UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 10)*
MESSAGEMEDIA, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
337486 10 4 ---------------------------------------------- (CUSIP Number)
- --------------------------------------------------------------------------------
RONALD D. FISHER STEPHEN A. GRANT, ESQ.
SOFTBANK INC. SULLIVAN & CROMWELL
10 LANGLEY ROAD, SUITE 403 125 BROAD STREET
NEWTON CENTER, MA 02159 NEW YORK, NY 10004
(617) 928-9300 (212) 558-4000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
AUGUST 16, 1999
---------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[_].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
PAGE 1 OF 134
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 2 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
SOFTBANK AMERICA INC.
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
OO
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 21,151,550
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
21,151,550
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,151,550
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.40%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 3 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
SOFTBANK HOLDINGS INC.
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 24,472,767
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
21,151,550
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,472,767
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.05%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
HC, CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 4 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
SOFTBANK CORP.
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 25,606,277
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
22,285,060
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,606,277
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.33%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
HC, CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 5 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
MASAYOSHI SON
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
JAPAN
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 25,606,277
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
22,285,060
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,606,277
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.33%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 6 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
STV IV LLC
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 13,896,992
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
10,575,775
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,896,992
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.86%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
OO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
__________________________ __________________________
CUSIP No. 337486 10 4 Page 7 of 134 Pages
__________________________ __________________________
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
SOFTBANK TECHNOLOGY VENTURES IV L.P.
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
________________________________________________________________________________
7 SOLE VOTING POWER
0
_________________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 13,698,167
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
10,376,950
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,698,167
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.46%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SOFTBANK America Inc., a Delaware corporation ("SB America"), SOFTBANK
Holdings Inc., a Delaware corporation ("SBH"), SOFTBANK Corp., a Japanese
corporation ("SOFTBANK"), Mr. Masayoshi Son, a Japanese citizen, SOFTBANK
Technology Ventures IV L.P., a Delaware limited partnership ("SOFTBANK
Technology"), and STV IV LLC, a Delaware limited liability company ("STV" and
together with SB America, SBH, SOFTBANK, Mr. Son and SOFTBANK Technology, the
"Reporting Persons"), hereby amend and supplement the statement on Schedule 13D
previously filed by them, as heretofore amended and supplemented, with respect
to the Common Stock, par value $0.001 per share (the "Common Stock"), of
MessageMedia, Inc., a Delaware corporation formerly known as First Virtual
Holdings Incorporated (the "Company"), beneficially owned by them, to reflect
the acquisition of shares of Common Stock of the Company by SOFTBANK Ventures,
Inc., a Japanese corporation ("SVI"), in connection with the merger of the
Company and Decisive Technology Corporation ("Decisive"), which became effective
on August 16, 1999. The statement on Schedule 13D, as heretofore amended and
supplemented and as amended and supplemented hereby (the "Statement"), remains
in full force and effect.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended and restated as follows:
Total Outstanding Shares
- ------------------------
The percentage interest held by each Reporting Person presented below
is based on the 49,890,388 shares of Common Stock reported to be outstanding as
of August 16, 1999, after the merger of Decisive and the Company became
effective, as communicated to the Reporting Persons by the Company (the
"Outstanding Shares").
Decisive Merger
- ---------------
On August 16, 1999, pursuant to the Agreement and Plan of Merger and
Reorganization filed as Exhibit S hereto, the merger of Decisive and the Company
became effective, and each outstanding share of common stock of Decisive was
converted into 0.0777 shares of Common Stock of the Company. Accordingly, SVI,
as the "operating principal" under a "silent partnership agreement" (a so-called
tokumei kumiai keiyaku), received 254,022 shares of Common Stock in exchange for
Decisive common stock previously owned by it. SVI holds the shares on behalf of
the silent partnership.
Relationships among Stockholders
- --------------------------------
By virtue of its ownership of a 50% interest in STV, the general
partner of SOFTBANK Technology and SOFTBANK Technology Advisers Fund L.P., a
Delaware partnership ("STAF"), SB America may be deemed the beneficial owner of
shares of Common Stock owned by SOFTBANK Technology and STAF.
PAGE 8 OF 134
<PAGE>
SB America is a wholly owned subsidiary of SBH, which in turn is a
wholly owned subsidiary of SOFTBANK. Mr. Son is the President and Chief
Executive Officer of SOFTBANK and owns an approximately 43.3% interest in
SOFTBANK. Accordingly, securities owned by SB America may be regarded as being
beneficially owned by SBH; securities owned by SBH may be regarded as being
beneficially owned by SOFTBANK; and securities owned by SOFTBANK may be regarded
as being beneficially owned by Mr. Son.
SOFTBANK also may be deemed the beneficial owner of shares of Common
Stock owned by SVI on behalf of the silent partnership by virtue of its
ownership of all of the stock of SVI, which under Japanese law has voting power
and investment power over such shares. SOFTBANK may also be deemed the
beneficial owner of shares of Common Stock owned by SOFTVEN No. 2 Investment
Enterprise Partnership, a Japanese partnership ("SOFTVEN"), by virtue of its
ownership of all of the stock of SoftVen Capital Co. Ltd., a Japanese
corporation that serves as the general partner of SOFTVEN.
In the Voting Agreement described in Item 6 of the Statement, Mr. Lee
Stein, Mrs. June Stein, Paymentech Merchant Services, Inc. ("Paymentech") and
First USA Financial, Inc. ("First USA") have agreed with SBH and SOFTBANK
Technology to vote their shares in furtherance of certain mutual agreements. As
a result, SBH, and SOFTBANK and Mr. Son through SBH, and SOFTBANK Technology,
and STV through SOFTBANK Technology, may be deemed to have shared power to vote,
and therefore may be deemed to beneficially own, the Common Stock beneficially
owned by Mr. Stein, Mrs. Stein, Paymentech and First USA.
Share Ownership
- ---------------
As of August 16, 1999:
o SB America owns 10,575,775 shares of Common Stock;
o SOFTBANK Technology owns 10,376,950 shares of Common Stock;
o STAF owns 198,825 shares of Common Stock;
o SVI owns 254,022 shares of Common Stock; and
o SOFTVEN owns 879,488 shares of Common Stock.
As of April 30, 1998, the aggregate number of shares beneficially owned
by Mr. Stein, Mrs. Stein, Paymentech and First USA was 3,321,217, representing
6.93% of the Outstanding Shares.
Total Beneficial Ownership of Reporting Persons
- -----------------------------------------------
As a result of the relationships described above:
o SOFTBANK Technology may be deemed to beneficially own 13,698,167
shares of Common Stock or 27.46% of the Outstanding Shares.
o STV may be deemed to beneficially own 13,896,992 shares of Common
Stock or 27.86% of the Outstanding Shares.
PAGE 9 OF 134
<PAGE>
o SB America may be deemed to beneficially own 21,151,550 shares of
Common Stock or 42.40% of the Outstanding Shares.
o SBH may be deemed to beneficially own 24,472,767 shares of Common
Stock or 49.05% of the Outstanding Shares.
o SOFTBANK and Mr. Son may be deemed to beneficially own 25,606,277
shares of Common Stock or 51.33% of the Outstanding Shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended and supplemented by the addition of the
following:
The Company entered into an Agreement and Plan of Merger and
Reorganization dated as of July 27, 1999 (the "Decisive Merger Agreement") with
MM2 Acquisition Corp. and Decisive in which the Company agreed to exchange
0.07777 of its shares for each outstanding share of voting stock of Decisive
(the "Decisive Merger"). Upon the completion of the Decisive Merger, Decisive
became a wholly owned subsidiary of the Company.
In Section 10.1 of the Decisive Merger Agreement, the shareholders of
Decisive, including SVI, appointed an agent (the "Securityholders' Agent") and
approved the terms of the form of registration rights agreement included as
Annex I to the Decisive Merger Agreement. On July 27, 1999, the Securityholders'
Agent, the Company and Decisive entered into the Decisive Registration Rights
Agreement (the "Decisive Registration Rights Agreement") which was substantially
in the form of Annex I to the Decisive Merger Agreement and which provides that
the Company shall register shares of its Common Stock that were issued pursuant
to the Decisive Merger Agreement and permits certain substantial shareholders,
including SVI, to include their shares in any registration of the Company's
shares that occurs within twelve months following the date of the Decisive
Merger Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended and supplemented by the addition of the
following:
Exhibit S Agreement and Plan of Merger and Reorganization dated as of
July 27, 1999 among the Company, MM2 Acquisition Corp. and
Decisive Technology Corporation.
PAGE 10 OF 134
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
September 1, 1999
SOFTBANK AMERICA SOFTBANK CORPORATION
By: /s/ RONALD D. FISHER By: /s/ RONALD D. FISHER
------------------------ ----------------------------
Name: Ronald D. Fisher Name: Ronald D. Fisher
Title: Vice Chairman Title: Attorney-in-Fact
SOFTBANK HOLDINGS INC. MASAYOSHI SON
By: /s/ RONALD D. FISHER By: /s/ RONALD D. FISHER
------------------------- ----------------------------
Name: Ronald D. Fisher Name: Ronald D. Fisher
Title: Vice Chairman Title: Attorney-in-Fact
STV IV LLC SOFTBANK TECHNOLOGY VENTURES IV L.P.
By: /s/ RONALD D. FISHER By: STV IV LLC
------------------------- Its General Partner
Name: Ronald D. Fisher
Title: Attorney-in-Fact
By: /s/ RONALD D. FISHER
----------------------------
Name: Ronald D. Fisher
Title: Attorney-in-Fact
PAGE 11 OF 134
<PAGE>
EXHIBIT INDEX
Exhibit EDGAR
No. Description Exhibit
- ------- ----------- -------
Exhibit S Agreement and Plan of Merger and Reorganization EX-2
dated as of July 27, 1999 among the Company, MM2
Acquisition Corp. and Decisive Technology
Corporation.
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
MESSAGEMEDIA, INC.,
a Delaware corporation;
MM2 ACQUISITION CORP.,
a Delaware corporation;
and
DECISIVE TECHNOLOGY CORPORATION,
a California corporation;
----------------------------------------
Dated as of July 27, 1999
----------------------------------------
================================================================================
<PAGE>
EXHIBITS
Exhibit A - Certain definitions
Exhibit B1 - Form of Voting Agreement
Exhibit B2 - Persons to execute Voting Agreements
Exhibit C - Form of Company Charter Amendment
Exhibit D - Form of Securityholder Representation Statement
Exhibit E - Certain employees
Exhibit F - Registration Rights Agreement
Exhibit G - Form of Escrow Agreement
1.
<PAGE>
TABLE OF CONTENTS
PAGE
1. DESCRIPTION OF TRANSACTION.............................................. 1
1.1 Merger of Merger Sub into the Company............................ 1
1.2 Effect of the Merger............................................. 1
1.3 Closing; Effective Time.......................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors
and Officers..................................................... 2
1.5 Conversion of Shares............................................. 2
1.6 Stock Options.................................................... 4
1.7 Closing of the Company's Transfer Books.......................... 4
1.8 Escrow........................................................... 5
1.9 Exchange of Certificates......................................... 5
1.10 Dissenting Shares................................................ 7
1.11 Working Capital Adjustment....................................... 7
1.12 Investment Banking Fee........................................... 8
1.13 Tax Consequences................................................. 8
1.14 Accounting Treatment............................................. 8
1.15 Further Action................................................... 8
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 9
2.1 Due Organization; No Subsidiaries; Etc........................... 9
2.2 Articles of Incorporation and Bylaws; Records.................... 10
2.3 Capitalization, Etc.............................................. 10
2.4 Financial Statements............................................. 11
2.5 Absence of Changes............................................... 12
2.6 Title to Assets.................................................. 13
2.7 Bank Accounts; Receivables....................................... 14
2.8 Equipment; Leasehold............................................. 14
2.9 Proprietary Assets............................................... 14
2.10 Contracts........................................................ 17
2.11 Liabilities...................................................... 19
2.12 Compliance with Legal Requirements............................... 20
2.13 Governmental Authorizations...................................... 20
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.14 Tax Matters...................................................... 20
2.15 Employee and Labor Matters; Benefit Plans........................ 21
2.16 Environmental Matters............................................ 24
2.17 Insurance........................................................ 25
2.18 Related Party Transactions....................................... 25
2.19 Legal Proceedings; Orders........................................ 25
2.20 Authority; Binding Nature of Agreement........................... 26
2.21 Non-Contravention; Consents...................................... 26
2.22 Full Disclosure.................................................. 27
2.23 No Discussions................................................... 28
2.24 Vote Required.................................................... 28
2.25 Financial Advisor................................................ 28
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................. 28
3.1 Organization, Standing and Power................................. 28
3.2 SEC Filings; Financial Statements................................ 28
3.3 Authority; Binding Nature of Agreement........................... 29
3.4 Valid Issuance................................................... 29
3.5 Governmental Authorization....................................... 29
3.6 Compliance with Laws............................................. 29
3.7 No Material Adverse Change....................................... 29
3.8 Legal Proceedings................................................ 30
3.9 Full Disclosure.................................................. 30
3.10 Non-Contravention; Consents...................................... 30
3.12 Interim Operations of Sub........................................ 31
4. CERTAIN COVENANTS OF THE COMPANY........................................ 31
4.1 Access and Investigation......................................... 31
4.2 Operation of the Company's Business.............................. 31
4.3 No Negotiation.................................................. 33
5. ADDITIONAL COVENANTS OF THE PARTIES..................................... 34
5.1 Filings and Consents............................................. 34
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.2 Company Shareholder Consent...................................... 34
5.3 Stock Options.................................................... 34
5.4 Conversion and Exercise.......................................... 35
5.5 Public Announcements............................................. 35
5.6 Best Efforts..................................................... 36
5.7 Tax Matters...................................................... 36
5.8 Severance and Noncompetition Agreements.......................... 36
5.9 Termination of Company Investor Rights Agreement................. 36
5.10 FIRPTA Matters................................................... 36
5.11 Listing.......................................................... 36
5.12 Resignation of Officers and Directors............................ 36
5.13 Securityholder Representation Statements; Appointment of
Purchaser Representative......................................... 36
5.14 Securities Act Exemption......................................... 37
5.15 Stock Restrictions.............................................. 37
5.16 Registration on Form S-3; Additional Stock Restrictions.......... 37
5.17 Blue Sky Laws.................................................... 38
5.18 Notification; Updates to Disclosure Schedule..................... 38
5.19 Nasdaq Stockholder Approval Requirements......................... 38
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB............ 39
6.1 Accuracy of Representations...................................... 39
6.2 Performance of Covenants......................................... 39
6.3 Shareholder Approval............................................. 39
6.4 Consents......................................................... 39
6.5 Agreements and Documents......................................... 39
6.6 FIRPTA Compliance................................................ 41
6.7 Listing.......................................................... 41
6.8 No Restraints.................................................... 41
6.9 No Legal Proceedings............................................. 41
6.10 Employees........................................................ 41
iii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.11 Securities Exemption............................................. 41
6.12 Termination of Employee Plans.................................... 41
6.13 Debt Payoff...................................................... 41
6.14 Dissenters' Rights............................................... 41
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY...................... 41
7.1 Accuracy of Representations...................................... 42
7.2 Performance of Covenants......................................... 42
7.3 Documents........................................................ 42
7.4 Listing.......................................................... 43
7.5 No Restraints.................................................... 43
7.6 Consents......................................................... 43
7.7 No Legal Proceedings............................................. 43
7.8 Governmental Approvals........................................... 43
8. TERMINATION............................................................. 43
8.1 Termination Events............................................... 43
8.2 Termination Procedures........................................... 44
8.3 Effect of Termination............................................ 44
9. INDEMNIFICATION, ETC.................................................... 44
9.1 Survival of Representations, Etc................................. 44
9.2 Indemnification by Company Shareholders.......................... 45
9.3 Threshold; Ceiling............................................... 46
9.4 Exclusive Remedy................................................. 46
9.5 No Contribution.................................................. 46
9.6 Interest......................................................... 46
9.7 Defense of Third Party Claims.................................... 47
9.8 Exercise of Remedies by Indemnitees Other Than Parent............ 47
10. MISCELLANEOUS PROVISIONS................................................ 47
10.1 Securityholders' Agent........................................... 47
10.2 Further Assurances............................................... 48
10.3 Fees and Expenses................................................ 48
iv.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.4 Attorneys' Fees.................................................. 48
10.5 Notices.......................................................... 48
10.6 Confidentiality.................................................. 50
10.7 Time of the Essence.............................................. 50
10.8 Headings......................................................... 50
10.9 Counterparts..................................................... 50
10.10 Governing Law.................................................... 50
10.11 Successors and Assigns........................................... 50
10.12 Remedies Cumulative; Specific Performance........................ 50
10.13 Waiver........................................................... 51
10.14 Amendments....................................................... 51
10.15 Severability..................................................... 51
10.16 Parties in Interest.............................................. 51
10.17 Entire Agreement................................................. 51
10.18 Construction..................................................... 51
v.
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of July 27, 1999, by and among: MESSAGEMEDIA, INC., a
Delaware corporation ("Parent"); MM2 ACQUISITION CORP., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"); and DECISIVE TECHNOLOGY
CORPORATION, a California corporation (the "Company"). Certain other capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company.
D. In order to induce Parent to enter into this Agreement and to
consummate the Merger, certain shareholders of the Company listed on Exhibit B-2
are entering into Voting Agreements, a form of which is attached hereto as
Exhibit B-1, pursuant to which they are agreeing to (i) vote in favor of the
adoption and approval of this Agreement and the approval of the Merger and (ii)
to vote in favor of an amendment to the Company's Articles of Incorporation in
the form attached hereto as Exhibit C (the "Charter Amendment") which will cause
all of the Company's outstanding preferred stock to convert into common stock
prior to the effective time of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the Delaware General
Corporation Law and California General Corporation Law. At the Effective Time,
all the property, rights, privileges,
1.
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powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts liabilities and duties of the Surviving Corporation.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, 2595 Canyon Boulevard, Suite 250, Boulder, Colorado
80302, at 10:00 a.m. on August 11, 1999, or as soon as practicable after such
time as the parties agree, but not later than two (2) business days following
satisfaction or waiver of each of the conditions set forth in Section 6 and
Section 7 below (the "Scheduled Closing Time"). The date on which the Closing
actually takes place is referred to in this Agreement as the "Closing Date."
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed certificate of merger, together with any required officers'
certificate, conforming to the requirements of the Delaware General Corporation
Law and California General Corporation Law shall be filed with the Secretary of
State of the State of Delaware and the Secretary of State of the State of
California respectively. The Merger shall become effective at the time that such
documents are filed or at such later time as may be specified in such
certificate of merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent and the Company prior to the Effective
Time:
(a) the Certificate of Incorporation of the Surviving Corporation
shall be amended and restated as of the Effective Time to conform to the
Certificate of Incorporation of Merger Sub as in effect immediately prior to the
Effective Time;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of Merger Sub immediately prior to
the Effective Time shall continue as the directors and officers of the Surviving
Corporation immediately after the Effective Tune.
1.5. CONVERSION OF SHARES.
(a) Subject to Sections 1.5(c), 1.5(d) and 1.10, at the Effective
Time, by virtue of the Merger and without any further action on the part of
Parent, Merger Sub, the Company or any shareholder of the Company ("Company
Shareholder"):
(i) any shares of common stock of the Company (the "Company
Common Stock") then held by the Company (or held in the Company's treasury)
shall be canceled and retired and shall cease to exist at the Effective Time,
and no consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by Parent or
Merger Sub shall be canceled and retired and shall cease to exist at the
Effective Time, and no consideration shall be delivered in exchange therefor;
2.
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(iii) each share of the common stock, $0.001 par value per
share, of Merger Sub then outstanding shall be converted into one share of
common stock of the Surviving Corporation;
(iv) except as provided in clauses "(i)" and "(ii)" of this
Section l.5(a), each share of Company Common Stock outstanding immediately prior
to the Effective Time shall be converted into the right to receive a fraction of
a share(s) of the common stock (par value $0.001 per share) of Parent ("Parent
Common Stock") equal to a fraction (the "Exchange Ratio"):
(1) if the Parent Average Stock price is $19.75 or more,
(x) the numerator of which is (i) $50,000,000 minus the dollar amount of
Excluded Expenses divided by (ii) the Parent Average Stock Price and (y) the
denominator of which is the Fully Diluted Number of Company Shares;
(2) if the Parent Average Stock price is less than
$19.75, (x) the numerator of which is 2,531,645 minus the Excluded Expenses
(expressed on an as converted to Parent Common Stock basis using the Parent
Average Stock Price as the measure for the per share value of the Parent Common
Stock) and (y) the denominator of which is the Fully Diluted Number of Company
Shares.
(b) The numerator of the fraction used to calculate the Exchange
Ratio, in accordance with this Agreement but prior to the deduction of any
Excluded Expenses, is hereinafter referred to as the "Aggregate Parent Share
Number."
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Company Common Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction (a "Recapitalization Event"), then the Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of such Recapitalization
Event.
(d) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends.
(e) The Company will have no shares of Preferred Stock outstanding
immediately prior to the Effective Time.
3.
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1.6 STOCK OPTIONS.
(a) At the Effective Time, each stock option that is then
outstanding, whether vested or unvested (a "Company Option"), shall be assumed
by Parent in accordance with the terms (as in effect as of the Effective Time)
of the Company's 1996 Stock Option Plan, the stock option agreement and/or
warrant agreement by which such Company Option is evidenced. All rights with
respect to Company Common Stock under outstanding Company Options shall
thereupon be converted into rights with respect to Parent Common Stock.
Accordingly, from and after the Effective Time, (a) each Company Option assumed
by Parent may be exercised solely for shares of Parent Common Stock, (b) the
number of shares of Parent Common Stock subject to each such assumed Company
Option shall be equal to the number of shares of Company Common Stock that were
subject to such Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock, (c) the per share exercise price for the Parent
Common Stock issuable upon exercise of each such assumed Company Option shall be
determined by dividing the exercise price per share of Company Common Stock
subject to such Company Option, as in effect immediately prior to the Effective
Time, by the Exchange Ratio, and rounding the resulting exercise price up to the
nearest whole cent, and (d) all restrictions on the exercise of each such
assumed Company Option shall continue in full force and effect, and the term,
exercisability, vesting schedule and other provisions of such Company Option
shall otherwise remain unchanged; provided, however, that each such assumed
Company Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any Recapitalization Event after the
Effective Time. The Company and Parent shall take all action that may be
necessary (under the Company's 1996 Stock Option Plan and otherwise) to
effectuate the provisions of this Section 1.6. Following the Closing, Parent
will send to each holder of an assumed Company Option a written notice setting
forth (i) the number of shares of Parent Common Stock subject to such assumed
Company Option, and (ii) the exercise price per share of Parent Common Stock
issuable upon exercise of such assumed Company Option. Parent shall file with
the SEC, within thirty (30) days after the Closing Date, a registration
statement on Form S-8 registering shares of Parent Common Stock issuable upon
the exercise of the Company Options assumed by Parent pursuant to this Section
1.6, provided such Company Options are registrable on Form S-8.
(b) It is the intention of the parties that the Company Options
assumed by Parent qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent such Company Options
qualified as incentive stock options prior to the Effective Time. As soon as
practicable after the Effective Time, Parent will issue to each person who,
immediately prior to the Effective Time was a holder of a Company Option under
the Company's 1996 Stock Option Plan, a written document evidencing the
foregoing assumption of such option by Parent.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time (a)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of the Company's
capital stock that were outstanding immediately prior to the Effective Time
shall cease to have any rights as shareholders of the Company, and (b) the stock
transfer books of the Company shall be closed with respect to all shares of such
capital
4.
<PAGE>
stock outstanding immediately prior to the Effective Time. No further transfer
of any such shares of the Company's capital stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Exchange Agent (as
defined in Section 1.9) or to the Surviving Corporation or Parent, such Company
Stock Certificate shall be canceled and shall be exchanged as provided in
Section 1.9
1.8 ESCROW
(a) The aggregate number of shares to be placed in escrow (the
"Escrow Shares") as collateral for the indemnification obligations of the
Company pursuant to Section 9 of this Agreement shall be equal to the product of
(x) .187 and (y) the Aggregate Parent Share Number. The Escrow Shares shall be
withheld pro rata from the number of whole shares of Parent Common Stock that
each Company shareholder has the right to receive pursuant to the provisions of
Section 1.5.
(b) The number of Escrow Shares to be withheld from each Company
shareholder shall equal the product of (x) the fraction, the numerator of which
is (i) the number of whole shares of Parent Common Stock that such shareholder
has the right to receive pursuant to the provisions of Section 1.5, and (ii) the
denominator of which is the Aggregate Parent Share Number, minus the number of
shares deducted for Excluded Expenses, minus the number of shares reserved for
issuance upon exercise of the assumed Company Options, and (y) the aggregate
number of Escrow Shares.
1.9 EXCHANGE OF CERTIFICATES.
(a) American Stock Transfer & Trust or such other reputable bank
or trust company selected by Parent prior to the Closing Date shall act as
exchange agent in the Merger (the "Exchange Agent"). Promptly after the
Effective Time, Parent shall deposit with the Exchange Agent certificates
representing the shares of Parent Common Stock issuable pursuant to this Section
1. The shares of Parent Common Stock so deposited with the Exchange Agent,
together with any dividends or distributions received by the Exchange Agent with
respect to such shares, are referred to collectively as the "Exchange Fund."
