1
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
DOUBLECLICK INC.,
ATLAS MERGER SUB, INC.,
ATLAS ACQUISITION CORP.
and
@XXXX.XXX
Dated as of November 17, 2000
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................2
SECTION 1.01 Certain Defined Terms.......................................2
ARTICLE II THE MERGER..........................................................6
SECTION 2.01 The Merger..................................................6
SECTION 2.02 Closing.....................................................7
SECTION 2.03 Effective Time..............................................7
SECTION 2.04 Effect of the Merger........................................7
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation...........................7
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.................8
SECTION 3.01 Conversion of Shares........................................8
SECTION 3.02 Exchange of Shares..........................................8
SECTION 3.03 Stock Transfer Books.......................................10
SECTION 3.04 No Fractional Share Certificates...........................11
SECTION 3.05 Options and Warrants to Purchase Company Common Stock......11
SECTION 3.06 Certain Adjustments........................................12
SECTION 3.07 Lost, Stolen or Destroyed Certificates.....................12
SECTION 3.08 Taking of Necessary Action; Further Action.................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY..........................13
SECTION 4.01 Organization and Qualification; No Subsidiaries............13
SECTION 4.02 Charter and Bylaws.........................................13
SECTION 4.03 Capitalization.............................................13
SECTION 4.04 Authority Relative to This Agreement.......................14
SECTION 4.05 No Conflict; Required Filings and Consents.................14
SECTION 4.06 Permits; Compliance with Laws..............................15
SECTION 4.07 SEC Filings; Financial Statements..........................15
SECTION 4.08 Absence of Certain Changes or Events.......................16
SECTION 4.09 Employee Benefit Plans; Labor Matters......................17
SECTION 4.10 Certain Tax Matters........................................20
SECTION 4.11 Contracts..................................................20
SECTION 4.12 Litigation.................................................20
SECTION 4.13 Environmental Matters......................................20
SECTION 4.14 Intellectual Property......................................21
SECTION 4.15 Taxes......................................................24
SECTION 4.16 Insurance..................................................25
i.
3
Page
----
SECTION 4.17 Properties.................................................25
SECTION 4.18 Affiliates.................................................26
SECTION 4.19 Opinion of Financial Advisor...............................26
SECTION 4.20 Brokers....................................................26
SECTION 4.21 Certain Business Practices.................................26
SECTION 4.22 Business Activity Restriction..............................26
SECTION 4.23 Privacy ...................................................27
SECTION 4.24 Sections 00-000-000 and 00-000-000 of Tennessee
Law Not Applicable.........................................27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.............27
SECTION 5.01 Organization and Qualification.............................27
SECTION 5.02 Certificate of Incorporation and Bylaws....................27
SECTION 5.03 Capitalization.............................................28
SECTION 5.04 Authority Relative to This Agreement.......................28
SECTION 5.05 No Conflict; Required Filings and Consents.................29
SECTION 5.06 SEC Filings; Financial Statements..........................29
SECTION 5.07 Certain Tax Matters........................................30
SECTION 5.08 Brokers....................................................30
SECTION 5.09 No Parent Material Adverse Effect..........................30
ARTICLE VI COVENANTS..........................................................30
SECTION 6.01 Conduct of Business Pending the Closing....................30
SECTION 6.02 Notices of Certain Events..................................33
SECTION 6.03 Access to Information; Confidentiality.....................33
SECTION 6.04 No Solicitation of Transactions............................33
SECTION 6.05 Tax-Free Transaction.......................................35
SECTION 6.06 Control of Operations......................................35
SECTION 6.07 Further Action; Consents; Filings..........................35
SECTION 6.08 Additional Reports.........................................36
SECTION 6.09 Tax Information............................................36
ARTICLE VII ADDITIONAL AGREEMENTS.............................................36
SECTION 7.01 Registration Statement; Proxy Statement....................36
SECTION 7.02 Company Shareholders' Meeting..............................38
SECTION 7.03 Affiliates.................................................38
SECTION 7.04 Directors' and Officers' Insurance.........................38
SECTION 7.05 No Shelf Registration......................................39
SECTION 7.06 Public Announcements.......................................39
SECTION 7.07 NNM Listing................................................40
ii.
4
Page
----
SECTION 7.08 Company Stock Options/Registration Statements on
Form S-8...................................................40
SECTION 7.09 Employee Matters...........................................40
SECTION 7.10 Warrants...................................................40
SECTION 7.11 Exemption from Liability Under Section 16(b)...............40
ARTICLE VIII CONDITIONS TO THE MERGER.........................................41
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger......................................41
SECTION 8.02 Conditions to the Obligations of Company...................41
SECTION 8.03 Conditions to the Obligations of Parent....................42
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..................................43
SECTION 9.01 Termination................................................43
SECTION 9.02 Effect of Termination......................................45
SECTION 9.03 Amendment..................................................45
SECTION 9.04 Waiver.....................................................45
SECTION 9.05 Termination Fee; Expenses..................................45
ARTICLE X GENERAL PROVISIONS..................................................46
SECTION 10.01 Non-Survival of Representations and Warranties.............46
SECTION 10.02 Notices....................................................46
SECTION 10.03 Severability...............................................47
SECTION 10.04 Assignment; Binding Effect; Benefit........................48
SECTION 10.05 Incorporation of Exhibits..................................48
SECTION 10.06 Governing Law..............................................48
SECTION 10.07 Waiver of Jury Trial.......................................48
SECTION 10.08 Headings; Interpretation...................................48
SECTION 10.09 Counterparts...............................................48
SECTION 10.10 Entire Agreement; Amendment and Restatement of
Original Agreement.........................................49
ANNEXES
ANNEX A Shareholder Agreement
ANNEX A-1 Shareholder Letter
iii.
5
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of November 17, 2000 (as further amended, supplemented
or otherwise modified from time to time, this "AGREEMENT"), among DOUBLECLICK
INC., a Delaware corporation ("PARENT"), @XXXX.XXX, a Tennessee corporation
("COMPANY"), ATLAS ACQUISITION CORP., a Delaware corporation and a direct wholly
owned Subsidiary of Parent ("MERGER SUB"), and ATLAS MERGER SUB, INC., a
Tennessee corporation and a direct wholly owned Subsidiary of Parent ("ORIGINAL
MERGER SUB"):
W I T N E S S E T H:
WHEREAS, Parent, Company and Original Merger Sub are parties to
that certain Agreement and Plan of Merger and Reorganization, dated as of
September 24, 2000 (the "ORIGINAL AGREEMENT"), which provided for a business
combination by means of the merger of Original Merger Sub with and into Company;
WHEREAS, Parent and Company have determined that it is
advisable and in the best interests of their respective companies and
shareholders to amend and restate the Original Agreement, in order to, among
other things, (A) provide for a business combination by means of the merger of
Company with and into Merger Sub, whereby the separate corporate existence of
Company shall cease and Merger Sub shall continue as the surviving corporation
(the "MERGER"), and (B) fix the value of the Merger Consideration (as defined);
WHEREAS, concurrently with the execution of the Original Agreement
and as an inducement to Parent to enter into this Agreement, certain
shareholders of Company have entered into a shareholder agreement ("SHAREHOLDER
AGREEMENT") in the form attached hereto as Annex A and have, concurrently with
the execution of this Agreement, agreed in writing ("SHAREHOLDER LETTER") in the
form attached hereto as Annex A-1, (A) to re-affirm their obligations under the
Shareholder Agreement and (B) that this Agreement does not constitute an
amendment of the Original Agreement in a manner materially adverse to their
interests;
WHEREAS, for United States Federal income tax purposes, it is
intended that, in the event Parent elects to pay the Merger Consideration
pursuant to Section 3.01(a)(i), the Merger shall qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (together with the rules and regulations promulgated thereunder, the
"CODE"), and that this Agreement shall be, and hereby is, adopted as a plan of
reorganization for purposes of Section 368(a) of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
6
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural forms of the terms defined):
"AFFILIATE" shall mean, with respect to any Person, any other
Person that controls, is controlled by or is under common control with the first
Person.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in the City of New
York.
"CLOSING DATE" shall mean the date that the Closing is held.
"COMPANY COMMON STOCK" shall mean the shares of common stock, no
par value per share, of Company.
"COMPANY COMPETING TRANSACTION" shall mean any of the following
involving Company (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, transfer or other disposition
of 20% or more of the assets of such party and its
subsidiaries, taken as a whole, in a single transaction
or series of transactions;
(iii) any tender offer or exchange offer for 20% or more of the
outstanding voting securities of such party or the filing of
a registration statement under the Securities Act in
connection therewith;
(iv) any Person having acquired beneficial ownership or the right
to acquire beneficial ownership of, or any "group" (as such
term is defined under Section 13(d) of the Exchange Act)
having been formed which beneficially owns, or has the right
to acquire beneficial ownership of, 20% or more of the
outstanding voting securities of such party;
(v) any solicitation in opposition to the approval of this
Agreement by the shareholders of such party; or
2
7
(vi) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of
the foregoing.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Company that, individually or in the aggregate (taking
into account all other such changes or effects), is, or is reasonably likely to
be, materially adverse to the business, assets, liabilities, financial condition
or results of operations of Company, except to the extent any such change or
effect results from or is attributable to (i) changes in general economic
conditions or changes affecting the industry generally in which Company operates
(provided that such changes do not affect Company in a materially
disproportionate manner), (ii) any litigation or loss of customers, employees or
revenues that Company successfully bears the burden of proving arose from
Company entering into this Agreement or (iii) any matter described in Section
1.01 of the Company Disclosure Schedule; provided, however, that in no event
shall a decrease in the trading price of Company Common Stock or litigation
relating thereto be considered a Company Material Adverse Effect.
"COMPANY SHAREHOLDERS' MEETING" shall mean the special meeting
of Company shareholders to consider approval of this Agreement and the Merger.
"COMPANY STOCK PLANS" shall mean the Second Amended and
Restated 1996 Stock Option Plan, the 1999 Stock Incentive Plan and the 1999
Stock Option Plan for New Employees.
"CONFIDENTIALITY AGREEMENTS" shall mean the confidentiality
agreements, dated as of July 19, 2000 and September 15, 2000, between Parent and
Company.
"$" shall mean United States Dollars.
"DELAWARE LAW" shall mean the Delaware General Corporation Law.
"ENCUMBRANCES" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal, preemptive
rights, mortgages, hypothecations, prior assignments, title retention
agreements, indentures, security agreements or any other encumbrance of any
kind.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
3
8
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder.
"EXCHANGE RATIO" shall mean the fraction equal to $8.00 divided by
the Final Average Closing Price.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and the
consummation of the Merger, the preparation, printing, filing and mailing of the
Registration Statement (as defined in Section 7.01) and the Proxy Statement (as
defined in Section 7.01), the solicitation of shareholder approvals, the filing
of HSR Act notice, if any, and all other matters related to the transactions
contemplated hereby and the closing of the Merger.
"FINAL AVERAGE CLOSING PRICE" shall mean the average closing
price of Parent Common Stock on the NNM for the ten trading days ending on the
Business Day prior to the date of (a) the Company Shareholders' Meeting, in the
event that all other conditions set forth in Article VIII hereof have been, or
are capable of being, satisfied or have been waived at such time or (b) the
Closing, in all other circumstances.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state
or local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials, friable
asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical,
material or substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"KNOWLEDGE OF COMPANY" shall mean that any officer or director of
Company is actually or reasonably should have been aware of a fact or other
matter.
4
9
"KNOWLEDGE OF PARENT" shall mean that any officer or director of
Parent is actually or reasonably should have been aware of a fact or other
matter.
"LAW" shall mean any Federal, state, foreign or local statute,
law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law of the United States or any other jurisdiction, and
any other similar act or law.
"MERGER CONSIDERATION" shall mean consideration to be received
in connection with the Merger in accordance with Section 3.01.
"NNM" shall mean the Nasdaq National Market.
"PARENT COMMON STOCK" shall mean the shares of common stock, par
value $.001 per share, of Parent.
"PARENT CONVERTIBLE NOTES" shall mean the $250,000,000 4.75%
Convertible Notes of Parent Due 2006.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Parent and the Parent Subsidiaries that, individually
or in the aggregate (taking into account all other such changes or effects), is,
or is reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent any such change or
effect results from or is attributable to (i) changes in general economic
conditions or changes affecting the industry generally in which Parent operates
(provided that such changes do not affect Parent in a materially
disproportionate manner), (ii) any litigation or loss of customers, employees or
revenues that Parent successfully bears the burden of proving arose from Parent
entering into this Agreement or (iii) any matter described in Section 1.01 of
the Parent Disclosure Schedule, provided, however, that in no event shall a
decrease in the trading price of Parent Common Stock or litigation relating
thereto be considered a Parent Material Adverse Effect.
