AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 23, 1998
BY AND AMONG
AMERICA ONLINE, INC.
APOLLO ACQUISITION CORP.
AND
NETSCAPE COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
TERMS OF MERGER
Section 2.1 Statutory Merger. . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.3 Certificate of Incorporation; Bylaws. . . . . . . . . . . . . .7
Section 2.4 Directors and Officers. . . . . . . . . . . . . . . . . . . . .8
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.1 Merger Consideration; Conversion and Cancellation
of Securities . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 3.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . .9
Section 3.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Stock Transfer Books. . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification; Subsidiaries. . . . . . . . . 13
Section 4.2 Certificate of Incorporation; Bylaws. . . . . . . . . . . . . 13
Section 4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Authorization of Agreement. . . . . . . . . . . . . . . . . . 14
Section 4.5 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.7 Reports; Financial Statements . . . . . . . . . . . . . . . . 16
Section 4.8 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 16
Section 4.9 Absence of Certain Changes or Events. . . . . . . . . . . . . 16
Section 4.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . 17
Section 4.11 Material Contracts. . . . . . . . . . . . . . . . . . . . . . 17
Section 4.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.13 Permits; Compliance . . . . . . . . . . . . . . . . . . . . . 18
Section 4.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.15 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 18
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Section 4.16 Registration Statement; Proxy Statement/Prospectus. . . . . . 18
Section 4.17 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 19
Section 4.18 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.19 Environmental Laws and Regulations. . . . . . . . . . . . . . 21
Section 4.20 Intellectual Property . . . . . . . . . . . . . . . . . . . . 22
Section 4.21 Pooling; Tax Matters. . . . . . . . . . . . . . . . . . . . . 24
Section 4.22 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.23 Certain Business Practices. . . . . . . . . . . . . . . . . . 25
Section 4.24 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.25 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . 25
Section 4.26 Interest Rate and Foreign Exchange Contracts. . . . . . . . . 25
Section 4.27 Company Rights Agreement. . . . . . . . . . . . . . . . . . . 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANIES
Section 5.1 Organization and Qualification; Subsidiaries. . . . . . . . . 26
Section 5.2 Certificate of Incorporation; Bylaws. . . . . . . . . . . . . 26
Section 5.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4 Authorization of Agreement. . . . . . . . . . . . . . . . . . 27
Section 5.5 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.8 Absence of Certain Changes or Events. . . . . . . . . . . . . 28
Section 5.9 Registration Statement; Proxy Statement/Prospectus. . . . . . 29
Section 5.10 Pooling; Tax Matters. . . . . . . . . . . . . . . . . . . . . 29
Section 5.11 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
COVENANTS RELATING TO THE CONDUCT OF BUSINESS
Section 6 Conduct of Business of the Company. . . . . . . . . . . . . . 29
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.2 Access and Information. . . . . . . . . . . . . . . . . . . . 34
Section 7.3 Meeting of Stockholders . . . . . . . . . . . . . . . . . . . 35
Section 7.4 Registration Statement; Proxy Statement . . . . . . . . . . . 35
Section 7.5 Appropriate Action; Consents; Filings . . . . . . . . . . . . 36
Section 7.6 Affiliates; Pooling; Tax Treatment. . . . . . . . . . . . . . 37
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Section 7.7 Public Announcements. . . . . . . . . . . . . . . . . . . . . 38
Section 7.8 Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . 39
Section 7.9 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 39
Section 7.10 Indemnification of Directors and Officers; Directors & Officers Insurance. . . . . . . . . . . . . . . . . . . . . . 40
Section 7.11 Event Notices . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.12 Assumption of Obligations to Issue Stock. . . . . . . . . . . 41
Section 7.13 Conveyance Taxes. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.14 Voting Agreement. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.15 Option Agreement. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.16 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.17 Reasonable Efforts and Further Assurances . . . . . . . . . . 42
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 Conditions to Obligations of Each Party Under This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.2 Additional Conditions to Obligations of the Acquiror
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.3 Additional Conditions to Obligations of the Company . . . . . 46
ARTICLE IX
TERMINATION, AMENDMENT AND EXPENSES
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 48
Section 9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.2 Effectiveness of Representations, Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.8 Parties in Interest . . . . . . . . . . . . . . . . . . . . . 52
Section 10.9 Failure or Indulgence Not Waiver; Remedies Cumulative. . . . 52
Section 10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 53
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ANNEXES
Annex A Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . A-1
Annex B Stock Option Agreement . . . . . . . . . . . . . . . . . . . . B-1
Annex C Affiliate's Agreement (Netscape Communications Corporation
Affiliates). . . . . . . . . . . . . . . . . . . . . . . . . C-1
Annex D Affiliate's Agreement (America Online, Inc. Affiliates). . . . D-1
Annex E Form of Certificate of Officer of America Online, Inc. . . . . E-1
Annex F Form of Certificate of Officer of Netscape Communications
Corporation. . . . . . . . . . . . . . . . . . . . . . . . . F-1
[Annexes A, B, C, D, E and F have been omitted]
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 23, 1998 (this
"Agreement"), is by and among America Online, Inc., a Delaware corporation
("Acquiror"), Apollo Acquisition Corp., a Delaware corporation and a
newly-formed wholly owned direct subsidiary of Acquiror ("Newco"), and
Netscape Communications Corporation, a Delaware corporation (the "Company").
Acquiror and Newco are sometimes referred to herein as the "Acquiror
Companies".
RECITALS:
WHEREAS, the Boards of Directors of Acquiror, Newco and the Company deem
it advisable and in the best interests of their respective companies and
their respective stockholders to enter into a business combination by means
of the merger of Newco with and into the Company under the terms of this
Agreement and have approved and adopted this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Acquiror and Newco to
enter into this Agreement, certain holders of common stock, par value $0.0001
per share, of the Company have each entered into a Voting Agreement in the
form attached hereto as Annex A (the "Voting Agreement") dated as of the date
hereof pursuant to which such holders have agreed to vote their shares of
Company Common Stock (as defined herein) in the manner set forth therein;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Acquiror and Newco to
enter into this Agreement, the Company has entered into a Stock Option
Agreement dated as of the date hereof in the form attached hereto as Annex B
(the "Option Agreement") granting Acquiror an irrevocable option to purchase
from the Company up to a number of authorized but unissued shares
representing 19.9% of the outstanding shares of Company Common Stock, upon
the terms and subject to the conditions set forth therein;
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the Delaware General Corporation Law (the "DGCL"),
Newco will merge with and into the Company (the "Merger") and the Company
will survive (the "Surviving Corporation"); and
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and that this Agreement shall be, and is hereby, adopted as a plan of
reorganization for purposes of Section 368 of the Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1 DEFINED TERMS. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section
1.
"Acquiror Common Stock" will mean the common stock, par value $0.01 per
share, of Acquiror and, unless the context requires otherwise, includes the
associated Acquiror Rights.
"Acquiror Rights" will mean rights to purchase shares of the preferred
stock of Acquiror pursuant to that certain Rights Agreement, dated as of May
12, 1998, between Acquiror and BankBoston, N.A., as Rights Agent.
"Acquiror's Disclosure Schedule" will mean a schedule of even date
herewith delivered by Acquiror to the Company concurrently with the execution
of this Agreement, which, among other things, will identify exceptions to
Acquiror's representations and warranties contained in Article V by specific
section references.
"Affiliate" will, with respect to any Person, mean any other Person that
controls, is controlled by or is under common control with the former.
"Agreement" will mean this Agreement and Plan of Merger made and entered
into as of November 23, 1998 by and among Acquiror, Newco and the Company,
including any amendments hereto and Schedules hereto (including Acquiror's
Disclosure Schedule and the Company's Disclosure Schedules but excluding the
Annexes hereto).
"Business Day" will mean any day other than a day on which banks in the
States of Virginia or California are authorized or obligated to be closed.
"Business Segment" will mean either of the Company's two business
segments: its Enterprise business segment and its Netcenter business segment.
"Certificate of Merger" will have the meaning ascribed to such term in
Section 2.2.
"Closing" will mean a meeting, which will be held in accordance with
Section 3.3, of all Persons interested in the transactions contemplated by
this Agreement at which all documents necessary to evidence the fulfillment
or waiver of all conditions precedent to the consummation of the transactions
contemplated by this Agreement are executed and delivered.
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"Closing Date" will mean the date the Closing occurs.
"Company Common Stock" will mean the common stock, par value $0.0001 per
share, of the Company and, unless the context requires otherwise, includes
the associated Company Rights.
"Company Option Plans" will mean collectively the following stock option
plans of the Company: the Company's 1994 Stock Option Plan, as amended; the
Company's 1995 Stock Plan; the Company's 1998 Stock Option Plan; the
Company's 1995 Director Option Plan; the Collabra Software, Inc. 1993
Incentive Stock Plan; the Insoft, Inc. 1993 Stock Option Plan; the Netcode
Corp. 1996 Stock Plan; the DigitalStyle Corp. 1995 Stock Option/Stock
Issuance Plan; the Portola Communications, Inc. 1996 Stock Option Plan; the
Kiva Software Corp. 1995 Stock Option Plan; and the Mosaic Communications
Corporation 1994 Stock Option Plan.
"Company Rights" will mean rights to purchase shares of the preferred
stock of the Company pursuant to the Company Rights Agreement.
"Company Rights Agreement" will mean the agreement of the Company,
entered into as of November 23, 1998 between the Company and BankBoston N.A.,
as Rights Agent.
"Company Stockholders' Meeting" will have the meaning ascribed to such
term in Section 4.16.
"Company Stock Purchase Plan" will mean the Company's 1995 Employee
Stock Purchase Plan.
"Company's Disclosure Schedule" will mean a schedule of even date
herewith delivered by the Company to the Acquiror Companies concurrently with
the execution of this Agreement, which, among other things, will identify
exceptions to the Company's representations and warranties contained in
Article IV by specific section and subsection references.
"Confidentiality Agreement" will mean the Confidential Non-Disclosure
Agreement by and between Acquiror and the Company dated as of September 16,
1998, as amended.
"control" (including the terms "controlled," "controlled by" and "under
common control with") will mean the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise.
"Court" will mean any court or arbitration tribunal of the United
States, any domestic state, or any foreign country, and any political
subdivision thereof.
"DGCL" will mean the Delaware General Corporation Law, as amended.
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"Effective Time" will mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with Section 2.2.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on
or resulting from (a) the presence, release or disposal of any Hazardous
Materials at any location, whether or not owned or operated by the Company,
or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Law" will mean any Law pertaining to: (i) the protection
of health, safety and the indoor or outdoor environment; (ii) the
conservation, management or use of natural resources and wildlife; (iii) the
protection or use of surface water and ground water; (iv) the management,
manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement,
removal, remediation or handling of, or exposure to, any Hazardous Material;
or (v) pollution (including any release to air, land, surface water and
ground water); and includes, without limitation, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980, as amended,
and the Regulations promulgated thereunder and the Solid Waste Disposal Act,
as amended, 42 U.S.C. Section 6901 ET SEQ.
"Exchange Act" will mean the Securities Exchange Act of 1934, as
amended, and the Regulations promulgated thereunder.
"Exchange Agent" will mean a bank or trust company organized under the
Laws of the United States or any of the states thereof and having a net worth
in excess of $100 million designated and appointed to act in the capacities
required under Section 3.2.
"Foreign Competition Laws" will mean foreign statutes, rules,
Regulations, Orders, decrees, administrative and judicial directives, and
other foreign Laws, that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization, lessening of
competition or restraint of trade.
"GAAP" will have the meaning ascribed to such term in Section 4.7(b).
"Governmental Authority" will mean any governmental agency or authority
(other than a Court) of the United States, any domestic state, or any foreign
country, and any political subdivision or agency thereof, and will include
any authority having governmental or quasi-governmental powers.
"Hazardous Material" will mean any substance, chemical, compound,
product, solid, gas, liquid, waste, by-product, pollutant, contaminant or
material which is hazardous or toxic and is regulated under any Environmental
Law, and includes without limitation, asbestos or any
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substance containing asbestos, polychlorinated biphenyls or petroleum
(including crude oil or any fraction thereof).
