AGREEMENT AND PLAN OF MERGER
BY AND AMONG
YAHOO! INC.
ALAMO ACQUISITION CORP.
AND
XXXXXXXXX.XXX INC.
DATED AS OF MARCH 31, 1999
TABLE OF CONTENTS
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ARTICLE I THE MERGER..................................................................................... 1
1.1 The Merger........................................................................................ 1
1.2 Effective Time; Closing........................................................................... 2
1.3 Effect of the Merger.............................................................................. 2
1.4 Certificate of Incorporation...................................................................... 2
1.5 Directors and Officers............................................................................ 2
1.6 Effect on Capital Stock........................................................................... 2
1.7 Surrender of Certificates......................................................................... 3
1.8 No Further Ownership Rights in Xxxxxxxxx.xxx Common Stock......................................... 4
1.9 Lost, Stolen or Destroyed Certificates............................................................ 4
1.10 Tax and Accounting Consequences................................................................... 4
1.11 Taking of Necessary Action; Further Action........................................................ 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..................................................... 5
2.1 Organization of Xxxxxxxxx.xxx..................................................................... 5
2.2 Xxxxxxxxx.xxx Capital Structure................................................................... 5
2.3 Obligations With Respect to Capital Stock......................................................... 6
2.4 Authority......................................................................................... 6
2.5 SEC Filings; Xxxxxxxxx.xxx Financial Statements................................................... 7
2.6 Absence of Certain Changes or Events.............................................................. 8
2.7 Taxes............................................................................................. 9
2.8 Title to Properties; Absence of Liens and Encumbrances............................................ 10
2.9 Intellectual Property............................................................................. 10
2.10 Compliance; Permits; Restrictions................................................................. 12
2.11 Litigation........................................................................................ 13
2.12 Employee Benefit Plans............................................................................ 13
2.13 Environmental Matters............................................................................. 16
2.14 Agreements, Contracts and Commitments............................................................. 16
2.15 Pooling of Interests.............................................................................. 17
2.16 Change of Control Payments........................................................................ 17
2.17 Statements; Proxy Statement/Prospectus............................................................ 17
2.18 Board Approval.................................................................................... 18
2.19 Brokers' and Finders' Fees........................................................................ 18
2.20 Fairness Opinion.................................................................................. 18
2.21 Affiliates........................................................................................ 18
2.22 Section 203 Not Applicable........................................................................ 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF YAHOO! AND MERGER SUB......................................
18
3.1 Organization of Yahoo! and Merger Sub............................................................. 18
3.2 Yahoo! and Merger Sub Capital Structure........................................................... 19
3.3 Authority......................................................................................... 19
3.4 SEC Filings; Yahoo! Financial Statements.......................................................... 20
3.5 Absence of Certain Changes or Events.............................................................. 20
3.6 Proxy Statement/Prospectus........................................................................ 20
3.7 Litigation........................................................................................ 21
3.8 Pooling of Interests.............................................................................. 21
3.9 Affiliates........................................................................................ 21
3.10 Valid Issuance.................................................................................... 21
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ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME........................................................... 21
4.1 Conduct of Business by Xxxxxxxxx.xxx.............................................................. 21
4.2 Conduct of Business by Yahoo!..................................................................... 23
ARTICLE V ADDITIONAL AGREEMENTS.......................................................................... 23
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings................................. 23
5.2 Meeting of Xxxxxxxxx.xxx Stockholders............................................................. 24
5.3 Confidentiality: Access to Information............................................................ 25
5.4 No Solicitation................................................................................... 25
5.5 Public Disclosure................................................................................. 27
5.6 Reasonable Efforts; Notification.................................................................. 27
5.7 Third Party Consents.............................................................................. 28
5.8 Stock Options and ESPP............................................................................ 28
5.9 Form S-8.......................................................................................... 28
5.10 Indemnification................................................................................... 29
5.11 Nasdaq Listing.................................................................................... 29
5.12 Affiliate Agreements.............................................................................. 29
5.13 Company Stock Option.............................................................................. 29
5.14 Letter of Xxxxxxxxx.xxx's Accountants............................................................. 32
ARTICLE VI CONDITIONS TO THE MERGER...................................................................... 32
6.1 Conditions to Obligations of Each Party to Effect the Merger...................................... 32
6.2 Additional Conditions to Obligations of Xxxxxxxxx.xxx............................................. 33
6.3 Additional Conditions to the Obligations of Yahoo! and Merger Sub................................. 34
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................................ 34
7.1 Termination....................................................................................... 34
7.2 Notice of Termination Effect of Termination....................................................... 36
7.3 Fees and Expenses................................................................................. 36
7.4 Amendment......................................................................................... 37
7.5 Extension; Waiver................................................................................. 37
ARTICLE VIII GENERAL PROVISIONS.......................................................................... 37
8.1 Non-Survival of Representations and Warranties.................................................... 37
8.2 Notices........................................................................................... 37
8.3 Interpretation; Certain Defined Terms............................................................. 38
8.4 Counterparts...................................................................................... 39
8.5 Entire Agreement; Third Party Beneficiaries....................................................... 39
8.6 Severability...................................................................................... 39
8.7 Other Remedies; Specific Performance.............................................................. 39
8.8 Governing Law..................................................................................... 39
8.9 Rules of Construction............................................................................. 39
8.10 Assignment........................................................................................ 40
8.11 Waiver of Jury Trial.............................................................................. 40
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INDEX OF EXHIBITS
Exhibit A Form of Xxxxxxxxx.xxx Voting Agreement
Exhibit B Form of Xxxxxxxxx.xxx Affiliate Agreement
Exhibit C Form of Noncompetition Agreement
Exhibit D Form of Yahoo! Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made and entered into as of March 31,
1999 (this "AGREEMENT"), among Yahoo! Inc., a California corporation ("YAHOO!"),
Alamo Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Yahoo! ("MERGER SUB"), and xxxxxxxxx.xxx inc., a Delaware corporation
("XXXXXXXXX.XXX").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("DELAWARE LAW"), Yahoo!,
Merger Sub and xxxxxxxxx.xxx intend to enter into a business combination
transaction.
B. The Board of Directors of xxxxxxxxx.xxx (i) has determined that the
Merger (as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of xxxxxxxxx.xxx and advisable and fair to, and in
the best interests of, xxxxxxxxx.xxx and its stockholders, (ii) has approved
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (iii) has determined to recommend that the stockholders of
xxxxxxxxx.xxx adopt and approve this Agreement and approve the Merger.
C. The Board of Directors of Yahoo! (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Yahoo!
and advisable and fair to, and in the best interests of, Yahoo! and its
shareholders and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
D. Concurrently with the execution of this Agreement, and as a condition and
inducement to Yahoo!'s willingness to enter into this Agreement, certain
stockholders of xxxxxxxxx.xxx are entering into Voting Agreements in
substantially the form attached hereto as EXHIBIT A (the "XXXXXXXXX.XXX VOTING
AGREEMENTS") and certain persons or entities who may be deemed to be affiliates
of xxxxxxxxx.xxx are entering into Affiliate Agreements in substantially the
form attached hereto as EXHIBIT B (the "XXXXXXXXX.XXX AFFILIATE AGREEMENTS").
E. In addition, concurrently with the execution of this Agreement, and as a
condition and inducement to Yahoo!'s willingness to enter into this Agreement,
Xxxx Xxxxx and Xxxx X. Xxxxxx are entering into Noncompetition Agreements in
substantially the form attached hereto as EXHIBIT C (the "NONCOMPETITION
AGREEMENTS").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall qualify
for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth herein, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of Delaware Law,
Merger Sub shall be merged with and into xxxxxxxxx.xxx (the "MERGER"), the
separate corporate existence of Merger Sub shall cease and xxxxxxxxx.xxx shall
continue as the surviving corporation. Xxxxxxxxx.xxx as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"SURVIVING CORPORATION."
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1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger, in such appropriate form as determined by the parties,
with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of Delaware Law (the "CERTIFICATE OF MERGER") (the time of
such filing (or such later time as may be agreed in writing by xxxxxxxxx.xxx and
Yahoo! and specified in the Certificate of Merger) being the "EFFECTIVE TIME")
as soon as practicable on or after the Closing Date (as herein defined). The
closing of the Merger (the "CLOSING") shall take place at the offices of Venture
Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at a time and date to be
specified by the parties, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in Article VI, or
at such other time, date and location as the parties hereto agree in writing
(the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time all
the property, rights, privileges, powers and franchises of xxxxxxxxx.xxx and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of xxxxxxxxx.xxx and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation of the Surviving
Corporation; PROVIDED, HOWEVER, that at the Effective Time Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read: "The name of the corporation is xxxxxxxxx.xxx inc."
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial corporate officers of the Surviving Corporation shall
be the corporate officers of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, xxxxxxxxx.xxx or the
holders of any of the following securities:
(a) CONVERSION OF XXXXXXXXX.XXX COMMON STOCK. Each share of common
stock, par value $0.01 per share, of xxxxxxxxx.xxx ("XXXXXXXXX.XXX COMMON
STOCK") issued and outstanding immediately prior to the Effective Time,
other than any shares of xxxxxxxxx.xxx Common Stock to be canceled pursuant
to Section 1.6(b), will be canceled and extinguished and automatically
converted (subject to Sections 1.6(d) and (e)) into the right to receive
0.7722 of a share (the "EXCHANGE RATIO") of common stock, par value $0.00017
per share, of Yahoo! ("YAHOO! COMMON STOCK") upon surrender of the
certificate representing such share of xxxxxxxxx.xxx Common Stock in the
manner provided in Section 1.7.
(b) CANCELLATION OF BROADCAST.COM-OWNED AND YAHOO!-OWNED STOCK. Each
share of xxxxxxxxx.xxx Common Stock held by xxxxxxxxx.xxx or owned by Merger
Sub, Yahoo! or any direct or indirect wholly owned subsidiary of
xxxxxxxxx.xxx or of Yahoo! immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(c) CAPITAL STOCK OF MERGER SUB. Each share of common stock, $0.0l par
value per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one validly issued, fully paid
and nonassessable share of common stock, $0.01 par value per share, of
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the Surviving Corporation. Each certificate evidencing ownership of shares
of the common stock of Merger Sub shall evidence ownership of such shares of
capital stock of the Surviving Corporation.
(d) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Yahoo! Common Stock or xxxxxxxxx.xxx Common
Stock), reorganization, recapitalization, reclassification or other like
change with respect to Yahoo! Common Stock or xxxxxxxxx.xxx Common Stock
occurring on or after the date hereof and prior to the Effective Time.
(e) FRACTIONAL SHARES. No fraction of a share of Yahoo! Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of xxxxxxxxx.xxx Common Stock who would otherwise be entitled to a
fraction of a share of Yahoo! Common Stock (after aggregating all fractional
shares of Yahoo! Common Stock that otherwise would be received by such
holder) shall receive from Yahoo! an amount of cash (rounded to the nearest
whole cent) equal to the product of (i) such fraction, multiplied by (ii)
the average closing sale price of one share of Yahoo! Common Stock for the
five (5) most recent days that Yahoo! Common Stock has traded ending on the
trading day immediately prior to the Effective Time, as reported on the
Nasdaq Stock Market.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Yahoo! shall select a bank or trust company reasonably
acceptable to xxxxxxxxx.xxx to act as the exchange agent (the "EXCHANGE AGENT")
in the Merger.
(b) YAHOO! TO PROVIDE COMMON STOCK. Promptly after the Effective Time,
Yahoo! shall make available to the Exchange Agent for exchange in accordance
with this Article I, the shares of Yahoo! Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of xxxxxxxxx.xxx Common Stock,
and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(e) and any dividends or distributions to which holders
of shares of xxxxxxxxx.xxx Common Stock may be entitled pursuant to Section
1.7(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, Yahoo! shall
cause the Exchange Agent to mail to each holder of record (as of the Effective
Time) of a certificate or certificates (the "CERTIFICATES"), which immediately
prior to the Effective Time represented outstanding shares of xxxxxxxxx.xxx
Common Stock, whose shares were converted into shares of Yahoo! Common Stock
pursuant to Section 1.6 (i) a letter of transmittal in customary form (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall contain such other customary provisions as Yahoo! may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Yahoo! Common
Stock, cash in lieu of any fractional shares pursuant to Section 1.6(e) and any
dividends or other distributions pursuant to Section 1.7(d). Upon surrender of
Certificates for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Yahoo!, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holders of such Certificates shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Yahoo! Common
Stock into which their shares of xxxxxxxxx.xxx Common Stock were converted at
the Effective Time, payment in lieu of fractional shares which such holders have
the right to receive pursuant to Section 1.6(e) and any dividends or
distributions payable pursuant to Section 1.7(d), and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all corporate
purposes, to evidence only the ownership of the number of full shares of Yahoo!
Common Stock into which such shares of xxxxxxxxx.xxx Common Stock shall have
been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6(e) and any
dividends or distributions payable pursuant to Section 1.7(d).
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(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Yahoo! Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Yahoo! Common Stock represented thereby until the holders of record of
such Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the record holders thereof, without interest, certificates representing whole
shares of Yahoo! Common Stock issued in exchange therefor along with payment in
lieu of fractional shares pursuant to Section 1.6(e) hereof and the amount of
any such dividends or other distributions with a record date after the Effective
Time payable with respect to such shares of Yahoo! Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing shares of Yahoo!
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Yahoo! or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Yahoo! Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Yahoo! or any agent designated by it that such tax has been paid
or is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in this Section
1.7, neither the Exchange Agent, Yahoo!, the Surviving Corporation nor any party
hereto shall be liable to a holder of shares of Yahoo! Common Stock or
xxxxxxxxx.xxx Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN XXXXXXXXX.XXX COMMON STOCK. All shares
of Yahoo! Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(e) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of xxxxxxxxx.xxx Common Stock, and there shall be no further registration
of transfers on the records of the Surviving Corporation of shares of
xxxxxxxxx.xxx Common Stock which were outstanding immediately prior to the
Effective Time. If after the Effective Time Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Yahoo! Common Stock into which the shares of
xxxxxxxxx.xxx Common Stock represented by such Certificates were converted
pursuant to Section 1.6, cash for fractional shares, if any, as may be required
pursuant to Section 1.6(e) and any dividends or distributions payable pursuant
to Section 1.7(d); PROVIDED, HOWEVER, that Yahoo! may, in its discretion and as
a condition precedent to the issuance of such certificates representing shares
of Yahoo! Common Stock, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum and with
customary provisions as it may reasonably direct as indemnity against any claim
that may be made against Yahoo!, the Surviving Corporation or the Exchange Agent
with respect to the Certificates alleged to have been lost, stolen or destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES.
