AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TICKETMASTER ONLINE-CITYSEARCH, INC.,
TMCS MERGER SUB, INC.
AND
TICKETWEB INC.
MAY 23, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS........................................................1
1.1. Defined Terms................................................1
1.2. Terms Defined Elsewhere......................................8
ARTICLE II. THE MERGER.......................................................10
2.1. The Merger..................................................10
2.2. Effective Time..............................................10
2.3. Closing of the Merger.......................................10
2.4. Effects of the Merger.......................................10
2.5. Certificate of Incorporation and Bylaws.....................10
2.6. Directors...................................................11
2.7. Officers....................................................11
2.8. Conversion of Shares........................................11
2.9. Appraisal Rights............................................14
2.10. Distribution of the Merger Consideration....................14
2.11. Form of Consideration.......................................16
2.12. Adjustment Events...........................................16
2.13. Additional Post-Closing Adjustments.........................16
2.14. Tax and Accounting Consequences.............................17
ARTICLE III. CLOSING DELIVERIES..............................................18
3.1. Deliveries by the Company at the Closing....................18
3.2. Deliveries by Parent and Merger Sub at the Closing..........18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................19
4.1. Organization of the Company.................................19
4.2. Subsidiaries................................................19
4.3. Authorization...............................................19
4.4. Capitalization..............................................20
4.5. Title to Properties and Assets..............................20
4.6. Absence of Certain Activities...............................21
4.7. Certain Actions.............................................21
4.8. Material Contracts..........................................22
4.9. Compliance with Other Instruments...........................22
4.10. Financial Statements........................................23
4.11. Liabilities.................................................23
4.12. Taxes ...................................................23
4.13. Environmental Matters.......................................26
4.14. Employee Benefits...........................................26
4.15. Compliance with Law.........................................27
4.16. Permits.....................................................27
4.17. Consents and Approvals......................................27
i
4.18. Litigation..................................................28
4.19. Labor Matters...............................................28
4.20. Software....................................................28
4.21. Intellectual Property.......................................29
4.22. Transactions with Certain Persons...........................34
4.23. Insurance...................................................34
4.24. Accounts Receivable.........................................34
4.25. Customers...................................................34
4.26. Certain Business Practices..................................35
4.27. No Brokers..................................................35
4.28. Material Misstatements or Omissions.........................35
4.29. Books and Records...........................................35
4.30. Bank Accounts...............................................35
4.31. Exemption from HSR Act......................................36
4.32. Other Commitments...........................................36
4.33. Tax-Free Reorganization.....................................36
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........36
5.1. Organization of Parent and Merger Sub.......................36
5.2. Authorization...............................................36
5.3. Compliance with Other Instruments...........................37
5.4. Consents and Approvals......................................37
5.5. No Prior Activities.........................................37
5.6. Litigation..................................................37
5.7. Public Documents; Parent's Financial Statements.............38
5.8. No Brokers..................................................38
5.9. Valid Issuance of Stock.....................................38
5.10. Tax Matters.................................................38
ARTICLE VI. COVENANTS OF ALL PARTIES.........................................39
6.1. Conduct of Business.........................................39
6.2. Investigation by Parent.....................................40
6.3. Further Assurances..........................................41
6.4. Ancillary Agreements........................................41
6.5. Notification of Certain Matters.............................41
6.6. Employee Matters............................................42
6.7. Public Announcements........................................43
6.8. Restrictions on Transfer....................................43
6.9. Registration Statements.....................................43
6.10. Options and Warrants........................................48
6.11. Indebtedness................................................49
6.12. Reorganization Treatment....................................50
6.13. Continuation of Indemnification.............................50
6.14. Transfer of TicketWeb UK Shares.............................50
ii
ARTICLE VII. CONDITIONS TO OBLIGATIONS..............................................................51
7.1. Conditions to Each Party's Obligations to Effect the Merger........................51
7.2. Conditions to the Company's Obligations to Effect the Merger.......................51
7.3. Conditions to the Obligations of Parent and Merger Sub to Effect the Merger........52
ARTICLE VIII. TERMINATION...........................................................................55
8.1. Termination........................................................................55
8.2. Effect of Termination..............................................................56
ARTICLE IX. INDEMNIFICATION.........................................................................56
9.1. Survival of Representations........................................................56
9.2. Indemnification....................................................................57
9.3. Notice of Claims...................................................................58
9.4. Third Person Claims................................................................59
9.5. Limitation on Indemnity............................................................59
9.6. Payment out of Escrow Account......................................................60
9.7. Remedies...........................................................................60
ARTICLE X. MISCELLANEOUS............................................................................61
10.1. Binding Effect; Assignment.........................................................61
10.2. Notices 61
10.3. Choice of Law......................................................................62
10.4. Entire Agreement; Amendments and Waivers...........................................62
10.5. Counterparts.......................................................................62
10.6. Severability.......................................................................62
10.7. Headings...........................................................................63
10.8. Schedules..........................................................................63
10.9. No Third Party Beneficiaries.......................................................63
10.10. Specific Performance...............................................................63
10.11. No Strict Construction.............................................................63
10.12. Expenses...........................................................................63
10.13. Stockholders' Representatives......................................................63
iii
LIST OF EXHIBITS
Exhibit A Form of Stockholder Support Agreement
Exhibit B Form of Consulting Agreement
Exhibit C Form of Employment Agreement
Exhibit D Form of Escrow Agreement
Exhibit E Form of Non-Competition Agreement
Exhibit F Employee Compensation Levels
Exhibit G Form of Employee Notice
Exhibit H Form of Executive Option Agreement
Exhibit I Form of Employee Option Agreement
Exhibit J Form of Opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP
Exhibit K Form of Opinion of Venture Law Group
Exhibit L Form of Certificate of Merger
Exhibit M Form of Opinion of Morris, Nichols, Arsht & Xxxxxxx
LIST OF SCHEDULES
Schedule I Schedule of Accredited Stockholders
Schedule II Schedule of Non-Accredited Stockholders
Schedule 2.7 Officers of the Surviving Corporation
Schedule 4.2 Subsidiaries
Schedule 4.4 Capitalization
Schedule 4.5 Assets and Property
Schedule 4.6 Absence of Certain Activities
Schedule 4.7 Certain Actions
Schedule 4.8 Material Contracts
Schedule 4.11 Liabilities
Schedule 4.12 Taxes
Schedule 4.14 Employee Benefits
Schedule 4.16 Permits
Schedule 4.17 Consents and Approvals
Schedule 4.18 Litigation
Schedule 4.19 Labor Matters
Schedule 4.21 Intellectual Property
Schedule 4.22 Transactions with Certain Persons
Schedule 4.23 Insurance
Schedule 4.24 Accounts Receivable
Schedule 4.25 Customers
Schedule 4.27 Brokers
Schedule 4.30 Bank Accounts
Schedule 4.32 Other Commitments
Schedule 6.6 Executive Options
Schedule 6.11 Closing Debt
Schedule 6.13 Indemnification Agreements
Schedule 7.3 Liens
iv
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as
of May 23, 2000, is entered into by and among Ticketmaster Online-CitySearch,
Inc., a Delaware corporation ("PARENT"), TMCS Merger Sub, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("MERGER SUB"), and TicketWeb
Inc., a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and
Merger Sub have each (a) determined that the Merger (as defined below) is
advisable and fair and in the best interests of their respective stockholders
and (b) approved the Merger upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, Parent, Merger Sub and the Company intend that the
Merger shall constitute a "reorganization" within the meaning of Section 368 of
the Code (as defined below), and in furtherance thereof intend that this
Agreement shall be 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; and
WHEREAS, the stockholders of the Company identified on
SCHEDULE I have (a) determined that the Merger is advisable and fair and in
their best interests, (b) approved the Merger upon the terms and subject to the
conditions set forth in this Agreement and (c) each executed a Stockholder
Support Agreement with Parent and Merger Sub concurrently herewith, in the form
attached hereto as EXHIBIT A (the "STOCKHOLDER SUPPORT AGREEMENT").
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants
and promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
1.1. DEFINED TERMS. As used herein, the terms below shall have
the following meanings. Any of such terms, unless the context otherwise
requires, may be used in the singular or plural, depending upon the reference.
"ACCREDITED STOCKHOLDERS" means those stockholders of the
Company who the Company believes to be "accredited investors" as that term is
defined in Rule 501 promulgated under the Act (as defined below), as indicated
on SCHEDULE I attached hereto.
1
"ADJUSTED STOCK PRICE" means the Average Stock Price on the
Effective Registration Date; PROVIDED, HOWEVER, that, (a) if the Adjusted Stock
Price is less than ninety percent (90%) of the Initial Stock Price, then the
Adjusted Stock Price shall be deemed to be ninety percent (90%) of the Initial
Stock Price and (b) if the Adjusted Stock Price is greater than one hundred ten
percent (110%) of the Initial Stock Price, then the Adjusted Stock Price shall
be deemed to be one hundred ten percent (110%) of the Initial Stock Price.
"AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
"AGGREGATE ADJUSTED MERGER CONSIDERATION" means, subject to
SECTION 2.11 hereof, the number of Parent Shares determined by DIVIDING (a) the
SUM of (i) the Purchase Price and (ii) the Aggregate Exercise Price by (b) the
Adjusted Stock Price.
"AGGREGATE CASH CONSIDERATION" means the number determined by
ADDING the Cash Consideration (as defined below) payable to each Non-Accredited
Stockholder (as defined below).
"AGGREGATE EXERCISE PRICE" means the aggregate consideration
due upon exercise of In-The-Money Options/Warrants (as defined below).
"AGGREGATE INITIAL MERGER CONSIDERATION" means, subject to
SECTION 2.11 hereof, the number of Parent Shares determined by DIVIDING (a) the
SUM of (i) the Purchase Price and (ii) the Aggregate Exercise Price by (b) the
Initial Stock Price.
"ANCILLARY AGREEMENTS" means the Consulting Agreement, the
Employment Agreements, the Escrow Agreement and the Non-Competition Agreements
substantially in the forms attached hereto as EXHIBITS B, C, D and E
respectively.
"AVERAGE STOCK PRICE" means the average of the closing sales
prices of Parent Shares (as defined below) on the NASDAQ National Market for
each of the seven trading days immediately preceding and including a specified
date (for example, the Closing Date or the Effective Registration Date), as
reported in the Western Edition of THE WALL STREET JOURNAL.
"BUSINESS" means the Company's business of providing
Internet-based box-office ticketing software and services.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in Los Angeles, California are authorized or
required by law to close.
"CLOSING DEBT" means (a) the outstanding long-term Debt (as
defined below) of the Company as set forth on SCHEDULE 6.11, specifically
excluding, among other things, trade payables in the Ordinary Course of Business
and (b) all Transaction Fees (as defined below) of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
2
"COMPANY ACCOUNTANTS" means Xxxxxx Xxxxxxxx LLP.
"COMPANY INTELLECTUAL PROPERTY" means any Intellectual
Property (as defined below) that is owned or used by, is licensed to, or was
developed or created by or for the Company.
"COMPANY MARKS" means all fictional business names, trade
names, trademarks and service marks (whether registered or unregistered,
including any applications for registration of any of the foregoing), logos,
Internet domain names, trade dress rights and general intangibles of a like
nature used by the Company in connection with the operation or conduct of the
Business, including the sale of any products or technology or the provision of
any services by the Company, together with the goodwill associated with any of
the foregoing.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all
Registered Intellectual Property (as defined below) owned by, filed in the name
of, assigned to or applied for by, the Company.
"COMPANY SOFTWARE" means all computer software (including all
source code and object code, and all documentation, including without limitation
all descriptions, programmers' notes, flow-charts, user manuals and other
documentation used in connection with the design, development, use and support
and maintenance of any computer software) that is owned or used by, is licensed
to, or was developed or created by or for the Company, including without
limitation any of the foregoing which is used by the Company in its products or
otherwise in its Business.
"COMPANY TRADE SECRETS" means all proprietary and confidential
information of the Company which constitute trade secrets such as proprietary
and confidential know-how, inventions, discoveries, concepts, ideas, methods,
processes, designs, formulae, technical data, drawings, specifications, and data
bases in each case excluding any of the foregoing to the extent the rights
therein comprise or are protected by copyrights or patents.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement, dated as of April 27, 2000, by and between the Company and Parent.
"CONSENTS" means any and all consents, approvals,
authorizations or waivers of any public, governmental or regulatory body or
authority or from parties to Material Contracts (as defined below) that are (a)
required for the consummation of the transactions contemplated by this Agreement
or (b) necessary in order that the Company can conduct the Business after the
Closing Date substantially in the same manner as the Business was conducted by
the Company before the Closing Date.
"CONSULTING AGREEMENT" means that certain Consulting Agreement
to be entered into at the Closing by and between the Company and Xxxx Xxxxx
("TYLER") substantially in the form attached hereto as EXHIBIT B.
"COURT ORDER" means any judgment, decision, consent decree,
injunction, ruling or order of any federal, state or local court or governmental
agency, department or authority that is binding on any Person or its property
under applicable law.
3
"DEBT" means (a) any indebtedness of the Company, whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or other similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing
capitalized lease obligations, (b) any balance deferred and unpaid of the
purchase price of any property, except any such balance that constitutes an
accrued expense or account payable, in each case referred to in this clause (b)
incurred in the ordinary course of business, (c) all indebtedness of others
secured by a lien on any asset of the Company (whether or not such indebtedness
is assumed by the Company) and (d) to the extent not otherwise included by
clauses (a), (b) and (c), any guaranty by the Company of any indebtedness of any
other Person.
"DEFAULT" means (a) any actual breach or default, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach or default or (c) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration.
"DISCOUNTED STOCK PRICE" means the number determined by
MULTIPLYING (a) the Initial Stock Price by (b) 85%.
"EFFECTIVE REGISTRATION DATE" means the date that is two
Business Days prior to the filing by Parent of a request for acceleration of the
effective date of the S-3 Registration Statement (as defined below) to be filed
by Parent pursuant to SECTION 6.9.
"EMPLOYMENT AGREEMENTS" means those certain Employment
Agreements to be entered into at the Closing by and between the Company and each
of the Executives (as defined below) substantially in the form attached hereto
as EXHIBIT C.
"ESCROWED SHARES" means both the Initial Escrowed Shares and
the Adjusted Escrowed Shares (both as defined below).
"ENCUMBRANCE" means any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, conditional sales
agreement, encumbrance or other right of third parties, whether voluntarily
incurred or arising by operation of law, and includes, without limitation, any
agreement to give any of the foregoing in the future, and any contingent sale or
other title retention agreement or lease in the nature thereof.
"ESCROW AGREEMENT" means that certain escrow agreement to be
entered into at the Closing by and between the Escrow Agent (as defined below),
the Stockholders' Representative (as defined below) and Parent substantially in
the form attached hereto as EXHIBIT D.
"EXECUTIVES" means Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxx and Xxx Teree.
"FINANCIAL STATEMENTS" means (a) the Company's audited balance
sheets dated as of December 31, 1998 and December 31, 1999, (b) the related
statements of operations, changes in shareholders' equity and cash flow for each
of the years ended December 31, 1998 and December 31, 1999 and (c) the March
2000 Balance Sheet (as defined below).
4
"FISCAL YEAR" means a twelve month period commencing on
January 1 of each calendar year.
"GAAP" means generally accepted United States accounting
principles.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"IN-THE-MONEY OPTIONS/WARRANTS" means those Options and
Warrants (both as defined below) that at the Effective Time, after giving effect
to the adjustments provided in SECTION 6.10, have an exercise price per Parent
Share that is less than the Initial Stock Price.
"INITIAL STOCK PRICE" means the Average Stock Price on the
date that is two Business Days prior to the Closing Date; PROVIDED, HOWEVER,
that, (a) if the Initial Stock Price is less than ninety percent (90%) of the
Signing Stock Price, then the Initial Stock Price shall be deemed to be ninety
percent (90%) of the Signing Stock Price and (b) if the Initial Stock Price is
greater than one hundred ten percent (110%) of the Signing Stock Price, then the
Initial Stock Price shall be deemed to be one hundred ten percent (110%) of the
Signing Stock Price.
"INTELLECTUAL PROPERTY" means all trademarks and trademark
rights, trade names and trade name rights, service marks and service xxxx
rights, service names and service name rights, patents and patent rights,
utility models and utility model rights, copyrights, mask work rights, brand
names, trade dress, product designs, product packaging, business and product
names, logos, slogans, rights of publicity, trade secrets, inventions (whether
patentable or not), invention disclosures, improvements, processes, formulae,
industrial models, processes, designs, specifications, technology,
methodologies, software, firmware, development tools, flow charts, annotations,
all Web addresses, sites and domain names, all data bases and data collections
and all rights therein, any other confidential and proprietary right or
information, whether or not subject to statutory registration, and all related
technical information, manufacturing, engineering and technical drawings,
know-how and all pending applications for and registrations of patents, utility
models, trademarks, service marks and copyrights, and the right to xxx for past
infringement, if any, in connection with any of the foregoing, and all
documents, disks, records, files and other media on which any of the foregoing
is stored.
"KNOWLEDGE" of the Company means the knowledge of the
Executives and Tyler, after a reasonable investigation of the surrounding
circumstances.
"LIABILITIES" means any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, known or unknown, and whether
accrued, absolute, contingent, matured, unmatured or other.
"LICENSE" means any contract that grants a Person the right to
use or otherwise enjoy the benefits of any Intellectual Property (including
without limitation any covenants not to xxx with respect to any Intellectual
Property.
"MARCH 2000 BALANCE SHEET" means the consolidated and
unaudited balance sheet of the Company and its Subsidiaries dated as of March
31, 2000.
5
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" will be
deemed to occur if any event, violation, inaccuracy, circumstance or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in this Agreement but
for the presence of "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties) has, or could reasonably be expected to have or give rise to, a
material adverse effect or material adverse change on (a) the condition
(financial or otherwise), business, results of operations, assets, prospects,
Liabilities, capitalization, operations or financial performance of the party
making the representations and warranties, (b) the ability of the Company to
consummate the Merger or any of the other transactions contemplated by this
Agreement or to perform any of its obligations under this Agreement or (c)
Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; PROVIDED, HOWEVER, that in no event shall any event, violation,
inaccuracy, circumstance or other matter that is attributable to or results from
changes in general economic conditions or changes affecting the industry
generally in which the Company operates, in and of itself, constitute a Material
Adverse Effect or Material Adverse Change.
"NON-ACCREDITED COMMON STOCKHOLDERS" means those stockholders
of the Company who the Company believes are not "accredited investors" as that
term is defined in Rule 501 promulgated under the Act, as indicated on SCHEDULE
II attached hereto.
"NON-COMPETITION AGREEMENTS" means those certain
Non-Competition Agreements to be entered into at the Closing, by and among
Parent, the Company and each of the Executives and Tyler, substantially in the
form attached hereto as EXHIBIT E.
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any
similar phrase means the ordinary course of the Business, consistent with the
past practice of the Company.
"PTO" means the United State Patent and Trademark Office.
"PARENT SHARES" means shares of the Class B Common Stock, par
value $.01 per share, of Parent.
"PERMITS" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other Person,
necessary for the past, present or anticipated conduct of, or relating to the
operation of the Business.
