<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
iMall, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
45244X207
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(CUSIP Number)
Gordon K. Davidson, Esq.
Thomas A. Jermoluk Douglas N. Cogen, Esq.
At Home Corporation Fenwick & West LLP
450 Broadway Street Two Palo Alto Square
Redwood City, CA 94063 Palo Alto, CA 94306
(650) 569-5000 (650) 494-0600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 12, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act.
<PAGE> 2
SCHEDULE 13D
- ----------------------------------------
CUSIP NO. 45244X207
- ----------------------------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AT HOME CORPORATION 77-0408542
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO (1)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER
OF 8,231,381
--------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED NOT APPLICABLE (2)
--------------------------------------------------------
BY 9 SOLE DISPOSITIVE POWER
EACH
REPORTING NOT APPLICABLE
--------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH
NOT APPLICABLE
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,231,381
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.8%
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14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- ------------------------
(1) See Item 3 infra.
(2) See Item 5(a)-(b) infra.
2
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This statement relates to the Common Stock, par value $0.001 per
share ("Common Stock"), of iMall, Inc., a Nevada corporation ("iMall" or the
"Issuer"). The 8,231,381 shares of the Issuer's Common Stock which are the
subject of this statement will be referred to as the "Shares" throughout this
statement. The principal executive offices of iMall are located at 233 Wilshire
Boulevard, Suite 820, Santa Monica, California 90401.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of At Home Corporation, a
Delaware corporation ("Excite@Home"). Excite@Home is the leading provider of
broadband Internet services over the cable television infrastructure to
consumers. The address of Excite@Home's principal business and its principal
office is 450 Broadway Street, Redwood City, California 94063.
AT&T Corp. ("AT&T"), a New York corporation, through its wholly
owned subsidiary Tele-Communications, Inc. ("TCI"), may be deemed to be a
controlling stockholder of Excite@Home. AT&T is among the world's communications
leaders, providing voice, data and video telecommunications services to large
and small businesses, consumers and government entities. AT&T and its
subsidiaries furnish regional, domestic, international, local and Internet
communication transmission services, including cellular telephone and other
wireless services, and cable television services. The address of AT&T's
principal executive office is 32 Avenue of the Americas, New York, New York
10013-2412.
Set forth on Schedule A to the Statement is the name, business
address, present principal occupation or employment and citizenship for each
director and executive officer of Excite@Home and AT&T pursuant to Item 2(a),
(b), (c) and (d) and is incorporated herein by reference.
During the last five years, neither Excite@Home nor, to
Excite@Home's knowledge, any person named on Schedule A has been: (a) convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors);
or (b) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which, he, she or it was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
To Excite@Home's knowledge, each of the individuals identified
on Schedule A to the Statement is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As an inducement for Excite@Home to enter the Merger Agreement,
certain of the stockholders of iMall entered into Voting Agreements representing
8,231,381 of the outstanding shares of iMall Common Stock (see Item 4).
Excite@Home did not pay additional consideration to any Stockholder in
connection with the execution and delivery of these Voting Agreements beyond the
consideration described in the Merger Agreement. Upon consummation of the
Merger, the shares of iMall Common Stock owned by signatories to the Voting
Agreements will be subject to the same exchange ratio as shares held by all
other shareholders of iMall Common Stock. Based upon the number of shares of
iMall Common Stock outstanding as of July 9, 1999 (as represented by iMall in
the Merger Agreement), the number of shares of iMall Common Stock subject to
these Voting Agreements represents 45.8% of the outstanding shares of iMall
Common Stock.
3
<PAGE> 4
ITEM 4. PURPOSE OF TRANSACTION
(a)-(b) Pursuant to an Agreement and Plan of Merger dated as of July 12,
1999 (the "Merger Agreement") by and between Excite@Home, Shop
Nevada, Inc., a Nevada corporation and a wholly-owned subsidiary
of Excite@Home ("Merger Sub") and iMall, and subject to the
conditions set forth therein (including approval by stockholders
of Excite@Home and iMall), Merger Sub will merge with and into
iMall and iMall will become a wholly-owned subsidiary of
Excite@Home (the "Merger"). As a result of the Merger, each
outstanding share of iMall Common Stock, other than shares owned
by Merger Sub, Excite@Home or any wholly-owned subsidiary of
Excite@Home, will be converted into the right to receive 0.46
shares (the "Exchange Ratio") of Excite@Home Series A Common
Stock, par value $0.01 per share, and each outstanding option to
purchase iMall Common Stock under iMall's 1997 Stock Option Plan
and 1999 Stock Option Plan (together, the "iMall Stock Options")
will be assumed by Excite@Home (each, an "Assumed Option") and
certain outstanding warrants to purchase iMall Common Stock will
be assumed by Excite@Home (each, an "Assumed Warrant"). Each
Assumed Option and each Assumed Warrant will become an option or
warrant to purchase shares of Excite@Home Series A Common Stock
according to the Exchange Ratio.
As an inducement for Excite@Home to enter into the Merger
Agreement and in consideration thereof, certain stockholders of
iMall (the "Stockholders") entered into a Voting Agreement, dated
as of July 12, 1999, with Excite@Home (collectively, the "Voting
Agreements") whereby the Stockholders agreed, severally and not
jointly, to vote all of the shares of iMall Common Stock
beneficially owned by them in favor of approval and adoption of
the Merger Agreement and approval of the Merger and related
matters. Concurrently with the execution of the Voting
Agreements, certain of the Stockholders delivered to Excite@Home
an irrevocable proxy (each a "Proxy," together the "Proxies")
granting Excite@Home the power to vote all of the shares of iMall
Common Stock beneficially owned by the Stockholders in favor of
the Merger and related matters. The Stockholders retained the
power to vote the shares on all such other matters. Excite@Home
did not pay additional consideration to any Stockholder in
connection with the execution and delivery of the Voting
Agreements and Proxies. Schedule B to this Statement sets forth
these Stockholders and the number of outstanding shares of iMall
Common Stock that each of them beneficially owns.
4
<PAGE> 5
(c) Not applicable.
(d) Upon consummation of the merger, the directors of the Surviving
Corporation shall be the current directors of the Merger Sub
until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation
shall be the current officers of Merger Sub, until their
respective successors are duly appointed.
(e) Other than as a result of the Merger described in Item 4(a)-(b)
above, Excite@Home does not presently have any plans or proposals
which relate to or would result in any material change in the
present capitalization or dividend policy of the Issuer.
(f) Not applicable.
(g) Pursuant to the Voting Agreements entered into by Excite@Home and
certain of the stockholders of iMall, the Stockholders agreed to
vote all of the shares of iMall Common Stock owned beneficially
by them in favor of approval of an amendment to the Articles of
Incorporation of iMall which deletes Article VI.C of iMall's
Articles of Incorporation, removing the requirement that no sale,
conveyance, transfer, exchange or other disposition of all or
substantially all of the property and assets of iMall can be made
without the vote or written consent of two-thirds of the
stockholders.
(h)-(i) Upon the closing of the Merger, iMall Common Stock will be
deregistered under the Act and delisted from the Nasdaq Stock
Market.
If the Merger is consummated as planned, Excite@Home will
authorize for listing on the Nasdaq Stock Market, the shares of
Excite@Home Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger, upon
official notice of issuance.
(j) Not applicable.
References to, and descriptions of, the Merger, the Merger
Agreement, the Voting Agreements and the Proxies as set forth
herein are qualified in their entirety by reference to the copies
of the Merger Agreement and the form of Voting Agreement,
respectively, included as Exhibits A and B, respectively, to this
Schedule 13D, and are incorporated herein in their entirety where
such references and descriptions appear.
5
<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) As a result of the Voting Agreements, Excite@Home may be deemed
to be the beneficial owner of at least 8,231,381 shares of iMall
Common Stock. Such iMall Common Stock constitutes approximately
45.8% of the issued and outstanding shares of iMall Common Stock
based on the number of shares of iMall Common Stock outstanding
as of July 9, 1999 (as represented by iMall in the Merger
Agreement). Excite@Home may be deemed to have the sole power to
vote the Shares with respect to those matters described above.
However, Excite@Home does not have the power to dispose of these
shares and, other than the power to vote conferred by the Voting
Agreements, is not entitled to any rights as a stockholder of
iMall as to these shares and disclaims any beneficial ownership
of these shares.
(c) Except for entering into the Merger Agreement and related
agreements, Excite@Home has not effected any transaction in the
Issuer's Common Stock during the past 60 days, and, to the best
of its knowledge, no person named in Schedule A has effected any
transactions in the Issuer's Common Stock during the past 60
days.
(d) No other person is known to Excite@Home to have the right to
receive or the power to direct the receipt of dividends from, or
proceeds from the sale of, any shares of iMall Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Other than the Merger Agreement and the exhibits thereto,
including the Voting Agreements, to the knowledge of Excite@Home, none of the
parties named in Item 2 to this Statement are a party to any contract,
arrangement, understanding or relationship of the type specified by this Item 6
with respect to any iMall securities.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits hereto:
Exhibit A: Agreement and Plan of Merger, dated as of July
12, 1999, between iMall and Excite@Home.
Exhibit B: Form of Voting Agreement entered into between
Excite@Home and certain stockholders of iMall
on July 12, 1999.
6
<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 30, 1999
AT HOME CORPORATION
By: /s/ DAVID G. PINE
--------------------------------
Name: David G. Pine
Title: Vice President, General
Counsel and Secretary
<PAGE> 8
SCHEDULE A
BOARD OF DIRECTORS OF EXCITE@HOME
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS OCCUPATION
- ------------------------- ----------
<S> <C>
Thomas A. Jermoluk Chairman of the Board of
450 Broadway Directors and Chief Executive
Redwood City, CA 94063 Officer of Excite@Home
William R. Hearst III General Partner, KPCB, a
2750 Sand Hill Road venture capital firm
Menlo Park, CA 94025
George Bell President of At Home
450 Broadway
Redwood City, CA 94063
C. Michael Armstrong Chairman of the Board and
295 North Maple Avenue Chief Executive Officer of
Basking Ridge, NJ 07920 AT&T
L. John Doerr General Partner, KPCB, a
2750 Sand Hill Road venture capital firm
Menlo Park, CA 94025
Leo J. Hindery, Jr. President and Chief
5619 DTC Parkway Executive Officer of AT&T
Englewood, CO 80110 Broadband & Internet Services
John C. Malone Chairman of Liberty Media
5619 DTC Parkway Group, a maker of cable TV
Englewood, CO 80110 programs
John C. Petrillo Executive Vice President,
295 North Maple Avenue Corporate Strategy and
Basking Ridge, NJ 07920 Business Development of AT&T
Brian L. Roberts President of Comcast, a cable
1500 Market Street, 35th Floor systems company
Philadelphia, PA 19102
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
Jim Shaw, Jr. President and Chief
Suite 400 Executive Officer of Shaw
630 3rd Avenue SW Communications Inc., a Canadian
Calgary, Alberta T2P 4LS Canada entertainment, information and
communications company
David M. Woodrow Senior Vice President of New
1400 Lake Hearn Drive Business Development of Cox, a
Atlanta, GA 30319 cable systems company
</TABLE>
EXECUTIVE OFFICERS OF EXCITE@HOME
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION (1)
- ------------------------- ----------------------------
<S> <C>
Thomas A. Jermoluk Chairman of the Board and Chief
450 Broadway Executive Officer
Redwood City, CA 94063
George Bell President
450 Broadway
Redwood City, CA 94063
Ben Addoms Executive Vice President Sales
450 Broadway
Redwood City, CA 94063
David P. Bagshaw Senior Vice President and General
450 Broadway Manager Customer Care
Redwood City, CA 94063
Brett Bullington Executive Vice President Business
450 Broadway Affairs
Redwood City, CA 94063
Leilani T. Gayles Vice President Human Resources
450 Broadway
Redwood City, CA 94063
Dean A. Gilbert Senior Vice President and General
450 Broadway Manager @Home Group
Redwood City, CA 94063
Kenneth A. Goldman Senior Vice President and Chief
450 Broadway Financial Officer
Redwood City, CA 94063
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
Adam Grosser Vice President Engineering and
450 Broadway Operations
Redwood City, CA 94063
Donald P. Hutchison Senior Vice President and
450 Broadway General Manager @Work Group
Redwood City, CA 94063
Joe Kraus Senior Vice President Content
450 Broadway
Redwood City, CA 94063
Milo S. Medin Senior Vice President of
450 Broadway Engineering and Chief Technology
Redwood City, CA 94063 Officer
John L. O'Farrell Senior Vice President International
450 Broadway
Redwood City, CA 94063
David G. Pine Vice President, General Counsel
450 Broadway and Secretary
Redwood City, CA 94063
Fred Siegel Senior Vice President Marketing
450 Broadway
Redwood City, CA 94063
Mark Stevens Executive Vice President Business
450 Broadway Development
Redwood City, CA 94063
</TABLE>
- ------------------------
(1) The present principal occupation of all executive officers of Excite@Home is
with Excite@Home.
BOARD OF DIRECTORS OF AT&T CORP.(2)
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME OCCUPATION
- ---- ----------
<S> <C>
C. Michael Armstrong Chairman of the Board and Chief
Executive Officer and Director of
AT&T
</TABLE>
<PAGE> 11
<TABLE>
<S> <C>
Kenneth T. Derr Chief Executive Officer of Chevron
Corporation, one of the world's largest
integrated petroleum companies
M. Kathryn Eickhoff President of Eickhoff Economics, Inc.,
economic consultants
Walter Y. Elisha Chairman and Chief Executive
Officer of Springs Industries, Inc.,
a textile manufacturing firm
George M.C. Fisher Chairman and Chief Executive
Officer of Eastman Kodak Company, a
developer, manufacturer and marketer of
consumer and commercial imaging products
Donald V. Fites Chairman and Chief Executive
Officer of Caterpillar, Inc., a
manufacturer of construction and mining
equipment
Amis B. Hostetter, Jr. Former Chief Executive Officer of
Continental Cablevision, a provider of
broadband communications services
Ralph S. Larsen Chairman and Chief Executive
Officer of Johnson & Johnson, a
diversified health care company
John C. Malone Chief Executive Officer of Liberty
Media Group, a maker of cable TV
programs
Donald F. McHenry President of IRC Group, international
relations consultants
Michael I. Sovern President Emeritus and Chancellor
Kent Professor of Law at Columbia
University
Sanford I. Weill Chairman and Co-Chief Executive
Officer of Citigroup Inc., provider
of diversified financial services
Thomas H. Wyman Former Chairman and Chief Executive
Officer of CBS Inc., a worldwide
media company
John D. Zeglis President and Director of AT&T
</TABLE>
- ------------------------
(2) The present principal business address for each person listed below is c/o
AT&T Corp., 295 North Maple Avenue, Basking Ridge, New Jersey 07920.