(a) It is intended by the parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code. The parties hereto
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
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(b) It is intended by the parties hereto that the Merger shall qualify for
accounting treatment as a pooling of interests.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of xxxxxxxxx.xxx and Merger Sub, the officers and directors of
xxxxxxxxx.xxx and Merger Sub will take all such lawful and necessary action.
Yahoo! shall cause Merger Sub to perform all of its obligations relating to this
Agreement and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Xxxxxxxxx.xxx represents and warrants to Yahoo! and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter
delivered by xxxxxxxxx.xxx to Yahoo! dated as of the date hereof and certified
by a duly authorized officer of xxxxxxxxx.xxx (the "XXXXXXXXX.XXX DISCLOSURE
LETTER"), as follows:
2.1 ORGANIZATION OF XXXXXXXXX.XXX.
(a) Xxxxxxxxx.xxx and each of its subsidiaries (i) is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized; (ii) has the corporate or
other power and authority to own, lease and operate its assets and property and
to carry on its business as now being conducted; and (iii) except as would not
be material to xxxxxxxxx.xxx, is duly qualified or licensed to do business in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary.
(b) Xxxxxxxxx.xxx has delivered to Yahoo! a true and complete list of all of
xxxxxxxxx.xxx's subsidiaries as of the date of this Agreement, indicating the
jurisdiction of organization of each subsidiary and xxxxxxxxx.xxx's equity
interest therein. Except as set forth on such list, neither xxxxxxxxx.xxx nor
any of its subsidiaries owns any equity interest in any corporation, partnership
or joint venture arrangement or other business entity that is material to
xxxxxxxxx.xxx.
(c) Xxxxxxxxx.xxx has delivered or made available to Yahoo! a true and
correct copy of the Certificate of Incorporation and Bylaws of xxxxxxxxx.xxx and
similar governing instruments of each of its subsidiaries, each as amended to
date, and each such instrument is in full force and effect. Neither
xxxxxxxxx.xxx nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or Bylaws or equivalent governing
instruments.
2.2 XXXXXXXXX.XXX CAPITAL STRUCTURE. The authorized capital stock of
xxxxxxxxx.xxx consists of 60,000,000 shares of Common Stock, par value $0.01 per
share, of which there were 36,851,149 shares issued and outstanding as of March
31, 1999 (none of which were held by xxxxxxxxx.xxx in its treasury), and
5,000,000 shares of Preferred Stock, par value $0.01 per share, none of which
are issued or outstanding. All outstanding shares of xxxxxxxxx.xxx Common Stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of xxxxxxxxx.xxx or any agreement or document to which
xxxxxxxxx.xxx is a party or by which it is bound. As of March 31, 1999,
xxxxxxxxx.xxx had reserved an aggregate of (i) 5,187,296 shares of xxxxxxxxx.xxx
Common Stock for issuance pursuant to xxxxxxxxx.xxx's 1998 Stock Option Plan,
(ii) 2,438,074 shares of xxxxxxxxx.xxx Common Stock for issuance pursuant to
xxxxxxxxx.xxx's 1996 Stock Option Plan, and (iii) 277,500 shares of
xxxxxxxxx.xxx Common Stock for issuance pursuant to xxxxxxxxx.xxx's 1996
Non-Employee Directors Stock Option Plan. As of March 31, 1999, there were
options outstanding to purchase an aggregate of (u) 5,121,108 shares of
xxxxxxxxx.xxx Common Stock pursuant to xxxxxxxxx.xxx's 1998 Stock Option Plan,
(v) 1,834,600 shares of xxxxxxxxx.xxx Common Stock pursuant to xxxxxxxxx.xxx's
1996 Stock Option Plan, and (w) 57,300 shares of
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xxxxxxxxx.xxx Common Stock pursuant to xxxxxxxxx.xxx's 1996 Non-Employee
Directors Stock Option Plan. Xxxxxxxxx.xxx's 1998 Stock Option Plan,
xxxxxxxxx.xxx's 1996 Stock Option Plan and xxxxxxxxx.xxx's 1996 Non-Employee
Directors Stock Option Plan are collectively referred to in this Agreement as
the "XXXXXXXXX.XXX STOCK OPTION PLANS." There are warrants outstanding to
purchase 436,192 shares of xxxxxxxxx.xxx Common Stock. As of March 31, 1999,
xxxxxxxxx.xxx had reserved an aggregate of 494,849 shares of xxxxxxxxx.xxx
Common Stock for issuance pursuant to xxxxxxxxx.xxx's 1998 Employee Stock
Purchase Plan (the "ESPP"). All shares of xxxxxxxxx.xxx Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. The xxxxxxxxx.xxx Disclosure
Letter lists for each person who held options or warrants to acquire shares of
xxxxxxxxx.xxx Common Stock as of March 31, 1999, the name of the holder of such
option or warrant, the exercise price of such option or warrant, the number of
shares as to which such option or warrant had vested at such date, the vesting
schedule for such option or warrant and whether the exercisability of such
option or warrant will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of acceleration, if
any.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of xxxxxxxxx.xxx equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities xxxxxxxxx.xxx owns
free and clear of all claims and encumbrances, directly or indirectly through
one or more subsidiaries, there are no equity securities, partnership interests
or similar ownership interests of any class of equity security of any subsidiary
of xxxxxxxxx.xxx, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 2.2, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which xxxxxxxxx.xxx or any of its subsidiaries is a party or by which it is
bound obligating xxxxxxxxx.xxx or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
xxxxxxxxx.xxx or any of its subsidiaries or obligating xxxxxxxxx.xxx or any of
its subsidiaries to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrant, equity security, call, right, commitment or
agreement. Except as contemplated by this Agreement, there are no registration
rights and there is no voting trust, proxy, rights plan, antitakeover plan or
other agreement or understanding to which xxxxxxxxx.xxx is a party or by which
it is bound with respect to any equity security of any class of xxxxxxxxx.xxx or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Stockholders of xxxxxxxxx.xxx
will not be entitled to dissenters' rights under applicable state law in
connection with the Merger.
2.4 AUTHORITY.
(a) Xxxxxxxxx.xxx has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of xxxxxxxxx.xxx, subject only to the approval and
adoption of this Agreement and the approval of the Merger by xxxxxxxxx.xxx's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. A vote of the holders of a majority of the outstanding shares of
xxxxxxxxx.xxx Common Stock is sufficient for xxxxxxxxx.xxx's stockholders to
approve and adopt this Agreement and approve the Merger. This Agreement has been
duly executed and delivered by xxxxxxxxx.xxx and, assuming the due execution and
delivery by Yahoo! and Merger Sub, constitutes a valid and binding obligation of
xxxxxxxxx.xxx, enforceable against xxxxxxxxx.xxx in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of
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equity. The execution and delivery of this Agreement by xxxxxxxxx.xxx does not,
and the performance of this Agreement by xxxxxxxxx.xxx will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of xxxxxxxxx.xxx or
the equivalent organizational documents of any of its subsidiaries, (ii) subject
to obtaining the approval and adoption of this Agreement and the approval of the
Merger by xxxxxxxxx.xxx's stockholders as contemplated in Section 5.2 and
compliance with the requirements set forth in Section 2.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to xxxxxxxxx.xxx or any of its subsidiaries or by which xxxxxxxxx.xxx or any of
its subsidiaries or any of their respective properties is bound or affected, or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or impair xxxxxxxxx.xxx'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, or result in the creation of a material lien or
encumbrance on any of the material properties or assets of xxxxxxxxx.xxx or any
of its subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, concession, or other instrument or
obligation, in each case that is material to xxxxxxxxx.xxx, to which
xxxxxxxxx.xxx or any of its subsidiaries is a party or by which xxxxxxxxx.xxx or
any of its subsidiaries or its or any of their respective assets are bound or
affected. The xxxxxxxxx.xxx Disclosure Letter lists all consents, waivers and
approvals under any of xxxxxxxxx.xxx's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a loss of benefits to
xxxxxxxxx.xxx, Yahoo! or the Surviving Corporation as a result of the Merger
that would be reasonably likely to result in a Material Adverse Effect (as
defined in Section 8.3(c)) with respect to xxxxxxxxx.xxx, Yahoo! or the
Surviving Corporation.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required to be obtained or made by xxxxxxxxx.xxx in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (ii) the filing of the Proxy
Statement/Prospectus (as defined in Section 2.17) with the Securities and
Exchange Commission ("SEC"), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to
xxxxxxxxx.xxx or Yahoo! or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
2.5 SEC FILINGS; XXXXXXXXX.XXX FINANCIAL STATEMENTS.
(a) Xxxxxxxxx.xxx has filed all forms, reports and documents required to be
filed by xxxxxxxxx.xxx with the SEC since July 16, 1998, and has made available
to Yahoo! such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that xxxxxxxxx.xxx
may file subsequent to the date hereof) are referred to herein as the
"XXXXXXXXX.XXX SEC REPORTS." As of their respective dates, the xxxxxxxxx.xxx 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"), as the case may be, and the rules and
regulations of the SEC thereunder applicable to such xxxxxxxxx.xxx SEC Reports
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 the light of the circumstances under which they were made, not
misleading. None of xxxxxxxxx.xxx's subsidiaries is required to file any forms,
reports or other documents with the SEC.
7
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the xxxxxxxxx.xxx SEC Reports (the
"XXXXXXXXX.XXX FINANCIALS"), including each xxxxxxxxx.xxx SEC Reports filed
after the date hereof until the Closing, (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of xxxxxxxxx.xxx and its subsidiaries as at the respective
dates thereof and the consolidated results of xxxxxxxxx.xxx's operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements may not contain footnotes and were or are subject to normal
and recurring year-end adjustments. The balance sheet of xxxxxxxxx.xxx contained
in xxxxxxxxx.xxx SEC Reports as of December 31, 1998 is hereinafter referred to
as the "XXXXXXXXX.XXX BALANCE SHEET." Except as disclosed in the xxxxxxxxx.xxx
Financials, since the date of the xxxxxxxxx.xxx Balance Sheet neither
xxxxxxxxx.xxx nor any of its subsidiaries has any liabilities required under
GAAP to be set forth on a balance sheet (absolute, accrued, contingent or
otherwise) which are, individually or in the aggregate, material to the
business, results of operations or financial condition of xxxxxxxxx.xxx and its
subsidiaries taken as a whole, except for liabilities incurred since the date of
the xxxxxxxxx.xxx Balance Sheet in the ordinary course of business consistent
with past practices and liabilities under this Agreement or incurred in
connection with the transactions contemplated hereby.
(c) Xxxxxxxxx.xxx has heretofore furnished to Yahoo! 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 agreements, documents or other
instruments which previously had been filed by xxxxxxxxx.xxx with the SEC
pursuant to the Securities Act or the Exchange Act.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
xxxxxxxxx.xxx Balance Sheet there has not been: (i) any Material Adverse Effect
with respect to xxxxxxxxx.xxx and its subsidiaries, taken as a whole, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of xxxxxxxxx.xxx's
capital stock, or any purchase, redemption or other acquisition by xxxxxxxxx.xxx
of any of xxxxxxxxx.xxx's capital stock or any other securities of xxxxxxxxx.xxx
or any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of xxxxxxxxx.xxx's
capital stock, (iv) any granting by xxxxxxxxx.xxx or any of its subsidiaries of
any increase in compensation or fringe benefits to any of their officers,
directors or managers or employees who earn more than $100,000 per year, or any
payment by xxxxxxxxx.xxx or any of its subsidiaries of any bonus to any of their
officers, directors or managers or employees who earn more than $100,000 per
year, or any granting by xxxxxxxxx.xxx or any of its subsidiaries of any
increase in severance or termination pay or any entry by xxxxxxxxx.xxx or any of
its subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving xxxxxxxxx.xxx
of the nature contemplated hereby, (v) any material change or alteration in the
policy of xxxxxxxxx.xxx relating to the granting of stock options to its
employees and consultants, (vi) entry by xxxxxxxxx.xxx or any of its
subsidiaries into, or material modification, amendment or cancellation of, any
licensing, distribution, sponsorship, advertising, merchant program or other
similar agreement or which either is not terminable by xxxxxxxxx.xxx or its
subsidiaries, as the case may be, without penalty upon no more than 45 days'
prior notice or provides for payments by or to xxxxxxxxx.xxx or its subsidiaries
in an amount in excess of $50,000 over the term of the agreement, (vii) any
material change by xxxxxxxxx.xxx in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (viii) any
revaluation by xxxxxxxxx.xxx of any of its assets,
8
including, without limitation, writing off notes or accounts receivable other
than in the ordinary course of business.
2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "TAX" or
"TAXES" refers to (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated
consolidated, combined or unitary group, and (iii) any liability for amounts of
the type described in clauses (i) and (ii) as a result of any express or implied
obligation to indemnify another person or as a result of any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) Xxxxxxxxx.xxx and each of its subsidiaries have timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by or
on behalf of xxxxxxxxx.xxx and each of its subsidiaries with any Tax authority,
such Returns are true, correct and complete in all material respects, and
xxxxxxxxx.xxx and each of its subsidiaries have paid (where required by law or
otherwise accrued) all Taxes shown to be due on such Returns.
(ii) Xxxxxxxxx.xxx and each of its subsidiaries have withheld with respect
to its employees all federal and state income Taxes, Taxes pursuant to the
Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld.
