1
EXHIBIT 2
AGREEMENT OF MERGER
DATED AS OF AUGUST 31, 2000
AMONG
THQ INC.,
VOLITION ACQUISITION COMPANY,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇
AND
VOLITION, INC.
2
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS..........................................................................1
2. THE MERGER...........................................................................7
2.1 The Merger; the Surviving Corporation.........................................7
2.2 Effects of the Merger.........................................................8
2.3 Certificate of Incorporation, Bylaws, Directors and Officers..................8
3. CONVERSION OF SHARES; DETERMINATION OF PURCHASE PRICE................................8
3.1 Conversion Terms..............................................................8
3.2 Determination of Merger Shares, Merger Ratio, Optionholder Merger
Shares, Gross Stockholder Merger Shares, Net Stockholder Merger Shares
and Per Share Amounts.........................................................8
3.3 Closing of Company Transfer Records...........................................9
4. CONSUMMATION OF THE MERGER...........................................................9
4.1 Closing Date..................................................................9
4.2 The Merger Filing.............................................................9
4.3 Payment of the Per Share Stock...............................................10
4.4 The Escrow...................................................................10
4.5 [Reserved]...................................................................10
4.6 Parent's Deliveries..........................................................10
4.7 Mergerco's Deliveries........................................................11
4.8 The Company's Deliveries.....................................................12
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................13
5.1 Organization and Good Standing...............................................13
5.2 Power, Authorization and Validity............................................13
5.3 Capitalization...............................................................13
5.4 Subsidiaries.................................................................15
5.5 No Violations or Required Consents...........................................15
5.6 Litigation...................................................................15
5.7 Financial Statements; Books and Records......................................15
5.8 Availability of Assets and Legality of Use...................................16
5.9 Governmental Permits.........................................................16
5.10 Real Property................................................................16
5.11 Personal Property............................................................16
5.12 Personal Property Leases.....................................................16
5.13 Title to Properties..........................................................16
5.14 Accounts Receivable..........................................................17
5.15 Taxes........................................................................17
5.16 Absence of Certain Changes...................................................18
5.17 Agreements and Commitments...................................................19
5.18 Intellectual Property........................................................21
5.19 Products and Distribution....................................................22
5.20 Development Tools............................................................22
5.21 Compliance with Law and Charter Documents....................................23
i
3
5.22 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇............................................................23
5.23 Employees and Employee Relations.............................................23
5.24 Business Plan................................................................25
5.25 Corporate Documents..........................................................25
5.26 No Brokers...................................................................25
5.27 Environmental Matters........................................................25
5.28 Insurance....................................................................26
5.29 Disclosure...................................................................26
5.30 Pooling-of-Interests.........................................................26
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO...............................26
6.1 Organization and Capital Structure...........................................26
6.2 Authority....................................................................27
6.3 No Investment Banker Fees Payable by Stockholders............................28
6.4 Parent SEC Documents.........................................................28
6.5 Disclosure...................................................................28
7. ACTION PRIOR TO THE MERGER FILING...................................................28
7.1 [Reserved]...................................................................28
7.2 Stockholders' Representative.................................................28
7.3 [Reserved]...................................................................29
7.4 Investigation of the Company by Parent.......................................29
7.5 Preserve Accuracy of Representations and Warranties..........................29
7.6 Conduct of Business Prior to the Effective Time..............................30
7.7 Notification by the Company of Certain Matters...............................31
7.8 Mutual Cooperation; Reasonable Best Efforts..................................31
7.9 No Solicitation..............................................................31
7.10 Removal of Assets............................................................32
7.11 [Reserved]...................................................................32
7.12 Assumption of Stock Options..................................................32
7.13 Consents of Third Parties and Governmental Approvals.........................32
7.14 Fees and Expenses............................................................33
7.15 [Reserved]...................................................................33
7.16 Preparation of Escrow Agreement..............................................33
7.17 Registration Rights..........................................................33
7.18 Parallax Obligations.........................................................33
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGERCO..........................34
8.1 No Misrepresentation or Breach of Covenants and Warranties...................34
8.2 No Changes to or Destruction of Property.....................................34
8.3 No Restraint or Litigation...................................................34
8.4 Necessary Governmental Approvals.............................................34
8.5 Necessary Consents...........................................................34
8.6 Stockholder Approval; No Dissenting Shares...................................34
8.7 [Reserved]...................................................................35
8.8 Certification of Shares and Options Outstanding..............................35
8.9 Comfort Letters..............................................................35
8.10 Pooling-of-Interests.........................................................35
8.11 Consent of Optionholders.....................................................35
ii
4
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..................................35
9.1 No Misrepresentation or Breach of Covenants and Warranties...................35
9.2 No Restraint or Litigation...................................................35
9.3 Necessary Governmental Approvals.............................................36
9.4 Stockholder Action...........................................................36
9.5 Approval of the Parent's Board of Directors..................................36
10. INDEMNIFICATION.....................................................................36
10.1 Indemnification of Parent Group Members......................................36
10.2 Indemnification by Parent and the Surviving Corporation......................37
10.3 Notice of Claims.............................................................37
10.4 Expiration of Indemnification................................................38
10.5 Exclusive Remedy Following the Merger........................................39
11. TERMINATION.........................................................................39
11.1 Termination Rights...........................................................39
11.2 Notice of Termination........................................................39
11.3 Effect of Termination........................................................39
12. GENERAL PROVISIONS..................................................................40
12.1 Survival of Obligations......................................................40
12.2 No Public Announcement.......................................................40
12.3 Notices......................................................................40
12.4 Successors and Assigns; No Third-Party Beneficiaries.........................41
12.5 Entire Agreement; Amendments.................................................41
12.6 Rules of Construction........................................................42
12.7 Waivers......................................................................42
12.8 Equitable Relief.............................................................42
12.9 Partial Invalidity...........................................................42
12.10 Business Day.................................................................42
12.11 Execution in Counterparts....................................................42
12.12 Further Assurances...........................................................43
12.13 Governing Law................................................................43
12.14 Attorneys' Fees..............................................................43
EXHIBITS
Form of Employment Agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ A-1
Form of Employment Agreement A-2
Form of Non-Competition Agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ B-1
Form of Non-Competition Agreement B-2
Form of Registration Obligations of Parent C
Form of General Release and Covenant Not to ▇▇▇ D
Form of Disclaimer of Reliance E
Form of Continuity of Interest Agreement F
Form of Legal Opinion from Company's Counsel G
Form of Consent of Optionholder H
SCHEDULE DESCRIPTION
5.1 Jurisdictions
iii
5
5.3 Capitalization, Shareholders and Optionholders
5.3.2.2 Rights of First Refusal
5.5 Violations or Required Consents
5.6 Actions
5.7 Financial Statements
5.7.2 Liabilities Not on the Balance Sheet
5.8 Availability of Assets and Legality of Use
5.9 Governmental Permits
5.11 Personal Property
5.15.1 Taxes
5.17 Agreements and Commitments
5.18 Intellectual Property
5.19 Products and Distribution
5.20 Development Tools
5.23 Employee Proprietary and Confidentiality Agreement
5.23.3 Employee Plans
5.23.8 Employees, Officer and Consultant Compensation
iv
6
EXECUTION COPY
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER, dated as of August 31, 2000, among THQ
INC., a Delaware corporation ("Parent"), VOLITION ACQUISITION COMPANY, a
Delaware corporation and a wholly owned subsidiary of Parent ("Mergerco"),
VOLITION, INC., a Delaware corporation (the "Company"); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("▇▇▇▇▇"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
W I T N E S S E T H:
WHEREAS, the Company is a Delaware corporation having an
authorized capital that consists of 10,000,000 shares of common stock, no par
value (the "Company Common Stock"), of which, as of the date hereof, 8,100,000
shares are issued and outstanding; and
WHEREAS, Parent is a Delaware corporation having an authorized
capital of (i) 35,000,000 shares of common stock, par value $0.01 per share (the
"THQ Stock"), of which, as of August 30, 2000, 19,246,073 shares were issued and
outstanding, and (ii) 1,000,000 shares of preferred stock, par value $0.01 per
share, none of which, as of the date hereof, is issued and outstanding; and
WHEREAS, Mergerco is a Delaware corporation having an authorized
capital of 1,000 shares of common stock, par value $0.01 per share, all of which
are issued and outstanding and owned of record and beneficially by Parent; and
WHEREAS, the Board of Directors and the shareholders of the
Company have approved the merger of Mergerco with and into the Company pursuant
to the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among the parties as
follows:
1. DEFINITIONS.
In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"ACQUISITION PROPOSAL" has the meaning set forth in Section 7.9.
"ACTION" means any governmental investigation; any suit or
action at law or in equity; any arbitration, audit, assessment, grievance or
other proceeding, whether actual, proposed or threatened; and any other claim.
"AFFILIATE" means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by or is under common
control with such Person.
"AGREED ACCOUNTING PRINCIPLES" means cash basis of accounting
consistently applied, provided that, for purposes of the Agreed Accounting
Principles, no known adjustments for items or matters, regardless of the amount
thereof, shall be deemed to be immaterial.
1
7
"▇▇▇▇▇▇▇▇" has the meaning specified in the first paragraph of
this Agreement.
"▇▇▇▇▇▇▇▇ SHARES" means the number of Merger Shares issued to
▇▇▇▇▇▇▇▇ pursuant to Section 4.3 hereof.
"ASSOCIATE" of any Person means (i) a corporation or
organization of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity; (iii) any relative or spouse of such Person, or
any relative of such spouse, who has the same home as such Person; and (iv) any
director or officer of the Person or any of its parents or subsidiaries.
"BALANCE SHEET" means the balance sheet of the Company included
in the Financial Statements.
"BALANCE SHEET DATE" means August 31, 2000.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a
day on which banks are required to be closed in the State of California.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended from time to time, and the rules and
regulations promulgated thereunder.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 4.1.
"CLAIM NOTICE" has the meaning set forth in Section 10.3.1.
"CLOSING DATE" has the meaning set forth in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
"COMPANY" means Volition, Inc., a Delaware corporation.
"COMPANY AGREEMENTS" has the meaning set forth in Section 5.17.
"COMPANY ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by the Company under this
Agreement or in connection herewith.
"COMPANY COMMON STOCK" has the meaning set forth in the recitals
to this Agreement.
"COMPANY GROUP" shall mean any "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) that, at any time on or before the Closing Date,
includes or has included the Company (or another such predecessor or successor),
or any other group of corporations that, at any time on or before the Closing
Date, files or has filed Tax Returns on a combined, consolidated or unitary
basis with the Company or any predecessor of or successor to the Company (or
another such predecessor or successor).
"COMPANY INTELLECTUAL PROPERTY" has the meaning set forth in
Section 5.18.
2
8
"COMPANY PROPERTY" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by the Company (including any surface
water thereon or adjacent thereto and any soil or ground water thereunder),
whether currently or at any previous time.
"CONSENT OF OPTIONHOLDER" means a Consent of Optionholder, in
the form of Exhibit G.
"CONTEMPLATED TRANSACTION" has the meaning set forth in Section
5.2.3.
"CONTINUITY OF INTEREST AGREEMENT" means those certain
Continuity of Interest Agreements to be dated the Closing Date between the
Company, Parent and each of the Effective Time Stockholders, respectively, each
substantially in the form of Exhibit H.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"DEVELOPMENT TOOLS" has the meaning set forth in Section 5.20.
"DGCL" means the Delaware General Corporation Law, as amended.
"DISCLAIMER OF RELIANCE" means the Disclaimer of Reliance in the
form of Exhibit E.
"EFFECTIVE TIME" has the meaning set forth in Section 4.1.
"EFFECTIVE TIME STOCKHOLDERS" means those Persons who, as of the
Effective Time, are the record holders of shares of Company Common Stock, and
each such Person's successors and assigns with respect to such shares.
"EMPLOYEE PLANS" has the meaning set forth in Section 5.23.
"EMPLOYMENT AGREEMENTS" means those certain Employment
Agreements to be dated the Closing Date between Parent and ▇▇▇▇▇, substantially
in the form attached hereto as Exhibit A-1, and Parent and each of ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇, each substantially in the form attached hereto
as Exhibit A-2.
"ENCUMBRANCE" means any security interest, pledge, mortgage,
lien (including a mechanics' lien), encumbrance, lease, conditional sales
agreement, option, covenant, easement, restriction, charge, claim or other
defect in title of any nature on any property or asset or property interest,
whether voluntarily incurred or arising by operation of law or otherwise; and
includes any agreement or commitment to grant, make or enter into any of the
foregoing, the filing of any financing statement under the Uniform Commercial
Code or any agreement to file any such financing statement or to record any lien
in the real property records maintained by a Governmental Body.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including the rules and regulations
promulgated thereunder.
"ERISA AFFILIATE" means (i) any corporation which at any time on
or before the Effective Time is or was a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Company;
(ii) any partnership, trade or business (whether or not incorporated) which at
any time on or before the Effective Time is or was under common control (within
meaning of Section 414(c) of the Code) with the Company; and (iii) any entity
which at any time on or
3
9
before the Effective Time is or was a member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as either the Company,
any corporation described in clause (i) of this definition or any partnership,
trade or business described in clause (ii) of this definition.
"ESCROW" has the meaning set forth in Section 4.4.
"ESCROW AGENT" means Chase Manhattan Trust Company, in its
capacity as escrow agent; or if such entity is unable or unwilling to so act,
another escrow agent mutually agreed upon by Parent and the Effective Time
Stockholders.
"ESCROW AGREEMENT" has the meaning set forth in Section 7.16.
"ESCROW SHARES" has the meaning set forth in Section 3.2.5.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934,
as amended.
"EXPENSES" means any and all expenses incurred in connection
with investigating, defending or asserting any Action indemnified against
hereunder (including, but not limited to, court filing fees, court costs,
arbitration fees or costs, witness fees and reasonable fees and disbursements of
legal counsel, investigators, expert witnesses, consultants, accountants and
other professionals).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 5.7.
"GAAP" means generally accepted accounting principles in the
United States, consistently applied, in effect as of the Closing Date.
"GENERAL CREDITOR" means each Person who, as of the Merger
Filing, is a creditor of the Company, whether or not the amount owing to such
Person has been billed to the Company as of the Merger Filing.
