserved for issuance in connection with the Lycos, Inc. 1996 Employee
Stock Purchase Plan (the "LYCOS ESPP") and 14,514,427 shares of Lycos Common
Stock reserved for issuance upon the exercise of stock options pursuant to the
Lycos, Inc. 1995 Stock Option Plan, Lycos, Inc. 1996 Stock Option Plan, Lycos,
Inc. 2000 Stock Option Plan, Lycos, Inc. 1996 Non-Employee Director Stock Option
Plan, 1995 Tripod Stock Option Plan, 1995 WiseWire Stock Option Plan, 1996
WiseWire Stock Option Plan or 1995 WhoWhere? Stock Option Plan (the "LYCOS STOCK
PLANS"). From May 15, 2000 to and including the date of this Agreement, Lycos
has not issued any shares of its capital stock or any securities convertible
into or exercisable or exchangeable for any shares of its capital stock. As of
the date of this Agreement, there are no outstanding bonds, debentures, notes or
other indebtedness or other securities of Lycos having the right to vote (or
convertible into, or exchangeable or exercisable for, securities having the
right to vote) on any matters on which stockholders of Lycos may vote. There are
no voting, sale, transfer or other similar agreements to which Lycos is a party
with respect to the Lycos Capital Stock or any other securities of Lycos that
are convertible into or exchangeable or exercisable for shares of the Lycos
Capital Stock. In any event, the maximum number of shares of Lycos Virginia
Common Stock that will be outstanding (on a fully diluted basis) at the Exchange
Effective Time shall be not more than 158,568,703.
(b) As of the date of this Agreement, Lycos owns, directly or indirectly,
all of the issued and outstanding shares of capital stock and other equity
ownership interests of each of the Lycos Subsidiaries, free and clear of any
liens, pledges, charges, encumbrances and security interests whatsoever
("LIENS"), and all of such shares and equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Lycos Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. There are no voting, sale, transfer or other similar agreements
to which any Lycos Subsidiary is a party with respect to its capital stock or
any other securities of it that are convertible or exchangeable into or
exercisable for shares of the capital stock of any Lycos Subsidiary. Section
4.2(b) of the Lycos Disclosure Schedule sets forth a list as of the date of this
Agreement of all material investments of Lycos in corporations, joint ventures,
partnerships, limited liability companies and other entities other than its
Subsidiaries.
4.3 Authority; No Violation. (a) Lycos has full corporate power and
authority to execute and deliver this Agreement and upon receipt of the Lycos
Stockholder Approval (as defined below) will have full corporate power and
authority to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by unanimous vote of the Board of
Directors of Lycos. The Board of Directors of Lycos has directed that this
Agreement and the transactions contemplated hereby be submitted to Lycos's
stockholders for adoption at a special meeting of such stockholders and, except
for the adoption of this Agreement by the affirmative vote of the holders of a
majority of the outstanding shares of Lycos Common Stock (the "LYCOS STOCKHOLDER
APPROVAL"), no other corporate proceedings on the part of Lycos are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Lycos and
(assuming due authorization, execution and delivery by Terra) constitutes a
valid and binding obligation of Lycos, enforceable against Lycos in accordance
with its terms.
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(b) Neither the execution and delivery of this Agreement by Lycos nor the
consummation by Lycos of the transactions contemplated hereby, nor compliance by
Lycos with any of the terms or provisions hereof, will (i) violate any provision
of the Lycos Certificate or Lycos By-Laws or any provision of any comparable
organizational documents of any Lycos Subsidiary (ii) assuming that the consents
and approvals referred to in Section 4.4 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Lycos, any of its Subsidiaries or any of their
respective properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Lycos or any of its Subsidiaries under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Lycos or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (ii) above)
for such violations, conflicts, breaches or defaults which, either individually
or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on Lycos.
4.4 Consents and Approvals. Except for (i) the filings required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and the expiration or termination of any applicable waiting period and the
filing of a notification with the European Commission under Council Regulation
(EEC) No. 4064/89 or similar antitrust filings or notifications in other
jurisdictions, as applicable, (ii) the filing with the Securities and Exchange
Commission (the "SEC") of the proxy statement (the "PROXY STATEMENT") in
definitive form relating to the special meeting of Lycos's stockholders to be
held in connection with this Agreement and the transactions contemplated hereby
and the filing and declaration of effectiveness of the registration statement of
Terra on Form F-4 (the "F-4") in which the Proxy Statement will be included as a
prospectus of Terra, and any filings required under applicable state securities
or "blue sky" laws, (iii) the filing of the certificate of merger and other
appropriate merger documents as required by the DGCL and the filing of the
articles of merger and articles of share exchange and other appropriate merger
and share exchange documents required by the VSCA and the issuance by the
Virginia State Corporation Commission of the certificate of merger and
certificate of exchange pursuant to the VSCA and (iv) the Lycos Stockholder
Approval, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental or regulatory
authority or instrumentality (each a "GOVERNMENTAL ENTITY"), or of or with any
third party, are necessary in connection with the execution and delivery by
Lycos of this Agreement and the consummation by Lycos of the transactions
contemplated hereby and compliance by Lycos with any of the provisions hereof
other than those the failure of which to obtain or make have not had and would
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Lycos.
4.5 SEC Reports and Financial Statements.
(a) Lycos and its subsidiaries have filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required by
be filed by them with the SEC since August 1, 1998 (as amended since the time of
their filing and prior to the date of this Agreement, collectively, the "LYCOS
SEC REPORTS") and has heretofore made available to Terra complete and correct
copies of all such forms, reports, schedules, registration statements, and proxy
statements. As of their respective dates, the Lycos SEC Reports complied in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended, including the rules and regulations of the SEC promulgated
thereunder (the "EXCHANGE ACT"), or the Securities Act of 1933, as amended,
including the rules and regulations of the SEC promulgated thereunder (the
"SECURITIES ACT") applicable, as the case may be, to such Lycos SEC Reports, and
none of the Lycos SEC Reports contained any untrue statement of a material fact
or omitted to state a material
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fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(b) Lycos has previously made available to Terra copies of the
consolidated balance sheet of Lycos and its Subsidiaries as of July 31, for each
of the fiscal years 1997, 1998 and 1999, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the fiscal years
1997 through 1999, inclusive, as reported in Lycos's Annual Report on Form 10-K
for the fiscal year ended July 31, 1999 (the "LYCOS 1999 10-K") filed with the
SEC under the Exchange Act in each case accompanied by the audit report of KPMG
LLP, independent public accountants with respect to Lycos. The July 31, 1999
consolidated balance sheet of Lycos (including the related notes, where
applicable) included in the Lycos 1999 10-K fairly presents in all material
respects the consolidated financial position of Lycos and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this Section
4.5(b) (including the related notes, where applicable) fairly present in all
material respects the results of the consolidated operations and changes in
stockholders' equity and cash flows of Lycos and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP") consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto. Except as fully reflected or reserved against in the July 31, 1999
consolidated balance sheet of Lycos (including the related notes, where
applicable) included in the Lycos 1999 10-K, since July 31, 1999 through to and
including the date of this Agreement, neither Lycos nor any of its subsidiaries
has incurred any liabilities or obligations of any nature whatsoever (absolute,
accrued, fixed, contingent or otherwise), other than liabilities incurred in the
ordinary course of business consistent with past practice since the date of such
balance sheet and which have not had and would not reasonably be expected to
have a Material Adverse Effect on Lycos. The books and records of Lycos and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with U.S. GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.6 Broker's Fees. Neither Lycos nor any Lycos Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
Credit Suisse First Boston, whose fees and expenses will be paid by Lycos.
4.7 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Lycos SEC Reports filed prior to the date hereof, since July 31,
1999, no event or events have occurred that have had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Lycos.
(b) Except as publicly disclosed in Lycos SEC Reports filed prior to the
date hereof, from July 31, 1999 to the date of this Agreement, Lycos and its
Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course.
(c) From July 31, 1999 to the date of this Agreement, neither Lycos nor
any of its Subsidiaries has (i) except for normal increases for employees (other
than officers subject to the reporting requirement of Section 16(a) of the
Exchange Act) made in the ordinary course of business consistent with past
practice or as required by applicable law, increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to any
executive officer, employee, or director from the amount thereof in effect as of
July 31, 1999, granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay, or paid any bonus,
in each case, other than the customary year-end bonuses for fiscal 1998 and 1999
in amounts consistent with past practice and other than agreements expressly
contemplated by or
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permitted under this Agreement, (ii) granted any stock appreciation rights or
granted any rights to acquire any shares of its capital stock to any executive
officer, director or employee, in each case, other than grants to employees
(other than officers subject to the reporting requirements of Section 16(a) of
the Exchange Act) made in the ordinary course of business consistent with past
practice under the Lycos Stock Plans and other than grants expressly
contemplated by or permitted under this Agreement or (iii) suffered any strike,
work stoppage, slowdown, or other labor disturbance.
4.8 Legal Proceedings. (a) Except as publicly disclosed in Lycos SEC
Reports filed prior to the date hereof, as of the date of this Agreement,
neither Lycos nor any of its Subsidiaries is a party to any, and there are no
pending or, to the best of Lycos's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Lycos or any of its Subsidiaries or
challenging the validity or propriety of the transactions contemplated by this
Agreement as to which, in any such case, there is a reasonable probability of an
adverse determination and which, if adversely determined, either individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on Lycos.
(b) As of the date of this Agreement, there is no injunction, order,
judgment, decree or regulatory restriction imposed upon Lycos, any of its
Subsidiaries or the assets of Lycos or any of its Subsidiaries that has had, or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Lycos or the Surviving Corporation.
4.9 Taxes and Tax Returns. (a) Each of Lycos and its Subsidiaries has
duly filed all U.S. federal, state, local, and foreign information returns and
Tax returns required to be filed by it on or prior to the date of this Agreement
and has duly paid or made provisions for the payment of all Taxes which have
been incurred by it or are due from it to U.S. federal, state, local, and
foreign taxing authorities on or prior to the date of this Agreement (including,
without limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, franchises, licenses, sales and
payrolls) other than (i) Taxes which are not yet delinquent or are being
contested in good faith and have not been finally determined, or (ii)
information returns, Tax returns, Taxes or other governmental charges as to
which the failure to file, pay or make provision for would not reasonably be
expected to, either individually or in the aggregate, have a Material Adverse
Effect on Lycos. The federal income Tax returns of Lycos and its Subsidiaries
are being examined by the Internal Revenue Service (the "IRS") for the fiscal
years ended on July 31, 1996, 1997 and 1998 and no liabilities with respect to
deficiencies are reasonably expected to be asserted as a result of such
examination other than deficiencies that would not reasonably expect to have,
either individually or in the aggregate, a Material Adverse Effect on Lycos. To
Lycos's knowledge, there are no material disputes pending with respect to, or
claims asserted for, Taxes or assessments upon Lycos or any of its Subsidiaries
for which Lycos does not have adequate reserves other than disputes, claims,
assessments or inadequacies that would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Lycos.