"Intellectual Property" will mean: trademarks, service marks, trade
names, URLs and Internet domain names, designs, slogans and general
intangibles of like nature, together with all goodwill related to the
foregoing (collectively, "Trademarks"); patents (including any registrations,
continuations, continuations in part, renewals and applications for any of
the foregoing); copyrights (including any registrations and applications
therefor); computer software; databases; technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae,
algorithms, models, user interfaces, customer lists, inventions, source
codes, object codes, methodologies and, with respect to all of the foregoing,
related confidential documentation (collectively, "Trade Secrets").
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of
such fact or other matter, or (b) such fact or matter is reflected in one or
more documents (including e-mails) in such individual's files. A Person
(other than an individual) will be deemed to have "Knowledge" of a particular
fact or other matter if any individual who on the date hereof is serving as a
director, executive officer (including any Senior Vice President), in-house
counsel, and, in the case of the Company, the Vice-President of Website
Development, of such Person has Knowledge of such fact or other matter.
"Law" will mean all laws, statutes, ordinances and Regulations of any
Governmental Authority including all decisions of Courts having the effect of
law.
"Lien" will mean any mortgage, pledge, security interest, attachment,
encumbrance, lien or charge of any kind (including any agreement to give any
of the foregoing); PROVIDED, HOWEVER, that the term "Lien" shall not include
(i) statutory liens for Taxes, which are not yet due and payable or are being
contested in good faith by appropriate proceedings, (ii) statutory or common
law liens to secure landlords, lessors or renters under leases or rental
agreements confined to the premises rented, (iii) deposits or pledges made in
connection with, or to secure payment of, workers' compensation, unemployment
insurance, old age pension or other social security programs mandated under
applicable Laws, (iv) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, to secure claims for labor,
materials or supplies and other like liens, and (v) restrictions on transfer
of securities imposed by applicable state and federal securities Laws.
"Litigation" will mean any suit, action, arbitration, cause of action,
claim, complaint, criminal prosecution, investigation, demand letter,
governmental or other administrative proceeding, whether at law or at equity,
before or by any Court or Governmental Authority or before any arbitrator.
"Material Adverse Effect" will mean, with respect to a specified Person
(including, for purposes of this definition as used in Section 4.9 and
Section 8.2(a)(ii), a Business Segment), any change, event or effect that
individually or in the aggregate (taking into account all other such
5
changes, events or effects) has had, or would be reasonably likely to have, a
material adverse effect on the consolidated business, results of operations,
or financial condition of such Person and its Subsidiaries, if any, taken as
a whole, except to the extent that any such change, event or effect is
attributable to or results from (i) the direct effect of the public
announcement or pendency of the transactions contemplated hereby on current
or prospective customers or revenues of the Company, (ii) changes in general
economic conditions or changes affecting the industry generally in which such
Person operates or (iii) shareholder class action litigation arising from
allegations of a breach of fiduciary duty relating to this Agreement;
PROVIDED, HOWEVER, that with respect to clause (i) of this sentence, the
Company shall bear the burden of proof in any proceeding before a Court with
regard to establishing that any change, event or effect is attributable to or
results from the direct effect of the public announcement or pendency of the
transactions contemplated hereby.
"Merger" will mean the merger of Newco with and into the Company
provided for in this Agreement.
"Newco" will mean Apollo Acquisition Corp., a newly-formed Delaware
corporation and a wholly owned direct Subsidiary of Acquiror.
"Order" will mean any judgment, order or decree of any Court or
Governmental Authority.
"Permit" will mean any and all permits, licenses, authorizations,
Orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Person" will mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but will not include a Governmental Authority.
"Repurchase Rights" will mean the Company's rights to repurchase stock
under any of the Company Option Plans pursuant to the terms of the applicable
Company Option Plans.
"Regulation" will mean any rule or regulation of any Governmental
Authority having the effect of Law.
"SEC" will mean the Securities and Exchange Commission.
"Securities Act" will mean the Securities Act of 1933, as amended, and
the Regulations promulgated thereunder.
A "Subsidiary" of a specified Person will be any corporation,
partnership, limited liability company, joint venture or other legal entity
of which the specified Person (either alone or through or together with any
other Subsidiary) owns, directly or indirectly, fifty percent (50%) or more
of the stock or other equity or partnership interests the holders of which
are generally
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entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
"Tax Returns" will mean any declaration, return, report, schedule,
certificate, statement or other similar document (including relating or
supporting information) required to be filed with a Governmental Authority,
or where none is required to be filed with a Governmental Authority, the
statement or other document issued by a Governmental Authority in connection
with any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"Taxes" will mean any and all federal, state, local, foreign,
provincial, territorial or other taxes, imposts, tariffs, fees, levies or
other similar assessments or liabilities and other charges of any kind,
including income taxes, ad valorem taxes, excise taxes, withholding taxes,
stamp taxes or other taxes of or with respect to gross receipts, premiums,
real property, personal property, windfall profits, sales, use, transfers,
licensing, employment, social security, workers' compensation, unemployment,
payroll and franchises imposed by or under any Law; and such terms will
include any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any such tax
or any contest or dispute thereof.
ARTICLE II
TERMS OF MERGER
Section 2.1 STATUTORY MERGER. Subject to the terms and conditions and
in reliance upon the representations, warranties, covenants and agreements
contained herein, Newco will merge with and into the Company at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the
same into effect will be as set forth in this Agreement. As a result of the
Merger, the separate corporate existence of Newco will cease and the Company
will continue as the Surviving Corporation and shall succeed to and assume
all of the rights and obligations of Newco in accordance with the DGCL. The
Merger shall have the effect set forth in the DGCL.
Section 2.2 EFFECTIVE TIME. As soon as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto will cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, the DGCL. The Merger
shall become effective at the time at which the Certificate of Merger has
been duly filed with the Secretary of State of the State of Delaware (the
time the Merger becomes effective in accordance with the foregoing being
referred to as the "Effective Time").
Section 2.3 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
Time, the certificate of incorporation of the Company shall be amended and
restated by deleting its provisions and substituting therefore the provisions
of the certificate of incorporation of Newco except that from and after the
Effective Time Article First of the certificate of incorporation will read in
its
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entirety substantially as follows: The name of the corporation is "Netscape
Communications Corporation." At the Effective Time, the by-laws of Newco, as
in effect immediately prior to the Effective Time, shall be the by-laws of
the Surviving Corporation until thereafter amended as provided by Law and the
certificate of incorporation of the Surviving Corporation and such by-laws.
Section 2.4 DIRECTORS AND OFFICERS. The directors of Newco
immediately prior to the Effective Time will be the directors of the
Surviving Corporation, each to hold office in accordance with the certificate
of incorporation and by-laws of the Surviving Corporation, and the officers
of the Company immediately prior to the Effective Time will be the officers
of the Surviving Corporation, in each case until their respective successors
are duly elected or appointed and qualify for such election.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.1 MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES. At the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any of the following securities:
(a) Subject to the other provisions of this Article III, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding any Company Common Stock described in Section
3.1(c)) will be converted into the right to receive 0.45 (the "Exchange
Ratio") shares of Acquiror Common Stock (the "Merger Consideration").
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding shares of Acquiror Common Stock or Company
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, conversion, consolidation,
combination or exchange of shares, the Exchange Ratio will be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, conversion, consolidation, combination or exchange
of shares.
(b) Subject to the other provisions of this Article III, all
shares of Company Common Stock will, upon conversion thereof into shares of
Acquiror Common Stock at the Effective Time, cease to be outstanding and will
automatically be cancelled and retired, and each certificate previously
evidencing Company Common Stock outstanding immediately prior to the
Effective Time (other than Company Common Stock described in Section 3.1(c))
will thereafter represent only the right to receive (i) the number of whole
shares of Acquiror Common Stock and (ii) as provided in Section 3.2(e), cash
in lieu of fractional shares into which the shares of Company Common Stock
represented by such certificate have been converted pursuant to this Section
3.1(b). The holders of certificates previously evidencing Company Common
Stock will cease to have any rights with respect to such Company Common
Stock except as otherwise provided herein or by Law.
8
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Common Stock held in the treasury of the
Company and each share of Company Common Stock, if any, owned by Acquiror or
any direct or indirect wholly owned Subsidiary of Acquiror or of the Company
immediately prior to the Effective Time will be cancelled.
(d) Each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
Section 3.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE FUND. On the day of the Effective Time, Acquiror
will deposit, or cause to be deposited, with the Exchange Agent, for the
benefit of the former holders of Company Common Stock, for exchange in
accordance with this Article III, through the Exchange Agent, certificates
representing shares of Acquiror Common Stock issuable pursuant to Section 3.1
in exchange for certificates representing Company Common Stock immediately
prior to the Effective Time (such shares of Acquiror Common Stock so
deposited, together with cash realized and held by the Exchange Agent for the
benefit of such former holders of Company Common Stock in accordance with
Section 3.2(e), being referred to as the "Exchange Fund"). Thereafter,
Acquiror will deposit, or cause to be deposited, with the Exchange Agent, for
the benefit of any former holders of Company Common Stock who have not yet
surrendered their shares of Company Common Stock for exchange, at the
appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to surrender, payable
with respect to any shares of Acquiror Common Stock remaining in the Exchange
Fund on such record date. The Exchange Agent will, pursuant to irrevocable
instructions from Acquiror, deliver Acquiror Common Stock and any such
dividends or distributions related thereto, in exchange for certificates
theretofore evidencing Company Common Stock surrendered to the Exchange Agent
pursuant to Section 3.2(c).
(b) LETTER OF TRANSMITTAL. Promptly after the Effective Time,
Acquiror will cause the Exchange Agent to mail to each record holder of a
certificate or certificates representing Company Common Stock immediately
prior to the Effective Time (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the
certificates formerly representing Company Common Stock shall pass, only upon
delivery of such certificates to the Exchange Agent and shall be in such form
and have such other provisions, including appropriate provisions with respect
to back-up withholding, as Acquiror may reasonably specify, and (ii)
instructions for use in effecting the surrender of the certificates formerly
representing Company Common Stock. Upon surrender of a certificate formerly
representing Company Common Stock for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder thereof shall be
entitled to receive in exchange therefor that portion of the Exchange Fund
which such holder has the right to receive pursuant to the provisions of this
Article III, after giving effect to any required withholding Tax, and the
certificate formerly
9
representing Company Common Stock so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash to be paid which
is in the Exchange Fund.
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Exchange Agent will distribute to each former holder of Company Common Stock,
upon surrender to the Exchange Agent for cancellation of one or more
certificates, accompanied by a duly executed letter of transmittal that
theretofore evidenced shares of Company Common Stock, certificates evidencing
the appropriate number of shares of Acquiror Common Stock into which such
shares of Company Common Stock were converted pursuant to the Merger and any
dividends or distributions related thereto which such former holder of
Company Common Stock is entitled to receive pursuant to the provisions of
this Article III. If shares of Acquiror Common Stock are to be issued to a
Person other than the Person in whose name the surrendered certificate or
certificates are registered, it will be a condition of issuance of Acquiror
Common Stock that the surrendered certificate or certificates shall be
properly endorsed, with signatures guaranteed by a member firm of the New
York Stock Exchange or a bank chartered under the Laws of the United States,
or otherwise in proper form for transfer and that the Person requesting such
payment shall pay any transfer or other Taxes required by reason of the
issuance of Acquiror Common Stock to a Person other than the registered
holder of the surrendered certificate or certificates or such Person shall
establish to the satisfaction of Acquiror that any such Tax has been paid or
is not applicable. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto will be liable to any former holder of Company Common
Stock for any Acquiror Common Stock or cash or dividends or distributions
thereon delivered to a public official pursuant to any applicable escheat Law.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF COMPANY
COMMON STOCK. No dividends or other distributions declared or made with
respect to Acquiror Common Stock on or after the Effective Time will be paid
to the holder of any certificate that theretofore evidenced shares of Company
Common Stock until the holder of such certificate shall surrender such
certificate. Subject to the effect of any applicable escheat Law, following
surrender of any such certificate, there will be paid from the Exchange Fund
to the holder of the certificates evidencing whole shares of Acquiror Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount
of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Acquiror Common
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect
to such whole shares of Acquiror Common Stock.
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional shares
of Acquiror Common Stock shall be issued upon the surrender for exchange of
certificates formerly representing shares of Company Common Stock pursuant to
this Article III; no dividend, stock split or other change in the capital
structure of Acquiror shall relate to any fractional security; and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder.
