Exhibit 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
among
MLB ADVANCED MEDIA, L.P.
MLBAM ACQUISITION CORP.
and
▇▇▇▇▇▇▇.▇▇▇, INC.
dated as of
February 14, 2005
================================================================================
PAGE
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER....................................................... 2
Section 1.01 The Offer................................................. 2
Section 1.02 Company Action............................................ 3
ARTICLE II THE MERGER..................................................... 4
Section 2.01 The Merger................................................ 4
Section 2.02 Closing; Effective Time................................... 4
Section 2.03 Effect of the Merger...................................... 5
Section 2.04 Subsequent Actions........................................ 5
Section 2.05 Certificate of Incorporation; By-Laws; Directors and
Officers................................................ 5
Section 2.06 Conversion of Shares...................................... 5
Section 2.07 Dissenting Shares......................................... 6
Section 2.08 Surrender of Shares; Stock Transfer Books................. 6
Section 2.09 Stock Plans............................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........ 11
Section 3.01 Corporate Organization.................................... 11
Section 3.02 Authority Relative to this Agreement...................... 11
Section 3.03 No Conflict; Required Filings and Consents................ 11
Section 3.04 Brokers................................................... 12
Section 3.05 Offer Documents........................................... 12
Section 3.06 Financing................................................. 12
Section 3.07 Securities Purchase Agreement; Stockholder Agreements..... 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY...................... 12
Section 4.01 Corporate................................................. 12
Section 4.02 Authority................................................. 14
Section 4.03 No Violation.............................................. 14
Section 4.04 Financial Matters......................................... 15
Section 4.05 Tax Matters............................................... 16
Section 4.06 Accounts Receivable....................................... 17
Section 4.07 Absence of Certain Changes................................ 18
Section 4.08 Absence of Undisclosed Liabilities........................ 19
Section 4.09 No Litigation............................................. 19
Section 4.10 Laws and Orders; Licenses and Permits; Environmental
Matters................................................. 19
Section 4.11 Title to and Condition of Properties...................... 21
Section 4.12 Insurance................................................. 21
Section 4.13 Contracts and Commitments................................. 22
Section 4.14 Labor Matters............................................. 24
Section 4.15 Employee Benefit Plans.................................... 25
Section 4.16 Employees; Compensation................................... 28
Section 4.17 Trade Rights.............................................. 28
Section 4.18 Customers; Suppliers; Dealers and Distributors............ 30
Section 4.19 Certain Loans............................................. 30
Section 4.20 Certain Relationships to Company.......................... 30
Section 4.21 Offer Documents........................................... 30
i
TABLE OF CONTENTS (CONT'D)
PAGE
Section 4.22 Brokers................................................... 31
Section 4.23 Takeover Statutes......................................... 31
Section 4.24 Opinions of Financial Advisors............................ 31
Section 4.25 Disclosure................................................ 31
Section 4.26 2004 Bonus Awards......................................... 32
ARTICLE V COVENANTS....................................................... 32
Section 5.01 Compensation Arrangements................................. 32
Section 5.02 Conduct of Business by Company Pending the Closing........ 32
Section 5.03 No Solicitation........................................... 35
Section 5.04 Access to Information..................................... 38
Section 5.05 Notification of Certain Matters........................... 38
Section 5.06 Public Announcements...................................... 39
Section 5.07 Reasonable Best Efforts; Cooperation...................... 39
Section 5.08 Takeover Statutes......................................... 39
Section 5.09 Confidentiality Agreement................................. 40
Section 5.10 D&O Indemnification and Insurance......................... 40
ARTICLE VI CONDITIONS TO THE MERGER....................................... 41
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................. 41
Section 7.01 Termination............................................... 41
Section 7.02 Effect of Termination..................................... 44
Section 7.03 Amendment................................................. 44
Section 7.04 Extension; Waiver......................................... 44
ARTICLE VIII GENERAL PROVISIONS........................................... 45
Section 8.01 Non-Survival of Representations and Warranties............ 45
Section 8.02 Expenses.................................................. 45
Section 8.03 Entire Agreement.......................................... 45
Section 8.04 Assignment................................................ 45
Section 8.05 Parties in Interest....................................... 45
Section 8.06 Validity.................................................. 46
Section 8.07 Notices................................................... 46
Section 8.08 Law Governing Agreement; Jurisdiction..................... 47
Section 8.09 Specific Performance...................................... 47
Section 8.10 Headings.................................................. 47
Section 8.11 Counterparts.............................................. 47
Section 8.12 Definitions............................................... 47
Annexes
I - Purchaser's Conditions to the Offer
II - Other Condition to the Offer
Exhibit A - Form of Option Cancellation Agreement
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 14, 2005 (the
"Agreement"), among ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("Company"), MLB
Advanced Media, L.P., a Delaware limited partnership ("Parent"), and MLBAM
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Purchaser, a Special Committee (the
"Special Committee") of the Board of Directors of Company (with authority
delegated by the Board of Directors of Company, hereinafter the "Company Board
of Directors"), the Company Board of Directors, and the General Partner of
Parent, have approved and/or recommended, as applicable, the Merger (as that
capitalized term is defined below), upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, it is proposed that Purchaser shall make a cash tender offer (as
it may be amended from time to time as permitted under this Agreement, the
"Offer") to acquire all of the issued and outstanding shares (the "Shares") of
the common stock, $0.000225 par value, of Company (the "Common Stock") at a
purchase price of $1.10 per Share (such price or such higher price as may be
paid in the Offer, the "Offer Price"), net to each seller of Shares in cash,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of Purchaser, the Special Committee, and
the General Partner of Parent, have each approved and/or recommended, as
applicable, this Agreement, the Offer, and the merger of Purchaser with and into
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, the Special Committee (i) has approved and/or recommended, as
applicable, the Offer and this Agreement, (ii) has recommended that the holders
of such Shares accept the Offer and approve this Agreement and the transactions
contemplated hereby, and (iii) has determined that the consideration to be paid
for each Share in the Offer is fair to the holders of such Shares;
WHEREAS, Parent, Purchaser and Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
WHEREAS, capitalized terms not defined in the context in the Section in
which they first appear shall have the meanings set forth in Section 8.12.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Purchaser and Company hereby agree as follows:
1
ARTICLE I
THE OFFER
Section 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII and none of the events set forth in Annex I shall
have occurred and be continuing, Parent shall cause Purchaser, as promptly as
practicable, to commence (within the meaning of Rule 14d-2 under the Exchange
Act), the Offer at the Offer Price. The obligation of Purchaser to consummate
the Offer and to accept for payment and to pay for any Shares tendered pursuant
to the Offer shall be subject to (i) the satisfaction or waiver of the
conditions set forth in Annex I, and (ii) the satisfaction of the condition set
forth in Annex II. The conditions to the Offer set forth in Annex I are for the
sole benefit of Parent and Purchaser and may be asserted by Parent and Purchaser
regardless of the circumstances giving rise to any such conditions, and Parent
and Purchaser expressly reserve the right, in their sole discretion, subject to
Laws to waive any such condition. The condition to the Offer set forth in Annex
II may not be waived by any party hereto. The initial expiration date of the
Offer shall be the 21st Business Day following commencement of the Offer (within
the meaning of Rule 14d-2 under the Exchange Act). The Offer Price shall be net
to each seller of Shares in cash, without interest, subject to any applicable
withholding taxes, upon the terms and subject to the conditions of the Offer.
(b) Parent and Purchaser expressly reserve the right, in their sole
discretion, to modify the terms and conditions of the Offer, including, without
limitation, to extend the Offer beyond any scheduled expiration date; provided,
however, that, without the prior written consent of Company, Purchaser shall not
(i) decrease the Offer Price or change the form of consideration payable in the
Offer (other than by adding consideration), (ii) seek to purchase less than all
outstanding Shares, or (iii) impose material conditions to the Offer in addition
to those set forth in Annex I. Upon the terms and subject to the conditions of
the Offer and this Agreement, Purchaser shall accept for payment and purchase
all Shares validly tendered and not withdrawn prior to the expiration of the
Offer.
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") subject to the conditions set forth in Annex I and Annex
II. As soon as reasonably practicable on the date the Offer is commenced, Parent
and Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer that (i) will comply in all material respects with the
provisions of all applicable federal securities Laws (except to the extent
formally or tacitly waived by the Staff of the SEC), (ii) will contain
(including as an exhibit) or incorporate by reference the Offer to Purchase, a
form of the related letter of transmittal, and (iii) may contain a summary
advertisement (at Parent's sole discretion), which documents, together with any
supplements or amendments thereto, are referred to collectively herein as the
"Offer Documents." Each of Company, on the one hand, and Parent and Purchaser,
on the other hand, agrees promptly to correct any information provided by it for
use in the Schedule TO or the Offer Documents if and to the extent that the
Schedule TO or the Offer Documents shall be, or have become, false or misleading
in any material respect, and Parent and Purchaser further agree
2
to take all steps necessary to cause the Schedule TO, as so corrected, to be
filed with the SEC and the Offer Documents, as so corrected, to be disseminated
to holders of Shares, in each case to the extent required by applicable federal
securities Laws. Parent and Purchaser shall provide Company and its counsel with
a reasonable opportunity to review and comment on the Schedule TO and any Offer
Documents before they are filed with the SEC.
(d) Notwithstanding the foregoing: (i) if, on the initial scheduled
expiration date of the Offer, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act to have expired or been
terminated, the Purchaser shall extend the Offer from time to time until five
Business Days after the expiration or termination of the waiting period under
the HSR Act; provided, however, that Purchaser shall not be required to extend
the Offer beyond the date that is twenty days after the initial scheduled
expiration date of the Offer.
(e) Notwithstanding the foregoing, Parent and Purchaser may, in
their sole discretion, elect to provide for a subsequent offering period
pursuant to, and on the terms required by, Rule 14d-11 under the Exchange Act.
Section 1.02 Company Action.
(a) Company hereby approves of and consents to the Offer and
represents and warrants that the Special Committee, at a meeting duly called and
held on February 4, 2005, acting by unanimous vote: (i) approved and/or
recommended, as applicable, this Agreement and the transactions contemplated
hereby, including the Offer and the Merger; (ii) resolved to recommend that the
stockholders of Company accept the Offer and tender their Shares pursuant to the
Offer; (iii) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are advisable, fair to, and in the
best interests of the stockholders of Company and that the consideration to be
paid for each Share in the Offer and the Merger is fair to the holders of
Shares; and (iv) took all other action necessary to render Section 203 of the
DGCL and other state takeover statutes inapplicable to the transactions
contemplated by the Securities Purchase Agreement, the Stockholder Agreements,
the Offer, the Merger and this Agreement and the transactions contemplated
hereby and thereby. Unless the recommendation of the Special Committee is
withdrawn in accordance with Section 5.03, Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Special Committee
described in this Section 1.02.
(b) Company shall file with the SEC, as promptly as practicable
after the filing by Purchaser of the Schedule TO with respect to the Offer but
in any event on the date such Schedule TO is filed with the SEC, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that (i) will comply in
all material respects with the provisions of all applicable federal securities
Laws, except to the extent formally or tacitly waived by the Staff of the SEC,
and (ii) unless the recommendation of the Special Committee is withdrawn in
accordance with Section 5.03, will include the recommendations of the Special
Committee referred to in clause (ii) of Section 1.02(a) and the opinions of
Houlihan, Lokey, ▇▇▇▇▇▇ & ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and the Perseus Group LLC (the
"Company Financial Advisor") referred to in Section 4.24. Company agrees to mail
such Schedule 14D-9 to the stockholders of Company along with the Offer
Documents promptly after the commencement of the Offer. Each of Company, on the
one hand,
3
and Parent and Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that the Schedule 14D-9 shall be, or have become, false or misleading in any
material respect, and Company shall take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to
Company's stockholders, in each case to the extent required by applicable
federal securities Laws. Company shall provide Parent and its counsel with a
reasonable opportunity to review and comment on the Schedule 14D-9 before it is
filed with the SEC.
(c) In connection with the Offer, Company shall promptly on Parent's
request furnish Parent and Purchaser with mailing labels, security position
listings, any available non-objecting beneficial owner lists and any available
listing or computer list containing the names and addresses of the record
holders of the Common Stock as of the most recent practicable date and shall
furnish Purchaser with such additional available information (including, but not
limited to, updated lists of holders of Common Stock and their addresses,
mailing labels and lists of security positions and non-objecting beneficial
owner lists) and such other information and assistance as Parent or its agents
may reasonably request for the purpose of communicating the Offer to the record
and beneficial holders of Shares. Company represents and warrants to Parent and
Purchaser that it has been advised that each of its directors and executive
officers intends to tender pursuant to the Offer all the Common Stock owned of
record and beneficially by him or her except to the extent such tender would
violate applicable federal securities Laws.
ARTICLE II
THE MERGER
Section 2.01 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time in accordance with the DGCL, Purchaser
shall be merged with and into Company. Following the Merger, the separate
corporate existence of Purchaser shall cease and Company shall continue as the
surviving corporation. Company as the surviving corporation after the Merger
hereinafter sometimes is referred to as the "Surviving Corporation."
Section 2.02 Closing; Effective Time.
(a) The closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date to be specified by the parties, which shall be no later
than the third Business Day after satisfaction or waiver of the conditions set
forth in Article VI, at the offices of ▇▇▇▇▇ & Lardner LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to in writing
between Parent and Company. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date."
(b) Upon the terms and subject to the conditions of this Agreement,
on the Closing Date the parties hereto shall file a Certificate of Ownership and
Merger, in accordance with Section 253 of the DGCL, with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL. The Merger shall become
effective upon the filing of the Certificate of Merger or Certificate of
Ownership and Merger (the time of such filing (or such later time as is
specified in such Certificate of Merger or Certificate of Merger and Ownership,
as applicable, as agreed between Parent and Company) being the "Effective
Time").
4
Section 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
Company and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 2.04 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of Company or Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either Company or Purchaser, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
Section 2.05 Certificate of Incorporation; By-Laws; Directors and
Officers.
(a) At the Effective Time, the Certificate of Incorporation of
Purchaser, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended as provided by Law and such Certificate of Incorporation; provided,
however, that Article FIRST of the Certificate of Incorporation of the Surviving
Corporation shall be amended to provide that the Surviving Corporation shall be
named "▇▇▇▇▇▇▇.▇▇▇, Inc."
(b) At the Effective Time, the By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation, and the
officers of Purchaser immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal.
Section 2.06 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, Company or the holder of
any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 2.06(b)
and any Dissenting Shares) shall be canceled and be converted into the right to
receive the Offer Price in cash
5
payable to the holder thereof, without interest (the "Merger Consideration"),
upon surrender of the certificate representing such Share, less any withholding
taxes.
(b) Each Share held in the treasury of Company or owned by any
Company Subsidiary and each Share owned by Parent or any direct or indirect
wholly owned subsidiary of Parent immediately prior to the Effective Time shall
be canceled and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, $0.0l par value, of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted into
and thereafter represent one validly issued, fully paid and nonassessable share
of common stock, $.0l par value, of the Surviving Corporation.
Section 2.07 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
but only to the extent required by the DGCL, Shares that are issued and
outstanding immediately prior to the Effective Time and held by any stockholder
who has not voted in favor of or consented to the Merger and who duly demands
appraisal of his or her Shares pursuant to the DGCL and complies with all the
provisions of the DGCL concerning the right of holders of Shares to demand
appraisal of their Shares in connection with the Merger (collectively, the
"Dissenting Shares") shall not be converted into the right to receive the Merger
Consideration, but shall become the right to receive such cash consideration as
may be determined to be due to such stockholder as provided in the DGCL. If,
however, such stockholder withdraws his or her demand for appraisal or fails to
perfect or otherwise loses his or her right of appraisal, in any case pursuant
to the DGCL, his or her Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration pursuant to
Section 2.06(a), without any interest thereon, upon surrender of the certificate
or certificates representing such Shares.
(b) Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by Company and (ii) the opportunity to participate
in and direct all negotiations and proceedings with respect to any such demands.
Company shall not, without the prior written consent of Parent, make any payment
with respect to, settle, offer to settle or otherwise negotiate, any such
demands.
(c) Each Dissenting Share, if any, shall be canceled after payment
in respect thereof has been made to the holder thereof pursuant to the DGCL.
Section 2.08 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as paying agent in the Merger (the "Paying Agent") to
receive the funds necessary to make the payments contemplated by Section
2.06(a). Parent shall, from time to time, make available or cause to be made
available to the Paying Agent cash in amounts necessary for the payment of the
Merger Consideration under Section 2.08(b) to which holders of Shares shall be
entitled at the Effective Time pursuant to Section 2.06(a). Such funds shall be
invested by the Paying Agent as directed by Parent. Any net profits resulting
from, or interest or income produced by, such investments shall be payable as
directed by Parent.
6
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time represented Shares (the "Certificates") (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration as provided in Section
2.06(a). Upon surrender of a Certificate for cancellation to the Paying Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash, without interest,
into which the Shares theretofore represented by such Certificate shall have
been converted pursuant to Section 2.06(a), and the Certificate so surrendered
shall forthwith be canceled.