(b) Except for actions expressly contemplated by Articles I, II, III and
VII of this Agreement, neither Lycos nor any of its Subsidiaries has taken or
agreed to take any action, or intends or plans to take any action or knows of
any agreement, plan or intention to take any action that is reasonably likely to
(i) prevent either of the Reincorporation Merger and the Share Exchange from
constituting a reorganization described in Section 368(a) of the Code or (ii)
result in gain recognition to the shareholders of Lycos Virginia pursuant to
Section 367(a) of the Code.
(c) As used in this Agreement, the term "TAX" or "TAXES" means all
Spanish, U.S. federal, state, province, local, and foreign income, excise, gross
receipts, gross income, ad valorem, profits, gains, property, capital, sales,
transfer, use, value-added, payroll, employment, severance, withholding, duties,
intangibles, franchise, backup withholding, and other taxes, charges, levies or
like assessments together with all penalties and additions to tax and interest
thereon.
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(d) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Lycos or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding in
effect prior to the Exchange Effective Time would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lycos.
4.10 Employees. (a) The Lycos Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit or compensation
plan, arrangement or agreement, and all material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or agreement that is
maintained, or contributed to, as of the date of this Agreement (the "LYCOS
BENEFIT PLANS") by Lycos, any of its Subsidiaries or by any trade or business,
whether or not incorporated (a "LYCOS ERISA AFFILIATE"), all of which together
with Lycos would be deemed a "single employer" within the meaning of Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Lycos has heretofore made available to Terra true and complete copies
of each of the Lycos Benefit Plans and certain related documents, including, but
not limited to, (i) the actuarial report for such Lycos Benefit Plan (if
applicable) for each of the last two years, (ii) the most recent annual report
(Form 5500 Series) and accompanying schedule and (iii) the most recent
determination letter from the IRS (if applicable) for such Lycos Benefit Plan.
(c) Except as have not or would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect on Lycos, (i)
each of the Lycos Benefit Plans has been operated and administered in all
respects in compliance with applicable laws, including, but not limited to,
ERISA and the Code, (ii) each of the Lycos Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified and
is listed on the Lycos Disclosure Schedule, and there are no existing
circumstances or any events that have occurred that are reasonably likely to
adversely affect the qualified status of any such Lycos Benefit Plan, (iii) with
respect to each Lycos Benefit Plan that is subject to Title IV of ERISA, the
present value of accrued benefits under such Lycos Benefit Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Lycos Benefit Plan's actuary with respect to such Lycos
Benefit Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Lycos Benefit Plan allocable to such accrued
benefits, (iv) no Lycos Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees or directors of Lycos or its Subsidiaries beyond
their retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA), (C)
deferred compensation benefits accrued as liabilities on the books of Lycos or
its Subsidiaries or (D) benefits the full cost of which is borne by the current
or former employee or director (or his beneficiary, (v) no liability under Title
IV of ERISA has been incurred by Lycos, its Subsidiaries or any Lycos ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Lycos, its Subsidiaries or any Lycos ERISA Affiliate
of incurring a liability thereunder, (vi) no Lycos Benefit Plan is or was a
"multiemployer plan" (as such term is defined in Section 3(37) and Section
4001(a)(3) of ERISA) or a "multiple employer plan" (as such term is defined in
Section 4063 of ERISA), (vii) all contributions or other amounts payable by
Lycos or its Subsidiaries as of the Reincorporation Effective Time with respect
to each Lycos Benefit Plan in respect of current or prior plan years have been
paid or accrued in accordance with U.S. GAAP and Section 412 of the Code, (viii)
none of Lycos, its Subsidiaries or, to the knowledge of Lycos, any other person,
including any fiduciary, has engaged in a transaction in connection with which
Lycos, its Subsidiaries or any Lycos Benefit Plan is reasonably likely to be
subject to either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of
the Code, and (ix) to the best knowledge of Lycos there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Lycos Benefit Plans or any trusts related
thereto and (ix) each Lycos Benefit Plan that is an employee welfare benefit
plan under Section 3(1) of ERISA is
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either unfunded or is funded through an insurance company contract and is not a
"welfare benefit fund" as defined in Section 419 of the Code.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) except as set forth in a report prepared
by Ernst & Young LLP, which has been provided to Terra prior to the date hereof,
result in any payment (including, without limitation, severance, unemployment
compensation, "excess parachute payment" (within the meaning of Section 280G of
the Code), forgiveness of indebtedness or otherwise) becoming due to any
director or any employee of Lycos or any of its affiliates from Lycos or any of
its affiliates under any Lycos Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Lycos Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits.
(e) Except as have not or would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect on Lycos, all
Lycos Benefit Plans subject to the laws of any jurisdiction outside of the
United States (i) have been maintained in accordance with all applicable
requirements, (ii) if they are intended to qualify for special tax treatment
meet all requirements for such treatment, and (iii) if they are intended to be
funded and/or book-reserved are fully funded and/or book reserved, as
appropriate, based upon reasonable actuarial assumptions.
4.11 Compliance with Applicable Law. Except as publicly disclosed in
Lycos SEC Reports filed prior to the date hereof, Lycos and each of its
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses under and pursuant to
each, and have complied in all respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Lycos or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default has not had and would
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Lycos.
4.12 Certain Contracts. (a) As of the date of this Agreement, neither
Lycos nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers or employees, other than in
the ordinary course of business consistent with past practice, (ii) which, upon
the consummation or stockholder approval of the transactions contemplated by
this Agreement will (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from Terra, Lycos, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Lycos SEC Reports, (iv) which
materially restricts the conduct of any line of business by Lycos or upon
consummation of the Reincorporation Merger will materially restrict the business
of the Surviving Corporation or Terra, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any stockholder
approval or the consummation of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement. Lycos has
previously made available to Terra true and correct copies of all employment and
deferred compensation agreements in effect as of the date of this Agreement
which are in writing and to which Lycos or any of its Subsidiaries is a party.
Each contract, arrangement, commitment or understanding of the type described in
this Section 4.12(a), whether or not set forth in the Lycos Disclosure Schedule,
is referred to herein as a "LYCOS CONTRACT," and neither Lycos nor any of its
Subsidiaries knows of, or has received notice of, any violation of the above by
any of the other
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parties thereto which has had or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Lycos.
(b) (i) As of the Date of this Agreement, each Lycos Contract is valid
and binding on Lycos or any of its Subsidiaries, as applicable, and in full
force and effect, (ii) Lycos and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date under
each Lycos Contract, except where such noncompliance would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Lycos, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, will constitute, a material default on
the part of Lycos or any of its Subsidiaries under any such Lycos Contract,
except where such default, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Lycos.
4.13 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Lycos of any liability or obligation arising under common
law or under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), pending
or threatened against Lycos, which liability or obligation, either individually
or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on Lycos. To the knowledge of Lycos, there is no reasonable basis
for any such proceeding, claim action or governmental investigation that would
impose any liability or obligation that could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Lycos.
Lycos is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any liability or obligation with respect to the foregoing
that will have or would reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect on Lycos.
4.14 State Takeover Laws. The Board of Directors of Lycos has approved
the transactions contemplated by this Agreement for purposes of Section 203 of
the DGCL such that the restrictions contained in Section 203 of the DGCL will
not apply to this Agreement or any of the transactions contemplated hereby.
4.15 Intellectual Property; Proprietary Rights; Employee
Restrictions. (a) All Intellectual Property Rights used by Lycos or its
Subsidiaries in their respective businesses are owned by Lycos or such
Subsidiaries by operation of law, have been validly assigned to Lycos or such
Subsidiaries or Lycos otherwise has the right to use such Intellectual Property
Rights in its business as currently conducted except for such failures that
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Lycos. Lycos or one of its Subsidiaries
has exclusive ownership of or a license to use all Intellectual Property Rights
used by Lycos or its Subsidiaries in Lycos's business as presently conducted,
including all other registered Intellectual Property Rights used in connection
with or contained in all versions of Lycos's World Wide Web sites and all
licenses, assignments and releases of Intellectual Property Rights of others
without which Lycos or its Subsidiaries could not offer the services they
currently offer or has obtained any licenses, releases or assignments reasonably
necessary to use all third parties' Intellectual Property Rights in works
embodied in its services, except, for such failures as, either individually or
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on Lycos. The present business activities or products of
Lycos do not infringe any Intellectual Property Rights of others, except as have
not had and would not reasonably be expected to have a Material Adverse Effect
on Lycos. To its knowledge, as of the date of this Agreement Lycos has not
received any notice or other claim from any person asserting that any of Lycos's
present activities infringe or may infringe any Intellectual Property Rights of
such person, except for such notices or claims which, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Lycos.
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(b) Except as have not had and would not reasonably be expected to have a
Material Adverse Effect on Lycos, (i) Lycos has the right to use all trade
secrets, customer lists, hardware designs, programming processes, software and
other information required for its services or its business as presently
conducted or contemplated; (ii) Lycos has taken all reasonable measures to
protect and preserve the security and confidentiality of its trade secrets and
other confidential information, (iii) all employees and consultants of Lycos or
its Subsidiaries involved in the design, review, evaluation or development of
products or Intellectual Property Rights have executed nondisclosure and
assignment of inventions agreements to protect the confidentiality of Lycos's
trade secrets and other confidential information and to vest in Lycos exclusive
ownership of such Intellectual Property Rights; (iv) to the knowledge of Lycos,
all trade secrets and other confidential information of Lycos are not part of
the public domain or knowledge, nor, to the knowledge of Lycos, have they been
misappropriated by any person having an obligation to maintain such trade
secrets or other confidential information in confidence for Lycos; (v) to the
knowledge of Lycos, no employee or consultant of Lycos or any of its
Subsidiaries has used any trade secrets or other confidential information of any
other person in the course of their work for Lycos or any such Subsidiary.