"PERMITTED ENCUMBRANCES" means (a) liens, taxes, assessments
and other governmental charges not yet due and payable, (b) statutory,
mechanics', laborers' and materialmen liens arising in the Ordinary Course of
Business for sums not yet due, (c) statutory and contractual landlord liens
under leases pursuant to which the Company is a lessee and not in Default, (d)
with regard to real property, any and all matters of record in the jurisdiction
where the real property is located including, without limitation, restrictions,
reservations, covenants, conditions, oil and gas leases, mineral severances and
liens and (e) with regard to real property, any easements, rights-of-way,
building or use restrictions, prescriptive rights, encroachments,
6
protrusions, rights and party walls, and liens for taxes, assessments, and
other governmental charges not yet due.
"PERSON" means any person or entity, whether an individual,
trustee, corporation, partnership, limited partnership, limited liability
company, trust, unincorporated organization, business association, firm, joint
venture, governmental agency or authority.
"PURCHASE PRICE" means $35,200,000, as adjusted pursuant to
SECTION 6.11 hereof.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and servicemarks
applications to register trademarks and servicemarks, intent-to-use
applications, other registrations or applications to trademarks or servicemarks,
or trademarks or servicemarks in which common law rights are owned or otherwise
controlled; (c) registered copyrights and applications for copyright
registration: (d) any mask work registrations and applications to register mask
works; and (e) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any state, government or other public legal
authority.
"REGULATIONS" means any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign, federal, state or local government
and any other governmental department or agency, and including, without
limitation, environmental laws, energy, public utility, health codes,
occupational safety and health regulations and laws respecting employment
practices, employee documentation, terms and conditions of employment and wages
and hours.
"REPRESENTATIVE" means, with respect to any Person, any
officer, director, principal, attorney, agent, employee or other representative
of such Person.
"SIGNING STOCK PRICE" means the Average Stock Price on the
date that is two Business Days prior to the date hereof.
"STOCKHOLDERS" means the Accredited Stockholders and the
Non-Accredited Stockholders.
"SUBSIDIARY" means (a) any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain, (b) any partnership in which the Company is a
general partner or (c) any limited liability company, partnership or other
entity in which the Company possesses a 50% or greater interest in the total
capital or total income of such limited liability company, partnership or other
entity.
"TERM SHEET" means that certain Employee Compensation Term
Sheet, dated as of April 27, 2000, between Parent and the Company.
"TICKETWEB UK" means TicketWeb (UK) Limited, a Subsidiary of
the Company.
7
1.2. TERMS DEFINED ELSEWHERE. The following is a list of additional
terms used in this Agreement and a reference to the Section hereof in which such
term is defined:
TERM SECTION
AAA Section 9.3(b)
Act Section 6.9(a)
Additional Expired Options/Warrants Section 2.13(b)
Adjusted Common Merger Consideration Section 2.8(d)
Adjusted Common Share Amount Section 2.8(d)
Adjusted Escrowed Shares Section 2.8(d)
Adjusted Preferred Merger Consideration Section 2.8(d)
Adjusted Preferred Share Amount Section 2.8(d)
Adjustment Event Section 2.12
Aggregate Exercise Price Section 1.1
Aggregate Initial Merger Consideration Section 2.8(b)
Agreement Preamble
Arbitrator Section 9.3(b)
CERCLA Section 4.13
Cash Consideration Section 2.8(b)
Claim Notice Section 9.3(a)
Closing Section 2.3
Closing Common Share Amount Section 2.8(b)
Closing Date Section 2.3
Closing Preferred Share Amount Section 2.8(a)
Common Shares Section 2.8(b)
Common Stock Section 2.8(b)
Company Preamble
Company Disclosure Schedule Article IV
Company Indemnified Parties Section 6.13
Continuing Company Employees Section 6.6(b)
DGCL Section 2.1
Damages Section 9.2(a)
Dispute Notice Section 9.3(b)
Dissenting Shares Section 2.9
Effective Time Section 2.2
Employee Pension Benefit Plan Section 4.14(a)
ERISA Section 4.14(a)
Escrow Account Section 2.8(c)
Escrow Agent Section 2.8(c)
Excess Closing Debt Section 6.11
Exchange Act Section 5.7
Exercise Price Section 6.6(b)
Expired Options/Warrants Section 2.13(a)
Hazardous Materials Section 4.13
Holder Section 6.9(b)
ISOs Section 6.10(a)
8
TERM SECTION
Indemnified Party Section 9.3(a)
Indemnitor Section 9.3(a)
Initial Common Merger Consideration Section 2.8(b)
Initial Escrowed Shares Section 2.8(c)
Initial Preferred Merger Consideration Section 2.8(a)
LLC Section 4.29
MCP Section 7.3(n)
Material Contracts Section 4.8(a)
Merger Section 2.1
Merger Certificate Section 2.2
Merger Consideration Section 2.8(e)
Merger Sub Preamble
Multiemployer Plan Section 4.14(a)
XXXX Section 7.3(o)
XXXX Agreement Section 7.3(o)
XXXX Principals Section 7.3(o)
Option Section 6.10
Outside Date Section 8.1(b)
Paciolan Section 4.32(b)
Parent Preamble
Parent Financial Statements Section 5.7
Parent Indemnified Parties Section 9.2(a)
Plan Section 6.10
Preferred Shares Section 2.8(a)
Preferred Stock Section 2.8(a)
Proceeding Section 4.18
Real Property Section 4.5(c)
Registrable Securities Section 6.9(a)
Registration Expenses Section 6.9(b)
Registration Indemnified Party Section 6.9(c)
Registration Indemnifying Party Section 6.9(c)
Registration Statements Section 6.9(h)
Release Section 7.3(d)
S-3 Effective Date Section 6.9(a)
S-3 Registration Statement Section 6.9(a)
S-8 Registration Statement Section 6.9(b)
SEC Section 6.9(a)
SEC Documents Section 5.7
Selling Expenses Section 6.10(b)
Shares Section 2.8(b)
Spread Section 2.13(c)
Stockholders Recitals
Stockholder Indemnified Parties Section 9.2(b)
Stockholder Support Agreement Recitals
Stockholders' Representative Section 10.13
9
TERM SECTION
Surviving Corporation Section 2.1
Tax Return Section 4.12(a)
Taxes Section 4.12(a)
Threshold Amount Section 9.5(a)
Transaction Fees Section 10.12
Tyler Section 1.1
UK Shares Section 6.14
Violation Section 6.9(c)
Warrant Section 6.10
ARTICLE II.
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in accordance
with the Delaware General Corporation Law (the "DGCL"), Merger Sub shall be
merged with and into the Company (the "MERGER"). Following the Merger, the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and the separate corporate existence of Merger Sub shall cease.
2.2 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined below), a Certificate
of Merger (the "MERGER CERTIFICATE"), the form of which is attached hereto as
EXHIBIT L, shall be duly executed and acknowledged by Merger Sub and the Company
and thereafter delivered to the Secretary of State of the State of Delaware for
filing pursuant to the DGCL. The Merger shall become effective at such time as a
properly executed copy of the Merger Certificate is duly filed with the
Secretary of State of the State of Delaware in accordance with the DGCL or such
later time as Parent and the Company may agree upon and as set forth in the
Merger Certificate (the time the Merger becomes effective being referred to
herein as the "EFFECTIVE TIME").
2.3. CLOSING OF THE MERGER. The closing of the transactions
contemplated hereby (the "CLOSING") will take place at the offices of Xxxxxx,
Xxxx & Xxxxxxxx LLP at 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, on
the second Business Day after the last of the conditions to Closing set forth in
ARTICLE VII have been satisfied or waived by the party or parties entitled to
waive the same or such other date as to which the parties may agree (the
"CLOSING DATE").
2.4. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate
of Incorporation of the Surviving Corporation shall be amended to be as set
forth in Exhibit A to the Merger
10
Certificate until further amended in accordance with applicable law. The
Bylaws of Merger Sub in effect at the Effective Time shall be the Bylaws of
the Surviving Corporation until amended in accordance with applicable law;
PROVIDED, HOWEVER, that the name of the Surviving Corporation shall be
"TicketWeb Inc."
2.6. DIRECTORS. The directors of Merger Sub at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
2.7. OFFICERS. The officers of Merger Sub at the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such officer's successor is duly elected or
appointed and qualified. In addition, each individual listed on SCHEDULE 2.7,
shall hold the office of the Surviving Corporation listed next to such
individual's name on SCHEDULE 2.7, as of the Closing Date until such officer's
successor is duly elected or appointed and qualified.
2.8. CONVERSION OF SHARES.
(a) Subject to SECTION 2.11, at the Effective Time,
each and every share of the Series A preferred stock of the Company, $.001 par
value (the "PREFERRED STOCK"), issued and outstanding immediately prior to the
Effective Time (the "PREFERRED SHARES") (which shall constitute all of the
issued and outstanding Preferred Stock, other than Preferred Stock held in the
treasury of the Company or owned by the Company immediately prior to the
Effective Time) shall, by virtue of the Merger and without any action on the
part of Merger Sub, the Company or the holder thereof, be canceled and
extinguished and be converted automatically into and become the right to receive
the number of fully paid and nonassessable Parent Shares equal to the Closing
Preferred Share Amount. For the purposes of this SECTION 2.8(a):
(i) "INITIAL PREFERRED MERGER CONSIDERATION"
shall mean the number of Parent Shares determined by DIVIDING (A) $7,500,000 by
(B) the Discounted Stock Price.
(ii) "CLOSING PREFERRED SHARE AMOUNT" shall
mean the Initial Preferred Merger Consideration DIVIDED by the aggregate number
of Preferred Shares outstanding immediately prior to the Effective Time.
(b) Subject to SECTION 2.11, at the Effective Time,
each and every share of the common stock of the Company, $.001 par value (the
"COMMON STOCK"), issued and outstanding immediately prior to the Effective Time
(the "COMMON SHARES" and, together with the Preferred Shares, the "SHARES")
(which Common Shares shall constitute all of the issued and outstanding Common
Stock, other than Common Stock held in the treasury of the Company or owned by
the Company immediately prior to the Effective Time and any Common Shares as to
which appraisal rights are perfected under Section 262 of the DGCL) shall, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holder thereof, be canceled and extinguished and be converted
automatically into and become the right to receive:
11
(i) with respect to the Common Shares held
by the Non-Accredited Stockholders, the right to receive in cash, without
interest, an amount equal to the number determined by MULTIPLYING (A) the
Initial Stock Price MULTIPLIED by the Closing Common Share Amount by (B) one
hundred ten percent (110%) (the "CASH CONSIDERATION"); and
(ii) with respect to the Common Shares held
by the Accredited Stockholders, the number of fully paid and nonassessable
Parent Shares equal to the Closing Common Share Amount. For the purposes of this
SECTION 2.8(b)(ii):
(A) "INITIAL COMMON MERGER
CONSIDERATION" shall mean the number of Parent Shares determined by SUBTRACTING
(1) the Initial Preferred Merger Consideration from (2) the Aggregate Initial
Merger Consideration.
(B) "CLOSING COMMON SHARE AMOUNT"
shall mean the Initial Common Merger Consideration DIVIDED by the SUM of (1) the
aggregate number of Common Shares outstanding immediately prior to the Effective
Time and (2) the aggregate number of shares of Common Stock issuable upon the
exercise of all In-The-Money Options/Warrants outstanding immediately prior to
the Effective Time.
(c) On the Closing Date, certificates representing
the portion of the Aggregate Initial Merger Consideration, otherwise allocable
to the Accredited Stockholders, determined by DIVIDING (i) $7,000,000 by (ii)
the Initial Stock Price (the "INITIAL ESCROWED SHARES") shall be delivered to
U.S. Bank Trust, National Association, as escrow agent (the "ESCROW AGENT") to
be held by such Escrow Agent in an escrow account (the "ESCROW ACCOUNT") until
the first anniversary of the Closing Date for the benefit of the Accredited
Stockholders pursuant to the terms and conditions of the Escrow Agreement. The
number of Parent Shares of each Accredited Stockholder to be tendered to the
Escrow Agent as Initial Escrowed Shares shall be determined by MULTIPLYING (A)
the aggregate number of Parent Shares such Accredited Stockholder is entitled to
receive pursuant to SECTION 2.8(a) or SECTION 2.8(b)(ii) by (b) a fraction, the
numerator of which is the aggregate number of Initial Escrowed Shares and the
denominator of which is the aggregate number of Parent Shares all Accredited
Stockholders are entitled to receive pursuant to SECTION 2.8(a) or SECTION
2.8(b)(ii).
(d) On the Effective Registration Date, the following
adjustments shall be effected:
(i) The Stockholders' Representative shall,
and the Escrow Agent shall be instructed to, tender to Parent for cancellation
all certificates representing Parent Shares previously distributed to the
Stockholders' Representative and the Escrow Agent on behalf of the holder of
Preferred Shares pursuant to this SECTION 2.8, and Parent shall tender to the
holder of Preferred Shares and the Escrow Agent for the benefit of the holder of
Preferred Shares new certificates representing an aggregate number of Parent
Shares determined by MULTIPLYING the aggregate number of Preferred Shares
outstanding immediately prior to the Effective Time by the Adjusted Preferred
Share Amount. For purposes of this SECTION 2.8(d)(i):
12
(A) "ADJUSTED PREFERRED MERGER
CONSIDERATION" shall mean the number of Parent Shares determined by DIVIDING (1)
$7,500,000 by (2) the Adjusted Stock Price.
(B) "ADJUSTED PREFERRED SHARE
AMOUNT" shall mean the Adjusted Preferred Merger Consideration divided by the
aggregate number of Preferred Shares outstanding immediately prior to the
Effective Time.
(ii) The Stockholders' Representative shall,
and the Escrow Agent shall be instructed to, tender to Parent for cancellation
all certificates representing Parent Shares previously distributed to the
Stockholders' Representative and the Escrow Agent on behalf of the Accredited
Stockholders pursuant to this SECTION 2.8, and Parent shall tender to each
Accredited Stockholder and the Escrow Agent for the benefit of such Accredited
Stockholder new certificates representing, in the aggregate, the number of
Parent Shares determined by MULTIPLYING (A) the number of Common Shares held by
such holder immediately prior to the Effective Time by (B) the Adjusted Common
Share Amount. For the purposes of this SECTION 2.8(d)(ii):
(A) "ADJUSTED COMMON MERGER
CONSIDERATION" shall mean the number of Parent Shares determined by SUBTRACTING
(a) the Adjusted Preferred Merger Consideration from (b) the Aggregate Adjusted
Merger Consideration.
(B) "ADJUSTED COMMON SHARE AMOUNT"
shall mean the Adjusted Common Merger Consideration DIVIDED by the SUM of (1)
the aggregate number of Common Shares outstanding immediately prior to the
Effective Time and (2) the aggregate number of shares of Common Stock issuable
upon the exercise of all In-The-Money Options/Warrants outstanding immediately
prior to the Effective Time.
(iii) Certificates representing the portion
of the Aggregate Adjusted Merger Consideration, otherwise allocable to the
Accredited Stockholders, determined by DIVIDING (A) $7,000,000 by (B) the
Adjusted Stock Price (the "ADJUSTED ESCROWED SHARES") shall be delivered to the
Escrow Agent to be held by the Escrow Agent in the Escrow Account until the
first anniversary of the Closing Date for the benefit of the Accredited
Stockholders pursuant to the terms and conditions of the Escrow Agreement. The
number of Parent Shares of each Accredited Stockholder to be tendered to the
Escrow Agent as Adjusted Escrowed Shares shall be determined by MULTIPLYING (1)
the aggregate number of Parent Shares such Accredited Stockholder is entitled to
receive pursuant to SECTION 2.8(d)(i) or SECTION 2.8(d)(ii) by (2) a fraction,
the numerator of which is the aggregate number of Adjusted Escrowed Shares and
the denominator of which is the aggregate number of Parent Shares all Accredited
Stockholders are entitled to receive pursuant to SECTION 2.8(d)(i) or SECTION
2.8(d)(ii).
(e) The Stockholders' Representative covenants and
agrees to tender the certificates representing Parent Shares of all Stockholders
no later than one Business Day prior to the Effective Registration Date. Until
such time as the certificates of all Stockholders representing Parent Shares
have been tendered by the Stockholders' Representative, Parent shall not be
obligated to cause the S-3 Registration Statement to be declared effective
pursuant to SECTION 6.9. The aggregate Parent Shares delivered to the
Stockholders and deposited with the
13
Escrow Agent after the adjustments in this paragraph (d), together with the
Aggregate Cash Consideration is referred to herein as the "MERGER
CONSIDERATION."
(f) At the Effective Time, each outstanding share of
the common stock, without par value, of Merger Sub shall be converted into one
share of common stock, $.01 par value, of the Surviving Corporation.
(g) At the Effective Time, each share of Common Stock
held in the treasury of the Company or owned by the Company or any direct or
indirect Subsidiary of the Company immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of Merger Sub,
the Company or the holder thereof, be canceled and extinguished and no payment
shall be made with respect thereto.
2.9. APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, each Share that is issued and outstanding immediately
prior to the Effective Time and that is held by a Stockholder who has properly
exercised and perfected appraisal rights under Section 262 of the DGCL (the
"DISSENTING SHARES") shall not be converted into or exchangeable for the right
to receive Parent Shares or the Cash Consideration as provided in SECTION 2.8,
but shall be entitled to receive such consideration as shall be determined
pursuant to Section 262 of the DGCL; PROVIDED, HOWEVER, that if such Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost the
right to appraisal and payment under the DGCL, each Share of such Stockholder
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective time, the right to receive Parent Shares
or the Cash Consideration (without any interest thereon) in accordance with
SECTION 2.8, and such shares shall no longer be Dissenting Shares. The Company
shall give prompt notice to Parent of any demands received by the Company for
appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, settle or offer to settle, any such demands.
2.10. DISTRIBUTION OF THE MERGER CONSIDERATION.
(a) On the Closing Date, (i) certificates
representing the Initial Escrowed Shares issuable to the Stockholders shall be
delivered to the Escrow Agent as provided in SECTION 2.8(c) and (ii)
certificates representing the Parent Shares issuable to the Stockholders less
the Initial Escrowed Shares shall be delivered to the Stockholders'
Representative. Such Parent Shares delivered to the Escrow Agent and the
Stockholders' Representative shall be subject to the restrictions provided in
this Agreement and shall be stamped or otherwise imprinted with a legend as
provided in the Stockholder Support Agreements.
(b) On the Closing Date, Parent shall reserve for the
benefit of the Non-Accredited Common Stockholders an amount in cash equal to the
Aggregate Cash Consideration payable pursuant to SECTION 2.8(b)(i). For the
purpose of determining the Aggregate Cash Consideration to be reserved, Parent
shall assume that no Non-Accredited Common Stockholders will perfect rights to
appraisal of their Common Shares. Promptly following the receipt of (i)
certificates representing all outstanding Common Shares held by a Non-Accredited
Common Stockholder and (ii) an executed release in form and substance
14
reasonably acceptable to Parent in its sole discretion, Parent shall pay to
such Non-Accredited Common Stockholder by check or wire transfer (as selected
by such holder) the Cash Consideration that such Non-Accredited Stockholder
has the right to receive pursuant to the provisions of SECTION 2.8(b)(i), and
the applicable certificate or certificates so surrendered shall forthwith be
canceled.
(c) In the event that any certificate representing
Shares shall have been lost, stolen or destroyed, Parent shall issue in exchange
therefor, upon making of an affidavit of that fact by the holder thereof, such
Merger Consideration or Cash Consideration as may be required pursuant to this
Agreement; PROVIDED, HOWEVER, that Parent may, in its discretion, require the
delivery of a suitable bond or indemnity.