"PARENT STOCK PLANS" shall mean Parent's 1996 Stock Plan, 1997
Stock Incentive Plan, 1999 Non-Officer Stock Option/Stock Issuance Plan and
Employee Stock Purchase Plan.
"PERMITTED ENCUMBRANCES" shall mean (i) liens for Taxes,
assessments and other governmental charges not yet due and payable, (ii)
immaterial unfiled mechanics', workmen's, repairmen's, warehousemen's, carriers'
or other like liens arising or incurred in the ordinary course of business and
(iii) equipment leases with third parties entered into in the ordinary course of
business.
"PERSON" shall mean an individual, corporation, partnership,
limited partnership, limited liability partnership, limited liability company,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
5
10
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such Person (either alone or through or together with any
other subsidiary of such Person) owns, directly or indirectly, a majority of the
stock or other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or other taxing authority
("TAXING AUTHORITY"), including, without limitation, taxes or other charges on
or with respect to income, franchises, windfall or other profits, gross or net
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value-added or gains taxes; license, registration and documentation
fees; and customers' duties, tariffs and similar charges; (ii) any liability for
the payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, combined, consolidated or unitary group for any taxable
period; and (iii) any liability for the payment of amounts of the type described
in (i) or (ii) as a result of being a transferee of, or a successor in interest
to, any Person or as a result of an express or implied obligation to indemnify
any Person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
"TENNESSEE LAW" shall mean the Tennessee Business Corporation Act.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Tennessee Law and
Delaware Law, at the Effective Time (as defined in Section 2.03), Company shall
be merged with and into Merger Sub. As a result of the Merger, the separate
corporate existence of Company shall cease and Merger Sub shall continue as the
surviving corporation of the Merger as a wholly owned Subsidiary of Parent (the
"SURVIVING CORPORATION").
6
11
SECTION 2.02 Closing. Unless this Agreement shall have been
terminated and the Merger herein contemplated shall have been abandoned pursuant
to Section 9.01 and subject to the satisfaction or waiver of the conditions set
forth in Article VIII, the consummation of the Merger shall take place as
promptly as practicable (and in any event within three Business Days) after
satisfaction or waiver of the conditions set forth in Article VIII, at a closing
(the "CLOSING") to be held at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date, time
or place is agreed to by Parent and Company.
SECTION 2.03 Effective Time. At and after the time of the Closing,
the parties (other than Original Merger Sub) shall cause the Merger to be
consummated by filing (i) the Certificate of Merger (the "DE CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with the relevant provisions of,
Delaware Law, and (ii) and the Articles of Merger (the "TN ARTICLES OF MERGER")
with the Secretary of State of the State of Tennessee, in such form as required
by, and executed in accordance with the relevant provisions of, Tennessee Law.
Subject to and in accordance with Delaware Law and Tennessee Law, the Merger
will become effective at the later of the date and time the DE Certificate of
Merger is filed with and accepted by the office of the Secretary of State of the
State of Delaware and the TN Articles of Merger are filed with and accepted by
the office of the Secretary of State of the State of Tennessee, or at such later
time or date as may be specified in the DE Certificate of Merger and the TN
Articles of Merger (the "EFFECTIVE TIME"). Each of the parties will use its best
efforts to cause the Merger to be consummated as soon as practicable following
the fulfillment or waiver of the conditions specified in Article VIII hereof.
SECTION 2.04 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law and Tennessee Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
Company and Merger Sub shall vest in Merger Sub as the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of Merger Sub as the Surviving Corporation.
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation. Unless otherwise agreed by Parent and Company
before the Effective Time, at the Effective Time:
(a) subject to the requirements of Section 7.04(a), the
Certificate of Incorporation and the Bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation, until
thereafter amended as provided by Law and such Certificate of
Incorporation or Bylaws; provided, however, that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended
to read as follows: "The name of the corporation is @xxxx.xxx";
(b) the officers of Merger Sub immediately prior to the
Effective Time shall serve in their respective offices of the Surviving
Corporation from and after the
7
12
Effective Time, in each case until their successors are elected or
appointed and qualified or until their resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall serve as the directors of the Surviving Corporation
from and after the Effective Time, in each case until their successors are
elected or appointed and qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares. At the Effective Time, by
virtue of the Merger, and without any action on the part of Parent, Merger Sub,
Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately before the Effective Time (excluding shares of Company Common Stock,
if any, owned by any wholly owned Subsidiary of Company) and all rights in
respect thereof, shall, forthwith cease to exist and be converted into the right
to receive, at Parent's election, either
(i) (A) a fraction of a share of Parent Common Stock, the
numerator of which is, at Parent's election, not less than $4.00 nor more than
$6.40 (the "STOCK CONSIDERATION VALUE"), and the denominator of which is the
Final Average Closing Price and (B) an amount of cash equal to $8.00 minus the
Stock Consideration Value; or
(ii) $8.00 in cash.
The Parent elections contemplated hereby shall be made in writing
to Company by 5:30 p.m. (New York City time) on the Business Day prior to the
date of (a) the Company Shareholders' Meeting, in the event that all other
conditions set forth in Article VIII hereof have been, or are capable of being,
satisfied or have been waived at such time or (b) the Closing, in all other
circumstances. For the purposes of this Agreement, cash paid pursuant to this
Section 3.01(a) shall be referred to as "CASH CONSIDERATION."
(b) Each share of Company Common Stock owned by any wholly owned
Subsidiary of Company immediately prior to the Effective Time shall be canceled
and retired and no shares of stock or other securities of Parent, the Surviving
Corporation or any other corporation shall be issuable, and no payment of other
consideration shall be made, with respect thereto.
SECTION 3.02 Exchange of Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall enter
into an agreement with a bank or trust company to act as exchange agent for the
Merger (the "EXCHANGE AGENT") as may be designated by Parent, and shall be
reasonably acceptable to Company.
8
13
(b) Parent to Provide Common Stock and Cash. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holders of Company Common Stock: (i) Certificates of Parent
Common Stock ("PARENT CERTIFICATES") representing the number of whole shares of
Parent Common Stock issuable pursuant to Section 3.01(a) in exchange for shares
of Company Common Stock outstanding immediately prior to the Effective Time;
(ii) sufficient funds to permit payment of the Cash Consideration payable
pursuant to Section 3.01(a) in exchange for each share of Company Stock; and
(iii) sufficient funds to permit payment in lieu of fractional shares pursuant
to Section 3.04.
(c) Exchange Procedures. The Exchange Agent shall mail to each
holder of record of certificates of Company Common Stock ("COMPANY
CERTIFICATES"), whose shares were converted into the right to receive Merger
Consideration (and cash in lieu of fractional shares pursuant to Section 3.04)
promptly after the Effective Time (and in any event no later than the later to
occur of three Business Days after the Effective Time and receipt by Parent of a
complete list from Company of the names and addresses of its holders of record):
(i) a form letter of transmittal in form and substance satisfactory to Company,
such approval not to be unreasonably withheld (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon receipt of the Company Certificates by the Exchange Agent, and
shall be in such form and have such other provisions as Parent may reasonably
specify); and (ii) instructions for use in effecting the surrender of the
Company Certificates in exchange for Parent Certificates, Cash Consideration and
cash in lieu of fractional shares. Upon surrender of a Company Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may be reasonably required by
the Exchange Agent, the holder of such Company Certificate shall be entitled to
receive in exchange therefor (i) a Parent Certificate as payment of the shares
of Parent Common Stock issuable in the Merger, (ii) cash as payment of any Cash
Consideration (without any interest accrued thereon), (iii) dividends or
distributions declared or made on the Parent Common Stock after the Effective
Time and payable between the Effective Time and the time of such surrender
and/or (iv) payment of cash in lieu of fractional shares which such holder has
the right to receive pursuant to Section 3.04, and the Company Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each outstanding
Company Certificate that, prior to the Effective Time, represented shares of
Company Common Stock, will be deemed from and after the Effective Time, for all
purposes other than the payment of dividends and distributions, to evidence the
ownership of the number of full shares of Parent Common Stock and amount of any
Cash Consideration into which such shares of Company Common Stock, as the case
may be, shall have been so converted, and the right to receive an amount in cash
in lieu of the issuance of any fractional shares in accordance with Section
3.04. Notwithstanding any other provision of this Agreement, no interest will be
paid or will accrue on any cash payable to holders of Company Certificates
pursuant to the provisions of this Article III.
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of Parent Common Stock represented
thereby until the holder of record of such Company Certificate shall surrender
such Company Certificate. Subject to the effect of applicable escheat
9
14
or similar laws, following surrender of any such Company Certificate, there
shall be paid to the record holder of the Parent Certificates issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 3.02(d)) with
respect to such shares of Parent Common Stock.
(e) Transfer of Ownership. If any Parent Certificate is to be
issued in a name, or Cash Consideration or cash in lieu of fractional shares
paid to a Person, other than that in which the Company Certificate surrendered
in exchange therefor is registered, it will be a condition of the issuance
and/or payment thereof that the Company Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a Parent
Certificate for shares of Parent Common Stock in any name other than that of the
registered holder of the Company Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(f) Termination of Exchange Agent Funding. Any portion of funds or
Parent Certificates held by the Exchange Agent which have not been delivered to
holders of Company Certificates pursuant to this Article III within six months
after the Effective Time shall promptly be paid or delivered, as appropriate, to
Parent, and thereafter holders of Company Certificates who have not theretofore
complied with the exchange procedures set forth in and contemplated by this
Section 3.02 shall thereafter look only to Parent (subject to abandoned
property, escheat and similar laws) only as general creditors thereof for their
claim for shares of Parent Common Stock, any Cash Consideration or cash in lieu
of fractional shares of Parent Common Stock and any dividends or distributions
(with a record date after the Effective Time) with respect to Parent Common
Stock to which they are entitled.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any Person in respect of any shares of Parent Common
Stock or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
SECTION 3.03 Stock Transfer Books. As of the Effective Time, the
stock transfer books of Company shall each be closed, and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of any such stock transfer books. In the event of a transfer of
ownership of shares of Company Common Stock that is not registered in the stock
transfer records of Company at the Effective Time, a certificate or certificates
representing the number of full shares of Parent Common Stock into which such
shares of Company Common Stock shall have been converted shall be issued to the
transferee together with a cash payment in the amount of the Cash Consideration
payable in accordance with Section 3.01(a), a cash payment in lieu of fractional
shares, if any, in accordance with Section 3.04 hereof, and a cash payment in
the amount of dividends, if any, in accordance with Section 3.02(d) hereof, if
the certificate or certificates representing such shares of Company Common
Stock, as the case may be, is or are surrendered as provided in Section 3.02(c)
hereof,
10
15
accompanied by all documents required to evidence and effect such transfer and
by evidence of payment of any applicable stock transfer tax.
SECTION 3.04 No Fractional Share Certificates. No scrip or
fractional share Parent Certificate shall be issued upon the surrender for
exchange of Company Certificates, and an outstanding fractional share interest
shall not entitle the owner thereof to vote, to receive dividends or to any
rights of a shareholder of Parent or of Surviving Corporation with respect to
such fractional share interest. As promptly as practicable following the
Effective Time, Parent shall deposit with the Exchange Agent (in addition to
funds representing any Cash Consideration payable in accordance with Section
3.01(a)) an amount in cash sufficient for the Exchange Agent to pay each holder
of Company Common Stock an amount in cash, rounded to the nearest whole cent,
equal to the product obtained by multiplying (i) the fractional share interest
to which such holder would otherwise be entitled (after taking into account all
shares of Company Common Stock held at the Effective Time by such holder) by
(ii) the Final Average Closing Price. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts, net of any required withholding taxes, to
such holders of Company Common Stock subject to and in accordance with the terms
of Section 3.02 hereof.