(iii) There is no material Tax deficiency outstanding, proposed or assessed
against xxxxxxxxx.xxx or any of its subsidiaries, nor has xxxxxxxxx.xxx or any
of its subsidiaries executed any unexpired waiver of any statute of limitations
on or extending the period for the assessment or collection of any Tax that is
still in effect.
(iv) No audit or other examination of any Return of xxxxxxxxx.xxx or any of
its subsidiaries by any Tax authority is presently in progress, nor has
xxxxxxxxx.xxx or any of its subsidiaries been notified of any request for such
an audit or other examination.
(v) No adjustment of Tax relating to any Returns filed by xxxxxxxxx.xxx or
any of its subsidiaries has been proposed in writing formally or informally by
any Tax authority to xxxxxxxxx.xxx or any of its subsidiaries or any
representative thereof.
(vi) Neither xxxxxxxxx.xxx nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the xxxxxxxxx.xxx
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to xxxxxxxxx.xxx, other than any liability for unpaid Taxes that may
have accrued since the date of the xxxxxxxxx.xxx Balance Sheet in connection
with the operation of the business of xxxxxxxxx.xxx and its subsidiaries in the
ordinary course.
(vii) There is no contract, agreement, plan or arrangement to which
xxxxxxxxx.xxx is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this Agreement,
covering any employee or former employee of xxxxxxxxx.xxx or any of its
subsidiaries that, individually or collectively, would be reasonably likely to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code.
(viii) Neither xxxxxxxxx.xxx nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by xxxxxxxxx.xxx.
9
(ix) Neither xxxxxxxxx.xxx nor any of its subsidiaries is party to or has
any obligation under any tax-sharing, tax indemnity or tax allocation agreement
or arrangement.
(x) Except as may be required as a result of the Merger, xxxxxxxxx.xxx and
its subsidiaries have not been and will not be required to include any material
adjustment in Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 or Section 263A of the Code or any comparable provision under state
or foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.
(xi) Xxxxxxxxx.xxx has made available to Yahoo! or its legal or accounting
representatives copies of all foreign, federal and state income tax and all
state sales and use tax Returns for xxxxxxxxx.xxx and each of its subsidiaries
filed for all periods since its inception.
(xii) There are no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"LIENS") on the assets of xxxxxxxxx.xxx or any of its subsidiaries relating to
or attributable to Taxes, other than Liens for Taxes not yet due and payable.
2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) Xxxxxxxxx.xxx owns no real property interests. The xxxxxxxxx.xxx
Disclosure Letter lists all real property leases to which xxxxxxxxx.xxx is a
party and each amendment thereto that is in effect as of the date of this
Agreement. All such current leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default) that would give
rise to a claim against xxxxxxxxx.xxx in an amount greater than $50,000.
(b) Xxxxxxxxx.xxx has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens, except as reflected in the xxxxxxxxx.xxx
Financials and except for Liens for Taxes not yet due and payable and such Liens
or other imperfections of title and encumbrances, if any, which are not material
in character, amount or extent, and which do not materially detract from the
value, or materially interfere with the present use, of the property subject
thereto or affected thereby.
2.9 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof; (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv) all
industrial designs and any registrations and applications therefor
throughout the world; (v) all trade names, logos, common law trademarks
and service marks, trademark and service xxxx registrations and
applications therefor throughout the world; (vi) all databases and data
collections and all rights therein throughout the world; (vii) all moral
and economic rights of authors and inventors, however denominated,
throughout the world; and (viii) any similar or equivalent rights to any
of the foregoing anywhere in the world.
"XXXXXXXXX.XXX INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, xxxxxxxxx.xxx or
one of its subsidiaries.
10
"REGISTERED INTELLECTUAL PROPERTY" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; and (iv) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
state, government or other public legal authority.
"XXXXXXXXX.XXX REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of,
xxxxxxxxx.xxx or one of its subsidiaries.
(a) No xxxxxxxxx.xxx Intellectual Property or product or service of
xxxxxxxxx.xxx is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation of any Governmental Entity restricting
(other than such restrictions that are contained in the instrument by which
xxxxxxxxx.xxx acquired such xxxxxxxxx.xxx Intellectual Property) in any
manner the use, transfer, or licensing thereof by xxxxxxxxx.xxx, or which
may affect the validity, use or enforceability of such xxxxxxxxx.xxx
Intellectual Property, which in any such case would be reasonably likely to
have a Material Adverse Effect on xxxxxxxxx.xxx.
(b) Each material item of xxxxxxxxx.xxx Registered Intellectual Property
is valid and subsisting. All necessary registration, maintenance and renewal
fees currently due in connection with such Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property 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 Intellectual Property, except where the failure
to do so would not be reasonably likely to have a Material Adverse Effect on
xxxxxxxxx.xxx.
(c) Xxxxxxxxx.xxx or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its
business as currently conducted to, each material item of xxxxxxxxx.xxx
Intellectual Property used in connection with the conduct of its business as
currently conducted free and clear of any lien or encumbrance (excluding
licenses and related restrictions); and xxxxxxxxx.xxx or one of its
subsidiaries is the exclusive owner of all trademarks and trade names used
in connection with and material to the operation or conduct of the business
of xxxxxxxxx.xxx and its subsidiaries, including the sale of any products or
the provision of any services by xxxxxxxxx.xxx and its subsidiaries.
(d) Xxxxxxxxx.xxx or one of its subsidiaries owns exclusively, and has
good title to, all copyrighted works that are xxxxxxxxx.xxx products or
which xxxxxxxxx.xxx otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for xxxxxxxxx.xxx or any of its
subsidiaries, xxxxxxxxx.xxx or its subsidiaries, as the case may be, has a
written agreement with such third party with respect thereto and
xxxxxxxxx.xxx or its subsidiary thereby either (i) has obtained ownership of
and is the exclusive owner of, or (ii) has obtained a license sufficient for
the conduct of its business as currently conducted to all such third party's
Intellectual Property in such work, material or invention by operation of
law or by valid assignment.
(f) The xxxxxxxxx.xxx Disclosure Letter lists all material contracts,
licenses and agreements to which xxxxxxxxx.xxx is a party (i) with respect
to xxxxxxxxx.xxx Intellectual Property licensed or transferred to any third
party (other than end-user licenses in the ordinary course); or (ii)
pursuant to which a third party has licensed or transferred any material
Intellectual Property to xxxxxxxxx.xxx.
(g) All material contracts, licenses and agreements relating to the
xxxxxxxxx.xxx Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this
11
Agreement will neither violate nor result in the breach, modification,
cancellation, termination, or suspension of such contracts, licenses and
agreements in accordance with its terms, the effect of which would have a
Material Adverse Effect on xxxxxxxxx.xxx. Xxxxxxxxx.xxx is in material
compliance with, and has not materially breached any term of any of such
contracts, licenses and agreements and, to the knowledge of xxxxxxxxx.xxx,
all other parties to such contracts, licenses and agreements are in
compliance in all material respects with, and have not materially breached
any term of, such contracts, licenses and agreements. Following the Closing
Date, the Surviving Corporation will be permitted to exercise all of
xxxxxxxxx.xxx's rights under such contracts, licenses and agreements to the
same extent xxxxxxxxx.xxx would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which xxxxxxxxx.xxx would otherwise be required to pay.
(h) The operation of the business of xxxxxxxxx.xxx as such business
currently is conducted, including xxxxxxxxx.xxx's design, development,
marketing and sale of the products or services of xxxxxxxxx.xxx (including
with respect to products currently under development) has not, does not and
will not infringe or misappropriate in any material manner the Intellectual
Property of any third party or, to the knowledge of xxxxxxxxx.xxx,
constitute unfair competition or trade practices under the laws of any
jurisdiction.
(i) Xxxxxxxxx.xxx has not received written notice from any third party,
and to the knowledge of xxxxxxxxx.xxx, no other pending overt threat from
any third party, that the operation of the business of xxxxxxxxx.xxx or any
act, product or service of xxxxxxxxx.xxx, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair competition
or trade practices under the laws of any jurisdiction.
(j) To the knowledge of xxxxxxxxx.xxx, no person has or is infringing or
misappropriating any xxxxxxxxx.xxx Intellectual Property.
(k) Xxxxxxxxx.xxx and its subsidiaries have taken reasonable steps to
protect xxxxxxxxx.xxx's and its subsidiaries' rights in xxxxxxxxx.xxx's and
such subsidiaries' confidential information and trade secrets that they wish
to protect or any trade secrets or confidential information of third parties
provided to xxxxxxxxx.xxx or such subsidiaries, and, without limiting the
foregoing, xxxxxxxxx.xxx and its subsidiaries have and enforce a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality agreement in substantially the form provided to
Yahoo!, and except under confidentiality obligations, there has been not
disclosure by xxxxxxxxx.xxx or one of its subsidiaries of any such trade
secrets or confidential information.
2.10 COMPLIANCE WITH LAWS; PERMITS; RESTRICTIONS.
(a) Neither xxxxxxxxx.xxx nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to xxxxxxxxx.xxx or any of its
subsidiaries or by which xxxxxxxxx.xxx or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which xxxxxxxxx.xxx or any of its
subsidiaries is a party or by which xxxxxxxxx.xxx or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that (individually or in the aggregate) would
not be reasonably likely to result in a Material Adverse Effect on
xxxxxxxxx.xxx. No investigation or review by any Governmental Entity is pending
or, to xxxxxxxxx.xxx's knowledge, has been threatened in a writing delivered to
xxxxxxxxx.xxx against xxxxxxxxx.xxx or any of its subsidiaries, nor, to
xxxxxxxxx.xxx's knowledge, has any Governmental Entity indicated an intention to
conduct an investigation of xxxxxxxxx.xxx or any of its subsidiaries. There is
no material agreement, judgment, injunction, order or decree binding upon
xxxxxxxxx.xxx or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of
12
xxxxxxxxx.xxx or any of its subsidiaries, any acquisition of material property
by xxxxxxxxx.xxx or any of its subsidiaries or the conduct of business by
xxxxxxxxx.xxx as currently conducted.
(b) Xxxxxxxxx.xxx and its subsidiaries hold, to the extent legally required,
all permits, licenses, variances, exemptions, orders and approvals from
governmental authorities that are material to and required for the operation of
the business of xxxxxxxxx.xxx as currently conducted (collectively, the
"XXXXXXXXX.XXX PERMITS"). Xxxxxxxxx.xxx and its subsidiaries are in compliance
in all material respects with the terms of the xxxxxxxxx.xxx Permits.
2.11 LITIGATION. There are no claims, suits, actions or proceedings that
have a reasonable likelihood of success on the merits pending or, to the
knowledge of xxxxxxxxx.xxx, threatened against xxxxxxxxx.xxx or any of its
subsidiaries, before any Governmental Entity or any arbitrator that seek to
restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to have a Material
Adverse Effect on xxxxxxxxx.xxx or the Surviving Corporation following the
Merger or have a material adverse effect on the ability of the parties hereto to
consummate the Merger. No Governmental Entity has at any time challenged or
questioned in a writing delivered to xxxxxxxxx.xxx the legal right of
xxxxxxxxx.xxx to design, offer or sell any of its services in the present manner
or style thereof.
2.12 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of "Affiliate" set
forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under common
control with xxxxxxxxx.xxx within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "XXXXXXXXX.XXX EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise, funded
or unfunded, including without limitation, each "EMPLOYEE BENEFIT PLAN,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by xxxxxxxxx.xxx or any
Affiliate for the benefit of any Employee and pursuant to which
xxxxxxxxx.xxx or any Affiliate has any material liability;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired employee,
officer, or director of xxxxxxxxx.xxx or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between xxxxxxxxx.xxx or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as amended;
(ix) "IRS" shall mean the Internal Revenue Service;
(x) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
13
(xi) "PBGC" shall mean the Pension Benefit Guaranty Corporation; and
(xii) "PENSION PLAN" shall mean each xxxxxxxxx.xxx Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) SCHEDULE. The xxxxxxxxx.xxx Disclosure Letter contains an accurate and
complete list of each xxxxxxxxx.xxx Employee Plan and each Employee Agreement.
Xxxxxxxxx.xxx does not have any intention or commitment to establish any new
xxxxxxxxx.xxx Employee Plan, to modify any xxxxxxxxx.xxx Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
xxxxxxxxx.xxx Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Yahoo! in writing, or as
required by this Agreement), or to adopt any xxxxxxxxx.xxx Employee Plan or
Employee Agreement, nor does it have any commitment to do any of the foregoing.
The xxxxxxxxx.xxx Disclosure Letter also contains a list of all xxxxxxxxx.xxx
employees as of the date hereof, each such person's date of hire and each such
person's annual compensation.