(c) To the knowledge of Lycos, no university, government agency (whether
federal or state) or other organization sponsored research and development
conducted by Lycos or any of its Subsidiaries or has any claim or right to or
ownership of or other encumbrance upon any of the Intellectual Property Rights
of Lycos, except for such claims or other encumbrances that would not reasonably
be expected to have a Material Adverse Effect on Lycos. Lycos is not aware of
any infringement by others of its copyrights or other Intellectual Proprietary
Rights in any of its technology or services, or any violation of the
confidentiality of any of its proprietary information, except for such
infringement and violations that would not reasonably be expected to have a
Material Adverse Effect on Lycos. To Lycos's knowledge, Lycos is not making
unlawful use of any confidential information or trade secrets of any past or
present employees of Lycos or any of its Subsidiaries, except for such use that
would not reasonably be expected to have a Material Adverse Effect on Lycos,
except for such infringement and violations that would not reasonably be
expected to have a Material Adverse Effect on Lycos. For the purposes of this
Section 4.15, and except where the context otherwise requires, Intellectual
Property Rights also includes any and all intellectual property rights,
licenses, databases, computer programs and other computer software user
interfaces, know-how, trade secrets, customer lists, proprietary technology,
processes and formulae, source code, object code, algorithms, architecture,
structure, display screens, layouts, development tools, instructions, templates,
marketing materials created by Lycos or its Subsidiaries, inventions, trade
dress, logos and designs.
4.16 Insurance. Lycos and its Subsidiaries have in effect insurance
coverage with reputable insurers or are self-insured, which in respect to
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by companies and their
subsidiaries comparable in size and operations to Lycos and its Subsidiaries
which are engaged in Lycos's industry.
4.17 Opinions. Prior to the execution of this Agreement, Lycos has
received an opinion from Credit Suisse First Boston to the effect that as of the
date thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of Lycos from a financial point of
view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
4.18 Lycos Information. The information relating to Lycos and its
Subsidiaries that is provided by Lycos or its representatives for inclusion in
the Proxy Statement, the F-4, the Prospectus and any supplements thereto and any
circulars or documents issued to shareholders, employees or debenture holders of
Terra or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to
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Terra or any of its Subsidiaries) will comply with the provisions of the
Exchange Act and the rules and regulations thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF TERRA
Except as set forth in the disclosure schedule delivered by Terra to Lycos
concurrently herewith (the "TERRA DISCLOSURE SCHEDULE"), Terra hereby represents
and warrants to Lycos as follows:
5.1 Corporate Organization. (a) Terra is a corporation duly organized,
validly existing and in good standing under the laws of the Kingdom of Spain.
Terra has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have and would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on Terra. True and complete
copies of the Articles of Incorporation of Terra (escritura de constitucion)
(the "TERRA ARTICLES") and the Revised Bylaws of Terra (estatutos) (the "TERRA
BY-LAWS"), in each case, as in effect as of the date of this Agreement, have
previously been made available by Terra to Lycos.
(b) Each Terra Subsidiary (i) is duly organized and validly existing under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have or would reasonably be expected to have a Material Adverse
Effect on Terra, and (iii) has all requisite corporate power and authority to
own or lease its properties and assets and to carry on its business as now
conducted.
5.2 Capitalization. (a) As of May 15, 2000, the authorized share capital
of Terra consists solely of 560,000,000 Euros represented by 280,500,000
ordinary shares ("TERRA SHARES" or "TERRA CAPITAL STOCK"). All of the issued and
outstanding shares of Terra Capital Stock have been duly authorized and validly
issued and are fully paid and nonassessable, with no personal liability
attaching to the ownership thereof. Except as provided by the SCL, no shares of
Terra Capital Stock are entitled to preemptive rights, and assuming adoption of
the resolution regarding preemptive rights referred to in Section 5.3, such
preemptive rights do not apply to the transactions contemplated hereby. As of
the date of this Agreement, except as described in this Section 4.2(a) and
except pursuant to the terms of options issued pursuant to the Terra Employee
Stock Option Plan (the "TERRA STOCK PLANS"), Terra does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Terra Capital Stock or any other equity securities of Terra or any securities
representing the right to purchase or otherwise receive any shares of Terra
Capital Stock (collectively the "TERRA RIGHTS"). As of May 15, 2000, no shares
of Terra Capital Stock were reserved for issuance, except for 14,000,000 shares
of Terra Common Stock reserved for issuance upon exercise of the options issued
pursuant to the Terra Employee Stock Option Plan. From May 15, 2000, to and
including the date of this Agreement, Terra has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock. As of the date of this Agreement, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities of Terra
having the right to vote (or convertible into, or exchangeable or exercisable
for, securities having the right to vote) on any matters on which stockholders
of Terra may vote. There are no voting, sale, transfer or other similar
agreements to which Terra is a party with respect to the capital stock of Terra
or any other securities of Terra that are convertible or exchangeable into or
exercisable for shares of the capital stock of Terra.
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(b) Terra owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of the Terra
Subsidiaries, free and clear of any Liens, and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Terra Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary. There are no voting,
sale, transfer or other similar agreements to which any Terra Subsidiary is a
party with respect to the capital stock of such Subsidiary or any other
securities of any such Subsidiary that are convertible or exchangeable into or
exercisable for shares of the capital stock of any Terra Subsidiary. Section
5.2(b) of the Terra Disclosure Schedule sets forth a list as of the date of this
Agreement of the material investments of Terra in corporations, joint ventures,
partnerships, limited liability companies and other entities other than its
Subsidiaries.
5.3 Authority; No Violation. (a) Terra has full corporate power and
authority to execute and deliver this Agreement and upon receipt of the Terra
Shareholder Approval (as defined below) will have full corporate power and
authority to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by unanimous vote of each of the
Board of Directors of Terra. The Board of Directors of Terra has proposed to
call the Terra Shareholder Meeting to seek the approval of the shareholders of
Terra for the delegation in favor of the Terra Board to approve the capital
increase required in connection with the Share Exchange, including approval in
accordance with Section 159 of the SCL of a resolution abolishing the preemptive
rights of Terra shareholders to subscribe for the shares of Terra Common Stock
being issued in the Share Exchange, which approval shall require the affirmative
vote of the holders of a majority of the outstanding shares of Terra Common
Stock present in person or represented by proxy at a duly constituted meeting of
Terra shareholders at which meeting, if on first call, a quorum of at least
one-half of the issued share capital is present or represented by proxy or, if
on second call, a quorum of at least one-quarter of the issued share capital is
present or represented by proxy (provided, however, if, on second call, less
than one-half of the issued share capital is present or represented by proxy,
the matters being voted upon must be adopted by at least two-thirds of the share
capital present or represented at such meeting) ("TERRA SHAREHOLDER APPROVAL"),
no other corporate proceedings on the part of Terra is necessary to approve this
Agreement and to consummate the transactions contemplated hereby other than the
resolution of the Terra Board approving the Capital Increase against
contribution in kind of the shares of Lycos Virginia Common Stock. The
affirmative vote of the shares of Terra Capital Stock held by Telefonica, S.A.
("TELEFONICA") are sufficient to obtain the Terra Shareholder Approval. Neither
a withdrawal or a modification of the Terra Board's recommendation relating to
this Agreement or any of the transactions contemplated hereby will affect (i)
Terra's obligation or ability to call or convene the meeting of its shareholders
referred to above or (ii) Telefonica's obligation to vote its shares of Terra
Capital Stock in favor of the approval of the matters set forth in the second
sentence of this Section 5.3. This Agreement has been duly and validly executed
and delivered by Terra and (assuming due authorization, execution and delivery
by Lycos) constitutes a valid and binding obligation of Terra, enforceable
against Terra in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Terra nor the
consummation by Terra of the transactions contemplated hereby, nor compliance by
Terra with any of the terms or provisions hereof, will (i) violate any provision
of the Terra Articles or By-Laws or (ii) assuming that the consents and
approvals referred to in Section 5.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Terra or any of Terra's Subsidiaries or any of their respective
properties or assets or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by,
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or result in the creation of any Lien upon any of the respective properties or
assets of Terra or Terra's Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Terra or any of
Terra's Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(ii) above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, would not have and would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Terra.
5.4 Consents and Approvals. Except for (i) the filings required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), the expiration or termination of any applicable waiting period, and the
filing of a notification with the European Commission under Council Regulation
(EEC) No. 4064/89 or similar antitrust filings or notifications in other
jurisdictions, as applicable, (ii) the filing with the SEC of the Proxy
Statement and declaration of effectiveness of the F-4 in which the Proxy
Statement will be included as a prospectus, and any filings required under
applicable state securities or "blue sky" laws, (iii) the filing of the articles
of share exchange and other appropriate documents as required by the VSCA and
the issuance by the Virginia State Corporation Commission of the certificate of
share exchange pursuant to the VSCA, (iv) receipt of the Terra Shareholder
Approval, (v) the registration with and verification by the National Securities
Exchange Commission of Spain (Comision Nacional del ▇▇▇▇▇▇▇ de Valores) (the
"NSEC") of a prospectus (folleto) relating to the Share Exchange (the
"PROSPECTUS"), (vi) the filing of the Deed of execution of the Capital Increase
against contribution in kind declaring that the capital increase has been
subscribed by the Lycos Virginia Stockholders, the filing of the necessary
auditors' report and the filing of the necessary report of the expert designated
by the Commercial Registry relating to the fair value of the assets acquired by
Terra in the Share Exchange (vi) the authorization of the listing of Terra
Shares on the SCME by the NSEC and the Managing Companies of the Spanish Stock
Exchanges and (viii) the filing with and approval of the Nasdaq National Market
(the "NASDAQ") to authorize the quotation of the ADSs on such market, no
consents or approvals of or filings or registrations with any Governmental
Entity or of or with any third party are necessary in connection with the
execution and delivery by Terra of this Agreement and the consummation by Terra
of the transactions contemplated hereby and compliance by Terra with any of the
provisions hereof other than those the failure of which to obtain or make have
not had and would not reasonably be expected to have a Material Adverse Effect
on Terra.
5.5 SEC Reports and Financial Statements.
(a) Terra has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
them with the SEC since the date of its initial public offering (as amended
since the time of their filing and prior to the date of this Agreement, and
together with the Terra Registration Statement (as defined below) collectively,
the "TERRA SEC REPORTS") and has heretofore made available to Lycos complete and
correct copies of all such forms, reports, schedules, registration statements,
and proxy statements. As of their respective dates, the Terra SEC Reports
(including, but not limited to, any financial statements or schedules included
or incorporated by reference therein) complied in all material respects with the
requirements of the Exchange Act or the Securities Act applicable, as the case
may be, to such Terra SEC Reports, and none of the Terra SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(b) Terra has previously made available to Lycos copies of the
consolidated balance sheet of Terra and its Subsidiaries for the year ended
December 31, 1999, for the six months ended June 30, 1999, and for the fiscal
years ended December 31, 1997 and 1998, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for such periods, as
previously provided by Terra to Lycos (in the case of information as of or for
December 31, 1999) and (for all other information) as reported in Terra's
Registration Statement No. 333-89997 on Form F-1 filed
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with the SEC on October 29, 1999, as amended (the "TERRA REGISTRATION
STATEMENT"), in each case accompanied by the audit report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
independent public accountants with respect to Terra. The December 31, 1999
consolidated balance sheet of Terra (including the related notes, where
applicable) included in the Terra Registration Statement fairly presents in all
material respects the consolidated financial position of Terra and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 5.5(b) (including the related notes, where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of Terra and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the Spanish Stock
Exchange, the CNMV and the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been prepared in all
material respects in accordance with Spanish generally accepted accounting
principles ("SPANISH GAAP") consistently applied during the periods involved,
except, in each case, as indicated in such statements or in the notes thereto.