"GENERAL RELEASE AND COVENANT NOT TO ▇▇▇" means the General
Release and Covenant Not to ▇▇▇ in the form of Exhibit D.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"GOVERNMENTAL CONSENTS AND FILINGS" has the meaning set forth in
Section 5.2.3.
"GOVERNMENTAL PERMITS" has the meaning set forth in Section 5.9.
"GROSS STOCKHOLDER MERGER SHARES" has the meaning set forth in
Section 3.2.4.
"HAZARDOUS MATERIALS" has the meaning set forth in Section 5.27.
"INDEMNIFIED PERSON" and "Indemnitor" each has the meaning set
forth in Section 10.3.1.
"IRS" means the Internal Revenue Service.
"INVENTIONS" has the meaning set forth in Section 5.18.
4
10
"KNOWLEDGE" means, with reference to a party hereto, only the
actual knowledge of any of the directors and officers of such party, after
reasonable inquiry of such party's employees, agents and consultants and
information set forth in documents in the possession of such party.
"KNOWLEDGE QUALIFICATION" means a qualification to any
representation or warranty made by a party expressed as "to the knowledge" of
such party or similar language intended to limit the scope of such
representation and warranty.
"▇▇▇▇▇" has the meaning specified in the first paragraph of this
Agreement.
"LEASED REAL PROPERTY" has the meaning set forth in Section
5.13.
"LOSS" means any and all losses, costs, obligations,
liabilities, diminution in value, settlement payments, awards, judgments, damage
to the environment, natural resources or public health, fines, penalties,
damages, expenses, deficiencies or other charges, whether foreseeable or
unforeseeable and including interest at the Reference Rate on such Losses.
"MATERIAL ADVERSE EFFECT" means, with respect to any party
hereto, any change or effect (or any development that, insofar as can be
reasonably foreseen, would result in any change or effect) that is materially
adverse to the assets, business, financial condition, results of operations or
prospects of such party.
"MERGER" has the meaning set forth in Section 2.1.
"MERGER FILING" has the meaning set forth in Section 4.2
"MERGERCO" has the meaning specified in the first paragraph of
this Agreement.
"MERGER RATIO" has the meaning set forth in Section 3.2.2
"MERGER SHARES" has the meaning set forth in Section 3.2.1.
"MORAL RIGHTS" has the meaning set forth in Section 5.18.
"NET STOCKHOLDER MERGER SHARES" has the meaning set forth in
Section 3.2.6.
"NON-COMPETITION AGREEMENTS" means those certain Non-Competition
Agreements to be dated the Closing Date between Parent and ▇▇▇▇▇, substantially
in the form of Exhibit B-1 and between Parent and each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇, each substantially in the form of Exhibit B-2.
"OPTIONHOLDER MERGER SHARES" has the meaning set forth in
Section 3.2.3.
"OPTIONS" means options granted by the Company under the Stock
Option Plan and assumed by Parent pursuant to Section 7.12.
"PARENT" has the meaning specified in the first paragraph of
this Agreement.
"PARENT ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Parent under this
Agreement or in connection herewith.
5
11
"PARENT GROUP MEMBER" means Parent and its Affiliates and their
respective successors and assigns, including, after the Effective Time, the
Surviving Corporation; and the stockholders, directors, officers, employees and
agents of each of such Persons.
"PARENT SEC DOCUMENTS" has the meaning set forth in Section 6.4.
"PERMITTED ENCUMBRANCES" means (i) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (ii)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, and (iii) other liens or imperfections on property
which are not material in amount, do not interfere with, and are not violated by
the consummation of the transactions contemplated by, this Agreement and do not
materially detract from the value or marketability of, or materially impair the
existing use of, the property affected by such lien or imperfection.
"PER OPTION SHARE STOCK" means shares of THQ stock issued
pursuant to Section 7.12.1.
"PER SHARE STOCK" and "PER SHARE ADDITIONAL STOCK" each has the
meaning set forth in Section 3.2.
"PERSON" means any individual, corporation, partnership, joint
venture, association, company, trust, estate, unincorporated organization or
other entity, or any Governmental Body.
"PRODUCTS" has the meaning set forth in Section 5.19.
"PRODUCTS UNDER DEVELOPMENT" has the meaning set forth in
Section 5.19.
"PUBLISHED PRODUCTS" has the meaning set forth in Section 5.19.
"RCRA" means the Resource Conservation and Recovery Act, as
amended from time to time, and the rules and regulations promulgated thereunder.
"REFERENCE RATE" means the "prime," "base" or "reference" rate
of interest announced from time to time by Union Bank of California, N.A., plus
2% per annum.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including those pertaining to
electrical, building, zoning, environmental and occupational safety and health
requirements) or common law.
"SEC" means the U. S. Securities and Exchange Commission.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as
amended.
"STOCK CERTIFICATE" has the meaning set forth in Section 3.1.1.
"STOCKHOLDER GROUP MEMBER" means (i) in the event the Merger is
not consummated, the Company, and (ii) from and after the Merger Filing, ▇▇▇▇▇.
"STOCKHOLDERS" means those Persons who from time to time are the
holders of shares of Company Common Stock.
6
12
"STOCKHOLDERS' REPRESENTATIVE" means ▇▇▇▇▇ acting from and after
the Effective Time on behalf of the Effective Time Stockholders in accordance
with Section 7.16.
"STOCK OPTION PLAN" means the Company's Employee Stock Option
Plan.
"SUBSIDIARY" shall mean any corporation, partnership, limited
liability company, joint venture or other entity in which the Company (a) owns,
directly or indirectly, 50% or more of the outstanding voting securities or
equity interests or (b) is a general partner.
"SURVIVING CORPORATION" has the meaning set forth in Section
2.1.
"TANGIBLE ASSETS" means the equipment, hardware, furniture,
supplies, inventory and similar assets and properties of the Company, whether
owned or leased, excluding, without limitation, accounts, Company Intellectual
Property, and contract rights.
"TAX" (and, with correlative meaning, "Taxes") shall mean: (i)
any federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer, stamp, or environmental (including taxes under
Code Section 59A) tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any governmental
authority; and (ii) any liability of the Company or any Subsidiary for the
payment of amounts with respect to payments of a type described in clause (i) as
a result of being a member of an affiliated, consolidated, combined or unitary
group, or as a result of any obligation of the Company or any Subsidiary under
any Tax Sharing Arrangement or Tax indemnity arrangement.
"TAX RETURN" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
"TAX SHARING ARRANGEMENT" shall mean any written or unwritten
agreement or arrangement for the allocation or payment of Tax liabilities or
payment for Tax benefits with respect to a consolidated, combined or unitary Tax
Return which Tax Return includes or has included the Company or any Subsidiary.
"THQ STOCK" has the meaning set forth in the recitals to this
Agreement.
"TREASURY REGULATIONS" has the meaning set forth in Section
5.15.3.
2. THE MERGER.
2.1 The Merger; the Surviving Corporation. On the terms and
subject to the conditions set forth herein, and in accordance with the
provisions of the DGCL, at the Effective Time Mergerco shall be merged with and
into the Company (the "Merger"). Upon the effectiveness of the Merger, the
separate existence of Mergerco shall cease except to the extent provided by law
in the case of a corporation after its merger into another corporation, and the
Company shall be the surviving corporation (the "Surviving Corporation") and
shall continue its existence under the laws of the State of Delaware.
7
13
2.2 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
2.3 Certificate of Incorporation, Bylaws, Directors and
Officers. The Certificate of Incorporation and the Bylaws of the Company as in
effect immediately prior to the Effective Time, shall continue in full force and
effect as the Certificate of Incorporation and the Bylaws of the Surviving
Corporation. The directors and officers of Mergerco immediately prior to the
Effective Time shall be the initial directors and officers of the Surviving
Corporation until their respective successors are duly elected and qualified.
3. CONVERSION OF SHARES; DETERMINATION OF PURCHASE PRICE.
3.1 Conversion Terms. As of the Effective Time, by virtue of the
Merger and without any action on the part of any Stockholder or any stockholder
of Mergerco:
3.1.1 Each share of Company Common Stock that is issued
and outstanding immediately prior to the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof,
shall be converted into and become the right to receive the Per Share
Stock and, subject to Section 4.4, the right to receive the Per Share
Additional Stock; and each share of Company Common Stock that is so
converted shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding and shall be
canceled and retired and shall cease to exist; and each holder of a
stock certificate which prior to the Effective Time evidenced any such
share (a "Stock Certificate") shall thereafter cease to have any rights
with respect to such share except, upon the surrender of such Stock
Certificate in accordance with Section 4.3, the right to receive the
amounts of Merger Shares provided for in this Agreement.
3.1.2 Each share of Company Common Stock that,
immediately prior to the Effective Time, is held in the treasury of the
Company, shall, by virtue of the Merger and without any action on the
part of the Company, cease to be outstanding and shall be canceled and
retired without payment of any consideration therefor, and shall cease
to exist; and
3.1.3 Each share of common stock of Mergerco that is
issued and outstanding immediately prior to the Effective Time, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become the right to receive one share of
Company Common Stock.
3.2 Determination of Merger Shares, Merger Ratio, Optionholder
Merger Shares, Gross Stockholder Merger Shares, Net Stockholder Merger Shares
and Per Share Amounts.
3.2.1 "Merger Shares" means 1,000,000 shares of THQ
Stock.
3.2.2 "Merger Ratio" means the number of Merger Shares
divided by the sum of (i) the number of shares of Company Common Stock
outstanding at the Effective Time, plus (ii) the number of shares of
Company Common Stock issuable upon the exercise of Options outstanding
as of the Effective Time.
3.2.3 "Optionholder Merger Shares" means the product of
(i) the Merger Ratio, times (ii) the number of shares of Company Common
Stock issuable upon the exercise of Options outstanding as of the
Effective Time.
8
14
3.2.4 "Gross Stockholder Merger Shares" means (i) the
Merger Shares, less (ii) the Optionholder Merger Shares.
3.2.5 "Escrow Shares" means five percent (5%) of the
number derived by subtracting (i) the ▇▇▇▇▇▇▇▇ Shares, from (ii) the
Gross Stockholder Merger Shares.
3.2.6 "Net Stockholder Merger Shares" means (i) the
Gross Stockholder Merger Shares, less (ii) the Escrow Shares.
3.2.7 "Per Share Stock" means (i) the Net Stockholder
Merger Shares, divided by (ii) the number of shares of Company Common
Stock outstanding at the Effective Time.
3.2.8 The "Per Share Additional Stock" means (i) the
number of Escrow Shares, if any, remaining in the Escrow upon
termination of the Escrow, divided by (ii) the number of shares of
Company Common Stock outstanding at the Effective Time.
3.3 Closing of Company Transfer Records. At the Effective Time,
the stock transfer records of the Company shall be closed and no transfer of
shares of Company Common Stock shall thereafter be made.
4. CONSUMMATION OF THE MERGER.
4.1 Closing Date. On the Closing Date, the Company, Parent and
Mergerco shall cause to be filed with the Secretary of State of the State of
Delaware a properly executed certificate of merger consistent with the terms of
this Agreement and the DGCL and in form and substance reasonably satisfactory to
the parties hereto (the "Certificate of Merger"). The Certificate of Merger
shall state that the effective time of the Merger (the "Effective Time") shall
be upon the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, and the Merger shall be effective at that time. The date
on which the Certificate of Merger is so filed (the "Closing Date") shall be a
date occurring within five Business Days after the conditions set forth in
Sections 8 and 9 are satisfied or waived, or such other date as may be agreed
upon by Parent and the Company. In the event that one or more of the conditions
set forth in Sections 8 or 9 has not been satisfied or waived on any date
scheduled to be the Closing Date, this Agreement shall not terminate (unless
pursuant to the exercise by one of the parties of its rights under Section 11)
and the Closing Date shall be rescheduled to such date as may be mutually agreed
by Parent and the Company or, if no such date is mutually agreed upon within two
Business Days after the previously scheduled Closing Date, the earliest date
specified in a written notice given by Parent or the Company to the other that
is at least three Business Days after the giving of such notice.
4.2 The Merger Filing. The "Merger Filing" shall mean the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware. To facilitate the Merger Filing, the parties shall execute and
acknowledge the Certificate of Merger in accordance with the laws of the State
of Delaware prior to the Closing Date and the Company shall deliver the executed
Certificate of Merger to counsel for Parent. Subject to the satisfaction or
waiver of each of the conditions set forth in Sections 8 and 9, counsel for
Parent shall file the Certificate of Merger on the Closing Date upon the
delivery by each party of all items required to be delivered by this Agreement
and immediately upon receipt of telephonic authorization from representatives of
Parent and the Company.
9
15
4.3 Payment of the Per Share Stock.
4.3.1 Parent shall establish such appropriate procedures
as may be necessary in order to provide for the payment, at or as soon
as practicable after the Effective Time, to each Effective Time
Stockholder who surrenders to Parent a duly endorsed Stock Certificate
together with a properly completed and duly executed letter of
transmittal, Merger Shares in the amounts specified in Section 3.2.
4.3.2 No certificate or scrip representing fractional
shares of THQ Stock shall be issued upon the surrender for exchange of
Stock Certificates pursuant to this Section 4.3. In lieu of any such
fractional share, each holder of Company Common Stock who would
otherwise be entitled to a fraction of a share of THQ Stock shall
(promptly, but in any event within 20 days after tender of such Stock
Certificates) be paid an amount in cash (without interest and rounded to
the nearest dollar), determined by multiplying the fractional interest
to which such holder would otherwise be entitled by $20.00. For the
purpose of paying such cash in lieu of fractional shares, all Stock
Certificates surrendered for exchange by a Stockholder shall be
aggregated.
4.3.3 No dividends or other distributions that are
declared on or after the Effective Time on THQ Stock, or are payable to
the holders of record thereof on or after the Effective Time, will be
paid to any Person entitled by reason of the Merger to receive a
certificate evidencing Merger Shares until such Person surrenders the
related Stock Certificate as provided in this Section 4.3.
4.3.4 The Merger Shares issued or paid upon the
surrender of a Stock Certificate shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock evidenced by such Stock Certificates.
