EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of July 22, 2003
TABLE OF CONTENTS
Page
ARTICLE I. HOLDING COMPANY AND SUBSIDIARIES......................................2
SECTION 1.01. Organization of Holdco................................2
SECTION 1.02. Directors and Officers of Holdco......................2
SECTION 1.03. Organization of Merger Subsidiaries...................3
SECTION 1.04. Actions of Parent.....................................3
ARTICLE II. THE MERGERS; CERTAIN RELATED MATTERS.................................3
SECTION 2.01. The Mergers...........................................3
SECTION 2.02. Closing...............................................3
SECTION 2.03. Effective Time........................................3
SECTION 2.04. Effects of the Mergers................................4
SECTION 2.05. Charters and Bylaws...................................4
SECTION 2.06. Officers and Directors................................4
SECTION 2.07. Effect on Company Common Stock........................4
SECTION 2.08. Company Stock Options; Company Employee Stock
Purchase Plan; Company Warrants.......................9
SECTION 2.09. Certain Adjustments..................................11
SECTION 2.10. Company Appraisal Rights.............................11
SECTION 2.11. Effect on Shares of Parent Common Stock..............12
SECTION 2.12. Parent Stock Options; Parent Employee Stock Purchase
Plan.................................................13
SECTION 2.13. Fractional Shares....................................13
ARTICLE III. EXCHANGE OF CERTIFICATES...........................................14
SECTION 3.01. Exchange Agent.......................................14
SECTION 3.02. Company Exchange Fund................................14
SECTION 3.03. Company Exchange Procedures..........................14
SECTION 3.04. Parent Exchange Fund.................................15
SECTION 3.05. Parent Exchange Procedures...........................15
SECTION 3.06. Distributions with Respect to Unexchanged Shares.....16
SECTION 3.07. No Further Ownership Rights in Shares of Company
Common Stock or Parent Common Stock..................16
SECTION 3.08. Funding of Fractional Shares of Holdco Common Stock..16
SECTION 3.09. Termination of Exchange Funds........................16
SECTION 3.10. No Liability.........................................17
SECTION 3.11. Investment of the Exchange Fund......................17
SECTION 3.12. Lost Certificates....................................17
SECTION 3.13. Withholding Rights...................................17
SECTION 3.14. Further Assurances...................................18
SECTION 3.15. Stock Transfer Books.................................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................18
SECTION 4.01. Organization and Qualification; Subsidiaries.........18
SECTION 4.02. Charter Documents....................................18
SECTION 4.03. Capitalization.......................................19
SECTION 4.04. Authority Relative to this Agreement.................20
SECTION 4.05. No Violation.........................................20
SECTION 4.06. Governmental Approvals, Consents and Filings.........21
SECTION 4.07. SEC Filings; Financial Statements....................22
SECTION 4.08. Absence of Certain Changes or Events.................23
SECTION 4.09. No Undisclosed Liabilities...........................23
SECTION 4.10. Material Contracts; No Violation.....................23
SECTION 4.11. Absence of Litigation................................25
SECTION 4.12. Employee Benefit Plans; Employment Agreements........25
SECTION 4.13. Labor and Employment Matters.........................28
SECTION 4.14. Taxes................................................29
SECTION 4.15. Environmental Matters................................31
SECTION 4.16. Intellectual Property................................32
SECTION 4.18. Antitakeover Statutes; Stockholder Rights Plan.......36
SECTION 4.19. Customers and Suppliers..............................36
SECTION 4.20. Title to Property....................................37
SECTION 4.21. Insurance............................................37
SECTION 4.22. Accounts Receivable..................................38
SECTION 4.23. Restrictions on Business Activities..................38
SECTION 4.24. Interested Party Transactions........................39
SECTION 4.25. Brokers; Fees........................................39
SECTION 4.26. Opinion of Financial Advisor.........................39
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT.............................39
SECTION 5.01. Organization and Qualification; Subsidiaries.........40
SECTION 5.02. Certificate of Incorporation and Bylaws..............40
SECTION 5.03. Capitalization.......................................40
SECTION 5.04. Authority Relative to this Agreement.................42
SECTION 5.05. No Violation.........................................43
SECTION 5.06. SEC Filings; Financial Statements....................43
SECTION 5.07. Absence of Certain Changes or Events.................44
SECTION 5.08. No Undisclosed Liabilities...........................45
SECTION 5.09. Absence of Litigation................................45
SECTION 5.10. Title to Property....................................45
SECTION 5.11. Taxes................................................45
SECTION 5.12. Broker; Fees.........................................45
SECTION 5.13. Interested Party Transactions........................46
SECTION 5.14. Opinion of Financial Advisor.........................46
ARTICLE VI. CONDUCT OF BUSINESS PENDING THE MERGERS.............................46
SECTION 6.01. Conduct of Business by the Company Pending the
Mergers..............................................46
SECTION 6.02. Conduct of Business by the Parent or Holdco Pending
the Mergers..........................................50
SECTION 6.03. Competing Transactions...............................50
ARTICLE VII. ADDITIONAL AGREEMENTS..............................................53
SECTION 7.01. Registration Statement; Joint Proxy Statement........53
SECTION 7.02. Stockholders' Meetings; Board Recommendations........54
SECTION 7.03. Access to Information; Confidentiality...............55
SECTION 7.04. Consents; Approvals..................................56
SECTION 7.05. Intentionally Omitted................................57
SECTION 7.06. Notification of Certain Matters......................57
SECTION 7.07. Further Assurances; Tax Treatment....................57
SECTION 7.08. Public Announcements.................................57
SECTION 7.09. Comfort Letters; Financial Statements; Audit.........58
SECTION 7.10. Listing of Shares of Holdco Common Stock.............59
SECTION 7.11. Form S-8.............................................59
SECTION 7.12. Conveyance Taxes.....................................59
SECTION 7.13. Director and Officer Liability.......................59
SECTION 7.14. Action by Parent and Company's Boards................60
SECTION 7.16. Company Rights Agreement.............................61
SECTION 7.17. Additional Employee Matters..........................61
ARTICLE VIII. CONDITIONS TO THE MERGERS.........................................63
SECTION 8.01. Conditions to Obligations of Each Party to Effect
its Respective Merger................................63
SECTION 8.02. Additional Conditions to Obligations of Parent.......64
SECTION 8.03. Additional Conditions to Obligation of the Company...65
ARTICLE IX. TERMINATION.........................................................65
SECTION 9.01. Termination..........................................66
SECTION 9.02. Effect of Termination................................67
SECTION 9.03. Fees and Expenses....................................67
ARTICLE X. GENERAL PROVISIONS...................................................69
SECTION 10.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc...........................69
SECTION 10.02. Notices..............................................70
SECTION 10.03. Amendment............................................70
SECTION 10.04. Waiver...............................................71
SECTION 10.05. Headings.............................................71
SECTION 10.06. Severability.........................................71
SECTION 10.07. Entire Agreement.....................................71
SECTION 10.08. Assignment...........................................71
SECTION 10.09. Parties in Interest..................................71
SECTION 10.10. Specific Performance.................................72
SECTION 10.11. Governing Law........................................72
SECTION 10.12. Counterparts Signature; Facsimile Delivery...........72
SECTION 10.13. WAIVER OF JURY TRIAL.................................72
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into
as of July 22, 2003, by and among NMP, Inc., a Delaware corporation
("Holdco"), ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("Parent"), Pinnacor
Inc., a Delaware corporation ("Company"), Maple Merger Sub, Inc., a Delaware
corporation ("Parent Merger Sub") and a direct wholly-owned subsidiary of
Holdco, and Pine Merger Sub, Inc., a Delaware corporation ("Company Merger
Sub") and a direct wholly owned subsidiary of Holdco.
WITNESSETH:
WHEREAS, the boards of directors of Parent and Company have each
determined that it is advisable and in the best interests of each corporation
and its respective stockholders for Parent and Company to enter into a
strategic business combination in order to advance the long-term strategic
business interests of Parent and Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, the combination of Company and Parent with a new holding
company structure which is intended to achieve important business objectives
shall be effected by the terms of this Agreement through the Mergers (as
defined in Section 2.01);
WHEREAS, in furtherance thereof, the Board of Directors of each of
Company, Parent, Holdco, Parent Merger Sub and Company Merger Sub has approved
this Agreement and the applicable Merger in accordance with the applicable
provisions of the Delaware General Corporation Law (the "DGCL"), and upon the
terms and subject to the conditions set forth in this Agreement, pursuant to
which the capital stock of Parent outstanding immediately prior to the
Effective Time will be converted into the right to receive shares of common
stock of Holdco and the capital stock of Company will be converted into the
right to receive cash and shares of common stock of Holdco as set forth
herein;
WHEREAS, concurrently with the consummation of the Parent Merger (as
defined herein), Holdco will be renamed "MAPLE" and will become the parent
corporation of Parent, as further described in Article II of this Agreement;
WHEREAS, for Federal income tax purposes, it is intended that the
Mergers shall qualify as exchanges within the meaning of Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code"), and that the Parent
Merger will also constitute a reorganization within the meaning of Section
368(a) of the Code and the regulations promulgated thereunder;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, General Atlantic Partners 69, L.P., GAP Coinvestment
Partners II, L.P., GapStar, LLC, RRE Ventures II L.P., RRE Ventures Fund II
L.P., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, stockholders of Company, are entering into voting
agreements in the form attached hereto as Exhibits A (the "Company Voting
Agreements");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, General Atlantic Partners 69, L.P., GAP Coinvestment
Partners II, L.P., GapStar, LLC, RRE Ventures II L.P., RRE Ventures Fund II
L.P., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, stockholders of Company,
are entering into affiliate letters, substantially in the form attached hereto
as Exhibit B (the "Company Affiliate Agreements");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Company's willingness to enter
into this Agreement, ▇▇▇▇▇▇▇ International Finance Ltd. ("Pearson") and CBS
Broadcasting Inc. ("CBS"), stockholders of Parent, are entering into a voting
and waiver agreement with Holdco, Parent and Company in the form attached
hereto as Exhibit C (the "Parent Voting Agreement"); and
WHEREAS, for purposes of this Agreement, any term not defined in this
Agreement shall have the meaning ascribed to it in Annex A - Definitions (such
meaning to be equally applicable to both the singular and the plural forms of
such defined term).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement, and intending to be legally bound hereby and thereby, the parties
hereto agree as follows:
Article I.
HOLDING COMPANY AND SUBSIDIARIES
SECTION 1.01. Organization of Holdco. Parent has caused Holdco to be
organized under the laws of the State of Delaware. The authorized capital
stock of Holdco consists of 100 shares of common stock, par value $0.01 per
share (the "Holdco Common Stock"), of which 100 shares have been issued to
Parent. Parent shall take, and shall cause Holdco to take, all requisite
action to cause the certificate of incorporation of Holdco to be in the form
of Exhibit D-1 (the "Holdco Charter") and the bylaws of Holdco to be in the
form of Exhibit D-2 (the "Holdco Bylaws"), in each case, at the Effective Time
(with such modifications to the Holdco Charter and Holdco Bylaws as Parent and
Company agree to prior to the Effective Time).
SECTION 1.02. Directors and Officers of Holdco. At the Effective
Time, the directors of Holdco shall consist of ten (10) representatives of
Parent as designated by Parent prior to the Effective Time and two (2)
representatives of Company as nominated by Company and approved by Parent
prior to the Effective Time. At the Effective Time, the officers of Holdco
shall be the officers of Parent then in effect. Each such director and officer
shall remain in office until his or her successors are elected in accordance
with the Holdco Bylaws.
SECTION 1.03. Organization of Merger Subsidiaries. Holdco has caused
Parent Merger Sub and Company Merger Sub to be organized for the sole purpose
of effectuating the Mergers contemplated herein. The authorized capital stock
of Company Merger Sub consists of 100 shares of common stock, par value $0.01
per share, all of which shares have been issued to Holdco at a price of $1.00
per share. The authorized capital stock of Parent Merger Sub consists of 100
shares of common stock, par value $0.01 per share, all of which shares shall
be issued to Holdco at a price of $1.00 per share.
SECTION 1.04. Actions of Parent. Parent, as the holder of all the
outstanding shares of Holdco Common Stock, has approved this Agreement and
shall cause Holdco, as the sole stockholder of each of the Merger
Subsidiaries, to adopt this Agreement. Parent shall cause Holdco, and Holdco
shall cause the Parent Merger Sub and Company Merger Sub, to perform their
respective obligations under this Agreement.
Article II.
THE MERGERS; CERTAIN RELATED MATTERS
SECTION 2.01. The Mergers. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL,
except as set forth on Schedule 2.01:
(a) Company Merger Sub shall be merged with and into Company (the
"Company Merger"). Company shall be the surviving corporation (the "Company
Surviving Corporation") in the Company Merger and shall continue its corporate
existence under the laws of the State of Delaware. As a result of the Company
Merger, Company shall become a wholly owned subsidiary of Holdco.
(b) Parent Merger Sub shall be merged with and into Parent (the
"Parent Merger"). Parent shall be the surviving corporation in the Parent
Merger and shall continue its corporate existence under the laws of the State
of Delaware. As a result of the Parent Merger, Parent shall become a wholly
owned subsidiary of Holdco. The Company Merger and the Parent Merger are
together referred to herein as the "Mergers."
SECTION 2.02. Closing. Upon the terms and subject to the conditions
set forth in Article VIII and the termination rights set forth in Article IX,
the closing of the Mergers (the "Closing") will take place on the first
Business Day after the satisfaction or waiver (subject to applicable law) of
the conditions (excluding conditions that, by their nature, cannot be
satisfied until the Closing Date) set forth in Article VIII, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to by the parties hereto (the actual time and
date of the Closing being referred to herein as the "Closing Date"). The
Closing shall be held at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another place is agreed to by the
parties hereto.
SECTION 2.03. Effective Time. As soon as practicable following the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article VIII, at the Closing the parties shall file the Certificates of
Merger (as defined below) with the Secretary of State of the State of Delaware
in such form as is required by and executed and acknowledged in accordance
with the relevant provisions of the DGCL and make all other filings or
recordings required under the DGCL. The Mergers shall become effective at (i)
the date and time both of the certificate of merger relating to the Company
Merger (the "Company Certificate of Merger") and the certificate of merger
relating to the Parent Merger (the "Parent Certificate of Merger" together
with the Company Certificate of Merger, the "Certificates of Merger") are duly
filed with the Secretary of State of the State of Delaware or (ii) such
subsequent time as Parent and Company shall agree and as shall be specified in
the Certificates of Merger; provided that both Mergers shall become effective
at the same time (such time as the Mergers become effective being the
"Effective Time").
SECTION 2.04. Effects of the Mergers. At and after the Effective
Time, the Mergers will have the effects set forth in the DGCL.
SECTION 2.05. Charters and Bylaws.
(a) Certificates of Incorporation. The certificate of incorporation
of Company, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the surviving corporation in the Company
Merger and as of the Effective Time shall be amended to be identical to the
certificate of incorporation of the Company Merger Sub, as in effect
immediately prior to the Effective Time. The certificate of incorporation of
Parent, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the surviving corporation in the Parent Merger
and as of the Effective Time shall be amended to be identical to the
certificate of incorporation of the Parent Merger Sub, as in effect
immediately prior to the Effective Time, except that the name of the surviving
corporation shall be changed to "MarketWatch Media, Inc."
(b) Bylaws. The bylaws of Company, as in effect immediately prior to
the Effective Time, shall be the bylaws of the surviving corporation in the
Company Merger. The bylaws of Parent, as in effect immediately prior to the
Effective Time, shall be the bylaws of the surviving corporation in the Parent
Merger.
SECTION 2.06. Officers and Directors. The officers and directors of
Company Merger Sub immediately prior to the Effective Time shall be the
officers and directors of the surviving corporation in the Company Merger. The
officers and directors of Parent Merger Sub immediately prior to the Effective
Time shall be the officers and directors of the surviving corporation in the
Parent Merger.
SECTION 2.07. Effect on Company Common Stock. As of the Effective
Time, by virtue of the Company Merger and without any action on the part of
the holder of any shares of Company Common Stock or any shares of capital
stock of Company Merger Sub:
(a) Common Stock of Company Merger Sub. Each issued and outstanding
share of common stock, par value $0.01 per share, of Company Merger Sub shall
be converted into one fully paid and nonassessable share of common stock, par
value $.0l per share, of the surviving corporation in the Company Merger.
(b) Cancellation of the Company Owned Shares of Company Common Stock.
Each share of Company Common Stock held by the Company or any subsidiary of
the Company immediately prior to the Effective Time shall cease to be
outstanding and shall be cancelled and extinguished without any conversion
thereof.
(c) Conversion of Shares of Company Common Stock.
(i) Definitions. As used in this Agreement (and in particular to
this Section), the following terms shall have the meanings specified below:
"Cash Deficiency Ratio" means a fraction (A) whose numerator is the
positive difference between the Cash Share Number and the Cash Electing Shares
Number and (B) whose denominator is the number of Non-Electing Shares.
"Cash Distribution Amount" means Forty Four Million Dollars
($44,000,000).
"Cash Electing Share" means a Company Outstanding Share as to which a
valid Election has been made to receive cash.
"Cash Electing Shares Number" means the number of Cash Electing
Shares and the number of Company Dissenting Shares.
"Cash Proration Factor" means (A) the Cash Share Number divided by
(B) the Cash Electing Shares Number.
"Cash Share Number" means the Cash Distribution Amount divided by the
Per Share Amount.
"Company Outstanding Shares" mean the shares of Company Common Stock
outstanding at the Effective Time.
"Exchange Ratio" means 0.2659.
"Non-Electing Shares" means all Company Outstanding Shares as to
which a valid election to receive either cash or shares of Holdco Common Stock
has not been made.
"Per Share Amount" means $2.42.
"Stock Deficiency Ratio" means a fraction (A) whose numerator equals
the positive difference between the Stock Share Number and the Stock Electing
Shares Number and (B) whose denominator is the number of Non-Electing Shares.
"Stock Electing Share" means a Company Outstanding Share as to which
a valid Election has been made to receive a share of Holdco Common Stock.
"Stock Electing Shares Number" means the number of Stock Electing
Shares.
"Stock Proration Factor" means (A) the Stock Share Number divided by
(B) the Stock Electing Shares Number.
"Stock Share Number" means (A) the number of Company Outstanding
Shares less (B) the Cash Share Number.
(ii) General. At and as of the Effective Time, by virtue of the
Company Merger and without any action on the part of the holder of any shares
of capital stock of either Holdco, Company Merger Sub, or the Company, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time, other than any shares of Company Common Stock to be cancelled
pursuant to Section 2.07(b) and other than shares of Company Common Stock to
which dissenters' rights are exercised pursuant to Section 2.10, will be
cancelled and extinguished and automatically converted (subject to Sections
3.12 and 3.13) into the right to receive, without any interest thereon, upon
surrender of the certificate representing such shares in the manner provided
in Article III (if not previously surrendered pursuant to Section
2.07(c)(vii)), cash, a fraction of a share of Holdco Common Stock, or a
combination of cash or a fraction of a share of Holdco Common Stock as
hereinafter provided, subject to Section 2.13.
(iii) Elections. Subject to Sections 2.07(c)(iv), (v) and (vi)
below, each holder of shares of Company Common Stock shall be entitled, with
respect to each share of Company Common Stock held by such holder, to elect to
receive either:
(1) cash equal to the Per Share Amount; or
(2) a fraction of a validly issued, fully paid and
nonassessable share of Holdco Common Stock equal to the Exchange Ratio.
(iv) Excess of Cash Electing Shares. If the Cash Electing Shares
Number exceeds the Cash Share Number:
(1) each Stock Electing Share and each Non-Electing Share
shall be converted into the right to receive a fraction of a validly issued,
fully paid and nonassessable share of Holdco Common Stock equal to the
Exchange Ratio; and
(2) each Cash Electing Share shall be converted into the
right to receive (A) cash equal to the Per Share Amount multiplied by the Cash
Proration Factor and (B) a fraction of a validly issued, fully paid and
nonassessable share of Holdco Common Stock equal to (i) the Exchange Ratio
multiplied by (ii) one minus the Cash Proration Factor.
(v) Excess of Stock Electing Shares. If the number of Stock
Electing Shares Number exceeds the Stock Share Number:
(1) each Cash Electing Share and each Non-Electing Share
shall be converted into the right to receive cash equal to the Per Share
Amount; and
(2) each Stock Electing Share shall be converted into the
right to receive (A) cash equal to (i) the Per Share Amount multiplied by (ii)
one minus the Stock Proration Factor and (B) a fraction of a validly issued,
fully paid and nonassessable share of a Holdco Common Stock equal to (i) the
Exchange Ratio multiplied by (ii) the Stock Proration Factor.
(vi) No Excess of Cash Electing Shares or Stock Electing Shares.
In the event that neither Section 2.07(c)(iv) nor Section 2.07(c)(v) above is
applicable:
(1) each Cash Electing Share shall be converted into the
right to receive cash equal to the Per Share Amount.
(2) each Stock Electing Share shall be converted into the
right to receive a fraction of a validly issued, fully paid and nonassessable
share of Holdco Common Stock equal to the Exchange Ratio; and
(3) each Non-Electing Share shall be converted into the
right to receive (A) cash in the amount of (i) the Per Share Amount multiplied
by (ii) the Cash Deficiency Ratio, and (B) a fraction of a validly issued,
fully paid and nonassessable share of Holdco Common Stock equal to (i) the
Exchange Ratio multiplied by (ii) the Stock Deficiency Ratio.
(vii) Exercise of Election.
(1) Form of Election. All elections in accordance with this
Section 2.07(c) shall be made on a form designed for that purpose and mutually
acceptable to the Company and Parent (a "Form of Election") and mailed to
holders of record of shares of the Company Common Stock as of the record date
for the Company Stockholders Meeting or such other date as Parent and the
Company mutually agree (the "Form of Election Record Date"). To the extent
practicable, the Form of Election shall permit each holder that beneficially
owns shares of the Company Common Stock, in more than one name or account, to
specify how to allocate the cash paid and shares of Holdco Common Stock to be
issued in the Merger among the various accounts that such holder beneficially
owns. Parent and Company shall make available one or more Forms of Election as
may be reasonably requested by any person or entity who becomes a holder (or
beneficial owner) of shares of the Company Common Stock between the Form of
Election Record Date and the close of business on the day prior to the
Election Deadline.
