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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Global Sports, Inc.,
a Delaware corporation;
Fido Acquisition Corp.,
a Delaware corporation;
and
Fogdog, Inc.,
a Delaware corporation
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Dated as of October 24, 2000
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of October 24, 2000, by and among: Global Sports, Inc., a
Delaware corporation ("Parent"); Fido Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent ("Merger Sub"); and Fogdog, Inc., a
Delaware corporation (the "Company"). Certain capitalized terms used in this
Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub with and into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly-owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved this Agreement and approved the Merger.
D. In order to induce Parent to enter into this Agreement, concurrently
with the execution and delivery of this Agreement, (1) Parent and certain
stockholders of the Company are executing Voting and Stock Transfer Restriction
Agreements (the "Company Stockholder Voting Agreements"), and (2) a subsidiary
of Parent ("Strategic Sub") and the Company are entering into a Strategic
Alliance Agreement (the "Strategic Alliance Agreement"), pursuant to which
Strategic Sub will provide certain merchandising and fulfillment services to the
Company, and an Inventory Purchase Agreement (the "Inventory Purchase
Agreement", and together with the Strategic Alliance Agreement, the "Ancillary
Business Agreements"), pursuant to which the Company is selling certain
inventory to Strategic Sub.
Agreement
The parties to this Agreement, intending to be legally bound, agree as
follows:
Section 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. The Company will continue
as the surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
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1.3 Closing; Effective Time. The consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Cooley Godward llp, 3175 Hanover Street, Palo Alto, California,
at 10:00 a.m. on a date to be designated by Parent (the "Closing Date"), which
shall be no later than the fifth business day after the satisfaction or waiver
of the last to be satisfied or waived of the conditions set forth in Sections 6
and 7 (other than those conditions that by their nature are to be satisfied at
the Closing (including the conditions set forth in Section 6.6), but subject to
the satisfaction or waiver of such conditions). Subject to the provisions of
this Agreement, a certificate of merger satisfying the applicable requirements
of the DGCL shall be duly executed by the Company and, concurrently with or as
soon as practicable following the Closing, delivered to and filed with the
Secretary of State of the State of Delaware in accordance with the DGCL. The
Merger shall become effective upon the date and time of the filing of such
certificate of merger with the Secretary of State of the State of Delaware (the
"Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and
Officers . At the Effective Time:
(a) the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated immediately after the Effective
Time to conform to the Certificate of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time, except that the name of the
Surviving Corporation shall be "Fogdog, Inc.";
(b) the Bylaws of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to the Bylaws of
Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals
who are directors and officers of Merger Sub immediately prior to the
Effective Time;
provided, however, that the Certificate of Incorporation and Bylaws of the
Surviving Corporation shall provide for the maximum indemnification permissible
under Delaware law with respect to its officers and directors.
1.5 Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or any
stockholder of the Company:
(i) any shares of Company Common Stock then held by
the Company or any wholly-owned Subsidiary of the Company (or held in the
Company's treasury) shall be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by
Parent, Merger Sub or any other wholly-owned Subsidiary of Parent shall be
canceled
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and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)"
above and subject to Sections 1.5(b), 1.5(c), 1.5(d) and 1.8, each share of
Company Common Stock then outstanding shall be converted into the right to
receive one hundred thirty-five thousandths (0.135) of a share of Parent
Common Stock; and
(iv) each share of the common stock, $0.01 par value
per share, of Merger Sub then outstanding shall be converted into one share
of common stock of the Surviving Corporation.
The fraction of a share of Parent Common Stock specified in clause "(iii)" of
the preceding sentence (as such fraction may be adjusted in accordance with
Section 1.5(b)) is referred to as the "Exchange Ratio."
(b) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock or Parent Common
Stock are changed into a different number or class of shares by reason of any
stock split, division or subdivision of shares, stock dividend, reverse stock
split, consolidation of shares, reclassification, recapitalization or other
similar transaction, then the Exchange Ratio shall be appropriately adjusted.
(c) If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company or under
which the Company has any rights, then the shares of Parent Common Stock issued
in exchange for such shares of Company Common Stock will also be unvested and
subject to the same repurchase option, risk of forfeiture or other condition,
and the certificates representing such shares of Parent Common Stock may
accordingly be marked with appropriate legends. The Company shall take all
action 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.
(d) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock who would
otherwise be entitled to receive a fraction of a share of Parent Common Stock
(after aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.6), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Parent Common Stock on the Nasdaq National Market on the date the Merger becomes
effective.
1.6 Closing of the Company's Transfer Books. At the Effective
Time: (a) all shares of Company Common Stock outstanding immediately prior to
the Effective Time shall automatically be canceled and retired and shall cease
to exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the
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Effective Time shall cease to have any rights as stockholders of the Company,
and each certificate representing any such Company Common Stock (a "Company
Stock Certificate") shall thereafter represent only the right to receive the
consideration referred to in Sections 1.5(a) and 1.5(d) until surrendered in
accordance with Section 1.7; and (b) the stock transfer books of the Company
shall be closed with respect to all shares of Company Common Stock outstanding
immediately prior to the Effective Time. No further transfer of any such shares
of Company Common Stock shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a Company Stock Certificate is
presented to the Exchange Agent (as defined in Section 1.7) or to the Surviving
Corporation or Parent, such Company Stock Certificate shall be canceled and
shall be exchanged as provided in Section 1.7.
1.7 Exchange of Certificates.
(a) On or prior to the Closing Date, Parent shall select a
reputable bank or trust company to act as exchange agent in the Merger (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent shall
deposit with the Exchange Agent (i) certificates representing the shares of
Parent Common Stock issuable pursuant to this Section 1, and (ii) cash
sufficient to make payments in lieu of fractional shares in accordance with
Section 1.5(d). The shares of Parent Common Stock and cash amounts so deposited
with the Exchange Agent, together with any dividends or distributions received
by the Exchange Agent with respect to such shares, are referred to collectively
as the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to the record holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify (including a provision confirming
that delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent), and (ii) instructions for use
in effecting the surrender of Company Stock Certificates in exchange for
certificates representing Parent Common Stock. Upon surrender of a Company Stock
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required by
the Exchange Agent or Parent, (1) the holder of such Company Stock Certificate
shall be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5 (and cash in lieu of any
fractional share of Parent Common Stock), and (2) the Company Stock Certificate
so surrendered shall be canceled. If any Company Stock Certificate shall have
been lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit and to deliver a bond (in such sum as Parent
may reasonably direct) as indemnity against any claim that may be made against
the Exchange Agent, Parent or the Surviving Corporation with respect to such
Company Stock Certificate.
(c) Notwithstanding anything to the contrary contained in
this Agreement, no shares of Parent Common Stock (or certificates therefor)
shall be issued in exchange for any Company Stock Certificate to any Person who
may be an "affiliate" (as that
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term is used in Rule 145 under the Securities Act) of the Company until such
Person shall have delivered to Parent a duly executed Affiliate Agreement as
contemplated by Section 5.10.
(d) No dividends or other distributions declared or made
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock that such holder has the right to
receive in the Merger until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7 (at which time such holder shall
be entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest).
(e) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date 180 days
after the date on which the Merger becomes effective shall be delivered to
Parent upon demand, and any holders of Company Stock Certificates who have not
theretofore surrendered their Company Stock Certificates in accordance with this
Section 1.7 shall thereafter look only to Parent for satisfaction of their
claims for Parent Common Stock, cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent Common
Stock.
(f) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state, local
or foreign tax law or under any other applicable Legal Requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(g) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock or to any other
Person with respect to any shares of Parent Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any
public official pursuant to any applicable abandoned property law, escheat law
or similar Legal Requirement.
1.8 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in
this Agreement (but without limiting the effect of Section 6.4), to the extent
that (1) the provisions of Chapter 13 of the California Corporations Code are or
prior to the Effective Date may become applicable to the Merger by reason of
Section 2115 of the California Corporations Code, or (2) the provisions of
Section 262 of the DGCL are or prior to the Effective Date may become applicable
to the Merger by reason of a delisting of the Company Common Stock from the
Nasdaq National Market, any shares of Company Common Stock that, as of the
Effective Time, are or may become "dissenting shares" within the meaning of
Section 1300(b) of the California Corporations Code or may carry appraisal
rights under Section 262 of the DGCL shall not be converted into or represent
the right to receive Parent Common Stock in accordance with Section 1.5(a) (or
cash in lieu of fractional shares in accordance with Section 1.5(d)), and the
holder or holders of such
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shares shall be entitled only to such rights as may be granted to such holder or
holders in Chapter 13 of the California Corporations Code or Section 262 of the
DGCL; provided, however, that if the status of any such shares as "dissenting
shares" or shares carrying appraisal rights shall not be perfected, or if any
such shares shall lose their status as "dissenting shares" or shares carrying
appraisal rights, then, as of the later of the Effective Time or the time of the
failure to perfect such status or the loss of such status, such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such shares)
Parent Common Stock in accordance with Section 1.5(a) (and cash in lieu of
fractional shares in accordance with Section 1.5(d)).
(b) The Company shall give Parent (i) prompt notice of any
written demand received by the Company prior to the Effective Time to require
the Company to purchase shares of Company Common Stock pursuant to Chapter 13 of
the California Corporations Code or Section 262 of the DGCL and of any other
demand, notice or instrument delivered to the Company prior to the Effective
Time pursuant to the California Corporations Code or the DGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
any such demand, notice or instrument. The Company shall not make any payment or
settlement offer prior to the Effective Time with respect to any such demand
unless Parent shall have consented in writing to such payment or settlement
offer.
1.9 Tax Consequences. For United States federal income tax
purposes, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a) of the Code. The parties to this Agreement hereby
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.10 Further Action. If, at any time after the Effective Time,
any further action is determined by Parent to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
Section 2. Representations and Warranties of the Company
The Company represents and warrants to Parent and Merger Sub, subject to
such exceptions as are disclosed in writing in the Company Disclosure Schedule
(which disclosure shall be deemed to constitute an exception to or otherwise
qualify the representations and warranties of the Company contained in the
section of this Agreement corresponding by number and letter to such disclosure,
and shall also be deemed to qualify other representations and warranties in this
Agreement only to the extent it is reasonably apparent that such disclosure
would qualify such other representations or warranties), as follows:
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2.1 Subsidiaries; Due Organization; Etc.
(a) The Company has no Subsidiaries, except for the
corporation identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and
neither the Company nor the other corporation identified in Part 2.1(a)(i) of
the Company Disclosure Schedule owns any capital stock of, or any equity
interest of any nature in, any other Entity, other than the Entities identified
in Part 2.1(a)(ii) of the Company Disclosure Schedule. (The Company and its
Subsidiary are referred to collectively in this Agreement as the "Acquired
Corporations.") None of the Acquired Corporations is bound by any Contract under
which it may become obligated to make any future investment in any other Entity.
(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification,
except where the failure to be so qualified or in such good standing is not,
when taken together with all such other failures, reasonably likely to have a
Material Adverse Effect on the Acquired Corporations.
2.2 Certificate of Incorporation and Bylaws. The Company has
delivered to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including all amendments thereto.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists
of: (i) 100,000,000 shares of Company Common Stock, of which 37,159,569 shares
have been issued and were outstanding as of October 23, 2000; and (ii) 5,000,000
shares of Preferred Stock, $.001 par value per share, of which no shares are
issued and outstanding. Except as set forth in Part 2.3(a)(i) of the Company
Disclosure Schedule, the Company does not hold any shares of its capital stock
in its treasury. All of the outstanding shares of Company Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. There
are no shares of Company Common Stock held by any other Acquired Corporation.
Except as set forth in Part 2.3(a)(ii) of the Company Disclosure Schedule: (i)
none of the outstanding shares of Company Common Stock is entitled or subject to
any preemptive right, right of participation, right of maintenance or any
similar right; (ii) none of the outstanding shares of Company Common Stock is
subject to any right of first refusal in favor of the Company; and (iii) there
is no Acquired Corporation Contract relating to the voting or registration of,
or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or granting any option or similar right with respect to), any
shares of Company Common Stock. None of the Acquired Corporations is under any
obligation, or is bound by any Contract pursuant to which it may become
obligated, to
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repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock. Part 2.3(a)(iii) of the Company Disclosure Schedule describes all
repurchase rights held by the Company with respect to shares of Company Common
Stock (whether such shares were issued pursuant to the exercise of Company
Options or otherwise).
(b) As of October 23, 2000: (i) 3,445,851 shares of Company
Common Stock are subject to issuance pursuant to stock options granted and
outstanding under the Company's 1999 Stock Incentive Plan, and 2,256,364 shares
of Company Common Stock remain available for future stock option grants under
the Company's 1999 Stock Incentive Plan; (ii) 453,860 shares of Company Common
Stock are reserved for future issuance pursuant to the Company's 1999 Employee
Stock Purchase Plan (the "ESPP"); and (iii) 4,114,349 shares of Company Common
Stock are reserved for future issuance pursuant to the Company Warrants held by
Nike, Inc. (Options to purchase shares of Company Common Stock (whether granted
by the Company pursuant to the Company's stock option plans, assumed by the
Company in connection with any merger, acquisition or similar transaction or
otherwise issued or granted) are referred to in this Agreement as "Company
Options.") Part 2.3(b) of the Company Disclosure Schedule sets forth the
following information with respect to each Company Option outstanding as of the
date of this Agreement: (i) the particular plan (if any) pursuant to which such
Company Option was granted; (ii) the name of the optionee; (iii) the number of
shares of Company Common Stock subject to such Company Option; (iv) the exercise
price of such Company Option; (v) the date on which such Company Option was
granted; (vi) the applicable vesting schedule, and the extent to which such
Company Option is vested and exercisable as of the date of this Agreement; and
(vii) the date on which such Company Option expires. The Company has delivered
to Parent accurate and complete copies of all stock option plans pursuant to
which any of the Acquired Corporations has ever granted stock options, and the
forms of all stock option agreements evidencing such options. The Company has
delivered to Parent accurate and complete copies of the Company Warrants. The
exercise price of the Company Warrants held by Nike, Inc. is $1.54 per share.
The Company Warrants held by Nike, Inc. by their terms will become automatically
exercised one day prior to the Closing Date (if not exercised earlier) and will
not be outstanding at the Effective Time.
(c) Except as set forth in Section 2.3(a) or Part 2.3(b) of
the Company Disclosure Schedule, there is no: (i) outstanding subscription,
option, call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of any of the Acquired
Corporations; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of any of the Acquired Corporations; or (iii) stockholder
rights plan (or similar plan commonly referred to as a "poison pill") or
Contract under which any of the Acquired Corporations is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities.
