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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
January 24, 2000 (January 19, 2000)
CNET, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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Delaware 0-20939 13-3696170
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
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150 Chestnut Street
San Francisco, California 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(415) 395-7800
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ITEM 5. OTHER EVENTS.
On January 19, 2000, the Registrant entered into an agreement to
acquire mySimon inc., a California corporation ("mySimon"), through a merger of
CNET Sub, Inc., a Delaware corporation and wholly-owned direct subsidiary of the
Registrant, with and into mySimon (the "Merger"), pursuant to which the
Registrant will issue approximately 11.3 million shares of its Common Stock. The
Registrant intends to account for this transaction using the pooling of
interests accounting method. MySimon owns and operates www.mySimon.com, an
online comparison shopping web site. For more information with respect to
mySimon or the terms of the Merger, reference is made to the Agreement and Plan
of Merger attached hereto as Exhibit 2.1 and the press release attached hereto
as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
2.1 Agreement and Plan of Merger dated January 19, 2000 among CNET, Inc.,
CNET Sub, Inc. and mySimon.
99.1 Press Release dated January 20, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: January 24, 2000
CNET, INC.
By: /S/ DOUGLAS N. WOODRUM
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Name: Douglas N. Woodrum
Title: Chief Financial Officer
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INDEX TO EXHIBITS
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EXHIBIT
NO. DESCRIPTION
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2.1 Agreement and Plan of Merger dated January 19, 2000 among CNET, Inc.,
CNET Sub, Inc. and mySimon.
99.1 Press Release dated January 20, 2000.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
CNET, INC.
CNET SUB, INC.
AND
MYSIMON INC.
JANUARY 19, 2000
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
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SECTION 1.01. The Merger.........................................................................2
SECTION 1.02. Closing; Closing Date; Effective Time..............................................2
SECTION 1.03. Effect of the Merger...............................................................3
SECTION 1.04. Articles of Incorporation; Bylaws..................................................3
SECTION 1.05. Directors and Officers.............................................................3
SECTION 1.06. Effect on Capital Stock............................................................3
SECTION 1.07. Adjustment of Merger Consideration.................................................5
SECTION 1.08. No Further Ownership Rights in Company Stock.......................................5
SECTION 1.09. No Fractional Shares...............................................................6
SECTION 1.10. Shares of Dissenting Shareholders..................................................6
ARTICLE II
EXCHANGE OF CERTIFICATES
SECTION 2.01. Exchange Agent.....................................................................6
SECTION 2.02. Exchange Procedures................................................................6
SECTION 2.03. Distributions with Respect to Unexchanged Shares...................................7
SECTION 2.04. Termination of Exchange Fund.......................................................7
SECTION 2.05. No Liability.......................................................................8
SECTION 2.06. Lost Certificates..................................................................8
SECTION 2.07. Withholding Rights.................................................................8
SECTION 2.08. Further Assurances.................................................................8
SECTION 2.09. Stock Transfer Books...............................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries.......................................9
SECTION 3.02. Charter and Bylaws.................................................................9
SECTION 3.03. Capitalization.....................................................................9
SECTION 3.04. Authority..........................................................................11
SECTION 3.05. No Conflict; Required Filings and Consents.........................................11
SECTION 3.06. Permits; Compliance................................................................12
SECTION 3.07. Financial Statements...............................................................12
SECTION 3.08. Absence of Certain Changes or Events...............................................13
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SECTION 3.09. No Undisclosed Liabilities.........................................................14
SECTION 3.10. Absence of Litigation..............................................................14
SECTION 3.11. Employee Benefit Plans; Labor Matters..............................................14
SECTION 3.12. Taxes..............................................................................17
SECTION 3.13. Tax Matters........................................................................18
SECTION 3.14. Certain Business Practices.........................................................18
SECTION 3.15. Insurance..........................................................................18
SECTION 3.16. Properties.........................................................................19
SECTION 3.17. Certain Material Contracts.........................................................19
SECTION 3.18. Intellectual Property..............................................................20
SECTION 3.19. Year 2000 Compliance...............................................................21
SECTION 3.20. Vote Required......................................................................21
SECTION 3.21 Brokers............................................................................21
SECTION 3.22 Insider Transactions...............................................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
SECTION 4.01. Organization and Qualification.....................................................22
SECTION 4.02. Charter and Bylaws.................................................................22
SECTION 4.03. Capitalization.....................................................................22
SECTION 4.04. Authority..........................................................................23
SECTION 4.05. No Conflict; Required Filings and Consent..........................................23
SECTION 4.06. SEC Reports; Financial Statements..................................................24
SECTION 4.07. Tax Matters........................................................................25
SECTION 4.08. Vote Required......................................................................25
SECTION 4.09. Brokers............................................................................25
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company...............................................25
SECTION 5.02. Negative Covenants of the Company..................................................25
SECTION 5.03. Parent Covenants...................................................................27
SECTION 5.04 Access and Information.............................................................28
SECTION 5.05 No Solicitation by Company.........................................................29
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Fairness Hearing...................................................................30
SECTION 6.02 Registration Statement; Proxy Statement............................................31
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SECTION 6.03. Meetings of Shareholders...........................................................32
SECTION 6.04. Appropriate Action; Consents; Filings..............................................32
SECTION 6.05. Public Announcements...............................................................34
SECTION 6.06 Nasdaq Listing.....................................................................34
SECTION 6.07 Stock Option Plans.................................................................34
SECTION 6.08 Merger Sub.........................................................................35
SECTION 6.09 Affiliates; Pooling; Tax Treatment.................................................35
SECTION 6.10 Employee Benefit Plans.............................................................35
SECTION 6.11 Indemnification of Directors and Officers..........................................36
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This Agreement.......................36
SECTION 7.02. Additional Conditions to Obligations of the Parent Companies.......................37
SECTION 7.03. Additional Conditions to Obligations of the Company................................38
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination........................................................................39
SECTION 8.02. Effect of Termination..............................................................40
SECTION 8.03. Amendment..........................................................................41
SECTION 8.04. Waiver.............................................................................41
SECTION 8.05. Fees, Expenses and Other Payments..................................................41
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements........................42
SECTION 9.02. Notices............................................................................42
SECTION 9.03. Certain Definitions................................................................43
SECTION 9.04. Headings...........................................................................44
SECTION 9.05. Severability.......................................................................44
SECTION 9.06. Entire Agreement...................................................................45
SECTION 9.07. Assignment.........................................................................45
SECTION 9.08. Parties in Interest................................................................45
SECTION 9.09. Specific Performance...............................................................45
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative..............................45
SECTION 9.11. Governing Law......................................................................45
SECTION 9.12. Counterparts.......................................................................45
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EXHIBITS
A - Form of Option Agreement
B - Form of Support Agreement
C - Form of Noncompetition Agreement
D - Form of Company Affiliate Letter
E - Form of Parent Affiliate Letter
F - Form of Company Counsel Opinion
G - Form of Parent Counsel Opinion
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 19, 2000, is among CNET, Inc., a Delaware corporation ("Parent"), CNET
Sub, Inc., a Delaware corporation and wholly-owned direct subsidiary of Parent
("Merger Sub"), and mySimon Inc., a California corporation (the "Company").
Parent and Merger Sub are sometimes referred to herein as the "Parent
Companies."
RECITALS
WHEREAS, the parties hereto desire Merger Sub, upon the terms and
subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of California ("California Law") and the General
Corporation Law of the State of Delaware ("Delaware Law"), to merge with and
into the Company (the "Merger"), and pursuant thereto, the issued and
outstanding shares of capital stock of the Company (the "Company Stock") not
owned directly or indirectly by the Company or the Parent Companies or their
respective subsidiaries shall be converted into the right to receive shares of
common stock, $.0001 par value, of Parent (the "Parent Common Stock"), as set
forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is fair to, and in the best interests of, the Company and its
shareholders and has approved and adopted this Agreement and the transactions
contemplated hereby;
WHEREAS, the Board of Directors of Parent has determined that the
Merger is fair to, and in the best interests of, Parent and its shareholders and
has approved and adopted this Agreement and the transactions contemplated
hereby;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted
this Agreement and Parent, as the sole shareholder of Merger Sub, will adopt
this Agreement promptly after the execution hereof by the parties hereto;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a)(2)(E)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the
Merger be treated as a "pooling of interests";
WHEREAS, Parent has requested, and the Company has agreed, as a
condition and an inducement to Parent's willingness to enter into this
Agreement, that the Company enter into that certain Option Agreement, dated as
of the date hereof and attached hereto as Exhibit A (the "Option Agreement"),
pursuant to which the Company has granted Parent an option to purchase shares of
the Company's common stock exercisable upon the occurrence of certain events;
and
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WHEREAS, Parent has requested, and certain shareholders of the Company
have agreed, as a condition and an inducement to Parent's willingness to enter
into this Agreement, that certain shareholders of the Company enter into support
agreements with Parent, dated as of the date hereof in the form attached hereto
as Exhibit B (the "Support Agreements"), pursuant to which such shareholders,
among other things, agree to vote all the shares of Company Stock beneficially
owned by such shareholders in favor of approval and adoption of this Agreement;
WHEREAS, Parent has requested, and certain shareholders of the Company
have agreed, as a condition and an inducement to Parent's willingness to enter
into this Agreement, that such shareholders enter into noncompetition agreements
with the Company, dated the date hereof and attached hereto as Exhibit C (the
"Noncompetition Agreements");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
AGREEMENT
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with California Law and Delaware
Law, at the Effective Time (as defined in Section 1.02 of this Agreement),
Merger Sub shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). Certain terms used in this Agreement are defined in Section 9.03
hereof.
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
Agreement shall have been terminated pursuant to Section 8.01, and subject to
the satisfaction or waiver of the conditions set forth in Article VII, the
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, Spear Street Tower, One Market, San
Francisco, California, as soon as practicable (but in any event within two
business days) after the satisfaction or waiver of the conditions set forth in
Article VII, or at such other date, time and place as Parent and the Company may
agree; provided, that the conditions set forth in Article VII shall have been
satisfied or waived at or prior to such time. The date on which the Closing
takes place is referred to herein as the "Closing Date." As promptly as
practicable on the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing a Certificate of Merger with the California Secretary of
State and the Delaware Secretary of State, in such form as required by, and
executed in accordance with the relevant provisions of, California Law and
Delaware Law (the date and time of such filing, or such later date or time
agreed upon by Parent and the Company and set forth therein, being the
"Effective Time").
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SECTION 1.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of California
Law and Delaware Law.
SECTION 1.04. Articles of Incorporation; Bylaws. At the Effective Time,
the articles of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the articles of incorporation of the Surviving
Corporation and thereafter shall continue to be its articles of incorporation
until amended as provided therein and pursuant to California Law. The bylaws of
the Company, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation and thereafter shall continue to be its
bylaws until amended as provided therein and pursuant to California Law.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the charter and bylaws of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, each to
hold office in accordance with the bylaws of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
SECTION 1.06. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of the Company Stock:
(a) Each share of Company Stock that is owned by the Company
or any wholly-owned subsidiary of the Company (as treasury stock or
otherwise) shall automatically be cancelled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(b) Each share of capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall remain
outstanding and shall be unchanged as a share of capital stock of the
Surviving Corporation.
(c) Each issued and outstanding share of Company Stock (other
than Dissenting Shares (as defined in Section 1.10) and shares to be
cancelled in accordance with Section 1.06(a)) shall be converted into
the right to receive a number of fully paid and nonassessable shares of
Parent Common Stock as follows:
(i) Each share of the Company's Series A preferred stock, no
par value (the "Series A Preferred Stock"), shall be entitled to
receive a number of Merger Consideration Shares (as defined in
clause (d) below) equal to (A) the number of Merger Consideration
Shares required to be distributed to a holder of a share of Series
A Preferred Stock pursuant to the Company's articles of
incorporation in satisfaction of the liquidation preference
thereof (the "Series A Liquidation Preference"), plus the product
of (B) the number of shares of the Company's common stock, no par
value (the "Company Common Stock"), a share of Series A Preferred
Stock would be converted into pursuant to the Company's articles
of incorporation, times the
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Common Stock Exchange Ratio (as defined in clause (c)(v) below).