(2) Manner of Exercise. For elections to be effective, (i)
with respect to shares of Company Common Stock represented by stock
certificates, an Election Form must be properly completed, signed, and
actually received by the Exchange Agent and accompanied by the certificates
representing all the shares of Company Common Stock ("Old Certificates") as to
which such an Election Form is being made, duly endorsed in blank or otherwise
in form acceptable for transfer on the books of the Company (or accompanied by
an appropriate guarantee of delivery by an Eligible Guarantor Institution, as
that term is defined in Rule 17Ad-15 promulgated pursuant to the Exchange Act,
provided that such certificates are in fact delivered to the Exchange Agent by
the time required in such guarantee, or an affidavit of lost certificate in
accordance with Section 3.12), or (ii) with respect to shares of Company
Common Stock that are held in book-entry form, Parent shall establish
procedures for the delivery of such shares, which procedures shall be
reasonably acceptable to the Company (either of (i) or (ii), an "Election").
(3) Election Deadline; Changes to the Election. An Election
must be received by the Exchange Agent not later than 5:00 p.m. New York City
time on the Effective Date (such time hereinafter referred to as the "Election
Deadline") in order to be effective. Any shares of Company Common Stock for
which the record holder has not, as of the Election Deadline, properly
submitted a properly completed Election Form to the Exchange Agent will be
deemed to be Non-Electing Shares. Any holder of shares of Company Common Stock
who has made an Election may at any time prior to the Election Deadline change
such holder's election by submitting a revised Election Form, properly
completed and signed, that is received by the Exchange Agent prior to the
Election Deadline. In addition, all Election Forms shall automatically be
revoked if the Exchange Agent is notified in writing by Parent and the Company
that the Merger has been abandoned.
(4) Deemed Non-Electing Shares. Parent shall have the
discretion, which it may delegate in whole or in part to the Exchange Agent,
to determine whether Election Forms have been properly completed, signed, and
timely submitted or to disregard defects in forms. Any such determination of
Parent or the Exchange Agent shall be conclusive and binding. Neither Parent
nor the Exchange Agent shall be under any obligation to notify any person of
any defect in an Election Form submitted to the Exchange Agent. Any shares of
Company Common Stock that a holder is deemed to have not submitted a valid
Election prior to the Election Deadline shall be deemed to be Non-Electing
Shares. Failure to deliver shares of the Company Common Stock covered by such
guarantee of delivery within the time set forth in such guarantee shall be
deemed to invalidate any otherwise properly made Election.
(viii) Exchange Agent Matters. The Exchange Agent shall also make
all the computation contemplated by this Section 2.07, including the
determination of the number of Cash Electing Shares, Stock Electing Shares and
Non-Electing Shares and, after consultation with Parent, all such computation
will be conclusive and binding on the former holders of shares of the Company
Common Stock absent manifest error. The Exchange Agent may, with the agreement
of Parent and the Company, make such rules as are consistent with this Section
2.07 for the implementation of the Elections provided for herein as shall be
necessary or desirable to effect fully such Elections. Prior to the Effective
Time, Holdco and Parent will enter into an exchange agent and nominee
agreement with the Exchange Agent, in a form reasonably acceptable to the
Company, setting forth the procedures to be used in accomplishing the
deliveries and other actions contemplated by this Section 2.07, the provision
of which agreement may vary the provisions of such Section in any respect not
material and adverse to the stockholders of the Company.
(ix) Return of Shares of Company Common Stock. In the event that
this Agreement is terminated without the Merger having been consummated,
Parent shall instruct the Exchange Agent to return all shares of Company
Common Stock submitted or transferred to the Exchange Agent pursuant to
Section 2.07(c)(vii).
The cash and shares of Holdco Common Stock into which shares of the
Company Common Stock are convertible pursuant to the foregoing are referred to
herein collectively as the "Company Merger Consideration."
As a result of the Company Merger and without any action on the part
of the holders thereof, at the Effective Time, all shares of the Company
Common Stock shall cease to be outstanding and shall be cancelled and retired
and shall cease to exist, and each holder of a certificate which immediately
prior to the Effective Time represented any such shares of the Company Common
Stock (such certificate or other evidence of ownership, a "Company
Certificate") shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right (subject to Section 2.07(b)
and Section 2.10) to receive the applicable Company Merger Consideration with
respect thereto and any cash in lieu of fractional shares of applicable Holdco
Common Stock with respect thereto to be issued in consideration therefor and
any dividends or other distributions to which holders of Company Common Stock
become entitled in accordance with Article III upon the surrender of such
Company Certificate.
SECTION 2.08. Company Stock Options; Company Employee Stock Purchase
Plan; Company Warrants.
(a) At the Effective Time, each outstanding Company Stock Option
shall fully vest and shall by virtue of the Company Merger be assumed by
Holdco. Each Company Stock Option so assumed by Holdco under this Agreement
will continue to have, and be subject to, the same terms and conditions of
such option immediately prior to the Effective Time, except that (i) each
Company Stock Option will be fully vested and exercisable, (ii) each Company
Stock Option will be exercisable for a number of shares of Holdco Common Stock
equal to that number of shares of Company Common Stock that were subject to
such Company Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, rounded down to the nearest whole number of shares of
Holdco Common Stock, and (iii) the per share exercise price for the shares of
Holdco Common Stock issuable upon exercise of such assumed Company Stock
Option will be equal to the quotient determined by dividing the exercise price
per share of Company Common Stock at which such Company Stock Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
(b) The current offering period under the Company Employee Stock
Purchase Plan shall terminate immediately prior to the Effective Time. Each
purchase right outstanding under the Company Employee Stock Purchase Plan
immediately prior to the Effective Time (a "Company Purchase Right") shall
automatically be exercised immediately prior to the Effective Time (the "New
Exercise Date"). The accumulated payroll deductions as of the New Exercise
Date for each holder of a Company Purchase Right shall be applied toward the
purchase of shares of Company Common Stock in accordance with the terms of the
Company Employee Stock Purchase Plan. The shares of Company Common Stock
issuable upon such exercise of each Company Purchase Right shall be issued and
outstanding immediately prior to the Effective Time and shall therefore be
subject to the terms of this Agreement. Company shall use its best efforts to
provide written notice of the Company Merger to holders of a Company Purchase
Right at least ten (10) days prior to the Effective Time. The Company shall
take such action, such that as of the date hereof, no change in payroll
deduction rate may be made by any participants in the Company Employee Stock
Purchase Plan.
(c) As soon as practicable after the Effective Time, Holdco shall
deliver to each holder of an outstanding Company Stock Option an appropriate
notice setting forth such holder's rights pursuant thereto and such Company
Stock Options shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 2.08 after giving effect
to the Company Merger). Holdco shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Holdco Common Stock for
delivery upon exercise of such assumed Company Stock Options pursuant to the
terms set forth in this Section 2.08.
(d) At the Effective Time, each outstanding warrant to purchase
shares of Company Common Stock (a "Company Stock Warrant") other than the
Stockpoint Warrants shall by virtue of the Company Merger be assumed by
Holdco. Each Company Stock Warrant so assumed by Holdco under this Agreement
will continue to have, and be subject to, the same terms and conditions of
such warrant immediately prior to the Effective Time, except that (i) each
Company Stock Warrant will be exercisable for a number of shares of Holdco
Common Stock equal to that number of shares of Company Common Stock that were
subject to such Company Stock Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Holdco Common Stock and (ii) the per share exercise price for the
shares of Holdco Common Stock issuable upon exercise of such assumed Company
Stock Warrant will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Stock
Warrant was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent.
(e) As soon as practicable after the Effective Time, but in no event
later than ten (10) business days after the Effective Time, Holdco shall
deliver to each holder of an outstanding Company Stock Warrant an appropriate
notice setting forth such holder's rights pursuant thereto and such Company
Stock Warrant shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 2.08 after giving effect
to the Company Merger). Holdco shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Holdco Common Stock for
delivery upon exercise of such assumed Company Stock Warrants pursuant to the
terms set forth in this Section 2.08.
(f) At the Effective Time, each outstanding share of the Company
Common Stock issued pursuant to and subject to the restrictions set forth in
Section 8 of the Company's 2000 Equity Incentive Plan, as amended (each, a
share of "Company Restricted Stock") and held by the individuals listed on
Exhibit 2.08(f) shall become fully vested and any restrictions with respect to
such stock shall immediately lapse. At the Effective Time, each holder of a
share of Company Restricted Stock, whether vested or unvested, shall be
allowed to make an Election in accordance with Section 2.07 hereof, and any
stock payable with respect to unvested shares of the Company Restricted Stock
shall be converted to Holdco Common Stock and will continue to be subject to
the restrictions set forth in the agreements under which such Company
Restricted Stock were issued, or otherwise applicable to such Company
Restricted Stock, and any cash payable with respect to unvested shares of the
Company Restricted Stock pursuant to Section 2.07 hereof shall be placed in an
escrow account for the benefit of holders of such unvested shares of the
Company Restricted Stock, and shall be releasable from such escrow account in
accordance with the vesting schedule of such Company Restricted Stock.
SECTION 2.09. Certain Adjustments. If, between the date of this
Agreement and the Effective Time (and as permitted by Sections 6.01 and 6.02),
the outstanding shares of Parent Common Stock or the outstanding shares of
Company Common Stock shall have been increased, decreased, changed into or
exchanged for a different number of shares or different class, in each case,
by reason of any reclassification, recapitalization, stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable in
any other securities shall be declared with a record date within such period,
or any similar event shall have occurred, the applicable Merger Consideration
(as defined in Section 2.11(c)) shall be appropriately adjusted to provide to
the holders of shares of Company Common Stock and shares of Parent Common
Stock the same economic effect as contemplated by this Agreement prior to such
event.
SECTION 2.10. Company Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary and
unless provided for by applicable law, shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and that are
owned by stockholders who have properly perfected their rights of appraisal
within the meaning of Section 262 of the DGCL (the "Company Dissenting
Shares") shall not be converted into the right to receive the applicable
Company Merger Consideration with respect thereto, unless and until such
stockholders shall have failed to perfect their right of appraisal under
applicable law, but, instead, the holders thereof shall be entitled to payment
of the appraised value of such Company Dissenting Shares in accordance with
Section 262 of the DGCL. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such right of appraisal, each share
of Company Common Stock held by such stockholder shall thereupon be deemed to
have been converted into the right to receive and become exchangeable for, at
the Effective Time, the applicable Company Merger Consideration with respect
thereto, in the manner provided for in Section 2.07.
(b) Company shall give Parent (i) prompt notice of any demands for
appraisal filed pursuant to Section 262 of the DGCL received by Company,
withdrawals of such demands and any other instruments served or delivered in
connection with such demands pursuant to the DGCL and received by Company and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands under the DGCL consistent with the obligations of Company
thereunder. Company shall not, except with the prior written consent of
Parent, (x) make any payment with respect to any such demand, (y) offer to
settle or settle any such demand or (z) waive any failure to timely deliver a
written demand for appraisal or timely take any other action to perfect
appraisal rights in accordance with the DGCL.
SECTION 2.11. Effect on Shares of Parent Common Stock. As of the
Effective Time, by virtue of the Parent Merger and without any action on the
part of the holder of any shares of Parent Common Stock or any shares of
capital stock of Parent Merger Sub:
(a) Common Stock of Parent Merger Sub. Each issued and outstanding
share of common stock, par value $0.01 per share, of Parent Merger Sub shall
be converted into one fully paid and nonassessable share of common stock, par
value $0.01 per share, of the surviving corporation in the Parent Merger.
(b) Cancellation of the Parent-Owned Shares of Parent Common Stock
and Holdco Common Stock. Each share of Parent Common Stock held by the Parent
or any subsidiary of the Parent immediately prior to the Effective Time shall
cease to be outstanding and shall be cancelled and extinguished without any
conversion thereof. Each share of Holdco Common Stock held by the Parent
immediately prior to the Effective Time shall cease to be outstanding and
shall be cancelled and extinguished without any conversion thereof.
(c) Conversion of Shares of Parent Common Stock. Each issued and
outstanding share of Parent Common Stock (other than shares to be cancelled in
accordance with Section 2.11(b)) shall be converted into the right to receive
one fully paid and nonassessable share of Holdco Common Stock (the "Parent
Merger Consideration" and, together with the Company Merger Consideration, the
"Merger Consideration").
As a result of the Parent Merger and without any action on the part
of the holders thereof, at the Effective Time, all shares of Parent Common
Stock shall cease to be outstanding and shall be cancelled and retired and
shall cease to exist, and each holder of a certificate that immediately prior
to the Effective Time represented any such shares of Parent Common Stock (a
"Parent Certificate" and, together with the Company Certificates, the
"Certificates") shall thereafter cease to have any rights with respect to such
shares of Parent Common Stock, except the right (subject to Section 2.11(b))
to receive the Parent Merger Consideration to be issued in consideration
therefor and any dividends or other distributions to which holders of shares
of Parent Common Stock become entitled in accordance with Article III upon the
surrender of such Parent Certificate.
SECTION 2.12. Parent Stock Options; Parent Employee Stock Purchase
Plan.
(a) At the Effective Time, each outstanding Parent Stock Option,
whether or not vested, shall by virtue of the Parent Merger be assumed by
Holdco. Each Parent Stock Option so assumed by Holdco under this Agreement
will continue to have, and be subject to, the same terms and conditions of
such option immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions and provisions
regarding the acceleration of vesting on certain transactions, other than the
transactions contemplated by this Agreement), except that (i) each Parent
Stock Option will be exercisable (or will become exercisable in accordance
with its terms) for a number of shares of Holdco Common Stock equal to that
number of shares of Parent Common Stock that were subject to such Parent Stock
Option immediately prior to the Effective Time and (ii) the per share exercise
price for the shares of Holdco Common Stock issuable upon exercise of such
assumed Parent Stock Option will be equal to the exercise price per share of
Parent Common Stock at which such Parent Stock Option was exercisable
immediately prior to the Effective Time.
(b) At the Effective Time, each outstanding purchase right under the
Parent 2000 Employee Stock Purchase Plan (a "Parent Purchase Right") shall by
virtue of the Parent Merger be assumed by Holdco. Each Parent Purchase Right
so assumed by Holdco under this Agreement will continue to have, and be
subject to, the same terms and conditions of such purchase right immediately
prior to the Effective Time (including, without limitation, any vesting
provisions and provisions regarding the acceleration of vesting on certain
transactions, other than the transactions contemplated by this Agreement),
except that (i) each Parent Purchase Right will become exercisable in
accordance with its terms for a number of shares of Holdco Common Stock equal
to that number of shares of Parent Common Stock that were subject to such
Parent Purchase Right immediately prior to the Effective Time and (ii) the per
share purchase price for the shares of Holdco Common Stock issuable upon
exercise of such assumed Parent Purchase Right will be equal to the purchase
price per share of Parent Common Stock at which such Parent Purchase Right was
exercisable immediately prior to the Effective Time.
(c) As soon as practicable after the Effective Time, Holdco shall
deliver to each holder of an outstanding Parent Stock Option or Parent
Purchase Right an appropriate notice setting forth such holder's rights
pursuant thereto and such Parent Stock Option and Parent Purchase Right shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 2.12 after giving effect to the Parent
Merger). Holdco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Holdco Common Stock for delivery
upon exercise of such assumed Parent Stock Options or Parent Purchase Rights
pursuant to the terms set forth in this Section 2.12.
SECTION 2.13. Fractional Shares. No certificate or scrip representing
fractional shares of Holdco Common Stock or book-entry credit of the same
shall be issued in the Company Merger upon the surrender for exchange of a
Company Certificate that immediately prior to the Effective Time represented
outstanding shares of Company Common Stock and such fractional shares
interests will not entitle the owner thereof to vote or to have any rights of
a stockholder of Holdco. In lieu of any such fractional shares of Holdco
Common Stock, each holder of Company Certificates who would otherwise have
been entitled to a fraction of a share of Holdco Common Stock in exchange for
such Company Certificate (after taking into account all Company Certificates
delivered by such holder) pursuant to this Article shall receive from the
Exchange Agent, as applicable, a cash payment determined by multiplying (A)
the fractional share interest to which such holder would otherwise be entitled
by (B) the Per Share Amount.
Article III.
EXCHANGE OF CERTIFICATES
SECTION 3.01. Exchange Agent. Prior to the Effective Time, Parent
shall select a bank or trust company reasonably acceptable to the Company to
act as the exchange agent for the purpose of exchanging certificates for the
applicable Merger Consideration in the Mergers (the "Exchange Agent").
SECTION 3.02. Company Exchange Fund. As necessary from time to time
following the Effective Time, Holdco shall make available to the Exchange
Agent for exchange in accordance with this Article III, (i) certificates
evidencing Holdco Common Stock issuable pursuant to Section 2.07(c), (ii) the
cash payable pursuant to Section 2.07(c), and (iii) cash payable in lieu of
fractional shares pursuant to Section 2.13 (such certificates for shares of
Holdco Common Stock, together with any dividends or distributions with respect
thereto (as described below), and cash are hereinafter referred to as the
"Company Exchange Fund").
SECTION 3.03. Company Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Holdco shall cause the Exchange Agent to
mail to each holder of record of Company Certificates who has not validly
submitted (or has submitted and withdrawn) such holder's Company Certificates
to the Exchange Agent in accordance with Section 2.07(c)(vii) (other than
Company Certificates representing shares of Company Common Stock as to which
dissenters' rights are exercised pursuant to Section 2.10 (i) a letter of
transmittal in customary form (that shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon proper delivery of the Company Certificates to the Exchange Agent
and shall contain such other customary provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Company Certificates in exchange for the shares of Holdco Common Stock and/or
cash, as provided in Section 2.07(c), and cash in lieu of any fractional
shares, as provided in Section 2.13. A holder that has validly surrendered and
not withdrawn Company Certificates as provided in Section 2.07(c)(vii) or that
surrenders Company Certificates for cancellation, together with a duly
executed letter of transmittal and other required documents, to the Exchange
Agent as provided in this Section 3.03, shall be entitled to receive in
exchange therefor solely (A) that number of whole shares of Holdco Common
Stock (which shall be in uncertificated book-entry form unless a physical
certificate is requested or is otherwise required by applicable Law or
regulation), if any, into which their shares of Company Common Stock were
converted at the Effective Time pursuant to Section 2.07(c), and/or (B) the
cash that such holders have the right to receive pursuant to Section 2.07(c)
in respect thereof, together with any cash in respect of fractional shares as
provided in Section 2.13. The holder of shares of Company Common Stock upon
their exchange, in whole or in part, for shares of Holdco Common Stock shall
also receive any dividends or other distributions declared or made with a
record date after the Effective Time with respect to such shares of Holdco
Common Stock.
No interest will be paid or accrued on any cash or on any unpaid
dividends or distributions payable to holders of Company Certificates. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, the Company Merger Consideration with respect
to the Shares formerly represented thereby may be issued or paid to a
transferee if the Company Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. The exchange of shares of
Company Common Stock held directly or indirectly, by or through participants
in the DTC shall be made in accordance with the customary procedures of the
DTC and such participants.
SECTION 3.04. Parent Exchange Fund. At or prior to the Effective
Time, Holdco shall deposit with the Exchange Agent, in trust for the benefit
of holders of shares of Parent Common Stock, certificates representing the
shares of Holdco Common Stock issuable pursuant to Section 2.11 in exchange
for outstanding shares of Parent Common Stock. Holdco agrees to make available
to the Exchange Agent from time to time as needed, cash sufficient to pay any
dividends and other distributions declared or made with a record date after
the Effective Time with respect to such shares of Holdco Common Stock. Any
such cash and certificates representing shares of Holdco Common Stock
deposited with the Exchange Agent shall hereinafter be referred to as the
"Parent Exchange Fund."
SECTION 3.05. Parent Exchange Procedures. Promptly after the
Effective Time, Holdco shall cause the Exchange Agent to mail to each holder
of a Parent Certificate (i) a letter of transmittal in customary form (that
shall specify that delivery shall be effected, and risk of loss and title to
the Company Certificates shall pass, only upon proper delivery of the Company
Certificates to the Exchange Agent and shall contain such other customary
provisions as Parent may reasonably specify) and (ii) instructions for
effecting the surrender of such Parent Certificates in exchange for shares of
Holdco Common Stock as provided in Section 2.11, together with any dividends
and other distributions with respect thereto. Upon surrender of a Parent
Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder of such Parent Certificate shall be entitled to receive in exchange
therefor shares of Holdco Common Stock (which shall be in uncertificated
book-entry form unless a physical certificate is requested or is otherwise
required by applicable law or regulation) representing, in the aggregate, the
whole number of shares that such holder has the right to receive pursuant to
Section 2.11 and (B) cash that such holder has the right to receive with
respect to dividends and other distributions pursuant to Section 3.06.
No interest will be paid or will accrue on any cash payable pursuant
to Section 3.06. In the event of a transfer of ownership of shares of Parent
Common Stock that is not registered in the transfer records of Parent, one or
more shares of Holdco Common Stock evidencing, in the aggregate, the proper
number of shares of Parent Common Stock, and any dividends or other
distributions to which such holder is entitled pursuant to Section 3.06, may
be issued with respect to such shares of Parent Common Stock to such a
transferee if the Parent Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. The
exchange of Parent Shares held directly or indirectly, by or through
participants in the DTC shall be made in accordance with the customary
procedures of the DTC and such participants.
SECTION 3.06. Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Holdco Common Stock that such holder would be entitled to
receive upon surrender of such Certificate and no cash payment in lieu of
fractional shares of Holdco Common Stock shall be paid to any such holder
pursuant to Section 2.13 until such holder shall surrender such Certificate in
accordance with Sections 3.03 or 3.05, as applicable. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder thereof without interest, (a) promptly after the
time of such surrender, the amount of any cash payable in lieu of fractional
shares of Holdco Common Stock to which such holder is entitled pursuant to
Section 2.13 and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Holdco Common Stock and (b) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time and a payment date subsequent to such surrender payable with
respect to such shares of Holdco Common Stock.
SECTION 3.07. No Further Ownership Rights in Shares of Company Common
Stock or Parent Common Stock. All shares of Holdco Common Stock issued and
cash paid upon conversion of shares of Company Common Stock or Parent Common
Stock in accordance with the terms of Article II and this Article III shall be
deemed to have been issued or paid in full satisfaction of all rights
pertaining to shares of the Company Common Stock or Parent Common Stock.
SECTION 3.08. Funding of Fractional Shares of Holdco Common Stock. As
promptly as practicable after the determination of the amount of cash, if any,
to be paid to holders of fractional interests, the Exchange Agent shall so
notify Holdco, and Holdco shall deposit such amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to such holders of
fractional interests subject to and in accordance with the terms hereof.