4.4 The Escrow. As a condition to the Merger Filing, Parent
shall deliver certificates evidencing the Escrow Shares to the Escrow Agent, to
be held by the Escrow Agent in an escrow account (the "Escrow") in accordance
with the provisions of the Escrow Agreement. Within five business days after
termination of the Escrow in accordance with the Escrow Agreement, the Escrow
Agent shall deliver the Escrow Shares remaining in the Escrow, after all
deductions have been made therefrom pursuant to Section 10.1, (I) to each
Effective Time Stockholder who surrendered a Stock Certificate and received the
Per Share Stock with respect to the shares evidenced by such Stock Certificate,
an amount equal to (a) the Per Share Additional Stock, multiplied by (b) the
number of shares of Company Common Stock evidenced by such Stock Certificate;
and (II) the balance to Parent. Thereafter the Escrow Agent shall not be liable
to any Persons claiming any amount of such Escrow Shares; and any subsequent
distribution of the balance of such Escrow Shares shall be effected directly
with Parent.
4.5 [Reserved]
4.6 Parent's Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Section 8, concurrently with the Merger Filing Parent
shall deliver, if and to the extent not previously delivered, all of the
following:
4.6.1 a copy of the Certificate of Incorporation of
Parent, certified as of a recent date by the Secretary of State of the
State of Delaware;
4.6.2 a certificate of good standing of Parent, issued
as of a recent date by the Secretary of State of the State of Delaware;
10
16
4.6.3 a certificate of the Secretary or an Assistant
Secretary of Parent, dated the Closing Date, in form and substance
reasonably satisfactory to the Company, to the effect that (i) the
Certificate of Incorporation of Parent has not been amended or modified
since the date of certification of the Delaware Secretary of State
referred to in Section 4.6.1; (ii) the Bylaws of Parent, as attached
thereto, have not been amended or modified as of the Closing Date; (iii)
the resolutions of the Board of Directors of Parent authorizing the
execution, delivery and performance of this Agreement and the
transactions contemplated herein by Parent, as attached thereto, are in
full force and effect and have not been superseded, amended or modified
as of the Closing Date; and (iv) the incumbency and signatures of the
officers of Parent executing this Agreement and any Parent Ancillary
Agreement are as set forth on the certificate;
4.6.4 an opinion of counsel to Parent, dated the Closing
Date and in form and substance reasonably satisfactory to the Company;
4.6.5 the certificate certifying satisfaction of the
conditions in Section 9.1, duly executed by the President or any Vice
President of Parent;
4.6.6 the Employment Agreements and the Non-Competition
Agreements, each duly executed by Parent;
4.6.7 the Net Stockholder Merger Shares for each
Effective Time Stockholder;
4.6.8 the Escrow Agreement; and
4.6.9 the Escrow Shares.
4.7 Mergerco's Deliveries. Subject to the fulfillment or waiver
of the conditions set forth in Section 8, concurrently with the Merger Filing
Mergerco shall deliver, if and to the extent not previously delivered, all of
the following to the Company:
4.7.1 a copy of the Certificate of Incorporation of
Mergerco, certified as of a recent date by the Secretary of State of the
State of Delaware;
4.7.2 a certificate of good standing of Mergerco, issued
as of a recent date by the Secretary of State of the State of Delaware;
4.7.3 a certificate of the Secretary or an Assistant
Secretary of Mergerco, dated the Closing Date, in form and substance
reasonably satisfactory to the Company to the effect that (i) the
Certificate of Incorporation of Mergerco has not been amended or
modified since the date of certification of the Delaware Secretary of
Delaware referred to in Section 4.7.1; (ii) the Bylaws of Mergerco, as
attached thereto, have not been amended or modified as of the Closing
Date; (iii) the resolutions of the Board of Directors of Mergerco
authorizing the execution, delivery and performance of this Agreement
and the transactions contemplated herein by Mergerco and the written
consent of Parent in its capacity as the sole shareholder of Mergerco
adopting this Agreement in accordance with the DGCL, as attached
thereto, are in full force and effect and have not been superseded,
amended or modified as of the Closing Date; and (iv) the incumbency and
signatures of the officers of Mergerco executing this Agreement are as
set forth on the certificate;
4.7.4 an opinion of counsel to Mergerco, dated the
Closing Date and in form and substance reasonably satisfactory to Parent
and Company; and
11
17
4.7.5 the certificate contemplated by Section 9.1, duly
executed by the President or any Vice President of Mergerco.
4.8 The Company's Deliveries. Subject to fulfillment or waiver
of the conditions set forth in Section 9, concurrently with the Merger Filing
the Company shall deliver (or cause to be delivered), if and to the extent not
previously delivered, all of the following to Parent:
4.8.1 a copy of the Certificate of Incorporation of the
Company, certified as of a recent date by the Secretary of State of the
State of Delaware;
4.8.2 a certificate of good standing of the Company,
issued as of a recent date by the Secretary of State of the State of
Delaware;
4.8.3 a certificate of the Secretary or an Assistant
Secretary of the Company, dated the Closing Date, in form and substance
reasonably satisfactory to Parent, to the effect that (i) the
Certificate of Incorporation of the Company has not been amended or
modified since the date of certification of the Delaware Secretary of
State referred to in Section 4.8.1; (ii) the Bylaws, as attached
thereto, have not been amended or modified as of the Closing Date; (iii)
the resolutions of the Board of Directors of the Company authorizing the
execution and performance of this Agreement and the transactions
contemplated herein and the resolutions of the Stockholders adopting
this Agreement, as attached thereto, are in full force and effect and
have not been superseded, amended or modified as of the Closing Date;
and (iv) the incumbency and signatures of the officers of the Company
executing this Agreement and any Company Ancillary Agreement are as set
forth on the certificate;
4.8.4 an opinion of counsel to the Company, dated the
Closing Date and in form and substance reasonably satisfactory to
Parent;
4.8.5 all consents, waivers or approvals, if any,
obtained by the Company with respect to the consummation of the
Contemplated Transaction;
4.8.6 a certificate certifying the satisfaction of the
conditions in Sections 8.1, 8.2, 8.6 and 8.8, duly executed by the
President or any Vice President of the Company;
4.8.7 the Employment Agreements and the Non-Competition
Agreements, duly executed by the respective counterparties thereto;
4.8.8 the General Release and Covenant Not to ▇▇▇, dated
the Closing Date and duly executed by each of the Effective Time
Stockholders;
4.8.9 the Disclaimer of Reliance, dated the Closing Date
and duly executed by each of the Effective Time Stockholders;
4.8.10 [Reserved]
4.8.11 the Continuity of Interest Agreements, dated the
Closing Date and duly executed by the Company and each of the Effective
Time Stockholders.
12
18
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As an inducement to Parent and Mergerco to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company,
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, each of which in their capacity as a Stockholder, represents
and warrants to Parent and Mergerco as follows:
5.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and any applicable provincial or local authority, has the power and authority to
own, operate and lease its properties and to carry on its business as now
conducted and as presently proposed to be conducted and is registered or
qualified to conduct its business in each country and subdivision thereof
(including each state) where it owns or rents property, has employees or
conducts business. Section 5.1 contains a correct and complete list of the
countries and the subdivisions thereof in which the Company is qualified or
registered to conduct business. True and complete copies of the Company's
Certificate of Incorporation and all amendments thereto through the date hereof,
and the Company's Bylaws as amended through the date hereof, have been delivered
to Parent.
5.2 Power, Authorization and Validity.
5.2.1 The Company has the right, power, legal capacity
and authority to enter into and perform its obligations under this
Agreement and all of the Company Ancillary Agreements.
5.2.2 The Company has full power and authority to
execute, deliver and perform this Agreement and all of the Company
Ancillary Agreements. The execution, delivery and performance of this
Agreement and the Company Ancillary Agreements by the Company have been
duly authorized and approved by the Company's board of directors and the
Stockholders and, except for the Merger Filing, no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and is the
legal, valid and binding obligation of the Company enforceable in
accordance with its terms, and each of the Company Ancillary Agreements
has been duly authorized by the Company and upon execution and delivery
by the Company will be a legal, valid and binding obligation of the
Company enforceable in accordance with its terms.
5.2.3 Other than the Merger Filing, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Company (the "Governmental
Consents and Filings") is required in connection with the consummation
of the transactions contemplated by this Agreement and the Company
Ancillary Agreements (the "Contemplated Transactions").
5.3 Capitalization.
5.3.1 The authorized capital of the Company consists of
10,000,000 shares of Company Common Stock, of which 8,100,000 have been
duly issued and are currently issued and outstanding and none are held
as treasury shares. The number of shares reserved for issuance and the
purpose of such reservation are set forth on Schedule 5.3.
13
19
5.3.2 Except for the 1,000,000 shares of Company Common
Stock reserved for issuance under the Stock Option Plan, under which
Options to purchase 1,000,000 shares of Company Common Stock are
outstanding:
5.3.2.1 There are not outstanding any options,
warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of
any shares of its capital stock or any securities convertible
into or ultimately exchangeable or exercisable for any shares of
the Company's capital stock; and
5.3.2.2 Except as set forth on Schedule 5.3.2.2,
no shares of the Company's outstanding capital stock, or capital
stock issuable upon exercise or exchange of any outstanding
options, warrants or rights, or other stock issuable by the
Company, are subject to any rights of first refusal or other
rights to purchase such stock (whether in favor of the Company
or any other person), pursuant to any agreement or commitment of
the Company.
5.3.3 Attached to this Agreement as Schedule 5.3 is a
complete list of all Stockholders and the number of shares of Company
Common Stock held by each.
5.3.4 At the Effective Time, Options to purchase not
more than 1,000,000 shares of Company Common Stock will be outstanding.
Attached to this Agreement as Schedule 5.3 is a complete list of the
holders of outstanding Options as of the Effective Time and the number
of shares of Company Common Stock issuable to each upon the exercise of
such optionholder's Options.
5.3.5 All of the issued and outstanding shares of
Company Common Stock are held beneficially and of record by the Persons
identified as the holder of such shares in Schedule 5.3, free and clear
of any lien, charge or encumbrance (except as set forth in Schedule
5.3), and no voting, dividend or other rights with respect to any of
such shares have been granted to any party other than the indicated
beneficial and record owner. All issued and outstanding securities of
the Company have been duly authorized and validly issued, are fully paid
and non-assessable, are not subject to any right of rescission, and have
been offered, issued, sold and delivered by the Company in full
compliance with all registration or qualification requirements (or
applicable exemptions therefrom) and all other applicable provisions,
including, without limitation, anti-fraud provisions of the securities
and corporate laws of the United States and Delaware, and all other
applicable jurisdictions. There is no liability to any beneficial or
record holder of the Company securities for dividends accrued or
declared but unpaid. There are no voting agreements, rights of first
refusal or other restrictions (other than normal restrictions on
transfer under applicable securities laws) applicable to any of the
Company's outstanding shares. The Company has no liability to any former
Stockholders or partners. The Company has not issued any certificate
evidencing any shares of Company Common Stock in replacement for any
certificate that has been lost, destroyed or stolen, except upon receipt
from the issuee thereof of written indemnification agreements in favor
of the Company. True and complete copies of such indemnification
agreements have been delivered to Parent.
5.3.6 The Company has not granted or agreed to grant to
any person or entity any rights to have any securities of the Company
registered or listed with any governmental authority or stock exchange
in order to facilitate the sale of such securities.
14
20
5.3.7 The Options, or the rights of the holders of the
Options under the Stock Option Plan, shall not accelerate as a result
of, or in connection with, the Merger.
5.4 Subsidiaries. The Company does not have any Subsidiaries or
any controlling interest, direct or indirect, in any Person.
5.5 No Violations or Required Consents. Except as set forth on
Schedule 5.5, neither the execution and delivery of this Agreement nor any of
the Company Ancillary Agreements, nor the consummation of the Contemplated
Transaction, (a) will conflict with or (with or without notice or lapse of time,
or both) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon, any of the Company's
assets, under (i) the Certificate of Incorporation or Bylaws of the Company,
(ii) any Company Agreement, (iii) any other material note, instrument,
agreement, mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which the Company is a party or by which any
of its assets or business is subject or by which the Company is bound, (iv) any
Court Order to which either the Company or, to the Company's knowledge, any
Stockholder is a party or by which the Company's assets or business is subject
or by which the Company is bound, or (v) any Requirements of Laws affecting the
Company or its respective assets or business; or (b) requires the consent,
approval or notification of any third party (other than the Governmental
Consents and Filings).
5.6 Litigation. There is not (i) any Action pending against the
Company, or any officer, director or employee of the Company, (ii) to the
knowledge of the Company any threat of any Action, or (iii) to the knowledge of
Company any factual basis for any Action, which Action, if determined adversely
to the Company, has an amount at issue that is greater than $3,000 individually
and $10,000 in the aggregate. The Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality and there is no Action initiated by the
Company currently pending or any Action which the Company intends to initiate.
5.7 Financial Statements; Books and Records.
5.7.1 The Company has delivered to Parent the Company's
unaudited balance sheet as of the Balance Sheet Date and statement of
operations for the period commencing on January 1, 2000 and ending on
the Balance Sheet Date, which are attached hereto as Schedule 5.7 (the
"Financial Statements"). The Financial Statements: (i) were prepared in
accordance with the books and records of the Company; (ii) are true,
correct, complete and fairly present the financial condition of the
Company at the respective dates therein indicated and the results of
operations for the respective periods therein specified; (iii) have been
prepared in accordance with Agreed Accounting Principles applied on a
consistent basis; and (iv) are certified by the President of the Company
as fairly presenting, in all material respects, the financial position
of the Company, subject to the limitations inherent in using Agreed
Accounting Principles.
5.7.2 Without limiting the foregoing, except as set
forth on Schedule 5.7.2 attached hereto, the Company has no debt,
liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise (other than liabilities with respect to an
Action as set forth in Section 5.6), and whether due or to become due,
that is not reflected, reserved against or disclosed in the Financial
Statements, except for (i) those that are not required to be reported in
accordance with Agreed Accounting Principles and are disclosed by the
Company in writing to Parent to the extent required pursuant to Sections
5.6 or 5.17 hereof, and (ii) those nonmaterial
15
21
obligations, individually or in the aggregate, that may have been
incurred after the Balance Sheet Date in the ordinary course of its
business, consistent with past practice.
5.8 Availability of Assets and Legality of Use. Except as set
forth on Schedule 5.8, the assets owned, leased or licensed by the Company
constitute all the assets used in its business (including all books, records,
computers and computer programs and data processing systems). All Tangible
Assets reflected on the Financial Statements are in good condition (subject to
normal wear and tear and immaterial impairments of value and damage) and
serviceable condition and are generally suitable for the uses for which
intended. The Company does not employ any assets that are owned by any Person
other than the Company or a lessor of such assets to the Company pursuant to a
lease that is either set forth on Schedule 5.17 or is not required to be set
forth thereon.
