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AGREEMENT AND PLAN OF MERGER
Dated as of June 1, 2001
Among
UNITED NEWVENTURES, INC.
UNV ACQUISITION CORP.
and
MYPOINTS.COM, INC.
=======================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................... 1
SECTION 1.01 Definitions........................ 1
ARTICLE II THE OFFER AND THE MERGER.............. 9
SECTION 2.01 The Offer.......................... 9
SECTION 2.02 Company Actions.................... 11
SECTION 2.03 Board of Directors; Section 14(f).. 12
SECTION 2.04 The Merger......................... 12
SECTION 2.05 Closing............................ 13
SECTION 2.06 Effective Time..................... 13
SECTION 2.07 Certificate of Incorporation and By-laws. 13
SECTION 2.08 Directors.......................... 13
SECTION 2.09 Officers........................... 13
ARTICLE III EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES.......................... 14
SECTION 3.01 Effect on Capital Stock............ 14
SECTION 3.02 Exchange of Certificates........... 15
SECTION 3.03 Adjustments........................ 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 17
SECTION 4.01 Organization, Standing and Power... 17
SECTION 4.02 Company Subsidiaries; Equity Interests. 17
SECTION 4.03 Capital Structure.................. 18
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action.19
SECTION 4.05 No Conflicts; Consents............. 20
SECTION 4.06 SEC Documents; Financial Statements; Undisclosed Liabilities. 20
SECTION 4.07 Information Supplied............... 21
SECTION 4.08 Absence of Certain Changes or Events. 21
SECTION 4.09 Taxes.............................. 22
SECTION 4.10 Benefit Plans; ERISA Compliance; Excess Parachute Payments. 23
SECTION 4.11 Litigation......................... 24
SECTION 4.12 Compliance with Applicable Laws.... 25
SECTION 4.13 Contracts; Debt Instruments........ 25
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SECTION 4.14 Company Rights Agreement............................................................. 26
SECTION 4.15 Intellectual Property................................................................ 27
SECTION 4.16 Takeover Laws........................................................................ 30
SECTION 4.17 Affiliate Transactions............................................................... 30
SECTION 4.18 Real Property........................................................................ 30
SECTION 4.19 Insurance............................................................................ 31
SECTION 4.20 Compensation......................................................................... 31
SECTION 4.21 Privacy.............................................................................. 32
SECTION 4.22 Receivables.......................................................................... 32
SECTION 4.23 Copies of Certain Documents.......................................................... 32
SECTION 4.24 Underlying Documents................................................................. 32
SECTION 4.25 Brokers; Fees and Expenses........................................................... 32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................ 33
SECTION 5.01 Organization, Standing and Power..................................................... 33
SECTION 5.02 Sub.................................................................................. 33
SECTION 5.03 Financing............................................................................ 33
SECTION 5.04 Ownership of Company Common Stock.................................................... 33
SECTION 5.05 Authorization; Validity of Agreement; Necessary Action............................... 33
SECTION 5.06 No Conflicts; Consents............................................................... 34
SECTION 5.07 Information Supplied................................................................. 34
SECTION 5.08 Brokers.............................................................................. 34
SECTION 5.09 Litigation........................................................................... 35
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS............................................... 35
SECTION 6.01 Conduct of Business.................................................................. 35
SECTION 6.02 No Solicitation...................................................................... 38
ARTICLE VII ADDITIONAL AGREEMENTS................................................................... 40
SECTION 7.01 Preparation of Proxy Statement; Stockholders Meeting................................. 40
SECTION 7.02 Access to Information; Confidentiality............................................... 41
SECTION 7.03 Commercially Reasonable Efforts; Notification........................................ 42
SECTION 7.04 Company Employee Stock Options and Company Warrants.................................. 43
SECTION 7.05 Employee Stock Purchase Plan......................................................... 44
SECTION 7.06 Indemnification; D&O Insurance....................................................... 44
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SECTION 7.07 Public Announcements.................................................................. 45
SECTION 7.08 Transfer Taxes........................................................................ 45
SECTION 7.09 Potential Litigation.................................................................. 45
SECTION 7.10 Other Actions by the Company and Parent............................................... 45
ARTICLE VIII CONDITIONS PRECEDENT..................................................................... 46
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger............................ 46
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER........................................................ 46
SECTION 9.01 Termination........................................................................... 46
SECTION 9.02 Effect of Termination; Fees and Expenses.............................................. 48
SECTION 9.03 Amendment............................................................................. 49
SECTION 9.04 Extension; Waiver..................................................................... 49
SECTION 9.05 Procedure for Termination, Amendment, Extension or Waiver............................. 49
ARTICLE X GENERAL PROVISIONS....................................................................... 50
SECTION 10.01 Nonsurvival of Representations and Warranties......................................... 50
SECTION 10.02 Notices............................................................................... 50
SECTION 10.03 Interpretation........................................................................ 51
SECTION 10.04 Severability.......................................................................... 51
SECTION 10.05 Counterparts.......................................................................... 51
SECTION 10.06 Entire Agreement; No Third-Party Beneficiaries........................................ 51
SECTION 10.07 Governing Law......................................................................... 52
SECTION 10.08 Assignment............................................................................ 52
SECTION 10.09 Enforcement........................................................................... 52
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of June 1, 2001 (the
"Agreement"), among United NewVentures, Inc., a Delaware corporation ("Parent"),
--------- ------
UNV Acquisition Corp., a Delaware corporation ("Sub") and a wholly owned
---
subsidiary of Parent, and MyPoints.com, Inc., a Delaware corporation (the
"Company").
-------
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the issued and outstanding
-----
shares of Company Common Stock (as defined herein) for U.S. $2.60 per share of
Company Common Stock (the "Offer Price"), net to the Seller in cash, upon the
-----------
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company
have approved the merger (the "Merger") of Sub into the Company on the terms and
------
subject to the conditions set forth in this Agreement, whereby each issued share
of Company Common Stock not owned directly or indirectly by Parent or the
Company, will be converted into the right to receive an amount in cash equal to
the Offer Price; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent and the Principal Company Stockholders (as defined herein) are
entering into Stock Option and Tender Agreements (as defined herein).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and conditions set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definitions. (a) As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, for any Person, another Person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Alternative Acquisition" has the meaning set forth in Section 6.02(a).
----------------------- ---------------
"Alternative Acquisition Proposal" has the meaning set forth in Section
-------------------------------- -------
6.02(a).
-------
<PAGE>
"Applicable Law" means any statute, law (including common law), ordinance,
--------------
rule or regulation applicable to the Company or any Company Subsidiary or their
respective properties or assets.
"Applicable Tax Law" means any Applicable Law relating to Taxes, including,
------------------
without limitation, regulations and other official pronouncements of any
Governmental Entity or political subdivision of such jurisdiction charged with
interpreting such Applicable Law.
"Certificate" or "Certificates" mean the certificate or certificates that
----------- ------------
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock.
"Certificate of Merger" means a certificate of merger, or other appropriate
---------------------
documents, to be filed with the Secretary of State of the State of Delaware to
effect the Merger.
"Closing" means the closing of the Merger.
-------
"Closing Date" means the date on which the Closing occurs.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" has the meaning set forth in the heading hereof.
-------
"Company 1999 Stock Plan" means the MyPoints.com, Inc. 1999 Stock Plan, as
-----------------------
amended and restated effective as of May 18, 2000, as further amended by the
Company Board on April 26, 2001 and May 23, 2001.
"Company Board" means the Board of Directors of the Company.
-------------
"Company By-laws" means the by-laws of the Company, as amended to the date
---------------
of this Agreement.
"Company Capital Stock" has the meaning set forth in Section 4.03.
--------------------- ------------
"Company Charter" means the certificate of incorporation of the Company, as
---------------
amended to the date of this Agreement.
"Company Common Stock" means the common stock, $.001 par value per share,
--------------------
of the Company, together with the associated Company Rights.
"Company Disclosure Letter" means the letter, dated as of the date of this
-------------------------
Agreement, delivered by the Company to Parent and Sub, which shall describe an
exception to, or otherwise qualify or respond to, the representations and
warranties of the Company specifically identified in each section of the letter
and, to the extent a disclosure by the Company is sufficient to reasonably
inform Parent and Sub of information required to be disclosed in another section
of the letter, such disclosure shall be deemed, for purposes of this Agreement,
to have been made with respect to such other section of the disclosure letter.