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(ii) As promptly as practicable following the Effective
Time, the Exchange Agent will determine the excess of (A) the number of whole
shares of Acquiror Common Stock delivered to the Exchange Agent by Acquiror
pursuant to Section 3.2(a) over (B) the aggregate number of whole shares of
Acquiror Common Stock to be distributed to holders of Company Common Stock
pursuant to Section 3.2(c) (such excess being herein called the "Excess
Shares"). Following the Effective Time, the Exchange Agent will, on behalf
of former stockholders of the Company, sell the Excess Shares at
then-prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all
in the manner provided in Section 3.2(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
will be executed on the NYSE through one or more member firms of the NYSE and
will be executed in round lots to the extent practicable. The Exchange Agent
will use reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's sole
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of
such sale or sales have been distributed to the holders of Company Common
Stock, the Exchange Agent will hold such proceeds in trust for the former
holders of Company Common Stock (the "Common Shares Trust"). The Surviving
Corporation will pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent incurred in connection with such sale of the Excess Shares. The
Exchange Agent will determine the portion of the Common Shares Trust to which
each former holder of Company Common Stock is entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such former holder of Company Common Stock
is entitled (after taking into account all shares of Company Common Stock
held at the Effective Time by such holder) and the denominator of which is
the aggregate amount of fractional share interests to which all holders of
Company Common Stock are entitled. For purposes of this Section 3.2(e),
shares of Company Common Stock of any former holder represented by two or
more certificates may be aggregated and in no event shall any holder be paid
an amount of cash in respect of more than one share of Acquiror Common Stock.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to the former holders of Company Common
Stock with respect to any fractional share interests, the Exchange Agent will
hold such cash amounts for the benefit of, and pay such cash amounts to, such
former holders of Company Common Stock subject to and in accordance with the
terms of Section 3.2(c).
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains unclaimed by the former holders of Company Common Stock
for twelve months after the Effective Time will be delivered to Acquiror,
upon demand, and any former holders of Company Common Stock who have not
theretofore complied with this Article III will, subject to applicable
abandoned property, escheat and other similar Laws, thereafter look only to
Acquiror for Acquiror Common Stock and any cash to which they are entitled.
11
(g) WITHHOLDING OF TAX. Acquiror or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Company Common Stock such
amounts as Acquiror (or any Affiliate thereof) or the Exchange Agent are
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign Tax Law. To the
extent that amounts are so withheld by Acquiror or the Exchange Agent, such
withheld amounts will be treated for all purposes of this Agreement as having
been paid to the former holder of Company Common Stock in respect of whom
such deduction and withholding was made by Acquiror.
(h) LOST CERTIFICATES. If any certificate evidencing Company
Common Stock shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by Acquiror, the posting by such Person
of a bond, in such reasonable amount as Acquiror may direct, as indemnity
against claims that may be made against it with respect to such certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate of Acquiror Common Stock to which the holder may be entitled
pursuant to this Article III and cash and any dividends or other
distributions to which the holder thereof may be entitled pursuant to Section
3.2(d) or Section 3.2(e).
Section 3.3 CLOSING. The Closing will take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, 31st Floor,
Boston, Massachusetts at 10:00 a.m. on the second Business Day following the
date on which the conditions to the Closing have been satisfied or waived or
at such other place, time and date as the parties hereto may agree. At the
conclusion of the Closing on the Closing Date, the parties hereto will cause
the Certificate of Merger to be filed with the Secretary of State of the
State of Delaware.
Section 3.4 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company will be closed and there will be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. If, after the Effective Time, certificates formerly
representing Company Common Stock are presented to the Surviving Corporation,
they shall be cancelled and exchanged for certificates representing Acquiror
Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Acquiror Companies,
subject to the exceptions set forth in the Company's Disclosure Schedule
(which exceptions shall specifically identify a Section, Subsection or clause
of a single Section or Subsection hereof, as applicable, to which such
exception relates, it being understood and agreed that each such exception
shall be deemed to be disclosed both under such Section, Subsection or clause
hereof and any other Section, Subsection or clause hereof to which such
disclosure reasonably relates) that:
12
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company
and each Subsidiary of the Company are legal entities duly organized, validly
existing and in good standing under the Laws of their respective
jurisdictions of incorporation or organization, have all requisite power and
authority to own, lease and operate their respective properties and to carry
on their business as it is now being conducted and are duly qualified and in
good standing to do business in each jurisdiction in which the nature of the
business conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary. Section 4.1 of the Company's
Disclosure Schedule sets forth, as of the date of this Agreement, a true and
complete list of all the Company's directly or indirectly owned Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock or other equity
interests owned by the Company or another Subsidiary of the Company. Neither
the Company nor any of its Subsidiaries owns an equity interest in any
partnership or joint venture arrangement or other business entity that is
material to the Company.
Section 4.2 CERTIFICATE OF INCORPORATION; BYLAWS. The Company has
furnished or made available to Acquiror complete and correct copies of the
certificate of incorporation and the bylaws or the equivalent organizational
documents, in each case as amended or restated to the date hereof, of the
Company and each of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in violation of any of the provisions of its certificate of
incorporation or bylaws or equivalent organizational documents.
Section 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
200,000,000 shares of Company Common Stock of which, as of November 23, 1998,
99,938,928 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and were not issued
in violation of any preemptive or similar rights of any Person and (ii)
5,000,000 shares of preferred stock, par value $.0001 per share, of which, as
of November 23, 1998, none were issued.
(b) Except for the Company Rights, as of the date hereof, no
shares of Company Common Stock are reserved for issuance, and there are no
contracts, agreements, commitments or arrangements obligating the Company to
offer, sell, issue or grant any shares of, or any options, warrants or rights
of any kind to acquire any shares of, or any securities that are convertible
into or exchangeable for any shares of, capital stock of the Company, to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of, or any outstanding options, warrants or rights of any kind to
acquire any shares of, or any outstanding securities that are convertible
into or exchangeable for any shares of, capital stock of the Company or to
grant any Lien on any shares of capital stock of the Company.
13
(c) The authorized, issued and outstanding capital stock of, or
other equity interests in, each of the Company's Subsidiaries and the names
of the holders of record of the capital stock or other equity interests of
each such Subsidiary, in each case, as of the date hereof, are set forth in
Section 4.3(c) of the Company's Disclosure Schedule. The issued and
outstanding shares of capital stock of, or other equity interests in, each of
the Subsidiaries of the Company that are owned by the Company or any of its
Subsidiaries have been duly authorized and are validly issued, and, with
respect to capital stock, are fully paid and nonassessable, and were not
issued in violation of any preemptive or similar rights of any Person. All
such issued and outstanding shares or other equity interests, that are
indicated as owned by the Company or one of its Subsidiaries in Section
4.3(c) of the Company's Disclosure Schedule, are owned beneficially as set
forth therein and free and clear of all Liens. No shares of capital stock
of, or other equity interests in, any Subsidiary of the Company are reserved
for issuance, and there are no contracts, agreements, commitments or
arrangements obligating the Company or any of its Subsidiaries (i) to offer,
sell, issue, grant, pledge, dispose of or encumber any shares of capital
stock of, or other equity interests in, or any options, warrants or rights of
any kind to acquire any shares of capital stock of, or other equity interests
in, or any securities that are convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, any of the
Subsidiaries of the Company, (ii) to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of capital stock of, or other
equity interests in, or any outstanding options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interest in,
or any outstanding securities that are convertible into or exchangeable for,
any shares of capital stock of, or other equity interests in, any of the
Subsidiaries of the Company or (iii) to grant any Lien on any outstanding
shares of capital stock of, or other equity interest in, any of the
Subsidiaries of the Company.
(d) There are no voting trusts, proxies or other similar
agreements or understandings to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or any of
its Subsidiaries or, except for the Option Agreement, with respect to the
registration of the offering, sale or delivery of any shares of capital stock
of the Company or any of its Subsidiaries under the Securities Act.
Section 4.4 AUTHORIZATION OF AGREEMENT. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, the
Option Agreement and each instrument required hereby to be executed and
delivered by it at the Closing, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Company of this Agreement, the
Option Agreement and each instrument required hereby to be executed and
delivered by it at the Closing and the performance of its obligations
hereunder and thereunder have been duly and validly authorized by all
requisite corporate action on the part of the Company other than, with
respect to the Merger, the approval and adoption of this Agreement by the
stockholders of the Company, which approval and adoption in accordance with
the DGCL and the Company's certificate of incorporation shall require the
affirmative vote of the holders of at least a majority
14
of the outstanding shares of Company Common Stock. This Agreement and the
Option Agreement have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery hereof by the Acquiror
Companies, this Agreement constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to creditors' rights
generally or to general principles of equity.
Section 4.5 APPROVALS. Except for the applicable requirements, if
any, of (a) the Securities Act, (b) the Exchange Act, (c) state securities
or blue sky Laws, (d) the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (e) Foreign Competition Laws, (f) the
filing and recordation of appropriate merger documents as required by the
DGCL and (g) those Laws, Regulations and Orders noncompliance with which
would not in the aggregate materially impair the ability of the Company to
perform its obligations under this Agreement or be material in any respect to
the Company, no filing or registration with, no waiting period imposed by and
no Permit, Order, authorization, consent or approval of, any Court or
Governmental Authority is required under any Law, Regulation or Order
applicable to the Company or any of its Subsidiaries to permit the Company to
execute, deliver or perform this Agreement or any instrument required hereby
to be executed and delivered by it at the Closing.
Section 4.6 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all Permits or Orders of, Courts and/or
Governmental Authorities indicated as required in Section 4.5 and receipt of
the approval of this Agreement by the stockholders of the Company as required
by the DGCL, neither the execution and delivery by the Company of this
Agreement or any instrument required hereby to be executed and delivered by
it at the Closing, nor the performance by the Company of its obligations
hereunder, nor the execution, delivery and performance of the Voting
Agreement by the parties thereto, will violate or breach the terms of or
cause a default, or accelerate the performance of any obligation of the
Company or any Company Subsidiary or give rise to any payment obligation of
any such Person, or give rise to any right of termination (any of the
foregoing a "Change of Control Effect"), or require any consent, approval or
waiver (any of the foregoing a "Change of Control Consent") of any third
party that is not a Governmental Authority, under, any Law, Regulation or
Order applicable to the Company or the certificate of incorporation or
bylaws of the Company or (b) with the passage of time or the giving of notice
have any of the effects set forth in clause (a) of this Section, except in
the case of matters referred to in clauses (a)(i) or (b) (in the case of (b),
solely with respect to clause (a)(i)) of this Section that would not,
individually or in the aggregate, have a material adverse effect upon the
ability of the Company to perform its obligations under this Agreement or be
material in any respect to the Company. Prior to the execution of this
Agreement, the Board of Directors of the Company has taken all requisite
action to cause this Agreement and the transactions contemplated hereby
(including those
15
contemplated by the Option Agreement and the Voting Agreement) to be exempt
from the provisions of Section 203 of the DGCL.
Section 4.7 REPORTS; FINANCIAL STATEMENTS.
(a) The Company has timely filed all reports required to be filed
by it with the SEC since January 1, 1997 pursuant to the Exchange Act, which
reports complied, at the time of filing in all material respects with
applicable requirements of the Exchange Act, (collectively, the "Company SEC
Reports"). None of the Company SEC Reports, as of their respective dates,
contained or, if filed after the date hereof, will contain, any untrue
statement of a material fact or omitted, or, if filed after the date hereof,
will 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 superseded by a Company SEC Report filed subsequently and prior to the
date hereof.
(b) The consolidated statements of financial position and the
related consolidated statements of operations, stockholders' equity and cash
flows (including the related notes thereto) of the Company included in the
Company SEC Reports complied in all material respects with applicable
accounting requirements and the published rules and Regulations of the SEC
with respect thereto, have been prepared in conformity with United States
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
basis consistent with prior periods (except as otherwise noted therein), and
present fairly the consolidated financial position of the Company as at their
respective dates, and the consolidated results of its operations and its cash
flows for the periods presented therein subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments that have not
been and are not expected to be material in amount.