Such amount is referred to herein as the "Series A Exchange
Ratio."
(ii) Each share of the Company's Series B preferred
stock, no par value (the "Series B Preferred Stock"), shall be
entitled to receive a number of Merger Consideration Shares equal
to (A) the number of Merger Consideration Shares required to be
distributed to a holder of a share of Series B Preferred Stock
pursuant to the Company's articles of incorporation in
satisfaction of the liquidation preference thereof (the "Series B
Liquidation Preference"), plus the product of (B) the number of
shares of Company Common Stock a share of Series B Preferred Stock
would be converted into pursuant to the Company's articles of
incorporation, times the Common Stock Exchange Ratio. Such amount
is referred to herein as the "Series B Exchange Ratio."
(iii) Each share of the Company's Series C preferred stock,
no par value (the "Series C Preferred Stock"), shall be entitled
to receive a number of Merger Consideration Shares equal to (A)
the number of Merger Consideration Shares required to be
distributed to a holder of a share of Series C Preferred Stock
pursuant to the Company's articles of incorporation in
satisfaction of the liquidation preference thereof (the "Series C
Liquidation Preference"), plus the product of (B) the number of
shares of Company Common Stock a share of Series C Preferred Stock
would be converted into pursuant to the Company's articles of
incorporation, times the Common Stock Exchange Ratio. Such amount
is referred to herein as the "Series C Exchange Ratio."
(iv) Each share of the Company's Series D preferred stock, no
par value (the "Series D Preferred Stock"), shall be entitled to
receive a number of Merger Consideration Shares equal to (A) the
number of Merger Consideration Shares required to be distributed
to a holder of a share of Series D Preferred Stock pursuant to the
Company's articles of incorporation in satisfaction of the
liquidation preference thereof (the "Series D Liquidation
Preference"), plus the product of (B) the number of shares of
Company Common Stock a share of Series D Preferred Stock would be
converted into pursuant to the Company's articles of
incorporation, times the Common Stock Exchange Ratio. Such amount
is referred to herein as the "Series D Exchange Ratio." As used
herein, the term "Company Preferred Stock" shall mean
collectively, the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred
Stock.
(v) Each share of Company Common Stock shall be entitled to
receive a number of Merger Consideration Shares equal to (A) the
difference of (i) the aggregate number of Merger Consideration
Shares, minus (ii) the sum of the Series A Liquidation Preference,
the Series B Liquidation Preference, the Series C Liquidation
Preference and the Series D Liquidation Preference, assuming the
prior exercise of all warrants of the Company outstanding at the
Effective Time to
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purchase shares of Series D Preferred Stock (the "Series D
Warrants"), divided by (B) an amount equal to (X) the number of
shares of Company Common Stock outstanding at the Effective Time,
assuming (i) the prior exercise of all stock options of the
Company, whether vested or unvested, to purchase shares of Company
Common Stock (the "Stock Options"), (ii) the exercise of all
warrants of the Company to purchase shares of Company Common Stock
(the "Common Stock Warrants"), (iii) the conversion into Company
Common Stock of all Company Preferred Stock and any other
securities convertible into Company Common Stock, and (iv) the
exercise of any other rights or obligations with respect to the
issuance of Company Stock, plus (Y) 1,500,000. Such amount is
referred to herein as the "Common Stock Exchange Ratio."
As of the Effective Time, all such shares of Company Stock shall no
longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing
any such shares of Company Stock shall cease to have any rights with
respect thereto, except the right to receive, upon surrender of such
certificate in accordance with Section 2.02, that number of shares of
Parent Common Stock determined pursuant to the applicable Exchange
Ratio and if applicable, cash pursuant to Section 1.09 (collectively,
the "Merger Consideration").
(d) As used herein, "Merger Consideration Shares" shall mean
that number of shares of Parent Common Stock equal to the quotient of
(i) the sum of (A) $661,250,000, plus (B) the aggregate exercise price
of all Stock Options, Series D Warrants and Common Stock Warrants that
are either outstanding immediately prior to the Effective Time or were
exercised after the date hereof and prior to the Effective Time,
divided by (ii) $58.4625 (the "Parent Stock Value").
SECTION 1.07 Adjustment of Merger Consideration. In the event that
pursuant to a transaction announced after the date hereof and becoming effective
prior to the Effective Time, there shall be a change in the class or number of
shares of Company Stock or Parent Common Stock issued and outstanding by reason
of any stock dividend, stock split, reclassification, recapitalization,
combination or mandatory exchange of shares, then the Exchange Ratios shall be
adjusted accordingly to eliminate the effects of such event.
SECTION 1.08 No Further Ownership Rights in Company Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of a certificate
which immediately prior to the Effective Time represented outstanding shares of
Company Stock (a "Certificate") in accordance with the terms hereof (including
any cash paid pursuant to Section 1.09) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Company Stock, and
from and after the Effective Time there shall be no further registration of
transfers of the shares of Company Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in Article II.
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SECTION 1.09 No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Stock exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash in an amount equal to such fractional part of a share of Parent
Common Stock multiplied by the Parent Stock Value, rounded to the nearest cent
and without interest.
SECTION 1.10 Shares of Dissenting Shareholders. Notwithstanding
anything to the contrary contained in this Agreement, any shares of Company
Stock that, as of the Effective Time, are or may become "dissenting shares"
within the meaning of Section 1300(b) of California Law (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive Merger Consideration, and the holder or holders of such shares shall be
entitled only to such rights as may be granted to such holder or holders in
Chapter 13 of California Law; provided, however, that if the status of any such
shares as "dissenting shares" changes, 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 surrender of the Certificate or Certificates
representing such shares), without interest, Merger Consideration. The Company
shall give Parent prompt notice of any notices or demands for payment in
accordance with California Law for shares of Company Stock received by the
Company, and Parent shall have the right to direct all proceedings, negotiations
and actions taken by the Company in respect thereof.
ARTICLE II
EXCHANGE OF CERTIFICATES
SECTION 2.01 Exchange Agent. As of the Effective Time, Parent shall
deposit with such bank or trust company as may be designated by Parent and be
reasonably acceptable to the Company (the "Exchange Agent") for the benefit of
the holders of shares of Company Stock, for exchange or payment in accordance
with this Section 2.01, through the Exchange Agent, (a) certificates evidencing
such number of shares of Parent Common Stock equal to the aggregate number of
shares of Parent Common Stock which may be issuable to holders of Common Stock
in the Merger, and (b) any cash necessary to pay amounts due pursuant to Section
1.09 (such certificates for shares of Parent Common Stock and such cash being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions in accordance with these Articles I and II,
deliver the Parent Common Stock and cash contemplated to be issued out of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose. The
Exchange Agent shall invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
SECTION 2.02 Exchange Procedures. As soon as reasonably practicable,
and in no event later than five business days, after the Effective Time, the
Exchange Agent shall mail to
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each holder of record of a Certificate or Certificates that were converted into
the right to receive shares of Parent Common Stock, (a) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent, and which shall be in such form and have such other
provisions as Parent may reasonably specify and which the Company shall have a
reasonable opportunity to review prior to the Effective Time) and (b)
instructions for use in effecting the surrender of the Certificates in exchange
for shares of Parent Common Stock and cash. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock and
cash which such holder has the right to receive pursuant to the provisions of
Article I and this Article II and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of Company Stock that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock and cash may be
issued to a person other than the person in whose name the Certificate so
surrendered is registered if the Certificate representing such Company Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Article
II, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon surrender the Merger Consideration as
contemplated by this Article II.
SECTION 2.03 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock to which such holder is entitled hereunder and no
cash payment shall be paid to any such holder pursuant to Section 1.09 until the
holder of record of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be given to the record holder of the certificates representing whole
shares of Parent Common Stock to which such holder is entitled hereunder,
without interest, (a) at the time of such surrender, a certificate representing
the number of whole shares of Parent Common Stock and the amount of any cash to
which such holder is entitled pursuant to Section 1.09 and the amount of
dividends or other distributions with respect to such whole shares of Parent
Common Stock with a record date after the Effective Time and a payment date
prior to their date of issuance to such holder, and (b) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
SECTION 2.04 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
shareholders of the Company who have not previously complied with the provisions
of this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock and cash and any dividends or distributions
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with respect to Parent Common Stock. Any portion of the Exchange Fund remaining
unclaimed by holders of Company Stock five years after the Effective Time (or
such earlier date immediately prior to such time as such portion would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation
free and clear of any claims or interest of any person previously entitled
therein.
SECTION 2.05 No Liability. To the fullest extent permitted by law, none
of Parent, Merger Sub, the Company or the Surviving Corporation shall be liable
to any holder of Company Stock or Parent Common Stock, as the case may be, for
any shares (or dividends or distributions with respect thereto) and cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 2.06 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock and any cash.
SECTION 2.07 Withholding Rights. Parent and the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Stock such amounts
as Parent or the Exchange Agent, as applicable, is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Stock in respect of which such deduction and withholding was
made by such party.
SECTION 2.08 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
SECTION 2.09 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Stock thereafter on the records
of the Company. From and after the Effective Time, the holders of Certificates
shall cease to have any rights with respect to such shares of Company Stock
formerly represented thereby, except as otherwise provided herein or by law. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
Parent for any reason shall be converted into the Merger Consideration with
respect to the shares of Company Stock formerly represented thereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent Companies
that, except as set forth in the relevant sections of the disclosure schedules
delivered by the Company to Parent herewith (the "Company Schedules"):
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, other than where the failure to
be so duly qualified and in good standing would not have a Company Material
Adverse Effect. The term "Company Material Adverse Effect" as used in this
Agreement shall mean any change or effect that, individually or when taken
together with all other such changes or effects, could reasonably be expected to
be materially adverse to the business, operations, assets, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole,
except to the extent that any such change or effect results from changes in
general economic conditions or changes affecting the industry generally in which
the Company and Parent operate. Schedule 3.01 sets forth, as of the date of this
Agreement, a true and complete list of all the Company's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation or
organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock or other equity interests owned by the Company or
another subsidiary of the Company. Neither the Company nor any of its
subsidiaries owns an equity interest in any other partnership or joint venture
arrangement or other business entity.
SECTION 3.02. Charter and Bylaws. The Company has heretofore furnished
to Parent complete and correct copies of the charter and the bylaws or the
equivalent organizational documents, in each case as amended or restated, of the
Company and each of its subsidiaries. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its charter or bylaws
(or equivalent organizational documents).
SECTION 3.03. Capitalization.
(a) As of January 19, 2000, the authorized capital stock of
the Company consists of (i) 50,000,000 shares of Company Common Stock
of which (w) 13,842,236 shares were issued and outstanding, (x) no
shares were held in treasury by the Company, (y) 3,436,142 shares are
reserved for future issuance pursuant to Stock Options granted pursuant
to the mySimon Inc. 1998 Stock Option Plan (the "Option Plan"), and (z)
392,945 shares are reserved for issuance pursuant to the Common Stock
Warrants, (ii) 2,857,142 shares of Series A Preferred Stock of which
2,857,142 are issued and
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<PAGE> 15
outstanding, (iii) 6,000,000 shares of Series B Preferred Stock of
which 1,800,000 are issued and outstanding, (iv) 5,000,000 shares of
Series C Preferred Stock of which 920,712 are issued and outstanding,
and (v) 18,000,000 shares of Series D Preferred Stock of which (x)
11,261,262 are issued and outstanding and (y) 4,331,250 shares are
reserved for future issuance pursuant to the Series D Warrants. The
holders, as of January 19, 2000, of Company Common Stock, Company
Preferred Stock, Stock Options, Series D Warrants, Common Stock
Warrants, and their respective ownership interests, are set forth in
Schedule 3.03(a). Except as described in this Section 3.03, no shares
of capital stock of the Company are reserved for any purpose. Each of
the outstanding shares of capital stock of, or other equity interests
in, each of the Company and its subsidiaries is duly authorized,
validly issued, and, in the case of shares of capital stock fully paid
and nonassessable, and has not been issued in violation of (nor are any
of the authorized shares of capital stock of, or other equity interests
in such entities subject to) any preemptive or similar rights created
by statute, the charter or bylaws (or the equivalent organizational
documents) of the Company or any of its subsidiaries, or any agreement
to which the Company or any of its subsidiaries is a party or bound,
and such outstanding shares or other equity interests owned by the
Company or a subsidiary of the Company are owned free and clear of all
security interests, liens, claims, pledges, agreements, limitations on
the Company's or such subsidiary's voting rights, charges or other
encumbrances of any nature whatsoever. All outstanding shares of
Company Stock, Stock Options, Common Stock Warrants and Series D
Warrants were issued in compliance with all applicable federal and
state securities laws.