(b) At or as soon as practicable after the Effective Time, the
Exchange Agent will send to the holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as Parent
may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor a certificate representing the number
of whole shares of Parent Common Stock that such holder has the right to receive
pursuant to the provisions of this Section 1, and the Company Stock Certificate
so surrendered shall be canceled. As soon as
5.
<PAGE>
practicable after receipt by the Exchange Agent of the applicable Company Stock
Certificate, the duly executed letter of transmittal and such other documents as
may be reasonably required by the Exchange Agent or Parent, the Exchange Agent
shall deliver to each former Company Shareholder a certificate representing the
number of whole shares of Parent Common Stock that such shareholder has the
right to receive pursuant to the provisions of Section 1.5 less the number of
shares to be delivered to the escrow agent (determined in accordance with
Section 1.8(b) above) and (ii) deliver to the escrow agent pursuant to the
Escrow Agreement (as defined below), on behalf and in the name of each
shareholder, a certificate representing such shareholder's proportionate share
of the Escrow Shares. Until surrendered as contemplated by this Section 1.9(b),
each Company Stock Certificate shall be deemed, from and after the Effective
Time, to represent only the right to receive upon such surrender a certificate
representing shares of Parent Common Stock as contemplated by this Section 1 and
as adjusted to reflect any claims made against the Escrow Shares. If any Company
Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit against
any claim that may be made against the Exchange Agent, Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby until such
holder surrenders such Company Stock Certificate in accordance with this Section
1.9 (at which time such holder shall be entitled to receive all such dividends
and distributions).
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no cash, certificates or scrip for any such
fractional shares shall be issued. In lieu thereof, the number of shares
otherwise issued or issuable to any holder of capital stock of the Company
(after aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, upon surrender of such holder's Company Stock Certificate(s), be
rounded to the nearest whole share of Parent Common Stock, with one-half share
or more being rounded up.
(e) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as the Exchange Agent, Parent or the Surviving
Corporation may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable
to any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto)
delivered to any public official pursuant to any applicable abandoned property,
escheat or similar law.
6.
<PAGE>
1.10 DISSENTING SHARES.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company that, as of the Effective
Time, are or may become "dissenting shares" within the meaning of Section 1300
of the California Corporations Code shall not be converted into or represent the
right to receive Parent Common Stock in accordance with Section 1.5, and the
holder or holders of such shares shall be entitled only to such rights as may be
granted to such holder or holders pursuant to California General Corporation
Law; provided, however, that if the status of any such shares as "dissenting
shares" shall not be perfected, or if any such shares shall lose their status as
"dissenting shares," then, as of the later of the Effective Time or the time of
the failure to perfect such status or the loss of such status such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such shares)
Parent Common Stock in accordance with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of capital stock of the Company pursuant to the
California General Corporation Law and of any other demand, notice or instrument
delivered to the Company prior to the Effective Time pursuant to the California
General Corporation Law, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to any such demand, notice or
instrument. The Company shall not make any payment or settlement offer prior to
the Effective Time with respect to any such demand unless Parent shall have
consented in writing to such payment or settlement offer.
1.11 WORKING CAPITAL ADJUSTMENT.
(a) On or within one day after the Closing Date, personnel
assigned by each of the Company and Parent shall jointly inspect all Inventory
of the Company and prepare a physical count of the Closing Inventory.
(b) As soon as practicable following the Closing Date, but not
later than 60 days thereafter, Parent shall determine the actual amount of the
Working Capital (as defined below) as of the Closing Date and shall deliver to
the Securityholders' Agent (as defined in Section 10.1) a certificate (the
"Working Capital Certificate") setting forth the final dollar amount of the
Working Capital and shall make available to the Securityholders' Agent the work
papers used in the preparation thereof. If the Securityholders' Agent agrees
with Parent's determination of Working Capital and if the dollar amount of the
Working Capital as reflected on the Working Capital Certificate is less than
negative $200,000, then the Securityholders' Agent shall authorize the escrow
agent to issue to Parent a sufficient amount of Escrow Shares to cover the
difference between negative $200,000 and the final dollar amount of the Working
Capital set forth on the Working Capital Certificate. The Escrow Shares for
purposes of this Section 1.11 shall be valued at the Parent Average Stock Price.
Any payment to be made under this Section 1.11 shall be made, without interest
thereon, within five business days after final determination of the amount of
the Working Capital as of the Closing Date.
7.
<PAGE>
(c) For purposes of this Agreement, "Working Capital" as of any
date shall be deemed to be the aggregate dollar value determined in accordance
with GAAP represented by: (i) cash, (ii) cash equivalents, (iii) Accounts
Receivable (net of an allowance for bad debts determined in accordance with
GAAP), (iv) Inventory and (v) Prepaid Expenses, less (x) Payables, (y) Accrued
Expenses and (z) all other current liabilities. The calculation of Working
Capital shall exclude (i) the proceeds of the exercise of any Company warrants
since April 1, 1999 and (ii) any transaction expenses incurred by the Company in
connection with the transactions contemplated hereby
(d) In the event the Parent and the Securityholders' Agent fail to
reach written agreement, within 90 days after the Closing Date, with respect to
the determination of the amount of the Working Capital as of the Closing Date,
then the Parent and the Securityholders' Agent shall (i) retain as arbitrator
Arthur Andersen LLP or, failing their agreement to act as arbitrator, such other
independent accounting firm as may be mutually agreed upon by the Parent and the
Securityholders' Agent to review such matters as to which written agreement has
not been reached and (ii) request such arbitrator to act as promptly as
practicable in accordance with its own rules to resolve all such disputed
matters within 30 days after being retained by the Parent and the
Securityholders' Agent. Upon resolution by such arbitrator to its satisfaction
of all such disputed matters, such arbitrator shall cause to be prepared and
shall deliver to the Parent and the Securityholders' Agent a certificate setting
forth the amount of Working Capital as of the Closing Date. The decision of such
arbitrator shall be final, non-appealable and binding on the Parent and the
Securityholders' Agent, and the fees and expenses, if any, of such arbitrator
shall be paid one-half by Parent and one-half by the Securityholders' Agent;
provided, however, that the Securityholders' Agent shall have the right to
recover from the Escrow Fund for any fees and expenses of such arbitration.
1.12 INVESTMENT BANKING FEE. Upon the Closing, the Parent shall issue
to William Blair & Company LLC ("William Blair & Company"), in full satisfaction
of certain fee and expense obligations of the Company (except for reimbursement
of certain expenses totaling less than $25,000), a number of shares of Parent
Common Stock equal to $750,000 divided by the Parent Average Stock Price. Such
shares shall be included in the S-3 registration statement referred to in the
Registration Rights Agreement attached hereto as Exhibit F. Such shares,
however, shall not be considered Resale Restricted Stock.
1.13 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations. Parent and the Company shall each use its
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code. From and after
the Effective Time, neither Parent, Merger Sub nor the Company shall take any
action that could reasonably be expected to cause the Merger not to be treated
as a reorganization within the meaning of Section 368(a) of the Code. Company
and Parent agree to file their federal and applicable state income tax returns
consistent with the treatment of the Merger as a reorganization.
1.14 ACCOUNTING TREATMENT. For accounting purposes, the Merger is
intended to be treated as a "purchase."
8.
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1.15 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Company to Parent prior to the execution and delivery
of this Agreement and referring to the representations and warranties in this
Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants, to and for the benefit of the Indemnitees, as follows;
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Company Contracts except where the failure to
have such power and authority would not have a Material Adverse Effect on the
Company.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule,
the Company has not conducted any business under or otherwise used, for any
purpose or in any jurisdiction, any fictitious name, assumed name, trade name or
other name, other than the name "Decisive Technology Corporation"
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and could not reasonably be expected to have
a Material Adverse Effect on the Company. The Company is in good standing as a
foreign corporation in each of the jurisdictions identified in Part 2.1 of the
Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Company's board of directors, (ii) the names of
the members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any
Entity and, except for the equity interests identified in Part 2.1 of the
Disclosure Schedule, the Company has never owned, beneficially or otherwise, any
shares or other securities of, or any direct or indirect equity interest in, any
Entity. The Company has not agreed and is not obligated to make any future
investment in or capital contribution to any Entity. The Company has not
guaranteed and
9.
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is not responsible or liable for any obligation of any of the Entities in which
it owns or has owned any equity interest.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's Articles
of Incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) except as set forth in Part 2.2 of the
Disclosure Schedule, the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the shareholders of the Company, the board of directors of the
Company and all committees of the board of directors of the Company. There have
been no formal meetings or other proceedings of the shareholders of the Company,
the board of directors of the Company or any committee of the board of directors
of the Company that are not fully reflected in such minutes or other records.
There has not been any violation of any of the provisions of the Company's
Articles of Incorporation or bylaws, and the Company has not taken any action
that is inconsistent in any material respect with any resolution adopted by the
Company's shareholders, the Company's board of directors or any committee of the
Company's board of directors. The books of account, stock and stock option
records, minute books and other records of the Company are accurate, up-to-date
and complete in all material respects, and have been maintained in accordance
with prudent business practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
38,000,000 shares of Common Stock ($0.001 par value), of which 1,839,174 shares
have been issued and are outstanding as of the date of this Agreement; and (ii)
25,000,000 shares of Preferred Stock ($0.01 par value), of which (x) 1,000,000
shares have been designated Series A Preferred Stock, 1,000,000 of which are
issued and are outstanding as of the date of this Agreement (the "Series A
Preferred"), (y) 3,000,000 shares have been designated Series B Preferred Stock,
2,002,750 of which are issued and are outstanding as of the date of this
Agreement (the "Series B Preferred"), and (z) 21,000,000 shares have been
designated Series C Preferred Stock, 19,462,810 of which are issued and are
outstanding as of the date of this Agreement (the "Series C Preferred"). All of
the outstanding shares of the Company's capital stock have been duly authorized
and validly issued, and are fully paid and non-assessable. Part 2.3 of the
Disclosure Schedule provides an accurate and complete description of the terms
of each repurchase option that is held by the Company and to which any of such
shares is subject. Upon the filing of the Charter Amendment immediately prior to
the Effective Time, all outstanding shares of the Company's Preferred Stock will
be converted into shares of Common Stock.
(b) The Company has reserved 10,470,267 shares of Company Common
Stock for issuance under its 1996 Stock Option Plan, of which options to
purchase 7,242,933 shares are outstanding as of the date of this Agreement. The
Company has no outstanding warrants to purchase capital stock of the Company.
Part 2.3 of the Disclosure Schedule accurately sets forth, with respect to each
Company Option and warrant that is outstanding as of the date of this Agreement:
(i) the name and mailing address of the holder of such Company Option or
warrant; (ii) the total number of shares of Company Common Stock that are
subject to such Company Option or warrant and the number of shares of Company
Common Stock with respect to which such Company Option or warrant is immediately
exercisable; (iii) the date on
10.
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which such Company Option or warrant was granted and the term of such Company
Option or warrant; (iv) the vesting schedule for such Company Option or warrant;
(v) the exercise price per share of Company Common Stock purchasable under such
Company Option or warrant; and (vi) whether such Company Option has been
designated an "incentive stock option" as defined in Section 422 of the Code.
Except as set forth in Part 2.3 of the Disclosure Schedule, there is no: (i)
outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) to the best of the knowledge of
the Company, condition or circumstance that may give rise to or provide a basis
for the assertion of a claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other securities
of the Company.
(c) All outstanding shares of Company Common Stock and Preferred
Stock, and all outstanding Company Options and warrants, have been issued and
granted in compliance with (i) all applicable securities laws and other
applicable Legal Requirements, and (ii) all requirements set forth in applicable
Contracts.
(d) Except as set forth in Part 2.3 of the Disclosure Schedule,
the Company has never repurchased, redeemed or otherwise reacquired any shares
of capital stock or other securities of the Company. All securities so
reacquired by the Company were reacquired in compliance with (i) the applicable
provisions of the California Corporations Code and all other applicable Legal
Requirements, and (ii) all requirements set forth in the agreements pursuant to
which such securities were issued.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The balance sheets of the Company as of December 31, 1998,
1997 and 1996, and the related audited income statements, statements of
shareholders' equity and statements of cash flows of the Company for the years
then ended, together with the notes thereto; and
(ii) The unaudited balance sheet of the Company as of March
31, 1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited
income statement of the Company for the three (3) months then ended.
(b) The Company Financial Statements are accurate and complete in
all material respects and present fairly the financial position of the Company
as of the respective dates thereof and the results of operations and (in the
case of the financial statements referred to in Section 2.4(a)(i)) cash flows of
the Company for the periods covered thereby. The Company Financial Statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except that the
financial statements referred to in Section 2.4(a)(ii) do not contain footnotes
and are subject to normal and
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recurring year-end audit adjustments, which could not reasonably, individually
or in the aggregate, be expected to be material in magnitude). The Company
Financial Statements referred to in Section 2.4(a)(i) shall be identical to
those statements on which PricewaterhouseCoopers LLP will issue an unqualified
report and opinion after the date hereof.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since March 31, 1999:
(a) there has not been any material adverse change in the
Company's business, condition, capitalization, assets, liabilities, operations,
financial performance or prospects, and no event has occurred that has, or could
reasonably be expected to, have a Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the Company's assets
(whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities except for repurchases of stock pursuant to
the terms of restricted stock purchase agreements under the Company's 1996 Stock
Option Plan;
(d) the Company has not sold, issued, granted or authorized the
issuance of (i) any capital stock or other security (except for Company Common
Stock issued upon the valid exercise of outstanding Company Options in
accordance with the terms of the option agreement pursuant to which such Company
Options are outstanding), (ii) any option or right to acquire any capital stock
or any other security (except for Company Options described in Part 2.3 of the
Disclosure Schedule), or (iii) any instrument convertible into or exchangeable
for any capital stock or other security;
(e) the Company has not amended or waived any of its rights under,
or permitted the acceleration of vesting under, (i) any provision of its 1996
Stock Option Plan, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;
(f) there has been no amendment to the Company's Articles of
Incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, division or subdivision of shares, reverse stock split, consolidation of
shares or similar transaction;
(g) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(h) since March 31, 1999 the Company has not made any capital
expenditure that exceeds $5,000 individually or $25,000 when added to all other
capital expenditures made on behalf of the Company since March 31, 1999;
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(i) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is a Material
Contract (as defined in Section 2.10(a)), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any such Material
Contract;
(j) the Company has not (i) acquired, leased or licensed any right
or other asset from any other Person, (ii) sold or otherwise disposed of, or
leased or licensed, any right or other asset to any other Person, or (iii)
waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices;
(k) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any material account
receivable or other indebtedness;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money except for travel or
similar advances made to employees or consultants in connection with their
employment or consulting duties in the ordinary course of business, which is
consistent with past practices and trade payables not in excess of $10,000 in
the aggregate and in the ordinary course of business, consistent with past
practices;
(n) the Company has not (i) established or adopted any employee
benefit plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(o) the Company has not changed any of its methods of accounting
or accounting practices in any respect;
(p) the Company has not made any Tax election;
(q) the Company has not commenced, become a party to or settled
any Legal Proceeding;
(r) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(s) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(r)" above.
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2.6 TITLE TO ASSETS.
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts 2.1,
2.7 and 2.9 of the Disclosure Schedule and all of the Company's rights under the
Contracts identified in Part 2.10 of the Disclosure Schedule; (iii) all other
assets reflected in the Company's books and records as being owned by the
Company; and (iv) all assets, intangible or otherwise, necessary to conduct and
continue the Company's current business. Except as set forth in Part 2.6(a) of
the Disclosure Schedule, all of said assets are owned by the Company free and
clear of any liens or other Encumbrances, except for (x) any lien for current
taxes not yet due and payable, and (y) minor liens that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are material to the business of the Company and that are being leased or
licensed to the Company.
2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information, including bank name, bank contact information, account number,
authorized signatories and most recent available balance, with respect to each
account maintained by or for the benefit of the Company at any bank or other
financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of the Company as of March 31, 1999. Except as set forth
in Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of
the Company (including those accounts receivable reflected on the Unaudited
Interim Balance Sheet that have not yet been collected and those accounts
receivable that have arisen since March 31, 1999 and have not yet been
collected) (i) represent valid obligations of customers of the Company arising
from bona fide transactions entered into in the ordinary course of business, and
(ii) are current and are reasonably expected by the Company to be collected in
full when due, without any counterclaim or set off (net of an allowance for
doubtful accounts and sales returns not to exceed $25,000 in the aggregate).
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets
owned by or leased to the Company are adequate for the uses to which they are
being put, are in good condition and repair (ordinary wear and tear excepted)
and are adequate for the conduct of the Company's business in the manner in
which such business is currently being conducted.
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property lease
identified in Part 2.10 of the Disclosure Schedule.
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2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application part
2.9(a)(ii) of the Disclosure Schedule identifies and provides a brief
description of all other Company Proprietary Assets owned by the Company. Part
2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any Person
(except for any Proprietary Asset that is licensed to the Company under any
third party software license generally available to the public at a cost of less
than $10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to the Company. Except as set forth in Part 2.9(a)(iv)
of the Disclosure Schedule, the Company has good, valid and marketable title to
all of the Company Proprietary Assets identified in Parts 2.9(a)(i) and
2.9(a)(ii) of the Disclosure Schedule, free and clear of all liens and other
Encumbrances, and has a valid right to use all Proprietary Assets identified in
Part 2.9(a)(iii) of the Disclosure Schedule. Except as set forth in Part
2.9(a)(v) of the Disclosure Schedule, the Company is not obligated to make any
payment to any Person for the use of any Company Proprietary Asset. Except as
set forth in Part 2.9(a)(vi) of the Disclosure Schedule, the Company has not
developed jointly with any other Person any Company Proprietary Asset with
respect to which such other Person has any rights.
(b) The Company has taken all measures and precautions necessary
to protect and maintain the confidentiality and secrecy of all Company
Proprietary Assets (except Company Proprietary Assets whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Company Proprietary Assets. Except as set forth in Part 2.9(b) of the
Disclosure Schedule, the Company has not (other than pursuant to license
agreements identified in Part 2.10 of the Disclosure Schedule) disclosed or
delivered to any Person, or permitted the disclosure or delivery to any Person
of, (i) the source code, or any portion or aspect of the source code, of any
Company Proprietary Asset, or (ii) the object code, or any portion or aspect of
the object code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. The Company is not
infringing, misappropriating or making any unlawful use of, and the Company has
not at any time infringed, misappropriated or made any unlawful use of, or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To the
best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule:
(i) each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of the Company; and (ii)
there has not been any claim by any customer or other Person alleging that any
Company Proprietary Asset (including each version thereof that
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has ever been licensed or otherwise made available by the Company to any Person)
does not conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company, and, to the best of the knowledge of the Company, there
is no basis for any such claim. The Company has established adequate reserves on
the Unaudited Interim Balance Sheet to cover all costs associated with any
obligations that the Company may have with respect to the correction or repair
of programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of the
Company Proprietary Assets to any Person on an exclusive basis, and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule,
(i) all current and former employees of the Company have executed and delivered
to the Company an agreement (containing no exceptions to or exclusions from the
scope of its coverage) that is substantially identical to one of the forms of
Proprietary Information Agreement or Confidential Information and Invention
Assignment Agreement previously delivered to Parent, and (ii) all current and
former consultants and independent contractors to the Company have executed and
delivered to the Company an agreement (containing no exceptions to or exclusions
from the scope of its coverage) that is substantially identical to one of the
forms of Proprietary Information Agreement or Confidential Information and
Invention Assignment Agreement previously delivered to Parent.
(g) Except as set forth in Part 2.9(g)(i) of the Disclosure
Schedule, each computer, item of computer related hardware, computer program and
other item of software (whether installed on a computer or on any other piece of
equipment, including firmware) that is owned, licensed or used by the Company
for its internal business operations is Year 2000 Compliant. Except as set forth
in Part 2.9(g)(ii) of the Disclosure Schedule, each computer program and other
item of software that has been designed, developed, sold, licensed or otherwise
made available to any Person by the Company is Year 2000 Compliant. Except as
set forth in Part 2.9(g)(iii) of the Disclosure Schedule, the Company has
conducted sufficient Year 2000 compliance testing for each computer, item of
computer related hardware, computer program and item of software referred to in
the preceding two sentences to be able to determine whether such computer, item
of computer related hardware, computer program and item of software is Year 2000
Compliant, and has obtained warranties or other written assurances from each of
its suppliers to the effect that the products and services provided by such
suppliers to the Company is Year 2000 Compliant. As used in this Section 2.9,
"Year 2000 Compliant" means, with respect to a computer, item of computer
related hardware, computer program or other item of software (i) the functions,
calculations, and other computing processes of the computer, program or software
(collectively, "Processes") perform in a consistent and correct manner without
interruption regardless of the date on which the Processes are actually
performed and regardless of the date input to the applicable computer system,
whether before, on, or after January 1, 2000 (ii) the computer, item of computer
related hardware, program or software
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accepts, calculates, compares, sorts, extracts, sequences, and otherwise
processes date inputs and date values, and returns and displays date values, in
a consistent and correct manner regardless of the dates used whether before, on,
or after January 1, 2000; (iii) the computer, item of computer related hardware,
program or software accepts and responds to year input, if any, in a manner that
resolves any ambiguities as to century in a defined, predetermined, and
appropriate manner; (iv) the computer, item of computer related hardware,
program or software stores and displays date information in ways that are
unambiguous as to the determination of the century; and (v) leap years will be
determined by the following standard (A) if dividing the year by 4 yields an
integer, it is a leap year, except for years ending in 00, but (B) a year ending
in 00 is a leap year if dividing it by 400 yields an integer.
(h) Except with respect to demonstration or trial copies, no
product, system, program or software module designed, developed, sold, licensed
or otherwise made available by the Company to any Person contains any "back
door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized access
or to disable or erase software, hardware or data without the consent of the
user.
2.10 CONTRACTS.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or
the performance of services by, any current or former employee, consultant or
independent contractor except for any "at will" employment relationships or
agreements for performance of services pursuant to which the Company is not
obligated to pay amounts exceeding $5,000; any Contract pursuant to which the
Company is or may become obligated to make any severance, termination or similar
payment to any current or former employee or director; and any Contract pursuant
to which the Company is or may become obligated to make any bonus or similar
payment (other than payments in respect of salary) to any current or former
employee or director;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
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(vi) each Company Contract relating to the creation of any
material Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.18);
(x) any other Company Contract that was entered into outside
the ordinary course of business or was inconsistent with the Company's past
practices;
(xi) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Company (without penalty) within
60 days after the delivery of a termination notice by the Company;
(xii) any Contract which provides for indemnification of any
officer, director, employee or agent;
(xiii) any other Company Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in an amount
or having a value in excess of $10,000 in the aggregate, or (B) the performance
of services having a value in excess of $10,000 in the aggregate;
(xiv) any Contract imposing any confidentiality obligation on
the Company except for agreements with customers which provide for
confidentiality of customer data and analysis conducted by Company for customer;
(xv) any Contract (not otherwise identified in clauses "(i)"
through "(xvi)" of this Section 2.10(a)) that could reasonably be expected to
have a material effect on the business, condition, capitalization, assets,
liabilities, operations, financial performance or prospects of the Company or to
any of the transactions contemplated by this Agreement;
(xvi) any Contract for which the Company must obtain a Consent
in connection with the transactions contemplated by this Agreement; and
(xvii) any other Contract, if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on the Company.
(Contracts in the respective categories described in clauses "(i)" through
"(xvii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete
copies of all written Contracts identified in Part 2.10 of the Disclosure
Schedule, including all amendments
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thereto. Part 2.10 of the Disclosure Schedule provides an accurate description
of the terms of each Company Contract that is not in written form. Each Contract
identified in Part 2.10 of the Disclosure Schedule is valid and in full force
and effect, and, to the commercially reasonable best knowledge of the Company,
is enforceable by the Company in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) the Company has not violated or breached, or committed any
default in each case in any material respect with respect to such Company
Contract under, any Company Contract, and, to the commercially reasonable best
knowledge of the Company, no other Person has breached or materially violated,
or committed any default under any Company Contract;
(ii) to the commercially reasonable best knowledge of the
Company, no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) will, or could reasonably be expected
to, (A) result in a breach or material violation of any of the provisions of any
Material Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Material Contract, (C) give any Person the right
to accelerate the maturity or performance of any Material Contract, or (D) give
any Person the right to cancel, terminate or modify any Material Contract;
(iii) since December 31, 1997, the Company has not received
any notice or other communication regarding any actual or possible breach or
material violation of, or default under, any Company Contract; and
(iv) the Company has not waived any of its material rights
under any Company Contract.
(d) No Person is renegotiating, or has a right pursuant to the
terms of any Company Contract to renegotiate, any amount paid or payable to the
Company under any Material Contract or any other material term or provision of
any Material Contract.
(e) The Contracts identified in Part 2.10 of the Disclosure
Schedule collectively constitute all of the Contracts necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted.
(f) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each proposed Material Contract as to which any bid, offer,
award, written proposal, term sheet or similar document has been submitted or
received by the Company since January 1, 1999.
(g) Part 2.10 of the Disclosure Schedule provides an accurate
description and breakdown of the Company's backlog under Company Contracts.