The related notes reconciling to U.S. GAAP the consolidated net income and
shareholders' equity of Terra and its Subsidiaries comply in all material
respects with the requirements of the SEC applicable to such reconciliation.
Except as fully reflected or reserved against in the December 31, 1999
consolidated balance sheet of Terra (including the related notes, where
applicable) included in the Terra Registration Statement, since December 31,
1999 through to and including the date of this Agreement, neither Terra nor any
of its Subsidiaries has incurred any liabilities or obligations of any nature
whatsoever (absolute, accrued, fixed, contingent or otherwise), other than
liabilities incurred in the ordinary course of business consistent with past
practice since the date of such balance and which have not had and would not
reasonably be expected to have a Material Adverse Effect on Terra. The books and
records of Terra and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with Spanish GAAP and any other applicable
legal and accounting requirements and reflect only actual transactions.
5.6 Broker's Fees. Neither Terra nor any of its Subsidiaries, nor any of
their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement except
Lazard Freres & Co., whose fees and expenses will be paid by Terra.
5.7 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Terra SEC Reports filed prior to the date hereof, since December
31, 1999, no event or events have occurred that have had or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Terra.
(b) Except as publicly disclosed in Terra SEC Reports filed prior to the
date hereof, from December 31, 1999, to the date of this Agreement, Terra and
its Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course.
(c) Since December 31, 1999, neither Terra nor any of its Subsidiaries has
(i) except for normal increases for employees (other than officers that would be
subject to the reporting requirements of Section 16(a) of the Exchange Act if
Terra were a U.S. company with reporting obligations under Section 12 of the
Exchange Act) made in the ordinary course of business consistent with past
practice or as required by applicable law, increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to any
executive officer, employee, or director from the amount thereof in effect as of
December 31, 1999, granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay, or paid any bonus
other than the customary year-end bonuses for fiscal 1999 in amounts consistent
with past practice, (ii) granted any stock appreciation rights or granted any
rights to acquire any shares of its capital stock to any executive officer,
director or employee other than grants to employees (other than officers subject
to the reporting requirements of Section 16(a) of the
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Exchange Act) made in the ordinary course of business consistent with past
practice under the Terra Stock Plans or (iii) suffered any strike, work
stoppage, slow-down, or other labor disturbance.
5.8 Legal Proceedings. (a) Except as publicly disclosed in Terra SEC
Reports filed prior to the date hereof, as of the date of this Agreement neither
Terra nor any of its Subsidiaries is a party to any, and there are no pending
or, to the best of Terra's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Terra or any of its Subsidiaries or
challenging the validity or propriety of the transactions contemplated by this
Agreement as to which, in any such case, there is a reasonable probability of an
adverse determination and which, if adversely determined, either individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on Terra.
(b) As of the date of this Agreement, there is no injunction, order,
judgment, decree, or regulatory restriction imposed upon Terra, any of its
Subsidiaries or the assets of Terra or any of its Subsidiaries that has had, or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Terra or the Surviving Corporation.
5.9 Taxes and Tax Returns. (a) Each of Terra and its Subsidiaries has
duly filed all Spanish, U.S. federal, state, province and local, and foreign
information returns and Tax returns required to be filed by it on or prior to
the date of this Agreement and has duly paid or made provisions for the payment
of all Taxes which have been incurred by it or are due from it to Spanish, U.S.
federal, state, province and local, and foreign taxing authorities on or prior
to the date of this Agreement (including, without limitation, if and to the
extent applicable, those due in respect of its properties, income, business,
capital stock, franchises, licenses, sales and payrolls) other than (i) Taxes
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, Tax returns or Taxes as to
which the failure to file, pay or make provision for would not reasonably be
expected to, either individually or in the aggregate, have a Material Adverse
Effect on Terra. None of the Spanish national income Tax returns of Terra or its
subsidiaries have yet been examined by the Spanish national Tax authorities. To
Terra's knowledge, there are no material disputes pending with respect to, or
claims asserted for, Taxes or assessments upon Terra or any of its Subsidiaries
for which Terra does not have adequate reserves other than such disputes,
claims, assessments or inadequacies that would not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on
Terra.
(b) Except for actions expressly contemplated by Articles I, II, III and
VII of this Agreement, neither Terra nor any of its Subsidiaries has taken or
agreed to take any action, or intends or plans to take any action or knows of
any agreement, plan or intention to take any action that is reasonably likely to
(i) prevent either of the Reincorporation Merger and the Share Exchange from
constituting a reorganization described in Section 368(a) of the Code or (ii)
result in gain recognition to the shareholders of Lycos Virginia pursuant to
Section 367(a) of the Code.
5.10 Employees. Terra has made available to Lycos copies, as of the date
of this Agreement, of: (a) the current documentation and rules of each of the
material employee benefit plans to which Terra and its Subsidiaries make or
could become liable to make payments for providing retirement, death, disability
or life assurance benefits (the "TERRA EMPLOYEE BENEFIT PLANS") (including any
draft amendments); (b) the most recently prepared explanatory booklets and
announcements relating to each of the Terra Employee Benefit Plans; and (iii)
the actuarial report for such Terra Employee Benefit Plans (if applicable) for
each of the last two years. The Terra Employee Benefit Plans are each funded so
as to comply with the minimum funding requirement under Spanish Law 8/1997 of
June 8, the Spanish Royal Decree 1307/1998 of September 30, both regulations as
amended and where applicable and there are no unfunded liabilities under any
such plans that would be reasonably likely to have a Material Adverse Effect on
Terra. Each Terra Employee Benefit Plan has been administered in accordance with
its terms and is in compliance with applicable law, other than
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instances of non-compliance that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect on Terra.
5.11 Compliance with Applicable Law. (a) Except as publicly disclosed in
Terra SEC Reports filed prior to the date hereof, Terra and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all respects with and are not in default
in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Terra
or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default, either
individually or in the aggregate, would not have and would not reasonably be
expected to have a Material Adverse Effect on Terra.
5.12 Certain Contracts. (a) As of the date of this Agreement, neither
Terra nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers or employees, other than in
the ordinary course of business consistent with past practice, (ii) which, upon
the consummation or stockholder approval of the transactions contemplated by
this Agreement will (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from Lycos, Terra, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Terra SEC Reports, (iv) which
materially restricts the conduct of any line of business by Terra or upon
consummation of the Share Exchange will materially restrict the business of
Terra; (v) with or to a labor union or guild (including any collective
bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any stockholder approval or the
consummation of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Terra has previously made
available to Lycos true and correct copies of all employment and deferred
compensation agreements in effect as of the date of this Agreement which are in
writing and to which Terra or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section
5.12(a), whether or not set forth in the Terra Disclosure Schedule, is referred
to herein as a "TERRA CONTRACT," and neither Terra nor any of its Subsidiaries
knows of, or has received notice of, any violation of the above by any of the
other parties thereto which has had or would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Terra.
(b) (i) As of the date of this Agreement, each Terra Contract is valid
and binding on Terra or any of its Subsidiaries, as applicable, and in full
force and effect, (ii) Terra and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date under
each Terra Contract, except where such noncompliance would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Terra, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, will constitute, a material default on
the part of Terra or any of its Subsidiaries under any such Terra Contract,
except where such default, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Terra.
5.13 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Terra of any liability or obligation arising under common
law or under any U.S., European Union, national, regional or local laws, rules
or regulations relating to pollution, the environment or protection of human
health as it relates to the environment pending or threatened
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against Terra, which liability or obligation, either individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on Terra. To the knowledge of Terra, there is no reasonable basis for any
such proceeding, claim action or governmental investigation that would impose
any liability or obligation that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Terra. Terra is
not subject to any agreement, order, judgment, decree, letter or memorandum by
or with Governmental Authority or third party imposing any liability or
obligation with respect to the foregoing that will or would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on Terra.
5.14 Intellectual Property; Proprietary Rights; Employee
Restrictions. (a) All Intellectual Property Rights used by Terra or its
Subsidiaries in their respective businesses are owned by Terra or such
Subsidiaries by operation of law, have been validly assigned to Terra or such
Subsidiaries or Terra otherwise has the right to use such Intellectual Property
Rights in its business as currently conducted except for such failures that
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Terra. Terra reasonably believes that
the Intellectual Property Rights are sufficient to carry on the business of
Terra as presently conducted. Terra or one of its Subsidiaries has exclusive
ownership of or a license to use all Intellectual Property Rights used by Terra
or its Subsidiaries in Terra's business as presently conducted, including all
other registered Intellectual Property Rights used in connection with or
contained in all versions of Terra's World Wide Web sites and all licenses,
assignments and releases of Intellectual Property Rights of others without which
Terra or its Subsidiaries could not offer the services they currently offer or
has obtained any licenses, releases or assignments reasonably necessary to use
all third parties' Intellectual Property Rights in works embodied in its
services, except for such failures as, either individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse
Effect on Terra. The present business activities or products of Terra do not
infringe any Intellectual Property Rights of others, except as have not had and
would not reasonably be expected to have a Material Adverse Effect on Terra. To
its knowledge, as of the date of this Agreement Terra has not received any
notice or other claim from any person asserting that any of Terra's present
activities infringe or may infringe any Intellectual Property Rights of such
person except for such notices or claims which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Terra.
(b) Except as have not had and would not reasonably be expected to have a
Material Adverse Effect on Terra or as disclosed in the Terra SEC Reports
publicly filed prior to the date of this Agreement, (i) Terra has the right to
use all trade secrets, customer lists, hardware designs, programming processes,
software and other information required for its services or its business as
presently conducted or contemplated; (ii) Terra has taken all reasonable
measures to protect and preserve the security and confidentiality of its trade
secrets and other confidential information; (iii) all employees and consultants
of Terra or its Subsidiaries involved in the design, review, evaluation or
development of products or Intellectual Property Rights have executed
nondisclosure and assignment of inventions agreements to protect the
confidentiality of Terra's trade secrets and other confidential information and
to vest in Terra exclusive ownership of such Intellectual Property Rights; (iv)
to the knowledge of Terra, all trade secrets and other confidential information
of Terra are not part of the public domain or knowledge, nor, to the knowledge
of Terra, have they been misappropriated by any person having an obligation to
maintain such trade secrets or other confidential information in confidence for
Terra; (v) to the knowledge of Terra, no employee or consultant of Terra or any
of its Subsidiaries has used any trade secrets or other confidential information
of any other person in the course of their work for Terra or any such
Subsidiary.