(c) If payment of cash in respect of canceled Shares is to be made
to a Person other than the Person in whose name a surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of such payment in a name other than
that of the registered holder of the Certificate surrendered or shall have
established to the satisfaction of Parent or the Paying Agent that such tax
either has been paid or is not payable. If a mutilated Certificate is
surrendered to the Paying Agent or if the holder of a Certificate submits an
affidavit to the Paying Agent stating that the Certificate has been lost,
destroyed or wrongfully taken, such holder shall, if required by Parent, furnish
an indemnity bond sufficient in the reasonable judgment of Parent to protect
Parent, the Surviving Corporation and the Paying Agent from any loss that any of
them may suffer.
(d) Promptly following the date which is six months after the
Effective Time, the Paying Agent shall deliver to Parent all cash, certificates
and other documents in its possession relating to the transactions contemplated
hereby, and the Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares to be canceled pursuant to Section 2.06(b))
shall look only to the Surviving Corporation (subject to abandoned property,
escheat or other similar Laws) and only as general creditors thereof, with
respect to any Merger Consideration that may be payable upon due surrender of
the Certificates held by such holder. Notwithstanding the foregoing, none of
Parent, Purchaser, the Surviving Corporation or the Paying Agent shall be liable
to any Person in respect of any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
(e) Parent (or any Affiliate thereof) or the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as Parent or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or under any provision of state, local or foreign
tax Law. To the extent that amounts are so withheld by Parent or the Paying
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been
7
paid to the holder of the Shares in respect of which such deduction and
withholding was made by the Parent or the Paying Agent.
(f) All cash paid upon the surrender of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates. At the Effective Time, the stock transfer books of Company
shall be closed and thereafter there shall not be any further registration of
transfers of Shares that were outstanding immediately prior to the Effective
Time on the records of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for transfer, they shall
be canceled and exchanged for the Merger Consideration as provided in Section
2.06(a) and this Section 2.08.
Section 2.09 Stock Plans.
(a) Subject to Sections 2.09(b) through (j) inclusive, prior to the
Effective Time, the Special Committee (or, if appropriate, Company Board of
Directors or any other committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide for the termination or
cancellation, as applicable, effective as of the Effective Time, of all stock
options for the issuance or grant of any interest in respect of the capital
stock of Company or any Company Subsidiary (collectively, other than the D&O
Options, TicketsLive Options, In-the-Money Options or Warrants, as those
capitalized terms are defined below, the "Options"), and stock option plans or
any other plan, program or arrangement providing for the issuance or grant of
any interest in respect of the capital stock of Company or any Company
Subsidiary (the "Stock Plans"), other than the outstanding warrants to purchase
an aggregate of 1,838,618 shares of Common Stock described in Company Disclosure
Schedule 4.01(f) ("Warrants"). Subject to Sections 2.09(b) through (j)
inclusive, immediately prior to the Effective Time, each such Option (whether
vested or unvested) shall no longer be exercisable and shall be cancelled or
terminated without any payment therefor.
(b) The Company has entered into agreements with certain of its
directors and senior officers which provide that at the Effective Time all
outstanding options to acquire an aggregate of 704,859 shares of the Common
Stock held by such directors and officers with an exercise price equal to or in
excess of the Offer Price will automatically be cancelled and terminated without
any payment therefor (the "D&O Options").
(c) Prior to the Effective Time, the Special Committee (or, if
appropriate, Company Board of Directors or any other committee thereof) shall
adopt appropriate resolutions and take all other actions necessary to provide
for the conversion of the TicketsLive Options, effective at the Effective Time,
from the right to receive shares of Common Stock upon exercise thereof into the
right to receive a cash payment from Company (subject to any applicable
withholding taxes), through the Paying Agent, equal to the product of (i) the
total number of shares of Common Stock subject to each such TicketsLive Option
multiplied by (ii) $0.10, without payment to Company of the exercise price under
such TicketsLive Option (the "TicketsLive Option Cash Payment(s)"). The term
"TicketsLive Option(s)" means the options to acquire an aggregate of 1,476
shares of Common Stock outstanding at the time of the commencement of the Offer
and granted under the TicketsLive Corporation Amended and Restated Stock Award
and Incentive Plan (adopted in 1999), which were assumed by Company
8
in connection with its acquisition of TicketsLive Corporation. The Company's
obligations with respect to the payment of the TicketsLive Option Cash Payments
shall be conditioned on consummation of the Merger at the Effective Time.
(d) Except with respect to any D&O Options or TicketsLive Options,
prior to the Effective Time, the Special Committee (or, if appropriate, the
Company Board of Directors or any other committee thereof) shall adopt
appropriate resolutions and take all other actions necessary to provide for the
automatic acceleration of vesting and the conversion, effective at the Effective
Time, of any options to acquire shares of Common Stock with an exercise price
that is less than the Offer Price, both vested and unvested, and which are
outstanding at the time of the commencement of the Offer ("In-the-Money
Option(s)"), into the right, in full settlement thereof, to receive a payment in
cash by Company (subject to any applicable withholding taxes), through the
Paying Agent, equal to the product of (a) the total number of shares of Common
Stock subject to such In-the-Money Options and (b) the excess, if any, of the
Merger Consideration over the exercise price per share of Common Stock subject
to such In-the-Money Options (such amounts payable hereunder being referred to
as the "In-the-Money Option Cash Payment(s)"), without payment to Company of the
exercise price under such In-the-Money Options. The Company's obligations with
respect to the payment of the In-the-Money Option Cash Payments shall be
conditioned on consummation of the Merger at the Effective Time.
(e) The Surviving Corporation shall, following the Effective Time,
make available or cause to be made available to the Paying Agent cash in amounts
necessary for the payment of (i) the aggregate TicketsLive Option Cash Payments
under Section 2.09(c) to which holders of such rights shall be entitled at the
Effective Time, and (ii) the aggregate In-the-Money Option Cash Payments under
Section 2.09(d) to which holders of such rights shall be entitled at the
Effective Time. Such funds shall be invested by the Paying Agent as directed by
the Surviving Corporation. Any net profits resulting from, or interest or income
produced by, such investments shall be payable as directed by the Surviving
Corporation.
(f) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a TicketsLive Option or an In-the-Money Option a copy of an Option
Cancellation Agreement, substantially in the form attached hereto as Exhibit A
("Option Cancellation Agreement"), together with a letter (which shall be in a
form and have such other provisions as the Surviving Corporation may reasonably
specify) including instructions for effecting the surrender of the Option
Cancellation Agreements in exchange for the TicketsLive Option Cash Payments
pursuant to Section 2.09(c) or In-the-Money Option Cash Payments pursuant to
Section 2.09(d), as applicable. No TicketsLive Option Cash Payment will be made
by the Paying Agent on behalf of Company with respect to a TicketsLive Option,
and no In-the-Money Option Cash Payment will be made by the Paying Agent on
behalf of Company with respect to an In-the-Money Option, to the holder thereof
until receipt by Company or the Paying Agent, as applicable, of an Option
Cancellation Agreement with respect to the related TicketsLive Option or
In-the-Money Option, properly completed and signed by the record holder of such
TicketsLive Option or In-the-Money Option. The Company (prior to the Effective
Time), and the Surviving Corporation (after the Effective Time), shall be
required to deliver to the Paying Agent all such executed Option Cancellation
Agreements promptly after receipt. Upon proper delivery of an Option
Cancellation Agreement to the Paying Agent or to such other agent or agents as
may be appointed by the Surviving
9
Corporation, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Option Cancellation Agreement
shall be entitled to receive in exchange therefor the amount of the TicketsLive
Option Cash Payment pursuant to Section 2.09(c) or In-the-Money Option Cash
Payment pursuant to Section 2.09(d), as applicable, without interest.
(g) If any payment pursuant to this Section 2.09 is to be made to a
Person other than the Person in whose name a TicketsLive Option or In-the-Money
Option is registered, it shall be a condition to such payment that the Option
Cancellation Agreement so delivered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the TicketsLive
Option or In-the-Money Option or shall have established to the satisfaction of
Parent or the Paying Agent that such tax either has been paid or is not payable.
(h) Promptly following the date which is six months after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, certificates and other documents in its possession relating to the
transactions contemplated by this Section 2.09, and the Paying Agent's duties
shall terminate. Thereafter, each holder of a TicketsLive Option or In-the-Money
Option canceled pursuant to this Section 2.09 shall look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar Laws) and
only as general creditors thereof, with respect to any TicketsLive Option Cash
Payment or In-the-Money Option Cash Payment that may be payable upon due
surrender of an Option Cancellation Agreement, duly completed and executed.
Notwithstanding the foregoing, none of Parent, Purchaser, Company, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(i) The Surviving Corporation (or any Affiliate thereof) or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Section 2.09 such amounts as the Surviving
Corporation or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under the Code, or under any provision of state,
local or foreign tax Law. To the extent that amounts are so withheld by
Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the recipient
of such payments in respect of which such deduction and withholding was made by
the Surviving Corporation or the Paying Agent.
(j) All TicketsLive Option Cash Payments and In-the-Money Option
Cash Payments shall be deemed to have been paid in full satisfaction of all
rights pertaining to the respective TicketsLive Options and In-the-Money
Options.
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to Company as follows:
Section 3.01 Corporate Organization. Parent is a limited partnership duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. Parent and Purchaser have
all requisite partnership or corporate power and authority to execute and
deliver this Agreement and the other documents and instruments to be executed
and delivered by Parent and Purchaser pursuant hereto and to carry out the
transactions contemplated hereby and thereby.
Section 3.02 Authority Relative to this Agreement. The execution and
delivery of this Agreement and the other documents and instruments to be
executed and delivered by Parent and Purchaser pursuant hereto and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the General Partner of Parent and the Board of Directors of
Purchaser. No other or further corporate or partnership act or proceeding on the
part of Parent or Purchaser or its General Partner or stockholders is necessary
to authorize this Agreement or the other documents and instruments to be
executed and delivered by Parent and Purchaser pursuant hereto or the
consummation of the transactions contemplated hereby and thereby. This Agreement
constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Parent and Purchaser pursuant hereto
will constitute, valid and binding agreements of Parent and Purchaser,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other Laws affecting
creditors' rights generally, and by general equitable principles.
Section 3.03 No Conflict; Required Filings and Consents. Neither the
execution and delivery of this Agreement, nor the other documents and
instruments to be executed and delivered by Purchaser pursuant hereto or
thereto, nor the consummation by Parent and Purchaser of the transactions
contemplated hereby and thereby (a) assuming all notices, reports or other
filings described in this Section 3.03 have been given or made, will violate any
Laws or Orders of any Governmental Entity applicable to Parent or Purchaser, (b)
except for (i) applicable requirements, if any, of the Exchange Act, (ii) the
pre-merger notification requirements of the HSR Act, (iii) the filing and
recordation of appropriate merger documents as required by the DGCL, (iv)
filings as may be required by any applicable state takeover or "blue sky" Laws,
and (v) filings as would not prevent or materially delay the consummation of the
Offer and the Merger, will require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Entity, or (c)
subject to obtaining the consents described in Section 3.03(b), will violate or
conflict with, or constitute a default (or an event that, with notice or lapse
of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, any term or provision
of the charter, bylaws or similar organizational documents of Parent or
Purchaser or of any Contract or restriction of any kind or character to which
Parent or Purchaser is a party or by which Parent or Purchaser or any of its
assets or properties may be bound or affected.
11
Section 3.04 Brokers. Except for such fees that will be paid by Parent
and/or Purchaser, none of Parent, Purchaser or any of their respective partners,
directors, officers, employees or agents have retained, employed or used any
investment banking firm, broker or finder in connection with the transactions
provided for herein or in connection with the negotiation thereof, nor are any
of them responsible for the payment of any investment banking, broker's or
finder's fees.
Section 3.05 Offer Documents. The Offer Documents will not, at the
respective times the Offer Documents are filed with the SEC or first published,
sent or given to Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Parent and Purchaser do not make any representation or warranty with
respect to statements made or incorporated by reference in any of the foregoing
documents based upon information that has been supplied by Company or its
accountants, counsel or other authorized representatives for use in any of the
foregoing documents. The Offer Documents will comply as to form in all material
respects with the provisions of the Exchange Act, except to the extent formally
or tacitly waived by the Staff of the SEC.
Section 3.06 Financing. Parent has access to sufficient funds to permit
Purchaser to acquire all the outstanding Shares in the Offer and the Merger and
to perform its obligations under the Securities Purchase Agreement.
Section 3.07 Securities Purchase Agreement; Stockholder Agreements. Parent
and Purchaser have entered into each of the Securities Purchase Agreement and
the Stockholder Agreements simultaneously with their execution of this Agreement
and have the present intention to perform their obligations under each of the
Securities Purchase Agreement and the Stockholder Agreements in accordance with
their respective terms.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Purchaser that as of the
date of this Agreement the statements contained in this Article IV, when read
together with and qualified by the disclosure schedules delivered by Company to
Parent in connection with and prior to the execution of this Agreement (the
"Company Disclosure Schedules"), are true and correct except for events,
transactions or occurrences contemplated or required by this Agreement. The
Company Disclosure Schedules are divided into sections and subsections
corresponding to the sections and subsections of Article IV of this Agreement.
The disclosure of any information in the Company Disclosure Schedules shall not
be deemed to constitute an acknowledgment that such information is required to
be disclosed in connection with the representations and warranties made by
Company in this Agreement or that it is material, nor shall such information be
deemed to establish a standard of materiality. Unless otherwise specifically
defined therein or the context otherwise requires, capitalized terms set forth
in the Company Disclosure Schedules shall have the meanings ascribed to such
terms in this Agreement.
Section 4.01 Corporate.
12
(a) Organization. Company is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
(b) Corporate Power. Company has all requisite corporate power and
authority to own, operate and lease its assets, to carry on its Business as and
where such is currently being conducted, to execute and deliver this Agreement
and the other documents and instruments to be executed and delivered by Company
pursuant hereto and thereto and to carry out the transactions contemplated
hereby and thereby.
(c) Qualification. Except as set forth on Company Disclosure
Schedule 4.01(c), Company is duly qualified to do business as a foreign
corporation, and is in good standing, in each jurisdiction in which the
character of the assets owned or leased by it, or the nature of its business,
makes such qualification necessary. Company Disclosure Schedule 4.01(c) sets
forth a true, correct and complete list of the jurisdictions in which Company is
duly qualified to do business as a foreign corporation.
(d) Company Subsidiaries. Company Disclosure Schedule 4.01(d)
contains a true, correct and complete list of the name and jurisdiction of
incorporation or organization of each Company Subsidiary and the percentage of
such subsidiary's outstanding equity ownership interests owned directly or
indirectly by Company. To Company's Knowledge, all outstanding capital stock and
other equity or ownership interests of each Company Subsidiary owned, directly
or indirectly, by Company are free and clear of any Liens and are validly
issued, fully paid and nonassessable. Except as set forth on Company Disclosure
Schedule 4.01(d), Company has the right to elect or appoint at least a majority
of directors to the boards of directors (or similar governing body), or to
otherwise control the operation, of each Company Subsidiary. Except as set forth
on Company Disclosure Schedule 4.01(d), to Company's Knowledge, Company does not
directly or indirectly own any capital stock or other equity or ownership
interest of any other corporation, limited liability company, partnership or
other entity. Except as set forth on Company Disclosure Schedule 4.01(d), each
Company Subsidiary (A) is a corporation, limited liability company, partnership
or other entity duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation or organization, (B) has full
corporate or other power and authority to carry on its business as it is now
being conducted and to own and lease the properties and assets it now owns and
leases, and (C) is in good standing and is duly qualified to do business as a
foreign corporation or other entity in each jurisdiction wherein the character
of the properties owned by it, or the nature of its business, makes such
qualification necessary.
(e) Corporate Documents. Company has delivered to Purchaser true,
correct and complete copies of its and each Company Subsidiary's charter, bylaws
and similar organizational documents, including any amendments thereto. The
corporate minute books and stock records, or equivalent books and records, of
Company and each Company Subsidiary made available for Purchaser's inspection
are true and correct copies of such documents and accurately reflect all
material corporate action taken by Company and each Company Subsidiary at the
meetings or proceedings reflected therein. Set forth in Company Disclosure
Schedule 4.01(e) is a true, correct and complete list of the directors and
officers, or equivalent governing and managing Persons, of Company and each
Company Subsidiary.
13
(f) Capitalization. The authorized capital stock of Company consists
entirely of (i) Two Hundred Twenty Five Million (225,000,000) shares of Common
Stock; and (ii) Forty Five Million (45,000,000) shares of preferred stock, par
value $0.000225 per share, of which (A) 28,333,333 shares have been designated
as Series F Preferred Stock, and 8,474,576 shares have been designated as Series
G Preferred Stock. No shares of such capital stock are issued or outstanding
except for 9,683,523 shares of Common Stock, 21,666,669 shares of Series F
Preferred Stock and 8,474,576 shares of Series G Preferred Stock. According to
the stock transfer records of Company, and to Company's Knowledge, the holders
of the Series F Preferred Stock and Series G Preferred Stock are as set forth on
Company Disclosure Schedule 4.01(f). All shares of Company's issued and
outstanding capital stock are validly issued, fully paid and nonassessable.
Other than as set forth on Company Disclosure Schedule 4.01(f), except for the
Series F Preferred Stock and the Series G Preferred Stock, there are no (i)
securities convertible into or exchangeable for any capital stock or other
securities of Company, (ii) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of Company or securities that are
convertible into or exchangeable for capital stock or other securities of
Company or (iii) any other Contracts, oral or written, to which Company is a
party relating to the issuance, sale or transfer of any capital stock or other
securities of Company, any such convertible or exchangeable securities, or any
such options, warrants or other rights.