(d) No fractions of a Parent Share shall be issued in
the Merger, but, in lieu thereof, each Stockholder otherwise entitled to a
fraction of a Parent Share on the Effective Registration Date shall be entitled
to receive an amount of cash (without interest) determined by multiplying the
Adjusted Stock Price by the fractional share interest to which such holder would
otherwise be entitled. The parties acknowledge that the payment of the cash
consideration in lieu of issuing fractional shares was not separately bargained
for consideration but merely represents a mechanical rounding off for purposes
of simplifying the corporate and accounting complexities which would otherwise
be caused by the issuance of fractional shares.
(e) All Merger Consideration and Cash Consideration
paid upon the surrender of Shares in accordance with the terms hereof shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
Shares, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates representing capital stock of the Company are presented to the
Surviving Corporation for any reason they shall be canceled as provided in this
ARTICLE II.
(f) Neither Parent nor the Surviving Corporation
shall be liable to any holder of Shares for Merger Consideration or Cash
Consideration delivered to a public official pursuant to any applicable
abandoned property escheat or similar law.
15
2.11. FORM OF CONSIDERATION. With the written consent of the
Company, in lieu of delivering the Merger Consideration in the form of Parent
Shares as described in SECTIONS 2.8(a) and 2.8(b) above, Parent may, in addition
to the Aggregate Cash Consideration, elect to pay all or any portion of the
Merger Consideration in cash; PROVIDED, that no consent shall be required if
such election does not affect the ability of the Merger to qualify as a
"reorganization" under the federal tax laws. In the event that Parent elects to
pay any portion of the Merger Consideration in cash rather than Parent Shares,
on the Closing Date, Parent will pay to the Stockholders' Representative in
immediately available funds to an account designated by such Stockholders'
Representative prior to the Closing Date, for the benefit of the Stockholders,
that portion of the Merger Consideration so converted to cash and the Company,
in its sole discretion, shall determine the allocation of such cash payment
among the Stockholders; PROVIDED, HOWEVER, that within each class of Shares,
cash and Parent Shares shall be allocated PRO RATA. The Shares held by any
Stockholder to whom any cash portion of the Merger Consideration has been
allocated pursuant to this SECTION 2.11 shall be deemed to have been converted
into the right to receive cash by virtue of the Merger to the extent of such
allocation.
2.12. ADJUSTMENT EVENTS. If, between the date of this
Agreement and the Effective Time, the outstanding Parent Shares shall have been
changed into or exchanged for a different number of shares or kind of shares of
Parent or another corporation or entity by reason of any reclassification,
split-up, stock dividend or stock combination or any arrangement, amalgamation
or similar statutory procedure (an "ADJUSTMENT EVENT"), then the Closing
Preferred Share Amount and the Closing Common Share Amount shall be
appropriately adjusted. If the record date for any such Adjustment Event shall
be prior to the Effective Time, but the payment date therefor shall be
subsequent to the Effective Time, Parent shall take such action as shall be
required so that on such payment date the Stockholders shall be entitled to
receive such number or kind of shares as such holder would have received as a
result of such event if the record date therefor had been immediately after the
Effective Time.
2.13. ADDITIONAL POST-CLOSING ADJUSTMENTS.
(a) In the event that any In-The-Money
Options/Warrants are cancelled or expire unexercised at any time prior to the
first anniversary of the Closing Date (the "EXPIRED OPTIONS/WARRANTS"), (i)
certificates representing the number of Parent Shares determined by MULTIPLYING
(A) a fraction, the numerator of which is the aggregate number of Common Shares
owned by the Accredited Common Stockholders and outstanding immediately prior to
the Effective Time and the denominator of which is the aggregate number of
Common Shares outstanding immediately prior to the Effective Time by (B) the
number determined by DIVIDING (1) the aggregate Spread for all Expired
Options/Warrants by (2) the Adjusted Stock Price, shall be delivered to the
Stockholders' Representative for the benefit of the Accredited Common
Stockholders PRO RATA based on such holders' respective percentage ownership of
all Common Shares owned by the Accredited Common Stockholders and outstanding
immediately prior to the Effective Time and (ii) cash equal to the amount
determined by MULTIPLYING (A) a fraction, the numerator of which is the
aggregate number of Common Shares owned by the Non-Accredited Common
Stockholders and outstanding immediately prior to the Effective Time and the
denominator of which is the aggregate number of Common Shares outstanding
immediately prior to the Effective Time by (B) the aggregate Spread for all
Expired Options/Warrants, shall be delivered to the Stockholders' Representative
for the benefit of the Non-Accredited
16
Stockholders PRO RATA based on such holders' respective percentage ownership
of all Common Shares owned by the Non-Accredited Stockholders outstanding
immediately prior to the Effective Time. Parent Shares and cash underlying
Expired Options/Warrants shall be delivered to the Stockholders'
Representative within five (5) Business Days of the first anniversary of the
Closing Date.
(b) In the event that any In-The-Money
Options/Warrants are cancelled or expire unexercised at any time after the first
anniversary of the Closing Date, but prior to the second anniversary of the
Closing Date (the "ADDITIONAL EXPIRED OPTIONS/WARRANTS"), (i) certificates
representing the number of Parent Shares determined by MULTIPLYING (A) a
fraction, the numerator of which is the aggregate number of Common Shares owned
by the Accredited Common Stockholders and outstanding immediately prior to the
Effective Time and the denominator of which is the aggregate number of Common
Shares outstanding immediately prior to the Effective Time by (B) the number
determined by DIVIDING (1) the aggregate Spread for all Additional Expired
Options/Warrants by (2) the Adjusted Stock Price, shall be delivered to the
Stockholders' Representative for the benefit of the Accredited Common
Stockholders PRO RATA based on such holders' respective percentage ownership of
all Common Shares owned by the Accredited Common Stockholders and outstanding
immediately prior to the Effective Time and (ii) cash equal to the amount
determined by MULTIPLYING (A) a fraction, the numerator of which is the
aggregate number of Common Shares owned by the Non-Accredited Common
Stockholders and outstanding immediately prior to the Effective Time and the
denominator of which is the aggregate number of Common Shares outstanding
immediately prior to the Effective Time by (B) the aggregate Spread for all
Additional Expired Options/Warrants, shall be delivered to the Stockholders'
Representative for the benefit of the Non-Accredited Stockholders PRO RATA based
on such holders' respective percentage ownership of all Common Shares owned by
the Non-Accredited Stockholders outstanding immediately prior to the Effective
Time. Parent Shares and cash underlying Additional Expired Options/Warrants
shall be delivered to the Stockholders' Representative within five (5) Business
Days of the second anniversary of the Closing Date.
(c) For the purposes of this SECTION 2.13, "SPREAD"
means, for each Expired Option/Warrant or Additional Expired Option/Warrant, the
number determined by SUBTRACTING (i) the exercise price per Parent Share (after
giving effect to the adjustments provided in SECTION 6.10) for such Expired
Option/Warrant or Additional Expired Option/Warrant, as the case may be, from
(ii) the Initial Stock Price, if the Spread is being calculated prior to the
Effective Registration Date, or, the Adjusted Stock Price, if the Spread is
being calculated on or after the Effective Registration Date.
2.14. TAX AND ACCOUNTING CONSEQUENCES.
(a) For federal income tax purposes, 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 Treasury Regulations.
(b) It is intended by the parties hereto that the
Merger shall be accounted for as a purchase transaction.
17
ARTICLE III.
CLOSING DELIVERIES
3.1. DELIVERIES BY THE COMPANY AT THE CLOSING. At the Closing,
the Company shall deliver, or cause to be delivered:
(a) the Ancillary Agreements;
(b) Except as provided in SECTION 2.10(b),
certificates representing all of the Shares;
(c) certificates of good standing (i) issued by the
Secretary of State of the State of Delaware for the Company and (ii) issued with
respect to TicketWeb UK, dated not more than five days prior to the Closing Date
with a bring-down good standing certificate dated as of the Closing Date;
(d) a certificate, dated as of the Closing Date and
signed by the Company's President or a Vice President, as to the fulfillment of
the conditions set forth in SECTION 7.3;
(e) a certificate executed by the Secretary of the
Company, dated as of the Closing Date, certifying resolutions adopted by the
Company's board of directors relating to the transactions contemplated by this
Agreement and the Ancillary Agreements;
(f) copies of all third party and governmental
consents, approvals and filings required in connection with the consummation of
the transactions hereunder;
(g) the written opinions of counsel described in
SECTION 7.3(f) and 7.3(q); and
(h) such other documents and items as Parent may
reasonably request, including, without limitation, those document referred to in
SECTION 7.3(l) through 7.3(q).
3.2. DELIVERIES BY PARENT AND MERGER SUB AT THE CLOSING. At
the Closing, Parent and Merger Sub shall deliver, or cause to be delivered:
(a) the Ancillary Agreements;
(b) certificates representing the Parent Shares to be
distributed to the Stockholders pursuant to SECTIONS 2.8(a) and 2.8(b);
(c) a certificate, dated as of the Closing Date and
signed by Parent's authorized representative, as to the fulfillment of the
conditions set forth in SECTION 7.2;
(d) a certificate executed by the Secretary of the
Parent, dated as of the Closing Date, certifying resolutions adopted by the
Parent's board of directors relating to the transactions contemplated by this
Agreement and the Ancillary Agreements;
18
(e) the written opinions of counsel described in
SECTION 7.2(d); and
(f) such other documents and items as the Company may
reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Parent and Merger Sub to enter
into this Agreement, the Company hereby represents and warrants to Parent and
Merger Sub, which representations and warranties are, as of the date hereof, and
will be, as of the Closing Date, true, correct and complete, subject to such
exceptions as are specifically disclosed with respect to specific numbered and
lettered sections and subsections of this ARTICLE IV in the disclosure schedule
delivered herewith and dated as of the date hereof (the "COMPANY DISCLOSURE
SCHEDULE"):
4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and corporate authority to conduct
the Business as it is presently being conducted, to own or lease, as applicable,
its assets and properties, and to perform all its obligations under its Material
Contracts. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on the assets of the Company
or the Business. Copies of the Certificate of Incorporation and Bylaws of the
Company, and all amendments thereto, heretofore delivered to Parent, are
accurate and complete as of the date hereof.
4.2. SUBSIDIARIES. Except as set forth on SCHEDULE 4.2, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, association, or
other entity.
4.3. AUTHORIZATION. Subject only to the requisite approval of
the Merger and this Agreement by the Stockholders pursuant to the Stockholder
Support Agreements, the Company has all requisite power and authority, and has
taken all action necessary, to execute, deliver and perform this Agreement and
the Ancillary Agreements to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly approved by the
board of directors of the Company. No other corporate proceedings on the part of
the Company are necessary to authorize this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by the Company and upon execution and
delivery of the Ancillary Agreements to which it is a party (assuming the due
authorization, execution and deliver of this Agreement and the Ancillary
Agreements by the other parties hereto and thereto), this Agreement and the
Ancillary Agreements to which the Company is party will be, the legal, valid and
binding obligations of the Company, enforceable
19
against it in accordance with their respective terms except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and except
insofar as the availability of equitable remedies may be limited by
applicable law.
4.4. CAPITALIZATION.
(a) SCHEDULE 4.4(a) sets forth the name of each
Person holding any equity securities of the Company or securities convertible
into or exchangeable for equity securities of the Company. The authorized
capital stock of the Company consists of (i) 20,000,000 shares of Common Stock,
of which 13,002,677 shares are issued and outstanding and (ii) 10,000,000 shares
of Preferred Stock, of which 1,607,717 shares are issued and outstanding. All
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable. No claim has been made or threatened to the
Company asserting that any Person other than a Person listed on SCHEDULE 4.4(a)
is the holder or beneficial owner of, or has the right to acquire beneficial
ownership of, any stock of, or any other voting, equity or ownership interest in
the Company.
(b) Except as set forth on SCHEDULE 4.4(b), there are
no (i) options, warrants, agreements, convertible or exchangeable securities or
other commitments pursuant to which the Company is or may become obligated to
issue, sell, transfer, purchase, return or redeem capital stock of the Company,
(ii) securities of the Company reserved for issuance for any purpose, (iii)
agreements pursuant to which registration rights in the capital stock of the
Company have been granted by the Company, (iv) stockholders agreements, whether
written or verbal, between the Company and any of its current and former
stockholders or (v) statutory preemptive rights or rights of first refusal nor
is the Company a party to any contracts which create any such rights with
respect to the Shares.
(c) The Company has not violated any applicable
federal or state securities laws in connection with the offer, sale or issuance
of any of its capital stock. Except as set forth on SCHEDULE 4.4(c), the Company
is not party to any agreement with any of its stockholders with respect to the
voting or transfer of the Company's capital stock or with respect to any other
aspect of the Company's affairs.
4.5. TITLE TO PROPERTIES AND ASSETS.
(a) Except as set forth on SCHEDULE 4.5(a), (i) the
Company has, or will have, as of the Closing, good and valid title to or, in the
case of leased properties or properties held under license, good and valid
leasehold or license interest in, all of its properties and assets and (ii) the
Company holds title to each such property and asset which it purports to own,
free and clear of all liens, adverse claims, mortgages, pledges, encumbrances,
security interests or charges of any kind. The representations in this SECTION
4.5 do not apply to the Intellectual Property Rights as to which only the
representations in SECTION 4.21 shall apply.
(b) All of the tangible assets of the Company, are,
or will be as of the Closing, in all material respects in reasonably serviceable
operating condition and repair, normal
20
wear and tear excepted, and are adequate for the conduct of the Business of
the Company in substantially the same manner as it has heretofore been
conducted.
(c) SCHEDULE 4.5(c) sets forth a true and complete
list of all real property owned or leased by the Company (collectively, the
"REAL PROPERTY"), including the location of, and a brief description of the
nature of the activities conducted on, such Real Property. Except as set forth
on SCHEDULE 4.5(c), the Company has good and marketable fee simple title to or a
valid leaseholder interest in the Real Property, free and clear of all
Encumbrances, except Permitted Encumbrances.
4.6. ABSENCE OF CERTAIN ACTIVITIES. Except as set forth on
SCHEDULE 4.6, since March 31, 2000, there has not been:
(a) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company (as
presently conducted and as presently proposed to be conducted);
(b) any waiver by the Company of a material right or
of a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company, except such a
satisfaction, discharge or payment made in the Ordinary Course of Business that
is not material to the assets, properties, financial condition, operating
results or Business of the Company;
(d) any material change or amendment to a Material
Contract (as defined below) or arrangement by which the Company or any of its
assets or properties is bound or subject, except for changes or amendments which
are expressly provided for or disclosed in this Agreement;
(e) any material change in any compensation
arrangement or agreement with any present or prospective employee, contractor or
director not approved by the Company's Board of Directors; or
(f) to the Company's knowledge, any other event or
condition of any character which would materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company.
4.7. CERTAIN ACTIONS. Since March 31, 2000, the Company
has not:
(a) declared or paid any dividends, or authorized or
made any distribution upon or with respect to any class or series of its capital
stock;
(b) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $25,000 or in excess of
$50,000 in the aggregate;
21
(c) made any loans or advances to any person, other
than ordinary advances for travel expenses;
(d) sold, exchanged or otherwise disposed of any
material assets or rights other than the sale of inventory in the Ordinary
Course of Business; or
(e) entered into any transactions with any of its
officers, directors or employees or any entity controlled by any of such
individuals (other than employment, stock option, confidentiality,
non-competition and intellectual property rights agreements entered into in the
Ordinary Course of Business and disclosed on SCHEDULE 4.8 hereto).
4.8. MATERIAL CONTRACTS.
(a) All agreements, contracts, leases, licenses,
instruments, commitments (oral or written), indebtedness, liabilities and other
obligations to which the Company is a party or by which it is bound that (i) are
material to the conduct and operations of its Business and properties, (ii)
involve any of the officers, consultants, directors, employees or Stockholders
of the Company or (iii) obligate the Company to develop any product or
technology (the "MATERIAL CONTRACTS") are listed on SCHEDULE 4.8 and have been
made available for inspection by Parent and its counsel. For purposes of this
SECTION 4.8, "material" shall mean any agreement, contract, indebtedness,
liability or other obligation either (x) having an aggregate value, cost or
amount in excess of $50,000 or (y) having an aggregate value, cost or amount in
excess of $25,000 and not terminable upon thirty days' notice.
(b) Each Material Contract is in full force and
effect, paid currently and has not been materially impaired by any acts or
omissions of the Company. Except for those Material Contracts denoted with an
asterisk (*) as set forth on SCHEDULE 4.8, no Material Contract requires the
consent of any other contracting party to the transactions contemplated by this
Agreement to prevent a breach of, a default under, or a termination, change in
the terms or conditions or modification of, any Material Contract. All of the
Material Contracts are valid, binding and enforceable in accordance with their
terms except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting enforcement of creditors'
rights generally and except insofar as the availability of equitable remedies
may be limited by applicable law. The Company has fulfilled, or taken all action
reasonably necessary to enable them to fulfill when due, all of its material
obligations under each of such Material Contracts. To the Company's knowledge,
no party is in material Default under such Material Contracts, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a Default and no
notice of any claim of Default has been given to the Company. The Company is not
aware of any intent by any party to any Material Contract to terminate or amend
the terms thereof or to refuse to renew any such Material Contract upon
expiration of its term. The Company is not currently paying liquidated damages
in lieu of performance thereunder.
4.9. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
Default of (a) any term of the Company's Certificate of Incorporation or Bylaws,
(b) in any material respect, any term or provision of any mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
may be bound, (c) any provision of any foreign or domestic
22
state or federal judgment, decree or order or (d) to the knowledge of the
Company, any statute, rule or regulation applicable to or binding upon the
Company. The execution, delivery and performance of and compliance with this
Agreement and the consummation of the transactions contemplated hereby will
not result in any such Default, or be in conflict with or constitute, with or
without the passage of time or the giving of notice or both, either a Default
under the Company's Certificate of Incorporation or Bylaws, or, to the best
of the Company's knowledge, a violation of any Regulations or Court Orders,
or an event which results in the creation of any lien, charge or encumbrance
upon any of the Company's assets.
4.10. FINANCIAL STATEMENTS. The Company heretofore has
delivered to Parent true and correct copies of the Financial Statements. The
Financial Statements (a) are complete in all material respects, (b) are in
accordance with the books and records of the Company, (c) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
and (d) fairly and accurately present the financial position of the Company as
of the respective dates thereof and the results of operations and changes in
cash flows for the periods then ended. Except for the March 2000 Balance Sheet,
the Financial Statements have been examined by the Company's Accountants, whose
report thereon is included with such financial statements. Specifically, but not
by way of limitation, the balance sheet of the Financial Statements discloses
all of the Company's material debts, Liabilities and obligations of any nature,
whether due or to become due, as of the date thereof to the extent such debts,
Liabilities and obligations are required to be disclosed in accordance with
GAAP. The Company has good and marketable title to all assets set forth on the
March 2000 Balance Sheet, except for such assets as have been spent, sold or
transferred in the Ordinary Course of Business since the date thereof. The
Company has not, and as of the Closing Date will not have, incurred a
compensation or other expense in connection with the grant of stock options or
warrants to purchase capital stock of the Company granted at any time prior to
the Closing Date, including, without limitation, those stock options and
warrants approved by the Board of Directors of the Company on May 19, 2000. The
closing of the purchase of the outstanding equity of TicketWeb UK as described
in SECTION 7.3(q) will not result in an increase in Liabilities or expenses on
the Company's consolidated financial statements as compared to the March 2000
Balance Sheet, subject to Permitted Encumbrances.