SECTION 3.05 Options and Warrants to Purchase Company Common
Stock. At the Effective Time, the Company Stock Plans and each option granted by
Company to purchase shares of Company Common Stock pursuant to the Company Stock
Plans or otherwise listed on Schedule 3.05 of the Company Disclosure Schedule
("COMPANY STOCK OPTIONS") which is outstanding and unexercised immediately prior
to the Effective Time, and each warrant to purchase shares of Company Common
Stock ("COMPANY WARRANTS") listed on Schedule 3.05 which is outstanding and
unexercised immediately prior to the Effective Time, shall be assumed by Parent
and converted into an option or warrant, as the case may be, to purchase shares
of Parent Common Stock in such number and at such exercise price as provided
below and otherwise having the same terms and conditions as in effect
immediately prior to the Effective Time (except to the extent that such terms,
conditions and restrictions may be altered in accordance with their terms as a
result of the Merger contemplated hereby and except that all references in each
such Company Stock Option or Company Warrant to Company shall be deemed to refer
to Parent):
(a) the number of shares of Parent Common Stock to be subject to
the new option or warrant, as the case may be, shall be equal to the product of
(x) the number of shares of Company Common Stock subject to the original Company
Stock Option or Company Warrant immediately prior to the Effective Time and (y)
the Exchange Ratio;
(b) the exercise price per share of Parent Common Stock under the
new option or warrant shall be equal to (x) the exercise price per share of
Company Common Stock in effect under the original Company Stock Option or
Company Warrant immediately prior to the Effective Time divided by (y) the
Exchange Ratio; and
(c) in effecting such assumption and conversion, the aggregate
number of shares of Parent Common Stock to be subject to each assumed Company
Stock Option or
11
16
Company Warrant will be rounded down, if necessary, to the next whole share and
the aggregate exercise price shall be rounded up, if necessary, to the next
whole cent.
The adjustments provided herein with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code.
SECTION 3.06 Certain Adjustments.
(a) If between the date of this Agreement and the Effective Time,
(i) the outstanding shares of Parent Common Stock, or Company Common Stock shall
be changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or (ii) the number of shares of Company Common Stock on
a fully diluted basis is in excess of that specified in Section 4.03 or
disclosed in Schedule 4.03 of the Company Disclosure Schedule (regardless of
whether such excess is a result of an additional issuance of capital stock
except as otherwise permitted pursuant to this Agreement or a correction to such
Sections), then, in either case, the Exchange Ratio and the Merger Consideration
shall be adjusted accordingly to provide to Parent and Company the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange, dividend or increase.
(b) Notwithstanding anything herein to the contrary, in the event
that Parent elects to pay the Merger Consideration pursuant to Section
3.01(a)(i) and the amount of cash to be paid by Parent in the Merger would
exceed the amount of cash permissible for the Merger to qualify as a tax-free
reorganization under Section 368(a) of the Code, including as a result of the
Final Average Closing Price being higher than the mean between the high and low
sale prices of Parent Common Stock on the Closing Date (the "Closing Date
Average Price"), then Parent shall reduce the amount of cash to be paid to each
holder of Company Common Stock and increase the number of shares of Parent
Common Stock, valued at the Closing Date Average Price, to be issued to such
holder by such amounts as required to qualify for such tax-free treatment.
SECTION 3.07 Lost, Stolen or Destroyed Certificates. In the event
any Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, such shares of Parent Common Stock and Cash Consideration (and cash in
lieu of fractional shares) as may be required pursuant to Sections 3.01(a) and
3.06(b) (and Section 3.04); provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificates to indemnify Parent
against any claim that may be made against Parent, the Surviving Corporation or
the Exchange Agent with respect to the Company Certificates alleged to have been
lost, stolen or destroyed.
SECTION 3.08 Taking of Necessary Action; Further Action. If, at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all
12
17
assets, property, rights, privileges, powers and franchises of Company, the
officers and directors of Company are fully authorized in the name of their
corporation or otherwise to take, and will use good faith efforts to take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Merger Sub,
subject to the exceptions specifically disclosed in writing in the Company
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article IV or otherwise be clearly applicable
to representations hereof not specifically referenced, that:
SECTION 4.01 Organization and Qualification; No Subsidiaries
(a) The Company has been duly organized and is validly existing
and in good standing (to the extent applicable) under the laws of the State of
Tennessee and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Company is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failure to be
so qualified or licensed and in good standing that could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) Company does not own an equity interest in any corporation,
partnership or joint venture arrangement or other business entity.
SECTION 4.02 Charter and Bylaws The copies of Company's charter
and bylaws previously presented to Parent by Company are true, complete and
correct copies thereof. Such charter and bylaws are in full force and effect.
Company is not in violation of any of the provisions of its charter or bylaws.
SECTION 4.03 Capitalization The authorized capital stock of
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of Preferred Stock, without par value, of the Company ("Company Preferred
Stock"). As of the close of business on November 1, 2000, (i) 11,332,770 shares
of Company Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Company Common Stock are
held in the treasury of Company, (iii) 3,012,906 shares of Company Common Stock
are reserved for future issuance pursuant to Company Stock Options, Company
Warrants and Company Preferred Stock, and (iv) no shares of Company Preferred
Stock are issued and outstanding. The name of each holder of a Company Stock
Option or Company Warrant, the grant or issuance date of each Company Stock
Option or Company Warrant, the number of shares of Company Common Stock for
which each Company Stock Option or Company Warrant is exercisable, the exercise
price of each Company Stock Option or
13
18
Company Warrant and the vesting schedule of each Company Stock Option are set
forth in Schedule 4.03 of the Company Disclosure Schedule. Except for shares of
Company Common Stock issuable pursuant to Company Stock Plans and as otherwise
set forth in Schedule 4.03 of the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which Company is a party or by which Company is bound relating
to the issued or unissued capital stock of Company or obligating Company to
issue or sell any shares of capital stock of, or other equity interests in,
Company. All shares of Company Common Stock subject to issuance as aforesaid,
upon issuance prior to the Effective Time on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Company to repurchase, redeem or otherwise acquire
any shares of Company Common Stock. There are no material outstanding
contractual obligations of Company to provide funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
entity or Person.
SECTION 4.04 Authority Relative to This Agreement. Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Company and
the consummation by Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote with
respect thereto at the Company Shareholders' Meeting, and the filing and
recordation of the DE Certificate of Merger as required by Delaware Law and the
TN Articles of Merger as required by Tennessee Law). This Agreement has been
duly executed and delivered by Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid
and binding obligation of Company, enforceable against Company in accordance
with its terms, except to the extent that enforceability hereof may be limited
by applicable bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies (whether in a
proceeding at law or in equity).
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Company do
not, and the performance by Company of its obligations hereunder, and the
consummation of the Merger will not, (i) conflict with or violate any provision
of the charter or bylaws of Company; (ii) assuming that all filings and
notifications described in Section 4.05(b) have been made, conflict with or
violate any Law applicable to Company or by which any property or asset of
Company is bound or affected; or (iii) result in any material breach of or
constitute a material default (or an event which with the giving of notice or
lapse of time or both could reasonably be expected to become a material default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other Encumbrance on any
property or asset
14
19
of Company pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by Company do
not, and the performance by Company of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by Company with or notification by Company
to, any Governmental Entity, except pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the rules and regulations of
the NNM, the premerger notification requirements of the HSR Act, and the filing
and recordation of the DE Certificate of Merger as required by Delaware Law and
the TN Articles of Merger as required by Tennessee Law.
SECTION 4.06 Permits; Compliance with Laws. Company is in
possession of all franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, approvals and orders of any
Governmental Entity necessary for Company to own, lease and operate its
properties and assets or otherwise to carry on its business in all material
respects as it is now being conducted (collectively, the "COMPANY PERMITS"),
and, as of the date of this Agreement, none of the Company Permits has been
suspended or cancelled nor is any such suspension or cancellation pending or, to
the Knowledge of Company, threatened in writing. Company is not in conflict
with, or in default or violation of, (i) any Law applicable to Company or by
which any property or asset of Company is bound or affected or (ii) any Company
Permits, which conflict, default or violation would likely result in a Company
Material Adverse Effect. Schedule 4.06 of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, all actions, proceedings,
investigations or surveys pending or, to the Knowledge of Company, threatened in
writing against Company that could reasonably be expected to result in the
suspension or cancellation of any Company Permit. Since December 31, 1997,
Company has not received from any Governmental Entity any written notification
with respect to possible conflicts, defaults or violations of Laws.
SECTION 4.07 SEC Filings; Financial Statements.
(a) Except as set forth on Schedule 4.07(a) of the Company
Disclosure Schedule, Company has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NNM since May 21,
1999 (collectively, together with any such forms, reports, statements and
documents Company may file subsequent to the date hereof until the Closing, the
"COMPANY REPORTS") and (B) with any other Governmental Entities. Each Company
Report (i) was prepared, in all material respects, in accordance with the
requirements of the Securities Act, the Exchange Act or the rules and
regulations of the NNM, as the case may be, and (ii) did not at the time it was
filed (or if amended or superseded by a filing prior to the date hereof, then as
of and on the date so amended or superseded) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each form, report,
statement and document referred to in clause (B) of this paragraph was prepared
in all material respects in accordance with the requirements of applicable Law.
15
20
(b) Each of the financial statements (including, in each case,
any notes thereto) contained in the Company Reports was prepared in accordance
with U.S. GAAP (except, in the case of unaudited financial statements, for the
absence of footnotes and subject to normal year end adjustments, which
adjustments are not material) applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto) and each
presented fairly, in all material respects, the financial position of Company as
at the respective dates thereof, and its results of operations, shareholders'
equity and cash flows for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements, to normal
and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on
the balance sheet of Company as reported in the Company Reports, including the
notes thereto, Company has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for immaterial liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December 31,
1999.
SECTION 4.08 Absence of Certain Changes or Events. Since December
31, 1999, Company has conducted its business, in all material respects, only in
the ordinary course consistent with past practice and, since such date, there
has not been (i) any Company Material Adverse Effect, (ii) any event that could
reasonably be expected to prevent or materially delay the performance of
Company's obligations pursuant to this Agreement and the consummation of the
Merger by Company, (iii) any change by Company in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Company Common Stock or any
redemption, purchase or other acquisition of any of Company's securities, (v)
except for changes in the ordinary course of business consistent with past
practice that only affect non-officer employees of Company, any increase in the
compensation or benefits or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of Company,
(vi) any issuance or sale of any stock, notes, bonds or other securities other
than pursuant to the exercise of outstanding securities, or entering into any
agreement with respect thereto, (vii) any amendment to the Company's charter or
bylaws, (viii) other than in the ordinary course of business, any (x) purchase,
sale, assignment or transfer of any material assets, (y) mortgage, pledge or the
institution of any lien, change or other Encumbrance on any material assets or
properties, tangible or intangible, except for liens for taxes not yet
delinquent or (z) waiver of any rights of material value or cancellation or any
material debts or claims, (ix) any incurrence of any material liability
(absolute or contingent), except for current liabilities and obligations
incurred in the ordinary course of business consistent with past practice, (x)
any incurrence of any damage, destruction or similar loss, whether or not
covered by insurance, materially affecting the business or properties of
Company, or (xi) any entering into any transaction of a material nature other
than in the ordinary course of business, consistent with past practices.
16
21
SECTION 4.09 Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit fund, plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan", as defined in Section 3(3) of ERISA) maintained, sponsored or contributed
to or required to be contributed to by Company or other trade or business
(whether or not incorporated) treated as a single employer with Company (a
"COMPANY ERISA AFFILIATE") pursuant to Code Section 414(b), (c), (m) or (o), or
with respect to which Company or any Company ERISA Affiliate could incur
liability under Section 4069, 4212(c) or 4204 of ERISA or Section 412 of the
Code (the "COMPANY BENEFIT PLANS"), Company has delivered or made available to
Parent a true, complete and correct copy of (i) such Company Benefit Plan and
the most recent summary plan description related to such Company Benefit Plan,
if a summary plan description is required therefor, (ii) each trust agreement or
other funding arrangement relating to such Company Benefit Plan, (iii) the most
recent annual report (Form 5500) filed with the IRS with respect to such Company
Benefit Plan, (iv) the most recent actuarial report or financial statement
relating to such Company Benefit Plan and (v) the most recent determination
letter issued by the IRS with respect to such Company Benefit Plan, if it is
intended to be qualified under Section 401(a) of the Code. Neither Company nor
any Company ERISA Affiliate nor, to the Knowledge of Company, any other person
or entity, has any express or implied commitment, whether legally enforceable or
not, to modify, change or terminate any Company Benefit Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable laws,
including, without limitation, ERISA and the Code, and all contributions
required to be made under the terms of any of the Company Benefit Plans as of
the date of this Agreement have been timely made or have been reflected on the
most recent balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. With respect to the Company Benefit
Plans, to the Knowledge of the Company, no event has occurred and there exists
no condition or set of circumstances in connection with which Company or any
Company ERISA Affiliate could be subject to any material liability (other than
for routine benefit liabilities) under the terms of such Company Benefit Plans,
ERISA, the Code or any other applicable Law.