2
<PAGE>
"Company Employee Stock Option" means any option to purchase Company
-----------------------------
Common Stock granted under any Company Option Plan.
"Company Intellectual Property Rights" means Intellectual Property
------------------------------------
Rights that are owned by, or exclusively licensed to, the Company and the
Company Subsidiaries.
"Company Investment" has the meaning set forth in Section 4.02(b).
------------------ ---------------
"Company Leased Real Property" has the meaning set forth in Section
---------------------------- -------
4.18(a).
-------
"Company Material Adverse Effect" means (a) a material adverse effect
-------------------------------
on the business, assets, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole (except where any change,
event, effect or development results from (i) changes affecting the U.S. economy
generally, (ii) changes affecting the member-driven Internet marketing services
industry in which the Company operates as a whole, and (iii) the announcement of
the existence and terms of this Agreement; provided, with respect to clauses
-------- -------
(a)(i) and (a)(ii) above, that such change, event, effect or development shall
------ -------
include a decline in the Company's stock price, increasing operating losses or
the failure to meet revenue earnings estimates to the extent such change, event,
effect or development does not affect the Company to a greater extent than other
participants in the member-driven Internet marketing services industry in the
U.S. in which the Company operates generally), or (b) a material adverse effect
on the ability of the Company to perform its obligations under the Transaction
Agreements to which it is a party or on the ability of the Company to consummate
the Offer, the Merger and the other Transactions.
"Company Option Plans" means the Company's 1999 Stock Plan, the
--------------------
Company's 1996 Stock Plan, the Company's 1999 Supplemental Stock Plan, the
Cybergold 1996 Stock Plan and the Cybergold 1999 Omnibus Equity Incentive Plan,
adopted May 18, 1999.
"Company Plans" has the meaning set forth in Section 4.10(a).
------------- ---------------
"Company Preferred Stock" has the meaning set forth in Section 4.03.
----------------------- ------------
"Company Products" has the meaning set forth in Section 4.15(b).
---------------- ---------------
"Company Rights" means the preferred share purchase rights issued
--------------
pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Preferred Stock Rights Agreement,
------------------------
dated as of December 13, 2000, as the same may be amended from time to time,
between the Company and Wells Fargo Shareholder Services, as Rights Agent.
"Company SAR" means any stock appreciation right linked to the price of
-----------
Company Common Stock and granted under any Company Option Plan.
"Company SEC Documents" means all reports, schedules, forms, statements
---------------------
and other documents filed or required to be filed by the Company with the SEC
since December 31, 1999.
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"Company Stockholder Approval" has the meaning set forth in Section
---------------------------- -------
4.04(c).
-------
"Company Stockholders Meeting" means a meeting of the Company's
----------------------------
stockholders for the purpose of seeking Company Stockholder Approval.
"Company Subsidiaries" means all the Subsidiaries of the Company.
--------------------
"Company Warrants" means warrants to purchase Company Common Stock.
----------------
"Confidentiality Agreement" means the confidentiality agreement, dated
-------------------------
April 4, 2001, between the Company and Parent.
"Consent" means any consent, approval, license, Permit, Order or
-------
authorization.
"Contract" means any Permit, indenture, note, bond, mortgage,
--------
agreement, concession, franchise, instrument, undertaking, commitment,
understanding or other arrangement (whether written or oral).
"DGCL" means the Delaware General Corporation Law, as amended from time
----
to time.
"D&O Insurance" means directors' and officers' insurance.
---
"Dissenters' Shares" means shares of Company Common Stock that are
------------------
outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to and properly demands payment of the fair value of such
shares pursuant to, and who complies in all respects with, Section 262 of the
DGCL.
"Effective Time" has the meaning set forth in Section 2.06.
-------------- ------------
"ERISA" means the Employment Retirement Income Security Act of 1974, as
-----
amended.
"ERISA Affiliate" means, with respect to any Person, any corporation,
---------------
trade or business which, together with such Person, is a member of a controlled
group of corporations or a group of trades or businesses under common control
within the meaning of section 414 of the Code.
"ESPP" has the meaning set forth in Section 7.05.
---- ------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Fund" has the meaning set forth in Section 3.02(a).
------------- ---------------
"Filed Company SEC Documents" means all Company SEC Documents that were
---------------------------
filed and publicly available prior to the date of this Agreement.
"Financial Statements" means the consolidated financial statements of
--------------------
the Company and its Subsidiaries included in each of the Company's Annual Report
on Form 10-K for the fiscal years ended December 31, 1998, December 31, 1999 and
December 31, 2000, the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001 and any consolidated
4
<PAGE>
financial statements of the Company filed with the SEC after the date hereof,
including in each case the footnotes thereto.
"Fully Diluted Shares" has the meaning set forth in Exhibit A.
-------------------- ---------
"GAAP" as to any Person means generally accepted United States
----
accounting principles, applied on a basis consistent with the basis on which the
most recent audited financial statements of such Person were prepared prior to
the date of this Agreement.
"Governmental Entity" means any:
-------------------
(i) federal, state, local, municipal or foreign government;
(ii) governmental or quasi-governmental authority of any nature
(including, without limitation, any governmental agency, branch,
department, official, instrumentality or entity and any court or
other tribunal);
(iii) multi-national organization or body; or
(iv) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
---
1976, as amended.
"Indebtedness" means, without duplication, (i) all obligations for
------------
borrowed money, or with respect to deposits or advances of any kind, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations under conditional sale or other title retention agreements
relating to purchased property, (iv) all obligations issued or assumed as the
deferred purchase price of property or services (excluding obligations to
creditors for raw materials, inventory, services and supplies incurred in the
ordinary and usual course of business), (v) all capitalized lease obligations,
(vi) all obligations under interest rate or currency hedging transactions
(valued at the termination value thereof), (vii) all letters of credit and
(viii) all guarantees and arrangements having the economic effect of a guarantee
of any indebtedness of any other Person (other than a Company Subsidiary).
"Indemnified Party" has the meaning set forth in Section 7.06(a).
----------------- ---------------
"Intellectual Property Rights" means any or all of the following and
----------------------------
all worldwide common law and statutory rights in, arising out of, or associated
with: (i) patents and applications therefore and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof (collectively referred to as "Patents"); (ii) inventions (whether
-------
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (iii) copyrights,
copyrights registrations and applications therefore, and all other rights
corresponding thereto throughout the world; (iv) domain names, uniform resource
locators and other names and locators associated with the Internet; (v)
industrial designs and any registrations and applications therefore; (vi) trade
names,
5
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logos, common law trademarks and service marks, trademark and service mark
registrations and applications therefore; (vii) all databases and data
collections and all rights therein; (viii) all moral and economic rights of
authors and inventors, however denominated, (ix) any similar or equivalent
rights to any of the foregoing (as applicable), and (x) software (in source code
and object code form) in all phases of development and all programming, user,
system and other documentation relating to the same.
"IRS" means the Internal Revenue Service.
---
"Liens" means pledges, liens, charges, mortgages, encumbrances and
-----
security interests of any kind or nature whatsoever.
"Material Contracts" means Contracts that are material to the business,
------------------
properties, assets, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole and those which are set forth in
Section 4.13(a) of the Company Disclosure Letter.
---------------
"Material Intellectual Property Rights" means all Intellectual Property
-------------------------------------
Rights that are material to the business, properties, assets, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole.
"Maximum Premium" has the meaning set forth in Section 7.06(b).
--------------- ---------------
"Merger" has the meaning set forth in the recitals hereto.
------
"Merger Consideration" means the U.S. dollar cash amount equal to the
--------------------
price per share of Company Common Stock paid pursuant to the Offer.
"Minimum Tender Condition" has the meaning set forth in Exhibit A.
------------------------ ---------
"Offer" has the meaning set forth in the recitals hereto.
-----
"Offer Documents" has the meaning set forth in Section 2.01(b).
--------------- ---------------
"Offer Price" has the meaning set forth in the recitals hereto.
-----------
"Order" means with respect to any Person, any award, decision,
-----
injunction, judgment, stipulation, order, ruling, subpoena, writ, decree,
consent decree, or verdict entered, issued, made, or rendered by any
Governmental Entity affecting such Person or any of its properties.