Section 4.8 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, except (a) liabilities or
obligations reflected in the Company SEC Reports through the date of the
filing of the Company's Quarterly Report on Form 10-Q in respect of the
fiscal quarter ending July 31, 1998, (b) liabilities or obligations incurred
in the ordinary course of business consistent with past practice since July
31, 1998 which are not, and will not have, individually or in the aggregate,
a Material Adverse Effect on the Company and (c) liabilities or obligations
which are not and will not have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since July 31, 1998, there is not and has not been a Material
Adverse Effect on any Business Segment.
16
Section 4.10 TITLE TO PROPERTIES. The Company or its Subsidiaries,
individually or together, have good, valid and marketable title to or a valid
leasehold in, all of the properties and assets (real, personal and mixed,
tangible and intangible) that are necessary to the conduct of the business of
the Company and its Subsidiaries as it is currently being conducted,
including all of the properties and assets reflected in the Company's
consolidated balance sheet as at July 31, 1998, which was filed with the SEC
as part of its report on Form 10-Q, other than any such properties or assets
that have been sold or otherwise disposed of in the ordinary course of
business since July 31, 1998. None of such properties are securities pledged
for interest rate swap, cap or floor contracts. The Company or its
Subsidiaries, individually or together, hold under valid lease agreements all
real and personal properties being held by the Company or its Subsidiaries
under capitalized leases, and all real and personal property held by the
Company or its Subsidiaries that is subject to operating leases, and enjoy
peaceful and undisturbed possession of such properties under such leases,
other than (i) any properties as to which such leases have expired in
accordance with their terms without any liability of any party thereto and
(ii) any immaterial properties. Neither the Company nor any of its
Subsidiaries has received any written notice or has Knowledge of any adverse
claim to the title to any properties owned by them or with respect to any
lease under which any properties are held by them, other than any claims
that, individually or in the aggregate, are immaterial to the Company.
Notwithstanding anything to the contrary, nothing in this Section 4.10 shall
be construed to relate to Intellectual Property (it being understood that
Section 4.20 contains representations and warranties relating to Intellectual
Property).
Section 4.11 MATERIAL CONTRACTS. Each Material Contract (as defined
herein) is in full force and effect, and is a legal, valid and binding
obligation of the Company or a Subsidiary and, to the Knowledge of the
Company, each of the other parties thereto, enforceable in accordance with
its terms, except (a) that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (b) as would not,
individually or in the aggregate, materially adversely impact any Business
Segment. No condition exists or event has occurred which (whether with or
without notice or lapse of time or both, or the happening or occurrence of
any other event) would constitute a default by the Company or a Subsidiary
or, to the Knowledge of the Company, any other party thereto under, or result
in a right in termination of, any Material Contract, except as would not,
individually or in the aggregate, materially adversely impact any Business
Segment. The term "Material Contract" shall mean any contract which is
material to the Company and its Subsidiaries taken as a whole or to any
Business Segment.
Section 4.12 INSURANCE. The Company and its Subsidiaries self-insure
or maintain with third parties policies of fire and casualty, liability and
other forms of insurance in such amounts, with such deductibles and retained
amounts, and against such risks and losses, as are consistent with industry
practice and as are reasonable for the conduct of the business as conducted
on the date hereof and for the assets of the Company and its Subsidiaries.
17
Section 4.13 PERMITS; COMPLIANCE. The Company and its Subsidiaries
have obtained all material Permits that are necessary to carry on their
businesses as currently conducted. Such Permits are in full force and effect
in all material respects, have not been violated in any material respect,
and, to the Knowledge of the Company, no suspension, revocation or
cancellation thereof has been threatened and there is no Litigation pending
or, to the Knowledge of the Company, threatened regarding suspension,
revocation or cancellation of any of such Permits.
Section 4.14 LITIGATION. As of the date hereof, there is no
Litigation pending, or to the Knowledge of the Company, threatened against
the Company or any Subsidiary of the Company, which if adversely determined
would be or have a Material Adverse Effect on the Company. As of the
Closing, there will be no Litigation pending, or to the Knowledge of the
Company, threatened against the Company or any Subsidiary of the Company that
would be or have a Material Adverse Effect on the Company.
Section 4.15 COMPLIANCE WITH LAWS. Neither the Company nor any
Subsidiary is subject to any written agreement, written directive, memorandum
of understanding or Order with or by any Court or Governmental Authority
restricting in any material respect its operation or requiring any materially
adverse actions by the Company. The Company and its Subsidiaries are in
compliance in all material respects with all applicable Laws and Regulations
and are not in default in any material respect with respect to any material
Order applicable to the Company or any of its Subsidiaries.
Section 4.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Company or required to be supplied by the Company
(except to the extent revised or superseded by amendments or supplements) for
inclusion in the registration statement on Form S-4, or any amendment or
supplement thereto, pursuant to which the shares of Acquiror Common Stock to
be issued in the Merger will be registered with the SEC (including any
amendments or supplements, the "Registration Statement") shall not, at the
time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC, 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 were made, not misleading. The information
supplied by the Company or required to be supplied by the Company (except to
the extent revised or superseded by amendments or supplements) for inclusion
in the proxy statement/prospectus or any amendment or supplement thereto to
be sent to the stockholders of the Company in connection with the meeting of
the Company's stockholders to consider the Merger (the "Company Stockholders'
Meeting") (such proxy statement/prospectus, as amended or supplemented, is
referred to herein as the "Proxy Statement") shall not, on the date the Proxy
Statement is first mailed to the Company's stockholders, at the time of the
Company Stockholders' Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
18
are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies by or on behalf of the Company for the Company
Stockholders' Meeting which has become false or misleading. The Proxy
Statement will comply in all material respects with the provisions of the
Exchange Act. Notwithstanding the foregoing, the Company makes no
representation, warranty or covenant with respect to any information supplied
or required to be supplied by Acquiror which is contained in or omitted from
any of the foregoing documents.
Section 4.17 EMPLOYEE BENEFIT PLANS.
(a) Section 4.17 of the Company's Disclosure Schedule contains a
true and complete list of each deferred compensation, incentive compensation,
stock purchase, stock option and other equity compensation plan, "welfare"
plan, fund or program (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); each "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); each
employment, termination or severance agreement with individuals whose annual
compensation is at a base rate exceeding $125,000, and each other material
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed
to by the Company or any entity, that together with the Company would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA (an
"ERISA Affiliate"), or to which the Company or an ERISA Affiliate is a party,
whether written or oral, for the benefit of any employee or former employee
of the Company or any of its Subsidiaries (the "Company Plans").
(b) With respect to each Company Plan, the Company has heretofore
delivered or made available to Acquiror true and complete copies of the
Company Plan and any amendments thereto (or if the Company Plan is not a
written Company Plan, a description thereof), any related trust or other
funding vehicle, any reports or summaries required under ERISA or the Code
and the most recent determination letter received from the Internal Revenue
Service with respect to each Company Plan intended to qualify under Section
401 of the Code.
(c) No material liability under Title IV or Section 302 of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
the Company or any ERISA Affiliate of incurring any such liability.
(d) No Company Plan is subject to Title IV of ERISA or Section 412
of the Code, nor is any Company Plan a "multiemployer pension plan", as
defined in Section 3(37) of ERISA, or subject to Section 302 of ERISA.
(e) Except as would not be materially adverse to the Company, each
Company Plan has been operated and administered in all respects in accordance
with its terms and applicable Law, including ERISA and the Code.
19
(f) Each Company Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code and the trusts maintained thereunder
that are intended to be exempt from taxation under Section 501(a) of the Code
have received a favorable determination or other letter indicating that they
are so qualified, and, to the Knowledge of the Company, no event has occurred
since the date of said letter(s) that will adversely affect the qualification
of such Company Plan.
(g) No Company Plan provides material medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any of its Subsidiaries for
periods extending beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits under
any "pension plan", or (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary).
(h) No amounts payable under the Company Plans will fail to be
deductible for federal income Tax purposes by virtue of Section 280G of the
Code.
(i) The execution, delivery and performance of, and consummation
of the transactions contemplated by, this Agreement, the Option Agreement or
the Voting Agreement will not (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer, or (iii) assuming
the Acquiror takes the action specified in Section 7.12(a), accelerate the
vesting of any stock option or of any shares of restricted stock.
(j) Except as would not be material in any respect to the Company,
there are no pending or, to the Knowledge of the Company, any threatened or
anticipated claims by or on behalf of any Company Plan, by any employee or
beneficiary covered under any such Company Plan, or otherwise involving any
such Company Plan (other than routine claims for benefits).
Section 4.18 TAXES. Except as set forth in Section 4.18 of the
Company's Disclosure Schedule, the Company represents and warrants as follows:
(a) Except as would not be materially adverse to the Company, all
federal, state, local and foreign Tax Returns required to be filed (taking
into account extensions) by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is or has been a member have
been timely filed, and all such Tax Returns are true, complete and correct.
(b) Except as would not be materially adverse to the Company, all
Taxes payable by or with respect to the Company or any Subsidiary of the
Company have been timely paid, or adequately reserved for in accordance with
GAAP. No deficiencies for any Taxes have
20
been proposed, asserted or assessed either orally or in writing against the
Company or any of its Subsidiaries that are not adequately reserved for in
accordance with GAAP. All assessments for Taxes due and owing by or with
respect to the Company or any Subsidiary of the Company with respect to
completed and settled examinations or concluded Litigation have been paid.
(c) Prior to the date of this Agreement, the Company has provided
Acquiror with written schedules setting forth the taxable years of the
Company for which the statutes of limitations with respect to federal and
material state income Taxes have not expired and with respect to federal and
material state income Taxes, those years for which examinations have been
completed and those years for which examinations are presently being
conducted.
(d) Except as would not be materially adverse to the Company, the
Company and each of its Subsidiaries have complied in all material respects
with all rules and Regulations relating to the payment and withholding of
Taxes (including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any foreign
Laws) and have, within the time and in the manner required by law, withheld
from employee wages and paid over to the proper Governmental Authorities all
material amounts required to be so withheld and paid over under all
applicable Laws.
(e) Neither the Company nor any of its Subsidiaries (i) has waived
any statutory period of limitations in respect of its or their Taxes or Tax
Returns or (ii) is a party to, bound by, or has any obligation under any Tax
sharing, allocation, indemnity, or similar contract or arrangement.
(f) The net operating losses ("NOL") of the Company or any
Subsidiary of the Company are not, as of the date hereof, subject to Section
382 or 269 of the Code, Regulation Section 1.1502-21T(c), or any similar
provisions or Regulations otherwise limiting the use of the NOL's of the
Company or the Subsidiaries of the Company.
(g) No property of the Company or any of the Subsidiaries of the
Company is "tax-exempt use property" (as such term is defined in Section 168
of the Code).
(h) None of the Company or any of the Subsidiaries of the Company
has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a "Subsection (f)
asset" (as such term is defined in Section 341(f)(4) of the Code) owned by
the Company or any of the Subsidiaries of the Company.
(i) The Company is not, and has not been for the five years
preceding the Closing, a "United States real property holding company" (as
such term is defined in Section 897(c)(2) of the Code).
Section 4.19 ENVIRONMENTAL LAWS AND REGULATIONS. Except as would not
be or result in a Material Adverse Effect on the Company: (a) the Company and
its Subsidiaries are and
21
have been in compliance with all applicable Environmental Laws; (b) the
Company and its Subsidiaries have obtained all Permits required by any
applicable Environmental Law and all such permits are in full force and
effect; (c) neither the Company nor any of its Subsidiaries has, and the
Company has no Knowledge of any other Person who has, caused any release,
threatened release or disposal of any Hazardous Material at any properties or
facilities previously or currently owned, leased or occupied by the Company
or its Subsidiaries; (d) the Company has no Knowledge that any of its or its
Subsidiaries' properties or facilities are adversely affected by any release,
threatened release or disposal of a Hazardous Material originating or
emanating from any other property; (e) neither the Company nor any of its
Subsidiaries (i) has any liability for response or corrective action, natural
resources damage, or any other harm pursuant to any Environmental Law, (ii)
is subject to, has notice or Knowledge of, or is required to give any notice
of any environmental claim or (iii) has Knowledge of any condition or
occurrence which could form the basis of an Environmental claim against the
Company, any Subsidiary or any of their properties or facilities; (f) the
Company and its Subsidiaries' properties and facilities are not subject to
any, and the Company has no Knowledge of any, imminent restriction on the
ownership, occupancy, use or transferability of their properties and
facilities arising from any (i) Environmental Law or (ii) release, threatened
release or disposal of any Hazardous Material; and (g) there is no
Environmental Claim pending, or, to the Company's knowledge, threatened,
against the Company or, to the Company's knowledge, against any Person whose
liability for any Environmental Claim the Company has or may have retained or
assumed either contractually or by operation of law.
