EXHIBIT 1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND BETWEEN
DESKTOP DATA, INC.
AND
INDIVIDUAL, INC.
DATED AS OF NOVEMBER 2, 1997
TABLE OF CONTENTS Page
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ARTICLE I -- THE MERGER...................................................... 2
SECTION 1.01. THE MERGER. ................................................. 2
SECTION 1.02. EFFECTIVE TIME. ............................................. 2
SECTION 1.03. EFFECT OF THE MERGER......................................... 2
SECTION 1.04. CERTIFICATE OF INCORPORATION; BY-LAWS........................ 3
SECTION 1.05. DIRECTORS AND OFFICERS....................................... 3
SECTION 1.06. EFFECT ON CAPITAL STOCK...................................... 3
SECTION 1.07. EXCHANGE OF CERTIFICATES..................................... 4
SECTION 1.08. STOCK TRANSFER BOOKS......................................... 6
SECTION 1.09. NO FURTHER OWNERSHIP RIGHTS IN INDIVIDUAL COMMON STOCK....... 6
SECTION 1.10. LOST, STOLEN OR DESTROYED CERTIFICATES....................... 6
SECTION 1.11. TAX AND ACCOUNTING CONSEQUENCES.............................. 6
SECTION 1.12. TAKING OF NECESSARY ACTION; FURTHER ACTION................... 6
SECTION 1.13. MATERIAL ADVERSE EFFECT...................................... 7
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL................... 7
SECTION 2.01. ORGANIZATION OF INDIVIDUAL................................... 7
SECTION 2.02. CAPITAL STRUCTURE............................................ 7
SECTION 2.03. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK.................... 8
SECTION 2.04. AUTHORITY.................................................... 8
SECTION 2.05. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT
APPLICABLE................................................. 9
SECTION 2.06. SEC FILINGS; INDIVIDUAL FINANCIAL STATEMENTS................. 10
SECTION 2.07. ABSENCE OF CERTAIN CHANGES OR EVENTS......................... 10
SECTION 2.08. TAXES........................................................ 11
SECTION 2.09. INTELLECTUAL PROPERTY........................................ 11
SECTION 2.10. COMPLIANCE; PERMITS; RESTRICTIONS............................ 12
SECTION 2.11. LITIGATION................................................... 12
SECTION 2.12. BROKERS' AND FINDERS' FEES................................... 12
SECTION 2.13. EMPLOYEE BENEFIT PLANS....................................... 13
SECTION 2.14. ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF EQUIPMENT.... 13
SECTION 2.15. ENVIRONMENTAL MATTERS........................................ 13
SECTION 2.16. LABOR MATTERS................................................ 14
SECTION 2.17. AGREEMENTS, CONTRACTS AND COMMITMENTS........................ 15
SECTION 2.18. POOLING OF INTERESTS......................................... 16
SECTION 2.19. CHANGE OF CONTROL PAYMENTS................................... 16
SECTION 2.20. STATEMENTS; PROXY STATEMENT/PROSPECTUS....................... 16
SECTION 2.21. BOARD APPROVAL............................................... 17
SECTION 2.22. FAIRNESS OPINION............................................. 17
SECTION 2.23. MINUTE BOOKS................................................. 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF DESKTOP........................ 17
SECTION 3.01. ORGANIZATION OF DESKTOP...................................... 17
SECTION 3.02. DESKTOP CAPITAL STRUCTURE.................................... 17
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SECTION 3.03. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK.................... 18
SECTION 3.04. AUTHORITY.................................................... 18
SECTION 3.05. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT
APPLICABLE................................................... 20
SECTION 3.06. SEC FILINGS; DESKTOP FINANCIAL STATEMENTS.................... 20
SECTION 3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS......................... 21
SECTION 3.08. TAXES........................................................ 21
SECTION 3.09. INTELLECTUAL PROPERTY........................................ 21
SECTION 3.10. COMPLIANCE; PERMITS; RESTRICTIONS............................ 22
SECTION 3.11. LITIGATION................................................... 22
SECTION 3.12. BROKERS' AND FINDERS' FEES................................... 23
SECTION 3.13. EMPLOYEE BENEFIT PLANS....................................... 23
SECTION 3.14. ABSENCE OF LIENS AND ENCUMBRANCES; CONDITIONS OF EQUIPMENT... 23
SECTION 3.15. ENVIRONMENTAL MATTERS........................................ 24
SECTION 3.16. LABOR MATTERS................................................ 24
SECTION 3.17. AGREEMENTS, CONTRACTS AND COMMISSIONS........................ 24
SECTION 3.18. POOLING OF INTERESTS......................................... 26
SECTION 3.19. CHANGE OF CONTROL PAYMENTS................................... 26
SECTION 3.20. STATEMENTS; PROXY STATEMENTS/PROSPECTUS...................... 26
SECTION 3.21. BOARD APPROVAL............................................... 26
SECTION 3.22. FAIRNESS OPINION............................................. 27
SECTION 3.23. MINUTE BOOKS................................................. 27
ARTICLE IV -- CONDUCT OF BUSINESS PENDING THE MERGER......................... 27
SECTION 4.01 CONDUCT OF BUSINESS........................................... 27
SECTION 4.02. NO SOLICITATION.............................................. 27
ARTICLE V -- ADDITIONAL INFORMATION.......................................... 30
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER
FILINGS...................................................... 32
SECTION 5.02. MEETINGS OF STOCKHOLDERS..................................... 33
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY....................... 33
SECTION 5.04. CONSENTS, APPROVALS.......................................... 34
SECTION 5.05. STOCK OPTIONS................................................ 34
SECTION 5.06. INDIVIDUAL EMPLOYEE STOCK PURCHASE PLAN...................... 35
SECTION 5.07. INDIVIDUAL AFFILIATE AGREEMENT............................... 36
SECTION 5.08. DESKTOP AFFILIATE AGREEMENT.................................. 36
SECTION 5.09. INDEMNIFICATION AND INSURANCE................................ 36
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS.............................. 37
SECTION 5.11. FURTHER ACTION/TAX TREATMENT................................. 38
SECTION 5.12. PUBLIC ANNOUNCEMENTS......................................... 38
SECTION 5.13. LISTING OF DESKTOP COMMON STOCK.............................. 38
SECTION 5.14. CONVEYANCE TAXES............................................. 38
SECTION 5.15. ACCOUNTANTS' LETTERS......................................... 38
SECTION 5.16. POOLING ACCOUNTING TREATMENT................................. 39
SECTION 5.17. THIRD PARTY CONSENTS......................................... 39
SECTION 5.18. TAX-FREE REORGANIZATION...................................... 39
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SECTION 5.19. BOARD OF DIRECTORS OF DESKTOP............................... 39
SECTION 5.20. OFFICERS OF DESKTOP......................................... 39
SECTION 5.21. CHANGE OF NAME.............................................. 39
SECTION 5.22. FORM S-8.................................................... 40
ARTICLE VI -- CONDITIONS TO THE MERGER...................................... 40
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. 40
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF DESKTOP............. 40
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATIONS OF INDIVIDUAL.......... 42
ARTICLE VII -- TERMINATION.................................................. 43
SECTION 7.01. TERMINATION................................................. 43
SECTION 7.02. NOTICE OF TERMINATION; EFFECT OF TERMINATION................ 45
SECTION 7.03. FEES AND EXPENSES........................................... 45
ARTICLE VIII -- GENERAL PROVISIONS.......................................... 47
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 47
SECTION 8.02. NOTICES..................................................... 47
SECTION 8.03. CERTAIN DEFINITIONS......................................... 48
SECTION 8.04. AMENDMENT................................................... 48
SECTION 8.05. WAIVER...................................................... 49
SECTION 8.06. HEADINGS.................................................... 49
SECTION 8.07. SEVERABILITY................................................ 49
SECTION 8.08. ENTIRE AGREEMENT............................................ 49
SECTION 8.09. ASSIGNMENT.................................................. 49
SECTION 8.10. PARTIES IN INTEREST......................................... 49
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER, REMEDIES CUMULATIVE....... 49
SECTION 8.12. GOVERNING LAW............................................... 49
SECTION 8.13. COUNTERPARTS................................................ 50
Exhibits: Exhibit A: Desktop Stock Option Agreement
Exhibit B: Individual Stock Option Agreement
Exhibit C: Form of Desktop Participation Agreement
Exhibit D: Form of Individual Participation Agreement
Exhibit E: Form of Individual Affiliate Agreement
Exhibit F: Form of Desktop Affiliate Agreement
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TH&T Draft 11/11/97
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of November
2, 1997 (this "Agreement"), between Desktop Data, Inc., a Delaware corporation
---------
("Desktop"), and Individual, Inc., a Delaware corporation ("Individual"),
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W I T N E S S E T H :
WHEREAS, the Boards of Directors of Desktop and Individual have each
determined that it is advisable and in the best interests of their respective
stockholders for Desktop to enter into a business combination with Individual
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors
of Desktop and Individual have each approved the merger (the "Merger") of
Individual with and into Desktop in accordance with the applicable provisions of
Delaware General Corporation Law ("Delaware Law"), and upon the terms and
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subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of
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Individual's common stock, $.01 par value (the "Individual Common Stock"), shall
-----------------------
be converted into the right to receive the Merger Consideration (as defined in
Section 1.07(b)), upon the terms and subject to the conditions set forth herein;
WHEREAS, Desktop and Individual intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder, and to cause the Merger to
qualify as a reorganization under the provisions of Section 368(a) of the Code;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Desktop's and Individual's willingness to enter into
this Agreement, Desktop shall execute and deliver a Stock Option Agreement in
favor of Individual in substantially the form attached hereto as Exhibit A (the
"Desktop Stock Option Agreement") and Individual shall execute and deliver a
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Stock Option Agreement in favor of Desktop in substantially the form attached
hereto as Exhibit B (the "Individual Stock Option Agreement" and, together with
---------------------------------
the Desktop Stock Option Agreement, the "Stock Option Agreements"). The Board
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of Directors of Desktop and Individual have each approved the Stock Option
Agreements;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Desktop's and Individual's willingness to enter into
this Agreement, the Chief Executive Officer of Desktop and certain other
affiliates of Desktop shall enter into a Participation Agreement in
substantially the form attached hereto as Exhibit C (the "Desktop Participation
---------------------
Agreements"), and the Chief Executive Officer of Individual and certain other
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affiliates of Individual shall enter into a Participation Agreement in
substantially the form
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attached hereto as Exhibit D (the "Individual Participation Agreements" and,
-----------------------------------
collectively with the Desktop Participation Agreements, the "Participation
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Agreements");
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WHEREAS, Desktop and Individual desire to make certain representations
and warranties and other agreements in connection with the Merger; and
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated hereby shall be accounted for as a pooling of interests under U.S.
generally accepted accounting principles ("GAAP");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Desktop and Individual hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER.
(a) Effective Time. At the Effective Time (as defined in Section
1.02), and subject to and upon the terms and conditions of this Agreement and
Delaware Law, Individual shall be merged with and into Desktop, the separate
corporate existence of Individual shall cease, and Desktop shall continue as the
surviving corporation. Desktop as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.01 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Xxxxx,
Xxxxxxx & Xxxxxxxxx, LLP, High Street Tower, 000 Xxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, unless another date, time or place is agreed to in writing
by the parties hereto.
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing a Certificate
of Merger in accordance with the relevant provisions of Delaware Law (the
"Certificate of Merger"), together with any required related certificates, with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of, Delaware Law (the
time of such filing being the "Effective Time").
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SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the
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Effective Time all the property, rights, privileges, powers and franchises of
Individual shall vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of Individual shall become the debts, liabilities,
obligations and duties of the Surviving Corporation.
SECTION 1.04. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) Certificate of Incorporation. The Certificate of Incorporation of
Desktop, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation;
provided, however, that the Certificate of Incorporation of the Surviving
Corporation shall be amended as of the Effective Time (i) to increase the number
of authorized shares of capital stock of the Surviving Corporation and (ii) so
that the name of the Surviving Corporation is "NewsEDGE Corporation."