5.9 Governmental Permits.
5.9.1 To the knowledge of the Company, the Company owns,
holds or possesses all licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from Governmental Bodies
which are necessary to entitle it to own or lease, operate and use its
assets and to carry on and conduct its business as currently conducted
(herein collectively called "Governmental Permits"). Schedule 5.9 sets
forth a list and brief description of each Governmental Permit owned,
held or possessed by the Company. Complete and correct copies of all
such Governmental Permits have been delivered to Parent.
5.9.2 Except as set forth in Schedule 5.9, to the
knowledge of the Company (i) the Company has fulfilled and performed its
obligations under each of the Governmental Permits, and no event has
occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a breach or
default under any such Governmental Permit or which permits or, after
notice or lapse of time or both, would permit revocation or termination
of any such Governmental Permit, or which might adversely affect in any
material respect the rights of the Company under any such Governmental
Permit; (ii) no notice of cancellation, of default or of any material
dispute concerning any Governmental Permit, or of any event, condition
or state of facts described in the preceding clause, has been received
by, or is known to, the Company; and (iii) each of the Governmental
Permits is valid, subsisting and in full force and effect and will
continue in full force and effect after the Effective Time, in each case
without (x) the occurrence of any breach, default or forfeiture of
rights thereunder, or (y) the consent, approval, or act of, or the
making of any filing with, any Governmental Body.
5.10 Real Property. The Company does not own any real property.
5.11 Personal Property. The Company's fixed asset register
attached hereto as Schedule 5.11 sets forth a true and complete listing as of
August 31, 2000 of all machinery, equipment, vehicles, furniture and other
personal property owned by the Company, other than such items that have been
expended in the fiscal year in which acquired.
5.12 Personal Property Leases. The Company has delivered to
Parent true and correct copies of each lease or other agreement under which the
Company is lessee of, or holds or operates, any Tangible Assets.
5.13 Title to Properties. The Company has good and marketable
title to all assets set forth on the balance sheet included in the Financial
Statements and all of the assets thereafter acquired by it (except for such
assets as have been spent, sold or transferred in the ordinary course of
business since
16
22
the Balance Sheet Date), free and clear of all Encumbrances, except Permitted
Encumbrances. All leases of real property (the "Leased Real Property") or
personal property to which the Company is a party (i) are in good standing in
all material respects, (ii) afford the Company peaceful and undisturbed
possession of the subject matter of the lease, and (iii) to the knowledge of the
Company provide the Company with valid leasehold interests in such assets free
of any Encumbrances except Permitted Encumbrances. The Company does not have
knowledge of any violation, nor has any such entity or person received any
notice of any violation, of any zoning, building, safety or environmental
ordinance, regulation or requirement or other law, bylaw or regulation
applicable to the operation of owned or leased properties or assets, the
violation of which could have a material adverse effect on the Company's
business. To the knowledge of the Company, neither the whole nor any part of any
Leased Real Property is subject to any pending suit for condemnation or other
taking by any public authority or other Person, and, to the knowledge of the
Company, no such condemnation or other taking is threatened or contemplated.
5.14 Accounts Receivable. All accounts receivable of the Company
have arisen from bona fide transactions by the Company in the ordinary course of
its business.
5.15 Taxes.
5.15.1 (i) The Company has filed on or before the date
due all Tax Returns required to be filed (after giving effect to any
extensions); (ii) all such Tax Returns are complete and accurate and
disclose all Taxes required to be paid by the Company for the periods
covered thereby and all taxes shown to be due on such Tax Returns have
been timely paid; (iii) all Taxes (whether or not shown on any Tax
Return) owed by the Company and required to be paid on or before the
Closing Date have been (or will be) timely paid; (iv) the Company has
not waived or been requested to waive any statute of limitations in
respect of Taxes; (v) the Tax Returns referred to in clause (i) have not
been examined by the Internal Revenue Service or any state, local or
foreign taxing authority; (vi) there is no Action pending or proposed or
threatened with respect to Taxes of the Company and, to the Company's
knowledge, no basis exists therefor; (vii) the Company is not a party to
any Tax Sharing Arrangement or any Tax indemnity arrangement and the
Company will not have any liability under any Tax Sharing Arrangement or
Tax indemnity arrangement on or after the Closing Date; (viii) the
Company has filed returns as a separate entity and has not been a member
of any Company Group; (ix) there are no liens for Taxes upon any of the
Company Property except liens relating to current Taxes not yet due; (x)
all Taxes which the Company is required by law to withhold or to collect
for payment have been duly withheld and collected, and have been paid or
accrued, reserved against and entered on the books of the Company; (xi)
no claim has ever been made by a Taxing authority in a jurisdiction
where the Company has never paid Taxes or filed Tax Returns asserting
that the Company is or may be subject to Taxes assessed by such
jurisdiction; (xii) the Company has no knowledge of any facts that, if
known to any taxing authority, would likely result in the issuance of a
notice of proposed deficiency or similar notice of intention to assess
Taxes against the Company; (xiii) there are no Tax rulings, requests for
rulings, or closing agreements relating to the Company which could
affect the Company's liability for Taxes for any period after the
Closing Date; (xiv) as a result of a change in accounting method for a
Tax period beginning on or before the Closing Date, the Company will not
be required to include any adjustment under Section 481(c) of the Code
(or any corresponding provision of state or local Tax law) in taxable
income for any Tax period beginning on or after the Closing Date; (xv)
as a result of any "closing agreement" (as described in Section 7121 of
the Code or any corresponding provision of state or local Tax law), the
Company will not be required to include any item of income in, or
exclude any item of deduction from, any taxable period beginning on or
after the Closing Date; (xvi) the Company has not disposed of property
in a transaction being accounted for under the installment method
17
23
pursuant to Section 453 or 453A of the Code; (xviii) the Company has not
filed a consent under Section 341(f) of the Code or any comparable
provision of state or local Tax law; (xix) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns
referred to in clause (i) have been paid in full; (xx) except as listed
on Schedule 5.15.1, no power of attorney has been granted with respect
to any matter relating to Taxes of the Company which is currently in
force; (xxi) the Company does not have corporate acquisition
indebtedness, as described in Section 279(b) of the Code; and (xxii) the
Company has not participated in or cooperated with an international
boycott, within the meaning of Section 999 of the Code, nor has any such
corporation had operations which are or may hereafter become reportable
under Section 999 of the Code.
5.15.2 No transaction contemplated by this Agreement is
subject to withholding under Section 1445 of the Code and no stock
transfer taxes, sales taxes, use taxes, real estate transfer taxes, or
other similar taxes will be imposed on the transactions contemplated by
this Agreement.
5.15.3 As a direct or indirect result of the
transactions contemplated by this Agreement, there will be no payment or
other benefit, nor will there be any acceleration of the vesting of any
options, payments or other benefits, in each case that will be an excess
"parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code and the Treasury Regulations
thereunder, without regard to whether such payment or acceleration is
reasonable compensation for personal services performed or to be
performed in the future.
5.16 Absence of Certain Changes. Since the Balance Sheet Date,
the Company has carried on its business in the ordinary course substantially in
accordance with the procedures and practices in effect on the Balance Sheet
Date, and since the Balance Sheet Date there has not been:
5.16.1 any change in the financial condition,
properties, assets, liabilities, business or operations of the Company
which change by itself or in conjunction with all other such changes,
whether or not arising in the ordinary course of business, has had or
can reasonably be expected to have a material adverse effect on the
Company;
5.16.2 any contingent liability incurred by the Company
as guarantor or surety with respect to the obligations of others;
5.16.3 any mortgage, encumbrance or lien filed against
any of the properties of the Company;
5.16.4 any obligation or liability in excess of $10,000,
individually or in the aggregate, incurred by the Company other than in
the ordinary course of business;
5.16.5 any purchase, sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other
disposition, of any of the properties or assets of the Company other
than in the ordinary course of business or in amounts less than $10,000;
5.16.6 any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
assets or business of the Company (as presently conducted or presently
proposed to be conducted);
18
24
5.16.7 any declaration, setting aside or payment of any
dividend on, or the making of any other distribution in respect of, the
shares of the Company, any split, combination or recapitalization of the
capital stock of the Company or any direct or indirect redemption,
purchase or other acquisition of the capital stock of the Company;
5.16.8 any material change with respect to the
management, supervisory, development or other key personnel of the
Company;
5.16.9 any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company, except such
a satisfaction, discharge or payment made in the ordinary course of
business that is not material to the assets, properties, financial
condition, operating results or business of the Company;
5.16.10 any obligation or liability incurred by the
Company to any of its officers, directors or any loans or advances made
to any of its officers or directors except normal compensation and
expense allowances payable to officers consistent with past practices;
5.16.11 any waiver by the Company of a valuable right or
of a material debt;
5.16.12 any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or
properties is bound or subject, except for changes or amendments which
are expressly provided for or disclosed in this Agreement or the Company
Ancillary Agreements;
5.16.13 any capital expenditure or commitments therefor
by the Company in excess of $10,000, individually or in the aggregate;
or
5.16.14 any Tax Return prepared or filed by the Company
that is inconsistent with past practice, or in which the Company has
taken any position, made any election, or adopted any method that is
inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax Returns in prior periods;
5.16.15 to the knowledge of the Company, any other event
or condition of any character which would materially and adversely
affect the assets, properties, financial condition, operating results
or, business of the Company.
5.17 Agreements and Commitments.
5.17.1 Attached to this Agreement as Schedule 5.17 is a
complete list of every oral or written executory agreement, obligation
or commitment which is material to the Company, its financial condition,
business or prospects, together with the amounts owed or owing under
each such agreement, obligation or commitment as of the Closing Date
(including but not limited to):
5.17.1.1 Any contract, commitment, letter
contract, quotation, purchase order, bid or proposal providing
for payments by or to the Company in an aggregate amount of
$5,000 or more in any calendar year;
5.17.1.2 Any license agreement as licensor or
licensee or any agreement to encumber, transfer or sell rights
in or with respect to any of the Company's Intellectual Property
(as defined in Section 5.18 below), except for standard
non-exclusive software
19
25
licenses for products that are available through general retail
or mail-order channels that are granted to end-user customers in
the ordinary course of business, the form of which has been
provided or made available to Parent's counsel;
5.17.1.3 Any agreement for the purchase, sale or
lease of real or personal Property or intangible assets
involving total payments of more than $10,000 in any calendar
year or in the aggregate;
5.17.1.4 Any agreement for the purchase or sale
of any business unit, business entity or franchise;
5.17.1.5 Any publishing, dealer, distributor,
sales representative, original equipment manufacturer or value
added remarketer agreement and any other agreement accounting
for more than $10,000 of the Company's revenue in any
consecutive twelve-month period;
5.17.1.6 Any purchase or sale agreement relating
to any equity or debt security;
5.17.1.7 Any joint venture contract or
arrangement or any other agreement that involves a sharing of
profits with other persons or entities;
5.17.1.8 Any instrument evidencing indebtedness
for borrowed money by way of direct loan, sale of debt
securities, purchase money obligation, conditional sale,
guarantee or otherwise (except for trade indebtedness and
advances to employees incurred in the ordinary course of
business), and any instrument, contract, indenture or financing
statement evidencing any lien, encumbrance or security interest
in any of the Company's assets;
5.17.1.9 Any contract containing covenants
purporting to limit the Company's freedom to compete in any line
of business in any geographic area;
5.17.1.10 Any lease of real or personal
property; and
5.17.1.11 Any other agreement not listed above
that is material to the assets, properties, financial condition,
operating results or business of the Company.
5.17.2 All agreements, obligations and commitments
listed or required to be listed according to Sections 5.17.1, 5.18 and
5.23 (collectively the "Company Agreements") are valid and in full force
and effect in all material respects, and a true and complete copy of
each has been delivered to, or made available for inspection by,
Parent's counsel. Neither the Company nor any other party is in breach
or default in any material respect under the terms of any Company
Agreement, nor does the Company have any knowledge of any claim or
threat by any other party that the Company has breached any Company
Agreement.
5.17.3 To the extent any Company Agreement with a third
party provides for development or other performance by the Company,
except as disclosed in Schedule 5.8: (i) such development or other
performance has been timely and properly completed in accordance with
the terms of such Company Agreement and the Company has no liability
arising out of any prior deliverables; (ii) the Company has not failed
to meet any milestone or other delivery specified in such Company
Agreement, except where any such failure has been waived or has not
resulted in
20
26
termination or notice of default in accordance with the terms of such
Company Agreement; and (iii) the Company does not have knowledge of any
matter which might cause the Company to materially fail to meet any such
milestone or other delivery date in accordance with any material Company
Agreement. The Company is not aware of any material breach or failure of
compliance with respect to any material maintenance and enhancement
obligations contained in any Company Agreements, and the Company has not
received any notice from any party to the contrary. No other party to a
Company Agreement has ever exercised a "right to complete" or similar
provision in a Company Agreement that allowed such party to correct or
complete any deliverable item from the Company. All other parties to any
Company Agreement regarding the publishing or distribution of products
have been substantially timely, and none is currently in arrears, with
respect to the payment of any royalty or similar payments to the
Company, the Company does not have knowledge that any prior royalty or
similar payment is incorrect by more than 5% and the Company has never
exercised an audit or other formal remedy under any Company Agreement
with respect to any such payment. Except as disclosed in Schedule 5.8,
in the event any Company Agreement is terminated by the other party
thereto, the Company will have no liability for a refund or other
repayment of any advance, minimum guarantee or other amounts previously
paid to the Company under such Company Agreement.