(b)(i) Except as set forth in Section 3.03(a) above or in
Schedule 3.03(b)(i), there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which the
Company or any of its subsidiaries is a party relating to the issued or
unissued capital stock of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to grant, issue or
sell any shares of the capital stock of the Company or any of its
subsidiaries, by sale, lease, license or otherwise.
(ii) Except as set forth in Schedule 3.03(a), there are no
obligations, contingent or otherwise, of the Company or any of its
subsidiaries to (A) repurchase, redeem or otherwise acquire any shares
of the Company Stock or other capital stock of the Company, or the
capital stock or other equity interests of any subsidiary of the
Company; or (B) (other than advances to subsidiaries in the ordinary
course of business) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations
of, any subsidiary of the Company or any other person.
(iii) Neither the Company nor any of its subsidiaries (x)
directly or indirectly owns, (y) has agreed to purchase or otherwise
acquire or (z) holds any interest convertible into or exchangeable or
exercisable for one percent or more of the capital stock of any
corporation, partnership, joint venture or other business association
or entity (other than the subsidiaries of the Company set forth in
Schedule 3.01).
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(iv) Except for any agreements, arrangements or commitments
between the Company and its subsidiaries or between such subsidiaries,
there are no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company or any of its
subsidiaries. There are no voting trusts, proxies or other agreements
or understandings to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or
any of its subsidiaries.
(c) The Company has delivered to Parent complete and correct
copies of (i) the Option Plan and the forms of Stock Options issued
pursuant to the Option Plan, including all amendments thereto, and (ii)
all Stock Options which are not in the respective forms thereof
provided under clause (i) above. Schedule 3.03(c) sets forth a complete
and correct list of all outstanding Stock Options, including any not
granted pursuant to the Option Plan, setting forth as of the date
hereof (w) the number and type of Stock Options outstanding, (x) the
exercise price of each outstanding Stock Option, (y) the number of
Stock Options exercisable and (z) assuming no amendment or waiver of
the terms thereof, the number of Stock Options which will become
exercisable on account of the Merger or any other transaction
contemplated hereby.
SECTION 3.04. Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and the Option Agreement, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby (subject to, with respect to the Merger, the
adoption of this Agreement by the shareholders of the Company as described in
Section 3.20 hereof). The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Option Agreement or to consummate the transactions
contemplated hereby (subject to, with respect to the consummation of the Merger,
the adoption of this Agreement by the shareholders of the Company as described
in Section 3.20 hereof). This Agreement and the Option Agreement have been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Parent Companies, constitute legal, valid
and binding obligations of the Company.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Option Agreement by the Company do not, and the consummation of the
transactions contemplated hereby will not (i) conflict with or violate
the charter or bylaws, or the equivalent organizational documents, in
each case as amended or restated, of the Company or any of its
subsidiaries, (ii) conflict with or violate any material federal,
state, foreign or local law, statute, ordinance, rule, regulation,
order, judgment or decree (collectively, "Laws") applicable to the
Company or any of its subsidiaries or by which any of their respective
properties is
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bound or subject or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under,
or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other material instrument or obligation
to which the Company or any of its subsidiaries is a party or by or to
which the Company or any of its subsidiaries or any of their respective
properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Company does not, and consummation of the transactions contemplated
hereby will not, require the Company to obtain any consent, license,
permit, approval, waiver, authorization or order of, or to make any
filing with or notification to, any governmental or regulatory
authority, domestic or foreign (collectively, "Governmental Entities"),
except for applicable requirements, if any, of the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act of 1934, as
amended (the "Exchange Act"), state securities laws or blue sky laws
("Blue Sky Laws"), and the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the filing and recordation of
appropriate merger documents as required by California Law and Delaware
Law.
SECTION 3.06. Permits; Compliance. Each of the Company and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), and there is no action, proceeding or investigation pending or, to
the knowledge of the Company, threatened regarding suspension or cancellation of
any of the Company Permits. Neither the Company nor any of its subsidiaries is
in material conflict with, or in default or violation of (a) any Law applicable
to the Company or any of its subsidiaries or by or to which any of their
respective properties is bound or subject or (b) any of the Company Permits.
Since January 1, 1998, neither the Company nor any of its subsidiaries has
received from any Governmental Entity any written notification with respect to
possible material conflicts, defaults or violations of Laws.
SECTION 3.07. Financial Statements.
(a) Schedule 3.07(a) includes true and complete copies of the
following: (i) the unaudited consolidated financial statements of the
Company and its subsidiaries for the fiscal year ended December 31,
1998, including balance sheets as of such date and the related
consolidated statements of operations, retained earnings and cash flows
of the Company and its subsidiaries for the fiscal year ended on such
date, and (ii) the unaudited consolidated financial statements of the
Company and its subsidiaries for the nine months ended September 30,
1998 and September 30, 1999, including balance sheets as of such date,
and the statements of operations, retained earnings and cash flows for
the nine-month periods ended on such dates. The foregoing financial
statements have been prepared
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from the books and records of the Company, which accurately and fairly
reflect the transactions of, acquisitions and dispositions of assets
by, and incurrence of liabilities by the Company and its subsidiaries.
(b) Except as set forth in Schedule 3.07(b), each of the
foregoing financial statements (i) has been prepared in accordance with
generally accepted accounting principles ("GAAP"), applied on a
consistent basis throughout the periods involved and (ii) fairly
present in all material respects the financial position of the Company
and its subsidiaries and their respective assets and liabilities as of
the respective dates thereof and the results of their operations,
transactions and cash flows for the periods indicated, except that the
interim financial statements are subject to normal and recurring
year-end adjustments for recurring accruals, which will not be material
individually or in the aggregate, and to the absence of footnote
disclosure and other presentation items.
(c) Schedule 3.07(c) sets forth certain reasonable estimates
of monthly traffic, unique visits, page views and click throughs to
merchants for each of the twelve months ended December 31, 1999.
(d) All accounts receivable reflected in the consolidated
balance sheet of the Company and its subsidiaries as of September 30,
1999 (the "Latest Balance Sheet") or generated since the date of the
Latest Balance Sheet arose in the ordinary course of business and are
fully collectible in the ordinary course of business, without resort to
litigation, at the face amount thereof less any reserve reflected in
the Latest Balance Sheet, and will not be subject to counterclaim,
set-off or other reduction.
SECTION 3.08. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as set forth in Schedule 3.08, since September
30, 1999, and through and including, in the case of clause (ix) below, the date
of this Agreement, the Company and its subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and there has not been: (i) any damage, destruction or loss
(whether or not covered by insurance) with respect to any material assets of the
Company or any of its subsidiaries; (ii) any change by the Company or its
subsidiaries in their accounting methods, principles or practices; (iii) except
for dividends by a subsidiary of the Company to the Company or another
subsidiary of the Company, any declaration, setting aside or payment of any
dividends or distributions in respect of shares of the Company Stock or the
shares of stock of, or other equity interests in, any subsidiary of the Company,
or any redemption, purchase or other acquisition by the Company or any of its
subsidiaries of any of the Company's securities or any of the securities of any
subsidiary of the Company; (iv) any increase in the benefits under, or the
establishment or amendment of, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any increase in the compensation payable or to become
payable to directors, officers or employees of the Company or its subsidiaries,
except for (A) increases in salaries or wages payable or to become payable in
the ordinary course of business and consistent with past practice or (B) the
granting of stock options pursuant to the Option Plan
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in the ordinary course of business to employees of the Company or its
subsidiaries; (v) any revaluation by the Company or any of its subsidiaries of
any of their assets, including the writing down of the value of inventory or the
writing down or off of notes or accounts receivable, other than in the ordinary
course of business and consistent with past practices; (vi) any entry by the
Company or any of its subsidiaries into any commitment or transaction material
to the Company or any of its subsidiaries (other than this Agreement and the
transactions contemplated hereby), including, without limitation, incurring or
agreeing to incur capital expenditures in excess of $100,000; (vii) any material
increase in indebtedness for borrowed money; (viii) the termination of
employment (whether voluntary or involuntary) of any officer of the Company or
any of its subsidiaries; or (ix) , any Company Material Adverse Effect.
SECTION 3.09. No Undisclosed Liabilities. Except as set forth in
Schedule 3.09, none of the Company or any of its subsidiaries has any direct or
indirect debts, liabilities or obligations, whether known or unknown, absolute,
accrued, contingent or otherwise ("Liabilities"), except for (a) Liabilities
fully reflected in the Latest Balance Sheet and related financial statement
notations; (b) Liabilities incurred in the ordinary course of business and
consistent with past practice since September 30, 1999; and (c) obligations to
be performed in the ordinary course of business under the Material Contracts (as
defined in Section 3.17) or under agreements that do not constitute Material
Contracts.
SECTION 3.10. Absence of Litigation. Except as set forth in Schedule
3.10, there is no claim, action, suit, litigation, proceeding, arbitration or,
to the knowledge of the Company, investigation of any kind, at law or in equity
(including actions or proceedings seeking injunctive relief), pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or any material properties or rights of the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries is subject to
any continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Government Entity or arbitrator, including,
without limitation, cease-and-desist or other orders, other than any of the
above not reflected on Schedule 3.10 that could not reasonably be expected to
have a Company Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Labor Matters.
(a) Set forth in Schedule 3.11(a) is a complete and correct
list of all "employee benefit plans" (as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all
plans or policies providing for "fringe benefits" (including but not
limited to vacation, paid holidays, personal leave, employee discount,
educational benefit or similar programs), and each other bonus,
incentive compensation, deferred compensation, profit sharing, stock,
severance, retirement, health, life, disability, group insurance,
workers compensation, employment, stock option, stock purchase, stock
appreciation right, supplemental unemployment, layoff, consulting, or
any other similar plan, agreement, policy or understanding (whether
written or oral, qualified or nonqualified, currently effective or
terminated), and any trust, escrow or other agreement related thereto,
which (i) is or has been established, maintained or contributed to by
the
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Company or any ERISA Affiliate or with respect to which the Company or
any ERISA Affiliate has any liability, or (ii) provides benefits, or
describes policies or procedures applicable, to any officer, employee,
director, former officer, former employee or former director of the
Company or any ERISA Affiliate, or any dependent thereof, regardless of
whether funded (each, an "Employee Plan," and collectively, the
"Employee Plans"). As used herein, "ERISA Affiliate" means any
corporation, trade or business the employees of which, together with
the employees of the Company, are required to be treated as employed by
a single employer under the provisions of ERISA or Section 414 of the
Code.
(b) Except as set forth in Schedule 3.11(b), no written or
oral representations have been made by the Company, or to the knowledge
of the Company, by any ERISA Affiliate, to any employee, officer or
director or former employee, officer or director of the Company or its
subsidiaries promising or guaranteeing any coverage under any employee
welfare plan for any period of time beyond the end of the current plan
year (except to the extent of coverage required under Code Section
4980B or similar state law). The consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment
or vesting, or increase the amount of compensation (including amounts
due under Employee Plans) due to any employee, officer or director or
former employee, officer or director of the Company or its
subsidiaries.
(c) Except as set forth in Schedule 3.11(c), all employees of
the Company and its subsidiaries are terminable at the will of the
Company, and neither the Company, nor any present or former director,
or officer, employee or agent of the Company has made any binding
commitments of the Company or any of its subsidiaries, written or
verbal, to any present or former director, officer, agent or employee
concerning his term, condition, benefits or employment (other than as
expressly required by law or stated in the applicable Employee Plan).
(d) With respect to each Employee Plan, the Company has
furnished to Parent true, correct and complete copies of (i) the plan
documents and summary plan description; (ii) the most recent
determination letter received from the Internal Revenue Service; (iii)
the annual reports required to be filed for the three most recent plan
years of each such Employee Plan; (iv) all related trust agreements,
insurance contracts or other funding agreements which implement such
Employee Plan; and (v) all other documents, records or other materials
related thereto reasonably requested by Buyer.