(b) By-Laws. The By-Laws of Desktop, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by Delaware Law, the Certificate of Incorporation
of the Surviving Corporation and such By-Laws.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Desktop
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Desktop immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Desktop, Individual
or the holders of any of the following securities:
(a) Conversion of Securities. Every Share issued and outstanding
immediately prior to the Effective Time (excluding any shares to be canceled
pursuant to Section 1.06(b)) shall be converted, subject to Section 1.06(e),
into the right to receive one-half (1/2) of a share (the "Exchange Ratio") of
validly issued, fully paid and nonassessable common stock of Desktop, $.01 par
value per share ("Desktop Common Stock").
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(b) Cancellation. Each Share held in the treasury of Individual and
each Share owned by Desktop or by any direct or indirect wholly owned subsidiary
of Individual or Desktop immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Stock Options; Employee Stock Purchase Plan. All options to
purchase Individual Common Stock then outstanding under Individual's Amended and
Restated 1989 Stock Option Plan, 1995 Incentive Stock Option Plan, 1996 Non-
Employee Director Stock
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Option Plan, 1996 Stock Option Plan and Amended and Restated 1996 Stock Plan
(collectively, the "Individual Stock Option Plans") shall be assumed by Desktop
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in accordance with Section 5.05. Immediately prior to the Effective Time, all
rights to purchase Individual Common Stock then outstanding under Individual's
1996 Employee Stock Purchase Plan (the "Individual Employee Stock Purchase
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Plan") will be assumed by Desktop in accordance with Section 5.06.
(d) Warrants. All warrants to purchase Individual Common Stock (the
"Warrants") then outstanding shall be assumed by Desktop in accordance with
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Section 5.05.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Desktop Common Stock or Individual Common Stock), reorganization,
recapitalization or other like change with respect to Desktop Common Stock or
Individual Common Stock occurring after the date hereof and prior to the
Effective Time.
(f) Fractional Shares. No fraction of a share of Desktop Common Stock
will be issued, but in lieu thereof each holder of Individual Common Stock who
would otherwise be entitled to a fraction of a share of Desktop Common Stock
(after aggregating all fractional shares of Desktop Common Stock to be received
by such holder) shall receive from Desktop an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of a share of Desktop
Common Stock for the ten (10) most recent days that Desktop Common Stock has
traded ending on the trading day immediately prior to the Effective Time, as
reported on the Nasdaq Stock Market ("Nasdaq").
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SECTION 1.07. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Desktop shall supply, or shall cause to be
supplied, to or for the account of a bank or trust company designated by Desktop
(the "Exchange Agent"), in trust for the benefit of the holders of Individual
Common Stock, for exchange in accordance with this Section 1.07, through the
Exchange Agent, certificates evidencing the Desktop Common Stock issuable
pursuant to Section 1.06 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Desktop will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding Shares (the "Certificates") (i) a letter of
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transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Desktop may reasonably specify after review by Individual) and
(ii) instructions to effect the surrender of the Certificates in exchange for
the certificates evidencing shares of Desktop Common Stock and, in lieu of any
fractional shares thereof, cash. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor (A) certificates evidencing that number of whole shares of
Desktop Common Stock which such holder has the
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right to receive in accordance with the Exchange Ratio in respect of the Shares
formerly evidenced by such Certificate, (B) any dividends or other distributions
to which such holder is entitled pursuant to Section 1.07(c), and (C) cash in
lieu of fractional shares of Desktop Common Stock to which such holder is
entitled pursuant to Section 1.06(f) (the Desktop Common Stock, dividends,
distributions and cash described in this clause (C) being, collectively, the
"Merger Consideration"), and the Certificate so surrendered shall forthwith be
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canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of Individual as of the Effective Time,
Desktop Common Stock and cash may be issued and paid in accordance with this
Article I to a transferee if the Certificate evidencing such Shares is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer pursuant to this Section 1.07(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares
will be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends, to evidence the ownership of the number of
full shares of Desktop Common Stock into which such Shares shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.06.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time, with respect to
Desktop Common Stock with a record date after the Effective Time, shall be paid
to the holder of any unsurrendered Certificate until the holder of such
Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Desktop Common Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Desktop
Common Stock.
(d) Transfers of Ownership. If any certificate for shares of Desktop
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Desktop or any person designated by it any transfer
or other taxes required by reason of the issuance of a certificate for shares of
Desktop Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Desktop or any
agent designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.07, neither Desktop nor Individual shall be liable to any holder of
Individual Common Stock or Desktop Common Stock for any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. The Surviving Corporation and the Exchange
Agent shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable
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pursuant to this Agreement to any holder of shares, such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code or any provision of
state, local, provincial or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or the
Exchange Agent.
SECTION 1.08. STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of Individual shall be closed, and there shall be no
further registration of transfers of Individual Common Stock thereafter on the
records of Individual.
SECTION 1.09. NO FURTHER OWNERSHIP RIGHTS IN INDIVIDUAL COMMON
STOCK. The Merger Consideration delivered upon the surrender for exchange
of Shares in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares, and there
shall be no further registration of transfers on the records of the Surviving
Corporation of Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article 1.
SECTION 1.10. LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, such shares
of Desktop Common Stock as may be required pursuant to Section 1.06; provided,
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however, that Desktop may, in its discretion and as a condition precedent to the
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issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Desktop or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 1.11. TAX AND ACCOUNTING CONSEQUENCES. It is intended by
the parties hereto that the Merger shall (i) constitute a reorganization within
the meaning of Section 368 of the Code and (ii) qualify for accounting treatment
as a pooling of interests under GAAP. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections 1.368-
2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.12. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each
of Desktop and Individual in good faith will take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Individual, the officers
and directors of Individual are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
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SECTION 1.13. MATERIAL ADVERSE EFFECT. When used in this Agreement
with respect to Individual or any of its subsidiaries, or Desktop or any of its
subsidiaries, as the case may be, the term "Material Adverse Effect" means any
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change or effect that, individually or when taken together with all other such
changes or effects that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of Individual and its subsidiaries
or Desktop and its subsidiaries, as the case may be, in each case taken as a
whole.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL
Individual hereby represents and warrants to Desktop that, except as
set forth in the written disclosure schedule previously delivered by Individual
to Desktop (the "Individual Disclosure Schedule") or pursuant to transactions
and agreements contemplated hereby:
SECTION 2.01. ORGANIZATION OF INDIVIDUAL. Each of Individual and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Individual. Individual has delivered to Desktop a true and
complete list of all of Individual's subsidiaries, together with the
jurisdiction of incorporation of each subsidiary. Individual has delivered or
made available a true and correct copy of the Certificate of Incorporation and
Bylaws of Individual and similar governing instruments of its subsidiaries, each
as amended to date, to counsel for Desktop.
SECTION 2.02. CAPITAL STRUCTURE. The authorized capital stock of
Individual consists of 25,000,000 shares of Common stock, par value $.01 per
share, of which there were $6,330,548 shares issued and outstanding as of
October 27, 1997 and 1,000,000 shares of Preferred Stock, par value $.01 per
share, of which no shares are issued or outstanding. All outstanding shares of
Individual Common Stock are duly authorized, validly issued, fully paid and non-
assessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or By-laws of Individual or any agreement or
document to which Individual is a party or by which it is bound. As of October
27, 1997, Individual had reserved an aggregate of 5,999,140 shares of Common
Stock, net of exercises, for issuance to employees, consultants and non-employee
directors pursuant to the Individual Stock Option Plans, under which options
were outstanding for an aggregate of 4,083,547 shares, and 2,174,528 shares, net
of exercises, for issuance to holders of Warrants upon their exercise. All
shares of Individual Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. Section 2.02 of the Individual Disclosure Schedule lists
each outstanding option
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and warrant to acquire shares of Individual Common Stock, the name of the holder
of such option or warrant, the number of shares subject to such option or
warrant, the exercise price of such option or warrant, the number of shares as
to which such option or warrant will have vested at such date, the vesting
schedule and termination date of such option or warrant and whether the
exercisability of such option or warrant will be accelerated in any way by the
transactions contemplated by this Agreement or for any other reason, and
indicate the extent of acceleration, if any. As of October 27, 1997, there were
127 participants in the Individual Employee Stock Purchase Plan and Individual
had reserved an aggregate of 400,090 shares of Common Stock, net of purchases,
thereunder.
SECTION 2.03. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set
forth in Section 2.02, there are no equity securities of any class of
Individual, or any securities exchangeable or convertible into or exercisable
for such equity securities, issued, reserved for issuance or outstanding.
Except for securities Individual owns, directly or indirectly through one or
more subsidiaries, there are no equity securities of any class of any subsidiary
of Individual, or any security exchangeable or convertible into or exercisable
for such equity securities, issued, reserved for issuance or outstanding.
Except as set forth in Section 2.02, there are no options, warrants, equity
securities, calls, rights (including preemptive rights), commitments or
agreements of any character to which Individual or any of its subsidiaries is a
party or by which it is bound obligating Individual or any of its subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or
acquisition of, any shares of capital stock of Individual or any of its
subsidiaries or obligating Individual or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. There are no registration
rights and, to the knowledge of Individual there are no voting trusts, proxies
or other agreements or understanding with respect to any equity security of any
class of Individual or with respect to any equity security of any class of any
of its subsidiaries.
SECTION 2.04. AUTHORITY.
(a) Individual has all requisite corporate power and authority to
enter into this Agreement and the Individual Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and the execution and delivery of the Individual Stock Option Agreement
and the consummation of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action on the part of Individual, subject
only to the approval of this Agreement by Individual's stockholders and the
filing and recordation of the Certificate of Merger pursuant to Delaware Law. A
vote of the holders of at least a majority of the outstanding shares of the
Individual Capital Stock is required for Individual's stockholders to approve
this Agreement. This Agreement and the Individual Stock Option Agreement have
been duly executed and delivered by Individual and, assuming the due
authorization, execution and delivery by Desktop constitute the valid and
binding obligations of Individual, enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement and
the Individual Stock Option Agreement by Individual do not, and the performance
of this Agreement and the Individual Stock Option Agreement will not, (i)
conflict
-9-
with or violate the Certificate of Incorporation or Bylaws of Individual or the
equivalent organizational documents of any of its subsidiaries, (ii) to the best
knowledge of Individual, subject to obtaining the approval of Individual's
stockholders of the Merger as contemplated in Section 5.02 and compliance with
the requirements set forth in Section 2.04(b) below, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Individual or
any of its subsidiaries or by which its or any of their respective properties is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or impair Individual's rights or alter the rights of obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Individual or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Individual or any of its subsidiaries is a party or by which Individual
or any of its subsidiaries or its or any of their respective properties are
bound or affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, defaults or other occurrences that would not have a
Material Adverse Effect on Individual. Section 2.04 of the Individual Disclosure
Schedule lists all material consents, waivers and approvals under any of
Individual's or any of its subsidiaries' agreements, contracts, license or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
-------------------
required by or with respect to Individual in connection with the execution and
delivery of this Agreement and the Individual Stock Option Agreement or the
consummation of the transactions contemplated hereby or thereby, except for (i)
the filing of a Form S-4 Registration Statement (the "Registration Statement")
----------------------
with the Securities and Exchange Commission ("SEC") in accordance with the
---
Securities Act of 1933, as amended (the "Securities Act"), (ii) the filing of
--------------
the Certificate of Merger with the Secretary of State of the State of Delaware,
(iii) the filing of the Proxy Statement (as defined in Section 2.20) with the
SEC in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iv) the filing of a Current Report on Form 8-K with the SEC,
-------------
(v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country and (vi) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Individual or
Desktop or have a material adverse effect on the ability of the parties to
consummate the Merger.
SECTION 2.05. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT
APPLICABLE. The Board of Directors of Individual has taken all actions so that
the restrictions contained in Section 2.03 of the Delaware General Corporation
Law applicable to a "business combination" (as defined in Section 203) will not
apply to the execution, delivery or performance of this Agreement or the Stock
Option Agreements or to the consummation of the Merger or the other transactions
contemplated by this Agreement or the Stock Option Agreements.
-10-
SECTION 2.06. SEC FILINGS; INDIVIDUAL FINANCIAL STATEMENTS.