5.18 Intellectual Property.
5.18.1 Except for matters disclosed on Schedule 5.18,
the Company owns or has the right to use all right, title and interest
in all patents, patent applications, trademarks, service marks, trade
names, copyrights, trade secrets, know-how, technology, Moral Rights (as
defined below) and other intellectual property and proprietary rights
reasonably necessary to the conduct of its business as presently
conducted and as presently proposed to be conducted (the "Company
Intellectual Property"). "Moral Rights" means any rights of paternity or
integrity, any right to claim authorship of an invention, improvement,
original work of authorship, formula, process, computer program,
database or trade secret ("Inventions"), to object to any distortion,
mutilation or other modification of, or other derogatory action in
relation to, any Invention, whether or not such would be prejudicial to
any developer's honor or reputation. Set forth on Schedule 5.18 hereto
is a true and complete list of all patents, copyright and trademark
registrations and all applications therefor regarding the Company
Intellectual Property that are owned or licensed by the Company, and no
loss, cancellation, termination, expiration or denial of any such
registration or application is foreseeable by the Company except as set
forth in Schedule 5.18. Copies of all forms of non-disclosure or
confidentiality agreements utilized to protect the Company Intellectual
Property have been provided to Parent's counsel.
5.18.2 To the knowledge of the Company, except as set
forth on Schedules 5.8 and 5.18, no employee, Stockholder or other
security holder of the Company or any other Person has any ownership
right, title, interest, claim in or lien on any of the Company
Intellectual Property, nor is any Person currently infringing or using
any misappropriated Company Intellectual Property. Except as set forth
on Schedule 5.18, the Company has taken and will take all steps
reasonably necessary to preserve its legal rights in, and the secrecy
of, the Company Intellectual Property, except that for which disclosure
is required for legitimate business or legal reasons. Except as set
forth in any Company Agreement or otherwise disclosed on Schedules 5.8,
5.17 and 5.18, the Company has not granted, and there are no outstanding
options, licenses or agreements of any kind relating to any Company
Intellectual Property, nor is the Company bound by or a party to any
option, license or agreement of any kind with respect to any of the
Company Intellectual Property. Except as set forth in any Company
Agreement, the Company is not
21
27
obligated to pay any royalties or other payments to third parties with
respect to the marketing, sale, distribution, manufacture, license or
use of any Company Intellectual Property.
5.18.3 Except as disclosed on Schedule 5.18, the
business of the Company as presently conducted and as proposed to be
conducted by the Company with respect to product produced or in
production prior to the Closing does not and will not cause the Company
to infringe or violate any of the patents, trademarks, service marks,
trade names, copyrights, trade secrets, proprietary rights or other
intellectual property rights of any other person or entity, and the
Company has not received any claim or notice of infringement or
potential infringement of the intellectual property of any other person.
The Company is not using any confidential information or trade secrets
of any former employer of any of its past or present employees. The
Company does not have knowledge that it will be necessary to utilize any
inventions of any employees of the Company (or persons the Company
currently intends to hire) made prior to their employment by the
Company. To the knowledge of Company, at no time during the conception
or reduction to practice of any Invention that is a part of the Company
Intellectual Property was any developer, inventor or other contributor
to such Invention operating under any grants from any governmental
entity or agency or private source, performing research sponsored by any
governmental entity or agency or private source or subject to any
employment agreement or invention assignment or nondisclosure agreement
or other obligation with any third party that could adversely affect the
Company's rights in the Company Intellectual Property.
5.19 Products and Distribution. Schedule 5.19 contains a
complete list of all of the software products (by SKU) developed, published
and/or distributed by the Company which products have been commercially released
(the "Published Products") and all products (by SKU) currently under development
by the Company, or which the Company is contractually obligated to develop (the
"Products Under Development" and collectively with the Published Products, the
"Products").
5.19.1 Schedule 5.19 sets forth, for each Product, a
list of all contracts and agreements (including without limitation all
development, trademark license, technology license, distribution or
other agreements) relating to the Product.
5.19.2 Schedule 5.19 also sets forth, for each Product
Under Development and as of the date of this Agreement, the following:
(a) the currently scheduled final software delivery date, and (b) an
estimate of percentage of completion.
5.20 Development Tools. Schedule 5.20 contains a complete list
of all software development tools used or intended to be used by the Company in
the development of any of the Products, except for any such tools that are
generally available and are used in their generally available form (such as
standard compilers) (the "Development Tools"). Schedule 5.20 also sets forth,
for each Development Tool: (i) for any Development Tool not entirely developed
internally by the Company employees, the identity of the independent contractors
and consultants involved in such development and a list of the agreements with
such independent contractors and consultants; (ii) a list of any third parties
with any rights to receive royalties or other payments with respect to such
Development Tool, and a schedule of all such royalties payable; (iii) a list of
any restrictions on the Company's right to use and distribute such Development
Tool; and (iv) a list of all agreements between the Company and third parties
for the use by such third party of such Development Tool. The Company has
sufficient right, title and interest in and to the Development Tools for the
conduct of its business as currently conducted and as proposed to be conducted.
22
28
5.21 Compliance with Law and Charter Documents. The Company is
not in violation or default of any provisions of its Certificate of
Incorporation or Bylaws, both as amended; and to the knowledge of the Company
except for any violations that individually and in the aggregate would have no
material adverse impact on the Company's business, the Company is in compliance
with all applicable statutes, laws, regulations and executive orders of the
United States and all states, provinces and local authorities and all foreign
countries or other governmental bodies and agencies having jurisdiction over the
Company's business or properties. The Company has not received any notice of any
violation of such statutes, laws, regulations or orders which has not been
remedied prior to the date hereof.
5.22 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.
5.22.1 ▇▇▇▇▇ is the "ultimate parent entity" of the
Company (as defined in 16 C.F.R. Section 801.1(a)(3) (1998)).
5.22.2 The "person" (as defined in 16 C.F.R. Section
801.1(a)(1) (1998)) in which the Company is included as the "ultimate
parent entity" (as defined in 16 C.F.R. Section 801.1(a)(3) (1998)),
does not have "annual net sales" (as defined in 16 C.F.R. Section 801.11
(1998)) or "total assets" (as defined in 16 C.F.R. Section 801.11
(1998)) of $10 million or more.
5.23 Employees and Employee Relations.
5.23.1 The Company has no employment contract or
material consulting agreement currently in effect that is not terminable
on notice or whose lawful termination would result in any payment to the
terminated employee greater than the minimum amounts required by
Illinois law upon termination of an employee (other than agreements with
the sole purpose of providing for the confidentiality of proprietary
information or assignment of inventions). All officers, employees and
consultants of the Company have executed and delivered to the Company an
agreement regarding the protection of such proprietary information and
the assignment of inventions to the Company substantially in the forms
attached hereto as Schedule 5.23. Except as disclosed on Schedule 5.18
(with respect to Parallax Software Corporation, an Illinois corporation
("Parallax")), the Company Intellectual Property does not incorporate or
include any "Prior Inventions" of any officer, employee or consultant
(as such term is defined in such forms).
5.23.2 The Company (i) has never been and is not now
subject to a union organizing effort, (ii) is not subject to any
collective bargaining agreement with respect to any of its employees,
(iii) is not subject to any other contract, written or oral, with any
trade or labor union, employees' association or similar organization,
and (iv) is not a party to any current strike or labor dispute. To the
knowledge of the Company, (I) no labor union has requested, sought or
attempted to represent any employees, representatives or agents of the
Company, (II) there is no labor organization activity involving the
Company's employees, (III) the consummation of the Contemplated
Transaction will not have a material adverse effect on the Company's
labor relations and (IV) none of the Company's key employees intend to
leave their employ.
5.23.3 Schedule 5.23.3 contains a summary of all
pension, retirement, disability, medical, dental or other health plans,
life insurance or other death benefit plans, profit sharing, deferred
compensation agreements, stock, option, bonus or other incentive plans,
vacation, sick, holiday or other paid leave plans, severance plans or
other similar employee benefit plans maintained by the Company (the
"Employee Plans"). Each of the Employee Plans, and their administration,
is, in all material respects, in compliance with all applicable federal,
state,
23
29
provincial, municipal, local and other governmental laws and ordinances,
orders, rules and regulations and the Company is in full compliance with
the terms of all of the Employee Plans.
5.23.4 All contributions or other payments due with
respect to any Employee Plan have been made or accrued on the Financial
Statements except those contributions or payments accruing after the
Balance Sheet Date in the ordinary course.
5.23.5 Neither the Company nor any ERISA Affiliate has
or has ever maintained any "employee pension benefit plan" or "employee
welfare benefit plan" (as such terms are defined in ERISA) or has ever
been required to make any payment to any employee pension benefit plan
or employee welfare plan.
5.23.6 To the knowledge of the Company, no employee of
the Company is in violation of (i) any material term of any employment
contract, invention disclosure or assignment agreement or noncompetition
agreement or (ii) any material term of any other contract or agreement,
or any restrictive covenant, relating to the right of any such employee
to be employed by the Company or to use trade secrets or proprietary
information of others. To the knowledge of the Company, the mere fact of
employment of any employee of the Company does not subject the Company
to any liability to any third party. There are no Actions pending or, to
the knowledge of the Company, threatened (or any basis therefor),
relating to the prior employment of any of the Company's employees or
consultants, their use in connection with the Company's business of any
information, technology or techniques allegedly proprietary to any of
their former employers, clients or other parties, or their obligations
under any agreements with prior employers, clients or other parties.
5.23.7 Other than the Employment Agreement and except as
required by law, the Company is not a party to any (i) agreement with
any executive officer or other key employee of the Company (a) the
benefits of which are contingent, or the terms of which are materially
altered, upon the execution of this Agreement or the Ancillary
Agreements (other than the modification of such benefits or terms of
employment by the Employment Agreement) or the occurrence of the
Contemplated Transaction, (b) providing any term of employment or
compensation guarantee or (c) providing severance benefits or other
benefits after the termination of employment of such employee regardless
of the reason for such termination of employment, or (ii) agreement or
plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of
which will be materially increased, or the vesting of benefits of which
will be materially accelerated, by the occurrence of any of the
Contemplated Transaction or the execution of this Agreement or the
Ancillary Agreements or the value of any of the benefits of which will
be calculated on the basis of any of the Contemplated Transaction or the
provisions of this Agreement or the Ancillary Agreements.
5.23.8 A list of all ongoing employees, officers and
development consultants of the Company and their current compensation
(salary and bonuses), their last annual review date and their latest
change in compensation (salary or bonus) is set forth in Schedule 5.23.8
attached to this Agreement.
5.23.9 The Company is not aware that any employee or
consultant of the Company is obligated under any agreement (including
licenses, covenants or commitments of any nature) or subject to any
judgment, decree or order of any court or administrative agency, or any
other restriction, that would interfere with the use of his or her best
efforts to carry out his or her duties for the Company or to promote the
interests of the Company or that would conflict with the
24
30
Company's business as presently conducted or proposed to be conducted.
The carrying on of the Company's business by the employees and
contractors of the Company and the conduct of the Company's business as
presently proposed, will not, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under
which any of such employees or contractors or the Company is now
obligated.
5.24 Business Plan. The Company has disclosed to Parent it's
current and proposed business activities.
5.25 Corporate Documents. The Company has made available to
Parent for examination complete copies of all documents and information listed
in the Exhibits and Schedules to this Agreement, including, without limitation,
the following: (i) copies of the Company's Certificate of Incorporation as
currently in effect; (ii) the Company's corporate minute books containing all
records of all proceedings, consents, actions and meetings of the Stockholders
and the Company's Board of Directors or any committees thereof, (iii) the
Company's stock ledgers and journals reflecting all stock issuances and
transfers, and agreements and documents relating thereto; and (iv) all permits,
orders and consents now in effect and issued by any regulatory agency expressly
to the Company and all applications for such permits, orders and consents. The
minute books and stock records of the Company provided to Parent contain a
complete summary of all meetings, consents and actions of the Board of Directors
of the Company and the Stockholders, and all issuances and transfers of the
Company's securities, since the time of its incorporation, accurately reflecting
all transactions referred to in such minutes and records in all material
respects.
5.26 No Brokers. The Company is not obligated for the payment of
fees or expenses of any investment banker, broker or finder in connection with
the origin, negotiation or execution of this Agreement or the Company Ancillary
Agreements or in connection with the Contemplated Transaction.
5.27 Environmental Matters.
5.27.1 To the knowledge of the Company, during the
period that the Company has leased or owned its properties or owned or
operated any facilities, there have been no disposals, releases or
threatened releases of Hazardous Materials (as defined below) on, from
or under such properties or facilities. The Company has no knowledge of
any presence, disposals, releases or threatened releases of Hazardous
Materials on, from or under any of such properties or facilities, which
may have occurred prior to the Company having taken possession of any of
such properties or facilities. For purposes of this Agreement, the terms
"disposal," "release," and "threatened release" shall have the
definitions assigned thereto by CERCLA. For the purposes of this Section
"Hazardous Materials" shall mean any hazardous or toxic substance,
material or waste which is or becomes prior to the Closing regulated
under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic
substance," or "hazardous chemical" under (1) CERCLA; (2) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; (5) the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801 et seq.; (4) the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; (5) the Occupational Safety and Health Act of 1970, 29
U.S.C. Section 651 et seq.; (6) regulations promulgated under any of the
above statutes; or (7) any applicable state or local statute, ordinance,
rule, or regulation that has a scope or purpose similar to those
statutes identified above;
25
31
5.27.2 To the knowledge of the Company, none of the
Company's properties or facilities is in violation of any federal,
state, or local law, ordinance, regulation, or order relating to
industrial hygiene or to the environmental conditions on, under or about
such properties or facilities, including, but not limited to, soil and
ground water condition. During the time that the Company has owned or
leased its properties and facilities, neither the Company nor, to the
Company's knowledge, any third party, has used, generated, manufactured
or stored on, under or about such properties or facilities or
transported to or from such properties or facilities any Hazardous
Materials.
5.27.3 During the time that the Company has owned or
leased its properties and facilities, there has been no litigation
brought or threatened against the Company, or any settlement reached by
the Company with, any party or parties alleging the presence, disposal,
release or threatened release of any Hazardous Materials on, from or
under any of such properties or facilities.
5.28 Insurance. The Company maintains, and at all times since
the incorporation of the Company has maintained, fire and casualty, general
liability, business interruption, and product liability insurance with such
coverages, and subject to limitations and deductibles as is usual and customary
for similarly situated businesses and which provides coverage sufficient in
amount to allow the Company to replace any of its properties that might be
damaged or destroyed.
5.29 Disclosure. This Agreement, the Company Ancillary
Agreements, the Exhibits hereto and thereto, the certificates and documents
delivered by, or to be delivered by, the Company to Parent under this Agreement
or the Company Ancillary Agreements, taken together, do not contain any untrue
statement of a material fact and do not omit to state any material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading.