(e) The Company's 401(k) plan (i) is the only employee pension
benefit plan maintained by the Company or any ERISA Affiliate; and (ii)
meets the qualification requirements of the Code in form and operation,
and such plan, and each trust (if any) forming a part thereof, has
received a favorable determination letter, opinion, notification and/or
advisory letter(s), as applicable, from the Internal Revenue Service as
to the qualification under the Code of such plan and the tax-exempt
status of such related trust, and nothing has occurred since the date
of such letter that may adversely affect the qualification of such plan
or the tax-exempt status of such related trust. All Employee
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Plans purporting to qualify for special tax treatment under any
provision of the Code, including, without limitation, Code Sections
79, 105, 106, 125, 127, 129, 132, 421 or 501(c)(9) meet in all
material respects the requirement of such sections in form and in
operation. All reports, returns or filings required by any government
agency have been timely filed in accordance in all material respects
with all applicable requirements.
(f) No condition exists that would subject the Company, any
ERISA Affiliate or Parent to any material excise tax, penalty tax or
fine related to any Employee Plan.
(g) There is no Employee Plan that is subject to Part 3 of
Title I of ERISA or Title IV of ERISA; each Employee Plan has been
operated in all material respects in compliance with ERISA, the Code
and all other applicable laws; none of the Employee Plans is a
"multiple employer plan" or "multiemployer plan" (as described or
defined in ERISA or the Code), nor has the Company or any ERISA
Affiliate ever contributed or been required to contribute to any such
plan; there are no material unfunded liabilities existing under any
Employee Plans, and each Employee Plan could be terminated as of the
Closing Date without any material liability to the Parent, the Company
or any ERISA Affiliate.
(h) There are no material actions, suits, claims, audits, or
investigations pending or, to the knowledge of the Company, threatened
against, or with respect to, any of the Employee Plans or their assets;
and all contributions required to be made to the Employee Plans have
been made timely.
(i) None of the Company or any of its subsidiaries is a party
to any collective bargaining or other labor union contract. No
collective bargaining agreement is being negotiated by the Company or
any of its subsidiaries. The Company and its subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment, employment practices and wages and hours. There is no
pending or threatened labor dispute, strike or work stoppage against
the Company or any of its subsidiaries which may materially interfere
with the respective business activities of the Company or any of its
subsidiaries. None of the Company, its subsidiaries or any of their
respective representatives or employees has committed any materially
unfair labor practices in connection with the operation of the
respective businesses of the Company or its subsidiaries, and there is
no materially pending or threatened charge or complaint against the
Company or any of its subsidiaries by the National Labor Relations
Board or any comparable state agency.
(j) None of the Company or any of its subsidiaries is a party
to or is bound by any severance agreements, programs, policies, plans
or arrangements, whether or not written. Schedule 3.11(j) sets forth,
and the Company has provided to Parent true and correct copies of, (i)
all employment agreements with officers or employees of the Company or
its subsidiaries; (ii) all agreements with consultants or directors of
the Company or its subsidiaries; and (iii) all non-competition
agreements with the Company.
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(k) Set forth on Schedule 3.11(k) is a complete list of all
current employees, temporary employees, contractors and consultants of
the Company or its subsidiaries, including date of hiring, current
title and compensation, and date and amount of last increase in
compensation.
SECTION 3.12. Taxes.
(a) (i) All returns and reports ("Tax Returns") of or with
respect to any Tax which is required to be filed on or before the
Closing Date by or with respect to the Company or any its subsidiaries
have been or will be duly and timely filed, (ii) all items of income,
gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been or will be so included and all
information provided in each such Tax Return is true, correct and
complete in all material respects, (iii) all Taxes which have become or
will become due with respect to the period covered by each such Tax
Return have been or will be timely paid in full, (iv) all withholding
Tax requirements imposed on or with respect to the Company or any of
its subsidiaries have been or will be satisfied in full in all material
respects, and (v) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or
late payment of any such Tax.
(b) All Tax Returns of or with respect to the Company or any
of its subsidiaries, with unexpired or extended statutes of
limitations, which have not been audited by the applicable governmental
authority are set forth in Schedule 3.12(b).
(c) There is not in force any extension of time with respect
to the due date for the filing of any Tax Return of or with respect to
the Company or any its subsidiaries or any waiver or agreement for any
extension of time for the assessment, collection or payment of any Tax
of or with respect to the Company or any of its subsidiaries.
(d) There are no pending audits, actions, proceedings,
investigations, disputes or claims with respect to or against the
Company or any of its subsidiaries for or with respect to any Taxes, no
assessment, deficiency or adjustment has been assessed or, to the
Company's knowledge, proposed with respect to any Tax Return of or with
respect to the Company or any of its subsidiaries.
(e) The Company has previously delivered to Parent true and
complete copies of each written Tax allocation or sharing agreement and
a true and complete description of each unwritten Tax allocation or
sharing arrangement affecting the Company or any of its subsidiaries.
(f) Except for statutory liens for current Taxes not yet due,
no liens for Taxes exist upon the assets of any of the Company or its
subsidiaries.
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(g) None of the property of the Company or any of its
subsidiaries is held in an arrangement for which partnership Tax
Returns are being filed, and neither the Company nor any of its
subsidiaries owns any interest in any controlled foreign corporation
(as defined in section 957 of the Code), passive foreign investment
company (as defined in section 1296 of the Code) or other entity the
income of which is required to be included in the income of the Company
or such subsidiary.
(h) None of the property of the Company or any of its
subsidiaries is subject to a safe-harbor lease (pursuant to Section
168(f) (8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of Section
168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of Section 168(g)(5) of the Code).
(i) None of the Company or any of its subsidiaries has made
an election under Section 341(f) of the Code.
(j) None of the Company or any subsidiary has ever been a
member of an affiliated group of corporations (as defined in Section
1504(a) of the Internal Revenue Code) other than the group of which the
Company is currently the common parent.
(k) None of the Company or any subsidiary is or has ever been
subject to Taxes in any jurisdiction outside the United States.
SECTION 3.13. Tax Matters. Neither the Company nor, to the knowledge of
the Company, any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a)(2)(E) of the Code. The Company is not an investment
company as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code, and the
Company is not under the jurisdiction of a court in a title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code.
SECTION 3.14. Certain Business Practices. None of the Company, any of
its subsidiaries or any directors or officers, or to the knowledge of the
Company any agents or employees of the Company or any of its subsidiaries has
(a) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (b) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (c) made any other unlawful
payment.
SECTION 3.15. Insurance. All primary, excess and umbrella policies,
bonds and other forms of insurance currently owned or held by or on behalf of
and/or providing insurance coverage to the Company and its subsidiaries, and
their respective directors, officers, agents and employees are in full force and
effect. The Company has not received a notice of default under any such policy
and has not received written notice of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any
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such policy. No letters of credit have been posted and no cash has been
restricted to support any reserves for insurance.
SECTION 3.16. Properties. Except as set forth on Schedule 3.16 and
except for properties and assets disposed of in the ordinary course of business
consistent with past practices after the date of the Latest Balance Sheet, the
Company and its subsidiaries have good and marketable title, free and clear of
all Liabilities and liens, to all their material properties and assets, whether
tangible or intangible, real, personal or mixed, reflected in the Latest Balance
Sheet as being owned by the Company and its subsidiaries as of the date thereof
or purported to be owned on the date hereof. All material buildings, fixtures,
equipment and other property and assets held under leases by the Company or any
of its subsidiaries are held under valid instruments enforceable by the Company
or such subsidiary in accordance with their respective terms. Substantially all
of the Company's and its subsidiaries' equipment in regular use has been well
maintained and is in good and serviceable condition, reasonable wear and tear
excepted.
SECTION 3.17. Certain Material Contracts.
(a) Schedule 3.17(a) lists each agreement (whether written or
oral and including all amendments thereto) to which the Company or any
of its subsidiaries is a party or a beneficiary or by which the Company
or any of its subsidiaries is bound that is material, directly or
indirectly, to the business of the Company and any of its subsidiaries,
(collectively, the "Material Contracts"), including without limitation
(i) any merchant agreement pursuant to which the Company earns, or is
reasonably expected to earn, per annum revenue in excess of $100,000;
(ii) any licensing, advertising, promotion, consulting or services
agreement pursuant to which the Company earns, or is reasonably
expected to earn, per annum revenue in excess of $50,000; (iii) any
real property leases or any capital or operating leases or conditional
sales agreements in excess of $50,000; (iv) any warranty agreements or
arrangements under which the Company or any of its subsidiaries has any
liability with a value in excess of $50,000; (v) any capital or
operating leases or conditional sales agreements relating to vehicles
or equipment with a value in excess of $50,000; (vi) any agreements or
arrangements pursuant to which the Company or any of its subsidiaries
is entitled or obligated to acquire any assets or services from a third
party in excess of $50,000; (vii) insurance policies; (viii) any
employment, consulting, noncompetition, separation, collective
bargaining, union or labor agreements or arrangements; (ix) any
agreement evidencing, securing or otherwise relating to any
indebtedness for which the Company or any of its subsidiaries has any
Liability in excess of $50,000; (x) any agreement with or for the
benefit of any shareholder, director, officer or employee of the
Company or any of its subsidiaries, or any affiliate or family member
thereof; (xi) the ten largest agreements by dollar volume with
suppliers for generating traffic or leads; and (xii) any other
agreement or arrangement pursuant to which the Company or any of its
subsidiaries could be required to make or be entitled to receive
aggregate payments in excess of $50,000 and which is not cancelable
within 30 days notice without penalty.
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(b) The Company and its subsidiaries have performed in all
material respects all of their obligations under each Material Contract
and there exists no material breach or default by the Company, or to
the knowledge of the Company, the Company's counterparty under any
Material Contract.
(c) On the date hereof and on the Closing Date, each Material
Contract will be valid, binding and in full force and effect and
enforceable in all material respects in accordance with its respective
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally and subject to
general principles of equity. There has been no termination or, to the
Company's knowledge, threatened termination or notice of default under
any Material Contract. The Company has delivered to Parent a copy of
each written Material Contract.
(d) Except as set forth in Schedule 3.17(d), no consent of any
person is required under any Material Contract in connection with the
consummation of the Merger or any of the other transactions
contemplated by this Agreement.
SECTION 3.18. Intellectual Property.
(a) Schedule 3.18(a) lists all Intellectual Property described
in clause (i) below owned by the Company or any of its subsidiaries.
For purposes of this Agreement, "Intellectual Property" means all (i)
patents, pending applications for patents, copyrights and copyrightable
works, trademarks, service marks, trade names, service names, brand
names, logos, trade dress, Internet domain names and all goodwill
symbolized thereby and appurtenant thereto or any licenses or
sublicenses with respect to any of the foregoing; (ii) trade secrets,
inventions, technology, know-how, proprietary information, research
material, specifications, surveys, designs, drawings and processes;
(iii) computer software and related documentation, including without
limitation operating software, network software, firmware, middleware,
design software, design tools, management information systems, systems
documentation and instructions, algorithms, databases and the tangible
objects in which the foregoing rights are embodied (collectively,
"Software"); (iv) World Wide Web sites, World Wide Web pages,
components, scripts (including cgi scripts), classes, interfaces,
forms, databases, Java applets, Web-related code (including HTML, XML
DHTML, Java, Active Server Pages and any similar code) and browser
plug-ins; (v) artwork, photographs, graphics, animation, editorial copy
and materials, formats, color schemes, look-and-feel, functions,
features and designs, including without limitation all content
currently or previously displayed through Internet sites operated by
the Company or any of its subsidiaries; (vi) customer, partner,
prospect and marketing lists, market research data, sales data and
traffic Internet log files and related reports, data mining reports,
third-party Internet reports (including traffic and referral reports)
and user data; and (vii) registrations, applications, recordings,
common law rights, "moral" rights of authors, licenses (to or from the
Company or any of its subsidiaries) and other agreements relating to
any of the foregoing.