4.11. LIABILITIES. Except as set forth on SCHEDULE 4.11 or on
the March 2000 Balance Sheet, the Company has no indebtedness for borrowed money
that the Company has, directly or indirectly, created, incurred, assumed or
guaranteed, or with respect to which Company has otherwise become directly or
indirectly liable, other than in the Ordinary Course of Business. The Company
has no Liabilities to any Person relating to, in connection with or arising from
the sale of counterfeit tickets to events ticketed by the Company in connection
with the Business. As of May 1, 2000, the aggregate Liability of the Company to
its commissioned salespersons for commissions that have been earned by such
salespersons, but have not been paid to such salespersons as of May 1, 2000 is
less than or equal to $19,000. As of May 19, 2000, the aggregate Liability of
the Company to all of its ticketing customers for (a) the face value of tickets
sold by the Company on behalf of such ticketing customers and (b) all amounts
contractually payable as rebates for such tickets sold is less than or equal to
$940,000.
4.12. TAXES.
23
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "TAX" (including with
correlative meaning, the terms "TAXES" and "TAXABLE") means (A) all federal,
state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto, (B)
any liability for payment of amounts described in clause (A) whether as a result
of transferee liability, of being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise through operation of law,
and (C) any liability for the payment of amounts described in clauses (A) or (B)
as a result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other person; and
(ii) the term "TAX RETURN" means any return,
declaration, report, statement, information statement and other document
required to be filed with respect to Taxes.
(b) The Company has accurately prepared and timely
filed all Tax Returns it is required to have filed. Such Tax Returns are
accurate, complete and correct in all material respects and do not contain a
disclosure statement under Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law).
(c) The Company has paid all Taxes it is required to
have paid.
(d) Except as set forth on SCHEDULE 4.12(d):
(i) no claim has been made by any taxing
authority in any jurisdiction where the Company does not file Tax Returns that
it is or may be subject to Tax by that jurisdiction; and
(ii) no extensions or waivers of statutes of
limitations with respect to the Tax Returns have been given by or requested from
the Company.
(e) SCHEDULE 4.12(e) sets forth:
(i) the taxable years of the Company as to
which the applicable statutes of limitations on the assessment and collection of
Taxes have not expired;
(ii) those taxable years for which
examinations by taxing authorities are presently being conducted;
(iii) those years for which notice of
pending or threatened examination or adjustment has been received; and
(iv) those years for which required income
Tax Returns have not yet been filed.
24
(f) Except to the extent indicated in SCHEDULE
4.12(f), all deficiencies asserted or assessments made against the Company as a
result of any examinations by any taxing authority have been fully paid.
(g) There are no liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of the Company.
(h) The Company is not a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement.
(i) The Company is not a party to or bound by any
closing agreement or offer in compromise with any taxing authority.
(j) Except to the extent indicated in SCHEDULE 4.12(j):
(i) the Company has never been a member of an affiliated
group of corporations, within the meaning of Section 1504 of the Code (or any
predecessor provision or comparable provision of state, local or foreign
law), or a member of combined, consolidated or unitary group for state, local
or foreign Tax purposes;
(ii) the Company has no liability for Taxes of
any person (other than the Company and its subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any corresponding provision of state, local
or foreign income Tax law), as transferee or successor, by contract, or
otherwise;
(iii) the Company has not filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the
Code (or any corresponding provision of state, local or foreign income Tax
law) or agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local or foreign income Tax law) apply to any disposition
of any asset owned by it; and
(iv) the Company has not been a personal
holding company under Section 542 of the Code.
(k) The Company has not agreed to make, nor is it
required to make, any adjustment under Sections 481(a) or 263A of the Code or
any comparable provision of state or foreign tax laws by reason of a change
in accounting method or otherwise. The Company has not taken action that is
not in accordance with past practice that could defer a liability for Taxes
of the Company from any taxable period ending on or before the Closing Date
to any taxable period ending after such date.
(l) The Company is not a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately
or in the aggregate, in connection with this Agreement or any change of
control of the Company, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code, other than an agreement,
contract, arrangement or plan for which stockholder approval meeting the
requirements of Code Section 280G(b)(5) has been or will be obtained prior to
the Closing.
25
(m) SCHEDULE 4.12(m) sets forth all foreign
jurisdictions in which the Company is subject to tax, is engaged in business
or has a permanent establishment.
(n) The Company is not a party to any joint venture,
partnership, or other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
(o) No material election with respect to Taxes of the
Company will be made by the Executives or the Company after the date of this
Agreement without the prior written consent of Parent.
(p) None of the income recognized, for federal, state,
local or foreign income tax purposes, by the Company during the period
commencing on the date hereof and ending on the Closing Date will be derived
other than in the ordinary course of business.
(q) The provisions for Taxes currently payable on the
March 2000 Balance Sheet are at least equal, as of the date thereof, to all
unpaid Taxes of the Company, whether or not disputed.
4.13. ENVIRONMENTAL MATTERS. During the period that the
Company has owned or leased its properties and facilities, (a) to the knowledge
of the Company, there have been no disposals, releases or threatened releases of
Hazardous Materials (as defined below) on, from or under such properties or
facilities and (b) neither the Company, nor, to the Company's knowledge, any
third party, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials. The Company has no knowledge of any presence,
disposals, releases or threatened releases of Hazardous Materials on, from or
under any of such properties or facilities, which may have occurred prior to the
Company having taken possession of any of such properties or facilities. For
purposes of this Agreement, the terms "disposal," "release" and "threatened
release" shall have the definitions assigned thereto by the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"). For the purposes of this SECTION
4.13, "HAZARDOUS MATERIALS" shall mean any hazardous or toxic substance,
material or waste which is regulated under, or defined as a "hazardous
substance," "pollutant," "contaminant," "toxic chemical," "hazardous material,"
"toxic substance" or "hazardous chemical" under (i) CERCLA; (ii) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; (iii)
the U.S. Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, ET
SEQ.; (iv) the U.S. Toxic Substances Control Act, 15 U.S.C. Section 2601 ET
SEQ.; (v) the U.S. Occupational Safety and Health Act of 1970, 29 U.S.C. Section
651 ET SEQ.; (vi) regulations promulgated under any of the above statutes or
(vii) any applicable state or local statute, ordinance, rule, or Regulation that
has a scope or purpose similar to those statutes identified above, but shall not
include normal cleaning, housekeeping or pest control products or photocopying
materials.
4.14. EMPLOYEE BENEFITS.
(a) For all purposes of this Agreement,
26
(i) "EMPLOYEE PENSION BENEFIT PLAN" means
any employee pension benefit plan, as defined in Section 3(2) of ERISA, that is
subject to Title IV of ERISA, other than a Multiemployer Plan.
(ii) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
(iii) "MULTIEMPLOYER PLAN" means a
multiemployer plan, as defined in Section 3(37) and 4001(a)(3) of ERISA.
(b) Except as disclosed on SCHEDULE 4.14(b), the
Company does not currently sponsor and has not ever sponsored, maintained,
contributed to, or incurred an obligation to contribute to, any Employee Pension
Benefit Plan on behalf of or with respect to any employee of the Company. The
Company does not currently sponsor, maintain or contribute to any Multiemployer
Plan covering its employees.
4.15. COMPLIANCE WITH LAW. The Company and the conduct of the
Business have not violated and are in compliance with all Regulations and Court
Orders relating to the Business or operations of the Company, except where such
violation or noncompliance would not have, either individually or in the
aggregate, a Material Adverse Effect. The Company has not received any notice to
the effect that, or otherwise been advised that, it is not in compliance in any
material respect with any such Regulations or Court Orders, and the Company does
not know of any existing circumstances that are likely to result in violations
of any of the foregoing.
4.16. PERMITS. SCHEDULE 4.16 sets forth a complete list of all
Permits material to the operation of the Business or otherwise held by the
Company in connection with the Business, all of which are as of the date hereof,
and all of which will be as of the Closing Date, in full force and effect. The
Company has, and at all times has had, all Permits required under any Regulation
in the operation of the Business and owns or possesses such Permits free and
clear of all Encumbrances except Permitted Encumbrances, and except such Permits
the failure of which to obtain would not have a Material Adverse Effect on the
Assets or the Business. The Company is not in material Default and has not
received any notice of any claim of Default, with respect to any such Permit.
Except as otherwise governed by law, all such Permits are renewable by their
terms or in the Ordinary Course of Business without the need to comply with any
special qualification procedures or to pay any amounts other than routine filing
fees and will not be adversely affected by the completion of the transactions
contemplated by this Agreement. Except as set forth on SCHEDULE 4.16, no present
or former stockholder, director, officer or employee of the Company or any
Affiliate thereof, or any other Person, owns or has any proprietary, financial
or other interest (direct or indirect) in any Permit which the Company owns,
possesses or uses.
4.17. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE
4.17 and except for filings, permits, authorizations, consents and approvals as
may be required under, and other applicable requirements, of state securities
laws, and the filing and recordation of the Merger Certificate as required by
the DGCL, no consent, approval or authorization of, declaration to, or filing or
registration with, any governmental or regulatory authority, or any other
Person, is required to be made or obtained by the Company or any of its
Affiliates in connection with the
27
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby.
4.18. LITIGATION. Except as set forth on SCHEDULE 4.18, there
is no action, suit, proceeding, claim, arbitration or investigation
("PROCEEDING") pending (or, to the Company's knowledge, currently threatened)
against the Company, its activities, properties or assets or, to the Company's
knowledge, against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship with, or
actions taken on behalf of, the Company. To the Company's knowledge, there is no
factual or legal basis for any such Proceeding that might result, individually
or in the aggregate, in any Material Adverse Change in the Business, properties,
assets, condition (financial or otherwise) or operations of the Company. The
Company is not a party to or subject to the provisions of any Court Order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality and there is no Proceeding by the Company currently pending or
which the Company intends to initiate.
4.19. LABOR MATTERS.
(a) The Company is not bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the knowledge of the Company, has sought
to represent any of the employees, representatives or agents of Company. There
is no strike or other labor dispute involving the Company pending, or to the
knowledge of the Company, threatened, which could have a Material Adverse Effect
on the assets, properties, financial condition, operating results or Business of
the Company, nor is the Company aware of any labor organization involving its
employees.
(b) SCHEDULE 4.19(b) sets forth the names of each of
the key, exempt employees (I.E., those employees whose annual cash compensation
exceeds $50,000 and who are considered "exempt" from the payment of overtime) of
the Company, and also sets forth the base payment made to such key employee each
pay period up to and including the date hereof and projections for the current
Fiscal Year of other incentive compensation (including bonuses) for each person
named therein. SCHEDULE 4.19(b) also lists as of the date hereof the names of
all other employees of the Company, the hourly pay rates of compensation and the
job titles for all such employees. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate his or
her employment with the Company, nor does the Company have a present intention
to terminate the employment of any of the foregoing. SCHEDULE 4.19(b) also sets
forth all agreements, written or oral, between the Company and any employee of
the Company. To the Company's knowledge, no employee or director of the Company
is a party to, or is otherwise bound by, any nondisclosure, confidentiality,
noncompetition, proprietary rights, employment, consulting or similar agreement,
between such employee or director and any other Person that materially adversely
affects or will affect the performance of his or her duties as an employee or
director of the Company.
4.20. SOFTWARE.
(a) The Company is not a party to any agreement,
arrangement or understanding requiring the Company to place in escrow, or
otherwise to permit any third party
28
to use or have access to, the source code to any of the Company Software. The
Company Software is fit in all respects for its intended purpose, works in
all respects in accordance with its specifications and user or other manuals,
does not contain any defect or feature which does or may adversely affect its
performance or the performance of any other software and is sufficient to
fulfill all commitments entered into by the Company to carry out its
Business. The Company has not at any time had any dispute with any Person
relating to the functionality, quality or fitness for purpose of the Company
Software or relating to its compliance with its specifications or with any
warranties given by the Company or any other Person relating to it. The
Company has taken all reasonable steps to ensure that the Company Software is
free of any virus and there are no grounds for believing that any virus has
or will come into contact with the Company Software. None of the Company
Software developed by or for the Company contains any software that embodies
rights in Intellectual Property of any person other than the Company, except
for such software obtained by the Company from other third parties that make
such software generally available to all interested purchasers or end-users
on standard commercial terms and that have expressly licensed the Company to
utilize such software in the manner they have been utilized. The Company has
lawfully acquired the right to use any Company Software not exclusively owned
by the Company, as it is used in the conduct of the Business as presently
conducted and contemplated to conducted, and have not exercised any rights in
respect of such Company Software, including, without limitation, any
reproduction, distribution or derivative work rights, outside the scope of
any license expressly granted by the person from which the right to use such
software was obtained. No royalties, fees, honoraria or other payments are
payable by the Company to any person by reason of the ownership, use, sale,
licensing, distribution or other exploitation of any Company Software or any
Company Intellectual Property.
(b) The Company has taken all reasonable actions to
document the Company Software and its operation, such that the Company Software,
including the source code and documentation, may be modified and maintained in
an efficient manner by reasonably competent programmers.
4.21. INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.21(b) lists all Company Intellectual
Property and lists any proceedings or actions pending as of the date hereof
before any court or tribunal (including the PTO or equivalent authority anywhere
in the world) related to any of the Company Intellectual Property.
(b) The Company has all requisite right, title and
interest in or valid and enforceable rights under contracts or Licenses to use
all Company Intellectual Property necessary to the conduct of its business as
presently conducted or contemplated to be conducted by the Company's existing
business plan. Each item of Company Intellectual Property is owned exclusively
by the Company (excluding Intellectual Property licensed to the Company under
any License) and is free and clear of any liens, covenants or other adverse
claims or interest of any kind or nature. The Company has not received any
notice or claim (whether written, oral or otherwise) challenging the Company's
ownership or rights in or to any Company Intellectual Property or suggesting
that any Person has any claim of legal or beneficial ownership with respect
thereto. The Company (i) owns exclusively, and has good title to, all Company
Marks
29
and (ii) owns exclusively, and has good title to, all copyrighted works that
are Company products or other works of authorship that the Company otherwise
purports to own or otherwise uses in connection with the Business; PROVIDED,
HOWEVER, that such works may incorporate copyrighted works or works of
authorship, trademarks or trade names of third parties which are licensed to
the Company or are in the public domain.
(c) SCHEDULE 4.21(c) lists all Company Marks. Except
as may be set forth in SCHEDULE 4.21(c), the Company makes the following
representations and warranties with respect to the Company Marks:
(i) the Company has not received any notice
or claim (whether written, oral or otherwise) challenging the validity or
enforceability of the Company Marks, and, to the knowledge of the Company, the
Company Marks are legally valid and enforceable without material qualification,
limitation or restriction on its use in the classifications and applicable
jurisdictions covered by the registrations referred to in SCHEDULE 4.21(a);
(ii) the Company has not taken any action
(or failed to take any action) with respect to, or used or enforced (or failed
to use or enforce), the Company Marks, in each case in a manner that would
result in the abandonment, cancellation, forfeiture, relinquishment, or
unenforceability of the Company Marks, or any of the Company's rights therein,
in connection with the uses of the Company Marks made by the Company as of the
Closing Date;
(iii) the Company has taken reasonable steps
to protect its rights in and to the Company Marks and to prevent the
unauthorized use thereof by any other Person, and has adequately policed the
Company Marks against third party infringement of which it is aware;
(iv) the Company Marks have not been and are
not now involved in any opposition or cancellation proceeding and, to the
knowledge of the Company, no such action is threatened with the respect to the
Company Marks;
(v) to the knowledge of the Company, there
is no trademark or service xxxx or application therefor of any other Person that
is conflicting with the Company Marks and the use of the Company Marks in the
manner used by the Company as of the Closing Date does not create a likelihood
of confusion with any trade name, trademark or service xxxx of any other Person;
(vi) to the knowledge of the Company, there
has been no prior use of the Company Marks by any third party which would confer
upon such third party superior rights in the Company Marks vis-a-vis the uses of
the Company Marks by the Company as of the Closing Date; and
(vii) the Company Marks have been
continuously used in the form appearing in, and in connection with the goods and
services listed in, their respective registration certificate.
(d) The Company does not own any patents or
applications therefor.
30
(e) To the extent that any Company Intellectual
Property has been developed or created by any Person other than the Company, the
Company has a written agreement with such Person with respect thereto and the
Company has either (i) obtained ownership of, and is the exclusive owner of, all
such Intellectual Property by operation of law or by valid assignment of any
such rights or (ii) has obtained a License under or to such Intellectual
Property of sufficient scope to authorize the Company to exercise all of the
rights in respect of such Intellectual Property that the Company has exercised
or is exercising.
(f) Except pursuant to agreements described in
SCHEDULE 4.21(h), the Company has not transferred ownership of or granted any
License of or other right to use or authorized the retention of any rights to
use any Intellectual Property that is or was Company Intellectual Property, to
any other Person.
(g) The Company Intellectual Property constitutes all
the Intellectual Property used in and/or necessary to the conduct of the
Business as it currently is conducted, including, without limitation, the
design, development, distribution, marketing, manufacture, use, import, license,
and sale of the products, technology and services of the Company (including
products, technology, or services currently under development).
(h) SCHEDULE 4.21(h) lists all contracts and Licenses
(including all inbound Licenses) to which the Company is a party with respect to
any Intellectual Property. No Person other than the Company has ownership rights
or any exclusive license to improvements made by the Company in Intellectual
Property which has been licensed to the Company. The expiration dates of all
inbound Licenses are sufficiently distant from the date hereof such that no
potential impairment on the ability of the Company to commercially exploit any
of the Company's technology, products or services could reasonably be imputed by
virtue of the non-renewal of the term of any License. To the Company's
knowledge, the rights licensed under each License shall be exercisable by the
Company on and after the Closing to the same extent as prior to the Closing.
Neither the Company nor, to the knowledge of the Company, any other party
thereto is any material breach of any contracts or Licenses listed on SCHEDULE
4.21(h) and there are no outstanding claims or, to the Company's knowledge, any
threatened disputes or disagreements with respect thereto.
(i) SCHEDULE 4.21(i) lists all contracts, Licenses
and agreements between the Company and any other Person wherein or whereby the
Company has agreed to, or assumed, any obligation or duty to warrant, indemnify,
reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or Liability or provide a right of rescission with respect to the infringement
or misappropriation by the Company or such other Person of the Intellectual
Property of any Person other than the Company.
(j) The operation of the business of the Company as
currently conducted, including the Company's design, development, use, import,
manufacture and sale of the products, technology or services of the Company
(including products, technology, or services currently under development) does
not infringe or misappropriate the Intellectual Property of any Person, violate
the rights of any Person (including rights to privacy or publicity), or
constitute unfair competition or an unfair trade practice under any Regulations,
and the Company has not received notice from any Person claiming that such
operation or any act, product, technology or
31
service (including products, technology or services currently under
development) of the Company infringes or misappropriates the Intellectual
Property of any Person or constitutes unfair competition or trade practices
under any Regulation, including notice of third party patent or other
Intellectual Property rights from a potential licensor of such rights. Except
as may be set forth in SCHEDULE 4.21(j), the Company is not a party and has
not, in the three years prior to the date hereof, been a party, to any legal
action or proceeding that involves or involved a claim of infringement,
misappropriation or other wrongful use or exploitation by any Person against
the Company of any Intellectual Property of such Person.