<PAGE> 12
EXECUTIVE OFFICERS OF AT&T CORP.(3)
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME OCCUPATION
- ---- ----------
<S> <C>
C. Michael Armstrong Chairman of the Board and
Chief Executive Officer and
Director of AT&T
John D. Zeglis President and Director of AT&T
Harold W. Burlingame Executive Vice President -
Merger & Joint Venture Integration
James Cicconi Executive Vice President - Law &
Governmental Affairs and
General Counsel
Nicholas S. Cyprus Vice President and Controller
David W. Dorman Chief Executive Officer - Global
Venture
Edward M. Dwyer Vice President and Treasurer
Mirian M. Graddick Executive Vice President -
Human Resources
Daniel R. Hesse Executive Vice President and
President and Chief Executive
Officer - AT&T Wireless Services
Leo J. Hindrey, Jr. President and Chief Executive
Officer - AT&T Broadband and
Internet Services
Frank Ianna Executive Vice President and
President - AT&T Network
Services
Michael G. Keith Executive Vice President and
President - AT&T Business
Services
</TABLE>
<PAGE> 13
<TABLE>
<S> <C>
H. Eugene Lockhart Executive Vice President and
President - AT&T Consumer Services
Richard J. Martin Executive Vice President - Public
Relations and Employee Communication
David C. Nagel President - AT&T Labs & Chief
Technology Officer
John C. Petrillo Executive Vice President - Corporate
Capital Strategy and Business
Development
Richard R. Roscitt Executive Vice President and
President and Chief Executive
Officer - AT&T Solutions
Daniel E. Somers Senior Executive Vice
President and Chief Financial
Officer
Marilyn J. Wasser Vice President and Secretary
</TABLE>
- ------------------------
(3) The present principal business address for each person listed below is c/o
AT&T Corp., 295 North Maple Avenue, Basking Ridge, New Jersey 07920.
<PAGE> 14
SCHEDULE B
STOCKHOLDERS SUBJECT TO VOTING AGREEMENTS
<TABLE>
<CAPTION>
STOCKHOLDER SHARES BENEFICIALLY OWNED
- ----------- -------------------------
<S> <C>
Cramer Rosenthal McGlynn, Inc. 988,575
Cramer Rosenthal McGlynn LLC 1,167,475
Mark Comer 829,908
First Data Merchant Services Corporation 2,000,000
Marshall Geller 102,265
Anthony Mazzarella 51,282
Craig Pickering 1,275,001
Richard Rogel 78,125
Richard Rosenblatt 1,625,000
Phillip Windley 113,750
</TABLE>
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Document Description
------- --------------------
<S> <C>
Exhibit A: Agreement and Plan of Merger, dated as of July 12, 1999,
between iMall and Excite@Home.
Exhibit B: Form of Voting Agreement entered into between Excite@Home
and certain stockholders of iMall on July 12, 1999.
</TABLE>
15
<PAGE> 1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
AT HOME CORPORATION,
SHOP NEVADA, INC.
AND
IMALL, INC.
JULY 12, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE MERGER.........................................................................2
1.1 The Merger.......................................................................2
1.2 Effective Time; Closing..........................................................2
1.3 Effect of the Merger.............................................................2
1.4 Articles of Incorporation; Bylaws................................................2
1.5 Directors and Officers...........................................................3
1.6 Effect on Capital Stock..........................................................3
1.7 Surrender of Certificates........................................................4
1.8 No Further Ownership Rights in Company Common Stock..............................6
1.9 Lost, Stolen or Destroyed Certificates...........................................6
1.10 Restricted Stock................................................................6
1.11 Tax and Accounting Consequences.................................................7
1.12 Taking of Necessary Action; Further Action......................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.........................................7
2.1 Organization; Subsidiaries.......................................................7
2.2 Company Capital Structure........................................................8
2.3 Obligations With Respect to Capital Stock........................................9
2.4 Authority.......................................................................10
2.5 SEC Filings; Company Financial Statements.......................................11
2.6 Absence of Changes..............................................................12
2.7 Taxes...........................................................................13
2.8 Title to Properties; Absence of Liens and Encumbrances..........................15
2.9 Intellectual Property...........................................................16
2.10 Compliance with Laws; Permits; Restrictions....................................19
2.11 Litigation.....................................................................20
2.12 Employee Benefit Plans.........................................................20
2.13 Environmental Matters..........................................................25
2.14 Agreements, Contracts and Commitments..........................................26
2.15 Change of Control Payments.....................................................27
2.16 Insurance......................................................................27
2.17 Disclosure.....................................................................27
2.18 Board Approval.................................................................28
2.19 Brokers' and Finders' Fees.....................................................28
2.20 Fairness Opinion...............................................................28
2.21 Nevada Law; Rights Agreement...................................................28
2.22 Related Party Transactions.....................................................29
2.23 Internet Yellow Pages..........................................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
MERGER SUB..................................................................................29
3.1 Organization of Parent and Merger Sub...........................................30
3.2 Parent and Merger Sub Capital Structure.........................................30
3.3 Authority.......................................................................31
3.4 SEC Filings; Parent Financial Statements........................................32
3.5 Absence of Changes..............................................................33
3.6 Litigation......................................................................33
3.7 Disclosure......................................................................33
3.8 Board Approval..................................................................34
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................................34
4.1 Conduct of Business by Company..................................................34
ARTICLE V ADDITIONAL AGREEMENTS.............................................................37
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other Filings.37
5.2 Meeting of Company Stockholders.................................................38
5.3 Confidentiality; Access to Information..........................................40
5.4 No Solicitation.................................................................40
5.5 Public Disclosure...............................................................42
5.6 Reasonable Efforts; Notification................................................42
5.7 Third Party Consents............................................................43
5.8 Stock Options...................................................................43
5.9 Registrations...................................................................44
5.10 Indemnification................................................................44
5.11 Nasdaq Listing.................................................................45
5.12 Affiliates; Restrictive Legend.................................................45
5.13 Letter of Company's Accountants................................................45
5.14 Takeover Statutes..............................................................45
5.15 Certain Employee Benefits......................................................46
5.16 Amendment of Company's Articles................................................46
5.17 Parent Warrant.................................................................46
ARTICLE VI CONDITIONS TO THE MERGER.........................................................46
6.1 Conditions to Obligations of Each Party to Effect the Merger....................46
6.2 Additional Conditions to Obligations of Company.................................47
6.3 Additional Conditions to the Obligations of Parent and Merger Sub...............48
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................................49
7.1 Termination.....................................................................49
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.2 Notice of Termination; Effect of Termination....................................51
7.3 Fees and Expenses...............................................................51
7.4 Amendment.......................................................................52
7.5 Extension; Waiver...............................................................52
ARTICLE VIII GENERAL PROVISIONS.............................................................53
8.1 Non-Survival of Representations and Warranties..................................53
8.2 Notices.........................................................................53
8.3 Interpretation; Certain Defined Terms...........................................54
8.4 Counterparts....................................................................55
8.5 Entire Agreement; Third Party Beneficiaries.....................................55
8.6 Severability....................................................................55
8.7 Other Remedies; Specific Performance............................................55
8.8 Governing Law...................................................................56
8.9 Rules of Construction...........................................................56
8.10 Assignment.....................................................................56
8.11 Waiver of Jury Trial...........................................................56
</TABLE>
INDEX OF EXHIBITS
Exhibit A Form of Parent Warrant
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of July 12 1999 among At Home Corporation, a Delaware corporation
("PARENT"), located at 425 Broadway, Redwood City, California 94063, Shop
Nevada, Inc., a Nevada corporation and a wholly-owned subsidiary of Parent
("MERGER SUB"), located at 425 Broadway, Redwood City, California 94063, and
iMALL, Inc., a Nevada corporation ("COMPANY"), located at 233 Wilshire
Boulevard, Suite 820, Santa Monica, California 90401.
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Nevada Revised Statutes ("NEVADA LAW"), Parent and Company
intend to enter into a business combination transaction.
B. The Merger (as defined in Section 1.1) is intended to constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE").
C. The Board of Directors of Company (i) has determined that the Merger
is advisable and fair to, and in the best interests of, Company and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement for all purposes under Nevada Law
and (iii) has determined to recommend that the stockholders of Company approve
this Agreement and the Merger.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
stockholders of Company are entering into voting agreements in which such
stockholders have agreed to vote in favor of the Merger (the "COMPANY VOTING
AGREEMENTS"). The Board of Directors of Company has approved the Company Voting
Agreements.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, (i) certain
officers of Company are entering into amendments, with Parent and Company, to
their current employment agreements with Company, effective upon the Effective
Time (as defined in Section 1.2) (such agreements, as amended, collectively, the
"AMENDED EMPLOYMENT AGREEMENTS"), and (ii) certain officers of Company are
entering into noncompetition agreements with Parent, effective upon the
Effective Time (collectively, the "NONCOMPETITION AGREEMENTS").
F. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, (i) Company
and First Data Merchant Services Corporation, a Florida corporation ("FIRST
DATA"), are entering into two amendments to and restatements of the Development
and Marketing Agreement, dated as of October 30, 1998 (the "MARKETING
AGREEMENT") between Company and First Data, the "FIRST AMENDED AND RESTATED
DEVELOPMENT AND MARKETING AGREEMENT" and the "SECOND AMENDED
<PAGE> 6
AND RESTATED DEVELOPMENT AND MARKETING AGREEMENT", (ii) Company and First Data
are amending the Investment Agreement, dated as of October 30, 1998 between the
Company and First Data, (such agreement, the "INVESTMENT AGREEMENT", and, as
amended, the "AMENDED INVESTMENT AGREEMENT"), and (iii) Parent and First Data
are entering into a Marketing Agreement (the "PARENT-FIRST DATA AGREEMENT", and,
together with the First Amended and Restated Development and Marketing
Agreement, the Second Amended and Restated Development and Marketing Agreement,
and the Amended Investment Agreement, collectively, the "FIRST DATA
AGREEMENTS").
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of Nevada Law,
Merger Sub shall be merged with and into Company (the "MERGER"), the separate
corporate existence of Merger Sub shall cease and Company shall continue as the
surviving corporation. Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
articles of merger, in such appropriate form as determined by the parties, with
the Secretary of State of the State of Nevada in accordance with the relevant
provisions of Nevada Law (the "ARTICLES OF MERGER") (the time of such filing (or
such later time as may be agreed in writing by Company and Parent and specified
in the Articles of Merger) being the "EFFECTIVE TIME") as soon as practicable on
or after the Closing Date (as herein defined). The closing of the Merger (the
"CLOSING") shall take place at the offices of Fenwick & West LLP, Two Palo Alto
Square, Palo Alto, California, at a time and date to be specified by the
parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Nevada Law. Without limiting the generality of the foregoing, at the Effective
Time all the property, rights, privileges, powers and franchises of Company and
Merger Sub shall vest in the Surviving Corporation without reversion or
impairment, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
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(a) At the Effective Time, the Articles of Incorporation of
Surviving Corporation shall be amended to conform to the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time; provided, however, that at the Effective Time, Article I of the Articles
of Incorporation of the Surviving Corporation shall not be so amended.
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. Each share of common
stock, par value $0.008 per share, of Company ("COMPANY COMMON STOCK") issued
and outstanding immediately prior to the Effective Time, other than any shares
of Company Common Stock to be canceled pursuant to Section 1.6(b), will be
canceled and extinguished and automatically converted (subject to Sections
1.6(d) and (e)) into the right to receive 0.46 (the "EXCHANGE RATIO") of a share
of Series A Common Stock, par value $0.01 per share, of Parent ("PARENT COMMON
STOCK"). As of the Effective Time, all such shares of Company Common Stock shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive upon the surrender of such certificates,
certificates representing the shares of Parent Common Stock, and cash in lieu of
fractional shares of Parent Common Stock to the extent provided in Section
1.7(e).
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each
share of Company Common Stock held by Company or owned by Merger Sub, Parent or
any direct or indirect wholly-owned subsidiary of Company or of Parent
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Capital Stock of Merger Sub. Each share of common stock, no
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving Corporation.
Each certificate evidencing ownership of shares of the common stock of Merger
Sub shall evidence ownership of such shares of capital stock of the Surviving
Corporation.
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(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification, exchange or other like change with respect
to Parent Common Stock or Company Common Stock occurring on or after the date
hereof and prior to the Effective Time.
(e) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall
receive from Parent an amount of cash (rounded to the nearest whole cent) equal
to the product of (i) such fraction, multiplied by (ii) the average closing sale
price of one share of Parent Common Stock for the ten most recent days that
Parent Common Stock has traded ending with and including the trading day
immediately prior to the Effective Time, as reported on the Nasdaq Stock Market.
(f) Stock Options; Warrants. At the Effective Time, all options
to purchase Company Common Stock then outstanding under the Company's 1997 Stock
Option Plan and 1999 Stock Option Plan (together, the "COMPANY STOCK OPTION
PLANS") shall be assumed by Parent in accordance with Section 5.8 of this
Agreement. At the Effective Time, all Company Warrants (as defined in Section
2.2) then outstanding shall be assumed by Parent in accordance with Section 5.8
of this Agreement.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
acceptable to Company to act as the exchange agent (the "EXCHANGE AGENT") in the
Merger.