Section 4.20 INTELLECTUAL PROPERTY.
(a) Section 4.20(a) of the Company's Disclosure Schedule sets
forth, for the Intellectual Property owned by the Company or its
Subsidiaries, a complete and accurate list of all United States and foreign
(a) patents and patent applications; (b) Trademark registrations (including
material Internet domain registrations) and applications and material
unregistered Trademarks; (c) copyright registrations and applications,
indicating for each, the applicable jurisdiction, registration number (or
application number), and date issued (or date filed).
(b) Section 4.20(b) of the Company's Disclosure Schedule sets
forth a complete and accurate list of all material license agreements
granting to the Company or any of its Subsidiaries any material right to use
or practice any rights under any Intellectual Property other than
Intellectual Property which is used for infrastructural purposes and is
commercially available on reasonable terms, (collectively, the "License
Agreements"), indicating for each the title and the parties thereto.
(c) Except as would not be materially adverse to the Company or
any Business Segment:
(i) the Company or its Subsidiaries own, free and clear of
Liens, Orders and arbitration awards, all owned Intellectual Property used in
the Company's business,
22
and have a valid and enforceable right to use all of the Intellectual
Property licensed to the Company and used in the Company's business;
(ii) the Company has taken reasonable steps to protect the
Intellectual Property of the Company;
(iii) the conduct of the Company's and its Subsidiaries'
businesses as currently conducted does not infringe upon any rights owned or
controlled by any third party;
(iv) there is no Litigation pending or to the Company's
Knowledge threatened or any written claim from any Person (A) alleging that
the Company's activities or the conduct of its businesses or that of any of
its Subsidiaries infringes upon, violates, or constitutes the unauthorized
use of the Intellectual Property rights of any third party or (B) challenging
the ownership, use, validity or enforceability of any Company Intellectual
Property;
(v) to the Knowledge of the Company and its Subsidiaries,
no third party is misappropriating, infringing, diluting, or violating any
Intellectual Property owned by the Company or any of its Subsidiaries and no
such claims have been brought against any third party by the Company or any
of its Subsidiaries; and
(vi) the execution, delivery and performance by the Company
of this Agreement, the Option Agreement and the Voting Agreement, and the
consummation of the transactions contemplated hereby and thereby, will not
result in the loss or impairment of, or give rise to any right of any third
party to terminate, any of the Company's or any of its Subsidiaries' rights
to own any of its Intellectual Property or their respective rights under the
License Agreements, nor require the consent of any Governmental Authority or
third party in respect of any such Intellectual Property.
(vii) The Software owned or purported to be owned by the
Company or any of its Subsidiaries, was either (i) developed by employees of
Company or any of its Subsidiaries within the scope of their employment; (ii)
developed by independent contractors who have assigned their rights to the
Company or any of its Subsidiaries pursuant to written agreements; or (iii)
otherwise acquired by the Company or a Subsidiary from a third party. For
purposes of this Section 4.20(c)(vii), "Software" means any and all (i)
computer programs, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data and collections
of data, whether machine readable or otherwise, (iii) descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, (iv) the technology supporting any Internet site(s)
operated by or on behalf of the Company or any of its Subsidiaries, and (iv)
all documentation, including user manuals and training materials, relating to
any of the foregoing.
23
(d) All material Trademarks registered in the United States have
been in continuous use by the Company or its Subsidiaries. To the Knowledge
of the Company and its Subsidiaries, there has been no prior use of such
Trademarks by any third party which would confer upon said third party
superior rights in such Trademarks; the Company and its Subsidiaries have
adequately policed the Trademarks against third party infringement; and the
material Trademarks registered in the United States have been continuously
used in the form appearing in, and in connection with the goods and services
listed in, their respective registration certificates.
(e) Except as would not be materially adverse to the Company or
any Business Segment, the Company has taken reasonable steps in accordance
with normal industry practice to protect the Company's rights in confidential
information and Trade Secrets of the Company. Without limiting the foregoing
and except as would not be materially adverse to the Company or any Business
Segment, the Company enforces a policy of requiring each relevant employee,
consultant and contractor to execute proprietary information, confidentiality
and assignment agreements substantially in the Company's standard forms, and,
except under confidentiality obligations, there has been no disclosure by the
Company or any Subsidiary of material confidential information or Trade
Secrets.
(f) Except as would not be materially adverse to the Company or
any Business Segment, the Company has taken reasonable steps with the intent
of ensuring that its products (including existing products and technology and
products and technology currently under development) will, when used in
accordance with associated documentation on a specified platform or
platforms, be capable upon installation of accurately processing, providing,
and receiving date data from, into, and between the Twentieth and
Twenty-First centuries, including the years 1999 and 2000, and making
leap-year calculations, provided that all other non-Company products (e.g.,
hardware, software and firmware) used in or in combination with the Company's
products, properly exchange data with the Company's products.
Section 4.21 POOLING; TAX MATTERS. As of the date hereof, to the
Knowledge of the Company, neither the Company nor any of its Affiliates has
taken or agreed to take any action or failed to take any action that would
prevent (a) the Merger from being treated for financial accounting purposes
as a "pooling of interests" in accordance with GAAP and the Regulations and
interpretations of the SEC or (b) the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Section 4.22 AFFILIATE LETTERS. Section 4.22 of the Company's
Disclosure Schedule contains a true and complete list of all Persons who, as
of the date hereof, to the Knowledge of the Company, may be deemed to be
Affiliates of the Company, excluding all its Subsidiaries but including all
directors and executive officers of the Company.
24
Section 4.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any
of its Subsidiaries nor any director, officer, employee or agent of the
Company or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party
or campaign or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) consummated any transaction, made any payment,
entered into any agreement or arrangement or taken any other action in
violation of Section 1128B(b) of the Social Security Act, as amended, or (iv)
made any other unlawful payment except for the foregoing matters that are not
material in any respect to the Company.
Section 4.24 BROKERS. No broker, finder, investment banker or other
Person (other than Morgan Stanley Dean Witter & Co.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. Prior to the date of this Agreement, the
Company has made available to Acquiror a complete and correct copy of all
agreements between the Company and Morgan Stanley Dean Witter & Co. pursuant
to which such firm will be entitled to any payment relating to the
transactions contemplated by this Agreement.
Section 4.25 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of Morgan Stanley Dean Witter & Co., the
Company's financial advisor, substantially to the effect that the
consideration to be received by the holders of the Company Common Stock in
the Merger is fair to such holders from a financial point of view, a copy of
which has been, or promptly will be, provided to Acquiror.
Section 4.26 INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS. All
material interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements and foreign exchange contracts to
hedge its investments in foreign subsidiaries, whether entered into for the
account of the Company or one of its Subsidiaries, were entered into in the
ordinary course of business and, to the Company's Knowledge, in accordance
with prudent business practice and applicable rules, Regulations and policies
of any Governmental Authority and with counterparties believed to be
financially responsible at the time, and in all material respects are valid
and binding obligations of the Company or one of its Subsidiaries enforceable
in accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar Laws affecting the rights
of creditors generally and the availability of equitable remedies), and are
in full force and effect in all material respects. The Company and each of
its Subsidiaries have duly performed in all material respects their material
obligations thereunder to the extent that such obligations to perform have
accrued, and, to the Company's Knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any other
party thereunder.
Section 4.27 COMPANY RIGHTS AGREEMENT. The Company has taken all
action such that (i) (A) no "Shares Acquisition Date" (as defined in the
Company Rights Agreement) shall
25
occur and neither Acquiror nor its Affiliates, individually or taken
together, shall become an "Acquiring Person" (as defined in the Company
Rights Agreement) and (B) the Company Rights Agreement and the Company Rights
shall not apply to Acquiror or any of its Affiliates, individually or taken
together, in the case of (A) or (B), solely as a result of this Agreement,
the Option Agreement, the Voting Agreement or the transactions contemplated
hereby and thereby and (ii) all Company Rights issued under the Company
Rights Agreement shall, immediately prior to the Effective Time, be
cancelled, void and of no further force or effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANIES
The Acquiror Companies hereby represent and warrant to the Company,
subject to the exceptions set forth in the Acquiror's Disclosure Schedule
(which exceptions shall specifically identify a Section, Subsection or clause
of a single Section or Subsection hereof, as applicable, to which such
exception relates, it being understood and agreed that each such exception
shall be deemed to be disclosed both under such Section, Subsection or clause
hereof and any other Section, Subsection or clause hereof to which such
disclosure reasonably relates) that:
Section 5.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Acquiror Companies are legal entities duly organized, validly existing and in
good standing under the Laws of their respective jurisdictions of
incorporation or organization, have all requisite power and authority to own,
lease and operate their respective properties and to carry on their business
as it is now being conducted and are duly qualified and in good standing to
do business in each jurisdiction in which the nature of the business
conducted by them or the ownership or leasing of their respective properties
makes such qualification necessary.
Section 5.2 CERTIFICATE OF INCORPORATION; BYLAWS. The Acquiror has
furnished or made available to the Company complete and correct copies of the
certificate of incorporation and the bylaws in each case as amended or
restated to the date hereof, of Acquiror and Newco. Neither the Acquiror nor
Newco is in violation of any of the provisions of its certificate of
incorporation or bylaws.
Section 5.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of
Acquiror consists of (i) 1,800,000,000 shares of Acquiror Common Stock of
which, as of November 17, 1998, 459,333,610 shares were issued and
outstanding, and (ii) 5,000,000 shares of preferred stock, par value $.01 per
share, of which none are issued. All of the outstanding shares of Acquiror
Common Stock are, and all shares to be issued as part of the Merger
Consideration will be, when issued in accordance with the terms hereof, duly
authorized, validly issued, fully paid and nonassessable.
26
(b) As of the date hereof, no shares of Acquiror Common Stock are
reserved for issuance, and there are no contracts, agreements, commitments or
arrangements obligating Acquiror to offer, sell, issue or grant any shares
of, or any options, warrants or rights of any kind to acquire any shares of,
or any securities that are convertible into or exchangeable for any shares
of, capital stock of Acquiror, to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of, or any outstanding options,
warrants or rights of any kind to acquire any shares of, or any outstanding
securities that are convertible into or exchangeable for any shares of,
capital stock of Acquiror or to grant any Lien on any shares of capital
stock of Acquiror.
Section 5.4 AUTHORIZATION OF AGREEMENT. Each of the Acquiror
Companies has all requisite corporate power and authority to execute and
deliver this Agreement and, in the case of Acquiror, the Option Agreement,
and each instrument required hereby to be executed and delivered by the
Acquiror Companies at the Closing, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Acquiror Companies of this
Agreement and, in the case of Acquiror, the Option Agreement, and each
instrument required hereby to be executed and delivered by the Acquiror
Companies at the Closing and the performance of their respective obligations
hereunder and thereunder have been duly and validly authorized by the Board
of Directors of each of Acquiror and Newco and by Acquiror as the sole
stockholder of Newco. Except for filing of the Certificate of Merger, no
other corporate proceedings on the part of Acquiror or Newco are necessary to
authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Acquiror
Companies and, assuming due authorization, execution and delivery hereof by
the Company, constitutes a legal, valid and binding obligation of each of the
Acquiror Companies, enforceable against each of the Acquiror Companies in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar Laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.
Section 5.5 APPROVALS. Except for the applicable requirements, if
any, of (a) the Securities Act, (b) the Exchange Act, (c) state securities or
blue sky Laws, (d) the HSR Act, (e) Foreign Competition Laws, (f) the New
York Stock Exchange, (g) the filing and recordation of appropriate merger
documents as required by the DGCL and (h) those Laws, Regulations and Orders
noncompliance with which would not in the aggregate materially impair the
ability of Acquiror or Newco to perform its obligations under this Agreement
or be material in any respect to Acquiror, no notices to, consents or
approvals of, or filings or registrations with any Court or Governmental
Authority is required under any Law, Regulation or Order applicable to
Acquiror or Newco to permit Acquiror or Newco to execute, deliver or perform
this Agreement or the Option Agreement or any instrument required hereby to
be executed and delivered by it at the Closing.