(h) The Company has entered into no Government Contracts.
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2.11 LIABILITIES. The Company has no material accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles, and whether due or to become due), except for:
(a) liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (b) accounts payable, accrued salaries or other
immaterial liabilities that have been incurred by the Company since March 31,
1999 in the ordinary course of business and consistent with the Company's past
practices; (c) liabilities under the Company Contracts identified in Part 2.10
of the Disclosure Schedule, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of such
Company Contracts; and (d) the liabilities identified in Part 2.11 of the
Disclosure Schedule
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all
times since the Company's inception been, in compliance with all applicable
Legal Requirements, except where the failure to comply with such Legal
Requirements has not had and could not reasonably be expected to have a Material
Adverse Effect on the Company. Except as set forth in Part 2.12 of the
Disclosure Schedule, since the Company's inception, the Company has not received
any notice or other communication from any Governmental Body regarding any
actual or possible material violation of, or material failure to comply with,
any Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times since the Company's inception has been, in
substantial compliance with the terms and requirements of the respective
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule.
Since the Company's inception, the Company has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
material violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has delivered to Parent accurate and complete copies of all Company
Returns filed since the Company's inception.
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(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
March 31, 1999 through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date.
(c) No Company Return relating to income Taxes has ever been
examined or audited by any Governmental Body. Except as se forth in Part 2.14 of
the Disclosure Schedule, there have been no examinations or audits of any
Company Returns. The Company has delivered to Parent accurate and complete
copies of all audit reports and similar documents (to which the Company has
access) relating to the Company Returns. Except as set forth in Part 2.14 of the
Disclosure Schedule, no extension or waiver of the limitation period applicable
to any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule,
no claim or Proceeding is pending or has been threatened against or with respect
to the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest additions to tax and penalties thereon
and related expenses) with respect to any notice of deficiency or similar
document received by the Company with respect to any Tax (other than liabilities
for Taxes asserted under any such notice of deficiency or similar document which
are being contested in good faith by the Company and with respect to which
adequate reserves for payment have been established). There are no liens for
Taxes upon any of the assets of the Company except liens for current Taxes not
yet due and payable. The Company has not entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code or any comparable
provisional state or foreign Tax laws. The Company has not been, and the Company
will not be, required to include any adjustment in taxable income for any tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of transactions
or events occurring, or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G or Section 162 of the Code
or any comparable provisional state or foreign Tax laws, other than the payments
listed on Part 2.14(e) of the Disclosure Schedule for which shareholder approval
meeting the requirements of section 280G(b)(5) of the Code are obtained prior to
the Closing Date. The Company is not, and has never been, a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay,
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termination pay, hospitalization, medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program or
agreement (collectively, the "Plans") sponsored, maintained, contributed to or
required to be contributed to by the Company for the benefit of any current or
former employee of the Company ("Employee"), except for Plans which would not
require the Company to make payments or provide benefits having a value in
excess of $25,000 in the aggregate.
(b) Except as set forth in Part 2.15(b) of the Disclosure
Schedule, the Company does not maintain, sponsor or contribute to, and, to the
best of the knowledge of the Company, has not at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or nor excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of Employees or former
Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which is a
multi-employer plan (within the meaning of Section 3(37) of ER1SA)
(d) With respect to each Plan, the Company has delivered to
Parent:
(i) an accurate and complete copy of such Plan (including
all amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last
two years;
(iii) an accurate and complete copy of the most recent
summary plan description, together with each Summary of Material
Modifications, if required under ERISA, with respect to such
Plan, and all material employee communications relating to such
Plan;
(iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust
or other funding agreement (including all amendments thereto) and
accurate and complete copies the most recent financial statements
thereof;
(v) accurate and complete copies of all Contracts relating
to such Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements,
investment management agreements, subscription and participation
agreements and record keeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service
with respect to such Plan (if such Plan is intended to be
qualified under Section 401(a) of the Code).
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(e) The Company is not required to be, and, to the best of the
knowledge of the Company has never been required to be, treated as a single
employer with any other Person under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code. The Company has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. The
Company has never made a complete or partial withdrawal from a multi-employer
plan, as such term is defined in Section 3(37) of ER1SA, resulting in
"withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the
Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service or has applied for (or has time remaining to apply for) a
determination letter within the period permitted such that retroactive remedial
amendments may be made under Code section 401(b) and the Company is not aware of
any reason why any such determination letter could be revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former Employee or director of
the Company (whether or not under any Plan), or materially increase the benefits
payable under any Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of
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employment and their positions. The Company is not a party to any collective
bargaining contract or other Contract with a labor union involving any of its
Employees. All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each
Employee who is not fully available to perform work because of disability or
other leave and sets forth the basis of such leave and the anticipated date of
return to full service.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure
Schedule, the Company has good labor relations, and has no knowledge of any
facts indicating that (i) the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Company's labor relations, or (ii) any of the Company's employees intends
to terminate his or her employment with the Company.
2.16 ENVIRONMENTAL MATTERS. The Company is in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes the possession by the Company of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. The Company has not received any notice or
other communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the commercially reasonable best
knowledge of the Company, there are no circumstances that could reasonably be
expected to prevent or interfere with the Company's compliance with any
Environmental Law in the future. To the commercially reasonable best knowledge
of the Company (a) all property that is leased to, controlled by or used by the
Company, and all surface water, groundwater and soil associated with or adjacent
to such property is free of any material environmental contamination of any
nature, (b) none of the property leased to, controlled by or used by the Company
contains any underground storage tanks, asbestos, equipment using PCBs,
underground injection wells, and (c) none of the property leased to, controlled
by or used by the Company contains any septic tanks in which process wastewater
or any Materials of Environmental Concern have been disposed. The Company has
never sent or transported, or arranged to send or transport, any Materials of
Environmental Concern to a site that, pursuant to any applicable Environmental
Law (i) has been placed on the "National Priorities List" of hazardous waste
sites or any similar state list, (ii) is otherwise designated or identified as a
potential site for remediation, cleanup, closure or other environmental remedial
activity, or (iii) is subject to a legal Requirement to take "removal" or
"remedial" action as detailed in any applicable Environmental Law or to make
payment for the cost of cleaning up the site. To the Company's commercially
reasonable best knowledge, no current or prior owner of any property leased or
controlled by the Company has received any notice or other communication (in
writing or otherwise), whether from a Government Body, citizens group, employee
or otherwise, that alleges that such current or prior owner or the Company is
not in compliance with any Environmental Law. All Governmental Authorizations
currently held by the Company pursuant to Environmental Laws are identified in
Part 2.16 of the Disclosure Schedule. (For purposes of this Section 2.16: (i)
"Environmental
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Law" means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (ii) "Materials
of Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now regulated by any Environmental Law or that is known generally to pose a
danger to health, reproduction or the environment.)
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since the Company's inception, the Company has not received any notice
or other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of
the Disclosure Schedule: (a) no Related Party has, and no Related Party has at
any time since the Company's inception had, any direct or indirect interest in
any material asset used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since the Company's inception been,
indebted to the Company; (c) since the Company's inception, no Related Party has
entered into, or has had any direct or indirect financial interest in, any
material Contract, transaction or business dealing involving the Company; (d) no
Related Party is competing, or has at any time since the Company's inception
competed, directly or indirectly, with the Company; and (e) no Related Party has
any claim or right against the Company (other than rights under Company Options
and rights to receive compensation for services performed as an employee of the
Company); provided, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation and no more than 5% of
any other entity shall not be deemed a "direct or indirect financial interest"
for purposes of this Section 2.18. (For purposes of the Section 2.18 each of the
following shall be deemed to be a "Related Party": (i) each individual who is,
or who has at any time since the Company's inception been, an officer or
director of the Company; (ii) each member of the immediate family of each of the
individuals referred to in clause "(i)" above; and (iii) any trust or other
Entity (other than the Company) in which any one of the individuals referred to
in clauses "(i)" and "(ii)" above holds (or in which more than one of such
individuals collectively hold), beneficially or otherwise, a material voting,
proprietary or equity interest.)
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and (to the best of the knowledge of the
Company no Person has threatened to commence any Legal Proceeding: (i) that
involves the Company or any of the assets owned or used by the Company or any
Person whose liability the Company has or may
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have retained or assumed, either contractually or by operation of law; or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the commercially reasonable best
knowledge of the Company, except as set forth in Part 2.19 of the Disclosure
Schedule, no event has occurred, and no claim, dispute or other condition or
circumstance exists that could reasonably be expected to, give rise to or serve
as a basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule,
no Legal Proceeding has ever been commenced by or has ever been pending against
the Company.
(c) There is no order, writ, injunction, judgment or decree to
which the Company, or any of the assets owned or used by the Company, is
subject. To the commercially reasonable best knowledge of the Company, no
officer or other employee of the Company is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to the
Company's business.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
requisite right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
the Company of this Agreement have been duly authorized all necessary action on
the part of the Company and its board of directors; subject only to approval of
the Merger by shareholders of the Company. The board of directors of the Company
(at a meeting duly called and held) has (a) determined (pursuant to a unanimous
vote of all members of the board of directors of the Company) that the Merger is
advisable and fair and in the best interests of the Company and its
shareholders, (b) authorized and approved (pursuant to a unanimous vote of all
members of the board of directors of the Company) the execution, delivery and
performance of this Agreement by the Company and approved (pursuant to a
unanimous vote of all members of the board of directors of the Company) the
Merger, (c) recommended (pursuant to a unanimous vote of all members of the
board of directors of the Company) the approval of this Agreement and the Merger
by the holders of Company Common Stock and the Company's Preferred Stock and
directed that this Agreement and the Merger be submitted for approval by the
Company's shareholders, and (d) adopted (pursuant to a unanimous vote of all
members of the board of directors of the Company) a resolution having the effect
of causing the Company not to be subject to any state takeover law or similar
Legal Requirement that might otherwise apply to the Merger or any of the other
transactions contemplated by this Agreement. This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of
the Disclosure Schedule, neither (1) the execution, delivery or performance of
this Agreement or any of the other agreements referred to in this Agreement, nor
(2) the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time);
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(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the Company's Articles of Incorporation or by
laws, or (ii) any resolution adopted by the Company's board of
directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order,
writ, injunction, judgment or decree to which the Company, or any of
the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the Company's business or to any of the assets
owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Company
Contract that is or would constitute a Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under
any such Company Contract, (ii) accelerate the maturity or performance
of any such Company Contract, or (iii) cancel, terminate or modify any
such Company Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the
Company (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of the Company).
Except as set forth in Part 2.21 of the Disclosure Schedule, the Company is not
and will not be required to make any filing with or give any notice to, or to
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, or (y) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, except for the filing of
the Merger Agreement with the Delaware Secretary of State and Agreement of
Merger with the California Secretary of State.
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2.22 FULL DISCLOSURE.
(a) The representations and warranties made by Company in this
Agreement (as amended by the Disclosure Schedule) do not, and the certificate
referred to in Section 6.5(o) will not, (i) contain any representation, warranty
or information that is false or misleading with respect to any material fact, or
(ii) omit to state any material fact necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein (in the light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading.
(b) The information supplied by the Company for inclusion in the
information statement to be delivered to the Company's shareholders will not, as
of the date of the information statement or as of the date of the Company
Shareholders' written consent, (i) contain any statement that is inaccurate or
misleading with respect to any material fact, or (ii) omit to state any material
fact necessary in order to make such information (in light of the circumstances
under which it is provided) not false or misleading.
2.23 NO DISCUSSIONS. Neither the Company nor any representative of the
Company, is, or has at any time since May 15, 1999 been, engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Proposal.
2.24 VOTE REQUIRED. The affirmative vote of the holders of a majority
of the shares of Company Common Stock and a majority of the shares of Preferred
Stock outstanding on the record date (the "Required Company Shareholder Vote")
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement, the Merger, the Charter Amendment and
the other transactions contemplated by this Agreement.
2.25 FINANCIAL ADVISOR. Except for the fees payable to William Blair &
Company referred to in Section 1.12 hereof, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or any of the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has furnished to Parent accurate and complete copies of all agreements
under which any such fees, commissions or other amounts have been paid or may
become payable and all indemnification and other agreements related to the
engagement of William Blair & Company.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company and the Company Shareholders as follows:
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its obligations under all Contracts
by which it is bound. Each of Parent and Merger Sub is duly qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the
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nature of its business requires such qualification and where the failure to be
so qualified would have a Material Adverse Effect on Parent or Merger Sub.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered or made available to the Company,
including through the SEC EDGAR system, accurate and complete copies (excluding
copies of exhibits) of each report, registration statement (on a form other than
Form S-8) and definitive proxy statement filed by Parent with the SEC between
January 1, 1999 and the date of this Agreement (the "Parent SEC Documents"),
which are all of the documents (other than preliminary material) that Parent was
required to file with the SEC since such date. As of the time it was filed with
the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The consolidated financial statements contained in the Parent
SEC Documents: (i) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered, except as may be indicated in the notes to such financial statements
and (in the case of unaudited statements) as permitted by Form lO-Q of the SEC,
and except that unaudited financial statements may not contain footnotes and are
subject to year-end audit adjustments which are not expected to be material in
amount; and (iii) fairly present the consolidated financial position of Parent
and its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its subsidiaries for the periods covered
thereby. There has been no material change in Parent's accounting policy except
as described in the notes to the Parent financial statements.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the requisite right, power and authority to perform their obligations under this
Agreement; and the execution, delivery and performance by Parent and Merger Sub
of this Agreement (including the contemplated issuance of Parent Common Stock in
the Merger in accordance with this Agreement) have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. No vote of Parent's stockholders is needed to approve the
Merger. This Agreement constitutes the legal, valid and binding obligation of
Parent and Merger Sub, enforceable against them in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.4 VALID ISSUANCE. Subject to Section 1.5(c), the Parent Common Stock
to be issued pursuant to this Agreement will, when issued in accordance with the
provisions of this Agreement, be validly issued, fully paid and nonassessable.
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3.5 GOVERNMENTAL AUTHORIZATION. Parent has obtained each federal,
state, county, local or foreign governmental consent, license, permit, grant, or
other authorization of a Governmental Body that is required for the operation of
Parent's business ("Parent Authorizations"), and all of such Parent
Authorizations are in full force and effect, except where the failure to obtain
or have any of such Parent Authorizations are not reasonably expected to have a
Material Adverse Effect on Parent.
3.6 COMPLIANCE WITH LAWS. Parent has complied with, is not in violation
of, and has not received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for such
violations or failures to comply as could not reasonably be expected to have a
Material Adverse Effect on Parent.
3.7 NO MATERIAL ADVERSE CHANGE. Between the date of the balance sheet
included in Parent's most recently filed report on Form 10-Q and the date of
this Agreement, except as disclosed in Parent's most recently filed report on
Form 10-Q, there has not occurred any material adverse change in the business,
financial condition or results of operations of Parent. For purposes of this
section, a change in the trading price of Parent's Common Stock, as reported by
the Nasdaq National Market or any other automated quotation system or exchange,
changes in economic conditions or changes in the industry and markets in which
Parent competes shall not constitute a material adverse change, whether
occurring at any time or from time to time.
3.8 LEGAL PROCEEDINGS. There is no pending Legal Proceeding, and to the
knowledge of Parent, no Person has threatened to commence any Legal Proceeding,
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement.
3.9 FULL DISCLOSURE. The representations and warranties made by Parent
and Merger Sub do not and the certificates of the Parent and Merger Sub referred
to in Section 7.3 will not, (i) contain any information that is false or
misleading with respect to any material fact, or (ii) omit to state any material
fact necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in light of the circumstances
under which such representations, warranties and information were or will be
made or provided) not false or misleading.
3.10 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery
or performance of this Agreement or any of the other agreements referred to in
this Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of Parent's or Merger Sub's Certificate of
Incorporation or bylaws, or (ii) any resolution adopted by Parent's or
Merger Sub's shareholders, board of directors or any committee
thereof;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any
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Legal Requirement or any order, writ, injunction, judgment or decree
to which Parent, or any of the assets owned or used by Parent, is
subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Parent or that otherwise
relates to Parent's business or to any of the assets owned or used by
the Company;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any agreement of
Parent filed or incorporated by reference in the Parent SEC Documents.
3.11 Except as set forth in Part 2.21 of the Disclosure Schedule, the
Company is not and will not be required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement, except for the
filing of the Merger Agreement with the Delaware Secretary of State and
Agreement of Merger with the California
3.12 INTERIM OPERATIONS OF SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request. Without
limiting the generality of the foregoing, during the Pre-Closing Period, the
Company shall promptly provide Parent with copies of:
(a) all material operating and financial reports prepared by the
Company and its Subsidiaries for the Company's senior management, including (A)
copies of the unaudited monthly consolidated balance sheets of the Company and
the related unaudited monthly consolidated statements of operations, statements
of shareholders' equity and statements of cash flows and (B) copies of any sales
forecasts, marketing plans, development plans, discount reports, write-off
reports, hiring reports and capital expenditure reports prepared for the
Company's senior management;
(b) any written materials or communications sent by or on behalf
of the Company to its shareholders;
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(c) any material notice, document or other communication sent by
or on behalf of the Company to any party to any Company Contract or sent to the
Company by any party to any Company Contract (other than any communication that
relates solely to routine commercial transactions between the Company and the
other party to any such Company Contract and that is of the type sent in the
ordinary course of business and consistent with past practices);
(d) any notice, report or other document filed with or sent to any
Governmental Body in connection with the Merger or any of the other transactions
contemplated by this Agreement; and
(e) any material notice, report or other document received by the
Company from any Governmental Body.
4.2 OPERATION OF THE COMPANY'S BUSINESS. During the Pre-Closing Period:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business
and operations have been conducted prior to the date of this
Agreement;
(b) the Company shall use all reasonable efforts to preserve
intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and
goodwill with all suppliers, customers, landlords, creditors,
employees and other Persons having business relationships with the
Company;
(c) the Company shall use commercially reasonable best efforts to
keep in full force all insurance policies identified in Part 2.17 of
the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but
in no event less frequently than weekly) to Parent concerning the
status of the Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of
capital stock, and shall not repurchase, redeem or otherwise reacquire
any shares of capital stock or other securities (except that the
Company may repurchase Company Common Stock from former employees and
consultants pursuant to the terms of existing restricted stock
purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance
of (i) any capital stock or other security, (ii) any option or right
to acquire any capital stock or other security, or (iii) any
instrument convertible into or exchangeable for any capital stock or
other security (except that the Company shall be permitted to issue
Company Common Stock to employees or consultants upon the exercise of
outstanding Company Options;
(g) the Company shall not amend or waive any of its rights under,
or permit the acceleration of vesting under, (i) any provision of its
1996 Stock Option Plan, (ii) any provision of any agreement evidencing
any outstanding Company Option, or (iii) any provision of any
restricted stock purchase agreement;
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(h) the Company shall not amend or permit the adoption of any
amendment to the Company's Articles of Incorporation or bylaws, or
effect or permit the Company to become a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock
split, division or subdivision of shares, reverse stock split,
consolidation of shares or similar transaction;
(i) the Company shall not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(j) the Company shall not make any capital expenditure, except
for capital expenditures that, when added to all other capital
expenditures made on behalf of the Company during the Pre-Closing
Period, do not exceed $10,000 in the aggregate;
(k) the Company shall not (i) enter into, or permit any of the
assets owned or used by it to become bound by, any Contract that is or
would constitute a Material Contract, or (ii) amend or prematurely
terminate, or waive or exercise any material right or remedy under,
any such Contract;
(l) the Company shall not (i) acquire, lease or license any right
or other asset from any other Person, (ii) sell or otherwise dispose
of, or lease or license, any right or other asset to any other Person,
or (iii) waive or relinquish any right, except for assets acquired,
leased, licensed or disposed of by the Company pursuant to Contracts
that are not Material Contracts except in the ordinaiy course of
business and consistent with past practice;
(m) the Company shall not (i) lend money to any Person (except
that the Company may make routine travel advances to employees and
consultants in the ordinary course of business or (ii) incur or
guarantee any indebtedness for borrowed money;
(n) the Company shall not (i) establish, adopt or amend any
employee benefit plan (except for the termination of the Company's
401(k) plan), (ii) pay any bonus or make any profit-sharing payment,
cash incentive payment or similar payment to, or increase the amount
of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors,
officers or employees, or (iii) hire any new employee;
(o) the Company shall not change any of its methods of accounting
or accounting practices in any material respect;
(p) the Company shall not make any Tax election;
(q) the Company shall not commence, settle or willingly become a
party to any Legal Proceeding;
(r) the Company shall not agree or commit to take any of the
actions described in clauses "(e)" through "(q)" above.
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Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Parent gives its prior written consent to
the taking of such action by the Company.
4.3 NO NEGOTIATION. During the Pre-Closing Period, neither the Company
nor any of its directors, officers, employees, shareholders or other Company
Representatives, shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal
or offer from any Person (other than Parent) relating to a possible
Acquisition Transaction;
(b) participate in any discussions or negotiations or enter into
any agreement with, or provide any non-public information to, any
Person (other than Parent) relating to or in connection with a
possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition
Transaction.
The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by the Company during the Pre-Closing Period. Notwithstanding the
foregoing provisions of this Section 4.3 above, if at any time prior to the
approval of this Agreement and the Merger by the shareholders of the Company,
the Board of Directors of the Company determines, in good faith after receipt of
advice from outside counsel, that the Board's fiduciary duties under applicable
law require it to do so, the Company in response to a proposal that has been
determined by it to be a Superior Offer that was not solicited by it and that
did not otherwise result from a breach of this Section 4.3, and subject to the
Company giving Parent at least two business days written notice of its intention
to do so, may (x) furnish information with respect to the Company to any person
making a Superior Offer pursuant to a customary confidentiality agreement
containing terms no less restrictive than the terms of the confidentiality
agreement entered into between the Company and Parent, provided that a copy of
all such information is delivered simultaneously to Parent, and (y) engage in
negotiations regarding such proposal. In the event the Company receives a
Superior Offer, nothing contained in this Agreement shall prevent the Board of
Directors of the Company from amending or withdrawing its recommendation of the
Merger to the Company's shareholders, if the Board determines in good faith,
after consultation with outside legal counsel, that such action is required by
its fiduciary duties under applicable law.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Merger and the other transactions contemplated
by this Agreement, and (1,) shall use all commercially reasonable efforts to
obtain all Consents (if any) required to be obtained (pursuant to any applicable
Legal Requirement or Contract, or otherwise) by such party in connection with
the Merger and the other transactions contemplated by this Agreement. The
Company shall (upon request) promptly deliver to Parent a copy of each such
filing made, each such notice given and each such Consent obtained by the
Company during the Pre-Closing Period.
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5.2 COMPANY SHAREHOLDER CONSENT. The Company shall, in accordance with
its Articles of Incorporation and bylaws and the applicable requirements of the
California Corporation Code, prepare and distribute a written consent of its
shareholders for approval of the Charter Amendment, the Merger and this
Agreement (the "Company Shareholder Consent"). The Company Shareholder Consent
shall be obtained as promptly as practicable and in any event within 12 days
after execution of this agreement. The Company shall ensure that the Company
Shareholder Consent is obtained in compliance with all applicable Legal
Requirements. The Company's obligation to obtain shareholder consent in
accordance with this Section 5.2 shall not be limited or otherwise affected by
the commencement, disclosure, announcement or submission of any Superior Offer
or other Acquisition Proposal, or by any withdrawal, amendment or modification
of the recommendation of the board of directors of the Company with respect to
the Merger.
5.3 STOCK OPTIONS.
(a) Subject to Section 5.3(b), at the Effective Time, all rights
with respect to Company Common Stock under each Company Option then outstanding
shall be converted into and become rights with respect to Parent Common Stock,
and Parent shall assume each such Company Option in accordance with the terms
(as in effect as of the closing date) of the stock option plan under which it
was issued and the stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each Company Option assumed by Parent may be
exercised solely for shares of Parent Common Stock, (ii) the number of shares of
Parent Common Stock subject to each such Company Option shall be equal to the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounding down to the nearest whole share, (iii) the per share exercise price
under each such Company Option shall be adjusted by dividing the per share
exercise price under such Company Option by the Exchange Ratio and rounding up
to the nearest cent and (iv) any restriction on the exercise of any such Company
Option shall continue in full force and effect and the term, exercisability,
vesting schedule and other provisions of such Company Option shall otherwise
remain unchanged; provided, however, that each Company Option assumed by Parent
in accordance with this Section 5.3(a) shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction subsequent to the Effective Time. Parent shall file with the SEC
within as soon as practicable after the date on which the Merger becomes
effective, and in any event within thirty (30) calendar days after the Effective
Time, a registration statement on Form S-8 relating to the shares of Parent
Common Stock issuable with respect to the Company Options assumed by Parent in
accordance with this Section 5.3(a), which may be legally registered on a Form
S-8 and shall use its reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as the Company options remain
outstanding.
(b) The Company shall take all action that may be necessary (under
the plans pursuant to which Company Options are outstanding and otherwise) to
effectuate the provisions of this Section 5.3 and to ensure that, from and after
the Effective Time, holders of Company Options have no rights with respect
thereto other than those specifically provided in this Section 5.3.