(c) Company on behalf of itself and all of the Company ERISA
Affiliates hereby represents that: (i) the Company Benefit Plan and its trust or
other funding arrangement which is intended to be qualified under Section
401(a), 401(k), 401(m), 4975(e)(1) or 501(a), as applicable, of the Code is a
standardized, prototype plan which has an opinion letter from the IRS as to its
qualified status under the Code, and, to the Knowledge of the Company, no fact
or event has occurred to adversely affect the qualified status of such Company
Benefit Plan or the exempt status of any related trust; (ii) to the Knowledge of
the Company, there has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Company
Benefit Plan; (iii) each Company Benefit Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability, other than (A) liability for ordinary administrative expenses
typically incurred in a termination event or (B) if the Company Benefit Plan is
a pension benefit plan subject to Part 2 of Title I of ERISA, liability for the
accrued benefits as of the date of such
17
22
termination (if and to the extent required by ERISA) to the extent that either
there are sufficient assets set aside in a trust or insurance contract to
satisfy such liability or such liability is reflected on the most recent balance
sheet filed or incorporated by reference in the Company Reports prior to the
date of this Agreement. No suit, administrative proceeding, action or other
litigation has been brought, or, to the Knowledge of the Company, is threatened,
against or with respect to any Company Benefit Plan, including any audit or
inquiry by the Internal Revenue Service or United States Department of Labor
(other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title IV of
ERISA and neither the Company nor any Company ERISA Affiliate has sponsored or
contributed to or been required to contribute to a multiemployer pension plan or
other pension plan subject to Title IV of ERISA. No material liability under
Title IV of ERISA has been incurred by Company or any Company ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to Company or any Company ERISA Affiliate of incurring or being
subject (whether primarily, jointly or secondarily) to a material liability
thereunder. None of the assets of Company or any Company ERISA Affiliate is, or
may reasonably be expected to become, the subject of any lien arising under
ERISA or Section 412(n) of the Code.
(e) With respect to each Company Benefit Plan that is subject to
Title IV or Part 3 of Title I of ERISA or Section 412 of the Code, (i) no
reportable event (within the meaning of Section 4043 of ERISA, other than an
event that is not required to be reported before or within 30 days of such
event) has occurred or is expected to occur, (ii) there was not an accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code), whether or not waived, as of the most recently ended plan year of
such Company Benefit Plan; and (iii) there is no "unfunded benefit liability"
(within the meaning of Section 4001(a)(18) of ERISA).
(f) Company has scheduled on Schedule 4.09(f) of the Company
Disclosure Schedule and has delivered to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
agreements of Company providing for annual compensation in excess of $100,000,
(ii) all severance plans, agreements, programs and policies of Company with or
relating to its employees, directors or consultants, and (iii) all plans,
programs, agreements and other arrangements of Company with or relating to its
employees, directors or consultants which contain "change of control"
provisions. Except as set forth in Schedule 4.09(f) of the Company Disclosure
Schedule, which discloses the Company's estimate of excess parachute payments
based on assumptions described therein, no payment or benefit which will be made
by Company under any Company Benefit Plan or other arrangement will constitute
an excess parachute payment under Code Section 280G(b)(1), and the consummation
of the transactions contemplated by this Agreement will not individually or in
conjunction with any other possible event (including termination of employment)
(i) entitle any current or former employee or other service provider of Company
to severance benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), except as expressly provided by this Agreement, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider. The form of
indemnification agreement set forth as Exhibit 10.7 to Company's Annual Report
on Form 10-K
18
23
for the year ended December 31, 1999, is identical, in all material respects to
the indemnification agreements entered into between the Company and each of its
current and future directors.
(g) Company is not a party to, and does not have any obligations
under or with respect to, any collective bargaining or other labor union
contract applicable to Persons providing services to Company and no collective
bargaining agreement is being negotiated by Company or any Person or entity that
may obligate Company thereunder. As of the date of this Agreement, there is no
labor dispute, strike, union organizing activity or work stoppage pending or, to
the Knowledge of Company, threatened against Company. As of the date of this
Agreement, to the Knowledge of Company, neither Company or any of its
representatives or employees has committed any unfair labor practice in
connection with the operation of the business of Company, and there is no charge
or complaint filed against Company by or with the National Labor Relations Board
or any comparable Governmental Entity pending or threatened in writing.
Company is in compliance in all material respects with all
currently applicable Laws and regulations respecting employment, discrimination
in employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice, which could result in any material liability to Company. Company
has withheld all amounts required by Law or by agreement to be withheld from the
wages, salaries, and other payments to employees; and is not liable for any
arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing. Company is not liable for any payment to any trust or other fund
or to any Governmental Entity, with respect to unemployment compensation
benefits, social security or other benefits or obligations for employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). There are no claims pending against Company under any
workers' compensation plan or policy or for long term disability. There are no
controversies pending or, to the Knowledge of Company, threatened, between
Company and any past or present employees or independent contractors, which
controversies have or could reasonably be expected to result in an action, suit,
proceeding, claim, arbitration or investigation before Governmental Entity. To
the Knowledge of the Company, no employees of Company are in violation of any
term of any employment contract, non-disclosure agreement, noncompetition
agreement or any restrictive covenant to a former employer relating to the right
of any such employee to be employed by Company because of the nature of the
business conducted or presently proposed to be conducted by Company or to the
use of trade secrets or proprietary information of others. No employees of
Company have given notice to Company, nor is Company otherwise aware, that any
such employee intends to terminate his or her employment with Company.
(h) Except as required by Law, no Company Benefit Plan, other
than the severance agreements previously provided to Parent and listed on
Schedule 4.09(h) of the Company Disclosure Schedule, provides any of the
following retiree or post-employment benefits to any Person: medical, disability
or life insurance benefits. Company and each Company ERISA Affiliate are in
material compliance with (i) the requirements of the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations (including proposed
regulations)
19
24
thereunder and (ii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations (including the
proposed regulations) thereunder.
SECTION 4.10 Certain Tax Matters. Neither Company nor any of its
Affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement, including, without limitation, the circumstances
contemplated by Section 3.01(a)(ii)) that could reasonably be expected to
prevent the Merger from constituting a "reorganization" under Section 368(a) of
the Code. Company is not aware of any agreement or plan to which Company or any
of its Affiliates is a party or other circumstances relating to Company or any
of its Affiliates that could reasonably be expected to prevent the Merger from
so qualifying as a reorganization under Section 368(a) of the Code.
SECTION 4.11 Contracts. Section 4.11 of the Company Disclosure
Schedule sets forth a list of each contract or agreement that is material to the
business, assets, liabilities, financial condition or results of operations of
Company (each, a "Material Contract"). Company is not in material violation of
or in default under (nor does there exist any condition which with the passage
of time or the giving of notice could reasonably be expected to cause such a
material violation of or material default under) any Material Contract. Each
Material Contract is in full force and effect and is a legal, valid and binding
obligation of Company and, to the Knowledge of Company, each of the other
parties thereto, enforceable in accordance with its terms.
SECTION 4.12 Litigation. There is no suit, claim, action,
proceeding or investigation pending or, to the Knowledge of Company, threatened
in writing against Company and, to the Knowledge of the Company, there are no
existing facts or circumstances that could reasonably be expected to result in
such a suit, claim, action, proceeding or investigation, and on or before the
Closing, there will be no suit, claim, action proceeding, pending or, to the
Knowledge of Company, threatened in writing that could reasonably be expected to
have a Company Material Adverse Effect. Company is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Company in respect of such suits,
claims, actions, proceedings and investigations, except in any case as could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Company is not subject to any outstanding order, writ,
injunction or decree which could reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect or materially interfere with
Company's ability to consummate the transactions contemplated herein.
SECTION 4.13 Environmental Matters. Except as could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) Company is in compliance with all applicable Environmental
Laws and all Company Permits required by Environmental Laws; (ii) all past
noncompliance of Company with Environmental Laws or Environmental Permits has
been resolved without any pending, ongoing or future obligation, cost or
liability; and (iii) Company has not released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Company in violation of any Environmental
Law.
20
25
SECTION 4.14 Intellectual Property.
(a) All patents (including, without limitation, all U.S. and
foreign patents, patent applications, patent disclosures, and any and all
divisions, continuations, continuations-in-part, reissues, re-examinations and
extensions thereof); design rights, trademarks, trade names and service marks
(whether or not registered); trade dress; Internet domain names; copyrights
(whether or not registered) and any renewal rights therefor; sui generis
database rights; data; statistical models; technology; inventions; supplier
lists; trade secrets and know-how; computer software programs or applications in
both source and object code form; databases; technical documentation of such
software programs and databases ("TECHNICAL DOCUMENTATION"); registrations and
applications for any of the foregoing and all other tangible or intangible
proprietary information or materials that are or have been used in (including,
without limitation, in the development of) Company's business and/or in any
product, technology or process (i) currently being or formerly manufactured,
published or marketed by Company or (ii) previously or currently under
development for possible future manufacturing, publication, marketing or other
use by Company are hereinafter referred to as the "COMPANY INTELLECTUAL
PROPERTY."
(b) Section 4.14 (b) of the Company Disclosure Schedule contains
a true and complete list of Company's patents, patent applications, registered
trademarks, trademark applications, common law trademarks, trade names,
registered service marks, service xxxx applications, common law service marks,
Internet domain names, Internet domain name applications, copyright
registrations and applications and other filings and formal actions made or
taken pursuant to Federal, state, local and foreign laws by Company to protect
its interests in Company Intellectual Property, and includes details of all due
dates for further filings, maintenance, payments or other actions falling due in
respect of Company Intellectual Property within twelve (12) months of the
Closing Date. All of Company's patents, patent applications, registered
trademarks, trademark applications, registered service marks and service xxxx
registrations, and registered copyrights remain in good standing with all fees
and filings due as of the Closing Date duly made and the due dates specified in
the Company Disclosure Schedule are accurate and complete.
(c) Section 4.14(c) of the Company Disclosure Schedule contains a
true and complete list of the registrations that Company has obtained anywhere
in the World in relation to the processing of data. Company has made all such
registrations which it is required to have made and is in good standing with
respect to such registrations with all fees due as of the Effective Time duly
made.
(d) Company Intellectual Property contains only those items and
rights which are: (i) owned by Company; (ii) in the public domain; or (iii)
rightfully used by Company pursuant to a valid and enforceable license (the
"COMPANY LICENSED INTELLECTUAL PROPERTY"), the parties, date, term and subject
matter of each such license agreement (each, a "LICENSE AGREEMENT") being set
forth on Section 4.14(d) of the Company Disclosure Schedule. Company has all
rights in Company Intellectual Property necessary to carry out Company's current
activities and Company's future activities to the extent such future activities
are already planned (and had all rights necessary to carry out its former
activities at the time such activities were
21
26
being conducted), including without limitation, to the extent required to carry
out such activities, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to Company Licensed Intellectual Property, assign and sell, Company
Intellectual Property.
(e) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Intellectual
Property, product, work, technology or process as now used or offered or
proposed for use, licensing or sale by Company does not infringe on any patent,
design right, trademark, trade name, service xxxx, trade dress, Internet domain
name, copyright, database, statistical model, technology, invention, supplier
list, trade secret, know-how, computer software program or application of any
person, anywhere in the World. No claims (i) challenging the validity,
effectiveness or, other than with respect to Company Licensed Intellectual
Property, ownership by Company of any Company Intellectual Property, or (ii) to
the effect that the use, distribution, licensing, sublicensing, sale or any
other exercise of rights in any product, work, technology or process as now used
or offered or proposed for use, licensing, sublicensing or sale by Company or
its agents or use by its customers infringes or will infringe on any
intellectual property or other proprietary or personal right of any person, have
been asserted or, to the Knowledge of Company, are threatened by any person, nor
are there any valid grounds for any bona fide claim of any such kind. All of the
rights within Company Intellectual Property are enforceable and subsisting. To
the Knowledge of Company, there is no unauthorized use, infringement or
misappropriation of any Company Intellectual Property by any third party,
employee or former employee.
(f) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of Company Intellectual Property on behalf of Company, have executed
nondisclosure agreements in the form set forth in Section 4.14 (f) of the
Company Disclosure Schedule and either (i) have been a party to an enforceable
"work-for-hire" arrangement or agreements with Company in accordance with
applicable national and state law that has accorded Company full, effective,
exclusive and original ownership of all tangible and intangible property thereby
arising, or (ii) have executed appropriate instruments of assignment in favor of
Company as assignee that have conveyed to Company effective and exclusive
ownership of all tangible and intangible property thereby arising.