(k) Each item of Company Registered Intellectual
Property is valid and subsisting, and all necessary registration, maintenance,
renewal fees, annuity fees and taxes in connection with such Registered
Intellectual Property have been paid and all necessary documents and
certificates in connection with such Company 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. SCHEDULE
4.21(k) lists all actions that must be taken by the Company within one hundred
eighty days from the date hereof, including the payment of any registration,
maintenance, renewal fees, annuity fees and taxes or the filing of any
documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any Company Registered Intellectual
Property. Except as set forth on SCHEDULE 4.21(k), the Company has registered
the copyright with the U.S. Copyright Office for the latest version of each
product or technology of the Company that constitutes or includes a
copyrightable work. In each case in which the Company has acquired ownership of
any Intellectual Property rights from any Person, the Company has obtained a
valid and enforceable assignment sufficient to irrevocably transfer all rights
in such Intellectual Property (including the right to seek past and future
damages with respect to such Intellectual Property) to the Company and, to the
maximum extent provided for by, and in accordance with, applicable Regulations,
the Company has recorded each such assignment of Registered Intellectual
Property with the relevant governmental or regulatory authority, including the
PTO, the U.S. Copyright Office, or their respective equivalents in any relevant
foreign jurisdiction, as the case may be. The Company has not taken any action
(or failed to take any action) with respect to, or used or enforced (or failed
to use or enforce), any copyrights in copyrighted works that are Company
products or other works of authorship that the Company otherwise purports to
exclusively own, in each case in a manner that would result in the
unenforceability of any such copyrights.
(l) There are no contracts or Licenses between the
Company and any other Person with respect to Company Intellectual Property under
which there is any dispute known to the Company regarding the scope of such
contract or License, or performance under such contract or License, including
with respect to any payments to be made or received by the Company thereunder.
There are no contracts or Licenses between the Company and any other Person with
respect to Company Intellectual Property that prevents, restricts or otherwise
inhibits the Company's freedom to use and exploit any Company Intellectual
Property.
(m) To the knowledge of the Company, no Person is
infringing or misappropriating any Company Intellectual Property. Except as may
be set forth in SCHEDULE 4.21(m), the Company is not a party and has not, in the
three years prior to the date hereof, been a party, to any legal action or
proceeding, nor is, or during the one-year period prior to date
32
hereof has there been, any legal action or proceeding threatened in writing,
that involves or involved a claim of infringement, misappropriation or other
wrongful use or exploitation, by the Company against any other Person with
regard to any Company Intellectual Property.
(n) The Company has taken all commercially reasonable
steps to protect the Company's rights in all material Company Trade Secrets.
With respect to each Company Trade Secret, the documentation relating thereto is
current, accurate and sufficient in detail and content to identify and explain
it and to allow its full and proper use without reliance on the special
knowledge or memory of others. Except under appropriate confidentiality
obligations that, to the Company's knowledge, have been fully observed and
performed in all material respects, there has been no disclosure by the Company
of material confidential information or other Company Trade Secrets to any other
Person.
(o) Without limiting the generality of the foregoing,
the Company has, and enforces, a policy requiring each employee, consultant and
independent contractor to execute proprietary information, confidentiality and
invention and copyright assignment agreements substantially in the form set
forth in SCHEDULE 4.21(o). Copies of all such agreements have been provided to
Parent or made available to Parent for review. SCHEDULE 4.21(o) sets forth a
list of all current and former employees, consultants and independent
contractors of the Company and their respective positions, and indicates whether
such person has executed such an agreement. To the knowledge of the Company, no
employee or consultant of the Company whose duties or responsibilities relate to
the development of any Company Software, content or other materials comprising
or protected by Company Intellectual Property is obligated under any agreement
(including Licenses, covenants or commitments of any nature) or subject to any
judgment, decree or order of any court or administrative agency, or any other
restriction that would interfere with the use of his or her best efforts to
carry out his or her duties for the Company or to promote the interests of the
Company or that would conflict with the Business. To the knowledge of the
Company, the carrying on of the Business by such employees and contractors of
the Company and the conduct of the Business as presently proposed, will not,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees or consultants or the Company is now obligated. Except as
set forth in SCHEDULE 4.21(o), it will not be necessary to utilize any
Intellectual Property of any employees of the Company (or Persons the Company
currently intends to hire) acquired prior to their employment by the Company in
order to continue to use, display and exploit any Company Intellectual Property.
(p) No Company Intellectual Property or product,
technology or service of the Company is subject to any Court Order or action or
proceeding that restricts, or that is reasonably expected to restrict in any
manner, the use, transfer or licensing of any Company Intellectual Property by
the Company or that may affect the validity, use or enforceability of such
Company Intellectual Property.
(q) No (i) product, technology, service or
publication of the Company, (ii) material published or distributed by the
Company, or (iii) conduct or statement of the Company constitutes obscene
material, a defamatory statement or material, false advertising or otherwise
violates any Law.
33
(r) Neither this Agreement nor any transactions
contemplated by this Agreement will result in Parent granting any rights or
licenses with respect to the Intellectual Property of Parent to any Person
pursuant to any contract to which the Company is a party or by which any of its
assets and properties are bound.
(s) SCHEDULE 4.21(s) sets forth a list of (i) Company
Software and (ii) a list of all "freeware" and "shareware" incorporated into any
product now or heretofore shipped by the Company. The Company has all rights
necessary to the use of such software, "freeware" and "shareware."
4.22. TRANSACTIONS WITH CERTAIN PERSONS. Except as set forth
SCHEDULE 4.22, no officer or director of any of the Company or any Affiliate of
any such person has had, either directly or indirectly, a material interest in:
(a) any person or entity which purchases from or sells, licenses or furnishes to
the Company any goods, property, technology, intellectual or other property
rights or (b) any contract or agreement to which the Company is a party or by
which it may be bound or affected.
4.23. INSURANCE. SCHEDULE 4.23 sets forth a complete and
correct list of all insurance policies of the Company of any kind currently in
force and also sets forth for each insurance policy the type of coverage, the
name of the insureds, the insurer, the premium, the expiration date and the
amounts of coverage. All insurance coverage applicable to the Company and the
Business is in full force and effect and, to the knowledge of the Company,
insures the Company in reasonably sufficient amounts against the risks disclosed
in such policies. Except as set forth on SCHEDULE 4.23, the Company has no
self-insurance or co-insurance programs, and the reserves set forth on the March
2000 Balance Sheet are adequate to cover all anticipated liabilities with
respect to any such self-insurance or co-insurance programs.
4.24. ACCOUNTS RECEIVABLE. The accounts receivable set forth
on the March 2000 Balance Sheet represent BONA FIDE claims of the Company
against debtors for products sold or services performed or other charges arising
on or before the date hereof. Except as set forth on SCHEDULE 4.24, to the
knowledge of the Company, such accounts receivable are subject to no defenses,
counterclaims or rights of setoff and are fully collectible in the Ordinary
Course of Business without material cost in collection efforts therefor, except
to the extent of the appropriate reserves for bad debts on accounts receivable
as set forth on the March 2000 Balance Sheet and, in the case of accounts
receivable arising since March 31, 2000, to the extent of a reasonable reserve
rate for bad debts on accounts receivable which is not greater than the rate
reflected by the reserve for bad debts on the March 2000 Balance Sheet.
4.25. CUSTOMERS.
(a) SCHEDULE 4.25 sets forth a true and correct list
of the twenty-five largest customers of the Company in terms of revenues during
the Fiscal Year ended December 31, 1999, showing the approximate total products
sold or services performed by the Company to or for each such customer during
each such period.
(b) No customer of the Company listed on SCHEDULE
4.25 has notified the Company in writing or otherwise of any intention to stop,
or materially decrease the rate of,
34
buying goods or services from the Company or to change its current business
relationship with the Company and no significant customer has otherwise
expressed such intention.
(c) The Company, the Executives and Tyler have no
reason to believe that any customer of the Company listed on SCHEDULE 4.25,
including, without limitation, Nobody In Particular Presents, The XxXxxxxx Group
Limited, Bravo Entertainment LLP and African Media Entertainment Ltd./The Big
Concerts Promotion Group, will change its current business relationship with the
Company as a result of the transactions contemplated hereby.
4.26. CERTAIN BUSINESS PRACTICES. None of the directors,
officers, agents or employees of the Company or any of its affiliates has, in
each case in connection with the Business, (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses, including
without limitation, expenses related to political activity, (b) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns, made any bribes or kickback
payments or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (c) made any other unlawful payment, in each case, except where
any such payment would not have a Material Adverse Effect.
4.27. NO BROKERS. Except as set forth on SCHEDULE 4.27, none
of the Company or any of the Company's officers, directors, employees or
Stockholders has entered into nor will enter into any contract, agreement,
arrangement or understanding with any broker, finder or similar agent or any
Person which will result in the obligation of Parent, the Company or any of
their respective Affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.28. MATERIAL MISSTATEMENTS OR OMISSIONS. No representations
or warranties by the Company in this Agreement, the Company Disclosure Schedules
or, to the knowledge of the Company, any document, exhibit, statement or
certificate heretofore or hereafter furnished to Parent pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements or facts contained therein not
misleading.
4.29. BOOKS AND RECORDS. The Company has made and kept (and
given Parent access to) its true, correct and complete books and records and
accounts, which, in reasonable detail, accurately and fairly reflect in all
material respects the activities of the Company and its predecessor, TicketWeb
LLC, a California limited liability company (the "LLC"). The minute books of the
Company previously made available to Parent accurately and adequately reflect in
all material respects all action previously taken by the stockholders, members,
board of directors and committees of the board of directors and governing bodies
of the Company and the LLC. The copies of the stock book records of the Company
previously made available to Parent are true, correct and complete, and
accurately reflect all transactions effected in the stock of the Company through
and including the date hereof.
4.30. BANK ACCOUNTS. SCHEDULE 4.30 contains a true, correct
and complete list of all bank accounts maintained by the Company, including each
account number and the name
35
and address of each bank and the name of each person who has signature power
with respect to each such account.
4.31. EXEMPTION FROM HSR ACT. The "person" controlled by the
Company's "ultimate parent entity" did not have either (a) "annual net sales" or
(b) "total assets" of $10,000,000 or more, as those terms are defined in the HSR
Act and its implementing rules.
4.32. OTHER COMMITMENTS.
(a) SCHEDULE 4.32(a) sets forth, as of the Closing
Date, the Company's agreements, commitments and understandings (whether or not
binding) with any Person intending to operate an on-line ticketing company in
Asia, Australia or New Zealand involving (i) the license of the Company's
Intellectual Property to any such Person or his, her or its Affiliates, (ii) the
investment by the Company in any such on-line ticketing company or (iii) the
provision of technology support by the Company to any such on-line ticketing
company.
(b) Except as set forth on SCHEDULE 4.32(b), the
Company has no obligations to pay any fees or other amounts to Paciolan Systems,
Inc. ("PACIOLAN")
(c) The Company is not party to any agreement,
commitment or understanding with a credit card company that would prevent the
Company from accepting any particular credit cards in payment for tickets
purchased in connection with the Business.
4.33. TAX-FREE REORGANIZATION. Neither the Company nor any of
its directors, officers or stockholders has taken any action which could
reasonably be expected to jeopardize the status of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants
to each of the Company as follows, which representations and warranties are, as
of the date hereof, and will be, as of the Closing Date, true and correct:
5.1. ORGANIZATION OF PARENT AND MERGER SUB. Each of Parent and
Merger Sub is duly organized, validly existing and in good standing under the
laws of its state of organization with full power and authority to conduct its
business as it is presently being conducted, to own or lease, as applicable, its
assets, and to perform all its obligations under its contracts. Each of Parent
and Merger Sub is duly qualified to do business as a foreign entity and is in
good standing in each jurisdiction where the character of its properties owned
or leased or the nature of its activities make such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on Parent or Merger Sub, as the case may be.
5.2. AUTHORIZATION. Each of Parent and Merger Sub has all
requisite power and authority, and has taken all action necessary, to execute
and deliver this Agreement and the
36
Ancillary Agreements to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions
contemplated hereby and thereby have been duly approved by the boards of
directors of each of Parent and Merger Sub. No other proceeding on the part
of each of Parent and Merger Sub are necessary to authorize this Agreement
and the Ancillary Agreements and the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by each of
Parent and Merger Sub and is, and upon execution and delivery the Ancillary
Agreements will be, a legal, valid and binding obligation of each of Parent
and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with their respective terms except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting creditors' rights generally and except insofar as the
availability of equitable remedies may be limited by applicable law
5.3. COMPLIANCE WITH OTHER INSTRUMENTS. Each of Parent and
Merger Sub is not in Default of any term of its charter or bylaws or in any
material respect of any term or provision of any mortgage, indenture, contract,
agreement or instrument to which Parent of Merger Sub is a party or by which it
may be bound, or of any provision of any foreign or domestic state or federal
judgment, decree, order, statute, rule or regulation applicable to or binding
upon Parent or Merger Sub. The execution, delivery and performance of and
compliance with this Agreement and the consummation of the transactions
contemplated hereby will not result in any such Default, or be in conflict with
or constitute, with or without the passage of time or the giving of notice or
both, either a Default under Parent's or Merger Sub's charter or bylaws, or any
agreement or contract to which Parent or Merger Sub is party, or, to the best of
Parent's knowledge, a violation of any statutes, laws, Regulations or Court
Orders, or an event which results in the creation of any lien, charge or
encumbrance upon any of the assets of Parent or Merger Sub.
5.4. CONSENTS AND APPROVALS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements, of state securities laws, and the filing and
recordation of the Merger Certificate as required by the DGCL no consent,
approval or authorization of, declaration to, or filing or registration with,
any governmental or regulatory authority, or any other Person, is required to be
made or obtained by each of Parent and Merger Sub in connection with the
execution, delivery and performance by each of Parent and Merger Sub of this
Agreement and the consummation of the transactions contemplated hereby.
5.5. NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Merger
Sub has neither incurred any obligation or liability nor engaged in any business
or activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person. Merger Sub is a wholly-owned, first-tier subsidiary
of Parent.
5.6. LITIGATION. There is no Proceeding pending, or to the
knowledge of each of Parent and Merger Sub, threatened or anticipated against or
affecting Parent and Merger Sub or either of them which has or might be
reasonably expected to have a Material Adverse Effect
37
on the ability of each of Parent and Merger Sub to perform any of its
obligations hereunder or on the consummation of the transactions contemplated
by this Agreement.
5.7. PUBLIC DOCUMENTS; PARENT'S FINANCIAL STATEMENTS. Parent
has furnished or made available to the Company a true and complete copy of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and its
Report of Form 10-Q for the three months ended March 31, 2000 (the "SEC
DOCUMENTS"), which Parent filed under the Securities and Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), with the SEC. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. There has been no change in Parent's operations resulting in a
Material Adverse Effect on Parent since March 31, 2000. The financial statements
of Parent, including the notes thereto, included in the SEC Documents (the
"PARENT FINANCIAL STATEMENTS") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by applicable rules and regulations of the SEC) and
fairly present the consolidated financial position of Parent at the dates
thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments). There has been no change in Parent's accounting policies except as
described in the notes to the Parent Financial Statements.
5.8. NO BROKERS. Neither Parent, Merger Sub nor any of their
respective partners, Representatives or Affiliates has entered into nor will
enter into any contract, agreement, arrangement or understanding with any
broker, finder or similar agent or any Person which will result in the
obligation of the Company or the Stockholders to pay any finder's fee, brokerage
fees or commission or similar payment in connection with the transactions
contemplated hereby.
5.9. VALID ISSUANCE OF STOCK. The Parent Shares to be issued
hereunder, when issued and delivered in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and non assessable, free
and clear of all liens, claims, encumbrances and adverse interests of any kind,
except for (a) such encumbrances as may have been created by the Stockholders
and (b) the adjustments provided in SECTION 2.8(d). All Parent Shares upon
issuance will have the rights, privileges and preferences set forth in Parent's
Certificate of Incorporation and Bylaws for such class of shares. The Parent
Shares will be issued in compliance with applicable federal securities laws and
the California Corporate Securities Law of 1968, as amended.
5.10 TAX MATTERS. Parent has no current plan or intention to
(a) cause the Surviving Corporation to take any action that would result in
Parent losing control of the Surviving Corporation within the meaning of Section
368(c)(1) of the Code, (b) cause the Surviving Corporation to sell or otherwise
dispose of substantially all of the assets of the Surviving Corporation, except
for (i) dispositions made in the ordinary course of business, (ii) transfers
(including successive transfers) of assets to one or more corporations
controlled in each case by the transferor corporation (a "qualified group") or
(iii) transfers to a partnership if (A)
38
members of the qualified group own 33 1/3% or greater interest in the
partnership or (B) one or more members of the qualified group have active and
substantial management function as a partner with respect to the partnership
business and members of the qualified group own 20% or greater interest in
the partnership, (c) cause or permit the Surviving Corporation to fail to
hold at least 90% of the fair market value of the Company's net assets and at
least 70% of the fair market value of its gross assets, and at least 90% of
the fair market value of Merger Sub's net assets and at least 70% of its
gross assets held immediately prior to the Merger (for this purpose, amounts
paid by the Company, Merger Sub, or the Surviving Corporation to dissenters,
to stockholders who receive cash or other property, to pay reorganization
expenses, and in connection with redemptions and distributions, except for
regular, normal distributions, will be treated as assets of the Company or
Merger Sub, respectively, held immediately prior to the Merger), (d) sell or
otherwise dispose of the capital stock of the Surviving Corporation (except
for transfers of such stock to corporations controlled by Parent within the
meaning of Code Section 368(a)(2)(C)) or (e) reacquire any shares of its
capital stock issued in the Merger, other than possible purchases in the
ordinary course of business of shares held by Company employees in connection
with termination of employment of such employees, or pursuant to a general
open market share repurchase program that was not created or modified in
connection with the Merger.
ARTICLE VI.
COVENANTS OF ALL PARTIES
Each of the Company, Parent and Merger Sub covenants and
agrees as follows:
6.1. CONDUCT OF BUSINESS. From the date hereof through the
Closing, the Company shall carry on the operation of the Business in the
Ordinary Course and substantially in accordance with past practice and will use
its reasonable best efforts not to take any action inconsistent with this
Agreement. Except as contemplated hereby or as may be incidental to or in
furtherance of the transactions contemplated hereby or as may have been set
forth herein or in the Company Disclosure Schedules, the Company shall use its
best efforts to maintain the present character and quality of the Business,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers and employees.
Without limiting the generality of the foregoing, unless consented to by Parent
in writing (which consent shall not be unreasonably withheld), the Company,
except as specifically contemplated by this Agreement, shall not:
(a) incur any indebtedness for borrowed or purchase
money or letters of credit, or assume, guarantee, endorse (other than
endorsements for deposit or collection in the Ordinary Course of Business), or
otherwise become responsible for obligations of any other Person except in the
Ordinary Course of Business;
(b) issue or redeem any securities;
(c) make or incur any obligation to make any
distribution to its Stockholders;
39
(d) make any change to its Certificate of
Incorporation or Bylaws;
(e) mortgage, pledge or otherwise encumber any of its
assets or sell, transfer or otherwise dispose of any of its assets except in the
Ordinary Course of Business;
(f) make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person,
except in the Ordinary Course of Business;
(g) terminate any Material Contract or make any
material change in any Material Contract;
(h) make any change in any method of accounting or
accounting practice;
(i) with respect to the Business, other than in the
Ordinary Course of Business, (i) enter into or renew any employment contract,
(ii) pay or agree to pay any compensation to or for any employee, stockholder,
officer or director of the Company other than in the Ordinary Course of Business
and in the amounts and manner as such compensation has been paid by the Company
in the past, (iii) pay or agree to pay any bonus, incentive compensation,
service award or other like benefit or (iv) enter into or renew any employee
welfare, pension, retirement, profit-sharing or similar payment or arrangement;
(j) enter into any agreement or make any commitment
or offer with respect to the Business other than in the Ordinary Course of
Business for the transfer of cash at rates and other terms consistent with past
practice;
(k) enter into or renew any other Material Contract
with respect to the Business, unless the same shall be terminable on no more
than 90 days' written notice without penalty or payment and is entered into in
the Ordinary Course of Business;
(l) distribute or incur any obligation to make any
distribution by the Company to the Stockholders; or
(m) do any other act which would cause any
representation or warranty of the Company in this Agreement to be or become
untrue in any material respect or that is not in the Ordinary Course of Business
consistent with past practice.