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5.4 CONVERSION AND EXERCISE. At or prior to the Closing, the Company
shall cause all outstanding shares of the Preferred Stock of the Company to be
converted into Company Common Stock in accordance with the Company's articles of
incorporation and the Charter Amendment. At or prior to the Closing, the Company
shall cause the holders of all outstanding warrants to purchase shares of the
Company's capital stock to exercise such warrants in accordance with their terms
for cash, and to cause any shares of preferred stock issued upon exercise of
such warrants to be converted into Company Common Stock. All proceeds from the
exercise of such warrants shall be applied, in the order as follows, only (i) to
pay off any bank or other debt, (ii) to pay off any notes payable outstanding,
and (iii) to pay any transaction related expenses. In the event that such
expenses are paid from the warrant proceeds, such expenses shall still be
considered "Excluded Expenses" for purposes of this Agreement.
5.5 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law, during
the Pre-Closing Period, the Company and the Parent shall not (and shall not
permit any of their respective Representatives to) issue any press release or
make any public statement regarding this Agreement or the Merger, or regarding
any of the other transactions contemplated by this Agreement, without the other
party's prior written consent.
5.6 BEST EFFORTS. During the Pre-Closing Period, (a) the Company shall
use its best efforts to cause the conditions set forth in Section 6 to be
satisfied on a timely basis, and (b) Parent and Merger Sub shall use their best
efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
5.7 TAX MATTERS. Prior to the Closing, Parent and the Company shall
execute and deliver to Venture Law Group, a professional corporation, tax
representation letters reasonably acceptable to Venture Law Group (which will
may be relied upon in connection with any tax opinion which such firm may render
to the Company Shareholders).
5.8 SEVERANCE AND NONCOMPETITION AGREEMENTS. Prior to the date of this
Agreement, the Company shall have caused each of Messrs. Altomare, Tilson and
Bonham to execute and deliver to the Company severance agreements in a form
reasonably acceptable to Parent. At or prior to the Closing, the Company shall
cause John Chisholm to execute and deliver a noninterference agreement in a form
reasonably acceptable to Parent. At or prior to the Closing, the Company shall
cause Messrs. Sammann and McNenny to execute and deliver amended or new
agreements providing for specified severance compensation in the event that they
are terminated following the Effective Time.
5.9 TERMINATION OF COMPANY INVESTOR RIGHTS AGREEMENT. Prior to the
Closing the Company and the parties to the Second Amended and Restated Investor
Rights Agreement dated March 5, 1998 by and between the Company and certain
investors in the Company (the "Rights Agreement") shall enter into an agreement
reasonably satisfactory in form and content to Parent (and conditioned and
effective upon the Closing), terminating all of each such investor's rights
under the Rights Agreement.
5.10 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(l)(i) of the
United States Treasury Regulations, and (b) the
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Company shall deliver to the Internal Revenue Service the notification required
under Section 1.897 - 2(h)(2) of the United States Treasury Regulations.
5.11 LISTING. Parent shall use reasonable efforts to cause the shares
of Parent Common Stock being issued pursuant to this Agreement to be approved
for listing (subject to notice of issuance) on the Nasdaq National Market.
5.12 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use all
reasonable efforts to obtain and deliver to Parent on or prior to the Closing
the resignation of each officer and director of each of the Company.
5.13 SECURITYHOLDER REPRESENTATION STATEMENTS; APPOINTMENT OF PURCHASER
REPRESENTATIVE. Each securityholder of the Company who is to receive Parent
Common Stock in connection with this Agreement shall complete and execute a
securityholder representation statement, which shall, among other things,
provide certain representations and warranties to Parent, and appoint The
Portola Group, Inc. to serve as such securityholder's purchaser representative
in the event that such securityholder is not an "accredited investor." A form of
such securityholder representation statement is attached as Exhibit D to this
Agreement.
5.14 SECURITIES ACT EXEMPTION. The Parent Common Stock to be issued
pursuant to this Agreement initially will not be registered under the Securities
Act of 1933 as amended (the "Securities Act"), in reliance on the exemption set
forth in Section 4(2) and Rule 506 of Regulation D thereunder.
5.15 STOCK RESTRICTIONS. In addition to any legend imposed by
applicable state securities laws or by any contract that continues in effect
after the Effective Time, the certificates representing shares of Parent Common
Stock issued pursuant to this Agreement shall bear a restrictive legend (and
stop orders shall be placed against the transfer thereof with the Parent's
Transfer Agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION.
The certificates representing shares of Parent Common Stock issued pursuant to
this Agreement that are Restricted Resale Stock shall bear a restrictive legend
(and stop orders shall be placed against the transfer thereof with the Parent's
Transfer Agent), stating substantially as follows
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH CERTAIN VOLUME LIMITATIONS PURSUANT TO
THE TERMS OF A CERTAIN AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION DATED JULY 27, 1999,
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A COPY OF WHICH WILL BE PROVIDED TO THE HOLDER OF THIS
CERTIFICATE UPON REQUEST.
5.16 REGISTRATION ON FORM S-3; ADDITIONAL STOCK RESTRICTIONS. During
the Pre-Closing Period, the Parent and Company shall each use its commercially
reasonable efforts to file, as soon as practicable after the Closing Date but in
any event within 30 days of the Closing Date, a registration statement on Form
S-3 with the Securities and Exchange Commission covering the resale of shares of
Parent Common Stock issued in connection with this Agreement. Any such
registration shall be subject to the terms and conditions set forth in the
Registration Rights Agreement attached hereto as Exhibit F. Except for (i) the
Parent Common Stock issued to William Blair & Company and (ii) the Parent
Common Stock issued upon the exercise of the warrants referred to in Section
5.4, all shares eligible for registration on the above-mentioned registration
statement shall be deemed Restricted Resale Stock.
5.17 BLUE SKY LAWS. Parent shall take such steps as may be necessary to
comply with the securities blue sky laws of all jurisdictions that are
applicable to the issuance of the Parent Common Stock pursuant to hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities blue sky laws of all jurisdictions that are
applicable in connection with the issuance of the Parent Common Stock pursuant
to hereto.
5.18 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Parent and Company shall
each promptly notify the other party in writing of:
(i) the discovery by the Parent or Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes an inaccuracy in or breach of
any representation or warranty made by the Parent or Company, respectively, in
this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Parent or Company in this Agreement if (A) such representation or warranty
had been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any breach of any covenant or obligation of the Parent
or Company pursuant to this Agreement; and
(iv) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to this Section 5.18 requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the date
of the occurrence, existence or discovery of such event,
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condition, fact or circumstance, then the Company shall promptly deliver to
Parent an update to the Disclosure Schedule specifying such change. No such
update shall be deemed to supplement or amend the Disclosure Schedule for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by the Company in this Agreement, or (ii) determining whether
any of the conditions set forth in Section 6 has been satisfied.
5.19 NASDAQ STOCKHOLDER APPROVAL REQUIREMENTS. Any other provisions of
this Agreement notwithstanding, in no event shall Parent issue, in connection
with the Merger and the transactions contemplated by this Agreement, shares of
Parent Common Stock in excess of 5% of the shares of Parent Common Stock
outstanding immediately prior to the Effective Time of the Merger without
obtaining all stockholder approvals as may be required under the rules of the
Nasdaq Stock Market.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company in this Agreement and in each of the other
agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
"Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, contained or incorporated directly or indirectly in such
representations and warranties), and shall be accurate in all material respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time
(without giving effect to any update to the Disclosure Schedule, and without
giving effect to any "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, contained or incorporated
directly or indirectly in such representations and warranties).
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all respects.
6.3 SHAREHOLDER APPROVAL. The principal terms of the Merger shall have
been duly approved by the requisite vote under applicable law and the Company's
Articles of Incorporation. The Charter Amendment shall have been duly approved
by the requisite vote under applicable law and the Company's Articles of
Incorporation.
6.4 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.5 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have
received the following agreements and documents, each of which shall be in full
force and effect:
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(a) Voting Agreements in the form of Exhibit B-1, executed by the
Persons identified on Exhibit B-2;
(b) Severance agreements in a form reasonably acceptable to
Parent executed by the individuals identified in Section 5.8 hereof;
(c) Noninterference agreement (including a waiver of intellectual
property rights) in a form reasonably acceptable to Parent executed by
Mr. Chisholm;
(d) Securityholder Representation Statements in the form of
Exhibit D, executed by each of the Company's non-accredited
securityholders;
(e) Evidence of termination of the Investor Rights Agreement
identified in Section 5.9;
(f) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Parent, executed by all employees
and former employees of the Company and by all consultants and
independent contractors and former consultants and former independent
contractors to the Company who have not already signed such
agreements;
(g) the statement referred to in Section 5.10(a), executed by the
Company;
(h) the Escrow Agreement in the form of Exhibit G, executed by
the Securityholders' Agent on behalf of each of the Company
Shareholders, and also executed by the escrow agent (the "Escrow
Agreement");
(i) an estoppel certificate, dated as of a date not more than
five days prior to the Closing Date and satisfactory in form and
content to Parent, executed by Landmark Investments Limited;
(j) a legal opinion of Venture Law Group, in a form reasonably
acceptable to Parent and its counsel;
(k) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that each of the representations and
warranties set forth in Section 2 is accurate in all respects as of
the Closing Date as if made on the Closing Date and that the
conditions set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.8 and 6.9 have
been duly satisfied;
(l) written resignations of all officers, directors of the
Company, effective as of the Effective Time;
(m) a market stand-off from each Major Investor (other than Frank
Sammann) agreeing to not to sell or dispose of his or her shares of
Parent Common Stock, during the period commencing with the filing by
Parent of a registration statement for an underwritten public offering
and ending on such date as may be specified by the managing
underwriter of such offering, provided that such period shall not
exceed (i) with respect to Parent's first underwritten public offering
after the date of this
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Agreement, 180 days following the closing of the public offering or
(ii) with respect to the second underwritten public offering, 90 days
following the closing of the public offering; provided further that
the market stand-off agreement shall apply only to Parent's first two
underwritten public offerings that commence within twelve months of
the Effective Time where Parent's executive officers, directors and 5%
stockholders have entered into similar market stand-off agreements;
(n) the Charter Amendment shall have been filed with the
Secretary of State of the State of California and shall have become
effective;
(o) the Registration Rights Agreement in the form of Exhibit F,
executed by the Securityholder Agent on behalf of each of the Company
Shareholders (the "Registration Rights Agreement"); and
(p) certificate of merger executed by the Company and Merger Sub
to be filed with the Secretary of State of the State of Delaware and a
certificate of merger executed by the Company to be filed with the
Secretary of State of the State of California in accordance with
Section 1.3.
6.6 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.10(b).
6.7 LISTING. The shares of Parent Common Stock to be issued pursuant to
this Agreement shall have been approved for listing (subject to notice of
issuance) on the Nasdaq National Market.
6.8 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened
to commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the Merger or seeking to prohibit
or limit the exercise by Parent of any material right pertaining to its
ownership of stock of the Surviving Corporation.
6.10 EMPLOYEES. None of the individuals identified on Exhibit E shall
have ceased to be employed by, or notified the Company of their intent to
terminate their employment with, the Company.
6.11 SECURITIES EXEMPTION. The issuance of Parent Common Stock in
accordance with this Agreement shall be exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder and/or
Rule 506 of Regulation D.
6.12 TERMINATION OF EMPLOYEE PLANS. Prior to the Closing, the Company's
board of directors shall have authorized the termination of the Company's 401(k)
plan, contingent on the effectiveness of the Merger.
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6.13 DEBT PAYOFF. The Company shall have paid off all outstanding debt
for money borrowed and terminated all existing bank lines of credit.
6.14 DISSENTERS' RIGHTS. Holders of not more than 5% of the outstanding
shares of the Company's capital stock shall not have exercised, nor shall they
have any continued right to exercise, appraisal, dissenters' or similar rights
under applicable law with respect to their shares by virtue of the Merger.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement and in each of the
other agreements and instruments delivered by Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
materiality or similar qualifications contained or incorporated directly or
indirectly in such representations and warranties), and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time (without giving effect to any materiality or similar qualifications
contained or incorporated directly or indirectly in such representations and
warranties).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects.
7.3 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Cooley Godward LLP, dated as of the
Closing Date, in a form reasonably acceptable to the Company and its
counsel;
(b) a certificate executed on behalf of Parent by its President
or its Chief Financial Officer to the effect that, as of the Effective
Time, each of the conditions set forth in Section 7.1 and 7.2 above
has been satisfied with respect to Parent;
(c) a certificate executed by the Secretary or Assistant
Secretary of Parent certifying: (1) resolutions duly adopted by the
Board of Directors of Parent authorizing the execution of this
Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby; and (2)
the incumbency of the officers of Parent executing this Agreement and
all agreements and documents contemplated hereby;
(d) a certificate executed on behalf of Merger Sub by its
President or its Chief Financial Officer to the effect that, as of the
Effective Time, each of the conditions set forth in Section 7.1 and
7.2 above has been satisfied with respect to Merger Sub;
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(e) the Registration Rights Agreement, in the form of Exhibit F,
executed by Parent; and
(f) a certificate executed by the Secretary or Assistant
Secretary of Merger Sub certifying: (1) resolutions duly adopted by
the Board of Directors and the sole stockholder of Merger Sub
authorizing the execution of this Agreement and the execution,
performance and delivery of all agreements, documents and transactions
contemplated hereby; and (2) the incumbency of the officers of Merger
Sub executing this Agreement and all agreements and documents
contemplated hereby.
7.4 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
7.5 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement by Parent
shall have been obtained and shall be in full force and effect.
7.7 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened
to commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the Merger or seeking to prohibit
or limit the exercise by Parent of any material right pertaining to its
ownership of stock of the Surviving Corporation.
7.8 GOVERNMENTAL APPROVALS. Other than the filings contemplated in
Section 2.21, all approvals of government and government agencies necessary to
consummate the transactions hereunder shall have been received, the absence of
which would have the effect of making the Merger illegal or otherwise
prohibiting the consummation of the Merger.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become
impossible (other than as a result of any failure on the part of
Parent or Merger Sub to comply with or perform any covenant or
obligation of Parent or Merger Sub set forth in this Agreement);
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(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the
Company to comply with or perform any covenant or obligation set forth
in this Agreement or in any other agreement or instrument delivered to
Parent);
(c) by Parent, if Company shall materially breach any of its
representations, warranties or obligationS hereunder and such breach
shall not have been cured within ten calendar days of receipt by
Company of written notice of such breach, provided that Parent is not
in material breach of any of its representations, warranties or
obligations hereunder, and provided further, that no cure period shall
be required for a breach which by its nature cannot be cured;
(d) by Company, if Parent shall materially breach any of its
representations, warranties or obligations hereunder and such breach
shall not have been cured within ten calendar days following receipt
by Parent of written notice of such breach, provided that Company is
not in material breach of any of its representations, warranties or
obligations hereunder, and provided further, that no cure period shall
be required for a breach which by its nature cannot be cured;
(e) by Parent if the Closing has not taken place on or before
August 31, 1999 (other than as a result of any failure on the part of
Parent to comply with or perform any covenant or obligation of Parent
set forth in this Agreement);
(f) by the Company if the Closing has not taken place on or
before August 31, 1999 (other than as a result of the failure on the
part of the Company to comply with or perform any covenant or
obligation set forth in this Agreement or in any other agreement or
instrument delivered to Parent); or
(g) by the mutual consent of Parent and the Company.
(h) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(i) by the Company if the Parent Average Stock Price as of the
Scheduled Closing Time is less than $7.00.
8.2 TERMINATION PROCEDURES. If Parent wishes to terminate this
Agreement pursuant to Section 8.1(a) or Section 8.1(c), Parent shall deliver to
the Company a written notice stating that Parent is terminating this Agreement
and setting forth a brief description of the basis on which Parent is
terminating this Agreement. If the Company wishes to terminate this Agreement
pursuant to Section 8.1(b) or Section 8.1(d), the Company shall deliver to
Parent a written notice stating that the Company is terminating this Agreement
and setting forth a brief description of the basis on which the Company is
terminating this Agreement.
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8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1 and 8.2, all further obligations of the parties under this Agreement
shall terminate; provided, however, that: (a) neither the Company nor Parent
shall be relieved of any obligation or liability arising from any prior breach
by such party of any provision of this Agreement; (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Section 10; and (c) the parties shall, in all events, remain bound by and
continue to be subject to Section 5.5.
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Company
(including the representations and warranties set forth in Section 2) shall
survive the Closing and shall expire fifteen months after the Closing Date;
provided, however, that if, at any time prior to the fifteenth month following
the Closing Date, any Indemnitee (acting in good faith) delivers to the
Securityholders' Agent a written notice alleging the existence of an inaccuracy
in or a breach of any of the representations and warranties made by the Company
(and setting forth in reasonable detail the basis for such Indemnitee's belief
that such an inaccuracy or breach may exist) and asserting a claim for recovery
under Section 9.2 in accordance with the Escrow Agreement based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive past
the fifteen-month period following the Closing until such time as such claim is
fully and finally resolved. All representations and warranties made by Parent
and Merger Sub shall survive the Closing and shall expire nine months after the
Closing Date.
(b) The representations, warranties, covenants and obligations of
the Company (as modified by the Disclosure Schedule delivered as of the date of
this Agreement), and the rights and remedies that may be exercised by the
Indeninitees, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or knowledge of, any
of the Indemnitees or any of their Representatives. The representations and
warranties of the Parent and the rights and remedies that may be exercised by
the Company Shareholders shall not be limited or otherwise affected by or as a
result of the information furnished to, or any investigation made by or
knowledge of, any of the Company Shareholders or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
9.2 INDEMNIFICATION BY COMPANY SHAREHOLDERS.
(a) From and after the Effective Time (but subject to Section
9.1(a)), the Company Shareholders, jointly and severally, shall hold harmless
and indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages that are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or
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indirectly connected with: (i) any inaccuracy in or breach of any representation
or warranty set forth in Section 2 or in the officers' closing certificate
(without giving effect to any "Material Adverse Effect" or other materiality
qualification or any similar qualification contained or incorporated directly or
indirectly in such representation or warranty, but giving effect to any update
to the Disclosure Schedule delivered by the Company to Parent prior to the
Closing); (ii) any breach of any covenant or obligation of the Company
(including the covenants set forth in Sections 4 and 5); (iii) any Excluded
Expenses to the extent not offset as of the Closing against the Aggregate Parent
Share Number pursuant to Section 1.5 above or (iv) any Legal Proceeding relating
to any inaccuracy or breach or expense of the type referred to in clause "(i)",
(ii) or "(iii)" above (including any Legal Proceeding commenced by any
Indemnitee for the purpose of enforcing any of its rights under this Section 9,
subject to the provisions of the Escrow Agreement).
(b) The Company Shareholders acknowledge and agree that, if the
Surviving Corporation suffers, incurs or otherwise becomes subject to any
Damages as a result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
9.3 THRESHOLD; CEILING.
(a) The Company Shareholders shall not be required to make any
indemnification payment pursuant to Section 9.2(a) until such time as the total
amount of all Damages (including the Damages arising from such inaccuracy or
breach and all other Damages arising from any other inaccuracies in or breaches
of any representations or warranties) that have been directly or indirectly
suffered or incurred by any one or more of the Indemnitees, or to which any one
or more of the Indemnitees has or have otherwise become subject, exceeds
$150,000 in the aggregate. If the total amount of such Damages exceeds $150,000,
then the Indemnitees shall be entitled to be indemnified against and compensated
and reimbursed for all of such Damages. The provisions of this Section 9.3(a)
shall not apply to any claims made by any Indemnitee regarding reimbursement of
costs incurred in connection with (i) Excluded Expenses and (ii) the termination
of any Company employee prior to the Effective Time.
(b) With the exception of claims based upon fraud, the maximum
liability of each Company Shareholder under Section 9.2(a) shall be equal to the
value of the shares of Parent Common Stock placed in escrow by such Company
Shareholders pursuant to Section 1.8 of this Agreement determined in accordance
with the terms of the Escrow Agreement.
9.4 EXCLUSIVE REMEDY. With the exception of claims based upon fraud,
from and after the Closing, recourse of Parent to the shares of Parent Common
Stock held in escrow pursuant to the Escrow Agreement shall be the sole and
exclusive remedy of Parent and the other Indemnitees for Damages for any
matters covered by this Article 9.
9.5 NO CONTRIBUTION. Each Company Shareholder waives, and acknowledges
and agrees that he shall not have and shall not exercise or assert (or attempt
to exercise or assert), any
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right of contribution, right of indemnity or other right or remedy against the
Suviving Corporation in connection with any indemnification obligation or any
other liability to which he may become subject under or in connection with this
Agreement or the officers' closing certificate.
9.6 INTEREST. Any Company Shareholder who is required to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9 and
in accordance with the Escrow Agreement with respect to any Damages shall also
be liable to such Indemnitee for interest on the amount of such Damages (for the
period commencing as of the date on which such Company Shareholder first
received notice of a claim for recovery by such Indemnitee and ending on the
date on which the liability of such Company Shareholder to such Indemnitee is
fully satisfied by such Shareholder) at a floating rate equal to the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate.
9.7 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Company Shareholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent shall give the Securityholders' Agent prompt notice of commencement of
any such Legal Proceeding. The Parent shall have the right, at its election, to
proceed with the defense of such claim or Legal Proceeding on its own, provided
that, the Company Shareholders shall have the right at their own expense to
participate in, but not control, such defense. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such claim
or Legal Proceeding shall be borne and paid exclusively by the Company
Shareholders;
(b) each Company Shareholder shall make available to Parent any
documents and materials in his possession or control that may be
necessary to the defense of such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the
Securityholders' Agent (as defined in Section 10.1); provided,
however, that such consent shall not be unreasonably withheld.
9.8 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No
Indemnitee (other than Parent or any successor thereto or assign thereof) shall
be permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless Parent (or any successor thereto or assign thereof)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
10. MISCELLANEOUS PROVISIONS
10.1 SECURITYHOLDERS' AGENT. In the event that the Merger is approved,
effective upon such vote and without any further act of any shareholder, the
Company Shareholders shall be deemed to have approved, among other matters, the
indemnification and escrow terms set forth
47.
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in Section 9, the Working Capital Adjustment provisions of Section 1.11 hereof,
the terms of the Escrow Agreement and the terms of the Registration Rights
Agreement, and shall irrevocably appoint Eric DiBenedetto as their agent for all
purposes in connection therewith (the "Securityholders' Agent"), including to
give and receive notices and communications, to authorize delivery to Parent of
Parent Common Stock, cash or other property from the Escrow Fund, to object to
such deliveries, to agree to, negotiate, enter into settlements and compromises
of, and demand dispute resolution pursuant to the Escrow Agreement and comply
with orders of courts and awards of arbitrators with respect to indemnification
claims, and to take all actions necessary or appropriate in the judgment of the
Securityholders' Agent for the accomplishment of the foregoing. Eric DiDenedetto
hereby accepts his appointment as the Securityholders' Agent. Parent shall be
entitled to deal exclusively with the Securityholders' Agent on all matters
relating to Section 9, and shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Company Shareholder by the Securitvholders'
Agent (including, without limitation, the execution of the Escrow Agreement and
the Registration Rights Agreement on behalf of the Company Shareholders) and on
any other action taken or purported to be taken on behalf of any Company
Shareholder by the Securityholders' Agent, as fully binding upon such Company
Shareholder. If the Securityholders' Agent shall die, become disabled or
otherwise be unable to fulfill his responsibilities as agent of the Company
Shareholders, then the Company Shareholders shall, in accordance with the Escrow
Agreement, appoint a successor agent and, promptly thereafter, shall notify
Parent of the identity of such successor. Any such successor shall become the
"Securityholders' Agent" for purposes of Section 9 and this Section 10.1. If for
any reason there is no Securityholders' Agent at any time, all references herein
to the Securityholders' Agent shall be deemed to refer to the Company
Shareholders.
10.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
10.3 FEES AND EXPENSES. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Company's business (and the furnishing of information to Parent
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (c) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated by this Agreement and the obtaining of any Consent
required to be obtained in connection with any of such transactions, and (d) the
consummation of the Merger; provided, however, that upon the successful Closing
of the transactions contemplated by this Agreement, Parent agrees to pay
transaction expenses of the Company Shareholders (without any adjustment to the
purchase price) in an amount equal to the lesser of (i) fifty percent (50%) of
the legal and accounting fees and expenses incurred by the Company (exclusive of
any fees and expenses paid to William
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Blair & Company) or (ii) $50,000. Transaction fees and expenses not paid by
Parent in accordance with the preceding proviso shall be "Excluded Expenses." If
Excluded Expenses are not paid in cash by the Company Shareholders and are paid
by the Parent or the Company, the amount of such Excluded Expenses (i) shall
reduce the Aggregate Parent Share Number in accordance with Section 1.5 hereof
or (ii) shall be paid out of the Escrow Fund.
10.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
IF TO PARENT:
MessageMedia, Inc.
6060 Spine Road
Boulder, Colorado 80301
(303) 440-0303 (fax)
Attention: Chief Executive Officer
WITH A COPY TO:
Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, Colorado 80302
(303) 546-4099 (fax)
Attention: James H. Carroll, Esq.
IF TO THE COMPANY:
Decisive Technology Corporation
1991 Landings Drive
Mountain View, CA 94043
(650) 237-4411 (fax)
Attention: Patrick B. McNenny
WITH A COPY TO:
Venture Law Group
2775 Sand Hill Road
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Menlo Park, CA 94025
(650) 233-8386 (fax)
Attention: Mark A. Medearis, Esq.
