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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 1996
EXCITE, INC.
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(Exact name of Registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-28064 77-0378215
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(Commission (IRS Employer
File Number) Identification No.)
1091 N. Shoreline Boulevard, Mountain View, CA 94043
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(Address of principal executive offices) (Zip Code)
(415) 943-1200
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
On August 30, 1996, Excite, Inc., a California corporation
("Registrant"), acquired The McKinley Group, Inc., a Delaware corporation
("McKinley"), pursuant to the merger (the "Merger") of Excite Acquisition
Company, a Delaware corporation and wholly owned subsidiary of Registrant
("Excite Sub") with and into McKinley. The Merger was effected pursuant to an
Agreement of Merger dated as of August 30, 1996 by and between Excite Sub and
McKinley and an Agreement and Plan of Reorganization dated as of August 7, 1996
(the "Plan"), by and among Registrant, Excite Sub, McKinley, Isabel Maxwell,
Christine Maxwell, David Hayden, Roger Malina and David Lynch. The Merger was
accounted for as a pooling of interests and was structured to be a "tax-free"
reorganization for federal income tax purposes. The directors and executive
officers of Registrant were not changed as a result of the Merger. Prior to the
Merger, McKinley was a publisher of Internet directories as well as the provider
of the Magellan on-line Internet guide which previews and rates Web sites that
assist users in conducting more targeted and useful Web searches. After
completion of the Merger, McKinley will continue its historical business as a
wholly owned subsidiary of Registrant.
Pursuant to the terms of the Plan, Registrant issued a total
of 850,000 shares of Registrant's Common Stock in exchange for all the
outstanding shares of Series A Common Stock and Series B Common Stock of
McKinley. Upon the Merger, each outstanding share of McKinley Series A Common
Stock was converted into .0817633 fully paid and nonassessable shares of
Registrant's Common Stock and each outstanding share of McKinley Series B Common
Stock was converted into .2452899 fully paid and nonassessable shares of
Registrant's Common Stock. Registrant also assumed approximately $10.0 million
of indebtedness of McKinley. In addition, Registrant assumed each option or
warrant to purchase McKinley Series A Common Stock as well as all other
outstanding securities of McKinley convertible into its Series A Common Stock
outstanding immediately before the effective time of the Merger. Each McKinley
option and warrant is exercisable for, and each convertible security is
convertible into, that number of shares of Registrant's Common Stock equal to
.0817633 multiplied by the number of shares of McKinley Series A Common Stock
purchasable under the McKinley options and warrants, or issuable upon conversion
of such convertible securities, immediately before the effective time of the
Merger. Pursuant to this exchange ratio, Registrant may also issue up to
approximately 22,820 shares of its Common Stock upon exercise of the assumed
options and warrants and upon conversion of all such convertible securities. The
exchange ratio was determined on the basis of, among other things: (i) a
comparison of certain financial and stock market information for Registrant and
certain financial information for McKinley with similar types of information for
certain other companies in businesses similar to those of Registrant and
McKinley and (ii) discussions between senior management of Registrant and
McKinley regarding the business and prospects of their respective companies.
The shares of Registrant's Common Stock received by the former
McKinley shareholders have not been registered under the Securities Act of 1933,
as amended (the "1933 Act"), in reliance upon the exemption from registration
provided by Section 3(a)(10) thereof.
In connection with the Merger, Registrant, Chemical Trust
Company of California, as escrow agent, and the former McKinley shareholders
entered into an escrow agreement (the
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"Escrow Agreement") under which Registrant deposited into escrow stock
certificates representing 10% of the shares of Registrant's Common Stock
issuable pursuant to the Merger (the "Escrow Shares"). The Escrow Shares will be
held in escrow as collateral for the indemnification obligations of the
stockholders of McKinley under the Plan. The Escrow Shares will be held by the
escrow agent until (a) the date on which Registrant has first received final
audited financial statements together with a report thereon from Registrant's
independent auditors covering the combined results of Registrant and McKinley
for certain matters; and (b) August 30, 1997 for other matters.
Contemporaneously with the Merger, each of Isabel Maxwell,
Christine Maxwell, David Hayden, Alexander Cohen, Daniel Lynch, Roger Malina and
Cindy Martin entered into noncompetition agreements with Registrant. The
noncompetition agreements provide that such persons will not compete with
Registrant or McKinley for a period of one year following the Merger.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired and (b) Pro Forma Financial
Information It is impracticable to provide the required financial
statements of McKinley and pro forma financial information at this
time. The Company intends to file the required financial statements as
soon as possible but not later than 60 days after the date this Form
8-K is required to be filed.
(c) Exhibits.
The following exhibits are filed herewith:
2.01 Agreement and Plan of Reorganization dated as of August 7, 1996, by and
among Registrant, Excite Acquisition Corporation, The McKinley Group,
Inc., Isabel Maxwell, Christine Maxwell, David Hayden, Roger Malina and
David Lynch.
2.02 Agreement of Merger dated as of August 30, 1996 by and between Excite
Acquisition Corporation and The McKinley Group, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXCITE, INC.
Date: September 11, 1996 By: /s/ Richard B. Redding
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Richard B. Redding
Director of Finance and
Acting Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
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2.01 Agreement and Plan of Reorganization dated as of
August 7, 1996 by and among Registrant, Excite
Acquisition Corporation, The McKinley Group, Inc.,
Isabel Maxwell, Christine Maxwell, David Hayden,
Roger Malina and David Lynch.
2.02 Agreement of Merger dated as of August 30, 1996 by
and between Excite Acquisition Corporation and The
McKinley Group, Inc.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is entered
into as of this 7th day of August, 1996, by and among Excite, Inc., a California
corporation ("Excite"), Excite Acquisition Corporation, a Delaware corporation
and a wholly owned subsidiary of Excite ("Sub"), The McKinley Group, Inc., a
Delaware corporation ("McKinley"), and, with respect to Sections 2, 4.10 and 10
only, Isabel Maxwell, Christine Maxwell, David Hayden, Roger Malina and Daniel
Lynch (collectively, the "Principals").
RECITALS
A. Sub will merge with and into McKinley in a reverse triangular merger
(the "Merger"), with McKinley to be the surviving corporation of the Merger,
pursuant to the terms and conditions of this Agreement and an Agreement of
Merger substantially in the form of Exhibit A attached hereto (the "Agreement of
Merger") and the applicable provisions of the law of the State of Delaware. Upon
the effectiveness of the Merger, all of the outstanding Common Stock of McKinley
will be converted into Common Stock of Excite ("Excite Common Stock"). In
addition, all outstanding options ("McKinley Options") and warrants ("McKinley
Warrants") to purchase shares of the Common Stock of McKinley will be converted
into options and warrants, respectively, to purchase Excite Common Stock, and
all debt or other instruments convertible into or exchangeable for equity
securities of McKinley ("McKinley Convertible Securities") will become
convertible into or exchangeable for equity securities of Excite, all as
provided in this Agreement and the Agreement of Merger. The options, warrants
and convertible securities exercisable for Excite Common Stock issued in the
Merger shall be referred to herein as the "Excite Securities."
B. The Merger is intended to be treated as a reorganization pursuant to the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), by virtue of the provisions of Section 368(a)(2)(E) of the
Code and as a "pooling of interests" for accounting purposes.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. PLAN OF REORGANIZATION
1.1 The Merger. An Agreement of Merger will be filed with the office of
the Secretary of State of the State of Delaware as soon as practicable after the
McKinley Stockholders' Meeting (as defined in Section 4.4 hereof). The effective
date and time of such filing is referred to herein as the "Effective Time". At
the Effective Time, Sub will be merged with and into McKinley pursuant to this
Agreement and the Agreement of Merger and in accordance with applicable
provisions of the law of the State of Delaware as follows:
1.1.1 Conversion of Shares. Each share of McKinley Series A
Common Stock ("McKinley A Common") and each share of McKinley Series B Common
Stock ("McKinley B Common" and collectively, the "McKinley Common Stock") issued
and outstanding immediately
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prior to the Effective Time, other than shares, if any, for which dissenters
rights have been or will be perfected in compliance with applicable law, will by
virtue of the Merger and at the Effective Time, and without further action on
the part of any holder thereof, be converted into the right to receive the
"Common A Applicable Fraction" and "Common B Applicable Fraction", respectively,
of a fully paid and nonassessable share of Excite Common Stock. The Common A
Applicable Fraction shall be determined by dividing (A) the Total Excite Shares
(as defined below) less the number of shares of Excite Common Stock equal to the
aggregate liquidation preference of the McKinley B Common as set forth in the
McKinley Certificate of Incorporation divided by the fair market value of a
share of Excite Common Stock (determined in accordance with the Certificate of
Incorporation of McKinley, unless otherwise agreed by the holders of McKinley B
Common), by (B) (i) the number of shares of McKinley A Common outstanding
immediately prior to the Effective Time, which number shall include the number
of shares of McKinley Series A Common Stock into which all shares of McKinley B
Common that are outstanding as of the date hereof could be converted, plus (ii)
the number of shares of McKinley A Common issuable upon exercise of all McKinley
Options and McKinley Warrants outstanding immediately prior to the Effective
Date, provided however, that shares of McKinley Common Stock issuable upon
exercise of McKinley Options and McKinley Warrants which, but for the operation
of this proviso, would immediately following the Effective Time and after their
conversion into rights to acquire Excite Common Stock, have an exercise price
greater than two times the closing price of Excite Common Stock on the Nasdaq
Stock Market ("Nasdaq") on the last trading day prior to the Effective Time
shall not be included in such calculation, plus (iii) the number of shares of
McKinley A Common into which the McKinley Convertible Securities are convertible
into or exchangeable for immediately after the Closing. The Common B Applicable
Fraction shall equal the Common A Applicable Fraction multiplied by the number
of shares of McKinley A Common into which each share of McKinley B Common is
convertible. In addition, the holders of shares of McKinley B Common shall be
entitled to that number of shares of Excite Common Stock equal to the aggregate
liquidation preference of the shares of McKinley B Common held by them divided
by the fair market value of a share of Excite Common Stock (determined in
accordance with the Certificate of Incorporation of McKinley, unless otherwise
agreed by the holders of McKinley B Common). The "Total Excite Shares" shall be
Eight Hundred Fifty Thousand (850,000).
1.1.2 McKinley Options. At the Effective Time, Excite will
assume all outstanding options to purchase shares of McKinley A Common and each
holder of an McKinley Option granted (a) under McKinley's 1996 Stock Incentive
Plan (the "McKinley Option Plan") or (b) outside of the McKinley Option Plan,
shall be entitled, in accordance with the existing terms of such McKinley
Option, to purchase after the Effective Time that number of shares of Excite
Common Stock determined by multiplying the number of shares of McKinley A Common
subject to such McKinley Option at the Effective Time by the Common A Applicable
Fraction, and the exercise price per share for each such assumed option (the
"Assumed Option") will equal the exercise price of the McKinley Option
immediately prior to the Effective Time divided by the Common A Applicable
Fraction. If the foregoing calculation results in an Assumed Option (a) being
exercisable for a fraction of a share, then the number of shares of Excite
Common Stock subject to such Assumed Option will be rounded down to the nearest
whole number with no cash being payable for such fractional share, or (b) being
exerciseable for an exercise price that includes a fraction of a cent, the
exercise price shall be rounded up to the nearest whole cent. The term,
exercisability, vesting schedule, status as an "incentive stock option" under
Section
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422A of the Code, if applicable, and all other terms of the Assumed Options will
otherwise be unchanged. None of the McKinley Options will accelerate or vest
automatically as a result of the Merger except for certain options held by Cindy
Martin. The continuous term of employment with McKinley will be credited to each
holder of an Assumed Option as if it were employment with Excite for purposes of
determining the vesting and the number of shares subject to exercise after the
Effective Time. Promptly following the Effective Time, Excite will issue to each
holder of an Assumed Option a document evidencing the foregoing assumption by
Excite. Attached hereto as Schedule 1.1.2 is list of all holders of McKinley
Options and the number of options held by each, the number of shares of Excite
Common Stock for which each McKinley Option will become exerciseable and the
exercise price of each such assumed option.
1.1.3 McKinley Warrants. At the Effective Time, Excite will
assume all outstanding warrants to purchase shares of McKinley A Common and each
holder of an McKinley Warrant shall be entitled, in accordance with the existing
terms of such McKinley Warrant, to purchase after the Effective Time that number
of shares of Excite Common Stock determined by multiplying the number of shares
of McKinley A Common subject to such McKinley Warrant at the Effective Time by
the Common A Applicable Fraction, and the exercise price per share for each such
assumed Warrant (the "Assumed Warrant") will equal the exercise price of the
McKinley Warrant immediately prior to the Effective Time divided by the Common A
Applicable Fraction. If the foregoing calculation results in an assumed warrant
being exercisable for a fraction of a share, then the number of shares of Excite
Common Stock subject to such warrant will be rounded down to the nearest whole
number with no cash being payable for such fractional share. The terms of the
McKinley Warrants will otherwise be unchanged.
1.1.4 McKinley Convertible Securities. At the Effective Time,
Excite will assume all outstanding McKinley Convertible Securities exercisable
for shares of McKinley Common A Stock and each holder of a McKinley Convertible
Security shall be entitled, in accordance with the existing terms thereof, to
purchase after the Effective Time that number of shares of Excite Common Stock
determined by multiplying the number of shares of McKinley A Common subject to
such McKinley Convertible Security at the Effective Time by the Common A
Applicable Fraction, and the exercise price per share for each such McKinley
Convertible Security will equal the exercise price of the McKinley Convertible
Security immediately prior to the Effective Time divided by the Common A
Applicable Fraction. If the foregoing calculation results in an assumed McKinley
Convertible Security being exercisable for a fraction of a share, then the
number of shares of Excite Common Stock subject to such McKinley Convertible
Security will be rounded down to the nearest whole number with no cash being
payable for such fractional share. The terms of the McKinley Convertible
Securities will otherwise be unchanged.