Section 4.02 Authority. Company has the necessary corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Company and the consummation by Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company and no other corporate proceeding is
necessary for the execution and delivery of this Agreement by Company, the
performance by Company of its obligations hereunder, and the consummation by
Company of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Company and, assuming due authorization, execution and
delivery by the Parent and Purchaser, constitute legal, valid and binding
obligations of Company, enforceable against it in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
Laws affecting creditors' rights generally, and by general equitable principles.
Section 4.03 No Violation.
(a) Upon approval of this Agreement by certain preferred
stockholders of Company by virtue of the Securities Purchase Agreement, the
execution and delivery of this Agreement by Company do not, and the performance
of this Agreement by Company will not, (i) assuming all notices, reports or
other filings described in clauses (i) through (v) of Section 4.03(b) have been
given or made, conflict with or violate any Law or Order of any Governmental
Entity applicable to Company or by which any of its property is bound or
affected, (ii) violate or conflict with either the Certificate of Incorporation
or By-Laws of Company or (iii) result in any violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment or cancellation of, or result in the creation of a lien or encumbrance
on any of the property or assets of Company pursuant to, any note, bond,
mortgage, indenture, Contract, instrument, permit, license, franchise or other
obligation to which Company is a party or by which Company or its property is
bound or affected, except for, in the case of clauses (i) and (iii), conflicts,
violations,
14
breaches or defaults which would not prevent or materially delay the
consummation of the Offer and the Merger.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification requirements of the HSR Act, (iii) the
filing and recordation of appropriate merger documents as required by the DGCL,
(iv) filings as may be required by any applicable state takeover or "blue sky"
Laws, and (v) filings as would not prevent or materially delay the consummation
of the Offer and the Merger, Company is not required to submit any notice,
report or other filing with any Governmental Entity in connection with the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby. No waiver, consent, approval or authorization
of any Governmental Entity is required to be obtained or made by Company in
connection with its execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except (A) where the
failure to obtain such waivers, consents, approvals or authorizations would not
prevent or materially delay the performance by Company of their respective
obligations under this Agreement or (B) in connection with any submission
required above.
Section 4.04 Financial Matters. Included as Company Disclosure Schedule
4.04(a) is a copy of the consolidated financial statements of Company (including
balance sheet and statements of operations, stockholders' equity and cash flows)
as of and for the fiscal year ended December 31, 2003 (including the notes
contained therein or annexed thereto), which financial statements have been
reported on, and are accompanied by, the signed, unqualified opinion of
PricewaterhouseCoopers LLP (the "2003 Audit"). Included as Company Disclosure
Schedule 4.04(b) are unaudited and internally prepared unconsolidated balance
sheets of the domestic and international operations of Company as of December
31, 2004 (the "Schedule of Assets/Liabilities"), which have not been reviewed by
Company's independent auditors, and unaudited and internally prepared
consolidated statements of operations and cash flows of Company, which have not
been reviewed by Company's independent auditors, for the nine months ended
September 30, 2004 (collectively with the Schedule of Assets/Liabilities, the
"Schedule of Performance Metrics"). The 2003 Audit (a) is prepared from such
financial statements as have been prepared and used by Company in the ordinary
course of managing its business and measuring and reporting its operating
results; (b) complies with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto (including, without
limitation, Regulation S-X); (c) is prepared in accordance with the accounting
principles generally accepted in the United States ("GAAP") applied on a
consistent basis; (d) has been prepared in accordance with the books and records
of Company; and (e) fairly presents the consolidated assets, Liabilities,
financial position, results of operations and cash flows of Company as of the
dates and for the periods indicated. The Schedule of Performance Metrics (x) is
prepared from such financial statements as have been prepared and used by
Company in the ordinary course of managing its business and measuring and
reporting its operating results; (y) has been prepared in accordance with the
books and records of Company; and (z) fairly presents the unconsolidated assets,
Liabilities and financial position, and consolidated results of operations and
cash flows of Company as of the dates and for the periods indicated. The
Schedule of Performance Metrics contains unaudited preliminary data based on
internal flash reports generated for the purpose of measuring and reporting
operating results, on an accrual basis, to management for its use in the
ordinary course of business. Actual operating results, when reported in
conformance with GAAP, will be different than those reported on an
15
accrual basis. For purposes of the preceding two sentences, the term "accrual
basis" shall mean financial statements which materially reflect the financial
position, operations and cash flows of Company, but which depart from GAAP. Such
departures from GAAP are described in the Schedule of Performance Metrics and
the financial information contained in the Schedule of Performance Metrics can
be expected to be adjusted pursuant to GAAP as a result of an audit by Company's
independent auditors.
Section 4.05 Tax Matters. Except as set forth in Company Disclosure
Schedule 4.05:
(a) Provision For Taxes. All Taxes of Company and Company
Subsidiaries attributable to periods preceding or ending with the date of the
Schedule of Assets/Liabilities have been paid or have been included in a
liability accrual for the specific Taxes on the Schedule of Assets/Liabilities.
The provision made for Taxes on the Schedule of Assets/Liabilities is sufficient
for the payment of all Taxes of Company and Company Subsidiaries at the date of
the Schedule of Assets/Liabilities and for all years and periods prior thereto.
Since the date of the Schedule of Assets/Liabilities, neither Company nor any
Company Subsidiary has incurred any Taxes other than Taxes incurred in the
ordinary course of the Business consistent in type and amount with its
respective past practices.
(b) Tax Returns Filed. Except as set forth on Company Disclosure
Schedule 4.05(b), all Tax Returns required to be filed by or on behalf of
Company and each Company Subsidiary have been filed and, when filed, were true,
correct and complete. All Taxes owed and/or due, and the Taxes shown as due on
such Tax Returns, were paid or adequately accrued. True, correct and complete
copies of all Tax Returns filed by Company and each Company Subsidiary for each
such entity's three most recent fiscal years have been delivered to Purchaser.
Neither Company nor any Company Subsidiary is currently the beneficiary of any
extension of time within which to file any Tax Return.
(c) Withholding. Company and each Company Subsidiary has duly
withheld and paid all Taxes that it is required to withhold and pay in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(d) Tax Audits. To Company's Knowledge, no claim has ever been made
by any authority in a jurisdiction in which Company or any Company Subsidiary
does not file Tax Returns that Company or such Company Subsidiary, as the case
may be, is or may be subject to taxation by that jurisdiction or authority. The
Tax Returns of Company and each Company Subsidiary that are under audit or have
been audited by the Internal Revenue Service ("IRS") or other applicable Tax
authorities, together with a true, correct and complete list of all powers of
attorney granted by Company or any Company Subsidiary with respect to any Tax
matter, are set forth in Company Disclosure Schedule 4.05(d). Neither Company
nor any Company Subsidiary has received from the IRS or any other applicable Tax
authorities any notice of underpayment or assessment of Taxes or other
deficiency that has not been paid or any objection to any Tax Return filed by
Company or any Company Subsidiary. There are no outstanding Contracts or waivers
extending the statutory period of limitations applicable to any Tax Return.
(e) Consolidated Group. Company Disclosure Schedule 4.05(e) contains
a true, correct and complete list for Company and each Company Subsidiary of
every year that
16
Company or such Company Subsidiary was a member of an affiliated group of
corporations that filed a consolidated Tax Return on which the statute of
limitations does not bar a federal Tax assessment and each corporation that has
been a part of such group. No affiliated group of corporations of which Company
or any Company Subsidiary has been a member has discontinued filing consolidated
returns during the past five (5) years.
(f) No Tax Liens. Neither Company nor any Company Subsidiary is
subject to any Liens for Taxes other than Permitted Real Property Liens (as
defined in Section 4.11(a)).
(g) Tax Attributes. Company Disclosure Schedule 4.05(g) sets forth
the following information with respect to Company and Company Subsidiaries as of
the most recent practical date: (i) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax or excess
charitable contribution of Company and Company Subsidiaries; and (ii) a
reconciliation of deferred Tax assets and liabilities.
(h) Other. To Company's Knowledge, neither Company nor any Company
Subsidiary has (i) filed any consent or agreement under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) applied for any Tax
ruling, (iii) entered into a closing agreement as described in Section 7121 of
the Code or otherwise (or any corresponding or similar provision of state,
municipal, county, local, foreign or other Tax Law) or any other Contract with
any Tax authority, (iv) filed an election under Section 338(g) or Section
338(h)(10) of the Code (nor has a deemed election under Section 338(e) of the
Code occurred), (v) made any payments, or been a party to a Contract (including
this Agreement) that under any circumstances could obligate it to make payments
(either before or after the Closing Date) that will not be deductible because of
Section 162(m) or Section 280G of the Code, or (vi) been a party to any Tax
allocation, Tax sharing or Tax indemnification Contract. Neither Company nor any
Company Subsidiary is a "United States real property holding company" within the
meaning of Section 897 of the Code. Neither Company nor any Company Subsidiary
has been the "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355 of the Code) with respect to a transaction described
in Section 355 of the Code.
(i) Effect of Transaction. Neither Company nor any Company
Subsidiary will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) installment sale
or open transaction disposition made on or prior to the Closing Date, (ii)
prepaid amount received on or prior to the Closing Date, (iii) use of the cash,
modified cash or modified accrual method of accounting or (iv) deferred
intercompany gain or any excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision of
state, municipal, county, local, foreign or other Tax Law).
Section 4.06 Accounts Receivable. All accounts receivable and notes
receivable reflected on the Schedule of Assets/Liabilities, and all accounts
receivable and notes receivable that have arisen since the date of the Schedule
of Assets/Liabilities, (a) arose out of arm's length transactions actually made
in the ordinary course of the Business, (b) are the valid and legally binding
obligations of the parties obligated to pay such amounts, and (c) to Company's
Knowledge are subject to no counterclaim or setoff and are not in dispute.
Company Disclosure
17
Schedule 4.06 contains an aged schedule of accounts receivable reflected on the
Schedule of Assets/Liabilities.
Section 4.07 Absence of Certain Changes. Except as set forth on Company
Disclosure Schedule 4.07, since the date of the Schedule of Assets/Liabilities
there has not been:
(a) No Adverse Change. Any Material Adverse Change.
(b) No Damage. Any material loss, damage or destruction, whether
covered by insurance or not, relating to or affecting the Business or assets of
Company or any Company Subsidiary.
(c) No Increase in Compensation. Any increase in the compensation,
salaries, commissions or wages payable or to become payable to any employees or
agents of Company or any Company Subsidiary, including any bonus or other
employee benefit granted, made or accrued in respect of such employees or agents
(including any such increase or change pursuant to any Employee Plans/Agreements
or other commitment), except to the extent increased, granted, made or accrued
in the ordinary course of the Business consistent with past practice.
(d) No Labor Disputes. Any labor dispute or disturbance relating to
or affecting Company or any Company Subsidiary, other than routine individual
grievances that are not material to the conduct, financial condition, assets,
Liabilities, the Business, prospects or operations of Company and Company
Subsidiaries, taken as a whole.
(e) No Distributions. Any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of Company or
any Company Subsidiary; any redemption, purchase or other acquisition by Company
or any Company Subsidiary of any capital stock of such entity, or any security
relating to such capital stock; or any other payment of any kind to a
stockholder of Company or to any stockholder of a Company Subsidiary in his or
her capacity as a stockholder.
(f) No Disposition of Property. Any sale, lease, grant or other
transfer or disposition of any material assets of Company or any Company
Subsidiary, except for the sale of Inventory items in the ordinary course of the
Business.
(g) No Indebtedness. Any material indebtedness for borrowed money
incurred, assumed or guaranteed by Company or any Company Subsidiary.
(h) No Liens. Any material Lien made on any assets or properties of
Company or any Company Subsidiary.
(i) Loans and Advances. Any loan or advance made by Company or any
Company Subsidiary to any Person, other than advances made to employees of
Company or any Company Subsidiary in the ordinary course of the Business for
travel and entertainment in accordance with past practice.
(j) Credit. Any grant of credit by Company or any Company Subsidiary
to any customer (including any distributor) of Company or such Company
Subsidiary on terms or
18
in amounts more favorable than those that have been previously extended to such
customer, any other change in the terms of any credit heretofore extended by
Company or any Company Subsidiary, or any other change of their respective
policies or practices with respect to the granting of credit, except in the
ordinary course of the Business.
(k) Discharge of Obligations. Any discharge, satisfaction or
agreement to satisfy or discharge any Liability of Company or any Company
Subsidiary, other than the discharge or satisfaction in the ordinary course of
the Business of current Liabilities reflected on the face of the Schedule of
Assets/Liabilities and current Liabilities incurred since the date of the
Schedule of Assets/Liabilities in the ordinary course of the Business.
(l) Accounting Principles. Any material change in Company's or any
Company Subsidiary's financial or Tax accounting principles or methods, except
as required by GAAP.
Section 4.08 Absence of Undisclosed Liabilities. Except as and to the
extent specifically (i) set forth on the face of the Schedule of
Assets/Liabilities, or (ii) disclosed in Company Disclosure Schedule 4.08,
neither Company nor any Company Subsidiary has any Liabilities, other than
commercial Liabilities incurred since the date of the Schedule of
Assets/Liabilities in the ordinary course of the Business, none of which has had
or is reasonably likely to have a Material Adverse Effect.
Section 4.09 No Litigation. Except for collection actions arising in the
ordinary course of the Business, or as otherwise set forth in Company Disclosure
Schedule 4.09, there is no Litigation pending or, to Company's Knowledge,
threatened against Company, any Company Subsidiary, the directors or officers of
Company or any Company Subsidiary (in such capacity) or its Business or assets.
To Company's Knowledge, no event has occurred or action been taken that is
reasonably likely to result in such Litigation. Company Disclosure Schedule 4.09
also identifies all Litigation to which Company, any Company Subsidiary or the
directors or officers of Company or any Company Subsidiary (in such capacity)
have been parties within the last three years. Neither Company nor any Company
Subsidiary nor any of their respective businesses or assets is subject to any
Order.
Section 4.10 Laws and Orders; Licenses and Permits; Environmental Matters.
(a) Laws and Orders. Company and each Company Subsidiary (including
its Business and assets) is and has been in compliance with all Laws and Orders
except to the extent where noncompliance therewith would not have a Material
Adverse Effect. Neither Company nor any Company Subsidiary has received notice
of any violation or alleged violation of any Laws or Orders or is subject to any
Liability for any past or continuing violation of any Laws or Orders where the
failure to correct such violation or alleged violation would have a Material
Adverse Effect. Except with respect to periodic reports and other filings
required by the Exchange Act, all reports, filings and returns required to be
filed by or on behalf of Company or any Company Subsidiary with any Governmental
Entity have been filed (except to the extent failure to make such filings would
not have a Material Adverse Effect) and, when filed, were true, correct and
complete, except to the extent that the failure to be true, correct and complete
would not have a Material Adverse Effect.
19
(b) Licenses and Permits. Company and each Company Subsidiary has
all government licenses, permits, approvals, certifications, consents and
listings of all Governmental Entities and all certification organizations
required, and all exemptions from requirements to obtain or apply for any of the
foregoing, for the conduct of its Business (as currently conducted) and the
operation of its facilities, except to the extent where failure to obtain same
or noncompliance therewith would not have a Material Adverse Effect. Company and
each Company Subsidiary (including its respective Business and assets) is and
has been in compliance with all such government licenses, permits, approvals,
certifications, consents and listings, except to the extent where noncompliance
therewith would not have a Material Adverse Effect.
(c) Environmental Matters. Without limiting the generality of the
foregoing provisions of this Section 4.10, Company and each Company Subsidiary
(including its respective Business and assets) is and has been in full
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws. There is no Litigation nor any demand, claim, hearing,
notice of violation or demand letter pending or, to Company's Knowledge,
threatened against Company or any Company Subsidiary relating in any way to the
Environmental Laws. To Company's Knowledge, there is no Litigation pending or to
Company's Knowledge threatened against any Person whose liability therefor may
have been retained or assumed by or could be imputed or attributed to Company or
any Company Subsidiary relating in any way to the Environmental Laws. There are
no past or present (or, to Company's Knowledge, future) events, conditions,
circumstances, activities, practices, incidents, actions, omissions or plans
that may (i) interfere with or prevent full compliance or continued full
compliance by Company or any Company Subsidiary with all Environmental Laws or
(ii) give rise to any Liability, including Liability under the Comprehensive
Environmental Response Compensation Liability Act, as amended, or similar state,
municipal, county, local, foreign or other Laws, or otherwise form the basis of
any Litigation, hearing, notice of violation, study or investigation, based on
or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Waste.
20
Section 4.11 Title to and Condition of Properties.
(a) Marketable Title. Company and each Company Subsidiary has, and
at the Closing will have, good and marketable fee title, valid license rights or
a valid leasehold interest in all of the properties and assets (tangible and
intangible) used by such entity, free and clear of all Liens, except for (i)
Liens for Taxes not yet due or that are being contested in good faith by
appropriate proceedings (and that have been sufficiently reflected or reserved
against on the face of the Schedule of Assets/Liabilities), (ii) Liens arising
from municipal and zoning ordinances and easements for public utilities, none of
which interfere with the conduct of Company's or any Company Subsidiary's
Business as currently conducted or adversely affect the marketability of
Company's or any Company Subsidiary's assets, (iii) landlord's, mechanic's,
materialmen's and similar Liens arising in the ordinary course of the Business
and (iv) other Liens arising in the ordinary course of the Business that do not,
individually or in the aggregate, materially impair the continued use and
operation of the specific properties and assets to which they relate
(collectively, the "Permitted Real Property Liens"). None of Company's or any
Company Subsidiary's owned properties or assets are subject to any restrictions
with respect to the transferability thereof. Company's and each Company
Subsidiary's title to its respective properties and assets will not be affected
by the transactions contemplated hereby.