IF TO THE SECURITYHOLDERS' AGENT:
Eric DiBenedetto
Convergence Partners
3000 Sand Hill Road
Building 2, Suite 235
Menlo Park, CA 94025
(650) 854-3015 (fax)
WITH A COPY TO:
Venture Law Group
2775 Sand Hill Road
Menlo Park, CA 94025
(650) 233-8386 (fax)
Attention: Mark A. Medearis, Esq.
10.6 CONFIDENTIALITY. Without limiting the generality of anything
contained in Section 5.5, on and at all times after the Closing Date, the
Company shall keep confidential, and shall not use or disclose to any other
Person, any non-public document or other non-public information in the Company's
possession that relates to the business of the Company or Parent.
10.7 TIME OF THE ESSENCE. Time is of the essence to this Agreement.
10.8 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.10 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
Colorado (without giving effect to principles of conflicts of laws), except that
the Merger and matters of corporate governance shall be governed by the laws of
Delaware or California, as appropriate.
10.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Company Shareholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); Parent and its successors and assigns
(if any); and Merger Sub and its successors and assigns (if any). This Agreement
shall inure to the benefit of: the Company; the Company Shareholders (to the
extent set forth in Section 1.5); the holders of assumed Company Options (to the
extent set forth
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in Section 1.6); Parent; Merger Sub; the other Indemnitees (subject to Section
9.8); and the respective successors and assigns (if any) of the foregoing.
Parent may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Section 9 and the Escrow Agreement),
in whole or in part, to any other Person without obtaining the consent or
approval of any other party hereto or of any other Person.
10.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or threatened
breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (b) an injunction restraining such breach or threatened
breach.
10.13 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this Agreement
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except
in the specific instance in which it is given.
10.14 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.15 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.16 PARTIES IN INTEREST. Except for the provisions of Sections 1.5,
1.6, 1.12 and 9, none of the provisions of this Agreement is intended to provide
any rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.17 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the
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parties relating to the subject matter hereof and thereof; provided, however,
that the nondisclosure agreements executed on behalf of Parent and the Company
on February 23, 1999 and May 11, 1999 shall not be superseded by this Agreement
and shall remain in effect in accordance with their terms until the earlier of
(a) the Effective Time, or (b) the date on which such nondisclosure agreements
are terminated in accordance with their terms.
10.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
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The parties hereto have caused this Agreement to be executed and
delivered as of July 27, 1999.
MESSAGEMEDIA, INC.,
a Delaware corporation
By:
--------------------------------
Print name:
Title:
MM2 ACQUISITION CORP.,
a Delaware corporation
By:
--------------------------------
Print name:
Title:
DECISIVE TECHNOLOGY
CORPORATION
a Delaware corporation
By:
--------------------------------
Print name:
Title:
SECURITYHOLDERS' AGENT
By:
--------------------------------
Eric DiBenedetto,
as Securityholders' Agent
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACCOUNTS RECEIVABLE. "Accounts Receivable" shall mean as of any date
any trade accounts receivable, notes receivable, bid or performance deposits,
employee advances and other miscellaneous receivables associated with the
Company's business as of such date, other than from an affiliate of the Company.
ACCRUED EXPENSES. "Accrued Expenses" shall mean as of any date accrued
payroll and benefits and other accrued expenses as would appear on a balance
sheet of the Company as of such date prepared in accordance with GAAP
consistently applied, including those described in Schedule 1.2 but excluding
any amounts payable to affiliates of the Company and any compensation to
employees or others contingent upon or payable as a result of the transactions
contemplated hereby.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of the Company's business or assets;
(b) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of the Company (other than common stock
issued to employees of the Company, upon exercise of Company Options
or otherwise, in routine transactions in accordance with the Company's
past practices), (ii) any option, call, warrant or right (whether or
not immediately exercisable) to acquire any capital stock or other
equity security of the Company (other than stock options granted to
employees of the Company in routine transactions in accordance with
the Company's past practices), or (iii) any security, instrument or
obligation that is or may become convertible into or exchangeable for
any capital stock or other equity security of the Company; or
(c) any merger, consolidation, business combination,
reorganization or similar transaction involving the Company.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than an offer or proposal by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
CLOSING INVENTORY. "Closing Inventory" shall mean all Inventory
relating to the business of the Company on the Closing Date.
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COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party; (b) by which the Company or any of its assets is
or may become bound or under which the Company has, or may become subject to,
any obligation; or (c) under which the Company has or may acquire any right or
interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Parent on behalf of the
Company.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXCLUDED EXPENSES. "Excluded Expenses" shall mean (i) any fees and
expenses payable to William Blair & Company (including but not limited to those
fees described in Section 1.12 hereof), (ii) any fees and expenses payable to
any other purchaser representative, financial advisor, investment banker, broker
or finder, and (iii) any other transaction fees and expenses of the Company and
the Company Shareholders (other than the amounts agreed to be paid by Parent,
not to exceed $50,000 pursuant to Section 10.3 hereof).
FULLY DILUTED NUMBER OF COMPANY SHARES. "Fully Diluted Number of
Company Shares" means the sum of (i) the aggregate number of shares of capital
stock of the Company
2.
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outstanding immediately prior to the Effective Time, plus (ii) the aggregate
number of shares of capital stock of the Company (if any) issuable upon the
exercise of any option or other right to acquire capital stock of the Company,
or the conversion of any convertible securities, outstanding immediately prior
to the Effective Time. The Fully Diluted Number of Company Shares shall include
all stock options held by David Norman as of the date of this Agreement.
GAAP. "GAAP" shall mean generally accepted accounting principles in the
United States of America.
GOVERNMENT AUTHORIZATION. "Government Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENT CONTRACT. "Government Contract" shall mean any prime
contract, subcontract, letter contract, purchase order or delivery order
executed or submitted to or on behalf of any Governmental Body or any prime
contractor or higher-tier subcontractor, or under which any Governmental Body or
any such prime contractor or subcontractor otherwise has or could be reasonably
expected to acquire any right or interest.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a)
Parent; (b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above.
INVENTORY. "Inventory" shall mean the inventory of the Company,
including raw materials, supplies, work in process and finished goods.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
3.
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MAJOR INVESTORS. "Major Investors" shall mean those individuals and
entities identified on Exhibit B-2.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on a party if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or in the
officers' closing certificate but for the presence of "Material Adverse Effect"
or other materiality qualifications, or any similar qualifications, in such
representations and warranties) would have a material adverse effect on a
party's business, condition, assets, liabilities, operations, financial
performance or prospects.
PARENT AVERAGE STOCK PRICE. "Parent Average Stock Price" shall mean the
average of the closing sales price of a share of Parent Common Stock as
reported on the Nasdaq National Market for each of the twenty consecutive
trading days ending on and including the trading day immediately preceding the
Scheduled Closing Time.
PAYABLES. "Payables" as of any date shall mean any of the accounts
payable associated with the Company as of such date in accordance with GAAP
consistently applied, other than to an affiliate of the Company.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PREPAID EXPENSES. "Prepaid Expenses" as of any date shall mean payments
made by Company with respect to its business, other than to an affiliate of the
Company, which constitute prepaid expenses of the Company in accordance with
GAAP consistently applied.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
RESTRICTED RESALE STOCK. "Restricted Resale Stock" shall mean shares of
Parent Common Stock issued as consideration for the Merger that are subject to
restrictions on resale in accordance with the following volume limitations: (i)
upon the effectiveness of a registration statement registering such shares of
Parent Common Stock, any Person holding Restricted Resale Stock may sell up to
4.5% of the shares of Parent Common Stock issuable to such Person pursuant to
this Agreement; (ii) during period between three months and six months following
the Closing Date any Person holding Restricted Resale Stock may sell up to an
additional 15% (aggregating 19.5%) of the shares of Parent Common Stock issuable
to such Person pursuant to this Agreement; (iii) during period between six
months and nine months following the Closing Date, any Person holding Restricted
Resale Stock may sell up to an additional 18% (aggregating
4.
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37.5%) of the shares of Parent Common Stock issuable to such Person pursuant to
this Agreement; (iv) during period between nine months and twelve months
following the Closing Date, any Person holding Restricted Resale Stock may sell
up to an additional 18% (aggregating 55.5%) of the shares of Parent Common Stock
issuable to such Person pursuant to this Agreement; (v) during period between
twelve months and fifteen months following the Closing Date, any Person holding
Restricted Resale Stock may sell up to an additional 20% (aggregating 75.5%) of
the shares of Parent Common Stock issuable to such Person pursuant to this
Agreement; and (vi) during period following the fifteenth month after the
Closing Date, any Person holding Restricted Resale Stock may sell up to an
additional 24.5% (aggregating 100%) of the shares of Parent Common Stock
issuable to such Person pursuant to this Agreement; provided, however, in no
event may any Person sell more than the total number of shares that they hold
that are vested at the time of such sale; provided, further, no Person may sell
any shares that are otherwise subject to other resale restrictions where such
sale would be in violation of such other resale restrictions. Except for (i) the
Parent Common Stock issued to William Blair & Company and (ii) the Parent Common
Stock issued to the holders of warrants referred to in Section 5.4 hereof, all
shares eligible for registration on the above-mentioned registration statement
shall be deemed Restricted Resale Stock.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of the outstanding
shares of Company Common Stock on terms that the board of directors of the
Company determines, in its reasonable judgment, based upon the written advice of
its financial advisor, to be more favorable to the Company's shareholders than
the terms of the Merger; provided, however, that any such offer shall not be
deemed to be a "Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely to be
obtained by such third party on a timely basis.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
5.
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EXHIBIT B-1
FORM OF VOTING AGREEMENTS
1.
<PAGE>
VOTING AGREEMENT
THIS VOTING AGREEMENT is entered into as of July 27, 1999, by and
between MessageMedia, Inc., a Delaware corporation ("Parent"), and __________
("Stockholder").
RECITALS
A. Parent, MM2 Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and Decisive Technology Corporation,
a California corporation (the "Company"), are entering into an Agreement and
Plan of Merger and Reorganization of even date herewith (the "Reorganization
Agreement") which provides (subject to the conditions set forth therein) for the
merger of Merger Sub into the Company (the "Merger").
B. In order to induce Parent and Merger Sub to enter into the
Reorganization Agreement, Stockholder is entering into this Voting Agreement.
AGREEMENT
The parties to this Voting Agreement, intending to be legally bound,
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Voting Agreement:
(a) "COMPANY CAPITAL STOCK" shall mean any of the following (i) the
common stock, par value $0.001 per share, of the Company, (ii) the Series A
preferred stock, par value $0.01 per share, of the Company, (iii) the Series B
preferred stock, par value $0.01 per share, of the Company, and (iv) the Series
C preferred stock, par value $0.01 per share, of the Company.
(b) "EXPIRATION DATE" shall mean the earlier of (i) the date upon which
the Reorganization Agreement is validly terminated, or (ii) the date upon which
the Merger becomes effective in accordance with the terms and conditions of the
Reorganization Agreement.
(c) Stockholder shall be deemed to "OWN" or to have acquired
"OWNERSHIP" of a security if Stockholder: (i) is the record owner of such
security; or (ii) is the "beneficial owner" (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) of such security.
(d) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental authority.
(e) "SUBJECT SECURITIES" shall mean: (i) all securities of the Company
(including all shares of Company Capital Stock and all options, warrants and
other rights to
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acquire shares of Company Capital Stock) Owned by Stockholder as of the date of
this Agreement; and (ii) all additional securities of the Company (including all
additional shares of Company Capital Stock and all additional options, warrants
and other rights to acquire shares of Company Capital Stock) of which
Stockholder acquires Ownership during the period from the date of this Agreement
through the Expiration Date.
(f) A Person shall be deemed to have a effected a "TRANSFER" of a
security if such Person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security; or (ii) enters into an agreement or commitment
contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
SECTION 2. TRANSFER OF SUBJECT SECURITIES
2.1 TRANSFEREE OF SUBJECT SECURITIES TO BE BOUND BY THIS AGREEMENT.
Stockholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Stockholder shall not cause or permit any
Transfer of any of the Subject Securities to be effected unless each Person to
which any of such Subject Securities, or any interest in any of such Subject
Securities, is or may be transferred shall have: (a) executed a counterpart of
this Voting Agreement and a proxy in the form attached hereto as Exhibit A (with
such modifications as Parent may reasonably request); and (b) agreed to hold
such Subject Securities (or interest in such Subject Securities) subject to all
of the terms and provisions of this Voting Agreement.
2.2 TRANSFER OF VOTING RIGHTS. Stockholder agrees that, during the
period from the date of this Voting Agreement through the Expiration Date,
Stockholder shall ensure that: (a) none of the Subject Securities is deposited
into a voting trust; and (b) no proxy is granted, and no voting agreement or
similar agreement is entered into, with respect to any of the Subject
Securities.
SECTION 3. VOTING OF SHARES
3.1 VOTING AGREEMENT. Stockholder agrees that, during the period from
the date of this Voting Agreement through the Expiration Date:
(a) at any meeting of stockholders of the Company, however
called, Stockholder shall (unless otherwise directed in writing by
Parent) cause all outstanding shares of Company Capital Stock that are
Owned by Stockholder as of the record date fixed for such meeting to
be voted in favor of the approval and adoption of the Reorganization
Agreement and the approval of the Merger, and in favor of each of the
other actions contemplated by the Reorganization Agreement (including,
without limitation, the Charter Amendment); and
(b) in the event written consents are solicited or otherwise
sought from stockholders of the Company with respect to the approval
or adoption of the Reorganization Agreement, with respect to the
approval of the Merger or with respect to any of the other actions
contemplated by the Reorganization Agreement (including,
2
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without limitation, the Charter Amendment), Stockholder shall (unless
otherwise directed in writing by Parent) cause to be executed, with
respect to all outstanding shares of Company Capital Stock that are
Owned by Stockholder as of the record date fixed for the consent to
the proposed action, a written consent or written consents to such
proposed action.
3.2 PROXY; FURTHER ASSURANCES.
(a) Contemporaneously with the execution of this Voting Agreement:
(i) Stockholder shall deliver to Parent a proxy in the form attached to this
Voting Agreement as Exhibit A, which shall be irrevocable to the fullest extent
permitted by law, with respect to the shares referred to therein (the "Proxy");
and (ii) Stockholder shall cause to be delivered to Parent an additional proxy
(in the form attached hereto as Exhibit A) executed on behalf of the record
owner of any outstanding shares of Company Capital Stock that are owned
beneficially (within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934), but not of record, by Stockholder.
(b) Stockholder shall, at his own expense, perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Parent the power to carry out and give effect to the
provisions of this Voting Agreement.
SECTION 4. WAIVER OF APPRAISAL RIGHTS
Stockholder hereby irrevocably and unconditionally waives, and agrees
to cause to be waived and to prevent the exercise of, any rights of appraisal,
any dissenters' rights and any similar rights relating to the Merger or any
related transaction that Stockholder may have by virtue of the ownership of any
outstanding shares of Company Capital Stock Owned by Stockholder.
SECTION 5. NO SOLICITATION
Stockholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Stockholder shall not, directly or
indirectly, and Stockholder shall ensure that such Stockholder's Representatives
(as defined in the Reorganization Agreement) do not, directly or indirectly: (i)
solicit, initiate, encourage or induce the making, submission or announcement of
any Acquisition Proposal (as defined in the Reorganization Agreement) or take
any action that could reasonably be expected to lead to an Acquisition Proposal;
(ii) furnish any information regarding the Company or any direct or indirect
subsidiary of the Company to any Person in connection with or in response to an
Acquisition Proposal or potential Acquisition Proposal; or (iii) engage in
discussions with any Person with respect to any Acquisition Proposal.
Stockholder shall immediately cease and discontinue, and Stockholder shall
ensure that his Representatives immediately cease and discontinue, any existing
discussions with any Person that relate to any Acquisition Proposal.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
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Stockholder hereby represents and warrants to Parent as follows:
6.1 AUTHORIZATION, ETC. Stockholder has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Voting
Agreement and the Proxy and to perform his obligations hereunder and thereunder.
This Voting Agreement and the Proxy have been duly executed and delivered by
Stockholder and constitute legal, valid and binding obligations of Stockholder,
enforceable against Stockholder in accordance with their terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
6.2 NO CONFLICTS OR CONSENTS.
(a) The execution and delivery of this Voting Agreement and the
Proxy by Stockholder do not, and the performance of this Voting Agreement and
the Proxy by Stockholder will not: (i) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to Stockholder or by which
Stockholder or any of Stockholder's properties is or may be bound or affected;
or (ii) result in or constitute (with or without notice or lapse of time) any
breach of or default under, or give to any other Person (with or without notice
or lapse of time) any right of termination, amendment, acceleration or
cancellation of, or result (with or without notice or lapse of time) in the
creation of any encumbrance or restriction on any of the Subject Securities
pursuant to, any contract to which Stockholder is a party or by which
Stockholder or any of his affiliates or properties is or may be bound or
affected.
(b) The execution and delivery of this Voting Agreement and the
Proxy by Stockholder do not, and the performance of this Voting Agreement and
the Proxy by Stockholder will not, require any consent or approval of any
Person.
6.3 TITLE TO SECURITIES. As of the date of this Voting Agreement: (a)
Stockholder holds of record (free and clear of any encumbrances or restrictions)
the number of outstanding shares of Company Capital Stock set forth under the
heading "Shares Held of Record" on the signature page hereof; (b) Stockholder
holds (free and clear of any encumbrances or restrictions) the options, warrants
and other rights to acquire shares of Company Capital Stock set forth under the
heading "Options and Other Rights" on the signature page hereof; (c) Stockholder
Owns the additional securities of the Company set forth under the heading
"Additional Securities Beneficially Owned" on the signature page hereof; and (d)
Stockholder does not directly or indirectly Own any shares of capital stock or
other securities of the Company, or any option, warrant or other right to
acquire (by purchase, conversion or otherwise) any shares of capital stock or
other securities of the Company, other than the shares and options, warrants and
other rights set forth on the signature page hereof.
6.4 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in this Voting Agreement are accurate in all respects as of the date
of this Voting Agreement, will be accurate in all respects at all times through
the Expiration Date and will be accurate in all respects as of the date of the
consummation of the Merger as if made on that date.
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<PAGE>
SECTION 7. MISCELLANEOUS
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by Stockholder in
this Voting Agreement shall survive any termination of the Reorganization
Agreement.
7.2 INDEMNIFICATION. Stockholder shall hold harmless and indemnify
Parent and Parent's affiliates from and against, and shall compensate and
reimburse Parent and Parent's affiliates for, any loss, damage, claim,
liability, fee (including attorneys' fees), demand, cost or expense (regardless
of whether or not such loss, damage, claim, liability, fee, demand, cost or
expense relates to a third-party claim) that is directly or indirectly suffered
or incurred by Parent or any of Parent's affiliates, or to which Parent or any
of Parent's affiliates otherwise becomes subject, and that arises directly or
indirectly from, or relates directly or indirectly to, (a) any inaccuracy in or
breach of any representation or warranty contained in this Voting Agreement, or
(b) any failure on the part of Stockholder to observe, perform or abide by, or
any other breach of, any restriction, covenant, obligation or other provision
contained in this Voting Agreement or in the Proxy.
7.3 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Voting Agreement shall be paid by the party
incurring such costs and expenses.
7.4 NOTICES. Any notice or other communication required or permitted to
be delivered to either party under this Voting Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other party):
if to Stockholder:
at the address set forth below Stockholder's signature on the
signature page hereof
if to Parent:
MessageMedia, Inc.
6060 Spine Road
Boulder, Colorado 80301
(303) 440-0303 (fax)
Attention: Chief Executive Officer
7.5 SEVERABILITY. If any provision of this Voting Agreement or any part
of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable
5
<PAGE>
to the fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Voting Agreement. Each
provision of this Voting Agreement is separable from every other provision of
this Voting Agreement, and each part of each provision of this Voting Agreement
is separable from every other part of such provision.
7.6 ENTIRE AGREEMENT. This Voting Agreement, the Proxy and any other
documents delivered by the parties in connection herewith constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto. No addition to or modification of any provision of
this Voting Agreement shall be binding upon either party unless made in writing
and signed by both parties.
7.7 ASSIGNMENT; BINDING EFFECT. Except as provided herein, neither this
Voting Agreement nor any of the interests or obligations hereunder may be
assigned or delegated by Stockholder and any attempted or purported assignment
or delegation of any of such interests or obligations shall be void. Subject to
the preceding sentence, this Voting Agreement shall be binding upon Stockholder
and his heirs, estate, executors, personal representatives, successors and
assigns, and shall inure to the benefit of Parent and its successors and
assigns. Without limiting any of the restrictions set forth in Section 2 or
elsewhere in this Voting Agreement, this Voting Agreement shall be binding upon
any Person to whom any Subject Securities are transferred. Nothing in this
Voting Agreement is intended to confer on any Person (other than Parent and its
successors and assigns) any rights or remedies of any nature.
7.8 SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Voting Agreement or
the Proxy was not performed in accordance with its specific terms or was
otherwise breached. Stockholder agrees that, in the event of any breach or
threatened breach by Stockholder of any covenant or obligation contained in this
Voting Agreement or in the Proxy, Parent shall be entitled (in addition to any
other remedy that may be available to it, including monetary damages) to seek
and obtain (a) a decree or order of specific performance to enforce the
observance and performance of such covenant or obligation, and (b) an injunction
restraining such breach or threatened breach. Stockholder further agrees that
neither Parent nor any other Person shall be required to obtain, furnish or post
any bond or similar instrument in connection with or as a condition to obtaining
any remedy referred to in this Section 7.8, and Stockholder irrevocably waives
any right he may have to require the obtaining, furnishing or posting of any
such bond or similar instrument.
7.9 NON-EXCLUSIVITY. The rights and remedies of Parent under this
Voting Agreement are not exclusive of or limited by any other rights or remedies
which it may have, whether at law, in equity, by contract or otherwise, all of
which shall be cumulative (and not alternative). Without limiting the generality
of the foregoing, the rights and remedies of Parent under this Voting Agreement,
and the obligations and liabilities of Stockholder under this Voting
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Agreement, are in addition to their respective rights, remedies, obligations and
liabilities under common law requirements and under all applicable statutes,
rules and regulations.
7.10 GOVERNING LAW; VENUE.
(a) This Voting Agreement and the Proxy shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
(b) STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS VOTING AGREEMENT OR THE
PROXY OR THE ENFORCEMENT OF ANY PROVISION OF THIS VOTING AGREEMENT OR THE PROXY.
7.11 COUNTERPARTS. This Voting Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.
7.12 CAPTIONS. The captions contained in this Voting Agreement are for
convenience of reference only, shall not be deemed to be a part of this Voting
Agreement and shall not be referred to in connection with the construction or
interpretation of this Voting Agreement.
7.13 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Voting Agreement or the enforcement of any provision of this
Voting Agreement is brought against Stockholder, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
7.14 WAIVER. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Voting Agreement, and no delay on the part
of Parent in exercising any power, right, privilege or remedy under this Voting
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. Parent shall not be deemed to have waived any claim
available to Parent arising out of this Voting Agreement, or any power, right,
privilege or remedy of Parent under this Voting Agreement, unless the waiver of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of Parent; and any such
waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
7.15 CONSTRUCTION.
(a) For purposes of this Voting Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
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(b) The parties agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Voting Agreement.
(c) As used in this Voting Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this Voting
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Voting Agreement and Exhibits to this Voting Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Parent and Stockholder have caused this Voting
Agreement to be executed as of the date first written above.
MessageMedia, Inc.
Print Name:
-----------------------------
Title:
----------------------------------
Signature:
------------------------------
Shareholder
Signature:
------------------------------
Print Signatory Name:
-------------------
Shareholder Name:
-----------------------
Address:
---------------------------
Facsimile:
-------------------------
<TABLE>
<CAPTION>
Shares Held of Record Options and Other Rights Additional Securities Beneficially
- --------------------- ------------------------ ----------------------------------
Owned
-----
<S> <C> <C>
</TABLE>
9
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EXHIBIT A
FORM OF IRREVOCABLE PROXY
The undersigned stockholder of DECISIVE TECHNOLOGY CORPORATION a
California corporation (the "Company"), hereby irrevocably (to the fullest
extent permitted by law) appoints and constitutes Larry Jones, Mary Beth Loesch
and MESSAGEMEDIA, INC., a Delaware corporation ("Parent"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the outstanding shares of capital stock of the Company owned of record by
the undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy, and (ii) any and all other shares of capital stock of
the Company which the undersigned may acquire on or after the date hereof. (The
shares of the capital stock of the Company referred to in clauses "(i)" and
"(ii)" of the immediately preceding sentence are collectively referred to as the
"Shares.") Upon the execution hereof, all prior proxies given by the undersigned
with respect to any of the Shares are hereby revoked, and the undersigned agrees
that no subsequent proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with the Voting Agreement, dated as of the date hereof, between
Parent and the undersigned (the "Voting Agreement"), and is granted in
consideration of Parent entering into the Agreement and Plan of Merger and
Reorganization, dated as of the date hereof, among Parent, MM2 Acquisition Corp.
and the Company (the "Reorganization Agreement").