"ordinary and usual course of business" means an action taken by a
-------------------------------------
Person that is consistent with the past practices of such Person and is taken in
the ordinary course of normal day-to-day operations of such Person.
"Outside Date" has the meaning set forth in Section 9.01(b)(i).
------------ ------------------
"Parent" has the meaning set forth in the heading hereof.
------
"Parent Board" has the meaning set forth in Section 5.05.
------------ ------------
6
<PAGE>
"Parent Disclosure Letter" means the letter, dated as of the date of
------------------------
this Agreement, delivered by Parent to the Company.
"Parent Material Adverse Effect" means a material adverse effect on the
------------------------------
ability of Parent or Sub to perform its obligations under the Transaction
Documents to which it is a party or on the ability of Parent or Sub to
consummate the Offer, the Merger and the other Transactions.
"Paying Agent" means the bank or trust company selected by Parent prior
------------
to the Effective Time to act as paying agent for the payment of the Merger
Consideration.
"Permit" means all necessary licenses, franchises, permits, consents,
------
approvals, Orders, certificates, authorizations, declarations and filings
required by all Governmental Entities for the conduct of the business and
operations of the Company and each Company Subsidiary as now conducted.
"Permitted Liens" means (i) statutory Liens of carriers, warehousemen,
---------------
mechanics, repairmen, workmen and materialmen incurred in the ordinary and usual
course of business for amounts not yet overdue or being contested in good faith,
(ii) Liens for Taxes not yet due and payable or being contested in good faith in
appropriate proceedings during which collection or enforcement is stayed and
(iii) Liens that, in the aggregate, do not and will not materially interfere
with the ability of the Company and the Company Subsidiaries to conduct business
as currently conducted.
"Person" means any individual, firm, corporation (including any
------
non-profit corporation), general or limited partnership, limited liability
company, trust, joint venture, estate, association, organization, labor union,
or other entity or Governmental Entity.
"Principal Company Stockholders" means those stockholders of the
------------------------------
Company identified in Part A of the Parent Disclosure Letter.
------
"Proceedings" means any action, arbitration, audit, hearing,
-----------
proceeding, investigation, litigation or suit (whether civil, criminal,
administrative or investigative) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Entity or arbitrator.
"Proxy Statement" means a proxy or information statement of the Company
---------------
relating to the approval of this Agreement and the Merger by the Company's
stockholders.
"Receivables" has the meaning set forth in Section 4.22.
----------- ------------
"Redemption Agreement" means the Redemption Agreement, dated as of the
--------------------
date hereof, between the Company and United Air Lines, Inc., a Delaware
corporation.
"Registered Intellectual Property Rights" means all of the registered
---------------------------------------
Intellectual Property Rights owned by, or filed in the name of, the Company or
any of the Company Subsidiaries.
"Rights Plan Amendment" has the meaning set forth in Section 4.14.
--------------------- ------------
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"Schedule 14D-9" means the Solicitation/Recommendation Statement on
--------------
Schedule 14D-9 with respect to the Offer, as amended from time to time.
"Schedule TO" means the Tender Offer Statement on Schedule TO with
-----------
respect to the Offer, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Stock Option and Tender Agreements" means the agreements entered into
----------------------------------
by Parent and the Principal Company Stockholders pursuant to which each of the
Principal Company Stockholders has agreed to take specified actions in
furtherance of the Offer and the Merger.
"Stock Transfer Taxes" means any state, local, foreign or provincial
--------------------
Tax that is attributable to the transfer of Company Common Stock pursuant to
this Agreement.
"Sub" has the meaning set forth in the heading hereof.
---
"Sub Board" has the meaning set forth in Section 5.05.
--------- ------------
"Subsidiary" means, with respect to any Person, any corporation,
----------
association, general or limited partnership, limited liability company, trust,
joint venture, organization or other entity of which more than 50% of the total
voting power of shares of capital stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Superior Company Proposal" has the meaning set forth in Section
------------------------- -------
6.02(e).
-------
"Surviving Corporation" has the meaning set forth in Section 2.04.
--------------------- ------------
"Takeover Statute" has the meaning set forth in Section 4.16.
---------------- ------------
"Tax" or "Taxes" means: (i) any income, corporation, gross income,
--- -----
gross receipts, franchise, profits, gains, capital stock, capital duty,
withholding, social security (or similar), employment, unemployment, disability,
real property, personal property, wealth, welfare, stamp, excise, license,
severance, environmental (including taxes under Section 59A of the Code),
customs duties, occupation, sales, use, transfer, registration, value added,
payroll, premium, property, or windfall profits tax, estimated, ad valorem or
excise tax, alternative or add-on minimum tax or other tax of any kind
whatsoever (whether or not measured in whole or in part by net income and
including any fee, assessment or other charge in the nature of or in lieu of any
tax) imposed by any Tax Authority, including any interest, penalty, or addition
thereto, whether disputed or not; and (ii) any liability for the payment of any
amount of the type described in clause (i) as a result of the Company or any
Company Subsidiary being a successor to or transferee of any other corporation
at any time on or prior to the Closing Date, and any interest, penalties,
additions to tax (whether imposed by law, contractual agreement or otherwise)
and any
8
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liability in respect of any tax as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group.
"Tax Authority" means, with respect to any Tax, the Governmental Entity
-------------
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Taxes for such entity or subdivision,
including any Governmental Entity that imposes, or is charged with collecting,
social security or similar charges or premiums.
"Tax Period" means, with respect to any Tax, the period for which the
----------
Tax is reported as provided under any Applicable Tax Law.
"Tax Return" means all Federal, state, local, provincial and foreign
----------
tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended tax return relating to Taxes.
"Termination Fee" has the meaning set forth in Section 9.02(b).
--------------- ---------------
"Transactions" means, collectively, the Offer, the Merger and the other
------------
transactions contemplated by the Transaction Agreements.
"Transaction Agreements" means this Agreement, the Stock Option and
----------------------
Tender Agreements and the Redemption Agreement.
"Transfer Taxes" means any state, local, foreign or provincial Tax that
--------------
is attributable to the transfer of the beneficial ownership of the Company's or
the Company's Subsidiaries' real or personal property.
"Valid Consents" has the meaning set forth in Section 4.15(i).
-------------- ---------------
"Virus" has the meaning set forth in Section 4.15(k).
----- ---------------
"Voting Company Debt" means any bonds, debentures, notes or other
-------------------
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote.
ARTICLE II
The Offer and the Merger
SECTION 2.01 The Offer.
(a) (i) As promptly as practicable but in no event later than ten
business days after the date of this Agreement, Sub shall, and Parent shall
cause Sub to, commence the Offer within the meaning of the applicable rules and
regulations of the SEC. The initial expiration date of the Offer shall be the
twentieth business day from and after the date the Offer is commenced. The
obligation of Sub to, and of Parent to cause Sub to, accept for payment, and pay
for, any shares of Company Common Stock tendered pursuant to the Offer shall be
subject to the conditions set forth in Exhibit A (any of which may be waived by
---------
Sub in its sole discretion) and to the other
9
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conditions in this Agreement. Sub expressly reserves the right to modify the
terms of the Offer, except that, without the prior written consent of the
Company (such consent to be authorized by the Company Board), Sub shall not (A)
reduce the number of shares of Company Common Stock subject to the Offer, (B)
reduce the consideration per share of Company Common Stock to be paid pursuant
to the Offer below the Offer Price, (C) modify or add to the conditions set
forth in Exhibit A in any manner adverse to the holders of Company Common Stock,
---------
(D) except as provided in Section 2.01 (ii), extend the Offer or (E) change the
-----------------
form of consideration payable in the Offer.
(ii) Notwithstanding the restriction in Section 2.01(a)(i)(D), Sub
---------------------
may, without the consent of the Company, extend the Offer: (A) if at the
scheduled expiration date of the Offer any of the conditions to Sub's obligation
to purchase shares of Company Common Stock are not satisfied or waived, until
such time as such conditions are satisfied or waived; (B) for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer; and (C) in order to provide sufficient
time to respond to any matter hereafter arising and required to be disclosed to
Parent pursuant to Section 6.01(c)(ii) and which causes Parent or Sub to amend
-------------------
the Offer Documents; provided that any extension pursuant to this clause (C)
-------- ----------
shall not exceed 20 business days. In addition, Sub may extend the Offer after
the acceptance of shares of Company Common Stock thereunder for a further period
of time by means of a subsequent offering period under Rule 14d-11 promulgated
under the Exchange Act of not more than 20 business days to meet the objective
(which is not a condition to the Offer) that there be validly tendered, in
accordance with the terms of the Offer, prior to the expiration date of the
Offer (as so extended) and not withdrawn a number of shares of Company Common
Stock, together with shares of Company Common Stock then owned by Parent and
Sub, which represents at least 90% of the Fully Diluted Shares.