(a) Individual has filed all forms, reports and documents required to
be filed with the SEC since March 15, 1996, and has made available to Desktop
such forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Individual may file
subsequent to the date hereof) are referred to herein as the "Individual SEC
--------------
Reports." As of their respective dates, the Individual SEC Reports (i) were
-------
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Individual SEC Reports, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing ) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
Individual's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Individual SEC Reports or
delivered to Desktop representing the financial condition of Individual as of
September 30, 1997 (the "Individual Financials"), including any Individual SEC
---------------------
Reports filed after the date hereof until the Closing, (x) complied or will
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (y) was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (z) fairly presented the consolidated financial position of
Individual and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not, or are not expected to
be, material in amount. The balance sheet of Individual as of September 30,
1997 is hereinafter referred to as the "Individual Balance Sheet." Except as
------------------------
disclosed in the Individual Financials, neither Individual nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Individual and its subsidiaries taken as a
whole, except liabilities (i) provided for in the Individual Balance Sheet, or
(ii) incurred since the date of the Individual Balance Sheet in the ordinary
course of business consistent with past practices.
(c) Individual has heretofore furnished to Desktop a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Individual with the SEC
pursuant to the Securities Act or the Exchange Act.
SECTION 2.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Individual Balance Sheet through the date of this Agreement, there has not been:
(i) any Material Adverse Effect on Individual, (ii) any material change by
Individual in its accounting methods,
-11-
principles or practices, except as required by concurrent changes in GAAP, or
(iii) any revaluation by Individual of any of its assets having a Material
Adverse Effect on Individual, including, without limitation, writing down the
value of capitalized software or inventory or writing off notes or accounts
receivable other than in the ordinary course of business.
SECTION 2.08. TAXES. Individual and each of its subsidiaries has filed
all tax returns required to be filed by any of them and has paid (or Individual
has paid on its behalf), or has set up an adequate reserve for the payment of,
all material taxes required to be paid as shown on such returns, and the most
recent financial statements delivered to Desktop reflect an adequate reserve for
all material taxes payable by Individual and its subsidiaries accrued through
the date of such financial statements. Except as reasonably would not be
expected to have a Material Adverse Effect on Individual, no deficiencies for
any taxes have been proposed, asserted or assessed against Individual or any of
its subsidiaries. For the purpose of this Agreement, the term "tax" shall
include all Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding, excise and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
SECTION 2.09. INTELLECTUAL PROPERTY.
(a) Individual and its subsidiaries own, or have the right to use,
sell or license all intellectual property utilized in their respective
businesses as presently conducted (such intellectual property and the rights
thereto are collectively referred to herein as the "Individual IP Rights"),
--------------------
except for any failure to own or have the right to use, sell or license that
would not have a Material Adverse Effect on Individual.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Individual IP Rights (the
"Individual IP Rights Agreements"), will not cause the forfeiture or termination
--------------------------------
or give rise to a right of forfeiture or termination of any Individual IP Rights
or impair the right of Individual and its subsidiaries or the Surviving
Corporation to use, sell or license any Individual IP Rights or portion thereof,
except for the occurrence of any such breach, forfeiture, termination or
impairment that would not individually or in the aggregate, result in a Material
Adverse Effect on Individual.
(c) (i) neither the manufacture, marketing, license, sale or intended
use of any product or technology currently licensed or sold or under development
by Individual or any of its subsidiaries violates any license or agreement
between Individual or any of its subsidiaries and any third party or, to the
knowledge of Individual infringes any intellectual property right of any other
party; and (ii) there is no pending or, to the knowledge of Individual,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Individual IP Rights, nor has Individual
received any written notice asserting that any Individual IP Rights or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party, except, with respect to clauses (i) and
(ii), for any violations, infringements, claims or litigation that would not
have a Material Adverse Effect on Individual.
-12-
(d) Individual has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Individual IP rights.
SECTION 2.10. COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Individual nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Individual or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Individual or any
of its subsidiaries is a party or by which Individual or any of its subsidiaries
or its or any of their respective properties is bound or affected, except for
any conflicts, defaults or violations which would not have a Material Adverse
Effect on Individual. Without limiting the foregoing, Individual is in
compliance with all material provisions of its agreements with information
providers, including provisions relating to royalty calculations; Individual has
not received any notice from any information provider claiming non-compliance
with any such agreement. To the knowledge of Individual, no investigation or
review by any governmental or regulatory body or authority is pending or
threatened against Individual or its subsidiaries, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same, other
than, in each such case, those the outcome of which would not have a Material
adverse Effect on Individual.
(b) Individual and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of Individual and its subsidiaries
taken as a whole (collectively, the "Individual Permits"). Individual and its
------------------
subsidiaries are in compliance with the terms of Individual Permits, except
where the failure to so comply would not have a Material Adverse Effect on
Individual.
SECTION 2.11. LITIGATION. Except as set forth in Section 2.11 of the
Individual Disclosure Schedule, as of the date of this Agreement, there is no
action, suit, proceeding, claim, arbitration or investigation pending, or as to
which Individual or any of its subsidiaries has received any notice of assertion
nor, to Individual's knowledge, is there a threatened action, suit, proceeding,
claim arbitration or investigation against Individual or any of its subsidiaries
which would have a Material Adverse Effect on Individual, or which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement.
SECTION 2.12. BROKERS' AND FINDERS' FEES''. Except for fees payable to
BancAmerica XXXXXXXXX XXXXXXXX pursuant to the engagement letter dated October
10, 1997, a copy of which has been provided to Desktop, Individual has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
-13-
SECTION 2.13. EMPLOYEE BENEFIT PLANS.
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) maintained or contributed to by Individual or any
-----
trade or business (an "ERISA Affiliate") which is under common control with
---------------
Individual within the meaning of Section 414 of the Code (the "Individual
----------
Employee Plans"), Individual has made available to Desktop a true and complete
--------------
copy of, to the extent applicable, (i) such Individual Employee Plan, (ii) the
most recent annual report (Form 5500), (iii) each trust agreement related to
such Individual Employee Plan, (iv) the most recent summary plan description for
each Individual Employee Plan for which such description is required, (v) the
most recent actuarial report relating to any Individual Employee Plan subject to
Title IV of ERISA and (vi) the most recent United States Internal Revenue
Service ("IRS") determination letter issued with respect to any Individual
---
Employee Plan.
(b) Each Individual Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination for the
IRS covering the provisions of the Tax Reform Act of 1986 stating that such
Individual Employee Plan is so qualified and nothing has occurred since the date
of such letter that could reasonably be expected to affect the qualified status
of such plan. Each Individual Employee Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law.
Neither Individual nor any ERISA Affiliate of Individual has incurred or is
reasonably expected to incur any material liability under Title IV of ERISA in
connection with the termination of any plan covered or previously covered by
Title IV of ERISA. No Individual Employee Plan is a Multiemployer Plan as
defined in Section 3(37) of ERISA. Individual
(c) With respect to the employees and former employees of Individual,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code. No tax under Section 4980B or Section
4980D of the Code has been incurred in respect of any Employee Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code.
SECTION 2.14. ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF EQUIPMENT.
Individual and each of its subsidiaries has good and valid title to, or, in the
case of leased properties and assets, valid leasehold interest in, all of its
material tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens or encumbrances except as reflected in the
Individual Financials and except for liens for taxes not yet due and payable and
such imperfections of title and encumbrances, if any, which would not have a
Material Adverse Effect on Individual.
SECTION 2.15. ENVIRONMENTAL MATTERS.
(a) Hazardous Material. Except as would not have a Material Adverse
Effect on Individual, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law, to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including,
-14-
without limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, (a "Hazardous Material"), but excluding office and janitorial
------------------
supplies, are present, as a result of the deliberate actions of Individual or
any of its subsidiaries, or, to Individual's knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property, including
the land and the improvements, ground water and surface water thereof, that
Individual or any of its subsidiaries has at any time owned, operated, occupied
or leased.
(b) Hazardous Material Activities. Except as would not have a
Material Adverse Effect on Individual, neither Individual nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the date hereof, nor has Individual or any of its
subsidiaries disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively "Hazardous Material Activities")
-----------------------------
in violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Individual and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"Individual Environmental Permits") necessary for the conduct of Individual's
---------------------------------
and its subsidiaries' Hazardous Material Activities and other businesses of
Individual and its subsidiaries as such activities and businesses are currently
being conducted, except where the failure to so hold would not have a Material
Adverse Effect on Individual.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to Individual's knowledge, threatened concerning any Individual
Environmental Permit, Hazardous Material or any Hazardous Material Activity of
Individual or any of its subsidiaries. Individual is not aware of any fact or
circumstance which could involve Individual or any of its subsidiaries in any
environmental litigation or impose upon Individual or any of its subsidiaries
any environmental liability that would have a Material Adverse Effect on
Individual.
SECTION 2.16. LABOR MATTERS. To Individual's knowledge, there are no
activities or proceedings of any labor union to organize any employees of
Individual or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect to
any employees of Individual or any of its subsidiaries. Individual and its
subsidiaries are and have been in compliance with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, ERISA (as defined below), WARN or any similar
state or local law), except for any noncompliance that would not have a Material
Adverse Effect on Individual.
-15-
SECTION 2.17. AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth
in Section 2.17 of the Individual Disclosure Schedule, neither Individual nor
any of its subsidiaries is a party to or is bound by:
(a) any collective bargaining agreements;
(b) any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements;
(c) any employment or consulting agreement, contract or commitment
with any officer or director level employee, not terminable by Individual or any
of its subsidiaries on thirty (30) days notice without liability, except to the
extent general principles of wrongful termination law may limit Individual's or
any of its subsidiaries' ability to terminate employees at will;
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
Individual or any of its subsidiaries and any of its officers or directors;
(f) any agreement, contract or commitment containing any covenant
limiting the freedom of Individual or any of its subsidiaries to engage in any
line of business or compete with any person;
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000 and not
cancelable without penalty;
(h) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;
(j) any joint marketing or development agreement;
(k) any distribution agreement (identifying any that contain
exclusivity provisions); or
(l) any other agreement, contract or commitment (excluding real and
personal property leases) which involve payment by Individual or any of its
subsidiaries under any such
-16-
agreement, contract or commitment of $100,000 or more in the aggregate and is
not cancelable without penalty within thirty (30) days.
Neither Individual nor any of its subsidiaries, nor to Individual's
knowledge any other party to a Individual Contract (as defined below), has
breached, violated or defaulted under, or received notice that it has breached,
violated or defaulted under, any of the material terms or conditions of any of
the agreements, contracts or commitments to which Individual is a party or by
which it is bound of the type described in clauses (a) through (l) above (any
such agreement, contract or commitment, a "Individual Contract") in such manner
-------------------
as would permit any other party to cancel or terminate any such Individual
Contract, or would permit any other party to seek damages, which would have a
Material Adverse Effect on Individual.
SECTION 2.18. POOLING OF INTERESTS. To the knowledge of Individual, based
on consultation with its independent accountants, neither Individual nor any of
its directors, officers or stockholders has taken any action which would
interfere with Desktop's ability to account for the Merger as a pooling of
interests.
SECTION 2.19. CHANGE OF CONTROL PAYMENTS. Section 2.19 of the Individual
Disclosure Schedule sets forth each plan or agreement pursuant to which all
material amounts may become payable (whether currently or in the future) to
current or former officers and directors of Individual as a result of or in
connection with the Merger.
SECTION 2.20. STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information
supplied by Individual for inclusion in the Registration Statement (as defined
in Section 2.04(b)) shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by Individual for inclusion in
the proxy statement/prospectus to be sent to the stockholders of Individual and
the stockholders of Desktop and in connection with the meeting of Individual's
stockholders to consider the approval of this Agreement (the "Individual
----------
Stockholders' Meeting") and in connection with the meeting of Desktop's
---------------------
stockholders to consider the approval of this Agreement and the issuance of
shares of Desktop Common Stock pursuant to the terms of the Merger (the "Desktop
-------
Stockholders' Meeting") (such proxy statement/prospectus as amended or
---------------------
supplemented is referred to herein as the "Proxy Statement") shall not, on the
---------------
date the Proxy Statement is first mailed to Individual's stockholders and
Desktop's stockholders, and at the time of the Individual Stockholders' Meeting
or the Desktop Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Individual Stockholders'
Meeting or the Desktop Stockholders' Meeting which has become false or
misleading. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
Individual or any of its affiliates, officers or directors should be discovered
by Individual which should be set forth in an amendment to the Registration
-17-
Statement or a supplement to the Proxy Statement, Individual shall promptly
inform Desktop. Notwithstanding the foregoing, Individual makes no
representation or warranty with respect to any information supplied by Desktop
which is contained in any of the foregoing documents.