(g) Company is not, nor as a result of the execution or delivery
of this Agreement, or performance of Company's obligations hereunder, will
Company be, in violation of any license, sublicense, agreement or instrument to
which Company is a party or otherwise bound, nor will execution or delivery of
this Agreement, or performance of Company's obligations hereunder, cause the
diminution, termination or forfeiture of any Company Intellectual Property.
(h) Section 4.14(h) of the Company Disclosure Schedule contains a
true and complete list of all of Company's software programs (the "COMPANY
SOFTWARE PROGRAMS"). Except with respect to software or technology in-licensed
by Company (to which Company holds appropriate and valid licenses), Company owns
full and unencumbered right and good,
22
27
valid and marketable title to such Company Software Programs free and clear of
all mortgages, pledges, liens, security interests, conditional sales agreements,
charges or Encumbrances of any kind.
(i) The source code and system documentation relating to the
Company Software Programs (i) have at all times been maintained in strict
confidence, (ii) have been disclosed by Company only to employees who have a
"need to know" the contents thereof in connection with the performance of their
duties to Company and who have executed the nondisclosure agreements referred to
in this Section 4.14, and (iii) have not been disclosed to any third party,
except those third parties set forth in Section 4.14(i) of the Company
Disclosure Schedule who have executed non-disclosure agreements with Company.
(j) Company has taken all reasonable steps, in accordance with
normal industry practice, to preserve and maintain complete notes and records
relating to Company Intellectual Property to cause the same to be readily
understood, identified and available.
(k) The Company Software Programs (i) have been designed to ensure
year 2000 compatibility, which includes, but is not limited to, date data
century recognition, and calculations that accommodate same century and
multi-century formulas and date values; (ii) operate and will operate in
accordance with their specifications prior to, during and after the calendar
year 2000 AD; and (iii) shall not end abnormally or provide invalid or incorrect
results as a result of date data, specifically including date data which
represents or references different centuries or more than one century.
(l) Company Intellectual Property is free and clear of any and all
mortgages, pledges, liens, security interests, conditional sale agreements,
charges or Encumbrances of any kind.
(m) Except as set forth in Section 4.14(m) of the Company
Disclosure Schedule, Company does not owe any royalties or other payments to
third parties in respect of Company Intellectual Property. All royalties or
other payments set forth in Section 4.14(m) of the Company Disclosure Schedule
that have accrued prior to the Effective Time have been paid.
(n) Company uses commercially reasonable efforts to regularly scan
the Company Software Programs and the Company Intellectual Property with
"best-in-class" virus detection software. To the Knowledge of the Company,
Company Software Programs and other Company Intellectual Property contain no
"viruses." For the purposes of this Agreement, "virus" means any computer code
intentionally designed to disrupt, disable or harm in any manner the operation
of any software or hardware. To the Knowledge of the Company, none of the
foregoing contains any worm, bomb, backdoor, clock, timer, or other disabling
device code, design or routine which causes the software to be erased,
inoperable, or otherwise incapable of being used, either automatically or upon
command by any party.
(o) Company has implemented all reasonable steps which are known
in the information systems industry and which constitute best practices in the
physical and electronic protection of its information assets from unauthorized
disclosure, use or modification.
23
28
Section 4.14(o) of the Company Disclosure Schedule sets forth (i) each breach of
security of which Company is aware, (ii) its known or anticipated consequences,
and (iii) the steps Company has taken to remedy such breach.
(p) All information (the "DATABASE INFORMATION") contained in the
databases maintained by Company (the "DATABASES") has been at all times (i)
collected in accordance with fair information collection practices (including
but not limited to (a) the standards promulgated by the Online Privacy Alliance;
(b) the standards promulgated by the Direct Marketing Association, and (c) all
applicable Federal, state and other laws, rules and regulations including but
not limited to those relating to the use of information collected from or about
consumers) so that, at a minimum and prior to submitting any information to
Company or its agents (including, but not limited to, The Gallup Organization,
Inc.), Internet users received notice of how the information will be used and a
choice whether to submit such information; and (ii) stored, maintained and used
in accordance with such notices and all Federal, state and local laws, rules and
regulations.
(q) Company has the sole and exclusive right to use and
commercially exploit the Database Information, free of consideration to any
third party (including, but not limited to, The Gallup Organization, Inc.) other
than as set forth in Section 4.14(q) of the Company Disclosure Schedule.
(r) The form of Company's customer agreement set forth in Section
4.14(r) of the Company Disclosure Schedule is substantially similar to Company's
contracts in effect with its other customers.
SECTION 4.15 Taxes.
(a) Company and any consolidated, combined, unitary or aggregate
group for Tax purposes of which Company is or has been a member, have properly
completed and timely filed all Tax Returns required to be filed by them and have
paid all Taxes required to be shown as due thereon. Company has provided
adequate accruals in accordance with generally accepted accounting principles in
its latest financial statements contained in the Company Reports for any Taxes
that have not been paid, whether or not shown as being due on any Tax Returns.
Other than in the ordinary course of business, Company has no material liability
for unpaid Taxes accruing after the date of the Company's latest financial
statements included in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien
against the property of Company or is being asserted against Company other than
liens for Taxes not yet due and payable, (ii) no audit of any Tax Return of
Company being conducted by a Tax Authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company and currently in
effect, and (iv) no agreement, contract or arrangement to which Company is a
party that may result in the payment of any amount that would not be deductible
by reason of Section 280G or Section 404 of the Code.
24
29
(c) There has been no change in ownership of Company that has
caused the utilization of any losses of such entities to be limited pursuant to
Section 382 of the Code, and any loss carryovers reflected on the latest
financial statements included in the Company Reports are properly computed and
reflected.
(d) Company has not been and will not be required to include any
material adjustment in taxable income for Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Merger.
(e) Company has not filed and will not file any consent to have
the provisions of Section 341(f)(2) of the Code (or comparable provisions of any
state Tax laws) apply to Company.
(f) Company is not a party to any Tax sharing or Tax allocation
agreement, nor does Company have any liability or potential liability to another
party under any such agreement.
(g) Company has not filed any disclosures under Section 6662 or
comparable provisions of state, local or foreign law to prevent the imposition
of penalties with respect to any Tax reporting position taken on any Tax Return.
(h) Company has not ever been a member of a consolidated, combined
or unitary group of which Company was not the ultimate parent corporation.
(i) Company has in its possession receipts for any Taxes paid to
foreign Tax authorities. Company has never been a "personal holding company"
within the meaning of Section 542 of the Code or a "United Sates real property
holding corporation" within the meaning of Section 897 of the Code.
SECTION 4.16 Insurance. Company is presently insured, and since
its inception has been insured, against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. The policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of Company provide, in the
good faith judgment of the Company's management, reasonably adequate coverage
against loss. Company has heretofore furnished to Parent a complete and correct
list as of the date hereof of all insurance policies maintained by Company, and
has made available to Parent complete and correct copies of all such policies,
together with all riders and amendments thereto. All such policies are in full
force and effect and all premiums due thereon have been paid to the date hereof.
Company has complied in all material respects with the terms of such policies.
SECTION 4.17 Properties. Company has good and valid title, free
and clear of all Encumbrances, except for Permitted Encumbrances, to all their
material properties and assets, whether tangible or intangible, real, personal
or mixed, reflected in the Company's financial statements contained in the
Company's Annual Report on Form 10-K for the period ended December 31, 1999 as
being owned by Company as of the date thereof, other than (i) any
25
30
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such financial statements, (ii)
liens disclosed in the notes to such financial statements and (iii) liens
arising in the ordinary course of business after the date of such financial
statements. All buildings, and all fixtures, equipment and other property and
assets that are material to its business, held under leases or sub-leases by
Company are held under valid instruments enforceable in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general principles
of equity (whether applied in a proceeding in law or equity). Substantially all
of Company's equipment in regular use has been reasonably maintained and is in
serviceable condition, reasonable wear and tear excepted.
SECTION 4.18 Affiliates. Schedule 4.18 of the Company Disclosure
Schedule sets forth the names and addresses of each Person who is, in Company's
reasonable judgment, an affiliate (as such term is used in Rule 145 under the
Securities Act) of Company.
SECTION 4.19 Opinion of Financial Advisor. Veronis, Suhler &
Associates Inc. ("COMPANY FINANCIAL ADVISOR") has delivered to the board of
directors of Company its opinion to the effect that the Merger Consideration to
be received by the holders of shares of Company Common Stock is fair to such
holders from a financial point of view.
SECTION 4.20 Brokers.
(a) No broker, finder or investment banker (other than Company
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of Company.
(b) Attached hereto as Schedule 4.20(b) of the Company Disclosure
Schedule are true, complete and correct copies of all agreements between Company
and the Company Financial Advisor. Other than as attached hereto as Schedule
4.20(b) of the Company Disclosure Schedule, there are no other agreements
between Company and the Company Financial Advisor.
SECTION 4.21 Certain Business Practices. Neither Company nor any
directors, officers, agents or employees of Company (in their capacities as
such) has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity or (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended.
SECTION 4.22 Business Activity Restriction. There is no
non-competition or other similar agreement, commitment, judgment, injunction,
order or decree to which Company is a party or subject to that has or could
reasonably be expected to have the effect of prohibiting or impairing the
conduct of business by Company. Company has not entered into any agreement under
which Company is restricted from selling, licensing or otherwise distributing
any of its technology or products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
26
31
SECTION 4.23 Privacy. The Company is, and has always been, in
compliance with its then-current privacy policy, including those posted on the
Company's Web site(s). The Company has conducted its business and maintained its
data at all times in accordance with (i) the standards promulgated by the Online
Privacy Alliance, (ii) the standards promulgated by the Direct Marketing
Association, and (iii) all applicable Federal, state and other laws, including,
but not limited to, those relating to the use of information collected from or
about consumers.
SECTION 4.24 Sections 00-000-000 and 00-000-000 of Tennessee Law
Not Applicable. The board of directors of Company has approved the Merger, this
Agreement, the Shareholder Agreements and the Shareholder Letters, and such
approval is sufficient to render inapplicable to the Merger, this Agreement, the
Shareholder Agreements and the Shareholder Letters and the transactions
contemplated by this Agreement and the Shareholder Agreements the provisions of
Sections 00-000-000 and 00-000-000 of Tennessee Law. No other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement, the Shareholder Agreements or the transactions
contemplated by this Agreement and the Shareholder Agreements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to
Company, subject to the exceptions specifically disclosed in the Parent
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article V or otherwise be clearly applicable to
representations hereof not specifically referenced, that:
SECTION 5.01 Organization and Qualification. Parent and Merger Sub
have each been duly organized and each is validly existing and in good standing
(to the extent applicable) under the laws of the State of Delaware, and has the
requisite corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each of Parent and Merger Sub is duly qualified or licensed
to do business, and each is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
SECTION 5.02 Certificate of Incorporation and Bylaws. The copies
of each of Parent's and Merger Sub's certificate of incorporation and bylaws
previously provided to Company by Parent are true, complete and correct copies
thereof. Such certificate of incorporation, and bylaws are in full force and
effect.
27
32
SECTION 5.03 Capitalization.
(a) The authorized capital stock of Parent consists of 400,000,000
shares of Parent Common Stock and 5,000,000 shares of preferred stock, par value
$.001 per share ("PARENT PREFERRED STOCK"). As of the close of business on
November 1, 2000, (i) 123,534,944 shares of Parent Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of Parent Common Stock are held in the treasury of Parent, (iii) no
shares of Parent Common Stock are held by any directly or indirectly owned
subsidiary of Parent, including Merger Sub (each a "PARENT SUBSIDIARY"), and
(iv) no shares of Parent preferred stock are issued and outstanding. Except for
the shares of Parent Common Stock issuable pursuant to the Parent Stock Plans
and shares of Parent Common Stock issuable upon conversion of the Parent
Convertible Notes, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Parent is a party or by
which Parent is bound relating to the issued or unissued capital stock of Parent
or any Parent Subsidiary or obligating Parent or any Parent Subsidiary to issue
or sell any shares of capital stock of, or other equity interests in, Parent or
any Parent Subsidiary. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of Parent to repurchase, redeem or otherwise
acquire any shares of Parent Common Stock. There are no material outstanding
contractual obligations of Parent to provide funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary or any other Person.