6.2. INVESTIGATION BY PARENT. The Company shall, upon
reasonable notice from Parent, allow Parent during regular business hours to
make such investigation of the business, properties, books and records of the
Company, and to conduct such examination of the condition of the assets of the
Company and the Business as Parent deems necessary or advisable to familiarize
itself with the assets, properties, books, records and other matters and to
verify the representations and warranties of the Company hereunder, including,
without limitation, (a) discussions with the Company's officers and (b)
interviews, with the Company's prior consent which shall not be unreasonably
withheld or delayed, of employees, independent accountants, actuaries,
customers, distributors and suppliers and other agents of the Company so long as
a representative of the Company is present at all times; PROVIDED that Parent
shall in all cases
40
conduct such investigation in a manner so as to minimize the disruption of
the Company's business and operations. Materials furnished to Parent pursuant
to this SECTION 6.2 shall in all respects be subject to the terms of the
Confidentiality Agreement.
6.3. FURTHER ASSURANCES. Upon the terms and subject to the
conditions contained herein, the parties agree (a) to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements, (b) to
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder and thereunder and (c) to cooperate with each other in
connection with the foregoing.
6.4. ANCILLARY AGREEMENTS.
(a) In connection with the transactions contemplated
hereby and pursuant to the terms and conditions outlined in the Term Sheet,
Parent and the Company will enter into with each of the Executives (i) the
Employment Agreements and (ii) the Non-Competition Agreements.
(b) In connection with the transactions contemplated
hereby, Parent and the Company will enter into with Tyler (i) the Consulting
Agreement and (ii) a Non-Competition Agreement.
6.5. NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to Parent of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of the Company
contained in this Agreement or in any Ancillary Agreement, exhibit or schedule
to be untrue or inaccurate in any material respect and (ii) any material failure
of the Company or any of its Affiliates to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any Ancillary Agreement, exhibit or schedule; PROVIDED, HOWEVER,
that such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. The Company shall
promptly notify Parent of the threat or commencement of any Action, or any
development that occurs before the Closing that could in any way result in a
Material Adverse Effect on the Company.
(b) Parent shall give prompt notice to the Company of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of Parent or
Merger Sub contained in this Agreement or in any Ancillary Agreement, exhibit or
schedule to be untrue or inaccurate in any material respect and (ii) any
material failure of Parent or Merger Sub or any of their respective Affiliates
or Representatives, as applicable, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any Ancillary Agreement, exhibit or schedule; PROVIDED, HOWEVER,
that such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. Parent shall
41
promptly notify the Company of the threat or commencement of any Action, or
any development that occurs before the Closing that, to Parent's knowledge,
could in any way result in a Material Adverse Effect on Parent.
6.6. EMPLOYEE MATTERS.
(a) Parent intends to hire, as employees of the
Surviving Corporation, each employee of the Company on an "at-will" basis at the
Closing, at the compensation level such employee received immediately prior to
the Closing; PROVIDED, HOWEVER, that each employee listed on EXHIBIT F attached
hereto shall receive the compensation reflected directly across from such
employee's name on EXHIBIT F. Parent shall hire such employees pursuant to a
notice in the form attached hereto as EXHIBIT G. The Company shall use its best
efforts to assist Parent in employing such employees of the Company. The Company
shall cause all employment agreements between the Company and any employee as
listed on SCHEDULE 4.19(b) to be terminated as of the Closing Date, which
employment agreements shall be of no further force or effect.
(b) After the Closing, the employees to be hired by
the Surviving Corporation and the Executives will be granted options to purchase
Parent Shares as follows:
(i) Each Executive will be granted, pursuant
to an executive option agreement in the form attached hereto as EXHIBIT H, the
number of options to purchase Parent Shares set forth adjacent to his name on
SCHEDULE 6.6. Such options will have an exercise price equal to the closing
sales prices of Parent Shares on the NASDAQ National Market for the trading day
immediately preceding the Closing Date, as reported in the Western Edition of
THE WALL STREET JOURNAL (the "EXERCISE PRICE"), and will vest as follows: (A)
1/2 of such options shall vest on the first anniversary of the date of grant and
(B) 1/24 of such options shall vest each month following the first anniversary
of the date of grant.
(ii) The employees of the Company (excluding
the Executives) who become and continue to be employed by Parent or the
Surviving Corporation (the "CONTINUING COMPANY EMPLOYEES") will be granted,
pursuant to employee option agreements in the form attached hereto as EXHIBIT I
and in amounts to be determined by Parent with the concurrence of the
Executives, options to purchase an aggregate of 150,000 Parent Shares for the
Exercise Price, which options shall vest as follows: (A) 1/4 of such options
shall vest on the first anniversary of the date of grant and (B) 1/48 of such
options shall vest each month following the first anniversary of the date of
grant.
(c) In addition, in accordance with Parent's normal
compensation and review process, all Continuing Company Employees will receive
salary adjustments and further Parent option awards commensurate with other
employees of Parent in the same general positions and geographic locations.
(d) All Continuing Company Employees shall be
eligible to participate in the health, vacation and other employee benefit plans
of Parent or the Surviving Corporation to the same extent as employees of Parent
or the Surviving Corporation in similar positions and at similar grade levels
(it being understood that such employees shall be eligible to begin to
42
participate (i) in Parent's employee stock purchase plan upon the
commencement of the first new offering period after the Effective Time and
(ii) in Parent's other employee benefit plan in accordance with the terms of
such plans; PROVIDED, HOWEVER, that in the case of plans for which the
Company maintains a plan offering the same type of benefit, such eligibility
need not be offered by Parent until the corresponding plan of the Company
ceases to be available after the Effective Time). As soon as administratively
feasible following the Effective Time, Parent agrees to take whatever action
is necessary to transition the Continuing Company Employees into Parent's
employee benefit plans as contemplated by the first sentence of this SECTION
6.7(d). Further, until such time that the Continuing Company Employees are
covered under an employee benefit plan of Parent, they shall continue to be
covered under the corresponding Company plan that offers the same type of
benefit. Parent also agrees to provide each Continuing Company Employee with
full credit under any Parent or Surviving Corporation plan for services as an
employee of the Company prior to the Effective Time for purposes of
eligibility, vesting (other than vesting under Parent's stock option plan
with respect to those new options granted pursuant to SECTION 6.6(b)(ii)
above) and the determination of the level of benefits under any Parent or
Surviving Corporation plan (including vacation).
6.7. PUBLIC ANNOUNCEMENTS. On and after the date hereof and
through the Closing Date, the Company and Parent shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby, and none of
the parties shall issue any press release or make any public statement prior to
obtaining the other parties' written approval, which approval shall not be
unreasonably withheld, except that no such approval shall be necessary to the
extent disclosure may be required by law or any listing agreement of any party
hereto.
6.8. RESTRICTIONS ON TRANSFER. The Parent Shares comprising
the Merger Consideration shall be subject to the transfer restrictions as
provided in the Stockholder Support Agreements and certificates representing
such Parent Shares shall be legended as provided in the Stockholder Support
Agreements.
6.9. REGISTRATION STATEMENTS.
(a) Parent shall promptly prepare, with the
cooperation of the Stockholders with respect to information relating to the
Stockholders or their sale of Parent Shares, and Parent shall file with the U.S.
Securities and Exchange Commission ("SEC") as soon as practicable following the
Closing (and in any event within fourteen (14) Business Days of the Closing, so
long as all of the Stockholders and the holders of the other Registrable
Securities (as defined below) provide information with respect to themselves and
their holding in a timely manner to enable Parent to make such filing on such
timetable), a Registration Statement on Form S-3 or other appropriate short-form
registration statement (the "S-3 REGISTRATION STATEMENT") under the Securities
Act of 1933, as amended (the "ACT"), with respect to (i) the Parent Shares
issued as Merger Consideration and (ii) the Parent Shares issuable upon the
exercise of each of the assumed Warrants and upon the exercise of those Options
that are held by Persons (if any) who are not eligible, pursuant to the rules
and regulations promulgated under the Act, to receive Parent Shares registered
on the S-8 Registration Statement (as defined below) (collectively, the
"REGISTRABLE SECURITIES"). Parent, with the cooperation of the Stockholders with
respect to information relating to the Stockholders or their sale of such Parent
Shares, shall
43
cause the S-3 Registration Statement to comply as to form in all material
respects with the applicable provisions of the Act and the rules and
regulations thereunder. Parent shall use all reasonable efforts, and the
Stockholders will cooperate with Parent, to have the S-3 Registration
Statement declared effective by the SEC as promptly as practicable. Parent
shall use its reasonable efforts to obtain, prior to the effective date of
the S-3 Registration Statement, all necessary state securities law or "Blue
Sky" permits or approvals required to carry out the sale of such Parent
Shares by the Stockholders. Parent agrees that the S-3 Registration Statement
and each amendment or supplement thereto at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or omission to state
a material fact was made by Parent in reliance upon and in conformity with
information concerning the Stockholders furnished to Parent by the
Stockholders specifically for use in the S-3 Registration Statement. Parent
shall advise the Stockholders, promptly after it receives notice thereof, of
the time when the S-3 Registration Statement has become effective (the date
on which the S-3 Registration Statement is declared effective in accordance
with the Act being the "S-3 EFFECTIVE DATE"). Parent shall cause the S-3
Registration Statement to remain effective until the earlier of (1) the date
at which all Registrable Securities have been sold by the holders thereof or
(2) the date on which the Registrable Securities may be sold pursuant to Rule
144 promulgated under the Act, without regard to volume limitations.
(b) EXPENSES OF REGISTRATION. Parent shall pay all
Registration Expenses (as hereafter defined) in connection with any
registration, qualification or compliance pursuant to this SECTION 6.9, and each
holder of Registrable Securities (individually, a "HOLDER" and collectively, the
"HOLDERS") shall pay all Selling Expenses (as hereafter defined) and other
expenses that are not Registration Expenses relating to the Registrable
Securities resold by such holder. For purposes of this SECTION 6.9(b),
"REGISTRATION EXPENSES" shall mean all expenses, except as otherwise stated
below, incurred by Parent in complying with the registration requirements
hereunder, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for Parent, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration. For purposes of this SECTION
6.9(b), "SELLING EXPENSES" shall mean all selling discounts commissions and
stock transfer or other governmental charges applicable to the Registrable
Securities and all fees and disbursements of counsel for any Holder
(c) INDEMNIFICATION.
(i) To the extent permitted by law, Parent
will indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder, its officers, directors, shareholders or partners and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"): (A) any untrue statement or alleged untrue statement of a material
fact contained in the S-3 Registration Statement, including any
44
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (B) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading or (C) any violation or alleged
violation by Parent of the Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and Parent will pay to each such Holder (and its
officers, directors, stockholders or partners), underwriter or controlling
person, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; PROVIDED, HOWEVER, that the indemnity agreement contained in this
SECTION 6.9(c)(i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of Parent; nor shall Parent be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon (a) a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in the
S-3 Registration Statement by any such Holder or (b) a Violation that would
not have occurred if such Holder had delivered to the purchaser the version
of the prospectus most recently made available by Parent to the Holder as of
the date of such sale.
(ii) To the extent permitted by law, each
selling Holder, severally and not jointly, will indemnify and hold harmless
Parent, each of its directors, each of its officers who has signed the S-3
Registration Statement, each person, if any, who controls Parent within the
meaning of the Act, any underwriter, any other Holder selling securities
pursuant to the S-3 Registration Statement and any controlling person of any
such underwriter or other Holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation (which includes without limitation
the failure of the Holder to comply with the prospectus delivery requirements
under the Act, and the failure of the Holder to deliver the most current
prospectus made available by Parent prior to such sale), in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in the S-3 Registration Statement or such Violation is caused by the
Holder's failure to deliver to the purchaser of the Holder's Registrable Shares
the most current version of the prospectus (or amendment or supplement thereto)
that had been made available to the Holder by Parent; and each such Holder will
pay any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this SECTION 6.9(c)(ii) in connection with investigating
or defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this SECTION 6.9(c)(ii) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder. The aggregate indemnification and contribution liability of each Holder
under this SECTION 6.9(c)(ii) shall not exceed the net proceeds received by such
Holder in connection with sale of shares pursuant to the S-3 Registration
Statement.
(iii) Each Person entitled to
indemnification under this SECTION 6.9(c) (for purposes of this SECTION 6.9(c),
the "REGISTRATION INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "REGISTRATION INDEMNIFYING PARTY") promptly after
such Registration Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought and shall permit the Registration Indemnifying
Party to assume
45
the defense of any such claim and any litigation resulting therefrom,
PROVIDED, that counsel for the Registration Indemnifying Party who conducts
the defense of such claim or any litigation resulting therefrom shall be
approved by the Registration Indemnified Party (whose approval shall not
unreasonably be withheld), and the Registration Indemnified Party may
participate in such defense at such party's expense; PROVIDED FURTHER, that
the failure of any Registration Indemnified Party to give notice as provided
herein shall not relieve the Registration Indemnifying Party of its
obligations under this SECTION 6.9 unless the Registration Indemnifying Party
is materially prejudiced thereby. No Registration Indemnifying Party, in the
defense of any such claim or litigation, shall (except with the consent of
each Registration Indemnified Party) consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Registration
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Registration Indemnified Party shall furnish such
information regarding itself or the claim in question as a Registration
Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(iv) To the extent that the indemnification
provided for in this SECTION 6.9(c) is held by a court of competent jurisdiction
to be unavailable to a Registration Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then the Registration
Indemnifying Party, in lieu of indemnifying such Registration Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Registration
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Registration Indemnifying Party on the one hand and of the Registration
Indemnified Party on the other in connection with the statements or omissions
which resulted in such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations. The relative fault of the Registration
Indemnifying Party and of the Registration Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Registration Indemnifying
Party or by the Registration Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(d) REGISTRATION PROCEDURES. Parent shall:
(i) Promptly prepare and file with the SEC
such amendments and supplements to the S-3 Registration Statement and the
prospectus used in connection with the S-3 Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the S-3 Registration Statement;
(ii) Furnish such number of prospectuses and
other documents incident thereto, including any amendment of or supplement to
the prospectus, as a Holder from time to time may reasonably request;
(iii) Notify each Holder of Registrable
Securities covered by the S-3 Registration Statement at any time when a
prospectus relating thereto is required to be
46
delivered under the Securities Act of the happening of any event as a result
of which the prospectus included in the S-3 Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; and
(iv) Cause all such Registrable Securities
registered pursuant to the S-3 Registration Statement to be listed on each
securities exchange or quotation system on which similar securities issued by
Parent are then listed or quoted, and in connection therewith and to the extent
required, file with the NASDAQ National Market an application for listing of
additional shares with respect to the Registrable Securities.
(e) RULE 144 REPORTING. With a view to making
available the benefits of certain rules and regulations of the SEC which may at
any time permit the sale of the Registrable Securities to the public without
registration, or pursuant to a registration on Form S-3, Parent agrees to use
its reasonable best efforts to:
(i) Make and keep public information
available, as those terms are understood and defined in Rule 144 under the Act,
at all times after the Merger;
(ii) File with the SEC in a timely manner
all reports and other documents required of Parent under the Act and the
Exchange Act; and
(iii) So long as a Holder owns any
Registrable Securities, to furnish to that Holder forthwith upon request a
written statement by Parent as to its compliance with the reporting requirements
of said Rule 144, and of the Act and the Exchange Act, a copy of the most recent
annual or quarterly report of Parent, and such other reports and documents of
Parent as such Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing such Holder to sell any such Registrable
Securities without registration.
(f) TRANSFER OF REGISTRATION RIGHTS. The rights and
obligations of any initial Holder under this SECTION 6.9 may be assigned to a
transferee or assignee in connection with any transfer or assignment of
Registrable Securities by an initial Holder; PROVIDED that: (i) such transfer
may otherwise be effected in accordance with applicable securities laws and (ii)
Parent is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; PROVIDED,
that all notices to be given by Parent pursuant to this SECTION 6.9 shall be
deemed properly given to any transferees or assignees of the initial Holder if
either delivered directly to such transferees or assignees at the address so
furnished or delivered to the initial Holder and specifically stating that such
notice is only being delivered to such initial Holder on behalf of all of its
transferees and assignees, (iii) each transferee shall agree to be bound by all
of the provisions of this SECTION 6.9 and (iv) such assignment shall be
47
effective only if immediately following such transfer the further disposition
of such Registrable Securities by the transferee or assignee is restricted
under the Act.
(g) THIRD-PARTY BENEFICIARIES. Each Holder is an
intended third-party beneficiary of the covenants of Parent contained in this
SECTION 6.9 and is entitled to enforce such covenants against Parent.
(h) Parent shall also promptly prepare, with the
cooperation of the Stockholders with respect to information relating to the
Stockholders or their sale of Parent Shares with respect to Options, and Parent
shall file with the SEC as soon as practicable following the Closing, a
Registration Statement on Form S-8 (the "S-8 REGISTRATION STATEMENT" and,
together with the S-3 Registration Statement, the "REGISTRATION STATEMENTS")
under the Act with respect to the issuance of Parent Shares underlying the
Options as provided in SECTION 6.10, in accordance with the provisions of
paragraph (a) above.
6.10. OPTIONS AND WARRANTS. At the Effective Time, each
outstanding option to purchase Common Stock (each an "OPTION" and collectively,
the "OPTIONS") issued pursuant to the Company's 2000 Stock Plan (the "PLAN"),
whether vested or unvested, and each outstanding warrant to purchase Common
Stock (each a "WARRANT") and collectively, the "WARRANTS") shall be assumed by
Parent in accordance with the terms of this SECTION 6.10.
(a) Each Option assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions as were applicable to such Option immediately prior to the Effective
Time; PROVIDED, that (i) such Option shall be exercisable for the number of
Parent Shares determined by MULTIPLYING (A) the number of shares of Common Stock
that were issuable upon exercise of such Option immediately prior to the
Effective Time by (B) the Closing Common Share Amount (rounded down to the
nearest whole number of Parent Shares) and (ii) the per share exercise price for
the Parent Shares issuable upon the exercise of such assumed Option shall be
determined by DIVIDING (1) the exercise price per share of Common Stock at which
such Option was exercisable immediately prior to the Effective Time by (2) the
Closing Common Share Amount (rounded up to the nearest whole cent); PROVIDED,
FURTHER, that in the case of any option to which Section 421 of the Code applies
by reason of its qualification under Section 422 of the Code ("ISOS"), the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with Section 424(a) of the Code.