SECTION 2.21. BOARD APPROVAL. The Board of Directors of Individual has,
as of the date of this Agreement, determined (i) that the Merger is fair to, and
in the best interests of Individual and its stockholders, and (ii) to recommend
that the stockholders of Individual approve this Agreement.
SECTION 2.22. FAIRNESS OPINION. Individual has received a written opinion
from BancAmerica XXXXXXXXX XXXXXXXX, dated as of the date hereof, to the effect
that as of the date hereof, the Exchange Ratio is fair to Individual's
stockholders from a financial point of view and has delivered to Desktop a copy
of such opinion.
SECTION 2.23. MINUTE BOOKS. The minute books of Individual made available
to counsel for Desktop are the only minute books of Individual and contain a
reasonably accurate summary, in all material respects, of all meetings of
directors (or committees thereof) and stockholders or actions by written consent
since the time of incorporation of Individual.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DESKTOP
Desktop hereby represents and warrants to individual that except as
set forth in the written disclosure schedule previously delivered by Desktop to
Individual (the "Desktop Disclosure Schedule") or pursuant to transactions and
agreements contemplated hereby:
SECTION 3.01. ORGANIZATION OF DESKTOP. Desktop and each of its material
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Desktop. Desktop has delivered to Individual a true and
complete list of all of Desktop's subsidiaries, together with the jurisdiction
of incorporation of each subsidiary and Desktop's equity interest therein.
Desktop has delivered or made available a true and correct copy of the
Certificate of Incorporation and Bylaws of Desktop and similar governing
instruments of its material subsidiaries, each as amended to date, to counsel
for Individual.
SECTION 3.02. DESKTOP CAPITAL STRUCTURE. The authorized capital stock of
Desktop consists of 15,000,000 shares of Common Stock, par value $.01 per share,
of which there were 8,675,369 shares issued and outstanding as of October 27,
1997 and 1,000,000 shares of Preferred Stock, par value $.01 per share, of which
no shares are issued or outstanding. All outstanding shares of the Common Stock
of Desktop are duly authorized, validly issued, fully paid and non-assessable
and are not subject to preemptive rights created by statute, the
-18-
Certificate of Incorporation or By-laws of Desktop or any agreement or
document to which Desktop is a party or by which it is bound. As of November 2,
1997, Desktop had reserved an aggregate of 1,871,024 shares of Common Stock, net
of exercises, for issuance to employees, consultants and non-employee directors
pursuant to Desktop's 1995 Stock Plan, 1989 Stock Option Plan and 1995 Non-
Employee Director Stock Option Plan, (collectively, the "Desktop Stock Option
--------------------
Plans"), under which options are outstanding for 899,306 shares. All shares of
-----
the Common Stock of Desktop subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Section 3.02 of the Desktop Disclosure Schedule lists each
outstanding option to acquire shares of the Desktop Common Stock at November 2,
1997, the name of the holder of such option, the number of shares subject to
such option, the exercise price of such option, the number of shares as to which
such option will have vested at such date, the vesting schedule and termination
date of such option or warrant and whether the exercisability of such option
will be accelerated in any way by the transactions contemplated by this
Agreement or for any other reason, and indicate the extent of acceleration, if
any. As of November 2, 1997, there were 79 participants in Desktop's Employee
Stock Purchase Plan (the "Desktop Employee Stock Purchase Plan") and Desktop had
------------------------------------
reserved an aggregate of 152,012 shares of Desktop Common Stock, net of
purchases, thereunder.
SECTION 3.03. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set
forth in Section 3.02, there are no equity securities of any class of Desktop,
or any securities exchangeable or convertible into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. Except for
securities Desktop owns, directly or indirectly through one or more
subsidiaries, there are no equity securities of any class of any subsidiary of
Desktop, or any security exchangeable or convertible into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except as
set forth in Section 3.02, there are no options, warrants, equity securities,
calls, rights (including preemptive rights), commitments or agreements or any
character to which Desktop or any of its subsidiaries is a party or by which it
is bound obligating Desktop or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock of Desktop or any of its subsidiaries or obligating
Desktop or any of its subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right, commitment
or agreement. There are no registration rights and, to the knowledge of Desktop
there are no voting trusts, proxies or other agreements or understandings with
respect to any equity security of any class of Desktop or with respect to any
equity security of any class of any of its subsidiaries.
SECTION 3.04. AUTHORITY.
(a) Desktop has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
Desktop has all requisite corporate power and authority to enter into the
Desktop Stock Option Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement and the Desktop Stock
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on
the part of Desktop, subject only to the approval of the Merger by Desktop's
stockholders as
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contemplated in Section 5.02 and the filing and recordation of the Certificate
of Merger pursuant to Delaware Law. This Agreement has been duly executed and
delivered by each of Desktop and, assuming the due authorization, execution and
delivery of this Agreement by Individual, this Agreement constitutes the valid
and binding obligation of Desktop, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The Desktop Stock Option Agreement has been duly
executed and delivered by Desktop and, assuming the due authorization, execution
and delivery of the Desktop Stock Option Agreement by Individual, the Desktop
Stock Option Agreement constitutes the valid and binding obligation of Desktop,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
The execution and delivery of this Agreement and the Desktop Stock Option
Agreement by Desktop do not, and the performance of this Agreement and the
Desktop Stock Option Agreement by Desktop will not, (i) conflict with or violate
the Certificate of Incorporation or Bylaws of Desktop or the equivalent
organizational documents of any of its other subsidiaries, (ii) to the best
knowledge of Desktop, subject to obtaining the approval of the Merger by
Desktop's stockholders as contemplated in Section 5.02 and compliance with the
requirements set forth in Section 3.04(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Desktop or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair Desktop's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Desktop or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Desktop or any of its
subsidiaries is a party or by which Desktop or any of its subsidiaries or its or
any of their respective properties are bound or affected, except, with respect
to clauses (ii) and (iii), for any such conflicts, violations, defaults or other
occurrences that would not have a Material Adverse Effect on Desktop. Section
3.04 of the Desktop Disclosure Schedule lists all material consents, waivers and
approvals under any of Desktop's or any of its subsidiaries agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Desktop in connection with the execution and delivery of this
Agreement or the Desktop Stock Option Agreement or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of the
Registration Statement with the SEC in accordance with the Securities Act, (ii)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, (iii) the filing of the Proxy Statement with the SEC in accordance
with the Exchange Act, (iv) the filing of a Current Report on Form 8-K with the
SEC, (v) the listing of the Desktop Common Stock on Nasdaq, (vi) the filing of
an amendment to Desktop's Certificate of Incorporation with the Secretary of
State of the State of Delaware, (vii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and the laws of any foreign country
and (viii) such other consents, authorizations, filings, approvals
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and registrations which, if not obtained or made, would not have a material
Adverse Effect on Individual or Desktop or have a Material Adverse Effect on the
ability of the parties to consummate the Merger.
SECTION 3.05. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT
APPLICABLE. The Board of Directors of Desktop has taken all actions so that the
restrictions contained in Section 203 of the Delaware General Corporation Law
applicable to a "business combination" (as defined in Section 203) will not
apply to the execution, delivery or performance of this Agreement or the Stock
Option Agreements or to the consummation of the Merger or the other transactions
contemplated by this Agreement or the Stock Option Agreements.
SECTION 3.06. SEC FILINGS; DESKTOP FINANCIAL STATEMENTS.
(a) Desktop has filed all forms, reports and documents required to be
filed with the SEC since November 1, 1995, and has made available to Individual
such forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Desktop may file
subsequent to the date hereof) are referred to herein as the "Desktop SEC
-----------
Reports." As of their respective dates, the Desktop SEC Reports (i) were
-------
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the Sec
thereunder applicable to such Desktop SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Desktop's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Desktop SEC Reports or
delivered to Individual representing the financial condition of Desktop as of
September 30, 1997 (the "Desktop Financials"), including any Desktop SEC Reports
------------------
filed after the date hereof until the Closing, (x) complied or will comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (y) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount. The balance sheet of Desktop as of
September 30, 1997 is hereinafter referred to as the "Desktop Balance Sheet."
---------------------
Except as disclosed in the Desktop Financials, neither Desktop nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Desktop and its subsidiaries taken as a
whole, except liabilities (i) provided for in
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the Desktop Balance Sheet, or (ii) incurred since the date of the Desktop
Balance Sheet in the ordinary course of business consistent with past practices.
(c) Desktop has heretofore furnished to Individual a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Desktop with the SEC
pursuant to the Securities Act or the Exchange Act.
SECTION 3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Desktop Balance Sheet through the date of this Agreement, there has not been:
(i) any Material Adverse Effect on Desktop, (ii) any material change by Desktop
in its accounting methods, principles or practices, except as required by
concurring changes in GAAP, or (ii) any revaluation by Desktop of any of its
assets having a Material Adverse Effect on Desktop, including, without
limitation, writing down the value of capitalized software or inventory or
writing off notes or accounts receivable other than in the ordinary course of
business.
SECTION 3.08. TAXES. Desktop and each of its subsidiaries has filed all
tax returns required to be filed by any of them and has paid (or Desktop has
paid on its behalf), or has set up an adequate reserve for the payment of, all
material taxes required to be paid as shown on such returns, and the most recent
financial statements delivered to Individual reflect an adequate reserve for all
material taxes payable by Desktop and its subsidiaries accrued through the date
of such financial statements. Except as reasonably would not be expected to
have a Material Adverse Effect on Desktop, no deficiencies for any taxes have
been proposed, asserted or assessed against Desktop or any of its subsidiaries.
SECTION 3.09. INTELLECTUAL PROPERTY.
(a) Desktop and its subsidiaries own, or have the right to use, sell
or license all intellectual property utilized in their respective businesses as
presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Desktop IP Rights"), except for any
-----------------
failure to own or have the right to use, sell or license that would not have a
Material Adverse Effect on Desktop.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Desktop IP Rights (the
"Desktop IP Rights Agreements"), will not cause the forfeiture or termination or
-----------------------------
give rise to a right of forfeiture or termination of any Desktop IP Rights or
impair the right of Desktop and its subsidiaries to use, sell or license any
Desktop IP Rights or portion thereof, except for the occurrence of any such
breach, forfeiture, termination or impairment that would not individually or in
the aggregate, result in a Material Adverse Effect on Desktop.
(c) (i) neither the manufacture, marketing, license, sale or intended
use of any product or technology currently licensed or sold or under development
by Desktop or any of its subsidiaries violates any licenses or agreement between
Desktop or any of its subsidiaries and any third party or, to the knowledge of
Desktop, infringes any intellectual property right of any other
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party; and (ii) there is no pending or, to the knowledge of Desktop, threatened
claim or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any Desktop IP Rights, nor has Desktop received any
written notice asserting that any Desktop IP Rights or the proposed use, sale,
license or disposition thereof conflicts or will conflict with the rights of any
other party, except, with respect to clauses (i) and (ii), for any violations,
infringements, claims or litigation that would not have a Material Adverse
Effect on Desktop.
(d) Desktop has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Desktop IP Rights.
SECTION 3.10. COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Desktop nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Desktop or any of its subsidiaries or by which its or any
of their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Desktop or any of its subsidiaries is a
party or by which Desktop or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any conflicts, defaults
or violations which would not have a Material Adverse Effect on Desktop.
Without limiting the foregoing, Desktop is in compliance with all material
provisions of its agreements with information providers, including provisions
relating to royalty calculations; Individual has not received any notice from
any information providers claiming non-compliance with any such agreements. To
the knowledge of Desktop, no investigation or review by any governmental or
regulatory body or authority is pending or threatened against Desktop or its
subsidiaries, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each such case, those the
outcome of which would not have a Material Adverse Effect on Desktop.
(b) Desktop and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of Desktop and its subsidiaries
taken as a whole (collectively, the "Desktop Permits"). Desktop and its
---------------
subsidiaries are in compliance with the terms of the Desktop Permits, except
where the failure to so comply would not have a Material Adverse Effect on
Desktop.
SECTION 3.11. LITIGATION. As of the date of this Agreement, there is no
action, suit, proceeding, claim, arbitration or investigation pending, or as to
which Desktop or any of its subsidiaries has received any notice of assertion
nor, to Desktop's knowledge, is there a threatened action, suit, proceeding,
claim, arbitration or investigation against Desktop or any of its subsidiaries
which would have a Material Adverse Effect on Desktop, or which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement.