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(b) Set forth on Schedule 3.18(b) are any licenses (to or from
the Company or any of its subsidiaries) with respect to any
Intellectual Property requiring payments in excess of $50,000.
(c) To the knowledge of the Company, the Company or its
subsidiary, as applicable, owns or has the right to use all
Intellectual Property used by the Company and its subsidiaries, as
applicable, in connection with or necessary to the operation of their
respective businesses without infringing on the rights or claimed
rights of any person. Neither the Company nor any of its subsidiaries
is obligated to pay any royalty or other consideration to any person in
connection with the use of any such Intellectual Property.
(d) No claim has been asserted against the Company or any of
its subsidiaries to the effect that the use of any Intellectual
Property by the Company or any of its subsidiaries infringes the rights
of any person. To the Company's knowledge, no other person is currently
infringing upon the rights of the Company or any of its subsidiaries
with respect to the Intellectual Property.
(e) To the knowledge of the Company, the Intellectual Property
owned by or licensed to the Company or any of its subsidiaries as of
the Closing is sufficient as of the Closing for the uses of their
respective businesses.
SECTION 3.19. Year 2000 Compliance. All hardware, firmware, software
and computer systems of the Company and its subsidiaries are Year 2000 Compliant
(as defined below) and have continued and shall continue to function in
accordance with their intended purpose without material error or material
interruption as a result of the transition to the year 2000. As used herein,
"Year 2000 Compliant" means, with respect to any entity, that the hardware,
firmware, software and computer systems of such entity (a) will completely and
accurately address, produce, store and calculate data involving dates before, on
and after January 1, 2000, and will not produce abnormally ending or incorrect
results involving such dates as used in any forward or regression dated based
functions; and (b) will provide that date-related functionalities and data
fields include the indication of century and millennium and will perform
calculations that involve a four-digit year.
SECTION 3.20. Vote Required. The only vote of the holders of any class
or series of the Company capital stock necessary to approve the Merger and adopt
this Agreement is the affirmative vote of the holders of (a) a majority of the
outstanding shares of the Company Common Stock, (b) a majority of the
outstanding shares of Series D Preferred Stock, and (c) a majority of the
aggregate outstanding shares of Company Preferred Stock.
SECTION 3.21. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
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SECTION 3.22. Insider Transactions. To the knowledge of the Company, no
affiliate of the Company has any interest in any equipment or other property,
real or personal, of the Company, or in any creditor, supplier, customer or
other person having material business dealings with the Company; provided,
however, that no such affiliate shall be deemed to have such an interest solely
by virtue of the ownership of less than one percent of the outstanding stock or
debt securities of any publicly-held company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies hereby represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification. Each of the Parent
Companies is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure to be so duly qualified
and in good standing would not have a Parent Material Adverse Effect. The term
"Parent Material Adverse Effect" as used in this Agreement shall mean any change
or effect that, individually or when taken together with all such other changes
or effects, could reasonably be expected to be materially adverse to the
business, operations, assets, financial condition or results of operations of
Parent and its subsidiaries, taken as a whole, except to the extent that any
such change or effect results from changes in general economic conditions or
changes affecting the industry generally in which Parent and the Company
operate.
SECTION 4.02. Charter and Bylaws. Parent has heretofore furnished to
the Company a complete and correct copy of the charter and bylaws, as amended or
restated, of each of the Parent Companies. None of the Parent Companies is in
violation of any of the provisions of its charter or bylaws.
SECTION 4.03. Capitalization.
(a) As of January 7, 2000, the authorized capital stock of
Parent consists of (i) 400,000,000 shares of Parent Common Stock, of
which (u) 73,962,768 shares were issued and outstanding, (v) no shares
were held in treasury, (w) 441,000 shares were reserved for issuance
upon exercise of outstanding warrants, (x) 12,170,161 shares were
reserved for future issuance pursuant to outstanding stock options and
shares reserved under stock option plans, (y) 1,400,000 shares were
reserved for issuance pursuant to an employee stock purchase plan, and
(z) 4,622,623 shares were reserved for issuance upon conversion of
Parent's 5% convertible notes due 2006; and (ii) 5,000,000 shares of
preferred stock, par value $.01 per share, of which no shares are
issued and outstanding. Except as described in this Section 4.03, as of
the date of this Agreement, no shares of capital stock of Parent are
reserved for any purpose. The outstanding shares of capital stock of
Parent are duly authorized, validly issued, fully paid and
nonassessable, and have not been issued
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in violation of (nor are any of the authorized shares of capital stock
of Parent subject to) any preemptive or similar rights created by
statute, the charter or bylaws of Parent, or any agreement to which
Parent is a party or bound.
(b) Except as set forth in Section 4.03(a) above, as of the
date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which
Parent is a party relating to the issued or unissued capital stock of
Parent or obligating Parent to grant, issue or sell any shares of the
capital stock of Parent, by sale, lease, license or otherwise. As of
the date of this Agreement, there are no obligations, contingent or
otherwise, of Parent or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or other capital
stock of Parent.
(c) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share ("Merger Sub
Common Stock"). As of the date of this Agreement, 100 shares of Merger
Sub Common Stock were issued and outstanding and held by Parent, all of
which are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, Merger Sub's
charter or bylaws or any agreement to which Merger Sub is a party or is
bound.
(d) The shares of Parent Common Stock to be issued pursuant to
the Merger will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
Parent's charter or bylaws or any agreement to which Parent is a party
or is bound.
SECTION 4.04. Authority. Each of the Parent Companies has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of the Parent
Companies and the consummation by each of the Parent Companies of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of any of the
Parent Companies are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Parent Companies and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes the legal, valid and
binding obligation of each of the Parent Companies.
SECTION 4.05. No Conflict; Required Filings and Consent.
(a) The execution and delivery of this Agreement by each of
the Parent Companies does not, and the consummation of the transactions
contemplated hereby will not (i) conflict with or violate the charter
or bylaws, or the equivalent organizational documents, in each case as
amended or restated, of Parent or any of Parent's subsidiaries, (ii)
conflict with or violate any Laws applicable to Parent or any of
Parent's subsidiaries or by which any of their properties is bound or
subject, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a
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default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Parent or any of
Parent's subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
material instrument or obligation to which Parent or any of Parent's
subsidiaries is a party or by or to which Parent or any of Parent's
subsidiaries or any of their respective properties is bound or subject,
except in the case of clauses (ii) and (iii) where such conflict,
violation, breach, default, right, requirement, lien or encumbrance
would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of
the Parent Companies does not, and the consummation of the transactions
contemplated hereby will not, require any of the Parent Companies to
obtain any consent, license, permit, approval, waiver, authorization or
order of, or to make any filing with or notification to, any
Governmental Entities, except for applicable requirements, if any, of
the Securities Act, the Exchange Act, the HSR Act, the filing of
appropriate documents with the California Department of Corporations as
contemplated by Section 6.01 and the filing and recordation of
appropriate merger documents as required by California Law and Delaware
Law.
SECTION 4.06. SEC Reports; Financial Statements.
(a) Parent and its subsidiaries have filed all forms, reports,
statements and other documents required to be filed with the SEC,
including, without limitation, (i) all Annual Reports on Form l0-K,
(ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements
relating to meetings of stockholders (whether annual or special), (iv)
all Current Reports on Form 8-K and (v) all other reports, schedules,
registration statements or other documents (collectively, the "SEC
Reports"). The SEC Reports, including all SEC Reports filed after the
date of this Agreement and prior to the Effective Time (x) were or will
be prepared in all material respects in accordance with the
requirements of applicable Law and (y) did not at the time they were
filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the SEC Reports
filed prior to the Effective Time (i) have been or will be prepared in
accordance with the published rules and regulations of the Securities
and Exchange Commission (the "SEC") and GAAP applied on a consistent
basis throughout the periods involved (except (A) to the extent
required by changes in GAAP and (B) with respect to SEC Reports filed
prior to the date of this Agreement, as may be indicated in the notes
thereto) and (ii) fairly present or will fairly present in all material
respects the consolidated financial position of Parent and its
subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated
(including reasonable estimates of normal and recurring year-end
adjustments), except that (x) any unaudited interim financial
statements were or will be subject to normal and recurring year-end
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adjustments and (y) any pro forma financial information contained in
such consolidated financial statements is not necessarily indicative of
the consolidated financial position of Parent and its subsidiaries as
of the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated.
SECTION 4.07. Tax Matters. None of the Parent Companies or, to the
knowledge of Parent, any of their affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a)(2)(E) of the Code.
SECTION 4.08. Vote Required. No vote of the holders or any class or
series of Parent capital stock is required to approve the Merger and adopt this
Agreement. Parent, as the sole shareholder of Merger Sub, will promptly vote to
approve the Merger and adopt this Agreement.
SECTION 4.09. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of any of the Parent Companies.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will and will cause its subsidiaries to:
(a) operate its business in all material respects in the
usual and ordinary course consistent with past practices; and
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its Material Contracts,
Intellectual Property and other material rights, retain the services of
its respective officers and key employees and consultants, and maintain
its relationships with its material customers and suppliers.
SECTION 5.02. Negative Covenants of the Company. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit any of its subsidiaries to do, any of the following:
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(a) (i) increase the compensation payable to or to become
payable to any director or executive officer, unless such increase
results from the operation of compensation arrangements in effect prior
to the date hereof; (ii) grant any severance or termination pay (other
than pursuant to the normal severance policy of the Company or its
subsidiaries as in effect on the date of this Agreement) to, or enter
into or amend any employment or severance agreement with, any director,
officer or employee; (iii) establish, adopt or enter into any employee
benefit plan or arrangement; or (iv) except as may be required by
applicable law and actions that are not inconsistent with the
provisions of Section 6.07, amend in any material respect, or take any
other actions with respect to, any of the Benefit Plans or any of the
plans, programs, agreements, policies or other arrangements described
in Section 3.11(a);
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock, except
for dividends by a wholly owned subsidiary of the Company to the
Company or another wholly-owned subsidiary of the Company;
(c) (i) redeem, purchase or otherwise acquire any shares of
its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly-owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations
(except in connection with the repurchase at cost of unvested shares of
employees upon the termination of their employment with the Company);
(ii) effect any reorganization or recapitalization; or (iii) split,
combine or reclassify any of its or its subsidiaries' capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its or its
subsidiaries' capital stock;
(d)(i) except as described in Schedule 3.03(b)(i), issue,
deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale (including the grant of any security
interests, liens, claims, pledges, limitations in voting rights,
charges or other encumbrances) of, any shares of any class of its or
its subsidiaries' capital stock (including shares held in treasury),
any securities convertible into or exercisable or exchangeable for any
such shares, or any rights, warrants or options to acquire any such
shares (except in connection with (y) the granting of Stock Options in
the ordinary course of business, consistent with past practice, and (z)
the exercise of outstanding Stock Options (and Stock Options granted in
compliance with this Agreement) in accordance with their terms); (ii)
amend or otherwise modify the terms of any such rights or options the
effect of which shall be to make such terms more favorable to the
holders thereof; or (iii) take any action to accelerate the
exercisability of Stock Options;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or
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division thereof, or otherwise acquire or agree to acquire any assets
of any other person (other than the purchase of assets from suppliers
or vendors in the ordinary course of business and consistent with past
practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for dispositions of assets in
the ordinary course of business and consistent with past practice;
(g) settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy;
(h) release any third party from its obligations, or grant any
consent, under any existing standstill provision relating to a
Competing Transaction (as defined in Section 5.05) or otherwise under
any confidentiality or other agreement, or fail to fully enforce any
such agreement;
(i) adopt or propose to adopt any amendments to its charter
or bylaws;
(j) (A) change any of its methods of accounting in effect at
September 30, 1999, or (B) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes from
those employed in the preparation of the federal income tax returns for
the taxable year ending December 31, 1998, except, in each case, as may
be required by Law or GAAP;
(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business
consistent with past practice;
(l) enter into any merchant or distribution agreement,
without the prior written consent of Parent, which consent will not be
unreasonably withheld;
(m) enter into any material arrangement, agreement or contract
with any third party which provides for an exclusive arrangement with
that third party; or
(n) agree in writing or otherwise to do any of the foregoing.