(b) Condition. All material tangible assets (real and personal)
owned or utilized by Company or any Company Subsidiary are in good operating
condition and repair (subject to normal wear and tear). To Company's Knowledge,
all buildings, plants and other structures utilized by Company or any Company
Subsidiary are in good condition and repair (subject to normal wear and tear).
(c) Real Property. Company Disclosure Schedule 4.11(c) sets forth
all real property used or occupied by Company and each Company Subsidiary (the
"Real Property"). Company and Company Subsidiaries do not own any Real Property.
To Company's Knowledge, no fact or condition exists that would prohibit or
adversely affect the current ordinary rights of access to and from the Real
Property from and to the existing nearby highways and roads, and there is no
pending or, to Company's Knowledge, threatened restriction or denial,
governmental or otherwise, upon such ingress and egress. No public improvements
have been commenced and, to Company's Knowledge, none are planned that in either
case may result in special assessments against or otherwise materially adversely
affect any Real Property.
(d) No Condemnation, Expropriation or Similar Action. Neither the
whole nor any portion of the properties or assets of Company or any Company
Subsidiary is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Entity with or without
payment of compensation therefore, and to Company's Knowledge, no such
condemnation, expropriation or taking has been planned, scheduled or proposed.
Section 4.12 Insurance. Company Disclosure Schedule 4.12 sets forth a list
and description of all policies of fire, liability, product liability, workers
compensation, health, product, recall and other forms of insurance currently in
effect with respect to, or that provides coverage for, the Business or assets of
Company and each Company Subsidiary (collectively, the "Company Insurance
Policies"). Neither Company nor any Company Subsidiary has received
21
any notice of cancellation or termination with respect to any Company Insurance
Policy, and to Company's Knowledge, no event or condition exists or has occurred
that would reasonably be expected to be likely to result in cancellation of any
Company Insurance Policy prior to its scheduled expiration date. To Company's
Knowledge, Company and each Company Subsidiary has duly and timely made all
claims that it has been entitled to make under each Company Insurance Policy.
Neither Company nor any Company Subsidiary has received any notice from or on
behalf of any insurance carrier issuing any Company Insurance Policy that
insurance rates therefor will hereafter be substantially increased (except to
the extent insurance rates may be increased for all similarly situated risks) or
that there will hereafter be a cancellation or an increase in a deductible (or
an increase in premiums to maintain an existing deductible) or nonrenewal of any
Company Insurance Policy. Company Insurance Policies comply in all material
respects with the requirements of all material Contracts to which Company or any
Company Subsidiary is a party. No Company Insurance Policy (nor any previous
policy) provides for or is subject to any currently enforceable retroactive rate
or premium adjustment, loss sharing arrangement or other actual or contingent
Liability arising wholly or partially out of events arising prior to the
Closing. Except as set forth in Company Disclosure Schedule 4.12, there is no
claim by Company or any Company Subsidiary pending under any Company Insurance
Policy as to which coverage has been questioned, denied or disputed by the
insurers under such policies, and to Company's Knowledge, there is no basis for
denial of any pending claim under any Company Insurance Policy. To Company's
Knowledge, neither Company nor any Company Subsidiary has been refused any
insurance with respect to any aspect of its assets or Business during the last
three years.
Section 4.13 Contracts and Commitments.
(a) Real Property Leases. Company has previously disclosed to Parent
any Contracts, to which Company or any Company Subsidiary is a party, for the
lease or occupancy of Real Property listed on Company Disclosure Schedule
4.11(c).
(b) Personal Property Leases. Except as set forth in Company
Disclosure Schedule 4.13(b), neither Company nor any Company Subsidiary (whether
as lessor or lessee) has any Contracts for the lease or use of personal property
involving any remaining consideration, termination charge or other expenditure
individually in excess of $100,000 (or its foreign currency equivalent as of the
date hereof).
(c) Purchase Commitments. Neither Company nor any Company Subsidiary
has any purchase Contracts for material Inventory items that, together with
amounts on hand, constitute more than twelve months normal usage.
(d) Contracts for Services. Except for its agreements with
distributors and employment contracts and bonus agreements with its employees,
neither Company nor any Company Subsidiary has any Contract with any officer,
employee, agent, consultant, sales representative, dealer, franchisee or other
third party performing similar functions that is not cancelable by Company or
any Company Subsidiary on notice of not longer than thirty calendar days without
Liability, penalty or premium of any nature or kind whatsoever.
22
(e) Powers of Attorney. Except as expressly contemplated by this
Agreement or as set forth on Company Disclosure Schedule 4.13(e), and except
with respect to powers of attorney entered into by Company in connection with
the granting or perfection of security interests in the ordinary course of the
Business, neither Company nor any Company Subsidiary has given a power of
attorney or proxy that is currently in effect to any Person for any purpose
whatsoever.
(f) Collective Bargaining Agreements. Neither Company nor any
Company Subsidiary has any collective bargaining Contract with any unions,
guilds, shop committees or other collective bargaining groups.
(g) Loan Agreements. Neither Company nor any Company Subsidiary is a
borrower under any loan Contract, promissory note, letter of credit or other
evidence of indebtedness, or is a guarantor or surety thereunder, except in the
ordinary course of the Business (including, but not limited to, the endorsement
of checks, drafts or other instruments).
(h) Guarantees. Neither Company nor any Company Subsidiary has
guaranteed the payment or performance of any Person, agreed to indemnify any
Person (except under Contracts entered into by Company or a Company Subsidiary
in the ordinary course of the Business), or to agreed act as a surety, or
otherwise agreed to be contingently or secondarily liable for the obligations of
any Person, except in the ordinary course of the Business (including, but not
limited to, the endorsement of checks, drafts or other instruments).
(i) Agreements Relating to Company Trade Rights. Except as set forth
on Company Disclosure Schedule 4.13(i) and for such Contracts entered into in
the ordinary course of the Business, neither Company nor any Company Subsidiary
has any consulting, development, joint development or similar Contract relating
to any of Company Trade Rights.
(j) Restrictive Agreements. Except as set forth on Company
Disclosure Schedule 4.13(j), neither Company nor any Company Subsidiary has any
Contract (i) requiring Company or any Company Subsidiary to assign any interest
in any Company Trade Rights, (ii) except for distributorship agreements,
prohibiting or restricting Company or any Company Subsidiary or any of their
respective employees from competing in any business or geographical area, or
soliciting customers or employees, or otherwise restricting it from carrying on
any business anywhere in the world, or (iii) except with respect to any MLB
Entity, relating to the location of employees or a minimum number of employees
to be employed by Company or any Company Subsidiary.
(k) No Default. Neither Company nor any Company Subsidiary is in
default in any material respect under any material Contract to which it is a
party or by which it is bound and no event or omission has occurred that,
through the passage of time or the giving of notice, or both, would constitute a
default in any material respect thereunder or cause the acceleration of any of
Company's or any Company Subsidiary's obligations thereunder or result in the
creation of any Lien on any of Company's or any Company Subsidiary's assets. To
Company's Knowledge, no third party is in default in any material respect under
any such Contract to which Company or any Company Subsidiary is a party, nor has
any event or omission occurred that, through the passage of time or the giving
of notice, or both, would constitute a default in any
23
material respect thereunder, or give rise to an automatic termination, or the
right of discretionary termination thereof.
(l) Other Material Contracts. Company Disclosure Schedule 4.13(l)
contains a true, correct and complete list for Company and each Company
Subsidiary of (i) all Contracts pursuant to which Company or any Company
Subsidiary incurred or accrued expenses in excess of $250,000 (or its foreign
currency equivalent as of the date hereof) during either of the fiscal years
ended December 31, 2004 and/or December 31, 2003, and (ii) all Contracts
pursuant to which Company can reasonably be expected, based on information
currently available to management, to incur or accrue expenses in excess of
$250,000 (or its foreign currency equivalent as of the date hereof) during the
current fiscal year.
Section 4.14 Labor Matters. Within the last three years, neither Company
nor any Company Subsidiary has experienced any labor disputes, any union
organization attempts or any work stoppages due to labor disagreements. Except
for past violations for which neither Company nor any Company Subsidiary is
subject to any current Liability or can become subject to any future Liability,
or which would not have been a Material Adverse Effect, Company and each Company
Subsidiary is and has been in compliance with all Laws or Orders relating to
employment and employment practices, terms and conditions of employment and
wages and hours, and neither Company nor any Company Subsidiary is engaged or
has been engaged in any unfair labor practice. There is no unfair labor practice
charge or complaint pending or to Company's Knowledge threatened against Company
or any Company Subsidiary. There is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or to Company's Knowledge
threatened against or affecting Company or any Company Subsidiary nor any
secondary boycott with respect to any products or services of Company or any
Company Subsidiary. No question concerning representation has been raised or is
or to Company's Knowledge threatened relating to the employees of Company or any
Company Subsidiary. No labor grievance that might have a Material Adverse
Effect, nor any arbitration proceeding arising out of or under collective
bargaining agreements, is pending. There are no administrative charges or court
complaints against Company concerning alleged employment discrimination or other
employment-related matters pending or to Company's Knowledge threatened before
the U.S. Equal Employment Opportunity Commission or any other Governmental
Entity that would have a Material Adverse Effect.
24
Section 4.15 Employee Benefit Plans.
(a) Disclosure. Company Disclosure Schedule 4.15(a) sets forth a
true, correct and complete list of all plans, programs, Contracts, policies and
practices providing benefits to any current or former employee, director or
independent contractor, or beneficiary or dependent thereof, sponsored or
maintained by Company, any Company Subsidiary or any ERISA Affiliate, to which
Company, any Company Subsidiary or any ERISA Affiliate has contributed,
contributes or is obligated to contribute, or under which Company, any Company
Subsidiary or any ERISA Affiliate has any Liability, including any pension,
thrift, savings, profit sharing, retirement, bonus, incentive, health, dental,
death, accident, disability, stock purchase, stock option, stock appreciation,
stock bonus, executive or deferred compensation, hospitalization, "parachute,"
severance, vacation, sick leave, fringe or welfare benefits, any employment or
consulting Contracts, "golden parachutes," collective bargaining agreements,
"employee benefit plans" (as defined in Section 3(3) of ERISA), employee
manuals, and written or binding oral statements of policies, practices or
understandings relating to employment (collectively, the "Employee
Plans/Agreements"). Each Employee Plan/Agreement is identified in Company
Disclosure Schedule 4.15(a), to the extent applicable, as one or more of the
following: (i) an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA); (ii) a "defined benefit plan" (as defined in Section 414 of the Code);
(iii) an "employee welfare benefit plan" (as defined in Section 3(1) of ERISA);
and/or (iv) a plan intended to be qualified under Section 401 of the Code.
Company Disclosure Schedule 4.15(a) also indicates, to the extent applicable,
each Employee Plan/Agreement with respect to which any benefits thereunder are
provided for or accelerated upon a "change of control" of Company, however
defined. No Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and neither Company, any Company Subsidiary nor any
ERISA Affiliate has ever contributed nor been obligated to contribute to any
such multiemployer plan.
(b) Delivery of Documents. Company has delivered to Purchaser true,
correct and complete copies of the following information with respect to each
Employee Plan/Agreement:
(i) the Employee Plan/Agreement, including all amendments, or
if there is not a written plan document, a written summary of the terms
and conditions of the Employee Plan/Agreement;
(ii) the annual report, if required under ERISA, with respect
to the Employee Plan/Agreement for each of the previous two plan years;
(iii) the summary plan description, together with each summary
of material modifications, if required under ERISA, with respect to the
Employee Plan/Agreement and all material employee communications relating
to the Employee Plan/Agreement;
(iv) if the Employee Plan/Agreement is funded through
insurance or a trust, insurance or any third party funding vehicle, the
insurance policy or Contract of the trust or other funding agreement and
the latest financial statements thereof; and
25
(v) the most recent determination letter received from the IRS
with respect to the Employee Plan/Agreement that is intended to be
qualified under Section 401 of the Code and the most recent application,
including all schedules and exhibits thereto, for a favorable
determination letter.
(c) Terminations, Proceedings, Penalties, Etc. With respect to each
employee benefit plan (including each Employee Plan/Agreement) that is subject
to Title IV of ERISA and with respect to which Company, any Company Subsidiary
any Person that is or at any prior time was aggregated with Company or any
Company Subsidiary pursuant to Section 414(b), (c), (m) or (o) of the Code or
any of their respective assets may, directly or indirectly, be subject to any
Liability, contingent or otherwise, or the imposition of any Lien (whether by
reason of the complete or partial termination of any such plan, the funded
status of any such plan, any "complete withdrawal" (as defined in Section 4203
of ERISA) or "partial withdrawal" (as defined in Section 4205 of ERISA) by any
Person from any such plan, or otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any of Company's or any Company Subsidiary's
assets to any Liability or the imposition of any Lien under Title IV of
ERISA;
(ii) no proceeding has been initiated or to Company's
Knowledge threatened by any Person to terminate any such plan;
(iii) no condition or event currently exists or is expected to
occur that could subject, directly or indirectly, any of Company's or any
Company Subsidiary's assets to any Liability or the imposition of any Lien
under Title IV of ERISA, whether to any other Person or otherwise on
account of the termination of any such plan;
(iv) if any such plan were to be terminated as of the Closing
Date, none of Company's assets or any Company Subsidiary's would be
subject, directly or indirectly, to any Liability or the imposition of any
Lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043 of
ERISA) has occurred with respect to any such plan;
(vi) no such plan that is subject to Section 302 of ERISA or
Section 412 of the Code has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code,
respectively), whether or not waived; and
(vii) no such plan is a plan described in Section 4064 of
ERISA.
(d) Prohibited Transactions. There have been no "prohibited
transactions" (within the meaning of Section 406 or 407 of ERISA or Section 4975
of the Code) for which a statutory or administrative exemption does not exist
with respect to any Employee Plan/Agreement, and no event or omission has
occurred in connection with which Company, any Company Subsidiary or any of
Company's or any Company Subsidiary's assets or any Employee Plan/Agreement,
directly or indirectly, could be subject to any Liability under ERISA, the Code
or any other Law or Order applicable to any Employee Plan/Agreement, or under
any Contract,
26
Law or Order pursuant to which Company or any Company Subsidiary has agreed or
is required to indemnify any Person against any Liability incurred under any
such Contract, Law or Order.
(e) Full Funding. The funds available under each Employee
Plan/Agreement that is intended to be a funded plan exceed the amounts required
to be paid, or that would be required to be paid if such Employee Plan/Agreement
were terminated, on account of rights vested or accrued as of the Closing Date
(using the actuarial methods and assumptions then used by Company's or a Company
Subsidiary's actuaries in connection with the funding of such Employee
Plan/Agreement).
(f) Controlled Group; Affiliated Service Group; Leased Employees.
Neither Company nor any Company Subsidiary is or ever has been a member of a
controlled group of corporations (as defined in Section 414(b) of the Code),
under common control with any unincorporated trade or business (as determined
under Section 414(c) of the Code) or a member of an "affiliated service group"
(within the meaning of Section 414(m) of the Code). There are not and never have
been any "leased employees" (within the meaning of Section 414(n) of the Code)
who perform services for the benefit of the Business of Company, and no
individuals are expected to become such leased employees with the passage of
time.
(g) Payments and Compliance. Except as set forth in Company
Disclosure Schedule 4.15(g), with respect to each Employee Plan/Agreement, (i)
all payments due from the Employee Plan/Agreement (or from Company or any
Company Subsidiary with respect to the Employee Plan/Agreement) have been made,
and all amounts properly accrued to date as Liabilities that have not been paid
have been properly recorded on the books of Company or a Company Subsidiary;
(ii) Company and Company Subsidiaries have complied with, and the Employee
Plan/Agreement conforms to, all Laws and Orders; (iii) all reports and
information relating to the Employee Plan/Agreement required to be filed with
any Governmental Entity or provided to participants or their beneficiaries have
been timely filed or disclosed and, when filed or disclosed, were true, correct
and complete; (iv) if any Employee Plan/Agreement is intended to qualify under
Section 401 of the Code, it has received a favorable determination letter from
the IRS with respect to such qualification, its related trust has been
determined to be exempt from taxation under Section 501(a) of the Code, and
nothing has occurred since the date of such letter that has or is reasonably
likely to adversely affect such qualification or exemption; (v) there are no
Litigation pending (other than routine Litigation for benefits) or, to Company's
Knowledge, threatened with respect to the Employee Plan/Agreement or against the
assets of the Employee Plan/Agreement; and (vi) the Employee Plan/Agreement is
not a plan that is established and maintained outside the United States
primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
(h) Post Employment Benefits. Except for the employment agreements
and severance agreements set forth in Company Disclosure Schedule 4.15(h), no
Employee Plan/Agreement provides benefits, including death or medical benefits
(whether or not insured), with respect to current or former employees, directors
or independent contractors of Company or any Company Subsidiary beyond their
retirement or other termination of service.