(iii) On The Terms And Subject To The Conditions Of The Offer And
This Agreement, Sub Shall Pay For All Shares Of Company Common Stock Validly
Tendered And Not Withdrawn Pursuant To The Offer As Soon As Practicable After
The Expiration Of The Offer And, With Respect To Any Extension Of The Offer, As
Soon As Practicable After Shares Of Company Common Stock Are Validly Tendered.
Sub May, At Any Time, Transfer Or Assign To One Or More Subsidiaries Of Parent
The Right To Purchase All Or Any Portion Of The Shares Of Company Common Stock
Tendered Pursuant To The Offer, But Any Such Transfer Or Assignment Shall Not
Relieve Sub Or Parent Of Their Respective Obligations Under The Offer Or
Prejudice The Rights Of Tendering Stockholders To Receive Payment For Shares Of
Company Common Stock Validly Tendered And Accepted For Payment.
(b) On The Date Of Commencement Of The Offer, Parent And Sub Shall File
With The Sec A Tender Offer Statement On Schedule To With Respect To The Offer,
Which Shall Contain An Offer To Purchase And A Related Letter Of Transmittal And
Summary Advertisement (Such Schedule To And The Documents Included Therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). The Offer Documents will comply as
---------------
to form in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations promulgated thereunder. Parent shall deliver
copies of the proposed forms of the Offer Documents to the Company within a
reasonable time prior to the commencement of the Offer for review and comment by
the Company and its counsel. Each of Parent, Sub and the Company shall promptly
correct any information provided by it for use in
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the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents, as so amended or supplemented, to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 2.02 Company Actions.
(a) The Company hereby approves of and consents to each of the
Transactions and has provided Parent with a signed copy of the written opinion
of Robertson Stephens, Inc. that the Offer Price to be received in the Offer and
the Merger Consideration to be received pursuant to the Merger is fair, from a
financial point of view, to the holders of Company Common Stock. The Company has
been authorized by Robertson Stephens, Inc. to include such fairness opinion (or
a reference thereto with the consent of Robertson Stephens, Inc.) in the
Schedule 14D-9 referred to below and the Proxy Statement.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC the Schedule 14D-9 containing the recommendations
described in Section 4.04(b) and shall mail the Schedule 14D-9 to the holders of
---------------
Company Common Stock. The Schedule 14D-9 will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall deliver copies of the
proposed form of the Schedule 14D-9 to Parent within a reasonable time prior to
the filing thereof with the SEC for review and comment by Parent and its
counsel. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings, computer files
and all other information in the Company's possession or control regarding the
beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including, without limitation, updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of Applicable Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Transactions, Parent and Sub shall hold in confidence the
information contained in any such labels, listings and files, shall use such
information only in
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connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall deliver to the Company or destroy all copies of such
information then in their possession.
SECTION 2.03 Board of Directors; Section 14(f).
(a) If requested by Parent, promptly after the acceptance for payment of
the shares of Company Common Stock to be purchased pursuant to the Offer, Sub
shall be entitled to designate such number of directors on the Company Board
(and on each committee of the Company Board and on each board of directors of
each Company Subsidiary designated by Parent) as will give Sub representation on
the Company Board (or such committee or Company Subsidiary board of directors)
equal to at least that number of directors, rounded up to the next whole number,
which is the product of (a) the total number of directors on the Company Board
(or such committee or Company Subsidiary board of directors) giving effect to
the directors appointed or elected pursuant to this sentence multiplied by (b)
the percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Sub plus the number of shares of Company
Common Stock otherwise owned by Sub or any other subsidiary of Parent bears to
(ii) the number of shares of Company Common Stock then outstanding, and the
Company shall, at such time, cause Sub's designees to be so appointed or
elected. The Company shall take all actions necessary to cause the persons
designated by Parent to be directors on the Company Board (or a committee of the
Company Board or the board of directors of a Company Subsidiary designated by
Parent) pursuant to the preceding sentence to be so appointed or elected
(whether, at the request of Parent, by means of increasing the size of the
Company Board (or such committee or Company Subsidiary board of directors) or
seeking the resignation of directors and causing Parent's designees to be
appointed or elected).
(b) The Company's obligation to appoint designees of Parent and/or Sub to
the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule l4f-1 in order to fulfill its
obligations under this Section 2.03, and shall include in the Schedule 14D-9
------------
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1. Parent and Sub will supply to
the Company any information with respect to any of them and their nominees,
officers, directors and Affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's and/or Sub's
designees pursuant to this Section 2.03 and prior to the Effective Time, any
------------
amendment or termination of this Agreement, extension for the performance or
waiver of the obligations or other acts of Parent or Sub or waiver of the
Company's rights hereunder, will require the concurrence of a majority of the
members of the Company Board who are members of the Company Board on the date of
this Agreement.
SECTION 2.04 The Merger. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time. At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"). At the election of
---------------------
Parent, any direct or indirect Subsidiary or other Affiliate of Parent may be
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substituted for Sub as a constituent corporation in the Merger. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
SECTION 2.05 Closing. The Closing shall take place at the offices of Mayer,
Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603 at 10:00 a.m.
on the second business day following the satisfaction (or, to the extent
permitted by Applicable Law, waiver by all parties) of the conditions set forth
in Article VIII (or, to the extent permitted by law, waived by the parties
------------
entitled to the benefits thereof), or at such other place, time and date as
shall be agreed in writing between Parent and the Company.
SECTION 2.06 Effective Time. At the Closing, Parent and the Company will
cause the Certificate of Merger to be executed and filed with the Secretary of
State of the State of Delaware as provided in Section 251 or 253 of the DGCL.
The Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Secretary of State of the State of Delaware or such
other time as shall be agreed upon by the parties and set forth in the
Certificate of Merger in accordance with the DGCL (the "Effective Time"). From
--------------
and after the Effective Time, the Merger shall have all the effects provided by
Section 259 of the DGCL, including without limitation, the effect that the
Surviving Corporation shall possess all of the assets, rights, privileges,
powers and franchises and shall be subject to all of the liabilities,
restrictions, disabilities and duties of the Company and Sub, all as provided
under the DGCL.
SECTION 2.07 Certificate of Incorporation and By-laws.
(a) The Company Charter, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by Applicable Law;
provided, however, that such Company Charter shall be amended to become
-------- -------
identical to the Certificate of Incorporation of Sub as in effect immediately
prior to the Effective Time except that Article I thereof shall be amended to
change the name of the Surviving Corporation to the name of the Company.
(b) The by-laws of Sub as in effect immediately prior to the Effective
Time shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by Applicable Law.
SECTION 2.08 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
SECTION 2.09 Officers. The officers of the Company shall, from and after
the Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
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ARTICLE III
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company, the Company Subsidiaries,
Parent or Sub shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock, Company Employee Stock Options and
Company Warrants.
(i) Subject to Sections 3.01(b), and 3.01(d), each issued and
---------------- -------
outstanding share of Company Common Stock shall be converted into the
Merger Consideration.
(ii) As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section
-------
3.02, without interest.
----
(iii) Company Employee Stock Options and Company Warrants shall be
treated as set forth in Section 7.04.