(c) To the knowledge of Terra, no university, government agency (whether
federal or state) or other organization sponsored research and development
conducted by Terra or any of its Subsidiaries or has any claim of right to or
ownership of or other encumbrance upon any of the Intellectual Property Rights
of Terra, except for such claims or other encumbrances that would not reasonably
be expected to have a Material Adverse Effect on Terra. Terra is not aware of
any
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infringement by others of its copyrights or other Intellectual Proprietary
Rights in any of its technology or services, or any violation of the
confidentiality of any of its proprietary information, except for such
infringement and violations that would not reasonably be expected to have a
Material Adverse Effect on Terra. To Terra's knowledge, Terra is not making
unlawful use of any confidential information or trade secrets of any past or
present employees of Terra or any of its Subsidiaries, except for such use as
would not reasonably be expected to have a Material Adverse Effect on Terra. For
the purposes of this Section 5.14, and except where the context otherwise
requires, Intellectual Property Rights also includes any and all intellectual
property rights, licenses, databases, computer programs and other computer
software user interfaces, know-how, trade secrets, customer lists, proprietary
technology, processes and formulae, source code, object code, algorithms,
architecture, structure, display screens, layouts, development tools,
instructions, templates, marketing materials created by Terra or its
Subsidiaries, inventions, trade dress, logos and designs.
5.15 Insurance. Terra and its Subsidiaries have in effect insurance
coverage with reputable insurers or are self-insured, which in respect of
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by companies and their
subsidiaries comparable in size and operations to Terra and its Subsidiaries
which are engaged in Terra's industry.
5.16 Opinions. Prior to the execution of this Agreement, Terra has
received an opinion from Lazard Freres & Co. to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of Terra from a financial point of
view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
5.17 Terra Information. The information relating to Terra and its
Subsidiaries to be contained in the Proxy Statement, the F-4, the Prospectus and
any supplements thereto and any circulars or documents issued to shareholders,
employees or debenture holders of Terra and the information relating to Terra
and its Subsidiaries that is provided by Terra and its representatives for
inclusion in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to Lycos or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder. The F-4 will comply with the provisions of the
Securities Act and the rules and regulations thereunder. The Prospectus and any
supplements thereto and any circulars or documents issued to shareholders,
employees or debenture holders of Terra will comply in all material respects
with all applicable law and all information contained therein (except for such
portions thereof that relate only to Lycos or any of its Subsidiaries) and will
be substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.
5.18 Telefonica Ownership. Telefonica owns beneficially and of record
approximately 66.6% of the outstanding Terra Capital Stock.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Business Prior to the Effective Time. During the period
from the date of this Agreement to the Exchange Effective Time, except as
expressly contemplated or permitted by this Agreement (including the Terra
Disclosure Schedule and the Lycos Disclosure Schedule), each of Lycos and Terra
shall, and shall cause each of their respective Subsidiaries to, (a) conduct its
business in the ordinary course, (b) use reasonable best efforts to maintain and
preserve intact its business organization, employees and advantageous business
relationships and retain the services of its key officers and key employees and
(c) take no action that would adversely affect or delay the ability of either
Lycos or Terra to obtain any necessary approvals of any Governmental Entity
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required for the transactions contemplated hereby or to perform its covenants
and agreements under this Agreement or to consummate the transactions
contemplated hereby.
6.2 Lycos Forbearances. During the period from the date of this Agreement
to the Exchange Effective Time, except as set forth in the Lycos Disclosure
Schedule and except as expressly contemplated or permitted by this Agreement,
Lycos shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Terra (which consent shall not be unreasonably
withheld):
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness
incurred to refinance short-term indebtedness, indebtedness of Lycos or any
of its wholly-owned Subsidiaries to Lycos or any of its Subsidiaries or
indebtedness incurred to finance investments expressly permitted by Section
6.2(d)), assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance;
(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend, or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its
capital stock (except dividends paid by any of the Subsidiaries of Lycos to
Lycos); (iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its capital
stock, other than pursuant to the Lycos Stock Plans in the ordinary course
of business and otherwise in accordance herewith; or (iv) issue any
additional shares of capital stock except (A) pursuant to the exercise of
stock options outstanding as of the date of this Agreement or issued in
compliance with Section 6.2(b)(iii), or (B) in the ordinary course of
business and consistent with past practice in connection with the Lycos
ESPP and the Lycos Stock Plans or (C) to finance acquisitions permitted by
Section 6.2(d);
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets, including by merger, consolidation or
otherwise, to any individual, corporation or other entity other than a
Subsidiary, or cancel, release or assign any indebtedness to any such
person or any claims held by any such person, in each case other than in
the ordinary course of business or pursuant to contracts or agreements in
force at the date of this Agreement;
(d) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or permitted by
this Agreement or investments in an aggregate amount not in excess of
$250,000,000, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers or purchase of any
property or assets, in each case, of or to any other individual,
corporation or other entity other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business,
terminate, or waive any material provision of any Lycos Contract or make
any change in any instrument or agreement governing the terms of any of its
securities, or material lease or contract, other than normal renewals of
contracts and leases without material adverse changes of terms;
(f) except as required by applicable law, increase, reduce or modify
in any manner the compensation or fringe benefits of any of its employees
or pay any pension or retirement allowance not required by any existing
plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of any
employee other than in
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the ordinary course of business, or accelerate the vesting of, or the
lapsing of restrictions with respect to, any stock options or other
stock-based compensation;
(g) settle any material claim, action or proceeding involving money
damages, except in the ordinary course of business;
(h) amend its articles of incorporation, its bylaws or comparable
governing documents or otherwise take any action to exempt any person or
entity (other than Terra or any of its Subsidiaries) or any action taken by
such person or entity from any takeover statute or similarly restrictive
provisions of Lycos's organizational documents;
(i) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Exchange
Effective Time, or in any of the conditions to the Share Exchange set forth
in Article VIII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable
law;
(j) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by U.S. GAAP or
regulatory guidelines;
(k) renew any current contract or agreement containing any material
exclusivity provisions or enter into any contract or agreement containing
any material exclusivity provision; or
(l) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 6.2.
6.3 Terra Forbearances. During the period from the date of this Agreement
to the Exchange Effective Time, except as set forth in the Terra Disclosure
Schedule and except as expressly contemplated or permitted by this Agreement,
Terra shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Lycos (which consent shall not be unreasonably
withheld):
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness
incurred to refinance short-term indebtedness, indebtedness of Terra or any
of its wholly-owned Subsidiaries to Terra or any of its Subsidiaries or
indebtedness incurred to finance investments expressly permitted by Section
6.3(d)), assume guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance;
(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend, or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its
capital stock (except dividends paid by any of the Subsidiaries of Terra to
Terra); (iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of tis capital
stock, other than pursuant to the Terra Stock Plans in the ordinary course
of business and otherwise in accordance herewith; or (iv) issue any
additional shares of capital stock except (A) pursuant to the exercise of
stock options outstanding as of the date of this Agreement or issued in
compliance with Section 6.3(b)(iii), or (B) in the ordinary course of
business and consistent with past practice in connection with the Terra
Stock Plans (as the same may be amended from time to time excluding,
however, amendments that would increase the authorized shares hereunder) or
(C) to finance acquisitions permitted by Section 6.3(d);
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets, including by merger, consolidation or
otherwise, to any individual, corporation or other entity other than a
Subsidiary, or cancel, release or assign any indebtedness to any such
person or any claims held by any such person, in each case other
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than in the ordinary course of business or pursuant to contracts or
agreements in force at the date of this Agreement;
(d) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or permitted by
this Agreement or investments in an aggregate amount not in excess of
$500,000,000, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers or purchase of any
property or assets, in each case, of or to any other individual,
corporation or other entity other than a Subsidiary thereof;
(e) amend its articles of incorporation, its bylaws or comparable
governing documents, except as contemplated by this Agreement or as
otherwise required to facilitate actions otherwise permitted hereunder;
(f) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Exchange
Effective Time, or in any of the conditions to the Share Exchange set forth
in Article VIII not being satisfied or in a violation of any provision of
this agreement, except, in every case, as may be required by applicable
law;
(g) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by Spanish GAAP or U.S.
GAAP or regulatory guidelines; or
(h) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 6.3.
6.4 Taxes. Neither Lycos nor Terra shall take any action or fail to take
any action, which action or failure to take action might reasonably be expected
to prevent the Reincorporation Merger or the Share Exchange from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or might
reasonably be expected to result in the shareholders of Lycos Virginia
recognizing gain under Section 367(a) of the Code with respect to the Share
Exchange. Terra and Lycos Virginia shall comply with the "reporting
requirements" of Treasury Regulation Section 1.367(a)-3(c)(6).
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) Lycos and Terra shall promptly prepare and
file with the SEC the Proxy Statement and Terra shall promptly prepare and file
with the SEC the F-4, in which the Proxy Statement will be included as a
prospectus. Each of Lycos and Terra shall use their reasonable best efforts to
have the F-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Lycos shall thereafter mail or deliver the
Proxy Statement to its stockholders. Terra shall also use its reasonable best
efforts to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this Agreement,
and Lycos shall furnish all information concerning Lycos and the holders of
Lycos Common Stock as may be reasonably requested in connection with any such
action.
(b) As soon as practicable, (i) the Terra Board of Directors shall, with
the reasonable assistance of Lycos, prepare reports (Informe del consejo de
administracion) to be made available to the holders of Terra Shares in
accordance with applicable law (the "BOARD REPORTS") in connection with the
Terra Shareholder Meeting containing information required by the SCL and (ii)
Terra shall prepare and arrange to have registered with and verified by the NSEC
a Prospectus. Terra will use its reasonable best efforts to cause the Prospectus
to receive the required registration with and verification of the NSEC as soon
as practicable after the date of this Agreement and to cause the definitive
Prospectus to be made available to the holders of Terra Shares in accordance
with applicable law as soon as reasonably practicable.
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(c) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities that are necessary
or advisable to consummate the transactions contemplated by this Agreement, and
to comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. Lycos and Terra shall have
the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to Terra or Lycos, as the
case may be, and any of their respective Subsidiaries, that appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing rights of review and consultation, each
of the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(d) Lycos and Terra shall, upon request, furnish each other will all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the F-4, the Board Reports and the
Prospectus or any other statement, filing, notice or application made by or on
behalf of Lycos, Terra or any of their respective Subsidiaries to any
Governmental Entity in connection with the transactions contemplated by this
Agreement.
(e) Lycos and Terra shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement that causes
such party to believe that there is a reasonable likelihood that any approval of
such Governmental Entity will not be obtained or that the receipt of any such
approval will be materially delayed.