SECTION 5.03. Parent Covenants. Except as expressly contemplated by
this Agreement or otherwise consented to in writing by the Company, from the
date of this Agreement until the Effective Time, Parent will not do, and will
not permit any of its subsidiaries to do, any of the following:
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(a) declare or pay any extraordinary dividend on, make any
extraordinary redemption or make any other extraordinary distribution
in respect of, outstanding shares of capital stock, except for
dividends by a wholly-owned subsidiary of Parent to Parent or another
wholly-owned subsidiary of Parent;
(b) acquire or agree to acquire, any business or any
corporation, partnership, association or other business organization or
division thereof, other than any such acquisitions that could not
reasonably be expected to materially and adversely affect Parent's
ability to effect the consummation of the Merger;
(c) adopt or propose to adopt any amendments to its charter or
bylaws that could reasonably be expected to materially and adversely
affect Parent's ability to effect the consummation of the Merger; or
(d) agree in writing or otherwise to do any of the foregoing.
SECTION 5.04. Access and Information.
(a) The Company shall, and shall cause its subsidiaries to (i)
afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives
(collectively, the "Parent Representatives") reasonable access at
reasonable times, upon reasonable prior notice, to the officers,
employees, agents, properties, offices and other facilities of the
Company and its subsidiaries and to the books and records thereof and
(ii) furnish promptly to Parent and the Parent Representatives such
information concerning the business, properties, contracts, records and
personnel of the Company and its subsidiaries (including, without
limitation, financial, operating and other data and information) as may
be reasonably requested, from time to time, by Parent.
(b) Parent shall, and shall cause its subsidiaries to (i)
afford to the Company and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Company Representatives")
reasonable access at reasonable times, upon reasonable prior notice, to
the officers, employees, accountants, agents, properties, offices and
other facilities of Parent and its subsidiaries and to the books and
records thereof and (ii) furnish promptly to the Company and the
Company Representatives such information concerning the business,
properties, contracts, records and personnel of Parent and its
subsidiaries (including, without limitation, financial, operating and
other data and information) as may be reasonably requested, from time
to time, by the Company.
(c) Notwithstanding the foregoing provisions of this Section
5.04, neither party shall be required to grant access or furnish
information to the other party to the extent that such access or the
furnishing of such information is prohibited by law. No investigation
by the parties hereto made heretofore or hereafter shall affect the
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representations and warranties of the parties which are herein
contained and each such representation and warranty shall survive such
investigation.
(d) The information received pursuant to Sections 5.04(a) and
(b) shall be deemed to be "Confidential Information" for purposes of
the Confidentiality Agreement, dated as of December 14, 1999 between
Parent and the Company (the "Confidentiality Agreement").
SECTION 5.05. No Solicitation by Company.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Competing
Transaction (as hereinafter defined) or (ii) participate in any
discussions or negotiations regarding any Competing Transaction. For
purposes of this Agreement, "Competing Transaction" means any bona fide
written inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 20 percent or more of the
assets of the Company and its subsidiaries on a consolidated basis or
20 percent or more of any class of equity securities of the Company,
any public offering of the Company's securities or any tender offer
(including a self-tender offer), merger, consolidation, acquisition,
business combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company, other than the transactions
contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the
Merger and this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Competing Transaction, or (iii)
cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to
any Competing Transaction.
(c) In addition to the obligations of the Company set forth in
clauses (a) and (b) above, the Company shall promptly, and in any event
within one business day, advise Parent orally and in writing of any
request for information relating to any Competing Transaction or of any
Competing Transaction, including the material terms thereof and the
identity of the person making such request or Competing Transaction.
Company will keep Parent informed of any material change to the scope
or terms of such request or Competing Transaction, respectively.
(d) Nothing contained in this Section 5.05 shall prohibit the
Company from making any disclosure to the Company's shareholders if, in
the good faith judgment of the
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Board of Directors of the Company, after consultation with outside
counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable Law;
provided, however, that neither the Company nor its Board of Directors
nor any committee thereof shall, withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this
Agreement and the Merger, or approve or recommend, or propose publicly
to approve or recommend, a Competing Transaction.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Fairness Hearing.
(a) As promptly as practicable after the execution of this
Agreement, Parent shall prepare and file with the California Department
of Corporations an application for a hearing on the fairness (the
"Fairness Hearing") of the Merger to the shareholders of the Company
(such application, together with any amendments or supplements thereto,
being the "Permit Application") pursuant to Section 25142 of the
California Corporate Securities Law. The Permit Application shall
contain such information as may be required under applicable Law or by
the California Department of Corporations. Each of Parent and the
Company shall use commercially reasonable efforts (i) to cause the
California Department of Corporations to issue the permit (the
"Permit") and the accompanying certificate of issuance (the
"Certificate of Issuance") approving the Merger on the terms and
conditions set forth in this Agreement, and (ii) to take any action
required under any applicable federal or state securities Laws to
obtain an exemption from registration pursuant to Section 3(a)(10)
under the Securities Act of the offer and sale of shares of Parent
Common Stock to be issued in the Merger. Prior to the Fairness Hearing,
if reasonably requested by Parent, the Company will obtain the opinion
of a financial advisor, reasonably acceptable to Parent, to the effect
that, as of the date of delivery of such opinion, the Merger
Consideration to be received by the holders of the Company Stock in the
Merger is fair, from a financial point of view, to such holders. All
reasonable out-of-pocket expenses related to such fairness opinion
shall be Parent's responsibility regardless of whether the Merger is
consummated. Each of Parent and the Company shall furnish to the other
all information concerning it and the holders of its capital stock as
the other may reasonably request in connection with such actions.
(b) The information supplied by the Company for inclusion in
the Permit Application shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its affiliates, or its
or their respective officers or directors, should be discovered by the
Company that should be set forth in an amendment to the Permit
Application, the Company shall promptly inform Parent thereof in
writing.
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(c) The information supplied by Parent for inclusion in the
Permit Application shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If
at any time prior to the Effective Time any event or circumstance
relating to Parent or any of its affiliates, or to their respective
officers or directors, should be discovered by Parent that should be
set forth in an amendment to the Permit Application, Parent shall
promptly inform the Company thereof in writing.
SECTION 6.02. Registration Statement; Proxy Statement.
(a) If the Permit and the Certificates of Issuance are not
issued, as promptly as practicable thereafter, (i) Parent shall prepare
and file with the SEC a proxy statement/prospectus (together with any
amendments thereof or supplements thereto, the "Proxy Statement") and
(ii) Parent shall prepare and file with the SEC a registration
statement to register the Parent Common Stock to be issued in the
Merger (in which the Proxy Statement will be included) on Form S-4
(such registration statement, together with any amendments thereof or
supplements thereto, being the "Registration Statement"). The Company
shall cooperate with Parent in the preparation of the Proxy Statement
and the Registration Statement and shall be provided a reasonable
opportunity to review and comment on such documents. Each of Parent and
the Company shall promptly advise the other if any event or
circumstance arises with respect to it or its affiliates or its
officers or directors that should be set forth in a supplement or
amendment to the Proxy Statement or the Registration Statement. Parent
shall use reasonable commercial efforts to cause the Registration
Statement to be declared effective as promptly as practicable, and
shall use reasonable commercial efforts to take any action required to
be taken under any applicable federal or state securities Laws in
connection with the issuance of the Parent Common Stock to be issued in
the Merger. As promptly as practicable after the Registration Statement
shall have been declared effective, the Company shall mail the Proxy
Statement to its shareholders. The Proxy Statement shall include the
recommendation of the Board of Directors of the Company to the
shareholders of the Company that they vote in favor of the adoption of
this Agreement and the Merger. Parent shall cause the Registration
Statement and the Proxy Statement to conform as to form and substance
in all material respects with all applicable requirements of (i) the
Exchange Act including Section 14(a) thereof, and the respective
regulations promulgated thereunder, (ii) the Securities Act, (iii) the
rules and regulations of the Nasdaq National Market, (iv) Delaware Law
and (v) California Law.
(b) The information supplied by the Company for inclusion in
the Registration Statement shall not, at the time the Registration
Statement is declared effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The information supplied by the Company for inclusion in
the Proxy Statement shall not, at the date the Proxy Statement is first
mailed or at the time of the Shareholders Meeting (as defined in
Section 6.03), contain any untrue statement of a material fact or omit
to state
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any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they are made, not misleading. If, at any time prior to the
Effective Time, any event or circumstance relating to the Company for
any of its subsidiaries, or any of their respective officers or
directors, should be discovered by the Company that should be set forth
in an amendment or supplement to the Registration Statement or the
Proxy Statement, the Company shall promptly inform Parent.
(c) The information supplied by Parent for inclusion in the
Registration Statement shall not, at the time the Registration
Statement is declared effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The information supplied by Parent for inclusion in the
Proxy Statement shall not, at the date the Proxy Statement is first
mailed or at the time of the Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
are made, not misleading. If, at any time prior to the Effective Time,
any event or circumstance relating to Parent or its subsidiaries, or
any of their respective officers or directors, should be discovered by
Parent that should be set forth in an amendment or supplement to the
Registration Statement or the Proxy Statement, Parent shall promptly
inform the Company.
SECTION 6.03. Meetings of Shareholders. The Company shall, promptly
after the issuance of the Permit and the Certificate of Issuance or the
effectiveness of the Registration Statement, as applicable, take all actions
necessary in accordance with California Law and its charter and bylaws to
convene a meeting of the Company's shareholders to act on this Agreement (the
"Shareholders Meeting"), and the Company shall consult with Parent in connection
therewith. The Company shall use commercially reasonable efforts to solicit from
its shareholders proxies in favor of the approval and adoption of this Agreement
and to secure the vote of its shareholders as required by California Law and its
charter and bylaws to approve and adopt this Agreement. The Company's Board of
Directors shall recommend that the Company's shareholders vote in favor of the
Merger and adoption of this Agreement.
SECTION 6.04. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall each use, and shall cause
each of their respective subsidiaries to use, commercially reasonable
efforts to (i) take, or cause to be taken, appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the Merger
and the other transactions contemplated by this Agreement, (ii) obtain
from any Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their subsidiaries in
connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the Merger, and (iii) make all necessary
filings, and thereafter make any other
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required submissions, with respect to this Agreement and the Merger
required under the Securities Act and the Exchange Act and the rules
and regulations thereunder, the HSR Act, Blue Sky Laws, California Law,
Delaware Law, the Nasdaq National Market and any other applicable Law.
(b) Parent and the Company shall cooperate and consult with
each other in connection with the making of all filings referred in
clause (a) above, including providing copies of all such documents to
the nonfiling party and its advisors prior to filings and, if
requested, shall accept all reasonable additions, deletions or changes
suggested in connection therewith and shall furnish all information
required for any application or other filing to be made pursuant to the
rules and regulations of any applicable Law.
(c) Parent and the Company agree to cooperate with respect to,
and shall cause each of their respective subsidiaries to cooperate with
respect to, and agree to use all commercially reasonable efforts to
contest and resist, any action, including a legislative, administrative
or judicial action, and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "Order") of any Governmental Entity that
is in effect and that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated by this Agreement.
(d) In the event that any party shall fail to obtain any
Governmental Entity or other third party consent, waiver, approval,
authorization or order described in clause (a) above and the parties
agree to consummate the Merger without such consent, waiver, approval,
authorization or order, such party shall use commercially reasonable
efforts, and shall take any such actions reasonably requested by the
other parties, to limit the adverse effect upon the Company and Parent,
their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent, waiver,
approval, authorization or order.
(e) Each of Parent and the Company shall promptly notify the
other of (i) any material change in its business, financial condition
or results of operations, (ii) any complaints, investigations or
hearings (or communications indicating that the same may be
contemplated) of any Governmental Entities with respect to its business
or the transactions contemplated hereby, (iii) the institution or the
threat of material litigation involving it or any of its subsidiaries,
or (iv) any event or condition that could reasonably be expected to
cause any of the conditions set forth in Section 7.02(a) or (b) or
Section 7.03(a) or (b), as applicable, not to be satisfied at the
Effective Time.