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Reorganization Agreement or the effective time
of the merger contemplated thereby (the "Merger") at any meeting of the
stockholders of the Company, however called, or in connection with any
solicitation of written consents from stockholders of the Company, in favor of
the approval and adoption of the Reorganization Agreement and the approval of
the Merger, and in favor of each of the other actions contemplated by the
Reorganization Agreement (including, without limitation, the Charter Amendment).
The undersigned may vote the Shares on all other matters.
This proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of the undersigned (including any
transferee of any of the Shares).
If any provision of this proxy or any part of any such provision is
held under any circumstances to be invalid or unenforceable in any jurisdiction,
then (a) such provision or part thereof shall, with respect to such
circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof
A-1
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under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this proxy. Each provision
of this proxy is separable from every other provision of this proxy, and each
part of each provision of this proxy is separable from every other part of such
provision.
This proxy shall terminate upon the earlier of the valid termination of
the Reorganization Agreement or the effective time of the Merger.
Dated: July 27, 1999.
-----------------------------------------
Name
-----------------------------------------
Print Name of Signatory
-----------------------------------------
Print Name of Shareholder
Number of shares of common stock of the
Company owned of record as of the date of
this proxy:
-----------------------------------------
A-2
<PAGE>
EXHIBIT B-2
PERSONS TO EXECUTE VOTING AGREEMENTS
Helix Investments
SOFTBANK Ventures
Hanna Capital Management
John Chisholm
Convergence Partners
Partech International
Frank Sammann
1.
<PAGE>
EXHIBIT C
FORM OF CHARTER AMENDMENT
2.
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
DECISIVE TECHNOLOGY CORPORATION
The undersigned, Fran Sammann and Patrick McNenny, hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of this corporation.
TWO: The Articles of Incorporation of this corporation shall be amended
and restated to read in full as follows:
"ARTICLE I
The name of this corporation is Decisive Technology Corporation.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
(A) Classes of Stock. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the corporation is authorized to issue
is sixty-three million (63,000,000) shares. Thirty-eight million (38,000,000)
shares shall be Common Stock, par value $0.01 per share, and twenty-five million
(25,000,000) shares shall be Preferred Stock, par value $0.01 per share.
(B) Rights, Preferences, Privileges and Restrictions of Preferred
Stock. The Preferred Stock authorized by these Restated Articles of
Incorporation may be issued from time to time in series. The first series of
Preferred Stock shall be designated Series A Preferred Stock and shall consist
of 1,000,000 shares. The second series of Preferred Stock shall be designated
Series B Preferred Stock and shall consist of 3,000,000 shares. The third series
of Preferred Stock shall be designated Series C Preferred Stock and shall
consist of 21,000,000 shares. The rights, preferences, privileges and
restrictions granted to and imposed on the Series A Preferred Stock, the Series
B Preferred Stock and the Series C Preferred Stock are as set forth below in
this Article III(B).
<PAGE>
Except as to the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock, and except as otherwise provided in the
Restated Articles of Incorporation, the Board of Directors is hereby authorized
to fix or alter the rights, preferences, privileges and restrictions granted to
or imposed upon any wholly unissued additional series of Preferred Stock, and
the number of shares constituting any such series and the designation thereof,
or any of them. The Board of Directors, except as otherwise provided in these
Articles of Incorporation, is also authorized to decrease the number of shares
of any series, excluding the Series A Preferred Stock, the Series B Preferred
Stock, and the Series C Preferred Stock, subsequent to the issuance of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
1. Dividend Provisions. The holders of shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock are
entitled to receive, out of funds legally available therefor, dividends at the
annual rate of $.02 per share for the Series A Preferred Stock per annum, $.18
for the Series B Preferred Stock and $.055 for the Series C Preferred Stock (as
adjusted to reflect stock splits, stock dividends and recapitalizations with
respect to such shares) or, if greater (as determined on an as-converted basis),
an amount equal (as determined on such basis) to that paid on any other
outstanding shares of this corporation, when, as and if declared by the Board of
Directors. Dividends or distributions (other than distributions payable solely
in shares of Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this corporation) may be declared and paid upon shares
of Common Stock in any fiscal year of the corporation only if dividends shall
have been paid on or declared and set apart on all shares of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock at such annual
rate. Dividends shall not be cumulative and no right shall accrue to holders of
shares of Preferred Stock by reason of the fact that dividends on said shares
are not declared in any prior year, nor shall any undeclared or unpaid dividend
bear or accrue interest.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, (i) the holders of Series
A Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of $0.25 for each outstanding share of Series A Preferred Stock (as adjusted to
reflect stock dividends, stock splits and recapitalizations with respect to such
shares) (the "Original Issue Price for Series A Preferred Stock") and an amount
equal to declared but unpaid dividends thereon, (ii) the holders of Series B
Preferred Stock shall be entitled to receive, prior, and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of $2.30 for each outstanding share of Series B Preferred Stock (as adjusted to
reflect stock dividends, stock splits and recapitalizations with respect to such
shares) (the "Original Issue Price for Series B Preferred Stock") and an amount
equal to declared but unpaid dividends
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<PAGE>
thereon, and (iii) the holders of Series C Preferred Stock shall be entitled to
receive, prior, and in preference to any distribution of any of the assets of
this corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of $0.7032 for each outstanding
share of Series C Preferred Stock (as adjusted to reflect stock dividends, stock
splits and recapitalizations with respect to such shares) (the "Original Issue
Price for Series C Preferred Stock") and an amount equal to declared but unpaid
dividends thereon. If, upon the occurrence of such an event, the assets and
property thus distributed among the holders of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be insufficient to
permit the payment to such holders of the full preferential amount, then the
assets and property of the corporation legally available for distribution shall
be distributed ratably among the holders of the Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock in proportion to the aggregate
preferential amounts owed such holders of the outstanding Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock upon a liquidation,
dissolution or winding up the corporation.
(b) After the distribution described in subsection (a) above
has been paid, the remaining assets of the corporation available for
distribution to shareholders shall be distributed ratably among the holders of
Common Stock based on the number of shares of Common Stock held by each.
(c) For purposes of this Section 2, (i) any acquisition of
this corporation by means of merger or other form of corporate reorganization in
which the shareholders of this corporation immediately preceding such merger or
reorganization do not own, directly or indirectly, a majority of the outstanding
shares of the surviving corporation following the closing of such merger or
consolidation or (ii) a sale of all or substantially all of the assets of this
corporation, shall be treated as a liquidation, dissolution or winding up of
this corporation and shall entitle the holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Common Stock to receive
at the closing cash, securities or other property as specified in Sections 2(a)
and 2(b).
(d) Any securities to be delivered to the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and/or Common Stock pursuant to Section 2(c) above shall be valued as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability:
(A) If traded on a securities exchange or the NASDAQ
National Market System, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-day period ending
three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending three (3) days prior to the closing; and
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<PAGE>
(C) If there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of this corporation.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (i)(A), (B)
or (C) to reflect the approximate fair market value thereof, as determined in
good faith by the Board of Directors of this corporation.
(e) In the event the requirements of subsection 2(c) are not
complied with, the corporation shall forthwith either:
(i) cause such closing to be postponed until such time as
the requirements of this Section 2(c) have been complied with, or
(ii) cancel such transaction, in which event the rights,
preferences, privileges and restrictions of the holders of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall
revert to and be the same as such rights, preferences, privileges and
restrictions existing immediately prior to the date of the first notice referred
to in Section 2(f) hereof.
(f) The corporation shall give each holder of record of Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock written
notice of a transaction described in Section 2(c) not later than twenty (20)
days prior to the shareholders' meeting called to approve such transaction, or
twenty (20) days prior to the closing of such transaction, whichever is earlier,
and shall also notify such holders in writing of the final approval of such
transaction. The first of such notices shall describe the material terms and
conditions of the impending transaction and the provisions of Section 2(c), and
the corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty (20)
days after the corporation has given the first notice provided for herein or
sooner than ten (10) days after the corporation has given notice of any material
changes provided for herein; provided, however, that such periods may be
shortened upon the written consent of the holders of a majority of the shares of
Series A Preferred Stock and 75% of the Series B Preferred Stock and Series C
Preferred Stock (consenting together as a class on an as-converted-to-Common
Stock basis) then outstanding.
(g) Notwithstanding anything in Section 2(c), (d), (e) or (f)
to the contrary, in the event of the closing of a transaction on or before
September 30, 1999 with MessageMedia, Inc. pursuant to which the outstanding
securities of the Company shall be exchanged for securities of MessageMedia,
Inc. and the corporation shall become a subsidiary of MessageMedia, Inc. (the
"MM Merger"), any securities received by the holders of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and/or Common Stock
shall be valued as set forth in the Agreement and Plan of Merger and
Reorganization entered into by the corporation and Message Media, Inc. in
connection with the MM Merger (the "MM Merger
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<PAGE>
Agreement"), and the provisions in Section 2(c), (d), (e) and (f) shall not
apply in connection with the MM Merger.
3. Conversion. The holders of the Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share, at the office of this corporation or any transfer agent for such series,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Issue Price for such series by the
Conversion Price at the time in effect for such share. The initial Conversion
Price for each series of Preferred Stock shall be the Original Issue Price for
such series. Any declared but unpaid dividends payable upon the Series A
Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock shall
be paid to the holders thereof within 10 days following conversion of such
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock.
(b) Automatic Conversion. Each share of Series A Preferred
Stock, Series B Preferred Stock, and Series C Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such series of Preferred Stock, immediately upon the
earlier of (i) the consummation of the corporation's sale of its Common Stock in
a bona fide, firm commitment underwriting pursuant to a registration statement
under the Securities Act of 1933, as amended, which results in aggregate gross
cash proceeds to this corporation in excess of $15,000,000 and the public
offering price of which is not less than $5.00 per share (adjusted to reflect
subsequent stock dividends, stock splits or recapitalizations) or (ii)
immediately prior to the closing of the MM Merger.
(c) Mechanics of Conversion. Before any holder of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for such series of Preferred Stock, and
shall give written notice by mail, postage prepaid, to this corporation at its
principal corporate office, stating therein the name or names in which the
certificate or certificates for shares of Common Stock are to be issued. This
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date. If the conversion is in connection with an
underwritten offering of securities registered pursuant to the Securities Act of
1933, as amended, the conversion will be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, unless
otherwise designated in writing by the holders of such Series A
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<PAGE>
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock in which
event the person(s) entitled to receive the Common Stock issuable upon such
conversion of such Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of
securities.
(d) Conversion Price Adjustments of Preferred Stock. The
Conversion Price of the Series B Preferred Stock and Series C Preferred Stock
shall be subject to adjustment from time to time as follows:
(i) (A) If the corporation, at any time or from time to
time after February 27, 1998 (the "Purchase Date"), shall issue any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the Conversion Price for the Series B Preferred Stock or Series C
Preferred Stock in effect immediately prior to the issuance of such Additional
Stock, the Conversion Price for the Series B Preferred Stock or Series C
Preferred Stock, as applicable, in effect immediately prior to each such
issuance shall forthwith be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock which the aggregate consideration received by
the corporation for the total number of shares of Additional Stock so issued
would purchase at such Conversion Price, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of such shares of Additional Stock so issued; provided
that for the purposes of this subsection, all shares of Common Stock issuable
upon conversion of outstanding Preferred Stock shall be deemed to be
outstanding, and immediately after any Additional Stock is deemed issued, such
Additional Stock shall be deemed to be outstanding.
(B) No adjustment of the Conversion Price for the Series
B Preferred Stock or Series C Preferred Stock shall be made in an amount less
than one cent per share, provided that any adjustments which are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to 3 years from the
date of the event giving rise to the adjustment being carried forward, or shall
be made at the end of 3 years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant
to this subsection 3(d) shall have the effect of increasing the Conversion Price
above the Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by this corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be
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<PAGE>
deemed to be the fair value thereof as determined by the Board of Directors
irrespective of any accounting treatment.
(E) In the case of the issuance, whether before, on or
after the Purchase Date, of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities (which are not excluded from the definition of
Additional Stock), the following provisions shall apply:
(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 3(d)(i)(C) and 3(d)(i)(D)), if
any, received by the corporation upon the issuance of such options or rights
plus the minimum purchase price provided in such options or rights for the
Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration, if any, received by the corporation
for any such securities and related options or rights (excluding any cash
received on account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the corporation upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in subsections 3(d)(i)(C) and 3(d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or any increase in the consideration payable
to this corporation upon exercise of such options or rights or upon conversion
of or in exchange for such convertible or exchangeable securities, including,
but not limited to, a change resulting from the antidilution provisions thereof,
the Conversion Price of the Series B Preferred Stock and/or Series C Preferred
Stock obtained with respect to the adjustment which was made upon the issuance
of such options, rights or securities, and any subsequent adjustments based
thereon, shall be recomputed to reflect such change, but no further adjustment
shall be made for the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such options or rights or the conversion
or exchange of such securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of the Series B Preferred Stock and/or Series C
Preferred Stock obtained with respect to the adjustment which was made upon the
issuance of such options, rights or securities or options or rights
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<PAGE>
related to such securities, and any subsequent adjustments based thereon, shall
be recomputed to reflect the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options or rights, upon the
conversion or exchange of such securities or upon the exercise of the options or
rights related to such securities. Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, only the number of shares of Common Stock actually issued upon the
exercise of such options or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights related to such
securities shall continue to be deemed to be issued.
(5) All Common Stock deemed issued pursuant to this
subsection 3(d)(i)(E) shall be considered issued only at the time of its deemed
issuance and any actual issuance of such stock shall not be an actual issuance
or a deemed issuance of the corporation's Common Stock under the provisions of
this Section 3.
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection 3(d)(i)(E))
by this corporation on or after the Purchase Date other than shares of capital
stock issued or issuable (or deemed to have been issued pursuant to subsection
(d)(i)(E)):
(A) pursuant to a transaction described in subsection
3(e) hereof,
(B) to officers, directors, employees and consultants
of this corporation pursuant to a stock option plan or agreement or restricted
stock plan or agreement, and in all cases approved by the directors of this
corporation,
(C) in connection with capital equipment leases,
technology acquisitions and other comparable transactions, and in all cases
approved by the Board of Directors,
(D) to lessors or institutional or other lenders or
otherwise in connection with bank or institutional loans,
(E) upon conversion of the Series A Preferred Stock,
Series B Preferred Stock and/or Series C Preferred Stock,
(F) in a bona fide, firm commitment underwriting
registered under the Securities Act of 1933, as amended, which results in
aggregate gross proceeds to the corporation in excess of $15,000,000 and a
public offering price which is not less than $5.00 per share (adjusted to
reflect subsequent stock dividends, stock splits, or recapitalizations), or
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<PAGE>
(G) pursuant to that certain Series C Preferred Stock
Purchase Agreement, dated on or about February 27, 1998, as may be amended (the
"Series C Purchase Agreement").
(e) Stock Dividends, Combinations or Subdivisions. In the
event the corporation should at any time or from time to time after the Purchase
Date fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Prices of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.
If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of each share of such series shall
be decreased in proportion to such decrease in outstanding shares.
(f) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights to purchase any such securities or evidences of
indebtedness, then, in each such case for the purpose of this Section 3(f), the
holders of the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, respectively, are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(g) Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision
or combination of shares provided for in this Section 3 or merger or sale of
assets transaction provided for in Section 2) provision shall be made so that
the holders of the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock shall thereafter be entitled to receive upon conversion of
such series the number of shares of stock or other securities or property of
this corporation or otherwise, to which a holder of Common Stock deliverable
upon conversion would have been
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<PAGE>
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3 with
respect to the rights of the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock after the recapitalization to the
end that the provisions of this Section 3 (including adjustment of the
Conversion Prices then in effect and the number of shares purchasable upon
conversion of such series) shall be applicable after that event as nearly
equivalent as may be practicable.
(h) No Impairment. This corporation will not, through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by this corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock against impairment.
(i) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion
of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock, and the number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock,
as applicable, that the holder is at the time converting into Common Stock and
the number of shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of any Conversion Price of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock pursuant to this Section 3, this
corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, as applicable, a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock, as applicable.
(j) Notices of Record Date. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail
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<PAGE>
to each holder of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, as applicable, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, in addition to such other remedies
as shall be available to the holder of such Preferred Stock, this corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
(l) Notices. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of this corporation.
4. Voting Rights. Each holder of shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock shall have the right
to one vote for each share of Common Stock into which such shares of such series
of Preferred Stock could then be converted (with any factional share determined
on an aggregate conversion basis being rounded to the nearest whole share), and
with respect to such vote, such holder shall have full voting rights and powers
equal to the voting rights and powers of the holders of Common Stock, and shall
be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the by-laws of this corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
5. Class Votes.
(a) So long as any shares of Preferred Stock are outstanding,
the corporation shall not, without first obtaining the approval by vote or
written consent, in the manner provided by law, of the holders of at least a
majority of the total number of shares of Preferred Stock outstanding, voting
together as a single class: (i) alter or change in any adverse manner any of the
powers, preferences, privileges or rights of the Preferred Stock, (ii) increase
or decrease the authorized number of shares of Preferred Stock; (iii) increase
the authorized number of shares of Common Stock; (iv) create any new class or
series of stock having a preference over or on a parity with the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred
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<PAGE>
Stock upon liquidation or in respect of voting, dividend, conversion or
redemption rights; or (v) cause the merger or consolidation of the corporation
with or into any other corporation or corporations, or the sale, transfer or
lease (other than a pledge or grant of a security interest to a bona fide
lender) of all or substantially all of the assets of the corporation, in which
the shareholders of the corporation immediately preceding such merger,
consolidation, transfer or lease directly or indirectly own less than 50% of the
voting stock of the surviving entity.
(b) So long as any shares of Series B Preferred Stock or
Series C Preferred Stock are outstanding, the corporation shall not, without
first obtaining the approval by vote or written consent, in the manner provided
by law, of the holders of at least eighty percent (80%) of the total number of
shares of Series B Preferred Stock and Series C Preferred Stock outstanding,
voting together as a class on an as-converted-to-Common Stock basis: (i)
increase or decrease the authorized number of members of the Board of Directors
of the corporation or otherwise amend Section 6 below, or (ii) increase or
decrease the authorized number of shares of Series B Preferred Stock or Series C
Preferred Stock.
(c) So long as any shares of Series C Preferred Stock are
outstanding, the corporation shall not, without first obtaining the approval by
vote or written consent, in the manner provided by law, of the holders of at
least a majority of the total number of shares of Series C Preferred Stock
outstanding, voting as a class on an as-converted-to-Common Stock basis,
increase the authorized number of members of the Board of Directors of the
corporation to a number greater than six.
(d) So long as any shares of Series B Preferred Stock or
Series C Preferred Stock are outstanding, the corporation shall not, without
first obtaining the approval by vote or written consent, in the manner provided
by law, of the holders of at least seventy-five percent (75%) of the total
number of shares of Series B Preferred Stock and Series C Preferred Stock
outstanding, voting together as a class on an as-converted-to-Common Stock
basis, issue any shares of Series B Preferred Stock or Series C Preferred Stock,
except for the shares of Series B Preferred Stock and Series C Preferred Stock
issued as of the Purchase Date, shares of Series C Preferred Stock issuable
pursuant to the Series C Purchase Agreement and shares of Series C Preferred
Stock issuable upon exercise of warrants outstanding as of the Purchase Date.
6. Board of Directors.
(a) The Board of Directors of the corporation shall consist of
six members. Four members shall be elected by (and may only be removed by) the
holders of the Series B Preferred Stock and Series C Preferred Stock, voting
together as a class on an as-converted-to-Common Stock basis. One member shall
be elected by (and may only be removed by) the holders of Common Stock voting as
a separate class. One member shall be elected by (and may only be removed by)
the holders of the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock, voting together as a class on an as-converted-to-Common Stock
basis.
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<PAGE>
(b) If the office of any director becomes vacant, such
director's replacement shall be elected by the class (or classes, as applicable)
of shares of which such director is the representative.
(c) Subsection 6(a) shall terminate and be of no further force
or effect immediately upon the consummation of the corporation's sale of its
Common Stock in a bona fide, firm commitment underwriting registered under the
Securities Act of 1933, as amended, which results in aggregate gross proceeds to
the corporation in excess of $15,000,000 and the public offering price of which
is not less than $5.00 per share (adjusted to reflect subsequent stock
dividends, stock splits or recapitalizations).
7. Status of Converted Stock. In the event any shares of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be
converted pursuant to Section 3 hereof, the shares so converted shall be
canceled and shall not be issuable by the corporation, and the Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
8. Repurchase of Shares. In connection with repurchases by this
corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof providing for such repurchases in the event of the termination
of the status of such holder as an employee, director or consultant to the
corporation, each holder of Preferred Stock shall be deemed to have consented,
for purposes of Sections 502, 503 and 506 of the California General Corporation
Law, to distributions made by the corporation with respect to such repurchases.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. Each holder of shares of Common Stock shall have
the right to one vote for each such share, and shall be entitled to notice of
any shareholders meeting in accordance with the Bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
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<PAGE>
ARTICLE IV
(A) Limitation of Directors, Liability. The liability of the directors
of the corporation for monetary damages shall be eliminated to the fullest
extent permissible under California law.
(B) Indemnification of Corporate Agents. The corporation is authorized
to provide indemnification of agents (as defined in Section 317 of the
California Corporations Code) to the fullest extent permissible under California
law.
(C) Repeal or Modification. Any amendment, repeal or modification of
any provision of this Article IV shall not adversely affect any right or
protection of an agent of this corporation existing at the time of such
amendment, repeal or modification."
* * *
THREE: The foregoing amendment and restatement of the Articles of
Incorporation of the corporation has been approved by the Board of Directors of
this corporation.
FOUR: The foregoing amendment and restatement of the Articles of
Incorporation of the corporation was approved by the holders of the requisite
number of shares of this corporation in accordance with Section 902 and 903 of
the California General Corporation Law. The total number of outstanding shares
entitled to vote with respect to the foregoing amendment was 1,839,174 shares of
Common Stock, 1,000,000 shares of Series A Preferred Stock, 2,002,750 shares of
Series B Preferred Stock, and 19,462,810 shares of Series C Preferred Stock. The
number of shares voting in favor of the foregoing amendment equaled or exceeded
the vote required, such required vote being a majority of the outstanding shares
of Common Stock and Preferred Stock, voting together on an
as-converted-to-Common Stock basis, a majority of the outstanding shares of
Preferred Stock, voting as a class on an as-converted-to-Common Stock basis and
a majority of the outstanding shares of Common Stock, voting as a class.
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<PAGE>
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at Menlo Park, California, August ___, 1999.
-----------------------------------
Frank Sammann, President
-----------------------------------
Patrick McNenny, Secretary
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<PAGE>
EXHIBIT D
FORM OF SECURITYHOLDER REPRESENTATION STATEMENT
3.
<PAGE>
SECURITYHOLDER REPRESENTATION STATEMENT
THIS SECURITYHOLDER REPRESENTATION STATEMENT (the "Representation
Statement") is being executed and delivered as of July ___, 1999, by the
undersigned Shareholder of Decisive Technology Corporation, a California
corporation (the "Company"), to and in favor of, and for the benefit of,
MessageMedia, Inc., a Delaware corporation ("MessageMedia").
RECITALS
A. The undersigned shareholder of the Company (the "Shareholder")
represents to MessageMedia that he or she owns, or has the right to acquire, the
number of shares of the common stock, $0.01 par value per share, and or
Preferred Stock, $0.01 par value per share, of the Company set forth below the
Shareholder's signature at the end of this Representation Statement. Said shares
are referred to in this Representation Statement as the "Shares."
B. Pursuant to an Agreement and Plan of Reorganization, dated as of
July _____, 1999 (the "Reorganization Agreement"), among MessageMedia, MM2
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
MessageMedia ("Merger Sub"), the Company, and the Securityholders' Agent, it is
contemplated that Merger Sub will merge into the Company (the merger of Merger
Sub into the Company being referred to in this Representation Statement as the
"Merger"). Upon the consummation of the Merger, the Company's shareholders are
to receive shares of common stock of MessageMedia ("MessageMedia Stock") in
exchange for their shares of common stock and preferred stock of the Company,
and the Company is to become a wholly owned subsidiary of MessageMedia.
Accordingly, it is contemplated that the Shareholder will receive shares of
MessageMedia Stock in the Merger.
C. Capitalized terms used in this Representation Statement have the
meaning ascribed to them in the Reorganization Agreement and the Plan unless
otherwise stated herein.
CERTIFICATION
1. ACCREDITED INVESTOR STATUS AND APPOINTMENT OF SHAREHOLDER
REPRESENTATIVE. The undersigned Shareholder as indicated below hereby certifies
that he or she:
(Check appropriate box)
[_] is an "Accredited Investor" as such term is defined under Rule 501
of the Securities Act of 1933, as amended (the "Securities Act"), or
[_] appoints [______________] to serve as his or her "Purchaser
Representative" (within the meaning ascribed under Rule 501 of the
Securities Act) in connection with the negotiation of the
Reorganization Agreement and the transactions and agreements
contemplated thereby.
1.