7.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Lycos and Terra
shall, and shall cause each of their respective Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of the other
party reasonable access, during normal business hours during the period prior to
the Exchange Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Lycos and Terra shall,
and shall cause their respective Subsidiaries to, make available to the other
party (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of U.S. federal or Spanish securities laws and (ii) all other information
concerning its business, properties and personnel as such party may reasonably
request. Neither Lycos nor Terra nor any of their respective Subsidiaries shall
be required to provide such access or to disclose such information where such
access or disclosure would violate or prejudice the rights of Lycos's or
Terra's, as the case may be, customers, jeopardize the attorney-client privilege
of the institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Each of Lycos and Terra shall hold all information furnished by or on
behalf of the other party or any of such party's Subsidiaries or representatives
pursuant to Section 7.2(a) in confidence to the extent required by, and in
accordance with, the provisions of confidentiality agreement, dated May 12,
2000, by and among Telefonica, Terra and Lycos (the "CONFIDENTIALITY
AGREEMENT").
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(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
7.3 Shareholder and Terra Board Approvals. (a) Notwithstanding any
action taken pursuant to the proviso of the last sentence of this Section
7.3(a), Lycos shall call a meeting of its stockholders (the "LYCOS STOCKHOLDER
MEETING") and shall use its reasonable best efforts to cause the Lycos
Stockholder Meeting to be held as soon as reasonably practicable following the
date of this Agreement for the purpose of voting upon this Agreement and the
transactions contemplated hereby, including, without limitation, the
Reincorporation Merger, and to ratify the actions theretofore taken by Lycos as
the sole shareholder of Lycos Virginia to approve the Share Exchange pursuant to
Section 7.3(b), and shall use its reasonable best efforts to cause such meeting
to occur as soon as reasonably practicable. Subject to the proviso of the last
sentence of this Section 7.3(a), the Board of Directors of Lycos shall use its
reasonable best efforts to obtain from such stockholders the vote in favor of
the adoption of this Agreement required by the DGCL and, as applicable, the
rules of the Nasdaq, to consummate the transactions contemplated hereby and the
ratification of such stockholders referred to in the preceding sentence. The
Lycos Board shall include in the Proxy Statement its recommendation to the Lycos
stockholders that they adopt this Agreement and approve the Reorganization and
ratify the actions to be taken by Lycos as the sole shareholder of Lycos
Virginia pursuant to Section 7.3(b); provided, however, that the Lycos Board
may, at any time prior to the vote of the Stockholders of Lycos on the
Reorganization, withdraw or modify such recommendation to the extent that it
determines, in good faith after consulting with outside legal counsel, that such
action is necessary to comply with the fiduciary duties of the Lycos Board under
applicable law.
(b) Lycos shall incorporate Lycos Virginia as a direct wholly owned
subsidiary as promptly as practicable after the date of this Agreement and shall
cause the Lycos Virginia Board to approve and adopt this Agreement and the Share
Exchange. Lycos, as the sole shareholder of Lycos Virginia, shall approve and
adopt this Agreement, the Reincorporation Merger and the Share Exchange and
shall waive any right to dissent (and any notice of such right) from the Share
Exchange for all purposes of Section 13.1-729 et seq. of the VSCA, in each case
prior to the Lycos Stockholder Meeting.
(c) Terra shall call a meeting of its stockholders to be held as soon as
reasonably practicable following the date of this Agreement for the purpose of
(i) approving the increase in capital of Terra required in connection with the
Share Exchange, (ii) approving a resolution abolishing the preemptive rights of
Terra shareholders and (iii) delegating to the Terra Board the requisite
authority to effectuate the Capital Increase following the contribution to Terra
of the shares of Lycos Virginia Common Stock (the "TERRA SHAREHOLDER APPROVAL"),
and shall use its reasonable best efforts to cause such meetings to occur as
soon as reasonably practicable. The Terra Board shall use its reasonable best
efforts to obtain from such stockholders the vote in favor of such capital
increase and abolishment of preemptive rights as required by the SCL.
7.4 Affiliates. Lycos shall use its reasonable best efforts to cause each
of its directors and executive officers and any other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act) of it to deliver
to Terra, as soon as practicable after the date of this Agreement, and prior to
the date of the Lycos Stockholder Meeting, a written agreement, in the form of
Exhibit 6.4 hereto.
7.5 Stock Exchange Listing. (a) Terra shall cause the Terra ADSs to be
issued in the Share Exchange to be approved for listing on the Nasdaq, subject
to official notice of issuance, prior to the Exchange Effective Time.
(b) Terra shall amend the Depositary Agreement to establish the Terra ADSs
to be issued pursuant to the Share Exchange (or, alternatively, enter into a new
depositary agreement on substantially similar terms).
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7.6 Employee Benefit Plans. (a) For a period of at least one year after
the Exchange Effective Time, the Lycos Benefit Plans (other than equity or
equity-based programs) in effect as of the date of this Agreement shall remain
in effect with respect to employees of Lycos (or its Subsidiaries) covered by
such plans at the Exchange Effective Time or such Plans may be replaced by
substitute plans providing benefits no less favorable in the aggregate than the
benefits provided for under such Plans at the Exchange Effective Time. From and
after the Exchange Effective Time, Terra will, or will cause Lycos Virginia to,
recognize the prior service with Lycos or its subsidiaries of each employee of
Lycos or any of its subsidiaries as of the Exchange Effective Time (the "LYCOS
EMPLOYEES") in connection with all Terra employee benefit plans in which such
Lycos Employees are eligible to participate following the Exchange Effective
Time, for purposes of eligibility, vesting and levels of benefits (but not for
purposes of benefit accruals under any defined benefit pension plan). From and
after the Effective Time, Terra will, or will cause Lycos Virginia to, (i) cause
any pre-existing conditions or limitations and eligibility waiting periods under
any group health plans of Terra to be waived with respect to the Lycos Employees
and their eligible dependents and (ii) give each Lycos Employee credit for the
plan year in which the Exchange Effective Time occurs towards applicable
deductibles and annual out-of-pocket limits for expenses incurred prior to the
Exchange Effective Time.
(b) the foregoing notwithstanding, as of the Exchange Effective Time Lycos
Virginia agrees to honor in accordance with their terms all benefits vested as
of the Exchange Effective Time under the Lycos Benefit Plans and all other
contractual commitments of Lycos to its current and former employees provided
that such Lycos Benefit Plans and contractual commitments are maintained and
administered after the date of this Agreement not in violation of Section 5.2(b)
of this Agreement.
(c) Nothing in this Section 7.6 shall be interpreted as preventing Lycos
Virginia from amending, modifying or terminating any Lycos Benefit Plans or
other contracts, arrangements, commitments or understandings, in accordance with
their terms and applicable law, except that Lycos Virginia shall in any event
comply with its obligations set forth in this Section 7.6.
7.7 Indemnification; Directors' and Officers' Insurance. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any individual (an "INDEMNIFIED PARTY") who is now, or has been at any time
prior to the date of this Agreement, or who becomes prior to the Exchange
Effective Time, a director or officer of Lycos or Lycos Virginia or any of their
respective Subsidiaries is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he or she is or was a director or officer of Lycos or Lycos Virginia
or any of their respective Subsidiaries or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Exchange Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. It is understood
and agreed that after the Exchange Effective Time, Terra shall indemnify and
hold harmless, pursuant to the Lycos Certificate, the Lycos By-Laws, the Lycos
Virginia Articles, the Lycos Virginia By-Laws and indemnification agreements and
otherwise as and to the fullest extent permitted by law, each such Indemnified
Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses), judgments, fines and
amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and shall advance costs and
expenses to any Indemnified Party in advance of the final disposition of any
claim, suit, proceeding or investigation to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law.
(b) For a period of six years after the Exchange Effective Time, Lycos
Virginia shall, and Terra shall cause Lycos Virginia to maintain in effect
policies of directors' and officers' liability insurance with coverage in amount
and scope at least as favorable as Lycos's existing policies with respect to
claims arising from facts or events that occurred prior to the Exchange
Effective Time; provided, however, that during such period, Lycos Virginia shall
in no event be required to expend pursuant to
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this Section 7.7(b) more than an amount per year equal to 200% of current
premiums paid by Lycos for such insurance, which current premium amount is set
forth in Section 7.7(b) of the Lycos Disclosure Schedule.
(c) In the event Terra or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Terra
assume the obligations set forth in this Section 7.7.
(d) The provisions of this Section 7.7 shall survive the Exchange
Effective Time and are intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party and his or her heirs and representatives.
7.8 Additional Agreements. In case at any time after the Exchange
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest Lycos Virginia with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Reincorporation Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by Terra or Lycos Virginia.
7.9 Advice of Changes. Lycos and Terra shall each promptly advise the
other party of any change or event (i) having a Material Adverse Effect on it or
(ii) that it believes would or would be reasonably likely to cause or constitute
a material breach of any of its representations, warranties or covenants
contained herein.
7.10 Exemption from Liability Under Section 16(b). Assuming that Lycos
delivers (as defined below) to Terra the Section 16 Information reasonably in
advance of the Exchange Effective Time, the Board of Directors of Terra, or a
committee of Non-Employee Directors thereof (as such term is defined for
purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly
thereafter and in any event prior to the Effective Time adopt a resolution
providing that the receipt by the Lycos Insiders (as defined below) of Terra
Stock in exchange for shares of Lycos Common Stock, and of options to purchase
Terra Stock upon conversion of options to purchase shares of Lycos Common Stock,
in each case pursuant to the transactions contemplated hereby and to the extent
such securities are listed in the Section 16 Information provided by Lycos to
Terra prior to the Exchange Effective Time, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act such that any such
receipt shall be so exempt. "SECTION 16 INFORMATION" shall mean information
accurate in all respects regarding the Lycos Insiders, the number of shares of
Lycos Common Stock held by each such Lycos Insider and expected to be exchanged
for Terra Common Stock in the Reincorporation Merger, and the number and
description of the options to purchase shares of Lycos Common Stock held by each
such Lycos Insider and expected to be converted into options to purchase shares
of Terra Common Stock in connection with the Reincorporation Merger. "LYCOS
INSIDERS" shall mean those officers and directors of Lycos who are subject to
the reporting requirements of Section 16(a) of the Exchange Act and who are
listed in the Section 16 Information.
7.11 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Terra and Lycos agrees that it shall use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Reorganization as promptly
as practicable and otherwise to enable consummation of the transactions
contemplated hereby including, without limitation, using its reasonable best
efforts to obtain (and cooperating with the other party hereto to obtain) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Authority and any other third party that is required to be obtained
by Lycos or Terra or any of their respective Subsidiaries in connection with the
Reorganization and the other transactions contemplated by this Agreement.