(c) DOCUMENTS. Xxxxxxxxx.xxx has provided or made available to Yahoo!: (i)
correct and complete copies of all material documents embodying to each
xxxxxxxxx.xxx Employee Plan and each Employee Agreement including all amendments
thereto and written interpretations thereof; (ii) the most recent annual
actuarial valuations, if any, prepared for each xxxxxxxxx.xxx Employee Plan;
(iii) the three (3) most recent annual reports (Form Series 5500 and all
schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each xxxxxxxxx.xxx Employee Plan or related
trust; (iv) if the xxxxxxxxx.xxx Employee Plan is funded, the most recent annual
and periodic accounting of xxxxxxxxx.xxx Employee Plan assets; (v) the most
recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each
xxxxxxxxx.xxx Employee Plan; (vi) all IRS determination, opinion, notification
and advisory letters, and rulings relating to xxxxxxxxx.xxx Employee Plans and
copies of all applications and correspondence to or from the IRS or the DOL with
respect to any xxxxxxxxx.xxx Employee Plan; (vii) all material written
agreements and contracts relating to each xxxxxxxxx.xxx Employee Plan,
including, but not limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (viii) all communications material to
any Employee or Employees relating to any xxxxxxxxx.xxx Employee Plan and any
proposed xxxxxxxxx.xxx Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to xxxxxxxxx.xxx; and (ix) all registration statements and
prospectuses prepared in connection with each xxxxxxxxx.xxx Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. (i) Xxxxxxxxx.xxx has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of; and has no knowledge of any material default or
violation by any other party to each xxxxxxxxx.xxx Employee Plan, and each
xxxxxxxxx.xxx Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) each xxxxxxxxx.xxx 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 has either received a favorable determination letter
from the IRS with respect to each such Plan as to its qualified status under the
Code or has remaining a period of time under applicable Treasury regulations or
IRS pronouncements in which to apply for such a determination letter and make
any amendments necessary to obtain a favorable determination and no event has
occurred which would adversely affect the status of such determination letter or
the qualified status of such Plan; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
xxxxxxxxx.xxx Employee Plan; (iv) there are no actions, suits or claims pending,
or, to the knowledge of xxxxxxxxx.xxx, threatened or reasonably anticipated
(other than routine claims for benefits) against any xxxxxxxxx.xxx Employee Plan
or against the assets of any xxxxxxxxx.xxx Employee Plan; (v) each xxxxxxxxx.xxx
Employee Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without
14
liability to Yahoo!, xxxxxxxxx.xxx or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (vi) there
are no audits, inquiries or proceedings pending or, to the knowledge of
xxxxxxxxx.xxx, threatened by the IRS or DOL with respect to any xxxxxxxxx.xxx
Employee Plan; and (vii) neither xxxxxxxxx.xxx nor any Affiliate is subject to
any penalty or tax with respect to any xxxxxxxxx.xxx Employee Plan under Section
402(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) PENSION PLANS. Xxxxxxxxx.xxx does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) MULTIEMPLOYER PLANS. At no time has xxxxxxxxx.xxx contributed to or
been requested to contribute to any Multiemployer Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. No xxxxxxxxx.xxx Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and
xxxxxxxxx.xxx has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
retiree life insurance, retiree health or other retiree employee welfare
benefit, except to the extent required by statute.
(h) COBRA; FMLA. Neither xxxxxxxxx.xxx nor any Affiliate has, prior to the
Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) EFFECT OF TRANSACTION.
(i) The execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any xxxxxxxxx.xxx
Employee Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made by xxxxxxxxx.xxx or its
Affiliates with respect to any Employee as a result of the transactions
contemplated by this Agreement will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code or will be
treated as a nondeductible expense within the meaning of Section 162 of the
Code.
(j) EMPLOYMENT MATTERS. Xxxxxxxxx.xxx: (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable in any material respect for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending, or, to xxxxxxxxx.xxx's knowledge,
threatened or reasonably anticipated claims or actions against xxxxxxxxx.xxx
under any worker's compensation policy or long-term disability policy which
would be reasonably likely to have a Material Adverse Effect on xxxxxxxxx.xxx.
To xxxxxxxxx.xxx's knowledge, no Employee of xxxxxxxxx.xxx has violated any
employment contract, nondisclosure agreement or noncompetition agreement by
which such Employee is bound due to such Employee being employed by
xxxxxxxxx.xxx and disclosing to xxxxxxxxx.xxx or using trade secrets or
proprietary information of any other person or entity.
15
(k) LABOR. No work stoppage or labor strike against xxxxxxxxx.xxx is
pending, or to xxxxxxxxx.xxx's knowledge, threatened or reasonably anticipated.
Xxxxxxxxx.xxx does not know of any activities or proceedings of any labor union
to organize any Employees. There are no actions, suits, claims, labor disputes
or grievances pending, or, to the knowledge of xxxxxxxxx.xxx, threatened or
reasonably anticipated relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to
xxxxxxxxx.xxx. Neither xxxxxxxxx.xxx nor any of its subsidiaries has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act. Xxxxxxxxx.xxx is not presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by
xxxxxxxxx.xxx.
(l) INTERNATIONAL EMPLOYEE PLAN. No Employee Plan has been adopted or
maintained by xxxxxxxxx.xxx, whether informally or formally, for the benefit of
Employees outside the United States.
2.13 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in material liability
to xxxxxxxxx.xxx, no underground storage tanks and no amount of any substance
that has been designated by any Governmental Entity or by applicable federal,
state or local law to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of the
actions of xxxxxxxxx.xxx or any of its subsidiaries or any affiliate of
xxxxxxxxx.xxx, or, to xxxxxxxxx.xxx's knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof that xxxxxxxxx.xxx
or any of its subsidiaries has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result in a
material liability to xxxxxxxxx.xxx (in any individual case or in the aggregate)
(i) neither xxxxxxxxx.xxx nor any of its subsidiaries has transported, stored,
used, manufactured, disposed of released or exposed its employees or others to
Hazardous Materials in violation of any law, and (ii) neither xxxxxxxxx.xxx nor
any of its subsidiaries has disposed of; transported, sold, used, released,
exposed its employees or others to or manufactured any product containing a
Hazardous Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation
of any rule, regulation, treaty or statute promulgated by any Governmental
Entity in effect prior to or as of the date hereof to prohibit, regulate or
control Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. Xxxxxxxxx.xxx and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"XXXXXXXXX.XXX ENVIRONMENTAL PERMITS") material to and necessary for the conduct
of xxxxxxxxx.xxx's and its subsidiaries' Hazardous Material Activities and other
businesses of xxxxxxxxx.xxx and its subsidiaries as such activities and
businesses are currently being conducted.
2.14 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as otherwise set forth
in the xxxxxxxxx.xxx Disclosure Letter, neither xxxxxxxxx.xxx nor any of its
subsidiaries is a party to or is bound by:
(a) any employment agreement, contract or commitment with any employee
or member of xxxxxxxxx.xxx's Board of Directors, other than those that are
terminable by xxxxxxxxx.xxx or any of its subsidiaries on no more than
thirty days notice without liability or financial obligation, except to the
extent general principles of wrongful termination law may limit
xxxxxxxxx.xxx's or any of its subsidiaries' ability to terminate employees
at will, or any consulting agreement;
16
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any agreement of indemnification outside the ordinary course of
xxxxxxxxx.xxx's business or any guaranty;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of xxxxxxxxx.xxx or any of its
subsidiaries to engage in any line of business or to compete with any person
or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by xxxxxxxxx.xxx or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which xxxxxxxxx.xxx has any
material ownership interest in any corporation, partnership, joint venture
or other business enterprise other than xxxxxxxxx.xxx's subsidiaries;
(f) any licensing, distribution, sponsorship, advertising, merchant
program or other similar agreement to which xxxxxxxxx.xxx or one of its
subsidiaries is a party which may not be canceled by xxxxxxxxx.xxx or its
subsidiaries, as the case may be, without penalty in excess of $50,000 upon
notice of 45 days or less or which provides for payments by or to
xxxxxxxxx.xxx or its subsidiaries in an amount in excess of $50,000 over the
term of the agreement;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology; or
(h) any other agreement, contract or commitment currently in effect that
is material to xxxxxxxxx.xxx's business as presently conducted.
Neither xxxxxxxxx.xxx nor any of its subsidiaries, nor to xxxxxxxxx.xxx's
knowledge any other party to a xxxxxxxxx.xxx Contract (as defined below), is in
breach, violation or default under, and neither xxxxxxxxx.xxx nor any of its
subsidiaries has received written notice (or to its knowledge, any other form of
notice) that it has breached, violated or defaulted under, any of the material
terms or conditions of any of the agreements, contracts or commitments to which
xxxxxxxxx.xxx or any of its subsidiaries is a party or by which it is bound that
are required to be disclosed in the xxxxxxxxx.xxx Disclosure Letter pursuant to
clauses (a) through (h) above or pursuant to Section 2.9 hereof (any such
agreement, contract or commitment, a "XXXXXXXXX.XXX CONTRACT") in such a manner
as would permit any other party to cancel or terminate any such xxxxxxxxx.xxx
Contract or seek damages or other remedies the effect of which would have a
Material Adverse Effect on xxxxxxxxx.xxx.
2.15 POOLING OF INTERESTS. To the knowledge of xxxxxxxxx.xxx, based on
consultation with its independent accountants, neither xxxxxxxxx.xxx nor any of
its directors, officers, affiliates or stockholders has taken or agreed to take
any action which would preclude Yahoo!'s ability to account for the Merger as a
pooling of interests.
2.16 CHANGE OF CONTROL PAYMENTS. The xxxxxxxxx.xxx Disclosure Letter sets
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers and directors
of xxxxxxxxx.xxx as a result of or in connection with the Merger.
2.17 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied by
xxxxxxxxx.xxx for inclusion in the Registration Statement (as defined in Section
3.3(b)) shall not at the time the Registration Statement is filed with the SEC
and at the time it becomes effective under the Securities Act contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or
17
necessary in order to make the statements therein not misleading. The
information supplied by xxxxxxxxx.xxx for inclusion in the proxy
statement/prospectus to be sent to the stockholders of xxxxxxxxx.xxx in
connection with the meeting of xxxxxxxxx.xxx's stockholders to consider the
approval and adoption of this Agreement and the approval of the Merger (the
"XXXXXXXXX.XXX STOCKHOLDERS' MEETING") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "PROXY STATEMENT/
PROSPECTUS") shall not, on the date the Proxy Statement/Prospectus is first
mailed to xxxxxxxxx.xxx's stockholders or at the time of the xxxxxxxxx.xxx
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the xxxxxxxxx.xxx Stockholders' Meeting which has
become false or misleading. If at any time prior to the Effective Time any event
relating to xxxxxxxxx.xxx or any of its affiliates, officers or directors should
be discovered by xxxxxxxxx.xxx which is required to be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement/Prospectus,
xxxxxxxxx.xxx shall promptly inform Yahoo!. Notwithstanding the foregoing,
xxxxxxxxx.xxx makes no representation or warranty with respect to any
information supplied by Yahoo! or Merger Sub which is contained in any of the
foregoing documents.
2.18 BOARD APPROVAL. The Board of Directors of xxxxxxxxx.xxx has, as of
the date of this Agreement, determined (i) that the Merger is advisable and fair
to, and in the best interests of xxxxxxxxx.xxx and its stockholders and (ii) to
recommend that the stockholders of xxxxxxxxx.xxx approve and adopt this
Agreement and approve the Merger.
2.19 BROKERS' AND FINDERS' FEES. Except for fees payable to Xxxxxx Xxxxxxx
& Co. Incorporated ("XXXXXX XXXXXXX"), xxxxxxxxx.xxx has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby. A copy of the Xxxxxx Xxxxxxx engagement
letter with xxxxxxxxx.xxx has been previously provided to Yahoo!.
2.20 FAIRNESS OPINION. Xxxxxxxxx.xxx's Board of Directors has received an
opinion from Xxxxxx Xxxxxxx as of the date hereof, to the effect that, as of the
date hereof, the Exchange Ratio is fair from a financial point of view to
xxxxxxxxx.xxx's stockholders (other than Yahoo! and its affiliates).
2.21 AFFILIATES. Set forth on the xxxxxxxxx.xxx Disclosure Letter is a
list of those persons who may be deemed to be, in xxxxxxxxx.xxx's reasonable
judgment, affiliates of xxxxxxxxx.xxx within the meaning of Rule 145 promulgated
under the Securities Act (each a "XXXXXXXXX.XXX AFFILIATE").
2.22 SECTION 203 NOT APPLICABLE. The Board of Directors of xxxxxxxxx.xxx
has taken all actions so that the restrictions contained in Section 203 of the
Delaware General Corporation Law applicable to a "business combination" (as
defined in such Section 203) will not apply to the execution, delivery or
performance of this Agreement or to the consummation of the Merger or the other
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF YAHOO! AND MERGER SUB
Yahoo! and Merger Sub represent and warrant to xxxxxxxxx.xxx, subject to the
exceptions specifically disclosed in writing in the disclosure letter delivered
by Yahoo! to xxxxxxxxx.xxx dated as of the date hereof and certified by a duly
authorized officer of Yahoo! (the "YAHOO! DISCLOSURE LETTER"), as follows:
3.1 ORGANIZATION OF YAHOO! AND MERGER SUB.
(a) Each of Yahoo! and Merger Sub (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized; (ii) has the corporate or other power and authority to
own, lease and operate its assets and property and to carry on its business as
now being
18
conducted; and (iii) except as would not be material to Yahoo!, is duly
qualified or licensed to do business in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary.
(b) Yahoo! has delivered or made available to xxxxxxxxx.xxx a true and
correct copy of the Certificate of Incorporation and Bylaws of Yahoo!, each as
amended to date, and each such instrument is in full force and effect. Neither
Yahoo! nor any of its subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws or equivalent governing instruments.
3.2 YAHOO! AND MERGER SUB CAPITAL STRUCTURE. The authorized capital stock
of Yahoo! consists of 225,000,000 shares of Yahoo! Common Stock, of which there
were 202,926,761 shares issued and outstanding as of March 31, 1999, and
10,000,000 shares of Preferred Stock, none of which are issued and outstanding.
All outstanding shares of Yahoo! Common Stock are duly authorized, validly
issued, fully paid and nonassessable and are not subject to preemptive rights
created by statute, the Certificate of Incorporation or Bylaws of Yahoo! or any
agreement or document to which Yahoo! is a party or by which it is bound. As of
March 31, 1999, there were options outstanding to purchase an aggregate of
50,823,743 shares of Yahoo! Common Stock under Yahoo!'s stock option plans. The
authorized capital stock of Merger Sub consists of 1,000 shares of Common Stock,
$0.01 par value, all of which, as of the date hereof, are issued and outstanding
and are held by Yahoo!. Merger Sub was formed for the purpose of consummating
the Merger and has no material assets or liabilities except as necessary for
such purpose.