(b) Provision of Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent for exchange in accordance
with this Article I, the shares of Parent Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of Company Common Stock, and cash
in an amount sufficient for payment in lieu of fractional shares pursuant to
Section 1.6(e) and any dividends or distributions to which holders of shares of
Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates ("CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into shares of Parent Common
Stock pursuant to Section 1.6, (i) a letter of transmittal in customary form
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall contain such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of
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Parent Common Stock, cash in lieu of any fractional shares pursuant to Section
1.6(e) and any dividends or other distributions pursuant to Section 1.7(d). Upon
surrender of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(e) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.6(e) and
any dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(e) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing shares
of Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(e) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common 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 canceled and exchanged as provided in
this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(e) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Restricted Stock. If any shares of the Company Common Stock that
are outstanding immediately prior to the Effective Time are unvested or are
subject to a repurchase option, risk of forfeiture or other condition providing
that such shares ("COMPANY RESTRICTED STOCK") may be forfeited or repurchased by
the Company upon any termination of the stockholders' employment, directorship
or other relationship with the Company (and/or any affiliate of the Company)
under the terms of any restricted stock purchase agreement or other agreement
with the Company that does not by its terms provide that such repurchase option,
risk of forfeiture or other condition lapses upon consummation of the Merger,
then the shares of Parent Common Stock issued upon the conversion of such shares
of Company Common Stock in the Merger will continue to be unvested and subject
to the same repurchase options, risks of forfeiture or other conditions
following the Effective Time, and the certificates representing such shares of
Parent Stock may accordingly be marked with appropriate legends noting such
repurchase options, risks of forfeiture or other conditions. The Company shall
take all actions that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or other
agreement. A listing of the holders of Company Restricted Stock, together with
the number of shares of Company Restricted Stock held by each, is set forth on
Part 1.10 of the Company Letter.
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1.11 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 354(a) and 361(a) of the Code and Sections 1.368-2(g) and
1.368-3(a) of the Federal Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a purchase.
1.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "COMPANY
LETTER"), as follows:
2.1 Organization; Subsidiaries
(a) Company and, except as disclosed in Part 2.1 of the Company
Letter, each of its subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized; (ii) has the corporate or other power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
conducted; and (iii) except as would not be material to Company, is duly
qualified or licensed to do business in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary.
(b) Other than the corporations identified in Part 2.1 of the
Company Letter , neither Company nor any of the other corporations or other
entities identified in Part 2.1 of the Company Letter owns any capital stock of,
or any equity interest of any nature in, any corporation, partnership, joint
venture arrangement or other business entity, other than the entities identified
in Part 2.1 of the Company Letter, except for passive investments in equity
interests of public companies as part of the cash management program of the
Company. Except
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as set forth in Part 2.1(b) of the Company Letter, all outstanding shares of
capital stock of each subsidiary of Company have been validly issued and are
fully paid and nonassessable and are owned by Company or another subsidiary of
Company, free and clear of all Encumbrances. Neither Company nor any of its
subsidiaries has agreed or is obligated to make, or is bound by any written,
oral or other agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature, as in effect as of the date hereof or as may hereinafter be in
effect under which it may become obligated to make any future investment in or
capital contribution to any other entity. Neither Company nor any of its
subsidiaries, has, at any time, been a general partner of any general
partnership, limited partnership or other entity. Part 2.1 of the Company Letter
indicates the jurisdiction of organization of each entity listed therein and
Company's direct or indirect equity interest therein.
(c) Except as set forth in Part 2.1(c) of the Company Letter,
Company has delivered or made available to Parent a true and correct copy of the
Articles of Incorporation and Bylaws of Company and similar governing
instruments of each of its subsidiaries, each as amended to date, and each such
instrument is in full force and effect. Neither Company nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent governing instruments.
2.2 Company Capital Structure.
(a) The authorized capital stock of Company consists of
37,500,000 shares of Company Common Stock, of which there were 17,990,028 shares
issued and outstanding as of July 9, 1999, and 10,000,000 shares of Preferred
Stock, par value $0.001 per share, of which no shares are issued or outstanding.
Except as disclosed in Part 2.2 of the Company Letter, all outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights or rights of first
refusal created by statute, the Articles of Incorporation or Bylaws of Company
or any agreement or document to which Company is a party or by which it is
bound. As of the date of this Agreement, there are 118,750 shares of Company
Common Stock held in treasury by Company. No shares of Company Common Stock have
been issued without certificates. From and after the Effective Time, the shares
of Parent Common Stock issued in exchange for any shares of Company Restricted
Stock will, without any further act of Parent, the Company or any other person,
become subject to the restrictions, conditions and other provisions of such
Company Restricted Stock, and Parent will automatically succeed to and become
entitled to exercise the Company's rights and remedies under such Company
Restricted Stock. As of July 9, 1999, Company had reserved an aggregate of
4,000,000 shares of Company Common Stock for issuance pursuant to the Company
Stock Option Plans. Stock options granted under the Company Stock Option Plans
are collectively referred to in this Agreement as "COMPANY OPTIONS." As of July
9, 1999, there were Company Options outstanding to purchase an aggregate of
2,930,598 shares of Company Common Stock. As of July 9, 1999, there were
warrants outstanding to purchase an aggregate of 2,384,097 shares of Company
Common Stock (collectively, "COMPANY WARRANTS"). As of the date of this
Agreement, no event has occurred which would require an adjustment to the
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"Warrant Share Amount" or "Exercise Price" (as such terms are defined therein)
of the warrant issuable to First Data pursuant to the Investment Agreement (the
"FIRST DATA WARRANT"). All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Part 2.2 of the Company Letter
list for each person who held Company Options or Company Warrants as of July 8,
1999, the name of the holder of such option or warrant, the Company Stock Option
Plan under which such option was granted, the exercise price of such option or
warrant, the number of shares as to which such option or warrant had vested at
such date, the vesting schedule for such option or warrant and whether the
exercisability of such option or warrant will be accelerated in any way by the
transactions contemplated by this Agreement, and indicates the extent of
acceleration, if any. The terms of the Company Options and Company Warrants,
respectively, permit the assumption of the Company Options and Company Warrants
as provided by Section 5.8 of this Agreement without the consent or approval of
the holders of the Company Options or Company Warrants, Company's stockholders
or otherwise and without any acceleration of the exercise schedule or vesting
provisions of such Company Options or Company Warrants, respectively.
(b) Except as set forth in Part 2.2(b) of the Company Letter, all
outstanding shares of Company Common Stock or other capital stock of Company,
all outstanding Company Options and Company Warrants, and all outstanding shares
of capital stock of each subsidiary of the Company have been issued and granted
in compliance with (i) all applicable securities laws and, to the knowledge of
Company, other applicable Legal Requirements (as defined below) and (ii) all
material requirements set forth in applicable agreements or instruments. For the
purposes of this Agreement, "LEGAL REQUIREMENTS" means any federal, state,
local, municipal, foreign or other law, statute, constitution, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Entity (as defined below).
2.3 Obligations With Respect to Capital Stock. Except as set forth in
Part 2.3 of the Company Letter, there are no equity securities, partnership
interests or similar ownership interests of any class of Company equity
security, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except for securities Company owns
free and clear of all Encumbrances (as defined herein), directly or indirectly
through one or more subsidiaries, and except for shares of capital stock or
other similar ownership interests of certain subsidiaries of Company that are
owned by certain nominee equity holders as required by the applicable law of the
jurisdiction of organization of such subsidiaries, as of the date of this
Agreement, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of
Company, or any security exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except as set forth in Part 2.2 or
Part 2.3 of the Company Letter, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Company or any of its subsidiaries is a party or by which it
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is bound obligating Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Company or any of its subsidiaries or obligating Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. Except as set forth in Part 2.3 of the Company Letter or as
contemplated by this Agreement, there are no registration rights and there is no
voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Company is a party or by which it is bound with respect
to any equity security of any class of Company or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries. Stockholders of Company will not be entitled to dissenters'
or appraisal rights under applicable state law (including under Section 92A.300
et seq. of Nevada Law) in connection with the Merger. For purposes of this
Agreement, "ENCUMBRANCES" means any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
2.4 Authority.
(a) Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the approval of this
Agreement and the Merger by Company's stockholders as contemplated by Section
5.2 and the filing of the Articles of Merger pursuant to Nevada Law.
Notwithstanding Company's agreement in Section 5.16 to seek the approval of
Company's stockholders of the Articles Amendment (as defined in Section 5.16),
whether or not the Articles Amendment is approved and effected, an affirmative
vote of a majority of the voting power of the Company is sufficient for
Company's stockholders to approve this Agreement and the Merger. No separate
voting by a class of the Company's stockholders is or will be required in
connection with the approval of the Merger or the other transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Company and, assuming the due execution and delivery by Parent and Merger Sub,
constitute the valid and binding obligations of Company, enforceable against
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity. The execution and delivery of this Agreement
by Company does not, and the performance of this Agreement by Company will not,
(i) conflict with or violate the Articles of Incorporation or Bylaws of Company
or the equivalent organizational documents of any of its subsidiaries, (ii)
subject to obtaining the approval of this Agreement and the Merger by Company's
stockholders as contemplated by Section 5.2 and compliance with the requirements
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set forth in Section 2.4(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Company or any of its
subsidiaries or by which Company or any of its subsidiaries or any of their
respective properties is bound or affected, or (iii) result in any material
breach of or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or impair
Company's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material Encumbrance on any of
the material properties or assets of Company or any of its subsidiaries pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, concession, or other instrument or obligation to which
Company or any of its subsidiaries is a party or by which Company or any of its
subsidiaries or its or any of their respective assets are bound or affected.
Part 2.4 of the Company Letter list all consents, waivers and approvals under
any of Company's or any of its subsidiaries' agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby, which, if individually or in the aggregate not
obtained, would result in a material loss of benefits to Company or any of its
subsidiaries, Parent or the Surviving Corporation.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required to be obtained or made by Company
in connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Articles of Merger
with the Secretary of State of the State of Nevada and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (ii) the filing of the Proxy Statement/Prospectus (as defined in
Section 2.17) with the Securities and Exchange Commission ("SEC") in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
the effectiveness of the Registration Statement (as defined in Section 2.17),
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and the securities or
antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not be material to the Company or Parent or have a material adverse
effect on the ability of the parties hereto to consummate the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) Except as disclosed in Part 2.5(a) of the Company Letter,
Company has filed all forms, reports and documents required to be filed by
Company with the SEC since January 1, 1997 and has made available to Parent such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports and documents (including those that Company may file subsequent
to the date hereof) are referred to herein as the "COMPANY SEC REPORTS." As of
their respective dates, the Company SEC Reports (i) were prepared in accordance
with the requirements of the Securities Act of 1933, as amended (the "SECURITIES
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ACT"), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Company SEC Reports and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except to
the extent corrected prior to the date of this Agreement by a subsequently filed
Company SEC Report. Except as set forth in Part 2.5(a) of the Company Letter,
all documents required to be filed as exhibits to the Company SEC Reports have
been so filed. None of Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented in all material respects the consolidated financial position of
Company and its subsidiaries as at the respective dates thereof and the
consolidated results of Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments. The audited balance sheet of Company contained in the Company SEC
Reports as of December 31, 1998 is hereinafter referred to as the "COMPANY
BALANCE SHEET." Except as disclosed in the Company Financials, since the date of
the Company Balance Sheet neither Company nor any of its subsidiaries has any
liabilities required under GAAP to be set forth on a consolidated balance sheet
(absolute, accrued, contingent or otherwise) which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of Company and its subsidiaries taken as a whole, except for
liabilities incurred since the date of the Company Balance Sheet in the ordinary
course of business consistent with past practices and liabilities incurred in
connection with this Agreement.
(c) Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.6 Absence of Changes. Except as set forth in Part 2.6 of the Company
Letter, since the date of the Company Balance Sheet there has not been: (i) any
Material Adverse Effect (as defined in Section 8.3(c)) with respect to Company,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, or any issuance
of, any of Company's or any of its subsidiaries' capital stock, or any purchase,
redemption or other acquisition by Company of any of Company's capital stock or
any other
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securities of Company or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock, (iv) any granting by Company or any of its subsidiaries of any increase
in compensation or fringe benefits to any of their officers or employees, except
for normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by Company or any of its
subsidiaries of any bonus to any of their officers or employees, except for
bonuses made in the ordinary course of business consistent with past practice,
or any granting by Company or any of its subsidiaries of any increase in
severance or termination pay or any entry by Company or any of its subsidiaries
into, or material modification or amendment of, any currently effective
employment, severance, termination or indemnification agreement or any agreement
the benefits of which are contingent or the terms of which are materially
altered upon the occurrence of a transaction involving Company of the nature
contemplated hereby, (v) any material change or alteration in the policy of
Company relating to the granting of stock options to its employees and
consultants, (vi) entry by Company or any of its subsidiaries into, or material
modification, amendment or cancellation of, any licensing, distribution,
marketing, reseller, merchant services, advertising, sponsorship or other
similar agreement other than any such agreement entered into in the ordinary
course of Company's business consistent with past practice which (A) provides
(or reasonably could provide) for payments by or to, or the incurrence of
obligations or expenses by, Company or its subsidiaries in an amount less than
$25,000 in any year, and (B) involves the performance of obligations for a
period of one year or less (such excepted agreements, collectively, "ORDINARY
COURSE AGREEMENTS"), (vii) any acquisition, sale or transfer of any material
asset of Company or any of its subsidiaries other than in the ordinary course of
business, (viii) any material change by Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP, or
(ix) any material revaluation by Company of any of its assets, including,
without limitation, writing off notes or accounts receivable other than in the
ordinary course of business. Those agreements deemed to be Ordinary Course
Agreements by reason of subclause (A) of clause (vi) do not provide for payments
by or to, or the incurrence of obligations or expenses by, Company and its
subsidiaries in excess of $250,000 in the aggregate.
2.7 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement,
"TAX" or "TAXES" refers to (i) any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts, (ii) any liability for payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated consolidated, combined or unitary group, and (iii) any liability for
amounts of the type described in clauses (i) and (ii) as a result of any express
or implied obligation to indemnify another person or as a result of any
obligations under any agreements or
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arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Except as set forth in Part 2.7(b)(i) of the Company
Letter, Company and each of its subsidiaries have timely filed all federal,
state, local and foreign returns, estimates, information statements and reports
("RETURNS") relating to Taxes required to be filed by or on behalf of Company
and each of its subsidiaries with any Tax authority, except where the failure to
file such Returns would not be material to Company. Such Returns are true,
correct and complete in all material respects, and Company and each of its
subsidiaries have paid all Taxes shown to be due on such Returns.
(ii) Except as set forth in Part 2.7(b)(ii) of the Company
Letter, Company and each of its subsidiaries have withheld with respect to its
employees all federal and state income taxes, Taxes pursuant to the Federal
Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment
Tax Act ("FUTA") and other Taxes required to be withheld, except such Taxes
which are not material to Company.
(iii) Neither Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Company or any of its
subsidiaries, nor has Company or any of its subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(iv) No audit or other examination of any Return of
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has Company or any of its subsidiaries been notified in writing,
or to the knowledge of Company, orally, of any request for such an audit or
other examination.