SECTION 3.12. BROKERS' AND FINDERS' FEES''. Except for fees payable to BT
Alex. Xxxxx Incorporated pursuant to an engagement letter dated June 11, 1997 a
copy of which has
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been provided to Individual, Desktop has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
SECTION 3.13. EMPLOYEE BENEFIT PLANS.
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA) maintained or contributed to by
Desktop or any trade or business which is under common control with Desktop
within the meaning of Section 414 of the Code (the "Desktop Employee Plans"),
----------------------
Desktop has made available to Individual a true and complete copy of, to the
extent applicable, (i) such Desktop Employee Plan, (ii) the most recent annual
report (Form 5500), (iii) each trust agreement related to such Desktop Employee
Plan, (iv) the most recent summary plan description for each Desktop Employee
Plan for which such a description is required, (v) the most recent actuarial
report relating to any Desktop Employee Plan subject to Title IV of ERISA and
(vi) the most recent IRS determination letter issued with respect to any Desktop
Employee Plan.
(b) Each Desktop Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
governing the provisions of the Tax Reform Act of 1986 stating that such Desktop
Employee Plan is so qualified and nothing has occurred since the date such
letter that could reasonably be expected to affect the qualified status of such
plan. Each Desktop Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law. Neither
Desktop nor any ERISA Affiliate of Desktop has incurred or is reasonably
expected to incur any material liability under Title IV of ERISA in connection
with the termination of any plan covered or previously covered by Title IV of
ERISA. No Desktop Employee Plan is a Multiemployer Plan as defined in Section
3(37) of ERISA.
(c) With respect to the employees and former employees of Desktop,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code. No tax under Section 4980B or Section
4980D of the Code has been incurred in respect of any Employee Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code.
SECTION 3.14. ABSENCE OF LIENS AND ENCUMBRANCES; CONDITIONS OF EQUIPMENT.
Desktop and each of its subsidiaries has good and valid title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
material tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens or encumbrances except as reflected in the
Desktop Financials and except for liens for taxes not yet due and payable and
such imperfections of title and encumbrances, if any, which would not have a
Material Adverse Effect on Desktop.
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SECTION 3.15. ENVIRONMENTAL MATTERS.
(a) Hazardous Material. Except as would not have a Material Adverse
Effect on Desktop, no underground storage tanks and no Hazardous Materials (but
excluding office and janitorial supplies) are present as a result of the
deliberate actions of Desktop or any of its subsidiaries, or, to Desktop's
knowledge, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that Desktop or any of its subsidiaries has at any time
owned, operated, occupied or leased.
(b) Hazardous Material Activities. Except as would not have a
Material Adverse Effect on Desktop, neither Desktop nor any of its subsidiaries
has transported, stored, used, manufactured, disposed of, released or exposed
its employees or others to Hazardous Materials in violation of any law in effect
on or before the date hereof, nor has Desktop or any of its subsidiaries engaged
in any Hazardous Material Activities in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Permits. Desktop and its subsidiaries currently holds all
environmental approvals, permits, licenses, clearances and consents (the
"Desktop Environmental Permits") necessary for the conduct of Desktop's and its
------------------------------
subsidiaries' Hazardous Material Activities and other businesses of Desktop and
its subsidiaries as such activities and businesses are currently being
conducted, except where the failure to so hold would not have a Material Adverse
Effect on Desktop.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to Desktop's knowledge, threatened concerning any Desktop
Environmental Permits, Hazardous Material or any Hazardous Material Activity of
Desktop or any of its subsidiaries. Desktop is not aware of any fact or
circumstance which could involve Desktop or any of its subsidiaries in any
environmental litigation or impose upon Desktop or any of its subsidiaries any
environmental liability that would have a Material Adverse Effect on Desktop.
SECTION 3.16. LABOR MATTERS. To Desktop's knowledge, there are no
activities or proceedings of any labor union to organize any employees of
Desktop or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect to
any employees of Desktop or any of its subsidiaries. Desktop and its
subsidiaries are and have been in compliance with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, ERISA, WARN or any similar state or local law),
except for any noncompliance that would not have a Material Adverse Effect on
Desktop.
SECTION 3.17. AGREEMENTS, CONTRACTS AND COMMISSIONS. Except as set forth
in Section 3.17 of the Desktop Disclosure Schedule, neither Desktop nor any of
its subsidiaries is a party to or is bound by:
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(a) any collective bargaining agreements;
(b) any bonus, deferred compensation, incentive compensation, pension,
profit sharing or retirement plans, or any other employee benefit plans or
arrangements;
(c) any employment or consulting agreement contract or commitment with
any officer or director level employee, not terminable by Desktop or any of its
subsidiaries on thirty (30) days notice without liability, except to the extent
general principles of wrongful termination law may limit Desktop's or any of its
subsidiaries' ability to terminate employees at will;
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which all will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
Desktop or any of its subsidiaries and any of its officers or directors;
(f) any agreement, contract or commitment containing any covenant
limiting the freedom of Desktop or any of its subsidiaries to engage in any line
of business or compete with any person;
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000 and not
cancelable without penalty;
(h) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(i) any mortgage, indenture, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;
(j) any joint marketing or development agreement;
(k) any distribution agreement (identifying any that contain
exclusivity provisions);
(l) any other agreement, contract or commitment (excluding real and
personal property leases) which involve payment by Desktop or any of its
subsidiaries under any such agreement, contract or commitment of $100,000 or
more in the aggregate and is not cancelable without penalty within thirty (30)
days.
Neither Desktop nor any of its subsidiaries, nor to Desktop's knowledge any
other party to a Desktop Contract (as defined below), has breached, violated or
defaulted under, or received
-26-
notice that it has breached violated or defaulted under, any of the material
terms or conditions of any of the agreements, contracts or commitments to which
Desktop is a party or by which it is bound of the type described in clauses (a)
through (1) above (any such agreement, contract or commitment, a "Desktop
-------
Contract") in such a manner as would permit any other party to cancel or
--------
terminate any such Desktop Contract, or would permit any other party to seek
damages, which would have a Material Adverse Effect on Desktop.
SECTION 3.18. POOLING OF INTERESTS. To the knowledge of Desktop, based on
consultation with its independent accountants, neither Desktop nor any of its
directors, officers or stockholders has taken any action which would interfere
with Desktop's ability to account for the Merger as a pooling of interests.
SECTION 3.19. CHANGE OF CONTROL PAYMENTS. Section 3.19 of the Desktop
Disclosure Schedule sets forth each plan or agreement pursuant to which all
material amounts may become payable (whether currently or in the future) to
current or former officers and directors of Desktop as a result of or in
connection with the Merger.
SECTION 3.20. STATEMENTS; PROXY STATEMENTS/PROSPECTUS. The information
supplied by Desktop for inclusion in the Registration Statement (as defined in
Section 2.04(b)) shall not at the time the Registration Statement is filed with
the SEC and at the time it becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by Desktop for inclusion in
the Proxy Statement to be sent to the stockholders of Desktop and stockholders
of Individual in connection with the Desktop Stockholders' Meeting and in
connection with the Individual Stockholders' Meeting shall not, on the date the
Proxy Statement is first mailed to Individual's stockholders and Desktop's
stockholders and at the time of the Individual Stockholders' Meeting or the
Desktop Stockholders' Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Desktop Stockholders' Meeting or the
Individual Stockholders' Meeting which has become false or misleading. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. If at
any time prior to the Effective Time, any event relating to Desktop or any of
its affiliates, officers or directors should be discovered by Desktop which
should be set forth in an amendment to the Regulation Statement or a supplement
to the Proxy Statement, Desktop shall promptly inform Individual.
Notwithstanding the foregoing, Desktop makes no representation or warranty with
respect to any information supplied by Individual which is contained in any of
the foregoing documents.
SECTION 3.21. BOARD APPROVAL. The Board of Directors of Desktop has, as
of the date of this Agreement, determined to recommend that the Stockholders of
Desktop approve the issuance of the Desktop Common Stock in the Merger.
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SECTION 3.22. FAIRNESS OPINION. Desktop has received a written opinion
from BT Alex. Xxxxx Incorporated, dated as of the date hereof, to the effect
that as of the date hereof, the Merger is fair to Desktop's stockholders from a
financial point of view and has delivered to Individual a copy of such opinion.
SECTION 3.23. MINUTE BOOKS. The minute books of Desktop made available to
counsel for Individual are the only minute books of Desktop and contain a
reasonably accurate summary, in all material respects, of all meetings of
directors (or committees thereof) and stockholders or actions by written consent
since the time of incorporation of Desktop.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 CONDUCT OF BUSINESS. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Individual (which for the
purposes of this Article 4 shall include Individual and each of its
subsidiaries) and Desktop (which for the purposes of this Article 4 shall
include Desktop and each of its subsidiaries) agree, except (i) in the case of
Individual as provided in Article 4 of the Individual Disclosure Schedule and in
the case of Desktop as provided in Article 4 of the Desktop Disclosure Schedule,
or (ii) to the extent that the other party shall otherwise consent in writing,
to carry on its business diligently and in accordance with good commercial
practice and to carry on its business in the usual, regular and ordinary course,
in substantially the same manner as heretofore conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In furtherance of the foregoing and subject to applicable
law, Individual and Desktop agree to confer, as promptly as practicable, prior
to taking any material actions or making any material management decisions with
respect to the conduct of business. In particular, but without limiting the
applicability of the foregoing sentence, Desktop and Individual shall use all
reasonable efforts, within 30 days after the date hereof, to agree on (i) mutual
capital expenditure budgets covering the period prior to the Effective Date and
(ii) an employee retention plan which will include provision for severance for
any employees whose jobs may be terminated as a result of the Merger. In
addition, except in the case of Individual as provided in Article 4 of the
Individual Disclosure Schedule and in the case of Desktop as provided in Article
4 of the Desktop Disclosure Schedule, without the prior written consent of the
other, neither Individual nor Desktop shall do any of the following, and neither
Individual nor Desktop shall permit its subsidiaries to do any of the following:
(a) amend or otherwise change its Certificate of Incorporation or By-
Laws;
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(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) (except
for the issuance of shares of common stock issuable pursuant to employee stock
options under the Individual Employee Stock Option Plans, the Desktop Employee
Stock Option Plans or the Warrants, as the case may be, or pursuant to rights to
purchase shares under the Individual Employee Stock Purchase Plan and the
Desktop Employee Stock Purchase Plan, as the case may be, which options,
warrants or rights, as the case may be, are outstanding on the date hereof);
provided, however, that Desktop may continue to grant options pursuant to the
-------- -------
Desktop Stock Option Plans without the prior consent of Individual, in amounts
not to exceed 1,500 shares per person, and Individual may continue to grant
options pursuant to the Individual Stock Option Plans, without the prior written
consent of Desktop, in amounts not to exceed 3,000 shares per person.
(c) sell, pledge, dispose of or encumber any assets (except for (i)
sales of assets in the ordinary course of business and in a manner consistent
with past practice and (ii) dispositions of obsolete or worthless assets);
(d) accelerate, amend or change the period (or permit any
acceleration, amendment or change) of exercisability of options granted under
the Individual Employee Plans or the Desktop Employee Plans (including the
Individual Stock Option Plans, the Desktop Stock Option Plans, the Individual
Employee Stock Purchase Plan and the Desktop Employee Stock Purchase Plan) or
the Warrants or authorize cash payments in exchange for any options granted
under any of such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary may
declare and pay a dividend to its parent, (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
Individual IP Rights or Desktop IP Rights, as the case may be, or amend or
modify any existing agreements with respect to any Individual IP Rights,
Individual IP Rights Agreements, Desktop IP Rights or Desktop IP Rights
Agreements, as the case may be, other than nonexclusive object and source code
licenses in the ordinary course of business consistent with past practice;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee (other than guarantees of bank debt of its
subsidiaries entered into in the ordinary course of business) or
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endorse or otherwise as an accommodation become responsible for, the obligations
of any person, or make any loans or advances, except in the ordinary course of
business consistent with past practice; (iii) enter into or amend any material
contract or agreement other than in the ordinary course of business; (iv)
authorize any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $100,000, taken as a whole (except pursuant to a capital
expenditure budget approved in writing by both parties); or (v) enter into or
amend any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.01(g);
(h) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees who
are not officers in accordance with past practices, or grant any severance or
termination pay to, or enter into any employment or severance agreement with any
director, officer (except for officers who are terminated on an involuntary
basis) or other employee, or establish, adopt, enter into or amend any Employee
Plan;
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures (including, without limitation, procedures
with respect to revenue recognition, capitalization of software development
costs, payments of accounts payable and collection of accounts receivable);
(j) make any material tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations for any assessment of any
tax, except to the extent the amount of any such settlement has been reserved
for on its most recent SEC Report;
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements of Individual or Desktop, as the case may be, or
incurred in the ordinary course of business and consistent with past practice;
(1) except as may be required by law, take any action to terminate or
amend any of its Employee Plans other than in connection with the Merger;
(m) take or allow to be taken or fail to take any act or omission
which would jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes under GAAP; or
(n) enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(o) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (n) above, or any action which would make
any of the representations or warranties of Individual or Desktop, as the case
may be, contained in this Agreement untrue or
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incorrect or prevent Individual or Desktop, as the case may be, from performing
or cause Individual or Desktop, as the case may be, not to perform its covenants
hereunder or result in any of the conditions to the Merger set forth herein not
being satisfied.