------------
(d) Dissenters' Rights. Notwithstanding anything in this Agreement to the
contrary, Dissenters' Shares shall not be converted into Merger Consideration as
provided in Section 3.01(c), but rather the holders of Dissenters' Shares shall
---------------
be entitled to payment of the fair value of such Dissenters' Shares in
accordance with Section 262 of the DGCL; provided, however, that if any such
-------- -------
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of fair value under Section 262 of the DGCL, then the
right of such holder to be paid the fair value of such holder's Dissenters'
Shares shall cease and such Dissenters' Shares shall be treated as if they had
been converted as of the Effective Time into Merger Consideration as provided in
Section 3.01(c). The Company shall provide prompt notice to Parent of any
---------------
demands received by the Company for appraisal of any shares of Company Common
Stock, attempted withdrawals of any such demands and any other documents
received in connection with any assertion of rights to payment of fair value
under Section 262 of the DGCL, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
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<PAGE>
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 3.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a bank
or trust company reasonably acceptable to the Company to act as the Paying Agent
for the payment of the Merger Consideration upon surrender of Certificates
representing Company Common Stock. The Surviving Corporation shall provide to
the Paying Agent on a timely basis, as and when needed after the Effective Time,
cash necessary to pay for the shares of Company Common Stock converted into the
right to receive the Merger Consideration pursuant to Section 3.01(c) (such cash
---------------
being hereinafter referred to as the "Exchange Fund").
-------------
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate or Certificates, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and shall
be in a form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
-------
3.01(c), and the Certificate so surrendered shall forthwith be canceled. In the
-------
event of a transfer of ownership of Company Common Stock which is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall (A) pay any transfer or
other Taxes required by reason of the payment to a Person other than the
registered holder of such Certificate, or (B) establish to the satisfaction of
the Surviving Corporation that such Tax has been paid or is otherwise not
applicable. Until surrendered as contemplated by this Section 3.02, each
------------
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01(c). No
---------------
interest shall be paid or shall accrue on any Merger Consideration payable upon
the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article III upon
-----------
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates formerly representing shares of Company Common Stock are presented
to the Surviving
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<PAGE>
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
-----------
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock six months after
the Effective Time shall be delivered to the Surviving Corporation, and any
holder of Company Common Stock who has not theretofore complied with this
Article III shall thereafter look only to the Surviving Corporation for payment
-----------
of its claim for Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Applicable Law. If any
Certificate has not been surrendered prior to the date that is five years after
the Effective Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(g) Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Company Common Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of applicable state, local or foreign tax law. To
the extent that amounts are so withheld and paid over to the appropriate Tax
Authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock, sold such consideration
for an amount of cash equal to the fair market value of such consideration at
the time of such deemed sale and paid such cash proceeds to the appropriate Tax
Authority.
(h) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed, the Paying
Agent shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with Section 3.01 hereof, provided that the Person to whom the Merger
------------
Consideration is paid shall, as a condition precedent to the payment thereof,
indemnify the Surviving Corporation in a manner satisfactory to it (including,
without limitation, the posting by such Person of such bond and security as the
Surviving Corporation may reasonably request) against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
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<PAGE>
SECTION 3.03 Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
Company Capital Stock (other than by virtue of the issuance of Company Common
Stock under the ESPP in accordance with this Agreement, upon the exercise of
Company Employee Stock Options or Company Warrants outstanding on the date of
this Agreement and in accordance with their present terms) shall occur that is
not otherwise consented to by Parent in writing, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or stock dividend thereon, in any of these cases with a
record date during such period, the cash payable pursuant to the Offer, the
Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted.
ARTICLE IV
Representations and Warranties of the Company
Except as otherwise disclosed in the Company Disclosure Letter, the Company
represents and warrants to Parent and Sub, as follows:
SECTION 4.01 Organization, Standing and Power. The Company and each of the
Company Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has full power
and authority and possesses all Permits necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its business as
presently conducted, other than such Permits the lack of which, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Company Material Adverse Effect. The Company and each Company Subsidiary is duly
qualified to do business in each jurisdiction where the nature of its business
or its ownership of its properties make such qualification necessary or
beneficial, except in such jurisdictions where the failure to be so qualified,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. True and complete copies of
the Company Charter, the Company By-laws and the charter documents, by-laws,
organizational documents and partnership, limited liability company and joint
venture agreements (and in each case all amendments thereto) of each of the
Company Subsidiaries as in effect immediately prior to the date hereof have been
delivered to Parent. Neither the Company nor any of the Company Subsidiaries is
in violation of any term of its respective certificate of incorporation or by-
laws (or other organizational documents).
SECTION 4.02 Company Subsidiaries; Equity Interests.
(a) The Company owns directly or indirectly each of the outstanding shares
of capital stock or a 100% ownership interest, as applicable, of each of the
Company Subsidiaries free and clear of all Liens. Each of the outstanding shares
of capital stock of each of the Company Subsidiaries having corporate form is
duly authorized, validly issued, fully paid and nonassessable. The following
information for each Company Subsidiary is set forth in Section 4.02 of the
------------
Company Disclosure Letter: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; and (iii) the
name of each stockholder or owner and the number of issued and outstanding
shares of capital stock or share capital held by it or the type and amount of
any ownership interest.
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(b) Except for its interests in the Company Subsidiaries, neither the
Company nor any Company Subsidiary (i) owns, has any right to, or, except as set
forth in Section 4.02 of the Company Disclosure Letter, is, or during the last
90 days has been involved in any material negotiations to, acquire, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any Person, except through barter
transactions entered into in the ordinary and usual course of business and where
the amount of the transaction is less than $100,000 or (ii) has the ability to
control (whether through the ownership of voting securities or otherwise) any
other Person (any of such interests under clause (i) or (ii) other than a
---------- ----
Company Subsidiary, a "Company Investment"). No Company Investment is,
------------------
individually or when taken together with all other Company Investments, material
to the business of the Company and the Company Subsidiaries taken as a whole.
SECTION 4.03 Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock, 10,000,000 shares of
preferred stock and 100,000 shares of Series A Participating Preferred Stock,
$0.001 par value per share ("Company Preferred Stock" and collectively with the
-----------------------
Company Common Stock, "Company Capital Stock"). As of the date hereof, (i)
---------------------
40,757,079 shares of Company Common Stock and no shares of Company Preferred
Stock were issued and outstanding, (ii) 241,000 shares of Company Common Stock
and no shares of Company Preferred Stock were held by the Company in its
treasury, (iii) 8,642,444 shares of Company Common Stock were subject to
outstanding Company Employee Stock Options and the weighted average exercise
price of such options was $1.3285 per share, and (iv) 161,408 shares of Company
Common Stock were subject to outstanding Company Warrants and the weighted
average exercise price of such warrants was $2.06 per share and 182,451 shares
of Company Common Stock reserved for issuance pursuant to the ESPP. Section 4.03
------------
of the Company Disclosure Letter sets forth a full list of all outstanding
Company Employee Stock Options and Company Warrants, including the name of the
Person to whom such options (or warrants) have been granted, the number of
shares subject to each option (or warrant), the per share exercise price for
each option (or warrant), the vesting schedule for each option (or warrant) and
whether such option (or warrant) automatically terminate in the event of a
change in control of the Company. Except as set forth above, and except for the
ESPP, as of the date hereof, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding. All
outstanding shares of Company Capital Stock are, and all such shares that may be
issued prior to the Effective Time will be when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Company Charter, the Company By-laws or any Contract to which the Company is a
party or otherwise bound. Except as set forth above, there are no Voting Company
Debts, Company Warrants or Company SARs issued or outstanding and the only
rights outstanding under any Company Option Plan are Company Employee Stock
Options. Except as set forth above or pursuant to the Company Rights Agreement,
as of the date of this Agreement, there are no options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (A) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other
18
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equity interest in, the Company or of any Company Subsidiary or any Voting
Company Debt, (B) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (C) that give any Person the
right to receive any economic benefit or right similar to or derived from the
economic benefits and rights occurring to holders of Company Capital Stock.
There are not any (1) outstanding contractual obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary, or (2) voting trusts or
other agreements or understandings to which the Company or any of the Company
Subsidiaries is a party with respect to the voting or transfer of capital stock
of the Company or any of the Company Subsidiaries.
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action.
(a) The Company has full corporate power and authority to execute and
deliver each Transaction Agreement to which it is a party and each agreement,
document and instrument to be executed and delivered by or on behalf of it
pursuant to, or in connection with or as contemplated by the Transaction
Agreements and to consummate the Transactions. The execution, delivery and
performance by the Company of each Transaction Agreement to which it is a party
and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company, and
except for the Company Stockholder Approval in the case of the Merger, no other
corporate action on the part of the Company is necessary to authorize the
consummation of the Transactions. The Transaction Agreements to which the
Company is a party have been duly executed and delivered by the Company and
constitute (assuming the due authorization, execution and delivery by Parent and
Sub), valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to general principles of equity.