SECTION 3.09. Termination of Exchange Funds. Any portion of the
Exchange Funds that remains undistributed to the holders of Certificates for
six months after the Effective Time shall, at Holdco's request, be delivered
to Holdco or otherwise on the instruction of Holdco, and any holders of the
Certificates who have not theretofore complied with this Article III shall
after such delivery look only to Holdco for the Merger Consideration with
respect to shares of the Company Common Stock or Parent Common Stock formerly
represented thereby to which such holders are entitled pursuant to Sections
2.07 or 2.11, any cash in lieu of fractional shares of Holdco Common Stock to
which such holders are entitled pursuant to Section 2.13 and any dividends or
distributions with respect to shares of Holdco Common Stock to which such
holders are entitled pursuant to Sections 3.03 or 3.05. Any such portion of
the Exchange Fund remaining unclaimed by holders of shares of Company Common
Stock or Parent Common Stock immediately prior to such time as such amounts
would otherwise escheat to or become property of any Governmental Entity
shall, to the extent permitted by law, become the property of Holdco free and
clear of any claims or interest of any Person previously entitled thereto.
SECTION 3.10. No Liability. None of Holdco, Parent, Parent Merger
Sub, Company, Company Merger Sub or the Exchange Agent shall be liable to any
Person in respect of any Merger Consideration from the Exchange Funds
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 3.11. Investment of the Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund as directed by Holdco on a
daily basis in Qualified Instruments; provided that no such investment or loss
thereon shall affect the amounts payable to Company's or Parent's stockholders
pursuant to Article II and the other provisions of this Article III. Any
interest and other income resulting from such investments shall promptly be
paid to Holdco.
SECTION 3.12. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Holdco, the posting by such Person of a bond in such reasonable
amount as Holdco may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver
in exchange for such lost, stolen or destroyed Certificate the applicable
Merger Consideration with respect to shares of the Company Common Stock or
Parent Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Holdco Common Stock, and unpaid dividends and
distributions on Holdco Common Stock deliverable in respect thereof, pursuant
to this Agreement.
SECTION 3.13. Withholding Rights. Holdco shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock or Parent Common
Stock such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code and the rules and regulations
promulgated thereunder, or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by Holdco, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of shares of Company Common Stock or Parent Common Stock in respect of
which such deduction and withholding was made by Holdco.
SECTION 3.14. Further Assurances. At and after the Effective Time,
the officers and directors of Holdco will be authorized to execute and
deliver, in the name and on behalf of Parent, Parent Merger Sub, Company or
Company Merger Sub, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of Parent, Parent Merger Sub, Company
or Company Merger Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in Holdco any and all right, title and interest
in, to and under any of the rights, properties or assets acquired or to be
acquired by Holdco as a result of, or in connection with, the Mergers.
SECTION 3.15. Stock Transfer Books. The stock transfer books of
Company and Parent shall be closed immediately upon the Effective Time and
there shall be no further registration of transfers of shares of Company
Common Stock or Parent Common Stock thereafter on the records of Company or
Parent.
Article IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that, except as
set forth in the written disclosure schedule previously delivered by the
Company to Parent, the paragraphs of which are numbered to correspond to the
Sections of this Agreement (the "Company Disclosure Schedule"):
SECTION 4.01. Organization and Qualification; Subsidiaries. The
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals")
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except
where the failure to have such power, authority and Approvals would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and each of its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated
by it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth in Section 4.01 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity (other than the Company's subsidiaries).
SECTION 4.02. Charter Documents. The Company has heretofore furnished
or made available to Parent a complete and correct copy of the charter
documents (including the articles or certificate of incorporation and bylaws,
if any), as most recently amended to date of the Company and each of its
subsidiaries. Each such charter document is in full force and effect. Neither
the Company nor any of its subsidiaries is in violation or any of the
provisions of its respective charter documents.
SECTION 4.03. Capitalization. The authorized capital stock of the
Company consists of one hundred million (100,000,000) shares of Company Common
Stock and twenty million (20,000,000) shares of Company Preferred Stock. As of
June 30, 2003, (i) 40,790,486 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
and issued in compliance with applicable securities laws, (ii) 4,424,779
shares of Company Common Stock were held in the Company's treasury or by any
subsidiary of the Company, (iii) 255,000 shares of the Company Common Stock
are Company Restricted Stock, (iv) no shares of Company Preferred Stock were
issued and outstanding, (v) 8,857,585 shares of Company Common Stock were
reserved for future issuance pursuant to then outstanding employee stock
options granted pursuant to the Company's Stock Option Plans, and (vi) 734,868
shares of Company Common Stock were reserved for future issuance pursuant to
outstanding Stock Warrants. No shares of Company Common Stock have been issued
between March 31, 2003 and the date hereof, other than pursuant to the
Company's Stock Option Plans or as set forth in Section 4.03 of the Company
Disclosure Schedule. Except for the Stockpoint Warrants, all other Company
Stock Warrants may be assumed by Parent as provided in Section 2.08 of this
Agreement without the consent of the holders thereof or any other Person.
Except for Company Stock Options, the Company Purchase Rights and as set forth
in Sections 4.03, 4.10 or 4.12 of the Company Disclosure Schedule, there are
no options, warrants, convertible securities, subscriptions, stock
appreciation rights, phantom stock plans or stock equivalents or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued shares (or other equity interests) of the Company or of any
subsidiary or obligating the Company or any of its subsidiaries to issue or
sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions, or other equity interests in, the Company or any of
its subsidiaries. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of the Company or of any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the shares of any of its subsidiaries or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
of its subsidiaries or any other entity. None of the options, warrants,
rights, agreements, arrangements or commitments identified in Section 4.03 or
4.12 of the Company Disclosure Schedule provide that, absent action by the
board of directors of the Company or a committee thereof, upon exercise or
conversion the holder thereof shall receive cash, and no such action of the
board of directors or a committee thereof has been taken. Except as set forth
in Section 4.03 of the Company Disclosure Schedule, all of the outstanding
shares of each of the Company's subsidiaries (and all shares to be issued
prior to the Effective Time) are or will be duly authorized, validly issued,
fully paid and nonassessable, and issued in compliance with applicable
securities laws, and all such shares are or will be owned by the Company free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges, encumbrances or rights or interests of
others of any nature whatsoever (collectively, "Liens"), other than Liens for
Taxes not yet due and payable. Except as set forth in Section 4.03 of the
Company Disclosure Schedule, the Company has not granted or agreed to grant
any registration rights for any shares of the capital stock of, or options,
warrants, convertible securities or other equity interest in the Company or
any of its subsidiaries. Except as disclosed in the Company SEC Reports,
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by Company or any of its subsidiaries in
accordance with and pursuant to Company's formal investment policy and
comprising less than 5% of the outstanding stock of such company.
SECTION 4.04. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and subject only to obtaining any necessary stockholder approval of
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the approval and
adoption of the Company Merger by a majority of the outstanding shares of the
Company Common Stock entitled to vote in accordance with the DGCL and the
Company's certificate of incorporation and bylaws (the "Company Requisite
Vote") and the filing of the Company Certificate of Merger with the Secretary
of State of Delaware as required by the DGCL). This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent, Holdco, Parent Merger Sub and
Company Merger Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms. The board of directors of the Company has unanimously determined
(i) that it is advisable, consistent with and in furtherance of the long-term
business strategy of the Company, and fair to, and in the best interests of
the Company and the Company's stockholders, for the Company to enter into a
strategic business combination with Parent upon the terms and subject to the
conditions of this Agreement, (ii) to approve and adopt this Agreement, the
Company Merger, and the transactions contemplated hereby, and (iii) to
recommend that the Company's stockholders approve and adopt this Agreement,
the Company Merger, and the transactions contemplated hereby (the "Company
Recommendation"), and, subject to Section 6.03 hereof, such resolutions of the
board of directors shall be in effect as of the Effective Time. The only vote
of the holders of any class or series of stock of the Company necessary to
approve the Company Merger, this Agreement and the other transactions
contemplated by this Agreement is the Company Requisite Vote.
SECTION 4.05. No Violation. Except for the need to obtain the Company
Requisite Vote and to file the Company Certificate of Merger with the
Secretary of State of Delaware as required by the DGCL or as set forth in
Section 4.05 of the Company Disclosure Schedule, the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated by this Agreement by the Company will not (i)
conflict with or violate the certificate of incorporation or bylaws of the
Company or any of its subsidiaries, (ii) conflict with or violate any federal,
foreign, state or provincial law, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to the Company or any subsidiary or by which
any of their respective properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair the Company's or any
subsidiary's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any contract, or result in the creation of a Lien on any of
the properties or assets of the Company or any subsidiary pursuant to, any
Material Contract or other note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any subsidiary is a party or by which the Company or
any subsidiary or any of their respective properties are bound or affected,
except in the case of clauses (ii) and (iii) for any such conflicts,
violations, defaults or other occurrences that would not, individually or in
the aggregate, have a Company Material Adverse Effect.
SECTION 4.06. Governmental Approvals, Consents and Filings.
(a) Except for the need to obtain the Company Requisite Vote and to
file the Company Certificate of Merger with the Secretary of State of the
State of Delaware as required by the DGCL, no approval, authorization,
consent, order, filing, registration or notification is required to be
obtained by the Company or any of its subsidiaries from, or made or given by
any of them to, any Governmental or Regulatory Authority or any other Person
in connection with the execution, delivery and performance of this Agreement
and the transactions contemplated hereby except for (i) the filings and/or
notices under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder ("HSR Act") and the
expiration of the waiting periods thereunder; (ii) compliance with any
applicable requirements of the Federal Securities Laws (as defined below), any
applicable state or other local securities laws and the Nasdaq National
Market; and (iii) such approvals, authorizations, consents, orders, filings,
registrations or notifications that, have not had, or, if not obtained, made
or given, individually or in the aggregate, are not likely to have a Company
Material Adverse Effect.
(b) The Company and each of its subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
since February 16, 2000, with any Governmental or Regulatory Authority, and
have paid all material fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Governmental or
Regulatory Authority in the ordinary course of the business of the Company or
any of its subsidiaries, no Governmental or Regulatory Authority has initiated
any proceeding or investigation or, to the knowledge of the Company,
threatened any investigation into the business or operations of the Company or
any of its subsidiaries since February 16, 2000, except for such proceedings
or investigations the outcomes of which would not be reasonably expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, exhibits and other
documents required to be filed with the Securities and Exchange Commission
(the "SEC") since February 16, 2000, and has made available to Parent, in the
form filed with the SEC (i) its Quarterly Report on Form 10-Q for the period
ended March 31, 2003, and its Annual Report on Form 10-K for the year ended
December 31, 2002, (ii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since June 12, 2001,
(iii) all other reports or registration statements (other than reports on
Forms 3, 4 or 5 filed on behalf of affiliates of the Company) filed by the
Company with the SEC since February 16, 2000, and (iv) all amendments and
supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "Company SEC Reports"). The Company
SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the SEC's rules and
regulations thereunder (collectively, the "Federal Securities Laws"), as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the Company's subsidiaries is required to
file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and each fairly presented, in all
material respects, the consolidated financial position of the Company and its
subsidiaries as of the respective dates thereof and the consolidated results
of its operations and cash flows and stockholder equity for the periods
indicated, except that the unaudited interim financial statements were and are
subject to normal and recurring year-end adjustments that were not and are not
expected to be material in amount and the absence of footnotes.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to the Company SEC Reports or
agreements, documents or other instruments that previously had been filed by
the Company with the SEC pursuant to the Securities Act or the Exchange Act.
(d) Since the adoption of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "New
Act"), the Company has complied in all material respects with the laws, rules
and regulation promulgated under the New Act.
SECTION 4.08. Absence of Certain Changes or Events. Except as set
forth in Section 4.08 of the Company Disclosure Schedule or in the Company SEC
Reports, since December 31, 2002, the Company has conducted its business in
the ordinary course and there has not occurred: (i) any Company Material
Adverse Effect; (ii) any amendments or changes in the certificate of
incorporation or bylaws of the Company or any of its subsidiaries; (iii) any
damage to, destruction or loss of any asset of the Company or any of its
subsidiaries, (whether or not covered by insurance) that has had or is
reasonably likely to have a Company Material Adverse Effect; (iv) any change
by the Company in its accounting methods, principles or practices; (v) any
material change to any Company Stock Option Plans or Company Employee Plans,
including the establishment of any new plans or any amendment that extends the
extension of coverage under any plan to new groups of employees or other
Persons not previously covered; (vi) any restructuring or reorganization of
the Company or any of its subsidiaries; (vii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (viii) any revaluation
of any of the Company's or any subsidiary's assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; (ix) any
sale, pledge, disposition of or encumbrance upon a material amount of property
of the Company or of any of its subsidiaries, except in the ordinary course of
business and consistent with past practice; (x) any material Tax election
inconsistent with past practices or the settlement or compromise of any
material Tax liability; (xi) any declaration, issuance or payment of any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) other than a dividend or distribution by a wholly-owned
subsidiary to the Company; or (xii) the creation of any indebtedness for
borrowed money or the issuance of any debt securities or the assumption,
guarantee (other than guarantees of bank debt of a subsidiary entered into in
the ordinary course of business) or endorsement or other accommodation whereby
the Company or any of its subsidiaries became responsible for, the obligations
of any person, or the making of any loans or advances, except in the ordinary
course of business consistent with past practice.
SECTION 4.09. No Undisclosed Liabilities. Except as is disclosed in
Section 4.09 of the Company Disclosure Schedule and in the Company SEC
Reports, neither the Company nor any subsidiary has any liabilities (absolute,
accrued, contingent, or otherwise) that are, in the aggregate, material to the
business, operations or financial condition of the Company and its
subsidiaries taken as a whole, except liabilities (a) adequately provided for
in the Company's audited balance sheet (including any related notes thereto)
for the fiscal year ended December 31, 2002 or in the unaudited balance sheet
(including any related notes thereto) for the fiscal quarters ended March 31,
2003 and June 30, 2003; (b) incurred since December 31, 2002 in the ordinary
course of business and consistent with past practice; or (c) incurred in
connection with this Agreement or the transactions contemplated hereby.
SECTION 4.10. Material Contracts; No Violation.
(a) Section 4.10(a) of the Company Disclosure Schedule includes a
list of each of the following currently outstanding agreements under which the
Company or any of its subsidiaries is a party or by which any of their assets
are bound: (i) joint venture, partnership, technology sharing and
non-competition agreements; (ii) intellectual property or content licensing
agreements that involve expenditures by the Company in excess of $25,000 per
annum, other than commercial shrink-wrap licenses; (iii) intellectual property
or content licensing agreements that involve receipts by the Company in excess
of $100,000 per annum, other than commercial shrink-wrap licenses; (iv)
agreements with any consultant, independent contractor, employee, officer or
director of the Company or any of its subsidiaries, (v) any other agreement
evidencing a service arrangement between the Company or any of its
subsidiaries with a third party, in each case for annual compensation in
excess of $100,000; (vi) distribution agreements that involve expenditures or
receipts in excess of $25,000; (vii) all loan agreements, indentures,
mortgages, pledges, conditional sale or title retention agreements, security
agreements, guaranties, standby letters of credit, equipment leases or lease
purchase agreements in an amount equal to or exceeding $25,000 individually or
$50,000 in the aggregate; and (viii) agreements, contracts or other
instruments (including all amendments thereto) which, in each case, as of the
date hereof, will be required to be filed by the Company with the SEC pursuant
to the requirements of the Exchange Act as "material contracts" and have not
been filed ((i) through (vi) collectively with all agreements, contracts and
other instruments (including amendments thereto) that have been filed by the
Company with the SEC, being, collectively, the "Material Contracts" of the
Company and its subsidiaries). The Company has made available to Parent prior
to the date hereof, true, correct and complete copies in all material respects
of each such Material Contract.
(b) Except as set forth in Section 4.10(b) of the Company Disclosure
Schedule, (i) neither the Company nor any subsidiary has materially breached,
is in default under, or has received written notice of any material breach of
or default under, any Material Contract, (ii) to the knowledge of the Company,
no other party to any of the Material Contracts has materially breached or is
in default of any of its obligations thereunder, and (iii) each of the
Material Contracts is in full force and effect.
(c) Except as set forth in Section 4.10(c) of the Company Disclosure
Schedule, none of the Material Contracts (i) is in conflict with or violates
the certificate of incorporation or bylaws of the Company or any of its
subsidiaries, (ii) to the knowledge of the Company, is in conflict with or
violates any Laws, or (iii) is in material conflict with or materially
violates any other Material Contract or other note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any subsidiary is a party or by which the
Company or any subsidiary or any of their respective properties are bound or
affected.
(d) Except as set forth in Section 4.10(d) of the Company Disclosure
Schedule, there has been no termination by a Major Customer of any customer
contract since December 31, 2002.
(e) Except as set forth in Section 4.10(e) of the Company Disclosure
Schedule, no person is (i) materially renegotiating, or (ii) has requested a
renegotiation of any material amount paid or payable to the Company or any of
its subsidiaries under any Material Contract or any other term or provision of
any Material Contract.
(f) Neither the Company nor any of its subsidiaries has waived any of
its material rights under any Material Contract.
(g) Except as set forth in Section 4.10(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has guaranteed or
otherwise agreed to cause, insure or become liable for, and has never pledged
any of its assets to secure, the performance or payment of any existing
material obligation or other liability of any third party.
(h) The performance of the Material Contracts will not, to the
knowledge of the Company, result in any violation of or failure to comply with
any applicable law, except for such violations or noncompliance, that
individually or in the aggregate, have not had and would not have a Company
Material Adverse Effect.
(i) To the knowledge of the Company, no person who is a third party
to a Material Contract is in material breach or default of such Material
Contract.
(j) The Material Contracts identified in Section 4.10(a) of the
Company Disclosure Schedule collectively constitute all of the Material
Contracts necessary to enable the Company and its subsidiaries to conduct
their respective businesses in the manner in which such businesses are
currently being conducted.
SECTION 4.11. Absence of Litigation. Except as set forth in Section
4.11 of the Company Disclosure Schedule or the Company SEC Reports, (i) there
are no claims, actions, suits, proceedings or investigations pending before
any court, agency or tribunal, foreign or domestic, or, to the knowledge of
the Company, threatened against the Company or against any subsidiary and (ii)
there is no judgment, decree, injunction, rule or order of any Governmental or
Regulatory Authority outstanding against the Company or its subsidiaries. The
Company has made available true and complete copies of all material filings
and correspondence related to any material legal action or proceeding
involving the Company or any of its subsidiaries.
SECTION 4.12. Employee Benefit Plans; Employment Agreements.
(a) Section 4.12(a) of the Company Disclosure Schedule lists all (i)
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), sponsored by the
Company and by each member of any trade or business (whether or not
incorporated) that would be treated as a single employer with the Company
under Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code
("Company ERISA Affiliate"); (ii) employment agreements providing for
compensation, severance or other benefits, including, but not limited to, any
individual benefit arrangement, policy or practice with respect to any current
or former employee or director of the Company or a Company ERISA Affiliate,
and (iii) other employee benefit, bonus or other incentive compensation, stock
option, stock purchase, stock appreciation, severance pay, lay-off or
reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service
award, employee discount, fringe benefit plans, arrangements, policies or
practices, whether legally binding or not, that the Company or any Company
ERISA Affiliate maintains, to which any of them contributes, or for which any
of them has any obligation or liability, provided, however, that the term
"Company Employee Plans" shall exclude any agreements with former employees
under which the Company has no remaining monetary obligations (collectively,
the "Company Employee Plans").
(b) Except as set forth in Section 4.12(b) of the Company Disclosure
Schedule, neither the Company nor any Company ERISA Affiliate maintains or
contributes to any plan or other arrangement (whether or not such plan or
other arrangement constitutes a Company Employee Plan) that provides health
benefits to an employee after the employee's termination of employment or
retirement except as required under Section 4980B of the Code and Sections 601
through 608 of ERISA.
(c) (i) The Company and its subsidiaries have materially complied
with ERISA, the Code and all laws and regulations applicable to the Company
Employee Plans and each Company Employee Plan has been maintained and
administered in material compliance with its terms; and (ii) each Company
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code and is the subject
of a favorable determination opinion, notification or advisory letter from the
Internal Revenue Service (the "IRS") issued after January 1, 1989, and nothing
has occurred that may reasonably be expected to adversely affect such
determination. The Company and all Company ERISA Affiliates have administered
each of the applicable Company Employee Plans in material compliance with the
Small Business Job Protection Act of 1996 and subsequent legislation enacted
through the date hereof, and Section 501 of the Code.
(d) None of the Company Employee Plans is a defined benefit plan
within the meaning of Section 3(35) of ERISA or a plan subject to the minimum
funding standards set forth in Section 302 of ERISA and Section 412 of the
Code, and neither the Company nor any Company ERISA Affiliate has ever
sponsored, maintained or contributed to, or ever been obligated to contribute
to, any such plan.
(e) None of the Company Employee Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA, and neither the Company nor any
Company ERISA Affiliate has ever contributed to, or ever been obligated to
contribute to, a multiemployer plan.
(f) All reports, forms and other documents required to be filed with
any government entity or furnished to employees, former employees or
beneficiaries with respect to any Company Employee Plan (including without
limitation, summary plan descriptions, Forms 5500 and summary annual reports)
have been timely filed and furnished and are accurate.
(g) With respect to the applicable Company Employee Plans, all
required contributions for all periods ending prior to the Closing (including
periods from the first day of the current plan year to the Closing) have been
made or will have been made by the Company prior to the Closing.
(h) All insurance premiums have been paid in full, subject only to
normal retrospective adjustments in the ordinary course, with regard to the
applicable Company Employees Plans for plan years ending on or before the
Closing.
(i) With respect to each Company Employee Plan:
(i) no prohibited transactions (as defined in Sections 406 or
407 of ERISA or Section 4975 of the Code) have occurred for which a statutory
exemption is not available;
(ii) no action or claims (other than routine claims for benefits
made in the ordinary course of plan administration for which plan
administrative review procedures have not been exhausted) are pending, to the
knowledge of the Company, threatened or imminent against or with respect to
any Company Employee Plan, any employer who is participating (or who has
participated) in such Company Employee Plan or any fiduciary (as defined in
Section 3(21) of ERISA), of such Company Employee Plan except such actions or
claims that would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect;
(iii) neither the Company nor any fiduciary has any knowledge of
any facts that could give rise to any such action or claim;
(iv) such Company Employee Plan provides that, subject to
certain limitations, it may be amended or terminated at any time and, except
for benefits protected under Section 411(d) of the Code, all benefits payable
to current, terminated employees or any beneficiary may be amended or
terminated by the Company at any time without liability;
(v) Neither the Company nor any Company ERISA Affiliate has any
liability or is threatened with any liability (whether joint or several) (i)
for any excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the
Code, or (ii) to a fine under Section 502 of ERISA.