Section 5.6 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all
27
Permits or Orders of, Courts and/or Governmental Authorities indicated as
required in Section 5.5, neither the execution and delivery by Acquiror or
Newco of this Agreement, or any instrument required hereby to be executed and
delivered by Acquiror or Newco at the Closing nor the performance by Acquiror
or Newco of their respective obligations hereunder or thereunder will (a)
violate or breach the terms of or cause a default under any Law, Regulation
or Order applicable to Acquiror or Newco, the articles of incorporation or
by-laws of Acquiror or Newco or any contract, note, bond, mortgage,
indenture, license, agreement or other instrument to which Acquiror or any of
its Subsidiaries is a party or by which it or any of its properties or assets
is bound, or (b) with the passage of time, the giving of notice or the taking
of any action by a third Person, have any of the effects set forth in clause
(a) of this Section, except in any such case for any matters described in
this Section 5.6 that would not in the aggregate have a material adverse
effect upon the ability of Acquiror or Newco to perform its obligations under
this Agreement or be material in any respect to Acquiror.
Section 5.7 REPORTS.
(a) Acquiror has timely filed all reports required to be filed by
it with the SEC since January 1, 1997 pursuant to the Exchange Act which
complied, at the time of filing, in all material respects with applicable
requirements of the Exchange Act (collectively, the "Acquiror SEC Reports").
None of Acquiror SEC Reports, as of their respective dates, contained or, if
filed after the date hereof, will contain any untrue statement of a material
fact or omitted or, if filed after the date hereof, will 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 superseded by an Acquiror SEC Report
filed subsequently and prior to the date hereof.
(b) The consolidated statements of financial position and the
related consolidated statements of operations, stockholders' equity and cash
flows (including the related notes thereto) of Acquiror included in the
Acquiror SEC Reports complied in all material respects with applicable
accounting requirements and the published rules and Regulations of the SEC
with respect thereto, have been prepared in conformity with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a basis consistent with prior periods (except as otherwise noted
therein), and present fairly the consolidated financial position of Acquiror
as at their respective dates, and the consolidated results of its operations
and its cash flows for the periods presented therein subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments
that have not been and are not expected to be material in amount.
Section 5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1998 there is not and has not been a Material Adverse Effect on Acquiror.
28
Section 5.9 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by Acquiror or required to be supplied by the Acquiror
(except to the extent revised or superseded by amendments or supplements) for
inclusion in the Registration Statement, or any amendment or supplement
thereto, shall not, at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC, 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 were made, not
misleading. The information supplied by Acquiror or required to be supplied
by the Acquiror (except to the extent revised or superseded by amendments or
supplements) for inclusion in the Proxy Statement shall not, on the date the
Proxy Statement is first mailed to the Company's stockholders, at the time of
the Company Stockholders' Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
are made, not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies by or on behalf of the Company for the Company
Stockholders' Meeting which has become false or misleading. The Registration
Statement will comply as to form in all material respects with the provisions
of the Securities Act. Notwithstanding the foregoing, Acquiror makes no
representation, warranty or covenant with respect to any information supplied
or required to be supplied by the Company which is contained in or omitted
from any of the foregoing documents.
Section 5.10 POOLING; TAX MATTERS. As of the date hereof, to the
Knowledge of Acquiror, neither Acquiror nor any of its Affiliates has taken
or agreed to take any action or failed to take any action that would prevent
(a) the Merger from being treated for financial accounting purposes as a
"pooling of interests" in accordance with GAAP and the Regulations and
interpretations of the SEC or (b) the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Section 5.11 AFFILIATES. Section 5.11 of Acquiror's Disclosure
Schedule contains a true and complete list of all Persons who, as of the date
hereof, to the Knowledge of Acquiror, may be deemed to be Affiliates of
Acquiror, excluding all its Subsidiaries but including all directors and
executive officers of Acquiror.
ARTICLE VI
COVENANTS RELATING TO THE CONDUCT OF BUSINESS
Section 6 CONDUCT OF BUSINESS OF THE COMPANY. Except as set forth in
Section 6 of the Company's Disclosure Schedule, during the period from the
date of this Agreement to the Closing Date (unless Acquiror shall otherwise
consent in writing and except as otherwise expressly contemplated or
permitted by this Agreement), the Company will, and will cause the
Subsidiaries of the Company to, to the extent permitted by this Agreement,
operate their
29
businesses in good faith with the goal of preserving intact their assets and
current business organizations, keeping available the services of their
current officers and employees, maintaining their Material Contracts and
preserving their relationships with customers, suppliers, creditors, brokers,
agents and others having business dealings with them, it being understood
that the failure to so preserve, keep or maintain shall not be a breach of
this Section 6 so long as such businesses are operated in good faith as
aforesaid. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement, or as set forth in
Section 6 of the Company's Disclosure Schedule, or as agreed to in writing by
Acquiror, the Company agrees as to itself and its Subsidiaries that:
(a) ISSUANCE AND REDEMPTION OF SECURITIES. Except as required by
the Option Agreement or the Company Rights Agreement, and, subject to Section
7.6(e)(ii), except for grants of stock options in the ordinary course
consistent with past practice pursuant to the Company Option Plans or Company
Stock Purchase Plan, in each case as in effect on the date hereof, or
issuance of Company Common Stock pursuant to the exercise of options granted
thereunder or the exercise or conversion of other securities outstanding on
the date hereof, the Company and its Subsidiaries shall not issue, sell or
grant any shares of capital stock of any class,or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any shares of capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire
any shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock or any other securities in respect of, in lieu of, or in
substitution for, shares outstanding on the date hereof. In no event shall
the vesting or exercisability of any Company stock option or shares of
restricted Company Common Stock granted or issued under any Company Plan be
accelerated as a result of or in connection with the execution, delivery or
performance of this Agreement, the Option Agreement or the Voting Agreement
or the consummation of the transactions contemplated hereby and thereby,
except to the extent required under the terms of the applicable Company Plan
or applicable individual agreement as in effect on the date hereof (or if
entered into after the date hereof in compliance with this Section 6(a), such
agreement which shall be in the standard form thereof as in effect on the
date hereof).
(b) DIVIDENDS. The Company shall not, nor shall it permit any of
its Subsidiaries to (i) split, combine, subdivide or reclassify any shares of
its capital stock or (ii) declare, set aside for payment or pay any dividend,
or make any other distribution in respect of, any of its capital stock, or
redeem or repurchase any of its capital stock or any outstanding options,
warrants or rights of any kind to acquire any shares of, or any outstanding
securities that are convertible into or exchangeable for any shares of,
capital stock of the Company or any of the Company's Subsidiaries, except for
(A) the distribution of the Rights pursuant to the Company Rights Agreement,
(B) dividends by a wholly owned Subsidiary of the Company to the Company or
another wholly owned Subsidiary of the Company and (C) repurchases of
unvested shares in connection with the termination of a relationship with any
employee,
30
consultant or director pursuant to stock option or purchase agreements in
effect on the date hereof or approved by Acquiror.
(c) RESTRUCTURING. The Company and its Subsidiaries shall not
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Subsidiary.
(d) GOVERNING DOCUMENTS. Except as required by the Company Rights
Agreement, the Company and its Subsidiaries shall not adopt any amendments to
their articles or certificates of incorporation, as the case may be, or their
bylaws or other equivalent organizational documents, or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of the Company or any such Subsidiary.
(e) INDEBTEDNESS. The Company and its Subsidiaries shall not
incur any indebtedness for money borrowed other than in the ordinary course
of business or guarantee any such indebtedness of another Person (other than
the Company or any other Subsidiary of the Company), enter into any "keep
well" or other agreement to maintain any financial condition of another
Person (other than the Company or any Subsidiary of the Company) or enter
into any arrangement having the economic effect of any of the foregoing in
each case, other than (i) in connection with the financing of ordinary course
trade payables in the ordinary course of business, (ii) pursuant to existing
credit facilities in the ordinary course of business or (iii) the guarantee
by the Company of any indebtedness of any Subsidiary of the Company.
(f) NO ACQUISITIONS. The Company and its Subsidiaries shall not
acquire or agree to acquire (i) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, limited liability company, partnership,
joint venture, association or other business organization or division thereof
or (ii) any assets that, individually or in the aggregate, are material to
the Company and its Subsidiaries except (without limitation of paragraph (h)
below but subject to paragraph (i) below), in the ordinary course of business
consistent with past practice.
(g) NO DISPOSITIONS. Except in the ordinary course of business,
the Company and its Subsidiaries shall not sell, lease, license or otherwise
encumber or subject to any Lien or otherwise dispose of any of the properties
or assets of the Company or any of its Subsidiaries that, individually or in
the aggregate, are material, in nature or amount, to any Business Segment.
(h) CAPITAL EXPENDITURES. The Company and its Subsidiaries shall
not make or agree to make any capital expenditures relating to a single
project in excess of $5 million or in the aggregate in excess of $25 million.
31
(i) CONTRACTS. Except in the ordinary course of business, the
Company and its Subsidiaries shall not (A) enter into any Material Contract,
or (B) modify, amend or transfer in any material respect or terminate any
Material Contract (other than the Company Rights Agreement) to which the
Company or any of its Subsidiaries is a party or waive, release or assign any
material rights or claims thereunder. Without limitation of the previous
sentence, without the consent of Acquiror not to be unreasonably withheld or
delayed (notwithstanding the last sentence of the first paragraph of this
Section 6), the Company and its Subsidiaries will not enter into any
Netcenter agreement or commitment (including any extension, amendment,
renewal or modification to any existing agreement) (i) having a term of more
than one year from the date hereof (including if the other party or parties
thereto have the unilateral right to extend such term beyond one year from
the date hereof) and (A) providing any of the following restrictions on the
Company: exclusivity across Netcenter or any channels within Netcenter, "most
favored nations" or rights of first refusal or first offer or (B) providing
inventory commitments on Netcenter with respect to twelve and one-half
percent (12.5%) or more of the saleable inventory on either the Netcenter
home page or NetSearch page during the term of the applicable agreement, or
(ii) providing for or allowing the termination thereof upon the Merger, or
upon a "change in control" of Acquiror or the sale or spin-off of the Company
or portions of its business after the Effective Time.
(j) EMPLOYEE MATTERS. Except as required by Law or in the
ordinary course of business, or in accordance with this Agreement, the
Company and its Subsidiaries shall not (i) increase the compensation or
fringe benefits of any of their respective employees, (ii) enter into any
contract with any of their respective employees, officers or directors
regarding his or her employment, compensation or benefits, or (iii) adopt any
plan, arrangement or policy which would become a Company Plan or amend any
Company Plan to the extent such adoption or amendment would create or
increase any liability or obligation on the part of the Company or its
Subsidiaries.
(k) ACCOUNTING POLICIES AND PROCEDURES. The Company and its
Subsidiaries shall not make any change to their accounting methods,
principles or practices, except as may be required by GAAP, Regulation S-X
promulgated by the SEC or applicable statutory accounting principles.
(l) LIENS. The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur or assume any material Lien on any of their
material assets.
(m) CLAIMS. The Company and its Subsidiaries shall not settle any
material Litigation or waive, assign or release any material rights or claims
except in either case (i) in the ordinary course of business and (ii) for any
such settlement which (A) would not impose either material restrictions on
the conduct of the business of the Company or any of its Subsidiaries or (B)
for Litigation items settled for money, involve in the aggregate in excess of
$10,000,000 in cost to the Company or any of its Subsidiaries. The Company
and its Subsidiaries shall not pay, discharge or satisfy any liabilities or
obligations (absolute, accrued,
32
asserted or unasserted, contingent or otherwise), except in the ordinary
course of business or in accordance with their terms.
(n) INTEREST RATE AND FOREIGN EXCHANGE. Except in the ordinary
course of business, the Company and its Subsidiaries shall not materially
restructure or materially change its gap position, through purchases, sales,
hedges, swaps, caps or collars or otherwise or the manner in which any
current hedges are classified or reported.
(o) TAXES. The Company and its Subsidiaries shall not make any
Tax election or settle or compromise any material Tax liability, except in
respect of ongoing matters or in the ordinary course of business.