There is no fact known by the Company which has not been disclosed herein or in
the Schedules hereto or in written materials delivered by the Company to Parent
or its counsel pursuant to Parent's due diligence of the Company and which
materially adversely affects the business of the Company, other than facts known
generally (either to the public generally or participants in the Company's
industry) that apply to the Company's industry as a whole with respect to
customers, suppliers, business or economic conditions.
5.30 Pooling-of-Interests. To the knowledge of the Company, the
Company has not engaged in any transaction that would preclude the Parent from
accounting for the Merger as a pooling-of-interests.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO.
As an inducement to the Company to enter into this Agreement and
to consummate the transactions contemplated hereby, Parent and Mergerco hereby
jointly and severally represent and warrant to the Company and agree as follows:
6.1 Organization and Capital Structure.
6.1.1 Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own or lease and to
operate and use its properties and assets and to carry on its business
as now conducted. The authorized capital of Parent consists of (i)
35,000,000 shares of THQ Stock, par value $0.01 per share, of which, as
of August 30, 2000, 19,246,073 shares were issued and
26
32
outstanding, and (ii) 1,000,000 shares of preferred stock, par value
$0.01 per share, none of which is issued and outstanding or reserved for
any purpose. Except for options and warrants described in the Parent SEC
Documents and as contemplated hereby, there are no options, warrants or
other rights to acquire from Parent, or agreements or commitments by
Parent to issue or sell, any shares of capital stock of Parent, whether
on conversion of other securities or otherwise. All of the Merger
Shares, when issued and delivered in accordance with this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
6.1.2 Mergerco is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The authorized capital of Mergerco consists of 1,000 shares of common
stock, par value $0.01 per share, all of which have been issued and are
outstanding and none are held as treasury shares. All of the outstanding
shares of capital stock of Mergerco are validly issued, fully paid and
nonassessable and owned of record and beneficially by Parent, free from
all Encumbrances.
6.2 Authority.
6.2.1 Parent has full corporate power and authority to
execute, deliver and perform this Agreement and all of the Parent
Ancillary Agreements. The execution, delivery and performance of this
Agreement and the Parent Ancillary Agreements by Parent have been duly
authorized and no other corporate proceedings on the part of Parent are
necessary to authorize this Agreement, the Parent Ancillary Agreements
and the transactions contemplated hereby and thereby. This Agreement has
been duly authorized, executed and delivered by Parent and is the legal,
valid and binding obligation of Parent enforceable in accordance with
its terms and each of the Parent Ancillary Agreements has been duly
authorized by Parent and upon execution and delivery by Parent will be a
legal, valid and binding obligation of Parent enforceable in accordance
with its terms.
6.2.2 Mergerco has full corporate power and authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Mergerco have been duly authorized and
approved by Mergerco's board of directors and, except for the Merger
Filing, no other corporate proceedings on the part of Mergerco are
necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by Mergerco and is the legal, valid and binding agreement of Mergerco
enforceable in accordance with its terms.
6.2.3 Neither the execution or delivery of this
Agreement or any of the Parent Ancillary Agreements, the consummation of
any of the transactions contemplated hereby or thereby nor compliance
with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
6.2.3.1 conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of
Parent's or Mergerco's assets under, (i) the Certificate of
Incorporation or Bylaws of Parent or the Certificate of
Incorporation or Bylaws of Mergerco, (ii) any material note,
instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation
to which either Parent or Mergerco is a party or any of their
respective assets or business is subject or by which either
Parent or Mergerco is bound, (iii) any Court Order to which
either
27
33
Parent or Mergerco is a party or by which either Parent or
Mergerco is bound or (iv) any Requirements of Laws affecting
Parent or Mergerco, except for, in the case of clauses (ii) or
(iii) of this Section 6.2.3.1, any such conflicts, breaches,
defaults, rights or Encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent or
materially impair the ability of Parent to perform its
obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby; or
6.2.3.2 require the approval, consent,
authorization or act of, or the making by either Parent or
Mergerco of any declaration, filing or registration with, any
Person, except for the Merger Filing and such other consents,
orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect
on Parent or materially impair the ability of Parent to perform
its obligations hereunder or prevent the consummation of any of
the transactions contemplated hereby.
6.3 No Investment Banker Fees Payable by Stockholders. No
Stockholder will have any liability for any fees or commissions payable by
either Mergerco or Parent (or any Person acting on behalf of Mergerco or Parent)
to any investment banker, broker, finder or intermediary for or on account of
the transactions contemplated by this Agreement.
6.4 Parent SEC Documents. Parent has previously delivered to the
Company and each of the Stockholders of the Company complete and correct copies
of all reports (including annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K) filed by it with the SEC since January 1,
2000 (the "Parent SEC Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Exchange Act and none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted 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.
6.5 Disclosure. This Agreement, Parent Ancillary Agreements, and
certificates and documents delivered by, or to be delivered by Parent under this
Agreement or the Parent Ancillary Agreements, taken together, do not contain any
untrue statement of a material fact and do not omit to state any material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading.
7. ACTION PRIOR TO THE MERGER FILING.
The parties hereto covenant and agree to take the following
actions between the date hereof and the Merger Filing:
7.1 [Reserved]
7.2 Stockholders' Representative. For purposes of this Agreement
and the transactions contemplated hereby, the Stockholders, without any further
action on the part of any such Stockholder, shall be deemed to have consented to
the appointment of ▇▇▇▇▇ as the representative of such Stockholders (the
"Stockholders' Representative"), as the attorney-in-fact for and on behalf of
each such Stockholder, and the taking by the Stockholders' Representative of any
and all actions and the making of any decisions required or permitted to be
taken by him under this Agreement, including the exercise of the power to (i)
execute the Escrow Agreement, (ii) authorize delivery to Parent of the Escrow
Shares, or
28
34
any portion thereof, in satisfaction of Losses and Expenses, (iii) agree to,
negotiate, enter into settlements and compromises of and comply with orders of
courts and awards of arbitrators with respect to such Losses and Expenses, (iv)
resolve any Parent indemnification claims, and (v) take all actions necessary in
the judgment of the Stockholders' Representative for the accomplishment of the
foregoing and all of the other terms, conditions and limitations of this
Agreement and the Escrow Agreement. Accordingly, the Stockholders'
Representative has unlimited authority and power to act on behalf of each
Stockholder with respect to this Agreement and the Escrow Agreement and the
disposition, settlement or other handling of all Losses and Expenses, rights or
obligations arising from and taken pursuant to this Agreement. The Stockholders
will be bound by all actions taken by the Stockholders' Representative in
connection with this Agreement or the Escrow Agreement, and Parent and Mergerco
shall be entitled to rely on any action or decision of the Stockholders'
Representative. The Stockholders' Representative will incur no liability with
respect to any action taken or suffered by him in reliance upon any notice,
direction, instruction, consent, statement or other document believed by him to
be genuine and to have been signed by the proper person (and shall have no
responsibility to determine the authenticity thereof), nor for any other action
or inaction, except his own willful misconduct or gross negligence. In all
questions arising under this Agreement or the Escrow Agreement, the
Stockholders' Representative may rely on the advice of counsel, and the
Stockholders' Representative will not be liable to Stockholders for anything
done, omitted or suffered in good faith by the Stockholder' Representative based
on such advice. The Stockholders' Representative will not be required to take
any action involving any expense unless the payment of such expense is made or
provided for in a manner satisfactory to him. At any time during the term of the
Escrow Agreement, holders of a majority in interest of the Escrow Shares can
appoint a new Stockholders' Representative by written consent by sending notice
and a copy of the written consent appointing such new Stockholders'
Representative signed by holders of a majority in interest of the Escrow Shares
to Parent and the Escrow Agent. Such appointment will be effective upon the
later of the date indicated in the consent or the date such consent is received
by Parent, Mergerco (or, if after the Effective Time, the Surviving Corporation)
and the Escrow Agent.
7.3 [Reserved]
7.4 Investigation of the Company by Parent. The Company shall
afford to the officers, employees and authorized representatives of Parent
(including its accountants, attorneys and financial advisors) reasonable access
during normal business hours to the offices, properties, employees and business
and financial records (including computer files, retrieval programs and similar
documentation) of the Company to the extent Parent shall deem necessary or
desirable, and shall furnish to Parent or its authorized representatives such
additional information concerning the operations, properties and business of the
Company as may be reasonably requested to enable Parent or its representatives
to verify the accuracy of the representations and warranties contained in this
Agreement, to verify that the covenants of the Company contained in this
Agreement have been complied with, to determine whether the conditions set forth
in Section 8 have been satisfied, and to make the determinations provided for in
this Agreement. Parent agrees that such investigation shall be conducted in such
a manner as not to interfere unreasonably with the operations of the Company. No
investigation made by Parent or its representatives hereunder shall affect the
efficacy of any of the representations and warranties of the Company hereunder
or the rights of Parent under Section 10.
7.5 Preserve Accuracy of Representations and Warranties. Each of
the parties hereto shall refrain from taking any action which would render any
representation or warranty set forth in Sections 5 or 6 of this Agreement
inaccurate as of the Effective Time. Each party shall promptly notify the other
parties of any Action that shall be instituted or threatened against such party
to restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. The Company
29
35
shall promptly notify Parent of any Action that may be instituted or threatened
against the Company which would have been listed in Schedule 5.6 if such Action
had arisen prior to the date hereof.
7.6 Conduct of Business Prior to the Effective Time. Except as
expressly contemplated by this Agreement, the Company shall carry on its
business in, and not enter into any material transaction other than in
accordance with, the ordinary course consistent with past practice and, to the
extent consistent therewith, use its reasonable best efforts to preserve intact
its current business organization, keep available the services of its current
employees and preserve its relationships with Persons having dealings with it.
In connection therewith, the Company shall not (i) transfer or cause to be
transferred any employee or agent of the Company to any Affiliates of the
Company or any Stockholder, (ii) permit any Affiliate of the Company or of any
Stockholder to offer employment to any such employee or agent, or (iii)
otherwise attempt to persuade any such employee or agent to terminate his or her
relationship with the Company other than for reasons that are in the best
interests of the Company. Without limiting the generality of the foregoing, and
except as expressly contemplated by this Agreement, the Company shall not,
without the prior written consent of Parent:
7.6.1 take any action described in Section 5.16;
7.6.2 grant any additional options, issue, deliver,
sell, pledge, dispose of or otherwise encumber any shares of its capital
stock or other securities (including any rights, warrants or options to
acquire any shares of its capital stock or other securities); or issue
any certificate evidencing any shares of Company Common Stock in
replacement for any certificate that has been lost, destroyed or stolen,
except upon receipt from the issuee thereof of indemnification of the
Company in form and substance satisfactory to Parent;
7.6.3 amend its Certificate of Incorporation or Bylaws;
7.6.4 acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets
of or equity in, or by any other manner, any business or any Person or
division thereof;
7.6.5 make or incur any new capital expenditure or
expenditures which, individually, is in excess of $10,000 or, in the
aggregate, are in excess of $50,000;
7.6.6 pay, discharge or satisfy (i) any claim by or
liability or obligation owing to, any present, former or purported
holder of any securities of the Company, or (ii) any other claim,
liability or obligation other than the payment, discharge or
satisfaction thereof in the ordinary course of business consistent with
past practice; in each case whether such claim, liability or obligation
is absolute, accrued, asserted or unasserted, contingent or otherwise;
7.6.7 alter through merger, liquidation, reorganization,
restructuring or in any other fashion its corporate structure;
7.6.8 enter into or adopt, or amend, any bonus,
incentive, deferred compensation, insurance, medical, hospital,
disability or severance plan, agreement or arrangement or enter into or
amend any employee benefit plan or employment, consulting or management
agreement, other than any such amendment to an employee benefit plan
that is made to maintain the qualified status of such plan or its
continued compliance with applicable law; or pay or commit to pay any
bonus to any officer or employee of the Company, or make any other
material change in the compensation of its employees;
30
36
7.6.9 modify in any material respect any of the Company
Agreements; or enter into any agreement, understanding, obligation or
commitment; or incur any indebtedness or obligation, of the type that
would have been required to be listed in Schedule 5.17 if in existence
on the date hereof; or enter into any contract that provides for any
approval or consent by any Person to the transactions contemplated by
this Agreement;
7.6.10 enter into any other transaction affecting the
business of the Company, other than in the ordinary course of business
consistent with past practice or as expressly contemplated by this
Agreement;
7.6.11 file any Tax Return in respect of its Federal
income Taxes or state income or franchise Taxes;
7.6.12 with respect to Taxes other than Federal income
Taxes or state income or franchise Taxes, prepare or file any Tax Return
inconsistent with prior practice, or on any such Tax Return, take any
position, make any election, or adopt any method that is inconsistent
with positions taken, elections made or methods used in preparing or
filing similar Tax Returns in prior periods; or
7.6.13 take any action that might preclude Parent from
accounting for the Merger as a pooling-of-interests.
7.7 Notification by the Company of Certain Matters. During the
period prior to the Effective Time, the Company shall promptly advise Parent in
writing of (i) any change or event of which the Company has knowledge that could
have a Material Adverse Effect on the Company, (ii) any notice or other
communication from any third Person alleging that the consent of such third
Person is or may be required in connection with the transactions contemplated by
this Agreement, and (iii) any material default under any Company Agreement or
event which, with notice or lapse of time or both, would become such a default
on or prior to the Effective Time and of which the Company has knowledge.
7.8 Mutual Cooperation; Reasonable Best Efforts. The parties
hereto shall cooperate with each other, and shall use their respective
reasonable best efforts to cause as promptly as possible the fulfillment of the
conditions to each other party's obligations hereunder and to obtain as promptly
as possible all consents, authorizations, orders or approvals from each and
every Person required in connection with the transactions contemplated by this
Agreement. Each of the parties hereto shall take all such actions as may
reasonably be requested by another party hereto in order to further the
consummation of the transactions contemplated hereby and the acquisition of the
control of the Company by Parent on the terms and subject to the conditions set
forth herein and to permit such party to verify that the covenants of the other
parties contained in this Agreement have been complied with.