If either party wishes to obtain the consent of the other to take
actions for which prior consent is required pursuant to this Section 4.01, such
party shall request such consent in writing by telecopy to the attention of the
Chief Executive Officer and the Chief Financial Officer of the other party. A
consent signed by either such officer shall be deemed sufficient for purposes
hereof. In addition, if the party receiving such a request does not respond in
writing (which may include an e-mailed response) to such request within 5
business days after the date the request is telecopied, the receiving party
shall be deemed to have consented to the requested action for all purposes of
this Agreement.
SECTION 4.02. NO SOLICITATION.
(a) Restrictions on Individual
(i) Except as set forth in section 4.02(a) of the Individual
Disclosure Schedule, without the prior written consent of Desktop, Individual
shall not, directly or indirectly, through any officer, director, employee,
representative or agent of Individual or any of its subsidiaries, solicit or
encourage (including by way of furnishing information) the initiation or
submission of any inquiries, proposals or offers regarding any acquisition,
merger, take-over bid, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer) or similar
transactions involving Individual or any subsidiaries of Individual (any of the
foregoing inquiries or proposals being referred to herein as an "Acquisition
-----------
Proposal"); provided, however, that nothing contained in this Agreement shall
--------
prevent the Board of Directors of Individual from referring any third party to
this Section 4.02(a). Nothing contained in this Section 4.02(a) or any other
provision of this Agreement shall prevent the Board of Directors of Individual
from considering, and recommending to the stockholders of Individual an
unsolicited bona fide written Acquisition Proposal which the Board of Directors
of Individual determines in good faith (after consultation with its financial
advisors, and after receiving a written opinion of outside counsel to the effect
that the Board of Directors is required to do so in order to discharge properly
its fiduciary duties) would result in a transaction more favorable to
Individual's stockholders from a financial point of view than the transaction
contemplated by this Agreement (any such Acquisition Proposal being referred to
herein as a "Individual Superior Proposal").
----------------------------
(ii) Individual shall immediately notify Desktop after receipt of
any Acquisition Proposal or any request for nonpublic information relating to
Individual or any of its subsidiaries in connection with an Acquisition Proposal
or for access to the properties, books or records of Individual or any
subsidiary by any person or entity that informs the Board of Directors of
Individual or such subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice to Desktop shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact.
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(iii) If the Board of Directors of Individual receives a request for
material nonpublic information by a party who makes a bona fide Acquisition
Proposal and the Board of Directors of Individual determines that such proposal,
if consummated pursuant to its terms, would be a Superior Proposal, then, and
only in such case, Individual may, subject to the execution of a confidentiality
agreement substantially similar to that then in effect between Individual and
Desktop, provide such party with access to information regarding Individual.
(iv) Individual shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than Desktop)
conducted heretofore with respect to any of the foregoing. Individual agrees not
to release any third party from any confidentiality or standstill agreement to
which Individual is a party.
(v) Individual shall ensure that the officers, directors and
employees of Individual and its subsidiaries and any investment banker or other
advisor or representative retained by Individual are aware of the restrictions
described in this Section, and shall be responsible for any breach of this
Section 4.02(a) by such bankers, advisors and representatives.
(b) Restrictions on Desktop
(i) Except as set forth in Section 4.02(b) of the Desktop
Disclosure Schedule, without the prior written consent of Individual, Desktop
shall not, directly or indirectly, through any officer, director, employee,
representative or agent of Desktop or any of its subsidiaries, solicit or
encourage (including by way of furnishing information) the initiation or
submission of any inquiries, proposals or offers regarding any acquisition,
merger, take-over bid, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer) or similar
transactions involving Desktop or any subsidiaries of Desktop(any of the
foregoing inquiries or proposals being referred to herein as an "Acquisition
-----------
Proposal"); provided, however, that nothing contained in this Agreement shall
---------
prevent the Board of Directors of Desktop from referring any third party to this
Section 4.02(b). Nothing contained in this Section 4.02(b) or any other
provision of this Agreement shall prevent the Board of Directors of Desktop from
considering, and recommending to the stockholders of Desktop an unsolicited bona
fide written Acquisition Proposal which the Board of Directors of Desktop
determines in good faith (after consultation with its financial advisors, and
after receiving a written opinion of outside counsel to the effect that the
Board of Directors is required to do so in order to discharge properly its
fiduciary duties) would result in a transaction more favorable to Desktop's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such Acquisition Proposal being referred to herein as a
"Desktop Superior Proposal").
-------------------------
(ii) Desktop shall immediately notify Individual after receipt of
any Acquisition Proposal or any request for nonpublic information relating to
Desktop or any of its subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of Desktop or any subsidiary by
any person or entity that informs the Board of Directors of Desktop or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Individual shall be made orally and in writing and shall indicate
in
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reasonable detail the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact.
(iii) If the Board of Directors of Desktop receives a request for
material nonpublic information by a party who makes a bona fide Acquisition
Proposal and the Board of Directors of Desktop determines that such proposal, if
consummated pursuant to its terms, would
be a Superior Proposal, then, and only in such case, Desktop may, subject to the
execution of a confidentiality agreement substantially similar to that then in
effect between Desktop and Individual, provide such party with access to
information regarding Desktop.
(iv) Desktop shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Individual)
conducted heretofore with respect to any of the foregoing. Desktop agrees not
to release any third party from any confidentiality or standstill agreement to
which Desktop is a party.
(v) Desktop shall ensure that the officers, directors and
employees of Desktop and its subsidiaries and any investment banker or other
advisor or representative retained by Desktop are aware of the restrictions
described in this Section, and shall be responsible for any breach of this
Section 4.02(b) by such bankers, advisors and representatives.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT;
OTHER FILINGS. As promptly as practicable after the execution of this
Agreement, Individual and Desktop will prepare, and file with the SEC, the Proxy
Statement and Desktop will prepare and file with the SEC the Registration
Statement in which the Proxy Statement will be included as a prospectus. Each
of Individual and Desktop will respond to any comments of the SEC, will use its
best efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing and will cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
time. As promptly as practicable after the date of this Agreement, Individual
and Desktop will prepare and file any other filings required under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky laws relating
to the Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Each party will notify the other party promptly upon the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff or any other governmental officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. The Proxy Statement, the Registration Statement and
the Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required
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to be set forth in an amendment or supplement to the Proxy Statement, the
Registration Statement or any Other Filing, Individual or Desktop, as the case
may be, will promptly inform the other party of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Individual and Desktop, such amendment or supplement.
The Proxy Statement will also include the recommendations of (i) the Board of
Directors of Individual in favor of approval of this Agreement and the Merger
(except that the Board of Directors of Individual may withdraw, modify or
refrain from making such recommendation if the Board receives an opinion of
counsel that the Board's fiduciary duties under applicable law require it to do
so), and (ii) the Board of Directors of Desktop in favor of the issuance of
shares of Desktop Common Stock in the Merger, the change of Desktop's name and
an increase in the number of authorized shares of capital stock (except that the
Board of Directors of Desktop may withdraw, modify or refrain from making such
recommendations if the Board receives an opinion of counsel that the Board's
fiduciary duties under applicable law require it to do so).
SECTION 5.02. MEETINGS OF STOCKHOLDERS. Promptly after the date
hereof, Individual will take all action necessary in accordance with Delaware
Law and its Certificate of Incorporation and Bylaws to convene the Individual
Stockholders' Meeting to be held as promptly as practicable, and in any event
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon this Agreement. Individual will
consult with Desktop and use its commercially reasonable efforts to hold the
Individual Stockholders' Meeting on the same day as the Desktop Stockholders'
Meeting. Promptly after the date hereof, Desktop will take all action necessary
in accordance with Delaware Law and its Certificate of Incorporation and Bylaws
to convene the Desktop Stockholders' Meeting to be held as promptly as
practicable, and in any event within 45 days after the declaration of
effectiveness of the Registration Statement, for the purpose of (i) voting upon
this Agreement, (ii) the issuance of shares of Desktop Common Stock by virtue of
the Merger, (iii) the increase in the number of authorized shares of capital
stock, and (iv) the change of the name of the Surviving Corporation to "NewsEDGE
Corporation." Desktop will consult with Individual and will use its
commercially reasonable efforts to hold the Desktop Stockholders' Meeting on the
same day as the Individual Stockholders' Meeting. Desktop and Individual will
each use its commercially reasonable efforts to solicit from its stockholders
proxies in favor of the approval of the foregoing proposals and to take all
other action necessary or advisable to secure the vote or consent of their
respective stockholders required by the rules of the National Association of
Securities Dealers, Inc. or Delaware Law to obtain such approvals, except to the
extent that the Board of Directors of such party determines that doing so would
cause the Board of Directors of such party to breach its fiduciary duties under
applicable law.
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject, Individual and
Desktop shall each (and shall cause each of their subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
other, reasonable access, during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records and, during such
period,
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Individual and Desktop each shall (and shall cause each of their subsidiaries
to) furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, and each
shall make available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of the other's
business, properties and personnel as either party may reasonably request. Each
party shall keep such information confidential in accordance with the terms of
the currently effective confidentiality and standstill agreement (the
"Confidentiality Agreement") between Desktop and Individual.
-------------------------
(b) Individual shall provide to Desktop and Desktop shall provide to
Individual promptly as available drafts of their respective Forms 10-Q for the
quarter ended September 30, 1997.
SECTION 5.04. CONSENTS; APPROVALS. Individual and Desktop shall
each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and Individual and
Desktop shall make all filings (including, without limitation, all filings with
United States and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
Individual and Desktop and the consummation by them of the transactions
contemplated hereby. Individual and Desktop shall furnish all information
required to be included in the Proxy Statement and the Registration Statement,
or for any application or other filing to be made pursuant to the rules and
regulations of any United States, or foreign governmental body in connection
with the transactions contemplated by this Agreement.
SECTION 5.05. STOCK OPTIONS AND WARRANTS.
(a) At the Effective Time, Individual's obligations with respect to
each outstanding option or warrant to purchase Shares of Individual Common Stock
(each, a "Individual Option") under Individual's Stock Option Plans or pursuant
-----------------
to the Warrants whether vested or unvested, will be assumed by Desktop. Each
Individual Option so assumed by Desktop under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in Individual's
Employee Stock Option Plans, the agreement or Warrant pursuant to which such
Individual Option was issued as in effect immediately prior to the Effective
Time, except that (i) such Individual Option will be exercisable for that number
of Shares of Desktop Common Stock equal to the product of the number of Shares
of Individual Common Stock that were purchasable under such Individual Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded up to the nearest whole number of Shares of Desktop Common Stock, and
(ii) the per share exercise price for the shares of Desktop Common Stock
issuable upon exercise of such assumed Individual Option will be equal to the
quotient determined by dividing the exercise price per share of Individual
Common Stock at which such Individual Option was exercisable immediately prior
to the Effective Time by the Exchange Ratio, and rounding the resulting exercise
price up to the nearest whole cent.
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(b) It is the intention of the parties that Individual Options assumed
by Desktop qualify following the Effective Time as incentive stock options as
defined in the Code ("ISO's") to the extent such Individual Options qualified as
ISO's prior to the Effective Time.
(c) After the Effective Time, Desktop will issue to each holder of an
outstanding Individual Option a document evidencing the foregoing assumption by
Desktop.