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(d) All outstanding shares of Company Common Stock,
options, warrants and other securities of the Acquired Corporations have been
issued and granted in compliance in all material respects with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of each
of the Company's Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof, and are owned beneficially and of
record by the Company, free and clear of any Encumbrances.
2.4 SEC Filings; Financial Statements.
(a) The Company has delivered or made available to Parent
accurate and complete copies of all registration statements, proxy statements
and other statements, reports, schedules, forms and other documents filed by the
Company with the SEC since July 1, 1999, and all amendments thereto (the
"Company SEC Documents"), as well as the Unaudited Interim Financial Statements.
The Company SEC Documents have been filed by the Company with the SEC on a
timely basis. None of the Company's Subsidiaries is required to file any
documents with the SEC. As of the time it was filed with the SEC (or, if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing): (i) each of the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements (including any related notes)
contained in the Company SEC Documents (at the time they were filed with the SEC
or, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) and the Unaudited Interim Financial Statements
(as of the date of this Agreement): (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto
(other than the Unaudited Interim Financial Statements); (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes to
such financial statements or, in the case of unaudited financial statements, as
permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end adjustments that will not, individually or in the aggregate, be
material in amount), and (iii) fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods covered thereby.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the
Company Disclosure Schedule or as expressly contemplated by this Agreement,
between September 30, 2000 and the date of this Agreement:
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(a) there was no Material Adverse Effect on the Acquired
Corporations, and no event occurred or circumstance arose that, in combination
with any other events or circumstances, could reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the assets of
any of the Acquired Corporations (whether or not covered by insurance) that has
had or could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations;
(c) none of the Acquired Corporations has (i) declared,
accrued, set aside or paid any dividend or made any other distribution in
respect of any shares of capital stock, or (ii) repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or
granted, or authorized the issuance of, (i) any capital stock or other security
(except for Company Common Stock issued upon the valid exercise of outstanding
Company Options), (ii) any option, warrant or right to acquire any capital stock
or any other security (except for Company Options which may, in the ordinary
course of business and consistent with past practices, have been granted under
the Company's 1999 Stock Incentive Plan to employees of the Acquired
Corporations with an exercise price per share equal to the fair market value of
a share of Company Common Stock on the grant date), or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision of any
of the Company's stock option plans, (ii) any provision of any Contract
evidencing any outstanding Company Option, or (iii) any restricted stock
purchase agreement;
(f) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of any of the
Acquired Corporations, and none of the Acquired Corporations has effected or
been a party to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(g) none of the Acquired Corporations has formed any
Subsidiary or acquired any equity interest in any other Entity;
(h) none of the Acquired Corporations has made any capital
expenditure or other cash expenditure which, when added to all other capital
expenditures and other cash expenditures made on behalf of the Acquired
Corporations during such period, exceeds $100,000 in the aggregate;
(i) except in the ordinary course of business and
consistent with past practices, none of the Acquired Corporations has amended or
terminated, or waived any material right or remedy under, any Material Contract;
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(j) none of the Acquired Corporations has (i) acquired,
leased or licensed any right or other asset material to the Acquired
Corporations taken as a whole from any other Person, (ii) sold or otherwise
disposed of, or leased or licensed, any material right or other material asset
to any other Person, or (iii) waived or relinquished any right, except in any of
the foregoing cases for rights or other assets acquired, leased, licensed or
disposed of in the ordinary course of business and consistent with past
practices;
(k) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness (net of an allowance for doubtful
accounts not to exceed $100,000 in the aggregate);
(l) none of the Acquired Corporations has made any pledge
of any of its assets or otherwise permitted any of its assets to become subject
to any Encumbrance, except for pledges of immaterial assets made in the ordinary
course of business and consistent with past practices;
(m) none of the Acquired Corporations has (i) lent money to
any Person (other than loans made in connection with the exercise of Company
Options, as set forth in Part 2.5(m) of the Company Disclosure Schedule), or
(ii) incurred or guaranteed any indebtedness for borrowed money;
(n) none of the Acquired Corporations has (i) adopted,
established or entered into any Employee Plan (as defined in Section 2.15), (ii)
caused or permitted any Employee Plan to be amended in any material respect, or
(iii) paid any bonus or made any profit-sharing or similar payment to, or
materially increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees (except for routine, reasonable salary increases and
bonuses granted or paid to employees between September 30, 2000 and October 20,
2000 in connection with their customary employee review process consistent with
past practices);
(o) none of the Acquired Corporations has changed any of
its methods of accounting or accounting practices in any material respect except
as required by United States generally accepted accounting principles;
(p) none of the Acquired Corporations has made any material
Tax election;
(q) none of the Acquired Corporations has commenced or
settled any Legal Proceeding;
(r) none of the Acquired Corporations has entered into any
material transaction that has had, or could reasonably be expected to have, a
Material Adverse Effect on the Acquired Corporations;
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(s) none of the Acquired Corporations has entered into any
material transaction or taken any other material action outside the ordinary
course of business or inconsistent with past practices; and
(t) none of the Acquired Corporations has agreed or
committed to take any of the actions referred to in clauses "(c)" through "(s)"
above.
2.6 Title to Assets. The Acquired Corporations own, and have
good and marketable title to, all assets purported to be owned by them,
including: (i) all assets reflected on the Unaudited Interim Balance Sheet
(except for inventory and immaterial assets sold or otherwise disposed of in the
ordinary course of business since the date of the Unaudited Interim Balance
Sheet or as otherwise contemplated by the Inventory Purchase Agreement ); and
(ii) all other assets reflected in the books and records of the Acquired
Corporations as being owned by the Acquired Corporations. All of said assets are
owned by the Acquired Corporations free and clear of any Encumbrances, except
for (1) any lien for current taxes not yet due and payable, (2) mechanics' and
carriers' liens and other similar Encumbrances arising in the ordinary course of
business which are immaterial to the Acquired Corporations, taken as a whole,
(3) minor liens that have arisen in the ordinary course of business and that do
not (in any case or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of any of the
Acquired Corporations, and (4) liens described in Part 2.6 of the Company
Disclosure Schedule.
2.7 Cash; Receivables; Inventories.
(a) The fair market value of the cash, cash equivalents and
short-term investments held by the Acquired Corporations (i) was $42,573,503 at
September 30, 2000, and (ii) is not less than $39,000,000 as of the date of this
Agreement determined after deducting the amount of all checks written on or
before the date of this Agreement and after deducting the amount of all payments
described in Part 2.7(a) of the Company Disclosure Schedule.
(b) All existing accounts receivable of the Acquired
Corporations (including those accounts receivable reflected on the Unaudited
Interim Balance Sheet that have not yet been collected and those accounts
receivable that have arisen since September 30, 2000 and have not yet been
collected, but other than any account receivable which arises pursuant to the
terms of the Inventory Purchase Agreement) (a) represent valid obligations of
customers of the Acquired Corporations arising from bona fide transactions
entered into in the ordinary course of business, (b) are current and, to the
Company's knowledge, will be collected in full when due, without any
counterclaim or set off (net of an allowance for doubtful accounts not to exceed
$100,000 in the aggregate).
(c) Part 2.7(c) of the Company Disclosure Schedule contains
an accurate and complete list as of the date of this Agreement of all loans and
advances made by any of the Acquired Corporations to any employee, director,
consultant or independent contractor, other than routine travel advances made to
employees in the ordinary course of business and those set forth in Part 2.5(m)
of the Company Disclosure Schedule.
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(d) The inventory of the Acquired Corporations reflected on
the Unaudited Interim Balance Sheet was, and the current inventory of the
Acquired Corporations immediately prior to the sale of a portion of such
inventory to Strategic Sub pursuant to the Inventory Purchase Agreement is, in
all material respects in usable and saleable condition in the ordinary course of
business consistent with past practices, and the inventory reflected on the
Unaudited Interim Balance Sheet has a fair market value not less than the
amounts at which such inventory is carried therein, subject to reserves of
$600,000.
2.8 Real Property; Leasehold. None of the Acquired Corporations
owns any real property or any interest in real property, except for the
leaseholds created under the real property leases identified in Part 2.8(a) of
the Company Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets
forth, with respect to each Proprietary Asset owned by any of the Acquired
Corporations and registered with any Governmental Body or for which an
application has been filed with any Governmental Body, (i) a brief description
of such Proprietary Asset, and (ii) the names of the jurisdictions covered by
the applicable registration or application. Part 2.9(a)(ii) of the Company
Disclosure Schedule identifies each Proprietary Asset owned by any of the
Acquired Corporations that is material to the business of the Acquired
Corporations. Part 2.9(a)(iii) of the Company Disclosure Schedule identifies
each Proprietary Asset that is licensed or otherwise made available to any of
the Acquired Corporations by any Person, and is material to the business of the
Acquired Corporations (except for any Proprietary Asset that is licensed to any
Acquired Corporation under any third party software license generally available
to the public). The Acquired Corporations have good and valid title to all of
the Acquired Corporation Proprietary Assets identified or required to be
identified in Parts 2.9(a)(i) and 2.9(a)(ii) of the Company Disclosure Schedule,
free and clear of all Encumbrances, except for (i) any lien for current taxes
not yet due and payable, and (ii) minor liens that have arisen in the ordinary
course of business and that do not (individually or in the aggregate) materially
detract from the value of the Acquired Corporation Proprietary Asset subject
thereto or materially impair the operations of any of the Acquired Corporations.
The Acquired Corporations have a valid right to use, license and otherwise
exploit all Acquired Corporation Proprietary Assets, and have the sole and
exclusive right to use of the name "Fogdog". Except as set forth in Part
2.9(a)(iv) of the Company Disclosure Schedule, none of the Acquired Corporations
has developed jointly with any other Person any Acquired Corporation Proprietary
Asset with respect to which such other Person has any rights. There is no
Acquired Corporation Contract (with the exception of end user license agreements
in the form previously delivered by the Company to Parent) that is material to
the business of the Acquired Corporations pursuant to which any Person has any
right (whether or not currently exercisable) to use, license or otherwise
exploit any Acquired Corporation Proprietary Asset.
(b) The Acquired Corporations have taken reasonable
measures and precautions to protect and maintain the confidentiality, secrecy
and value of all material Acquired Corporation Proprietary Assets (except
Acquired Corporation Proprietary Assets whose value would be unimpaired by
disclosure). Without limiting the generality of the foregoing, except as set
forth in Part 2.9(b) of the Company Disclosure Schedule, (i) each
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current or former employee of any Acquired Corporation who is or was involved
in, or who has contributed to, the creation or development of any material
Acquired Corporation Proprietary Asset has executed and delivered to such
Acquired Corporation an agreement (containing no material exceptions to or
exclusions from the scope of its coverage) that is substantially identical to
the form of Confidential Information and Invention Assignment Agreement
previously delivered by the Company to Parent, and (ii) each current consultant
and independent contractor to any Acquired Corporation who is or was involved
in, or who has contributed to, the creation or development of any material
Acquired Corporation Proprietary Asset has executed and delivered to the Company
an agreement (containing no material exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
to Parent. To the knowledge of the Company, no current or former employee,
officer, director, stockholder, consultant or independent contractor has any
right, claim or interest in or with respect to any Acquired Corporation
Proprietary Asset.
(c) To the knowledge of the Company: (i) all patents,
trademarks, service marks and copyrights owned by or exclusively licensed to any
of the Acquired Corporations are valid, enforceable and subsisting; (ii) none of
the Acquired Corporation Proprietary Assets and no Proprietary Asset that is
currently being developed by any of the Acquired Corporations (either by itself
or with any other Person) infringes, misappropriates or conflicts with any
Proprietary Asset owned or used by any other Person; (iii) none of the products,
systems, software, computer programs, source code, models, algorithm, formula,
compounds, inventions, designs, technology, proprietary rights or other
intellectual property rights or intangible assets that is or has been designed,
created, developed, assembled, manufactured or sold by any of the Acquired
Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person, and
none of such products has at any time infringed, misappropriated or made any
unlawful or unauthorized use of any such Proprietary Asset; (iv) none of the
Acquired Corporations has received any notice or other communication (in writing
or otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful or unauthorized use of, any Proprietary Asset owned
or used by any other Person; and (v) no other Person is infringing,
misappropriating or making any unlawful or unauthorized use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts with,
any material Acquired Corporation Proprietary Asset.
(d) The Acquired Corporation Proprietary Assets constitute
all the Proprietary Assets necessary to enable the Acquired Corporations to
conduct their business in the manner in which such business has been and is
being conducted. None of the Acquired Corporations has (i) licensed any of the
material Acquired Corporation Proprietary Assets to any Person on an exclusive
basis, or (ii) entered into any covenant not to compete or Contract limiting or
purporting to limit the ability of any Acquired Corporation to exploit fully any
material Acquired Corporation Proprietary Assets or to transact business in any
market or geographical area or with any Person.
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2.10 Contracts.
(a) Part 2.10 of the Company Disclosure Schedule identifies
each Acquired Corporation Contract that constitutes a "Material Contract",
provided that in addition to the Acquired Corporation Contracts listed in Part
2.10 of the Company Disclosure Schedule, any material Contract that may not be
terminated by an Acquired Corporation (without penalty) within 60 days after the
delivery of a termination notice by such Acquired Corporation shall also be
considered a Material Contract hereunder. (For purposes of this Agreement, each
of the following shall also be deemed to constitute a "Material Contract":
(i) any Contract (A) relating to the employment of,
or the performance of services by, any employee or consultant (excluding
offer letters and similar agreements which establish "at-will" employment
arrangements), (B) pursuant to which any of the Acquired Corporations is or
may become obligated to make any severance, termination or similar payment
to any current or former employee or director, or (C) pursuant to which any
of the Acquired Corporations is or may become obligated to make any bonus
or similar payment (other than payments constituting base salary) in excess
of $25,000 to any current or former employee or director;
(ii) any Contract relating to the acquisition,
transfer, development, sharing or license of any Proprietary Asset (except
for any Contract pursuant to which (A) any Proprietary Asset is licensed to
the Acquired Corporations under any third-party software license generally
available to the public, or (B) any Proprietary Asset is licensed by any of
the Acquired Corporations to any Person on a non-exclusive basis);
(iii) any Contract that provides for indemnification of
any officer, director, employee or agent;
(iv) any Contract imposing any material restriction on
the right or ability of any Acquired Corporation (A) to compete with any
other Person, (B) to acquire from any other Person any product or other
asset or any services necessary for the conduct of the business of the
Acquired Corporations, (C) to solicit, hire or retain any Person as an
employee, consultant or independent contractor (except for ordinary course
third party consulting agreements prohibiting the Acquired Corporations
from hiring employees of such consultants), or (D) to develop, sell,
supply, distribute, offer, support or service to or for any other Person
any product or any technology or other asset necessary for the conduct of
the business of the Acquired Corporations;
(v) any Contract constituting or creating any
guaranty of any material obligation or indebtedness of any third party;
(vi) any Contract requiring that any of the Acquired
Corporations give any notice or provide any information to any Person prior
to considering or accepting any Acquisition Proposal or similar proposal,
or prior to entering into any discussions, agreement, arrangement or
understanding relating to any Acquisition Transaction or similar
transaction;
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(vii) any Contract that contemplates or involves the
payment or delivery of cash or other consideration in an amount or having a
value in excess of $25,000 in the aggregate, or contemplates or involves
the performance of services having a value in excess of $25,000 in the
aggregate;
(viii) any Contract for the provision of professional
services to any of the Acquired Corporations that provides for any fees or
other compensation to be calculated or paid on other than a standard hourly
basis plus reasonable out-of-pocket expenses;
(ix) any Contract (the termination or cancellation of
which could reasonably be expected to be material to the Acquired
Corporations) relating to the hosting of any Web sites owned or maintained
by the Company ("Company Sites"), relating to the fulfillment of orders
placed through any Company Sites, relating to the advertising or marketing
of any goods or services offered or otherwise available through any Company
Sites, relating to the collection or use of customer or other data
collected through any Company Sites, or otherwise relating to or evidencing
any strategic alliance between any of the Acquired Corporations and any
third party; and
(x) any other Contract, if a breach of such Contract
could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations.