(b) All of the shares of Parent Common Stock to be issued (i) in
connection with the Merger, when issued in accordance with this Agreement, and
(ii) upon the conversion of any Company Stock Option or Company Warrant into an
option or warrant, as the case may be, to purchase shares of Parent Common Stock
in accordance with Section 3.05, when issued upon exercise thereof following the
Effective Time, will be validly issued, fully paid and nonassessable and will
not be subject to preemptive rights or similar contractual rights granted by
Parent.
SECTION 5.04 Authority Relative to This Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by each of Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate such transactions (other than the consent of Parent as sole
shareholder of Merger Sub and the filing and recordation of the DE Certificate
of Merger as required by Delaware Law and the TN Articles of Merger as required
by Tennessee Law). This Agreement has been duly executed and delivered by each
of Parent, Original Merger Sub and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitutes a legal, valid and
binding obligation of each of Parent, Original Merger Sub and Merger Sub
enforceable against Parent, Original Merger Sub and Merger Sub in accordance
with
28
33
its terms, except to the extent that enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
SECTION 5.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i) conflict
with or violate any provision of the certificate of incorporation or bylaws of
Parent or any equivalent organizational documents of any Parent Subsidiary, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 5.05(b) have been obtained and all filings and notifications described
in Section 5.05(b) have been made, conflict with or violate any Law applicable
to Parent or any other Parent Subsidiary or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected or (iii) result in any
breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other Encumbrance on any
property or asset of Parent pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, require any
consent, approval, authorization or permit of, or filing by Parent with or
notification by Parent to, any Governmental Entity, except pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the rules and regulations of the NNM, the premerger notification requirements of
the HSR Act, if any, and the filing and recordation of the DE Certificate of
Merger as required by Delaware Law and the TN Articles of Merger as required by
Tennessee Law.
SECTION 5.06 SEC Filings; Financial Statements.
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NNM since February
20, 1998 (collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Closing, the
"PARENT REPORTS") and (B) with any other Governmental Entities. Each Parent
Report (i) was prepared in accordance with the requirements of the Securities
Act, the Exchange Act or the NNM, as the case may be, and (ii) did not at the
time it was filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Each form, report, statement and document
referred to in clause (B) of this paragraph was prepared in all material
respects in accordance with the requirements of applicable Law. No Parent
Subsidiary is subject to the periodic reporting requirements of the Exchange Act
or required to file any form, report or other document with the SEC, the NNM,
any other stock exchange or any other comparable Governmental Entity.
29
34
(b) Except as provided in the Parent Reports, each of the
consolidated financial statements (including, in each case, any notes thereto)
contained in the Parent Reports was prepared in accordance with U.S. GAAP
(except, in the case of unaudited financial statements, for the absence of
footnotes and subject to normal year end adjustments, which adjustments are not
material) applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each presented fairly the
consolidated financial position of Parent and the Parent Subsidiaries as at the
respective dates thereof, and their consolidated results of operations,
shareholders' equity and cash flows for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on
the consolidated balance sheet of Parent and the Parent Subsidiaries as reported
in the Parent Reports, none of Parent or any Parent Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with U.S. GAAP, except for liabilities or
obligations incurred in the ordinary course of business consistent with past
practice since December 31, 1999.
SECTION 5.07 Certain Tax Matters. Neither Parent nor, to the
Knowledge of Parent, any of its Affiliates has taken or agreed to take any
action (other than actions contemplated by this Agreement, including, without
limitation, as contemplated by Section 3.01(a)(ii)) that could reasonably be
expected to prevent the Merger from constituting a "reorganization" under
Section 368(a) of the Code. Parent is not aware of any agreement, plan or other
circumstance that could reasonably be expected to prevent the Merger from so
qualifying as a reorganization under Section 368(a) of the Code.
SECTION 5.08 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent.
SECTION 5.09 No Parent Material Adverse Effect. Since December
31, 1999, there has been no Parent Material Adverse Effect.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business Pending the Closing. Company
agrees that, between the date of this Agreement and the Effective Time, unless
Parent shall otherwise agree in writing, (x) the business of Company shall be
conducted only in, and Company shall not take any action except in, the ordinary
course of business consistent with past practice and (y) Company shall use its
reasonable efforts to keep available the services of such of the current
officers, significant employees and consultants of Company and to preserve the
current relationships of Company with such of the corporate partners, customers,
suppliers and
30
35
other Persons with which Company has significant business relations in order to
preserve substantially intact its business organization. Without limitation,
Company shall not, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of Parent:
(a) amend or otherwise change its charter or bylaws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer,
lease, license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or Encumbrance of,
(i) any shares of capital stock of Company of any class, or securities
convertible into or exchangeable or exercisable for any shares of such
capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Company, other
than the issuance of shares of Company Common Stock pursuant to the
exercise of stock options, warrants or convertible securities therefor
outstanding as of the date hereof or expressly permitted by this Agreement
and other than stock options issued in accordance with the guidelines set
forth in Section 6.01(b) of Company Disclosure Schedule, or (ii) any
material property or assets of Company except transactions pursuant to
existing contracts;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or Person or any
division thereof, other than the purchase of assets in the ordinary course
of business consistent with past practice; (ii) incur any indebtedness for
borrowed money (other than indebtedness with respect to working capital in
amounts consistent with past practice) or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person for borrowed money or make
any loans or advances material to the business, assets, liabilities,
financial condition or results of operations of Company; (iii), except as
listed in Section 6.01(c) of Company Disclosure Schedule, terminate,
cancel or request any material change in, or agree to any material change
in, any Material Contract; (iv) make or authorize any capital expenditure,
other than capital expenditures in the ordinary course of business
consistent with past practice that are disclosed in writing to Parent and
that are not, in the aggregate, in excess of $25,000 for Company; or (v)
enter into or amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this Section
6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option
or purchase agreements in effect on the date hereof;
31
36
(f) amend or change the period (from that currently provided
for) of exercisability of options granted under the Company Stock Plans or
authorize cash payments in exchange for any Company Stock Options granted
under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire
any of its securities, except repurchases of unvested shares at cost in
connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the
date hereof;
(h) increase the compensation payable or to become payable to
its directors, officers, consultants or employees, grant any rights to
retention, severance or termination pay to, or enter into any employment,
retention or severance agreement which provides benefits upon a change in
control of Company that would be triggered by the Merger with, any
director, officer, consultant or other employee of Company who is not
currently entitled to such benefits from the Merger, establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer, consultant or employee of Company, except to the extent
required by applicable Law or the terms of a collective bargaining
agreement, or enter into or amend any contract, agreement, commitment or
arrangement between Company and any of Company's directors, officers,
consultants or employees;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of claims,
liabilities or obligations (A) in the ordinary course of business and
consistent with past practice or (B) claims, liabilities or obligations
reflected or reserved against on the latest balance sheet included in the
Company Reports or (C) as otherwise set forth on Schedule 6.01 of the
Company Disclosure Schedule;
(j) except as required by any Governmental Entity, make any
change with respect to Company's accounting policies, principles, methods
or procedures, including, without limitation, revenue recognition
policies, other than as required by U.S. GAAP;
(k) make any Tax election or settle or compromise any Tax
liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of
Company contained in this Agreement untrue or incorrect or prevent Company
from performing or cause Company not to perform its covenants hereunder or
result in any of the conditions to the Merger set forth herein not being
satisfied.
32
37
SECTION 6.02 Notices of Certain Events. Each of Parent and Company
shall give prompt notice to the other of (i) any notice or other communication
from any Person alleging that the consent of such Person is or may be required
in connection with the Merger; (ii) any notice or other communication from any
Governmental Entity in connection with the Merger; (iii) any actions, suits,
claims, investigations or proceedings commenced or, to the Knowledge of Company
or the Knowledge of Parent, as the case may be, threatened in writing against,
relating to or involving or otherwise affecting Parent or Company, respectively,
which, if pending on the date hereof, would have been required to have been
disclosed in this Agreement, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Company Material Contract
and (v) any change that could reasonably be expected to have a Parent Material
Adverse Effect or Company Material Adverse Effect, or to delay or impede the
ability of Parent or Company, respectively, to perform their respective
obligations pursuant to this Agreement and to effect the consummation of the
Merger.
SECTION 6.03 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement
or similar agreement or arrangement to which Parent or Company is a party or
pursuant to applicable Law or the regulations or requirements of any stock
exchange or other regulatory organization with whose rules a party hereto is
required to comply, from the date of this Agreement to the Effective Time,
Parent shall and Company shall (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, "REPRESENTATIVES")) access at reasonable times
upon prior notice to its and its subsidiaries' officers, employees, agents,
properties, offices and other facilities and to the books and records thereof,
and (ii) furnish promptly such information concerning its and its subsidiaries'
business, properties, contracts, assets, liabilities and personnel as the other
party or its Representatives may reasonably request. No investigation conducted
pursuant to this Section 6.03 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreements with respect to the information disclosed
pursuant to this Agreement.
SECTION 6.04 No Solicitation of Transactions.
(a) Until this Agreement has been terminated as provided herein,
Company shall not, directly or indirectly, and shall cause its Representatives
not to, directly or indirectly, solicit, initiate or encourage (including by way
of furnishing nonpublic information), any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) that constitutes, or may reasonably be expected to lead to, any
Company Competing Transaction, or enter into or maintain or continue discussions
or negotiate with any Person in furtherance of such inquiries or to obtain a
Company Competing Transaction, or agree to or endorse any Company Competing
Transaction, or authorize or permit any of Company's Representatives or
subsidiaries, or any Representative retained by Company's
33
38
subsidiaries, to take any such action; provided, however, that nothing contained
in this Section 6.04 shall prohibit the board of directors of Company (i) from
complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act with
regard to a tender or exchange offer not made in violation of this Section 6.04
or (ii) prior to receipt of the approval by the shareholders of Company of this
Agreement and the Merger from providing information (subject to a
confidentiality agreement at least as restrictive as the Confidentiality
Agreements) in connection with, and negotiating, another unsolicited, bona fide
written proposal regarding a Company Competing Transaction that (x) Company's
board of directors shall have concluded in good faith, based in part on the
advice of independent outside counsel, that failure to take such action would be
a breach of the Company's board of directors' fiduciary duties to Company's
shareholders under applicable law, (y) if any cash consideration is involved,
shall not be subject to any financing contingency, and with respect to which
Company's board of directors shall have determined (based in part on the advice
of Company's independent financial advisors of nationally recognized reputation)
in the proper exercise of its fiduciary duties to Company's shareholders that
the acquiring party is capable of consummating such Company Competing
Transaction on the terms proposed, and (z) Company's board of directors shall
have determined (based in part on the advice of Company's independent financial
advisors of nationally recognized reputation) in the proper exercise of its
fiduciary duties to Company's shareholders that such Company Competing
Transaction provides greater value to the shareholders of Company than the
Merger (and Company's independent financial advisors of nationally recognized
reputation opine in writing that such Company Competing Transaction is superior
from a financial point of view) (any such Company Competing Transaction
fulfilling each of the requirements of this clause (ii) of Section 6.04 being
referred to herein as a "COMPANY SUPERIOR PROPOSAL"). Any violation of the
restrictions set forth in this Section 6.04 by any Representative of Company,
whether or not such Person is purporting to act on behalf of Company or
otherwise, shall be deemed to be a breach of this Section 6.04 by Company.
Company shall notify Parent promptly if any proposal or offer, or any inquiry or
contact with any Person with respect thereto, regarding a Company Competing
Transaction is made, such notice to include the identity of the Person making
such proposal, offer, inquiry or contact, and the terms of such Company
Competing Transaction and of any modifications of the terms thereof. In
connection with any such potential Company Competing Transaction, prior to
furnishing any information or entering into any discussions or negotiations with
any Person making such proposal, Company shall provide to Parent written notice
to the effect that Company is furnishing information to, or entering into
discussions or negotiations with, such Person and Company shall keep Parent
promptly informed of the status of the terms and conditions of any such
discussions or negotiations. Prior to accepting a Company Competing Proposal,
Company shall provide Parent with 24 hours' written notice of such intention.
(b) Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Company Competing Transaction. Company shall not release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party.
34
39
SECTION 6.05 Tax-Free Transaction.
(a) From and after the date of this Agreement, each party hereto
shall use all reasonable efforts to cause the Merger to qualify, and shall not
knowingly take any actions or cause any actions (except as contemplated by this
Agreement) to be taken which could reasonably be expected to prevent the Merger
from qualifying as a "reorganization" under Section 368(a) of the Code.