1.1.5 Adjustments for Capital Changes. If prior to the Merger,
Excite or McKinley recapitalizes through a split-up of its outstanding shares
into a greater number, or a combination of its outstanding shares into a lesser
number, reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares of other classes (other than
through a split-up or combination of shares provided for in the previous
clause), or declares a dividend on its outstanding shares payable in shares or
securities convertible into shares, the number of shares of Excite Common Stock
into which the shares of McKinley Common and Preferred Stock ("McKinley Capital
Stock"), Options, Warrants and Convertible
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Securities are to be converted will be adjusted appropriately so as to maintain
the proportionate interests of the holders of the McKinley Capital Stock,
Options, Warrants and Convertible Securities and the holders of Excite shares.
1.1.6 Dissenting Shares. Holders of shares of McKinley Capital
Stock who have complied with all requirements for perfecting dissenter's rights,
as set forth in the General Corporation Law of the State of Delaware ("Delaware
Law") and the General Corporation Law of the State of California ("California
Law"), shall be entitled to their rights under the Delaware Law and the
California Law with respect to such shares ("Dissenting Shares").
1.2 Fractional Shares. No fractional shares of Excite Common Stock will
be issued in connection with the Merger, but in lieu thereof, the holder of any
shares of McKinley Capital Stock who would otherwise be entitled to receive a
fraction of a share of Excite Common Stock will receive from Excite, promptly
after the Effective Time, an amount of cash equal to Excite Trading Price
multiplied by the fraction of a share to which such holder would otherwise be
entitled.
1.3 Escrow Agreement. At the closing of the Merger (the "Closing"),
Excite will withhold that number of shares of Excite Common Stock otherwise
issuable to the stockholders of McKinley (the "McKinley Stockholders") in
accordance with Section 1.1 (the "Issuable Shares") as determined pursuant to
this Section 1.3 (rounded down to the nearest whole number of shares to be
issued to each McKinley Stockholder) and deliver such shares (the "Escrow
Shares") to Chemical Trust Company of California (the "Escrow Agent"), as escrow
agent, to be held by the Escrow Agent as collateral for the McKinley
Stockholder's obligations under Section 10.2 and pursuant to the provisions of
an escrow agreement (the "Escrow Agreement") in substantially the form of
Exhibit 1.3. The Escrow Shares will be represented by a certificate or
certificates issued in the name of the Escrow Agent and will be held as
collateral for Damages suffered by an Indemnified Person (each as defined in
Section 10.2) for breaches of the representations, warranties and covenants of
McKinley contained in this Agreement. The Escrow Shares shall equal Ten Percent
(10%) of the Issuable Shares. The Escrow Shares will be delivered and will be
held by the Escrow Agent from the Closing until (a) the date on which Excite has
received audited financial statements together with a report thereon from
Excite's independent auditors covering the combined results of Excite and
McKinley for the first fiscal year of Excite ending after the Closing Date
(i.e., the year ending December 31, 1996, unless the Closing occurs after
December 31, 1996), for items expected to be encountered in the audit process,
provided that Excite shall have a reasonable period of time, not to exceed
ninety (90) days, to review the audit results to determine if any claim for
Damages (as defined in Section 10.2) exists under Section 10.2 and Excite shall
provide notice of any claim for Damages within the ninety (90) day period and
(b) twelve (12) months after the Closing Date for all other items (the "Escrow
Period"). However, in all cases as to matters which an Indemnified Person has
given written notice of a claim for Damages during the Escrow Period, such
period with respect thereto shall continue until such claim for Damages is
finally resolved and the McKinley Stockholder's indemnification obligations
under Section 10.2 hereof with respect thereto are fully satisfied.
In the event that the Merger is approved by the McKinley Stockholders,
as provided herein, the McKinley Stockholders shall, without any further act of
any McKinley Stockholder,
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be deemed to have consented to and approved (i) the use of the Escrow Shares as
collateral for the McKinley Stockholder's indemnification obligations under
Section 10.2 in the manner set forth in the Escrow Agreement, (ii) the
appointment of Isabel Maxwell and Jerry Murdock as the representatives of the
McKinley Stockholders (collectively, the "Representative") under the Escrow
Agreement and as the attorney-in-fact and agent for and on behalf of each
McKinley Stockholder (other than holders of Dissenting Shares), and the taking
by the Representatives of any and all actions and the making of any decisions
required or permitted to be taken by the Representatives under the Escrow
Agreement (including, without limitation, the exercise of the power to:
authorize delivery to Excite of Escrow Shares in satisfaction of claims by
Excite; agree to, negotiate, enter into settlements and compromises of and
demand arbitration and comply with orders of courts and awards of arbitrators
with respect to such claims; resolve any claim made pursuant to Section 10.2;
and take all actions necessary in the judgment of the Representatives for the
accomplishment of the foregoing) and (iii) to all of the other terms, conditions
and limitations in the Escrow Agreement.
1.4 Effects of the Merger. At the Effective Time: (a) the separate
existence of Sub will cease and Sub will be merged with and into McKinley, and
McKinley will be the surviving corporation, pursuant to the terms of the
Agreement of Merger, (b) the Certificate of Incorporation and Bylaws of McKinley
will be amended and restated to be the same as the Certificate of Incorporation
and Bylaws of Sub; provided, however, that the corporate name of McKinley will
not change, (c) the Board of Directors and officers of Excite will remain
unchanged, (d) all the directors of McKinley immediately prior to the Effective
Time will resign and Excite will appoint new directors of the surviving
corporation and the officers of McKinley immediately prior to the Effective Time
will resign and Excite will appoint the new officers of the surviving
corporation, (e) each share of McKinley Capital Stock outstanding immediately
prior to the Effective Time will be converted into Excite Common Stock and each
McKinley Option, McKinley Warrant and McKinley Convertible Security outstanding
immediately prior to the Effective Time will be assumed by Excite, each as
provided in Sections 1.1, and (f) the Merger will, from and after the Effective
Time, have all of the effects provided by applicable law.
1.5 Further Assurances. Sub agrees that if, at any time before or after
the Effective Time, McKinley considers or is advised that any further deeds,
assignments or assurances are reasonably necessary or desirable to vest, perfect
or confirm in McKinley title to any property or rights of Sub, McKinley and its
proper officers and directors may execute and deliver all such proper deeds,
assignments and assurances and do all other things necessary or desirable to
vest, perfect or confirm title to such property or rights in McKinley and
otherwise to carry out the purpose of this Agreement, in the name of Sub or
otherwise.
1.6 Fairness Hearing; S-4 Alternative; S-8.
1.6.1 Fairness Hearing. The Excite Common Stock and Excite
Securities to be issued in the Merger will be qualified by a permit (the
"Permit") issued under Section 25121 of the California Corporate Securities Law
of 1968 (the "Securities Law") after a fairness hearing (the "Fairness Hearing")
to be held on or about August 28, 1996 before the California
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Commissioner of Corporations pursuant to Section 25142 of the Securities Law and
shall thereby be an exempt transaction under Section 3(a)(10) of the Securities
Act of 1933, as amended (the "Securities Act"). Excite shall prepare and, after
McKinley's review and approval, file with the California Department of
Corporations (the "Department") an application for qualification of the Excite
Common Stock and Excite Securities to be issued in the Merger, an application
for a Fairness Hearing together with the disclosure statement included therein
(the "Disclosure Statement"), and any other documents required by the Securities
Law, in connection with the Merger. Excite shall use its best efforts to have
the Permit issued under the Securities Law as promptly as practicable after such
filing. Excite shall also take any action required to be taken under any
applicable state securities or "blue sky" laws in connection with the issuance
of the Excite Common Stock and Excite Securities in the Merger.
1.6.2 S-4 Registration Statement Alternative. Excite will have
no obligation to change any provision of its Articles of Incorporation or
Bylaws, or to make any change in its rights and obligations with respect to its
securities or its security holders in order to obtain the Permit. If Excite is
unable to obtain the Permit within 75 days after the date of this Agreement,
Excite will promptly prepare and, after McKinley's review and approval, file
with the Securities and Exchange Commission ("SEC") a registration statement on
Form S-4 ("S-4") with respect to the offer and issuance of Excite Common Stock
in the Merger, at Excite's expense. Excite will use its best efforts to cause
the S-4 to become effective as soon after such filing as practicable. Excite and
Sub will also take any action required to be taken under any applicable state
securities or "blue sky" laws in connection with the offer and issuance of the
shares of Excite Securities in the Merger.
1.6.3 Provision of Information. McKinley will timely furnish
to Excite all information concerning McKinley, including without limitation,
information regarding McKinley's business, management, financial statements and
the holders of securities of McKinley as may be reasonably requested in
connection with any action provided for in this Section 1.6. Excite will timely
furnish to McKinley all information requested by McKinley concerning Excite,
including without limitation, information regarding Excite's business,
management, financial statements and the holders of securities of Excite as may
be reasonably requested in connection with any action provided for in this
Section 1.6. Excite and McKinley, as applicable, will be responsible for any
statement, information or omission of a material fact necessary to make the
information contained therein not misleading in the Disclosure Statement
relating to Excite or McKinley, respectively, or to their respective affiliates.
1.6.4 Registration on Form S-8. In addition, Excite shall use
its best efforts to cause the shares of Excite Common Stock that are issuable
upon exercise of the Assumed Options to be registered under the Securities Act
on Form S-8 ("S-8") or other applicable form and for such registration statement
to become effective on or around the date (expected to be around October 1,
1996) that the "Lock-Up" provisions contained in that certain Underwriting
Agreement by and between Excite and Robertson, Stephens & Company LLC dated as
of April 3, 1996 (the "Underwriting Agreement") expire. McKinley will cooperate
with Excite to the best of McKinley's ability in the preparation of the Form
S-8. Shares of Excite Common Stock issued upon the exercise after the Merger of
the McKinley Warrants and Convertible Securities assumed in the Merger will not
be registered on Form S-8 and, accordingly, will be subject to the resale
restrictions provided for in Rule 144 under the Securities Act for restricted
securities.
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1.7 Reorganization. The parties intend to adopt this Agreement as a
plan of reorganization and to consummate the Merger in accordance with the
provisions of Section 368(a)(1)(A) of the Code. The parties believe that the
total value of the Excite Common Stock to be received in the Merger by the
stockholders of McKinley is equal, in each instance, to the total value of the
McKinley Capital Stock to be surrendered in exchange therefor. The Excite Common
Stock, and Excite Securities issued in the Merger will be issued solely in
exchange for McKinley Capital Stock and McKinley Options, Warrants and
Convertible Securities, respectively, and no other transaction other than the
Merger represents, provides for or is intended to be an adjustment to the
consideration paid for the McKinley Capital Stock and McKinley Options, Warrants
and Convertible Securities. Except for cash paid in lieu of fractional shares or
for Dissenting Shares, no consideration that could constitute "other property"
within the meaning of Section 356 of the Code is being paid by Excite for the
McKinley Capital Stock in the Merger. The parties shall not take a position on
any tax returns inconsistent with this Section 1.7. In addition, Excite
represents now, and as of the Closing Date, that it presently intends to
continue McKinley's historic business or use a significant portion of McKinley's
business assets in a business. Excite has no current plan or intention to
liquidate McKinley, to merge McKinley with and into another corporation, to sell
or otherwise dispose of the stock of McKinley or to cause McKinley to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business or transfers described in Section 368(a)(2)(C) of
the Code. At the Closing, officers of each of Excite and McKinley shall execute
and deliver officers' certificates in the forms of Exhibits 1.7A-B, together
with an acknowledgment that such certificates will be relied upon by counsel to
McKinley and counsel to Excite. The provisions and representations contained or
referred to in this Section 1.7 shall survive until the expiration of the
applicable statute of limitations.
1.8 Services Agreement. Concurrently herewith, Excite and McKinley have
entered in the Services Agreement attached as Exhibit B hereto.
1.9 Amendment of Credit Agreement and Secured Promissory Note. The
parties hereby agree as follows:
(a) That certain Credit Agreement entered into by and between
Excite and McKinley as of July 3, 1996 (the "Credit Agreement") is hereby
amended as follows:
(i) Section 1.5 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"1.5 MATURITY DATE. The term "MATURITY DATE" means
that the date which is the earlier to occur of: (a)
September 15, 1996; (b) the termination of the Merger
Agreement by any party thereto in accordance with
Article 9 thereof; and (c) the date on which the
Lender declares the entire unpaid principal amount
and all accrued interest on each outstanding Note
immediately due and payable in full under Section
7.2(b), or such amount otherwise becomes due and
payable."
(ii) Section 1.6 of the Credit Agreement is hereby
amended to read in its entirety as follows:
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"1.6 MERGER AGREEMENT. The term "MERGER AGREEMENT"
means that certain Agreement and Plan of
Reorganization among the Lender, Excite Acquisition
Corporation and Borrower dated on or about August 5,
1996."
(iii) Section 2.1(a) of the Credit Agreement is
hereby amended to replace the words "two million dollars (US $2,000,000)"
therein with the words "five million dollars (U.S. $5,000,000)."
(iv) Section 2.1(c) of the Credit Agreement is hereby
amended to replace the words "Section 13 of the Memorandum of Agreement" therein
with the words "Section 4.10 of the Merger Agreement."