3.3 AUTHORITY.
(a) Each of Yahoo! and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Yahoo! and Merger Sub, subject
only to the filing of the Certificate of Merger pursuant to Delaware Law. This
Agreement has been duly executed and delivered by each of Yahoo! and Merger Sub
and, assuming the due authorization, execution and delivery by xxxxxxxxx.xxx,
constitutes the valid and binding obligation of Yahoo! and Merger Sub,
enforceable against Yahoo! and Merger Sub in accordance with its terms, except
as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement by
each of Yahoo! and Merger Sub does not, and the performance of this Agreement by
each of Yahoo! and Merger Sub will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Yahoo! or Merger Sub, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Yahoo! or Merger Sub or by which any of their respective properties is bound
or affected, or (iii) result in any material breach of or constitute a material
default (or an event that with notice or lapse of time or both would become a
material default) under, or impair Yahoo!'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; or result in the
creation of a material lien or encumbrance on any of the material properties or
assets of Yahoo! or Merger Sub pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, in each case that is material to Yahoo!, to which Yahoo! or Merger
Sub is a party or by which Yahoo! or Merger Sub or any of their respective
properties are bound or affected.
(b) No consent, approval, order or authorization of; or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by Yahoo! or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of a
Form S-4 (or any similar successor form thereto) Registration Statement (the
"REGISTRATION STATEMENT") with the SEC in accordance with the Securities Act,
(ii) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and the HSR Act, and (v)
such other consents, authorizations, filings, approvals
19
and registrations which if not obtained or made would not be material to Yahoo!
or xxxxxxxxx.xxx or have a material adverse effect on the ability of the parties
hereto to consummate the Merger.
3.4 SEC FILINGS; YAHOO! FINANCIAL STATEMENTS.
(a) Yahoo! has filed all forms, reports and documents required to be filed
by Yahoo! with the SEC since January 1, 1997, and has made available to
xxxxxxxxx.xxx such forms, reports and documents in the form filed with the SEC.
All such required forms, reports and documents (including those that Yahoo! may
file subsequent to the date hereof) are referred to herein as the "YAHOO! SEC
REPORTS." As of their respective dates, the Yahoo! SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Yahoo! SEC Reports, 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 the light of the
circumstances under which they were made, not misleading. None of Yahoo!'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 Yahoo! SEC Reports (the "YAHOO!
FINANCIALS"), including any Yahoo! SEC Reports filed after the date hereof until
the Closing, (i) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (ii) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
1O-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Yahoo! and its subsidiaries as at the respective dates
thereof and the consolidated results of Yahoo!'s operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Yahoo! contained in Yahoo! SEC
Reports as of December 31, 1998 is hereinafter referred to as the "YAHOO!
BALANCE SHEET."
(c) Yahoo! has heretofore furnished to xxxxxxxxx.xxx 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 agreements, documents or other
instruments which previously had been filed by Yahoo! with the SEC pursuant to
the Securities Act or the Exchange Act.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Yahoo!
Balance Sheet there has not been any Material Adverse Effect with respect to
Yahoo! and its subsidiaries, taken as a whole.
3.6 PROXY STATEMENT/PROSPECTUS. The information supplied by Yahoo! for
inclusion in the Registration Statement shall not at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. The information supplied by Yahoo! for
inclusion in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is first mailed to xxxxxxxxx.xxx's stockholders or at the
time of the xxxxxxxxx.xxx Stockholders' Meeting contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the xxxxxxxxx.xxx
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time, any event relating to Yahoo! or any of its affiliates,
officers or directors should be discovered by Yahoo! which is required to be set
forth in an amendment to the Registration Statement
20
or a supplement to the Proxy Statement/Prospectus, Yahoo! shall promptly inform
xxxxxxxxx.xxx. Notwithstanding the foregoing, Yahoo! makes no representation or
warranty with respect to any information supplied by xxxxxxxxx.xxx which is
contained in any of the foregoing documents.
3.7 LITIGATION. There are no claims, suits, actions or proceedings that
have a reasonable likelihood of success on the merits pending or, to the
knowledge of Yahoo!, threatened against, relating to or affecting Yahoo! or any
of its subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement.
3.8 POOLING OF INTERESTS. To the knowledge of Yahoo!, based on
consultation with its independent accountants, neither Yahoo! nor any of its
directors, officers, affiliates or stockholders has taken or agreed to take any
action which would preclude Yahoo!'s ability to account for the Merger as a
pooling of interests.
3.9 AFFILIATES. Set forth on the Yahoo! Disclosure Letter is a list of
those persons who may be deemed to be, in Yahoo!'s reasonable judgment,
affiliates of Yahoo! within the meaning of Rule 145 promulgated under the
Securities Act (each a "YAHOO! AFFILIATE").
3.10 VALID ISSUANCE. The Yahoo! Common Stock to be issued in the Merger,
when issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY XXXXXXXXX.XXX. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, xxxxxxxxx.xxx and each of
its subsidiaries shall, except to the extent that Yahoo! shall otherwise consent
in writing, carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance in all
material respects with all applicable laws and regulations, pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and employees and (iii) preserve its relationships with customers,
suppliers, licensors, licensees, and others with which it has business dealings.
In addition, except as permitted by the terms of this Agreement, without the
prior written consent of Yahoo!, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, xxxxxxxxx.xxx shall not do any of
the following and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of
such plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on
the date hereof and as previously disclosed in writing to Yahoo!, or adopt
any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the xxxxxxxxx.xxx
Intellectual Property, other than non-exclusive licenses in the ordinary
course of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any
21
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of xxxxxxxxx.xxx or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of
the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares
of capital stock or any securities convertible into shares of capital stock,
or enter into other agreements or commitments of any character obligating it
to issue any such shares or convertible securities, other than the issuance
delivery and/or sale of (i) shares of xxxxxxxxx.xxx Common Stock pursuant to
the exercise of stock options or warrants therefor, and (ii) shares of
xxxxxxxxx.xxx Common Stock issuable to participants in the ESPP consistent
with the terms thereof;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof; or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of xxxxxxxxx.xxx or enter into any material joint
ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate,
to the business of xxxxxxxxx.xxx;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
xxxxxxxxx.xxx, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with
the financing of ordinary course trade payables consistent with past
practice or (ii) pursuant to existing credit facilities in the ordinary
course of business;
(k) Adopt or amend any employee benefit plan or employee stock purchase
or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with
past practice with employees who are terminable "at will"), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants other
than in the ordinary course of business, consistent with past practice;
(l) Modify, amend or terminate any material contract or agreement to
which xxxxxxxxx.xxx or any subsidiary thereof is a party or waive, release
or assign any material rights or claims thereunder;
(m) Enter into any licensing, distribution, sponsorship, advertising,
merchant program or other similar contracts, agreements, or obligations
which may not be canceled without penalty by xxxxxxxxx.xxx or its
subsidiaries upon notice of 45 days or less or which provide for payments by
or to xxxxxxxxx.xxx or its subsidiaries in an amount in excess of $50,000
over the term of the Agreement;
(n) Revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
22
(o) Take any action, or omit to take any action, that would be
reasonably likely to interfere with Yahoo!'s ability to account for the
Merger as a pooling of interests, whether or not otherwise permitted by the
provisions of this Article IV;
(p) Fail to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
(q) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (q) above.
4.2 CONDUCT OF BUSINESS BY YAHOO!. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, without the prior written consent
of xxxxxxxxx.xxx, Yahoo! shall not do any of the following and shall not permit
its subsidiaries to do any of the following:
(a) Cause, permit or propose any amendments to its Articles of
Incorporation or Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries) in a manner that would have an
adverse impact on xxxxxxxxx.xxx's stockholders; PROVIDED that the foregoing
shall not restrict the ability of Yahoo! to reincorporate in another
jurisdiction prior to the termination of this Agreement or the Effective
Time;
(b) Take any action that would be reasonably likely to interfere with
Yahoo!'s ability to account for the Merger as a pooling of interests,
whether or not otherwise permitted by this Article IV; or
(c) Fail to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS. As
promptly as practicable after the execution of this Agreement, xxxxxxxxx.xxx and
Yahoo! will prepare, and file with the SEC, the Proxy Statement/Prospectus and
Yahoo! will prepare and file with the SEC the Registration Statement in which
the Proxy Statement/Prospectus will be included as a prospectus. Each of
xxxxxxxxx.xxx and Yahoo! will respond to any comments of the SEC, will use its
respective commercially reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing and xxxxxxxxx.xxx will cause the Proxy Statement/Prospectus to be
mailed to its stockholders at the earliest practicable time after the
Registration Statement is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of xxxxxxxxx.xxx and Yahoo!
will prepare and file any other filings required to be filed by it under the
Exchange Act, the Securities Act or any other Federal, foreign or Blue Sky or
related laws relating to the Merger and the transactions contemplated by this
Agreement (the "OTHER FILINGS"). Each of xxxxxxxxx.xxx and Yahoo! will notify
the other promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or any
other government officials for amendments or supplements to the Registration
Statement, the Proxy Statement/Prospectus or any Other Filing or for additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC or its
staff or any other government officials, on the other hand, with respect to the
Registration Statement, the Proxy Statement/Prospectus, the Merger or any Other
Filing. Each of xxxxxxxxx.xxx and Yahoo! will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, the
23
Registration Statement or any Other Filing, xxxxxxxxx.xxx or Yahoo!, as the case
may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of xxxxxxxxx.xxx, such amendment or supplement.
5.2 MEETING OF XXXXXXXXX.XXX STOCKHOLDERS.
(a) Promptly after the date hereof, xxxxxxxxx.xxx will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the xxxxxxxxx.xxx Stockholders' Meeting to
be held as promptly as practicable after the declaration of effectiveness of the
Registration Statement, for the purpose of voting upon this Agreement and the
Merger. Xxxxxxxxx.xxx will use its commercially reasonable efforts to solicit
from its stockholders proxies in favor of the adoption and approval of this
Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the rules of the NASD or Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement,
xxxxxxxxx.xxx may adjourn or postpone xxxxxxxxx.xxx Stockholders' Meeting to the
extent necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to xxxxxxxxx.xxx's stockholders in
advance of a vote on the Merger and this Agreement or, if as of the time for
which xxxxxxxxx.xxx Stockholders' Meeting is originally scheduled (as set forth
in the Prospectus/Proxy Statement) there are insufficient shares of
xxxxxxxxx.xxx Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the xxxxxxxxx.xxx's
Stockholders' Meeting. Xxxxxxxxx.xxx shall ensure that the xxxxxxxxx.xxx
Stockholders' Meeting is called, noticed, convened, held and conducted, and
subject to Section 5.2(c) that all proxies solicited by xxxxxxxxx.xxx in
connection with the xxxxxxxxx.xxx Stockholders' Meeting are solicited, in
compliance with the Delaware Law, its Certificate of Incorporation and Bylaws,
the rules of the NASD and all other applicable legal requirements.
Xxxxxxxxx.xxx's obligation to call, give notice of, convene and hold the
xxxxxxxxx.xxx Stockholders' Meeting in accordance with this Section 5.2(a) shall
not be limited to or otherwise affected by the commencement, disclosure,
announcement or submission to xxxxxxxxx.xxx of any Acquisition Proposal (as
defined in Section 5.4(a)), or by any withdrawal, amendment or modification of
the recommendation of the Board of Directors of xxxxxxxxx.xxx with respect to
the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of xxxxxxxxx.xxx
shall recommend that xxxxxxxxx.xxx's stockholders vote in favor of and adopt and
approve this Agreement and the Merger at the xxxxxxxxx.xxx Stockholders'
Meeting; (ii) the Prospectus/Proxy Statement shall include a statement to the
effect that the Board of Directors of xxxxxxxxx.xxx has recommended that
xxxxxxxxx.xxx's stockholders vote in favor of and adopt and approve this
Agreement and the Merger at the xxxxxxxxx.xxx Stockholders' Meeting; and (iii)
neither the Board of Directors of xxxxxxxxx.xxx nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in
a manner adverse to Yahoo!, the recommendation of the Board of Directors of
xxxxxxxxx.xxx that xxxxxxxxx.xxx's stockholders vote in favor of and adopt and
approve this Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Board of Directors of
xxxxxxxxx.xxx from withholding, withdrawing, amending or modifying its
recommendation in favor of the Merger if (i) a Superior Offer (as defined
below), or an offer reasonably believed by the Board of Directors of
xxxxxxxxx.xxx to be a Superior Offer, is made to xxxxxxxxx.xxx and is not
withdrawn, (ii) neither xxxxxxxxx.xxx nor any of its representatives shall have
violated any of the restrictions set forth in Section 5.4, and (iii) the Board
of Directors of xxxxxxxxx.xxx or any committee thereof concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of xxxxxxxxx.xxx
or any committee thereof to comply with its obligations to xxxxxxxxx.xxx's
stockholders under applicable law. Nothing contained in this Section 5.2(c)
shall limit xxxxxxxxx.xxx's obligation to hold and convene the xxxxxxxxx.xxx
Stockholders' Meeting (regardless of whether the recommendation of the Board of
Directors of xxxxxxxxx.xxx shall have been withdrawn, amended or modified). For
purposes of this Agreement ("SUPERIOR OFFER") shall mean an unsolicited, bona
fide written offer made by a third party to
24
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving xxxxxxxxx.xxx pursuant to which the stockholders of
xxxxxxxxx.xxx immediately preceding such transaction hold less than 50% of the
equity interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by xxxxxxxxx.xxx of assets representing in excess of
50% of the fair market value of xxxxxxxxx.xxx's business immediately prior to
such sale, or (iii) the acquisition by any person or group (including by way of
a tender offer or an exchange offer or issuance by xxxxxxxxx.xxx), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of 50% of the voting power of the then
outstanding shares of capital stock of xxxxxxxxx.xxx, on terms that the Board of
Directors of xxxxxxxxx.xxx determines, in its reasonable judgment, after
consultation with its financial advisor, to be more favorable, or is reasonably
likely to be more favorable, to xxxxxxxxx.xxx stockholders than the terms of the
Merger; PROVIDED, HOWEVER, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the judgment of
xxxxxxxxx.xxx's Board of Directors to be obtained by such third party on a
timely basis.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that xxxxxxxxx.xxx and Yahoo! have previously
executed a Confidentiality Agreement (the "CONFIDENTIALITY AGREEMENT"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms.