Except as set forth in Part 2.10(a) of the Company Disclosure Schedule, the
Company has delivered to Parent an accurate and complete copy of each Acquired
Corporation Contract that constitutes a Material Contract.
(b) To the Company's knowledge, each Acquired Corporation
Contract that constitutes a Material Contract is valid and in full force and
effect, and is enforceable in accordance with its terms against the Company, and
to the Company's knowledge, against the other party thereto, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.10(c) of the Company
Disclosure Schedule: (i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches and defaults that have not had and could not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and, to the knowledge of the Company, no other Person has violated
or breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches and defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and (ii) to the knowledge of the Company, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) could reasonably be expected to (A) result in a violation or breach of
any of the provisions of any Acquired Corporation Contract, (B) give any Person
the right to declare a default or exercise any remedy under any Acquired
Corporation Contract, (C) give any Person the right to receive or require a
rebate, chargeback, penalty or change in delivery schedule under any Acquired
Corporation Contract, (D) give any Person the right to accelerate the maturity
or
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performance of any Acquired Corporation Contract, or (E) give any Person the
right to cancel, terminate or modify any Acquired Corporation Contract, except
in each such case for defaults, acceleration rights, termination rights and
other rights that have not had and could not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
2.11 Liabilities. None of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured (and including liabilities for warranty claims or the return of
merchandise), except for: (a) liabilities identified as such in the
"liabilities" column of the Unaudited Interim Balance Sheet; (b) normal and
recurring current liabilities that have been incurred by the Acquired
Corporations since September 30, 2000 in the ordinary course of business and
consistent with past practices; and (c) liabilities that, in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Acquired
Corporations.
2.12 Compliance with Legal Requirements. Each of the Acquired
Corporations is and has at all times been in compliance in all material respects
with all applicable Legal Requirements.
2.13 Governmental Authorizations.
(a) The Acquired Corporations hold all Governmental
Authorizations necessary to enable the Acquired Corporations to conduct their
respective businesses in the manner in which such businesses are currently being
conducted, except where the failure to hold such Governmental Authorizations has
not had and would not reasonably be expected to have a Material Adverse Effect
on the Acquired Corporations. All such Governmental Authorizations are valid and
in full force and effect. Each Acquired Corporation is and at all times has been
in substantial compliance with the terms and requirements of such Governmental
Authorizations, except where the failure to be in compliance with the terms and
requirements of such Governmental Authorizations has not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. No Governmental Body has at any time and in any material respect
challenged in writing the right of any of the Acquired Corporations to design,
manufacture, offer or sell any of its respective products or services.
(b) Each of the Acquired Corporations is in compliance in
all material respects with all of the terms and requirements of each grant,
incentive and subsidy provided or made available to or for the benefit of any of
the Acquired Corporations by any U.S. or foreign Governmental Body or otherwise.
Neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will (with or without notice or lapse of time) give any Person the
right to revoke, withdraw, suspend, cancel, terminate or modify any such grant,
incentive or subsidy.
2.14 Tax Matters.
(a) Each of the Tax Returns required to be filed by or on
behalf of the respective Acquired Corporations with any Governmental Body with
respect to any taxable period ending on or before the Closing Date (the
"Acquired Corporation Returns") (i) has been or will be filed on or before the
applicable due date (including any extensions of such due date),
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and (ii) has been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on the
Acquired Corporation Returns to be due on or before the Closing Date have been
or will be paid on or before the Closing Date.
(b) The Unaudited Interim Balance Sheet fully accrues all
actual and contingent liabilities for Taxes with respect to all periods through
September 30, 2000 in accordance with generally accepted accounting principles.
Each Acquired Corporation will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from September 30, 2000 through the Closing Date.
(c) No Acquired Corporation Return has ever been examined
or audited by any Governmental Body. No extension or waiver of the limitation
period applicable to any of the Acquired Corporation Returns has been granted
(by the Company or any other Person), and no such extension or waiver has been
requested from any Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the
knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any material Tax (other than liabilities for Taxes asserted under any such
notice of deficiency or similar document which are being contested in good faith
by the Acquired Corporations and with respect to which adequate reserves for
payment have been established on the Unaudited Interim Balance Sheet). There are
no liens for material Taxes upon any of the assets of any of the Acquired
Corporations except liens for current Taxes not yet due and payable. None of the
Acquired Corporations has entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code (or any comparable provision of
state or foreign Tax laws). None of the Acquired Corporations has been, and none
of the Acquired Corporations will be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code (or any comparable provision of state or foreign Tax laws)
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing. None of the Acquired Corporations has made any
distribution of stock of any controlled corporation, as that term is defined in
Code Section 355(a)(1).
(e) Except as set forth in Part 2.14(e) of the Company
Disclosure Schedule, there is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code (or any comparable provision under state or foreign Tax laws).
None of the Acquired Corporations is, or has ever been, a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation agreement,
agreement to compensate any service provider for taxes incurred under Code
Section 4999 or similar Contract.
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(f) Section 2.14(f) of the Company Disclosure Schedule
contains an accurate and complete description of the Company's income tax
carryovers. The Company has no net operating losses or other tax attributes
currently subject to limitation under Code Sections 382, 383 or 384, or the
federal consolidated return regulations (but the limitations of such Code
Sections will apply as a result of the Merger).
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Company Disclosure Schedule
identifies each salary, bonus, vacation, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, termination pay,
death and disability benefits, hospitalization, medical, life or other
insurance, flexible benefits, supplemental unemployment benefits, profit-
sharing, pension or retirement plan, program or agreement and each other
employee benefit plan or arrangement (collectively, the "Employee Plans")
sponsored, maintained, contributed to or required to be contributed to by any of
the Acquired Corporations for the benefit of any current or former employee of
any of the Acquired Corporations. The Employee Plans include the 2000 Retention
Plan and the 2000 Severance Plan.
(b) Except as set forth in Part 2.15(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and none of the Acquired Corporations has at any time in the
past maintained, sponsored or contributed to, any employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any similar pension benefit plan under the laws
of any foreign jurisdiction, whether or not excluded from coverage under
specific Titles or Subtitles of ERISA for the benefit of employees or former
employees of any of the Acquired Corporations (a "Pension Plan").
(c) Except as set forth in Part 2.15(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA or any similar welfare benefit plan under the laws of any foreign
jurisdiction, whether or not excluded from coverage under specific Titles or
Subtitles of ERISA), for the benefit of any current or former employees or
directors of any of the Acquired Corporations (a "Welfare Plan").
(d) With respect to each Employee Plan, the Company has
delivered or made available to Parent: (i) an accurate and complete copy of such
Employee Plan (including all amendments thereto); (ii) an accurate and complete
copy of the annual report, if required under ERISA, with respect to such
Employee Plan for the last two years; (iii) an accurate and complete copy of the
most recent summary plan description, together with each summary of material
modifications, if required under ERISA, with respect to such Employee Plan, (iv)
if such Employee Plan is funded through a trust or any third party funding
vehicle, an accurate and complete copy of the trust or other funding agreement
(including all amendments thereto) and accurate and complete copies the most
recent financial statements thereof; (v) accurate and complete copies of all
Contracts relating to such Employee Plan, including service provider agreements,
insurance contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) an accurate and complete copy of the most
recent determination letter
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received from the Internal Revenue Service with respect to such Employee Plan
(if such Employee Plan is intended to be qualified under Section 401(a) of the
Code).
(e) None of the Acquired Corporations is or has ever been
required to be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code, except for
the Acquired Corporations. None of the Acquired Corporations has ever been a
member of an "affiliated service group" within the meaning of Section 414(m) of
the Code. None of the Employee Plans identified in the Company Disclosure
Schedule is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
None of the Acquired Corporations has ever made a complete or partial withdrawal
from a multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or
commitment to create any Welfare Plan or any Pension Plan, or to modify or
change any existing Welfare Plan or Pension Plan (other than to comply with
applicable law) in a manner that would affect any current or former employee or
director of any of the Acquired Corporations.
(g) No Employee Plan (other than the 2000 Retention Plan
and the 2000 Severance Plan) provides death, medical or health benefits (whether
or not insured) after any termination of service of any current or former
employee or director of any of the Acquired Corporations (other than benefit
coverage mandated by applicable law, including coverage provided pursuant to
Section 4980B of the Code).
(h) With respect to any Employee Plan constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Employee Plans has been operated and
administered in all material respects in accordance with its terms and with
applicable Legal Requirements, including ERISA, the Code and applicable foreign
Legal Requirements. The Acquired Corporations have performed all of their
respective obligations under the Employee Plans.
(j) Each of the Employee Plans intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and nothing has occurred that would adversely
affect such determination.
(k) Except as set forth in Part 2.15(k) of the Company
Disclosure Schedule, the execution, delivery or performance of this Agreement,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will result in any bonus, golden parachute, severance or
other payment or obligation to any current or former employee or director of any
of the Acquired Corporations (whether or not under any Employee Plan), or
materially increase the benefits payable or provided under any Employee Plan, or
result in any acceleration of the time of payment or vesting of any such
benefits. Without limiting the generality of the foregoing (and except as set
forth in Part 2.15(k) of the Company Disclosure
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Schedule), the consummation of the Merger will not result in the acceleration of
vesting of any unvested Company Options.
(l) Part 2.15(l) of the Company Disclosure Schedule
contains a list of all salaried employees of each of the Acquired Corporations
as of the date of this Agreement, and correctly reflects, in all material
respects, their salaries, any other compensation payable to them (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements), their dates of employment and their positions. None of the
Acquired Corporations is a party to any collective bargaining contract or other
Contract with a labor union involving any of its employees. All of the employees
of the Acquired Corporations are "at will" employees, and except as set forth in
Part 2.15(l) of the Company Disclosure Schedule, may be terminated without any
of the Acquired Corporations being required to make any payment to any such
employee.
(m) Part 2.15(m) of the Company Disclosure Schedule
identifies each employee of any of the Acquired Corporations who is not fully
available to perform work because of disability or other leave and sets forth
the basis of such disability or leave and the anticipated date of return to full
service.
(n) Each of the Acquired Corporations is in compliance in
all material respects with all applicable Legal Requirements and Contracts
relating to employment, employment practices, wages, bonuses and terms and
conditions of employment, including employee compensation matters.
(o) None of the Acquired Corporations is aware that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the labor relations of any of
the Acquired Corporations with the members of its engineering and information
systems teams, taken as a whole, or (ii) any of the employees of any of the
Acquired Corporations who are members of its engineering and information systems
teams intends to terminate his or her employment with the Acquired Corporation
with which such employee is employed (other than as contemplated by the 2000
Retention Plan and the 2000 Severance Plan).
2.16 Environmental Matters. Each of the Acquired Corporations (i)
is in compliance in all material respects with all applicable Environmental
Laws, and (ii) possesses all permits and other Governmental Authorizations
required under applicable Environmental Laws, and is in compliance in all
material respects with the terms and conditions thereof. None of the Acquired
Corporations has received any written notice or other written communication,
whether from a Governmental Body, citizens group, Employee or otherwise, that
alleges that any of the Acquired Corporations is not in compliance in any
material respect with any Environmental Law, and, to the knowledge of the
Company, there are no circumstances that may prevent or interfere with the
compliance by any of the Acquired Corporations with any Environmental Law in the
future. To the knowledge of the Company, (a) all property that is leased to,
controlled by or used by any of the Acquired Corporations, and all surface
water, groundwater and soil associated with or adjacent to such property, is
free of any material environmental contamination of any nature, (b) none of the
property leased to, controlled by or used by any of the Acquired Corporations
contains any underground storage tanks, asbestos, equipment using PCBs,
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underground injection wells, and (c) none of the property leased to, controlled
by or used by any of the Acquired Corporations contains any septic tanks in
which process wastewater or any Materials of Environmental Concern have been
disposed of. No Acquired Corporation has ever sent or transported, or arranged
to send or transport, any Materials of Environmental Concern to a site that,
pursuant to any applicable Environmental Law, (i) has been placed on the
"National Priorities List" of hazardous waste sites or any similar state list,
(ii) is otherwise designated or identified as a potential site for remediation,
cleanup, closure or other environmental remedial activity, or (iii) is subject
to a Legal Requirement to take "removal" or "remedial" action as detailed in any
applicable Environmental Law or to make payment for the cost of cleaning up any
site. (For purposes of this Section 2.16: (A) "Environmental Law" means any
federal, state, local or foreign Legal Requirement relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata), including any law or
regulation relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern; and (B) "Materials of
Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.)
2.17 Insurance. The Company has delivered or made available to
Parent a copy of all material insurance policies and all material self insurance
programs and arrangements relating to the business, assets and operations of the
Acquired Corporations. Each of such insurance policies is in full force and
effect. None of the Acquired Corporations has received any written notice or
other written communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any material claim under any insurance policy, or (c) material adjustment in
the amount of the premiums payable with respect to any insurance policy. Except
as set forth in Part 2.17 of the Company Disclosure Schedule, there is no
pending workers' compensation or other claim under or based upon any insurance
policy of any of the Acquired Corporations.
2.18 Transactions with Affiliates. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement, between the
date of the Company's last proxy statement filed with the SEC and the date of
this Agreement and except as set forth in Part 2.10 of the Company Disclosure
Schedule, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 2.18
of the Company Disclosure Schedule identifies each Person who is (or who may be
deemed to be) an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Company as of the date of this Agreement.