(b) The Company Board, at a meeting duly called and held prior to
execution of any of the Transaction Agreements, duly and unanimously adopted
resolutions (i) approving and declaring advisable this Agreement and the other
Transaction Agreements, the Merger and the other Transactions, (ii) determining
that the terms of the Offer, the Merger and the other Transactions are fair to
and in the best interests of the Company and its stockholders, (iii)
recommending that the holders of Company Common Stock accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer, (iv)
recommending that the Company's stockholders approve and adopt this Agreement
and (v) adopting this Agreement and the other Transaction Agreements. Such
resolutions are sufficient to render inapplicable to Parent and Sub, to this
Agreement and the other Transaction Agreements to which the Company is a party,
and to the Offer, the Merger and the other Transactions the provisions of
Section 203 of the DGCL. The Company has been advised by each of its directors,
executive officers, affiliates or Subsidiaries that each such Person intends to
tender all shares of Company Common Stock owned by such Person pursuant to the
Offer, except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval and adoption of
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this Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the "Company Stockholder Approval"). No vote or approval of any
----------------------------
holder of Company Capital Stock is necessary to approve any Transaction
Agreement other than this Agreement or to consummate the Offer or any
Transaction other than the Merger.
SECTION 4.05 No Conflicts; Consents. Except as set forth in Section 4.05 of
------------
the Company Disclosure Letter, the execution and delivery by the Company of each
Transaction Agreement to which it is a party do not, and the consummation of the
Offer, the Merger and the other Transactions and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
a loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien (other than Permitted Liens) upon any of the properties or assets of
the Company or any Company Subsidiary under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any Contract to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in the following sentence, any provision of any Order or Applicable Law
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the cases of clause (ii) or (iii) above,
----------- -----
any such items that, individually or in the aggregate, have not had and could
not reasonably be expected to have a Company Material Adverse Effect. No Consent
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to the Company or any Company
Subsidiary in connection with the execution, delivery and performance of any
Transaction Agreement to which it is a party or the consummation of the
Transactions, other than (A) compliance with and filings under the HSR Act, (B)
the filing with the SEC of (1) the Schedule 14D-9, (2) a Proxy Statement, if
such approval is required by Applicable Law, and (3) such reports under Section
13 of the Exchange Act as may be required in connection with this Agreement and
the other Transaction Agreements, the Offer, the Merger and the other
Transactions, (C) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business, (D) such filings as may be required in connection with the Taxes
described in Section 7.08, and (E) such other items as are set forth in Section
------------ -------
4.05 of the Company Disclosure Letter.
----
SECTION 4.06 SEC Documents; Financial Statements; Undisclosed Liabilities.
(a) The Company has timely filed with the SEC all Company SEC Documents.
As of its respective date, each Company SEC Document, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the requirements of the Securities Act and Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been revised
or superseded by a later filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material
20
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fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The Financial Statements comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(c) The Company and the Company Subsidiaries have no material liabilities
or obligations of any nature, whether accrued, absolute, contingent or
otherwise, and whether or not required to be disclosed on a balance sheet
prepared in accordance with GAAP, except liabilities (i) stated or adequately
reserved against in the Financial Statements of the Company included in the
Filed Company SEC Documents or disclosed in Section 4.06(c) of the Company
---------------
Disclosure Letter, or (ii) incurred in the ordinary and usual course of business
since March 31, 2001, or (iii) provided for in footnotes to the Financial
Statements.
SECTION 4.07 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents or the Schedule 14D-9 will, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) the Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 4.08 Absence of Certain Changes or Events. Except as disclosed in
the Filed Company SEC Documents or in Section 4.08 of the Company Disclosure
------------
Letter, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, the Company
has conducted its business only in the ordinary and usual course of business,
and during such period none of the Company or any Company Subsidiary has:
(i) experienced or been affected by any event, change, effect or
development that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect; or
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(ii) taken any action that would not be permitted to be taken after
the date hereof under Section 6.01.
------------
SECTION 4.09 Taxes.
(a) All Tax Returns required to be filed or sent through the date hereof
and which have not otherwise been validly extended, by or with respect to the
Company and the Company Subsidiaries, have been filed or sent and all Taxes
required to be paid through the date hereof by the Company and the Company
Subsidiaries, whether disputed or not and whether or not shown on any Tax
Return, have been paid, except Taxes which have not yet accrued or otherwise
become due, for which adequate provision has been made in the pertinent
financial statements referred to in Section 4.06 hereof. All such Tax Returns
------------
were correct and complete in all material respects. The provisions for Taxes on
the Financial Statements and on the latest balance sheet included in the Company
SEC Documents are sufficient as of their respective dates for the payment of all
accrued and unpaid Taxes of any nature of the Company and the Company
Subsidiaries, whether or not assessed or disputed. All Taxes and other
assessments and levies which the Company or any of the Company Subsidiaries is
required to withhold or collect have been withheld and collected and have been
paid over to the proper Governmental Entities in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party. There is no pending dispute or claim concerning any Tax liability
of the Company or any of the Company Subsidiaries either (A) claimed or raised
by any Tax Authority or (B) as to which the Company has knowledge based upon
personal contact with any agent of or other Person acting on behalf of or for
such Tax Authority. Except as provided in Section 4.09 of the Company Disclosure
------------
Letter, neither the Company nor any of the Company Subsidiaries has received
notice of any audit of any Tax Return filed by such Person. Except as provided
in Section 4.09 of the Company Disclosure Letter, neither the Company nor any of
------------
the Company Subsidiaries has received notice of any claim made by any authority
in a jurisdiction where the Company or such Company Subsidiary does not file Tax
Returns that the Company or such Company Subsidiary is or may be subject to
taxation by that jurisdiction. There are no Liens recorded or asserted on any of
the assets or properties of the Company or any of the Company Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) The Company has made available to Parent correct and complete copies
of all Tax Returns, examination reports, statements of deficiencies assessed
against or agreed to by the Company or any of the Company Subsidiaries and all
other communications relating thereto since December 31, 1998.
(c) Except as set forth in Section 4.09 of the Company Disclosure Letter,
------------
neither the Company nor any of the Company Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, nor has any such waiver or agreement
been requested by the IRS or any other Tax Authority; and neither the Company
nor any of the Company Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return.
(d) Except as set forth in Section 4.09 of the Company Disclosure Letter:
------------
(i) neither the Company nor any of the Company Subsidiaries has filed a consent
under Section 341(f) of
22
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the Code concerning collapsible corporations or agreed to have Section 341(f)(2)
of the Code apply; (ii) neither the Company nor any of the Company Subsidiaries
has made any payments, is obligated to make any payments, or is party to any
agreement that under any circumstances could obligate it to make any payments
that will not be deductible under Section 280G or Section 162(m) of the Code;
(iii) neither the Company nor any of the Company Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code; (iv) neither the Company nor any of the Company Subsidiaries is a
party to any Tax allocation or sharing agreement; (v) neither the Company nor
any of the Company Subsidiaries (A) has been a member of an affiliated group
filing a consolidated federal income Tax return (other than such a group of
which the Company is the common parent) or (B) will be required to pay the Taxes
of any other Person under Treasury Regulation ss.1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, agreement or otherwise; and (vi) neither the Company nor any of the
Company Subsidiaries is or will be required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company or a Company Subsidiary (nor does the
Company have any knowledge that the Internal Revenue Service has proposed any
such adjustment or change of accounting method). There are no requests for
rulings or determinations in respect of any Tax or Tax matter pending between
the Company or any of the Company Subsidiaries and any Tax Authority.
SECTION 4.10 Benefit Plans; ERISA Compliance; Excess Parachute Payments.
(a) Section 4.10 of the Company Disclosure Letter contains a true and
------------
complete list of each "employee benefit plan" (within the meaning of Section
3(3) of ERISA), stock purchase, stock option, severance, employment, change-in-
control, fringe benefit, collective bargaining, unemployment compensation,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including, without limitation, any funding mechanism therefor now in
effect or required in the future as a result of any Transaction, including the
Offer or the Merger or otherwise), whether formal or informal, oral or written,
legally binding or not, under which any employee or former employee of the
Company or the Company Subsidiaries or any of their respective ERISA Affiliates
has any present or future right to benefits or under which the Company or the
Company Subsidiaries or any of their respective ERISA Affiliates has any present
or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans."