(f) Each party hereto shall promptly inform the other of any
communication from the California Department of Corporations, the SEC,
the Federal Trade Commission, the Department of Justice or any other
governmental authority regarding any of the transactions contemplated
by this Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any
such governmental authority with respect to the transactions
contemplated by this Agreement, then such party
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will endeavor in good faith to make, or cause to be made, as soon as
reasonably practical after consultation with the other party, an
appropriate response in compliance with such request.
SECTION 6.05. Public Announcements. Prior to the Closing, the Company
will not issue a press release or make any statement to the general public or
its employees generally concerning the Merger or this Agreement without the
express prior written consent of Parent, and Parent will not issue a press
release or make any statement to the general public concerning the Merger or
this Agreement without first consulting with the Company. Parent and the Company
will develop jointly and agree upon the announcement to be made to the Company's
employees concerning the Merger.
SECTION 6.06. Nasdaq Listing. Parent shall use reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing (subject to official notice of issuance) on the Nasdaq
National Market prior to the Effective Time.
SECTION 6.07. Stock Option Plans.
(a) Option Plans. Parent and the Company shall take such
actions including (with respect to the Company) the amendment of the
Option Plan and Stock Options, to permit Parent to assume, and Parent
shall assume, effective at the Effective Time, each Stock Option that
remains unexercised in whole or in part as of the Effective Time and
substitute shares of Parent Common Stock for the shares of the Company
Stock purchasable under each such assumed option ("Assumed Option"),
which assumption and substitution shall be effected as follows:
(i) the Assumed Option shall not give the optionee
additional benefits which such optionee did not have under the
Stock Option before such assumption and shall be assumed on
the same terms and conditions as the Stock Option being
assumed, subject to clauses (ii) and (iii) below;
(ii) the number of shares of Parent Common Stock
purchasable under the Assumed Option shall be equal to the
number of shares of Parent Common Stock that the holder of the
Stock Option being assumed would have received (without regard
to any vesting schedule) upon consummation of the Merger had
such Stock Option been exercised in full immediately prior to
consummation of the Merger, rounded down to the nearest whole
number; and
(iii) the per share exercise price of such Assumed
Option shall be an amount equal to the per share exercise
price of the Stock Option being assumed divided by the Common
Stock Exchange Ratio, rounded up to the nearest whole cent.
(b) Registration. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise
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of the Assumed Options, and, as soon as practicable, and in no event
later than ten business days, after the Effective Time, Parent shall
file a registration statement on Form S-8 (or other appropriate form)
with respect to the shares of Parent Common Stock subject to the
Assumed Options, and shall use its best efforts to maintain the
effectiveness of such registration statement for so long as any of the
Assumed Options remain outstanding.
(c) Incentive Stock Options. It is the intention of the
parties that Stock Options granted pursuant to the Option Plan that
qualified as "incentive stock options" (as defined in Section 422 of
the Code) immediately prior to the Effective Time will continue to
qualify as "incentive stock options."
SECTION 6.08. Merger Sub. Prior to the Effective Time, Merger Sub shall
not conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a de
minimis amount of cash paid to Merger Sub for the issuance of its stock to
Parent) or liabilities.
SECTION 6.09. Affiliates; Pooling; Tax Treatment.
(a) The Company shall use reasonable efforts to obtain from
any person who, to the knowledge of the Company, may reasonably be
deemed to be an affiliate of the Company under Rule 145 of the
Securities Act or under the pooling rules of the Accounting Principles
Board of the SEC, a written agreement substantially in the form of
Exhibit D prior to the Effective Time.
(b) Parent shall use reasonable efforts to obtain from any
person who, to the knowledge of Parent, may reasonably be deemed to be
an affiliate of Parent under the pooling rules of Accounting Principles
Board of the SEC, a written agreement substantially in the form of
Exhibit E prior to the Effective Time.
(c) Each party hereto shall use reasonable efforts to cause
the Merger to be treated for financial accounting purposes as a
"pooling of interests" in accordance with GAAP and the rules and
regulations of the SEC (a "Pooling Transaction"), and shall not take,
and shall use reasonable efforts to prevent any affiliate of such party
from taking, any actions which could prevent the Merger from being
treated for financial accounting purposes as a Pooling Transaction.
(d) Each party hereto shall use reasonable efforts to cause
the Merger to qualify, and shall not take, and shall use reasonable
efforts to prevent any affiliate of such party from taking, any actions
which could prevent the Merger from qualifying as a reorganization
under the provisions of Section 368(a)(2)(E) of the Code.
SECTION 6.10. Employee Benefit Plans. For a period of 12 months
following the Effective Time, the Parent, in its sole discretion, shall either:
(a) continue (or cause the Surviving Corporation to continue) to maintain the
Company Employee Plans on substantially the same
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terms in the aggregate as in effect immediately prior to the Effective Time, or
(b) arrange for each participant in the Company Employee Plans ("Company
Participants") to participate in any similar plans of the Parent ("Parent
Plans") on terms no less favorable than those offered to similarly situated
employees of Parent, or (c) a combination of clauses (a) and (b). Each Company
Participant who continues to be employed by the Surviving Corporation or any of
its subsidiaries immediately following the Effective Time shall, to the extent
permitted by law and applicable tax qualification requirements, and subject to
any generally applicable break in service or similar rule, receive credit for
purposes of eligibility to participate and vesting under the Parent Plans for
years of service with the Company or its subsidiaries prior to the Effective
Time. Subject to the approval of any insurance carrier and to the extent
consistent with law and applicable tax qualification requirements, Parent shall
cause any and all pre-existing condition limitations, eligibility waiting
periods and evidence of insurability requirements under any group health plans
to be waived with respect to such Company Participants and their eligible
dependents and shall provide them with credit for any co-payments and
deductibles prior to the Effective Time for purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under any Parent
Plans in which they are eligible to participate immediately after the Effective
Time. Notwithstanding any of the foregoing to the contrary, none of the
provisions contained herein shall operate to duplicate any benefit provided to
any employee of the Company or the funding of any such benefit. Nothing in this
Section 6.10 shall be construed to entitle any employee to continue his or her
employment for any period of time, nor to interfere with the rights of the
Parent and/or the Company to discharge or discipline any employee, to change the
terms of any employee's employment, or to amend or terminate employee benefit
plans or programs at any time.
SECTION 6.11. Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent will fulfill and
honor, and will cause the Surviving Corporation to fulfill and honor,
in all respects the obligations of Company pursuant to any currently in
force indemnification agreements between Company and its directors and
officers (which agreements are attached hereto as Schedule 6.11(a)) and
any indemnification provisions under the Company's articles of
incorporation or bylaws as in effect immediately prior to the Effective
Time.
(b) The provisions of this Section 6.11 are intended to be for
the benefit of, and will be enforceable by, each person entitled to
indemnification hereunder and the heirs and representatives of such
Person.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Date of the
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following conditions, any or all of which may be waived in writing by the
parties hereto, in whole or in part, to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the
shareholders of the Company.
(b) No Order. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger.
(c) HSR Act. The applicable waiting period under the HSR Act
with respect to the transactions contemplated by this Agreement shall
have expired or been terminated.
(d) Nasdaq Listing. The shares of Parent Common Stock issuable
pursuant to the Merger or pursuant to the Assumed Options shall have
been authorized for listing on the Nasdaq National Market, subject to
official notice of issuance.
(e) Permit; Registration. The California Commissioner of
Corporations shall have issued the Permit and the Certificate of
Issuance with respect to the Merger or the issuance of the Parent
Common Stock in connection with the Merger shall have been registered
pursuant to the Registration Statement declared effective by the SEC.
SECTION 7.02. Additional Conditions to Obligations of the Parent
Companies. The obligations of the Parent Companies to effect the Merger and the
other transactions contemplated hereby are also subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived in writing by Parent, in whole or in part:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement shall be true and correct as of the date hereof, except that,
to the extent such representations and warranties address matters only
as of a particular date, such representations and warranties shall, to
such extent, be true and correct at and as of such particular date as
if made at and as of such particular date; provided that if any of such
representations and warranties shall not be true and correct as
aforesaid, then this condition shall nevertheless be deemed satisfied
if the cumulative effect of all inaccuracies of such representations
and breaches of such warranties shall not be or have a Company Material
Adverse Effect. The Parent Companies shall have received a certificate
of the President and the Chief Financial Officer of the Company, dated
the Closing Date, to such effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with the agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date. The
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Parent Companies shall have received a certificate of the President and
the Chief Financial Officer of the Company, dated the Closing Date, to
that effect.
(c) 1999 Financial Statements. The Company shall have
delivered to Parent true and complete copies of the audited
consolidated financial statements of the Company and its subsidiaries
for the fiscal year ended December 31, 1999, including a balance sheet
and related statements of operations, retained earnings and cash flows
of the Company and its subsidiaries for the fiscal year ended on such
date (the "1999 Financial Statements"). As of the date of delivery to
Parent, the 1999 Financial Statements shall be deemed incorporated into
and part of the representations and warranties set forth in Section
3.07.
(d) Dissenting Shareholders. At the Effective Time, holders
representing no more than five percent of the outstanding shares of
Company Stock shall be eligible to seek appraisal in accordance with
California Law.
(e) Opinion of Company Counsel. Counsel to the Company shall
furnish to Parent a written legal opinion, in form and substance
reasonably satisfactory to Parent and its counsel, covering the matters
set forth in Exhibit F.
(f) Material Consents and Approvals. The Company shall provide
written evidence that all filings, authorizations, consents, approvals
or other actions necessary to consummate the Merger shall have been
filed, obtained or taken, as the case may be, and there shall be no
action taking or any agreement entered into in connection with such
authorization, consent, approval or other action which imposes any
condition or restriction upon Parent or the Company, which, in the
reasonable judgment of Parent, would be materially burdensome in the
context of the transactions contemplated by this Agreement.
(g) Termination of Investors Rights Agreement. The requisite
parties to the Amended and Restated Investor Rights Agreement, dated as
of June 4, 1999, as such agreement may have been amended or amended and
restated, by and among the Company and the investors party thereto,
shall have agreed in writing that the Investor Rights Agreement will
terminate upon the Closing.
SECTION 7.03. Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
writing by the Company, in whole or in part:
(a) Representations and Warranties. Each of the
representations and warranties of the Parent Companies contained in
this Agreement shall be true and correct as of the date hereof, except
that to the extent such representations and warranties address matters
only as of a particular date, such representations and warranties
shall, to such extent, be true and correct as of the date hereof and at
and as of such particular date as if
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made at and as of such particular date; provided that if any of such
representations and warranties shall not be true and correct as
aforesaid, then this condition shall nevertheless be deemed satisfied
if the cumulative effect of all inaccuracies of such representations
and breaches of such warranties shall not be or have a Parent Material
Adverse Effect. The Company shall have received a certificate of the
President and the Chief Financial Officer of the Parent, dated the
Closing Date, to such effect.
(b) Agreements and Covenants. The Parent Companies shall have
performed or complied with the agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to
the Closing Date. The Company shall have received a certificate of the
President and the Chief Financial Officer of the Parent, dated the
Closing Date, to that effect.
(c) Tax Opinion. Wilson Sonsini Goodrich & Rosati,
Professional Corporation, shall have delivered to the Company its
written opinion substantially to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a)(2)(E)
of the Code, (ii) Parent, Merger Sub and the Company will each be a
party to that reorganization within the meaning of Section 368(b) of
the Code, and (iii) no gain or loss for U.S. federal income tax
purposes will be recognized by the holders of the Company Stock upon
receipt of shares of Parent Common Stock in the Merger, except with
respect to any cash received in lieu of a fractional share interest in
Parent Common Stock, and such opinion shall not have been withdrawn or
modified in any material respect.