(vi) All of the Company Employee Plans, to the extent
applicable, are in material compliance with the continuation of group health
coverage provisions contained in Section 4980B of the Code and Sections 601
through 608 of ERISA;
(vii) True, correct and complete copies of all documents
creating or evidencing any Company Employee Plan have been delivered or made
available to Parent, and true, correct and complete copies of all reports,
forms and other documents required to be filed with any governmental entity or
furnished to employees, former employees or beneficiaries (including, without
limitation, summary plan descriptions, Forms 5500 and summary annual reports
for all plans subject to ERISA, but excluding individual account statements
and tax forms) have been delivered to Parent. There are no negotiations,
demands or proposals that are pending or have been made that concern matters
now covered, or that would be covered, by the type of agreements required to
be listed in Section 4.12(a) of the Company Disclosure Schedule.
(viii) All expenses and liabilities relating to all of the
Company Employee Plans have been, and will on the Closing be fully and
properly accrued on the Company's books and records and disclosed in
accordance with U.S. GAAP and in the applicable Company Employee Plan
financial statements
(j) Except as set forth in Section 4.12(j) of the Company Disclosure
Schedule, every asset held under any of the Company Employee Plans may be
liquidated or terminated without the imposition of any redemption fee,
surrender charge, or comparable liability.
(k) No Company Employee Plan is a self-insured employee welfare
benefit plan (as defined in Section 3(1) of ERISA), including, without
limitation, any such plan pursuant to which a stop-loss policy or contract
applies.
SECTION 4.13. Labor and Employment Matters.
(a) Except as set forth in Section 4.13 of the Company Disclosure
Schedule, (i) there are no controversies pending or, to the knowledge of the
Company, threatened, between the Company or any of its subsidiaries and any of
their respective employees; (ii) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or by any of its
subsidiaries nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees,
and (iii) neither the Company nor any of its subsidiaries has any knowledge of
any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any employees of the Company or of any of its subsidiaries.
(b) Each of the Company and its subsidiaries is in compliance, and
has not failed to be in compliance, with all applicable U.S. and non-U.S.
laws, agreements and contracts relating to employment practices, terms and
conditions of employment, and the employment of (i) current employees,
consultants, independent contractors and "leased employees" (within the
meaning of Section 414(n) of the Code) of the Company or any of its
subsidiaries and (ii) employees, consultants, independent contractors and
"leased employees" (within the meaning of Section 414(n) of the Code) of the
Company or any of its subsidiaries who have been terminated since January 1,
2001, including all such U.S. and non-U.S. laws, agreements and contracts
relating to wages, hours, collective bargaining, the payment of Social
Security and other similar taxes, equal employment opportunity, employment
discrimination, The Worker Adjustment and Retraining Notification Act ("WARN
Act"), immigration, disability, civil rights, human rights, fair labor
standards, occupational safety and health, workers' compensation, pay equity,
wrongful discharge and violation of the potential rights of such (i) current
employees, consultants, independent contractors and "leased employees" (within
the meaning of Section 414(n) of the Code) and (ii) employees, independent
contractors and "leased employees" (within the meaning of Section 414(n) of
the Code) who have been terminated since January 1, 2001, and has timely
prepared and filed all appropriate forms (including Immigration and
Naturalization Service Form I-9) required by any relevant Governmental or
Regulatory Authority, except where the failure to be or have been in
compliance would not be reasonably expected, individually or in the aggregate,
to have a Company Material Adverse Effect.
(c) Except as set forth on Section 4.13(c) of the Company Disclosure
Schedule, to the knowledge of the Company, no officer or key employee, or any
group of key employees, currently intends to terminate their employment with
the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Except as set forth in Section 4.13(c) of
the Company Disclosure Schedule, the employment of each officer and employee
of the Company is terminable at the will of the Company.
SECTION 4.14. Taxes.
(a) The Company and each of its subsidiaries have timely filed all
Tax Returns required to be filed by any of them, and all such Tax Returns are
accurate and complete in all material respects. All Taxes shown as payable on
such Tax Returns or on subsequent assessments with respect thereto have been
paid in full on a timely basis, and no other Taxes are payable by the Company
or its subsidiaries with respect to items or periods covered by such Tax
Returns (whether or not shown on or reportable on such Tax Returns) or with
respect to any period prior to the date of this Agreement (or an adequate
reserve has been established for the payment of any such Taxes). There are no
liens on any of the assets of the Company or any of its subsidiaries with
respect to Taxes, other than liens for Taxes not yet due and payable.
(b) The aggregate liability of the Company and its subsidiaries for
unpaid Taxes for all periods ending on or before December 31, 2002 does not,
in the aggregate, exceed the amount of the current liability accruals for
Taxes (excluding reserves for deferred Taxes), reflected on the Company's
audited balance sheet for the fiscal year ended December 31, 2002, and the
aggregate liability of the Company and its subsidiaries for unpaid Taxes for
all periods ending on or before the Effective Time shall not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes), as such accruals are reflected on the
Company's audited balance sheet for the fiscal year ended December 31, 2002,
as adjusted for operations and transactions in the ordinary course of business
since December 31, 2002, in accordance with past custom and practice.
(c) Neither the Company nor any of its subsidiaries has a material
amount of income reportable for a taxable period ending after the Effective
Time that is attributable to an activity or a transaction (other than
activities or transactions entered into in the ordinary course of the business
of the Company) occurring in or a change in accounting method made for a
period ending on or prior to the Effective Time, including, without
limitation, any adjustment pursuant to Section 481 of the Code. Neither the
Company nor any of its subsidiaries is a "consenting corporation" under
Section 341(f) of the Code.
(d) There are no outstanding agreements or waivers extending the
statutory period of limitation for assessment or collection of Tax with
respect to the Company or any of its subsidiaries. The Company has made
available to Parent (i) correct and complete copies of all federal and state
income and franchise Tax Returns and any other material Tax Returns of the
Company and its subsidiaries for 1998 and thereafter and (ii) relevant
portions of income tax audit reports, statements of deficiencies, closing or
other agreements received by the Company or any of its subsidiaries relating
to Taxes. The Tax Returns of the Company and its subsidiaries have never been
audited by a government or taxing authority, nor is any such audit in process,
pending or threatened (either in writing or orally, formally or informally).
No outstanding or pending deficiency for any amount of Tax has been proposed,
asserted or assessed by a taxing authority against the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries has received
notice or expects to receive notice that it has not filed a Tax Return or paid
Taxes required to be filed or paid by it.
(e) Neither the Company nor any of its subsidiaries has ever (i) been
a party to any tax sharing agreement or tax indemnity agreement or (ii)
assumed the Tax liability of any other person under contract. Neither the
Company nor any of its subsidiaries has ever been a member of an affiliated
group filing a consolidated federal income Tax Return, other than the group of
which it currently is a member (the "Company Affiliated Group"). Neither the
Company nor any of its subsidiaries is liable for the Taxes of any other
person as a successor or transferee, or pursuant to any provision of federal,
state, local or non-U.S. law, other than Taxes of other members of the Company
Affiliated Group.
(f) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement, plan or arrangement that, individually or collectively,
could reasonably be expected to give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G or 162(m) of the Code. There
is no contract, agreement, plan or arrangement to which Company or any of its
subsidiaries is a party or by which it is bound to compensate any individual
for excise taxes paid pursuant to Section 4999 of the Code. The Company and
each of its subsidiaries have withheld and paid over all Taxes required to
have been withheld and paid over, and complied with all information reporting
and back-up withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party.
(g) The Company has not been the "distributing corporation" (within
the meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the three-year period ending as of
the date of this Agreement.
(h) As used in this Agreement, (i) the term "Taxes" shall mean all
taxes, however, denominated, including any interest, penalties or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign Governmental or Regulatory
Authority or political subdivision of any such Governmental or Regulatory
Authority, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal
income taxes and state income taxes), payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, that
the Company or its subsidiaries is required to pay, withhold or collect; and
(ii) the term "Tax Returns" shall mean all reports, estimates, declarations of
estimated tax, information statements and returns relating to, or required to
be filed in connection with, any Taxes, including information returns or
reports with respect to back-up withholding and other payments to third
parties.
SECTION 4.15. Environmental Matters.
(a) Each of the Company and its subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental or
Regulatory Authority that are required under any applicable Environmental Law
in respect of its business or operations ("Environmental Permits"). Each of
such Environmental Permits is in full force and effect and each of the Company
and its subsidiaries is in compliance with the terms and conditions of all
such Environmental Permits and with any applicable Environmental Law.
(b) There is no Environmental Claim pending or to the knowledge of
the Company threatened against the Company or any of its subsidiaries or to
the knowledge of the Company, pending or threatened against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the Company, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, threatened release or presence of
any Hazardous Material that could form the basis of any Environmental Claim
against the Company or any of its subsidiaries, or to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has or may have retained or
assumed either contractually or by operation of law.
(d) To the knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations thereunder
("CERCLA").
(e) No Liens have arisen under or pursuant to any Environmental Law
on any site or facility owned, operated or leased by the Company or any of its
subsidiaries, other than any such Liens that would not, individually or in the
aggregate, have a Company Material Adverse Effect, and no action of any
Governmental or Regulatory Authority has been taken or, to the knowledge of
the Company, is in process that could subject any of such properties to such
Liens.
(f) The Company has delivered or otherwise made available for
inspection to the Parent true, complete and correct copies and results of any
material reports, studies, analyses, tests or monitoring possessed or
initiated by the Company or any of its subsidiaries pertaining to Hazardous
Materials in, on, beneath or adjacent to any property currently or formerly
owned, operated or leased by the Company or any of its subsidiaries, or
regarding the Company's or any of its subsidiaries' compliance with applicable
Environmental Laws.
(g) As used herein: (i) "Governmental or Regulatory Authority" means
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision; (ii)
"Environmental Claim" means any claim, action, cause of action, investigation
or notice (written or oral) by any person or entity alleging potential
liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (A) the presence, or release or threatened
release, of any Hazardous Materials at any location, whether or not owned or
operated by the Company or any of its subsidiaries, or (B) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law; (iii) "Environmental Law" means any law or order of any Governmental or
Regulatory Authority relating to the regulation or protection of human health,
safety or the environment or to emissions, discharges, releases or threatened
releases of Hazardous Material, pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment; and
(iv) "Hazardous Material" means (A) any petroleum or petroleum products,
flammable materials, radioactive materials, friable asbestos, urea
formaldehyde foam insulation and transformers or other equipment that contain
dielectric fluid containing regulated levels of polychlorinated biphenyls
(PCBs); (B) any chemicals or other materials or substances that are now or
hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law; and (C) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental or Regulatory Authority
under any Environmental Law.
SECTION 4.16. Intellectual Property.
(a) Section 4.16(a) of the Company Disclosure Schedule lists (i) all
Registered Proprietary Assets owned by Company or any of its subsidiaries,
specifying the nature of the general right, any jurisdiction that has issued a
registration with respect thereto or in which an application for such a
registration is pending, and any applicable registration or application
number, and (ii) all licenses, sublicenses and other agreements under which
the Company or any of its subsidiaries has granted an exclusive license in any
Proprietary Asset owned or licensed by Company or agreed not to license,
sublicense or otherwise use any Proprietary Asset owned or licensed by
Company. The Company and its subsidiaries own or have the right to use, as
currently used or anticipated to be used, all Company Proprietary Assets
(including without limitation those Proprietary Assets listed in Section
4.16(a) of the Company Disclosure Schedule), and except as set forth on
Section 4.16(a) of the Company Disclosure Schedule, upon Closing, will
continue to own or have the right to use all such Proprietary Assets as
currently used, free and clear of all Liens and royalty obligations.
(b) The Company and its subsidiaries have taken reasonable measures
and precautions to protect the confidentiality of their trade secrets and
other information of a confidential or proprietary nature. Except as would
not, individually or in the aggregate, have a Company Material Adverse Effect,
and except as set forth in Section 4.16(b) of the Company Disclosure Schedule,
without limiting the generality of the foregoing, all current and former
employees, agents, independent contractors and consultants of the Company and
any of its subsidiaries have entered into and executed a confidentiality
agreement that has industry standard protections and conditions protecting
Company's trade secrets. A true and complete form of the Company's
confidentiality agreement has been provided to the Parent. To the knowledge of
the Company, none of its employees, agents, independent contractor or
consultants who have signed the Company's confidentiality agreement is in
violation of that confidentiality agreement.
(c) Except as set forth in Section 4.16(c) of the Company Disclosure
Schedule, to the knowledge of the Company, all Registered Proprietary Assets
held by Company or its subsidiaries are valid, subsisting and in full force
and effect.
(d) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, and except as set forth in Section 4.16(d) of
the Company Disclosure Schedule, to the knowledge of the Company, neither the
Company nor its subsidiaries, nor the conduct of the business of Company or
its subsidiaries, are infringing or misappropriating (including without
limitation due to methods, content or processes used by the Company or its
subsidiaries). Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, and except as set forth in Section 4.16(d) of
the Company Disclosure Schedule, Company has not received any written notice,
claim or other communication of any actual, alleged, or potential infringement
or misappropriation of, any Proprietary Asset owned or used by any other
person or entity within the last three (3) years. Except as would not,
individually or in the aggregate, have a Company Material Adverse Effect, and
except as forth in Section 4.16(d) of the Company Disclosure Schedule, to the
knowledge of the Company, no other person or entity is infringing or
misappropriating, and no Proprietary Asset owned or used by any other person
or entity infringes or misappropriates, any Company Proprietary Assets.
(e) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, with respect to any licenses or other
agreements listed or that should have been listed under Section 4.10(a) of the
Company Disclosure Schedule, there are no defaults or threatened defaults by
the Company, its subsidiaries or any other party under such agreements.
(f) Except as set forth in Section 4.16(f) of the Company Disclosure
Schedule, there are no judgments, arbitration awards, decrees or orders or
other proceedings pending, outstanding, threatened or concluded with respect
to or affecting the Company Proprietary Assets.
(g) Except as set forth in Section 4.16(g) of the Company Disclosure
Schedule, to the knowledge of the Company, Company has not, since June 30,
2002, made any refunds, individually, in excess of $25,000 for such period,
for the failure to comply with its representations or warranties as to the
accuracy or timeliness of any content, services or goods.
(h) All current and former employees, agents and consultants of the
Company and its subsidiaries who have contributed to or participated in the
conception or development of any aspect of a Proprietary Asset relating to the
business of the Company or its subsidiaries as currently conducted, and as
currently planned or contemplated to be conducted, have executed appropriate
agreements with Company and its subsidiaries, in accordance with applicable
federal and state law, that have accorded the Company and its subsidiaries
full, effective, exclusive and original ownership of all rights in such
Proprietary Assets.
(i) In each case in which Company or its subsidiaries have acquired
any Proprietary Assets from any person or entity, Company or its subsidiary
(as applicable) has, to the knowledge of the Company, obtained a valid and
enforceable assignment sufficient to irrevocably transfer all rights in such
Proprietary Asset (including the right to seek past and future damages with
respect thereto) to Company or its subsidiary (as applicable).
(j) All necessary registration, maintenance and renewal fees in
connection with each item of Registered Proprietary Assets have been paid and
all necessary documents and certificates in connection with such Registered
Proprietary Assets have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining such Registered
Proprietary Assets. Except as set forth in Section 4.16(j) of the Company
Disclosure Schedule, there are no actions that must be taken by Company or its
subsidiaries within one hundred eighty (180) days following the date of this
Agreement, including the payment of any registration, maintenance or renewal
fees or the filing of any responses to office actions, documents, applications
or certificates for the purposes of obtaining, maintaining, perfecting,
preserving or renewing any Registered Proprietary Assets. To the maximum
extent provided for by, and in accordance with, applicable laws and
regulations, Company and its subsidiaries have recorded in a timely manner
each such assignment of a Registered Proprietary Asset assigned to Company or
its subsidiaries with the relevant governmental authority, including the
United States Patent and Trademark Office (the "PTO"), the U.S. Copyright
Office or their respective counterparts in any relevant foreign jurisdiction,
as the case may be.
(k) Neither this Agreement nor the Mergers will result in (i) Company
or its subsidiaries granting to any third party any new material right or
access to, or with respect to, any Proprietary Asset owned by, or licensed to
Company or its subsidiaries; (ii) Company or its subsidiaries being bound by,
or subject to, any new non-compete or other restriction on the operation or
scope of its businesses, including the business of the Company and its
subsidiaries as currently conducted, and as it is currently planned or
contemplated to be conducted; or (iii) Company or its subsidiaries being
obligated to pay any new material royalties or other amounts to any third
party.
SECTION 4.17. Compliance; Permits.
(a) Except as set forth in Section 4.17 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of (i) any Laws applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is
bound or affected, or (ii) any Material Contract to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that (individually
or in the aggregate) would not cause the Company or any of its subsidiaries to
lose any material benefit or incur any material liability. No investigation or
review by any governmental or regulatory body or authority is pending, or to
the knowledge of the Company, threatened against the Company or its
subsidiaries, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each such case,
those the outcome of which could not, individually or in the aggregate,
reasonably be expected to have the effect of prohibition or materially
impairing any business practice of the Company or any of its subsidiaries, any
acquisition of a material property by the Company or any of its subsidiaries,
or the conduct of business by the Company or any of its subsidiaries.
(b) The Company and its subsidiaries hold all permits, license,
variances, exemptions, orders and approval from governmental authorities that
are material to the operation of the business of the Company and its
subsidiaries taken as a whole (collectively, the "Company Permits"). The
Company and its subsidiaries are in compliance in all material respect with
the terms of the Company Permits.
(c) Except for the need to obtain the Company Requisite Vote and to
file the Company Certificate of Merger with the Secretary of State of the
State of Delaware as required by the DGCL, to the knowledge of the Company, no
event or circumstance exists that would cause the Company or any of its
subsidiaries to be deemed to be out of compliance with any Law or Company
Permit, except where the failure to so comply has not had and would not have a
Company Material Adverse Effect.
SECTION 4.18. Antitakeover Statutes; Stockholder Rights Plan. The
board of directors of the Company has approved this Agreement and the
transactions contemplated hereby and neither Section 203 of the DGCL nor any
other antitakeover or similar statute or regulation applies or purports to
apply to the transactions contemplated hereby. Other than the Company's Rights
Agreement and except as set forth in Section 4.18 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
"stockholder rights" plan or any similar antitakeover plan or device. Prior to
the time this Agreement is executed, the board of directors of the Company has
taken all action necessary, if any, to exempt under or make not subject to
Section 203 of the DGCL and to ensure no stockholder of the Company will have
any rights under any Company stockholder rights agreement as a result of, (i)
the execution of this Agreement, (ii) the Company Merger and (iii) the other
transactions contemplated hereby.
SECTION 4.19. Customers and Suppliers.
(a) Section 4.19(a) of the Company Disclosure Schedule sets forth a
list of each customer that accounted for revenues to the Company and its
subsidiaries in the aggregate of more than one hundred thousand dollars
($100,000) during the six months ended June 30, 2003 (each a "Major
Customer"), together with in each case the amount of revenues generated from
each Major Customer during such period. Except as set forth in Section 4.19(a)
of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is engaged in any material dispute with any Major Customer, and
no Major Customer has provided the Company with written notice of termination
of such Major Customer's business relationship with the Company or any of its
subsidiaries. Except as set forth in Section 4.19(a) of the Company Disclosure
Schedule, to the knowledge of the Company, no Major Customer intends to
materially limit or reduce its business relations with the Company or any of
its subsidiaries.
(b) Section 4.19(b) of the Company Disclosure Schedule sets forth a
list of each supplier of goods or services to the Company and its subsidiaries
(including the content providers) (i) who is a supplier of critical or key
elements (including with respect to the Company Proprietary Assets) for the
operation of the businesses of the Company and its subsidiaries or (ii) to
whom the Company and its subsidiaries paid in the aggregate more than fifty
thousand dollars ($50,000) during the six months ended June 30, 2003 (each a
"Major Supplier"), together with in each case the amount paid to each Major
Supplier during such period. Except as set forth in Section 4.19(b) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is engaged in any material dispute with any Major Supplier, and no Major
Supplier has provided the Company with written notice of termination of such
Major Supplier's business relationship with the Company or any of its
subsidiaries. Except as set forth in Section 4.19(a) of the Company Disclosure
Schedule, to the knowledge of the Company, no Major Supplier intends to
materially limit or reduce its business relations with the Company or any of
its subsidiaries.
SECTION 4.20. Title to Property.
(a) The Company and its subsidiaries own or lease no material real
property other than as set forth in Section 4.20 of the Company Disclosure
Schedule or the Company SEC Reports. Except as reflected in the Company's
financial statements included in the Company SEC Reports, each of the Company
and its subsidiaries has good and valid title to all of its respective owned
properties and assets, free and clear of all Liens except Liens for Taxes not
yet due and payable and such liens or other imperfections of title, if any,
that do not materially detract from the value of or materially interfere with
the present use of property affected thereby; and, to the knowledge of the
Company, all leases pursuant to which the Company or any subsidiary leases
from others material amounts of real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of the Company, under any of such leases, any
existing material default or event of default (or event that with notice or
lapse of time, or both, would constitute a material default and in respect of
which the Company or any of its subsidiaries, as applicable, has not taken
adequate steps to prevent such a default from occurring).
(b) Neither the Company nor any of its subsidiaries has received
notice from any Governmental or Regulatory Authority requiring material work
to be done or material improvements to be made upon any property owned or
leased by the Company or any of its subsidiaries.
(c) Neither the Company nor any of its subsidiaries has received
notice from any lessor of any property leased by the Company or any of its
subsidiaries requiring it to make a material repair, or to pay for any
material repair of, any property leased by the Company or any of its
subsidiaries which material repairs remain unremedied, and if any such leased
property were to be surrendered in its present condition, such leased property
would be required to be accepted by the lessor in such condition under the
terms of the applicable lease.
(d) Except as set forth in Section 4.20 of the Company Disclosure
Schedule, no consent is required by the lessor under any lease agreement
relating to any property leased by the Company or any of its subsidiaries to
the transactions contemplated by this Agreement in order for said lease to
remain in full force and effect after the Closing.
(e) All tangible assets owned or used by the Company and its
subsidiaries in the operation of their respective businesses are in good
operating condition and in a good state of maintenance and repair and are
adequate for such businesses as currently conducted, except as would not be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect.
SECTION 4.21. Insurance.