(b) In the event Parent elects to pay Merger Consideration
pursuant to Section 3.01(a)(i), each of Company and Parent shall execute and
deliver to the other a certificate, in form reasonably acceptable to Company and
Parent, as the case may be, signed by an officer of Company or Parent, as the
case may be, setting forth factual representations and covenants that will serve
as a basis for the tax opinion required under Section 8.02(c) hereof. Company
shall use its best efforts to obtain a tax opinion that would satisfy the
condition to the Closing set forth in Section 8.02(c).
SECTION 6.06 Control of Operations. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the operations of Company prior to the Effective Time. Prior to the
Effective Time, Company shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its operations.
SECTION 6.07 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger, (ii) obtain from Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent or Company in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger and (iii) make all necessary filings, and thereafter make any other
required or appropriate submissions, with respect to this Agreement and the
Merger required under (A) the rules and regulations of the NNM, (B) the
Securities Act, the Exchange Act and any other applicable Federal or state
securities Laws, (C) the HSR Act, if any, and (D) any other applicable Law. The
parties hereto shall cooperate and consult with each other in connection with
the making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and none
of the parties shall file any such document if any of the other parties shall
have reasonably objected to the filing of such document. No party shall consent
to any voluntary extension of any statutory deadline or waiting period or to any
voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent and agreement of the other parties
hereto, which consent shall not be unreasonably withheld or delayed.
(b) Each of Company and Parent will give any notices to third
Persons, and use, and cause their respective subsidiaries to use, reasonable
efforts to obtain any consents from
35
40
third Persons necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
SECTION 6.08 Additional Reports. Company and Parent shall each
furnish to the other copies of any reports of the type referred to in Sections
4.07 and 5.06, which it files with the SEC on or after the date hereof, and
Company and Parent, as the case may be, covenant and warrant that as of the
respective dates thereof, such reports will 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 therein, in light of the circumstances under
which they were made, not misleading. Any consolidated interim financial
statements included in such reports (including any related notes and schedules)
will fairly present the financial position of Company and its consolidated
subsidiaries or Parent and its consolidated subsidiaries, as the case may be, as
of the dates thereof and the results of operations and changes in financial
position or other information included therein for the periods or as of the date
then ended (subject, where appropriate, to normal year-end adjustments), in each
case in accordance with past practice and U.S. GAAP (except for the absence of
footnotes) consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto).
SECTION 6.09 Tax Information. Company shall provide the following
information to Parent not later than two weeks after the date of this Agreement:
(i) a complete list of the types of Tax Returns being filed by Company in each
taxing jurisdiction, (ii) a list of all closed years with respect to each such
type of Tax Return filed in each jurisdiction, (iii) a list of any deferred
intercompany gain with respect to transactions to which Company has been a party
and (iv) a list of the acquisition date, original cost, accumulated
depreciation, adjusted tax basis, and methods of depreciation for all
depreciable and amortizable assets of the Company. Company shall provide Parent
and its accountants, counsel and other representatives reasonable access, during
normal business hours during the period prior to the Effective Time, to all of
Company's Tax Returns and other records and workpapers relating to Taxes.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, Parent and Company shall jointly prepare and shall file with the SEC
a document or documents that will constitute (i) the registration statement on
Form S-4 of Parent (together with all amendments thereto, the "REGISTRATION
STATEMENT"), in connection with the registration under the Securities Act of
Parent Common Stock to be issued to Company's shareholders pursuant to the
Merger and (ii) the proxy statement with respect to the Merger relating to the
Company Shareholders' Meeting (together with any amendments thereto, the "PROXY
STATEMENT"). Copies of the Proxy Statement shall be provided to the NNM in
accordance with its rules. Each of the parties hereto shall use all reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
Registration
36
41
Statement, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common Stock
pursuant to the Merger. Parent or Company, as the case may be, shall furnish all
information concerning Parent or Company as the other party may reasonably
request in connection with such actions and the preparation of the Registration
Statement and the Proxy Statement. Each of Parent and Company shall notify the
other of the receipt of any comments from the SEC on the Registration Statement
and the Proxy Statement and of any requests by the SEC for any amendments or
supplements thereto or for additional information and shall provide to each
other promptly copies of all correspondence between Parent, Company or any of
their representatives and advisors and the SEC. As promptly as practicable after
the effective date of the Registration Statement, the Proxy Statement shall be
mailed to the shareholders of Company. Each of the parties hereto shall cause
the Proxy Statement to comply as to form and substance in all material respects
with the applicable requirements of (i) the Exchange Act, (ii) the Securities
Act and (iii) the rules and regulations of the NNM.
(b) The Proxy Statement shall include, with respect to Company and
its shareholders, (i) the approval of the Merger and the recommendation of the
board of directors of Company to Company's shareholders that they vote in favor
of approval of this Agreement and the Merger, unless a withdrawal of such
approval and recommendation is required following receipt by Company of a
Company Superior Proposal, and (ii) the opinion of Company Financial Advisor
referred to in Section 4.19.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement shall be made without the approval of Parent and Company,
which approval shall not be unreasonably withheld or delayed. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or its officers
or directors, should be discovered by Company that should be set forth in an
amendment or a supplement to the Registration Statement or the Proxy Statement,
Company shall promptly inform Parent. All documents that Company is responsible
for filing with the SEC in connection
37
42
with the Merger will comply as to form in all material respects with the
applicable requirements of the rules and regulations of the Securities Act and
the Exchange Act.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event or circumstance relating to Parent or any
Parent Subsidiary, or their respective officers or directors, should be
discovered by Parent that should be set forth in an amendment or a supplement to
the Registration Statement or the Proxy Statement, Parent shall promptly inform
Company. All documents that Parent is responsible for filing with the SEC in
connection with the Merger will comply as to form in all material respects with
the applicable requirements of the rules and regulations of the Securities Act
and the Exchange Act.
SECTION 7.02 Company Shareholders' Meeting. Company shall call and
hold the Company Shareholders' Meeting, as promptly as practicable after the
date hereof for the purpose of voting upon the approval of this Agreement and
the Merger pursuant to the Proxy Statement, and Company shall use all reasonable
efforts to hold the Company Shareholders' Meeting as soon as practicable after
the date on which the Registration Statement becomes effective (but in no event
prior to the date that is twelve trading days following the first public
announcement by Parent of Parent's financial results for the year ended December
31, 2000). Company shall use all reasonable efforts to solicit from its
shareholders proxies in favor of the approval of this Agreement and the Merger
pursuant to the Proxy Statement and shall take all other action necessary or
advisable to secure the vote or consent of shareholders required by Tennessee
Law or applicable stock exchange requirements to obtain such approval. Each of
the parties hereto shall take all other action necessary or, in the opinion of
the other parties hereto, advisable to promptly and expeditiously secure any
vote or consent of shareholders required by applicable Law and such party's
certificate of incorporation or charter and bylaws to effect the Merger.
SECTION 7.03 Affiliates. Parent shall be entitled to place legends
on the certificates evidencing any of the Parent Common Stock to be received by
(i) any Affiliate of Company or (ii) any Person Parent reasonably identifies (by
written notice to Company) as being a Person who may be deemed an "affiliate"
within the meaning of Rule 145 promulgated under the Securities Act, and to
issue appropriate stop transfer instructions to the transfer agent for such
Parent Common Stock.
SECTION 7.04 Directors' and Officers' Insurance.
(a) The provisions with respect to immunities and indemnification
that are set forth in Merger Sub's present certificate of incorporation, bylaws
and contractual arrangements
38
43
in effect on the date hereof other than the provisions to be modified as
provided in Section 8.03(e) of the Company Disclosure Schedule, shall survive
the Merger and not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who at or at any time prior to the Effective
Time were directors, officers, employees or agents of Company.
(b) In the event Company or Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers a material amount of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guaranty the
indemnification obligations referred to in this Section 7.04 or will make or
cause to be made proper provision so that the successors and assigns of Company
or Surviving Corporation, as the case may be, assume the indemnification
obligations described herein for the benefit of the indemnified parties and have
substantially equal financial ability as Company (immediately prior to the
Effective Time) to satisfy the obligations of the parties pursuant to this
Section 7.04 as a condition to such merger, consolidation or transfer becoming
effective.
(c) The provisions of this Section 7.04 are (i) intended to be for
the benefit of, and will be enforceable by, each of the indemnified parties and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Person may have by contract or
otherwise.
(d) For a period of three years after the Effective Time, Parent
shall maintain in effect the directors' and officers' liability insurance
policies maintained by Company; provided, however, that in no event shall Parent
be required to expend in any one year in excess of 150% of the annual premium
currently paid by Company for such coverage, which annual premium Company hereby
represents is $227,000; and provided further, that if the premium for such
coverage exceeds such amount, Parent shall purchase a policy with the greatest
coverage available for such 150% of the annual premium.
SECTION 7.05 No Shelf Registration. Parent shall not be required
to amend or maintain the effectiveness of the Registration Statement for the
purpose of permitting resale of the shares of Parent Common Stock received
pursuant hereto by the Persons who may be deemed to be "affiliates" of Company
within the meaning of Rule 145 promulgated under the Securities Act.
SECTION 7.06 Public Announcements. The press release concerning
this Agreement to be released in connection with the execution and delivery of
this Agreement shall be a joint press release and, thereafter, Parent and
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement without the prior approval of the other, except to the extent required
by applicable Law or the requirements of the rules and regulations of the NNM,
in which case the issuing party shall use all reasonable efforts to consult with
the other party before issuing any such release or making any such public
statement.
39
44
SECTION 7.07 NNM Listing. Prior to the Effective Time, Parent
shall use all reasonable efforts to have the shares of Parent Common Stock
issued or issuable in connection with the Merger and approved for quotation on
the NNM.
SECTION 7.08 Company Stock Options/Registration Statements on Form
S-8. Prior to the Effective Time, Company shall take, or cause to be taken, all
action necessary and appropriate to effect the assumption of Company Stock
Options and Company Warrants as contemplated by Section 3.05, including, if
applicable, amending the Company Stock Plans and Company Stock Options and
Warrants to provide that no "cash-out" will be made in connection with the
Merger and obtaining the consent of affected optionees and warrant holders.
Parent shall reserve for issuance the number of shares of Parent Common Stock
that will be issuable upon exercise of Company Stock Options and Warrants
assumed pursuant to Section 3.05 hereof. Within 20 Business Days after the
Effective Time, Parent shall file with the SEC one or more registration
statements on Form S-8 for the shares of Parent Common Stock issuable with
respect to Company Stock Options and will maintain the effectiveness of such
registration statements for so long as any of such options or other rights
remain outstanding.
SECTION 7.09 Employee Matters. As of the Effective Time, Parent
shall cause the Surviving Corporation to honor and satisfy all obligations and
liabilities with respect to the Company Benefit Plans. Notwithstanding the
foregoing, the Surviving Corporation shall not be required to continue any
particular Company Benefit Plan after the Effective Time, and any Company
Benefit Plan may be amended or terminated in accordance with its terms and
applicable law. If requested by Parent prior to the Effective Time, Company
shall take all actions necessary and appropriate to terminate any Company
Benefit Plan that is a 401(k) plan (each, a "401(k) Plan") effective immediately
preceding the Closing Date and no further contributions shall be made to any
401(k) Plan, and Company shall provide to Parent (i) executed resolutions by the
board of directors of Company, as applicable, authorizing such termination.
SECTION 7.10 Warrants. Parent shall use all reasonable efforts to
cause the securities into which the Company Warrants are exercisable (after they
are assumed by Parent) to be included in the Registration Statement. As of the
Effective Time, Company shall have caused the holders of Company Warrants (a) to
terminate all registration rights with respect to the Company Warrants and the
securities underlying such warrants and (b) to waive all rights to receive
consideration other than shares of Parent Common Stock in connection with the
exercise of the Company Warrants.