2.19 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.19 of the Company
Disclosure Schedule, there is no pending Legal Proceeding, and (to the knowledge
of the Company) no Person has threatened to commence any Legal Proceeding, that
involves any of the Acquired Corporations or any of the assets owned or used by
any of the Acquired Corporations. None of the Legal Proceedings set forth (or
required to be set forth) in Part 2.19 of the Company
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Disclosure Schedule) has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Acquired
Corporations.
(b) There is no order, writ, injunction, judgment or decree
to which any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, is subject.
2.20 Authority; Inapplicability of Anti-takeover Statutes;
Binding Nature of Agreement. The Company has the right, power and authority to
enter into and to perform its obligations under this Agreement and under the
Ancillary Business Agreements. The board of directors of the Company (at a
meeting duly called and held) has (a) unanimously determined that the Merger is
advisable and fair and in the best interests of the Company and its
stockholders, (b) unanimously authorized and approved the execution, delivery
and performance of this Agreement and the Ancillary Business Agreements by the
Company and unanimously approved the Merger, and (c) unanimously recommended the
approval of this Agreement by the holders of Company Common Stock and directed
that this Agreement and the Merger be submitted for consideration by the
Company's stockholders at the Company Stockholders' Meeting (as defined in
Section 5.2). This Agreement and the Ancillary Business Agreements constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Prior to the execution of the Company Stockholder Voting
Agreements, the Board of Directors of the Company approved the Company
Stockholder Voting Agreements and the transactions contemplated thereby. No
state takeover statute or similar Legal Requirement applies or purports to apply
to the Merger, this Agreement or any of the transactions contemplated hereby.
2.21 Section 203 of the DGCL Not Applicable. Prior to the
execution hereof and at all times on or prior to the Effective Time, the board
of directors of the Company has taken and will take all actions so that the
restrictions applicable to business combinations contained in Section 203 of the
DGCL are, and will be, inapplicable to the execution, delivery and performance
of this Agreement and to the consummation of the Merger and the other
transactions contemplated by this Agreement.
2.22 Compliance with Nasdaq Listing Requirements. The Company is
and has at all times since the date of the closing of its initial public
offering been in full compliance with all listing requirements applicable to
companies listed on the Nasdaq National Market, and (other than with respect to
the possible effect of any decline in the market price for the Company Common
Stock) has no reason to believe that it will for any reason cease to be in full
compliance with such requirements at any time (or for any period) prior to the
Effective Time.
2.23 Section 2115 of California Corporations Code. The Company is
subject to Section 2115 of the California Corporations Code.
2.24 No Discussions. None of the Acquired Corporations, and no
Representative of any of the Acquired Corporations, is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Proposal. None of
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the Acquired Corporations has waived, and none of the Acquired Corporations will
waive, any rights of any of the Acquired Corporations under any confidentiality,
"standstill", nonsolicitation or similar agreement with any third party to which
any of the Acquired Corporations is a party or under which any of the Acquired
Corporations has any rights.
2.25 Vote Required. The affirmative vote of the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Company Stockholders' Meeting (the "Required Company Stockholder Vote")
is the only vote of the holders of any class or series of the Company's capital
stock necessary to adopt this Agreement and approve the Merger and the other
transactions contemplated by this Agreement. No vote of the holders of any of
the shares of Company Common Stock is or was required for the Company to enter
into the Ancillary Business Agreements.
2.26 Non-Contravention; Consents. Except as set forth in Part
2.26 of the Company Disclosure Schedule, neither (1) the execution, delivery or
performance of this Agreement or the Ancillary Business Agreements, nor (2) the
consummation by the Company of the Merger or any of the other transactions
contemplated by this Agreement or the Ancillary Business Agreements, will
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of
(i) any of the provisions of the articles or certificate of incorporation,
bylaws or other charter or organizational documents of any of the Acquired
Corporations, or (ii) any resolution in force and effect adopted by the
stockholders, the board of directors or any committee of the board of
directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to challenge the
Merger or any of the other transactions contemplated by this Agreement or
to exercise any remedy or obtain any relief under, any Legal Requirement or
any order, writ, injunction, judgment or decree to which any of the
Acquired Corporations, or any of the assets owned or used by any of the
Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by any of the Acquired Corporations
or that otherwise relates to the business of any of the Acquired
Corporations or to any of the assets owned or used by any of the Acquired
Corporations; or
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Acquired
Corporation Contract that constitutes a Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
such Acquired Corporation Contract, (ii) a rebate, chargeback, penalty or
change in delivery schedule under any such Acquired Corporation Contract,
(iii) accelerate the maturity or performance of any such Acquired
Corporation Contract, or (iv) cancel, terminate or modify any term of such
Acquired Corporation Contract.
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Except as may be required by the Exchange Act, the DGCL, the HSR Act, any
foreign antitrust law or regulation and the NASD Bylaws (as they relate to the
Form S-4 Registration Statement and the Prospectus/Proxy Statement), none of the
Acquired Corporations was, is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance of this Agreement or the Ancillary
Business Agreements by the Company, or (y) the consummation by the Company of
the Merger or any of the other transactions contemplated by this Agreement or
the Ancillary Business Agreements (except filings already made, notices already
given and Consents already obtained).
2.27 Opinion of Financial Advisor. The Company's board of
directors has received the oral opinion (which opinion will be confirmed in
writing) of CIBC World Markets Corp., financial advisor to the Company, dated
the date of this Agreement, to the effect that, as of such date, the Exchange
Ratio is fair, from a financial point of view, to holders of Company Common
Stock. The Company will furnish an accurate and complete copy of such written
opinion to Parent for informational purposes as soon as it is available.
2.28 Financial and Other Professional Advisors.
(a) Except for CIBC World Markets Corp., no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Acquired Corporations. The total of all fees, commissions and other
amounts that have been paid by the Company to CIBC World Markets Corp., and all
fees, commissions and other amounts that may become payable to CIBC World
Markets Corp. by the Company if the Merger is consummated will not exceed
$550,000 plus reasonable out-of-pocket expenses. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid to may become payable and all
indemnification and other agreements related to the engagement of CIBC World
Markets Corp.
(b) All fees and other amounts that have been paid by the
Acquired Corporations to their outside legal counsel and other professional
advisors in connection with this Agreement and the transactions contemplated
hereby and all fees and other amounts that may become payable to such legal
counsel or other advisors by the Acquired Corporations following the date of
this Agreement have been and will be billed solely on a standard hourly basis
for time actually incurred plus reasonable out-of-pocket expenses.
2.29 Full Disclosure. This representations and warranties of the
Company contained in Section 2 of this Agreement (as modified by the Company
Disclosure Schedule) do not, and the certificate referred to in Section 6.6(e)
will not, contain any representation or warranty that is materially false or
misleading with respect to any material fact, and the Company Disclosure
Schedule does not omit to state any material fact necessary in order to make the
representations and warranties of the Company contained in Section 2 of this
Agreement (in the light of the circumstances under which such representations
and warranties were or will be made or provided) not materially false or
misleading.
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2.30 Disclosure Schedule . Certain information set forth in the
Company Disclosure Schedule is included solely for informational purposes and
may not be required to be disclosed pursuant to this Agreement. The disclosure
of any information shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the representations
and warranties made by the Company in this Agreement or that it is material, nor
shall such information be deemed to establish a standard of materiality (and the
actual standard of materiality may be higher or lower than the matters disclosed
by such information).
Section 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 Due Organization; Subsidiaries. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and Merger
Sub has all necessary power and authority: (a) to conduct its business in the
manner in which its business is currently being conducted; (b) to own and use
its assets in the manner in which its assets are currently owned and used; and
(c) to perform its obligations under all Contracts by which it is bound.
3.2 Capitalization. The authorized capital stock of Parent
consists of 60,000,000 shares of Parent Common Stock and 1,000,000 shares of
preferred stock of Parent. As of October 20, 2000, 26,717,320 shares of Parent
Common Stock were issued and outstanding, and 800 shares of preferred stock of
Parent were issued and outstanding. All of the outstanding shares of Parent
Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. As of October 20, 2000, 9,908,999 shares of Parent Common
Stock were reserved for future issuance pursuant to outstanding stock options
and warrants.
3.3 SEC Filings; Financial Statements.
(a) Parent has delivered or made available to the Company
accurate and complete copies (excluding copies of exhibits) of each report,
registration statement and definitive proxy statement filed by Parent with the
SEC since July 1, 1999 (the "Parent SEC Documents"). The Parent SEC Documents
have been filed by Parent with the SEC on a timely basis. As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the
Parent SEC Documents (at the time they were filed with the SEC or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
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prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements and, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end audit adjustments which will not, individually or in the aggregate, be
material in amount); and (iii) fairly present the consolidated financial
position of Parent and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations of Parent and its
consolidated subsidiaries for the periods covered thereby.
3.4 Absence of Material Adverse Effect. Except as expressly
contemplated by this Agreement, between September 30, 2000 and the date of this
Agreement, there was no Material Adverse Effect on Parent, and no event occurred
or circumstance arose that, in combination with any other events or
circumstances, could reasonably be expected to have a Material Adverse Effect on
Parent.
3.5 Compliance with Legal Requirements. Parent is and has at all
times been in compliance in all material respects with all applicable Legal
Requirements.
3.6 Governmental Authorizations.
(a) Parent holds all Governmental Authorizations necessary
to enable Parent to conduct its business in the manner in which such business is
currently being conducted, except where the failure to hold such Governmental
Authorizations has not had and would not reasonably be expected to have a
Material Adverse Effect on Parent. All such Governmental Authorizations are
valid and in full force and effect. Parent is and at all times has been in
substantial compliance with the terms and requirements of such Governmental
Authorizations, except where the failure to be in compliance with the terms and
requirements of such Governmental Authorizations has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent. No
Governmental Body has at any time and in any material respect challenged in
writing the right of Parent to design, manufacture, offer or sell any of its
respective products or services.
(b) Parent is in compliance in all material respects with
all of the terms and requirements of each grant, incentive and subsidy provided
or made available to or for the benefit of Parent by any U.S. or foreign
Governmental Body or otherwise. Neither the execution, delivery or performance
of this Agreement, nor the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will (with or without notice or
lapse of time) give any Person the right to revoke, withdraw, suspend, cancel,
terminate or modify any such grant, incentive or subsidy.
3.7 Financial Advisor. Except for Robertson Stephens & Co. Inc.,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
3.8 Authority; Binding Nature of Agreement. Parent and Merger
Sub have the absolute and unrestricted right, power and authority to perform
their obligations under this
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Agreement, and Strategic Sub has the absolute and unrestricted right, power and
authority to perform its obligations under the Ancillary Business Agreements;
and the execution, delivery and performance by Parent and Merger Sub of this
Agreement and by Strategic Sub of the Ancillary Business Agreements have been
duly authorized by all necessary action on the part of Parent, Merger Sub,
Strategic Sub and their respective boards of directors. This Agreement
constitutes the legal, valid and binding obligation of Parent and Merger Sub,
and the Ancillary Business Agreements constitute the legal, valid and binding
obligation of Strategic Sub, enforceable against them in accordance with their
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.9 Vote Required. Any vote of the holders of Parent Common
Stock that may be required to authorize the Merger will be obtained prior to the
Effective Time.
3.10 Non-Contravention; Consents. Neither the execution and
delivery of this Agreement by Parent and Merger Sub, nor the consummation by
Parent and Merger Sub of the Merger or any of the other transactions
contemplated by this Agreement or the Ancillary Business Agreements, will
directly or indirectly (with or without notice or lapse of time) (a) conflict
with or result in any breach of any provision of the certificate of
incorporation or bylaws of Parent or Merger Sub, (b) result in a default by
Parent or Merger Sub under any Contract to which Parent or Merger Sub is a
party, except for any default that has not had and will not have a Material
Adverse Effect on Parent, or (c) result in a violation by Parent or Merger Sub
of any order, writ, injunction, judgment or decree to which Parent or Merger Sub
is subject, except for any violation that has not had and will not have a
Material Adverse Effect on Parent. Except as may be required by the Securities
Act, the Exchange Act, state securities or "blue sky" laws, the DGCL, the HSR
Act, any foreign antitrust law or regulation and the NASD Bylaws (as they relate
to the S-4 Registration Statement and the Prospectus/Proxy Statement), Parent is
not and will not be required to make any filing with or give any notice to, or
to obtain any Consent from, any Person in connection with the execution,
delivery or performance of this Agreement or the consummation of the Merger or
any of the other transactions contemplated by this Agreement or the Ancillary
Business Agreements (except filings already made, notices already given and
Consents already obtained).
3.11 Valid Issuance. The Parent Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.12 Disclosure. None of the information to be supplied by or on
behalf of Parent for inclusion in the Form S-4 Registration Statement will, at
the time the Form S-4 Registration Statement 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 the light of the circumstances under which they are
made, not misleading. None of the information to be supplied by or on behalf of
Parent for inclusion in the Prospectus/Proxy Statement will, at the time the
Prospectus/Proxy Statement is mailed to the stockholders of the Company or at
the time of the Company Stockholders' Meeting (or any adjournment or
postponement thereof), 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
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statements therein, in the light of the circumstances under which they are made,
not misleading. The Prospectus/Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, except that no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Prospectus/Proxy Statement.
Section 4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the date of
this Agreement through the Effective Time (the "Pre-Closing Period"), the
Company shall, and shall cause the respective Representatives of the Acquired
Corporations to: (a) provide Parent and Parent's Representatives with reasonable
access to the Acquired Corporations' Representatives, personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations; and (b) provide Parent and
Parent's Representatives with such copies of the existing books, records, Tax
Returns, work papers and other documents and information relating to the
Acquired Corporations, and with such additional financial, operating and other
data and information regarding the Acquired Corporations, as Parent may
reasonably request. Without limiting the generality of the foregoing, during the
Pre-Closing Period, the Company shall promptly provide Parent with copies of:
(i) all material operating and financial reports prepared
by the Acquired Corporations for the Company's senior management, including
(A) copies of the unaudited monthly consolidated balance sheets of the
Acquired Corporations and the related unaudited monthly consolidated
statements of operations, statements of stockholders' equity and statements
of cash flows and (B) copies of any sales forecasts, marketing plans,
development plans, discount reports, write-off reports, hiring reports and
capital expenditure reports prepared for the Company's senior management;
(ii) any written materials or communications sent by or on
behalf of the Company to its stockholders;
(iii) any material notice, document or other communication
sent by or on behalf of any of the Acquired Corporations to any party to
any Acquired Corporation Contract or sent to any of the Acquired
Corporations by any party to any Acquired Corporation Contract (other than
any communication that relates solely to routine commercial transactions
between an Acquired Corporation and the other party to any such Acquired
Corporation Contract and that is of the type sent in the ordinary course of
business and consistent with past practices);
(iv) any notice, report or other document filed with or
sent to any Governmental Body on behalf of any of the Acquired Corporations
in connection with the Merger or any of the other transactions contemplated
by this Agreement; and
(v) any material notice, report or other document received
by any of the Acquired Corporations from any Governmental Body.