(b) Xxxxxxxxx.xxx will afford Yahoo! and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of xxxxxxxxx.xxx during the period
prior to the Effective Time to obtain all information concerning the business,
including the status of product development efforts, properties, results of
operations and personnel of xxxxxxxxx.xxx, as Yahoo! may reasonably request.
Yahoo! will afford xxxxxxxxx.xxx and its representatives reasonable access to
information concerning Yahoo!'s business that xxxxxxxxx.xxx may reasonably
request in order to permit, and solely for the purpose of permitting,
xxxxxxxxx.xxx to confirm the accuracy of the representations and warranties made
by Yahoo! in Article III. No information or knowledge obtained by Yahoo! or
xxxxxxxxx.xxx in any investigation pursuant to this Section 5.3 will affect or
be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective Time or
termination of this Agreement pursuant to Article VII, xxxxxxxxx.xxx and its
subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to, directly or
indirectly, (i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of these provisions,
(iv) subject to Section 5.2(c), approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction; PROVIDED, HOWEVER, that prior to the approval of this
Agreement by the required xxxxxxxxx.xxx stockholder vote, this Section 5.4(a)
shall not prohibit xxxxxxxxx.xxx from furnishing nonpublic information regarding
xxxxxxxxx.xxx and its subsidiaries to, entering into a confidentiality agreement
with or entering into discussions with, any person or group in response to a
Superior Offer submitted by such person or group (and not withdrawn) if (1)
neither xxxxxxxxx.xxx nor any representative of xxxxxxxxx.xxx and its
subsidiaries shall have violated any of the restrictions set forth in
25
this Section 5.4, (2) the Board of Directors of xxxxxxxxx.xxx concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the Board of Directors of xxxxxxxxx.xxx to comply with its
fiduciary obligations to xxxxxxxxx.xxx's stockholders under applicable law, (3)
prior to furnishing any such nonpublic information to, or entering into
discussions with, such person or group, xxxxxxxxx.xxx gives Yahoo! written
notice of the identity of such person or group and of xxxxxxxxx.xxx's intention
to furnish nonpublic information to, or enter into discussions with, such person
or group and xxxxxxxxx.xxx receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
person or group by or on behalf of xxxxxxxxx.xxx, and (4) contemporaneously with
furnishing any such nonpublic information to such person or group, xxxxxxxxx.xxx
furnishes such nonpublic information to Yahoo! (to the extent such nonpublic
information has not been previously furnished by xxxxxxxxx.xxx to Yahoo!);
PROVIDED, FURTHER, that nothing herein shall prevent the Board of Directors of
xxxxxxxxx.xxx from taking, and disclosing to xxxxxxxxx.xxx's stockholders, a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act. Xxxxxxxxx.xxx and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of
xxxxxxxxx.xxx or any of its subsidiaries or any investment banker, attorney or
other advisor or representative of xxxxxxxxx.xxx or any of its subsidiaries
shall be deemed to be a breach of this Section 5.4 by xxxxxxxxx.xxx. In addition
to the foregoing, xxxxxxxxx.xxx shall provide Yahoo! with at least two (2)
business days or forty-eight (48) hours prior written notice of a meeting of
xxxxxxxxx.xxx's Board of Directors at which xxxxxxxxx.xxx's Board of Directors
is reasonably expected to recommend a Superior Offer to its stockholders and
together with such notice a copy of the documentation relating to such Superior
Offer that exists at such time.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any bona
fide offer or proposal (other than an offer or proposal by Yahoo!) relating to
any Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from xxxxxxxxx.xxx by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 30% interest in the total outstanding voting
securities of xxxxxxxxx.xxx or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 30% or more of the total outstanding voting
securities of xxxxxxxxx.xxx or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving
xxxxxxxxx.xxx pursuant to which the stockholders of xxxxxxxxx.xxx immediately
preceding such transaction hold less than 70% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or disposition of more
than 50% of the assets of xxxxxxxxx.xxx; or (C) any liquidation or dissolution
of xxxxxxxxx.xxx.
(b) In addition to the obligations of xxxxxxxxx.xxx set forth in paragraph
(a) of this Section 5.4, xxxxxxxxx.xxx as promptly as practicable shall advise
Yahoo! orally and in writing of any request for non-public information which
xxxxxxxxx.xxx reasonably believes would lead to an Acquisition Proposal or of
any Acquisition Proposal, or any inquiry with respect to or which xxxxxxxxx.xxx
reasonably should believe would lead to any Acquisition Proposal, the material
terms and conditions of such Acquisition Proposal (to the extent known), and the
identity of the person or group making any such request, Acquisition Proposal or
inquiry. Xxxxxxxxx.xxx will keep Yahoo! informed in all material respects of any
material amendments or proposed amendments to any such Acquisition Proposal.
26
5.5 PUBLIC DISCLOSURE. Yahoo! and xxxxxxxxx.xxx will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange. The parties
have agreed to the text of the joint press release announcing the execution of
this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed, and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, xxxxxxxxx.xxx and its Board
of Directors shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Yahoo! or any of its affiliates to make proposals, execute
or carry out agreements or submit to orders providing for the sale or other
disposition or holding separate (through the establishment of a trust or
otherwise) of any assets or categories of assets of Yahoo!, any of its
affiliates or xxxxxxxxx.xxx or the holding separate of the shares of
xxxxxxxxx.xxx Common Stock or imposing or seeking to impose any limitation on
the ability of Yahoo! or any of its subsidiaries or affiliates to conduct their
business or own such assets or to acquire, hold or exercise full rights of
ownership of the shares of xxxxxxxxx.xxx Common Stock.
(b) Xxxxxxxxx.xxx shall give prompt notice to Yahoo! of any representation
or warranty made by it contained in this Agreement becoming untrue or
inaccurate, or any failure of xxxxxxxxx.xxx to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied; PROVIDED, HOWEVER,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) Yahoo! shall give prompt notice to xxxxxxxxx.xxx of any representation
or warranty made by it or Merger Sub contained in this Agreement becoming untrue
or inaccurate, or any failure of Yahoo! or Merger Sub to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement, in each case, such that the conditions
set forth in Section 6.2(a) or 6.2(b) would not be satisfied; PROVIDED, HOWEVER,
that no such notification shall affect the
27
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Yahoo! and xxxxxxxxx.xxx will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 STOCK OPTIONS AND ESPP.
(a) At the Effective Time, each outstanding option to purchase shares of
xxxxxxxxx.xxx Common Stock (each a "XXXXXXXXX.XXX STOCK OPTION") under the
xxxxxxxxx.xxx Stock Option Plans, whether or not exercisable, will be assumed by
Yahoo!. Each xxxxxxxxx.xxx Stock Option so assumed by Yahoo! under this
Agreement will continue to have, and be subject to, the same terms and
conditions set forth in the applicable xxxxxxxxx.xxx Stock Option Plan
immediately prior to the Effective Time (including, without limitation, any
repurchase rights or vesting provisions), except that (i) each xxxxxxxxx.xxx
Stock Option will be exercisable (or will become exercisable in accordance with
its terms) for that number of whole shares of Yahoo! Common Stock equal to the
product of the number of shares of xxxxxxxxx.xxx Common Stock that were issuable
upon exercise of such xxxxxxxxx.xxx Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Yahoo! Common Stock and (ii) the per share exercise
price for the shares of Yahoo! Common Stock issuable upon exercise of such
assumed xxxxxxxxx.xxx Stock Option will be equal to the quotient determined by
dividing the exercise price per share of xxxxxxxxx.xxx Common Stock at which
such xxxxxxxxx.xxx Stock Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
(b) It is intended that xxxxxxxxx.xxx Stock Options assumed by Yahoo! shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent xxxxxxxxx.xxx Stock Options qualified as
incentive stock options immediately prior to the Effective Time and the
provisions of this Section 5.8 shall be applied consistent with such intent.
(c) Xxxxxxxxx.xxx shall take all actions necessary pursuant to the terms of
the ESPP in order to accelerate the exercise date of the offering period under
such plan which includes the Effective Time (the "CURRENT OFFERING PERIOD") such
that a new exercise date for such offering period shall occur prior to the
Effective Time and shares shall be purchased by ESPP participants prior to the
Effective Time. The Current Offering Period shall expire immediately following
such new exercise date, and the ESPP shall terminate immediately prior to the
Effective Time. Subsequent to such new exercise date, xxxxxxxxx.xxx shall take
no action, pursuant to the terms of the ESPP, to commence any new offering
period.
(d) Xxxxxxxxx.xxx shall take all necessary action to cause any 401(k) plan
sponsored or maintained by xxxxxxxxx.xxx to be terminated one day prior to the
Closing Date.
(e) Prior to the Effective Time, xxxxxxxxx.xxx agrees to make such
modifications to xxxxxxxxx.xxx's 1996 Non-Employee Directors Stock Option Plan
(relating to exercise of options following termination of service with
xxxxxxxxx.xxx) as shall be reasonably requested by Yahoo! in order to permit the
business combination contemplated by the Merger to be accounted for as a pooling
of interests.
(f) The Board of Directors of Yahoo! shall, to the extent permitted by
applicable law, take or cause to be taken all actions necessary to obtain
approval in the form required by Rule 16b-3 of the Exchange Act so that, with
respect to persons who will or may become officers or directors of Yahoo!, the
transactions relating to the Merger that may be considered acquisitions under
such Rule for such persons will be exempt from Section 16 of the Exchange Act.
5.9 FORM S-8. Yahoo! agrees to file a registration statement on Form S-8
for the shares of Yahoo! Common Stock issuable with respect to assumed
xxxxxxxxx.xxx Stock Options as soon as is reasonably
28
practicable after the Effective Time, and in any event within 30 days after the
Effective Time, and intends to maintain the effectiveness of such registration
statement thereafter for so long as any of such options or other rights remain
outstanding.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Yahoo! will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of
xxxxxxxxx.xxx pursuant to any indemnification agreements between xxxxxxxxx.xxx
and its directors and officers as of the Effective Time (the "INDEMNIFIED
PARTIES") and any indemnification provisions under xxxxxxxxx.xxx's Certificate
of Incorporation or Bylaws as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Certificate of
Incorporation and Bylaws of xxxxxxxxx.xxx as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the Effective Time,
were directors, officers, employees or agents of xxxxxxxxx.xxx, unless such
modification is required by law.
(b) For a period of three years after the Effective Time, Yahoo! will cause
the Surviving Corporation to use its commercially reasonable efforts to maintain
in effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by xxxxxxxxx.xxx's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of xxxxxxxxx.xxx; PROVIDED, HOWEVER, that in
no event will Yahoo! or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by xxxxxxxxx.xxx for such
coverage (or such coverage as is available for such 150% of such annual
premium).
(c) This Section 5.10 shall survive the consummation of the Merger, is
intended to benefit xxxxxxxxx.xxx, the Surviving Corporation and each
indemnified party, shall be binding on all successors and assigns of the
Surviving Corporation and Yahoo!, and shall be enforceable by the indemnified
parties.
5.11 NASDAQ LISTING. Yahoo! agrees to authorize for listing on the Nasdaq
Stock Market the shares of Yahoo! Common Stock issuable, and those required to
be reserved for issuance, in connection with the Merger, upon official notice of
issuance
5.12 AFFILIATE AGREEMENTS. In addition to those xxxxxxxxx.xxx Affiliate
Agreements executed and delivered to Yahoo! concurrently with the execution of
this Agreement, xxxxxxxxx.xxx will use its commercially reasonable efforts to
deliver or cause to be delivered to Yahoo!, as promptly as practicable on or
following the date hereof, from each additional xxxxxxxxx.xxx Affiliate an
executed xxxxxxxxx.xxx Affiliate Agreement, each of which will be in full force
and effect as of the Effective Time. Yahoo! will use its commercially reasonable
efforts to deliver or cause to be delivered, as promptly as practicable
following the date hereof, from each Yahoo! Affiliate an executed affiliate
agreement in substantially the form attached hereto as EXHIBIT D (the "YAHOO!
AFFILIATE AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Yahoo! will be entitled to place appropriate legends on the
certificates evidencing any Yahoo! Common Stock to be received by a
xxxxxxxxx.xxx Affiliate pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Yahoo!
Common Stock, consistent with the terms of the xxxxxxxxx.xxx Affiliate
Agreement.
5.13 COMPANY STOCK OPTION.
(a) GRANT OF XXXXXXXXX.XXX STOCK OPTION. Subject to the terms of Section
7.3(d), xxxxxxxxx.xxx hereby grants to Yahoo! an irrevocable option (the
"XXXXXXXXX.XXX STOCK OPTION") to purchase for $130.02 per share (the "EXERCISE
PRICE") in cash up to 7,333,300 shares of xxxxxxxxx.xxx Common Stock.
(b) TERM OF XXXXXXXXX.XXX STOCK OPTION. Yahoo! may exercise the
xxxxxxxxx.xxx Stock Option, in whole or in part, at any time or from time to
time on the date (the "EXERCISE COMMENCEMENT DATE") and
29
from the time contemporaneously with the time at which a Triggering Event (as
such term is defined in Section 7.1) shall have occurred or on which this
Agreement shall be terminated in the circumstances contemplated by Section
7.1(d), until the day (the "OPTION TERMINATION DATE") which is the earlier of
(i) the Effective Time or (ii) 270 days after the termination of this Agreement.
(c) CONDITIONS TO PURCHASE. Yahoo! may purchase shares of xxxxxxxxx.xxx
Common Stock pursuant to the xxxxxxxxx.xxx Stock Option only if all of the
following conditions are satisfied: (i) Yahoo! is not at the time of purchase in
material breach of its obligations under this Agreement, (ii) no preliminary or
permanent injunction or other order, decree or ruling against the sale or
delivery of the shares of xxxxxxxxx.xxx Common Stock issued by any federal or
state court of competent jurisdiction in the United States is in effect at such
time, and (iii) any applicable waiting period under the HSR Act shall have
expired or been terminated at or prior to such time.