SECTION 7.11 Exemption from Liability Under Section 16(b). If
Company delivers to Parent in a timely fashion prior to the Effective Time
accurate information regarding those officers and directors of Company
determined by Parent to be subject to the reporting requirements of Section
16(a) of the Exchange Act (the "COMPANY INSIDERS"), the number of shares of
Company Common Stock held or to be held by each such Company Insider expected to
be exchanged for Parent Common Stock in the Merger, and the number and
description of the options and warrants to purchase shares of Company Common
Stock held by each Company Insider and expected to be converted into options and
warrants to purchase Parent Common Stock in the Merger, the Board of Directors
of Parent, or a committee of non-employee
40
45
directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act), shall reasonably promptly thereafter, and in any event prior
to the Effective Time, if required, adopt a resolution providing that the
receipt by the Company Insiders of Parent Common Stock in exchange for shares of
Company Common Stock, and of options and warrants to purchase shares of Parent
Common Stock upon conversion of options and warrants to purchase Company Common
Stock, in each case pursuant to the transactions contemplated hereby, and to the
extent such securities are listed in the information provided by Company, are
approved by such Board of Directors or by such committee thereof, and are
intended to be exempt from liability pursuant to Section 16(b) of the Exchange
Act, such that any such receipt shall be so exempt.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger. The obligations of the parties hereto to consummate the
Merger are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued by
the SEC and no proceeding for that purpose shall have been initiated by
the SEC and not concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly approved
by the requisite vote of shareholders of Company in accordance with
Tennessee Law;
(c) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or Governmental Entity which
prohibits or prevents the consummation of the Merger which has not been
vacated, dismissed or withdrawn prior to the Effective Time. Company and
Parent shall use their reasonable best efforts to have any of the
foregoing vacated, dismissed or withdrawn by the Effective Time;
(d) any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act or any other applicable
competition, merger control or similar Law shall have expired or been
terminated; and
(e) all consents, approvals and authorizations legally required
to be obtained to consummate the Merger shall have been obtained from all
Governmental Entities, except where the failure to obtain any such
consent, approval or authorization could not reasonably be expected to
result in a Parent Material Adverse Effect or a Company Material Adverse
Effect.
SECTION 8.02 Conditions to the Obligations of Company. The
obligations of Company to consummate the Merger, or to permit the consummation
of the Merger are
41
46
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following further conditions:
(a) each of the representations and warranties of Parent and
Merger Sub contained in this Agreement shall be true, complete and correct
in all material respects (other than representations and warranties
subject to "materiality" or "material adverse effect" qualifiers, which
shall be true, complete and correct in all respects) both when made and on
and as of the Effective Time as if made at and as of the Effective Time
(other than representations and warranties which address matters only as
of a certain date which shall be so true, complete and correct as of such
certain date), and Company shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Parent to such effect;
(b) Parent and Merger Sub shall have performed or complied in
all material respects with all covenants required by this Agreement to be
performed or complied with by them on or prior to the Effective Time and
Company shall have received certificates of the Chief Executive Officer
and Chief Financial Officer of Parent and the President of Merger Sub to
that effect;
(c) If Parent elects to pay the Merger Consideration pursuant
to Section 3.01(a)(i), Company shall have obtained an opinion from
Company's legal counsel in form and substance reasonably satisfactory to
it substantially to the effect that if the Merger is consummated in
accordance with the provisions of this Agreement, under current law, for
federal income tax purposes, the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code; provided, that if
Company is unable to obtain such an opinion from its legal counsel, this
condition shall be deemed to be satisfied if Parent's legal counsel
delivers an opinion to Company to the same effect;
(d) The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on the NNM, subject to notice of
issuance; and
(e) Parent has provided Company with the written elections
contemplated by Section 3.01(a).
SECTION 8.03 Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger are subject to the satisfaction
or waiver of the following further conditions:
(a) each of the representations and warranties of Company
contained in this Agreement shall be true, complete and correct in all
material respects (other than representations and warranties subject to
"materiality" or "material adverse effect" qualifiers, which shall be
true, complete and correct in all respects) both when made and on and as
of the Effective Time as if made at and as of the Effective Time (other
than representations and warranties which address matters only as of a
certain date which shall be so true, complete and correct as of such
certain date), and Parent shall have received a
42
47
certificate of the Chief Executive Officer and Chief Financial Officer of
Company to such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Parent shall
have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Company to that effect;
(c) none of Xxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxx or Xxxx
Xxxxxxxxxxx shall have terminated or modified their respective agreements,
copies of which are set forth in Section 8.03(c) of the Company Disclosure
Schedule.
(d) Company shall have received from each of the parties set
forth on Section 8.03(d) of the Company Disclosure Schedule (each such
party, an "Assigning Party"), a valid and effective assignment, in form
reasonably acceptable to Parent, of all intellectual property rights in
all work created by such Assigning Party on behalf of Company.
(e) The indemnification agreements between Company and each
director have each been amended as set forth in Section 8.03(e) of the
Company Disclosure Schedule.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall not
have occurred on or before March 23, 2001; provided, however, that the
right to terminate this Agreement under this Section 9.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have caused, or resulted in, the failure of the Effective
Time to occur on or before such date;
(c) by either Parent or Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the Merger shall
have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or its shareholders or shall have
resolved to do so, (ii) the board of
43
48
directors of Company shall have recommended to the shareholders of Company
a Company Competing Transaction or shall have resolved to do so, (iii)
Company fails to comply in all material respects with Section 6.04 or
Section 7.02, (iv) a party to a Shareholder Agreement (other than Parent)
takes any action prohibited thereby, or (v) a Company Competing
Transaction shall have been announced or otherwise publicly known and the
board of directors of Company shall have (A) failed to recommend against
acceptance of such by its shareholders (including by taking no position,
or indicating its inability to take a position, with respect to the
acceptance of a Company Competing Transaction involving a tender offer or
exchange offer by its shareholders) within five Business Days of delivery
of a written request from Parent for such action, (B) failed to reconfirm
its approval and recommendation of this Agreement and the transactions
contemplated hereby within five Business Days of the first announcement or
other public knowledge of such proposal for a Company Competing
Transaction or (C) determined that such Company Competing Transaction was
a Company Superior Proposal and to take any of the actions allowed by
clause (ii) of Section 6.04(a), (and shall not have, prior to Parent's
termination of this Agreement pursuant to this Section 9.01(d)(v)(C), (x)
reconfirmed its approval and recommendation of this Agreement and (y)
recommended against acceptance of such Company Superior Proposal by its
shareholders) or the board of directors of Company resolves to take any of
the actions described in (A) - (C) of this Section 9.01(d)(v);
(e) by Parent or Company, if this Agreement and the Merger is
brought to a vote and shall fail to receive the requisite votes for
approval at the Company Shareholders' Meeting or any adjournment or
postponement thereof;
(f) by Parent, 10 Business Days after receipt by Company of a
written notice from Parent of a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement,
or if any representation or warranty of Company shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth
in Section 8.03 would not be satisfied (a "TERMINATING COMPANY BREACH");
provided, however, that if such Terminating Company Breach is cured by
Company within 10 Business Days, Parent may not terminate this Agreement
under this Section 9.01(f);
(g) by Company, 10 Business Days after receipt by Parent of a
written notice from Company of a breach of any representation, warranty,
covenant or agreement 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, incomplete or incorrect, in either case such
that the conditions set forth in Section 8.02 would not be satisfied (a
"TERMINATING PARENT BREACH"); provided, however, that if such Terminating
Parent Breach is cured by Parent within 10 Business Days, Company may not
terminate this Agreement under this Section 9.01(g); or
(h) by Company, if it determines to recommend or enter into a
Company Competing Transaction that is a Company Superior Proposal that was
not solicited by Company in violation of this Agreement; provided,
however, that Company
44
49
shall not be permitted to terminate this Agreement pursuant to this
Section 9.01(h) if such Company Superior Proposal is attributable to a
violation by Company of its obligations under Section 6.04; and provided
further that no termination pursuant to this Section 9.01(h) shall be
effective until after the payment of the applicable Termination Fee
pursuant to Section 9.05.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.01 will remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.02 Effect of Termination. Except as provided in Section
9.05, in the event of termination of this Agreement pursuant to Section 9.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of any party hereto or any of its Affiliates or any
of its or their officers or directors, and all rights and obligations of each
party hereto shall cease; provided, however, that nothing herein shall relieve
any party hereto from liability for breach of any of its representations and
warranties or the breach of any of its covenants or agreements set forth in this
Agreement. No termination of this Agreement shall affect the obligation of the
parties contained in the Confidentiality Agreements, which shall survive
termination of this Agreement and remain in full force and effect in accordance
with their terms.
SECTION 9.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards of
directors at any time prior to the Effective Time; provided, however, that,
after the approval of this Agreement by the shareholders of Company, no
amendment may be made that changes the amount or type of consideration into
which Company Common Stock will be converted pursuant to this Agreement. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 9.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 9.05 Termination Fee; Expenses.
(a) Except as set forth in this Section 9.05, all Expenses
incurred in connection with this Agreement and the Merger shall be paid by the
party incurring such Expenses, whether or not the Merger is consummated, except
that Parent and Company each shall pay one-half of all Expenses incurred solely
for printing, filing and mailing the Registration Statement and the Proxy
Statement and all SEC and other regulatory filing fees incurred in
45
50
connection with the Registration Statement and the Proxy Statement and any fees
required to be paid under the HSR Act.
(b) In the event that (i) Parent shall terminate this Agreement
due to a Terminating Company Breach of any covenant or agreement contained in
this Agreement pursuant to Section 9.01(f) or (ii) Parent shall terminate this
Agreement pursuant to Section 9.01(d), Company shall terminate this Agreement
pursuant to Section 9.01(h), this Agreement is terminated pursuant to Section
9.01 (b) or Parent shall terminate this Agreement pursuant to Section 9.01(e)
and (A) at or prior to the time of such termination, either there shall have
been proposed or publicly announced a Company Competing Transaction or (B)
within twelve (12) months after such termination, Company shall enter into a
definitive agreement with respect to any Company Competing Transaction or any
Company Competing Transaction involving Company shall be consummated, then
Company shall pay to Parent (the "COMPANY TERMINATION FEE") a sum equal to
Parent's Expenses up to $1,000,000 and an additional amount equal to $4,000,000.
Notwithstanding the foregoing, no fee shall be paid pursuant to this Section
9.05(b) if Parent shall be in material breach of its obligations hereunder. Any
Company Termination Fee shall be paid in same day funds within three (3)
Business Days of the date this Agreement is terminated or the Company
Termination Fee otherwise becomes due and payable.
(c) Parent and Company agree that the agreements contained in
Section 9.05(b) above are an integral part of the transaction contemplated by
this Agreement and constitute liquidated damages and not a penalty. Accordingly,
if Company fails to pay to Parent any amounts due under Section 9.05(b), Company
shall pay the cash and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit of other legal
action, taken to collect payment, together with interest on such amounts at the
prime rate of Citibank, N.A. in effect on the date such payment was required to
be made.
(d) In the event Company should terminate this Agreement due to a
Terminating Parent Breach of any covenant or agreement contained in this
Agreement pursuant to Section 9.01(g) then Parent shall promptly reimburse
Company for Company's expenses up to $250,000.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be. This Section 10.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 Notices. All notices, requests, claims, demands an
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in Person, by
telecopy or facsimile, by registered or
46
51
certified mail (postage prepaid, return receipt requested) or by a nationally
recognized courier service to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 10.02):
(a) if to Company:
@xxxx.xxx
Three Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Fax (000) 000-0000
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: J. Page Davidson, Esq.
Fax (000) 000-0000
(b) if to Parent or Merger Sub:
DoubleClick Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 10.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner to the fullest
extent permitted by applicable Law in order that the Merger may be consummated
as originally contemplated to the fullest extent possible.
47
52
SECTION 10.04 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
other than Section 7.04, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Annexes attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein. Parent and Company
acknowledge that the Parent Disclosure Schedule and the Company Disclosure
Schedule (i) are qualified in their entirety by reference to specific provisions
of this Agreement and (ii) are not intended to constitute and shall not be
construed as indicating that such matter is required to be disclosed, nor shall
such disclosure be construed as an admission that such information is material
with respect to Parent or Company, as the case may be, except to the extent
required by this Agreement and by applicable law.
SECTION 10.06 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY
LAW OTHER THAN THAT OF THE STATE OF NEW YORK.
SECTION 10.07 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 Headings; Interpretation. The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement. The
parties 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,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
SECTION 10.09 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
48
53
SECTION 10.10 Entire Agreement; Amendment and Restatement of
Original Agreement. This Agreement (including the Annexes, the Parent Disclosure
Schedule and the Company Disclosure Schedule) and the Confidentiality Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. For the avoidance of doubt, the parties hereto,
other than Merger Sub, being all of the parties to the Original Agreement,
hereby acknowledge and agree that this Agreement constitutes a valid amendment
and restatement of the Original Agreement pursuant to Section 9.03 thereof.
49
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
DOUBLECLICK INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name:
Title:
ATLAS ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name:
Title:
@XXXX.XXX
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: CEO
ATLAS MERGER SUB, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name:
Title:
50