(i) No Triggering of Obligations. Except as set forth in Company
Disclosure Schedule 4.15(i), the consummation of the transactions contemplated
hereby will not (i) entitle
27
any current or former employee, director or independent contractor to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, (ii) accelerate the time of payment or vesting or
increase the amount of compensation due to any current or former employee,
director or independent contractor or (iii) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code for which an
exemption is not available.
(j) Future Commitments. Neither Company nor any Company Subsidiary
has announced any plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plans/Agreements.
Section 4.16 Employees; Compensation. Company Disclosure Schedule 4.16
contains a true, correct and complete list of (a) all salaried employees of
Company and each Company Subsidiary whose annual salary is greater than
$200,000, (b) each such employee's title, duties and location of employment, (c)
each such employee's employment status, and (d) each such employee's annual rate
of compensation, including bonuses and incentives.
Section 4.17 Trade Rights.
(a) To Company's Knowledge, Company Disclosure Schedule 4.17
contains a true, correct and complete list of all Company Trade Rights (to the
extent susceptible to listing) that are material to the Business. Company
Disclosure Schedule 4.17 also specifies which of such Company Trade Rights are
registered. To Company's Knowledge, all Company Trade Rights shown as registered
in Company Disclosure Schedule 4.17 have been properly registered in all
jurisdictions where required, which jurisdictions are set forth in Company
Disclosure Schedule 4.17. All pending registrations and applications of such
Company Trade Rights have been properly made and filed, and all annuity,
maintenance, renewal and other fees relating to such registrations or
applications are current except where the failure to obtain same would not have
a Material Adverse Effect. To conduct its Business as it is currently conducted,
neither Company nor any Company Subsidiary requires any Trade Rights that it
does not already have. To Company's Knowledge, neither Company nor any Company
Subsidiary is infringing or has infringed any Trade Rights of another Person. To
Company's Knowledge, no Person is infringing or has infringed any of Company's
Trade Rights, except for (i) such infringements that individually or in the
aggregate would not have a Material Adverse Effect on the Business of Company,
or (ii) such infringements that are included in Company Disclosure Schedule
4.17. Except for grants and assignments in the ordinary course of the Business,
neither Company nor any Company Subsidiary has granted any license or made any
assignment of any of Company Trade Rights. Except as set forth in Company
Disclosure Schedule 4.17, neither Company nor any Company Subsidiary pays any
royalties or other consideration for the right to use any Trade Rights of
others. All registered Trade Rights that are used by Company and Company
Subsidiaries and, except as would not be expected to have a Material Adverse
Effect, all other Trade Rights (regardless of whether or not they are
registered), are valid, enforceable and in good standing, and to Company's
Knowledge there are no equitable defenses to enforcement based on any act or
omission of Company or any Company Subsidiary. The consummation of the
transactions contemplated hereby will not alter to the detriment of Company or
impair any of Company Trade Rights.
28
(b) No former employer or any employee of Company or any Company
Subsidiary, and no current or former client of any consultant of Company or any
Company Subsidiary, has made a claim against Company, any Company Subsidiary or
any Affiliates thereof or, to the Knowledge of Company, against any other
person, that such employee or consultant is utilizing any Trade Rights of such
former employer or client.
(c) Neither Company nor any Company Subsidiary is party to or bound
by any license or other agreement requiring the payment by Company or any
Company Subsidiary of any royalty payment, excluding such agreements relating to
software licensed for use on the computers of Company or any Company Subsidiary.
(d) To the Knowledge of Company, no employee of Company or any
Company Subsidiary is in violation of any Law or Order applicable to such
employee, or any term of any employment agreement, patent or invention
disclosure agreement or other Contract relating to the relationship of such
employee with Company or any Company Subsidiary with respect to Company's Trade
Rights or the Trade Rights of any prior employer.
(e) Except pursuant to agreements of nondisclosure entered into in
the ordinary course of the Business of Company and as required pursuant to the
filing of a patent application by Company or any Company Subsidiary, to the
Knowledge of Company, none of Company Trade Rights, wherever located, the value
of which is contingent upon maintenance of confidentiality thereof, have been
disclosed to any Person other than employees, representatives and agents of
Company or any Company Subsidiary.
(f) It is not necessary for the Business to use any Trade Rights
owned by any director, officer, employee or consultant of Company or any Company
Subsidiary, except to the extent Company or any Company Subsidiary has obtained
valid and enforceable Trade Rights therein. To the Knowledge of Company, at no
time during the conception or reduction to practice of any of Company Trade
Rights was any developer, inventor or other contributor to such Trade Rights
operating under any grants from any Governmental Entity or subject to any
employment agreement, invention assignment, nondisclosure agreement or other
Contract with any Person that could adversely affect Company's or any Company
Subsidiary's rights to any Company Trade Rights.
(g) All present employees of Company and any Company Subsidiary
required by Company's policies to execute proprietary invention agreements with
Company have executed and delivered proprietary invention agreements with
Company or a Company Subsidiary, as the case may be, and are obligated under the
terms thereof to assign all inventions made by them during the course of
employment to Company or any Company Subsidiary. To Company's Knowledge, no such
employee or present consultant of Company or any Company Subsidiary has claimed
to have excluded works or inventions made prior to his or her employment with or
work for Company or any Company Subsidiary from his or her assignment of
inventions pursuant to such proprietary invention agreements.
(h) Neither Company nor any Company Subsidiary uses any of the
customer information it receives through its websites or otherwise in an
unlawful manner, or in a manner violative of Company's or any Company
Subsidiary's privacy policy or the private rights of its
29
customers. Company and Company Subsidiaries have not collected any customer
information through their websites or otherwise in an unlawful manner or in
violation of its privacy policy or the private rights of its customers. Company
and Company Subsidiaries have adequate security measures in place to protect the
customer information they receive through their websites and which they store in
their computer systems from illegal use by third parties or use by third parties
in a manner violative of the rights of privacy of their customers.
Section 4.18 Customers; Suppliers; Dealers and Distributors.
(a) Major Customers. Except as otherwise set forth on Company
Disclosure Schedule 4.18(a), Company Disclosure Schedule 4.18(a) contains a
true, correct and complete list of the twenty largest customers, including
distributors, of Company and Company Subsidiaries (on a consolidated basis) for
the most recently completed fiscal year (determined on the basis of the total
dollar amount of net sales) showing the total dollar amount of net sales to each
such customer during each such year and whether such customer is an Affiliate or
a third party. Except as otherwise set forth on Company Disclosure Schedule
4.18(a), Company does not have any Knowledge of any facts indicating, nor any
other reason to believe, that any of the customers described in Company
Disclosure Schedule 4.18(a) will not continue to be customers of Company and
Company Subsidiaries after the Closing at substantially the same level of
purchases as heretofore.
(b) Major Suppliers. Company Disclosure Schedule 4.18(b) contains a
true, correct and complete list of the twenty largest suppliers to Company and
Company Subsidiaries (on a consolidated basis) for the most recently completed
fiscal year (determined on the basis of the total dollar amount of purchases)
showing the total dollar amount of purchases from each such supplier during each
such year and whether such supplier is an Affiliate or third party. Company does
not have any Knowledge of any facts indicating, nor any other reason to believe,
that any of the suppliers described in Company Disclosure Schedule 4.18(b) will
not continue to be suppliers to Company and Company Subsidiaries after the
Closing and will not continue to supply Company and Company Subsidiaries with
substantially the same quantity and quality of goods and services at competitive
prices.
Section 4.19 Certain Loans. Company has not, since July 22, 2002, extended
credit, arranged for the extension of credit, or renewed an extension of credit,
in the form of a personal loan to or for any director or executive officer (or
equivalent thereof) of Company.
Section 4.20 Certain Relationships to Company. No Affiliate of Company or
any Company Subsidiary (other than Company and Company Subsidiaries) has any
direct or indirect interest in or other business relationship or arrangement
with (i) any Person or entity that does business with Company or any Company
Subsidiary in connection with the operation of, or is competitive with, the
Business or any other business of Company or (ii) any property, asset or right
that is used by Company or any Company Subsidiary.
Section 4.21 Offer Documents. The Schedule 14D-9, when filed with the SEC
and first published, sent or given to stockholders of Company, will comply in
all material respects with the Exchange Act, except for any formal or informal
waivers thereof or exceptions thereto by the SEC Staff. Giving consideration to
such waivers or exceptions, neither the Schedule 14D-9 nor
30
any of the information provided by or on behalf of Company specifically for
inclusion in the Schedule TO or the Offer Documents will, at the respective
times the Schedule 14D-9, the Schedule TO and the Offer Documents or any
amendments or supplements thereto are filed with the SEC or first published,
sent or given to stockholders of Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. No representation is
made by Company with respect to written information supplied by Parent or
Purchaser specifically for inclusion in the Schedule 14D-9, Schedule TO or the
Offer Documents.
Section 4.22 Brokers. No broker, finder or investment banker (other than
▇▇▇▇▇▇▇▇ or Company Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Company. Company has
heretofore furnished to Parent true and complete copies of all agreements and
other arrangements between Company, on the one hand, and ▇▇▇▇▇▇▇▇ or Company
Financial Advisor on the other hand.
Section 4.23 Takeover Statutes. The Special Committee has approved and/or
recommended, as applicable, the transactions contemplated by the Securities
Purchase Agreement, the Stockholder Agreements, the Offer, the Merger and this
Agreement, and the Company Board of Directors has approved the Merger, and such
approval, recommendation and consent is sufficient to render inapplicable to the
transactions contemplated by the Securities Purchase Agreement, the Stockholder
Agreements, the Offer, the Merger and this Agreement the limitations on business
combinations contained in any restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested stockholder" or other
similar anti-takeover Law (including, without limitation, Section 203 of the
DGCL) or restrictive provision of any applicable anti-takeover provision in
Company's Certificate of Incorporation or By-Laws. No other state takeover Law
or other comparable takeover provision of Company's Certificate of Incorporation
or By-Laws applies to the transactions contemplated by the Securities Purchase
Agreement, the Stockholder Agreements, the Offer, the Merger, this Agreement or
any of the transactions contemplated by this Agreement.
Section 4.24 Opinions of Financial Advisors. ▇▇▇▇▇▇▇▇ and Company
Financial Advisor have delivered to the Special Committee their written
opinions, dated prior to or as of the date of this Agreement, that based on the
assumptions, qualifications and limitations contained therein, the consideration
to be received by Company's stockholders, other than General Atlantic Partners
and its Affiliates, and any other holders of preferred stock and their
Affiliates in the Offer and the Merger is fair from a financial point of view to
such stockholders. Company has been authorized to permit inclusion of such
opinions (or a reference thereto) in the Offer Documents and the Schedule 14D-9.
Company has provided a copy of such opinions to Parent.
Section 4.25 Disclosure. No representation or warranty by Company in this
Agreement, nor any written statement, certificate, schedule or exhibit hereto
furnished or to be furnished by or on behalf of Company pursuant to this
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact
31
or omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
Section 4.26 2004 Bonus Awards. No Bonus (as such term is defined in
Company's 2004 Executive Cash Incentive Plan (the "2004 Bonus Plan")) has been
awarded to any participant in the 2004 Bonus Plan.
ARTICLE V
COVENANTS
Section 5.01 Compensation Arrangements. Parent and Purchaser agree that
commencing at the later to occur of the Closing Date or the Effective Time,
Parent or Purchaser shall provide at its expense, or shall cause the Surviving
Corporation to provide at its own expense, all change in control bonuses,
severance and supplemental retirement account payments or credits to Company
management in accordance with the terms and conditions of the agreements between
Company and Company management set forth on Company Disclosure Schedule 4.15(a).
To secure Surviving Corporation's obligations under the Executive Restated
Change in Control Bonus Letters dated February 9, 2005, entered into between
Company and Company management described on Footnote 3 to Company Disclosure
Schedule 4.15(a), Parent and Company management have agreed that upon the
commencement of the Offer, Parent or Purchaser shall deposit at its expense in
an escrow account $3,475,334, which amount equals the aggregate sum of the
change in control bonuses payable to Company management. The rights and
obligations set forth in this Section 5.01 shall survive consummation of the
Merger and are intended to benefit, and shall be enforceable by, the Persons
entitled to receive the payments described in this Section 5.01.
Section 5.02 Conduct of Business by Company Pending the Closing. From the
date of this Agreement to the Effective Time, except as expressly required by
this Agreement, or otherwise with the prior written consent of Parent, Company
shall, and shall cause each of Company Subsidiaries, to (a) carry on its
respective businesses in the ordinary course consistent with past practice, (b)
use commercially reasonable efforts to preserve intact its current business
organizations and keep available the services of its current officers and
employees, (c) use commercially reasonable efforts to preserve its relationships
with principal customers, suppliers and other Persons with which it has business
dealings and (d) comply in all material respects with all Laws applicable to it
or any of its properties, assets or business. Without limiting the generality of
the foregoing, Company shall not, and it shall cause Company Subsidiaries not
to, between the date of this Agreement and the Effective Time, except as
expressly required by this Agreement, directly or indirectly, do, or commit to
do, any of the following without the prior written consent of Parent:
(i) Amend or otherwise change its Certificate of Incorporation
or By-Laws or the equivalent organizational documents;
(ii) Sell, pledge or encumber any stock owned by Company in
any of Company Subsidiaries;
(iii) Issue, reissue, sell, or authorize the issuance,
reissuance or sale of any shares of capital stock of any class, or any
bonds, debentures, notes or other
32
indebtedness of Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote on any matters on
which stockholders of Company may vote) ("Company Voting Debt"), or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock or any Company Voting Debt, or any
other ownership interest (including, but not limited to, stock
appreciation rights, phantom stock or stock-based performance units) of
Company or any Company Subsidiary (except for the issuance of shares of
Common Stock required to be issued pursuant to the terms of the Options
outstanding as of the date hereof) or make any other changes in its
capital structure;
(iv) Declare, set aside, make or pay any dividend or other
distribution, whether payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than dividends or distributions
by any wholly owned Company Subsidiary to its parent);
(v) Reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any shares of capital stock
of Company or any Company Subsidiary or any securities convertible into or
exercisable for any such shares of its capital stock or securities, other
than pursuant to Options outstanding as of the date hereof in accordance
with their terms;
(vi) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof, or any assets that are material,
individually or in the aggregate, to Company and Company Subsidiaries,
taken as a whole;
(vii) Incur any indebtedness for borrowed money (including by
issuance of debt securities) other than borrowings in the ordinary course
of the Business under Company's existing credit facility or issue any debt
securities or warrants or other rights to acquire any debt securities of
Company or any Company Subsidiary, or assume, guarantee or endorse (other
than for collection or deposit in the ordinary course of the Business), or
otherwise as an accommodation become responsible for, the obligations of
any Person, or make any loans or advances or make any capital
contributions to, or investments in, any other Person;
(viii) Enter into, or modify, amend or terminate, any material
Contract other than in the ordinary course of the Business;
(ix) Except as set forth on Company Disclosure Schedule
5.02(ix) (which schedule includes Company's budget of all expenditures for
a period of sixty days from the date of this Agreement and, among other
things, includes no more than $230,000 in bonuses that may be paid
pursuant to the 2004 Bonus Plan in accordance with the terms thereof),
authorize or make any expenditures without the consent of Parent;
(x) (A) increase the compensation or fringe benefits of any of
its directors, officers or employees, except as required by contractual
obligations existing as
33
of the date hereof, (B) grant any increase in severance or termination pay
not currently required to be paid under existing severance plans or
Contracts to any director, officer or other employee of Company or any
Company Subsidiary, including without limitation any increase as a result
of promotion, (C) enter into any employment, consulting or severance
agreement or arrangement, including any arrangement to provide
post-retirement medical or life insurance benefits, with any present or
former director, officer or other employee of Company or any Company
Subsidiary or (D) except as is required by Law, establish, adopt, enter
into or amend or terminate, or take any action to accelerate any rights or
benefits under, or make any material determination not in the ordinary
course of the Business consistent with past practice under, any collective
bargaining agreement, Employee Plan/Agreement or employee benefit
arrangement that would have been Employee Plan/Agreements if they were in
effect as of the date hereof, including, but not limited to, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(xi) Except as may be required as a result of a change in Law
or in generally accepted accounting principles, change any of the
accounting methods, practices or principles used by it;
(xii) Except as may be required to comply with a change in
Law, make any material tax election, make or change any method of
accounting with respect to Taxes, file any amended Tax Returns that may
have a Material Adverse Effect or settle or compromise any material
federal, state, local or foreign Tax liability or refund;
(xiii) Except for any litigation described in Company
Disclosure Schedule 4.09, settle or compromise any pending suit, action,
audit or claim (A) against Company or any Company Subsidiary by any
Governmental Entity, or (B) which is material to Company and Company
Subsidiaries, taken as a whole, or which relates to the transactions
contemplated hereby;
(xiv) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of Company or any Company Subsidiary (other than the
Merger);
(xv) Except for any litigation described in Company Disclosure
Schedule 4.09, (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (I) in the
ordinary course of the Business and consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against
in the most recent consolidated financial statements of Company included
in Company SEC Reports filed prior to the date of this Agreement or (II)
of liabilities incurred in the ordinary course of the Business and
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify
34
in any manner, any confidentiality, standstill or similar agreement to
which Company or any Company Subsidiary is a party;
(xvi) Sell, lease (as lessor), license or otherwise dispose of
or subject to any lien or encumbrance any properties or assets, except
sales of excess or obsolete assets or properties in the ordinary course
consistent with past practice;
(xvii) Take, or propose to take, or agree to take in writing
or otherwise, any of the actions described in this Section 5.02, any
action which would cause any representation or warranty in this Agreement
to become untrue or incorrect or any action which would result in any of
the conditions set forth in Annex I not being satisfied; or
(xviii) Undertake any restructuring of Company's organization
or operations outside of the normal course of the Business.