(b) Each Warrant, to the extent outstanding at the
Effective Time, whether or not exercisable and whether or not vested at the
Effective Time, shall remain outstanding at the Effective Time. At the Effective
Time, the Warrants shall, by virtue of the Merger and without any further action
on the part of the Company or the holder of any Warrants (unless further action
may be required by the terms of any of the Warrants), be assumed by Parent
pursuant to such documentation as is reasonably acceptable to the Company and
each Warrant so assumed by Parent shall be exercisable upon the same terms and
conditions as under the applicable warrant agreements; PROVIDED, that (i) each
such Warrant shall be exercisable for the number of Parent Shares determined by
MULTIPLYING (A) the number of shares of Common Stock that were issuable upon the
exercise of such Warrant immediately prior to the Effective Time by (B) the
Closing Common Share Amount (rounded down to the nearest whole share) and
48
(ii) the per share exercise price for the Parent Shares issuable upon the
exercise of such assumed Warrant shall be determined by DIVIDING (A) the
exercise price per share of Common Stock at which such Warrant was
exercisable immediately prior to the Effective Time by (B) the Closing Common
Share Amount (rounded up to the nearest whole cent). From and after the
Effective Time, all references to the Company in the warrant agreements
underlying the Warrants shall be deemed to refer to Parent. Parent further
agrees, that, notwithstanding any other term of this SECTION 6.10 to the
contrary, if required under the terms of the Warrants or if otherwise
appropriate under the terms of the Warrants, it will execute a supplemental
agreement with the holders of the Warrants to effectuate the foregoing. As
promptly as practicable following the Effective Time, Parent shall issue to
each holder of an outstanding Warrant a document evidencing the foregoing
assumption.
(c) On the Effective Registration Date, (i) each
assumed Option and Warrant then outstanding shall thereafter be exercisable for
the number of Parent Shares determined by MULTIPLYING (A) the number of shares
of Common Stock that were issuable upon exercise of such Option or Warrant
immediately prior to the Effective Time by (B) the Adjusted Common Share Amount
(rounded down to the nearest whole number of Parent Shares) and (ii) the per
share exercise price for the Parent Shares issuable upon the exercise of such
assumed Option or Warrant shall be determined by DIVIDING (1) the exercise price
per share of Common Stock at which such Option or Warrant was exercisable
immediately prior to the Effective Time by (2) the Adjusted Common Share Amount
(rounded up to the nearest whole cent); PROVIDED, that in the case of any ISO,
the option price, the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be determined in order
to comply with Section 424(a) of the Code.
(d) As soon as practicable after the Effective Time,
Parent shall deliver to the holders of Options appropriate notices setting forth
such holders' rights pursuant to the Plan and that the agreements evidencing the
grants of such Options shall continue in effect on the same terms and conditions
(subject to the adjustments required by this SECTION 6.10 after giving effect to
the Merger). Parent shall comply with the terms of the Plan and ensure, to the
extent required by and subject to the provisions of such Plan, that Options
which qualified as ISOs prior to the Effective Time continue to qualify as ISOs
of Parent after the Effective Time.
(e) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of Parent Shares for delivery upon
exercise of the Options assumed in accordance with this SECTION 6.10. Parent
shall file the S-8 Registration Statement with respect to the Parent Shares
subject to any Options held by persons who are directors, officers or employees
of the Company and shall use its best efforts to maintain the effectiveness of
such S-8 Registration Statement (and maintain the current status of the
prospectus contained therein) for so long as such Options remain outstanding.
(f) At or before the Effective Time, the Company
shall cause to be effected any necessary amendments to the Plan and to the
agreements evidencing the grants of the Options to give effect to the foregoing
provisions of this SECTION 6.10.
6.11. INDEBTEDNESS. On the Closing Date, the Company shall use
all cash of the Company (which means cash on hand less cash due to venues for
the face value of tickets sold
49
and less cash that is contractually payable as rebates for such tickets sold)
as of the Closing Date to pay any and all Closing Debt. To the extent that
there is Closing Debt in excess of the cash on hand of the Company as of the
Closing Date (the "EXCESS CLOSING DEBT"), Parent shall, on the Closing Date,
pay such Excess Closing Debt. In connection therewith, the Purchase Price
shall be reduced dollar for dollar by an amount that is equal to the Excess
Closing Debt, all as reflected on SCHEDULE 6.11.
6.12. REORGANIZATION TREATMENT.
(a) Except as may occur in accordance with SECTION
2.11 of this Agreement, the Company has not taken nor will it take any action,
nor has it failed to take or will it fail to take any action, either before or
after the Closing of the Merger, which could reasonably be expected to cause the
Merger to fail to qualify as a reorganization under Section 368(a) of the Code.
(b) Parent will not, within the two year period
following the Effective Time (i) liquidate the Company; (ii) except for the
Merger, merge the Company with or into another corporation if the Company is not
the surviving corporation, (iii) otherwise terminate the existence of the
Company or (iv) cause the Company to distribute substantially all of its assets.
Following the Merger, Parent will continue the Company's historic business or
use a significant portion of the Company's historic business assets in a
business, within the meaning of Treasury Regulation Section 1.368-1(d). Parent
shall report, and shall cause the Surviving Corporation to report, the Merger
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, unless any of the parties to this Agreement are
required, pursuant to a "determination" within the meaning of Section 1313(a) of
the Code, to treat the transaction in a different manner.
6.13. CONTINUATION OF INDEMNIFICATION. Parent, the Company and
the Surviving Corporation agree that all rights to indemnification or
exculpation now existing in favor of the employees, agents, directors or
officers of the Company (the "COMPANY INDEMNIFIED PARTIES") as provided in its
Certificate of Incorporation or Bylaws or the indemnification agreements as in
effect on the date of this Agreement, as set forth on SCHEDULE 6.13, shall
continue in full force and effect for a period of six year from the Closing
Date; PROVIDED, HOWEVER, that, in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue to disposition of any and all such
claims. Parent shall assume the foregoing indemnification obligations of the
Company and the Surviving Corporation effective at the Effective Time.
Notwithstanding anything to the contrary in this SECTION 6.13, Parent and the
Surviving Corporation shall not be liable for any amounts payable resulting from
any claim or action brought by any officer or director of the Company or any of
their Affiliates. The Company hereby represents and warrants to Parent that no
claim for indemnification has been made by any director or officer of the
Company or any of their Affiliates. To the knowledge of the Company, no basis
exists for any claim for indemnification.
6.14. TRANSFER OF TICKETWEB UK SHARES. The Company agrees
that, on or before the fifth day following the Closing Date, the Company shall
purchase all of the outstanding equity of TicketWeb UK not already owned by the
Company (the "UK SHARES").
50
The Company agrees that, upon the completion of the transfer of the UK Shares
to the Company in compliance with applicable laws, the Company shall own such
UK Shares, free and clear of all liens, claims, encumbrances and adverse
interests of any kind. On or before the fifth day following the Closing Date,
the Company shall deliver an executed opinion of counsel identical to the
draft approved by Parent as provided in SECTION 7.3(q). The Company agrees
(a) to use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transfer of the UK Shares and (b) to
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to purchase the UK Shares.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party hereto to consummate the
transactions provided for hereby are subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions:
(a) No Proceeding by any governmental authority or
other Person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage in any material respect the assets of the
Company or the Business if the transactions contemplated hereby are consummated.
There shall not be any Regulation or Court Order that makes the transactions
contemplated hereby and by the Ancillary Agreements illegal or otherwise
prohibited.
(b) Any governmental or regulatory notices or
approvals required under any Regulations to carry out the transactions
contemplated by this Agreement shall have been obtained and the parties shall
have complied with all Regulations applicable to the transactions contemplated
by this Agreement.
7.2. CONDITIONS TO THE COMPANY'S OBLIGATIONS TO EFFECT THE
MERGER. The obligations of the Company to consummate the transactions provided
for hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by the Company:
(a) All representations and warranties of Parent and
Merger Sub contained in this Agreement shall be accurate in all respects at and
as of the date of this Agreement and at and as of the Closing Date, except as
and to the extent that the facts and conditions upon which such representations
and warranties are based are expressly required or permitted to be changed by
the terms hereof, and except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a Material Adverse Effect on Parent; PROVIDED,
HOWEVER, that, for purposes of determining the accuracy of such representations
and warranties, all "Material Adverse Effect" qualifications
51
and other materiality qualifications, and any similar qualifications,
contained in such representations and warranties shall be disregarded.
(b) Parent and Merger Sub shall have performed and
complied with in all material respects each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Parent and
Merger Sub prior to or on the Closing Date.
(c) Each of Parent and Merger Sub shall have tendered
for delivery the documents and other items to be delivered by such parties
pursuant to ARTICLE III of this Agreement.
(d) Parent shall have delivered to the Company (i) a
written opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, dated as of the Closing Date,
substantially in the form attached hereto as EXHIBIT J and (ii) for the benefit
of all parties hereto, a written opinion of Morris, Nichols, Arsht & Xxxxxxx,
dated as of the Closing Date, substantially in the form attached hereto as
EXHIBIT M.
7.3. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB TO
EFFECT THE MERGER. The respective obligations of Parent and Merger Sub to
consummate the transactions provided for hereby are subject to the satisfaction,
on or prior to the Closing Date, of each of the following conditions, any of
which may be waived by Parent or Merger Sub:
(a) All representations and warranties of the Company
contained in this Agreement shall be accurate in all respects at and as of the
date of this Agreement and at and as of the Closing Date, except as and to the
extent that the facts and conditions upon which such representations and
warranties are based are expressly required or permitted to be changed by the
terms hereof, and except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and would not
reasonably be expected to have, a Material Adverse Effect on the Company;
PROVIDED, HOWEVER, that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other materiality qualifications, and any similar qualifications, contained
in such representations and warranties shall be disregarded, and (ii) any update
of or modification to the Company Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded.
(b) The Company shall have performed and complied
with in all material respects each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company prior to or
on the Closing Date.
(c) All representations and warranties of the
Stockholders contained in the Stockholder Support Agreements and the Releases
(as defined below) shall be accurate in all respects at and as of the date of
such Agreement and at and as of the Closing Date, except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof, and
except that any inaccuracies in such representations and warranties will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and would not
52
reasonably be expected to have, a Material Adverse Effect on the Company;
PROVIDED, HOWEVER, that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded.
(d) Each Stockholder (other than the Non-Accredited
Common Stockholders) shall have executed and delivered a Stockholder Support
Agreement in the form attached hereto as EXHIBIT A. Each Non-Accredited Common
Stockholder shall have executed and delivered a release ("RELEASE") in form and
substance reasonably acceptable to Parent in its sole discretion. Each
Stockholder shall have performed and complied with in all material respects each
agreement, covenant and obligation required by the Stockholder Support
Agreements and the Releases, as applicable, to be so performed or complied with
by such Stockholder prior to or on the Closing Date.
(e) The Company shall have tendered for delivery the
documents and other items to be delivered by such parties pursuant to ARTICLE
III of this Agreement.
(f) The Company shall have delivered to Parent a
written opinion of Venture Law Group, dated as of the Closing Date,
substantially in the form attached hereto as EXHIBIT K.
(g) The Merger shall have been approved by one
hundred percent (100%) of the Stockholders in accordance with the DGCL.
(h) All Permits and Consents by governmental agencies
that are required for the consummation of the transactions contemplated hereby,
or by third parties that are required in order to prevent a breach of, a default
under, or a termination, change in the terms or conditions or modification of,
any instrument, contract, lease, license or other agreement to which the Company
is a party and which is denoted with an asterisk (*) on SCHEDULES 4.8 shall have
been obtained on terms and conditions satisfactory to Parent. In addition,
Parent shall have received from the Company the Consents set forth on SCHEDULE
4.17 hereto. In the event the Company cannot obtain certain Consents prior to
the Closing and Parent elects to waive this condition to Closing, the Company
shall have the continuing obligation after the Closing to use its commercially
reasonable efforts to endeavor to obtain all necessary consents.
(i) The Executives shall have executed and delivered
the Employment Agreements and the Non-Competition Agreements.
(j) Tyler shall have executed and delivered (i) the
Consulting Agreement, (ii) a Non-Competition Agreement and (iii) all
documentation reasonably requested by Parent to transfer the trademark
"TicketWeb - The Online Ticketing Alternative," and any other Company trademark
held by Tyler, to the Company.
(k) All liens against the Company or any of its
assets or properties shall have been released, including, without limitation,
those liens listed on SCHEDULE 7.3(k) hereto.
53
(l) That certain employment agreement, dated as of
October 1998, by and between the Company and Tyler shall have been terminated
and Parent shall have received documentation reasonably requested by Parent to
evidence such termination.
(m) The Company and Paciolan shall have entered into
an amendment to that certain agreement, dated as of February 8, 1999, by and
between the Company and Paciolan setting forth (i) the understanding between the
parties with respect to all fees or other amounts due to Paciolan by the Company
and (ii) limitations on liability for breaches of such agreement, subject to the
reasonable approval of Parent with respect to the form and substance of such
amendment.
(n) Midland Concert Promotions Group Ltd. and its
successor, SFX Entertainment Inc. (collectively, "MCP"), shall have agreed in
writing, subject to the reasonable satisfaction of Parent, that MCP has no right
to purchase equity in TicketWeb UK and that MCP's sole right to purchase equity
of the Company or any of its Subsidiaries is evidenced by that certain warrant,
dated as of May 19, 2000, issued by the Company to MCP.
(o) Nobody in Particular Presents ("XXXX") shall have
agreed in writing, subject to the reasonable satisfaction of Parent, that the
Company's obligation to issue options and/or warrants to XXXX pursuant to that
certain agreement, effective as of April 1, 1999, by and between the Company and
XXXX (the "XXXX AGREEMENT") has been satisfied in full by the issuance of
warrants to purchase capital stock of the Company to Xxxx Xxxxxxxx, Xxxxx
Xxxxxxxx and Xxxxx Xxxxx (the "XXXX PRINCIPALS"). In addition, the warrants
issued to the XXXX Principals shall have been amended, subject to the reasonable
satisfaction of Parent, to add the performance based vesting requirements set
forth in the XXXX Agreement.
(p) The Company shall have provided Parent with a
fully executed copy of that certain agreement, date as of March 7, 2000, between
the Company and Bravo Entertainment LLP.
(q) The Company shall have provided Parent with all
documentation, subject to the reasonable approval of Parent with respect to the
form and substance of such documentation, evidencing that the purchase by the
Company of all UK Shares shall take place immediately following the Closing
pursuant to SECTION 6.14. Such documentation shall include, without limitation,
(i) a draft opinion of counsel stating that the transfer of the UK Shares to the
Company was accomplished in accordance with the applicable corporate and
securities laws of the United Kingdom and (ii) copies of certificates evidencing
the UK Shares, together with such unstamped share transfer forms duly executed
by the registered holders thereof in favor of the Company as shall be necessary
to vest in the Company (and its nominees or such Persons as the Company may
designate) good and marketable title to the UK Shares, free and clear of all
Encumbrances.
(r) Each of Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and African
Media Entertainment shall have waived in writing, subject to the reasonable
satisfaction of Parent, any and all rights of first refusal he or it may have in
connection with the transactions contemplated hereunder pursuant to that certain
Stockholders' Agreement, dated as of October 19, 1999, by and among the Company,
Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and African Media Entertainment.
54
(s) The Company shall have waived in writing, subject
to the reasonable satisfaction of Parent, any and all rights of first refusal it
may have in connection with the transactions contemplated hereunder pursuant to
each of the Restricted Stock Agreements with Xxxxx Xxxxxxx, Xxxxx Xxxxxxxxx,
Xxxx Xxxxx and Xxxx Xxxxxxxxxx.
ARTICLE VIII.
TERMINATION
8.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time whether before
or after approval and adoption of this Agreement by the Stockholders:
(a) by mutual written consent of Parent, Merger Sub
and the Company;
(b) by Parent and Merger Sub or the Company if (i)
any court of competent jurisdiction in the United States or other United States
Governmental Entity shall have issued a final order, decree or ruling or taken
any other final action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
nonappealable or (ii) subject to the following, the Merger has not been
consummated by July 5, 2000 (the "OUTSIDE DATE"); PROVIDED that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure to
fulfill any of its obligations under this Agreement shall have been the reason
that the Effective Time shall not have occurred on or before said date;
(c) by the Company if (i) there shall have been a
breach of any representation or warranty on the part of Parent or Merger Sub set
forth in this Agreement or if any representation or warranty of Parent or Merger
Sub shall have become untrue, in either case such that the conditions set forth
in SECTION 7.2(a) would be incapable of being satisfied by the Outside Date (or
as otherwise extended) or (ii) there shall have been a breach by Parent or
Merger Sub of any of their respective covenants or agreements hereunder having a
Material Adverse Effect on Parent or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Parent or Merger Sub,
as the case may be, has not cured such breach within twenty (20) Business Days
after notice by the Company thereof; PROVIDED that the Company has not breached
any of its obligations hereunder; or
(d) by Parent and Merger Sub if (i) there shall have
been a breach of any representation or warranty on the part of the Company set
forth in this Agreement or if any representation or warranty of the Company
shall have become untrue in either case such that the conditions set forth in
SECTION 7.3(a) would be incapable of being satisfied by the Outside Date (or as
otherwise extended) or (ii) there shall have been a breach by the Company of any
of its respective covenants or agreements hereunder having a Material Adverse
Effect on the Company or materially adversely affecting (or materially delaying)
the consummation of the Merger, and the Company has not cured such breach within
twenty (20) Business Days after notice by Parent or Merger Sub thereof; PROVIDED
that neither Parent nor Merger Sub has breached any of their respective
obligations hereunder.
55
(e) by Parent and Merger Sub if (i) there shall have
been a breach of any representation or warranty on the part of the Stockholders
set forth in the Stockholder Support Agreements or if any representation or
warranty of the Stockholders shall have become untrue in either case such that
the conditions set forth in SECTION 7.3(b) would be incapable of being satisfied
by the Outside Date (or as otherwise extended) or (ii) there shall have been a
breach by the Stockholders of any of its respective covenants or agreements
hereunder having a Material Adverse Effect on the Company or materially
adversely affecting (or materially delaying) the consummation of the Merger, and
the Stockholders have not cured such breach within twenty (20) Business Days
after notice by Parent or Merger Sub thereof; PROVIDED that neither Parent nor
Merger Sub has breached any of their respective obligations hereunder.
8.2. EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to SECTION 8.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this SECTION 8.2, the arbitration provisions of SECTION
9.3(b) and SECTION 10.12 hereof. Nothing contained in this SECTION 8.2 shall
relieve any party from liability for any breach of this Agreement.
ARTICLE IX.
INDEMNIFICATION
9.1. SURVIVAL OF REPRESENTATIONS. The representations and
warranties of the Company, Parent and Merger Sub contained herein shall survive
the Effective Time until the first anniversary of the Closing Date; PROVIDED,
HOWEVER, that in the case of breaches with respect to (a) fraud, intentional
misrepresentation or active concealment or (b) the several obligations of the
Stockholders provided in Section 5 of each Stockholder Support Agreement, the
representations and warranties of such breaching party shall survive until sixty
days following the expiration of any applicable statute of limitations
(including any extensions thereof). The indemnification obligations of Parent
and the Holders of Registrable Securities contemplated by SECTION 6.9(c) hereof
shall survive indefinitely. Any claims under this Agreement with respect to a
breach of a representation and warranty must be asserted by written notice
within the applicable survival period contemplated by this SECTION 9.1, and if
such a notice is given, the survival period for such representation and warranty
shall continue until the claim is fully resolved. The right to indemnification
or other remedy based on the representations, warranties, covenants and
agreements herein will not be affected by any investigation conducted with
respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant or agreement. All representations
and warranties of each party set forth in this Agreement shall be deemed to have
been made again by such party at and as of the Closing Date (with such
modifications as shall be necessary to reflect the changes to the facts and
conditions upon which such representations and warranties are based that are
expressly required or permitted to be changed by the terms hereof). The waiver
of any condition based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or agreement, will not affect
the right to indemnification or other remedy based on such representations,
warranties, covenants and agreements.