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4.2 Operation of the Business of the Acquired Corporations.
(a) During the Pre-Closing Period, except as Parent may
otherwise agree in writing: (i) the Company shall ensure that each of the
Acquired Corporations conducts its business and operations (A) in the ordinary
course and in accordance with prudent practices and (B) in compliance with all
applicable Legal Requirements and the requirements of all Acquired Corporation
Contracts that constitute Material Contracts; (ii) except as expressly
contemplated by this Agreement and the 2000 Severance Plan, the Company shall
use all reasonable efforts to ensure that each of the Acquired Corporations
preserves intact its current business organization, keeps available the services
of its current officers and employees and maintains its relations and goodwill
with all suppliers, customers, landlords, creditors, licensors, licensees,
employees and other Persons having business relationships with the respective
Acquired Corporations; (iii) the Company shall keep in full force all insurance
policies referred to in Section 2.17; (iv) the Company shall promptly notify
Parent of (A) any notice or other communication from any Person alleging that
the Consent of such Person is or may be required in connection with any of the
transactions contemplated by this Agreement or the Ancillary Business
Agreements, and (B) any Legal Proceeding commenced or, to its knowledge
threatened against, relating to or involving or otherwise affecting any of the
Acquired Corporations that relates to the consummation of the transactions
contemplated by this Agreement; and (v) the Company shall (to the extent
requested by Parent) cause its officers and the officers of its Subsidiaries to
report regularly to Parent concerning the status of the Company's business, and
consult with Parent prior to taking any action, whether or not in the ordinary
course of business, that could reasonably have an adverse effect on the business
of the Acquired Corporations or the transition of the business of the Acquired
Corporations to Parent in accordance with this Agreement and the Ancillary
Business Agreements.
(b) During the Pre-Closing Period, the Company shall not
(without the prior written consent of Parent, which in the case of clause (xvi)
below shall not be unreasonably withheld), except as otherwise required by the
2000 Severance Plan or the 2000 Retention Plan, and shall not permit any other
Acquired Corporation to:
(i) declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities;
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock or other security, (B) any option, call,
warrant or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or other
security (except that the Company may issue shares of Company Common Stock
(x) upon the valid exercise of Company Options or Company Warrants
outstanding as of the date of this Agreement, and (y) pursuant to the
ESPP);
(iii) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Company's stock
option plans, any provision of any agreement evidencing any outstanding
stock option or any restricted stock purchase agreement, or otherwise
modify any of the terms of any outstanding option, warrant or other
security or any related Contract;
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(iv) amend or permit the adoption of any amendment to
its certificate of incorporation or bylaws or other charter or
organizational documents, or effect or become a party to any merger,
consolidation, share exchange, business combination, amalgamation,
recapitalization, reclassification of shares, stock split, reverse stock
split, division or subdivision of shares, consolidation of shares or
similar transaction;
(v) form any Subsidiary or acquire any equity
interest in any other Entity;
(vi) take or permit to be taken any action other than
in accordance with the Operating Budget, or fail to take or cause to be
taken any action required to be taken or otherwise contemplated by the
Operating Budget, or make or permit to be made any capital expenditure or
other cash expenditure which, when aggregated with other such expenditures,
exceeds 103% of the aggregate dollar amount of the Operating Budget;
(vii) enter into or become bound by, or permit any of
the assets owned or used by it to become bound by, any Material Contract,
or amend or terminate, or waive or exercise any material right or remedy
under, any Material Contract;
(viii) enter into or become bound by any new marketing
agreements, other than marketing agreements under which the payments for
which the Acquired Corporations are obligated are solely performance-based
and do not involve (A) revenue guaranties or (B) revenue sharing
arrangements requiring the Acquired Corporations to share over 15% of the
applicable revenues with third parties;
(ix) publish or otherwise make available any coupons
or comparable promotions applicable to the purchase of the products sold by
the Acquired Corporations;
(x) acquire, lease or license any right or other
asset from any other Person or sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person (except in each case
for immaterial assets acquired, leased, licensed or disposed of by the
Company in the ordinary course of business and consistent with past
practices), or waive or relinquish any material right;
(xi) lend money to any Person, or incur or guarantee
any indebtedness;
(xii) establish, adopt or amend any employee benefit
plan, pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors,
officers or employees;
(xiii) hire or promote any employee or (except as
expressly contemplated by this Agreement, the 2000 Severance Plan and the
2000 Incentive Plan) terminate any employee;
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(xiv) change any of its pricing policies, product
return policies, product maintenance policies, service policies, product
modification or upgrade policies, personnel policies or other business
policies, or any of its methods of accounting or accounting practices in
any respect;
(xv) make any material Tax election;
(xvi) commence or settle any Legal Proceeding (other
than (1) Legal Proceedings commenced by the Company against Parent to
enforce the Company's rights under this Agreement or the Ancillary Business
Agreements, and (2) Legal Proceedings that the board of directors of the
Company, after consulting with outside legal counsel, determines in good
faith must be commenced in order for the board of directors of the Company
to comply with its fiduciary obligations to the Company's stockholders
under applicable law);
(xvii) cause or permit any of the Acquired
Corporations to fail to comply with any material term of any Employee Plan,
including the 2000 Severance Plan and the 2000 Incentive Plan;
(xviii) enter into any transaction or take any other
action outside the ordinary course of business or inconsistent with past
practices; or
(xix) agree or commit to take any of the actions
described in clauses "(i)" through "(xviii)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall
promptly notify Parent in writing of: (i) the discovery by the Company of any
event, condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes a material inaccuracy
in any representation or warranty made by the Company in this Agreement; (ii)
any event, condition, fact or circumstance that occurs, arises or exists after
the date of this Agreement and that would cause or constitute a material
inaccuracy in any representation or warranty made by the Company in this
Agreement if (A) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any material
breach of any covenant or obligation of the Company; and (iv) any event,
condition, fact or circumstance that would make the timely satisfaction of any
of the conditions set forth in Section 6 or Section 7 impossible or unlikely or
that has had or could reasonably be expected to have a Material Adverse Effect
on the Acquired Corporations. Without limiting the generality of the foregoing,
the Company shall promptly advise Parent in writing of any Legal Proceeding or
material claim threatened, commenced or asserted against or with respect to any
of the Acquired Corporations. No notification given to Parent pursuant to this
Section 4.2(c) shall limit or otherwise affect any of the representations,
warranties, covenants or obligations of the Company contained in this Agreement.
4.3 No Solicitation.
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(a) The Company shall not directly or indirectly, and shall
not authorize or permit any other Acquired Corporation or any Representative of
any of the Acquired Corporations directly or indirectly to, (i) solicit,
initiate, encourage, induce or facilitate the making, submission or announcement
of any Acquisition Proposal or take any action that could reasonably be expected
to lead to an Acquisition Proposal, (ii) furnish any information regarding any
of the Acquired Corporations to any Person in connection with or in response to
an Acquisition Proposal or an inquiry or indication of interest that could lead
to an Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that this Section 4.3 shall not be
deemed to prevent the Company or its board of directors from complying with its
legal obligations under Rules 14d-9 and 14e-2 as promulgated under the Exchange
Act with regard to an Acquisition Proposal (it being understood that such
compliance may constitute a Triggering Event under certain circumstances); and
provided, further, that prior to the adoption of this Agreement by the Required
Company Stockholder Vote, this Section 4.3(a) shall not prohibit the Company
from furnishing nonpublic information regarding the Acquired Corporations to, or
entering into discussions with, any Person in response to a Superior Offer that
is submitted to the Company by such Person (and not withdrawn) if (1) neither
the Company nor any Representative of any of the Acquired Corporations shall
have breached or taken any action inconsistent with any of the provisions set
forth in this Section 4.3, (2) the board of directors of the Company concludes
in good faith, after having consulted with its outside legal counsel, that such
action is required in order for the board of directors of the Company to comply
with its fiduciary obligations to the Company's stockholders under applicable
law, (3) at least two business days prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, the Company
gives Parent written notice of the identity of such Person and of the Company's
intention to furnish nonpublic information to, or enter into discussions with,
such Person, and the Company receives from such Person an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
Person by or on behalf of the Company and containing "standstill" provisions no
less favorable to the Company than the "standstill" provisions contained in
section 4 of that certain Mutual Confidentiality Agreement dated October 10,
2000 between the Company and Parent (the "Confidentiality Agreement"), and (4)
at least two business days prior to furnishing any such nonpublic information to
such Person, the Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent). Without limiting the generality of the foregoing, the
Company acknowledges and agrees that any action inconsistent with any of the
provisions set forth in the preceding sentence by any Representative of any of
the Acquired Corporations, whether or not such Representative is purporting to
act on behalf of any of the Acquired Corporations, shall be deemed to constitute
a breach of this Section 4.3 by the Company. Nothing herein shall prohibit the
Company filing a copy of this Agreement pursuant to a Form 8-K, Form 10-Q, Form
10-K or other schedule or form under the Securities Exchange Act of 1934.
(b) The Company shall promptly (and in no event later than
24 hours after receipt of any Acquisition Proposal, any inquiry or indication of
interest that could lead to an Acquisition Proposal or any request for nonpublic
information) advise Parent orally and in writing of any Acquisition Proposal,
any inquiry or indication of interest that could lead to an
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Acquisition Proposal or any request for nonpublic information relating to any of
the Acquired Corporations (including the identity of the Person making or
submitting such Acquisition Proposal, inquiry, indication of interest or
request, and the terms thereof) that is made or submitted by any Person during
the Pre-Closing Period. The Company shall keep Parent fully informed with
respect to the status of any such Acquisition Proposal, inquiry, indication of
interest or request and any modification or proposed modification thereto.
(c) The Company shall immediately cease and cause to be
terminated any existing discussions with any Person that relate to any
Acquisition Proposal.
(d) The Company agrees not to release or permit the release
of any Person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill", nonsolicitation or similar agreement to which any
of the Acquired Corporations is a party or under which any of the Acquired
Corporations has any rights, and will use its reasonable best efforts to enforce
or cause to be enforced each such agreement at the request of Parent. The
Company also will promptly request each Person that has executed a
confidentiality agreement in connection with its consideration of a possible
Acquisition Transaction or equity investment to return all confidential
information heretofore furnished to such Person by or on behalf of any of the
Acquired Corporations.
Section 5. Additional Covenants of the Parties
5.1 Registration Statement; Prospectus/Proxy Statement.
(a) As promptly as practicable after the date of this
Agreement, Parent and the Company shall prepare and cause to be filed with the
SEC the Prospectus/Proxy Statement and Parent shall prepare and cause to be
filed with the SEC the Form S-4 Registration Statement, in which the
Prospectus/Proxy Statement will be included as a prospectus. Each of Parent and
the Company shall use all reasonable efforts to cause the Form S-4 Registration
Statement and the Prospectus/Proxy Statement to comply with the rules and
regulations promulgated by the SEC, to respond promptly to any comments of the
SEC or its staff and to have the Form S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after it is filed
with the SEC. The Company will use all reasonable efforts to cause the
Prospectus/Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall promptly furnish to Parent
all information concerning the Acquired Corporations and the Company's
stockholders that may be required or reasonably requested in connection with any
action contemplated by this Section 5.1. The Company shall ensure that: (1) none
of the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Form S-4 Registration Statement
will, at the time the Form S-4 Registration Statement is filed with the SEC or
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 the
light of the circumstances under which they are made, not misleading; (2) none
of the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Prospectus/Proxy Statement will,
at the time the Prospectus/Proxy Statement is mailed to the stockholders of the
Company or at the time of the
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Company Stockholders' Meeting (or any adjournment or postponement thereof),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; and (3) the Prospectus/Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. If any event relating to any of
the Acquired Corporations or Parent occurs, or if either the Company or Parent
becomes aware of any information, that should be disclosed in an amendment or
supplement to the Form S-4 Registration Statement or the Prospectus/Proxy
Statement, then the Company or Parent shall promptly inform the other party
thereof and the parties shall cooperate with each other in filing such amendment
or supplement with the SEC and, if appropriate, in mailing such amendment or
supplement to the stockholders of the Company.
(b) Prior to the Effective Time, Parent shall use
reasonable efforts to obtain all regulatory approvals needed to ensure that the
Parent Common Stock to be issued in the Merger will be registered or qualified
under the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the record
date for determining the stockholders entitled to notice of and to vote at the
Company Stockholders' Meeting; provided, however, that Parent shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.
5.2 Company Stockholders' Meeting.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of and hold a meeting of the
holders of Company Common Stock to vote on the adoption of this Agreement (the
"Company Stockholders' Meeting"). The Company Stockholders' Meeting shall be
held (on a date selected by the Company in consultation with Parent) as promptly
as reasonably practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall ensure that all proxies
solicited in connection with the Company Stockholders' Meeting are solicited in
compliance with all applicable Legal Requirements.
(b) Subject to Section 5.2(c): (i) the Proxy Statement
shall include a statement to the effect that the board of directors of the
Company recommends that the Company's stockholders vote to adopt this Agreement
at the Company Stockholders' Meeting (the recommendation of the Company's board
of directors that the Company's stockholders vote to adopt this Agreement being
referred to as the "Company Board Recommendation"); and (ii) the Company Board
Recommendation shall not be withdrawn or modified in a manner adverse to Parent,
and no resolution by the board of directors of the Company or any committee
thereof to withdraw or modify the Company Board Recommendation in a manner
adverse to Parent shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in
Section 5.2(b), at any time prior to the adoption of this Agreement by the
Required Company Stockholder Vote, the Company Board Recommendation may be
withdrawn or modified in a manner adverse to Parent if: (i) an unsolicited, bona
fide written offer to directly or indirectly
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purchase all or substantially all of the outstanding shares of Company Common
Stock (by way of merger, reorganization, consolidation, tender offer,
acquisition or business combination or otherwise) or all or substantially all of
the assets of the Company is made to the Company and is not withdrawn; (ii) the
Company provides Parent with at least two business days' prior notice of any
meeting of the Company's board of directors at which such board of directors
will consider and determine whether such offer is a Superior Offer; (iii) the
Company's board of directors determines in good faith (after consultation with
an independent financial advisor of nationally recognized reputation) that such
offer constitutes a Superior Offer; (iv) the Company's board of directors
determines in good faith, after having consulted with the Company's outside
legal counsel, that, in light of such Superior Offer, the withdrawal or
modification of the Company Board Recommendation is required in order for the
Company's board of directors to comply with its fiduciary obligations to the
Company's stockholders under applicable law; (v) the Company Board
Recommendation is not withdrawn or modified in a manner adverse to Parent at any
time within two business days after Parent receives written notice from the
Company confirming that the Company's board of directors has determined that
such offer is a Superior Offer; and (vi) neither the Company nor any of its
Representatives shall have breached or taken any action inconsistent with any of
the provisions set forth in Section 4.3; provided, however, that nothing
contained in this Section 5.2(c) shall limit the right or authority of the
Company's board of directors to make any disclosures to the Company's
stockholders that are required to be made in order to fulfill its disclosure
obligations to the Company's stockholders under applicable law.