(v) Section 7.17(l) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(d) Borrower fails to perform, keep or observe any
covenant set forth in this Agreement or in any of the
other loan Documents or in the Merger Agreement, and
the same has not been cured within five (5) days
after Borrower receives written notice of such
failure to perform from Lender; or"
(b) The Secured Promissory Note (the "Note") dated July 3,
1996 executed by McKinley pursuant to the Credit Agreement is hereby amended (i)
to replace the reference, prior to the first paragraph thereof, to $2,000,000 to
instead refer to $5,000,000; (ii) to replace the words "Two Million Dollars
($2,000,000)" in Section 1 thereof with the words "Five Million Dollars
$5,000,000)" and (iii) to replace the date "August 15, 1996" in Section 1
thereof with the date "September 15, 1996."
McKinley agrees, upon the request of Excite, to execute a new
note reflecting the amendments effected by this paragraph, but otherwise
identical to the Note, and to deliver such new note to Excite in exchange for
the Note.
(c) Except as expressly amended hereby, the terms and
conditions of the Credit Agreement and Note shall remain in full force and
effect, and all references in the Security Agreement dated July 3, 1996 between
McKinley and Excite, and in any financing statements filed pursuant thereto,
shall be deemed to the Credit Agreement as amended hereby.
1.10 McKinley Directors' Indemnification Agreements. Excite
agrees that McKinley may execute indemnification agreements with its current
directors in substantially the form provided to counsel for Excite, and agrees
to take the necessary steps to ensure that McKinley is financially able to
perform its obligations under such indemnification agreements.
2. REPRESENTATIONS AND WARRANTIES OF MCKINLEY AND PRINCIPALS
The Principals (but only with respect to Section 2.3) and McKinley,
jointly and severally, hereby represent and warrant as follows, except as set
forth in the McKinley Schedule of Exceptions (in numbered paragraphs that
correspond to the Section numbers below) simultaneously delivered to Excite with
the execution of this Agreement:
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2.1 Organization and Good Standing. McKinley is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified as a foreign corporation in each jurisdiction in
which a failure to be so qualified could reasonably be expected to have a
material adverse effect on its present operations or financial condition.
2.2 Power, Authorization and Validity.
2.2.1 Subject only to the requisite approval of the Merger by
the McKinley Stockholders, McKinley has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement, and
all agreements to which McKinley is or will be a party that are required to be
executed pursuant to this Agreement (the "McKinley Ancillary Agreements"). The
execution, delivery and performance of this Agreement and the McKinley Ancillary
Agreements have been duly and validly approved and authorized by McKinley's
Board of Directors.
2.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable McKinley to enter into, and to perform its
obligations under, this Agreement and the McKinley Ancillary Agreements, except
for (a) the filing of the Agreement of Merger with the Delaware Secretary of
State, and the filing of appropriate documents with the relevant authorities of
other states in which McKinley is qualified to do business, if any, (b) such
filings as may be required to comply with federal and state securities laws, (c)
consents required under contracts disclosed in Schedule 2.11 and (d) the
approval of the McKinley Stockholders of the transactions contemplated hereby.
2.2.3 This Agreement and the McKinley Ancillary Agreements
are, or when executed by McKinley will be, valid and binding obligations of
McKinley enforceable in accordance with their respective terms, except as to the
effect, if any, of (a) applicable bankruptcy and other similar laws affecting
the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities; provided, however, that the Agreement
of Merger will not be effective until filed with the Delaware Secretary of
State.
2.3 Capitalization. The authorized capital stock of McKinley consists
of 30,000,000 shares of Common Stock ($0.01 par value) and 5,000,000 shares of
Preferred Stock ($0.01 par value). Of the McKinley Common Stock, 29,903,125
shares are McKinley A Common and 96,875 shares are McKinley B Common. Of the
McKinley Preferred Stock, 316,456 shares are designated as Series A Preferred
Stock ("McKinley Series A Preferred") and the remaining shares of McKinley
Preferred Stock are undesignated as to series. 7,241,103 shares of McKinley A
Common, 96,875 shares of McKinley B Common, and no shares of McKinley Series A
Preferred, are issued and outstanding. An aggregate of 1,125,000 shares of
McKinley A Common are reserved and authorized for issuance pursuant to the
McKinley Option Plan, of which no options are outstanding thereunder. Options
issued outside of the McKinley Option Plan to purchase a total of 178,500 shares
of McKinley A Common are outstanding. All issued and outstanding shares of
McKinley Common Stock and McKinley Preferred Stock have been
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duly authorized and validly issued, are fully paid and non assessable, are not
subject to any right of rescission, and have been offered, issued, sold and
delivered by McKinley in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws. A list of all holders of McKinley Common Stock, Preferred
Stock, Options, Warrants and Convertible Securities and the number of shares,
options, warrants and convertible securities held by each has been delivered by
McKinley to Excite herewith as Schedule 2.3. Except as set forth in this Section
2.3 and in Schedule 2.3, there are no options, warrants, calls, commitments,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase any of McKinley's authorized but unissued capital stock or any
securities convertible into or exchangeable for shares of McKinley Capital Stock
or obligating McKinley to grant, extend, or enter into any such option, warrant,
call, right, commitment, conversion privilege or other right or agreement, and
there is no liability for dividends accrued but unpaid. There are no voting
agreements, rights of first refusal or other restrictions (other than normal
restrictions on transfer under applicable federal and state securities laws)
applicable to any of McKinley's outstanding securities. McKinley is not under
any obligation to register under the Securities Act any securities that may be
subsequently issued.
2.4 Subsidiaries. McKinley does not have any subsidiaries or any
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity.
2.5 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement nor of any McKinley Ancillary Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of (a) any provision of the
Certificate of Incorporation or Bylaws of McKinley, as currently in effect, (b)
in any material respect, any Material Agreement (as defined in Section 2.11) to
which McKinley is a party or by which McKinley is bound, or (c) any federal,
state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to McKinley or its assets or properties. The consummation
of the Merger will not require the consent of any third party.
2.6 Litigation. There is no action, proceeding, claim or investigation
pending against McKinley before any court or administrative agency that if
determined adversely to McKinley may reasonably be expected to have a material
adverse effect on the present or future operations or financial condition of
McKinley; nor, to the best of McKinley's knowledge, has any such action,
proceeding, claim or investigation been threatened. There is, to the best of
McKinley's knowledge, no reasonable basis for any stockholder or former
stockholder of McKinley, or any other person, firm, corporation, or entity, to
assert a claim against McKinley or Excite based upon: (a) ownership or rights to
ownership of any shares of McKinley Capital Stock (except for dissenter's rights
with respect to shares of Excite Common Stock issuable by virtue of the Merger),
(b) any rights as an McKinley Stockholder, including any option or preemptive
rights or rights to notice or to vote, or (c) any rights under any agreement
among McKinley and its Stockholders.
2.7 Taxes. McKinley has timely filed all material federal, state, local
and foreign tax returns, estimates, information statements and reports required
to be filed with respect to McKinley and its operations (collectively,
"Returns"), has timely paid all taxes shown due on all Returns which have been
filed, has established an adequate accrual or reserve for the payment of
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all taxes, due and payable, including reasonable accruals for taxes payable in
respect of the periods subsequent to the periods covered by the most recent
applicable tax Returns, has made all necessary estimated tax payments, and has
no material liability for taxes in excess of the amounts so paid or accruals or
reserves so established. No deficiencies for any tax have been threatened,
claimed, proposed, or assessed by any taxing authority nor has McKinley executed
any waiver of any statute of limitations on or extending the period for the
assessment or collection of any tax. McKinley has not received any notification
that any material issues have been raised (and are currently pending) by the
Internal Revenue Service or any other taxing authority (including but not
limited to any sales tax authority) regarding McKinley and no tax return of
McKinley has ever been audited by the Internal Revenue Service or any state
taxing agency or authority. McKinley has provided to Excite copies of all
federal and state income and all state sales and use Returns for all periods
since the date of McKinley's incorporation. There are no liens, pledges,
charges, claims, security interests or other encumbrances of any sort on the
assets of McKinley relating to or attributable to taxes, other than liens for
taxes not yet due and payable. There is no contract, agreement, plan or
arrangement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of McKinley that, individually or
collectively, could give rise to the payment of any amount that would be
disallowed pursuant to Section 280G or 162(m) of the Code. McKinley is not a
party to a tax sharing or allocation agreement nor does McKinley owe any amount
under any such agreement. McKinley is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code. McKinley has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by McKinley. None of McKinley's assets are treated as
"tax-exempt use property" within the meaning of Section 168(h) of the Code. For
the purposes of this Agreement, the terms "tax" and "taxes" include all federal,
state, local and foreign income, gains, franchise, excise, property, sales, use,
employment, license, payroll, occupation, recording, value added or transfer
taxes, governmental charges, fees, levies or assessments (whether payable
directly or by withholding), and, with respect to such taxes, any estimated tax,
interest and penalties or additions to tax and interest on such penalties and
additions to tax.
2.8 McKinley Financial Statements. McKinley has delivered to Excite as
Schedule 2.8 McKinley's (a) audited balance sheet as of December 31, 1995 (the
"1995 Balance Sheet") and income statement and statement of cash flows for the
12 month period then ended (collectively, the "1995 Financial Statements"), and
(b) audited balance sheet as of June 30, 1996 (the "June 30 Balance Sheet") and
income statement and statement of cash flows for the six month period then ended
(collectively, the "June Financial Statements") (the 1995 Financial Statements
and June Financial Statements are collectively referred to herein as the
"Financial Statements"). The Financial Statements are in accordance with the
books and records of McKinley and fairly present the financial condition of
McKinley at the dates therein indicated and the results of operations for the
periods therein specified. The Audited Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis. McKinley has no material debt, liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, that is not reflected or reserved against in the Financial
Statements which would be required under generally accepted accounting
principles to be reflected or reserved, except for those that may have been
incurred after the date of the Financial Statements in the ordinary course of
its business,
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consistent with past practice and that are not material in amount either
individually or collectively.
2.9 Title to Properties. McKinley has good and marketable title to all
of its assets as shown on the June 30 Balance Sheet, free and clear of all
liens, charges, restrictions or encumbrances (other than for taxes not yet due
and payable). All machinery and equipment included in such properties is in good
condition and repair, normal wear and tear excepted, and all leases of real or
personal property to which McKinley is a party are fully effective and afford
McKinley peaceful and undisturbed possession of the subject matter of the lease.
McKinley is not in violation of any zoning, building, safety or environmental
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties (the violation of which would have a
material adverse effect on its business), and has not received any notice of
violation with which it has not complied.
2.10 Absence of Certain Changes. Since June 30, 1996, there has not
been with respect to McKinley:
(a) any change in the financial condition, properties, assets,
liabilities, business or operations thereof which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or will have a material adverse effect thereon;
(b) any material contingent liability incurred thereby as
guarantor or otherwise with respect to the obligations of others;
(c) any material mortgage, encumbrance or lien placed on any
of the properties thereof;
(d) any material obligation or liability incurred thereby
other than obligations and liabilities incurred in the ordinary course of
business;
(e) any material purchase or sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition, of
any of the properties or assets thereof other than in the ordinary course of
business;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
thereof;
(g) any declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock
thereof, any split, combination or recapitalization of the capital stock thereof
or any direct or indirect redemption, purchase or other acquisition of the
capital stock thereof;
(h) any labor dispute or claim of unfair labor practices, any
change in the compensation payable or to become payable to any of its officers,
employees or agents, or any bonus payment or arrangement made to or with any of
such officers, employees or agents;
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(i) any change with respect to the management, supervisory or
other key personnel thereof;
(j) any payment or discharge of a lien or liability thereof
which lien was not either shown on the 1995 Balance Sheet or incurred in the
ordinary course of business thereafter; or
(k) any obligation or liability incurred thereby to any of its
officers, directors or shareholders or any loans or advances made thereby to any
of its officers, directors or shareholders except normal compensation and
expense allowances payable to officers.
2.11 Material Agreements, Contracts and Commitments. Except as set
forth on Schedule 2.11 delivered to Excite herewith, McKinley is not a party or
subject to any oral or written contracts, obligations, commitments, plans,
leases, instruments, arrangements or licenses not entered into in the ordinary
course of business which is material to the business of McKinley (each a
"Material Agreement"), including, but not limited to any:
(a) Contract providing for payments by or to McKinley in an
aggregate amount of Fifty Thousand Dollars ($50,000) or more;
(b) License agreement as licensor or licensee (except for
standard non-exclusive hardware and software licenses granted to end-user
customers in the ordinary course of business the form of which has been provided
to Excite's counsel);
(c) Material agreement for the lease of real or personal
property;
(d) Joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons;
(e) Instrument evidencing or related in any way to
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise, except for
trade indebtedness incurred in the ordinary course of business, and except as
disclosed in the Financial Statements;
(f) Contract containing covenants purporting to limit
McKinley's freedom to compete in any line of business in any geographic area; or
(g) Stock redemption or purchase agreement yet to be
performed.
All Material Agreements listed in Schedule 2.11 constitute
valid and enforceable obligations of the parties thereto and are in full force
and effect. McKinley is not, nor, to the knowledge of McKinley and the
Principals, is any other party thereto, in breach or default in any material
respect under the terms of any such Material Agreement, which breach or default
may reasonably be expected to have a material adverse effect on McKinley. A copy
of each agreement or document listed on Schedule 2.11 has been delivered to
Excite's counsel. McKinley is not a party to any contract or arrangement which
has had or could reasonably be
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expected to have a material adverse effect on its business or prospects.
McKinley does not have any material liability for renegotiation of government
contracts or subcontracts, if any.