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7.12 Acquisition Proposals. Lycos will not, and will not permit or cause
any of its Subsidiaries or any of the officers and directors of it or its
Subsidiaries to, and shall direct and cause its and its Subsidiaries' employees,
agents and representatives (including any advisor, investment banker, attorney
or accountant retained by it or any of its Subsidiaries) ("REPRESENTATIVES") not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of 15% or more of the voting securities of Lycos or 15% or more
of the consolidated assets of Lycos and its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "ACQUISITION PROPOSAL"). Lycos will
not, and will not permit or cause any of its Subsidiaries or any of the officers
and directors of it or its Subsidiaries to and shall direct and cause its and
its Subsidiaries' employees, agents and Representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, whether made before or after the date of this Agreement,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; provided, however, that (A) Lycos may, and may authorize
and permit its employees, agents and Representatives to, furnish or cause to be
furnished confidential information and may participate in such negotiations and
discussions, (B) the Lycos Board may take the actions described in the last
sentence of Section 7.3(a) as permitted thereby, (C) the Lycos Board may
recommend an Acquisition Proposal to the Lycos stockholders and (D) may
terminate this Agreement pursuant to Section 9.1(g) of this Agreement in order
to immediately thereafter enter into a definitive agreement with respect to such
Acquisition Proposal, in each case, if the Lycos Board determines, in good faith
after consulting with outside legal counsel, that such action is necessary to
comply with fiduciary duties of the Lycos Board under applicable law, provided
that prior to furnishing non-public information to any such party, Lycos shall
have entered into a confidentiality agreement on customary terms as advised by
outside legal counsel; provided, further, however, that nothing contained in
this Agreement shall prevent Lycos or the Lycos Board from (x) complying with
Rule 14e-2 promulgated under the Exchange Act or (y) making any disclosure to
the Lycos stockholders required by applicable law. Lycos will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
Lycos agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.12. Lycos will notify Terra promptly if
any such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its officers, directors or its
Representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers. Lycos
also will promptly request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of an Acquisition
Proposal to return all confidential information heretofore furnished to such
Person by or on behalf of it or any of its Subsidiaries.
7.13 Board of Directors. The parties will take such actions with respect
to the Terra Board as are necessary to cause the Terra Board, from and after the
Exchange Effective Time, to be comprised of not more than 15 members, of which
three shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and one member of the Lycos
Board selected by Lycos prior to the Exchange Effective Time and reasonably
acceptable to Terra.
7.14 Capital Increase. The Terra Board shall execute the approval of the
shareholders of Terra to increase the share capital of Terra against a
contribution in kind (Aumento con aportaciones no dinerarias) and shall register
such action pursuant to the Deed of Capital Increase with the Commercial
Registry immediately following receipt of the Lycos Virginia Certificate.
7.15 Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred in
connection with the Reorganization shall be paid by the party incurring such tax
and the parties hereto shall cooperate in preparing, executing and filing any
tax returns with respect
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to such Transfer Taxes. Notwithstanding the foregoing, any Transfer Taxes
incurred by the shareholders of either Lycos or Lycos Virginia in connection
with the Reorganization ("SHAREHOLDER TRANSFER TAXES") shall be paid by Lycos
Virginia out of its own funds. No funds will be supplied, directly or
indirectly, by Terra for the purpose of paying Shareholder Transfer Taxes, nor
will Terra, directly or indirectly, reimburse Lycos Virginia for any such
payment of Shareholder Transfer Taxes.
7.16 Lycos Virginia. Lycos and Terra agree that Lycos Virginia shall
become a party to this Agreement for all purposes hereunder as soon as
practicable after the formation of Lycos Virginia, and Lycos shall cause Lycos
Virginia to become a party to this Agreement for all purposes hereunder as soon
as practicable after such formation.
7.17 Employee Stock Purchase Plan. Lycos shall take all necessary action
to provide that the "purchase period" commencing February 1, 2000 under the ESPP
shall be the final purchase period under such plan and that the last day of such
final purchase period shall occur on the earlier of (1) the date on which such
purchase period would terminate according to the terms of the ESPP and (2) the
last day of the payroll period immediately prior to the Exchange Effective Time.
7.18 State Takeover Laws. The Lycos will cause the Board of Directors of
Lycos Virginia to approve the transactions contemplated by this Agreement for
purposes of Sections 13.1-725 et seq. and 13.1-728.1 et seq. of the VSCA such
that the provisions of such Sections will not apply to this Agreement or any of
the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Reincorporation
Merger and the Share Exchange. The respective obligations of the parties to
effect each of the Reincorporation Merger and the Share Exchange shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. The Lycos Stockholder Approval and the
Terra Shareholder Approval each shall have been obtained.
(b) Listing. The Terra ADSs to be issued to the stockholders of
Lycos Virginia upon consummation of the Share Exchange shall have been
authorized for quotation on the Nasdaq, subject to official notice of
issuance.
(c) HSR Act; EC Merger Regulations; Deed of Execution. The waiting
period (and any extension thereof) applicable to the Reincorporation Merger
or the Share Exchange under the HSR Act shall have been terminated or shall
have expired, any required approval of the Reincorporation Merger or the
Share Exchange of the European Commission under Counsel Regulation (EEC)
No. 4064/89 shall have been obtained and the execution of the Deed of
execution of Capital Increase, the filing of the necessary auditors' report
and the filing of the necessary report of the expert designated by the
Commercial Registry relating to the fair value of the assets acquired by
Terra in the Share Exchange shall have been filed or made.
(d) F-4. The F-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the F-4 shall have
been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No (i) order,
injunction, writ or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Reorganization or any of the other transactions
contemplated by this Agreement shall be in effect and (ii) statute, rule,
regulation, order, injunction, writ or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity that prohibits,
or makes illegal consummation of the Reorganization (collectively,
"RESTRAINTS").
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(f) Federal Tax Opinion. Lycos shall each have received the opinion
of Cravath, Swaine & ▇▇▇▇▇, and Terra shall have received the opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, in form and substance reasonably
satisfactory to Lycos and Terra, respectively, dated the Closing Date,
substantially to the effect that, for U.S. tax purposes on the basis of
facts, representations and assumptions set forth in each such opinion that
are consistent with the state of facts existing at the Reincorporation
Effective Time and at the Exchange Effective Time:
(i) Each of the Reincorporation Merger and the Share Exchange will
constitute a reorganization within the meaning of Section 368(a) of the
Code;
(ii) Lycos and Lycos Virginia will each be a party to the
reorganization within the meaning of Section 368(b) of the Code with
respect to the Reincorporation Merger and Lycos Virginia and Terra will
each be a party to the reorganization within the meaning of Section
368(b) of the Code with respect to the Share Exchange;
(iii) No gain or loss will be recognized by Lycos or Lycos
Virginia as a result of the Reincorporation Merger or by Lycos Virginia
as a result of the Share Exchange; and
(iv) No gain or loss will be recognized by shareholders of Lycos
who exchange all of their Lycos Common Stock solely for shares of Lycos
Virginia Common Stock pursuant to the Reincorporation Merger and no gain
or loss will be recognized by shareholders of Lycos Virginia who
exchange all of their Lycos Virginia Common Stock solely for Terra Stock
pursuant to the Share Exchange (except with respect to cash received in
lieu of a fractional share interest in Terra Stock).
In rendering such opinions, counsel may require and rely upon
representations contained in certificates of officers of Lycos, Lycos
Virginia and Terra and may assume that any shareholder of Lycos that is a
U.S. person and a "five percent transferee shareholder" as defined in
Treas. Reg. sec. 1.367(a)-3(c)(5)(ii) will enter into a five-year gain
recognition agreement in the form provided in Treas. Reg. sec. 1.367(a)-8.
(g) Prospectus Verification. The Prospectus shall have been verified
by, and registered with, the NSEC.
8.2 Conditions to Obligations of Lycos. The obligation of Lycos to effect
each of the Reincorporation Merger and the Share Exchange is also subject to the
satisfaction, or waiver by Lycos, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Terra set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this Section 8.2(a), Terra's
representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be
so true and correct, either individually or in the aggregate, and without
giving effect to any qualification as to materiality or Material Adverse
Effect set forth in such representations or warranties, has had or would
reasonably be expected to have a Material Adverse Effect on Terra or the
Surviving Corporation. Lycos shall have received a certificate signed on
behalf of Terra by the Chief Executive Officer and the Chief Financial
Officer of Terra to the foregoing effect.
(b) Performance of Obligations of Terra. Terra shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and Lycos shall have
received a certificate signed on behalf of Terra by the Chief Executive
Officer and the Chief Financial Officer of Terra to such effect.
(c) Completion of Rights Offering. Terra shall have completed, and
received the proceeds from, a rights offering in respect of Terra Shares
contemplated by the Rights Offering Agreement
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(as defined below) for aggregate value, including a par value plus premium
to be paid in by the subscribers, of 2.2 billion Euros;
(d) Entry into Wireless Agreement. Terra and Telefonica Moviles,
S.A., shall have entered into a definitive agreement with respect to the
matters set forth on Schedule 8.2 hereto.
(e) Performance of Obligations of Telefonica. Telefonica shall have
performed in all material respects all obligations required to be performed
by it under the Rights Offering Agreement dated the date hereof between
Telefonica, Terra and Lycos at or prior to the Closing Date.
8.3 Conditions to Obligations of Terra. The obligation of Terra to effect
the Share Exchange is also subject to the satisfaction or waiver by Terra at or
prior to the Reorganization Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Lycos set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
provided, however, that for purposes of this Section 8.3(a), Lycos's
representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be
so true and correct, either individually or in the aggregate, and without
giving effect to any qualification as to materiality set forth in such
representations or warranties, has had or would reasonably be expected to
have a Material Adverse Effect on Lycos. Terra shall have received a
certificate signed on behalf of Lycos by the Chief Executive Officer and
the Chief Financial Officer of Lycos to the foregoing effect.