(a) Section 4.21(a) of the Company Disclosure Schedule lists all
material insurance policies maintained by or on behalf of the Company or any
of its subsidiaries (specifying all material terms thereof including types of
coverage, coverage amounts, deductible amounts, and annual premium amounts)
(the "Company Insurance Policies"). Each of the policies identified in Section
4.21(a) of the Company Disclosure Schedule is in full force and effect.
(b) There is no pending claim under or based upon any of the policies
identified in Section 4.21(a) of the Company Disclosure Schedule, and, to the
knowledge of the Company, no event has occurred, and no condition or
circumstances exists, that likely would (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
claim, except for any such claim, event, condition or circumstances that,
individually or in the aggregate, has not had and would not have a Company
Material Adverse Effect.
(c) Section 4.21(c) of the Company Disclosure Schedule lists all
material claims made by the Company under the Company Insurance Policies
during the three (3) years prior to the date hereof.
(d) Except as set forth in Section 4.21 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has received any
notice or other communication (in writing or, to the knowledge of the Company,
otherwise) regarding (i) any actual or possible cancellation or invalidation
of any of the policies identified in Section 4.21(a) of the Company Disclosure
Schedule or regarding any actual or possible material adjustment in the amount
of the premiums payable with respect to any of said policies; (ii) any actual
or possible refusal of coverage under, or any actual or possible rejection of
any material claim under, any of the policies identified in Section 4.21(a) of
the Company Disclosure Schedule; or (iii) any written indication that the
issuer of any of the policies identified in Section 4.21(a) of the Company
Disclosure Schedule may be unwilling or unable to perform any of its
obligations thereunder.
SECTION 4.22. Accounts Receivable. Section 4.22 of the Company
Disclosure Schedule provides an accurate and complete breakdown and aging of
all accounts receivable of the Company as of June 30, 2003. All existing
accounts receivable of the Company represent valid obligations of customers of
the Company arising from bona fide transactions entered into in the ordinary
course of business and are subject to reserves reflected in the consolidated
financial statements contained in the SEC Reports or, with respect to accounts
receivable arising subsequent to the date hereof, to reserves established in
the ordinary course and consistent with past practice. Where known material
collection problems exist, such problems have been disclosed in Section 4.22
of the Company Disclosure Schedule.
SECTION 4.23. Restrictions on Business Activities.
(a) Except as set forth in Section 4.23(a) of the Company Disclosure
Schedule, neither the Company or any of its subsidiaries has granted material
rights to develop, distribute, market or sell its products and services to any
Person or is bound by any agreement that affects the exclusive right of the
Company or any of its subsidiaries to develop, distribute, license, market or
sell its products and services.
(b) Except as set forth in Section 4.23(b) of the Company Disclosure
Schedule, there is no agreement providing for most favored nation or similar
clauses, exclusivity or restriction of competition, or any judgment,
injunction, order or decree, binding upon the Company or any of its
subsidiaries, that has or could be expected to have the effect of prohibiting
or materially impairing the conduct of business by the Company or any of its
subsidiaries, or restricting any transaction between the Company and its
subsidiaries.
SECTION 4.24. Interested Party Transactions. There are no obligations
between the Company or any of its subsidiaries, on the one hand, and any of
the officers or directors of the Company or any of its subsidiaries, or any
stockholders holding more than 1% of the outstanding securities of the
Company, or any members of their immediate families, on the other hand, other
than (i) for payment of regular salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company or its
subsidiaries and (iii) for other standard employee benefits made generally
available to all employees. To the Company's knowledge, or as set forth in
Section 4.24 of the Company Disclosure Schedule, no officer or director of the
Company or any of its subsidiaries (or any members of their immediate
families), or any stockholder affiliated with such officer or director, has
any direct or indirect ownership interest in any firm or corporation (a) with
which the Company or its subsidiaries is affiliated, (b) with which the
Company or its subsidiaries has a business relationship or (c) that competes
with the Company or its subsidiaries, other than passive investments in
publicly traded companies (representing less than 1% of such company) that may
compete with the Company and its subsidiaries.
SECTION 4.25. Brokers; Fees. No broker, finder or investment banker
(other than Citigroup Global Markets Inc. ("Citigroup"), 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 or
on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Citigroup
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder. The Company has heretofore furnished on
Section 4.25 of the Company Disclosure Schedule all fees, expenses and
commissions the Company expects to incur in connection with the transactions
contemplated hereunder, including all severance-related expenses.
SECTION 4.26. Opinion of Financial Advisor. The board of directors of
the Company has received the opinion of the Company's financial advisor,
Citigroup, to the effect that, as of the date of this Agreement, the Company
Merger Consideration is fair, from a financial point of view, to the holders
of shares of Company Common Stock, a written copy of which opinion will be
provided to Parent solely for informational purposes after receipt thereof by
the Company.
Article V.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and (with respect to Sections 5.01, 5.03 , 5.04, 5.05, and
5.07 through 5.13 as such Sections shall relate to Holdco, except that with
respect to Holdco (other than in the case of the first two sentences of
Section 5.03(b)) any references to the "Effective Time" or "at the Effective
Time" shall be deemed to be mean "immediately prior to the Effective Time")
Holdco hereby represent and warrant to the Company that, except as set forth
in the written disclosure schedule previously delivered by Parent to the
Company, the paragraphs of which are numbered to correspond to the Sections of
this Agreement (the "Parent Disclosure Schedule"):
SECTION 5.01. Organization and Qualification; Subsidiaries.. Parent,
Holdco and each of their subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and have the requisite corporate power and authority and are in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such power, authority and
Approvals would not, individually or in the aggregate, have a Parent Material
Adverse Effect. Holdco, Parent and each of their subsidiaries are duly
qualified or licensed as a foreign corporation to do business, and are in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Parent Material Adverse Effect.
SECTION 5.02. Certificate of Incorporation and Bylaws. Parent has
heretofore furnished to the Company a complete and correct copy of the
certificate of incorporation and bylaws, as amended to date, of Parent. Such
certificate of incorporation and bylaws of Parent are in full force and
effect. The Parent is not in violation of any of the provisions of its
certificate of incorporation or bylaws.
SECTION 5.03. Capitalization.
(a) The authorized capital stock of Parent consists of (i) 30,000,000
shares of Parent Common Stock and (ii) 5,000,000 shares of Preferred Stock,
$0.01 par value ("Parent Preferred Stock"). As of March 31, 2003, (1)
17,222,722 shares of Parent Common Stock were issued and outstanding, all of
which are validly issued fully paid and nonassessable, and issued in
compliance with applicable securities laws, (2) no shares of Parent Preferred
Stock were issued and outstanding (3) no shares of capital stock were held in
its treasury, and (4) 5,451,204 shares of Parent Common Stock were reserved
for issuance pursuant to outstanding options under Parent's Stock Option
Plans. No shares of Parent Common Stock have been issued between March 31,
2003 and the date hereof, except for shares issued upon exercise of options
outstanding under Parent's Stock Option Plans. Except for Parent Stock
Options, Parent Purchase Rights and as set forth in Section 5.03(a) of the
Parent Disclosure Schedule and as described in the Parent SEC Reports, there
are no options, warrants, convertible securities, subscriptions, stock
appreciation rights, phantom stock plans, stock equivalents or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued common stock of Parent or any of its subsidiaries or
obligating Parent or any of its subsidiaries to issue or sell any shares of
common stock of, or options, warrants, convertible securities, subscriptions,
or other equity interests in, Parent or any of its subsidiaries. All shares of
Parent Common Stock subject to the issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of Parent or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of Parent Common Stock or the common stock of any subsidiary. Except as set
forth in Section 5.03(a) of the Parent Disclosure Schedule or as will not have
a Parent Material Adverse Effect, all of the outstanding shares of common
stock (or other equity interests) of each of Parent's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and issued in
compliance with applicable securities laws and all such shares are owned by
Parent or another subsidiary free and clear of all Liens, other than Liens for
Taxes not yet due and payable. Parent is the owner of all outstanding shares
of capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable, and were issued in
compliance in all material respects with applicable securities laws. Except as
set forth in Section 5.03(a) of the Parent Disclosure Schedule, Parent has not
granted or agreed to grant any registration rights for any shares of the
capital stock of, or options, warrants, convertible securities or other equity
interest in Parent. Except as disclosed in the Parent SEC Reports, Parent does
not directly or indirectly own any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity, excluding securities in any publicly traded company
held for investment by Parent or any of its subsidiaries in accordance with
and pursuant to Parent's formal investment policy and comprising less than 5%
of the outstanding stock of such company.
(b) At the Effective Time, the authorized capital stock of Holdco
will consist of (i) 50,000,000 shares of Holdco Common Stock and (ii)
5,000,000 shares of Preferred Stock, $0.01 par value ("Holdco Preferred
Stock"). At the Effective Time, (1) the shares of Holdco Common Stock that
will be issued and outstanding (including the shares of Holdco Common Stock to
be issued pursuant to the Parent Merger and Company Merger, to the extent
issued) will be validly issued, fully paid and nonassessable, and issued in
compliance with applicable securities laws, (2) no shares of Holdco Preferred
Stock will be issued and outstanding, and (3) no shares of capital stock will
be held in its treasury. No shares of Holdco Common Stock will be issued
between the date hereof and the Closing Date. At the Effective Time, except
pursuant to the provisions of Articles I and II of this Agreement, and as set
forth in Section 5.03(b) of the Parent Disclosure Schedule, there will be no
options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans, stock equivalents or other rights, agreements,
arrangements or commitments of any character relating to the issued or
unissued common stock of Holdco or any of its subsidiaries or obligating
Holdco or any of its subsidiaries to issue or sell any shares of common stock
of, or options, warrants, convertible securities, subscriptions, or other
equity interests in, Holdco or any of its subsidiaries. All shares of Holdco
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. There
will be no obligations, contingent or otherwise, of Holdco or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Holdco Common
Shares or the common stock of any subsidiary. Except as set forth in Section
5.03(b) of the Parent Disclosure Schedule, all of the outstanding shares of
common stock (or other equity interests) of each of Holdco's subsidiaries will
be duly authorized, validly issued, fully paid and nonassessable, and issued
in compliance with applicable securities laws and all such shares will be
owned by Holdco or another subsidiary free and clear of all Liens, other than
Liens for Taxes not yet due and payable. Holdco will be the owner of all
outstanding shares of capital stock of each of its subsidiaries and all such
shares will be duly authorized, validly issued, fully paid and nonassessable,
and will be issued in compliance in all material respects with applicable
securities laws. At the Effective Time, except as set forth in Section 5.03(b)
of the Parent Disclosure Schedule, Holdco will not have granted or agreed to
grant any registration rights for any shares of the capital stock of, or
options, warrants, convertible securities or other equity interest in Holdco
or any of its subsidiaries. At the Effective Time, Holdco will not directly or
indirectly own any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity, excluding the Parent Merger Sub, the Company Merger Sub, and
securities in any publicly traded company to be held for investment by Holdco
or any of its subsidiaries in accordance with and pursuant to Holdco's formal
investment policy and comprising less than 5% of the outstanding stock of such
company.
(c) Holdco, Parent Merger Sub, and Company Merger Sub were formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, have engaged in no other business activities and have conducted
their operations only as contemplated in this Agreement. Except for
obligations or liabilities incurred by Holdco, Parent Merger Sub, and Company
Merger Sub in connection with their incorporation or organization, this
Agreement and any other agreements, arrangements or transactions contemplated
by this Agreement, neither of Holdco, Parent Merger Sub, or Company Merger Sub
have incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements with
any person.
SECTION 5.04. Authority Relative to this Agreement. The Parent and
Holdco each has all necessary corporate power and authority to execute and
deliver this Agreement and subject to obtaining any necessary stockholder
approval of this Agreement and the Parent Merger, to perform its respective
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and Holdco and the
consummation by Parent and Holdco of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Holdco, and no other corporate proceedings on the part of Parent
and Holdco are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval and adoption of the
Parent Merger by a majority of the holders of the outstanding shares of Parent
Common Stock entitled to vote in accordance with the DGCL and Parent's
certificate of incorporation and bylaws and the approval of the issuance of
the shares of Holdco Common Stock in the Company Merger (the "Parent Requisite
Vote") and the filing of the Parent Certificate of Merger with the Secretary
of State of Delaware as required by the DGCL). This Agreement has been duly
and validly executed and delivered by Parent, Holdco, Parent Merger Sub and
Company Merger Sub and, assuming the due authorization, execution and delivery
by the Company, constitutes a legal, valid, and binding obligation of Parent,
Holdco, Parent Merger Sub and Company Merger Sub, enforceable against each in
accordance with its terms. The board of directors of Parent has determined (i)
that it is advisable, consistent with and in furtherance of the long-term
business strategy of the Parent, and fair to, and in the best interest of the
Parent and Parent's stockholders, for the Company to enter into a strategic
business combination with the Company upon the terms and subject to the
conditions of this Agreement, (ii) to approve and adopt this Agreement, the
Parent Merger, the issuance of the shares of Holdco Common Stock in the
Company Merger and the transactions contemplated hereby and (iii) to recommend
that the Parent's stockholders approve and adopt this Agreement, the Parent
Merger, and the transactions contemplated hereby and such resolutions of the
board of directors shall be in effect as of the Effective Time. As of the date
hereof, the only vote of holders of any class or series of stock of Parent or
Holdco necessary to approve this Agreement (with respect to Parent's
obligations), the Parent Merger, the issuance of the shares of Holdco Common
Stock in the Company Merger and the other transaction contemplated by this
Agreement is the vote of CBS and Pearson pursuant to the Parent Voting
Agreement.
SECTION 5.05. No Violation. Except for the need to obtain the Parent
Requisite Vote and to file the Parent Certificate of Merger with the Secretary
of State of the State of Delaware as required by the DGCL, or as set forth in
Section 5.05(a) of the Parent Disclosure Schedule, the execution, delivery and
the performance of this Agreement and the consummation of the transactions
contemplated by this Agreement by Parent and Holdco will not, (i) conflict
with or violate the certificate of incorporation or bylaws of Parent or
Holdco, (ii) conflict with or violate any Laws applicable to the Parent or
Holdco or any subsidiary or by which any of their respective properties are
bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or impair the Parent's, Holdco's or any of their subsidiary's rights or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
contract, or result in the creation of a Lien on any of the properties or
assets of the Parent, Holdco or any of their subsidiaries pursuant to, any
material contract filed as an exhibit or required to be filed as an exhibit to
the Parent SEC Reports or other note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent, Holdco or any of their subsidiaries is a party or by which
Parent, Holdco or any their subsidiaries or any of their respective properties
are bound or affected, except in the case of clauses (ii) and (iii) for any
such conflicts, violations, breaches, defaults or other occurrences that would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 5.06. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports, exhibits and other documents
required to be filed with the SEC since January 15, 1999 and has made
available to the Company, in the form filed with the SEC, (i) its Quarterly
Report on Form 10-Q for the period ended March 31, 2003 and its Annual Report
on Form 10-K for the fiscal year ended December 31, 2002, (ii) all proxy
statements relating to Parent's meetings of stockholders (whether annual or
special) held since January 15, 1999, (iii) all other reports or registration
statements (other than reports on Form 3, 4 or 5 filed on behalf of affiliates
of the Parent) filed by Parent with the SEC since January 15, 1999, and (iv)
all amendments and supplements to all such reports and registration statements
filed by Parent with the SEC (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared in accordance with the requirements of
the Federal Securities Laws, and (ii) did not at the time they were filed (or
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of Parent's subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
each fairly presented, in all material respects, the consolidated financial
position of Parent and its subsidiaries as of the respective dates thereof and
the consolidated results of its operations and cash flows and stockholder
equity for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
that were not or are not expected to be material in amount and the absence of
footnotes.
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to the Parent SEC Reports or
agreements, documents or other instruments that previously had been filed by
Parent with the SEC pursuant to the Securities Act or the Exchange Act.
(d) Since the adoption of the New Act, Parent has complied in all
material respects with the laws, rules and regulation under the New Act.
SECTION 5.07. Absence of Certain Changes or Events. Except as set
forth in Section 5.07 of the Parent Disclosure Schedule or the Parent SEC
Reports, since December 31, 2002, each of Parent and Holdco has conducted its
business in the ordinary course and there has not occurred: (i) any Parent
Material Adverse Effect; (ii) any amendments or changes in the certificate of
incorporation or bylaws of Parent or Holdco (other than amendments to increase
the authorized common stock of Parent); (iii) any damage to, destruction or
loss of any asset of Parent or Holdco, (whether or not covered by insurance)
that has had or is reasonably likely to have a Parent Material Adverse Effect;
(iv) any change by Parent or Holdco in its accounting methods, principles or
practices; (v) any revaluation of any of Parent's, Holdco's or any
subsidiary's assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any sale, pledge, disposition of or
encumbrance upon a material amount of property of Parent, Holdco or of any
subsidiary, except in the ordinary course of business and consistent with past
practice; or (vii) any declaration, issuance or payment of any dividend or
other distribution (whether in cash, stock or property or any thereof), other
than inter-company dividends or distributions among Parent and any of its
wholly-owned direct and indirect subsidiaries.
SECTION 5.08. No Undisclosed Liabilities. Except as is set forth in
the Parent SEC Reports, none of Parent, Holdco or any of their subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) that are, in
the aggregate, material to the business, operations or financial condition of
the Parent, Holdco and their subsidiaries taken as a whole, except liabilities
(a) adequately provided for in the Parent's audited balance sheet (including
any related notes thereto) as of December 31, 2002 or in the unaudited balance
sheet (including any related notes thereto) for the fiscal quarter ended March
31, 2003, or (b) incurred since December 31, 2002 in the ordinary course of
business and consistent with past practice, or (d) incurred in connection with
this Agreement or the transactions contemplated thereby.
SECTION 5.09. Absence of Litigation. Except as set forth in the
Parent SEC Reports, (i) there are no claims, actions, suits, proceedings or
investigations pending before any court, agency or tribunal, foreign or
domestic, or to the knowledge of the Parent, threatened against Parent, Holdco
or against any of their subsidiaries and (ii) there is no judgment, decree,
injunction, rule or order of any Governmental or Regulatory Authority
outstanding against Parent, Holdco or any of their subsidiaries.
SECTION 5.10. Title to Property. Parent, Holdco and their
subsidiaries own or lease no material real property other than as set forth in
Section 5.10 of the Parent Disclosure Schedule or the Parent SEC Reports.
Except as reflected in Parent's financial statements included in the Parent
SEC Reports, each of Parent, Holdco and their subsidiaries has good and valid
title to all of their respective properties and assets, free and clear of all
Liens except Liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, that do not materially detract from the value
or of materially interfere with the present use of the property affected
thereby; and, to the knowledge of Parent, all leases pursuant to which Parent,
Holdco or any subsidiary leases from others material amounts of real or
personal property are in good standing, valid and effective in accordance with
their respective terms, and there is not, to the knowledge of Parent under any
of such leases, any existing material default or event of default (or event
that with notice or lapse of time, or both, would constitute a material
default and in respect of which Parent, Holdco or any of their subsidiaries,
as applicable, has not taken adequate steps to prevent such a default from
occurring).
SECTION 5.11. Taxes. Parent and its subsidiaries have filed all Tax
Returns required to be filed by them, and have duly paid or made adequate
provision on their financial statements for the payment of all Taxes that have
been incurred or are due and payable.
SECTION 5.12. Broker; Fees. No broker, finder or investment banker
(other than UBS Securities LLC (formerly UBS Warburg LLC) ("UBSW") 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 or
on behalf of Parent or Holdco. Parent and Holdco have heretofore furnished to
the Company a complete and correct copy of all agreements between Parent or
Holdco and UBSW pursuant to which such firm would be entitled to any payment
relating to the transaction contemplated hereunder.
SECTION 5.13. Interested Party Transactions. There are no obligations
between the Parent, Holdco or any of their subsidiaries, on the one hand, and
any of the officers or directors of Parent, Holdco or any of their
subsidiaries, or any stockholders holding more than 1% of the outstanding
securities of the Parent or Holdco, or any members of their immediate
families, on the other hand, other than (i) for payment of regular salary for
services rendered, (ii) reimbursement for reasonable expenses incurred on
behalf of the Parent, Holdco or their subsidiaries and (iii) for other
standard employee benefits made generally available to all employees. To
Parent's and Holdco's knowledge, or as set forth in Section 5.13 of the Parent
Disclosure Schedule, no officer or director of the Parent, Holdco or any of
their subsidiaries (or any members of their immediate families), or any
stockholder affiliated with such officer or director, has any direct or
indirect ownership interest in any firm or corporation (a) with which the
Parent, Holdco or any of their subsidiaries is affiliated, (b) with which the
Parent, Holdco or any of their subsidiaries has a business relationship or (c)
that competes with the Parent, Holdco or their subsidiaries, other than
passive investments in publicly traded companies (representing less than 1% of
such company) that may compete with the Parent, Holdco and their subsidiaries.
SECTION 5.14. Opinion of Financial Advisor. The board of directors of
Parent has received the opinion of its financial advisor, UBSW, that as of the
date of this Agreement, the consideration to be paid to the Company's
stockholders is fair from a financial point of view to Parent. Parent will
deliver to the Company a written copy of such opinion solely for informational
purposes after receipt thereof by Parent.
Article VI.