2.12 Intellectual Property. McKinley owns, or has the rights to use,
sell or license all Intellectual Property Rights (as defined below) necessary or
required for the conduct of, or used in, its business as presently conducted
(such Intellectual Property Rights being hereinafter collectively referred to as
the "McKinley IP Rights") and such rights to use, sell or license are reasonably
sufficient for the conduct of its business. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a material breach of any instrument or
agreement governing any McKinley IP Right (the "McKinley IP Rights Agreements"),
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any McKinley IP Right or materially impair the
right of McKinley to use, sell or license any McKinley IP Right or portion
thereof (except where such breach, forfeiture or termination would not have a
material adverse effect on McKinley, taken as a whole). There are no royalties,
honoraria, fees or other payments payable by McKinley to any person by reason of
the ownership, use, license, sale or disposition of the McKinley IP Rights
(other than as set forth in the McKinley IP Rights Agreements listed in Schedule
2.12). Neither the manufacture, marketing, license, sale or intended use of any
product currently licensed or sold by McKinley or currently under development by
McKinley violates any license or agreement between McKinley and any third party
or infringes any Intellectual Property Right of any other party; and there is no
pending or, to the best knowledge of McKinley and the Principals, threatened
claim or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any McKinley IP Right; nor, to the best knowledge of
McKinley and the Principals without any independent investigation thereof, is
there any basis for any such claim; nor has McKinley received any notice
asserting that any McKinley IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor, to the best knowledge of McKinley and the Principals, is there any
basis for any such assertion. McKinley has taken reasonable and practicable
steps designed to safeguard and maintain the secrecy and confidentiality of, and
its proprietary rights in, all material McKinley IP Rights. All officers,
employees and consultants of McKinley have executed and delivered to McKinley an
agreement regarding the protection of proprietary information and the assignment
to McKinley of all Intellectual Property Rights arising from the services
performed for McKinley by such persons. Schedule 2.12 contains a list of all
applications, registrations, filings and other formal actions made or taken
pursuant to federal, state and foreign laws by McKinley to perfect or protect
its interest in McKinley IP Rights, including, without limitation, all patents,
patent applications, copyrights, copyright applications, trademarks, trademark
applications and service marks and all McKinley IP Rights Agreements (except for
object code end-user licenses granted to end-users in the ordinary course of
business that permit use of software products without a right to modify,
distribute or sublicense the same). As used herein, the term "Intellectual
Property Rights" shall mean all industrial and intellectual property rights in
any jurisdiction in the world, including, without limitation, patents, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyright, copyright applications,
franchises, licenses, inventories, know-how, trade secrets, customer lists,
proprietary processes and formulae, all source and object code, algorithms,
architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the
above, including, without limitation, manuals, memoranda and records.
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2.13 Compliance with Laws. McKinley has complied, or prior to the
Closing Date will have complied, and is or will be at the Closing Date in full
compliance, in all material respects with all applicable laws, ordinances,
regulations, and rules, and all orders, writs, injunctions, awards, judgments,
and decrees applicable to it or to the assets, properties, and business thereof
(the violation of which would have a material adverse effect upon its business),
including, without limitation: (a) all applicable federal and state securities
laws and regulations, (b) all applicable federal, state, and local laws,
ordinances, regulations, and all orders, writs, injunctions, awards, judgments,
and decrees pertaining to (i) the sale, licensing, leasing, ownership, or
management of its owned, leased or licensed real or personal property, products
and technical data, (ii) employment and employment practices, terms and
conditions of employment, and wages and hours and (iii) safety, health, fire
prevention, environmental protection, toxic waste disposal, building standards,
zoning and other similar matters (c) the Export Administration Act and
regulations promulgated thereunder and all other laws, regulations, rules,
orders, writs, injunctions, judgments and decrees applicable to the export or
re-export of controlled commodities or technical data and (d) the Immigration
Reform and Control Act. McKinley has received all permits and approvals from,
and has made all filings with, third parties, including government agencies and
authorities, that are necessary in connection with its present business and
which, if not received or filed, would have a material adverse effect on its
business. There are no legal or administrative proceedings or investigations
pending or threatened, that, if enacted or determined adversely to McKinley,
would result in any material adverse change in the present or future operations
or financial condition thereof.
2.14 Certain Transactions and Agreements. None of the Principals nor
any member of their immediate families, has any direct or indirect ownership
interest in any firm or corporation that competes with McKinley (except with
respect to any interest in less than one percent of the stock of any corporation
whose stock is publicly traded). None of the Principals nor any member of their
immediate families is directly or indirectly interested in any contract or
informal arrangement with McKinley. None of the Principals nor any member of
their immediate families has any interest in any property, real or personal,
tangible or intangible, including inventions, patents, copyrights, trademarks or
trade names or trade secrets, used in or pertaining to the business of McKinley,
except for the normal rights of a shareholder.
2.15 Employees, ERISA and Other Compliance.
2.15.1 Except as set forth in Schedule 2.15.1, McKinley has no
employment contracts or consulting agreements currently in effect that are not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions). All
officers, employees and consultants of McKinley having access to proprietary
information have executed and delivered to McKinley an agreement regarding the
protection of such proprietary information and the assignment of inventions to
McKinley; copies of the form of all such agreements have been delivered to
Excite's counsel.
2.15.2 McKinley (i) has not ever been or is now subject to a
union organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization, or (iv) has not any current labor disputes.
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2.15.3 Schedule 2.15.3 identifies each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), but excluding workers' compensation, unemployment
compensation and other government-mandated programs currently or previously
maintained, contributed to or entered into by McKinley under which McKinley or
any ERISA Affiliate (as defined below) thereof has any present or future
obligation or liability (collectively, the "McKinley Employee Plans"). For
purposes of this Section 2.15.3, "ERISA Affiliate" shall mean any entity which
is a member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as defined
in Section 414(c) of the Code, or (C) an "affiliated service group," as defined
in Section 414(m) of the Code, or treasury regulations promulgated under Section
414(o) of the Code, any of which includes McKinley. Copies of all McKinley
Employee Plans (and, if applicable, related trust agreements) and all amendments
thereto and summary plan descriptions thereof (including summary plan
descriptions) have been delivered to Excite or its counsel, together with the
three most recent annual reports (Form 5500, including, if applicable, Schedule
B thereto) prepared in connection with any such McKinley Employee Plan. All
McKinley Employee Plans which individually or collectively would constitute an
"employee pension benefit plan," as defined in Section 3(2) of ERISA
(collectively, the "McKinley Pension Plans"), are identified as such in Schedule
2.15.3. As of March 31, 1996, all contributions due from McKinley with respect
to any of the McKinley Employee Plans have been made as required under ERISA or
have been accrued on McKinley's financial statements. Each McKinley Employee
Plan has been maintained substantially in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including, without limitation, ERISA and the Code, which are applicable to such
McKinley Employee Plans.
2.15.4 No "prohibited transaction," as defined in Section 406
of ERISA or Section 4975 of the Code, has occurred with respect to any McKinley
Employee Plan which is covered by Title I of ERISA which would result in a
material liability to McKinley taken as a whole, excluding transactions effected
pursuant to a statutory or administrative exemption. Nothing done or omitted to
be done and no transaction or holding of any asset under or in connection with
any McKinley Employee Plan has or will make McKinley or any officer or director
of McKinley subject to any material liability under Title I of ERISA or liable
for any material tax (as defined in Section 2.7) or penalty pursuant to Sections
4972, 4975, 4976 or 4979 of the Code.
2.15.5 Any McKinley Pension Plan which is intended to be
qualified under Section 401(a) of the Code (an "McKinley 401(a) Plan") has
received a favorable determination from the Internal Revenue Service as to its
qualifications, and McKinley is not aware of any reason why such determination
may not be relied upon by such plan.
2.15.6 Schedule 2.15.6 lists each employment, severance or
other similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing for insurance coverage (including any self-insured
arrangements), workers' benefits, vacation benefits, severance benefits,
disability benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits for
employees, consultants or directors which (A)
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is not an McKinley Employee Plan, (B) is entered into, maintained or contributed
to, as the case may be, by McKinley and (C) covers any employee or former
employee of McKinley. Such contracts, plans and arrangements as are described in
this Section 2.15.6 are herein referred to collectively as the "McKinley Benefit
Arrangements." Each McKinley Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
McKinley Benefit Arrangement. McKinley has delivered to Excite or its counsel a
complete and correct copy or description of each McKinley Benefit Arrangement.
2.15.7 There has been no amendment to, written interpretation
or announcement (whether or not written) by McKinley relating to, or change in
employee participation or coverage under, any McKinley Employee Plan or McKinley
Benefit Arrangement that would increase materially the expense of maintaining
such McKinley Employee Plan or McKinley Benefit Arrangement above the level of
the expense incurred in respect thereof for the fiscal year ended June 30, 1995.
2.15.8 McKinley has timely provided to individuals entitled
thereto all required notices and coverage pursuant to Section 4980B of the Code
and the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), with respect to any "qualifying event" (as defined in Section
4980B(f)(3) of the Code) under any McKinley Employee Plan occurring prior to and
including the Closing Date, and no material Tax payable on account of Section
4980B of the Code has been incurred with respect to any current or former
employees (or their beneficiaries) of McKinley.
2.15.9 No benefit payable or which may become payable by
McKinley pursuant to any McKinley Employee Plan or any McKinley Benefit
Arrangement or as a result of or arising under this Agreement shall constitute
an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code)
which is subject to the imposition of an excise Tax under Section 4999 of the
Code or which would not be deductible by reason of Section 280G of the Code.
2.15.10 McKinley is in compliance in all material respects
with all applicable laws, agreements and contracts relating to employment,
employment practices, wages, hours, and terms and conditions of employment,
including, but not limited to, employee compensation matters, but not including
ERISA.
2.15.11 To McKinley's actual knowledge, no employee of
McKinley is in violation of any term of any employment contract, patent
disclosure agreement, noncompetition agreement, or any other contract or
agreement, or any restrictive covenant relating to the right of any such
employee to be employed thereby, or to use trade secrets or proprietary
information of others, and the employment of such employees does not subject
McKinley to any liability.
2.15.12 A list of all employees, officers and consultants of
McKinley and their current compensation is set forth on Schedule 2.15.12, which
has been delivered to Excite.
2.15.13 McKinley is not a party to any (a) agreement with any
executive officer or other key employee thereof (i) the benefits of which are
contingent, or the terms of which are
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materially altered, upon the occurrence of a transaction involving McKinley in
the nature of any of the transactions contemplated by this Agreement and the
Agreement of Merger, (ii) providing any term of employment or compensation
guarantee, or (iii) providing severance benefits or other benefits after the
termination of employment of such employee regardless of the reason for such
termination of employment, or (b) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be materially increased, or the
vesting of benefits of which will be materially accelerated, by the occurrence
of any of the transactions contemplated by this Agreement and the Agreement of
Merger 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 and the
Agreement of Merger.
2.16 Corporate Documents. McKinley has made available to Excite for
examination all documents and information listed in the McKinley Schedule of
Exceptions or other Exhibits called for by this Agreement or which have been
requested by Excite's legal counsel, including, without limitation, the
following: (a) copies of McKinley's Certificate of Incorporation and Bylaws as
currently in effect; (b) its Minute Book containing all records of all
proceedings, consents, actions, and meetings of the shareholders, the board of
directors and any committees thereof; (c) its stock ledger and journal
reflecting all stock issuances and transfers; and (d) all permits, orders, and
consents issued by any regulatory agency with respect to McKinley, or any
securities of McKinley, and all applications for such permits, orders, and
consents.
2.17 No Brokers. Neither McKinley nor any of the McKinley Stockholders
are obligated for the payment of fees or expenses of any investment banker,
broker or finder in connection with the origin, negotiation or execution of this
Agreement or the McKinley Ancillary Agreements or in connection with any
transaction contemplated hereby or thereby.
2.18 Disclosure. Neither this Agreement, its exhibits and schedules,
nor any of the certificates or documents to be delivered by McKinley to Excite
under this Agreement, when taken together, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not materially misleading.
2.19 Information Supplied. None of the information supplied or to be
supplied by McKinley to its stockholders in connection with any stockholder's
meeting (collectively, "Notice Materials"), at the date such information is
supplied and at the time of the meeting of the McKinley Stockholders to be held
to approve the Merger, contains or will contain any untrue statement of a
material fact or omits or will 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 materially misleading;
provided, however, that McKinley makes no representations or warranties
regarding information furnished or related to Excite.
2.20 Insurance. McKinley maintains and at all times during the prior
three years has maintained fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance which
it believes to be reasonably prudent for similarly sized and similarly situated
businesses.
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2.21 Environmental Matters.
2.21.1 During the period that McKinley has leased or owned its
properties or owned or operated any facilities, there have been no disposals,
releases or threatened releases of Hazardous Materials (as defined below) by
McKinley, or to McKinley's or the Principal Shareholder's knowledge, by others,
on, from or under such properties or facilities, the liability for which would
have a material adverse effect on its business. McKinley has no knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any of such properties or facilities, which may have occurred
prior to McKinley having taken possession of any of such properties or
facilities. For the purposes of this Agreement, the terms "disposal," "release,"
and "threatened release" shall have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of this
Agreement "Hazardous Materials" shall mean any hazardous or toxic substance,
material or waste which is or becomes prior to the Closing regulated under, or
defined as a "hazardous substance," "pollutant," "contaminant," "toxic
chemical," "hazardous materials," "toxic substance" or "hazardous chemical"
under (1) CERCLA; (2) any similar federal, state or local law; or (3)
regulations promulgated under any of the above laws or statutes.
2.21.2 To the best knowledge of McKinley and the Principals,
none of the properties or facilities of McKinley is in material violation of any
federal, state or local law, ordinance, regulation or order relating to
industrial hygiene or to the environmental conditions on, under or about such
properties or facilities, including, but not limited to, soil and ground water
condition. During the time that McKinley has owned or leased its properties and
facilities, neither McKinley nor, to McKinley's and the Principal's knowledge,
any third party, has used, generated, manufactured or stored on, under or about
such properties or facilities or transported to or from such properties or
facilities any Hazardous Materials except in substantial accordance with
applicable environmental laws.