(d) EXERCISE OF STOCK OPTION. If Yahoo! wishes to exercise the
xxxxxxxxx.xxx Stock Option, it shall do so by giving xxxxxxxxx.xxx notice to
such effect, specifying the number of Shares to be purchased and a place and
date not earlier than one business day nor later than ten business days from the
date such notice is given for the closing of the purchase. If any such closing
cannot be consummated on the date specified by Yahoo! in its notice of election
to exercise the xxxxxxxxx.xxx Stock Option because any condition to the purchase
of shares of xxxxxxxxx.xxx Common Stock has not been satisfied or as a result of
any restriction arising under any applicable law or regulation, the date for
such closing shall be on such date within five days following the satisfaction
of all such conditions and the cessation of all such restrictions as Yahoo! may
specify. Yahoo! represents and warrants to xxxxxxxxx.xxx that any shares of
xxxxxxxxx.xxx Common Stock acquired upon exercise of the xxxxxxxxx.xxx Stock
Option will be acquired for Yahoo!'s own account, and will not be, and the
xxxxxxxxx.xxx Stock Option is not being, acquired by Yahoo! with a view to the
distribution thereof in violation of any applicable provision of the Securities
Act. Yahoo! has such knowledge and experience in business and financial matters
as to be capable of utilizing the information which is available to Yahoo! to
evaluate the merits and risks of an investment by Yahoo! in the xxxxxxxxx.xxx
Common Stock and Yahoo! is able to bear the economic risks of any investment in
the xxxxxxxxx.xxx Common Stock which Yahoo! may acquire upon exercise of the
xxxxxxxxx.xxx Stock Option.
(e) PAYMENT AND DELIVERY OF SHARES. At any closing in connection with the
xxxxxxxxx.xxx Stock Option, (i) Yahoo! shall make payment to xxxxxxxxx.xxx of
the aggregate purchase price for the shares of xxxxxxxxx.xxx Common Stock to be
purchased by delivery to xxxxxxxxx.xxx of a certified, cashier's or bank check
payable to the order of xxxxxxxxx.xxx or, if mutually agreed, by wire transfer
of funds to an account designated by xxxxxxxxx.xxx, and (ii) xxxxxxxxx.xxx shall
deliver to Yahoo! a certificate or certificates representing the shares so
purchased, registered in the name of Yahoo! or its designee. Certificates for
xxxxxxxxx.xxx Common Stock delivered at any closing may be endorsed with a
restrictive legend that shall read substantially as follows: "The transfer of
the shares represented by this certificate is subject to certain provisions of
an agreement between the registered holder hereof and xxxxxxxxx.xxx, a copy of
which agreement is on file at the principal office of xxxxxxxxx.xxx, and to
resale restrictions arising under the Securities Act of 1933, as amended. A copy
of the aforementioned agreement will be mailed to the holder without charge
promptly after receipt by xxxxxxxxx.xxx of a written request therefor." In
addition, the certificates shall bear any other legend as may be required by
applicable law.
(f) CERTAIN ADJUSTMENTS. In the event of any change in xxxxxxxxx.xxx's
capital stock by reason of stock dividends, stock splits, mergers,
consolidations, recapitalizations, combinations, conversions, exchanges of
shares, extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of xxxxxxxxx.xxx which would have the effect of
diluting or changing Yahoo!'s rights hereunder, the number and kind of shares of
xxxxxxxxx.xxx Common Stock subject to the xxxxxxxxx.xxx Stock Option and the
purchase price per Share (but not the total purchase price) shall be
appropriately and equitably adjusted so that Yahoo! shall receive upon exercise
of the xxxxxxxxx.xxx Stock Option the number and class of shares of
xxxxxxxxx.xxx Common Stock or other securities or property that Yahoo!
30
would have received in respect of the shares purchasable upon exercise of the
xxxxxxxxx.xxx Stock Option if the xxxxxxxxx.xxx Stock Option had been exercised
immediately prior to such event.
(g) SURRENDER RIGHT. At any time or from time to time after the Exercise
Commencement Date and prior to the Option Termination Date, Yahoo! may, at its
election, upon two business days' notice to xxxxxxxxx.xxx, surrender all or a
part of the xxxxxxxxx.xxx Stock Option to xxxxxxxxx.xxx, in which event
xxxxxxxxx.xxx shall pay to Yahoo!, on the day of each such surrender and in
consideration thereof, against tender by Yahoo! of an instrument evidencing such
surrender, an amount in cash per share of xxxxxxxxx.xxx Common Stock the rights
to which are surrendered equal to (i) the closing sale price of the
xxxxxxxxx.xxx's Common Stock on the Nasdaq Stock Market on the date of surrender
(or the closing price as reported by any other applicable securities exchange if
not listed on the Nasdaq Stock Market), or if not actively traded, the fair
market value as determined by investment bankers chosen by Yahoo! over (ii) the
Exercise Price. Upon exercise of its right to surrender the xxxxxxxxx.xxx Stock
Option or any portion thereof and the receipt by Yahoo! of cash pursuant to this
Section 5.13(g), any and all rights of Yahoo! to purchase shares of
xxxxxxxxx.xxx Common Stock with respect to the portion of the xxxxxxxxx.xxx
Stock Option surrendered pursuant to this Section shall be terminated.
(h) LISTING AND RESERVATION OF SHARES; NOTIFICATION OF RECORD DATES.
(i) Promptly after the date hereof, and from time to time thereafter if
necessary, xxxxxxxxx.xxx will apply to list all of the shares of xxxxxxxxx.xxx
Common Stock subject to the xxxxxxxxx.xxx Stock Option on the Nasdaq Stock
Market and will use its best efforts to obtain approval of such listing as soon
as practicable.
(ii) Xxxxxxxxx.xxx has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof until such time as the obligation to deliver shares of xxxxxxxxx.xxx
Common Stock upon the exercise of the xxxxxxxxx.xxx Stock Option terminates,
will have reserved for issuance, upon any exercise of the xxxxxxxxx.xxx Stock
Option, the number of shares of xxxxxxxxx.xxx Common Stock subject to the
xxxxxxxxx.xxx Stock Option (less the number of shares previously issued upon any
partial exercise of the xxxxxxxxx.xxx Stock Option or as to which the
xxxxxxxxx.xxx Stock Option may no longer be exercised).
(iii) Xxxxxxxxx.xxx shall give Yahoo! at least ten days' prior written notice
before setting the record date for determining the holders of record of shares
of xxxxxxxxx.xxx Common Stock entitled to notice of, or to vote on, any matter,
to receive any dividend or distribution or to participate in any rights offering
or other matter, or to receive any other benefit or right, with respect to
shares of xxxxxxxxx.xxx Common Stock.
(i) REGISTRATION OF THE SHARES.
(i) If Yahoo! requests xxxxxxxxx.xxx in writing to register under the
Securities Act any of the shares of xxxxxxxxx.xxx Common Stock owned by Yahoo!,
xxxxxxxxx.xxx will use its best efforts to cause the offering of the shares so
specified in such request to be registered as soon as practicable so as to
permit the sale or other distribution by Yahoo! of the shares specified in its
request (and to keep such registration in effect for a period of at least 90
days), and in connection therewith prepare and file as promptly as reasonably
possible (but in no event later than 60 days from receipt of Yahoo!'s request) a
registration statement under the Securities Act to effect such registration on
an appropriate form, which would permit the sale of the shares of xxxxxxxxx.xxx
Common Stock by Yahoo! in the manner specified by Yahoo! in its request.
Xxxxxxxxx.xxx shall not be obligated to make effective more than two
registration statements pursuant to the foregoing sentence. Upon written notice
to Yahoo!, xxxxxxxxx.xxx may postpone effecting a registration pursuant to this
Section 5.13 on one occasion during any period of six consecutive months for a
reasonable time specified in the notice but not exceeding 90 days (which period
may not be extended or renewed) if (1) an investment banking firm of recognized
national standing shall advise xxxxxxxxx.xxx and Yahoo! in writing that
effecting the registration would materially and adversely affect an offering of
31
securities of xxxxxxxxx.xxx the preparation of which had then been commenced, or
(2) xxxxxxxxx.xxx is in possession of material non-public information the
disclosure of which during the period specified in such notice xxxxxxxxx.xxx
believes, in its reasonable judgment, would not be in the best interests of
xxxxxxxxx.xxx. The obligations of xxxxxxxxx.xxx under this Section 5.13(i)(i)
shall terminate at such time as Yahoo! may sell all shares of xxxxxxxxx.xxx
Common Stock without restriction under Rule 144 (k).
(ii) Xxxxxxxxx.xxx shall notify Yahoo! in writing not less than ten days
prior to filing a registration statement under the Securities Act (other than a
filing on Form S-4 or S-8) with respect to any shares of xxxxxxxxx.xxx Common
Stock of xxxxxxxxx.xxx's intention so to file. If Yahoo! wishes to have any
portion of its shares of xxxxxxxxx.xxx Common Stock included in such
registration statement, it shall advise xxxxxxxxx.xxx in writing to that effect
within two business days following receipt of such notice, and xxxxxxxxx.xxx
will thereupon include the number of shares of xxxxxxxxx.xxx Common Stock
indicated by Yahoo! under such Registration Statement. If such registration
involves an underwritten public offering and the managing underwriter shall
advise xxxxxxxxx.xxx and Yahoo! that in its view the number of shares of
xxxxxxxxx.xxx Common Stock requested to be included in such registration
(including any securities which xxxxxxxxx.xxx proposes to be included) exceeds
the largest number of shares which can be sold without having an adverse effect
on such offering, including the price at which such shares can be sold (the
"MAXIMUM OFFERING SIZE"), xxxxxxxxx.xxx will include in such registration, up to
the Maximum Offering Size, first, all securities proposed to be registered by
xxxxxxxxx.xxx, and second, shares of xxxxxxxxx.xxx Common Stock requested to be
registered by Yahoo!.
(iii) Xxxxxxxxx.xxx shall pay all fees and expenses in connection with any
registration pursuant to this Section 5.13 other than underwriting discounts and
commissions to brokers or dealers and shall indemnify Yahoo!, its officers,
directors, agents, other controlling persons and any underwriters retained by
Yahoo! in connection with such sale of such shares of xxxxxxxxx.xxx Common Stock
in the customary way, and agree to customary contribution provisions with such
persons, with respect to claims, damages, losses and liabilities (and any
expenses relating thereto) arising (or to which Yahoo!, its officers, directors,
agents, other controlling persons or underwriters may be subject) in connection
with any such offer or sale under the federal securities laws or otherwise,
except for information furnished in writing by Yahoo! or its underwriters to
xxxxxxxxx.xxx. Yahoo! and its underwriters, respectively, shall indemnify
xxxxxxxxx.xxx to the same extent with respect to information furnished in
writing to xxxxxxxxx.xxx by Yahoo! and such underwriters.
5.14 LETTER OF XXXXXXXXX.XXX'S ACCOUNTANTS. Xxxxxxxxx.xxx shall use all
reasonable efforts to cause to be delivered to Yahoo! a letter of
PricewaterhouseCoopers LLP, dated no more than two (2) business days before the
date on which the Registration Statement becomes effective (and reasonably
satisfactory in form and substance to Yahoo!), that is customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) XXXXXXXXX.XXX STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of xxxxxxxxx.xxx.
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(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC shall
have declared the Registration Statement effective. No stop order suspending
the effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement/Prospectus, shall have been
initiated or threatened in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early and
all material foreign antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby shall
have been obtained.
(d) TAX OPINIONS. Yahoo! and xxxxxxxxx.xxx shall each have received
written opinions from their respective tax counsel (Venture Law Group, A
Professional Corporation, and Xxxxxx, Xxxx & Xxxxxxxx LLP, respectively), in
form and substance reasonably satisfactory to them, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code and such opinions shall not have been withdrawn; PROVIDED,
HOWEVER, that if the counsel to either Yahoo! or xxxxxxxxx.xxx does not
render such opinion, this condition shall nonetheless be deemed to be
satisfied with respect to such party if counsel to the other party renders
such opinion to such party. The parties to this Agreement agree to make
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) NASDAQ LISTING. The shares of Yahoo! Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq Stock Market.
(f) OPINION OF ACCOUNTANTS. Yahoo! shall have received letters from
PricewaterhouseCoopers LLP, dated within two (2) business days prior to the
Effective Time, regarding that firm's concurrence with Yahoo!'s management's
and xxxxxxxxx.xxx's management's conclusions as to the appropriateness of
pooling of interest accounting for the Merger under Accounting Principles
Board Opinion No. 16, if the Merger is consummated in accordance with this
Agreement; provided, however, that this condition shall be deemed waived by
xxxxxxxxx.xxx in the event that any action taken by, or omitted to be taken
by, xxxxxxxxx.xxx or any of its stockholders, employees or affiliates shall
have been the proximate cause of the inability of Yahoo! to account for the
Merger as a pooling of interests.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF XXXXXXXXX.XXX. The obligation
of xxxxxxxxx.xxx to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by
xxxxxxxxx.xxx:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Yahoo! and Merger Sub contained in this Agreement (i) shall have been
true and correct in all material respects as of the date of this Agreement,
and (ii) shall be true and correct on and as of the Closing Date with the
same force and effect as if made on the Closing Date except (A) in each
case, or in the aggregate, as does not constitute a Material Adverse Effect
on Yahoo! and Merger Sub, (B) for changes contemplated by this Agreement,
and (C) for those representations and warranties which address matters only
as of a particular date (which representations shall have been true and
correct except as does not constitute a Material Adverse Effect on Yahoo!
and Merger Sub as of such particular date) (it being understood that, for
purposes of determining the accuracy of such representations and warranties
for purposes of clause (ii), (1) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded, and (2) any update of or modification to the Yahoo! Disclosure
Letter made or purported to have been made after the date of this Agreement
shall be disregarded). Xxxxxxxxx.xxx shall have received
33
a certificate with respect to the foregoing signed on behalf of Yahoo! by an
authorized officer of Yahoo!.