(v) No adjustment relating to any Returns filed by Company
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Company or any of its subsidiaries or any representative
thereof.
(vi) Neither Company nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on the
Company Balance Sheet, whether asserted or unasserted, contingent or otherwise,
which is material to Company, other than any liability for unpaid Taxes that may
have accrued since the date of the Company Balance Sheet in connection with the
operation of the business of Company and its subsidiaries in the ordinary
course.
(vii) There is no contract, agreement, plan or arrangement
to which Company is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this Agreement,
covering any employee or former employee of Company or any of its subsidiaries
that, individually or collectively, would give rise
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to the payment of any amount that would not be deductible pursuant to Sections
280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or
arrangement to which the Company is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
(viii) Neither Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by Company.
(ix) Neither Company nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Company and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(xii) Company has made available to Parent or its legal or
accounting representatives copies of all foreign, federal and state income tax
and all state sales and use tax Returns for the Company and each of its
subsidiaries filed for all periods since December 31, 1995.
(xiii) There are no Encumbrances of any sort on the assets
of the Company or Subsidiary relating to or attributable to Taxes, other than
liens for Taxes not yet due and payable.
2.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Part 2.8 of the Company Letter list all real property leases
to which Company is a party that provide for annual payments of $100,000 or
more, and each amendment thereto that is in effect as of the date of this
Agreement. All such current leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default) that could give
rise to a claim against Company in an amount greater than $25,000. Other than
the leaseholds created under the real property leases identified in Part 2.8 of
the Company Letter, the Company and its subsidiaries own no interests in real
property.
(b) Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its material
tangible properties and assets, real,
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personal and mixed, used or held for use in its business, free and clear of any
Encumbrances, except as reflected in the Company Financials and except for liens
for Taxes not yet due and payable and such Encumbrances, if any, which are not
material in character, amount or extent, and which do not materially detract
from the value, or materially interfere with the present use, of the property
subject thereto or affected thereby.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of; or associated therewith: (i)
all United States, international and foreign patents and
applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names,
URLs, logos, common law trademarks and service marks, trademark
and service mark registrations and applications therefor
throughout the world (collectively, "TRADEMARKS"); (vi) all
databases and data collections and all rights therein throughout
the world including but not limited to User Data (as defined
below); (vii) all moral and economic rights of authors and
inventors, however denominated, throughout the world, and (viii)
any similar or equivalent rights to any of the foregoing anywhere
in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Company or
one of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications,
or other registrations or applications related to trademarks;
(iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is
the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any state,
government or other public legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name
of, Company or one of its subsidiaries.
"USER DATA" means, known, assumed or inferred information or
attributes about a user or subscriber.
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(a) No material Company Intellectual Property or product or
service of Company is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property, except for restrictions on
User Data included in published privacy policies of Company or any of its
subsidiaries.
(b) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(c) Company or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its business as
currently conducted to, each material item of Company Intellectual Property free
and clear of any Encumbrance (excluding licenses and related restrictions).
Company reasonably believes that it will be able to obtain on commercially
reasonable terms each material item of Company Intellectual Property, free and
clear of any Encumbrance (excluding licenses and related restrictions), required
to conduct its business as proposed to be conducted. Company or one of its
subsidiaries is the exclusive owner of all material Trademarks used in
connection with the operation or conduct of the business of Company and its
subsidiaries, including the sale of any products or the provision of any
services by Company and its subsidiaries.
(d) Company or one of its subsidiaries owns exclusively, and has
good title to, all copyrighted works that are Company products or which Company
otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property has
been developed or created by a third party for Company or any of its
subsidiaries, Company or its subsidiaries, as the case may be, has a written
agreement with such third party with respect thereto and Company or its
subsidiary thereby either (i) has obtained ownership of and is the exclusive
owner of, or (ii) has obtained a license (sufficient for the conduct of its
business as currently conducted and as proposed to be conducted) to all such
third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment.
(f) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Company Intellectual Property, to any third
party.
(g) Part 2.9 of the Company Letter list all material contracts,
licenses and agreements to which Company or any of its subsidiaries is a party
(i) with respect to Company Intellectual Property licensed or transferred to any
third party (other than Ordinary Course
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Agreements); or (ii) pursuant to which a third party has licensed or transferred
any material Intellectual Property to Company or any of its subsidiaries.
(h) All material contracts, licenses and agreements relating to
the Company Intellectual Property to which Company or any of its subsidiaries is
a party are in full force and effect. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, or suspension of such contracts,
licenses and agreements. Company and each of its subsidiaries are in material
compliance with, and have not materially breached any term of any of such
contracts, licenses and agreements and, to the knowledge of Company and its
subsidiaries, all other parties to such contracts, licenses and agreements are
in compliance in all material respects with, and have not materially breached
any term of, such contracts, licenses and agreements. Following the Closing
Date, the Surviving Corporation will be permitted to exercise all of Company's
and its subsidiaries' rights under such contracts, licenses and agreements to
the same extent Company would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Company would otherwise be required to pay.
(i) The operation of the business of Company as such business
currently is conducted, including Company's design, development, marketing and
sale of the products or services of Company (including with respect to products
currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or, to its
knowledge, constitute unfair competition or trade practices under the laws of
any jurisdiction.
(j) Company has not received notice from any third party that the
operation of the business of Company or any act, product or service of Company,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) To the knowledge of Company, no person has or is infringing
or misappropriating any material Company Intellectual Property.
(l) Company and its subsidiaries have taken reasonable and
appropriate steps to protect Company's and its subsidiaries' rights in Company's
and such subsidiaries' confidential information and trade secrets that they wish
to protect or any trade secrets or confidential information of third parties
provided to Company or such subsidiaries, and, without limiting the foregoing,
Company and its subsidiaries have and enforce a policy requiring each employee
and contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Company and its subsidiaries have executed such an
agreement, except where the failure to do so in respect of employees not
involved in development of the Company Intellectual Property is not reasonably
expected to be material to Company. All disclosure of material confidential
information of Company or its subsidiaries provided to third parties has been
pursuant to a written agreement between Company or such subsidiary and such
third party
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(m) The Development and Operational Services, Marketing Services,
Electronic Commerce Tools, and Company Software (as each such term is defined in
the Marketing Agreement) are and shall remain year 2000 compliant in that: date
data from at least 1900 through 2101 will process without error or interruption
due solely to the change in century, in any level of computer hardware, software
or services, including, microcode, firmware, system and application programs,
files, databases and computer services; there will be no loss of functionality
of any of the foregoing due solely to the change in century, with respect to the
introduction, processing or output of records containing dates falling on or
after January 1, 2000; and on and after January 1, 2000, all of the foregoing
will continue to be interoperable, in the same manner as they are prior to
January 1, 2000, with software and hardware that may deliver records to, receive
records from or interact with the foregoing in the course of processing data,
provided that such other software and hardware uses a century windowing or
interpretive approach (with a pivot year of 50). Except as set forth in Part
2.9(m) of the Company Letter, since January 1, 1998, neither Company nor any of
its subsidiaries has given to customers any written representations or
warranties or indemnities with respect to year 2000 compliance or conformity,
except where Company's liability is limited to amounts paid to Company pursuant
to the contract in which such representation, warranty or indemnity appears and
lost profits and consequential damages are expressly excluded.
2.10 Compliance with Laws; Permits; Restrictions.
(a) Except as disclosed in Part 2.10 of the Company Letter,
neither Company nor any of its subsidiaries is, in any material respect, in
conflict with, or in default or in violation of (i) any law, rule, regulation,
order, judgment or decree applicable to Company or any of its subsidiaries or by
which Company or any of its subsidiaries or any of their respective properties
is bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective properties is bound or
affected, except for such conflicts, violations and defaults that (individually
or in the aggregate) would not cause Company to lose any material benefit or
incur any material liability. No investigation or review by any Governmental
Entity is pending or, to Company's knowledge, has been threatened in a writing
delivered to Company against Company or any of its subsidiaries, nor, to
Company's knowledge, has any Governmental Entity indicated an intention to
conduct an investigation of Company or any of its subsidiaries. Neither Company
nor any of its subsidiaries is liable, either primarily or jointly and severally
with any other party, for any fines, penalties or other amounts payable to any
Governmental Entity, which, in the case of a subsidiary (but not Company) exceed
$10,000. There is no agreement, judgment, injunction, order or decree binding
upon Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Company or any of its subsidiaries, any acquisition of material
property by Company or any of its subsidiaries, the conduct of business by
Company as currently conducted, or the Merger or other transactions contemplated
by this Agreement. Except as set forth in Part 2.10 of the Company Letter,
neither Company nor any of its subsidiaries is subject to any reporting or
filing
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requirement with or to any Governmental Entity other than such requirements
which are applicable to companies similarly situated to Company or such
subsidiary.
(b) Company and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from Governmental Entities that are material to and required for the operation
of the business of Company as currently conducted (collectively, the "COMPANY
PERMITS"). Company and its subsidiaries are in compliance in all respects with
the terms of each Company Permit, except where the failure to be in compliance
with the terms of such Company Permit would not be material to Company.
2.11 Litigation.
(a) Except as disclosed in Part 2.11 of the Company Letter, there
are no claims, suits, actions or proceedings pending or, to the knowledge of
Company, threatened against, relating to or affecting Company or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either singularly or in the aggregate with all
such claims, actions or proceedings, to be material to Company or, following the
Merger, to the Surviving Corporation, or have a material adverse effect on the
ability of the parties hereto to consummate the Merger. Except as disclosed in
Part 2.11 of the Company Letter, no Governmental Entity has at any time
challenged or questioned in a writing delivered to Company the legal right of
Company to design, offer or sell any of its products or services in the present
manner or style thereof. Except as set forth in Part 2.11 of the Company Letter,
as of the date hereof, to the knowledge of Company, no event has occurred, and
no claim, dispute or other condition or circumstance exists, that will, or that
would reasonably be expected to, cause or provide a bona fide basis for a
director or executive officer of Company to seek indemnification from the
Company.
(b) Company has never been subject to an audit, compliance
review, investigation or like contract review by the GSA office of the Inspector
General or other Governmental Entity or agent thereof in connection with any
government contract (a "GOVERNMENT AUDIT"), to the Company's knowledge no
Government Audit is threatened or reasonably anticipated, and in the event of
such Government Audit, to the knowledge of the Company no basis exists for a
finding of noncompliance with any material provision of any government contract
or a refund of any amounts paid or owed by any Governmental Entity pursuant to
such government contract. For each item disclosed in the Company Letter pursuant
to this Section 2.11 a true and complete copy of all correspondence and
documentation with respect thereto has been provided to Parent.
2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.12(a)(i) below (which definition shall apply
only to this Section 2.12), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
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(i) "AFFILIATE" shall mean any other person or entity
under common control with Company within the meaning of Section 414(b), (c) or
(m) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any material plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan" within the meaning of
Section 3(3) of ERISA without regard to materiality which is or has been
maintained, contributed to, or required to be contributed to, by Company or any
Affiliate for the benefit of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
common law employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Company or any
Affiliate and any Employee or consultant which pertains to a service provider
who is receiving or will receive payments from the Company of $85,000 or more in
any calendar year;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether informally
or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN"
(as defined below) which is a "multiemployer plan," as defined in Section 3(37)
of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
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(xiii) "PENSION PLAN" shall mean each Company Employee
Plan which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) Schedule. Part 2.12 of the Company Letter contain an accurate
and complete list of each Company Employee Plan and each Employee Agreement.
Company does not have any plan or commitment to establish any new Company
Employee Plan, to modify any Company Employee Plan or Employee Agreement (except
to the extent required by law or to conform any such Company Employee Plan or
Employee Agreement to the requirements of any applicable law, in each case as
previously disclosed to Parent in writing, or as required by this Agreement), or
to enter into any Company Employee Plan or Employee Agreement, nor does it have
any intention or commitment to do any of the foregoing.
(c) Documents. Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Company Employee Plan and each
Employee Agreement including all amendments thereto; (ii) the most recent annual
actuarial valuations, if any, prepared for each Company Employee Plan; (iii) the
three (3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the Code
in connection with each Company Employee Plan or related trust; (iv) if the
Company Employee Plan is funded, the most recent annual and periodic accounting
of Company Employee Plan assets; (v) the most recent summary plan description
together with the summary of material modifications thereto, if any, required
under ERISA with respect to each Company Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Company Employee Plans and copies of all applications and correspondence to
or from the IRS or the DOL with respect to any filings required under the Code
or ERISA or any examination or submission under IRS Revenue Procedure 98-22 with
respect to any Company Employee Plan; (vii) all material written agreements and
contracts relating to each Company Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Employee or Employees
relating to any Company Employee Plan and any proposed Company Employee Plans,
in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to
Company; (ix) all COBRA forms and related notices currently in use; and (x) all
registration statements and prospectuses prepared in connection with each
Company Employee Plan.
(d) Employee Plan Compliance. (i) Company has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of; and has no knowledge of any default or violation by
any other party to each Company Employee Plan, and each Company Employee Plan
has been established and maintained in all material respects in accordance with
its terms and in substantial compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or the Code
provided that any disqualifying defect in the operation of the plan may be
corrected under APRSC as defined in Revenue Procedure 98-22; (ii) each Company
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the
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Code has either received a favorable determination letter from the IRS with
respect to each such Plan as to its qualified status under the Code or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make any
amendments necessary to obtain a favorable determination; (iii) Company has not
engaged in any "prohibited transaction," within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under
Section 408 of ERISA, with respect to any Company Employee Plan; (iv) there are
no actions, suits or claims pending, or, to the knowledge of Company, threatened
or reasonably anticipated (other than routine claims for benefits) against any
Company Employee Plan or against the assets of any Company Employee Plan; (v)
each Company Employee Plan can be amended, terminated or otherwise discontinued
after the Effective Time in accordance with its terms, without material
liability to Parent, Company or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (vi) there
are no audits, inquiries or proceedings pending or, to the knowledge of Company,
threatened by the IRS or DOL with respect to any Company Employee Plan; and
(vii) neither Company nor any Affiliate is subject to any penalty or tax with
respect to any Company Employee Plan under Section 402(i) of ERISA or Sections
4975 through 4980 of the Code. Company has timely made all required
contributions to each Company Employee Plan through the date hereof (and the
Closing Date) or has accrued such amounts on the Company Financials.
(e) Pension Plans. Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company contributed to or
been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and Company has
never represented, promised or contracted (whether in oral or written form) to
any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA; FMLA. Neither Company nor any Affiliate has, prior to
the Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) Effect of Transaction.