CONDUCT OF BUSINESS PENDING THE MERGERS
SECTION 6.01. Conduct of Business by the Company Pending the Mergers.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing or as required or permitted under this Agreement, the Company shall
conduct its business and shall cause the business of its subsidiaries to be
conducted only in, and the Company and its subsidiaries shall not take any
action, except in the ordinary course of business and in a manner consistent
with past practice; and the Company shall use all commercially reasonable
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any
subsidiary has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement and except for transfers
of cash among the Company and its wholly-owned subsidiaries pursuant to the
Company's ordinary cash management policies as disclosed in Section 6.01 of
the Company Disclosure Schedule, neither the Company nor any subsidiary shall,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, directly
or indirectly do, or propose to do, any of the following without the prior
written consent of Parent:
(a) amend or otherwise change the Company's certificate of
incorporation or bylaws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of Company
capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of Company capital stock, or
any other ownership interest (including, without limitation, any phantom
interest) of the Company, any subsidiary or any of its affiliates, except for
the issuance of shares of Company Common Stock issuable to participants in the
Company's Employee Stock Purchase Plan or upon the exercise of outstanding
Company Stock Options or Company Stock Warrants; or
(c) sell, pledge, lease or otherwise dispose of or encumber any
assets or inventory of the Company or of any subsidiary (except for (i) sales
of assets or inventory in the ordinary course of business and in a manner
consistent with past practice, (ii) dispositions of obsolete or worthless
assets, and (iii) pledges of assets pursuant to existing agreements), or take
any action that would reasonably be expected to result in any damage to,
destruction or loss of any material asset of the Company (whether or not
covered by insurance);
(d) except as is contemplated by this Agreement, or the applicable
award agreement or Employee Plan, accelerate, amend or change the period (or
permit any acceleration, amendment or change) of exercisability of options or
restricted stock granted under the Employee Plans (including the Company Stock
Option Plans) or authorize cash payments in exchange for any options granted
under any of such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its common stock, except that a subsidiary may declare
and pay a dividend to the Company, (ii) split, combine or reclassify any of
its common stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
common stock, (iii) amend the terms of, repurchase (including without
limitation through its currently existing stock buy-back programs), redeem or
otherwise acquire, or permit any subsidiary to repurchase, redeem or otherwise
acquire, any of its securities or any securities of a subsidiary, or propose
to do any of the foregoing;
(f) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership or other business organization
or division thereof, or enter into or amend any contract, agreement,
commitment or arrangement to effect any such acquisition, except with respect
to those transactions as set forth in Section 6.01(f) of the Company
Disclosure Schedule, (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank debt
of a subsidiary entered into in the ordinary course of business) or endorse or
otherwise as an accommodation become responsible for, the obligations of any
person, or make any loans or advances, except in each case in the ordinary
course of business consistent with past practice (including pursuant to
existing credit lines and lease facilities); (iii) except in the ordinary
course of business or otherwise provided or permitted by this Agreement, to
enter into or amend any material agreement or contract that provides for the
sale, license, or purchase by the Company or any of its subsidiaries of
assets, including without limitation any licensing or technology transfer
agreement; (iv) have or make any capital expenditures or commitment for the
purchase of fixed assets in excess of $410,000 in the aggregate in the third
quarter of 2003 and amounts to purchase assets under capital leases under
existing contracts on the date hereof, in accordance with their terms, in the
fourth quarter of 2004, without the consent of Parent, which consent shall not
be unreasonably withheld; or (v) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 6.01(f);
(g) except as set forth in Section 6.01(g) of the Company Disclosure
Schedule or as required by Law, increase the compensation payable or to become
payable to its officers or employees, except for increases in salary or wages
of employees of the Company or of any subsidiary who are not vice-president
level or higher level employees of the Company in the ordinary course of
business and in accordance with past practices, or grant any bonus, severance
or termination pay to, or enter into any employment or severance agreement
with any director, officer (except for officers who are terminated on an
involuntary basis and payments relating thereto made pursuant to written
agreements outstanding on the date hereof as set forth on the Company
Disclosure Schedule) or other employee of the Company or of any subsidiary, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in each case, as
may be required by Law or as contemplated by this Agreement;
(h) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by concurrent changes in GAAP or Federal
Securities Law applicable to companies generally;
(i) make any material Tax election inconsistent with past practices
or settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved against
in the financial statements of the Company or incurred since the date of such
financial statements;
(k) waive the benefits of, agree to modify in any manner, terminate,
release any person from or fail to enforce any confidentiality or similar
agreement to which Company or any of its subsidiaries is a party or of which
Company or any of its subsidiaries is a beneficiary;
(l) engage in any action or enter into any transaction or authorize
any action to be taken or transaction to be entered into that could reasonably
be expected to delay the consummation of, or otherwise adversely affect, any
of the transactions contemplated by this Agreement, including the taking of
any action that would prevent the Mergers, taken together from qualifying as
an exchange described under Section 351 of the Code;
(m) undertake any revaluation of any of the Company's or any
subsidiary's assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business and consistent with past practice, or in
accordance with GAAP consistently applied;
(n) adopt a plan of complete or partial liquidation or dissolution of
Parent or any of its material subsidiaries;
(o) except for the existing Company Rights Agreement, adopt any
similar antitakeover plan or device, or enter into any other arrangement that
has an antitakeover effect, or that otherwise would limit the ability of
Holdco to consummate the Company Merger, or any of the other transactions
contemplated hereby;
(p) amend the Company Rights Agreement in any manner that would
permit any person other than Parent or its affiliates, including Holdco to
acquire more than 15% of the Company Commons, or redeem the Company Rights;
(q) except as reflected on the balance sheet dated June 30, 2003 and
covered by an adequate reserve therefor, make any sale or acceleration of
accounts receivable or any accrual of liabilities not in the ordinary course
or write off any notes or accounts receivable or portions thereof as
uncollectible other than in the ordinary course or as required by GAAP;
(r) discharge any lien or pay any obligation or liability (whether
absolute, accrued, contingent or otherwise) other than current liabilities
shown on the balance sheet dated June 30, 2003, and current liabilities
incurred thereafter or liabilities incurred in the ordinary course and not
required under GAAP to be reflected on such balance sheet;
(s) make any gifts or sell, transfer or exchange any property for
less than the fair value thereof;
(t) make any cash expenditure other than (i) in the ordinary course
of business, (ii) in connection with the implementation of the transactions
contemplated by this Agreement, including payment of transaction expenses,
(iii) in connection with payments for director and officer insurance policies
or (iv) in connection with the settlement of claims in the ordinary course of
business as permitted in Section 6.01(j); or
(u) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.01(a) through (t) above, or any action that
would make any of the representations or warranties of the Company contained
in this Agreement untrue or incorrect or prevent the Company from performing
or cause the Company not to perform its covenants hereunder.
SECTION 6.02. Conduct of Business by the Parent or Holdco Pending the
Mergers. Except as contemplated by this Agreement, during the period from the
date hereof to the Effective Time or earlier termination of this Agreement,
neither Parent not any of its subsidiaries nor Holdco, without the prior
written consent of the Company (which consent will not be unreasonably
withheld), shall:
(a) amend or otherwise change its certificate of incorporation or
bylaws (other than as provided for in Section 1.01);
(b) engage in any action or enter into any transaction or permit any
action to be taken or transaction to be entered into that could reasonably be
expected to delay the consummation of, or otherwise adversely affect, any of
the transactions contemplated by this Agreement, including the taking of any
action that would prevent the Mergers, taken together from qualifying as an
exchange described under Section 351 of the Code;
(c) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its common stock, except that a subsidiary may declare
and pay a dividend to the Company, (ii) split, combine or reclassify any of
its common stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
common stock, (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of a subsidiary, or propose to do any
of the foregoing;
(d) adopt a plan of complete or partial liquidation or dissolution of
Parent or any of its material subsidiaries; or
(e) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.02(a) through (d) above, or any action that
would make any of the representations or warranties of the Parent contained in
this Agreement untrue or incorrect or prevent the Parent from performing or
cause the Parent not to perform its covenants hereunder.
SECTION 6.03. Competing Transactions.
(a) The Company shall not, and shall not permit or authorize the
Company's subsidiaries, its and their officers, directors, employees,
controlled affiliates, agents or other representatives (including without
limitation any investment banker, financial advisor, attorney or accountant
retained by it or any of its subsidiaries), directly or indirectly, to
initiate, solicit or knowingly encourage (including by way of furnishing
nonpublic information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may
reasonably be expected to lead to, any Alternative Transaction, or enter into
discussions (except as to the existence of these provisions) or negotiate with
any person or entity in furtherance of such inquiries or to obtain an
Alternative Transaction, or agree to, or endorse, any Alternative Transaction
and the Company shall notify (within 24 hours after the Company attains
knowledge thereof) Parent of all relevant terms of any such inquiries or
proposals received by the Company or by any subsidiary or by any such officer,
director, employee, agent, investment banker, financial advisor, attorney,
accountant or other representative relating to any of such matters and if such
inquiry or proposal is in writing, the Company shall deliver or cause to be
delivered (within 24 hours of receipt) to Parent a copy of such inquiry or
proposal and update Parent (within 24 hours of receipt) as to any material
changes (and provide Parent with copies of same if in writing) with respect to
such inquiry or proposal, it being understood that Parent shall hold any such
inquiry or proposal or term confidential pursuant to the terms of the
Confidentiality Agreement; provided, however, that nothing contained in this
subsection (a) shall prohibit the board of directors of the Company, any of
its subsidiaries, and each of their officers, directors, employees,
affiliates, agents or other representatives (including without limitation any
investment banker, financial advisor, attorney or accountant retained by it or
any of its subsidiaries) from (i) furnishing information to, entering into a
confidentiality agreement with, or entering into discussions or negotiations
with, any persons or entity in connection with an unsolicited bona fide
proposal in writing by such person or entity relating to an Alternative
Transaction if, and only to the extent that (A) the board of directors of the
Company determines in good faith, after consultation with and taking into
account advice of its outside legal counsel, that such action is necessary to
comply with its fiduciary duties under Delaware law, (B) such action is in
response to an unsolicited bona fide written proposal made by a third party
relating to an Alternative Transaction on terms that the Company's board of
directors believes, after consultation with and taking into account advice
from the Company's financial advisor and outside legal counsel to be more
favorable to the Company's stockholders than the Company Merger or may
reasonably be expected to result in an Alternative Transaction on terms that
the Company's board of directors believes taking into account advice from the
Company's financial advisor and outside legal counsel would be more favorable
to the Company's stockholders than the Company Merger, and in each case (I)
any amount of financing, to the extent required, is (in the good faith
judgment of the Company's board of directors, after consultation with the
Company's financial advisors and outside legal counsel) then reasonably
certain of being obtained on a timely basis, (II) there is no condition to
closing such Alternative Transaction relating to the performance or completion
of due diligence (it being understood that customary closing conditions
relating to the accuracy of representations and warranties shall not be deemed
to be such a condition) with respect to the Company by such third party, and
(III) such Alternative Transaction is for more than 50% of the voting power of
the voting securities of the Company then outstanding or all or substantially
all of the assets of the Company and its subsidiaries, taken as a whole (a
"Superior Proposal"), and (C) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or entity the
Company (x) provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity, and (y) the Company receives from such person or entity
an executed confidentiality agreement with terms no less restrictive than
those contained in the Confidentiality Agreement; (ii) complying with Rule
14e-2 promulgated under the Exchange Act or from making any legally required
disclosure to stockholders with regard to an Alternative Transaction;
provided, however, that neither Company nor its Board of Directors nor any
committee thereof shall, except in the event that such Alternative Transaction
constitutes a Superior Proposal, withdraw, qualify, or modify, or propose to
withdraw, qualify or modify, its position with respect to the Company Merger
or this Agreement or approve or recommend, or propose to approve or recommend
an Alternative Transaction; or (iii) in the event of a Superior Proposal, to
enter into an agreement or understanding with respect to the Superior
Proposal; provided, however, that if Parent proposes to amend this Agreement
after receipt of a notice described under Section 6.03(c) below, the board of
directors of the Company shall consider such proposed amendments and shall not
enter into any agreement regarding such Alternative Transaction unless it has
provided the Parent with written notice, at least twenty-four (24) hours in
advance of entering into such agreement, which notice shall indicate that the
board of directors has reconfirmed its view that such Alternative Transaction
remains a Superior Proposal.
(b) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than Parent)
conducted heretofore with respect to any Alternative Transaction. The Company
agrees not to release any third party from any confidentiality or standstill
agreement to which the Company is a party.
(c) In addition to the foregoing, the Company shall (i) provide
Parent with at least forty-eight (48) hours prior written notice (or such
lesser prior written notice as provided to the members of the Company's board
of directors but in no event less than eight (8) hours) of any meeting of the
Company's board of directors at which the Company's board of directors is
reasonably expected to consider a Superior Proposal and (ii) provide Parent
with at least five (5) business days prior written notice (or such lesser
prior notice as provided to the members of the Company's board of directors
but in no event less than forty-eight (48) hours) of any meeting of the
Company's board of directors at which the Company's board of directors is
reasonably expected to recommend a Superior Proposal to its stockholders.
(d) In addition to the obligations of the Company set forth in this
Section 6.03, the Company shall advise Parent (within 48 hours of receipt)
orally and in writing of any request received by the Company for nonpublic
information which the Company reasonably believes would lead to an Alternative
Transaction or of any Alternative Transaction, or any inquiry received by the
Company with respect to or that the Company reasonably should believe would
lead to any Alternative Transaction or inquiry, and the identity of the person
or group making any such request, Alternative Transaction or inquiry. The
Company will update Parent (within 24 hours thereof) as to any material
changes with respect to such request, Alternative Transaction or inquiry.
(e) The Company shall use commercially reasonable efforts to ensure
that the officers, directors and employees of the Company and of each
subsidiary and any investment banker or other advisor or representative
retained by the Company are aware of the restrictions described in this
Section.
Article VII.
ADDITIONAL AGREEMENTS
SECTION 7.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as reasonably practicable after the execution of this
Agreement, (i) Parent and the Company shall prepare and each file with the SEC
proxy materials that shall constitute the joint proxy statement (together with
any amendments thereof or supplements thereto, (the "Proxy Statement"))
relating to the meeting of the Company's stockholders (the "Company
Stockholders' Meeting") and the meeting of Parent's stockholders (the "Parent
Stockholders' Meeting" and, together with the Company Stockholders' Meeting,
the "Stockholders' Meetings") to be held to consider adoption of this
Agreement and approval of the Mergers (including, in the case of the Parent
Stockholders Meeting, the issuance of the shares of Holdco Common Stock in the
Company Merger), and (ii) Holdco shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with the registration under the Securities Act of
shares of Holdco common Stock to be issued to the stockholders of the Company
and the Parent pursuant to the Mergers. Each of Parent and the Company shall
use commercially reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and to keep the Registration
Statement effective as long as is necessary to consummate the Mergers and the
transactions contemplated hereby. The Company shall furnish all information
concerning the Company as Parent may reasonably request in connection with
such actions and the preparation of the Registration Statement. As promptly as
practicable after the Registration Statement shall have become effective, the
Company shall mail the Proxy Statement to its stockholders and Parent shall
mail the Proxy Statement to its stockholders. The Proxy Statement and all
other proxy materials shall be subject to the review and reasonable approval
of Parent and the Company.
(b) Subject to the obligations of Parent and the Company under
applicable Law, no amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of Parent and the Company. Holdco and Parent will advise the Company
promptly after receipt of notice thereof, of the time at which the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of the
qualification of the shares of Holdco Common Stock issuable in connection with
the Mergers for offering or sale in any jurisdiction, or of any request by the
SEC for amendment of the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information and each
of Parent and the Company, as applicable, will advise the other, promptly
after it receives notice thereof, of any request by the SEC for amendment of
the Proxy Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(c) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement (if applicable) shall not, at
(i) the time the Registration Statement is declared effective, (ii) the time
the Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to the stockholders of the Company or the stockholders of Parent, (iii)
the time of each of the Stockholders' Meetings, and (iv) the Effective Time,
contain any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any of its Subsidiaries, or their
respective officers or directors, that should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement is discovered by
Parent, Parent shall promptly inform the Company thereof. All documents that
Parent is responsible for filing with the SEC in connection with the Mergers
or the other transactions contemplated by this Agreement will comply as to
form and substance in all material respects with the applicable requirements
of the Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder.
(d) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company or the stockholders of Parent, (iii) the time
of each of the Stockholders' Meetings and (iv) the Effective Time, contain any
untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company or any of its subsidiaries, or their
respective officers or directors, that should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement is discovered by
the Company, the Company shall promptly inform Parent. All documents that the
Company is responsible for filing with the SEC in connection with the Mergers
or the other transactions contemplated by this Agreement will comply as to
form and substance in all material respects with the applicable requirements
of the Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder.
SECTION 7.02. Stockholders' Meetings; Board Recommendations.
(a) The Company, acting through its Board of Directors, shall,
subject to and according to applicable law and its certificate of
incorporation and bylaws, promptly and duly call, give notice of, convene and
hold as soon as practicable to ensure obtaining requisite stockholder approval
following the date on which the Registration Statement becomes effective, the
Company Stockholders' Meeting for the purpose of voting to approve and adopt
this Agreement and the Company Merger (the "Company Voting Proposal"). The
board of directors of the Company shall, subject to the fiduciary duties of
the board of directors of the Company under applicable Law, (i) recommend
approval and adoption of the Company Voting Proposal by the stockholders of
the Company and include in the Proxy Statement such recommendation and (ii)
take all reasonable and lawful action to solicit and obtain such approval and
take all other action necessary or advisable to secure the vote or consent of
the Company stockholders required by Delaware Law or applicable Nasdaq
National Market requirements to obtain such approval; provided, however, that
the board of directors of the Company may withdraw such recommendation (and be
relieved of its duty to solicit approval of Company's stockholders but only
after the Company terminates this Agreement in accordance with Section
9.01(g)), if (but only if) (i) the board of directors of the Company has
received a Superior Proposal and (ii) such board of directors after
consultation with and taking into account advice from its outside legal
counsel determines that it is necessary, in order to comply with its fiduciary
duties under applicable law, to recommend such Superior Proposal to the
stockholders of the Company. The Company stockholder vote required for the
approval of the Company Voting Proposal shall be a majority of the outstanding
shares of Company Common Stock on the record date for the Company
Stockholders' Meeting.
(b) The Parent, acting through its Board of Directors, shall, subject
to and according to applicable law and its certificate of incorporation and
bylaws, promptly and duly call, give notice of, convene and hold as soon as
practicable to ensure obtaining requisite stockholder approval following the
date on which the Registration Statement becomes effective, the Parent
Stockholders' Meeting for the purpose of voting to approve and adopt this
Agreement, the Parent Merger, and the issuance of the shares of Holdco Common
Stock in the Company Merger (the "Parent Voting Proposal"). The board of
directors of the Parent shall take all reasonable and lawful action to solicit
and obtain such approval and take all other action necessary or advisable to
secure the vote or consent of the Parent stockholders required by Delaware Law
or applicable Nasdaq National Market requirements to obtain such approval.
(c) Nothing contained in this Section 7.02 shall prevent Company or
Parent from adjourning or postponing the Company Stockholders' Meeting or the
Parent Stockholders' Meeting, as the case may be, if there are insufficient
shares of Company Common Stock or Parent Common Stock, as the case may be,
necessary to conduct business at their respective stockholders' meetings.
Parent and the Company shall use all commercially reasonable efforts to hold
the Stockholders' Meetings on the same day and as soon as practicable after
the date on which the Registration Statement becomes effective, it being
understood that for purposes of determining what is "as promptly as
practicable" for the purposes of this sentence the parties shall take into
account the status of regulatory approvals and related waiting periods.
SECTION 7.03. Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall each (and shall
cause each of their subsidiaries to) afford to the officers, employees,
accountants, investment bankers, legal counsel and other representatives of
the other, reasonable access, during the period prior to the Effective Time,
to all its properties, books, contracts, commitments and records and, during
such period. The Company and Parent each shall (and shall cause each of their
subsidiaries to) furnish promptly to the other all information concerning its
business, properties, assets, legal and financial condition, and personnel as
such other party may reasonably request, and each shall make available to the
other the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties assets,
legal and financial condition, and personnel as either party may reasonably
request. Each party shall keep such information confidential in accordance
with the terms of the Confidentiality and Exclusivity Agreement, entered into
on May 1, 2003, as amended by the parties on May 31, 2003 (the
"Confidentiality Agreement"), between Parent and the Company. The Company and
Parent shall file all reports required to be filed by each of them with the
SEC between the date of this Agreement and the Effective Time and shall
deliver to the other party copies of such reports promptly after the same are
filed.
SECTION 7.04. Consents; Approvals. The Company and Parent shall
coordinate and cooperate with one another and shall each use all commercially
reasonable efforts to obtain (and shall each refrain from taking any willful
action that would impede obtaining) all consents, waivers, approvals,
authorizations or orders (including, without limitation, all rulings,
decisions or approvals by any Governmental or Regulatory Authority), and the
Company and Parent shall make all filings (including, without limitation, the
pre-merger notification filings required under the HSR Act, as amended, and
all other filings with Governmental or Regulatory Authorities) required in
connection with the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the transactions
contemplated hereby, excepting only those merger notification filings with
foreign jurisdictions for which the failure to file would not have a Material
Adverse Effect on the Company or the transactions contemplated hereby. Without
limiting the generality of the foregoing, each party shall take or omit to
take such action as the other party shall reasonably request to cause the
parties to obtain any of the aforementioned consents, waivers, approvals,
authorizations or orders, including, without limitation, holding separate and
agreeing to sell or otherwise dispose of, assets, categories of assets or
businesses of Parent or Company or any of their respective subsidiaries (and
to enter into agreements with the relevant governmental antitrust entity
giving effect thereto), provided that the foregoing shall not obligate either
party to take or omit to take any action (including, without limitation, the
expenditure of funds or any such holding separate and agreeing to sell or
otherwise dispose of assets, categories of assets or businesses) that is to be
effective prior to the Closing or that would or could reasonably be expected
to have, in the good faith opinion of such party a Material Adverse Effect on
Parent, Company, or their respective subsidiaries, taken as a whole after the
Closing. The Company and Parent shall furnish all information required to be
included in the Company Proxy Statement and the Registration Statement, or for
any application or other filing to be made pursuant to the rules and
regulations of any Governmental or Regulatory Authority in connection with the
transactions contemplated by this Agreement. Except where prohibited by
applicable statutes and regulations, and subject to the Confidentiality
Agreement, each party shall coordinate with one another in preparing and
exchanging such information, and shall promptly provide the other (or its
counsel) with copies of all filings, presentations or submissions made by such
party with any Governmental or Regulatory Authority in connection with this
Agreement or the transactions contemplated hereby.
SECTION 7.05. Intentionally Omitted.
SECTION 7.06. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be materially untrue or inaccurate,
and (ii) any failure of the Company or Parent, as the case may be, to
materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, as the case may be; provided,
however, that the delivery of any notice pursuant to this Section 7.06 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice and further provided that failure to give such notice
shall not be treated as a breach of covenant for the purposes of Section
8.02(b) or 8.03(b) unless the failure to give such notice results in material
prejudice to the other party. No disclosure by any party pursuant to this
Section 7.06, however, shall be deemed to amend or supplement the disclosures
set forth on Company Disclosure Schedule or the Parent Disclosure Schedule or
prevent or cure any misrepresentation, breach of warranty or breach of
covenant.
SECTION 7.07. Further Assurances; Tax Treatment.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all commercially reasonable efforts to take, or cause
to be taken, all 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, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
(b) Each of Parent and the Company shall use commercially reasonable
efforts to cause the Mergers to qualify, and will not (both before and after
consummation of the Mergers) take any actions which could reasonably be
expected to prevent the Mergers from qualifying as exchanges with the meaning
of Section 351 of the Code and the Parent Merger qualifying as a
reorganization under the provisions of Section 368 of the Code.