2.21.3 During the time that McKinley has owned or leased its
respective properties and facilities, there has been no litigation brought or
threatened against McKinley by, or any settlement reached by McKinley with, any
party or parties alleging the presence, disposal, release or threatened release
of any Hazardous Materials on, from or under any of such properties or
facilities.
2.22 Interested Party Transactions. No officer or director of McKinley
or any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act) of any such person has had, either
directly or indirectly, a material interest in: (i) any person or entity which
purchases from or sells, licenses or furnishes to McKinley any goods, property,
technology or intellectual or other property rights or services; or (ii) any
contract or agreement to which McKinley is a party or by which it may be bound
or affected.
2.23 Average Page Views. The Average Page Views during the four week
period ending June 27, 1996 were 970,485.
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3. REPRESENTATIONS AND WARRANTIES OF EXCITE AND SUB
Excite and Sub hereby jointly and severally represent and warrant as
follows, that, except as set forth on the Excite Schedule of Exceptions
delivered to McKinley as Exhibit 3.0:
3.1 Organization and Good Standing.
3.1.1 Excite is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, and has the
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified as a foreign corporation in each jurisdiction in which a failure to be
so qualified could reasonably be expected to have a material adverse effect on
its present operations or financial condition.
3.1.2 Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified as a foreign corporation in each jurisdiction in which a failure to be
so qualified could reasonably be expected to have a material adverse effect on
its present operations or financial condition.
3.2 Power, Authorization and Validity.
3.2.1 Excite and Sub have the right, power, legal capacity and
authority to enter into and perform their obligations under this Agreement, and
all agreements to which Excite and Sub are or will be a party that are required
to be executed pursuant to this Agreement (the "Excite Ancillary Agreements").
The execution, delivery and performance of this Agreement and the Excite
Ancillary Agreements have been duly and validly approved and authorized by
Excite's Board of Directors and Sub's Board of Directors.
3.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable Excite or Sub to enter into, and to perform
their obligations under, this Agreement and the Excite Ancillary Agreements,
except for (a) the filing of the Agreement of Merger with the Delaware Secretary
of State, the filing of appropriate documents with the relevant authorities of
other states in which Excite and Sub are qualified to do business, if any; (b)
such filings as may be required to comply with federal and state securities
laws; and (c) the approval by the sole stockholder of Sub of the transactions
contemplated hereby.
3.2.3 This Agreement and the Excite Ancillary Agreements are,
or when executed by Excite and Sub will be, valid and binding obligations of
Excite and Sub enforceable in accordance with their respective terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities; provided, however, that the Agreement
of Merger will not be effective until filed with the Delaware Secretary of
State.
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3.2.4 Due Authorization. The Excite Common Stock to be issued
to McKinley Stockholders in the Merger, when issued by Excite pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable, will be issued in compliance with applicable federal and state
securities laws and will be free and clear of all liens, encumbrances and
adverse claims and, except as provided in the McKinley Affiliates Agreement (as
defined in Section 4.13 hereof), may be resold by McKinley affiliates in
accordance with Rule 145 of the Securities Act and may be freely resold, without
restriction, by non-affiliates of McKinley.
3.3 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement nor any Excite Ancillary Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of (a) any provision of the
Articles of Incorporation or Certificate of Incorporation of Excite or Sub,
respectively, or the Bylaws of Excite or Sub, all as currently in effect, (b) in
any material respect, any material instrument or contract to which Excite or Sub
is a party or by which Excite or Sub is bound, or (c) any federal, state, local
or foreign judgment, writ, decree, order, statute, rule or regulation applicable
to Excite or Sub or their assets or properties. Excite is not currently in
material violation of any agreement material to its business.
3.4 Disclosure. Excite has made available to McKinley an investor
disclosure package consisting of true and complete copies of (a) the final
prospectus from the initial public offering of Excite's Common Stock dated April
3, 1996, (b) all Forms 10-Q and 8-K filed by Excite with the Securities and
Exchange Commission (the "SEC") since December 31, 1995 (the "Fiscal Year End")
and up to the date of this Agreement, (b) any registration statement and
amendments thereto filed with the SEC by Excite in the twelve month period prior
to execution of this Agreement, and (d) all proxy materials distributed to
Excite's shareholders since the Fiscal Year End and up to the date of this
Agreement (collectively, the "Excite Disclosure Package"). The Excite Disclosure
Package, this Agreement, the exhibits and schedules hereto, and any certificates
or documents to be delivered to McKinley pursuant to this Agreement, when taken
together, as of the date filed with the SEC unless subsequently amended, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
3.5 Absence of Certain Changes. Since the Fiscal Year End, there has
not been any change in the financial condition, properties, assets, liabilities,
business or operations of Excite which change by itself or in conjunction with
all other such changes, whether or not arising in the ordinary course of
business, has had or will have a material adverse effect thereon except as
disclosed in the Excite Disclosure Package.
3.6 Litigation. There is no action, proceeding, claim or investigation
pending against Excite before any court or administrative agency that if
determined adversely to Excite may reasonably be expected to have a material
adverse effect on the present or future operations or financial condition of
Excite, nor, to the best of Excite's knowledge, has any such action, proceeding,
claim or investigation been threatened.
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3.7 Compliance with Laws. Excite and Sub have complied, or prior to the
Closing Date will have complied, and are or will be at the Closing Date in full
compliance, in all material respects with all applicable laws, ordinances,
regulations, and rules, and all orders, writs, injunctions, awards, judgments,
and decrees applicable to them, the violation of which would have a material
adverse effect upon their business. Excite and Sub have received all permits and
approvals from, and have made all filings with, third parties, including
government agencies and authorities, that are necessary in connection with their
present business. To the best of Excite's and Sub's knowledge, there are no
legal or administrative proceedings or investigations pending or threatened,
that, if enacted or determined adversely to them, would result in any material
adverse change in the present or future operations or financial condition
thereof.
3.8 No Brokers. Excite and Sub are not obligated for the payment of
fees or expenses of any investment banker, broker or finder in connection with
the origin, negotiation or execution of this Agreement or the Excite Ancillary
Agreements or in connection with any transaction contemplated hereby or thereby.
3.9 Excite Financial Statements. Excite has delivered to McKinley as
Schedule 3.9 Excite's (a) audited balance sheet as of December 31, 1995 (the
"1995 Excite Balance Sheet") and income statement and statement of cash flows
for the 12 month period then ended (collectively, the "1995 Excite Financial
Statements"), and (b) unaudited balance sheet as of June 30, 1996 (the "June 30
Excite Balance Sheet") and income statement and statement of cash flows for the
six month period then ended (collectively, the "June Excite Financial
Statements") (the 1995 Excite Financial Statements and June Excite Financial
Statements are collectively referred to herein as the "Excite Financial
Statements"). The Excite Financial Statements are in accordance with the books
and records of Excite and fairly present the financial condition of Excite at
the dates therein indicated and the results of operations for the periods
therein specified. The 1995 Excite Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis. Excite has no material debt, liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, that is not reflected or reserved against in the Excite Financial
Statements which would be required under generally accepted accounting
principles to be reflected or reserved, except for those that may have been
incurred after the date of the Excite Financial Statements in the ordinary
course of its business, consistent with past practice and that are not material
in amount either individually or collectively.
3.10 Capitalization. The authorized capital stock of Excite consists of
25,000,000 shares of Common Stock and 4,000,000 shares of Preferred Stock.
11,071,132 shares of Excite Common Stock were issued and outstanding and no
shares of Excite Preferred Stock were outstanding as of July 31, 1996. An
aggregate of 2,200,000 shares of Excite Common Stock are reserved and authorized
for issuance pursuant to the Excite 1995 Equity Incentive Plan, an aggregate of
1,500,000 shares of Excite Common Stock are reserved and authorized for issuance
pursuant to the Excite 1996 Equity Incentive Plan, an aggregate of 150,000
shares of Excite Common Stock are reserved and authorized for issuance pursuant
to the Excite 1996 Directors Stock Option Plan, and an aggregate of 150,000
shares of Excite Common Stock are reserved and authorized for issuance pursuant
to the Excite 1996 Employee Stock Purchase Plan. Options to purchase 2,055,514
shares of Excite Common Stock are outstanding. Warrants to purchase
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696,000 shares of Excite Common Stock are outstanding. All issued and
outstanding shares of Excite Common Stock have been duly authorized and validly
issued, are fully paid and non assessable, are not subject to any right of
rescission, and have been offered, issued, sold and delivered by Excite in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state securities laws. Except as
set forth in this Section 3.10, there are no options, warrants, calls,
commitments, conversion privileges or preemptive or other rights or agreements
outstanding to purchase any of Excite's authorized but unissued capital stock or
any securities convertible into or exchangeable for shares of Excite Capital
Stock or obligating Excite to grant, extend, or enter into any such option,
warrant, call, right, commitment, conversion privilege or other right or
agreement, and there is no liability for dividends accrued but unpaid. There are
no voting agreements, rights of first refusal or other restrictions (other than
normal restrictions on transfer under applicable federal and state securities
laws) applicable to any of Excite's outstanding securities. Excite is not under
any obligation to register under the Securities Act any securities that may be
subsequently issued.
4. MCKINLEY PRECLOSING COVENANTS
During the period from the date of this Agreement until the Effective
Time, McKinley covenants and agrees as follows:
4.1 Advice of Changes. McKinley will promptly advise Excite in writing
(a) of any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of McKinley contained in this Agreement,
if made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect and (b) of any material adverse change in
McKinley's business, results of operations or financial condition.
4.2 Maintenance of Business. McKinley will use its best efforts to
carry on and preserve its business and its relationships with customers,
suppliers, employees and others in substantially the same manner as it has prior
to the date hereof. If McKinley becomes aware of a material deterioration in the
relationship with any material customer, supplier or key employee, it will
promptly bring such information to the attention of Excite in writing and, if
requested by Excite, will exert its best efforts to restore the relationship.
4.3 Conduct of Business. McKinley will continue to conduct its business
and maintain its business relationships in the ordinary and usual course and
will not, without the prior written consent of Excite:
(a) borrow any money;
(b) enter into any transaction not in the ordinary course of
business or which involves an expense or capital commitment by McKinley in
excess of $10,000 or which obligates McKinley for a period exceeding six months;
(c) encumber or permit to be encumbered any of its assets or
grant liens therein;
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(d) dispose of any portion of its assets with a value
exceeding $10,000;
(e) enter into any lease or contract for the purchase or sale
of any property, real or personal, except in the ordinary course of business
consistent with past practice;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
(g) pay any bonus, royalty, increased salary or special
remuneration to any officer, employee or consultant or agree to same or enter
into any new employment, severance, "golden parachute" or consulting agreement
with any such person;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital stock, or redeem or otherwise acquire
any of its capital stock;
(j) amend or terminate any contract, agreement or license to
which it is a party except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(k) lend any amount to any person or entity, other than (i)
advances for travel and expenses which are incurred in the ordinary course of
business consistent with past practice, not material in amount and documented by
receipts for the claimed amount;
(l) guarantee or act as a surety for any obligation except for
the endorsement of checks and other negotiable instruments in the ordinary
course of business, consistent with past practice, which are not material in
amount;
(m) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital stock of any class
(except upon the exercise of a convertible security, option or warrant currently
outstanding), or any other of its securities, or issue or create any warrants,
obligations, subscriptions, options, convertible securities, or other
commitments to issue shares of capital stock, or (except pursuant to contractual
obligations currently in existence) accelerate the vesting of any outstanding
option or other security;
(o) split or combine the outstanding shares of its capital
stock of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(p) merge, consolidate or reorganize with, or acquire any
entity;
(q) amend its Certificate of Incorporation or Bylaws;
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(r) license any of its technology or intellectual property
except in the ordinary course of business consistent with past practice;
(s) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return unless copies of such
returns have been delivered to Excite for its review and approved by Excite
prior to filing;
(t) change any insurance coverage or issue any certificates of
insurance except as is routinely done in the ordinary course of McKinley's
business;
(u) hire or terminate any employee or consultant;
(v) adopt or amend any employee benefit plan; or
(x) enter into any contracts for the sale of advertising in an
amount exceeding $50,000 or for longer than 30 days.
4.4 Stockholders Approval. McKinley will hold a special meeting of its
stockholders (the "Stockholders Meeting") at the earliest practicable date to
submit this Agreement, the Merger and related matters for the consideration and
approval of the McKinley Stockholders, which approval will be unanimously
recommended by McKinley's Board of Directors and management. Such meeting will
be called, held and conducted, and any proxies will be solicited, in compliance
with applicable law.
4.5 Proxy Statement. McKinley will send to its stockholders in a timely
manner, for the purpose of considering and voting upon the Merger at the
Stockholders Meeting, the Notice Materials. McKinley will promptly provide all
information relating to its business or operations necessary for inclusion in
the Notice Materials to satisfy all requirements of applicable state and federal
securities laws. McKinley and Excite each shall be solely responsible for any
statement, information or omission in the Notice Materials relating to it or its
affiliates based upon written information furnished by it. McKinley will not
provide or publish to its stockholders any material concerning it or its
affiliates that violates the Securities Act or the United States Securities
Exchange Act of 1934, as amended, (the "Exchange Act") with respect to the
transactions contemplated hereby.
4.6 Preparation of Permit Application, Hearing Request and Hearing
Notice. As promptly as practicable after the date hereof, Excite and McKinley
shall prepare and file with the Commissioner of the Department of Corporations
of the State of California the Permit Application, Hearing Request and Hearing
Notice and any other documents required by the California Corporate Securities
Law of 1968, as amended in connection with the Merger. Each of Excite and
McKinley shall use its best efforts to have the Permit Application, Hearing
Request and Hearing Notice declared effective under the California Corporate
Securities Law of 1968, as amended as promptly as practicable after such filing.