(i) Except as disclosed in Part 2.12(i)(i) of the Company
Letter, the execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an
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event under any Company Employee Plan, Employee Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Employee.
(ii) Except as disclosed in Part 2.12(i)(ii) of the
Company Letter, no payment or benefit which will or may be made by Company or
its Affiliates with respect to any Employee as a result of the transactions
contemplated by this Agreement will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code or will be
treated as a nondeductible expense within the meaning of Section 162 of the
Code.
(j) Employment Matters. Company and each of its subsidiaries: (i)
is in compliance in all material respects with all applicable foreign, federal,
state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) to Company's knowledge, is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, or, to
Company's knowledge, threatened or reasonably anticipated claims or actions
against Company under any worker's compensation policy or long-term disability
policy. To Company's knowledge, no Employee of Company has violated any
employment contract, nondisclosure agreement or noncompetition agreement by
which such Employee is bound due to such Employee being employed by Company and
disclosing to Company or using trade secrets or proprietary information of any
other person or entity.
(k) Labor. No work stoppage or labor strike against Company is
pending, threatened or reasonably anticipated. Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in any material liability to Company. Neither Company nor any
of its subsidiaries has engaged in any unfair labor practices within the meaning
of the National Labor Relations Act. Company is not presently, nor has it been
in the past, a party to, or bound by, any collective bargaining agreement or
union contract with respect to Employees and no collective bargaining agreement
is being negotiated by Company.
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions
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and with the requirements prescribed by any and all statutory or regulatory laws
that are applicable to such International Employee Plan. Furthermore, no
International Employee Plan has any unfunded liabilities, that as of the
Effective Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent Company or Parent from
terminating or amending any International Employee Plan at any time for any
reason.
2.13 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Company, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies and other hazardous substances used in compliance with law
(a "HAZARDOUS MATERIAL") are present, as a result of the actions of Company or
any of its subsidiaries or any affiliate of Company, or, to Company's knowledge
(in this case not including a duty of inquiry), as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof that Company or any
of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in
a material liability to Company (in any individual case or in the aggregate) (i)
neither Company nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, and (ii) neither Company nor any of its subsidiaries has disposed of;
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") material to and necessary for the conduct of
Company's and its subsidiaries' Hazardous Material Activities and other
businesses of Company and its subsidiaries as such activities and businesses are
currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Company's
knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened
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by any Governmental Entity against Company or any of its subsidiaries in a
writing delivered to Company concerning any Company Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of Company or any of its
subsidiaries. To the knowledge of Company(in this case not including a duty of
inquiry), there is no fact or circumstance which could involve Company or any of
its subsidiaries in any environmental litigation or impose upon Company any
material environmental liability.
2.14 Agreements, Contracts and Commitments. Except as otherwise set
forth in Part 2.14 of the Company Letter, neither Company nor any of its
subsidiaries is a party to or is bound by:
(a) any employment agreement, contract or commitment with any
employee or member of Company's Board of Directors, other than those that are
terminable by Company or any of its subsidiaries on no more than thirty days
notice without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Company's or any of its
subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification, any guaranty or any
instrument evidencing indebtedness for borrowed money by way of direct loan,
sale of debt securities, purchase money obligation, conditional sale, or
otherwise;
(d) any agreement, obligation or commitment containing covenants
purporting to limit or which effectively limit the Company's or any of its
subsidiaries' freedom to compete in any line of business or in any geographic
area or which would so limit Company or Surviving Corporation or any of its
subsidiaries after the Effective Time or granting any exclusive distribution or
other exclusive rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Company's subsidiaries;
(f) any licensing, distribution, marketing, reseller, merchant
services, advertising, sponsorship or other similar agreement other than
Ordinary Course Agreements;
(g) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology; or
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(h) (i) any other agreement, contract or commitment currently in
effect that is material to Company's business as presently conducted and
proposed to be conducted entered into since the filing of Company's Quarterly
Report on Form 10-Q for the Fiscal Quarter ending March 31, 1999, or (ii) any
amendment or modification to any agreement, contract or commitment required to
be publicly filed by Company pursuant to the Exchange Act which has not been so
filed as a result of such amendment or modification having been entered into
subsequent to the filing of such Form 10-Q.
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which Company or any of its subsidiaries is a party or by which
it is bound that are required to be disclosed in the Company Letter pursuant to
clauses (a) through (h) above, pursuant to Section 2.9 hereof, or pursuant to
Item 601(b)(10) of Regulation S-K under the Exchange Act (any such agreement,
contract or commitment, a "COMPANY CONTRACT") in such a manner as would permit
any other party to cancel or terminate any such Company Contract, or would
permit any other party to seek material damages or other remedies (for any or
all of such breaches, violations or defaults, in the aggregate).
2.15 Change of Control Payments. Part 2.15 of the Company Letter set
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers and directors
of Company as a result of or in connection with the Merger.
2.16 Insurance. Part 2.16 of the Company Letter sets forth a complete
list of each insurance policy held by Company or any of its subsidiaries and
true and correct copies of such policies have been provided to Parent. There is
no material claim pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. Each such policy is in full force and effect. All premiums
due and payable under all such policies have been paid and the Company and its
subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. To the knowledge of Company, there has been no
threatened termination of, or material premium increase with respect to, any of
such policies.
2.17 Disclosure. None of the information supplied by Company for
inclusion in the registration statement on Form S-4 (or any similar successor
form thereto) to be filed by Parent with the SEC in connection with the issuance
of Parent Common Stock in the Merger (the "REGISTRATION STATEMENT") will, at the
time the Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein about Parent or Merger Sub supplied by
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<PAGE> 32
Parent for inclusion or incorporation by reference in the Registration
Statement. None of the information supplied by Company for inclusion in the
proxy statement/prospectus to be filed with the SEC as part of the Registration
Statement (such proxy statement/prospectus as amended or supplemented is
referred to herein as the "PROXY STATEMENT/PROSPECTUS") will, at the time the
Proxy Statement/Prospectus is mailed to Company's stockholders, or at the time
of the meeting of the Company's stockholders to consider the approval of this
Agreement, the Merger and the Articles Amendment (the "COMPANY'S STOCKHOLDERS'
MEETING") or as of the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders'
Meeting which has become misleading, except that no representation or warranty
is made by Company with respect to statements made or incorporated by reference
therein about Parent or Merger Sub supplied by Parent for inclusion or
incorporation by reference in the Proxy Statement/Prospectus. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
thereunder.
2.18 Board Approval. The Board of Directors of Company, by unanimous
written consent dated July 10, 1999, (i) declared that, prior to such date, it
had not acted on any proposed agreement, arrangement or understanding with
Parent or any other party with respect to the transactions contemplated by this
Agreement, the Company Voting Agreements or the Merger, and (ii) approved the
continuation of negotiations for the purpose of reaching an agreement with
respect thereto, and, at a meeting duly held on July 11, 1999, unanimously
determined that the Merger is advisable and fair to, and in the best interests
of, Company and its stockholders, approved this Agreement, the Company Voting
Agreements, the Merger, the Articles Amendment and the other transactions
contemplated by this Agreement under relevant Nevada Law, and determined to
recommend that the stockholders of Company approve this Agreement, the Merger
and the Articles Amendment.
2.19 Brokers' and Finders' Fees. Except for fees payable to BancBoston
Robertson Stephens, Inc. pursuant to an engagement letter dated June 14, 1999,
as amended June 18, 1999, a copy of which has been provided to Parent, Company
has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.20 Fairness Opinion. Company's Board of Directors has received a
written opinion from BancBoston Robertson Stephens, Inc., dated as of the date
hereof, to the effect that, as of the date hereof, the Exchange Ratio is fair to
Company's stockholders from a financial point of view, and has delivered to
Parent a copy of such opinion.
2.21 Nevada Law; Rights Agreement. The Board of Directors of Company, by
unanimous written consent dated July 10, 1999, has taken all actions so that the
provisions of Section 78.378 et seq. of Nevada Law applicable to the acquisition
of a "controlling interest" (as
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defined in such Section 78.3785) and the restrictions on any "combination" with
an "interested stockholder" (as defined in Sections 78.416 and 78.423,
respectively) set forth in Section 78.438 and Section 78.439 of Nevada Law and
any other applicable law or regulation having an adverse effect upon the
consummation of the Merger and other transactions contemplated hereby, in each
case, will not apply to the execution, delivery or performance of this Agreement
or the Company Voting Agreements or to the consummation of the Merger or the
other transactions contemplated by this Agreement or the Company Voting
Agreements. Without limiting the foregoing, the Board of Directors of Company
has amended Company's Bylaws to exempt from the provisions of Sections 78.378 to
78.3793 of Nevada Law the execution, delivery and performance of this Agreement
and the Company Voting Agreements and the consummation of the Merger and the
other transactions contemplated by this Agreement and the Company Voting
Agreements, which Bylaw amendment cannot by its terms be repealed or amended in
a manner adverse to Parent without Parent's prior written consent unless this
Agreement has been terminated in accordance with its terms. Neither Company nor
any of its subsidiaries has adopted, nor are any of them subject to, a
stockholder rights plan, "poison pill" or other anti-takeover or similar plan or
arrangement, or entered into a stockholder rights agreement or any similar
agreement or instrument with any entity (a "RIGHTS AGREEMENT").
2.22 Related Party Transactions. Except as set forth in the Company SEC
Reports, and except as contemplated by this Agreement or as executed
concurrently herewith or prior hereto at the request of Parent, since the date
of Company's last proxy statement filed with the SEC, no event has occurred as
of the date of this Agreement that would be required to be reported by Company
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
2.23 Internet Yellow Pages. From January 1, 1999 through the date of
this Agreement, Company's "Internet Yellow Pages" line of business has been
responsible for less than $10,000 of revenues to Company and its subsidiaries.
Company is currently able to, and immediately following the Closing, Surviving
Corporation or Parent would be able to, discontinue the business operations of
the "Internet Yellow Pages" without material liability to any third party. To
Company's knowledge, no third party (other than RMS Internet Marketing Group,
Inc. ("RMS")) has the right to resell space on the "Internet Yellow Pages".
Company and its subsidiaries have, prior to the date of this Agreement,
terminated all agreements and business dealings with RMS.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, Parent and
Merger Sub represent and warrant to Company, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Parent to Company dated as of the date
hereof and certified by a duly authorized officer of Parent (the "PARENT
LETTER"), as follows:
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3.1 Organization of Parent and Merger Sub.
(a) Each of Parent and Merger Sub (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the corporate or other power and
authority to own, lease and operate its assets and properties and to carry on
its business as now being conducted; and (iii) except as would not be material
to Parent, is duly qualified or licensed to do business in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing necessary.
(b) Parent and Merger Sub have made available to Company a true
and correct copy of the Certificate of Incorporation or Articles of
Incorporation and Bylaws of Parent and Merger Sub, each as amended to date, and
each such instrument is in full force and effect. Neither Parent, Merger Sub nor
any of their subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent governing instruments.
3.2 Parent and Merger Sub Capital Structure.
(a) The authorized capital stock of Parent consists of
719,719,414 shares of common stock, par value $0.01 per share, of which
683,700,000 shares have been designated Series A Common Stock (or Parent Common
Stock), 30,800,000 shares have been designated Series B Common Stock and
5,219,414 shares have been designated Series K Common Stock, of which there were
331,563,340 shares of Series A Common Stock, 30,800,000 shares of Series B
Common Stock and 5,219,414 shares of Series K Common Stock issued and
outstanding as of June 30, 1999, and 9,650,000 shares of Preferred Stock, par
value $0.01 per share, of which no shares are issued or outstanding as of June
30, 1999. All outstanding shares of Parent Common Stock are duly authorized,
validly issued, fully paid and nonassessable. As of June 30, 1999: (i) there
were options outstanding to purchase an aggregate of 50,608,261 shares of Parent
Common Stock pursuant to Parent's stock option plans; and (ii) 1,775,542 shares
of Parent Common Stock reserved for future issuance under Parent's 1997 Employee
Stock Purchase Plan. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable.
(b) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, no par value, all of which, as of the date hereof, are
issued and outstanding and are held by Parent. All of the outstanding shares of
Merger Sub's common stock have been duly authorized and validly issued, and are
fully paid and nonassessable. Merger Sub was formed for the purpose of
consummating the Merger and has no material assets or liabilities except as
necessary for such purpose.
(c) The Parent Common Stock to be issued in the Merger, when
issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable.
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3.3 Authority.
(a) Parent has all requisite corporate power and authority to
enter into this Agreement and the Company Voting Agreements and to consummate
the transactions contemplated hereby and thereby. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the Company Voting Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub, subject only to the
filing of the Articles of Merger pursuant to Nevada Law. This Agreement and the
Company Voting Agreements have each been duly executed and delivered by Parent
and this Agreement has been duly executed and delivered by Merger Sub and,
assuming the due authorization, execution and delivery by Company, constitute
the valid and binding obligations of Parent and Merger Sub, respectively,
enforceable against Parent and Merger Sub in accordance with their terms, except
as enforceability may be limited by bankruptcy and other similar laws affecting
the rights of creditors generally and general principles of equity. The
execution and delivery of this Agreement and the Company Voting Agreements by
Parent and the execution and delivery of this Agreement by Merger Sub does not,
and the performance of this Agreement and the Company Voting Agreements by
Parent and the performance of this Agreement by Merger Sub will not, (i)
conflict with or violate the Certificate of Incorporation or Bylaws of Parent or
Merger Sub, (ii) subject to compliance with the requirements set forth in
Section 3.3(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Merger Sub or by which any of their
respective properties is bound or affected, or (iii) result in any material
breach of or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or impair Parent's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of; or
result in the creation of a material Encumbrance on any of the material
properties or assets of Parent or Merger Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or any of their respective properties are bound or
affected. Part 3.3 of the Parent Letter list all consents, waivers and approvals
under any of Parent's or any of its subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby, which, if individually or in the
aggregate not obtained, would result in a material loss of benefits to Parent or
the Surviving Corporation as a result of the Merger.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by Parent or Merger Sub in connection with the execution and
delivery of this Agreement and the Company Voting Agreements or the consummation
of the Merger, except for (i) the filing of the Articles of Merger with the
Secretary of State of the State of Nevada, (ii) the filing of the Registration
Statement and a Schedule 13D with regard to the Company Voting Agreements in
accordance with the Securities Act and the Exchange Act, and the effectiveness
of the Registration Statement, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and
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filings as may be required under applicable federal, foreign and state
securities (or related) laws and the HSR Act and the securities or antitrust
laws of any foreign country, and (iv) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not be
material to Parent or Company or have a material adverse effect on the ability
of the parties hereto to consummate the Merger.