(p) NO AGREEMENTS. The Company and its Subsidiaries shall not
authorize, recommend, propose or announce an intention to do any of the
foregoing, or agree or enter into any contract to do any of the foregoing.
(q) INSURANCE. The Company shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to maintain in full
force and effect all self-insurance or insurance, as the case may be,
currently in effect.
(r) Y2K COMPLIANCE PLAN. The Company shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to carry forward in all
material respects the Y2K Review and Assessment Report and Recommendations
dated November 13, 1998, previously made available by the Company to Acquiror.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 NO SOLICITATION. From the date hereof until the Effective
Time or, if earlier, the termination of this Agreement pursuant to Article IX,
the Company shall not (whether directly or indirectly through advisors, agents
or other intermediaries), and the Company shall cause its respective officers,
directors, advisors, representatives or other agents of the Company not to, (a)
solicit, initiate or knowingly encourage any Acquisition Proposal (as defined
herein) or (b) engage in discussions or negotiations with, or disclose any
non-public information relating to the Company or its Subsidiaries or afford
access to the properties, books or records of the Company or its Subsidiaries
to, any Person that has made an Acquisition Proposal or has advised the Company
that it is interested in making an Acquisition Proposal; PROVIDED that, if and
only if (i) the Company's Board of Directors believes in good faith, based on
such matters as it deems relevant, including the advice of the Company's
financial advisor, that such Acquisition Proposal is a Financially Superior
Proposal (as defined herein) and (ii) the Company's Board of Directors
determines in good faith, based on such matters as it deems relevant, including
consultation with the Company's outside legal counsel, that the failure to
33
engage in such negotiations or discussions or provide such information is a
breach of the fiduciary duties of the Board of Directors of the Company under
applicable Law, then the Company may engage in any act otherwise proscribed
by clause (b) above. The Company shall as promptly as practicable provide
Acquiror with a copy of any written Acquisition Proposal received and a
written statement with respect to any nonwritten Acquisition Proposal
received, which statement shall include the identity of the Person making the
Acquisition Proposal and the material terms thereof. The Company shall
inform Acquiror as promptly as practicable of any change in the price,
structure, form of consideration or material terms and conditions regarding
the Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" means any offer or proposal for a merger, consolidation,
recapitalization, liquidation or other business combination involving the
Company or any of its Material Subsidiaries (as defined herein) or the
acquisition or purchase of 20% or more of any class of equity securities of
the Company or any of its Material Subsidiaries, or any tender offer or
exchange offer, that, if consummated, would result in any Person (other than
Acquiror and its affiliates) beneficially owning 20% or more of any class of
equity securities of the Company or any of its Material Subsidiaries, or the
acquisition, license or purchase of a substantial portion of the technology,
business or assets of the Company and its Subsidiaries, other than the
transactions contemplated by this Agreement and other than in the ordinary
course of business. As used herein, a "Financially Superior Proposal" shall
mean an Acquisition Proposal which in the reasonable judgment of the
Company's Board of Directors, based on such matters as it deems relevant,
including the advice of the Company's financial advisor, (i) will result in a
transaction providing aggregate value greater than that provided pursuant to
this Agreement and (ii) is reasonably capable of being financed by the Person
making such Acquisition Proposal. As used herein, "Material Subsidiary"
means any Subsidiary of the Company whose consolidated revenues, net income
or assets constitute 20% or more of the revenues, net income or assets of the
Company and its Subsidiaries, taken as a whole. Nothing in this Agreement,
including Section 6(g), shall prohibit the Company or the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure required by an applicable Law.
Section 7.2 ACCESS AND INFORMATION. Each of the parties will, and
will cause its Subsidiaries to, (i) afford to the other party and its
officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives (collectively, the "Representatives") full
access at reasonable times upon reasonable prior notice to the officers,
employees, agents, properties, offices and other facilities of such party and
its Subsidiaries and to their books and records, (ii) furnish promptly to the
other party and its Representatives such information concerning the business,
properties, contracts, records and personnel of such party and its
Subsidiaries (including financial, operating and other data and information)
as may be reasonably requested, from time to time, by or on behalf of the
other party. No investigation by any party hereto shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained
by
34
Acquiror or the Company pursuant to this Section 7.2 shall be kept
confidential in accordance with the Confidentiality Agreement.
Section 7.3 MEETING OF STOCKHOLDERS. The Company, acting through its
Board of Directors, shall, in accordance with the DGCL and its certificate of
incorporation and bylaws, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date upon which the Registration
Statement becomes effective, the Company Stockholders' Meeting, and the
Company shall consult with Acquiror in connection therewith. Unless the Board
of Directors determines, based on such matters as it deems relevant,
including consultation with the Company's outside legal counsel, that to do
so is a breach of the fiduciary duties of the Board of Directors of the
Company under applicable Law, the Board of Directors of the Company shall
declare that this Agreement is advisable and recommend that the Agreement and
the transactions contemplated hereby be approved and adopted by the
stockholders of the Company and include in the Registration Statement and
Proxy Statement a copy of such recommendations; PROVIDED, HOWEVER, that, the
Board of Directors of the Company shall submit this Agreement to the
Company's stockholders, whether or not the Board of Directors of the Company
at any time subsequent to the date hereof determines that this Agreement is
no longer advisable or recommends that the stockholders of the Company reject
it. Unless the Board of Directors of the Company has withdrawn its
recommendation of this Agreement in compliance herewith, the Company shall
use reasonable efforts to solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and the Merger and to
secure the vote or consent of stockholders required by the DGCL and its
certificate of incorporation and bylaws to approve and adopt this Agreement
and the Merger.
Section 7.4 REGISTRATION STATEMENT; PROXY STATEMENT.
(a) As promptly as practicable following the date of this
Agreement, the Company shall prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement and
obtain and furnish the information required to be included by the SEC in the
Proxy Statement and, after consultation with Acquiror, respond promptly to
any comments made by the SEC with respect to the Proxy Statement to be mailed
to its stockholders at the earliest practicable date after the Registration
Statement is declared effective by the SEC, PROVIDED that no amendment or
supplement to the Proxy Statement will be made by the Company without
consultation with Acquiror and its counsel.
(b) Acquiror shall prepare and file with the SEC the Registration
Statement, in which the Proxy Statement shall be included as a prospectus,
and shall use reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. Acquiror shall obtain and
furnish the information required to be included in the Registration Statement
and, after consultation with the Company, respond promptly to any comments
made by the SEC with respect to the Registration Statement and cause the
prospectus included therein, including any amendment or supplement thereto,
to be mailed to the Company's stockholders at the earliest practicable date
after the Registration Statement is declared effective
35
by the SEC, provided that no amendment or supplement to the Registration
Statement will be made by Acquiror without consultation with the Company and
its counsel. Acquiror shall also take any action required to be taken under
state blue sky or other securities Laws in connection with the issuance of
Acquiror Common Stock in the Merger.
Section 7.5 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and Acquiror will each use reasonable efforts (i)
to take, or to cause to be taken, all appropriate action, and to do, or to
cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, unless the Board of the Directors of the
Company has withdrawn its recommendation of this Agreement in compliance
herewith, (ii) to obtain from any Governmental Authorities any Permits or
Orders required to be obtained by Acquiror or the Company or any of their
Subsidiaries in connection with the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger, (iii) to make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities Laws, (B)
the HSR Act (C) Foreign Competition Laws and (D) any other applicable Law;
PROVIDED that Acquiror and the Company will cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the nonfiling party and its advisors prior to filings
and, if requested, will accept all reasonable additions, deletions or changes
suggested in connection therewith and (iv) to furnish all information
required for any application or other filing to be made pursuant to any
applicable Law or any applicable Regulations of any Governmental Authority
(including all information required to be included in the Proxy Statement or
the Registration Statement) in connection with the transactions contemplated
by this Agreement PROVIDED, HOWEVER, that neither Acquiror nor any of its
Affiliates shall be under any obligation to make proposals, execute or carry
out agreements or submit to Orders providing for the sale or other
disposition or holding separate (through the establishment of a trust or
otherwise) of any material (in nature or amount) assets or categories of
material (in nature or amount) assets of Acquiror, any of its Affiliates or
the Company or the holding separate of the shares of Company Common Stock or
imposing or seeking to impose any material limitation on the ability of
Acquiror or any of its Subsidiaries or Affiliates to conduct their business
or own such assets or to acquire, hold or exercise full rights of ownership
of the shares of Company Common Stock.
(b) Each of the Company and Acquiror will give prompt notice to
the other of (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
Merger, (ii) any notice or other communication from any Governmental
Authority in connection with the Merger, (iii) any Litigation, relating to or
involving or otherwise affecting the Company, Acquiror or their Subsidiaries
that relates to the consummation of the Merger; and (iv) any change that is
reasonably likely to have a Material Adverse Effect on the Company or
Acquiror.
36
(c) Each of the Company and Acquiror will give (or will cause
their respective Subsidiaries to give) any notices to third Persons, and use,
and cause their respective Subsidiaries to use, reasonable efforts to obtain
any consents from third Persons necessary, proper or advisable (as determined
in good faith by Acquiror with respect to such notices or consents to be
delivered or obtained by the Company) to consummate the transactions
contemplated by this Agreement.
(d) To the extent requested by Acquiror, the Company shall
cooperate with Acquiror to identify any "Encumbrances" that may adversely
affect the Company's or its Subsidiaries' right to sublicense any
Intellectual Property rights owned or licensed by the Company (including the
right to further sublicense such rights) in the Company's or its
Subsidiaries' client or server software (including without limitation
development tools, tests and other development components) which will exist
as of the Closing Date, and any maintenance upgrades and new releases of such
software, if any, which will be already in progress at the Company as of the
Closing Date, and/or any components of the foregoing (collectively, the
"Software Products"). Such cooperation shall include, upon Acquiror's
written request, granting Acquiror full access, subject to existing or other
reasonable confidentiality restrictions, to the Company's technology
licenses, acquisition agreements and Intellectual Property claims relating to
the Software Products. "Encumbrance" means any restriction or limit that
would prevent or materially limit or restrict the Company's ability to
sublicense any Intellectual Property right owned or licensed by the Company
(including the right to further sublicense such rights) with respect to the
Software Products, including, without limitation, limitations on source code
access and sublicensing rights, as well as prohibitions or required consents
to assignment of rights from the Company to the Acquiror upon the Closing
Date, which rights, if not available, would constitute an Encumbrance. The
Company shall use reasonable efforts in consultation with Acquiror to remove,
limit or diminish such Encumbrances in a reasonable priority order designated
by Acquiror, with the goal of removing or minimizing as soon as practicable
all such Encumbrances and having no ongoing financial obligations in
connection therewith.
Section 7.6 AFFILIATES; POOLING; TAX TREATMENT.
(a) The Company will use reasonable efforts to obtain an executed
letter agreement substantially in the form of ANNEX C hereto from (i) each
Person identified in Section 4.22 of the Company's Disclosure Schedule within
15 days following the execution and delivery of this Agreement and (ii) from
any Person who, to the Company's Knowledge, may be deemed to have become an
Affiliate of the Company after the date of this Agreement and prior to the
Effective Time as soon as practicable after attaining such status.
(b) Acquiror will use reasonable efforts to obtain an executed
letter agreement substantially in the form of ANNEX D hereto from (i) each
Person identified in Section 5.11 of Acquiror's Disclosure Schedule within 15
days following the execution and delivery of this Agreement and (ii) from any
Person who, to Acquiror's Knowledge, may be
37
deemed to have become an Affiliate of Acquiror after the date of this
Agreement and prior to the Effective Time as soon as practicable after
attaining such status.
(c) Acquiror Companies will not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale by
stockholders of the Company who may be Affiliates of the Company pursuant to
Rule 145 under the Securities Act.
(d) Acquiror and the Company will each use reasonable efforts
before and after the Closing to cause the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Code, and will not
take, and will use reasonable efforts to prevent any Affiliate of such party
from taking, any actions which could prevent the Merger from qualifying as
such a reorganization, and will take such action as is available and may be
reasonably required to negate the impact of any past actions by such party or
its respective Affiliates which would reasonably be expected to adversely
impact the qualification of the Merger as a reorganization within the meaning
of Section 368(a) of the Code. Acquiror and the Company will each use
reasonable efforts to obtain executed representation letters described in
Sections 8.2(d) and 8.3(c), respectively, substantially in the respective
forms attached hereto as Annexes E and F.