4.7 Regulatory Approvals. McKinley will execute and file, or join in
the execution and filing, of any application or other document that may be
necessary in order to obtain the
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authorization, approval or consent of any governmental body, federal, state,
local or foreign which may be reasonably required, in connection with the
consummation of the transactions contemplated by this Agreement. McKinley will
use its best efforts to obtain all such authorizations, approvals and consents.
4.8 Necessary Consents. McKinley will use its best efforts to obtain
such written consents and take such other actions as may be necessary or
appropriate in addition to those set forth in Section 4.7 to allow the
consummation of the transactions contemplated hereby and to allow Excite to
carry on McKinley's business after the Closing.
4.9 Litigation. McKinley will notify Excite in writing promptly after
learning of any actions, suits, proceedings or investigations by or before any
court, board or governmental agency, initiated by or against it, or known by it
to be threatened against it.
4.10 No Other Negotiations. McKinley and the Principals agree that,
until the earlier of (i) September 30, 1996, (ii) November 15, 1996 (but only if
the shares of Excite Common Stock being issued in the Merger are being
registered under the Securities Act because a permit from the California
Department of Corporations is unavailable and the sole reason why the Merger has
not been consummated before such time is that the registration statement has not
been declared effective by the SEC), (iii) the failure of Excite to advance
funds to McKinley in accordance with Section 2 of the Credit Agreement, (iv) the
consummation or earlier mutual abandonment of the transactions contemplated
hereby, or (v) the termination of this Agreement pursuant to Article 9 hereof,
McKinley and the Principals will not, and will not authorize any officer or
director of McKinley or any other person on its or their behalf to, solicit,
encourage, negotiate or accept any offer from any party concerning the possible
disposition of all or any substantial portion of McKinley's business, assets or
capital stock by merger, sale or any other means or any other transaction that
would involve a change in control of McKinley, or any transaction in which
McKinley contemplates issuing equity securities except to employees and
consultants for incentive and not capital-raising purposes. McKinley and the
Principals will promptly notify Excite in writing of any third party inquiries
or proposals. If McKinley merges with, or McKinley or its assets are acquired
by, a company other than Excite or a wholly-owned subsidiary of Excite, in
either case pursuant to a definitive agreement that is executed during a period
of six months after the date hereof based on any discussion that was a breach of
the foregoing obligation, McKinley and the Principals acknowledge that Excite
will incur substantial direct and consequential damages and injury, including
without limitation, the value that Excite could have obtained by acquiring
McKinley, and that McKinley and the Principals will be liable for any such
damages or injury in an action by Excite. McKinley shall have no obligations
under this Section 4.10 if Excite unilaterally decides not to proceed with this
transaction.
4.11 Access to Information. Until the Closing, McKinley will allow
Excite and its agents reasonable access to the files, books, records and offices
of McKinley, including, without limitation, any and all information relating to
McKinley's taxes, commitments, contracts, leases, licenses, and real, personal
and intangible property and financial condition. McKinley will cause its
accountants to cooperate with Excite and its agents in making available all
financial information reasonably requested, including without limitation the
right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
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4.12 Satisfaction of Conditions Precedent. McKinley will use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Section 8, and McKinley will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.
4.13 McKinley Affiliates Agreements. To ensure that the issuance of
Excite Common Stock in the Merger complies with the Securities Act and that the
Merger will be accounted for as a "pooling of interests," concurrently with the
execution of this Agreement, McKinley will deliver to Excite a letter
identifying all persons who are, in McKinley's reasonable judgment, "affiliates"
of McKinley at the time this Agreement is executed, including, all officers,
directors and all persons or entities who own ten percent (10%) or greater of
McKinley Capital Stock, assuming in that calculation that all McKinley Options,
Warrants and Convertible Securities have been exercised (the "Significant
Stockholders"). McKinley will provide Excite with all information and documents
needed to evaluate this list for compliance with securities laws. McKinley will
use its best efforts to cause each of its affiliates to deliver to Excite, upon
Excite's request, a written agreement (the "McKinley Affiliates Agreement"),
substantially in the form of Exhibit 4.13.
4.14 McKinley Stockholder Representations. To ensure that the Merger
will qualify as a reorganization for federal income tax purposes, McKinley will
cause each of the Principal Stockholders to execute, at or before the Closing,
the McKinley Affiliates Agreement which contains a representation that such
stockholder has no present plan or intention to sell or otherwise dispose of
more than fifty percent (50%) of the shares of Excite Common Stock which the
shareholder receives in the Merger and making such other representations as may
be reasonably requested by Excite, its accountants or its attorneys for the
purpose of ensuring such tax treatment.
4.15 McKinley Dissenting Shares. As promptly as practicable after the
date of the McKinley Stockholders' Meeting and prior to the Closing Date,
McKinley shall furnish Excite with the name and address of each McKinley
Dissenting Stockholder and the number of McKinley Dissenting Shares owned by
such McKinley Dissenting Stockholder.
4.16 Non-Competition Agreements. McKinley shall assist Excite in
obtaining from each of Isabel Maxwell, Christine Maxwell, David Hayden,
Alexander Cohen, Daniel Lynch, Roger Malina and Cindy Martin an agreement, in
form and substance attached hereto as Exhibit 8.14, not to compete with the
business of McKinley and Excite (or any successor corporations) for a period of
one (1) year after the Effective Time of the Merger.
4.17 Pooling Accounting. McKinley shall use its best efforts to cause
the business combination to be effected by the Merger to be accounted for as a
pooling of interests. McKinley shall use its best efforts to cause its
Affiliates not to take any action that would adversely affect the ability of
Excite to account for the business combination to be effected by the Merger as a
pooling of interests.
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4.18 Blue Sky Laws. McKinley shall use its best efforts to assist
Excite to the extent necessary to comply with the securities and Blue Sky laws
of all jurisdictions which are applicable in connection with the Merger.
4.19 Waivers from Security Holders. McKinley shall obtain fully
executed security holder consent and waiver of rights forms from each McKinley
Affiliate and from holders of McKinley Capital Stock representing at least 75%
of outstanding McKinley Capital Stock in the form attached hereto as Exhibit
4.19 (the "Security Holder Consent and Waiver of Rights").
5. EXCITE AND SUB PRECLOSING COVENANTS
During the period from the date of this Agreement until the Effective
Time, Excite and Sub covenant and agree as follows:
5.1 Advice of Changes. Excite and Sub will promptly advise McKinley in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Excite or Sub contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (b) of any material adverse
change in Excite's or Sub's business, results of operations or financial
condition.
5.2 Regulatory Approvals. Excite and Sub will execute and file, or join
in the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, in connection with the consummation of the transactions contemplated
by this Agreement. Each of Excite and Sub will use its best efforts to obtain
all such authorizations, approvals and consents.
5.3 Satisfaction of Conditions Precedent. Each of Excite and Sub will
use its best efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 7, and each of Excite and Sub will use
its best efforts to cause the transactions contemplated by this Agreement to be
consummated and, without limiting the generality of the foregoing, to obtain all
consents and authorizations of third parties and to make all filings with, and
give all notices to, third parties that may be necessary or reasonably required
on its part in order to effect the transactions contemplated hereby.
5.4 Excite Affiliates Agreements. To ensure that the Merger will be
accounted for as a "pooling of interests," Excite will cause each of its
affiliates to sign and deliver to Excite a written agreement (the "Excite
Affiliates Agreement"), in the form of Exhibit 5.4, providing that such person
will make no disposition of Excite Common Stock (a) in the 30 day period prior
to the Effective Time or (b) after the Effective Time until Excite shall have
publicly released a report including the combined financial results of Excite
and McKinley for a period of at least 30 days of combined operations of Excite
and McKinley.
5.5 Preparation of Permit Application, Hearing Request and Hearing
Notice. As promptly as practicable after the date hereof, Excite and Sub, with
McKinley's assistance, shall prepare and file with the Commissioner the Permit
Application, Hearing Request and Hearing Notice and any other documents required
by the California Corporate Securities Law of 1968, as
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amended in connection with the Merger. Excite, with McKinley's assistance, shall
use its best efforts to have the Permit Application, Hearing Request and Hearing
Notice declared effective under the California Corporate Securities Law of 1968,
as amended as promptly as practicable after such filing.
5.6 Blue Sky Laws. Excite shall take such steps as may be necessary to
comply with the securities and Blue Sky laws of all jurisdictions which are
applicable in connection with the Merger.
5.7 Pooling Accounting. Excite shall use its best efforts to cause the
business combination to be effected by the Merger to be accounted for as a
pooling of interests. Excite shall use its best efforts to cause its Affiliates
not to take any action that would adversely affect the ability of Excite to
account for the business combination to be effected by the Merger as a pooling
of interests.
5.8 Necessary Consents. Excite will use its best efforts to obtain such
written consents and take such other actions as may be necessary or appropriate
in addition to those set forth in Section 5.2 to allow the consummation of the
transactions contemplated hereby and to allow Excite to carry on McKinley's
business after the Closing.
5.9 Litigation. Excite will notify McKinley in writing promptly after
learning of any actions, suits, proceedings or investigations by or before any
court, board or governmental agency, initiated by or against it, or known by it
to be threatened against it.
5.10 Access to Information. Until the Closing, Excite will allow
McKinley and its agents reasonable access to the files, books, records and
offices of Excite, including, without limitation, any and all information
relating to Excite's taxes, commitments, contracts, leases, licenses, and real,
personal and intangible property and financial condition. Excite will cause its
accountants to cooperate with McKinley and its agents in making available all
financial information reasonably requested, including without limitation the
right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
5.11 Nasdaq Listing. Excite shall prepare a listing application for the
shares of Excite Common Stock to be issued in the Merger and shall cause such
application to be filed with the Nasdaq Stock Market.
5.12 Repayment of Convertible Securities. Excite agrees to cause any
McKinley Convertible Securities outstanding as of the date hereof and that are
presented by the holders thereof for repayment at the Closing to be repaid at
the Closing.
6. CLOSING MATTERS
6.1 The Closing. Subject to termination of this Agreement as provided
in Section 9 below, the Closing will take place at the offices of Fenwick & West
LLP, Two Palo Alto Square, Palo Alto, California on or before August 15, 1996,
or, if all conditions to closing have not been satisfied or waived by such date,
such other place, time and date as McKinley and Excite may mutually select (the
"Closing Date"). Concurrently with the Closing, an Agreement of Merger
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will be filed in the office of the Delaware Secretary of State. The Agreement of
Merger provides that the Merger shall become effective upon filing.
6.3 Exchange of Certificates.
6.3.1 As of the Effective Time, all shares of McKinley Capital
Stock that are outstanding immediately prior thereto will, by virtue of the
Merger and without further action, cease to exist and will be converted into the
right to receive from Excite the number of shares of Excite Common Stock
determined as set forth in Section 1.1.1, subject to Sections 1.1.5, 1.2 and
1.3.
6.3.2 Promptly after the Effective Time, each holder of shares
of McKinley Capital Stock that are not Dissenting Shares will surrender the
certificate(s) for such shares (the "McKinley Certificates"), duly endorsed as
requested by Excite, to an entity designated by Excite (the "Exchange Agent")
for cancellation. Promptly after the Effective Time and receipt of such McKinley
Certificates, the Exchange Agent will issue to each tendering holder a
certificate for the number of shares of Excite Common Stock to which such holder
is entitled pursuant to Section 1.1.1 hereof, less the shares of Excite Common
Stock deposited into escrow pursuant to Section 1.3 hereof, and distribute any
cash payable under Section 1.2.
6.3.3 No dividends or distributions payable to holders of
record of Excite Common Stock after the Effective Time, or cash payable in lieu
of fractional shares, will be paid to the holder of any unsurrendered McKinley
Certificate(s) until the holder of the McKinley Certificate(s) surrenders such
McKinley Certificate(s), or if such certificates are lost, stolen or destroyed,
provides an indemnity reasonably acceptable to Excite. Subject to the effect, if
any, of applicable escheat and other laws, following surrender of any McKinley
Certificate, there will be delivered to the person entitled thereto, without
interest, the amount of any dividends and distributions therefor paid with
respect to Excite Common Stock so withheld as of any date subsequent to the
Effective Time and prior to such date of delivery.
6.3.4 All Excite Common Stock delivered upon the surrender of
McKinley Capital Stock in accordance with the terms hereof will be deemed to
have been delivered in full satisfaction of all rights pertaining to such
McKinley Capital Stock. There will be no further registration of transfers on
the stock transfer books of McKinley or its transfer agent of the McKinley
Capital Stock. If, after the Effective Time, McKinley Certificates are presented
for any reason, they will be canceled and exchanged as provided in this Section
6.3.
6.3.5 Until certificates representing McKinley Capital Stock
outstanding prior to the Merger are surrendered pursuant to Section 6.3.2 above,
such certificates will be deemed, for all purposes, to evidence ownership of the
number of shares of Excite Common Stock into which the McKinley Capital Stock
will have been converted, reduced by the number of shares withheld as Escrow
Shares.
6.3.6 Certificates which are not presented to Excite's
Exchange Agent within three years after the Closing shall be cancelled and the
holder thereof will no longer be entitled to receive any Excite securities in
consideration thereof.
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6.4 Assumption of Options, Warrants and Convertible Securities.
Promptly after the Effective Time, Excite will notify in writing each holder of
an McKinley Option, Warrant and Convertible Security of the assumption of such
McKinley Option, Warrant and Convertible Security by Excite, and the number of
shares of Excite Common Stock that are then subject to such option, warrant and
convertible security and the exercise price of such option, as determined
pursuant to Section 1.1 hereof.
7. CONDITIONS TO OBLIGATIONS OF MCKINLEY
McKinley's obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by McKinley, but only in a writing signed by
McKinley):
7.1 Accuracy of Representations and Warranties. The representations and
warranties of Excite and Sub set forth in Section 3 shall be true and accurate
in all material respects on and as of the Closing with the same force and effect
as if they had been made at the Closing, and McKinley shall receive a
certificate to such effect executed by each of Excite's and Sub's Chief
Executive Officer and Chief Financial Officer.