3.4 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to
be filed by Parent with the SEC since January 1, 1997, and has made available to
Company such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Parent may file
subsequent to the date hereof) are referred to herein as the "PARENT SEC
REPORTS." As of their respective dates, the Parent SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Parent SEC
Report. All documents required to be filed as exhibits to the Parent SEC Reports
have been so filed. None of Parent's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports (the
"PARENT FINANCIALS"), including any Parent SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 1O-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented in all material respects the consolidated financial position of Parent
and its subsidiaries as at the respective dates thereof and the consolidated
results of Parent's operations and cash flows for the periods indicated, except
that the unaudited interim financial statements may not contain footnotes and
were or are subject to normal and recurring year-end adjustments. The audited
balance sheet of Parent contained in Parent SEC Reports as of December 31, 1998
is hereinafter referred to as the "PARENT BALANCE SHEET." Except as disclosed in
the Parent Financials, since the date of the Parent Balance Sheet neither Parent
nor any of its subsidiaries has any liabilities required under GAAP to be set
forth on a balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
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(c) Parent has heretofore furnished to Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.5 Absence of Changes. Since the date of the Parent Balance Sheet there
has not been: (i) any Material Adverse Effect with respect to Parent, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Parent's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Parent of any of Parent's capital stock or any other securities
of Parent or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) other than a two-for-one
stock split of Parent's common stock on June 16, 1999, any split, combination or
reclassification of any of Parent's or any of its subsidiaries' capital stock,
(iv) any material change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (v) any material
revaluation by Parent of any of its assets, including, without limitation,
writing off notes or accounts receivable other than in the ordinary course of
business.
3.6 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
be material to Parent or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
3.7 Disclosure. None of the information supplied by Parent for inclusion
in the Registration Statement will, at the time the Registration Statement is
filed with the SEC and at the time it becomes effective under the Securities Act
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by Parent with
respect to statements made or incorporated by reference therein about Company
supplied by Company for inclusion or incorporation by reference in the
Registration Statement. None of the information supplied by Parent for inclusion
in the Proxy Statement/Prospectus will, at the time the Proxy
Statement/Prospectus is mailed to Company's stockholders, at the time of the
Company Stockholders' Meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders' Meeting which has become misleading, except that no representation
or warranty is made by Parent with respect to statements made or incorporated by
reference therein about Company supplied by Company for
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inclusion or incorporation by reference in the Proxy Statement/Prospectus. The
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.
3.8 Board Approval. The Board of Directors of Parent has approved this
Agreement, the Company Voting Agreements, the Merger and the other transactions
contemplated by this Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business in all material respects in the usual, regular
and ordinary course, in substantially the same manner as heretofore conducted
and in compliance in all material respects with all applicable laws and
regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due
subject to good faith disputes over such obligations, and use its commercially
reasonable efforts consistent with past practices and policies to (i) preserve
intact its present business organization, (ii) keep available the services of
its present officers and employees and (iii) preserve its relationships with
customers, suppliers, licensors, licensees, and others with which it has
business dealings. In addition, Company will promptly notify Parent of any
material event involving its business or operations.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Part 4.1 of the Company Letter, without the prior written
consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following and
shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or repurchase of restricted stock
(including Company Restricted Stock), or reprice options granted under any
employee, consultant, director or other stock plans or authorize cash payments
in exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements in effect, or policies existing,
on the date hereof and as previously disclosed in writing to Parent, or adopt
any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, other than non-exclusive licenses in the ordinary course
of business and consistent with past practice;
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(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into, or exercisable or exchangeable
for, shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible, exercisable
or exchangeable securities, other than (i) grants of Company Options to newly
hired employees, consistent with Company's past practices regarding such grants,
not to exceed Company Options in respect of 100,000 shares of Company Common
Stock in the aggregate, and (ii) the issuance delivery and/or sale of shares of
Company Common Stock pursuant to the exercise of Company Options or Company
Warrants outstanding as of July 9, 1999 and Company Options granted pursuant to
the preceding clause (i);
(g) Cause, permit or propose any amendments to its Articles of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any 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 division thereof; or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Company or enter into any material joint ventures, strategic
partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan; enter into, amend, terminate or waive
any rights under any employment agreement or collective bargaining agreement
(other than offer letters and letter agreements entered into in the ordinary
course of business consistent with past practice with
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employees who are terminable "at will"); pay any special bonus or special
remuneration to any director or employee; increase the salaries or wage rates or
fringe benefits (other than in the ordinary course of business, consistent with
past practice) of, or make any change with respect to the rights to severance,
indemnification, acceleration of options, or lapse or termination of repurchase
or similar rights of Company Restricted Stock for, its directors, officers,
employees or consultants; change in any material respect any management policies
or procedures;
(1) Make any payments outside of the ordinary course of business
in excess of $50,000 in the aggregate, or any capital expenditures, capital
additions or capital improvements in excess of $100,000 in the aggregate;
(m) Modify, amend or terminate any Company Contract or other
contract or agreement to which Company or any subsidiary thereof is a party that
is material to the Company and its subsidiaries as a whole or waive, release or
assign any material rights or claims thereunder, other than (i) the
modification, amendment or termination of Ordinary Course Agreements in the
ordinary course of business, consistent with past practice or (ii) immaterial
oral modifications or amendments in the ordinary course of business, consistent
with past practice;
(n) Enter into (i) any licensing, distribution, marketing,
reseller, merchant services, advertising, sponsorship or other similar agreement
other than in the ordinary course of business, consistent with Company's past
practice, or (ii) any contracts, agreements, or obligations granting any
exclusive distribution or other exclusive rights;
(o) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(p) [Intentionally omitted];
(q) Pay, discharge or satisfy any material claim, liability or
obligation arising other than in the ordinary course of business, other than the
payment, discharge or satisfaction of liabilities reflected or reserved against
in the Company Financials;
(r) Enter into any Rights Agreement, or take or fail to take any
action which would, or could reasonably be expected to, cause the Company's
representations set forth in Section 2.21 to be or become untrue in any respect;
or
(s) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (r) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and
Other Filings. As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare and file with the SEC, the Prospectus/Proxy
Statement and Parent will prepare and file with the SEC the Registration
Statement in which the Prospectus/Proxy Statement will be included as a
prospectus. Each of Company and Parent will respond to any comments of the SEC,
will use its respective commercially reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing and each of Company and Parent will cause the Prospectus/Proxy
Statement to be mailed to Company's stockholders at the earliest practicable
time after the Registration Statement is declared effective by the SEC. As
promptly as practicable after the date of this Agreement, each of Company and
Parent will prepare and file (i) with the United States Federal Trade Commission
and the Antitrust Division of the United States Department of Justice
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties (the "ANTITRUST FILINGS")
and (ii) any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other Federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). Company and Parent each shall promptly supply the other with any
information which may be required in order to effectuate any filings pursuant to
this Section 5.1. Each of Company and Parent will notify the other promptly upon
the receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Prospectus/Proxy Statement or any
Antitrust Filings or Other Filings or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Prospectus/Proxy Statement, the Merger or any Antitrust Filing or
Other Filing. Each of Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1 to comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Prospectus/Proxy Statement, the Registration Statement or any Antitrust Filing
or Other Filing, Company or Parent, as the case may be, will promptly inform the
other of such occurrence and cooperate in filing with the SEC or its staff or
any other government officials, and/or mailing to stockholders of Company, such
amendment or supplement. Notwithstanding the foregoing, neither Parent nor any
of its affiliates shall be under any obligation to make proposals, execute or
carry out agreements or submit to orders providing for the sale or other
disposition or holding separate (through the establishment of a trust or
otherwise) of any assets or categories of assets of Parent, any of its
affiliates or Company or the holding separate of the shares of Company Common
Stock or imposing or seeking to impose any limitation on the ability of Parent
or any of its subsidiaries or affiliates to conduct their business
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or own such assets or to acquire, hold or exercise full rights of ownership of
the shares of Company Common Stock.
5.2 Meeting of Company Stockholders.
(a) Company will take all action necessary in accordance with the
Nevada Law and its Articles of Incorporation and Bylaws to call, notice, convene
and hold the Company Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon approval of this Agreement, the Merger
and the Articles Amendment. Subject to Section 5.2(c), Company will solicit from
its stockholders proxies in favor of the approval of this Agreement, the Merger
and the Articles Amendment, and will use its commercially reasonable efforts to
take all other action necessary or advisable to secure the vote or consent of
its stockholders required by the rules of Nasdaq or Nevada Law to obtain such
approvals. Notwithstanding anything to the contrary contained in this Agreement,
Company may adjourn or postpone the Company Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to Company's stockholders in advance of a
vote on this Agreement, the Merger and the Articles Amendment or, if as of the
time for which Company Stockholders' Meeting is originally scheduled (as set
forth in the Prospectus/Proxy Statement) there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company's Stockholders' Meeting.
Company shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted prior to and separate from any meeting of Company's
stockholders at which any Acquisition Proposal or Acquisition Transaction is
considered or voted upon. Company will use its commercially reasonable efforts
to ensure that all proxies solicited by Company in connection with the Company
Stockholders' Meeting are solicited in compliance with the Nevada Law, its
Articles of Incorporation and Bylaws, the rules of Nasdaq and all other
applicable legal requirements. Company's obligation to call, give notice of,
convene, hold and conduct the Company Stockholders' Meeting in accordance with
this Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal (as defined in Section 5.4) (including a Superior Offer (as
defined in Section 5.2(c)), or by any withdrawal, amendment or modification of
the recommendation of the Board of Directors of Company to Company's
stockholders to approve this Agreement and the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
Company shall unanimously recommend that Company's stockholders vote in favor of
and approve this Agreement, the Merger and the Articles Amendment at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that Company's stockholders vote in favor of and approve
this Agreement, the Merger and the Articles Amendment at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of Company nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in
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a manner adverse to Parent, the unanimous recommendation of the Board of
Directors of Company that Company's stockholders vote in favor of and approve
this Agreement, the Merger and the Articles Amendment. For purposes of this
Agreement, said recommendation of the Board of Directors shall be deemed to have
been modified in a manner adverse to Parent if said recommendation shall no
longer be unanimous, provided that, for all purposes of this Agreement, an
action by the Board of Directors of Company or a committee thereof shall be
unanimous if each member of such Board of Directors or committee has approved
such action other than (i) any such member who has appropriately abstained from
voting on such matter because of an actual or potential conflict of interest and
(ii) any such member who is unable to vote in connection with such action as a
result of death or disability.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer is made
to the Company and is not withdrawn, (ii) Company shall have provided written
notice to Parent (a "NOTICE OF SUPERIOR OFFER") advising Parent that Company has
received a Superior Offer, specifying all of the material terms and conditions
of such Superior Offer and identifying the person or entity making such Superior
Offer, (iii) Parent shall not have, within five business days of Parent's
receipt of the Notice of Superior Offer, made an offer that the Company Board by
a majority vote determines in its good faith judgment (after consultation with
its financial adviser) to be at least as favorable to the Company's stockholders
as such Superior Offer (it being agreed that the Board of Directors of Company
shall convene a meeting to consider any such offer by Parent promptly following
the receipt thereof), (iv) the Board of Directors of Company concludes in good
faith, after consultation with its outside counsel, that, in light of such
Superior Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of Company to
comply with its fiduciary obligations to the Company's stockholders under
applicable law and (v) the Company shall not have violated any of the
restrictions set forth in Section 5.4 or this Section 5.2. The Company shall
provide Parent with at least three business days prior notice (or such lesser
prior notice as provided to the members of the Company's Board of Directors but
in no event less than twenty-four hours) of any meeting of the Company's Board
of Directors at which the Company's Board of Directors is reasonably expected to
consider any Acquisition Proposal (as defined in Section 5.4) to determine
whether such Acquisition Proposal is a Superior Offer. Subject to applicable
laws, nothing contained in this Section 5.2 shall limit the Company's obligation
to hold and convene the Company Stockholders' Meeting (regardless of whether the
unanimous recommendation of the Board of Directors of the Company shall have
been withdrawn, amended or modified). For purposes of this Agreement "SUPERIOR
OFFER" shall mean an unsolicited, bona fide written offer made by a third party
to consummate any of the following transactions: (i) a merger or consolidation
involving Company pursuant to which the stockholders of Company immediately
preceding such transaction hold less than 50% of the equity interest in the
surviving or resulting entity of such transaction or (ii) the acquisition by any
person or group (including by way of a tender offer or an exchange offer or a
two step transaction involving a tender offer followed with reasonable
promptness by a cash-out merger involving Company), directly or indirectly, of
ownership of 100% of the then outstanding shares of capital stock of Company, on
terms that the
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Board of Directors of Company determines, in its reasonable judgment (after
consultation with its financial adviser) to be more favorable to Company's
stockholders than the terms of the Merger; provided, however, that any such
offer shall not be deemed to be a "Superior Offer" if any financing required to
consummate the transaction contemplated by such offer is not committed and is
not likely in the reasonable judgment of the Board of Directors of Company to be
obtained by such third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit Company or
its Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement (as defined in the Company
Letter), which Confidentiality Agreement will continue in full force and effect
in accordance with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of Company, as Parent may reasonably
request. No information or knowledge obtained by Parent in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to, directly or
indirectly: (i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal (as hereinafter defined); (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal; (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions; (iv) except as permitted by Section
5.2(c), approve, endorse or recommend any Acquisition Proposal; or (v) enter
into any letter of intent or similar document or any contract, agreement,
agreement in principle or commitment contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that prior to the approval of this
Agreement and the Merger at the Company Stockholders' Meeting, this Section
5.4(a) shall not prohibit Company from furnishing nonpublic information
regarding Company and its subsidiaries to, or entering into discussions with,
any person or group who has submitted (and not withdrawn) to
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Company an unsolicited, written, bona fide Acquisition Proposal that the Board
of Directors of Company reasonably concludes (after consultation with its
financial adviser) may constitute a Superior Offer if (1) neither Company nor
any representative of Company or its subsidiaries shall have violated any of the
restrictions set forth in this Section 5.4, (2) the Board of Directors of
Company concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's stockholders under
applicable law, (3) prior to furnishing any such nonpublic information to, or
entering into any such discussions with, such person or group, Company gives
Parent written notice of the identity of such person or group and all of the
material terms and conditions of such Acquisition Proposal and of Company's
intention to furnish nonpublic information to, or enter into discussions with,
such person or group, and Company receives from such person or group an executed
confidentiality agreement containing terms at least as restrictive with regard
to Company's confidential information as the Confidentiality Agreement, (4)
Company gives Parent at least three business days advance notice of its intent
to furnish such nonpublic information or enter into such discussions, and (5)
contemporaneously with furnishing any such nonpublic information to such person
or group, Company furnishes such nonpublic information to Parent (to the extent
such nonpublic information has not been previously furnished by the Company to
Parent). Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of Company or
any of its subsidiaries or any investment banker, attorney or other advisor or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.4 by Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company, or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the
Company; (B) any sale, lease (other than in the ordinary course of business),
exchange, transfer, license (other than in the ordinary course of business),
acquisition or disposition of more than 5% of the assets of the Company; or (C)
any liquidation or dissolution of the Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information or
any other inquiry which Company reasonably believes
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could lead to an Acquisition Proposal or of any Acquisition Proposal, the
material terms and conditions of such request, inquiry or Acquisition Proposal,
and the identity of the person or group making any such request, inquiry or
Acquisition Proposal. Company will keep Parent informed as promptly as
practicable in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, inquiry or
Acquisition Proposal.