7.9 No Solicitation. The Company acknowledges that Parent has
incurred and will incur substantial third party fees and internal costs in
performing its due diligence investigation and performing its other covenants
and agreements hereunder. In consideration of the efforts Parent has undertaken
and proposes to undertake and in order to facilitate the transactions
contemplated hereby, the Company agrees that prior to the termination pursuant
to Section 11 of the obligations of the parties to consummate the Merger, it
will not, nor shall it authorize or permit any of its Affiliates or any officer,
director, employee, investment banker, attorney or other adviser or
representative of the Company or any of its Affiliates to, (i) solicit,
initiate, or encourage the submission of, any Acquisition Proposal, (ii) enter
into any agreement with respect to any Acquisition Proposal, or (iii) except to
the extent required by law as advised by counsel in writing, participate in any
discussions or negotiations regarding, or furnish to
31
37
any person any information for the purpose of facilitating the making of, or
take any other action to facilitate any inquiries or the making of, any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal. The Company promptly shall advise Parent of any Acquisition Proposal
and any inquiries with respect to any Acquisition Proposal. "Acquisition
Proposal" means any proposal for a merger or other business combination
involving the Company or any of its Affiliates or any proposal or offer to
acquire in any manner, directly or indirectly, an equity interest in the Company
or any of its Affiliates, any voting securities of the Company or any of its
Affiliates or a substantial portion of the assets of the Company.
7.10 Removal of Assets. The Company shall not knowingly permit
the removal from the Company's premises of any of the assets, books or records
of the Company by any of the Stockholders or any of the Company's directors,
officers or employees.
7.11 [Reserved]
7.12 Assumption of Stock Options.
7.12.1.1 At the Effective Time, Parent shall
agree to assume the obligations of the Company with respect to
the Options, with the effect that (i) each of the Options shall
remain outstanding in accordance with the terms of the Plan and
the agreements reflecting the terms and conditions of each of
the Options, and (ii) upon each exercise of an Option after the
Effective Time the holder of such option shall receive, in lieu
of shares of Company Common Stock, that number of Optionholder
Merger Shares equal to (i) the number of shares of Company
Common Stock that would have been issuable upon exercise of such
Option, multiplied by (ii) the Merger Ratio (adjusted to take
into account any stock split, stock dividend or similar change
in capitalization after the Effective Time. Parent agrees to
file with the SEC a registration statement on Form S-8 covering
the THQ Shares that will be issuable upon the exercise of the
Options not later than 60 days after the Closing Date.
7.13 Consents of Third Parties and Governmental Approvals.
7.13.1 The Stockholders and the Company will act
diligently and reasonably to secure, before the Effective Time, the
consent, approval or waiver, in form and substance reasonably
satisfactory to Parent, from any party to any Company Agreement required
to satisfy the condition set forth in Section 8.5, including without
limitation the release of any guaranties that the Company or any the
Shareholders, on behalf of the Company, have given; provided, however,
that the Company shall not make any agreement or understanding affecting
the Company or its assets or business as a condition for obtaining any
such consents or waivers except with the prior written consent of
Parent.
7.13.2 During the period prior to the Effective Time,
the parties hereto shall act diligently and reasonably, and shall
cooperate with each other, to secure any consents and approvals of any
Governmental Body required to be obtained by them in order to permit the
consummation of the transactions contemplated by this Agreement or to
otherwise satisfy the conditions set forth in Section 8.4; provided,
however, that the Company shall not make any agreement or understanding
affecting the Company or its assets or business as a condition for
obtaining any such consents or approvals except with the prior written
consent of Parent.
32
38
7.14 Fees and Expenses. Except as may otherwise be provided in
this Agreement, and subject to limit of $30,000 in the aggregate, Parent shall,
upon receipt of appropriate documentation, reimburse or pay on behalf of the
Company and the Stockholders for their costs and expenses (including the fees
and disbursements of their counsel, accountants and other financial, legal,
accounting or other advisors), incurred by the Company or any of the
Stockholders in connection with the preparation, negotiation, execution,
delivery and performance of this Agreement and each of the other documents and
instruments executed in connection with or contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby; provided,
however, that the payment of any fees and disbursements of counsel, accountants
and other financial, legal, accounting and other advisors retained by the
Company or any Stockholder for the purposes of instituting legal action to
construe or enforce this Agreement or any provision hereof shall be made solely
pursuant to Section 12.14 below. Any payment by Parent of fees or expenses in
excess of the limit described in this Section 7.14 ("Excess Expenses") shall be
recovered by Parent pursuant to Section 10.1 hereof.
7.15 [Reserved].
7.16 Preparation of Escrow Agreement. The parties shall prepare
and cause to be executed, prior to or concurrently with the Merger Filing, an
escrow agreement among the Company, Parent, the Stockholders' Representative and
the Escrow Agent (the "Escrow Agreement"). The Escrow Agreement shall, among
other matters, (i) appoint the Escrow Agent as the escrow agent thereunder; (ii)
provide for the deposit by Parent of the Escrow Shares into the Escrow at or
before the Merger Filing; (iii) provide for the release of Escrow Shares to
Parent in accordance with the terms thereof, (iv) provide for the procedures by
which the Parent Group Members may submit Claims Notices and by which the
Stockholders' Representative may challenge such Claims Notices; (v) provide for
the release of all Escrow Shares then in escrow to the Stockholders on the date
of issuance by Parent's auditor's of the audit report on Parent's financial
statements for its fiscal year ending December 31, 2000 (the "Audit Issuance
Date") (except to extent any such amounts are required to cover Losses or
Expenses for which a right to indemnification is asserted in Claim Notices); and
(vi) include such other provisions as are customary for such agreements or which
the Escrow Agent requires be included for its benefit. Parent shall pay all
fees, costs and expenses incurred in connection with the establishment and
administration of the Escrow Agreement.
7.17 Registration Rights. Parent agrees to provide to each of
the Effective Time Stockholders registration rights with respect to the THQ
Shares issued to them, on the terms and subject to the conditions set forth in
Exhibit C hereto.
7.18 Parallax Obligations. The Company and ▇▇▇▇▇ agree that
except as is provided in that certain side letter to Parent from the Company and
Parallax, dated as of the date hereof, all obligations that the Company owes to
Parallax have been satisfied as of the Closing Date.
7A. ACTION SUBSEQUENT TO THE MERGER FILING.
7A.1 Parallax Agreement. Within thirty (30) days after the
Effective Time, ▇▇▇▇▇ will use his best efforts to cause to be executed by
Parallax and ▇▇▇▇▇ an agreement to be prepared by Parent, whereby Parent will
purchase certain assets from Parallax.
7A.2 Principal Business Location of the Company. If ▇▇▇▇▇'▇
employment by Parent is terminated by Parent other than for cause, Parent agrees
to maintain the principal business location of the Company in Champaign,
Illinois until March 1, 2004.
33
39
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGERCO
The obligations of Parent and Mergerco to cause the Merger
Filing shall, except to the extent waived by Parent, be subject to the
satisfaction, on or prior to the Merger Filing, of the following conditions:
8.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by the Company in the performance of
its covenants and agreements herein or in any of the Company Ancillary
Agreements. None of the representations and warranties of the Company contained
or referred to herein shall be untrue and incorrect in any respect (in the case
of any representation or warranty containing any materiality qualification) or
in any material respects (in the case of any representation and warranty without
any materiality qualification) either when made or as of the Effective Time (in
each case, without regard to any Knowledge Qualification that may be included in
such representation and warranty), except for changes therein specifically
permitted by this Agreement or resulting from any transaction expressly
consented to in writing by Parent. There shall have been delivered to Parent and
Mergerco a certificate or certificates to such effect, dated the Closing Date
and signed on behalf of the Company by the President or any Vice President of
the Company.
8.2 No Changes to or Destruction of Property. Between the date
hereof and the Effective Time, there shall have been (i) no change or event
having a Material Adverse Effect on the Company; and (ii) no material adverse
federal or state legislative or regulatory change affecting the Company's
business; and there shall have been delivered to Parent and Mergerco a
certificate or certificates to such effect, dated the Closing Date and signed on
behalf of the Company by the President or any Vice President of the Company.
8.3 No Restraint or Litigation. (i) No order shall have been
entered in any Action before any Governmental Body, and no preliminary or
permanent injunction by a court of competent jurisdiction shall have been issued
and remain in effect, that would have the effect of (a) making the purchase of,
or payment for, any shares of Company Common Stock pursuant to this Agreement
illegal, or (b) otherwise making the consummation of the Merger illegal; and
(ii) no Action shall be pending before any Governmental Body or any such court
against the Company, Parent or Mergerco that challenges the legality or validity
of this Agreement, the Merger or any of the transactions contemplated hereby or
seek damages or any other remedy in connection therewith.
8.4 Necessary Governmental Approvals. The parties shall have
received all approvals and actions of or by all Governmental Bodies which are
necessary to consummate the transactions contemplated hereby, which are either
specified in Schedule 5.5 or otherwise required to be obtained prior to the
Effective Time by applicable Requirements of Laws or which are necessary to
prevent a Material Adverse Effect on the Company.
8.5 Necessary Consents. The Company shall have received
consents, in form and substance reasonably satisfactory to Mergerco and Parent,
to the transactions contemplated hereby from the other parties to all contracts,
leases, agreements and permits to which the Company is a party or by which the
Company or any of its assets is affected and which are specified in Schedule 5.5
or are otherwise necessary to prevent a Material Adverse Effect on the Company.
8.6 Stockholder Approval; No Dissenting Shares. This Agreement
shall have been unanimously adopted by all of the Stockholders, no Stockholder
shall have delivered a written demand for appraisal of its Company Common Stock
pursuant to the DGCL and there shall have been delivered to
34
40
Parent and Mergerco a certificate or certificates to such effect, dated the
Closing Date and signed on behalf of the Company by the President or any Vice
President of the Company.
8.7 [Reserved]
8.8 Certification of Shares and Options Outstanding. On the
Closing Date, the Company shall deliver a certification of its corporate
secretary to the effect that the number of shares of Company Common Stock and
the number of Options outstanding as of the Closing Date is consistent with the
representations made in Section 5.3.2.
8.9 Comfort Letters. Parent shall have received comfort letters
addressed to Parent from Deloitte & Touche LLP, the independent public
accountants for Parent, and from such investment banking firm as may be selected
by Parent, dated the Closing Date, in form and substance reasonably satisfactory
to Parent, covering such matters as Parent shall reasonably request.
8.10 Pooling-of-Interests. No event shall have occurred or facts
discovered that might preclude Parent from accounting for the Merger as a
pooling-of-interests.
8.11 Consent of Optionholders. Each Effective Time Optionholder
shall have executed and delivered to Company a Consent of Optionholder.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to cause the Merger Filing shall,
except to the extent waived by the Company, be subject to the satisfaction, on
or prior to the Merger Filing, of the following conditions:
9.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Parent or Mergerco in the
performance of any of their respective covenants and agreements herein. None of
the representations and warranties of Parent or Mergerco contained or referred
to herein shall be untrue and incorrect in any respect (in the case of any
representation or warranty containing any materiality qualification) or in any
material respects (in the case of any representation and warranty without any
materiality qualification), either when made or as of the Effective Time (in
each case, without regard to any Knowledge Qualification that may be included in
such representation and warranty), except for changes therein specifically
permitted by this Agreement or resulting from any transaction expressly
consented to in writing by the Company. There shall have been delivered to the
Company a certificate or certificates to such effect, dated the Closing Date and
signed on behalf of Parent by the President or any Vice President of Parent and
on behalf of Mergerco by the President or any Vice President of Mergerco.
9.2 No Restraint or Litigation. (i) No order shall have been
entered in any Action before any Governmental Body, and no preliminary or
permanent injunction by a court of competent jurisdiction shall have been issued
and remain in effect, that would have the effect of (a) making the purchase of,
or payment for, any shares of Company Common Stock pursuant to this Agreement
illegal, or (b) otherwise making the consummation of the Merger illegal; and
(ii) no Action shall be pending before any Governmental Body or any such court
against the Company that challenges the legality or validity of this Agreement,
the Merger or any of the transactions contemplated hereby or seek damages or any
other remedy in connection therewith.
35
41
9.3 Necessary Governmental Approvals. The Company shall have
received all approvals and actions of or by all Governmental Bodies necessary to
consummate the transactions contemplated hereby, which are required to be
obtained prior to the Effective Time by applicable Requirements of Laws.
9.4 Stockholder Action. This Agreement shall have been approved
and adopted by the Company's Stockholders as required by DGCL.
9.5 Approval of the Parent's Board of Directors. This Agreement
shall have been ratified and approved by Parent's board of directors.
10. INDEMNIFICATION.
10.1 Indemnification of Parent Group Members.
10.1.1 To the extent set forth under Section 10.1.2,
each Stockholder Group Member shall jointly and severally indemnify and
hold harmless each Parent Group Member from and against any and all
Losses and Expenses incurred by such Parent Group Member in connection
with or arising from:
10.1.1.1 any breach or failure to perform, or
any third party claim that if successful would constitute a
breach or failure to perform, by the Company of any of its
agreements, covenants or obligations in this Agreement or in any
Company Ancillary Agreement to be performed prior to the
Effective Time; or
10.1.1.2 any breach, or any third party claim
that if successful would constitute a breach, of any warranty,
or the inaccuracy, or any third party claim that if successful
would constitute an inaccuracy, of any representation or
warranty of Company, contained or referred to in this Agreement
(including any misrepresentation or warranty in, or omission
from, any Schedule, Exhibit, statement, certificate, report or
other document furnished or to be furnished by or on behalf of
the Company or any Stockholder pursuant hereto or thereto).
10.1.1.3 any Excess Expense arising under
Section 7.14 hereto.
10.1.2 Except as limited below, Parent shall have the
right to set off or recover any Losses or Expenses, with respect to
which Parent is entitled to indemnification under this Section 10.1
against any payments otherwise payable to any Stockholder Group Member
from the Escrow in accordance with the terms of the Escrow Agreement,
provided that (i) the aggregate amount of Losses or Expenses in
connection with or arising from the fraud, willful deceit or intentional
misrepresentation of the Company or any of the Effective Time
Stockholders shall be limited to $10,000,000, and (ii) the aggregate
amount of Losses or Expenses in connection with or arising from any
situation other that that described in subsection (i) of this Section
10.1.2 shall be limited to $5,000,000, provided further that, with
respect to any breach of Section 5.7.2 hereof, the amount of any such
debts, liabilities or obligations in excess of the amounts provided
thereunder may be reduced by the amount of any assets of the Company in
excess of those reflected on the Balance Sheet or that would have been
reflected on the Balance Sheet if the Balance Sheet was prepared on an
accrual accounting basis in accordance with GAAP. The parties hereto
hereby agree that for purposes of this Section 10, the Escrow Shares
shall be valued at $20.00 per share.