(d) Opinion of Parent Counsel. Counsel to the Parent Companies
shall furnish to the Company a written legal opinion, in form and
substance reasonably satisfactory to the Company and its counsel,
covering the matters set forth in Exhibit G.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the shareholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company is
untrue, in either case such that the conditions set forth in Section
7.02(a) or (b), as the case may be, would be incapable of being
satisfied by September 30, 2000; provided, that in any case, a willful
breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this clause (b);
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(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Parent Companies set
forth in this Agreement, or if any representation or warranty of the
Parent Companies is untrue, in either case such that the conditions set
forth in Section 7.03(a) or (b), as the case may be, would be incapable
of being satisfied by September 30, 2000; provided, that in any case, a
willful breach shall be deemed to cause such conditions to be incapable
of being satisfied for purposes of this clause (c);
(d) by either Parent or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of
the Merger, except if the party relying on such Order to terminate this
Agreement has not complied with its obligations under Section 6.04(c)
of this Agreement;
(e) by either Parent or the Company, if the Merger shall not
have been consummated before September 30, 2000, unless the failure to
consummate the Merger by such date is the result of a willful breach of
this Agreement by the party seeking to terminate; or
(f) by either Parent or the Company, if this Agreement and the
Merger shall fail to receive the requisite vote for approval and
adoption by the shareholders of the Company at the Shareholders
Meeting.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 8.02. Effect of Termination.
(a) Except as provided in Section 8.05, Section 9.01 and
clauses (b) and (d) of this Section 8.02, in the event of the
termination of this Agreement pursuant to Section 8.01, this Agreement
shall forthwith become void, there shall be no liability on the part of
the Parent Companies or the Company to the other and all rights and
obligations of any party hereto shall cease.
(b) Nothing herein shall relieve the Company of any liability
for any willful breach of the Company's representations, warranties,
covenants or agreements contained in this Agreement, in which case
Parent shall have the rights and remedies available to it at Law or in
equity as a result of such willful breach, without regard to the Option
Agreement or any payment made to Parent by the Company pursuant to
Section 8.05(b).
(c) Parent and Merger Sub shall be relieved of any and all
liability for any willful breach of any of their representations,
warranties, covenants or agreements contained in this Agreement upon
the payment to the Company of a liquidated damages fee in the amount of
$60,000,000 (the "Liquidated Damages Fee"), in which case the
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Company shall have no rights and remedies available to it at Law or in
equity as a result of such willful breach. The parties acknowledge and
agree that it would be impractical to estimate the amount of any
damages that could arise out of any willful breach by Parent and/or
Merger Sub. The parties therefore agree that in the event of any
willful breach by Parent and/or Merger Sub, the Company will be
entitled to the Liquidated Damages Fee, which all parties agree is a
reasonable estimate of actual damages that the Company would suffer or
incur as a result of a willful breach by Parent and/or Merger Sub.
(d) The Option Agreement shall be governed by its own terms
with respect to termination.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Company, no amendment, which under
applicable Law may not be made without the approval of the shareholders of the
Company, may be made without such approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. Subject to Section 8.03, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
the other party with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. For purposes of this
Section 8.04, the Parent Companies as a group shall be deemed to be one party.
SECTION 8.05. Fees, Expenses and Other Payments.
(a) Except as set forth in Section 6.01(a), all Expenses
incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such Expenses. "Expenses" as used in this
Agreement shall include all out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to
the authorization, preparation, negotiation, execution and performance
of this Agreement, the preparation and filing of the Permit Application
and the solicitation of shareholder approvals and all other matters
related to the consummation of the transactions contemplated hereby.
(b) The Company agrees that if this Agreement is terminated
pursuant to either Section 8.01(b) due to a willful breach or Section
8.01(f), and the Company enters into a definitive agreement with
respect to a Competing Transaction (defined for this purpose to
substitute "50 percent" for the reference to "20 percent" in the
definition thereof set
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forth in Section 5.05) or shall consummate a Competing Transaction
(defined for this purpose to substitute "50 percent" for the reference
to "20 percent" in the definition thereof set forth in Section 5.05) at
any time prior to or within the nine-month period commencing on the
date of termination of this Agreement, then the Company shall pay to
Parent an amount equal to $25,000,000.
(c) Any payment required to be made pursuant to clause (b)
above shall be made contemporaneously with the consummation of a
Competing Transaction. In either of the foregoing cases, payment shall
be made by wire transfer of immediately available funds to an account
designated by Parent.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in clause (b) below, the
representations, warranties and agreements of each party hereto shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any
person controlling any such party or any of their officers, directors,
representatives or agents, whether prior to or after the execution of
this Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination
of this Agreement pursuant to Article VIII, except that the agreements
set forth in Articles I and II and IX and Sections 6.07, 6.09, 6.10 and
6.11 shall survive the Effective Time and those set forth in Sections
8.02 and 8.05 and Article IX hereof shall survive termination. Nothing
herein shall be construed to cause the Confidentiality Agreement to
terminate upon the termination of this Agreement pursuant to Article
VIII.
SECTION 9.02. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the facsimile number
specified below:
(a) If to any of the Parent Companies, to:
CNET, Inc.
150 Chestnut Street
San Francisco, CA 94111
Attention: Chief Financial Officer
Facsimile No: (415) 395-9330
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with a copy to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attention: R. Clayton Mulford
Facsimile No.: (214) 939-6100
(b) If to the Company, to:
mySimon Inc.
4500 Great America Parkway
Suite 300
Santa Clara, California 95054
Attention: Chief Financial Officer
Facsimile No: (408) 330-4401
with copies to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Mark E. Bonham
Facsimile: (650) 493-6811
and
Wilson Sonsini Goodrich & Rosati
Professional Corporation
Spear Street Tower
One Market
San Francisco, California 94105
Attention: Steve L. Camahort
Facsimile: (415) 222-9633
SECTION 9.03. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
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(b) "business day" means any day other than a day on which
banks in the State of California are authorized or obligated to be
closed;
(c) "control" (including the terms "controlled," "controlled
by," and "under common control with") means the possession, directly or
indirectly, or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise;
(d) "knowledge" or "known" means with respect to any matter in
question, (i) with respect to the Company, if an officer or director of
the Company has actual knowledge of such matter, and (ii) with respect
to Parent, if an executive officer has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as used in Section l3(d) of the Exchange Act);
(f) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person, means any corporation,
partnership, joint venture or other legal entity of which the Company,
Parent, the Surviving Corporation or any such other person, as the case
may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity; and
(g) "Tax" or "Taxes" means any and all taxes, charges, fees,
levies, assessments, duties or other amounts payable to any federal,
state, local or foreign taxing authority or agency, including, without
limitation, (x) income, franchise, profits, gross receipts, minimum,
alternative minimum, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (y) customs, duties,
imposts, charges, levies or other similar assessments of any kind, and
(z) interest, penalties and additions to tax imposed with respect
thereto.
SECTION 9.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement Section references herein are, unless the
context otherwise requires, references to sections of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in
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<PAGE> 50
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 9.06. Entire Agreement. This Agreement (together with the
Exhibits and the Company Schedules), the Option Agreement and the
Confidentiality Agreement constitute the entire agreement of the parties, and
supersede all prior agreements and undertakings, both written and oral, among
the parties or between any of them, with respect to the subject matter hereof.
SECTION 9.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise except that Parent may assign the right and
obligation of Merger Sub to another of its wholly-owned subsidiaries.
SECTION 9.08. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than as contemplated by Section 6.07 and
Section 6.11), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 9.11. Governing Law. Except to the extent the laws of the State
of California are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.
SECTION 9.12. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when
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executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CNET, INC.
By: /s/ HALSEY MINOR
--------------------------------
Name: Halsey Minor
------------------------------
Title: Chairman of the Board
-----------------------------
and Chief Executive Officer
-----------------------------
CNET SUB, INC.
By: /s/ HALSEY MINOR
--------------------------------
Name: Halsey Minor
------------------------------
Title: Chairman of the Board
-----------------------------
and Chief Executive Officer
-----------------------------
MYSIMON INC.
By: /s/ JOSH GOLDMAN
--------------------------------
Name: Josh Goldman
------------------------------
Title: President & CEO
-----------------------------
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EXHIBIT 99.1
CONTACT: KAREN WOOD BRIAN ROLFE
CNET, INC. MYSIMON
(415) 364-8473 (408) 330-4448
[email protected] [email protected]
FOR IMMEDIATE RELEASE
CNET TO ACQUIRE MYSIMON
Companies will Join Forces to Create the Ultimate Destination for Online
Shoppers
New Nielsen//NetRatings Data Show `Off-the-Chart Growth' for Commerce Enablers
SAN FRANCISCO, CALIF. JANUARY 20, 2000 - In a move that will create the
definitive destination for online shoppers, CNET, Inc. (Nasdaq: CNET) today
announced that it will acquire mySimon (www.mysimon.com), the leading comparison
shopping service on the Internet, for approximately 11.3 million shares of CNET
common stock, valued at approximately $700 million as of the close of the market
on Wednesday. The marriage of the two companies will immediately create the
world leader in comparison shopping, with 10 million unique users, 250 product
categories, hundreds of million products and more than 2600 merchants and
advertisers. The transaction is expected to close by the end of the first
quarter.
In conjunction with the acquisition, CNET also announced today that it would
change its corporate name to CNET Networks, Inc. to reflect the company's
expansion and the growth of additional brands under the CNET Networks banner.
CNET.com will continue to be focused on computers and technology, and mySimon
will maintain its own brand, management team and staff.
"We are at an inflection point on the Internet with the explosion of
e-commerce," said Halsey Minor, Chairman and CEO of CNET. "The unprecedented
tide of retailers coming online is threatening to overwhelm consumers, when it
should be empowering them. We believe the time has come for a single destination
devoted to organizing the e-commerce landscape and informing online shoppers in
every category, and we are confident there is no better team to do it than CNET
and mySimon."
Josh Goldman, President and CEO of mySimon, stated, "We have built the leading
comparison shopping service on the Internet by deploying the best tools and
technologies to help consumers look across a very broad spectrum of shopping
categories. CNET brings unparalleled experience in integrating content,
community and commerce to help us create the shopping category killer."
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The acquisition of mySimon enables CNET to quickly expand its leading content
model into 250 categories with hundreds of millions of products. Since it was
founded in 1992, CNET's mission has been to provide content and services that
help users make informed purchase decisions about technology products. CNET
pioneered the lead-based business model and today generates nearly 200,000 leads
per day to its 150 merchant partners.
Minor continued, "We have proven that we can build a profitable business out of
linking buyers and sellers of technology products. In the future, the company
that will be most important to e-commerce will be the one that enables the truly
informed purchase decision in every category."
Off-the-Chart Growth for Comparison Shopping Sites
According to Nielsen//NetRatings, during the online holiday shopping season,
comparison shopping sites experienced tremendous growth in traffic between the
months of November and December.
Allen Weiner, Vice President, Analytical Services at NetRatings, Inc., said,
"Commerce enablers are bound to be one of the Web's hottest sectors this year.
The marriage of CNET and mySimon comes directly on the heels of the 1999 holiday
e-commerce season when we saw the emergence of commerce enablers as important
drivers to all sectors of e-commerce. mySimon, with a 146 percent growth in
traffic from November 1999 to December 1999, is clearly one of the leaders in
this space, and its broad vision of the commerce marketplace, combined with
CNET's expansive content channels, will create a powerful force."
About CNET
CNET, Inc. is at the leading edge of media companies, producing a branded
Internet network and television programming for both targeted and general
audiences. Online and on television, CNET is the leading authority on computers,
the Internet and digital technologies. CNET's network serves millions of users
each day. CNET television programming airs on CNBC and in national syndication,
as well as 61 foreign countries. CNET currently has investments in cash and
marketable securities that are valued at over $700 million including its 13
percent stake in NBC Internet Inc.
About mySimon, inc.
mySimon (www.mysimon.com (http://www.mysimon.com/)), is the premier comparison
shopping destination on the Internet. mySimon's easy-to-use Web shopping
service, powered by Virtual Learning Agent (VLA) technology, helps consumers
find the best values for anything sold on the Web. mySimon searches hundreds of
millions of products at thousands of stores online.
# # #
This press release includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ
materially. These statements are
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generally identified by words like "expect", "intend", "believe" and other
similar expressions. Statements regarding the consummation of the transaction
are subject to risks that the closing conditions to the transaction will not be
satisfied, including the risk that regulatory approvals will not be obtained or
that the stockholders' of mySimon will not approve the merger.
In addition, statements regarding the expected benefits of the transaction are
subject to the risk that expected synergies will not be achieved and to the
general risks associated with the companies' businesses. For risks about CNET's
business see its Form 10-K for the year-ended December 31, 1998 and subsequent
Forms 10-Q and Forms 8-K.
3