-------------
(b) With respect to each Company Plan, the Company has delivered to Parent
a current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent IRS
determination or opinion letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company, the Company Subsidiaries or any of their ERISA
Affiliates concerning the extent or nature of the benefits provided under a
Company Plan; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information.
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(c) (i) Each Company Plan has been established and complies and has been
administered in form and operation in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations; (ii) each Company Plan which is intended
to be qualified within the meaning of Code Section 401(a) is so qualified and
has received a favorable determination letter or, in the case of a prototype
plan, opinion letter from the IRS as to its qualification under Section 401(a)
of the Code and the tax-exempt status of any trust which forms a part of such
plan under Section 501(a) of the Code, which favorable determination letter or,
in the case of a prototype plan, opinion letter covers all amendments to the
plan for which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired, and nothing has
occurred, whether by action or failure to act, that could reasonably be expected
to cause the loss of such qualification; (iii) no event has occurred and no
condition exists that would subject the Company or the Company Subsidiaries or
any of their respective ERISA Affiliates, to any tax, fine, Lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (iv) for each Company Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; (v) no "prohibited transaction"
(as such term is defined in ERISA Section 406 and Code Section 4975) has
occurred with respect to any Company Plan; (vi) no Company Plan provides retiree
welfare benefits (and none of the Company or any Company Subsidiaries has any
obligations to provide any retiree welfare benefits) except, in either case, to
the extent required by Section 4980B of the Code; and (vii) all awards, grants
or bonuses made pursuant to any Company Plan have been, or will be, fully
deductible to the Company or the Company Subsidiaries notwithstanding the
provisions of Section 162(m) of the Code and the regulations promulgated
thereunder.
(d) With respect to any Company Plan (or the assets thereof), (i) no
actions, suits or claims (other than routine claims for benefits in the ordinary
and usual course of business) are pending or threatened in writing, (ii) no
facts or circumstances exist that could give rise to any such actions, suits or
claims and (iii) none of the assets of any Company Plan are invested in employer
securities or employer real property.
(e) Except as set forth in Section 4.10 of the Company Disclosure Letter,
------------
no Company Plan exists that could result in the payment to any present or former
employee of the Company or the Company Subsidiaries or any of their respective
ERISA Affiliates of any money or other property or accelerate or provide any
other rights or benefits to any present or former employee of the Company or any
Company Subsidiary or any of their respective ERISA Affiliates as a result of
the Transactions, including the Offer and the Merger. None of the payments
contemplated by the Company Plans would, individually or in the aggregate,
constitute excess parachute payments (as defined in Section 280G of the Code
(without regard to subsection (b)(4) thereof)).
(f) None of the Company Plans is subject to Title IV of ERISA and none of
the Company Plans is a multiemployer plan (as defined in Section 3(37) of
ERISA).
SECTION 4.11 Litigation. Except as set forth in Section 4.11 of the Company
------------
Disclosure Letter, there are (i) no continuing Orders, to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets are bound or to
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<PAGE>
which any of their respective directors, officers, employees or agents, in such
capacities, is a party or by which any of their respective properties or assets
are bound, and (ii) no Proceedings pending and for which service of process has
been made against the Company or any Company Subsidiary or against any of their
respective directors, officers, employees or agents, in such capacities or, to
the knowledge of the Company, threatened or pending against the Company or any
Company Subsidiary, or against any of their respective directors, officers,
employees or agents, at law or in equity, or before or by any Governmental
Entity. There are no Proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary which may call into
question the validity or hinder the enforceability or performance of this
Agreement or any of the Transaction Agreements, and, to the knowledge of the
Company, there has occurred no event, and there does not exist any condition or
state of facts, on the basis of which any such claim may be asserted.
SECTION 4.12 Compliance with Applicable Laws.
(a) The business of the Company and each Company Subsidiary has been and
is being conducted in compliance in all material respects with all Applicable
Laws and Orders, including, without limitation, ERISA, all Applicable Laws and
Orders relating to antitrust or trade regulation, employment practices and
procedures and the health and safety of employees. Except as set forth in
Section 4.12(a) of the Company Disclosure Letter, none of the Company or the
---------------
Company Subsidiaries has, since December 31, 1997, been subject to any Order
with respect to any of the foregoing or received any notice, demand letter,
inquiry or formal complaint or claim with respect to any of the foregoing or the
enforcement of any of the foregoing, nor has the Company or any Company
Subsidiary been the subject of any criminal Proceedings or convicted of any
felony or misdemeanor.
(b) The Company and the Company Subsidiaries employ the number of full-
time and part-time employees as are indicated in Section 4.12(b) of the Company
---------------
Disclosure Letter. Except as set forth in Section 4.12(b) of the Company
---------------
Disclosure Letter: (i) none of the Company or any of the Company Subsidiaries is
delinquent in payments to any of its employees for any wages, salaries,
commissions, fees, bonuses or other direct compensation for any services
performed for it to the date hereof or amounts required to be reimbursed to such
employees; (ii) there are no charges of employment discrimination, retaliation,
or unfair labor practices or strikes, slowdowns, stoppages of work, or any other
concerted interference with normal operations existing, pending or, to the
knowledge of the Company, threatened against or involving the Company or any of
the Company Subsidiaries; and (iii) there are no claims or charges relating to
or alleging violations of any Applicable Laws and Orders, including, without
limitation, ERISA, all Applicable Laws and Orders relating to antitrust or trade
regulation, employment practices and procedures and the health and safety of
employees, existing, pending or, to the knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries nor, to the knowledge of
the Company, has there occurred any event nor does there exist any condition on
the basis of which any such claim is reasonably likely to be asserted.
SECTION 4.13 Contracts; Debt Instruments.
(a) Except as disclosed in Section 4.13(a) or 4.15(h) of the Company
--------------- -------
Disclosure Letter, there are no Material Contracts relating to the business of
the Company. Neither the
25
<PAGE>
Company nor any of the Company Subsidiaries is in violation of or in default
under (nor does there exist any condition which with the passage of time or the
giving of notice or both would cause such a violation of or default under) any
Material Contract to which it is a party or by which it or any of its properties
or assets is bound, except for violations or defaults that have not and could
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect. Each Material Contract is in full force and
effect, and is a legal, valid and binding obligation of the Company or a Company
Subsidiary and, to the knowledge of the Company, each of the other parties
thereto, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity (regardless of whether considered in a
proceeding in equity or at law). No condition exists or event has occurred which
(whether with or without notice or lapse of time or both) would constitute a
default by the Company or a Company Subsidiary or, to the knowledge of the
Company, any other party thereto under any Material Contract or result (other
than due to consummation of the Offer or the Merger) in a right of termination
of any Material Contract.
(b) Set forth in Section 4.13(b) of the Company Disclosure Letter is (i) a
---------------
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any Indebtedness of the
Company or the Company Subsidiaries in an aggregate principal amount in excess
of $150,000 is outstanding or may be incurred, and (ii) the respective principal
amounts currently outstanding thereunder.
(c) Except as disclosed in Section 4.13(c) of the Company Disclosure
---------------
Letter, neither the Company nor any of the Company Subsidiaries has entered into
any Contract and there is no commitment, judgment, injunction, Order or decree
to which the Company or any Company Subsidiary is a party or subject to that has
or could reasonably be expected to have the effect of prohibiting or impairing
the conduct of business by the Company or any Company Subsidiary or any Contract
that may be terminable as a result of Parent's status as a competitor of any
party to such Contract or arrangement. Except as disclosed in Section 4.13(c) of
---------------
the Company Disclosure Letter, the Company and the Company Subsidiaries have not
entered into any Contract under which the Company or any Company Subsidiary is
restricted from selling, licensing or otherwise distributing any of their
respective technology or products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
SECTION 4.14 Company Rights Agreement. The Company has taken all necessary
action, including, without limitation, amending the Company Rights Agreement
with respect to all of the outstanding Company Rights, (a) to render the Company
Rights Agreement inapplicable to this Agreement, the Offer, the Merger and the
other Transactions (including the execution of the Stock Option and Tender
Agreements), (b) to ensure that in connection with the Merger, the Offer and the
Transactions that (i) Parent and Sub, or either of them, are not deemed to be an
Acquiring Person (as defined in the Company Rights Agreement) pursuant to the
Company Rights Agreement and (ii) no "Share Acquisition Date," "Section
11(a)(ii) Trigger Date" or "Section 13 Event" (as such terms are defined in the
Company Rights Agreement) occurs by reason of the execution and delivery of this
Agreement or the consummation of the Offer, the Merger or other Transactions
(including the execution of the Stock Option and Tender Agreements) and (c) so
that the Company will have no obligations under the Company Rights or
26
<PAGE>
the Company Rights Agreement in connection with the Offer, the Merger or the
Transactions and the holders of Company Common Stock and the associated Company
Rights will have no rights under the Company Rights or the Company Rights
Agreement in connection with the Offer, the Merger or the Transactions
(including the execution of the Stock Option and Tender Agreements) (the "Rights
Plan Amendment"). The Company Rights Agreement, as so amended, has not been
further amended or modified. Copies of all such amendments to the Company Rights
Agreement have been and will be provided to Parent and its counsel for their
approval prior to the adoption of any such amendments.