(d) Desktop will reserve sufficient shares of Desktop Common Stock for
issuance under this Section 5.05 hereof.
SECTION 5.06. INDIVIDUAL EMPLOYEE STOCK PURCHASE PLAN.
(a) Individual shall use all reasonable efforts, to the extent
permitted by law and the provisions of the Individual Employee Stock Purchase
Plan (including the amendment provision thereof) to cause the exercise date (as
such term is used in the Individual Employee Stock Purchase Plan) applicable to
the then current offering period (as such term is used in the Individual
Employee Stock Purchase Plan) to be the last trading day on which the shares of
Individual Common Stock are traded on Nasdaq immediately prior to the Effective
Time (the "Final Individual Purchase Date"); provided, that, such change in the
Purchase Date shall be conditioned upon the consummation of the Merger. On the
Final Individual Purchase Date, Individual shall apply the funds credited as of
such date under the individual stock purchase plan within each participant's
payroll withholdings account to the purchase of whole shares of Individual
Common Stock in accordance with the terms of the Individual Employee Stock
Purchase Plan. the cost to each participant in the Individual Stock Purchase
Plan for shares of Individual Common Stock shall be the lower of 85% of the
average market price of individual Common Stock on Nasdaq on (i) the first day
of the then current offering period or (ii) the Final Individual Purchase Date,
in either event rounded up to the nearest quarter.
(b) Desktop shall use all reasonable efforts to amend Desktop's
Employee Stock Purchase Plan so that Employees of Individual as of the Effective
Time shall be permitted to participate in Desktop's Employee Stock Purchase Plan
commencing on the first enrollment date following the Effective Time, subject to
compliance with the eligibility provisions of such plan (with employees
receiving credit, for purposes of such eligibility provisions, for service with
Individual).
(c) It is the intention of the parties that notwithstanding anything
contained in this Agreement, the exercise price, the number of shares
purchasable and the terms and conditions applicable to any adjustments to the
Individual Employee Stock Purchase Plan and any employee stock purchase plan
maintained by Desktop shall be determined so as to comply with Sections 423 and
424 of the Code and the regulations promulgated thereunder (specifically the
provisions of Code Section 424(a) and 424(h)(3)(A) and Treasury Regulation
SECTION 1.425-1) such that the arrangement implemented under the Individual
Employee Stock Purchase Plan by reason of the Merger not constitute a
"modification."
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(d) Desktop will reserve sufficient shares of Desktop Common Stock for
issuance under Section 5.06 hereof.
SECTION 5.07. INDIVIDUAL AFFILIATE AGREEMENT. Set forth in Section
5.07 of the Individual Disclosure Schedule is a list of those persons who may be
deemed to be, in Individual's reasonable judgment, affiliates of Individual
within the meaning of Rule 145 promulgated under the Securities Act (a
"Individual Affiliate"). Individual will provide Desktop with such
---------------------
information and documents as Desktop reasonably requests for purposes of
reviewing such list. Individual will use its best efforts to deliver or cause
to be delivered to Desktop prior to the Closing Date from each Individual
Affiliate an executed affiliate agreement in substantially the form attached
hereto as Exhibit E (the "Individual Affiliate Agreement"), each of which will
------------------------------
be in full force and effect as of the Effective Time. Desktop will be entitled
to place appropriate legends on the certificate evidencing any Desktop Common
Stock to be received by a Individual Affiliate pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Desktop Common Stock, consistent with the terms of the Individual
Affiliate Agreement.
SECTION 5.08. DESKTOP AFFILIATE AGREEMENT. Set forth on Section 5.08
of the Desktop Disclosure Schedule is a list of those persons who may be deemed
to be, in Desktop's reasonable judgment, affiliates of Desktop within the
meaning of Rule 145 promulgated under the Securities Act (a "Desktop
-------
Affiliate"). Desktop will provide Individual with such information and
documents as Individual reasonably requests for purposes of reviewing such list.
Desktop will use its best efforts to deliver or cause to be delivered to
Individual prior to the Closing Date from each Desktop Affiliate an executed
affiliate agreement in substantially the form attached hereto as Exhibit F (the
"Desktop Affiliate Agreement"), each of which will be in full force and effect
---------------------------
as of the Effective Time.
SECTION 5.09. INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, the Surviving Corporation will
fulfill and honor in all respects the obligations of Individual which exist
prior to the date hereof to indemnify Individual's present and former directors
and officers and their heirs, executors and assigns. The Certificate of
Incorporation and By-laws of the Surviving Corporation will contain the
provisions with respect to indemnification and elimination of liability for
monetary damages set forth in the Certificate of Incorporation and By-laws of
Individual, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, at the Effective
Time, were directors, officers, employees or agents of Individual, unless such
modification is required by law.
(b) After the Effective Time the Surviving Corporation will, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-laws, indemnify and hold
harmless, each present or former director or officer of Individual or any of its
subsidiaries and his or her heirs, executors and assigns (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments,
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fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, to the extent arising out of
or pertaining to any action or omission in his or her capacity as a director,
officer, employee or agent of Individual occurring prior to the Effective Time
(including without limitation actions or omissions relating to the Merger) for a
period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time will be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation will pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; provided, however, that the Surviving
-------- -------
Corporation will not be liable for any settlement effected without its written
consent (which consent will not be unreasonably withheld); and provided,
--------
further, that, in the event that any claim or claims for indemnification are
-------
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims will continue until the disposition of any
and all such claims. The Indemnified Parties as group may retain only one law
firm (in addition to local counsel) to represent them with respect to any single
action unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties.
(c) For a period of six years after the Effective Time, the Surviving
Corporation will use all commercially reasonable efforts to maintain in effect,
if available, directors' and officers' liability insurance covering those
persons who are currently covered by Individual's Directors, Officers and
Company Liability insurance policies on terms comparable to those applicable to
the current directors of Individual; provided, however, that in no event will
-------- -------
the Surviving Corporation be required to expend per year an amount in excess of
two times the annual premium currently paid by Desktop for its directors and
officers' liability insurance coverage.
(d) Individual shall use best efforts, after consultation with
Desktop, to negotiate and secure a "tail" on its existing Directors, Officers
and Company Liability insurance policies for a period of one year, at a total
cost not to exceed $300,000.
(e) This Section 5.09 will survive any termination of this Agreement
and the consummation of the Merger at the Effective Time, is intended to benefit
Individual, the Surviving Corporation and the Indemnified Parties, and will be
binding on all successors and assigns of the Surviving Corporation.
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS. Individual shall give prompt
notice to Desktop, and Desktop shall give prompt notice to Individual, of (i)
the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate, and (ii) any failure of
Individual or Desktop, as the case may be, materially to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise
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affect the remedies available hereunder to the party receiving such notice; and
provided, further, that failure to give such notice shall not be treated as a
breach of covenant for the purposes of Sections 6.02(a) and 6.03(a) unless the
failure to give such notice results in material prejudice to the other party.
SECTION 5.11. FURTHER ACTION/TAX TREATMENT. Upon the terms and subject to
the conditions hereof, each of the parties hereto in good faith shall use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, and to otherwise satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement. Each of Desktop and
Individual shall use its best efforts to cause the Merger to qualify, and will
not (both before and after consummation of the Merger) take any actions which
could prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368 of the Code.
SECTION 5.12. PUBLIC ANNOUNCEMENTS. Desktop and Individual shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law or the National Association of Securities Dealers, Inc. if it
has used all reasonable efforts to consult with the other party.
SECTION 5.13. LISTING OF DESKTOP COMMON STOCK. Desktop shall use its
reasonable best efforts to cause the shares of Desktop Common Stock to be issued
in the Merger to be approved for listing on Nasdaq prior to the Effective Time.
SECTION 5.14. CONVEYANCE TAXES. Desktop and Individual shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
SECTION 5.15. ACCOUNTANTS' LETTERS. Upon reasonable notice from
Desktop, Individual shall use its best efforts to cause Coopers & Xxxxxxx, LLP
to deliver to Desktop a letter covering such matters as are requested by Desktop
and as are customarily addressed in accountant's "comfort" letters.
SECTION 5.16. POOLING ACCOUNTING TREATMENT. Each of Desktop and
Individual agree not to take any action that would adversely affect the ability
of Desktop to treat the Merger as a pooling of interests under GAAP.
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SECTION 5.17. THIRD PARTY CONSENTS. As soon as practicable following
the date hereof, Desktop and Individual will each use its commercially
reasonable efforts to obtain all material consents, waivers and approvals under
any of its or its subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby.
SECTION 5.18. TAX-FREE REORGANIZATION. Desktop and Individual will
each use its commercially reasonable efforts to cause the Merger to be treated
as a reorganization within the meaning of Section 368 of the Code. Desktop and
Individual will each make available to the other party and their respective
legal counsel copies of all returns requested by the other party.
SECTION 5.19. BOARD OF DIRECTORS OF DESKTOP. The Board of Directors
of Desktop shall recommend to the stockholders of Desktop and shall use all
other reasonable efforts to take all actions necessary (i) to cause the Board of
Directors of the Surviving Corporation, immediately after the Effective Time, to
consist of seven (7) persons, four (4) of whom shall have served on the Board of
Directors of Desktop immediately prior to the Effective Time (the "Former
Desktop Directors"), and three (3) of whom (selected by the Chief Executive
Officer of Individual and approved by the Chief Executive Officer of Desktop)
shall have served on the Board of Directors of Individual immediately prior to
the Effective Time (the "Former Individual Directors") and (ii) to constitute
the Board of Directors of Desktop so that two Former Desktop Directors and one
Former Individual Director shall be in the class of directors whose terms expire
at the Annual Meeting of Stockholders for the third year after the Effective
Date, one Former Desktop Director and one Former Individual Director shall be in
the class whose term expires two years after the Effective Date, and one Former
Desktop Director and one Former Individual Director shall be in the class whose
term expires at the Annual Meeting one year after the Effective Date. If, prior
to the Effective Time, any of the Individual or Desktop designees shall decline
or be unable to serve as a Individual or Desktop director, Individual (if such
person was designated by Individual) or Desktop (if such person was designated
by Desktop) shall designate another person to serve in such person's stead,
which person shall be reasonably acceptable to the other party.
SECTION 5.20. OFFICERS OF DESKTOP. At the Effective Time, Xxxxxx X.
XxXxxxx will continue to serve as the Chief Executive Officer, Chairman and
President of the Surviving Corporation, Xxxxxx X. Xxxxxxxxx will continue to
serve as the Chief Financial Officer and Vice President-Finance and Operations
of the Surviving Corporation and Xxxxxxx X. Xxxxxxxx will become the Vice-
Chairman of the Surviving Corporation.
SECTION 5.21. CHANGE OF NAME. Subject to the last sentence of Section
5.01 hereof, at the Desktop Stockholders' Meeting Desktop shall propose and
recommend that its Certificate of Incorporation be amended at the Effective Time
to change its name to "NewsEDGE Corporation".
SECTION 5.22. FORM S-8. Desktop agrees to file a registration
statement on Form S-8 for the shares of Desktop Common Stock issuable with
respect to assumed Individual Stock Options no later than two (2) business days
after the Closing Date.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been initiated
or, to the knowledge of Desktop or Individual, threatened by the SEC;
(b) Stockholder Approval. This Agreement shall have been approved and
adopted, and the Merger shall have been approved and adopted, by the requisite
vote, under applicable law, by the stockholders of Individual and Desktop,
respectively; and the issuance of shares of Desktop Common Stock by virtue of
the Merger shall have been approved by the requisite vote under the rules of the
National Association of Securities Dealers, Inc. by the Stockholders of Desktop.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by any administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal;
(d) Tax Opinions. Desktop and Individual shall have received
substantially identical written opinions of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP and
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. respectively, in form and
substance reasonably satisfactory to them to the effect that the Mergers will
constitute a reorganization within the meaning of Section 368 of the Code.
(e) Nasdaq Listing. The Desktop Common Stock shall have been
approved for listing, subject to notice of issuance, on Nasdaq.
(f) Opinion of Accountants. Each of Desktop and Individual shall have
received letters from each of Xxxxxx Xxxxxxxx LLP and Coopers & Xxxxxxx, LLP,
each dated within two (2) business days prior to the Effective Time, regarding
those firms' concurrence with Desktop managements' and Individual managements'
conclusions as to the appropriateness of
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pooling of interest accounting for the Merger under Accounting Principles Board
Opinion No. 16, if the Merger is consummated in accordance with this Agreement.