(b) AGREEMENTS AND COVENANTS. Yahoo! and Merger Sub 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
them on or prior to the Closing Date, and xxxxxxxxx.xxx shall have received
a certificate to such effect signed on behalf of Yahoo! by an authorized
officer of Yahoo!.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF YAHOO! AND MERGER SUB. The
obligations of Yahoo! and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Yahoo!:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of xxxxxxxxx.xxx contained in this Agreement (i) shall have been true and
correct in all material respects as of the date of this Agreement, and (ii)
shall be true and correct on and as of the Closing Date with the same force
and effect as if made on and as of the Closing Date except (A) in each case,
or in the aggregate, as does not constitute a Material Adverse Effect on
xxxxxxxxx.xxx, (B) for changes contemplated by this Agreement, and (C) for
those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct
except as does not constitute a Material Adverse Effect on xxxxxxxxx.xxx as
of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (1) all
"Material Adverse Effect" qualifications and other qualifications based on
the word "material" or similar phrases contained in such representations and
warranties shall be disregarded, and (2) any update of or modification to
the xxxxxxxxx.xxx Disclosure Letter made or purported to have been made
after the date of this Agreement shall be disregarded). Yahoo! shall have
received a certificate with respect to the foregoing signed on behalf of
xxxxxxxxx.xxx by an authorized officer of xxxxxxxxx.xxx.
(b) AGREEMENTS AND COVENANTS. Xxxxxxxxx.xxx 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 at or prior to the
Closing Date, and Yahoo! shall have received a certificate to such effect
signed on behalf of xxxxxxxxx.xxx by the Chief Executive Officer and the
Chief Financial Officer of xxxxxxxxx.xxx.
(c) AFFILIATE AGREEMENTS. Each of the xxxxxxxxx.xxx Affiliates shall
have entered into the xxxxxxxxx.xxx Affiliate Agreement and each of such
agreements will be in full force and effect as of the Effective Time.
(d) NONCOMPETITION AGREEMENTS. Each of the Noncompetition Agreements
entered into concurrently with the execution of this Agreement shall remain
in full force and effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of xxxxxxxxx.xxx or Yahoo!:
(a) by mutual written consent duly authorized by the Boards of Directors
of Yahoo! and xxxxxxxxx.xxx;
(b) by either xxxxxxxxx.xxx or Yahoo! if the Merger shall not have been
consummated by October 31, 1999, for any reason; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach by such party of
this Agreement;
34
(c) by either xxxxxxxxx.xxx or Yahoo! if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final
and nonappealable;
(d) by either xxxxxxxxx.xxx or Yahoo! if the required approval of the
stockholders of xxxxxxxxx.xxx contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at a
meeting of xxxxxxxxx.xxx stockholders duly convened therefor or at any
adjournment thereof (provided that the right to terminate this Agreement
under this Section 7.1(d) shall not be available to xxxxxxxxx.xxx where the
failure to obtain xxxxxxxxx.xxx stockholder approval shall have been caused
by the action or failure to act of xxxxxxxxx.xxx and such action or failure
to act constitutes a breach by xxxxxxxxx.xxx of this Agreement);
(e) by Yahoo! if a Triggering Event (as defined below) shall have
occurred.
(f) by xxxxxxxxx.xxx, upon a breach of any representation, warranty,
covenant or agreement on the part of Yahoo! set forth in this Agreement, or
if any representation or warranty of Yahoo! shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(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, PROVIDED that
if such inaccuracy in Yahoo!'s representations and warranties or breach by
Yahoo! is curable by Yahoo! through the exercise of its commercially
reasonable efforts, then xxxxxxxxx.xxx may not terminate this Agreement
under this Section 7.1(f) for twenty (20) days after delivery of written
notice from xxxxxxxxx.xxx to Yahoo! of such breach, provided Yahoo!
continues to exercise commercially reasonable efforts to cure such breach
(it being understood that xxxxxxxxx.xxx may not terminate this Agreement
pursuant to this Section 7.1(f) if it shall have materially breached this
Agreement or if such breach by Yahoo! is cured during such 20-day period and
PROVIDED that such cure shall be completed on or prior to October 31, 1999);
or
(g) by Yahoo!, upon a breach of any representation, warranty, covenant
or agreement on the part of xxxxxxxxx.xxx set forth in this Agreement, or if
any representation or warranty of xxxxxxxxx.xxx shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(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, PROVIDED that
if such inaccuracy in xxxxxxxxx.xxx's representations and warranties or
breach by xxxxxxxxx.xxx is curable by xxxxxxxxx.xxx through the exercise of
its commercially reasonable efforts, then Yahoo! may not terminate this
Agreement under this Section 7.1(g) for twenty (20) days after delivery of
written notice from Yahoo! to xxxxxxxxx.xxx of such breach, provided
xxxxxxxxx.xxx continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Yahoo! may not terminate this
Agreement pursuant to this Section 7.1(g) if it shall have materially
breached this Agreement or if such breach by xxxxxxxxx.xxx is cured during
such 20-day period and PROVIDED that such cure shall be completed on or
prior to October 31, 1999).
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be deemed
to have occurred if: (i) the Board of Directors of xxxxxxxxx.xxx or any
committee thereof having authority to bind the Board shall for any reason
have withdrawn or shall have amended or modified in a manner adverse to
Yahoo! its recommendation in favor of the adoption and approval of the
Agreement or the approval of the Merger; (ii) xxxxxxxxx.xxx shall have
failed to include in the Proxy Statement/Prospectus the recommendation of
the Board of Directors of xxxxxxxxx.xxx in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the Board of
Directors of xxxxxxxxx.xxx fails to reaffirm its recommendation in favor of
the adoption and approval of the Agreement and the approval of the Merger
within 15 business days after Yahoo! requests in writing that such
recommendation be reaffirmed at any time following the public announcement
of an Acquisition Proposal; (iv) the Board of Directors of xxxxxxxxx.xxx or
any committee thereof having authority to bind the
35
Board shall have approved or publicly recommended any Acquisition Proposal;
(v) xxxxxxxxx.xxx shall have entered into any letter of intent of similar
document or any agreement, contract or commitment accepting any Acquisition
Proposal; (vi) a tender or exchange offer relating to securities of
xxxxxxxxx.xxx in excess of 50% of its outstanding voting securities shall
have been commenced by a person unaffiliated with Yahoo! and xxxxxxxxx.xxx
shall have sent to its stockholders pursuant to Rule 14e-2 promulgated under
the Exchange Act a statement disclosing that xxxxxxxxx.xxx recommends
acceptance of such tender or exchange offer; or (vii) xxxxxxxxx.xxx shall
have intentionally breached its obligations under Section 5.4.
7.2 NOTICE OF TERMINATION EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect and there shall be no
liability hereunder on the part of xxxxxxxxx.xxx, Yahoo!, Merger Sub or their
respective officers or directors, except (i) as set forth in this Section 7.2,
Section 7.3 and Article VIII (Miscellaneous), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful or intentional breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Yahoo! and
xxxxxxxxx.xxx shall share equally all fees and expenses, other than attorneys'
and accountants fees and expenses, incurred in relation to the printing and
filing with the SEC of the Proxy Statement/Prospectus (including any preliminary
materials related thereto) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto.
(b) XXXXXXXXX.XXX PAYMENTS. In the event that this Agreement is terminated
by Yahoo! pursuant to Section 7.1(e), xxxxxxxxx.xxx shall promptly, but in no
event later than one day after the date of such termination, pay Yahoo! a fee
equal to $135,000,000 in immediately available funds (the "TERMINATION FEE"). In
addition, in the event that this Agreement is terminated by Yahoo! or
xxxxxxxxx.xxx, as the case may be, pursuant to Section 7.1(d) and prior to the
vote of xxxxxxxxx.xxx stockholders at the xxxxxxxxx.xxx Stockholders' Meeting an
Acquisition Proposal shall have been publicly announced, xxxxxxxxx.xxx shall
promptly, but in no event later than one day after the date of such termination,
pay Yahoo! a amount equal to Yahoo!'s documented expenses incurred in connection
with the transactions contemplated by this Agreement, and furthermore, in the
event that within 270 days following such termination xxxxxxxxx.xxx shall enter
into a definitive agreement with respect to an Acquisition Transaction (defined
for this purpose to substitute "50%" for the references to "30%" and "70%" in
the definition set forth in Section 5.4(a)) or shall consummate an Acquisition
Transaction (defined for this purpose to substitute "50%" for the references to
"30%" and "70%" in the definition set forth in Section 5.4(a)) with a third
party, xxxxxxxxx.xxx shall contemporaneously with such execution or
consummation, as the case may be, pay Yahoo! a fee equal to the Termination Fee.
xxxxxxxxx.xxx acknowledges that the agreements contained in this Section 7.3(b)
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Yahoo! would not enter into this Agreement;
accordingly, if xxxxxxxxx.xxx fails promptly to pay the amounts due pursuant to
this Section 7.3(b), and, in order to obtain such payment, Yahoo! commences a
suit which results in a judgment against xxxxxxxxx.xxx for the amounts set forth
in this Section 7.3(b), xxxxxxxxx.xxx shall pay to Yahoo! its reasonable costs
and expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on the amounts set forth in this Section 7.3(b) at
the prime rate of The Chase Manhattan Bank in effect on the date such payment
was required to be made.
36
(c) Payment of the fees described in Section 7.3(b) above shall not be in
lieu of damages incurred in the event of a willful or intentional breach of this
Agreement.
(d) Notwithstanding any provision of this Agreement to the contrary, the
"Total Proceeds" (as hereinafter defined) that Yahoo! shall be permitted to
realize in respect of the Termination Fee and the xxxxxxxxx.xxx Stock Option
shall not exceed $165,000,000. In the event Yahoo!'s Total Proceeds would exceed
such amount, Yahoo! shall, at its sole election, (a) reduce the number of shares
of xxxxxxxxx.xxx Common Stock subject to the xxxxxxxxx.xxx Stock Option, (b)
deliver shares of xxxxxxxxx.xxx Common Stock received upon an exercise of the
xxxxxxxxx.xxx Stock Option to xxxxxxxxx.xxx for cancellation, (c) pay an amount
of cash to xxxxxxxxx.xxx, or (d) do any combination of the foregoing so that
Yahoo!'s actual realized Total Proceeds shall not exceed $165,000,000. "TOTAL
PROCEEDS" shall mean the aggregate (before taxes) of (i) any amount received
pursuant to xxxxxxxxx.xxx's repurchase of that xxxxxxxxx.xxx Stock Option (or
any portion thereof), (ii) any amount received pursuant to xxxxxxxxx.xxx's
repurchase of the shares of xxxxxxxxx.xxx Common Stock (less the purchase price
for such shares), (iii) any net cash received pursuant to the sale of shares of
xxxxxxxxx.xxx Common Stock received by Yahoo! in any exercise of the
xxxxxxxxx.xxx Stock Option to any third party (less the purchase price of such
shares), (iv) any amounts received on transfer of the xxxxxxxxx.xxx Stock Option
or any portion thereof to a third party, (v) any equivalent amounts received
with respect to the xxxxxxxxx.xxx Stock Option adjusted pursuant to Section
5.13(f), and (vi) the Termination Fee actually paid.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Yahoo!, Merger Sub and xxxxxxxxx.xxx.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of xxxxxxxxx.xxx, Yahoo! and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Yahoo! or Merger Sub, to:
Yahoo! Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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with a copy at the same address to the attention of the General
Counsel and Secretary and with a copy to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to xxxxxxxxx.xxx, to:
xxxxxxxxx.xxx inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.3 INTERPRETATION; CERTAIN DEFINED TERMS.
(a) When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. When a
reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATIONS." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
(b) For purposes of this Agreement the term "KNOWLEDGE" means with respect
to a party hereto, with respect to any matter in question, that any of the
executive officers of such party has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT" when
used in connection with a party hereto means any change, event, circumstance or
effect that is materially adverse to the business, assets (including intangible
assets), capitalization, financial condition or results of operations of such
party and its subsidiaries taken as a whole, except (i) any continued or
increased operating losses (provided that obligations of xxxxxxxxx.xxx set forth
in Section 4.1 are complied with) or (ii) to the extent that any such change,
event or effect is attributable to or results from (w) the direct effect of the
public announcement or pendency of the transactions contemplated hereby on
current or prospective customers or revenues of xxxxxxxxx.xxx, (x) changes in
general economic conditions or changes affecting the industry generally in which
such party operates, (y) changes in trading prices for such party's capital
stock, or (z) stockholder class action litigation arising from allegations of a
breach of fiduciary duty of the
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xxxxxxxxx.xxx Board of Directors relating to this Agreement; PROVIDED, HOWEVER,
that with respect to clause (ii)(w) of this sentence, xxxxxxxxx.xxx shall bear
the burden of proof in any proceeding with regard to establishing that any
change, event, circumstance or effect is attributable to or results from the
direct effect of the public announcement or pendency of the transactions
contemplated hereby.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, xxxxxxxxx.xxx (including any limited liability xxxxxxxxx.xxx or
joint stock xxxxxxxxx.xxx), firm or other enterprise, association, organization,
entity or Governmental Entity.
(e) For purposes of this Agreement, "SUBSIDIARY" of a specified entity will
be any corporation, partnership, limited liability xxxxxxxxx.xxx, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, fifty percent
(50%) or more of the stock or other equity or partnership interests the holders
of which are generally entitled to vote for the election of the Board of
Directors or other governing body of such corporation or other legal entity.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by facsimile, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the xxxxxxxxx.xxx Disclosure
Letter and the Yahoo! Disclosure Letter (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law,
39
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF YAHOO!, XXXXXXXXX.XXX AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF YAHOO!, XXXXXXXXX.XXX OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
YAHOO! INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------------
Title: Chairman and Chief Executive
Officer
---------------------------------
ALAMO ACQUISITION CORP.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------------
Title: President
---------------------------------
XXXXXXXXX.XXX INC.
By: /s/ XXXX XXXXXX
-----------------------------------
Name: Xxxx Xxxxxx
---------------------------------
Title: Chief Executive Officer
---------------------------------
**** AGREEMENT AND PLAN OF MERGER ****
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