7.2 Covenants. Excite shall have performed and complied in all material
respects with all of its covenants contained in Section 5 on or before the
Closing, and McKinley shall receive a certificate to such effect signed by each
of Excite's and Sub's Chief Executive Officer and Chief Financial Officer.
7.3 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
7.4 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Merger by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, including but not limited to, requirements under applicable federal
and state securities laws.
7.5 Opinion of Excite's Counsel. McKinley shall have received from
counsel to Excite an opinion in customary form, reasonably acceptable to
McKinley.
7.6 Stockholder Approval. The principal terms of this Agreement and the
Agreement of Merger shall have been approved and adopted by McKinley
Stockholders, as required by applicable law and McKinley's Certificate of
Incorporation and Bylaws.
7.7 No Litigation. No litigation or proceeding shall be threatened or
pending for the purpose or with the probable effect of enjoining or preventing
the consummation of any of the transactions contemplated by this Agreement.
7.8 Fairness Hearing. Excite shall have received the issuance of the
Permit by the California Department of Corporations following a Fairness Hearing
for this Merger and the
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issuance of the Excite Common Stock shall be an exempt transaction under Section
3(a)(10) of the Securities Act or the Registration Statement on Form S-4 shall
have been declared effective by the SEC with respect to the Excite Securities
issued in the Merger.
7.9 Nasdaq Listing. The shares of Excite Common Stock to be issued in
the Merger shall be approved for listing on the Nasdaq Stock Market.
7.10 Escrow Agreement. The Escrow Agreement substantially in the form
attached hereto as Exhibit 1.3 shall have been executed by Excite.
8. CONDITIONS TO OBLIGATIONS OF EXCITE
The obligations of Excite and Sub hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Excite, but only in a
writing signed by Excite):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of McKinley set forth in Section 2 shall be true and accurate in all
material respects on and as of the Closing with the same force and effect as if
they had been made at the Closing, and Excite shall receive a certificate to
such effect executed by McKinley's Chief Executive Officer and Chief Financial
Officer.
8.2 Covenants. McKinley shall have performed and complied in all
material respects with all of its covenants contained in Section 4 on or before
the Closing, and Excite shall receive a certificate to such effect signed by
McKinley's Chief Executive Officer and Chief Financial Officer.
8.3 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.4 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Merger by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, including but not limited to, requirements under applicable federal
and state securities laws.
8.5 Opinion of McKinley's Counsel. Excite shall have received from
counsel to McKinley, an opinion substantially in customary form, reasonably
acceptable to Excite.
8.6 Consents. Excite shall have received duly executed copies of all
material third-party consents, approvals, assignments, waivers, authorizations
or other certificates contemplated by this Agreement or the Excite Schedule of
Exceptions or as otherwise set forth on Schedule 8.7 hereto to provide for the
continuation in full force and effect of any and all material contracts and
leases of McKinley and for Excite to consummate the transactions contemplated
hereby in form and substance reasonably satisfactory to Excite, except for such
consents and approvals thereof
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as Excite and McKinley shall have agreed shall not be obtained, as contemplated
by the Excite Schedule of Exceptions.
8.7 No Litigation. No litigation or proceeding shall be threatened or
pending for the purpose or with the probable effect of enjoining or preventing
the consummation of any of the transactions contemplated by this Agreement, or
which could be reasonably expected to have a material adverse effect on the
present or future operations or financial condition of McKinley.
8.6 Requisite Approvals. The principal terms of this Agreement and the
Agreement of Merger shall have been approved and adopted by the holders of no
less than ninety five percent (95%) of McKinley Capital Stock and by a majority
of McKinley's Board of Directors.
8.9 Dissenting Shares. There shall be no more than five percent (5%)
Dissenting Shares.
8.10 Affiliates Agreements and Principal Shareholder Representatives.
McKinley shall have delivered to Excite the letter required by Section 4.13
naming all persons who are Significant Stockholders for purposes of Section 4.14
and all persons who are "affiliates" of McKinley for purposes of Rule 145 under
the Securities Act, and each such person shall have executed and delivered an
McKinley Affiliates Agreement to Excite in accordance with Sections 4.13 and
4.14.
8.11 Pooling Opinion. Excite's accounting firm, Ernst & Young LLP
("Excite's Auditors"), shall have received from McKinley's accounting firm,
Price Waterhouse ("McKinley's Auditors"), a letter, in form and substance
satisfactory to Excite's Auditors, to the effect that McKinley's Auditors are
not aware of any fact concerning McKinley that would preclude Excite from
accounting for the Merger as a pooling of interests, and Excite shall have
received from Excite's Auditors a letter, in form and substance satisfactory to
Excite, regarding the appropriateness of "pooling of interests" accounting
treatment for the Merger under APB No. 16, if closed and consummated in
accordance with this Agreement.
8.12 Non-Competition and Non-Solicitation Agreements. Excite shall have
received executed copies of Non-Competition and Non-Solicitation Agreements
executed by Excite, and each of Isabel Maxwell, Christine Maxwell, David Hayden,
Alexander Cohen, Daniel Lynch, Roger Malina and Cindy Martin in substantially
the form of Exhibit 8.12.
8.13 Employment Agreements. Each of the existing employment agreements
between McKinley and its employees shall have been terminated.
8.14 Resignation of Directors. The directors of McKinley in office
immediately prior to the Effective Time of the Merger shall have resigned as
directors of the Surviving Corporation effective as of the Effective Time of the
Merger.
8.15 Fairness Hearing. Excite shall have received the issuance of the
Permit by the California Department of Corporations following a Fairness Hearing
for this Merger and the issuance of the Excite Common Stock shall be an exempt
transaction under Section 3(a)(10) of
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the Securities Act or the Registration Statement on Form S-4 shall have been
declared effective by the SEC with respect to the Excite Securities issued in
the Merger.
8.16 Waivers from Security Holders. McKinley shall have obtained fully
executed Security Holder Consent and Waiver of Rights from such current security
holders of McKinley, as specified in Section 4.19 hereof, which such consents
and waivers will contain an agreement to be bound by the resale restrictions
imposed on the Excite Common Stock and Excite Securities issued in the Merger.
8.17 Escrow. Excite shall have received an Escrow Agreement executed by
McKinley and Isabel Maxwell and Jerry Murdock, as the Representatives for all
McKinley Stockholders, providing for the escrow of the Escrow Shares on the
terms and conditions of the Escrow Agreement.
8.18 Observance of Services and Credit Agreements. McKinley shall have
complied in all material respects with its obligations under the Services
Agreement and Credit Agreement entered into as of the date hereof by and between
Excite and McKinley.
8.19 Release of McKinley. The Principals shall have executed a release
substantially in the Form of Exhibit 8.19.
8.20 Status of Agreements. Excite shall be reasonable satisfied that
all agreements that are material to the business of McKinley will continue in
full force and effect following the Closing.
9. TERMINATION OF AGREEMENT
9.1 Prior to Closing.
9.1.1 This Agreement may be terminated at any time prior to
the Closing by the mutual written consent of each of the parties hereto.
9.1.2 Unless otherwise agreed by the parties hereto, this
Agreement will be terminated if the Closing shall not have occurred on or before
September 30, 1996, provided however, that if the shares of Excite Common Stock
being issued in the Merger are being registered under the Securities Act and the
sole reason why the Closing has not occurred is that the registration statement
has not been declared effective by the SEC, the Agreement will not be terminated
by virtue of this provision unless the Closing shall not have occurred on or
before November 15, 1996.
9.1.3 This Agreement may be terminated at any time prior to
the Closing by Excite subject to Section 9.3.
9.2 At the Closing. At the Closing, this Agreement may be terminated
and abandoned:
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9.2.1 By Excite if any of the conditions precedent to Excite's
obligations set forth in Section 8 above have not been fulfilled or waived at
and as of the Closing; or
9.2.2 By McKinley if any of the conditions precedent to
McKinley's obligations set forth in Section 7 above have not been fulfilled or
waived at and as of the Closing.
Any termination of this Agreement under this Section 9.2 will
be effective by the delivery of notice of the terminating party to the other
party hereto.
9.3 Termination Fee. In the event that Excite elects not to proceed
with the Merger and terminates this Agreement and such election and termination
is not the result of a material breach of this Agreement by McKinley or the
Principals or the failure of McKinley to satisfy a material condition to the
obligations of Excite set forth In Article 8, Excite will pay McKinley a
one-time payment of $4,000,000, which shall constitute the sole remedy of
McKinley with respect such termination.
9.4 No Liability. Except as provided in Section 9.3, any termination of
this Agreement pursuant to this Section 9 will be without further obligation or
liability upon any party in favor of the other party hereto other than the
obligations provided in Sections 10.2, 11.8 and 11.16 and in the Nondisclosure
Agreement between McKinley and Excite dated May 2, 1996, which will survive
termination of this Agreement; provided, however, that nothing herein will limit
the obligation of McKinley and Excite to use their best efforts to cause the
Merger to be consummated, as set forth in Sections 4.12 and 5.3 hereof,
respectively.
10. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES, CONTINUING
COVENANTS
10.1 Survival of Representations. All representations, warranties and
covenants of McKinley, Excite and Sub contained in this Agreement will survive
the Effective Time and remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to this Agreement,
until the earlier of (a) the termination of this Agreement or (b) one year after
the Closing Date, whereupon such representations, warranties and covenants will
expire (except for covenants that by their terms survive for a longer period),
provided however, that representations, warranties and covenants involving
intentional fraud or willful misconduct shall survive the Closing without the
limitations of subsections (a) or (b) above, and the representations and
warranties made in Sections 2.3 by the Principals shall survive the Closing for
a period of three years.
10.2 Agreement to Indemnify.
10.2.1 Subject to the limitations set forth
in this Section 10, the McKinley Stockholders will indemnify and hold harmless
Excite and its officers, directors, agents and employees, and each person, if
any, who controls or may control Excite within the meaning of the Securities Act
(hereinafter referred to individually as an "Indemnified Person" and
collectively as "Indemnified Persons") from and against any and all claims,
demands, actions, causes of actions, losses, costs, damages, liabilities and
expenses including, without limitation, reasonable legal fees (hereinafter
referred to as "Damages"):
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(a) arising out of any misrepresentation or
breach of or default in connection with any of the representations, warranties
and covenants given or made by McKinley and the Principal Stockholders in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of McKinley pursuant hereto.
(b) Resulting from any failure of any
McKinley Stockholders to have good, valid and marketable title to the issued and
outstanding McKinley Capital Stock held by such Stockholders, free and clear of
all liens, claims, pledges, options, adverse claims, assessments or charges of
any nature whatsoever, or to have full right, capacity and authority to vote
such McKinley Capital Stock in favor of the Merger and the other transactions
contemplated by the Agreement of Merger.
10.2.2 Subject to the limitations set forth
in this Section 10, the Principals will indemnify and hold harmless the
Indemnified Persons from and against any and all Damages arising out of any
misrepresentation or breach of or default in connection with any of the
representations and warranties given or made by McKinley in Section 2.3 of this
Agreement.
10.2.3 The indemnification provided for
subsections 10.2.2 and 10.2.3 shall not apply unless and until the aggregate
Damages for which one or more Indemnified Persons seeks indemnification under
this section, exclusive of legal fees, exceeds $50,000.00 (the "Basket") and
then only to the extent that aggregate Damages exceed the Basket. Excite will
use its best efforts to obtain recoveries under all applicable insurance
policies for all Damages. In seeking indemnification for Damages under Section
10.2.1, the Indemnified Persons shall exercise their remedies with respect to
the Escrow Shares and any other assets deposited in escrow pursuant to the
Escrow Agreement and these Escrow Shares and such other assets shall be the sole
source of indemnification in connection therewith; provided, however, that no
such claim for Damages will be asserted after the expiration of the Escrow
Period. In seeking indemnification for Damages under Section 10.2.2, the
Indemnified Persons shall exercise their remedies first with respect to the
Escrow Shares and any other assets deposited in escrow pursuant to the Escrow
Agreement and second, after the Escrow Shares have been exhausted, with respect
to the shares of Excite Common Stock issued in the Merger to the Principals.
Except for intentional fraud or willful misconduct or breach of any of the
provisions of the Affiliates Agreement: (i) no McKinley Stockholder, except for
the Principals, shall have any liability to an Indemnified Person under this
Agreement except to the extent of such McKinley Stockholder's Escrow Shares and
any other assets deposited under the Escrow Agreement and (ii) the remedies set
forth in this Section 10.2 shall be the exclusive remedies of Excite and the
other Indemnified Persons hereunder against any McKinley Stockholder. The
maximum liability of the Principals shall be the total number of shares issued
to such Principals in the Merger.
10.2.4 Subject to the limitations set forth
in this Section 10, Excite will indemnify and hold harmless the McKinley
Stockholders from and against any and all Damages arising out of any
misrepresentation or breach of or default in connection with any of the
representations, warranties and covenants given or made by Excite in this
Agreement or in any certificate, document or instrument delivered by or on
behalf of Excite pursuant hereto,
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provided however, that Excite's total liability under this Section 10.2.4 shall
be limited to ten percent (10%) of the consideration paid by Excite to the
McKinley Stockholders.
11. MISCELLANEOUS
11.1 Governing Law. The internal laws of the State of California
(irrespective of its conflict of law principles) will govern the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties hereto.
11.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto and any attempt to do so will be void.
This Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
11.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all parties reflected hereon as signatories.
11.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
11.6 Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The Agreement may be amended by the parties hereto at any
time before or after approval of the McKinley Stockholders; but, after such
approval, no amendment will be made which by applicable law requires the further
approval of the McKinley Stockholders without obtaining such further approval.