5.5 Public Disclosure. Parent and Company will consult with each other,
and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange or Nasdaq. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective in an expeditious manner,
the Merger and the other transactions contemplated by this Agreement, including
using reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in Article
VI to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any) and the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental Entity,
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iv) the defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. Notwithstanding anything
in this Agreement to the contrary, neither Parent nor any of its affiliates
shall be under any obligation to make proposals, execute or carry out agreements
or submit to orders providing for the sale or other disposition or holding
separate (through the establishment of a trust or otherwise) of any assets or
categories of assets of Parent, any of its affiliates or Company or the holding
separate of the shares of Company Common Stock or imposing or seeking to impose
any limitation on the ability of Parent or any of its subsidiaries or affiliates
to conduct their business or own such assets or to acquire, hold or exercise
full rights of ownership of the shares of Company Common Stock.
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(b) Each of Company and Parent will give prompt notice to the
other of (i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger, (ii)
any notice or other communication from any Governmental Entity in connection
with the Merger, (iii) any litigation relating to, involving or otherwise
affecting Company, Parent or their respective subsidiaries that relates to the
consummation of the Merger. Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3 would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2 would not be satisfied, provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
5.8 Stock Options.
(a) At the Effective Time, each outstanding Company Option,
whether or not then exercisable, will be assumed by Parent. Each Company Option
so assumed by Parent under this Agreement will continue to have, and be subject
to, the same terms and conditions set forth in the applicable Company Stock
Option Plan immediately prior to the Effective Time (including any repurchase
rights or vesting provisions), except that (i) each Company Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent Common Stock equal to the product of the number
of shares of Company Common Stock that were issuable upon exercise of such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Stock Option will be
equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent. Continuous employment with Company or its subsidiaries shall be
credited to the optionee for purposes of determining the vesting of all assumed
Company Options after the Effective Time.
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(b) It is intended that Company Options assumed by Parent shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent such Company Options qualified as
incentive stock options immediately prior to the Effective Time and the
provisions of this Section 5.8 shall be applied consistent with such intent.
(c) At the Effective Time, each Company Warrant, whether or not
then exercisable, will be assumed by Parent. Each Company Warrant so assumed by
Parent under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable Company Warrant immediately
prior to the Effective Time (including any vesting provisions), except that (i)
each Company Warrant will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Warrant immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Warrant will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Warrant
was exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
5.9 Registrations. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Options as soon as is reasonably practicable after the Effective Time
and shall maintain the effectiveness of such registration statement thereafter
for so long as any of such options or other rights remain outstanding. Parent
agrees to file at its expense a registration statement on Form S-3 for the
shares of Parent Common Stock issuable with respect to Company Warrants assumed
by Parent hereunder as soon as is reasonably practicable after the Effective
Time and shall maintain the effectiveness of such registration statement
thereafter for a period ending on the one year anniversary of the Effective
Time. The registration rights granted hereunder shall be subject to customary
blackout periods imposed by Parent in its discretion.
5.10 Indemnification. From and after the Effective Time, Parent will
cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Company pursuant to any indemnification agreements between
Company and its directors and officers as of the Effective Time (the
"INDEMNIFIED PARTIES") and any indemnification provisions under Company's
Articles of Incorporation or Bylaws as in effect on the date hereof. The
Articles of Incorporation and Bylaws of the Surviving Corporation will contain
provisions with respect to exculpation and indemnification that are
substantially as favorable to the Indemnified Parties as those contained in the
Articles of Incorporation and Bylaws of Company as in effect on the date hereof,
which provisions will not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of Company, unless
such modification is required by law. This Section 5.10 shall survive the
consummation of the Merger, is intended to benefit Company, the Surviving
Corporation and
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each Indemnified Party, shall be binding on all successors and assigns of the
Surviving Corporation and Parent, and shall be enforceable by the Indemnified
Parties. For a period of six years after the Effective Time, Parent will cause
the Surviving Corporation to use its commercially reasonable efforts to maintain
in effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of Company; provided, however, that in no
event will Parent or Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by Company for such coverage, and if
the annual premium for such coverage exceeds 150% of such existing annual
premium, Parent or Surviving Corporation shall maintain insurance policies which
provide the maximum coverage available at an annual premium equal to 150% of
such amount.
5.11 Nasdaq Listing. Prior to the Effective Time, Parent agrees to
authorize for listing on the Nasdaq Stock Market the shares of Parent Common
Stock issuable, and those required to be reserved for issuance, in connection
with the Merger, upon official notice of issuance
5.12 Affiliates; Restrictive Legend. Not less than five business days
prior to the Closing, Company will deliver to Parent a complete list of those
persons who may be deemed to be, in Company's reasonable judgment, affiliates of
Company within the meaning of Rule 145 promulgated under the Securities Act.
Parent will give stop transfer instructions to its transfer agent with respect
to any Parent Common Stock received pursuant to the Merger by any stockholder of
the Company who may reasonably be deemed to be an affiliate of Company and there
will be placed on the certificates representing such Parent Common Stock, or any
substitutions therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED
IN CONFORMITY WITH RULE 145(d) UNDER SUCH ACT.
5.13 Letter of Company's Accountants. Company shall use all reasonable
efforts to cause to be delivered to Parent a letter of Arthur Andersen LLP,
dated no more than two business days before the date on which the Registration
Statement becomes effective (and reasonably satisfactory in form and substance
to Parent), that is customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
5.14 Takeover Statutes. If any "control share acquisition", "fair
price", "moratorium" or other similar anti-takeover statute or regulation is or
may become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent and Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary to ensure that such transactions may be consummated as promptly as
practicable on the
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terms contemplated by this Agreement and otherwise act to eliminate or minimize
the effects of such statute and any regulations promulgated thereunder on such
transactions.
5.15 Certain Employee Benefits. As soon as practicable after the
execution of this Agreement, Company and Parent shall confer and work together
in good faith to agree upon mutually acceptable employee benefit and
compensation arrangements (and terminate Company Employee Plans immediately
prior to the Effective Time if appropriate) so as to provide benefits to Company
employees generally equivalent in the aggregate to those provided to similarly
situated employees of Parent. In addition, Company agrees that it and its
subsidiaries shall terminate any and all severance, separation, retention and
salary continuation plans, programs or arrangements (other than contractual
agreements disclosed in Part 5.15 of the Company Letter) prior to the Effective
Time.
5.16 Amendment of Company's Articles. Company agrees that at the Company
Stockholders' Meeting, in addition to seeking the approval of this Agreement and
the Merger by Company's stockholders, Company shall also seek the approval of
Company's stockholders, by the vote required under applicable law, of an
amendment of Company's Articles of Incorporation to delete in its entirety
Article VI.C. thereof (such amendment, the "ARTICLES AMENDMENT").
5.17 Parent Warrant. At the Effective Time, Parent shall issue to First
Data a warrant in substantially the form attached hereto as Exhibit A (the
"PARENT WARRANT"). At the time of issuance, the Parent Warrant shall entitle the
holder thereof to purchase 2,300,000 shares of Parent Common Stock at an
exercise price of $36.9565 per share; provided, however, that if the Parent
Warrant had been issued on the date hereof with such terms and prior to the time
at which it is actually issued pursuant to this Section 5.17, the number of
shares of Parent Common Stock covered by the Parent Warrant, the exercise price
per share or the type of securities deliverable upon exercise of the Parent
Warrant would have been adjusted or changed pursuant to the terms of the Parent
Warrant, the Parent Warrant shall be issued with such adjustments or changes.
First Data is an intended third party beneficiary of this Section 5.17.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement and the Merger
shall have been approved by the requisite vote of the stockholders of Company
under applicable law and the governance documents of the Company.
(b) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the
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Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
(c) No Order; HSR Act. No Governmental Entity 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, or
prohibiting Parent's ownership or operation of, or compelling Parent to dispose
of or hold separate, all or a material portion of the business or assets of
Company or its subsidiaries. All waiting periods, if any, under the HSR Act
relating to the transactions contemplated hereby will have expired or terminated
early and all material foreign antitrust approvals required to be obtained prior
to the Merger in connection with the transactions contemplated hereby shall have
been obtained.
(d) Tax Opinions. Parent and Company shall each have received
written opinions from their respective tax counsel (Fenwick & West LLP and
Latham & Watkins LLP, respectively), in form and substance reasonably
satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn; provided, however, that if the counsel
to either Parent or Company does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such party if counsel to
the other party renders such opinion to such party. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Nasdaq Listing. The shares of Parent Common Stock to be
issued in the Merger shall have been approved for quotation on the Nasdaq Stock
Market.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Parent at the Closing Date, and (B)
for those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to the Parent Schedules made or purported to have been made after the execution
of this
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Agreement shall be disregarded). The Company shall have received a certificate
with respect to the foregoing signed on behalf of Parent by an authorized
officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement and be
continuing.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which (subject to Section 8.5) may be waived,
in writing, exclusively by Parent:
(a) Representations and Warranties. Each representation and
warranty of the Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Company at the Closing Date; provided,
however, such Material Adverse Effect qualification shall be inapplicable with
respect to the representations and warranties contained in Sections 2.2(a) and
(b), 2.3, 2.18, 2.20 and 2.21 (which representations shall be true and correct
at the applicable times in all material respects) and (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct (subject to the
qualifications set forth in the preceding clause (A)) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, any update of or modification to the
Company Letter made or purported to have been made after the execution of this
Agreement shall be disregarded). Parent shall have received a certificate with
respect to the foregoing signed on behalf of the Company by an authorized
officer of the Company.
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date; provided, that this condition shall be deemed to be satisfied with respect
to the agreements and covenants required by this Agreement to be performed or
complied with by Company set forth in the introductory language in Section 4.1,
or Sections 4.1(c), 4.1(i), 4.1(l), 4.1(m), 4.1(n), 4.1(o), 4.1(q), or 4.1(s) as
4.1(s) relates to clauses (c), (i), (l), (m), (n), (o) or (q) of Section 4.1 if
such nonperformance of any such agreement or covenant does not or would not have
a Material Adverse Effect on Company; and, provided, further, that this
condition shall be deemed to be satisfied with respect to the agreements and
covenants required by this Agreement to be performed or complied with by Company
set forth in Sections 5.1, 5.3, 5.5, 5.6, 5.7, 5.12, 5.13, 5.15 if such
nonperformance of
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any such agreement or covenant does not or would not have a material adverse
effect on the ability or likelihood of the parties hereto to consummate the
Merger. Parent shall have received a certificate with respect to this condition
signed on behalf of Company by the Chief Executive Officer and the Chief
Financial Officer of Company.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Company shall have occurred since the date of this Agreement and be
continuing.
(d) Consents. Company shall have obtained all consents, waivers
and approvals required in connection with the consummation of the transactions
contemplated hereby, the failure of which to obtain, individually or in the
aggregate, would have a Material Adverse Effect on Company.
(e) Employment and Noncompetition Agreements. Each Amended
Employment Agreement shall be in full force and effect. Richard Rosenblatt, and
at least two of Phillip Windley, Joseph Ruskiewicz and Steven Fulling, shall
each be employed by Company. Each Noncompetition Agreement shall be in full
force and effect.
(f) First Data Transactions. Each of the First Data Agreements
shall be in full force and effect.
(g) Amendment of Articles. The Articles Amendment shall have been
approved by the requisite vote of the stockholders of Company under applicable
law and the governance documents of Company.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approval of the
Company's stockholders:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by March 1, 2000 for any reason; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently
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restraining, enjoining or otherwise prohibiting the Merger, which order, decree,
ruling or other action is final and nonappealable;
(d) by either Company or Parent if the required approval of
Company's stockholders contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company's stockholders duly convened therefore or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Company where the failure to obtain the Company
stockholder approval shall have been caused by (i) the action or failure to act
of Company and such action or failure to act constitutes a breach by Company of
this Agreement or (ii) a breach of any Company Voting Agreement by any party
thereto other than Parent;
(e) by Parent (at any time prior to the approval of this
Agreement and the Merger by the required vote of the stockholders of Company) if
a Triggering Event (as defined below) shall have occurred.
(f) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then Company may not terminate this Agreement under this Section 7.1(f) for 30
days after delivery of written notice from Company to Parent of such breach,
provided Parent continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Company may not terminate this Agreement
pursuant to this paragraph (f) if such breach by Parent is cured during such
30-day period, or if Company shall have materially breached this Agreement); or
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Company's representations and warranties or breach by Company is
curable by Company through the exercise of its commercially reasonable efforts,
then Parent may not terminate this Agreement under this Section 7.1(g) for 30
days after delivery of written notice from Parent to Company of such breach,
provided Company continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (g) if such breach by Company is cured during such
30-day period, or if Parent shall have materially breached this Agreement).