56
9.2. INDEMNIFICATION.
(a) Subsequent to the Closing, subject to the
limitations described below in SECTIONS 9.5 through 9.7, the Escrowed Shares
shall be available to satisfy any damage, claim, loss, cost, liability or
expense, including without limitation, interest, penalties, reasonable
attorneys' fees and expenses of investigation, consequential damages, response
action, removal action or remedial action (collectively "DAMAGES") incurred by
Parent and its respective Affiliates (including, after the Closing, the
Company), and each of its respective officers, directors, employees,
stockholders, partners and agents ("PARENT INDEMNIFIED PARTIES") that are
incident to, arise out of, in connection with, or related to, whether directly
or indirectly: (i) any misrepresentation or breach of any warranty on the part
of the Company contained in this Agreement or in any agreement, certificate or
other instrument delivered by the Company pursuant to this Agreement, (ii) any
breach or non-performance by the Company of any of its covenants or agreements
contained in this Agreement or in any agreement, certificate or other instrument
delivered by the Company pursuant to this Agreement, (iii) any misrepresentation
or breach of any warranty on the part of any Stockholder contained in a
Stockholder Support Agreement, Release or in any agreement, certificate or other
instrument delivered by a Stockholder pursuant thereto or (iv) any breach or
non-performance by any Stockholder of any of its covenants or agreements
contained in a Stockholder Support Agreements, Release or in any agreement,
certificate or other instrument delivered by a Stockholder pursuant thereto.
(b) Subsequent to the Closing, subject to the
limitations described below in SECTIONS 9.5 through 9.7, Parent shall indemnify
each of the Stockholders and each of their respective officers, directors,
employees, stockholders, partners and agents ("STOCKHOLDER INDEMNIFIED
PARTIES"), against, and hold each of the Stockholder Indemnified Parties
harmless from, any Damages incurred by such Stockholder Indemnified Party that
are incident to, arise out of, in connection with or related to, whether
directly or indirectly: (i) any breach of any representation or warranty of
Parent or Merger Sub contained in this Agreement or in any agreement,
certificate or other instrument delivered by Parent or Merger Sub pursuant to
this Agreement or (ii) any breach or non-performance by Parent or Merger of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Parent or Merger Sub pursuant to
this Agreement.
(c) The term "DAMAGES" as used in this SECTION 9.2 is
not limited to matters asserted by third parties against Stockholder Indemnified
Parties or Parent Indemnified Parties, but includes Damages incurred or
sustained by such persons in the absence of third-party claims, and payments by
the indemnitee shall not be a condition precedent to recovery.
57
9.3. NOTICE OF CLAIMS.
(a) Any Parent Indemnified Party or Stockholder
Indemnified Party (the "INDEMNIFIED PARTY") seeking indemnification hereunder
shall, within the relevant limitation period provided for in SECTION 9.1 above,
give to the party obligated to provide indemnification to such Indemnified Party
(the "INDEMNITOR") a notice (a "CLAIM NOTICE") describing in reasonable detail
the facts giving rise to any claims for indemnification hereunder and shall
include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any agreement, certificate or instrument executed pursuant
hereto or in connection herewith upon which such claim is based; PROVIDED, that
a Claim Notice in respect of any action at law or suit in equity by or against a
third Person as to which indemnification will be sought shall be given promptly
after the action or suit is commenced; and PROVIDED FURTHER, that failure to
give such notice shall not relieve the Indemnitor of its obligations hereunder
except to the extent it shall have been prejudiced by such failure. All notices
to be given by the Parent Indemnified Parties to the Stockholders under this
ARTICLE IX shall be deemed properly given if delivered to the Stockholders'
Representative and the Escrow Agent in accordance with the provisions of the
Escrow Agreement and all notices to be given by the Stockholder Indemnified
Parties to Parent under this ARTICLE IX shall be deemed properly given if
delivered to Parent in accordance with the provisions of SECTION 10.2 of this
Agreement.
(b) Indemnitor shall have thirty days after the
giving of any Claim Notice pursuant hereto to (i) agree to the amount or method
of determination set forth in the Claim Notice and to pay such amount to such
Indemnified Party in immediately available funds or Escrowed Shares as provided
in SECTION 9.6 or (ii) to provide such Indemnified Party with notice that it
disagrees with the purported facts, the amount or method of determination set
forth in the Claim Notice (the "DISPUTE NOTICE"). Within fifteen days after the
giving of the Dispute Notice, a representative of Indemnitor and such
Indemnified Party shall negotiate in a BONA FIDE attempt to resolve the matter.
In the event that the controversy is not resolved within thirty days of the
giving of the Dispute Notice, the parties shall proceed to binding arbitration
pursuant to the following procedures:
(1) Any party may send another party written
notice identifying the matter in dispute and invoking the procedures of this
SECTION 9.3. Within 14 days, each party involved in the dispute shall meet at a
mutually agreed location in Phoenix, Arizona, for the purpose of determining
whether they can resolve the dispute themselves by written agreement, and, if
not, whether they can agree upon a third-party arbitrator to whom to submit the
matter in dispute for final and binding arbitration.
(2) If such parties fail to resolve the
dispute by written agreement or agree on the arbitrator within said 14-day
period, any such party may make written application to the American Arbitration
Association ("AAA") for the appointment of a panel of three arbitrators
(collectively, the "ARBITRATOR") to resolve the dispute by arbitration. At the
request of AAA the parties involved in the dispute shall meet with AAA at its
offices within ten calendar days of such request to discuss the dispute and the
qualifications and experience which each party respectively believes the
Arbitrator should have; PROVIDED, HOWEVER, that the selection
58
of the Arbitrator shall be the exclusive decision of AAA and shall be made
within 30 days of the written application to AAA.
(3) Within 120 days of the selection of the
Arbitrator, the parties involved in the dispute shall meet in Phoenix, Arizona
with such Arbitrator at a place and time designated by such Arbitrator after
consultation with such parties and present their respective positions on the
dispute. The arbitration proceeding shall be held in accordance with the rules
for commercial arbitration of the AAA in effect on the date of the initial
request by for appointment of the Arbitrator, that gave rise to the dispute to
be arbitrated (as such rules are modified by the terms of this Agreement or may
be further modified by mutual agreement of the parties) Each party shall have no
longer than five days to present its position, the entire proceedings before the
Arbitrator shall be no more than ten consecutive days, and the decision of the
Arbitrator shall be made in writing no more than 30 days following the end of
the proceeding. Such an award shall be a final and binding determination of the
dispute and shall be fully enforceable as an arbitration decision in any court
having jurisdiction and venue over such parties. The prevailing party (as
determined by the Arbitrator) shall in addition be awarded by the Arbitrator
such party's own attorneys' fees and expenses in connection with such
proceeding. The non-prevailing party (as determined by the Arbitrator) shall pay
the Arbitrator's fees and expenses.
9.4. THIRD PERSON CLAIMS. If a claim by a third Person is made
against an Indemnified Party, and if such party intends to seek indemnity with
respect thereto under this ARTICLE IX, such Indemnified Party shall promptly
notify the Indemnitor in writing of such claims, setting forth such claims in
reasonable detail. The Indemnitor shall have twenty days after receipt of such
notice to undertake, conduct and control, through counsel of its own choosing
and at its own expense, the settlement or defense thereof, and the Indemnified
Party shall cooperate with it in connection therewith; PROVIDED that the
Indemnified Party may participate in such settlement or defense through counsel
chosen by such Indemnified Party and paid at its own expense; and PROVIDED
FURTHER that, if in the opinion of counsel for such Indemnified Party, there is
a reasonable likelihood of a conflict of interest between the Indemnitor and the
Indemnified Party, the Indemnitor shall be responsible for reasonable fees and
expenses of one counsel to such Indemnified Party in connection with such
defense. So long as the Indemnitor is reasonably contesting any such claim in
good faith, the Indemnified Party shall not pay or settle any such claim without
the consent of the Indemnitor. If the Indemnitor does not notify the Indemnified
Party within ten days after receipt of the Indemnified Party's notice of a claim
of indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to undertake, at Indemnitor's cost, risk
and expense, the defense, compromise or settlement of the claim but shall not
thereby waive any right to indemnity therefore pursuant to this Agreement. The
Indemnitor shall not, except with the consent of the Indemnified Party, enter
into any settlement that does not include as an unconditional term thereof the
giving by the person or persons asserting such claim to all Indemnified Parties
(I.E., the Stockholder Indemnified Party or the Parent Indemnified Party, as the
case may be) of an unconditional release from all liability with respect to such
claim or consent to entry of any judgment.
9.5. LIMITATION ON INDEMNITY.
59
(a) Notwithstanding the foregoing, an Indemnitor
shall not be obligated to indemnify an Indemnified Party under SECTIONS 9.2(a)
or (b) unless and until the aggregate of all Damages suffered by such
Indemnified Parties hereunder exceeds $200,000 (the "THRESHOLD AMOUNT"),
whereupon, provided the other requirements of this ARTICLE IX have been complied
with, the full amount of Damages in excess of such Threshold Amount, and all
subsequent Damages, shall become due and payable. Notwithstanding the foregoing,
no Threshold Amount shall apply to (i) the obligations of any party hereto to
the extent a breach results from fraud, intentional misrepresentation or
intentional concealment or (ii) the several obligations of the Stockholders
provided in Section 5 of each Stockholder Support Agreement.
(b) Notwithstanding anything to the contrary
contained in this Agreement or in any other agreement or document delivered
pursuant hereto, the indemnification obligations of the Stockholders pursuant to
this ARTICLE IX or otherwise shall be limited to the amount and assets deposited
and present in the Escrow Account and, in the case of indemnification claims
pursuant to clauses (iii) and (iv) of SECTION 9.2(a) relating to breaches by an
individual Stockholder of the representations, warranties and covenants in his,
her or its Stockholder Support Agreement or Release, shall be limited to the
number of Escrowed Shares held in the Escrow Account on behalf of such breaching
Stockholder; PROVIDED, HOWEVER, that with respect to breaches by an individual
Stockholder of the representations, warranties and covenants in his, her or its
Release, Parent shall be entitled to indemnification from all Escrowed Shares.
Parent shall not be entitled to pursue any claims for indemnification under this
ARTICLE IX or otherwise against the Stockholders directly or personally, and the
sole and exclusive recourse of Parent shall be to make claims against the Escrow
Account in accordance with the terms of this Agreement and the Escrow Agreement,
except claims for Damages with respect to (i) breaches resulting from fraud,
intentional misrepresentation or intentional concealment, which claims, to the
extent they exceed the amount of the Escrow Account (or in the case of a
breaching Stockholder, such breaching Stockholder's portion of the Escrow
Account), may be pursued by Parent only against the party or parties that are
determined to have committed such breaches and (ii) breaches by an individual
Stockholder of the obligations set forth in Section 5 of his, her or its
Stockholder Support Agreement, which claims, to the extent they exceed the
amount of the breaching Stockholder's portion of the Escrow Account, may be
pursued by Parent only against such breaching Stockholder. The total indemnity
obligations of Parent shall not exceed $7,000,000.
9.6. PAYMENT OUT OF ESCROW ACCOUNT. All indemnification or
reimbursement payments to be made by the Stockholders pursuant to this ARTICLE
IX shall be paid from the Escrow Account pursuant to the terms of the Escrow
Agreement. Escrowed Shares tendered as indemnification payments shall be valued
at the Initial Stock Price if paid prior to the Effective Registration Date and
at the Adjusted Stock Price if paid on or after the Effective Registration Date.
9.7. REMEDIES. The remedies in this ARTICLE IX shall be the
exclusive remedies of the parties with respect to any and all matters covered by
this Agreement, except for the remedies of specific performance, injunction and
other equitable relief; PROVIDED, HOWEVER, that no party hereto shall be deemed
to have waived any rights, claims, causes of action or remedies if and to the
extent such rights, claims, causes of action or remedies may not be waived under
60
applicable law or fraud, intentional misrepresentation or active concealment is
proven on the part of a party by another party hereto.
ARTICLE X.
MISCELLANEOUS
10.1. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors
and permitted assigns, in accordance with the terms hereof. Neither this
Agreement nor any of the rights or obligations hereunder may be assigned by the
Company without the prior written consent of Parent, or by Parent or Merger Sub
without the prior written consent of the Company, except that Parent may,
without such consent, assign the rights hereunder (either before or after the
Closing Date), to an Affiliate of Parent; PROVIDED, HOWEVER, that no such
assignment shall release Parent of any of its obligations under this Agreement.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, and
no other Person shall have any right, benefit or obligation hereunder.
10.2. NOTICES. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to the
other shall be in writing and delivered in person or by courier, telegraphed,
telexed or by facsimile transmission or mailed by registered or certified mail,
postage prepaid, return receipt requested (such mailed notice to be effective on
the date of such receipt is acknowledged), as follows:
If to Parent or Merger Sub:
Ticketmaster Online-CitySearch, Inc.
000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With copies to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Company:
TicketWeb Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
61
With a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Any party may, from time to time, designate any other address
to which any such notice to such party shall be sent. Any such notice shall be
deemed to have been delivered upon receipt.
10.3. CHOICE OF LAW. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of Delaware, as applied to agreements among Delaware residents
entered into and wholly to be performed within the State of Delaware (without
reference to any choice of law rules that would require the application of the
laws of any other jurisdiction).
10.4. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This
Agreement, together with the Ancillary Agreements and all exhibits and schedules
hereto, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
supplement, modification or other amendment or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
10.5. COUNTERPARTS. This Agreement may be executed by
facsimile and in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.6. SEVERABILITY. If any provision of this Agreement is
deemed or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; PROVIDED, HOWEVER, that if any
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision that is legal,
valid and enforceable. Further, should any provision contained in this Agreement
ever be reformed or rewritten by any judicial body of competent jurisdiction,
such provision as so reformed or rewritten shall be binding upon all parties
hereto.
62
10.7. HEADINGS. The headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.8. SCHEDULES. The Schedules and the Exhibits referenced in
this Agreement are a material part hereof and shall be treated as if fully
incorporated into the body of the Agreement.
10.9. NO THIRD PARTY BENEFICIARIES. Nothing expressed or
referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement (and their successors and assigns) any legal or
equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement.
10.10. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity without the necessity of demonstrating the inadequacy of
monetary damages.
10.11. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
10.12. EXPENSES. Except as otherwise specifically provided in
this Agreement, (a) Parent will pay its own fees and expenses incident to this
Agreement and the transactions contemplated hereby, including legal and
accounting fees, investment banking fees, fees and points to any lender,
consulting fees and related disbursements in connection with any of the
foregoing ("TRANSACTION FEES") and (b) the aggregate Transaction Fees of the
Company, which shall be reasonable and, to the extent practicable, shall be
approved by Parent prior to being incurred, shall be paid as provided in SECTION
6.11.
10.13. STOCKHOLDERS' REPRESENTATIVE.
(a) By executing the Stockholder Support Agreements,
each Stockholder irrevocably constitutes and appoints Xxxxxx Xxxxxxx as the true
and lawful agent and attorney-in-fact (hereinafter referred to as the
"STOCKHOLDERS' REPRESENTATIVE") of each Stockholder, with full powers of
substitution, to act in the name, place and stead of each Stockholder with
respect to the Merger in accordance with the provisions of this Agreement and
the Escrow Agreement, and to do or refrain from doing all such further acts and
things, to execute all such certificates, instruments and other documents, as
such Stockholders' Representative may deem necessary or appropriate in
connection with any of the transactions contemplated under this Agreement or the
Escrow Agreement, to give and receive notices and communications, to authorize
delivery to Parent of the Escrow Shares or other property from the Escrow
Account in satisfaction of claims by Parent, to object to such deliveries, to
agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with
63
orders of courts and awards of arbitrators with respect to such claims and to
take all actions necessary or appropriate in the judgment of the
Stockholders' Representative for the accomplishment of the foregoing. Such
agency may be changed by the Stockholders from time to time upon not less
than thirty days prior written notice to Parent; PROVIDED, HOWEVER, that the
Stockholders' Representative may not be removed unless holders of a
two-thirds interest in the Escrow Account agree to such removal and to the
identity of the substituted stockholders' representative. Any vacancy in the
position of Stockholders' Representative may be filled by approval of the
holders of a majority in interest of the Escrow Account.. The Stockholders
agree that any such action, if material to the rights and obligations of the
Stockholders in the reasonable judgment of the Stockholders' Representative,
shall be taken in the same manner with respect to all Stockholders, unless
otherwise agreed by each Stockholders. The appointment of the Stockholders'
Representative shall be deemed coupled with an interest and shall be
irrevocable, and Parent and any other person may conclusively and absolutely
rely, without inquiry, upon any actions of the Stockholders' Representative
as the act of Stockholders in all matters referred to in this Agreement.
(b) The Stockholders' Representative shall not be
liable for any act done or omitted hereunder as Stockholders' Representative
while acting in good faith and in the exercise of reasonable judgment.
(c) The Stockholders' Representative shall have
reasonable access to information about the Company and Parent and the reasonable
assistance of the Company's and Parent's officers and employees for purposes of
performing his duties and exercising his rights hereunder, PROVIDED, that (i)
the Stockholders' Representative shall treat confidentially and not disclose any
nonpublic information from or about the Company or Parent to anyone (except on a
need to know basis to individuals who agree in writing to treat such information
confidentially) and (ii) such information shall not be provided by Parent or the
Company to the extent that (A) such information is subject to a confidentiality
or nondisclosure agreement to which Parent or the Company is a party, (B)
disclosure of such information would jeopardize the attorney/client or work
product privileges attaching to such information or (C) such information would
not otherwise be required to be disclosed by Parent or the Company pursuant to
applicable discovery rules.
(d) The Stockholders shall, severally and not
jointly, on a pro rata basis based on their proportionate ownership interests in
the Escrow Account immediately following the Closing, indemnify, defend and hold
the Stockholders' Representative harmless from and against any loss, damage,
tax, liability and expense that may be incurred by the Stockholders'
Representative arising out of or in connection with the acceptance or
administration of the Stockholders' Representative's duties, except as caused by
the Stockholders' Representative's gross negligence or willful misconduct,
including the legal costs and expenses of defending such Stockholders'
Representative against any claim or liability in connection with the performance
of the Stockholders' Representative's duties. Prior to final distribution of
Escrowed Shares in termination of the Escrow as provided in the Escrow
Agreement, the Stockholders' Representative shall be entitled, but not limited
to, such indemnification from the Escrow Fund (with the Parent Shares included
therein, if any, being valued at the Adjusted Stock Price for this purpose)
prior to any distribution thereof to the Stockholders, but after any
distributions therefrom to Parent; PROVIDED, HOWEVER, that the Escrow
64
Agent shall disburse such Escrowed Shares, if any, FIRST, from the Accounts
(as defined in the Escrow Agreement) of all Stockholders other than the
holder of Preferred Shares on a PRO RATA basis and SECOND, to the extent
additional Escrowed Shares are necessary to satisfy such claims, from the
Account of the holder of Preferred Shares.
65
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be duly executed on their respective
behalf, by their respective officers thereunto duly authorized, all as of the
day and year first above written.
TICKETMASTER ONLINE-CITYSEARCH, INC., a
Delaware corporation
By:
------------------------------------------
Name: Xxxxxx Marriott
Title: Executive Vice President
TMCS MERGER SUB, INC., a Delaware corporation
By:
------------------------------------------
Name: Xxxxxx Marriott
Title: Executive Vice President
TICKETWEB INC.,
a Delaware corporation
By:
------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
66