36
42
10.2 Indemnification by Parent and the Surviving Corporation.
Parent and the Surviving Corporation shall jointly and severally indemnify and
hold harmless each Stockholder Group Member from and against any and all Losses
and Expenses incurred by such Stockholder Group Member in connection with or
arising from:
10.2.1 any breach or failure to perform, or any third
party claim that if successful would constitute a breach or failure to
perform, by Parent or Mergerco of any of their respective agreements,
covenants or obligations in this Agreement or in any Parent Ancillary
Agreement; or
10.2.2 any breach, or any third party claim that if
successful would constitute a breach, of any warranty or the inaccuracy,
or any third party claim that if successful would constitute an
inaccuracy, of any representation or warranty of Parent or Mergerco
contained or referred to in this Agreement (including any
misrepresentation or warranty in, or omission from, any Schedule,
Exhibit, statement, certificate, report or other document furnished or
to be furnished by or on behalf of Parent or Mergerco pursuant hereto).
10.3 Notice of Claims.
10.3.1 If any Parent Group Member (with respect to
Section 10.1) or any Stockholder Group Member (with respect to Section
10.2) believes that it has suffered or incurred any Loss or incurred any
Expense, such Parent Group Member or Stockholder Group Member, as the
case may be (the "Indemnified Person"), shall so notify the parties
obligated to provide indemnification to such Indemnified Person (the
"Indemnitor") (which, in the event such notice is given by a Parent
Group Member, shall be given to the Stockholders' Representative)
promptly in writing describing such Loss or Expense, the amount thereof,
if known, and the method of computation of such Loss or Expense, all
with reasonable particularity and containing a reference to the
provisions of this Agreement, any certificate delivered pursuant hereto
or any Parent Ancillary Agreement or Stockholder Ancillary Agreement in
respect of which such Loss or Expense shall have occurred (such written
notification being sometimes hereinafter referred to as the "Claim
Notice"); provided, however, that an omission by the Indemnified Person
to give notice as provided herein shall not relieve the Indemnitor of
its indemnification obligation under this Section 10 except (i) to the
extent that such omission results in a failure of actual notice to the
Indemnitor and such Indemnitor is materially damaged as a result of such
failure to give notice, or (ii) if the Indemnified Person fails to give
notice prior to the termination of the indemnity obligation. If any
Action is instituted by or against a third party with respect to which
any Indemnified Person intends to claim any liability or expense as Loss
or Expense under this Section 10, such Indemnified Person shall promptly
notify the Indemnitor of such Action as specified in this Section 10.3.
10.3.2 The Indemnitor shall have the right, at its own
cost, to elect to assume the defense of any third-party claim, demand,
lawsuit or other proceeding in connection with which the Indemnified
Person has claimed indemnification hereunder (the "Election"), within
fifteen (15) Business Days following notice thereof, upon its written
unconditional acknowledgment of its obligation to indemnify the
Indemnified Person with respect to such claim, provided, however, in the
event the Indemnitor making the Election is any Stockholder Group
Member, the choice of legal counsel to defend such claim shall require
the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed, provided further that, in the event
there exists (a) a conflict or potential conflict between the interests
of the Indemnitor and the Indemnified Person, or (b) additional defenses
available to the Indemnified
37
43
Person, the Indemnified Person shall be entitled to separate counsel,
paid for by the Indemnitor. If the Indemnitor makes the Election, (i) it
shall keep the Indemnified Person informed as to the status of such
matter and shall promptly send copies of all pleadings to the
Indemnified Person, and (ii) with respect to any issue involved in such
claim, it shall have the sole right, with respect to claims or portions
of claims seeking monetary damages only, to settle or otherwise dispose
of such claim on such terms as it, in its sole discretion, shall deem
appropriate; provided, however, that the consent of the Indemnified
Person to the settlement or disposition shall be required if such
settlement or disposition shall result in any liability to, equitable
relief against, as admission of liability by, or adverse business effect
on the Indemnified Person, which consent shall not be unreasonably
withheld or delayed. If the Indemnitor does not make the Election, the
Indemnitor shall have the right to participate, at it own cost, in the
defense of such claim, and the Indemnified Party shall have the right to
contest, compromise or settle such claim in the exercise of its
reasonable judgment; provided, however, that the consent of the
Indemnitor to any compromise or settlement of such claim shall be
required if such compromise or settlement shall require any payment by
the Indemnitor or otherwise result in any liability to the Indemnitor,
which consent shall not be unreasonably withheld or delayed.
10.3.3 In calculating any Loss or Expense there shall be
deducted (i) any insurance recovery in respect thereof (and no right of
subrogation shall accrue hereunder to any insurer), and (ii) the amount
of any tax benefit to the Indemnified Person (or any of its Affiliates)
with respect to such Loss or Expense (after giving effect to the tax
effect of receipt of the indemnification payments).
10.3.4 After the giving of any Claim Notice, the amount
of indemnification to which an Indemnified Person shall be entitled
under this Section 10 shall be determined: (i) by a written agreement
between the Indemnified Person and the Indemnitor; (ii) in accordance
with the final determination of a court of competent jurisdiction; or
(iii) by any other means to which the Indemnified Person and the
Indemnitor shall agree.
10.4 Expiration of Indemnification.
10.4.1 In the event the Merger is consummated, the
Parent Group Members' right to indemnification pursuant to Section 10.1
shall expire on the Audit Issuance Date; provided, however, that if any
Claim Notice is given by a Parent Group Member prior to the Audit
Issuance Date, such Parent Group Member's right to indemnification in
respect of the matters giving rise to such Claim Notice (i) shall
continue until such matters are finally terminated or otherwise resolved
between such Parent Group Member and the Stockholders' Representative or
by a court of competent jurisdiction and all amounts, if any, payable
hereunder in respect of those matters are finally determined and (ii)
subject to the limits set forth in Section 10.1.2 hereof, shall extend
to all Losses and Expenses that are the subject of that indemnification
obligation, whether incurred before or after such Claim Notice is given.
10.4.2 In the event the Merger is consummated, the
Stockholder Group Members' right to indemnification pursuant to Section
10.2 shall expire on the Audit Issuance Date; provided, however, that if
any Claim Notice is given by the a Stockholder Group Member prior to the
Audit Issuance Date, such Stockholder Group Member's right to
indemnification in respect of the matters giving rise to such Claim
Notice (i) shall continue until such matters are finally terminated or
otherwise resolved between such Stockholder Group Member, Parent and the
Surviving Corporation or by a court of competent jurisdiction and all
amounts, if any, payable hereunder in respect of those matters are
finally determined and paid by Parent and/or the
38
44
Surviving Corporation, and (ii) shall extend to all Losses and Expenses
that are the subject of that indemnification obligation, whether
incurred before or after such Claim Notice is given.
10.5 Exclusive Remedy Following the Merger. In the event that
the Merger is consummated, any claim against any party hereto for any breach of
this Agreement, the Company Ancillary Agreements or the Parent Ancillary
Agreements or in connection with any of the transactions contemplated hereby or
thereby shall be made solely pursuant to this Section 10, provided, however,
that if any of the Company Ancillary Agreements or the Parent Ancillary
Agreements, by their terms, provide for remedies other than those provided in
this Section 10 ("Ancillary Remedies"), such Ancillary Remedies shall be the
sole remedy for such Company Ancillary Agreement or Parent Ancillary Agreement.
11. TERMINATION.
11.1 Termination Rights. Notwithstanding anything contained in
this Agreement to the contrary notwithstanding, the obligations of the parties
to consummate the Merger may be terminated at any time prior to the Effective
Time:
11.1.1 By the mutual consent of all of the parties
hereto;
11.1.2 By Parent and Mergerco or the Company if the
Merger Filing shall not have occurred on or before August 31, 2000 (or
such later date as may be mutually agreed to by Parent and the Company);
11.1.3 By Parent and Mergerco in the event of any
material breach by the Company or any of the Stockholders of any of
their respective agreements, representations or warranties contained
herein and, with respect to any such breach that is curable, the failure
of Company or such Stockholder to cure such breach within seven days
after receipt of notice from Parent requesting that such breach be
cured; or
11.1.4 By the Company in the event of any material breach
by Parent or Mergerco of any of their respective agreements,
representations or warranties contained herein and, with respect to any
breach that is curable, the failure of Parent to cure such breach, or
cause Mergerco to cure such breach, within seven days after receipt of
notice from the Company requesting that such breach be cured.
11.2 Notice of Termination. Any party desiring to terminate the
obligation of the parties to consummate the Merger this Agreement pursuant to
Section 11.1 (other than Section 11.1.1) shall give notice of such termination
to each of the other parties to this Agreement, identifying in such notice the
provision under which such termination is being effected.
11.3 Effect of Termination. In the event that the obligation of
the parties to consummate the Merger shall be terminated pursuant to this
Section 11, all further obligations of the parties under this Agreement shall be
terminated without further liability of any party to the others; provided,
however, that such termination shall not relieve any party from liability for
its breach of this Agreement, or from such party's obligations under Section 10.
39
45
12. GENERAL PROVISIONS.
12.1 Survival of Obligations. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement for the periods
set forth herein.
12.2 No Public Announcement. No party hereto shall, without the
approval of all of the other parties, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
to the extent that any of the parties shall be so obligated by law, in which
case such party shall so advise the other parties of such determination and the
basis therefor and will either prepare a joint statement for public release or
will permit the other parties to review and approve the content of such
announcement not less than 24 hours prior to its release; provided, however,
that the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement.
12.3 Notices. All notices, requests, demands, consents,
approvals, designations and other communications called for or contemplated by
this Agreement shall be in writing and shall be deemed given to the party to
whom addressed (i) when delivered to such party by hand or by facsimile
transmission, (ii) one Business Day after being sent to such party by overnight
courier, or (iii) three Business Days after being sent to such party by
registered or certified mail (return receipt requested, postage prepaid), in
each case at the following address, or at such other address as such party may
designate by notice in the manner aforesaid:
If to the Company (after the Effective Time), Parent or Mergerco, to:
THQ Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company (prior to the Effective Time):
40
46
Volition, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to any of the Stockholders
c/o Volition, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
12.4 Successors and Assigns; No Third-Party Beneficiaries.
12.4.1 The rights of each party under this Agreement
shall not be assignable by such party prior to the Effective Time
without the written consent of each of the other parties. Following the
Effective Time, any party may assign any of its rights hereunder, but no
such assignment shall relieve it of its obligations hereunder.
12.4.2 This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted
assigns. The successors and permitted assigns hereunder shall include
without limitation, in the case of Parent, any permitted assignee as
well as the successors in interest to such permitted assignee (whether
by merger, liquidation (including successive mergers or liquidations) or
otherwise). Except as provided in Sections 7.17, 7A.2 and 10 in the
event of the consummation of the Merger with respect to registration
rights and the rights and remedies of the Stockholders, nothing in this
Agreement, expressed or implied, is intended or shall be construed to
confer upon any Stockholder or other Person other than (i) the parties
hereto and their successors and permitted assigns, and (ii) the
Stockholders' Representative, in his capacity as such, any right, remedy
or claim under or by reason of this Agreement or the transactions
contemplated hereby.
12.5 Entire Agreement; Amendments. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein; and such agreements and other
documents supersede all prior agreements and understandings between or among any
of the
41
47
parties hereto. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the parties hereto.
12.6 Rules of Construction. Whenever in this Agreement the
context so suggests, references to the masculine shall be deemed to include the
feminine and the neuter, references to the singular shall be deemed to include
the plural, and references to "or" shall be deemed to be disjunctive but not
necessarily exclusive. No provision of this Agreement shall be construed in
favor of or against any party hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof, nor shall the
interpretation of this Agreement be affected by reason that this Agreement or
any provision hereof is inconsistent with any prior draft hereof. Except where
expressly provided to the contrary, each reference herein to a "Section" is to a
Section of this Agreement; each reference herein to a Section includes all
Sections subsidiary to the Section referred to. The words "herein," "hereof,"
and "hereunder," and other words of similar import, refer to this Agreement as a
whole and not to any particular Article, Section or subsection, and the word
"including" means "including but not limited to." Titles and headings to
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Except as expressly stated to the contrary herein, all
dollar amounts in this Agreement refer to lawful money of the United States of
America.
12.7 Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
12.8 Equitable Relief. Each of the parties hereto agrees that a
monetary remedy for a breach of this Agreement would be inadequate and would be
impracticable and extremely difficult to prove, and further agrees that such a
breach would cause the other party irrevocable harm, and that either party shall
be entitled to temporary and permanent injunctive relief without the necessity
of proving actual damages and without the necessity of posting a bond or making
any undertaking in connection therewith. Any such requirement of a bond or
undertaking is hereby waived by the parties.
12.9 Partial Invalidity. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
12.10 Business Day. Whenever this Agreement requires that an
action be taken or a notice be given on a date that would otherwise not be a
Business Day, the time period for taking such action or giving such notice shall
be extended to the first day thereafter that is a Business Day.
12.11 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be
42
48
considered one and the same agreement, and shall become binding when one or more
counterparts have been signed by each of the parties hereto and delivered to
each of the other parties.
12.12 Further Assurances. From time to time after the Effective
Time, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Mergerco, the
Company or otherwise, such deeds and other instruments and to take or cause to
be taken such further or other action as shall be necessary or desirable in
order to vest or perfect in or to confirm, of record or otherwise, in the
Surviving Corporation title to, and possession of, all of the property, rights,
privileges, powers, immunities and franchises of Mergerco and the Company and
otherwise carry out the purposes of this Agreement.
12.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Delaware.
12.14 Attorneys' Fees. In the event any legal action is
instituted to construe or enforce this Agreement or any provision hereof, the
prevailing party shall be entitled to recover reasonable attorneys' fees. Such
recovery shall not be limited by the terms of Section 7.14 hereof.
* * *
43
49
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
VOLITION, INC.,
a Delaware corporation
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
VOLITION ACQUISITION COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Vice President
THQ INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President -
Finance and Administration
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
SIGNATURE PAGE 1 OF 1