(d) The Company's obligation to call, give notice of and
hold the Company Stockholders' Meeting in accordance with Section 5.2(a) shall
not be limited or otherwise affected by the commencement, disclosure,
announcement or submission of any Superior Offer or other Acquisition Proposal,
or by any withdrawal or modification of the Company Board Recommendation.
5.3 Regulatory Approvals. Each party shall (i) use all
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed by such
party with any Governmental Body with respect to the Merger and the other
transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Body and (ii)
cooperate with the other parties hereto and, subject to Section 5.8(b), use its
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement and applicable Laws to consummate and make effective the Merger and
the other transactions contemplated hereby. Without limiting the generality of
the foregoing, the Company and Parent shall, promptly after the date of this
Agreement, prepare and file the notifications required under the HSR Act and any
applicable foreign antitrust laws or regulations in connection with the Merger.
The Company and Parent shall respond as promptly as practicable to (i) any
inquiries or requests received from the Federal Trade Commission or the
Department of Justice for additional information or documentation and (ii) any
inquiries or requests received from any state attorney general, foreign
antitrust authority or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Parent shall (1) give the other party
prompt notice of the commencement or known threat of commencement of any Legal
Proceeding by or before any Governmental Body with respect to the Merger or any
of the other transactions contemplated by this Agreement, (2) keep the other
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party informed as to the status of any such Legal Proceeding or threat, and (3)
promptly inform the other party of any communication to or from the Federal
Trade Commission, the Department of Justice or any other Governmental Body
regarding the Merger. Except as may be prohibited by any Governmental Body or by
any Legal Requirement, (a) the Company and Parent will consult and cooperate
with one another, and will consider in good faith the views of one another, in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any Legal
Proceeding under or relating to the HSR Act or any other foreign, federal or
state antitrust or fair trade law, and (b) in connection with any such Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
with governmental representatives relating to any such Legal Proceeding and to
have access to and be consulted in connection with any document, opinion or
proposal made or submitted to any Governmental Body in connection with any such
Legal Proceeding. The Company and Parent may, as each reasonably deems advisable
and necessary, reasonably designate any competitively sensitive material
provided to the other under this Section as "outside counsel only." Such
materials and the information contained therein shall be given only to the
outside legal counsel to the recipient and will not be disclosed by such outside
counsel to employees, officers or directors of the recipient unless express
permission is obtained in advance from the source of the materials (the Company
or Parent, as the case may be) or its legal counsel. At the request of Parent,
the Company shall agree to divest, sell, dispose of, hold separate or otherwise
take or commit to take any action that limits its freedom of action with respect
to its or its Subsidiary's ability to operate or retain any of the businesses,
product lines or assets of the Company or its Subsidiary, provided that any such
action is conditioned upon the consummation of the Merger.
5.4 Stock Options.
(a) Subject to Section 5.4(b), at the Effective Time, each
Company Option which is outstanding and unexercised immediately prior to the
Effective Time (whether or not vested) shall be converted into and become an
option to purchase Parent Common Stock, and Parent shall assume each such
Company Option in accordance with the terms (as in effect as of the date of this
Agreement) of the stock option plan under which it was issued and the terms of
the stock option agreement by which it is evidenced. Accordingly, from and after
the Effective Time, (i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (ii) the number of shares of Parent
Common Stock subject to each such Company Option shall be equal to the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounding down to the
nearest whole share, (iii) the per share exercise price under each such Company
Option shall be adjusted by dividing the per share exercise price under such
Company Option by the Exchange Ratio and rounding up to the nearest cent, and
(iv) any restriction on the exercise of any such Company Option shall continue
in full force and effect and the term, exercisability, vesting schedule and
other provisions of such Company Option shall otherwise remain unchanged;
provided, however, that each Company Option assumed by Parent in accordance with
this Section 5.4(a) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, division or subdivision of
shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction subsequent to
the Effective Time. Parent shall file with the SEC, no later than 15 days after
the date on which the Merger becomes effective, a
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registration statement on Form S-8 relating to the shares of Parent Common Stock
issuable with respect to the Company Options assumed by Parent in accordance
with this Section 5.4(a), and shall use reasonable efforts to maintain the
effectiveness of such registration statement for so long as such options remain
outstanding.
(b) Notwithstanding anything to the contrary contained in
this Section 5.4, in lieu of assuming outstanding Company Options in accordance
with Section 5.4(a), Parent may, at its election, cause such outstanding Company
Options to be replaced by issuing reasonably equivalent replacement stock
options in substitution therefor.
(c) Prior to the Effective Time, the Company shall take all
action that may be necessary (under the plans pursuant to which Company Options
are outstanding and otherwise) to effectuate the provisions of this Section 5.4
(including reserving for issuance a sufficient number of shares of Parent Common
Stock for delivery upon the exercise of the Company Stock Options assumed in
accordance with Section 5.4(a)), and to ensure that, from and after the
Effective Time, holders of Company Options have no rights with respect thereto
other than those specifically provided in this Section 5.4.
(d) The board of directors of the Company, to the extent
necessary, shall prior to or as of the Effective Time take appropriate action to
approve, for purposes of Section 16(b) of the Exchange Act, the deemed
disposition and cancellation of the Company Options in the Merger. The board of
directors of Parent shall, prior to the Effective Time, take appropriate action
to approve, for purposes of Section 16(b) of the Exchange Act, the deemed grant
of options to purchase Parent Common Stock under the Company Options (as assumed
pursuant to Section 5.4(a)). The disposition of shares of Company Common Stock
by the Company's executive officers and directors and the issuance of shares of
Parent Common Stock to such persons in the Merger shall also be included in the
approval process of the boards of directors of Company and Parent for purposes
of Section 16(b) of the Exchange Act.
(e) As of the Effective Time, the ESPP shall be terminated.
The rights of participants in the ESPP with respect to any offering period then
underway under the ESPP shall be determined by treating the last business day
prior to the Effective Time as the last day of such offering period and by
making such other pro-rata adjustments as may be necessary to reflect the
shortened offering period but otherwise treating such shortened offering period
as a fully effective and completed offering period for all purposes under the
ESPP. Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP) that are necessary
to give effect to the transactions contemplated by this Section 5.4(e).
5.5 Warrants. At the Effective Time, each Company Warrant (if
any) which (a) is not and will not be as a result of the consummation (or
impending consummation) of the transactions contemplated by this Agreement
terminated or deemed exercised, and (b) is outstanding and unexercised
immediately prior to the Effective Time, shall be converted into and become a
warrant to purchase Parent Common Stock, and Parent shall assume each such
Company Warrant in accordance with the terms (as in effect as of the date of
this Agreement) of the applicable warrant agreement by which it is evidenced.
Accordingly, from and after the Effective Time, (i) each Company Warrant assumed
by Parent may be exercised solely for shares
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of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject
to each such Company Warrant shall be equal to the number of shares of Company
Common Stock subject to such Company Warrant immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounding down to the nearest whole share,
(iii) the per share exercise price under each such Company Warrant shall be
adjusted by dividing the per share exercise price under such Company Warrant by
the Exchange Ratio and rounding up to the nearest cent, and (iv) any restriction
on the exercise of any such Company Warrant shall continue in full force and
effect and the term, exercisability and other provisions of such Company Warrant
shall otherwise remain unchanged; provided, however, that each Company Warrant
assumed by Parent in accordance with this Section 5.5 shall, in accordance with
its terms, be subject to further adjustment as appropriate to reflect any stock
split, division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction subsequent to the Effective Time.
5.6 Employee Benefits.
(a) Nothing in this Agreement shall be construed to create
a right in favor of any employee to employment with Parent, the Surviving
Corporation or any Subsidiary of the Surviving Corporation, and notwithstanding
any of the other provisions of this Section 5.6 or any of the other provisions
of this Agreement, the employment of each employee of the Acquired Corporations
who continues employment with Parent, the Surviving Corporation or any
Subsidiary of the Surviving Corporation after the Effective Time shall be "at
will" employment and any benefits described in this Agreement shall be
applicable only for the duration of such employee's employment following the
Effective Time.
(b) The Company agrees to take (or cause to be taken) all
actions necessary or appropriate to terminate, effective immediately prior to
the Effective Time, any employee benefit plan sponsored by any of the Acquired
Corporations (or in which any of the Acquired Corporations participates) that
contains a cash or deferred arrangement intended to qualify under section 401(k)
of the Code.
(c) From and after the Effective Time, employees of the
Acquired Corporations whose employment with the Acquired Corporations has been
continued following the Effective Time shall be provided, at Parent's option
from time to time, with either (i) employee benefits that are substantially as
favorable in the aggregate as those currently provided by the Acquired
Corporations to such employees, or (ii) employee benefits that are substantially
as favorable in the aggregate as those currently provided by Parent to its
employees who are similarly situated to such continuing employees (giving such
continuing employees credit for years of service with the Company to the extent
permitted by applicable law and by the terms of applicable employee benefit
plans of Parent).
5.7 Indemnification of Officers and Directors.
(a) All rights to indemnification existing in favor of
those Persons who are directors and officers of the Company as of the date of
this Agreement (the "Indemnified Persons") for their acts and omissions
occurring prior to the Effective Time, as provided in the Company's bylaws (as
in effect as of the date of this Agreement) and as provided in the
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indemnification agreements between the Company and said Indemnified Persons (as
in effect as of the date of this Agreement) in the forms disclosed by the
Company to Parent prior to the date of this Agreement, shall survive the Merger
and shall be observed by the Surviving Corporation to the fullest extent
available under Delaware law for a period of six years from the Effective Time.
(b) From the Effective Time until the sixth anniversary of
the Effective Time, the Surviving Corporation shall maintain in effect, for the
benefit of the Indemnified Persons with respect to their acts and omissions in
their capacities as directors and officers of the Acquired Corporations
occurring prior to the Effective Time, the existing policy of directors' and
officers' liability insurance maintained by the Company as of the date of this
Agreement in the form disclosed by the Company to Parent prior to the date of
this Agreement (the "Existing Policy"), to the extent that directors' and
officers' liability insurance coverage is commercially available; provided,
however, that (i) the Surviving Corporation may substitute for the Existing
Policy a policy or policies of comparable coverage, and (ii) the Surviving
Corporation shall not be required to pay annual premiums for the Existing Policy
(or for any substitute policies) in excess of $600,000 (the "Maximum Premium").
In the event any future annual premiums for the Existing Policy (or any
substitute policies) exceeds the Maximum Premium, the Surviving Corporation
shall be entitled to reduce the amount of coverage of the Existing Policy (or
any substitute policies) to the amount of coverage that can be obtained for a
premium equal to the Maximum Premium.
(c) The covenant set forth in this Section 5.7 is intended
to be for the benefit of, and shall be enforceable by, each of the Indemnified
Persons and their respective heirs and successors. The indemnification provided
for herein shall not be deemed exclusive of any other rights to which an
Indemnified Party is entitled, whether pursuant to law, contract or otherwise.
(d) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case to the
extent necessary to effectuate the purpose of this Section 5.7, Parent shall
cause the Company to make proper provision so that the successors and assigns of
the Surviving Corporation shall succeed to the obligations set forth in this
Section 5.7.
5.8 Additional Agreements.
(a) Subject to Section 5.8(b), Parent and the Company shall
use all reasonable efforts to take, or cause to be taken, all actions necessary
to consummate the Merger and make effective the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, but subject
to Section 5.8(b), each party to this Agreement (i) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, (ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use
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all reasonable efforts to lift any restraint, injunction or other legal bar to
the Merger. The Company shall promptly deliver to Parent a copy of each such
filing made, each such notice given and each such Consent obtained by the
Company during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Parent shall not have any obligation under this Agreement: (i)
to dispose of or transfer or cause any of its Subsidiaries to dispose of or
transfer any assets, or to commit to cause any of the Acquired Corporations to
dispose of any assets; (ii) to discontinue or cause any of its Subsidiaries to
discontinue offering any product or service, or to commit to cause any of the
Acquired Corporations to discontinue offering any product or service; (iii) to
license or otherwise make available, or cause any of its Subsidiaries to license
or otherwise make available, to any Person, any technology, software or other
Proprietary Asset, or to commit to cause any of the Acquired Corporations to
license or otherwise make available to any Person any technology, software or
other Proprietary Asset; (iv) to hold separate or cause any of its Subsidiaries
to hold separate any assets or operations (either before or after the Closing
Date), or to commit to cause any of the Acquired Corporations to hold separate
any assets or operations; (v) to make or cause any of its Subsidiaries to make
any commitment (to any Governmental Body or otherwise) regarding its future
operations or the future operations of any of the Acquired Corporations; or (vi)
to contest any Legal Proceeding relating to the Merger if Parent determines in
good faith that contesting such Legal Proceeding might not be advisable.
5.9 Disclosure. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or any of the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, the Company shall
not, and shall not permit its Subsidiary or any Representative of any of the
Acquired Corporations to, make any disclosure regarding the Merger or any of the
other transactions contemplated by this Agreement unless (a) Parent shall have
approved such disclosure or (b) the Company shall have been advised in writing
by its outside legal counsel that such disclosure is required by applicable law.
5.10 Affiliate Agreements. The Company shall use all reasonable
efforts to cause each Person who is or becomes (or may be deemed to be) an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company to execute and deliver to Parent, prior to the date of the mailing of
the Prospectus/Proxy Statement to the Company's stockholders, an Affiliate
Agreement in the form of Exhibit C. The Company shall not register, or allow its
transfer agent to register, on its books any transfer of any shares of Company
Common Stock of any "affiliate" of the Company who has not provided a signed
Affiliate Agreement in accordance with this Section 5.10.