<PAGE>
(a) The Shareholder is the holder and beneficial owner of the
Shares and has good and valid title to the Shares free and clear of any
Encumbrances. The Shares are the only shares of the capital stock of the Company
held by the Shareholder. The Shareholder has the ability to vote (to the extent
such Shares may be voted in accordance with the Company's charter documents) all
of the Shares at any meeting of the shareholders of the Company, or by written
consent in lieu of any such meeting. Other than the Voting Agreement, if
applicable, the Shareholder has not appointed or granted any proxy or entered
into any agreement, contract, commitment or understanding with respect to the
voting of any of the Shares.
(b) The Shareholder has the absolute and unrestricted right,
power, authority and capacity to enter into, execute, deliver and perform all of
his or her obligations under the Registration Rights Agreement and the Escrow
Agreement.
(c) The Registration Rights Agreement and the Escrow Agreement to
which the Shareholder is or is to become a party (i) has been (or will when
executed by the Securityholders' Agent be) duly and validly executed by the
Securityholder's Agent, and (ii) constitutes (or will when executed by the
Securityholders' Agent constitute) a valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors, and to rules of law governing specific performance,
injunctive relief and other equitable remedies.
(d) Neither the execution, delivery or performance of the
Registration Rights Agreement or the Escrow Agreement to which the Shareholder
is or is to become a party, nor the consummation of the Merger or any of the
other transactions contemplated by the Reorganization Agreement, will directly
or indirectly: (i) result in any violation or breach of any agreement or other
instrument to which the Shareholder is a party or by which the Shareholder is
bound; or (ii) result in a violation of any law, rule, regulation, order,
judgment or decree to which the Shareholder or any of the Shares is subject. No
authorization, consent or approval of, or notice to, any Person is required to
be obtained or given by the Shareholder in connection with the execution,
delivery or performance of the Registration Rights Agreement or the Escrow
Agreement.
(e) There is no proceeding by or before any Governmental Body
pending or, to the knowledge of the Shareholder, threatened against the
Shareholder that challenges or would challenge the execution and delivery of the
Registration Rights Agreement and the Escrow Agreement or the taking of any of
the actions required to be taken by the Shareholder under the Registration
Rights Agreement and the Escrow Agreement.
3. SECURITIES ISSUANCE REPRESENTATIONS AND WARRANTIES. The Shareholder
represents, warrants and certifies to MessageMedia as follows:
(a) The Shareholder is aware (i) that the MessageMedia Stock to be
issued to the Shareholder in the Merger will not be registered and will not be
issued pursuant to a registration statement under the Securities Act of 1933, as
amended (the "Act"), but will instead be issued in reliance on the exemption
from registration set forth in Section 4(2) of the Securities Act and/or in
Regulation D under the Securities Act, and (ii) that neither the Merger nor the
2.
<PAGE>
issuance of such MessageMedia Stock has been approved or reviewed by the SEC or
by any other Governmental Body.
(b) The Shareholder is aware that, because the MessageMedia Stock
to be issued in the Merger will not be registered under the Securities Act, such
MessageMedia Stock cannot be resold unless such MessageMedia Stock is registered
under the Securities Act or unless an exemption from registration is available.
The Shareholder is also aware that: (i) except pursuant to the Registration
Rights Agreement, MessageMedia is under no obligation to file a registration
statement with respect to the MessageMedia Stock to be issued to the Shareholder
in the Merger; and (ii) the provisions of Rule 144 under the Securities Act will
permit resale of the MessageMedia Stock to be issued to the Shareholder in the
Merger only under limited circumstances, and such MessageMedia Stock must be
held by the Shareholder for at least one year before it can be sold pursuant to
Rule 144, assuming MessageMedia continues to satisfy the other requirements of
Rule 144.
(c) The MessageMedia Stock to be issued to the Shareholder in the
Merger will be acquired by the Shareholder for investment and for his or her own
account, and not with a view to, or for resale in connection with, any
unregistered distribution thereof.
(d) The Shareholder understands that stop transfer instructions
will be given to MessageMedia's transfer agent with respect to the MessageMedia
Stock to be issued to the Shareholder in the Merger and that there will be
placed on the certificate or certificates representing such MessageMedia Stock
legends identical or similar in effect to the following legend (together with
any other legend or legends required by applicable state securities laws or
otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR
UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT IS AVAILABLE."
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH CERTAIN VOLUME
LIMITATIONS PURSUANT TO THE TERMS OF A CERTAIN AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION DATED JULY __, 1999, A COPY
OF WHICH WILL BE PROVIDED TO THE HOLDER OF THIS CERTIFICATE
UPON REQUEST.
(e) The Shareholder has received and examined MessageMedia's
Annual Report on Form 10-K for the year ended December 31, 1998; the Company's
Information Statement; and MessageMedia's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999.
3.
<PAGE>
4. SHAREHOLDER REPRESENTATIONS AND WARRANTIES. The Shareholder
represents, warrants and certifies to MessageMedia as follows:
(a) The Shareholder, who checked the second box in Section 1 of
this agreement thereby indicating that he or she is not an "Accredited
Investor", acknowledges that the Portola Group, Inc. has served as the Purchaser
Representative of such Shareholder in connection with the negotiation of the
Reorganization Agreement and this Representation Statement.
(b) Either alone or with the assistance of such Shareholder's
Purchaser Representative and professional advisors, that such Shareholder has
been given the opportunity: (i) to ask questions of, and to receive answers
from, persons acting on behalf of the Company and MessageMedia concerning the
terms and conditions of the Merger and the contemplated issuance of MessageMedia
Stock in the Merger, and the business, properties, prospects and financial
condition of the Company and MessageMedia; and (ii) to obtain any additional
information (to the extent the Company or MessageMedia possesses such
information or is able to acquire it without unreasonable effort or expense and
without breach of confidentiality obligations) that is necessary to verify the
accuracy of the information set forth in the documents, provided or made
available to the Shareholder.
(c) Either alone or with the assistance of such Shareholder's
Purchaser Representative and professional advisors, such Shareholder is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities presenting investment
decisions like that involved in the Shareholder's contemplated investment in the
MessageMedia Stock to be issued in the Merger. The Shareholder understands, has
fully considered, and believes that he has been fully apprised of all facts and
circumstances necessary to permit him to make an informed decision regarding,
the risks of acquiring and owning MessageMedia Stock.
5. RELIANCE. The Shareholder acknowledges that MessageMedia will rely
on his or her representations, warranties and certifications set forth in
Sections 1, 2, 3 and 4 above for purposes of determining his or her suitability
as an investor in MessageMedia Stock and for purposes of confirming the
availability of an exemption from the registration requirements of the
Securities Act.
6. PROHIBITIONS AGAINST TRANSFER. The Shareholder shall not effect any
sale, transfer or other disposition of any of the MessageMedia Stock that he or
she is to receive in the Merger unless:
(a) such sale, transfer or other disposition has been registered
under the Securities Act;
(b) such sale, transfer or other disposition is made in conformity
with the requirements of Rule 144 under the Securities Act, as evidenced by a
broker's letter and a representation letter executed by the Shareholder
(satisfactory in form and content to MessageMedia) stating that such
requirements have been met;
4.
<PAGE>
(c) counsel reasonably satisfactory to MessageMedia shall have
advised MessageMedia in a written opinion letter (satisfactory in form and
content to MessageMedia), upon which MessageMedia may rely, that such sale,
transfer or other disposition will be exempt from registration under the
Securities Act; or
(d) an authorized representative of the SEC shall have rendered
written advice to the Shareholder to the effect that the SEC would take no
action, or that the staff of the SEC would not recommend that the SEC take
action, with respect to such sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the SEC shall have
been delivered to MessageMedia.
[Remainder of page intentionally left blank]
5.
<PAGE>
The Shareholder has executed and delivered this Representation Statement as of
the date first written above.
----------------------------------------------
(Signature)
Name:
-----------------------------------------
Number of Common shares:
----------------------
Number of Preferred shares:
-------------------
State of Residence:
---------------------------
6.
<PAGE>
EXHIBIT E
CERTAIN EMPLOYEES
Kelley Wood
Peter Murton
Lori Iventosch James
Eleanor Duff
Alex Garbagnati
Ryan Day
4.
<PAGE>
EXHIBIT F
FORM OF REGISTRATION RIGHTS AGREEMENT
5.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT OF REGISTRATION RIGHTS ("Agreement") is made as of
August 16, 1999 between MESSAGEMEDIA, INC., a Delaware corporation ("Parent"),
William Blair & Company LLC, and Eric DiBenedetto, as the Securityholders' Agent
(as defined below) for the benefit of Holders (as defined below) of capital
stock of Decisive Technology Corporation, a California corporation (the
"Company"), acquiring shares of Parent Common Stock pursuant to that Agreement
and Plan of Merger and Reorganization, dated as of July 27 1999 (the
"Reorganization Agreement"), among Parent, the Company and MM2 Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger
Sub") and in consideration of such Holders approving the Reorganization
Agreement and the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Reorganization Agreement, the parties mutually agree as
follows:
SECTION 1
REGISTRATION
1.1 "HOLDER" means: (i) a holder of shares of capital stock of the
Company to whom shares of Common Stock of Parent are issued pursuant to the
Reorganization Agreement, (ii) the Escrow Agent (as defined in the
Reorganization Agreement), (iii) William Blair & Company LLC with respect to the
shares of Common Stock of Parent issued pursuant to Section 1.12 of the
Reorganization Agreement or (iv) a transferee to whom registration rights
granted under this Agreement are assigned pursuant to Section 6.3 of this
Agreement.
1.2 "MAJOR INVESTORS" shall mean those individuals and entities
identified on Exhibit B-2 of the Reorganization Agreement.
1.3 "REGISTRABLE SECURITIES" means for each Holder the number of shares
of Parent Common Stock issued to such Holder pursuant to the Reorganization
Agreement, and any shares of Parent Common Stock issued in respect thereof as a
result of any stock split, stock dividend, share exchange, merger, consolidation
or similar recapitalization (including shares of Parent Common Stock issued to
the Escrow Agent pursuant to Sections 1.8 of the Reorganization Agreement), in
each case rounded to the nearest integral amount, and for all Holders the sum of
the Registrable Securities held by them; provided, however, that Registrable
Securities shall cease to be Registrable Securities when (i) a registration
statement covering such Registrable Securities shall have become effective under
the Securities Act of 1933, as amended (the "1933 Act"), and such Registrable
Securities shall have been disposed of in accordance with such
1.
<PAGE>
registration statement and in accordance with the 1933 Act, or (ii) with respect
to a Holder, at such time as all of the Registrable Securities held by such
Holder can be sold by such Holder in a three-month period in accordance with
Rule 144 under the 1933 Act, as such rule may be amended from time to time, or
any successor rule or regulation ("Rule 144").
1.4 REGISTRATION. Parent shall use its commercially reasonable best
efforts to prepare and file with the Securities and Exchange Commission ("SEC")
a registration statement on Form S-3 (the "Registration Statement") covering the
resale of the Registrable Securities as soon as reasonably practicable but in
any event within thirty (30) days following the Effective Time; provided,
however, that each Holder shall provide all such information and materials and
take all such action as may be reasonably required in order to permit Parent to
comply with all applicable requirements of the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and of the SEC, and to obtain any
desired acceleration of the effective date of such registration statement, such
provision of information and materials to be a condition precedent to the
obligations of Parent pursuant to this Agreement. Parent shall not be required
to effect more than one (1) registration pursuant to this Section 1.4. The
offerings made pursuant to such registration shall not be underwritten. Parent
shall use its commercially reasonable best efforts to have such Registration
Statement declared effective as soon as practicable following the Effective
Time. The Holders shall furnish such information as Parent may reasonably
request in connection with the preparation of the Registration Statement. Upon
registration of the Registrable Securities with the SEC in accordance with this
Agreement, the Registrable Securities may be sold in accordance with the
Registration Statement under the 1933 Act. Parent shall use its reasonable
efforts to cause such Registration Statement to remain effective until the
earlier of (i) the date on which all Registrable Securities covered by the
Registration Statement have been sold to the public pursuant to the Registration
Statement, (ii) such time as which all Registrable Securities covered by the
Registration Statement may be sold pursuant to Rule 144 within a three-month
period, or (iii) two (2) years after the Closing Date.
1.5 OTHER SHARES. Parent may include in any registration statement
under this Section 1 any other shares of Parent Common Stock (including issued
and outstanding shares of Parent Common Stock as to which the holders thereof
have contracted with Parent for "piggyback" registration rights).
1.6 SECURITYHOLDERS' AGENT. Securityholders' Agent shall be that
certain person appointed by the shareholders of the Company pursuant to Section
10.1 of the Reorganization Agreement.
SECTION 2
PARENT'S OBLIGATIONS
In connection with the Registration Statement referred to in Section
1.4, Parent shall:
2.1 REGISTRATION STATEMENT. Prepare and file with the SEC a
registration statement with respect to the Registrable Securities and thereafter
use its commercially reasonable best efforts to cause such Registration
Statement to become and remain effective for the period set forth in Section
1.4.
2.
<PAGE>
2.2 AMENDMENTS AND SUPPLEMENTS. Prepare and file with the SEC such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for the period set forth in Section 1.4 and to comply with
the provisions of the 1933 Act with respect to the sale or other disposition of
the shares of Parent Common Stock covered by such Registration Statement.
2.3 COPIES OF OFFERING DOCUMENTS. Promptly furnish to the Holders such
numbers of copies of such registration statements, prospectuses, and any
amendments and supplements thereto, in conformity with the requirements of the
1933 Act, such documents incorporated by reference in such Registration
Statement and such other documents as the Holders reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities, but only while Parent shall be required under the provisions hereof
to cause the registration statement to remain effective.
2.4 MISLEADING PROSPECTUS. Promptly notify each Holder, at any time
when a prospectus relating thereto covered by such registration statement is
required to be delivered under the 1933 Act, upon Parent becoming aware that the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and as soon as
practicable thereafter use its commercially reasonable best efforts to prepare
and file with the SEC and furnish to such Holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they are made.
2.5 RULE 144. Use its commercially reasonable best efforts to file in a
timely manner any reports required to be filed by it under the 1933 Act and the
1934 Act, and take such further action as the Holders may reasonably request,
all from time to time to enable each such Holder to sell the Registrable
Securities owned by it without registration under the 1933 Act pursuant to the
exemption provided by Rule 144.
2.6 PIGGYBACK REGISTRATIONS.
(a) NOTICE AND PARTICIPATION. For a period of twelve months
following the date of this Agreement, Parent shall notify all Holders who are
also Major Investors in writing at least ten (10) days prior to the filing of
any registration statement under the 1933 Act for purposes of an underwritten
public offering of securities of Parent (including, but not limited to,
registration statements relating to secondary offerings of securities of Parent,
but excluding registration statements relating to employee benefit plans or with
respect to corporate reorganizations or other transactions under Rule 145 of the
1933 Act) and will afford each such Holder an opportunity to include in such
registration statement all or part of such Registrable Securities held by such
Holder. Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by it shall, within ten (10) days
after the above-described notice from Parent, so notify Parent in writing. Such
notice shall state the
3.
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intended method of disposition of the Registrable Securities by such Holder. If
a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by Parent, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
the next registration statement as may be filed by Parent with respect to
underwritten offerings of its securities, all upon the terms and conditions set
forth herein; provided such registration statement is filed within twelve months
of the date of this Agreement, and further provided that such rights shall not
attach to more than two underwritten registrations of Parent.
(b) UNDERWRITING. The right of any such Holder to be included in a
registration pursuant to this Section 2.6 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by Parent.
Notwithstanding any other provision of the Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting shall be allocated, first, to Parent; second, to all holders
of Parent Common Stock (including the Major Investors) that have similar
piggyback registration rights on a pro rata basis based on the total number of
Registrable Securities held by such holders; and third, to any shareholder of
Parent (other than a holder with registration rights). No such reduction shall
(i) reduce the securities being offered by Parent for its own account to be
included in the registration and underwriting. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to Parent and the underwriter, delivered at least twenty (20)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing person shall be
deemed to be a single "HOLDER", and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
(c) RIGHT TO TERMINATE REGISTRATION. Parent shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.6
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by Parent in accordance with Section
5 hereof.
2.7 BLUE SKY FILINGS. Parent shall use its reasonable efforts to
register and qualify the securities covered by the Registration Statement under
the Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that Parent shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
4.
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2.8 EARNING STATEMENT. To make generally available to its
securityholders an earning statement satisfying the provisions of Section 11(a)
of the 1933 Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
SECTION 3
THE HOLDER'S OBLIGATIONS
In connection with the Registration Statement referred to in Section
1.4 or Section 2.6, the Holders shall each:
3.1 OTHER DOCUMENTS AND INFORMATION. Complete, execute, acknowledge
and/or deliver such questionnaires, indemnification agreements, custody
agreements, underwriting agreements (if the registration is underwritten) and
other documents, certificates and instruments as are reasonably required by
Parent or any underwriter(s) or are otherwise necessary in connection with the
registration and offering. Each Holder shall promptly provide to Parent such
information concerning such Holder, such Holder's ownership of Parent's
securities, the intended method of distribution and such other information as
may be required by applicable law or regulation or as may be reasonably
requested by Parent.
3.2 CESSATION OF OFFERING. Upon receipt of any notice from Parent of
the happening of any event of the kind described in Section 2.4, immediately
discontinue disposition of the Registrable Securities pursuant to the
Registration Statement covering such shares until the Holders' receipt of the
copies of the supplemented or amended prospectus contemplated by Section 2.4,
and, if so directed by Parent, deliver to Parent all copies of the prospectus
covering such Registrable Securities in such Holder's possession at the time of
receipt of such notice.
3.3 NO PRELIMINARY PROSPECTUS. No Holder and no person or entity acting
on his or her behalf (other than an underwriter selected by Parent or approved
by Parent) shall offer any Registrable Securities by means of any preliminary
prospectus.
3.4 SUSPENSION OF PROSPECTUS. Each Holder will be required to notify
Parent in writing at least two (2) business days prior to a disposition of
Registrable Securities pursuant to the Registration Statement of his or her
intent to dispose of such Registrable Securities. At any time within such two
(2) business day period, Parent may restrict disposition of such Registrable
Securities, in which event such Holder will not be able to dispose of such
Registrable Securities, provided that: (i) Parent shall have delivered a notice
in writing to such Holder stating that a delay in the disposition of such
Registrable Securities is necessary because Parent, in its reasonable judgment,
has determined that such sales would require public disclosure by Parent of
material nonpublic information that Parent deems it advisable not to disclose;
provided, however, that no such delay shall be imposed unless Parent shall
equally prohibit during the period of such delay any sale of Parent's securities
by all executive officers and directors of Parent and by all other holders of
the Company's restricted stock covered by resale registration statements; (ii)
in the event of the delivery of the notice described in (i) above by Parent,
Parent shall use its
5.
<PAGE>
commercially reasonable best efforts to amend the registration statement and/or
amend or supplement the related prospectus if necessary and to take all other
actions necessary to allow the proposed sale to take place as promptly as
possible after the conditions referred to in the notice have ceased to exist or
have been disclosed; and (iii) Parent shall not restrict dispositions under (i)
above, Section 2.4 and Section 4.1 for a period exceeding, in the aggregate,
forty-five (45) days during any calendar quarter.
SECTION 4
LIMITATIONS
4.1 OTHER TRANSACTIONS. Parent shall not be obligated to effect a
registration pursuant to Section 1, or to file any amendment or supplement
thereto, and may suspend the Holders' rights to make sales pursuant to an
effective registration pursuant to Section 1, at any time when Parent, in the
good faith judgment of its Board of Directors, reasonably believes that the
filing thereof at the time requested, or the offering of securities pursuant
thereto, would (i) materially and adversely affect a pending or proposed
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction, or negotiations, discussions or pending proposals related thereto,
or (ii) be seriously detrimental to Parent and its stockholders, in which event
(under clause (i) or (ii) above) Parent's sole relief from its registration
obligations is the right to defer filing of a registration statement (or to
suspend the Holders' rights to make sales pursuant to an effective registration
pursuant to Section 1) for a period of not more than forty-five (45) days;
provided, however, that Parent shall not use the right described in this Section
4.1, Section 2.4 and Section 3.4(i) for a period exceeding, in the aggregate,
forty-five (45) days during any calendar quarter.
SECTION 5
EXPENSES AND INDEMNIFICATION
5.1 EXPENSES. Parent shall pay all of the out-of-pocket expenses
incurred, other than underwriting discounts and commissions and counsel to the
selling shareholders, in connection with any registration of Registrable
Securities pursuant to this Agreement, including, without limitation, all SEC
and blue sky registration and filing fees, printing expenses, transfer agents'
and registrars' fees, and the reasonable fees and disbursements of Parent's
outside counsel and independent accountants.
5.2 OTHER EXPENSES. Parent shall pay all registration and filing fees
attributable to the Registrable Securities and the listing fee payable to the
Nasdaq National Market.
5.3 INDEMNIFICATION AND CONTRIBUTION. In the event any Registrable
Securities are included in a registration statement under Section 1:
(a) INDEMNIFICATION BY PARENT. To the extent permitted by law,
Parent will indemnify and hold harmless each Holder, his heirs, successors and
assigns, any underwriter (as defined in the 1933 Act) for such Holder, and each
person, if any, who controls such Holder or underwriter within the meaning of
the 1933 Act or the 1934 Act, against any losses, claims,
6.
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damages, liabilities or actions to which they may become subject under the 1933
Act, the 1934 Act or other federal or state law, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus (not
prohibited by Section 3.3) or final prospectus contained therein or any
amendments or supplements thereto, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the context in which
made, not misleading; and Parent will reimburse each such Holder, his heirs,
successors and assigns, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnification and other rights provided for in this Section 5.3(a)
shall not apply (i) to any such loss, claim, damage, liability, or action
insofar as it arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, preliminary prospectus or final prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any Holder
or (ii) if the person asserting any such loss, claim, damage, liability or
action who purchased the Registrable Securities which are the subject thereof
did not receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or prior to
the written confirmation of the sale of such Registrable Securities to such
person because of the failure of such Holder or underwriter to so provide such
amended preliminary or final prospectus and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact made in such
preliminary prospectus was corrected in the amended preliminary prospectus or
the final prospectus (or the final prospectus as amended and supplemented). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Holder, underwriter or controlling person and shall
survive the transfer of the Registrable Securities by such Holder.
(b) INDEMNIFICATION BY HOLDERS. To the extent permitted by law,
the Holders will severally (but not jointly and pro rata) indemnify and hold
harmless Parent, its successors and assigns, its officers and directors, any
underwriter (as defined in the 1933 Act) requested by the Holders, and each
person, if any, who controls Parent or any such underwriter requested by the
Holders within the meaning of the 1933 Act or the 1934 Act, against any losses,
claims, damages, liabilities or actions (joint or several) to which they may
become subject under the 1933 Act, the 1934 Act or other federal or state law,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the context in which
made, not misleading; provided that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in such registration by such Holder, or (ii) the failure of any Holder or any
underwriter requested by the Holders at or prior to the written confirmation of
the sale of the Registrable Securities to send or arrange delivery of a copy of
an amended preliminary prospectus or the final prospectus (or the final
prospectus as amended or supplemented) to the person asserting any such loss,
claim, damage, liability or action who purchased the Registrable Securities
which is the subject thereof and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in
7.
<PAGE>
such preliminary prospectus was corrected in the amended preliminary prospectus
or the final prospectus (or the final prospectus as amended and supplemented).
The Holders will reimburse Parent and each such officer or director or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Parent or any such
officer, director, underwriter requested by the Holders or controlling person
and shall survive the transfer of the Registrable Securities by such Holder.
(c) INDEMNIFICATION PROCEDURES. Promptly after receipt by a person
who may be entitled to indemnification under this Section 5.3 (an "indemnified
party") of notice of the commencement of any action (including any governmental
action) for which indemnification may be available under this Section 5.3, such
indemnified party will, if a claim in respect thereof is to be made against any
person who must provide indemnification under this Section 5.3 (an "indemnifying
party"), deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel (and the
reasonable fees of such counsel shall be paid by the indemnifying party) and
assume its own defense if (i) the retention of such counsel has been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has failed to promptly assume the defense and employ
experienced counsel reasonably acceptable to the indemnified party after the
indemnifying party has received the notice of the indemnification matter from
the indemnified party, or (iii) the named parties to any such action include
both the indemnified party and the indemnifying party, and the representation of
both parties by the same counsel would be inappropriate due to a conflict of
interest between them. It is understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for all
indemnified parties unless the indemnified parties in good faith conclude and
are advised by their counsel that there is an actual or potential conflict of
interest among the indemnified parties. No indemnification provided for in
Section 5.3(a) or Section 5.3(b) shall be available to any party who shall fail
to give notice as provided in this Section 5.3(c) to the extent that the party
to whom notice was not given was unaware of the proceeding to which such notice
would have related and was materially prejudiced by the failure to give such
notice.
(d) CONTRIBUTION. If a claim for indemnification under this
Section 5.3 is unavailable to an indemnified party because of a failure or
refusal of a court of competent jurisdiction to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of any such loss, claim, damage, liability or action referred to therein in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the statements or omissions that
resulted in such loss, claim, damage, liability or action, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a
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<PAGE>
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5.3(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in this paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
SECTION 6
OTHER PROVISIONS
6.1 NOTICES. All notices, requests and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed to have been duly given when delivered personally or one business day
after being sent by a nationally recognized overnight delivery service to the
Holders at their respective addresses of record with Parent's transfer agent,
and to Parent at its address stated in the Reorganization Agreement. Notices may
also be given by facsimile and shall be effective on the date transmitted if
confirmed within 48 hours thereafter by a signed original sent in the manner
provided in the preceding sentence.