11.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
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11.8 Expenses. Excite will pay on the Closing Date the investment
banking, legal and accounting fees incurred by McKinley in connection with the
Merger up to the following maximum amounts: investment banking fees of 3% of the
acquisition value paid in the Merger, as defined in that certain engagement
letter between Lehman Brothers and McKinley dated June 7, 1996, as amended June
21, 1996, legal fees of $100,000 and accounting fees of $30,000, provided
however, that in the event that Excite files a registration statement on Form
S-4 for the shares being issued to the McKinley Stockholders, the parties will
in good faith negotiate an increase in such legal and accounting fees.
11.9 Attorneys' Fees. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including without limitation, costs, expenses and fees
on any appeal). The prevailing party will be entitled to recover its costs of
suit.
11.10 Notices. Any notice or other communication required or permitted
to be given under this Agreement will be in writing, will be delivered
personally, by registered or certified mail, postage prepaid, by telecopy or by
nationally recognized courier service, and will be deemed given upon delivery,
if delivered personally, or three days after deposit in the mails, if mailed, to
the following addresses:
(i) If to Excite:
Excite, Inc.
1091 N. Shoreline Boulevard
Mountain View, CA 94043
Facsimile: (408) 943-1299
Attention: President
With a copy to:
Mark Stevens
Fenwick & West LLP
2 Palo Alto Square
Palo Alto, CA 94306
Facsimile: (415) 494-0674
(ii) If to McKinley:
The McKinley Group, Inc.
85 Liberty Ship Way, Suite 201
Sausalito, CA 94965
Facsimile: (415)
Attention: President
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With a copy to:
Michael Sullivan
Pillsbury Madison & Sutro LLP
2700 Sand Hill Road
Menlo Park, CA 94025-7020
Facsimile: (415) 233-4545
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 11.10.
11.11 Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole.
11.12 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
11.13 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
11.14 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
11.15 Public Announcement. Upon execution of the Agreement by both
parties, and until the consummation of the Merger, all press releases and other
public and private communications shall be made by the parties only with the
mutual written consent of McKinley and Excite, except that Excite may make such
disclosures as are required by applicable law, provided, however, that a copy of
such disclosure shall first be submitted to McKinley within a reasonable time
period prior to the dissemination thereof.
11.16 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and
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<PAGE> 40
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties, including but not limited to the Memorandum of Agreement dated June 27,
1996 executed by Excite, McKinley and the members of the Board of Directors of
McKinley, with respect hereto, other than the Nondisclosure Agreement between
McKinley and Excite dated _____________, 1996. The express terms hereof control
and supersede any course of performance or usage of the trade inconsistent with
any of the terms hereof.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"EXCITE" "MCKINLEY"
Excite, Inc. The McKinley Group, Inc.
By: /s/ George Bell By: /s/ David Lynch
------------------------------- --------------------------
Name: George Bell Name: David Lynch
------------------------------- --------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
------------------------------- --------------------------
"SUB" "PRINCIPALS"
Excite Acquisition Corporation
By: /s/ George Bell /s/ Isabel Maxwell
------------------------------- --------------------------
Isabel Maxwell
Name: George Bell
------------------------------- /s/ Christine Maxwell
Its: President --------------------------
Christine Maxwell
/s/ David Hayden
--------------------------
David Hayden
/s/ Roger Malina
--------------------------
Roger Malina
/s/ Daniel Lynch
--------------------------
Daniel Lynch
[SIGNATURE PAGE FOR AGREEMENT AND PLAN OF REORGANIZATION]
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<PAGE> 1
AGREEMENT OF MERGER OF
EXCITE ACQUISITION CORPORATION,
A DELAWARE CORPORATION,
WITH AND INTO
THE MCKINLEY GROUP, INC.,
A DELAWARE CORPORATION
This Agreement of Merger (this "Agreement") is entered into as of
August 30, 1996 by and between Excite Acquisition Corporation, a Delaware
corporation ("Sub") and a wholly-owned subsidiary of Excite, Inc., a California
corporation ("Excite"), and The McKinley Group, Inc., a Delaware corporation
("McKinley").
RECITALS
A. Excite, Sub and McKinley have entered into an Agreement and Plan of
Reorganization, dated as of August 7, 1996 (the "Plan"), providing for certain
representations, warranties and agreements in connection with the transactions
contemplated thereby and hereby and for the merger of Sub with and into McKinley
(the "Merger"), in accordance with the Delaware General Corporation Law (the
"Delaware Law"). All capitalized terms not herein defined shall have the meaning
ascribed to them in the Plan.
B. The Boards of Directors of Excite, Sub and McKinley have determined
it to be advisable and in the respective best interests of Excite, Sub and
McKinley and their respective stockholders that Sub be merged with and into
McKinley so that McKinley will be the surviving corporation of the Merger.
C. The Plan, this Agreement and the Merger have been approved by
Excite, as the sole stockholder of Sub, and by the stockholders of McKinley, in
accordance with the Delaware Law.
NOW, THEREFORE, Sub and McKinley hereby agree as follows:
1. THE MERGER
At the time of the filing of this Agreement (together with the
Officers' Certificates attached hereto) with the Secretary of State of the State
of Delaware (the "Effective Time"), Sub will be merged with and into McKinley,
and McKinley shall continue as the surviving corporation (following the Merger,
McKinley is hereinafter sometimes referred to as the "Surviving Corporation"),
pursuant to the terms and conditions of this Agreement and in accordance with
applicable provisions of Delaware law as follows:
1.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
McKinley shall be amended and restated in its entirety to be the same as the
Certificate of Incorporation of Sub
<PAGE> 2
and shall be the Certificate of Incorporation of the Surviving Corporation, a
copy of which is attached as Exhibit A hereto.
1.2 BYLAWS. The Bylaws of McKinley shall be amended and restated in
their entirety to be the same as the Bylaws of Sub and shall be the Bylaws of
the Surviving Corporation. The Bylaws of the Surviving Corporation thereafter
may be amended in accordance with their terms, the Certificate of Incorporation
of the Surviving Corporation and as provided by the Delaware Law.
1.3 CONVERSION OF SHARES OF SERIES A COMMON STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of any
stockholder of McKinley, each issued and outstanding share of McKinley's Series
A Common Stock (the "Series A Common Shares") (other than any shares held by
persons exercising dissenters' rights in accordance with Section 262 of the
Delaware Law (" Series A Dissenting Shares")) shall be converted into the right
to receive, subject to the provisions of Section 1.1.1 of the Plan, .0817633
(the "Common A Applicable Fraction") shares of fully paid and nonassessable
Common Stock of Excite.
1.4 CONVERSION OF SHARES OF SERIES B COMMON STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of any
stockholder of McKinley, each issued and outstanding share of McKinley's Series
B Common Stock (the "Series B Common Shares") (other than any shares held by
persons exercising dissenters' rights in accordance with Section 262 of the
Delaware Law ("Series B Dissenting Shares")) shall be converted into the right
to receive, subject to the provisions of Section 1.1.1 of the Plan, .2452899
(the "Common B Applicable Fraction") shares of fully paid and nonassessable
Common Stock of Excite (which together with the shares of Excite Common Stock
into which the McKinley Series A Common Stock is convertible are referred to
herein as the "Conversion Shares"). In addition, the holders of shares of
McKinley Series B Common Stock shall be entitled to that number of shares of
Excite Common Stock equal to the (x) aggregate liquidation preference of the
shares of McKinley Series B Common Stock held by them (determined in accordance
with the Certificate of Incorporation of McKinley) divided, by (y) the fair
market value of a share of Excite Common Stock (determined in accordance with
the Certificate of Incorporation of McKinley, unless otherwise agreed by the
holders of McKinley B Common).
1.5 ASSUMPTION OF CONVERTIBLE SECURITIES. At the Effective Time, each
option, warrant or note that is exercisable for, or convertible into, shares of
McKinley Series A Common Stock (each, a "Convertible Security") and that is
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without further action on the part of any holder thereof, be assumed
by Excite and become exercisable for, or convertible into, the number of shares
of Excite Common Stock that equals the number of shares of McKinley Series A
Common Stock subject to such Convertible Security multiplied by the Common A
Applicable Fraction. The purchase price per share of Excite Common Stock
issuable upon exercise or conversion of each such Convertible Security will be
equal to the exercise price of the Convertible Security divided by the Common A
Applicable Fraction. All other terms of each Convertible Security will remain
unchanged.
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<PAGE> 3
1.6 FRACTIONAL SHARES. No fraction of a Conversion Share will be issued
by virtue of the Merger, but in lieu thereof each holder of shares of McKinley
Common Stock (excluding holders of warrants and notes exercisable for, or
convertible into, shares of McKinley Common Stock) who would otherwise be
entitled to a fraction of a Conversion Share (after aggregating all fractional
Conversion Shares to be received by such holder) shall receive from Excite an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
the price of a share of Excite's Common Stock determined pursuant to Section
1.1.1 of the Plan or $14.14, multiplied by (ii) the fraction of a Conversion
Share to which each such holder would otherwise be entitled.
1.7 DIRECTORS. All of the directors of McKinley will resign and Excite
shall appoint new directors.
1.8 ESCROW. Of the aggregate number of Conversion Shares issuable by
virtue of the Merger to a stockholder, Excite shall deposit in escrow a number
of Conversion Shares equal to ten percent (10%) of the total number of
Conversion Shares issuable by virtue of the Merger to such stockholder (the
"Escrowed Shares"), pursuant to the terms of a separate Escrow Agreement.
1.9 NO FURTHER TRANSFER. At the Effective Time, the stock transfer
books of McKinley shall be closed and no transfer of McKinley Shares shall
thereafter be made.
1.10 DISSENTERS' RIGHTS. Holders of Dissenting Shares who have complied
with all requirements for perfecting the rights of dissenting shareholders as
set forth in Section 262 of the Delaware Law and Chapter 13 of the General
Corporation Law of the State of California (the "California Law") shall be
entitled to their rights under the Delaware Law and the California Law.
1.11 SURVIVING CORPORATION. The McKinley Group, Inc., a Delaware
corporation, will be the surviving corporation of the Merger.
2. SURRENDER OF CERTIFICATES
2.1 SURRENDER AND EXCHANGE OF OUTSTANDING CERTIFICATES. As soon as
practicable after the Effective Time, each holder of a certificate or
certificates representing shares of McKinley Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares) shall
surrender, or authorize the surrender of, such certificate(s) to Excite's
transfer agent. Thereupon, each such holder shall be entitled to receive in
exchange therefor the number of shares of Excite's Common Stock represented by
such certificate(s). Excite's transfer agent shall issue to McKinley's
stockholders certificates for the shares of Excite Common Stock issuable to
McKinley's stockholders in the Merger as soon as practicable following such
surrender. Each certificate which immediately before the Effective Time
evidenced shares of McKinley Common Stock shall, from and after the Effective
Time until such certificate is surrendered to Excite, or its transfer agent, be
deemed, for all corporate purposes, to evidence the right to receive the
consideration described above; provided, however, that until such certificate is
so surrendered by the holder thereof, no dividend or other distribution payable
to such holder after the Effective Time shall be paid in respect of such
certificates.
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<PAGE> 4
3. TERMINATION AND AMENDMENT
3.1 TERMINATION. Notwithstanding the approval of this Agreement by the
stockholders of Sub and McKinley, this Agreement may be terminated at any time
prior to the Effective Time by the mutual written agreement of Sub and McKinley,
and will terminate in the event the Plan is terminated in accordance with its
terms. In the event of the termination of this Agreement as provided above, this
Agreement will forthwith become void and there will be no liability on the part
of either Excite, Sub and McKinley or their respective officers and directors,
except as otherwise provided in the Plan.
3.2 AMENDMENT. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
4. MISCELLANEOUS
4.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement.
4.2 PLAN. The Plan and this Agreement are intended to be construed
together in order to effectuate their purposes.
4.3 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. Neither party
hereto may assign any of its rights or obligations under this Agreement without
the prior written consent of the other party hereto. This Agreement will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
4.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware (irrespective of its
choice of law principles).
4.5 FURTHER ASSIGNMENTS. After the Effective Time, McKinley and its
officers and directors may execute and deliver such deeds, assignments and
assurances and do all other things necessary or desirable to vest, perfect or
confirm title to McKinley's property or rights in Excite or Sub and otherwise to
carry out the purposes of the Plan, in the name of Excite or Sub or otherwise.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
THE MCKINLEY GROUP, INC.
By: /s/ Daniel Lynch By: /s/ Isabel Maxwell
------------------------------------- --------------------------
Daniel Lynch, Chief Executive Officer Isabel Maxwell, Secretary
EXCITE ACQUISITION CORPORATION
By: /s/ George Bell By: /s/ Richard Redding
-------------------------------------- --------------------------
George Bell, President Richard Redding, Secretary
SIGNATURE PAGE TO AGREEMENT OF MERGER
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<PAGE> 6
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
THE MCKINLEY GROUP, INC.
ARTICLE I
The name of the corporation is The McKinley Group, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, 19805.
The name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of stock which the corporation has authority
to issue is 1,000 shares, all of which shall be Common Stock, $0.001 par value
per share.
ARTICLE V
The Board of Directors of the corporation shall have the power to
adopt, amend or repeal Bylaws of the corporation.
ARTICLE VI
Election of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.
ARTICLE VII
To the fullest extent permitted by law, no director of the corporation
shall be personally liable for monetary damages for breach of fiduciary duty as
a director. Without limiting the effect of the preceding sentence, if the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Neither any amendment nor repeal of this Article VII, nor the adoption
of any provision of this Certificate of Incorporation inconsistent with this
Article VII, shall eliminate, reduce or otherwise adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such amendment, repeal or adoption of such an inconsistent
provision.