(c) Each of Parent and the Company shall cooperate with each other in
obtaining the opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and Skadden, Arps, Slate,
▇▇▇▇▇▇▇ and ▇▇▇▇ LLP described in Section 8.01(c). In connection therewith,
each of Parent and the Company shall deliver to such counsel customary
representation letters in form and substance satisfactory to such counsel.
SECTION 7.08. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release with respect to the
Mergers or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law, or
the Nasdaq National Market if it has used all reasonable efforts to consult
with the other party. Each of Parent and Company shall make all necessary
filings with Governmental or Regulatory Authorities and shall promptly provide
the other party with copies of filings made by such party between the date
hereof and the Effective Time.
SECTION 7.09. Comfort Letters; Financial Statements; Audit.
(a) Upon request of Parent, Company shall use commercially reasonable
efforts to cause to be delivered to Parent a letter (the "Company Comfort
Letter") of Deloitte & Touche LLP, Independent Accountants, addressed to
Parent and dated as of a date within five days before the date the Proxy
Statement is first mailed to each company's respective stockholders, in form
and substance reasonably satisfactory to Parent and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with proxy statements similar to the Proxy Statement.
(b) Upon request of Company, Parent shall use commercially reasonable
efforts to cause to be delivered to Company a letter (the "Parent Comfort
Letter") of PricewaterhouseCoopers LLP, Independent Accountants, addressed to
Company and dated as of a date within five days before the date the Proxy
Statement is first mailed to each company's respective stockholders, in form
and substance reasonably satisfactory to Company and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with proxy statements similar to the Proxy Statement.
(c) Prior to the Closing Date, Company will deliver to Parent as soon
as practicable, for each successive monthly period ending after June 30, 2003,
an unaudited consolidated monthly balance sheet and related monthly statements
of income, stockholder's equity and changes in financial position of Company.
Such financial statements shall be complete, accurate and correct and present
fairly, in all material respects, the financial condition of Company, as of
the end of each such monthly period, and shall present fairly, in all material
respects, the results of operations for each of the monthly periods then
ended, in accordance with GAAP consistently applied except for the absence of
footnotes thereto, normal year-end adjustments consistent with past practices
or as contemplated by this Agreement.
(d) Prior to the Closing Date, Company will deliver to Parent, as
soon as practicable, for each successive monthly period after June 30, 2003, a
true and correct summary of all accounts receivable of Company as at the end
of such monthly period.
(e) Upon request of Parent, the Company will use its commercially
reasonable efforts to provide that an audited balance sheet of the Company as
of September 30, 2003 accompanied by an audit report of Deloitte & Touche LLP
is delivered to Parent by the Effective Time, if practicable, or as soon
thereafter as is practicable, but in no event later than November 28, 2003, it
being understood that delivery of such audited balance sheet shall not be
deemed to constitute a condition to consummation of the Mergers, nor shall the
Effective Time be delayed in order to permit receipt of such audited balance
sheet and report if all conditions to the Mergers are otherwise satisfied.
Notwithstanding any other provision in this Agreement, Parent hereby agrees to
pay all of Deloitte & Touche LLP's or other outside accounting firm's fees and
expenses associated with the process set forth in this Section 7.09(e) unless
(i) this Agreement is terminated and (ii) the provisions of Section 9.03(c)
are triggered as a result of such termination, in which case, the Company
shall pay all of Deloitte & Touche LLP's or other outside accounting firm's
fees and expenses associated with the process set forth in this Section
7.09(e) in addition to any other expenses payable by the Company under Section
9.03(c), and, if applicable, Section 9.03(b).
SECTION 7.10. Listing of Shares of Holdco Common Stock. Holdco shall
use all commercially reasonable efforts to cause the shares of Holdco Common
Stock to be issued in the Mergers to be approved for quotation on the Nasdaq
National Market prior to the Effective Time. Holdco shall use all commercially
reasonable efforts to cause the shares of Holdco Common Stock, when issued
upon exercise of Company Stock Options, the Company Purchase Rights, the
Parent Stock Options, and the Parent Purchase Rights, to be approved for
quotation on the Nasdaq National Market.
SECTION 7.11. Form S-8. Holdco shall file with the SEC, no later than
30 days after the Effective Time, a registration statement on Form S-8 (or any
successor form) relating to shares of Holdco Common Stock issuable pursuant to
assumed awards under the Company Stock Options, the Company Purchase Rights,
the Parent Stock Options, and the Parent Purchase Rights, and shall use all
commercially reasonable efforts to maintain the current status of the
prospectus contained therein, as well as comply with applicable state
securities or "blue sky" laws, for so long as the Company Stock Options, the
Company Purchase Rights, the Parent Stock Options, and the Parent Purchase
Rights remain outstanding.
SECTION 7.12. Conveyance Taxes. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
SECTION 7.13. Director and Officer Liability.
(a) From and after the Effective Time, Holdco will, and will cause
the surviving corporation in the Company Merger to, fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and its present or former officers, directors
and employees immediately prior to the Effective Time (the "Indemnified
Parties"), subject to applicable Law. For five years after the Effective Time,
Holdco will cause the Company Surviving Corporation to indemnify and hold
harmless the Indemnified Parties in respect of acts or omissions occurring
prior to the Effective Time to the extent provided under the Company's
certificate of incorporation and bylaws in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
five years from the Effective Time in any manner that would adversely affect
the rights thereunder of the Indemnified Parties, unless such modification is
required by Law. For a period of five years after the Effective Time, Holdco
shall cause to be maintained in effect the policies of directors' and
officers' liability insurance currently maintained by the Company for the
benefit of those persons who are covered by such policies (or Holdco and/or
the Company Surviving Corporation may substitute therefor run-off or tail
policy or endorsement policies with a reputable insurance company covering on
substantially the same terms and conditions claims arising out of acts or
conduct occurring on or prior to the Effective Time asserted within the five
year period after the Effective Time); provided, however, that in no event
shall Holdco and/or the Company Surviving Corporation be required to expend on
an annual basis in excess of 150 percent of the annual premium currently paid
by the Company for such coverage, and provided further, that if the annual
premium for such coverage exceeds such annual amount, Holdco and/or the
Company Surviving Corporation shall purchase a policy with the greatest
coverage available for such 150 percent of the current annual premium, and
provided further that if certain elements of coverage of such directors' and
officers' liability insurance are not being made available by national
directors and officers insurance carriers after the Effective Time, then
neither Holdco nor the Company Surviving Corporation will be required to
provide such coverage.
(b) This Section 7.13 is intended to be for the benefit of, and shall
be enforceable by the Indemnified Parties and their heirs and personal
representatives and shall be binding on Holdco and the surviving corporation
in the Company Merger and its successors and assigns. In the event Holdco or
the surviving corporation in the Company Merger or its successor or assign (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successor or assign of Holdco or the surviving corporation in the Company
Merger, as the case may be, shall honor the obligations set forth with respect
to Holdco or the surviving corporation in the Company Merger, as the case may
be, in Section 7.13.
SECTION 7.14. Action by Parent and Company's Boards. Prior to the
Effective Time, Parent and Company shall use all commercially reasonable
efforts to approve in advance in accordance with the procedures set forth in
Rule 16b-3 promulgated under the Exchange Act and the Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP SEC No-Action Letter (dated January 12, 1999) any
dispositions of Parent Common Stock or Company Common Stock, as applicable
(including derivative securities with respect to Parent Common Stock or
Company Common Stock) or acquisitions of Holdco Common Stock (including
derivative securities with respect to Holdco Common Stock) resulting from the
transactions contemplated by this Agreement by each officer or director of
Parent or Company who is subject to Section 16 of the Exchange Act (or who
will become subject to Section 16 of the Exchange Act as a result of the
transactions contemplated hereby) with respect to equity securities of Parent
or Company.
SECTION 7.15. Certain Employee Benefits Matters. At Parent's
direction, Company shall, immediately prior to the Closing Date, terminate any
one or more of the Company Employee Plans as specified by Parent, subject to
closing of the transactions contemplated herein and in any such event, no
further contributions shall be made to the Company Employee Plans. In the
event Parent directs Company to terminate one or more of the Company Employee
Plans, Company shall provide to Parent (i) executed resolutions by the Board
of Directors of Company authorizing the termination of such plan or plans; and
(ii) if applicable, an executed amendment to the Plans sufficient to assure
compliance with all applicable requirements of the Code and regulations
thereunder so that the tax-qualified status of the Plan will be maintained at
the time of termination.
SECTION 7.16. Company Rights Agreement. The Board of Directors of the
Company shall take all action to the extent necessary (including amending the
Company Rights Agreement) in order to render the Company Rights inapplicable
to the Company Merger and the other transactions contemplated by this
Agreement. Except in connection with the foregoing sentence, the Board of
Directors of Company shall not, without the prior written consent of Parent
(except immediately prior to the entry into a Superior Proposal), (i) amend
the Company Rights Agreement or (ii) take any action with respect to, or make
any determination under, the Company Rights Agreement, including a redemption
of the Company Rights, in each case in order to facilitate any Alternative
Transaction with respect to Company.
SECTION 7.17. Additional Employee Matters.
(a) Employee Benefit Plans; Existing Arrangements. For the period
commencing on the Closing Date and ending on December 31, 2003, Holdco shall
provide, or shall cause Parent to provide, the employees of the Company,
including those employees who are inactive as a result of short-term or
long-term disability or a leave of absence (collectively, the "Company
Employees") with compensation (including base salary, commission, and
Incentive Bonus) and employee benefits (including but not limited to severance
benefits in accordance with the Company's past practices) that are no less
favorable in the aggregate than the compensation and employee benefits
provided to the Company Employees as of the date hereof. Each eligible Company
Employee will receive a portion of his/her Incentive Bonus based on (i) the
achievement by the Company of the corporate performance targets under such
Incentive Bonus, and (ii) the achievement by the Company Employee of his/her
individual performance targets provided under his/her Incentive Bonus
arrangement (as reasonably determined based on past practices of the Company),
proportionate to the number of days employed in 2003 relative to the full year
irrespective of whether such Company Employee is employed by the Company at
the time payment is made. On and after January 1, 2004, the Company Employees
shall receive compensation in accordance with Holdco's then-effective
policies, and, to the extent permissible under applicable Law, Company
Employees shall be entitled to participate in employee benefit plans of Holdco
or Parent (as applicable) in which similarly situated employees of Holdco or
Parent are eligible to participate (as applicable), including, without
limitation, participation in the Parent 401(k) Plan.
(b) Credit for Service. Subject to the requirements of applicable Law
and the terms of the applicable plans, Holdco or Parent (as applicable) shall
cause the Company Employees to be given full credit for all service with the
Company or an affiliate of the Company prior to the Closing for purposes of
eligibility, vesting and determination of the level of benefits under any
employee benefit plans or arrangements of Holdco, Parent or any affiliate of
Holdco or Parent (as applicable) in which such Company Employees participate
from and after the Closing (other than Parent's 401(k) Plan or its successor
plan, and subject to any applicable waiting periods applicable to new
participants in such plan). Subject to the approval of any insurance carrier
and to the extent consistent with applicable Law, Holdco or Parent (as
applicable) shall, or shall cause an affiliate of Holdco or Parent to make
commercially reasonable efforts to, (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to Company Employees under
any welfare plan in which such employees may be eligible to participate after
the Closing, other than limitations or waiting periods that are already in
effect with respect to such Company Employees and that have not been satisfied
as of the Closing under any welfare plan of the Company or any affiliate of
the Company in which such Company Employees participate immediately prior to
the Closing Date, and (ii) provide each Company Employee with credit for any
co-payments and deductibles paid prior to the Closing in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans in
which such employees are eligible to participate after the Closing, as if
those deductibles or co-payments had been paid under the welfare plans in
which such employees are eligible to participate after the Closing. Without
limiting the generality of the foregoing, subject to the applicable
limitations imposed under the Holdco or Parent vacation and leave of absence
policies, all vacation, sickness and long service leave, holiday and personal
days accrued by the Company Employees prior to the Closing shall be honored by
the surviving corporation in the Company Merger, Holdco and Parent or an
affiliate of the surviving corporation in the Company Merger, Holdco or Parent
after the Closing (as applicable).
(c) 401(k) Plan. In the event Parent directs Company to terminate the
Company's 401(k) plan (the "Company 401(k) Plan"), effective as of the date of
the termination of the Company 401(k) Plan, Company Employees shall no longer
actively participate in such plan. In such event, Holdco or Parent (as
applicable) shall designate a tax-qualified defined contribution plan of
Holdco, Parent or one of their affiliates (such plan(s), the "Parent 401(k)
Plan") that either (i) currently provides for the receipt from Company
Employees of "eligible rollover distributions" (as such term is defined under
Section 402 of the Code) or (ii) shall be amended as soon as practicable
following the Closing Date to provide for the receipt from the Company
Employees of eligible rollover distributions. As soon as practicable following
the Closing Date, the surviving corporation in the Company Merger shall
provide Holdco or Parent (as applicable) with such documents and other
information as Holdco or Parent (as applicable) shall reasonably request to
assure itself that the accounts of the Company Employees would be eligible
rollover distributions. Each Company Employee who is a participant in the
Company 401(k) Plan shall be given the opportunity to receive a distribution
of his or her account balance and shall be given the opportunity to elect to
"roll over" such account balance to the Parent 401(k) Plan, subject to and in
accordance with the provisions of such plan(s) and applicable Law. The Company
shall provide Holdco or Parent (as applicable) with copies of such personnel
and other records of the Company pertaining to the Company Employees and such
records of any agent or representative of the Company pertaining to the
Company Employees and such records of any agent or representative of the
Company, in each case pertaining to the Company 401(k) Plan and as Holdco or
Parent (as applicable) may reasonably request in order to administer and
manage the accounts and assets rolled over to the Parent's 401(k) Plan.
(d) COBRA. Effective as of the Closing Date, Holdco, Parent or an
affiliate of Holdco or Parent (as applicable) shall assume all obligations
with respect to the provision of notices, election periods and benefits
pursuant to Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA ("COBRA") to all current and former employees of the Company (and their
beneficiaries) who, as of the Closing Date, are receiving, entitled to receive
or entitled to elect to receive continuation of group health plan coverage to
COBRA.
(e) Employment Agreements. Effective as of the Closing Date, Holdco,
Parent or an affiliate of Holdco or Parent (as applicable) shall use
commercially reasonable efforts to enter into employment agreements with those
individuals mutually agreed to by Parent and Company on such terms and
conditions as are mutually agreed upon by and between Holdco or Parent (as
applicable) and each such individual.
Article VIII.
CONDITIONS TO THE MERGERS
SECTION 8.01. Conditions to Obligations of Each Party to Effect its
Respective Merger. The respective obligations of each party to effect the
Company Merger and Parent Merger shall be subject to the satisfaction or
waiver by the other party (where permissible) at or prior to the Effective
Time of the following conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been initiated
or threatened by the SEC;
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Mergers shall be in effect; and there shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Mergers, which makes the
consummation of the Mergers illegal or otherwise prohibits consummation of the
Mergers;
(c) Tax Opinions.
(i) Company shall have received an opinion of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ and ▇▇▇▇ LLP, in form and substance reasonably satisfactory to
Company, on the basis of certain facts, representations (including those
contained in the representation letters described in Section 7.07(c) of this
Agreement) and assumptions set forth in such opinion, dated the Effective
Time, to the effect that the Mergers shall qualify as exchanges within the
meaning of Section 351 of the Code.
(ii) Parent shall have received an opinion of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, in form and substance reasonably satisfactory to Parent, on the
basis of certain facts, representations (including those contained in the
representation letters described in Section 7.07(c) of this Agreement) and
assumptions set forth in such opinion, dated the Effective Time, to the effect
that the Mergers shall qualify as exchanges within the meaning of Section 351
of the Code and that the Parent Merger shall qualify as a reorganization
within the meaning Section 368(a) of the Code;
(d) Antitrust Waiting Periods; Approvals. Any waiting period (and any
extension thereof) or approvals applicable to the consummation of the Mergers
under the HSR Act or any foreign antitrust or combination Law or material
filings, consents, approvals and authorizations legally required to be
obtained to consummate the Mergers shall have expired, been terminated or
obtained, as applicable;
(e) Stockholder Approvals. This Agreement, the Mergers and the
issuance of the shares of Holdco Common Stock in the Company Merger shall have
been approved and adopted by the requisite affirmative vote of the
stockholders of the Company and Parent, as applicable, in accordance with
DGCL, the rules of Nasdaq National Market, and the Company Certificate of
Incorporation and the Parent Certificate of Incorporation, respectively; and
(f) Nasdaq National Market Listing. The shares of Holdco Common Stock
to be issued pursuant to the Parent Merger and the Company Merger shall have
been approved for quotation on the Nasdaq National Market.
SECTION 8.02. Additional Conditions to Obligations of Parent. The
obligations of Parent to effect the Parent Merger are also subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct on and as of the Effective Time, except (i) those representations and
warranties that address matters only as of a particular date (which shall
remain true and correct as of such date (subject to the qualifications in
clause (ii) below)); and (ii) where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation
as to "materiality" or "material adverse effect" set forth therein) would not
have, individually or in the aggregate, a Company Material Adverse Effect,
with the same force and effect as if made on and as of the Effective Time, and
Parent shall have received a certificate to such effect signed by the Chief
Executive Officer and Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent shall have received a certificate to such effect
signed by the President and Chief Financial Officer of the Company;
(c) Consents Obtained. The material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made by the Company for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
(the "Material Consents") are listed on Schedule 8.02(c), shall have been
obtained and made by the Company;
(d) Stockpoint Warrants. Prior to the Effective Time, the Company
shall have provided the necessary written notices to all holders of warrants
for shares of Company Common Stock issued in connection with the Company's
acquisition of Stockpoint, Inc. (the "Stockpoint Warrants"), such that such
warrants will expire prior to the Effective Time and not be assumed by Holdco
pursuant to Section 2.08; and
(e) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred a Company Material Adverse Effect.
SECTION 8.03. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Company Merger is also subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement shall be true and correct on
and as of the Effective Time, except (i) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date (subject to the qualifications in clause (ii)
below)), and (ii) where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) would not have,
individually or in the aggregate, a Parent Material Adverse Effect, with the
same force and effect as if made on and as of the Effective Time, and the
Company shall have received a certificate to such effect signed by the
President and Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and the Company shall have received a certificate to such effect signed
by the President and Chief Financial Officer of Parent; and
(c) Material Adverse Effect. Since the date of this Agreement, there
shall not have been a Parent Material Adverse Effect.
Article IX.
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company and Parent:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company; or
(b) by either Parent or the Company, if the Effective Time shall not
have occurred on or before December 31, 2003 (the "Outside Date") (provided
that the right to terminate this Agreement under this Section 9.01(b) shall
not be available to any party whose willful failure to fulfill any obligation
under this Agreement has been a cause of, or resulted in, the failure of the
Mergers to be consummated on or before such date); or
(c) by either Parent or the Company, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling or
taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Mergers, except if the
party relying on such order, decree or ruling or other action has not complied
with its obligations under Sections 7.04 and 7.07; or
(d) by Parent or the Company, if at the Company Stockholders' Meeting
(including any adjournment or postponement thereof), the Company Requisite
Vote as required by the DGCL shall not have been obtained; provided, however,
that the right to terminate this Agreement under this Section 9.01(d) shall
not be available to the Company where the failure to obtain the Company
Requisite Vote shall have been caused by or related to the Company's willful
breach of this Agreement; or
(e) by Parent or the Company, if at the Parent Stockholders' Meeting
(including any adjournment or postponement thereof), the Parent Requisite Vote
as required by the DGCL and the Nasdaq National Market shall not have been
obtained; provided, however, that the right to terminate this Agreement under
this Section 9.01(e) shall not be available to Parent where the failure to
obtain the Parent Requisite Vote shall have been caused by or related to
Parent's willful breach of this Agreement; or
(f) by Parent, if (i) the board of directors of the Company
withholds, withdraws, modifies or changes the Company Recommendation in a
manner adverse to Parent, or shall have resolved to do so (it being understood
that any communication to stockholders pursuant to Rule 14d-9(f) of the
Exchange Act shall not be deemed to be a withdrawal, modification or change),
(ii) the board of directors of the Company endorses, approves or recommends
any Alternative Transaction, or shall have resolved to do so (it being
understood that any communication to stockholders pursuant to Rule 14d-9(f) of
the Exchange Act shall not be deemed to be a withdrawal, modification or
change), (iii) the Company shall have failed to include in the Proxy Statement
the Company Recommendation, (iv) a tender offer or exchange offer for 15% or
more of the outstanding shares of stock of the Company has commenced, and the
board of directors of the Company has not recommended rejection of such tender
offer or exchange offer by its stockholders within ten (10) business days of
the commencement thereof pursuant to Rule 14e-2 of the Exchange Act, or (v)
the Registration Statement is effective, and for any reason (other than the
inability to provide adequate notice under the DGCL subsequent to such
effectiveness) the Company fails to call and hold the Company Stockholders'
Meeting, by the Outside Date; or
(g) by the Company, only if prior to the Company Stockholders'
Meeting, on five (5) business days prior written notice to Parent, if the
Board of Directors of the Company authorizes the Company to enter into a
binding written agreement concerning a transaction that constitutes a Superior
Proposal; provided that the Company shall have complied with all its
obligations under Section 6.03 hereof and with applicable requirements of
Section 9.03 hereof, including payment of the Fee (as defined in Section
9.03(b) hereof) pursuant to Section 9.03(b) hereof; or
(h) by Parent, if there has been a breach by the Company of any of
its representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become untrue,
in either case only if (i) the conditions set forth in Section 8.02(a) or
Section 8.02(b) would not be satisfied as of the time of such breach or as of
the time such representation or warranty shall have become untrue, and (ii)
the breach of a condition by the Company or the inaccuracy of the Company's
representation and warranty has not been promptly cured within 30 days
following receipt by the Company of written notice of such breach (provided,
however that no cure period shall be required under this Section 9.01(h) for a
breach which by its nature cannot be cured); or
(i) by Company, if there has been a breach by the Parent of any of
its representations, warranties, covenants or agreements contained in this
Agreement, or any such representation and warranty shall have become untrue,
in either case only if (i) the conditions set forth in Section 8.03(a) or
Section 8.03(b) would not be satisfied as of the time of such breach or as of
the time such representation or warranty shall have become untrue, and (ii)
the breach of a condition by the Parent or the inaccuracy of the Parent's
representation and warranty has not been promptly cured within 30 days
following receipt by the Parent of written notice of such breach (provided,
however that no cure period shall be required under this Section 9.01(i) for a
breach which by its nature cannot be cured).