5.11 Tax Matters. At or prior to the filing of the Form S-4
Registration Statement, the Company and Parent shall execute and deliver to
Cooley Godward llp and to Brobeck, Phleger & Harrison llp tax representation
letters prepared by such counsel. To the extent requested by such counsel,
Parent, Merger Sub and the Company shall each confirm to Cooley Godward llp and
to Brobeck, Phleger & Harrison llp the accuracy and completeness as of the
Effective Time of any such tax representation letters delivered pursuant to the
immediately preceding sentence, or shall deliver at the Closing such tax
representation letters as such counsel shall request. Parent and the Company
shall use all reasonable efforts prior to the Effective Time
41.
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to cause the Merger to qualify as a reorganization under Section 368(a) of the
Code. Following delivery of the tax representation letters pursuant to the first
sentence of this Section 5.11, each of Parent and the Company shall use its
reasonable efforts to cause Cooley Godward llp and Brobeck, Phleger & Harrison
llp, respectively, to deliver to it a tax opinion satisfying the requirements of
Item 601 of Regulation S-K promulgated under the Securities Act. In rendering
such opinions, each of such counsel shall be entitled to rely on the tax
representation letters referred to in this Section 5.11.
5.12 Letter of the Company's Accountants. The Company shall use
all reasonable efforts to cause to be delivered to Parent a letter of
PricewaterhouseCoopers llp, dated no more than two business days before the date
on which the Form S-4 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 Form S-4 Registration Statement.
5.13 Listing. Parent shall use its reasonable best efforts to
cause the shares of Parent Common Stock being issued in the Merger to be
approved for listing (subject to notice of issuance) on the Nasdaq National
Market.
5.14 Resignation of Officers and Directors. The Company shall use
its reasonable best efforts to obtain and deliver to Parent at or prior to the
Closing the resignation of each officer and director of each of the Acquired
Corporations.
Section 6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 Accuracy of Representations.
(a) The representations and warranties of the Company
contained in this Agreement and in the Ancillary Business Agreements that are
qualified by "Material Adverse Effect" or otherwise qualified as to materiality
shall have been accurate in all respects as of the date of this Agreement,
except for any such representations and warranties made as of a specific date,
which shall have been accurate in all respects as of such date (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Company
Disclosure Schedule made or purported to have been made after the date of this
Agreement shall be disregarded).
(b) The representations and warranties of the Company
contained in this Agreement and in the Ancillary Business Agreements that are
not qualified by "Material Adverse Effect" or otherwise qualified as to
materiality shall have been accurate in all material respects as of the date of
this Agreement, except for any such representations and warranties made as of a
specific date, which shall have been accurate in all material respects as of
such date (it being understood that, for purposes of determining the accuracy of
such representations and
42.
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warranties, any update of or modification to the Company Disclosure Schedule
made or purported to have been made after the date of this Agreement shall be
disregarded).
(c) The representations and warranties of the Company
contained in Sections 2.1, 2.2, 2.3 and 2.7 shall be accurate in all material
respects as of the Closing Date as if made on and as of the Closing Date (it
being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all materiality qualifications contained in
such representations and warranties shall be disregarded and (ii) any update of
or modification to the Company Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded).
(d) The representations and warranties of the Company
contained in this Agreement (other than the representations and warranties of
the Company contained in Sections 2.1, 2.2, 2.3 and 2.7) and in the Ancillary
Business Agreements shall be accurate in all respects as of the Closing Date as
if made on and as of the Closing Date, except for those representations and
warranties made as of a specific date, which shall have been accurate in all
material respects as of such date, and except that any inaccuracies in such
representations and warranties will be disregarded if, after aggregating all
inaccuracies in such representations and warranties as of such specific date or
the Closing Date (as the case may be and without duplication), such inaccuracies
and the circumstances giving rise to all such inaccuracies do not constitute and
could not reasonably be expected to result in a Material Adverse Effect on the
Acquired Corporations determined as of such specific date or the Closing Date
(as the case may be) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other materiality qualifications contained in such
representations and warranties shall be disregarded and (ii) any update of or
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded).
6.2 Performance of Covenants.
(a) The covenant set forth in Section 4.2(b)(vi) of this
Agreement shall have been complied with and performed in all respects.
(b) Each other covenant or obligation that the Company is
required to comply with or to perform at or prior to the Closing pursuant to
this Agreement or the Ancillary Business Agreements shall have been complied
with and performed in all material respects.
6.3 Effectiveness of Registration Statement. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued and
still be pending, and no proceeding for that purpose shall have been initiated
or be threatened, by the SEC with respect to the Form S-4 Registration
Statement.
6.4 Stockholder Approval. This Agreement shall have been duly
adopted by the Required Company Stockholder Vote, and holders of less than
eleven percent (11%) in the aggregate of the Company Common Stock shall have
filed demands for payment under Chapter 13 of the California Corporations Code
or Section 262 of the DGCL
43.
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with respect to their Company Common Stock or shall otherwise continue to have
dissenters' or appraisal rights under any applicable law.
6.5 Consents. All material Consents required to be obtained in
connection with the Merger and the other transactions contemplated by this
Agreement (including the Consents identified in Part 6.5 of the Company
Disclosure Schedule) shall have been obtained and shall be in full force and
effect.
6.6 Agreements and Documents. Parent and the Company shall have
received the following agreements and documents, each of which shall be in full
force and effect:
(a) Affiliate Agreements in the form of Exhibit C, executed
by each Person who could reasonably be deemed to be an "affiliate" (as that
term is used in Rule 145 under the Securities Act) of the Company;
(b) an Employment Agreement, executed by Parent and
Timothy Harrington, in the form entered into by such parties
contemporaneously with the execution of this Agreement;
(c) a letter from PricewaterhouseCoopers llp, dated as of
the Closing Date and addressed to Parent, reasonably satisfactory in form
and substance to Parent, updating the letter referred to in Section 5.12;
(d) a legal opinion of Cooley Godward llp dated as of the
Closing Date and addressed to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code (it being understood that (i) in rendering such opinion, Cooley
Godward llp may rely upon the tax representation letters referred to in
Section 5.11, and (ii) if Cooley Godward llp does not render such opinion
or withdraws or modifies such opinion, this condition shall nonetheless be
deemed to be satisfied if Brobeck, Phleger & Harrison llp renders such
opinion); and
(e) a certificate executed on behalf of the Company by its
Chief Executive Officer and Chief Financial Officer confirming that the
conditions set forth in Sections 6.1, 6.2, 6.4, 6.5, 6.7, 6.8 and 6.9 have
been duly satisfied.
6.7 HSR Act. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated; any
similar waiting period under any applicable foreign antitrust law or regulation
or other Legal Requirement shall have expired or been terminated; and any
Consent required under any applicable foreign antitrust law or regulation or
other Legal Requirement shall have been obtained.
6.8 No Restraints. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
44.
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6.9 No Governmental Litigation. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is threatened
to become a party or is otherwise involved: (a) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (b) relating to the Merger and
seeking to obtain from Parent or any of the Acquired Corporations any damages or
other relief that may be material to Parent or the Acquired Corporations; (c)
seeking to prohibit or limit in any material respect Parent's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Surviving Corporation; (d) that could materially and
adversely affect the right of Parent or any of the Acquired Corporations to own
the assets or operate the business of the Acquired Corporations; or (e) seeking
to compel any of the Acquired Corporations, Parent or any Subsidiary of Parent
to dispose of or hold separate any material assets as a result of the Merger or
any of the other transactions contemplated by this Agreement.
Section 7. Conditions Precedent to Obligation of the Company
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
at or prior to the Closing, of the following conditions:
7.1 Accuracy of Representations.
(a) The representations and warranties of Parent and Merger
Sub contained in this Agreement that are qualified by "Material Adverse Effect"
or otherwise qualified as to materiality shall have been accurate in all
respects as of the date of this Agreement, except for any such representations
and warranties made as of a specific date, which shall have been accurate in all
respects as of such date.
(b) The representations and warranties of Parent and Merger
Sub contained in this Agreement that are not qualified by "Material Adverse
Effect" or otherwise qualified as to materiality shall have been accurate in all
material respects as of the date of this Agreement, except for any such
representations and warranties made as of a specific date, which shall have been
accurate in all material respects as of such date.
(c) The representations and warranties of Parent and Merger
Sub contained in this Agreement shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date, except for any such
representations and warranties made as of a specific date, which shall have been
accurate in all respects as of such date, and except that any inaccuracies in
such representations and warranties as of the Closing Date will be disregarded
if, after aggregating all inaccuracies of such representations and warranties as
of the Closing Date (without duplication), such inaccuracies and the
circumstances giving rise to all such inaccuracies do not constitute a Material
Adverse Effect on Parent determined as of the Closing Date (it being understood
that, for purposes of determining the accuracy of such representations and
warranties, all materiality qualifications contained in such representations and
warranties shall be disregarded).
45.
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7.2 Performance of Covenants. All of the covenants and
obligations that Parent and Merger Sub are required to comply with or to perform
at or prior to the Closing pursuant to this Agreement shall have been complied
with and performed in all material respects.
7.3 Effectiveness of Registration Statement. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued, and
no proceeding for that purpose shall have been initiated or be threatened, by
the SEC with respect to the Form S-4 Registration Statement.
7.4 Stockholder Approval. This Agreement shall have been duly
adopted by the Required Company Stockholder Vote.
7.5 Documents. The Company shall have received the following
documents:
(a) a legal opinion of Brobeck, Phleger & Harrison llp,
dated as of the Closing Date, to the effect that the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Code (it being
understood that, in rendering such opinion, (i) Brobeck, Phleger & Harrison
llp may rely upon the tax representation letters referred to in Section
5.11, and (ii) if Brobeck, Phleger & Harrison llp does not render such
opinion or withdraws or modifies such opinion, this condition shall
nonetheless be deemed to be satisfied if Cooley Godward llp renders such
opinion); and
(b) a certificate executed on behalf of Parent by an
executive officer of Parent, confirming that the conditions set forth in
Sections 7.1 and 7.2 have been duly satisfied.
7.6 HSR Act. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
7.7 Listing. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing (subject to notice of issuance)
on the Nasdaq National Market.
7.8 No Restraints. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
by the Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by the Company
illegal.
Section 8. Termination
8.1 Termination. This Agreement may be terminated prior to the
Effective Time (whether before or after the adoption of this Agreement by the
Required Company Stockholder Vote):
(a) by mutual written consent of Parent and the Company;
46.
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(b) by either Parent or the Company if the Merger shall not
have been consummated by July 31, 2001 (the "Termination Date"); provided,
however, that either the Company or Parent shall have the option, in its
sole discretion exercisable by delivery of a written notice to the other
party not earlier than July 15, 2001 and not later than July 25, 2001, to
extend the Termination Date for an additional period of time not to exceed
90 days if all other conditions to consummation of the Merger are satisfied
or capable of then being satisfied and the sole reason that the Merger has
not been consummated by such date is that either (A) the conditions set
forth in Sections 6.7 and 7.6 have not been satisfied and the party giving
such notice is still attempting in good faith to satisfy such conditions,
or (B) the conditions set forth in Sections 6.8 and 7.8 have not been
satisfied due to the existence of a temporary restraining order or
preliminary injunction as described therein; and provided further, that (i)
a party shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(b) if the failure to consummate the Merger by the Termination
Date is attributable to a failure on the part of such party to perform any
covenant in this Agreement required to be performed by such party at or
prior to the Effective Time, and (ii) the Company shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(b) unless the Company
shall have made any payment required to be made to Parent pursuant to
Section 8.3(a) and shall have paid to Parent any fee required to be paid to
Parent pursuant to Section 8.3(d);
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(d) by either Parent or the Company if (i) the Company
Stockholders' Meeting (including any adjournments and postponements
thereof) shall have been held and completed and the Company's stockholders
shall have taken a final vote on a proposal to adopt this Agreement, and
(ii) this Agreement shall not have been adopted at the Company
Stockholders' Meeting (and shall not have been adopted at any adjournment
or postponement thereof) by the Required Company Stockholder Vote;
provided, however, that (A) a party shall not be permitted to terminate
this Agreement pursuant to this Section 8.1(d) if the failure to have this
Agreement adopted by the Required Company Stockholder Vote is attributable
to a failure on the part of such party to perform any covenant in this
Agreement required to be performed by such party at or prior to the
Effective Time, and (B) the Company shall not be permitted to terminate
this Agreement pursuant to this Section 8.1(d) unless the Company shall
have made the payment required to be made to Parent pursuant to Section
8.3(a) and shall have paid to Parent the fee required to be paid to Parent
pursuant to Section 8.3(b) or Section 8.3(d);
(e) by Parent (at any time prior to the adoption of this
Agreement by the Required Company Stockholder Vote) if a Triggering Event
shall have occurred;
(f) by Parent if (i) any of the Company's representations
and warranties contained in this Agreement shall be inaccurate as of the
date of this Agreement, or shall have become inaccurate as of a date
subsequent to the date of this Agreement (as if made on such subsequent
date), such that the condition set forth in
47.
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Section 6.1 would not be satisfied (it being understood that, for purposes
of determining the accuracy of such representations and warranties as of
the date of this Agreement or as of any subsequent date, any update of or
modification to the Company Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded), or (ii)
any of the Company's covenants contained in this Agreement shall have been
breached such that the condition set forth in Section 6.2 would not be
satisfied; provided, however, that if an inaccuracy in any of the Company's
representations and warranties as of a date subsequent to the date of this
Agreement or a breach of a covenant by the Company is curable by the
Company and the Company is continuing to exercise all reasonable efforts to
cure such inaccuracy or breach, then Parent may not terminate this
Agreement under this Section 8.1(f) on account of such inaccuracy or
breach; or
(g) by the Company if (i) any of Parent's representations
and warranties contained in this Agreement shall be inaccurate as of the
date of this Agreement, or shall have become inaccurate as of a date
subsequent to the date of this Agreement (as if made on such subsequent
date), such that the condition set forth in Section 7.1 would not be
satisfied, or (ii) if any of Parent's covenants contained in this Agreement
shall have been breached such that the condition set forth in Section 7.2
would not be satisfied; provided, however, that if an inaccuracy in any of
Parent's representations and warranties as of a date subsequent to the date
of this Agreement or a breach of a covenant by Parent is curable by Parent
and Parent is continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then the Company may not terminate this Agreement
under this Section 8.1(g) on account of such inaccuracy or breach.
8.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 8.2, Section 8.3 and
Section 9 (and subject to Section 9.4, the Confidentiality Agreement) shall
survive the termination of this Agreement and shall remain in full force and
effect, and (ii) the termination of this Agreement shall not relieve any party
from any liability for any breach of any representation, warranty, covenant,
obligation or other provision contained in this Agreement.