Notwithstanding anything herein contained to the contrary (including, but
not limited to Section 5.02(x), above), none of the Board of Directors nor any
committee thereof, including, but not limited to the Compensation Committee of
the Board of Directors, nor any authorized member of management of the Company,
shall approve, authorize make or allow to be made any payment for any
compensation matter, including, but not limited to any bonus or similar payment,
whether pursuant to any existing agreement, plan, arrangement or otherwise,
prior to the Effective Time, without the consent of Parent; provided, however,
that the foregoing sentence shall not apply to payments described on Company
Disclosure Schedule 5.02(ix). Notwithstanding the foregoing, at any time on or
after April 14, 2005, but not later than June 30, 2005, the Compensation
Committee of the Board of Directors of the Company (as then constituted), in
consultation with ▇▇▇ ▇▇▇▇▇▇▇, shall meet to consider awarding that portion of
the management bonuses allowed under the 2004 Bonus Plan that is otherwise not
included in Company Disclosure Schedule 5.02(ix), in accordance with the terms
of the 2004 Bonus Plan.
Section 5.03 No Solicitation.
(a) Until this Agreement has been terminated in accordance with
Section 7.01 (and the payments, if any, required to be made in connection with
such termination pursuant to Section 7.02(b) have been made), Company shall not,
and shall not permit any of its Affiliates to, and shall use commercially
reasonable efforts to cause its and its Affiliates' officers, directors,
employees, consultants, representatives and other agents, including, but not
limited to, investment bankers, attorneys and accountants (collectively, the
"Representatives"), not to, directly or indirectly, (i) knowingly encourage,
solicit, initiate or encourage the making of, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal (including, without
limitation, by taking any action that would make Section 203 of the DGCL
inapplicable to an Acquisition Proposal), (ii) participate in any way in
discussions or negotiations with, or furnish or disclose any nonpublic
information to, any Person (other than Parent or Purchaser) in connection with
any Acquisition Proposal, (iii) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser the approval and/or
recommendation of the Offer, the Merger or this Agreement, (iv) approve or
recommend, or propose to approve or recommend any Acquisition Proposal or (v)
enter into any agreement, letter of intent or similar document
35
contemplating or otherwise relating to any Acquisition Proposal; provided,
however, that this Section 5.03 shall not prohibit Company or the
Representatives from:
(A) participating in discussions or negotiations with,
or furnishing or disclosing nonpublic information to, any Person in
response to an unsolicited, bona fide and written Acquisition
Proposal that is submitted to Company by such Person after the date
of this Agreement and prior to the date any Shares are accepted for
payment pursuant to the Offer (and not withdrawn) if (I) none of
Company, any of its Affiliates or any of the Representatives shall
have violated any of the provisions of this Section 5.03, (II) a
majority of the members of the Special Committee determines in good
faith that such Acquisition Proposal is reasonably likely to
constitute a Superior Proposal, and (III) after consultation with
its outside counsel, the Special Committee determines in good faith
that the failure to take such action would be inconsistent with its
fiduciary duties under Law; (IV) at least two business days prior to
participating in discussions or negotiations with, or furnishing or
disclosing any nonpublic information to, such Person, Company gives
Parent written notice of Company's intention to participate in
discussions or negotiations with, or furnish or disclose nonpublic
information to, such Person (without identifying such Person), and
Company receives from such Person an executed confidentiality
agreement containing terms no less restrictive than the terms of the
Confidentiality Agreement, dated on or about June 18, 2004, and
amended on or about September 16, 2004, between Parent and Company,
and (V) at least two business days prior to furnishing or disclosing
any nonpublic information to such Person, Company furnishes such
information to Parent (to the extent such information has not been
previously delivered or made available by Company to Parent) except
for the identification of such Person or any information that might
reasonably enable the identification of such Person; or
(B) approving or recommending, or entering into (and in
connection therewith, withdrawing or modifying the approval and/or
recommendation of the Offer, the Merger and this Agreement) a
definitive agreement with respect to an unsolicited, bona fide and
written Acquisition Proposal that is submitted to Company after the
date of this Agreement and prior to the date any Shares are accepted
for payment pursuant to the Offer (and not withdrawn) if (I) none of
Company, any of its Affiliates or any of the Representatives have
violated any of the provisions of this Section 5.03, (II) Company
provides Parent with written notice at least five business days
prior to any meeting of the Special Committee at which the Special
Committee will consider whether such Acquisition Proposal
constitutes a Superior Proposal, during which five-business day
period Company shall cause its financial and legal advisors to
negotiate in good faith with Parent in an effort to make such
adjustments in the terms and conditions of this Agreement as would
enable Company to proceed with the transactions contemplated herein
on such adjusted terms, (III) notwithstanding such negotiations and
adjustments pursuant to clause (II) above, the Special Committee
makes the determination necessary for such Acquisition Proposal to
constitute a Superior Proposal, (IV) after consultation
36
with its outside counsel, the Special Committee determines in good
faith that the failure to take such action would be inconsistent
with its fiduciary duties under Law, (V) Company does not approve or
recommend or enter into a definitive agreement with respect to such
Acquisition Proposal at any time before the day that is the fifth
business day after Parent receives written notice from Company
stating that the Special Committee has determined such Acquisition
Proposal constitutes a Superior Proposal, and (VI) simultaneously
with the earlier of the approval or recommendation of, or execution
of a definitive agreement with respect to, any such Superior
Proposal, Company makes the payments required to be made pursuant to
Section 7.02(b).
(b) In addition to the obligations of Company set forth in Section
5.03(a), on the date of receipt thereof, Company shall advise Parent of any
request for information or of any Acquisition Proposal, or any inquiry,
proposal, discussions or negotiation with respect to any Acquisition Proposal,
the terms and conditions of such request, Acquisition Proposal, inquiry,
proposal, discussion or negotiation (but not the identity of any potential
acquiror or party to the Acquisition Proposal or any information that might
reasonably enable the identification of such party). Company shall keep Parent
fully informed of the status and general progress (including amendments or
proposed amendments) of any such request or Acquisition Proposal and keep Parent
fully informed as to the details of any information requested of or provided by
Company and as to the details of all discussions or negotiations (but not the
identity of any potential acquiror or party to the Acquisition Proposal).
Company shall promptly provide to Parent any nonpublic information Company
provided to any other Person in connection with any Acquisition Proposal that
was not previously provided to Parent (but not the identity of any potential
acquiror or party to the Acquisition Proposal).
(c) Company, its Affiliates and the Representatives shall
immediately cease any discussions or negotiations, if any, with any other
parties that may be ongoing as of the date hereof with respect to any
Acquisition Proposal. Company shall immediately request each Person who has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring Company or any portion thereof to return all
confidential information heretofore furnished to such Person by or on behalf of
Company.
(d) "Acquisition Proposal" shall mean any proposal or offer from any
Person (in each case, whether or not in writing and whether or not delivered to
the stockholders of Company generally) relating to (i) any direct or indirect
acquisition or purchase of a substantial amount of assets of Company or any of
its Company Subsidiaries or of over 15% of any class of equity securities of
Company or any of its Company Subsidiaries, (ii) any tender offer or exchange
offer that, if consummated, would result in any Person beneficially owning 15%
or more of any class of equity securities of Company or any of its Company
Subsidiaries, (iii) any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation, dissolution or
similar transaction involving Company or any of its Company Subsidiaries or (iv)
any other transaction, the consummation of which would reasonably be expected to
impede, interfere with, prevent or materially delay the Offer or the Merger or
which would reasonably be expected to dilute materially the benefits to Parent
of the transactions contemplated hereby. "Superior Proposal" shall mean an
Acquisition Proposal which the Special Committee in good faith determines (based
on such matters as it deems relevant, including the
37
advice of its Financial Advisor and outside counsel), would, if consummated,
result in a transaction that is more favorable to the stockholders of Company
(in their capacities as stockholders) than the transactions contemplated hereby
(including any changes to the terms of this Agreement proposed by Parent in
response to such offer or otherwise).
(e) Subject to the provisions of Section 7.01, nothing contained in
this Section 5.03 shall prohibit Purchaser from purchasing the Shares pursuant
to the Offer or consummating the Merger.
Section 5.04 Access to Information.
(a) Subject to Law and the Confidentiality Agreement, during the
period commencing on the date hereof and ending on the earlier of (i) the
Closing Date and (ii) the date on which this Agreement is terminated pursuant to
Section 7.01, Company shall, and shall cause each of its Company Subsidiaries
to, upon reasonable notice, afford Parent and Purchaser, and their respective
counsel, accountants, consultants and other authorized representatives, full and
complete access during normal business hours to the employees, properties, books
and records of Company and its Company Subsidiaries so that they may have the
opportunity to make such investigations as they shall desire of the affairs of
Company and its Company Subsidiaries; provided, however, that such investigation
shall not affect the representations and warranties made by Company in this
Agreement (provided that if Company can prove by a preponderance of the evidence
that Parent or Purchaser had Knowledge of a breach or violation of a covenant or
warranty by Company as of or prior to the date of this Agreement or at Closing,
as applicable, then such breach or violation shall not constitute a breach of
such representation, covenant or warranty by Company). In addition, if Parent or
Purchaser can prove by a preponderance of the evidence that Company had
Knowledge of a breach or violation of a covenant or warranty by Parent or
Purchaser as of or prior to the date of this Agreement or at Closing, as
applicable, then such breach or violation shall not constitute a breach of such
representation, covenant or warranty by the Parent or Purchaser. Company shall
furnish as promptly as practicable to Parent and Purchaser a copy of each form,
report, schedule, statement, registration statement and other document filed by
it or its Company Subsidiaries during such period pursuant to the requirements
of federal or state securities Laws or the DGCL. Company agrees to cause its
officers and employees, in a manner consistent with the fulfillment of their
ongoing duties and obligations, to furnish such additional financial and
operating data and other information and respond to such inquiries as Parent and
Purchaser shall from time to time reasonably request.
(b) Subject to Law, during the period commencing on the date hereof
and ending on the earlier of (i) the Closing Date and (ii) the date on which
this Agreement is terminated pursuant to Section 7.01, Parent shall cause its
officers and employees to furnish such information and respond to such inquiries
as Company shall from time to time reasonably request regarding post-closing
integration and operational issues and issues arising under this Agreement.
Section 5.05 Notification of Certain Matters. Company shall give prompt
notice to Parent (a) of the occurrence, or non-occurrence of any event whose
occurrence, or non-occurrence would be likely to cause (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any respect
at any time from the date hereof to the
38
Effective Time, (ii) any condition set forth in Annex I to be unsatisfied at any
time from the date hereof to the date Parent purchases Shares pursuant to the
Offer, or (iii) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied; and (b) any failure by Company to comply
in all material respects with any of its covenants or agreements hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.05
shall not limit or otherwise affect (1) the right of Parent to terminate this
agreement pursuant to Section 7.01; or (2) any other remedies available to
Parent under Article 7 of this Agreement. Company shall give prompt notice to
Parent of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; provided, however, that the failure
to give such notice or other communication shall not (by itself) relieve Parent
or Purchaser from their obligations under this Agreement.
Section 5.06 Public Announcements. So long as this Agreement is in effect,
Parent and Company shall consult with each other before issuing, and provide
each other a reasonable opportunity to review and comment upon, any press
release or other public statements with respect to the Offer or the Merger and
shall not issue, or permit their Affiliates to issue, any such press release or
make any such public statement prior to such consultation, except as may be
required by Law or in accordance with any listing agreement with any securities
exchange on which such party's securities are listed.
Section 5.07 Reasonable Best Efforts; Cooperation. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including, without limitation, (a)
cooperating in responding to inquiries from, and making presentations to,
regulatory authorities and customers, (b) defending against and responding to
any action, suit, proceeding, or investigation, whether judicial or
administrative, challenging or relating to this Agreement or the transactions
contemplated hereby, including seeking to have any stay or temporary restraining
order entered, by any court or other Governmental Entity vacated or reversed,
(c) cooperating in the preparation and filing of the Offer Documents, the
Schedule TO and the Schedule 14D-9 and (d) promptly making all regulatory
filings and applications, including without limitation any required filings
under the HSR Act, and any amendments thereto as are necessary for the
consummation of the transactions contemplated by this Agreement. Notwithstanding
anything herein to the contrary, in connection with any filing or submission or
other action required to be made or taken by any party to effect the Merger and
all other transactions contemplated hereby, Company shall not, without the prior
written consent of Parent, commit to any divestiture transaction, and Parent
shall not be required to divest or hold separate or otherwise take or commence
to take any action that, in the reasonable discretion of Parent, limits its
freedom of action with respect to, or its ability to retain, Company or any of
Company's Affiliates or any material portion of Company's assets or businesses.
Section 5.08 Takeover Statutes. If any state takeover Law or other similar
Law becomes or is deemed to become applicable to the Offer, the Merger, this
Agreement or any of
39
the transactions contemplated hereby, Company shall promptly take all
commercially reasonable actions necessary to render such Law inapplicable to all
of the foregoing.
Section 5.09 Confidentiality Agreement. Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the filing of required documents with the SEC in connection with the
consummations of the Merger and the transactions contemplated hereby.
Section 5.10 D&O Indemnification and Insurance.
(a) Regardless of whether the Merger becomes effective, Company
shall indemnify and hold harmless and shall pay expenses to the present and
former directors and officers of Company, and each Person who prior to the
latter to occur of the Closing or the Effective Time becomes an officer or
director of Company (each an "Indemnified Person"), in respect of acts or
omissions by any of them in their capacities as such occurring at or prior to
the latter to occur of the Closing or the Effective Time (including, without
limitation, for acts or omissions occurring in connection with this Agreement
and the consummation of the Merger) (collectively, the "Indemnified Losses") to
the fullest extent permissible under Law and under the Certificate of
Incorporation and the Bylaws of Company for a period of seven years and one
Business Day after the date hereof.
(b) Parent agrees that commencing at the latter to occur of the
Closing or the Effective Time and for seven years and one Business Day after the
latter to occur of the Closing or the Effective Time, the bylaws of the
Surviving Corporation shall provide that the Surviving Corporation shall
indemnify and hold harmless, and shall pay expenses to, the Indemnified Persons,
in respect of Indemnified Losses to the fullest extent permissible under Law
and, in any event, on terms no less favorable than the terms of the Certificate
of Incorporation and the Bylaws of Company in effect immediately prior to the
latter to occur of the Closing or the Effective Time. Such provisions of the
Surviving Corporation's certificate of incorporation and bylaws relating to the
indemnification of Indemnified Persons for Indemnified Losses shall not be
amended, modified, repealed or rescinded for a period of seven years and one
Business Day after the latter to occur of the Closing or the Effective Time in
any manner that would materially and adversely effect the rights of Indemnified
Persons thereunder, unless such modification shall be required by Law. Without
limiting the generality of the foregoing, the Indemnified Losses shall include
reasonable costs of prosecuting a claim under this Section 5.10(b). The Parent
shall cause the Surviving Corporation to honor, assume and perform the
obligations of Company in the place and stead of Company under any and all
indemnification agreements between Company and any such Indemnified Persons in
existence on the Closing Date (which agreements have been made available by
Company to the Parent).
(c) Parent and Purchaser agree that commencing at the latter to
occur of the Closing or the Effective Time and for six years and one Business
Day after the latter to occur of the Closing or the Effective Time, Parent or
Purchaser shall obtain and provide at its expense, or shall cause the Surviving
Corporation to obtain and provide at its expense (and shall provide evidence to
Company that the Parent has obtained and provided or caused the Surviving
Corporation to obtain or provide same on or before the Closing), officers' and
directors' liability insurance or officers' and directors' liability tail
insurance policies with respect to acts or
40
omissions occurring prior to the latter to occur of the Closing or the Effective
Time (including, without limitation, for acts or omissions occurring in
connection with this Agreement and the consummation of the Merger) covering each
Indemnified Person on terms with respect to coverage and amount (including with
respect to the payment of attorney's fees) no less favorable than those of
Company's policies in effect or bound on the date hereof (the "D&O Tail
Insurance"); provided, however, that if the foregoing would otherwise require
Parent, Purchaser or Surviving Corporation to collectively pay in excess of
$787,000 in additional aggregate premiums to obtain such tail insurance, then
the obligations set forth above shall extend only to obtaining such policies
with respect to coverage and amount that can be obtained for a maximum of
$787,000 in aggregate premiums.
(d) The rights of each Indemnified Person and his or her heirs and
legal representatives under this Section 5.10 shall survive consummation of the
Merger and are intended to benefit, and shall be enforceable by, each
Indemnified Person.