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For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of
the approval of this Agreement or the Merger; (ii) Company shall have failed to
include in the Proxy Statement/Prospectus the unanimous recommendation of the
Board of Directors of Company in favor of the approval of this Agreement and the
Merger; (iii) the Board of Directors of Company fails to reaffirm its unanimous
recommendation in favor of the adoption and approval of this Agreement and the
Merger within 10 business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the public announcement of an
Acquisition Proposal; (iv) the Board of Directors of Company or any committee
thereof shall have approved or publicly recommended any Acquisition Proposal;
(v) Company shall have entered into any letter of intent of similar document or
any agreement, contract or commitment accepting any Acquisition Proposal; or
(vi) a tender or exchange offer relating to securities of Company shall have
been commenced by a Person unaffiliated with Parent, and Company shall not have
sent to its stockholders pursuant to Rule 14e-2 promulgated under the Securities
Act, within 10 business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of such party's representations,
warranties, covenants or agreements in this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Proxy Statement/Prospectus (including any preliminary materials
related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto.
(b) Company Payments. In the event that this Agreement is
terminated by Parent pursuant to Sections 7.1(e), (i) Company shall promptly,
but in no event later than two days after the date of such termination, pay
Parent a fee equal to $2,500,000 in immediately
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available funds, and (ii) if, within 15 months following the termination of this
Agreement, a Company Acquisition (as defined below) is consummated or Company
enters into an agreement providing for a Company Acquisition, Company shall
promptly, but in no event later than two days after the consummation of such
Company Acquisition or the entry by the Company into such agreement, pay Parent
a fee equal to $19,600,000 in immediately available funds. In the event that (i)
this Agreement is terminated by Parent or Company, as applicable, pursuant to
Section 7.1(d), (ii) following the date hereof and prior to the termination of
this Agreement, a third party has publicly announced an Acquisition Proposal and
(iii) within 15 months following the termination of this Agreement, a Company
Acquisition is consummated or the Company enters into an agreement providing for
a Company Acquisition, Company shall promptly, but in no event later than two
days after the consummation of such Company Acquisition or the entry by the
Company into such agreement, pay Parent a fee equal to $22,100,000 in
immediately available funds. For the purposes of this Agreement, "COMPANY
ACQUISITION" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement); (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 50% of
the voting power of the then outstanding shares of capital stock of the Company.
Company acknowledges that the agreements contained in this Section 7.3(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if Company fails to pay in a timely manner the amounts due pursuant
to this Section 7.3(b) , and, in order to obtain such payment, Parent makes a
claim that results in a judgment against Company for the amounts set forth in
this Section 7.3(b), Company shall pay to Parent its reasonable costs and
expenses (including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amounts set forth in this Section
7.3(b) at the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made. Payment of the fees described in this Section
7.3(b) shall not be in lieu of damages incurred in the event of breach of this
Agreement.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party
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contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
At Home Corporation
425 Broadway
Redwood City, California 94063
Attention: Chief Executive Officer
Fax No.: 650-596-5100
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: Gordon K. Davidson
Douglas N. Cogen
Fax No.: 650-494-1417
(b) if to Company, to:
iMALL, Inc.
233 Wilshire Boulevard, Suite 820
Santa Monica, California 90401
Attention: Chief Executive Officer
Fax No.:
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with a copy to:
Latham & Watkins
633 West 5th Street
Los Angeles, California 90071
Attention: Paul Tosetti
Fax No.: 213-891-8763
8.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity. Reference to a statute, regulation or
agreement shall include all amendments thereto.
(b) For purposes of this Agreement, the term "KNOWLEDGE" as
applied to a party hereto, means, with respect to any matter in question, that
any of the officers or directors of such party has actual knowledge of such
matter, after reasonable inquiry of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is or is reasonably likely to
be materially adverse to the business, assets (including intangible assets),
capitalization, financial condition or results of operations of such entity
taken as a whole with its subsidiaries, except to the extent that any such
change, event, violation, inaccuracy, circumstance or effect directly and
primarily results from (i) changes in general economic conditions or changes
affecting the industry generally in which such entity operates (provided that
such changes do not affect such entity in a materially disproportionate manner),
(ii) changes in the trading prices for such entity's capital stock, or (iii) the
announcement or pendency of the Merger; provided, that in any litigation
regarding this definition, Company shall be required to sustain the burden of
proving by clear and convincing evidence that the exclusion set forth in clause
(iii) is applicable.
(d) For purposes of this Agreement, the term "PERSON" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
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(e) For purposes of this Agreement, a "SUBSIDIARY" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly, 50%
or more of the stock or other equity or partnership 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.
(f) For purposes of this Agreement, an action by the Board of
Directors of Company or a committee thereof shall be "UNANIMOUS" if each member
of such Board of Directors or committee has approved such action other than (i)
any such member who has appropriately abstained from voting on such matter
because of an actual or potential conflict of interest and (ii) any such member
who is unable to vote in connection with such action as a result of death or
disability.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Letter and the
Parent Letter (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being agreed that the Confidentiality Agreement shall
continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Sections 5.10 or 5.17. Neither the condition contained in Section 6.3(f) may be
waived, nor may Section 5.17 or this sentence be amended, by Parent or Merger
Sub, without the prior written consent of First Data, who is made a third party
beneficiary of this sentence.
8.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The
55
<PAGE> 60
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law; provided
that issues involving the corporate governance of any of the parties hereto
shall be governed by their respective jurisdictions of incorporation, and issues
involving the consummation and effects of the Merger shall be governed by the
laws of the State of Nevada.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
AT HOME CORPORATION
By: _______________________________
Name:
Title:
SHOP NEVADA, INC.
By: _______________________________
Name:
Title:
iMALL, INC.
By: _______________________________
Name:
Title:
[AGREEMENT AND PLAN OF MERGER]
57
<PAGE> 1
VOTING AGREEMENT
This VOTING AGREEMENT (the "AGREEMENT") is made and entered into as of
July 12, 1999, between At Home Corporation, a Delaware corporation ("PARENT"),
and the undersigned stockholder ("STOCKHOLDER") of iMall, Inc., a Nevada
corporation ("COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Company
and Shop Nevada, Inc., a Nevada corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"), are entering into an Agreement and Plan of Merger (the
"MERGER AGREEMENT") which provides for the merger (the "MERGER") of Merger Sub
with and into Company. Pursuant to the Merger, shares of capital stock of
Company will be converted into shares of Series A Common Stock of Parent on the
basis described in the Merger Agreement. Capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement.
B. Stockholder is the record holder of such number of outstanding shares
of Company Common Stock as is indicated on the final page of this Agreement.
C. As a material inducement to enter into the Merger Agreement, Parent
desires Stockholder to agree, and Stockholder is willing to agree, to vote the
Shares (as defined below), and such other shares of capital stock of Company
over which Stockholder has voting power, so as to facilitate consummation of the
Merger.
Intending to be legally bound, the parties agree as follows:
1. Agreement to Vote Shares.
1.1 Definitions. For purposes of this Agreement:
"SHARES" shall mean all issued and outstanding shares of Company Common
Stock owned of record or beneficially by Stockholder or over which Stockholder
exercises voting power, in each case, as of the record date for persons entitled
(a) to receive notice of, and to vote at the meeting of the stockholders of
Company called for the purpose of voting on the matters referred to in Section
1.2, or (b) to take action by written consent of the stockholders of Company
with respect to the matters referred to in Section 1.2. Stockholder agrees that
any shares of capital stock of Company that Stockholder purchases or with
respect to which Stockholder otherwise acquires beneficial ownership or over
which Stockholder exercises voting power after the execution of this Agreement
and prior to the date of termination of this Agreement pursuant to Section 3
below shall be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Shares on the date hereof.
"SUBJECT SECURITIES" shall mean: (i) all securities of Company
(including all shares of
<PAGE> 2
Company Common Stock and all options, warrants and other rights to acquire
shares of Company Common Stock) beneficially owned by Stockholder as of the date
of this Agreement; and (ii) all additional securities of Company (including all
additional shares of Company Common Stock and all additional options, warrants
and other rights to acquire shares of Company Common Stock) of which Stockholder
acquires ownership during the period from the date of this Agreement through the
earlier of termination of this Agreement pursuant to Section 3 below or the
record date for the meeting at which stockholders of Company are asked to vote
upon approval of the Merger Agreement and the Merger (the "RECORD DATE").
Stockholder shall be deemed to have effected a "TRANSFER" of a security
if Stockholder directly or indirectly: (i) sells, pledges, encumbers, transfers
or disposes of, or grants an option with respect to, such security or any
interest in such security; or (ii) enters into an agreement or commitment
providing for the sale, pledge, encumbrance, transfer or disposition of, or
grant of an option with respect to, such security or any interest therein.
Stockholder shall not be deemed to have effected a "Transfer" of a security by
virtue of entering into a merger, consolidation or other business combination of
any nature with another entity or entities.
1.2 Agreement to Vote Shares. Until the termination of this Agreement
pursuant to Section 3 below, at every meeting of the stockholders of Company
called with respect to any of the following, and at every adjournment thereof,
and on every action or approval by written consent of the stockholders of
Company with respect to any of the following, Stockholder shall cause the Shares
to be voted (i) in favor of approval of the Merger Agreement and the Merger,
(ii) in favor of approval of an amendment to the Articles of Incorporation of
the Company which deletes Article VI.C of the Company's Articles of
Incorporation regarding a supermajority vote requirement in certain dispositions
of assets of the Company and (iii) against approval of (a) any proposal made in
opposition to or in competition with consummation of the Merger, (b) any merger,
consolidation, sale of assets, reorganization or recapitalization with any party
other than Parent or its affiliates or (c) any liquidation or winding up of
Company.
1.3. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit I (the "PROXY"), which shall be irrevocable, with respect to
the Shares.
1.4. No Transfer of Subject Securities. Until the earlier of termination
of this Agreement pursuant to Section 3 below or the Record Date, except as may
be required by (i) the foreclosure on any encumbrance secured by such Subject
Securities as of the date hereof or (ii) court order, Stockholder agrees not to
Transfer any of the Subject Securities.
2. Representations and Warranties of Stockholder. Stockholder (i) is the
owner of record or beneficially or Stockholder exercises voting power of the
shares of Company Common Stock indicated on the final page of this Agreement,
which at the date hereof are free and clear of any liens, claims, options,
charges or other encumbrances that would adversely affect the ability of
Stockholder to carry out the terms of this Agreement; and (ii) has the legal
capacity or full corporate power and authority to make, enter into and carry out
the terms of this Agreement.
3. Termination. This Agreement shall terminate and shall have no further
force or
2
<PAGE> 3
effect as of the first to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the Merger
Agreement, or (ii) such date and time as the Merger Agreement shall have been
terminated pursuant to Article VII thereof.
4. Miscellaneous.
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
4.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by commercial delivery service to the respective parties
as follows (or at such other address for a party as shall be specified by like
notice):
If to Parent:
At Home Corporation
425 Broadway Street
Redwood City, CA 94063
Attn: General Counsel
3
<PAGE> 4
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attn: Gordon K. Davidson
Douglas N. Cogen
If to Stockholder, to the address for notice set forth on the
last page hereof.
4.6 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of California,
without regard to the principles of conflict of laws thereof.
4.7 Entire Agreement. This Agreement contains the entire understanding
of the parties in respect of the subject matter hereof, and supersedes all prior
negotiations and understandings, both oral and written, between the parties with
respect to such subject matter.
4.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
4.9 Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
* * * * *
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
AT HOME CORPORATION
By: _______________________________
Name:
Title:
STOCKHOLDER:
___________________________________
Name:
Stockholder's Address for Notice:
___________________________________
___________________________________
___________________________________
Shares of Company Common Stock
Beneficially Owned by Stockholder:
______________________
[VOTING AGREEMENT]
<PAGE> 6
EXHIBIT I
IRREVOCABLE PROXY
The undersigned stockholder (the "STOCKHOLDER") of iMall, Inc., a Nevada
corporation (the "COMPANY"), hereby irrevocably appoints and constitutes the
members of the Board of Directors of At Home Corporation, a Delaware corporation
("PARENT"), and each of them (the "PROXYHOLDERS"), the agents, attorneys and
proxies of the undersigned, with full power of substitution and resubstitution,
to the full extent of the undersigned's rights with respect to the shares of
capital stock of Company which are listed below (the "SHARES"), and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof and prior to the date this proxy terminates, to vote the Shares as
follows: the agents and proxies named above are empowered at any time prior to
termination of this proxy to exercise all voting and other rights (including,
without limitation, the power to execute and deliver written consents with
respect to the Shares) of the undersigned at every annual, special or adjourned
meeting of Company stockholders, and in every written consent in lieu of such a
meeting, or otherwise, (i) in favor of approval of the Merger (as defined in the
Voting Agreement dated the date hereof between the Stockholder and Parent (the
"VOTING AGREEMENT")) and the Agreement and Plan of Merger (the "MERGER
AGREEMENT") among Parent, a wholly-owned subsidiary of Parent and Company, (ii)
in favor of approval of an amendment to the Articles of Incorporation of the
Company which deletes Article VI.C of the Company's Articles of Incorporation
regarding a supermajority vote requirement in certain dispositions of assets of
the Company, and (iii) against approval of (a) any proposal made in opposition
to or in competition with consummation of the Merger, (b) any merger,
consolidation, sale of assets, reorganization or recapitalization with any party
other than Parent or its affiliates or (c) any liquidation or winding up of
Company. The Proxyholders may not exercise this proxy on any other matter. The
Stockholder may vote the Shares on all such other matters. The proxy granted by
the Stockholder to the Proxyholders hereby is granted as of the date of this
Irrevocable Proxy in order to secure the obligations of the Stockholder set
forth in Section 1 of the Voting Agreement, and is irrevocable and coupled with
an interest in such obligations and in the interests in Company to be purchased
and sold pursuant the Merger Agreement. This proxy will terminate upon the
termination of the Voting Agreement in accordance with its terms. Upon the
execution hereof, all prior proxies given by the undersigned with respect to the
Shares and any and all other shares or securities issued or issuable in respect
thereof on or after the date hereof are hereby revoked and no subsequent proxies
will be given until such time as this proxy shall be terminated in accordance
with its terms. Any obligation of the undersigned hereunder shall be binding
upon the successors and assigns of the undersigned. The undersigned stockholder
authorizes the Proxyholders to file this proxy and any substitution or
revocation of substitution with the Secretary of the Company and with any
Inspector of Elections at any meeting of the stockholders of the Company.
This proxy is irrevocable and shall survive the insolvency, incapacity,
death or liquidation of the undersigned. Dated: July 12, 1999.
___________________________________
Signature
___________________________________
Name (and Title)
Shares of Company Common Stock beneficially owned:
__________________
6