6.2 AMENDMENT OF REGISTRATION RIGHTS. The Holders of a majority of the
Registrable Securities from time to time outstanding may, with the written
consent of Parent, amend the registration rights granted hereunder.
6.3 PARTIES IN INTEREST. This Agreement shall be binding upon each of
the parties hereto and each of their respective permitted successors and
assigns, if any. No Holder may assign such Holder's rights under this Agreement
without the express prior written consent of Parent, provided, however, that (i)
upon the death of a Holder, such Holder's rights under this Agreement shall be
transferred to the person(s) who receive such Holder's Parent Common Stock under
the laws of descent and distribution, (ii) a Holder may assign such Holder's
rights under this Agreement to any organization qualified under Section
501(c)(3) of the Internal Revenue Code to which the Holder transfers Registrable
Securities or in connection with an estate planning transaction, (iii) a Holder
may transfer its rights under this Agreement to any transferee of 50,000 or more
of the Registrable Securities (subject to appropriate adjustment based on stock
dividends, stock splits and other similar transactions after the date hereof)
who agrees in writing to be bound by the terms of this Agreement to the same
extent as if such transferee were a Holder hereunder and subject to such
Holder's prior delivery to Parent of an opinion of counsel in form reasonably
satisfactory to the Parent to the effect that the transfer of Registrable
Securities was made in compliance with all applicable federal and state
securities laws and (iv) a pro rata distribution of Registrable Securities
without additional consideration to the general and limited partners,
shareholders or trust beneficiaries of a Holder shall not be deemed a sale or
transfer for purposes of this Section 6.3 and such persons shall be entitled to
the same rights under this Agreement as the initial Holder from which the
Registrable Securities were received were entitled to and shall be deemed a
Holder for the purposes of this Agreement. Any person receiving Registrable
Securities from a Major Investor shall take such securities
9.
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subject to the provisions of the lock-up agreement referred to in Section 6.5 of
the Reorganization Agreement. Nothing in this Agreement is intended to confer,
or shall be deemed to confer, any rights or remedies upon any person or entity
other than the parties hereto and their permitted successors and assigns. This
Agreement shall inure to the benefit of: the Holders; Parent; and the respective
successors and assigns, if any, of the foregoing.
6.4 WAIVERS. Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing and signed
by the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between or among any of the parties, shall constitute a waiver of, or
shall preclude any other or further exercise of, any right, power or remedy.
6.5 SEVERABILITY. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
6.6 SECTION HEADINGS. Section headings in this Agreement are for
convenience of reference only, do not constitute a part of this Agreement, and
shall not affect its interpretation.
6.7 REFERENCES. All words used in this Agreement shall be construed to
be of such number and gender as the context requires. The terms "it" and "its"
as used herein include entities as well as masculine and feminine persons.
Unless a particular context clearly requires otherwise, the words "hereof" and
"hereunder" and similar references refer to this Agreement in its entirety and
not to any specific section or subsection of this Agreement.
10.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
MESSAGEMEDIA, INC.
/s/ Larry Jones
---------------------------------------------
By: Larry Jones
------------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
SECURITYHOLDERS' AGENT:
/s/ Eric DiBenedetto
---------------------------------------------
Eric DiBenedetto, as the Securityholders'
Agent
WILLIAM BLAIR & COMPANY LLC
/s/ WILLIAM BLAIR & COMPANY LLC
---------------------------------------------
By: W. Rick Stearns
------------------------------------------
Title: Associate
---------------------------------------
11.
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EXHIBIT G
FORM OF ESCROW AGREEMENT
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
August __, 1999 by and among: MESSAGEMEDIA, INC., a Delaware corporation
("Parent"), ________________, AS SECURITYHOLDERS' AGENT (the "Securityholders'
Agent") for the shareholders identified on Exhibit A hereto (the "Shareholders")
of Decisive Technology Corporation, a California corporation (the "Company") and
CHASE MANHATTAN BANK AND TRUST, N.A., a national banking association (the
"Escrow Agent").
RECITALS
A. Parent, MM2 Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the Company have entered into an
Agreement and Plan of Merger and Reorganization dated as of July __, 1999 (the
"Reorganization Agreement"), pursuant to which Merger Sub will merge with and
into the Company and the Shareholders will have the right to receive shares of
common stock of Parent.
B. The Reorganization Agreement contemplates the establishment of an
escrow arrangement to secure the indemnification and other obligations of the
Shareholders under the Reorganization Agreement.
C. Pursuant to Section 10.1 of the Reorganization Agreement and Section
10 of this Agreement, the Shareholders have irrevocably appointed _____________
to serve as Securityholders' Agent for, among other things, all matters set
forth in Section 9 of the Reorganization Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given to them in the Reorganization
Agreement, a copy of which is attached hereto.
2. ESCROW AND INDEMNIFICATION.
(a) SHARES PLACED IN ESCROW. At the Effective Time, which shall be
set forth in a notice to Escrow Agent: (i) Parent shall issue certificates for
shares of Parent Common Stock registered in the names of the Shareholders as set
forth on Exhibit A hereto, evidencing the shares of Parent Common Stock to be
held in escrow in accordance with this Agreement. The shares of Parent Common
Stock being held in escrow pursuant to this Agreement (the "Escrow Shares")
shall constitute an escrow fund (the "Escrow Fund") with respect to the
indemnification obligations of the Shareholders under the Reorganization
Agreement. The Escrow Fund shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any Shareholder or of any party hereto. The Escrow Agent
agrees to accept delivery of the Escrow Fund and to hold the Escrow Fund in an
escrow account (the "Escrow Account"), subject to the terms and conditions of
this Agreement.
1.
<PAGE>
(b) VOTING OF ESCROW SHARES. The record owner of the Escrow Shares
shall be entitled to exercise all voting rights with respect to such Escrow
Shares.
(c) DIVIDENDS, ETC. Parent and each of the Shareholders agree
among themselves, for the benefit of Parent and the Escrow Agent, that any
securities or other property distributable (whether by way of dividend, stock
split or otherwise) in respect of or in exchange for any Escrow Shares shall not
be distributed to the record owners of such Escrow Shares, but rather shall be
distributed to and held by the Escrow Agent in the Escrow Account. Ordinary cash
dividends will be paid by Parent directly to the Shareholders and not to the
Escrow Agent. Unless and until the Escrow Agent shall actually receive such
additional securities or other property, it may assume without inquiry that the
Escrow Shares currently being held by it in the Escrow Account are all that the
Escrow Agent is required to hold. At the time any Escrow Shares are required to
be released from the Escrow Account to any Person pursuant to this Agreement,
any securities or other property previously received by the Escrow Agent in
respect of or in exchange for such Escrow Shares shall be released from the
Escrow to such Person.
(d) TRANSFERABILITY. The interests of the Shareholders in the
Escrow Account and in the Escrow Shares shall not be assignable or transferable,
other than by operation of law. No transfer of any of such interests by
operation of law shall be recognized or given effect until Parent and the Escrow
Agent shall have received written notice of such transfer.
(e) FRACTIONAL SHARES. No fractional shares of Parent Common Stock
shall be retained in or released from the Escrow Account pursuant to this
Agreement. In connection with any release of Escrow Shares from the Escrow
Account, Parent and the Escrow Agent shall "round down" in order to avoid
retaining any fractional share in the Escrow Account and in order to avoid
releasing any fractional share from the Escrow Account. When shares are "rounded
down", no cash-in-lieu payments need to be made.
3. ADMINISTRATION OF ESCROW ACCOUNT. Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Account as follows:
(a) If any Indemnitee has or claims to have incurred or suffered
Damages for which it is or may be entitled to indemnification, compensation or
reimbursement under Section 9 of the Reorganization Agreement, such Indemnitee
may, on or prior to the fifteenth month anniversary of the Closing Date (the
"Termination Date"), deliver a claim notice (a "Claim Notice") to the
Securityholders' Agent and to the Escrow Agent. Each Claim Notice shall state
that such Indemnitee believes that there is or has been a breach of a
representation, warranty or covenant contained in the Reorganization Agreement
or that such Indemnitee is otherwise entitled to indemnification, compensation
or reimbursement under Section 9.2 of the Reorganization Agreement and contain a
description in reasonable detail of the circumstances supporting such
Indemnitee's belief that there is or has been such a breach or that such
Indemnitee is so entitled to indemnification, compensation or reimbursement and
shall, to the extent possible, contain a non-binding, preliminary estimate of
the amount of Damages such Indemnitee claims to have so incurred or suffered
(the "Claimed Amount").
(b) Within 30 business days after receipt by the Securityholders'
Agent of a Claim Notice, the Securityholders' Agent may deliver to the
Indemnitee who delivered the Claim
2.
<PAGE>
Notice and to the Escrow Agent a written response (the "Response Notice") in
which the Securityholders' Agent: (i) agrees that a whole number of Escrow
Shares having a "Stipulated Value" (as defined below) equal to the full Claimed
Amount may be released from the Escrow Account to the Indemnitee; (ii) agrees
that Escrow Shares having a Stipulated Value equal to part, but not all, of the
Claimed Amount (the "Agreed Amount") may be released from the Escrow Account to
the Indemnitee or (iii) indicates that no part of the Claimed Amount may be
released from the Escrow Account to the Indemnitee (due to the application of
Section 9.3(a) of the Reorganization Agreement or otherwise). Any part of the
Claimed Amount that is not to be released to the Indemnitee shall be the
"Contested Amount." If a Response Notice is not received by the Escrow Agent
within such 30 business-day period, then the Securityholders' Agent shall be
deemed to have agreed that Escrow Shares having a Stipulated Value equal to the
full Claimed Amount may be released to the Indemnitee from the Escrow Account.
(c) If the Securityholders' Agent delivers a Response Notice
agreeing that Escrow Shares having a Stipulated Value equal to the full Claimed
Amount may be released from the Escrow Account to the Indemnitee, or if the
Securityholders' Agent does not deliver a Response Notice in accordance with
Section 3(b), the Escrow Agent shall promptly following the receipt of the
Response Notice (or, if the Escrow Agent has not received a Response Notice,
promptly following the expiration of the 30 business-day period referred to in
Section 3(b)), deliver to such Indemnitee such Escrow Shares.
(d) If the Securityholders' Agent delivers a Response Notice
agreeing that Escrow Shares having a Stipulated Value equal to part, but not
all, of the Claimed Amount may be released from the Escrow Account to the
Indemnitee, the Escrow Agent shall promptly following the receipt of the
Response Notice deliver to such Indemnitee Escrow Shares having a Stipulated
Value equal to the Agreed Amount.
(e) If the Securityholders' Agent delivers a Response Notice
indicating that there is a Contested Amount, the Securityholders' Agent and the
Indemnitee shall attempt in good faith to resolve the dispute related to the
Contested Amount. If the Indemnitee and the Securityholders' Agent shall resolve
such dispute, such resolution shall be binding on all of the Shareholders and
all of the Indemnitees and a settlement agreement shall be signed by the
Indemnitee and the Securityholders' Agent and sent to the Escrow Agent, who
shall, upon receipt thereof, if applicable, release Escrow Shares from the
Escrow Account in accordance with such agreement.
(f) If the Securityholders' Agent and the Indemnitee are unable to
resolve the dispute relating to any Contested Amount within 30 business days
after the delivery of the Claim Notice, then the claim described in the Claim
Notice shall be settled by binding arbitration in Denver or Boulder, Colorado in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "AAA Rules"). Arbitration will be conducted by
three arbitrators, selected in accordance with the AAA Rules. The parties agree
to use all reasonable efforts to cause the arbitration hearing to be conducted
within 60 calendar days after the appointment of the arbitrators and to use all
reasonable efforts to cause the arbitrators' decision to be furnished within 90
calendar days after the appointment of the arbitrators. The parties further
agree that discovery shall be completed at least 20 calendar days prior to the
date of the arbitration hearing. The arbitrators' decision shall relate solely
to whether the Indemnitee
3.
<PAGE>
is entitled to recover the Contested Amount (or a portion thereof), and the
portion of such Contested Amount the Indemnitee is entitled to recover. The
final decision of the arbitrators shall be furnished to the Securityholders'
Agent, the Indemnitee and the Escrow Agent in writing and shall constitute a
conclusive determination of the issue in question, binding upon the
Shareholders, the Indemnitee and the Escrow Agent and shall not be contested by
any of them. The non-prevailing party in any arbitration shall pay the
reasonable expenses (including attorneys' fees) of the prevailing party, any
additional reasonable fees and expenses (including reasonable legal fees) of the
Escrow Agent, and the fees and expenses associated with the arbitration
(including the arbitrators' fees and expenses). For purposes of this Section
3(f), the non-prevailing party shall be deemed to be the Indemnitee if it is
entitled to recover less than 50% of the Contested Amount; otherwise it shall be
the Shareholders.
(g) The Escrow Agent shall release Escrow Shares from the Escrow
Account in connection with any Contested Amount within 5 business days after the
delivery to it of: (i) a copy of a settlement agreement executed by the
Indemnitee and the Securityholders' Agent setting forth instructions to the
Escrow Agent as to the number of Escrow Shares, if any, to be released from the
Escrow Account, with respect to such Contested Amount or (ii) a copy of the
award of the arbitrators referred to and as provided in Section 3(f) setting
forth instructions to the Escrow Agent as to the number of Escrow Shares, if
any, to be released from the Escrow Account, with respect to such Contested
Amount.
(h) Any Escrow Shares released from the Escrow Account to an
Indemnitee shall be deemed to reduce the Escrow Shares pro rata with respect to
each Shareholder in accordance with each Shareholder's percentage interest in
the Escrow Fund as set forth in Exhibit A.
4. RELEASE OF ESCROW SHARES. The Escrow Agent is not the stock transfer
agent for the Parent Common Stock. Accordingly, if a distribution of a number of
shares of Parent Common Stock less than all of the Escrow Shares is to be made,
the Escrow Agent must requisition the appropriate number of shares from such
stock transfer agent, delivering to it the appropriate stock certificates. For
the purposes of this Agreement, the Escrow Agent shall be deemed to have
delivered Parent Common Stock to the Person entitled to it when the Escrow Agent
has delivered such certificates to such stock transfer agent with instructions
to deliver it to the appropriate Person. Distributions of Parent Common Stock
shall be made to Parent or the Shareholders, as appropriate, at the addresses
described in Section 11(b). Whenever a distribution is to be made to the
Shareholders, pro rata distributions shall be made to each of them based on the
percentage interests in the Escrow Fund set forth in Exhibit A as then in
effect. Within five business days after the Termination Date, the Escrow Agent
shall distribute or cause the stock transfer agent for the Parent Common Stock
to distribute to each of the Shareholders such Shareholder's pro-rata portion of
the Escrow Shares then held in escrow based on the percentage interests in the
Escrow Fund set forth in Exhibit A as then in effect; provided, however, that
notwithstanding the foregoing, if, prior to the Termination Date, any Indemnitee
has given a Claim Notice containing a claim which has not been resolved prior to
the Termination Date in accordance with Section 3, the Escrow Agent shall retain
in the Escrow Account after the Termination Date Escrow Shares having a
Stipulated Value equal to 100% of the Claimed Amount or Contested Amount, as the
case may be, with respect to all claims which have not then been resolved.
4.
<PAGE>
5. VALUATION OF ESCROW SHARES, ETC.
(a) STIPULATED VALUE. For purposes of this Agreement, the
"Stipulated Value" of each Escrow Share shall be deemed to be equal to
$___________, which equals the Parent Average Stock Price as of the Closing Date
under the Reorganization Agreement.
(b) STOCK SPLITS. All numbers contained in, and all calculations
required to be made pursuant to, this Agreement shall be adjusted as appropriate
to reflect any stock split, reverse stock split, stock dividend or similar
transaction effected by Parent after the date hereof; provided, however, that
the Escrow Agent shall have received notice of such stock split or other action
and shall have received the appropriate number of additional shares of Parent
Common Stock or other property pursuant to Section 2(c) hereof. In the event of
any such stock split or other similar occurrence, Parent shall deliver to the
Securityholders' Agent and the Escrow Agent a revised version of Exhibit A
setting forth the new number of Escrow Shares held in the Escrow Fund. Unless
and until the Escrow Agent receives the certificates representing additional
shares of Parent Common Stock or other property pursuant to Section 2(c), the
Escrow Agent may assume without inquiry that no such stock or other property has
been or is required to be issued with respect to Escrow Shares.
(c) EXCLUSIVE REMEDY. With the exception of claims based upon
fraud, from and after the Closing, recourse of Parent to the Escrow Shares
(adjusted as appropriate to reflect any stock split, reverse stock split, stock
dividend or similar transaction effected by Parent after the date hereof)
pursuant to the Reorganization Agreement and this Agreement shall be the sole
and exclusive remedy of Parent and the other Indemnitees for any claim for
damages under the indemnification provisions contained in, or any breach of, the
Reorganization Agreement (it being understood that nothing in this paragraph or
elsewhere in this Agreement or in the Reorganization Agreement shall affect
Parent's rights to specific performance or other similar equitable remedies).
6. FEES AND EXPENSES. Upon the execution of this Agreement by all
parties hereto and the initial deposit of the Escrow Fund in the Escrow Account,
fees and expenses, in accordance with Exhibit B attached hereto, will be payable
to the Escrow Agent. This annual Escrow Agent fee will cover the first twelve
months of the escrow. In accordance with Exhibit B attached hereto, the Escrow
Agent will also be entitled to reimbursement for reasonable and documented
out-of-pocket expenses, including those of its counsel, incurred by the Escrow
Agent in the performance of its duties hereunder and the execution and delivery
of this Agreement. All such fees and expenses shall be paid by Parent.
7. LIMITATION OF ESCROW AGENT'S LIABILITY.
The Escrow Agent undertakes to perform such duties as are specifically
set forth in this Agreement only and shall have no duty under any other
agreement or document notwithstanding their being referred to herein or attached
hereto as an exhibit. The Escrow Agent shall not be liable except for the
performance of such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement against
the Escrow Agent. The Escrow Agent shall incur no liability with respect to any
action taken by it or for any inaction on its part in reliance upon any notice,
direction, instruction,
5.
<PAGE>
consent, statement or other document believed by it to be genuine and duly
authorized, nor for any other action or inaction except for its own willful
misconduct or gross negligence. In all questions arising under this Agreement,
the Escrow Agent may rely on the advice of counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based upon such advice the
Escrow Agent shall not be liable to anyone. The Escrow Agent shall not be
required to take any action hereunder involving any expense unless the payment
of such expense is made or provided for in a manner reasonably satisfactory to
it. In no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
Parent hereby agrees to indemnify the Escrow Agent for, and hold it
harmless against, any loss, liability or expense incurred without negligence or
willful misconduct on the part of Escrow Agent, arising out of or in connection
with its carrying out of its duties hereunder. This right of indemnification
shall survive the termination of this Agreement, and the resignation of the
Escrow Agent. The costs and expenses of enforcing this right of indemnification
shall also be paid by Parent.
8. TERMINATION. This Agreement shall terminate on the Termination Date
or, if earlier, upon the release by the Escrow Agent of the entire Escrow Fund
in accordance with this Agreement; provided, however, that if the Escrow Agent
has received from any Indemnitee a Claim Notice setting forth a claim that has
not been resolved by the Termination Date, then this Agreement shall continue in
full force and effect until the claim has been resolved and the Escrow Shares
released in accordance with this Agreement.
9. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than 30 calendar days after it is
given to all parties hereto. Parent may appoint a successor Escrow Agent only
with the consent of the Securityholders' Agent (which consent shall not be
unreasonably withheld or delayed). The Escrow Agent shall act in accordance with
written instructions from Parent as to the transfer of the Escrow Fund to a
successor escrow agent. Any company into which the Escrow Agent may be merged or
converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company
to which the Escrow Agent may sell or transfer all or substantially all of its
escrow/custody business, provided such company shall be eligible to serve as
Escrow Agent hereunder, shall be the successor hereunder to the Escrow Agent
without the execution or filing of any paper or any further act.
10. SECURITYHOLDERS' AGENT. By virtue of their approval of the Merger
and the Reorganization Agreement, the Shareholders shall have approved the
indemnification and escrow terms set forth in the Reorganization Agreement and
this Agreement and shall have agreed to irrevocably appoint _______________ as
Securityholders' Agent, to give and receive notices and communications, to
authorize delivery to Parent of Parent Common Stock, cash or other property from
the Escrow Fund, to object to such deliveries, to agree to, negotiate, enter
into settlements and compromises of, and demand dispute resolution pursuant to
Section 3 of this
6.
<PAGE>
Agreement and comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or appropriate in the
judgment of the Securityholders' Agent for the accomplishment of the foregoing.
The Securityholders' Agent shall not be responsible for any act done or omitted
thereunder as Securityholders' Agent while acting in good faith and in the
exercise of reasonable judgment. The Shareholders shall jointly and severally
indemnify the Securityholders' Agent and hold the Securityholders' Agent
harmless against any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Securityholders'
Agent and arising out of or in connection with the acceptance or administration
of the Securityholders' Agent's duties hereunder, including the reasonable fees
and expenses of any legal counsel or other professional retained by the
Securityholders' Agent. By virtue of their approval of the Merger and this
Agreement, the Shareholders hereby agree to pay all costs and expenses,
including those of any legal counsel or other professional retained by the
Securityholders' Agent, in connection with the acceptance and administration of
the Securityholders' Agent's duties hereunder. Subject to the prior right of
Parent to make claims for Damages, the Securityholders' Agent shall have the
right to recover from the Escrow Fund prior to any distribution to the
Shareholders, any costs and expenses, including those of any legal counsel or
other professional retained by the Securityholders' Agent, in connection with
the acceptance and administration of the Securityholders' Agent's duties
hereunder.
11. MISCELLANEOUS.
(a) ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
(b) NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth in Section
10.6 of the Reorganization Agreement or to the Escrow Agent at the address set
forth below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
Chase Manhattan Bank and Trust, N.A.
101 California Street
Suite 2725
San Francisco, CA 94111-5930
Attention: James Nagy
Facsimile: (415) 693-8850
The Escrow Agent may assume that any Claim Notice, Response Notice
or other notice of any kind required to be delivered to the Escrow Agent and any
other Person has been received by such other Person if it has been received by
the Escrow Agent, but the Escrow Agent need not inquire into or verify such
receipt.
7.
<PAGE>
(c) HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
(d) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
(e) GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
Colorado (without giving effect to principles of conflicts of laws), except that
the fiduciary duties and responsibilities of the Escrow Agent shall be governed
by the Laws of the State of California.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
each of the parties hereto and each of their respective permitted successors and
assigns, if any. No Shareholder may assign such Shareholder's rights under this
Agreement without the express prior written consent of Parent, provided,
however, that upon the death of a Shareholder, such Shareholder's rights under
this Agreement shall be transferred to the person(s) who receive such
Shareholder's Parent Common Stock under the laws of descent and distribution.
Nothing in this Agreement is intended to confer, or shall be deemed to confer,
any rights or remedies upon any person or entity other than the parties hereto
and their permitted successors and assigns. This Agreement shall inure to the
benefit of: the Shareholders; Parent; Escrow Agent and the respective successors
and assigns, if any, of the foregoing.
(g) WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
(h) AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto; provided,
however, that any amendment duly executed and delivered by the Securityholders'
Agent shall be deemed to have been duly executed and delivered by all of the
Shareholders.
(i) SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
8.
<PAGE>
(j) PARTIES IN INTEREST. None of the provisions of this Agreement
is intended to provide any rights or remedies to any Person other than the
parties hereto and their respective successors and assigns, if any.
(k) ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
(l) WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any Legal Proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
(m) TAX REPORTING INFORMATION AND CERTIFICATION OF TAX
IDENTIFICATION NUMBERS.
(i) The parties hereto agree that, for tax reporting
purposes, all interest on or other income, if any, attributable to the Escrow
Shares or any other amount held in escrow by the Escrow Agent pursuant to this
Agreement shall be allocable to the Shareholders in accordance with their
percentage interests in the Escrow Fund set forth in Exhibit A.
(ii) Parent and each of the Shareholders agree to provide the
Escrow Agent with certified tax identification numbers for each of them by
furnishing appropriate forms W-9 (or Forms W-8, in the case of non-U.S. persons)
and other forms and documents that the Escrow Agent may reasonably request
(collectively, "Tax Reporting Documentation") to the Escrow Agent within 30 days
after the date hereof. The parties hereto understand that, if such Tax Reporting
Documentation is not so certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code, as it may be amended from time to time,
to withhold a portion of any interest or other income earned on the investment
of monies or other property held by the Escrow Agent pursuant to this Agreement.
(n) CONSTRUCTION.
(i) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(ii) The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.
(iii) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
9.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
MESSAGEMEDIA, INC.
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By:
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Title:
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SECURITYHOLDERS' AGENT:
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CHASE MANHATTAN BANK AND TRUST, N.A.
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By: James Nagy
Title:
10.
<PAGE>
EXHIBIT A
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Name and Address of Shareholder Number of Escrow Shareholder's percentage
Shares interest in the Escrow Fund
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11.
<PAGE>
EXHIBIT B
ESCROW FEES AND EXPENSES
12.