ARTICLE VI
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Effective Time of the following
conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and
shall have accepted for payment and paid for Shares in an amount sufficient to
satisfy the Minimum Condition and otherwise pursuant to the Offer;
(b) No Law, judgment, writ, decree, order or injunction shall have
been promulgated, enacted, entered or enforced, and no other action shall have
been taken, by any Governmental Entity that in any of the foregoing cases has
the effect of making illegal or directly or indirectly restraining, prohibiting
or restricting the consummation of the Merger; and
(c) Any waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) By the mutual written consent of Parent and Company, by action
of their respective General Partner and Special Committee;
(b) By either of Parent or Company if any Law shall have been
promulgated that prohibits the consummation of the Offer or the Merger or if any
Governmental Entity of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action
41
(which order, decree or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed in accordance with Section
5.07), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable;
(c) By either of Parent or Company if the Offer is terminated or
withdrawn pursuant to its terms (including pursuant to the conditions set forth
in Annex I or Annex II) or the Offer shall have expired without Purchaser having
purchased any Shares pursuant thereto; provided, however, that Parent may not
terminate this Agreement pursuant to this Section 7.01(c) if Parent or Purchaser
shall have materially breached this Agreement and Company may not terminate this
Agreement pursuant to this Section 7.01(c) if Company shall have materially
breached this Agreement;
(d) By Company (i) if the Special Committee shall have approved
and/or recommended, as applicable, or Company shall have executed or entered
into a definitive agreement with respect to, a Superior Proposal in compliance
with Section 5.03(a)(B); provided, however, that such termination under this
clause (i) shall not be effective until Company has made the payments required
by Section 7.02(b); or (ii) if Parent, Purchaser or any of their Affiliates
shall have failed to commence the Offer in accordance with Section 1.01(a);
provided, however, that Company may not terminate this Agreement pursuant to
this Section 7.01(d)(ii) if such failure to have commenced the Offer shall have
been caused by Company's failure to perform any of its obligations under this
Agreement;
(e) By Parent if any of the following have occurred: (i) Company,
any of its Affiliates or any of the Representatives violates in any material
respect any of the provisions of Section 5.03; (ii) the Special Committee
recommends to Company's stockholders any Acquisition Proposal or Superior
Proposal; (iii) Company enters into any agreement, letter of intent or similar
document contemplating or otherwise relating to any Acquisition Proposal or
Superior Proposal; (iv) Company Board of Directors or any committee thereof (A)
shall have withdrawn, or modified or changed, or publicly proposed to withdraw,
modify or change, in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its approval and/or recommendation of the
Offer, this Agreement or the Merger or shall have approved and/or recommended,
as applicable, or publicly proposed to approve or recommend an Acquisition
Proposal, or (B) fails to reaffirm publicly and unconditionally its
recommendation to Company's stockholders that they tender their Shares in the
Offer, which public reaffirmation must be made within five Business Days after
Parent's written request to do so (which request may be made at any time that an
Acquisition Proposal is pending and not withdrawn); (v) an Acquisition Proposal
is publicly announced and Company fails to issue a press release announcing its
opposition to such Acquisition Proposal within five Business Days after such
Acquisition Proposal is announced; or
(f) By Parent or Company in the event the Closing shall not have
occurred on or before the later to occur of (i) May 15, 2005 and (ii) the date
that is 90 days after the commencement of the Offer, or such other date as
Parent and Company shall agree upon in writing; provided, however, that if a
party seeking termination pursuant to this Section 7.01(f) is in breach in any
material respect of any of its representations, warranties, covenants or
agreements contained in this Agreement, then that party may not terminate this
Agreement pursuant to this Section 7.01(f).
42
Section 7.02 Effect of Termination.
(a) In the event of termination of this Agreement by either Company
or Parent or Purchaser as provided in Section 7.01, (i) this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Purchaser or Company for damages or otherwise, except that
(i) Section 8.02 and this Section 7.02 shall survive any termination of this
Agreement and (ii) nothing in this Section 7.02 shall relieve any party to this
Agreement for liability for breach of this Agreement.
(b) If (i) Company terminates this Agreement pursuant to Section
7.01(d)(i), (ii) Parent or Purchaser terminates this Agreement pursuant to
Section 7.01(e) or (iii) Company, Parent or Purchaser terminate this Agreement
pursuant to Section 7.01(c) and in the case of such a termination pursuant to
Section 7.01(c) (A) at any time after the date of this Agreement and prior to
such termination an Acquisition Proposal shall have been publicly announced or
otherwise publicly communicated to the stockholders of Company generally and (B)
prior to the six month anniversary of such termination, Company shall enter into
a definitive agreement with respect to an Acquisition Proposal or an Acquisition
Proposal is consummated, then Company shall, in the case of clause (i), as
provided in Section 5.03(a)(B)(VI), in the case of clause (ii), not later than
one business day following such termination, or in the case of clause (iii) not
later than one business day following the entering into of a definitive
agreement with respect to, or the consummation of, an Acquisition Proposal prior
to the six month anniversary of such termination, as applicable, pay to Parent
in immediately available funds an amount equal to $2,500,000. Company
acknowledges that the agreements contained in this Section 7.02(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Purchaser would not enter into this
Agreement; accordingly, if Company fails to pay the amount due pursuant to this
Section 7.02(b), and, in order to obtain such payment, Parent or Purchaser
commences a suit which results in a judgment against Company for the fee set
forth in this Section 7.02(b), Company shall pay to Parent or Purchaser, as the
case may be, its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee at
the prime rate in effect on the date such payment was required to be made.
Section 7.03 Amendment. Subject to Section 1.01(b), this Agreement may be
amended by the parties hereto by action taken by the General Partner of Parent
and the Special Committee and the Board of Directors of Purchaser or by the
respective officers authorized by such General Partner, Special Committee or
Company Board of Directors at any time prior to the Effective Time
(notwithstanding any stockholder approval); provided, however, that, after
approval of the Merger by the stockholders of Company, no amendment may be made
which by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
Section 7.04 Extension; Waiver. Subject to Section 1.01(b), at any time
prior to the Effective Time, any party hereto may (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 of the other
parties hereto contained herein or in any document delivered pursuant hereto,
and (c) waive compliance by the other parties hereto with any of their
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any
43
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by such party. The failure of any party hereto to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Non-Survival of Representations and Warranties. The
representations and warranties and agreements in this Agreement shall not
survive beyond the Effective Time. Notwithstanding the foregoing, the agreements
set forth in Sections 5.01, 5.06 and 5.10 shall survive the Effective Time
indefinitely (except to the extent a shorter period of time is explicitly
specified therein).
Section 8.02 Expenses. Whether or not the Merger is consummated, except as
expressly set forth in Section 7.02(b), all fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby and
thereby shall be paid by the party incurring such fees, costs and expenses;
provided, however, that in the event of any dispute between Company and Parent
or Purchaser as to whether any monies are due and payable pursuant to Article
VII, the prevailing party shall be entitled to receive from the other party the
reasonable costs and expenses (including reasonable legal fees and expenses)
incurred in connection with any action, including the filing of any lawsuit or
other legal action relating to such dispute. Interest, calculated at the
publicly announced prime rate of the Bank of America, N.A., shall be paid on the
amount of any unpaid monies required to be paid by any party to another party to
this Agreement pursuant to this Section 8.02, calculated from the date such
monies were required to be paid.
Section 8.03 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes any and all other prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof.
Section 8.04 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other party (except that Parent may assign its rights and
Purchaser may assign its rights, interest and obligations to any Affiliate of
Parent or any other MLB Entity without the consent of Company, provided that no
such assignment shall relieve Parent of any liability for any breach by such
assignee). Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.05 Parties in Interest. Except with respect to Sections 5.01 and
5.10 (which are intended to be for the benefit of the Persons identified
therein, and may be enforced by such Persons), this Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
44
Section 8.06 Validity. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the maximum extent possible.
Section 8.07 Notices. All notices and other communications given or made
pursuant hereto shall be in writing (and shall be deemed to have been duly given
or made when received) by delivery in Person, by telegram, or by registered or
certified mail (postage prepaid, return receipt requested), in each case with
the transmission of a simultaneous facsimile copy thereof, 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 Parent or Purchaser:
MLB Advanced Media, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
MLB Advanced Media, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And:
▇▇▇▇▇ & Lardner LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
45
(b) If to Company:
▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.08 Law Governing Agreement; Jurisdiction. This Agreement shall
be construed and interpreted according to the Laws of the State of New York,
excluding any choice of Law rules that may direct the application of the Laws of
another jurisdiction. Any court of competent jurisdiction sitting within the
State of New York, New York County will be the exclusive jurisdiction and venue
for any dispute arising out of or relating to this Agreement.
Section 8.09 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at Law or in equity.
Section 8.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which shall
constitute one and the same agreement.
Section 8.12 Definitions. For purposes of this Agreement, the term:
46
"Acquisition Proposal" shall have the meaning set forth in Section
5.03(d).
"Affiliate" of a Person shall mean a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
"Business" shall mean Company's (a) business of providing
business-to-business ticketing software and systems, including licensed software
products and full ticketing services through various integrated distribution
channels; (b) products and services which enable the sale of tickets for
attractions and live events by venues and entertainment organizations, such as
performing arts centers, concert halls, professional sports organizations and
stadiums and arenas in the United States, Canada, Europe, Australia, Latin
America and Asia; (c) full service ticketing systems employing multiple
points-of-sale, including the Internet, telephone call centers, interactive
voice response systems, kiosks and retail outlets, all of which are integrated
with Company's ticketing software systems; (d) Internet ticketing distribution
capabilities, including its "▇▇▇▇▇▇▇.▇▇▇" proprietary website and customized
private labeled ticketing gateways for certain customers; and (e) software
licensing business, which enables venues and organizations to operate and manage
ticket sales on an in-house, stand alone system with optional ticket
distribution channels such as retail outlets and the Internet.
"Business Day" shall mean shall mean a day, other than a Saturday or
Sunday, on which banks in New York City, New York, are open for the transaction
of banking business.
"Certificates" shall have the meaning set forth in Section 2.08(b).
"Closing" shall have the meaning set forth in Section 2.02.
"Closing Date" shall have the meaning set forth in Section 2.02.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals of
this Agreement.
"Company" shall have the meaning set forth in the preamble of this
Agreement.
"Company Board of Directors" shall have the meaning set forth in the
recitals of this Agreement.
"Company Disclosure Schedule(s)" shall have the meaning set forth in
the prefatory paragraphs of Article IV.
"Company Financial Advisor" shall have the meaning set forth in
Section 1.02(b).
"Company Insurance Policies" shall have the meaning set forth in
Section 4.12.
"Company SEC Reports" means all forms, reports, schedules,
statements, documents and correspondence required to be filed by Company with
the SEC (collectively with
47
all exhibits included therein and financial statements and schedules
incorporated therein by reference).
"Company Subsidiary" shall mean any of the corporations, limited
liability companies, partnerships or other entities, of which capital stock or
other equity or ownership interests are directly or indirectly owned by Company,
as set forth on Company Disclosure Schedule 4.01(d). The term "Company
Subsidiaries" shall mean more than one Company Subsidiary.
"Company Trade Rights" means all of Company's and Company
Subsidiaries' worldwide rights in, to and under Trade Rights.
"Company Voting Debt" shall have the meaning set forth in Section
5.02.
"Confidentiality Agreement" shall mean that Agreement executed on or
about June 18, 2004, and extended September 16, 2004, between Parent and
Company.
"Contract" shall mean all written contracts, purchase orders, sales
orders, licenses, leases and other agreements, commitments, arrangements and
understandings that may be enforceable against Company.
"Control" (including the terms "controlled by" and "under common
control with") shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by Contract or
otherwise.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section
2.07(a).
"Effective Time" shall have the meaning set forth in Section 2.02.
"Environmental Law" shall mean any Laws relating to regulation of
pollution or the protection of human health or the environment, including
without limitation the following federal statutes and their state counterparts,
as each may be amended from time to time, and any regulations promulgated
thereunder: the Atomic Energy Act, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Federal Insecticide, Fungicide, and Rodenticide Act, the Hazardous Materials
Transportation Act, the Occupational Safety and Health Act, the Resource
Conservation and Recovery Act and the Safe Drinking Water Act.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any entity that is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) of which
Company or any Water Company Subsidiary is a member, an unincorporated trade or
business under common control with Company or any Water Company Subsidiary (as
determined under Section 414(c) of the
48
Code), or a member of an "affiliated service group" (within the meaning of
Section 414(m) of the Code) of which Company or any Water Company Subsidiary is
a member.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder).
"GAAP" shall mean accounting principles generally accepted in the
United States.
"General Adverse Conditions" shall mean:
(a) Conditions, events or circumstances (other than any changes or
proposed changes in Laws) affecting either (i) the United States economy
generally or (ii) the industry of Company and Company Subsidiaries generally,
which in each case does not have a materially disproportionate effect on Company
and Company Subsidiaries, taken as a whole;
(b) Changes in GAAP or in SEC accounting rules, policies, practices
or interpretations;
(c) Acts or omissions of Parent and/or Purchaser prior to the latter
to occur of the Closing and the Effective Time;
(d) Acts or omissions of Company or any of Company Subsidiaries
taken at the request of the Parent or Purchaser prior to the latter to occur of
the Closing and the Effective Time;
(e) The effects of compliance with this Agreement by Company or any
of Company Subsidiaries, including the incurrence of expenses by Company or any
of its Subsidiaries in connection with the consummation of the transactions
contemplated hereby;
(f) Acts or omissions of Parent, Purchaser, Company or its
Subsidiaries contemplated hereby that have an effect on Company or its
Subsidiaries, including any disruptions to the Business of Company or any of its
Subsidiaries as a result of the execution, delivery and performance of this
Agreement or the transactions contemplated hereby;
(g) Any outbreak or escalation of hostilities, any occurrence or
threat of acts commonly referred to as terrorist attacks or any armed
hostilities associated therewith, and any national or international calamity or
emergency or any escalation thereof; or
(h) Changes in the market price or trading volume of the shares of
Company Common Stock (but not any change or effect underlying such decrease to
the extent such change or effect would otherwise constitute a Material Adverse
Change or Material Adverse Effect).
"Governmental Entity" shall mean any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, county, local, foreign or other.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in Section 1.02(b).
▇▇
"▇▇▇ ▇▇▇" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"Indemnified Losses" shall have the meaning set forth in Section
5.10(a).
"Indemnified Person" shall have the meaning set forth in Section
5.10(a).
"IRS" shall have the meaning set forth in Section 4.05(d).
"Knowledge", "know", "known", "to the knowledge of", and all
variations thereof and other words of similar meaning, whether or not
capitalized, when used with respect to:
(a) Company or any of Company Subsidiaries, shall be deemed to refer
to the actual knowledge, after reasonable inquiry, of ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇, provided that (i) in each
case, with respect to the directors, officers and employees of Company and its
Subsidiaries described herein, any knowledge acquired by any such Person
following termination of employment shall not be deemed to be actual knowledge
of any remaining director, officer, or employee of Company or its Subsidiaries,
or Company, and (ii) any information protected as an attorney client privileged
communication or attorney client work product possessed by ▇▇▇▇▇▇ ▇▇▇▇▇▇, as
counsel to Company, shall not be deemed to be included in this definition of
"Knowledge", "know", "known", "to the knowledge of", and all variations thereof
and other words of similar meaning, whether or not capitalized; and
(b) the Parent or Purchaser, shall be deemed to refer to the actual
knowledge, after reasonable inquiry, of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇'▇▇▇▇▇▇▇, provided that (i) in each case, with respect to the directors,
officers and employees of the Parent or Purchaser described herein, any
knowledge acquired by any such Person following termination of employment shall
not be deemed to be actual knowledge of any remaining director, officer, or
employee of the Parent or Purchaser, or the Parent or Purchaser, and (ii) any
information protected as an attorney client privileged communication or attorney
client work product possessed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as counsel to Purchaser, shall
not be deemed to be included in this definition of "Knowledge", "know", "known",
"to the knowledge of", and all variations thereof and other words of similar
meaning, whether or not capitalized.
"Laws" shall mean any applicable statute, law, ordinance, rule or
regulation.
"Liability" means any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted or unasserted,
liquidated or unliquidated, secured or unsecured.
"Liens" means any mortgages, liens (statutory or otherwise),
security interests, claims, pledges, licenses, equities, options, conditional
sales Contracts, assessments, levies, easements, covenants, conditions,
reservations, encroachments, hypothecations, equities, restrictions,
rights-of-way, exceptions, limitations, charges, possibilities of reversion,
rights of refusal or encumbrances of any nature whatsoever.
50
"Litigation" means any complaint, action, suit, proceeding,
arbitration or other alternate dispute resolution procedure, demand,
investigation or inquiry, whether civil, criminal or administrative.
"Material Adverse Change" shall mean a material adverse change in
the Business, operations, assets, Liabilities, financial condition or results of
operations of Company and Company Subsidiaries, taken as a whole, provided that
a Material Adverse Change shall not be deemed to include any material adverse
change due to General Adverse Conditions.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Business, operations, assets, Liabilities, financial condition or
results of operations of Company and Company Subsidiaries, taken as a whole, or
(b) the ability of Company to perform its obligations under this Agreement,
provided that a Material Adverse Effect shall not be deemed to include any
material adverse effect due to General Adverse Conditions.
"Merger" shall have the meaning set forth in the recitals of this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section
2.06(a).
"Minimum Condition" shall have the meaning set forth in Annex II.