8.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that:
(i) Parent and the Company shall share equally all
fees and expenses, other than attorneys' fees, incurred in connection with
(A) the filing, printing and mailing of the Form S-4 Registration Statement
and the Prospectus/Proxy Statement and any amendments or supplements
thereto and (B) the filing by the parties hereto of the premerger
notification and report forms relating to the Merger under the HSR Act and
the filing of any notice or other document under any applicable foreign
antitrust law or regulation; and
48.
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(ii) if this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b) and at or prior to the time of the
termination of this Agreement an Acquisition Proposal shall have been
disclosed, announced, commenced, submitted or made (and shall not have been
withdrawn or terminated pursuant to a public announcement at least five
days before the Company Stockholders' Meeting), or if this Agreement is
terminated by Parent or the Company pursuant to Section 8.1(d) or by Parent
pursuant to Section 8.1(e), then (without limiting any obligation of the
Company to pay any fee payable pursuant to Section 8.3(b) or Section
8.3(d)), the Company shall make a nonrefundable cash payment to Parent, at
the time specified in Section 8.3(c), in an amount equal to the aggregate
amount of all reasonable fees and expenses (including all reasonable
attorneys' fees, accountants' fees, financial advisory fees and filing
fees) that have been paid or that may become payable by or on behalf of
Parent in connection with the preparation and negotiation of this Agreement
and the Ancillary Business Agreements and otherwise in connection with the
Merger.
(b) If this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(d) then (unless Parent is then entitled to
receive a fee pursuant to Section 8.3(d)) the Company shall pay to Parent, in
cash at the time specified in Section 8.3(c) (and in addition to the amounts
payable by the Company pursuant to Section 8.3(a)) a nonrefundable fee in an
amount equal to $700,000.
(c) In the case of termination of this Agreement by the
Company pursuant to Section 8.1(b) or Section 8.1(d), any nonrefundable payment
required to be made pursuant to clause "(ii)" of the proviso to Section 8.3(a)
shall be made, and any fee payable pursuant to Section 8.3(b) shall be paid, by
the Company prior to the time of such termination; and in the case of
termination of this Agreement by Parent pursuant to Section 8.1(b), Section
8.1(d) or Section 8.1(e), any nonrefundable payment required to be made pursuant
to clause "(ii)" of the proviso to Section 8.3(a) shall be made, and any fee
payable pursuant to Section 8.3(b) shall be paid, by the Company within two
business days after such termination.
(d) If (i) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b) or Section 8.1(d) and at or prior to the time
of the termination of this Agreement an Acquisition Proposal shall have been
disclosed, announced, commenced, submitted or made, or (ii) this Agreement is
terminated by Parent pursuant to Section 8.1(e), then the Company shall pay to
Parent, in cash at the time specified in the next sentence (and in addition to
the amounts payable pursuant to Section 8.3(a)), a nonrefundable fee in an
amount equal to $1,900,000. In the case of termination of this Agreement by the
Company pursuant to Section 8.1(b) or Section 8.1(d), the fee referred to in the
preceding sentence shall be paid by the Company prior to the time of such
termination; and in the case of termination of this Agreement by Parent pursuant
to Section 8.1(b), Section 8.1(d) or Section 8.1(e), the fee referred to in the
preceding sentence shall be paid by the Company within two business days after
such termination.
(e) If the Company fails to pay when due any amount payable
under this Section 8.3, then (i) the Company shall reimburse Parent for all
reasonable costs and expenses (including reasonable fees and disbursements of
counsel) incurred in connection with the collection of such overdue amount and
the enforcement by Parent of its rights under this
49.
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Section 8.3, and (ii) the Company shall pay to Parent interest on such overdue
amount (for the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such overdue amount is
actually paid to Parent in full) at a rate per annum equal to the "prime rate"
(as announced by Bank of America or any successor thereto) in effect on the date
such overdue amount was originally required to be paid.
Section 9. Miscellaneous Provisions
9.1 Amendment. This Agreement may be amended with the approval
of the respective boards of directors of the Company and Parent at any time
(whether before or after the adoption of this Agreement by the Company's
stockholders); provided, however, that after any such adoption of this Agreement
by the Company's stockholders, no amendment shall be made which by law requires
further approval of the stockholders of the Company without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
9.2 Waiver.
(a) No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.3 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
9.4 Entire Agreement; Counterparts. This Agreement, the
Ancillary Business Agreements and the other agreements to be entered into
pursuant hereto constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among or between any of
the parties with respect to the subject matter hereof and thereof; provided,
however, that sections 1 through 3 and sections 5 through 12 of the
Confidentiality Agreement shall not be superseded and shall remain in full force
and effect (it being understood that section 4 of the Confidentiality Agreement,
and the "standstill" provisions contained therein, shall be deemed to have
terminated as of the date of this Agreement and shall be of no further force or
effect). This Agreement may be executed in several counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
instrument
9.5 Applicable Law; Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might
50.
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otherwise govern under applicable principles of conflicts of laws thereof. In
any action between any of the parties arising out of or relating to this
Agreement or any of the transactions contemplated by this Agreement: (a) each of
the parties irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of the state and federal courts located in the
State of Delaware; (b) if any such action is commenced in a state court, then,
subject to applicable law, no party shall object to the removal of such action
to any federal court located in Delaware; (c) each of the parties irrevocably
waives the right to trial by jury; and (d) each of the parties irrevocably
consents to service of process by first class certified mail, return receipt
requested, postage prepaid, to the address at which such party is to receive
notice in accordance with Section 9.8.
9.6 Attorneys' Fees. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
9.7 Assignability. This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors and assigns; provided, however, that neither
this Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person (other than the parties
hereto) any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
9.8 Notices. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received (a) upon receipt when
delivered by hand, or (b) two business days after being sent by registered mail
or by courier or express delivery service or by facsimile, provided that in each
case the notice or other communication is sent to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified
in a written notice given to the other parties hereto):
if to Parent or Merger Sub:
Global Sports, Inc.
1075 First Avenue
King of Prussia, PA 19406
Attention: General Counsel
Facsimile: 610-265-2866
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if to the Company:
Fogdog, Inc.
500 Broadway Street
Redwood City, CA 94063
Attention: General Counsel
Facsimile: 650-980-2600
9.9 Cooperation. The Company agrees to cooperate fully with
Parent and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by Parent to evidence or reflect the transactions contemplated by this
Agreement and to carry out the intent and purposes of this Agreement.
9.10 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
9.11 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
(e) The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
52.
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In Witness Whereof, the parties have caused this Agreement to be executed
as of the date first above written.
Global Sports, Inc.
By: _______________________________
Fido Acquisition Corp.
By: _______________________________
Fogdog, Inc.
By: _______________________________
53.
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Exhibit A
Certain Definitions
For purposes of the Agreement (including this Exhibit A):
Acquired Corporation Contract. "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
Acquired Corporation Proprietary Asset. "Acquired Corporation Proprietary
Asset" shall mean any Proprietary Asset owned by or licensed to any of the
Acquired Corporations or otherwise used by any of the Acquired Corporations.
Acquisition Proposal. "Acquisition Proposal" shall mean any offer,
proposal, inquiry or indication of interest (other than an offer, proposal,
inquiry or indication of interest made or submitted by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of securities,
recapitalization, tender offer, exchange offer or other similar transaction
(i) in which any of the Acquired Corporations is a constituent corporation,
(ii) in which a Person or "group" (as defined in the Exchange Act and the
rules promulgated thereunder) of Persons directly or indirectly acquires
beneficial or record ownership of securities representing more than 15% of
the outstanding securities of any class of voting securities of any of the
Acquired Corporations, or (iii) in which any of the Acquired Corporations
issues securities representing more than 15% of the outstanding securities
of any class of voting securities of any of the Acquired Corporations;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or assets that constitute or
account for 15% or more of the consolidated net revenues, net income or
assets of any of the Acquired Corporations; or
(c) any liquidation or dissolution of any of the Acquired
Corporations.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
Company Common Stock. "Company Common Stock" shall mean the Common Stock,
$0.001 par value per share, of the Company.
1.
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Company Disclosure Schedule. "Company Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by the Company in accordance with the
requirements of this Agreement and that has been delivered by the Company to
Parent on the date of the Agreement.
Company Warrants. "Company Warrants" shall mean those certain warrants to
purchase shares of Company Common Stock described in Section 2.3(b).
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Form S-4 Registration Statement. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared effective
by the SEC.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, ministry, fund, foundation, center, organization,
unit, body or Entity and any court or other tribunal).
2.
<PAGE>
HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).
Material Adverse Effect. An event, violation, inaccuracy, circumstance or
other matter will be deemed to have a "Material Adverse Effect" on the Acquired
Corporations if such event, violation, inaccuracy, circumstance or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties of the Company set forth in the Agreement,
disregarding any "Material Adverse Effect" or other materiality qualifications,
or any similar qualifications, in such representations and warranties) had or
could reasonably be expected to have a material adverse effect on (i) the
business, the financial condition, the assets and liabilities (taken together)
or the capitalization of the Acquired Corporations taken as a whole, (ii) the
ability of the Company to consummate the Merger or any of the other transactions
contemplated by the Agreement or the Ancillary Business Agreements or to perform
any of its obligations under the Agreement or the Ancillary Business Agreements,
or (iii) Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; provided, however, that (A) the failure of any engineer(s) to
continue his or their employment with the Company shall not, in and of itself,
be deemed to have or give rise to a Material Adverse Effect on the Acquired
Corporations, and (B) the failure of Nike, Inc. or Callaway Golf to continue to
supply merchandise to the Company shall not, in and of itself, be deemed to have
or give rise to a Material Adverse Effect on the Acquired Corporations. An
event, violation, inaccuracy, circumstance or other matter will be deemed to
have a "Material Adverse Effect" on Parent if such event, violation, inaccuracy,
circumstance or other matter (considered together with all other matters that
would constitute exceptions to the representations and warranties of Parent set
forth in the Agreement, disregarding any "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, in such
representations and warranties) had or could reasonably be expected to have a
material adverse effect on (i) the business, the financial condition, the assets
and liabilities (taken together) or the capitalization of Parent and its
Subsidiaries taken as a whole or (ii) the ability of Parent to consummate the
Merger or any of the other transactions contemplated by the Agreement or to
perform any of its obligations under the Agreement; provided, however, that a
decline in Parent's stock price, in and of itself, shall not be deemed to have a
Material Adverse Effect on Parent.
Operating Budget. "Operating Budget" shall mean that certain Operating Plan
and Budget for the Acquired Corporations for the period between the date of this
Agreement and the Effective Time in the form of Exhibit B.
3.
<PAGE>
Parent Common Stock. "Parent Common Stock" shall mean the Common Stock,
$.01 par value per share, of Parent.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, domain name, service mark
(whether registered or unregistered), service mark application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, model, algorithm, formula, compound,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset; or (b) right to use or exploit any of the foregoing.
Prospectus/Proxy Statement. "Prospectus/Proxy Statement" shall mean the
proxy statement to be sent to the Company's stockholders in connection with the
Company Stockholders' Meeting.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Subsidiary. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns or purports to own,
beneficially or of record, (a) an amount of voting securities of other interests
in such Entity that is sufficient to enable such Person to elect at least a
majority of the members of such Entity's board of directors or other governing
body, or (b) at least 50% of the outstanding equity or financial interests or
such Entity.
Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase all or substantially all of the
outstanding shares of Company Common Stock (by way of merger, reorganization,
consolidation, tender offer, acquisition, business combination or otherwise) or
all or substantially all of the assets of the Company on terms that the board of
directors of the Company determines, in its reasonable judgment, after
consultation with the Company's outside legal counsel and an independent
financial advisor of nationally recognized reputation, to be more favorable to
the 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 reasonably capable of being obtained by such third party.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax,
unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
4.
<PAGE>
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
Triggering Event. A "Triggering Event" shall be deemed to have occurred if:
(i) the board of directors of the Company shall have failed to recommend that
the Company's stockholders vote to adopt the Agreement, or shall have withdrawn
or modified in a manner adverse to Parent the Company Board Recommendation; (ii)
the Company shall have failed to include in the Prospectus/Proxy Statement the
Company Board Recommendation or a statement to the effect that the board of
directors of the Company has determined and believes that the Merger is in the
best interests of the Company's stockholders; (iii) the board of directors of
the Company fails to reaffirm the Company Board Recommendation, or fails to
reaffirm its determination that the Merger is in the best interests of the
Company's stockholders, within 48 hours after Parent requests in writing that
such recommendation or determination be reaffirmed; (iv) the board of directors
of the Company shall have approved, endorsed or recommended any Acquisition
Proposal; (v) the Company shall have entered into any letter of intent or
memorandum of understanding or any Contract contemplating any Acquisition
Proposal; (vi) the Company shall have failed to hold the Company Stockholders'
Meeting as promptly as practicable and in any event within 60 days after the
Form S-4 Registration Statement is declared effective under the Securities Act;
(vii) a tender or exchange offer relating to securities of the Company shall
have been commenced and the Company shall not have sent to its securityholders,
within ten business days after the commencement of such tender or exchange
offer, a statement disclosing that the Company recommends rejection of such
tender or exchange offer; (viii) an Acquisition Proposal is publicly announced,
and the Company fails to issue a press release announcing its opposition to such
Acquisition Proposal within five business days after such Acquisition Proposal
is announced; (ix) any Person or "group" (as defined in the Exchange Act and the
rules promulgated thereunder) of Persons directly or indirectly acquires or
agrees to acquire, or discloses an intention to acquire, beneficial or record
ownership of securities representing more than 15% of the outstanding securities
of any class of voting securities of the Company; or (x) any of the Acquired
Corporations or any Representative of any of the Acquired Corporations shall
have breached or taken any action inconsistent with any of the provisions set
forth in Section 4.3.
2000 Retention Plan. "2000 Retention Plan" shall mean that certain written
plan providing for the retention of selected employees of the Acquired
Corporations for periods ending on various dates between the date of the
Agreement and the Closing Date.
2000 Severance Plan. "2000 Severance Plan" shall mean that certain written
plan providing for the severance of selected employees of the Acquired
Corporations immediately following the execution of the Agreement.
5.
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Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
mean the unaudited consolidated balance sheet of the Acquired Corporations
included in the Unaudited Interim Financial Statements.
Unaudited Interim Financial Statements. "Unaudited Interim Financial
Statements" shall mean the unaudited consolidated balance sheet of the Company
as of September 30, 2000, and the related unaudited consolidated income
statement of the Acquired Corporations for the three-month period ended
September 30, 2000, together with the notes (if any) thereto, in the form
attached as Exhibit D.
6.
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Exhibits
Exhibit A Certain Definitions
Exhibit B Operating Plan and Budget
Exhibit C Form of Affiliate Agreement
Exhibit D Interim Financial Statements
1.