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF DESKTOP. The
obligations of Desktop to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Individual contained in this Agreement (together with the
Individual Disclosure Schedule) shall be true and correct in all respects on and
as of the Effective Time, with the same force and effect as if made on and as of
the Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) or (iii)
failures to be true and correct that would not have a Material Adverse Effect on
Individual; and Desktop shall have received a certificate to such effect signed
by the President and Chief Financial Officer of Individual;
(b) Agreements and Covenants. Individual shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, except to the extent any such non-performance or non-compliance
would not have a Material Adverse Effect on Individual, and Desktop shall have
received a certificate to such effect signed by the President and Chief
Financial Officer of Individual;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Individual for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by Individual;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Desktop from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Desktop or any of its subsidiaries of all or a
material portion of the business or assets of Desktop or any of its
subsidiaries, or seeking to compel Desktop or any of its subsidiaries to dispose
of or hold separate all or any material portion of the business or assets of
Desktop or any of its subsidiaries, as a result of the Merger or the
transactions contemplated by this Agreement;
(e) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business, results
of operations or financial condition of Individual or any subsidiary of
Individual having or reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect;
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(f) Affiliate Agreements. Desktop shall have received from each person
who is identified in Section 5.07 of the Individual Disclosure Schedule as an
"affiliate" of Individual an Affiliate Agreement, and each such Affiliate
Agreement shall be in full force and effect;
(g) Legal Opinion. Desktop shall have received a legal opinion from
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Individual, in a
form reasonably acceptable to Desktop;
(h) Transfer of Material Agreements. Individual shall have received
all consents and approvals required to the Merger under Individual's agreements
with Reuters NewMedia, Inc. and Netscape Communications, Inc.
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATIONS OF INDIVIDUAL.
The obligation of Individual to effect the Merger is also subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Desktop contained in this Agreement (together with the Desktop
Disclosure Schedule) shall be true and correct in all respects on and as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and (iii)
failures to be true and correct that would not have a Material Adverse Effect on
Desktop; and Individual shall have received a certificate to such effect signed
by the President and Chief Financial Officer of Desktop;
(b) Agreements and Covenants. Desktop shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, except to the extent any such non-performance or non-compliance
would not have a Material Adverse Effect on Desktop, and Individual shall have
received a certificate to such effect signed by the President and Chief
Financial Officer of Desktop;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Desktop for the authorization, execution and delivery of this Agreement
and the consummation by them of the transactions contemplated hereby shall have
been obtained and made by Desktop; and
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Individual from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Individual or any of its subsidiaries of all or a
material portion of the business or assets of Individual or any of its
subsidiaries, or seeking to
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compel Individual or any of its subsidiaries to dispose of or hold separate all
or any material portion of the business or assets of Individual or any of its
subsidiaries, as a result of the Merger or the transactions contemplated by this
Agreement;
(e) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business, results
of operations or financial condition of Desktop or any subsidiary of Desktop
having or reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
(f) Affiliate Agreements. Individual shall have received from each
person who is identified in Section 5.08 of the Desktop Disclosure Schedule as
an "affiliate" of Desktop an Affiliate Agreement, and each such Affiliate
Agreement shall be in full force and effect;
(g) Legal Opinion. Individual shall have received a legal opinion
from Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel to Desktop, in a form reasonably
acceptable to Individual.
(h) Consent. Desktop shall have received all consents and approvals
required to the Merger under Desktop's agreement with Reuters, Inc.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of Individual and Desktop:
(a) by mutual written consent duly authorized by the Boards of
Directors of Desktop and Individual; or
(b) by either Desktop or Individual if the Merger shall not have been
consummated by April 30, 1998 (provided that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or
(c) by either Desktop or Individual if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by either Desktop or Individual, if the required approvals of the
stockholders of Desktop or Individual contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the requisite vote upon a
vote taken as a meeting of
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stockholders convened therefor or at any adjournment thereof (provided that the
right to terminate this Agreement under this Section 7.01(d) shall not be
available to any party where the failure to obtain stockholder approval of such
party shall have been caused by the action or failure to act of such party in
breach of this Agreement); or
(e) by Desktop, if the Board of Directors of Individual shall have
withheld, withdrawn or modified in a manner adverse to Desktop its
recommendation in favor of the Merger; or
(f) by Individual, if the Board of Directors of Desktop shall have
withheld, withdrawn or modified in a manner adverse to Individual its
recommendation in favor of the Merger; or
(g) by Desktop or Individual, upon a breach of any, covenant or
agreement on the part of Individual or Desktop, respectively, set forth in this
Agreement, in either case, such that the conditions set forth in Section
6.02(b), or Section 6.03(b), would not be satisfied (a "Terminating Breach"),
provided that, if such Terminating Breach is curable prior to the expiration of
5 days from its occurrence (but in no event later than April 30, 1998) by
Desktop or Individual, as the case may be, through the exercise of its
reasonable best efforts and for so long as Desktop or Individual, as the case
may be, continues to exercise such reasonable best efforts, neither Individual
nor Desktop, respectively, may terminate this Agreement under this Section
7.01(g) unless such 5-day period expires without such Terminating Breach having
been cured; or
(h) by either Individual or Desktop, if Individual shall have accepted
a Individual Superior Proposal or if the Board of Directors of Individual
recommends a Individual Superior Proposal to the stockholders of Individual; or
(i) by either Desktop or Individual, if Desktop shall have accepted a
Desktop Superior Proposal or if the Desktop Board of Directors recommends a
Desktop Superior Proposal to the stockholders of Desktop; or
(j) by Individual, if there shall have occurred any Material Adverse
Effect with respect to Desktop since the date of this Agreement; or
(k) by Desktop, if there shall have occurred any Material Adverse
Effect with respect to Individual since the date of this Agreement; or
(l) by either Desktop or Individual, if the SEC determines that
Desktop may not account for the Merger as a pooling of interests; or
(m) by either Desktop or Individual, if any representation or warranty
on the part of the other party set forth in this Agreement proves to have been
untrue on the date hereof, if such failure to be true is reasonably likely to
have a Material Adverse Effect.
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SECTION 7.02. NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination
of this Agreement under Section 7.01 above will be effective immediately upon
the delivery of written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement pursuant to Section
7.01, this Agreement shall forthwith become void and there shall be no liability
on the part of any party hereto or any of its affiliates, directors, officers or
stockholders except (i) as set forth in Sections 7.02, 7.03 and 8.01 hereof, and
(ii) nothing herein shall relieve any party from liability for any willful
breach hereof. No termination of this Agreement shall affect the obligations of
the parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with its terms.
SECTION 7.03. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that Desktop and Individual shall
-------- -------
share equally all fees and expenses incurred in relation to the preparation,
printing and filing of the Proxy Statement (including any preliminary materials
related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto.
(b) Individual shall pay Desktop a fee of $3,500,000, plus actual,
documented and reasonable out-of-pocket expenses of Desktop relating to the
transactions contemplated by this Agreement (including but not limited to, fees
and expenses of Desktop's counsel, accountants and financial advisors) upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Desktop pursuant to
Section 7.01(e), 7.01 (g) or 7.01(m); or
(ii) the termination of this Agreement by Desktop or Individual
pursuant to Section 7.01(h); or
(iii) the termination of this Agreement by Individual or Desktop
pursuant to Section 7.01(d) as a result of the failure to receive the
requisite vote for approval and adoption by the stockholders of Individual
at the Individual Stockholders' Meeting, if Individual subsequently enters
into an Alternative Transaction; or
(iv) the delivery of information by Individual to a Third Party
(as defined in paragraph (d) below) or described in Section 4.02(a)(iii)
hereof.
(c) Desktop shall pay Individual a fee of $3,500,000, plus actual,
documented and reasonable out-of-pocket expenses of Individual relating to the
transactions contemplated by this Agreement (including but not limited to, fees
and expenses of Individual's counsel, accountants and financial advisors) upon
the earliest to occur of the following events:
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(i) the termination of this Agreement by Individual pursuant to
Section 7.01(f), 7.01(g) or 7.01(m); or
(ii) the termination of this Agreement by Desktop or Individual
pursuant to Section 7.01(i); or
(iii) the termination of this Agreement by Individual or Desktop
pursuant to Section 7.01(d) as a result of the failure to receive the
requisite vote for approval and adoption by the stockholders of Desktop at
the Desktop Stockholders' Meeting, if Desktop subsequently enters into an
Alternative Transaction; or
(iv) the delivery of information by Desktop to a Third Party as
described in Section 4.02(b)(iii) hereof.
(d) As used herein, "Alternative Transaction" means (i) a transaction
pursuant to which any person (or group of persons) other than Desktop or its
affiliates or Individual or its affiliates, as the case may be (a "Third
Party"), acquires more than 50 percent of the outstanding shares, whether from
Individual or Desktop, as the case may be, pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving Individual or Desktop, as the case may be, pursuant to which any Third
Party acquires more than 50 percent of the outstanding equity securities of
Individual or Desktop, as the case may be, or the entity surviving such merger
or business combination or (iii) any other transaction pursuant to which any
Third Party acquires control of assets (including for this purpose the
outstanding equity securities of subsidiaries of Individual or Desktop, as the
case may be, or of the entity surviving any merger or business combination
including any of them) of Individual or Desktop, as the case may be, and its
subsidiaries having a fair market value equal to more than 50 percent of the
fair market value of all the assets of Individual or Desktop, as the case may
be, and its subsidiaries, taken as a whole, immediately prior to such
transaction).
(e) The fee payable pursuant to Sections 7.03(b)(i), (ii) and (iv) and
7.03(c)(i), (ii), (iv) shall be paid within one business day after the first to
occur of the events described in Sections 7.03(b)(i), (ii) and (iv) and
7.03(c)(i), (ii) and (iv), as the case may be. The fee payable pursuant to
Sections 7.03(b)(iii) and 7.03(c)(iii) shall be paid on the date of the closing
of the Alternative Transaction giving rise to such fee, provided, however, that
no fee shall be payable unless the party entering into an Alternative
Transaction has completed or agreed to complete such Alternative Transaction
within six months of termination of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any
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investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement. Any disclosure made with reference
to one or more sections of the Individual Disclosure Schedule or the Desktop
Disclosure Schedule shall be deemed disclosed with respect to each other section
therein as to which such disclosure is relevant provided such relevance is
reasonably apparent. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.01, as the case may be, except that the
agreements set forth in Sections 5.05, 5.06, 5.09, 5.19 and 5.22 shall survive
the Effective Time indefinitely and those set forth in Sections 5.03 and 7.03
shall survive termination indefinitely. The Confidentiality Agreement shall
remain in full force and effect and shall survive termination of this Agreement
as provided therein.
SECTION 8.02. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered if delivered personally, three
days after being sent by registered or certified mail (postage prepaid, return
receipt requested), one day after dispatch by recognized overnight courier
(provided delivery is confirmed by the carrier) and upon transmission by
telecopy, confirmed received, to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of
address):
(a) If to Desktop:
Desktop Data, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxx
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxxx, Esq.
(b) If to Individual:
Individual, Inc.
0 Xxx Xxxxxxx Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
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With a copy to:
Mintz, Levin, Xxxx, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
SECTION 8.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "`affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person, including, without limitation, any
partnership or joint venture in which Individual or Desktop, as the case may be,
(either alone, or through or together with any other subsidiary) has, directly
or indirectly, an interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks in
Boston are required or authorized to be closed;
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of Individual, the Surviving
Corporation, Desktop or any other person means any corporation, partnership,
joint venture or other legal entity of which Individual, the Surviving
Corporation, Desktop or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 8.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of Individual and Desktop, no amendment may be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.05. WAIVER. At any time prior to the Effective Time, any party
hereto may, with respect to any other party hereto, (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
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SECTION 8.06. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 8.09. ASSIGNMENT No party may assign this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other parties hereto.
SECTION 8.10. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
expressed or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.08 (which is intended to be for the benefit of
the Indemnified Parties and may be enforced by such Indemnified Parties).
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.12. GOVERNING LAW. This agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
SECTION 8.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Desktop and Individual have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
DESKTOP DATA, INC.
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------------
Xxxxxx X. XxXxxxx
President and Chief Executive Officer
INDIVIDUAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