"MLB Entity" means each of, and "MLB Entities" means more than one
of, the Office of the Commissioner of Baseball, its Bureaus, Committees,
Subcommittees and Councils, MLB Advanced Media, L.P., MLBAM Acquisition Corp.,
SportsOnEarth LLC, Major League Baseball Enterprises, Inc., Major League
Baseball Properties, Inc. (doing business in its own name and as Major League
Baseball Productions), Baseball Television, Inc. (d/b/a Major League Baseball
International), the Major League Baseball Clubs, and each of their subsidiaries
or Affiliated entities, any entity which, now or in the future, controls, is
controlled by, or is under common control with the Major League Baseball Clubs
or the Office of the Commissioner of Baseball, and the directors, officers and
employees of the above entities.
"Offer" shall have the meaning set forth in the recitals of this
Agreement.
"Offer Documents" shall have the meaning set forth in Section
1.01(c).
"Offer Price" shall have the meaning set forth in the recitals of
this Agreement.
"Offer to Purchase" shall have the meaning set forth in Section
1.01(c).
"Options" shall have the meaning set forth in Section 2.09.
"Orders" shall mean any order, writ, injunction, judgment, plan or
decree.
"Parent" shall have the meaning set forth in the preamble of this
Agreement.
"Paying Agent" shall have the meaning set forth in Section 2.08(a).
51
"Permitted Real Property Liens" shall have the meaning set forth in
Section 4.11(a).
"Person" shall mean an individual, corporation, partnership,
association, trust, any unincorporated organization or group (within the meaning
of Section 13(d)(3) of the Exchange Act).
"Purchaser" shall have the meaning set forth in the preamble of this
Agreement.
"Real Property" shall have the meaning set forth in Section 4.11(c).
"Representatives" shall have the meaning set forth in Section
5.03(a).
"Schedule 14D-9" shall have the meaning set forth in Section
1.02(b).
"Schedule of Assets/Liabilities" shall have the meaning set forth in
Section 4.04.
"Schedule of Performance Metrics" shall have the meaning set forth
in Section 4.04.
"Schedule TO" shall have the meaning set forth in Section 1.01(c).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement dated as of February 14, 2005, by and among Parent,
Purchaser, General Atlantic Partners 74, L.P., a Delaware limited partnership,
General Atlantic Partners 54, L.P., a Delaware limited partnership, GAP
Coinvestment Partners II, L.P., a Delaware limited partnership, and GapStar,
LLC, a Delaware limited liability company.
"Series F Preferred Stock" shall mean Company's Series F Senior
Cumulative Redeemable Preferred Stock, par value $0.000225 per share.
"Series G Preferred Stock" shall mean Company's Series G Senior
Cumulative Redeemable Convertible Participating Preferred Stock, par value
$0.000225 per share.
"Shares" shall have the meaning set forth in the recitals of this
Agreement.
"Special Committee" shall have the meaning set forth in the recitals
of this Agreement.
"Stockholder Agreements" shall refer to (a) that certain Stockholder
Agreement dated as of February 14, 2005, by and among each of Parent, Purchaser,
General Atlantic Partners 74, L.P., General Atlantic Partners 54, L.P., General
Atlantic Partners 46, L.P., GAP Coinvestment Partners, L.P., GAP Coinvestment
Partners II, L.P., and GapStar, LLC, (b) that certain Stockholder Agreement
dated as of February 14, 2005, by and among Parent, Purchaser, and International
Capital Partners, Inc. Profit Sharing Trust, (c) that certain Stockholder
Agreement dated as of February 14, 2005, by and among each of Parent, Purchaser,
Sports Capital Partners, L.P., Sports Capital Partners
52
(Cayman Islands), L.P., and Sports Capital Partners CEV, LLC, and (d) that
certain Stockholder Agreement dated as of February 14, 2005, by and among each
of Parent, Purchaser, Competiber, S.A., ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇, and Valor XXI SICAV, S.A.
"Stock Plans" shall have the meaning set forth in Section 2.09.
"Superior Proposal" shall have the meaning set forth in Section
5.03(d).
"Surviving Corporation" shall have the meaning set forth in Section
2.01.
"Taxes" shall mean any federal, state, county, local, territorial,
provincial, or foreign income, net income, gross receipts, single business,
unincorporated business, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
gains, withholding, social security (or similar), payroll, unemployment,
disability, workers compensation, real property, personal property, ad valorem,
replacement, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition, whether or not disputed and whether or not
disputed and whether imposed by Law, Order, Contract or otherwise.
"Tax Returns" shall mean any return, declaration, report, estimate,
claim for refund, or information return or statement relating to, or required to
be filed in connection with, any Taxes, including any schedule, form, attachment
or amendment.
"Trade Rights" shall mean rights in the following: (a) all trademark
rights, trade dress, service marks, trade names and brand names; (b) all
copyrights and all other rights associated therewith and the underlying works of
authorship; (c) all patents and all proprietary rights associated therewith; (d)
all Contracts granting any right, title, license or privilege under the
intellectual property rights of any third party; (e) all inventions, mask works
and mask work registrations, know how, discoveries, improvements, designs,
computer source codes, programs and other software (including all machine
readable code, printed listings of code, documentation and related property and
information), trade secrets, websites, domain names, shop and royalty rights,
employee covenants and agreements respecting intellectual property and non
competition and all other types of intellectual property; and (f) all
registrations of any of the foregoing, all applications therefor, all goodwill
associated with any of the foregoing and all claims for infringement or breach
thereof.
"2003 Audit" shall have the meaning set forth in Section 4.04.
"Waste" shall mean (a) any petroleum, hazardous or toxic
petroleum-derived substance or petroleum product, flammable or explosive
material, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, foundry sand or polychlorinated
biphenyls (PCBs); (b) any chemical or other material or substance that is now
regulated, classified or defined as or included in the definition of "hazardous
substance," "hazardous waste," "hazardous material," "extremely hazardous
substance," "restricted hazardous waste," "toxic substance," "toxic pollutant,"
"pollutant" or "contaminant" under any Environmental Law, or any similar
denomination intended to classify substance by reason of toxicity,
carcinogenicity, ignitability, corrosivity or reactivity under any Environmental
Law; or
53
(c) any other chemical or other material, waste or substance, exposure to which
is now prohibited, limited or regulated by or under any Environmental Law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
54
IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MLB ADVANCED MEDIA, L.P.,
by MLB Advanced Media, Inc., its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President & General Counsel
MLBAM ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
55
ANNEX I
PURCHASER'S CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer or Agreement (except for
the provisions of Section 1.01(b) which shall remain applicable), Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), to pay for any
tendered Shares, and may delay the acceptance for payment of any tendered Shares
and amend or terminate the Offer if (a) any applicable waiting period under the
HSR Act shall not have expired or been terminated prior to the expiration of the
Offer; or (b) at any time after the date of this Agreement and prior to the time
of payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment or paid for pursuant to the Offer), any of the following
events shall occur and be continuing or conditions shall exist:
(i) There shall have been any action taken, or any Law,
interpretation, judgment, order or injunction, proposed, sought, promulgated,
enacted, entered, enforced, issued, amended or deemed applicable to Parent,
Purchaser, Company, any other Affiliate of Parent or Company, the Offer or the
Merger, by any Governmental Entity that is reasonably likely to, directly or
indirectly:
(A) Make illegal by the acceptance for payment of, or
payment for or purchase of any or all of the Shares pursuant to the
Offer, or otherwise restrict, make materially more costly or
prohibit the making of the Offer or the consummation of the Offer or
the Merger; or
(B) Result in a material delay in or materially restrict
the ability of Purchaser to accept for payment, pay for or purchase
any or all of the Shares pursuant to the Offer or to effect the
Merger; or
(C) Render Purchaser unable to accept for payment or pay
for or purchase any or all of the Shares pursuant to the Offer; or
(D) Impose material limitations on the ability of
Parent, Purchaser or any of their respective Company Subsidiaries or
Affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, any of the
Shares to be acquired by Company, including, without limitation, the
right to vote any such Shares on an equal basis with all other
Shares on all matters properly presented to the stockholders of
Company; or
(E) Require the divestiture by Parent, Purchaser or any
of their respective Company Subsidiaries or Affiliates of any
Shares, or require Purchaser, Parent, Company, or any of their
respective Company Subsidiaries or Affiliates to dispose of or hold
separate all or any material portion of their respective businesses,
assets or properties or impose any material limitations on the
ability of any of such entities to conduct their respective
businesses or own such assets, properties or Shares or on the
ability of Parent or Purchaser to conduct the
Annex I-1
business of Company and its Company Subsidiaries and own the assets
and properties of Company and its Company Subsidiaries; or
(F) Impose any material limitations on the ability of
Parent, Purchaser or any of their respective Company Subsidiaries or
Affiliates effectively to control the business or operations of
Company, Parent, Purchaser or any of their respective Company
Subsidiaries or Affiliates; or
(ii) There shall have been instituted or pending any action,
proceeding or counterclaim by any Governmental Entity, challenging the making of
the Offer or the acquisition by Purchaser of the Shares pursuant to the Offer or
the consummation of the Merger, or seeking to, directly or indirectly, result in
any of the consequences referred to in subclauses (A) through (F) in clause (i)
above; or
(iii) There shall have been threatened any action, proceeding or
counterclaim by any Governmental Entity, challenging the making of the Offer or
the acquisition by Purchaser of the Shares pursuant to the Offer or the
consummation of the Merger, or seeking to, directly or indirectly, result in any
of the consequences referred to in subclauses (A) through (F) in clause (i)
above that, in the judgment of Parent, has a reasonable probability of success;
or
(iv) This Agreement shall have been terminated in accordance with
its terms or any event shall have occurred which gives Parent or Purchaser the
right to terminate the Agreement or not consummate the Merger; or
(v) Any event, change, effect, condition, fact or circumstance shall
have occurred following the date of this Agreement that, individually or in the
aggregate, constitutes a Material Adverse Change or would reasonably be expected
to have a Material Adverse Effect; or
(vi) Any of the representations and warranties of Company set forth
in the Agreement shall not be true and correct (except as to any such
representation or warranty which speaks as of a specific date, which must be
true or correct only as of such specific date), except where the failure to be
so true and correct, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; or
(vii) Company shall have failed to perform in any material respect,
or to comply in any material respect with, any obligation, agreement or covenant
of Company to be performed or complied with by it under the Agreement, except
where the failure to be so perform or comply, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect; or
(viii) There shall have occurred and be continuing (A) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States for a period of five (5) days, (B) any decline in any of the Dow ▇▇▇▇▇
Industrial Average, the Standard & Poor's Index of 500 Industrial Companies, the
New York Stock Exchange Composite Index or the Nasdaq Composite Index in excess
of 25% measured from the close of business on
Annex I-2
the trading day next preceding the date of the Agreement, or (C) any material
adverse change in the general political, market, economic or financial
conditions in the United States or abroad that has had or would reasonably be
expected to have a Material Adverse Effect; or
(ix) The Special Committee (A) shall have withdrawn, or modified or
amended in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its approval and/or recommendation of the Agreement or the
transactions contemplated hereby, including the Offer or the Merger, (B)
approved and/or recommended, as applicable, or announced a neutral position with
respect to, any Acquisition Proposal, (C) shall have adopted any resolution to
effect any of the foregoing or (D) upon request of Parent, shall fail to
reaffirm publicly and unconditionally its approval and/or recommendation of the
Offer, the Agreement or the Merger within five Business Days after Parent's
written request to do so under the circumstances described in Section
7.01(e)(iv) of the Agreement; or
(x) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser, their Affiliates or any group of
which any of them is a member, and other than any current stockholders of
Company or their Affiliates or any group of which any of them is a member, shall
have acquired or entered into a definitive agreement or agreement in principle
to acquire beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 5% or more of the then outstanding Shares
or shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of 5% or more of the then outstanding
Shares.
The foregoing conditions are for the sole benefit of Parent or Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
(including any action or inaction by Parent or Purchaser) giving rise to any
such conditions and may be waived by Parent or Purchaser in whole or in part at
any time and from time to time, in their sole discretion subject to the terms of
this Agreement. The failure by Parent or Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination by Parent or Purchaser with
respect to whether or not the foregoing conditions to the Offer in this Annex I
have been satisfied shall be final and binding upon all parties.
Capitalized terms used but not defined in this Annex I shall have the
meanings assigned to such terms in the Agreement to which it is annexed, except
that the term "Agreement" shall be deemed to refer to the Agreement to which
this Annex I is appended.
Annex I-3
ANNEX II
OTHER CONDITION TO THE OFFER
Notwithstanding any other provision of the Offer or Agreement (except for
the provisions of Section 1.01(b) which shall remain applicable), Purchaser
shall not accept for payment or pay for any tendered Shares if there shall not
have been validly tendered and not properly withdrawn prior to the expiration of
the Offer such number of shares of Common Stock which, together with the shares
of Common Stock into which the Warrants and shares of Preferred Stock to be
acquired by Purchaser pursuant to the Securities Purchase Agreement are
exercisable or convertible, represents at least 90% of all of the issued and
outstanding Common Stock, assuming the exercise of the Warrants and conversion
of the Preferred Stock into Common Stock (the "Minimum Condition").
Capitalized terms used but not defined in this Annex II shall have the
meanings assigned to such terms in the Agreement to which it is annexed, except
that the term "Agreement" shall be deemed to refer to the Agreement to which
this Annex II is appended.
Annex II
EXHIBIT A
FORM OF OPTION CANCELLATION AGREEMENT
_____________ ___, 2005
Mellon Investor Services LLC
Attn: Reorganization Dept.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Option Cancellation Agreement
Ladies and Gentlemen:
As set forth in the books and records of ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation (the "Company"), the undersigned is the holder of record of
In-the-Money Options and/or TicketsLive Options (as such terms are defined in
that certain Agreement and Plan of Merger, dated as of February 14, 2005, among
MLB Advanced Media, L.P., a Delaware limited partnership ("Parent"), MLBAM
Acquisition Corp., a Delaware corporation ("Purchaser"), and the Company (the
"Merger Agreement")). All capitalized terms utilized herein, unless otherwise
defined herein, shall bear the meaning ascribed to such terms in the Merger
Agreement.
Pursuant to the terms and conditions of the Merger Agreement, and as
described in the Offer Documents, the undersigned understands that, if the Offer
is consummated, then effective at the Effective Time, Purchaser will be merged
with and into the Company (the "Merger"). In connection with the Merger the
undersigned understands and agrees, and represents and warrants to you, the
Parent and the Purchaser that:
(a) at the Effective Time, all Stock Plans shall be terminated and all
Options, In-the-Money Options, and D&O Options and certificates representing
such options, if any, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist;
(b) the undersigned shall cease to have any rights with respect to all
Options, In-the-Money Options and TicketsLive Options (and any certificate
representing any Option, In-the-Money Option or TicketsLive Option), other than
and subject to the undersigned's rights to receive the In-the-Money Option Cash
Payment(s) and/or TicketsLive Option Cash Payment(s), as applicable, pursuant to
the Merger Agreement;
(c) the undersigned has become fully vested in the right to receive the
In-the-Money Option Cash Payment(s) and/or TicketsLive Option Cash Payment(s),
as applicable, without requiring any payment by the undersigned of any cash with
respect to the exercise of the respective In-the-Money Options and/or
TicketsLive Options of the undersigned, subject to the deduction of applicable
withholding taxes;
(d) the undersigned is the holder of record of, and the sole owner of, all
rights, title (beneficially or otherwise) and interests in, to and under the
undersigned's In-the-Money Options and/or TicketsLive Options, such In-the-Money
Options and/or TicketsLive Options are not subject to any claim, lien, charge,
security interest, pledge, mortgage, or any other restriction or
Mellon Investor Services LLC
Page 2
encumbrance of any kind or nature, and the undersigned has not sold, assigned,
granted, hypothecated, gifted or otherwise transferred or disposed of any
rights, title or interests in, to or under the undersigned's In-the-Money
Options and/or TicketsLive Options;
(e) the address, contact information, Social Security Number or Federal
Employer Identification Number (FEIN), set forth below for the undersigned is
true and correct; and
(f) as a condition precedent to the Paying Agent delivering such
In-the-Money Option Cash Payment(s) and/or TicketsLive Option Cash Payment(s),
as applicable, to the undersigned, the undersigned is required to fully
complete, date, sign and deliver, and hereby delivers, to you as the Paying
Agent for the Parent and Purchaser, this Option Cancellation Agreement as the
undersigned's free and voluntary act.
Accordingly, the undersigned requests that you, as the Paying Agent for
the Parent and Purchaser, deliver to the undersigned at the address set forth
below for the undersigned, such In-the-Money Option Cash Payment(s) and/or
TicketsLive Option Cash Payment(s), as applicable, payable to the undersigned
pursuant to the terms and conditions of the Merger Agreement, subject to the
deduction of applicable withholding taxes, in exchange for all of the
undersigned's In-the-Money Options and/or TicketsLive Options (and all of the
shares of Company Common Stock issuable upon exercise of such In-the-Money
Options and/or TicketsLive Options), on or following the Effective Time pursuant
to the terms and conditions of the Merger Agreement.
Very Truly Yours,
--------------------------------------------
Full Legal Name of In-the-Money Options
and/or TicketsLive Options Holder
--------------------------------------------
Social Security Number or Federal Employer
Identification Number (FEIN) of In-the-Money
Options and/or TicketsLive Options Holder
--------------------------------------------
--------------------------------------------
--------------------------------------------
Mailing Address of In-the-Money Options
and/or TicketsLive Options Holder
Home Telephone Number:
---------------------
Work Telephone Number:
---------------------
E-Mail Address:
----------------------------
2