SECTION 4.15 Intellectual Property.
(a) Section 4.15(a) of the Company Disclosure Letter is a complete and
---------------
accurate list of all Registered Intellectual Property Rights and specifies,
where applicable, the jurisdictions in which each such item of Registered
Intellectual Property Rights has been issued or registered.
(b) Section 4.15(b) of the Company Disclosure Letter is a complete and
---------------
accurate list (by name and version number) of all current products or service
offerings of the Company or any of the Company Subsidiaries. Such list set forth
in Section 4.15(b) of the Company Disclosure Letter, together with any products
---------------
or service offerings of the Company or any Company Subsidiary that have been
distributed or provided in the two year period preceding the date hereof or
which are intended to be distributed in the future or are under development are
referred to herein as the "Company Products".
----------------
(c) The Company and the Company Subsidiaries own, or are validly licensed
or otherwise have the enforceable right to use, all Material Intellectual
Property Rights that are currently used in the conduct of the business of the
Company and the Company Subsidiaries. The Company has sole and exclusive rights
(and is not contractually obligated to pay any compensation to any third party
in respect thereof) to the use of all the Material Intellectual Property Rights
or the material covered thereby in connection with the services or products in
respect of which the Material Intellectual Property Rights are being used.
Without limiting the foregoing: (i) the Company owns or has a license to use all
trade names, logos, common law and statutory trademarks and service marks used
in connection with the operation or conduct of the business of the Company and
the Company Subsidiaries, including the sale, distribution or provision of any
Company Products by the Company or the Company Subsidiaries and (ii) the Company
owns or has a license to use all copyrighted works that are Company Products and
used in connection with the operation or conduct of the business of the Company
and the Company Subsidiaries, including the sale, distribution or provision of
any Company Products by the Company or the Company Subsidiaries.
(d) No claims with respect to any Intellectual Property Rights owned or
used by the Company and the Company Subsidiaries have been asserted or are
threatened in writing by any Person, and to the knowledge of the Company there
is no basis for any Person to make any claim, (i) to the effect that the sale,
licensing or use of any of the Company Products as now manufactured, sold or
licensed or used or proposed for manufacture, use, sale or licensing by the
Company or any of the Company Subsidiaries infringes on any Intellectual
Property Rights of another Person, (ii) against the use by the Company or any of
the Company Subsidiaries of any Intellectual Property Rights of another Person,
(iii) challenging the ownership by the Company
27
<PAGE>
or any of the Company Subsidiaries or the validity of any of Intellectual
Property Rights owned or used by the Company or any of the Company Subsidiaries,
or (iv) to the effect that the Company or any Company Subsidiary is engaged in
any unfair competition or trade practices under any jurisdiction, except claims
which have not had and could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. To the Company's knowledge,
there is no material unauthorized use, infringement or misappropriation of any
of the Intellectual Property Rights owned or used by the Company and the Company
Subsidiaries by any third party, including, without limitation, any employee or
former employee of the Company or any of the Company Subsidiaries, which has had
or could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No Intellectual Property Rights owned or used
by the Company and the Company Subsidiaries or Company Product is subject to any
Proceeding or outstanding Order restricting in any manner the use, licensing or
transfer thereof by the Company or any of the Company Subsidiaries or which may
affect the validity, enforceability or use of such Intellectual Property Rights,
except to the extent any such restriction has not had and could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(e) To the Company's knowledge and except as set forth in Section 4.15(e)
---------------
of the Company Disclosure Letter, each material item of Registered Intellectual
Property Rights is valid and subsisting, all necessary registration, maintenance
and renewal fees currently due in connection with such Registered Intellectual
Property Rights have been made and all necessary documents, recordations and
certificates in connection with such Registered Intellectual Property Rights
have been filed with the relevant patent, copyright, trademark or other
Governmental Entity, as the case may be, for the purposes of maintaining such
Registered Intellectual Property Rights in the ordinary and usual course of the
Company's or any Company Subsidiary's business.
(f) Except as set forth in Section 4.15(f) of the Company Disclosure
---------------
Letter, neither the Company nor any Company Subsidiary has knowingly permitted
the Company's rights in any Material Intellectual Property Rights to lapse or
enter the public domain.
(g) Section 4.15(g) of the Company Disclosure Letter lists all Material
---------------
Contracts to which the Company or any Company Subsidiary is a party: (i) with
respect to Company Intellectual Property Rights licensed or transferred to any
third party (other than end-user licenses in the ordinary and usual course of
business); or (ii) pursuant to which a third party has licensed or transferred
any Material Intellectual Property Rights to the Company or any Company
Subsidiary (other than end-user licenses in the ordinary and usual course of
business). Except as set forth in Section 4.15(g) of the Company Disclosure
---------------
Letter, all Material Contracts relating to either (i) the Company Intellectual
Property Rights or (ii) Intellectual Property Rights of a third party licensed
to the Company or any Company Subsidiary, are in full force and effect. Except
as set forth in Section 4.15(g) of the Company Disclosure Letter, the
---------------
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to a loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Lien (other than Permitted Liens) upon
any of the properties or assets of the Company or any Company
28
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Subsidiary under such Material Contracts. To the Company's knowledge, it and
each of its Subsidiaries is in compliance with, and has not materially breached
any term of any such Material Contracts and, to the knowledge of Company, all
other parties to such Material Contracts are in compliance with, and have not
materially breached any term of, such Material Contracts. Except with respect to
the nontransferable Contracts listed in Section 4.15(g) of the Company
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Disclosure Letter, following the Closing Date, the Surviving Corporation will be
permitted to exercise all of the Company's rights under such Contracts to the
same extent the Company and the Company Subsidiaries would have been able to had
the Transactions not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments that the Company
would otherwise be required to pay. Neither this Agreement nor the Transactions,
including the assignment to Parent or Sub by operation of law or otherwise of
any Contracts to which any Company Subsidiary is a party, will result in (i)
either Parent's or the Sub's granting to any third party any right to or with
respect to any Material Intellectual Property Rights owned by, or licensed to,
either of them, (ii) either Parent or Sub being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses, or (iii) either Parent or Sub being obligated to pay any
royalties or other material amounts to any third party in excess of those
otherwise payable by the Company or any of its Subsidiaries.
(h) The Company and each of its Subsidiaries have taken reasonable steps
under the relevant circumstances to protect their respective rights in the
confidential information and trade secrets that they wish to protect or any
trade secrets or confidential information of third parties provided to the
Company or any of the Company Subsidiaries.
(i) The Company and each Company Subsidiary have received Valid Consents
(as defined below) from all Persons who have provided personal information,
which are sufficient to give the Company or any Company Subsidiary the right to
use such personal information for the purposes of conducting the Company's or
any Company Subsidiary's current activities, and the Company's or any Company
Subsidiary's future activities to the extent such future activities are already
planned. For the purposes of this Section 4.15(i), "Valid Consents" shall mean
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consents obtained from persons aged 18 and over, using only the Company's "True-
Opt-In" or double opt-in method by which the persons providing personal
information to the Company or any Company Subsidiary have both (a) indicated
their consent by checking a box which signifies his or her desire to have his or
her personal information registered with the site and used by the Company or any
Company Subsidiary, and (b) thereafter responded to a confirmatory e-mail
message to signify his or her desire to have his or her personal information
registered with the