(b) Performance of Obligations of Lycos. Lycos shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and Terra shall have
received a certificate signed on behalf of Lycos by the Chief Executive
Officer and the Chief Financial Officer of Lycos to such effect.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to
the Reorganization Effective Time, whether before or after (unless otherwise
provided below) approval of the matters presented in connection with the
Reincorporation Merger or the Share Exchange by the shareholders of Lycos or
Terra:
(a) by mutual consent of Lycos and Terra in a written instrument, if
the Board of Directors of each so determines by a vote of majority of the
members of its entire Board;
(b) by either the Board of Directors of Lycos or the Board of
Directors of Terra if any Restraint having any of the effects set forth in
Section 8.1(e) shall be in effect and shall have become final and
nonappealable, provided that such terminating party shall have used its
reasonable best efforts to prevent the entry of and to remove such
Restraint;
(c) any shareholder approval required by Section 8.1(a) is not
obtained at shareholder meetings duly convened pursuant to Section 7.3 or
at any postponement or adjournment thereof;
(d) by either the Board of Directors of Lycos or the Board of
Directors of Terra if the Reorganization shall not have been consummated on
or before January 31, 2001, unless the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such
party set forth herein;
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(e) by either the Board of Directors of Lycos or the Board of
Directors of Terra (provided that the terminating party is not then in
breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a breach of any of the covenants
or agreements or any of the representations or warranties set forth in this
Agreement on the part of Terra, in the case of a termination by Lycos, or
Lycos, in the case of a termination by Terra, which breach, either
individually or in the aggregate, would constitute, if occurring or
continuing on the Closing Date, the failure of the conditions set forth in
Section 8.2 or 8.3, as the case may be, and that is not cured within 30
days following written notice to the party committing such breach or by its
nature or timing cannot be cured prior to the Closing Date;
(f) by Terra, (i) if the Board of Directors of Lycos withdraws,
modifies or changes its recommendation of this Agreement in a manner
adverse to Terra or shall have resolved to do so, (ii) if, after a bona
fide Acquisition Proposal shall have been made public, the Board of
Directors of Lycos shall have refused to affirm its recommendation of this
Agreement as promptly as practicable (but in any case within 10 business
days) after receipt of any written request from Terra (provided that Terra
may only make one such request in respect of each Acquisition Proposal),
(iii) if the Board of Directors of Lycos shall have recommended to the
stockholders of Lycos an Acquisition Proposal or shall have resolved to do
so, or (iv) if a tender offer or exchange offer for 15% or more of the
outstanding shares of capital stock of Lycos is commenced, and the Board of
Directors of Lycos fails to recommend against acceptance of such tender
offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange
offer by its stockholders);
(g) by Lycos prior to the vote of the stockholders of Lycos on the
Agreement and the Reorganization, if, after receiving a bona fide
Acquisition Proposal, the Board of Directors of Lycos determines, in good
faith after consulting with outside legal counsel, that such action is
necessary to comply with the fiduciary duties of the Lycos Board under
applicable law; provided, however, that Lycos may not terminate this
Agreement pursuant to this subsection (g) until three business days have
elapsed following delivery to Terra of written notice of such determination
of Lycos (which written notice will inform Terra of the material terms and
conditions of the Acquisition Proposal); provided, further, however, that
such termination under this Section 9.1(g) shall not be effective until
Lycos has made payment to Terra of the amounts required to be paid pursuant
to Section 9.2(b).
9.2 Effect of Termination. (a) In the event of termination of this
Agreement by either Lycos or Terra as provided in Section 9.1, this Agreement
shall forthwith become void and have no effect, and none of Lycos, Terra, any of
their respective Subsidiaries or any of the officers or directors of any of them
shall have any liability of any nature whatsoever hereunder, or in connection
with the transactions contemplated hereby, except that (i) Sections 9.2(b), 9.2,
10.3, and 10.12 through and including 10.15 shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the contrary contained in
this Agreement, neither Lycos nor Terra shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
(b) In the event that (i) this Agreement is terminated by Terra pursuant
to clause (ii), (iii) or (iv) of Section 9.1(f) or (ii) this Agreement is
terminated by Lycos pursuant to Section 9.1(g) or (iii) (A) this Agreement is
terminated pursuant to (x) Section 9.1(c) due to the failure of Lycos's
stockholders to approve and adopt this Agreement, (y) Section 9.1(d) without the
Lycos Stockholder Meeting having occurred or (z) clause (i) of Section 9.1(f)
and (B) at the time of such failure to so approve and adopt this Agreement (in
the case of clause (x)) or at the time of such termination, (in the case of
clause (y)) or at the time of the withdrawal, modification or change in
recommendation (in the case of clause (z)) any person (other than Terra) has
made to Lycos or any of its Subsidiaries a bona fide Acquisition Proposal which
shall have been made known to the Lycos stockholders generally or shall have
publicly announced an intention (whether or not conditional) to make an
Acquisition Proposal and, within 12 months of the termination of this Agreement,
Lycos enters into a definitive agreement with any third party to consummate, or
consummates, an Acquisition Proposal
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(as defined in Section 7.12 except that the references to "15%" therein shall be
deemed to be references to "40%"), then in each of (i)-(iii), Lycos shall pay to
Terra an amount equal to 3% of the product of (A) the closing price of Terra
Shares on the SCME on May 16, 2000 expressed in U.S. dollars using the noon
buying rate of Euros for U.S. dollars as of such date as reported by the U.S.
Federal Reserve, (B) 1.72 and (C) 120,000,000 (the "Termination Fee").
(c) The Termination Fee required to be paid pursuant to Section 9.2(b)(i)
shall be paid to Terra by wire transfer of immediately available funds no later
than two days after this Agreement has been terminated. The Termination Fee
required to be paid pursuant to Section 9.2(b)(ii) shall be paid to Terra prior
to, and shall be a pre-condition to effectiveness of, termination of this
Agreement pursuant to Section 9.1(g). The Termination Fee required to be paid
pursuant to Sections 9.2(b)(iii) shall be paid to Terra no later than two days
after the earlier to occur of the date of entrance by Lycos or any of its
Subsidiaries into the definitive agreement referenced in Section 9.2(b)(iii) and
the date of consummation of such Acquisition Proposal referenced in Section
9.2(b)(iii).
(d) Each of Lycos and Terra agrees that the payments provided for in
Sections 9.2(b) shall be the sole and exclusive remedies of the parties upon a
termination of this Agreement pursuant to Section 9.1(c), (d), (f), or (g), as
the case may be, and such remedies shall be limited to the payments stipulated
in Section 9.2(b); provided, however, that nothing herein shall relieve any
party from liability for the willful breach of any of its representations and
warranties or the breach of any of its covenants or agreements set forth in this
Agreement.
(e) Any payment required to be made pursuant to Section 9.2(b) shall be
made by wire transfer of immediately available funds to an account designated by
the party entitled to receive payment.
9.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with Reorganization by the shareholders of Lycos
and Terra; provided, however, that after any approval of the transactions
contemplated by this Agreement by the respective shareholders of Lycos or Terra,
there may not be, without further approval of such shareholders, any amendment
of this Agreement that changes the amount or the form of the consideration to be
delivered hereunder to the holders of Lycos Common Stock, other than as
contemplated by this Agreement, or that under applicable law otherwise requires
the further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.4 Extension; Waiver. At any time prior to the Exchange Effective Time,
the parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the respective shareholders of Lycos or Terra, there may not be, without further
approval of such shareholders, any extension or waiver of this Agreement or any
portion thereof that reduces the amount or changes the form of the consideration
to be delivered to the holders of Lycos Common Stock hereunder, other than as
contemplated by this Agreement, or that under applicable law otherwise requires
the further approval of such shareholders. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Reincorporation Merger and the Share Exchange (the "CLOSING")
will take place at 10:00 a.m. on a date and at a place to be specified by the
parties, which shall be no later than five business days after the satisfaction
(or, to the extent permitted by law or regulation, waiver by all parties) of the
conditions set forth in Section 8.01, or, if on such day any condition set forth
in Section 8.02 or 8.03 has not been satisfied (or, to the extent permitted by
law or regulation, waived by the party or parties entitled to the benefits
thereof), as soon as practicable after all the conditions set forth in Article
VIII have been satisfied (or, to the extent permitted by law or regulation,
waived by the parties entitled to the benefits thereof), or at such other place,
time and date as shall be agreed in writing between Terra and Lycos. The date on
which the Closing occurs is referred to in this Agreement as the "CLOSING DATE".
10.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the
Confidentiality Agreement, which shall terminate in accordance with the terms
thereof) shall survive the Closing, except for Section 7.7 and for those other
covenants and agreements contained herein and therein that by their terms apply
in whole or in part after the Closing.
10.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Proxy Statement, and all filing and other fees paid to
the SEC in connection with the Reincorporation Merger, shall be shared equally
by Lycos and Terra.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Lycos, to:
Lycos, Inc.
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: 212-474-3700
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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and
(b) if to Terra, to:
Terra, S.A.
▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇, Complejo Atica, Edeficial
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
Facsimile No.: 011-34-91-452-3305
Attention: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇(▇▇) ▇▇.
▇▇▇ ▇▇▇▇, ▇▇
Facsimile: 212-403-2000
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
and a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
The MetLife Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
10.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
10.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement, Rights
Offering Agreement, dated as of May 16, 2000, by and among Lycos, Terra and
Telefonica, and the [Bobcat] Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
10.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles.
10.9 Publicity. Except as otherwise required by applicable law or the
rules of the Nasdaq or the CNMV, neither Lycos or Terra shall, or shall permit
any of its Subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of Terra, in the case of a proposed announcement or statement by
Lycos, or Lycos, in the case of a proposed announcement or statement by Terra,
which consent shall not be unreasonably withheld.
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10.10 Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 7.7, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
10.11 Submission to Jurisdiction; Waivers; Consent to Service of
Process. (a) Each of Terra and Lycos irrevocably agree that any legal action
or proceeding with respect to this Agreement or for recognition and enforcement
of any judgment in respect hereof brought by another party hereto or its
successors or assigns may be brought and determined in any Delaware state court
or Federal court sitting in the State of New York or the State of Delaware, and
each of Terra and Lycos hereby (x) irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive personal jurisdiction of the aforesaid courts
in the event any dispute arises out of this Agreement or any transaction
contemplated hereby, (y) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (z) agrees that it will not bring any action relating to this Agreement or
any transaction contemplated hereby in any court other than any Delaware state
or Federal court sitting in the State of New York or the State of Delaware. Any
service of process to be made in such action or proceeding may be made by
delivery of process in accordance with the notice provisions contained in
Section 10.11(b). Each of Terra and Lycos hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) the defense of
sovereign immunity, (b) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to
serve process in accordance with this Section 10.11, (c) that it or its property
is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (d) to the fullest extent permitted by applicable
law that (i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
(c) Terra hereby appoints National Registered Agents, Inc., with offices
on the date hereof at ▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the City of Dover, County of
Kent, State of Delaware, and with offices on the date hereof at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in the City of New York, County of New York, State of New
York, as its authorized agent, (the "AUTHORIZED AGENT"), upon whom process may
be served in any suit, action or proceeding arising out of or relating to this
Agreement or any transaction contemplated by this Agreement that may be
instituted in any court described in Section 10.11(a). Telefonica agrees to take
any and all reasonable action, including the filing of any and all documents,
that may be necessary to establish and continue such appointment in full force
and effect as aforesaid. Telefonica agrees that service of process upon the
Authorized Agent shall be, in every respect, effective service of process upon
Telefonica.
10.12 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specified terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
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(WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
TERRA NETWORKS, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
LYCOS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
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