SECTION 9.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or stockholders except (i) as set
forth in Sections 9.03 and 10.01 hereof, and (ii) nothing herein shall relieve
any party from liability for any willful breach of its representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 9.03. Fees and Expenses.
(a) Except as set forth in this Section 9.03, (i) all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses if the
Mergers are not consummated, or (ii) if the Mergers are consummated, then,
Holdco shall cause such fees and expenses to be paid; provided, however, that
Parent and the Company shall share equally all fees and expenses, other than
attorneys' fees, incurred in relation to the printing and filing of the Proxy
Statement (including any preliminary materials related thereto) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto, and all SEC and other regulatory filing
fees, including without limitation any HSR and foreign antitrust filing fees.
(b) The Company shall pay Parent a fee of $3,000,000 in cash (the
"Fee"), in addition to any Parent Expenses (as defined in Section 9.03(c)
hereof) that have been paid to Parent pursuant to Section 9.03(c) hereof, upon
the earliest to occur of the following events:
(i) the termination by Parent or the Company pursuant to Section
9.01(d) if (x) an Alternative Transaction has been proposed to the Company or
its stockholders at or prior to the time the Company Requisite Vote is sought
to be obtained (an "Alternative Proposal"), or (y) any Third Party shall have
publicly announced an intention to make an Alternative Proposal with respect
to the Company at or prior to the time the Company Requisite Vote is sought to
be obtained, and either: (A) such proposed Alternative Transaction has not
been absolutely and unconditionally withdrawn or abandoned by such Third Party
(unless the Company's board of directors publicly announces that it
unconditionally rejects the Alternative Proposal within ten (10) business days
after the announcement thereof by the Third Party); or (B) notwithstanding the
withdrawal of such Alternative Transaction as provided in the foregoing clause
(A), an agreement for an Alternative Transaction is entered into, or an
Alternative Transaction is consummated within twelve (12) months of the date
the Company Requisite Vote is sought to be obtained as provided above; or
(ii) the termination of this Agreement by Parent pursuant to
Section 9.01(f); or
(iii) the termination of this Agreement by Company pursuant to
Section 9.01(g).
(c) Upon the termination by Parent or the Company pursuant to (i)
Section 9.01(b) as a result of the failure by the Company to satisfy the
conditions set forth in Section 8.02 (a), (ii) Section 9.01(d), (iii) Section
9.01(f), (iv) Section 9.01(g), or (v) Section 9.01(h), the Company shall pay
Parent an amount equal to reasonable actual out-of-pocket costs and expenses
(not in excess of an aggregate of $1,500,000) that Parent has incurred and is
expected to incur after such termination in connection with the transactions
contemplated by this Agreement (the "Parent Expenses"), and which amount shall
represent the entire amount that Parent is entitled to receive with respect to
such expenses, including, but not limited to, fees and expenses of Parent's
counsel, accountants and financial advisors.
(d) The Company acknowledges that the agreements contained in
Sections 9.03(b) and 9.03(c) are an integral part of the transactions
contemplated by this Agreement, that the damages resulting from the
termination of this Agreement as referred to in Sections 9.03(b) and 9.03(c)
are uncertain and incapable of accurate calculation and that the amounts
payable pursuant to Sections 9.03(b) and 9.03(c) are reasonable forecasts of
the actual damages which may be incurred by the Parent under such
circumstances, that the amounts payable pursuant to Sections 9.03(b) and
9.03(c) hereof constitute liquidated damages and not a penalty, and further
that, without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to pay in a timely manner the amounts due
pursuant to Sections 9.03(b) and 9.03(c) and, in order to obtain such payment,
Parent makes a claim that results in a judgment against Company for the
amounts set forth in Section 9.03(b) and 9.03(c), the Company shall pay to
Parent its reasonable costs and expenses (including reasonable attorneys' fees
and expenses) in connection with such suit, together with interest on the
amounts set forth in Section 9.03(b) and 9.03(c) at the prime rate of Bank of
America N.T. & S.A. in effect on the date such payment was required to be
made.
(e) Upon the termination by Parent or the Company pursuant to (i)
Section 9.01(b) as a result of the failure by the Parent to satisfy the
conditions set forth in Section 8.03(a), (ii) Section 9.01(e), or (iii)
Section 9.01(i) above, Parent shall pay the Company an amount equal to
reasonable actual out-of-pocket costs and expenses (not in excess of an
aggregate of $1,500,000) that Company has incurred and is expected to incur
after such termination in connection with the transactions contemplated by
this Agreement (the "Company Expenses"), and which amount shall represent the
entire amount that the Company is entitled to receive with respect to such
expenses, including, but not limited to, fees and expenses of the Company's
counsel, accountants and financial advisers.
(i) The Fee payable pursuant to Sections 9.03(b)(ii) and
9.03(b)(iii) hereof, and Expenses payable pursuant to Section 9.03(c) and
9.03(e) hereof, shall be paid within two (2) business days after the
termination of the Agreement.
(ii) The Fee payable pursuant to Section 9.03(b)(i) hereof shall
be paid within two (2) business days after the later of (x) the termination of
the Agreement and (y) the date on which the contingencies described in Section
9.03(b)(i) shall have been satisfied.
(f) Payment of the fees or expenses described in this Section 9.03
shall not be in lieu of damages incurred in the event of a willful breach of
this Agreement.
Article X.
GENERAL PROVISIONS
SECTION 10.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc.
(a) The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 9.01(a) through (i), as the case may be, except
that the agreements set forth in Article I, the penultimate sentence of
Section 7.03, Section 7.08, and Section 9.02 shall survive termination
indefinitely and the agreements and liabilities set forth or otherwise
described in Section 9.03 shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
SECTION 10.02. 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 as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like changes of address which shall be
effective upon receipt) or sent by electronic transmission, with confirmation
received, to the telefacsimile number specified below:
(a) If to Parent:
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
With copies to (which shall not constitute notice):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(b) If to the Company:
Pinnacor Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
With copies to (which shall not constitute notice):
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 10.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards of
directors at any time prior to the Effective Time; provided, however, that,
after approval of the Company Merger by the stockholders of the 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 10.04. Waiver. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 10.05. 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 10.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 10.07. Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person
any rights or remedies hereunder.
SECTION 10.08. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent may assign all or any of its
rights hereunder to any affiliate provided that no such assignment shall
relieve the assigning party of its obligations hereunder.
SECTION 10.09. Parties in Interest. 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 or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, except as provided in Section 7.13 hereof.
SECTION 10.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 10.11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware, without regard to the conflicts of laws provisions thereof.
SECTION 10.12. Counterparts Signature; Facsimile Delivery. This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, and delivered by facsimile, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.13. WAIVER OF JURY TRIAL. EACH OF PARENT, HOLDCO, PARENT
MERGER SUB, COMPANY MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Holdco, Parent, Company, Parent Merger Sub and
the Company Merger Sub have caused this Agreement and Plan of Merger to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
HOLDCO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
PARENT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CFO
PARENT MERGER SUB
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
COMPANY MERGER SUB
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
[Signature Page to the Agreement and Plan of Merger]
Annex A -- Definitions
For convenience, terms that are defined in the Agreement may be
listed in this Annex and shall refer to the section in the document where such
term is defined; provided, however that any incorrect reference shall be of no
force and effect, shall not in any way alter the meaning of such term, and
that the actual definition of such term in the Agreement shall govern the
meaning of such term. Terms that are not otherwise defined in the Agreement
shall have the respective meanings specified therefore in this Annex A.
1. [reserved]
2. "Agreement" is defined in the introductory paragraph of the Agreement.
3. "affiliates" means 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.
4. "Alternative Proposal" is defined in Section 9.03(b)(i) of the Agreement.
5. "Alternative Transaction" means any of the following: (i) transaction
pursuant to which any Third Party seeks to acquire, directly or
indirectly, more than 15 percent of the outstanding Shares, whether from
the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company
pursuant to which any Third Party acquires more than 15 percent of the
outstanding equity securities of the Company or the entity surviving such
merger or business combination, (iii) any other transaction pursuant to
which any Third Party acquires control of all or substantially all of the
assets of the Company (including for this purpose the outstanding equity
securities of the Company's subsidiaries), (iv) the adoption by the
Company of a plan of liquidation, the declaration or payment by the
Company of an extraordinary dividend on any of its shares of capital
stock or the effectuation by the Company of a recapitalization or other
type of transaction that would involve either a change in the Company's
outstanding capital stock or a distribution of assets of any kind to the
holders of such capital stock or (v) the repurchase by the Company or any
of its subsidiaries of shares of the Company's capital stock representing
at least 15 percent or more of the aggregate voting power of all voting
securities of the Company; provided, however, that the term Alternative
Transaction shall not include any acquisition of securities by a broker
dealer in connection with a bona fide public offering of such securities.
6. "Approvals" is defined in Section 4.01 of the Agreement.
7. "business day" means any day other than a day on which banks in San
Francisco are required or authorized to be closed.
8. "Cash Balances" means the total amount of cash and cash equivalents, as
such terms are defined under GAAP and as applied by the Company with
respect to its publicly filed consolidated financial statements.
9. "Cash Deficiency Ratio" is defined in Section 2.07(c)(i) of the
Agreement.
10. "Cash Distribution Amount" is defined in Section 2.07(c)(i) of the
Agreement.
11. "Cash Electing Shares Number" is defined in Section 2.07(c)(i) of the
Agreement.
12. "Cash Proration Factor" is defined in Section 2.07(c)(i) of the
Agreement.
13. "Cash Share Number" is defined in Section 2.07(c)(i) of the Agreement.
14. "CERCLA" is defined in Section 4.15(d) of the Agreement.
15. "Certificates" is defined in Section 2.11(c) of the Agreement.
16. "Certificates of Merger" is defined in Section 2.03 of the Agreement.
17. "Citigroup" is defined in Section 4.25 of the Agreement.
18. "Closing" is defined in Section 2.02 of the Agreement.
19. "Closing Date" is defined in Section 2.02 of the Agreement.
20. "COBRA" is defined in Section 7.17(d) of the Agreement.
21. "Code" is defined in the recitals to the Agreement.
22. "Company" is defined in the introductory paragraph of the Agreement.
23. "Company 401(k) Plan" is defined in Section 7.17(c) of the Agreement.
24. "Company Affiliate Letter" is defined in Section 7.05 of the Agreement.
25. "Company Affiliated Group" is defined in Section 4.14(e) of the
Agreement.
26. "Company Certificate" is defined in Section 2.07(c)(ix) of the Agreement.
27. "Company Certificate of Merger" is defined in Section 2.03 of the
Agreement.
28. "Company Comfort Letter" is defined in Section 7.09(a) of the Agreement.
29. "Company Common Stock" means a share of the Company's common stock, par
value $0.01.
30. "Company Disclosure Schedule" is defined in the introductory paragraph of
Article IV of the Agreement.
31. "Company Dissenting Shares" is defined in Section 2.10(a) of the
Agreement.
32. "Company Employees" is defined in Section 7.17(a) of the Agreement.
33. "Company Employee Plans" is defined in Section 4.12(a) of the Agreement.
34. "Company Employee Stock Purchase Plan" means the Company's Employee Stock
Purchase Plan, as amended.
35. "Company ERISA Affiliate" is defined in Section 4.12(a) of the Agreement.
36. "Company Exchange Fund" is defined in Section 3.02 of the Agreement.
37. "Company Expenses" is defined in Section 9.03(e) of the Agreement.
38. "Company Insurance Policies" is defined in Section 4.21(a) of the
Agreement.
39. "Company Merger" is defined in Section 2.01(a) of the Agreement.
40. "Company Merger Sub" is defined in the introductory paragraph of the
Agreement.
41. "Company Merger Consideration" is defined in Section 2.07(c)(ix) of the
Agreement.
42. "Company Outstanding Shares" is defined in Section 2.07(c)(i) of the
Agreement.
43. "Company Permits" is defined in Section 4.17(b) of the Agreement.
44. "Company Proprietary Assets" means all material Proprietary Assets that
are used or proposed to be used in the business of the Company or any of
its subsidiaries or otherwise owned, controlled or licensed by Company
and its subsidiaries.
45. "Company Purchase Right" is defined in Section 2.08(b) of the Agreement.
46. "Company Recommendation" is defined in Section 4.04 of the Agreement.
47. "Company Requisite Vote" is defined in Section 4.04 of the Agreement.
48. "Company Rights Agreement" shall mean the Company's currently existing
rights agreement which provides for certain anti-takeover effects.
49. "Company SEC Reports" is defined in Section 4.07(a) of the Agreement.
50. "Company Stock Option" means an option to acquire shares of Company
Common Stock including, but not limited to, options issued under the
Company's 1999 Stock Option Plan and the 2000 Equity Incentive Plan.
51. "Company's Stock Option Plans" means the Company's 1999 Stock Option
Plan, 2000 Equity Incentive Plan and Company Employee Stock Purchase
Plan.
52. "Company Stock Warrant" is defined in Section 2.08(d) of the Agreement.
53. "Company Stockholders' Meeting" is defined in Section 7.01(a) of the
Agreement.
54. "Company Surviving Corporation" is defined in Section 2.01(a) of the
Agreement.
55. "Company Voting Agreements" is defined in the recitals to the Agreement.
56. "Company Voting Proposal" is defined in Section 7.02(a) of the Agreement.
57. "Confidentiality Agreement" is defined in Section 7.03 of the Agreement.
58. "control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
or policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise.
59. "DGCL" is defined in the recitals to the Agreement.
60. "DTC" means the Depository Trust Company.
61. "Effective Time" is defined in Section 2.03 of the Agreement.
62. "Election" is defined in Section 2.07(c)(vii)(2) of the Agreement.
63. "Election Deadline" is defined in Section 2.07(c)(vii)(3) of the
Agreement.
64. "Environmental Claim" is defined in Section 4.15(g) of the Agreement.
65. "Environmental Law" is defined in Section 4.15(g) of the Agreement.
66. "Environmental Permits" is defined in Section 4.15(a) of the Agreement.
67. "ERISA" is defined in Section 4.12(a) of the Agreement.
68. "Exchange Act" is defined in Section 4.07(a) of the Agreement.
69. "Exchange Agent" is defined in Section 3.01 of the Agreement.
70. "Exchange Ratio" is defined in Section 2.07 of the Agreement.
71. "Federal Securities Laws" is defined in Section 4.07(a) of the Agreement.
72. "Fee" is defined in Section 9.03(b) of the Agreement.
73. "Form of Election" is defined in Section 2.07(c)(vii)(1) of the
Agreement.
74. "Form of Election Record Date" is defined in Section 2.07(c)(vii)(1) of
the Agreement.
75. "GAAP" is defined in Section 4.07(b) of the Agreement.
76. "Governmental or Regulatory Authority" is defined in Section 4.15(g) of
the Agreement.
77. "Hazardous Material" is defined in Section 4.15(g) of the Agreement.
78. "Holdco" is defined in the introductory paragraph of the Agreement.
79. "Holdco Bylaws" is defined in Section 1.01 of the Agreement.
80. "Holdco Charter" is defined in Section 1.01 of the Agreement.
81. "Holdco Common Stock" is defined in Section 1.01 of the Agreement.
82. "Holdco Preferred Stock" is defined in Section 5.03(b) of the Agreement.
83. "HSR Act" is defined in Section 4.06(a) of the Agreement.
84. "IRS" is defined in Section 4.12(c) of the Agreement.
85. "Incentive Bonus" means a bonus payable under the Company's 2003 bonus
plan.
86. "knowledge" means the actual knowledge of such Person's executive
officers (determined in accordance with Rule 16a-1(f) under the Exchange
Act) and directors after reasonable inquiry.
87. "Laws" is defined in Section 4.05 of the Agreement.
88. "Liens" is defined in Section 4.03 of the Agreement.
89. "Lock-Up Agreements" is defined in the recitals to the Agreement.
90. "Major Customer" is defined in Section 4.19(a) of the Agreement.
91. "Major Supplier" is defined in Section 4.19(b) of the Agreement.
92. "Material Adverse Effect" when used in connection with the Company or any
of its subsidiaries, or Parent or Holdco or any of their respective
subsidiaries, as the case may be, means any change or effect that,
individually or in the aggregate, is or could reasonably be expected to
be materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of the Company and
its respective subsidiaries (a "Company Material Adverse Effect") or
Parent or Holdco and their respective subsidiaries (a "Parent Material
Adverse Effect"), respectively, in each case taken as a whole, but other
than those adverse changes or effects occurring as a result of (i)
general economic, market or industry conditions (including, without
limitation, any change in trading prices, in and of itself and without
the occurrence of any other Material Adverse Effect, of either Parent's
or the Company's outstanding publicly traded equity securities), or (ii)
any loss of customers by Company that the Company can reasonably show to
Parent to have resulted from the announcement of the execution of this
Agreement.
93. "Material Consents" is defined in Section 8.02(c) of the Agreement.
94. "Material Contracts" is defined in Section 4.10(a) of the Agreement.
95. "Mergers" is defined in Section 2.01(b) of the Agreement.
96. "Merger Consideration" is defined in Section 2.11(c) of the Agreement.
97. "New Act" is defined in Section 4.07(d) of the Agreement.
98. "New Exercise Date" is defined in Section 2.08(b) of the Agreement.
99. "Non-Electing Shares" is defined in Section 2.07(c)(i) of the Agreement.
100. "Old Certificates" is defined in Section 2.07(c)(vii)(2) of the
Agreement.
101. "Outside Date" is defined in Section 9.01(b) of the Agreement.
102. "Parent" is defined in the introductory paragraph of the Agreement.
103. "Parent 401(k) Plan" is defined in Section 7.17(c) of the Agreement.
104. "Parent Affiliate Letter" is defined in Section 7.05 of the Agreement.
105. "Parent Certificate" is defined in Section 2.11(c) of the Agreement.
106. "Parent Certificate of Merger" is defined in Section 2.03 of the
Agreement.
107. "Parent Comfort Letter" is defined in Section 7.09(b) of the Agreement.
108. "Parent Common Stock" means a share of the Parent's common stock, par
value $0.01.
109. "Parent Disclosure Schedule" is defined in the introductory paragraph of
Article V of the Agreement.
110. "Parent Expenses" is defined in Section 9.03(c) of the Agreement.
111. "Parent Merger" is defined in Section 2.01(b) of the Agreement.
112. "Parent Merger Consideration" is defined in Section 2.11(c) of the
Agreement.
113. "Parent Merger Sub" is defined in the introductory paragraph of the
Agreement.
114. "Parent Preferred Stock" is defined in Section 5.03(a) of the Agreement.
115. "Parent Purchase Right" is defined in Section 2.12(b) of the Agreement.
116. "Parent Requisite Vote" is defined in Section 5.04 of the Agreement.
117. "Parent SEC Reports" is defined in Section 5.06(a) of the Agreement.
118. "Parent Stock Option" means an option to acquire shares of Parent Common
Stock including, but not limited to, options issued under the Parent's
1998 Directors Stock Option Plan and the 1998 Equity Incentive Plan.
119. "Parent Stockholders' Meeting" is defined in Section 7.01(a) of the
Agreement.
120. "Parent Voting Agreement" is defined in the recitals to the Agreement.
121. "Parent Voting Proposal" is defined in Section 7.02(b) of the Agreement.
122. "Parent's Stock Option Plans" means Parent's 1998 Directors Stock Option
Plan, 1998 Equity Incentive Plan and 2000 Employee Stock Purchase Plan.
123. "Per Share Amount" is defined in Section 2.07(c)(i) of the Agreement.
124. "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act).
125. "Proprietary Asset" means any patent, patent application, business
processes, trademark (whether registered or unregistered and whether or
not relating to a published work), trademark application, trade secret,
know-how, rights in data or databases, trade name, trade dress,
fictitious business name, service ▇▇▇▇ (whether registered or
unregistered), service ▇▇▇▇ application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application,
computer software, internet domain registrations or other
internet-related assets such as web sites, invention or design together
with all rights therein, thereunder or thereto.
126. "Proxy Statement" is defined in Section 7.01(a) of the Agreement.
127. "PTO" is defined in Section 4.16(j) of the Agreement.
128. "Qualified Instruments" shall mean obligations of or guaranteed by the
United States of America or certificates of deposit, bank repurchase
agreements or bankers acceptances of commercial banks with capital
exceeding $500 million.
129. "Registered Proprietary Assets" means all United States, international
and foreign: (i) patents, including applications therefor; (ii)
registered trademarks, applications to register trademarks, including
intent-to-use applications, or other registrations or applications
related to trademarks; (iii) copyright registrations and applications to
register copyrights; (iv) maskwork registrations and applications to
register maskworks; and (v) any other intellectual property rights that
are the subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any state,
government or other public legal authority at any time.
130. "Registration Statement" is defined in Section 7.01(a) of the Agreement.
131. "Releases" is defined in the recitals to the Agreement.
132. "SEC" is defined in Section 4.07(a) of the Agreement.
133. "Securities Act" is defined in Section 4.07(a) of the Agreement.
134. "Stock Deficiency Ratio" is defined in Section 2.07(c)(i) of the
Agreement.
135. "Stock Electing Share Number" is defined in Section 2.07(c)(i) of the
Agreement.
136. "Stock Proration Factor" is defined in Section 2.07(c)(i) of the
Agreement.
137. "Stock Share Number" is defined in Section 2.07(c)(i) of the Agreement.
138. "Stockholder's Meetings" is defined in Section 7.01(a) of the Agreement.
139. "Stockpoint Warrants" is defined in Section 8.02(d) of the Agreement.
140. "subsidiary" or "subsidiaries" of the Company, the Surviving Company,
Parent or any other person means (i) a corporation or other entity in
which the Company, the Surviving Company, Parent or such other person, as
the case may be, owns, directly or indirectly, 50% or more of the shares
of capital stock or other securities having ordinary voting power to
elect the board of directors or any similar governing body or (ii) any
partnership, limited liability company or other unincorporated entity of
which the Company, the Surviving Company, Parent or such other person, as
the case may be, is the general partner or of which it owns, directly or
indirectly, securities or other ownership interests which entitle them to
receive more than 50% of the distributions made by such partnership,
limited liability company or other entity.
141. "Superior Proposal" is defined in Section 6.03(a) of the Agreement.
142. "Taxes" is defined in Section 4.14(h) of the Agreement.
143. "Tax Returns" is defined in Section 4.14(h) of the Agreement.
144. "Third Party" means any person (or group of persons) other than Parent or
its affiliates.
145. "UBSW" is defined in Section 5.12 of the Agreement.
146. "WARN Act" is defined in Section 4.13(b) of the Agreement.