(e) (i) Acquiror will not knowingly take, or knowingly permit
any controlled Affiliate of Acquiror to take, any actions which could prevent
the Merger from being treated for financial accounting purposes as a "pooling
of interests" under GAAP, it being understood and agreed that if Ernst & Young LLP, Acquiror's independent accountants, advises Acquiror that an
action would not prevent the Merger from being so treated, such action will
be conclusively deemed not to constitute a breach of this Section 7.6 (e)(i).
(ii) The Company will not knowingly take, or knowingly
permit any controlled Affiliate of the Company to take, any actions which
could prevent the Merger from being treated for financial accounting purposes
as a "pooling of interests" under GAAP, it being understood and agreed that
if Ernst & Young LLP, the Company's independent accountants, advises the
Company that an action would not prevent the Merger from being so treated,
such action will be conclusively deemed not to constitute a breach of this
Section 7.6 (e)(ii).
Section 7.7 PUBLIC ANNOUNCEMENTS. The parties will consult with each
other and will mutually agree upon any press release or public announcement
pertaining to the Merger and shall not issue any such press release or make
any such public announcement prior to such consultation and agreement, except
as may be required by applicable Law or by obligations pursuant to any
listing agreement with any national securities exchange or national automated
quotation system, in which case the party proposing to issue such press
release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press
release or making any such public announcement. Notwithstanding the
foregoing, in the event the Company's Board of Directors withdraws its
recommendation of this Agreement in compliance herewith, the Company will no
longer be
38
required to consult with or obtain the agreement of Acquiror or Newco in
connection with any press release or public announcement.
Section 7.8 STOCK EXCHANGE LISTING. Acquiror will use reasonable
efforts to cause the shares of Acquiror Common Stock to be issued in the
Merger to be approved for listing (subject to official notice of issuance) on
the New York Stock Exchange prior to the Effective Time.
Section 7.9 EMPLOYEE BENEFIT PLANS.
(a) Acquiror agrees that individuals who are employed by the
Company or any Subsidiary of the Company immediately prior to the Effective
Time shall become employees of the Surviving Corporation or one of its
Subsidiaries following the Effective Time (each such employee, an "Affected
Employee"); PROVIDED, HOWEVER, that this Section 7.9(a) shall not be
construed to limit the ability of the applicable employer to terminate the
employment of any Affected Employee at any time.
(b) Acquiror will, or will cause the Surviving Corporation to,
give Affected Employees full credit for purposes of eligibility (including
service and waiting period requirements), vesting, benefit accrual and
determination of the level of benefits under any employee benefit plans or
arrangements maintained by the Acquiror, the Surviving Corporation or any
Subsidiary of the Acquiror for such Affected Employees' service with the
Company or any Subsidiary of the Company to the same extent recognized by the
Company or any Subsidiary of the Company immediately prior to the Effective
Time.
(c) Acquiror will, or will cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods and service requirements with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans that such employees may be eligible to participate in after the
Effective Time, other than limitations, waiting periods or service
requirements that are already in effect with respect to such employees and
that have not been satisfied as of the Effective Time under any welfare plan
maintained for the Affected Employees immediately prior to the Effective
Time, and (ii) provide each Affected Employee with credit for any co-payments
and deductibles paid prior to the Effective Time (as shown on the Company's
records) in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(d) For a period of six months immediately following the Effective
Time, the coverage and benefits provided to Affected Employees pursuant to
employee benefit plans or arrangements maintained by Acquiror, the Company or
any Subsidiary of the Company, or any Subsidiary of the Acquiror shall be, in
the aggregate, not less favorable than those provided to such employees
immediately prior to the Effective Time.
39
Section 7.10 INDEMNIFICATION OF DIRECTORS AND OFFICERS; DIRECTORS & OFFICERS INSURANCE.
(a) From and after the Effective Time, Acquiror will fulfill and
honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and its directors and officers as of or prior
to the date hereof (or indemnification agreements in the Company's customary
form for directors joining the Company's Board of Directors prior to the
Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time.
(b) For a period of six years after the Effective Time, Acquiror
will maintain or cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those
Persons who, as of immediately prior to the Effective Time, are covered by
the Company's directors' and officers' liability insurance policy (the
"Insured Parties") on terms no less favorable to the Insured Parties than
those of the Company's present directors' and officers' liability insurance
policy; PROVIDED, HOWEVER, that in no event will Acquiror or the Surviving
Corporation be required to expend in excess of 150% of the annual premium
currently paid by the Company for such coverage (or such coverage as is
available for 150% of such annual premium).
(c) The provisions of this Section 7.10 are intended to be for the
benefit of, and will be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such Person.
Acquiror will not permit the Surviving Corporation to merge or consolidate
with any other Person unless the Surviving Corporation will ensure that the
surviving or resulting entity assumes the obligations imposed by this Section
7.10.
Section 7.11 EVENT NOTICES. From and after the date of this Agreement
until the Effective Time, each party hereto will promptly notify the other
party hereto of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any condition
to the obligations of such party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied and (ii) the
failure of such party to comply with any covenant or agreement to be complied
with by it pursuant to this Agreement which would be likely to result in any
condition to the obligations of such party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied. No delivery
of any notice pursuant to this Section 7.11 will cure any breach of any
representation or warranty of such party contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.
40
Section 7.12 ASSUMPTION OF OBLIGATIONS TO ISSUE STOCK.
(a) Simultaneously with the Merger, (i) each outstanding option or
warrant to purchase or acquire a share of Company Common Stock under any
Company Option Plan or otherwise shall, in accordance with the terms thereof,
be converted into an option or warrant to purchase the number of shares of
Acquiror Common Stock equal to the Exchange Ratio times the number of shares
of Company Common Stock which could have been obtained prior to the Effective
Time upon the exercise of each such option or warrant (rounded down to the
nearest whole share), at an exercise price per share equal to the exercise
price for each such share of Company Common Stock (rounded up to the nearest
whole cent) subject to such option or warrant divided by the Exchange Ratio,
and all references in each such option or warrant to the Company shall be
deemed to refer to Acquiror, where appropriate, and (ii) Acquiror shall
assume the obligations of the Company under the Company Option Plans. The
other terms of each such option or warrant and any Company Option Plans under
which they were issued, shall continue to apply in accordance with their
terms, including any provisions providing for acceleration.
(b) Simultaneously with the Merger, each outstanding award
(including restricted stock, stock equivalents and stock units) ("Company
Award") under any employee incentive or benefit plans, programs or
arrangements presently maintained by the Company or any Company Subsidiary
which provide for grants of equity-based awards shall be amended or converted
into a similar instrument of Acquiror, in each case with such adjustments to
the terms of such Company Awards as are appropriate to preserve the value
inherent in such Company Awards with no detrimental effects on the holders
thereof. The other terms of each Company Award, and the plans or agreements
under which they were issued, shall continue to apply in accordance with
their terms, including any provisions providing for acceleration.
(c) The Company and Acquiror agree that each of their respective
employee incentive or benefit plans, programs and arrangements shall be
amended, to the extent necessary and appropriate, to reflect the transactions
contemplated by this Agreement, including, but not limited to the conversion
of shares of Company Common Stock held or to be awarded or paid pursuant to
such benefit plans, programs or arrangements into shares of Acquiror Common
Stock on a basis consistent with the transactions contemplated by this
Agreement.
(d) Acquiror shall (i) reserve for issuance the number of shares
of Acquiror Common Stock that will become subject to the benefit plans,
programs, arrangements and warrants referred to in this Section 7.12 and (ii)
issue or cause to be issued the appropriate number of shares of Acquiror
Common Stock pursuant to such plans, programs, arrangements and warrants,
upon the exercise or maturation of rights existing thereunder at the
Effective Time or thereafter granted or awarded.
(e) The parties will use their reasonable efforts to mutually
agree with respect to the treatment of the Company Stock Purchase Plan in the
Merger on terms not
41
inconsistent with the Company Stock Purchase Plan or the terms of this
Agreement; provided, however, that in no event may Company Common Stock be
purchased under the Company Stock Purchase Plan after the Effective Time.
(f) Acquiror agrees to file a registration statement on Form S-8
for the shares of Acquiror Common Stock issuable with respect to options
under any Company Option Plan at or prior to the Effective Time and shall use
its commercially reasonable efforts to maintain the effectiveness of such
registration statement thereafter for as long as any of such options remain
outstanding, to the same extent as Acquiror maintains the effectiveness of
its existing Form S-8.
(g) The Company hereby assigns all Repurchase Rights to the Surviving
Corporation as of the Effective Time.
Section 7.13 CONVEYANCE TAXES. Acquiror and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding (i) any real
property transfer gains, sales, use, transfer, value-added, stock transfer
(subject to Section 3.2(c)), and stamp Taxes (ii) any recording, registration
and other fees, and (iii) any similar Taxes or fees that become payable in
connection with the transactions contemplated hereby. The Taxes described in
clause (i) above shall be paid by the Company.
Section 7.14 VOTING AGREEMENT. The Company shall use reasonable
efforts, on behalf of Acquiror and pursuant to the request of Acquiror, to
cause each Company stockholder named on the signature pages to the Voting
Agreement to execute and deliver to Acquiror the Voting Agreement
concurrently with the execution of this Agreement.
Section 7.15 OPTION AGREEMENT. Concurrently with the execution of
this Agreement, the Company shall deliver to Acquiror an executed Option
Agreement in the form of ANNEX B attached hereto. The Company agrees to
fully perform to the fullest extent permitted under applicable Law its
obligations under the Option Agreement.
Section 7.16 RIGHTS AGREEMENT. The Company covenants and agrees with
Acquiror that the Company shall not take any action which would cause (A) a
"Shares Acquisition Date" to occur, or Acquiror or any of its Affiliates,
individually or taken together, to be or be deemed to be an "Acquiring
Person" under the Company Rights Agreement, or (B) the Company Rights
Agreement or the Company Rights to apply to Acquiror or any of its
Affiliates, individually or taken together, in the case of (A) or (B), solely
as a result of this Agreement, the Option Agreement, the Voting Agreement or
the transactions contemplated hereby and thereby. The Company agrees to take
all actions as are required to prevent any event described in (A) or (B) from
occurring, in any such case solely as a result of this Agreement, the Option
Agreement, the Voting Agreement or the transactions contemplated hereby and
thereby.
Section 7.17 REASONABLE EFFORTS AND FURTHER ASSURANCES. Subject to
the terms and conditions hereof, each of the parties to this Agreement shall
use reasonable efforts to effectuate
42
the transactions contemplated hereby and to fulfill and cause to be fulfilled
the conditions to Closing under this Agreement. Subject to the terms and
conditions hereof, each party hereto, at the reasonable request of another
party hereto, shall execute and deliver such other instruments and do and
perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby will be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the party entitled to the benefit
thereof, in whole or in part, to the extent permitted by applicable Law:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act; no stop Order suspending the effectiveness of the
Registration Statement shall be in effect; and no proceedings for that
purpose shall be pending before or threatened by the SEC.
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of
the Company in accordance with the DGCL and the certificate of incorporation
and bylaws of the Company.
(c) NO ORDER. No Court or Governmental Authority having
jurisdiction over the Company or Acquiror shall have enacted, issued,
promulgated, enforced or entered any Law, Regulation or Order (whether
temporary, preliminary or permanent) which is then in effect and which has
the effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger substantially on the terms contemplated by this Agreement.
(d) REGULATORY APPROVALS. All approvals and consents of
applicable Courts and/or Governmental Authorities required to consummate the
Merger shall have been received, and all applicable waiting periods under the
HSR Act and Foreign Competition Laws shall have expired or been terminated.
(e) STOCK EXCHANGE LISTING. The shares of Acquiror Common Stock
to be issued pursuant to the Merger shall have been approved for listing,
subject to official notice of issuance, on the New York Stock Exchange.
(f) POOLING OF INTERESTS. Acquiror shall have been advised in
writing by Ernst & Young LLP as of the date upon which the Effective Time is
to occur, in a form and in substance reasonably acceptable to Acquiror and
the Company, that the transactions
43
contemplated by this Agreement, if consummated, can properly be accounted for
as a "pooling of interests" business combination in accordance with GAAP and
the criteria of Accounting Principles Board Opinion No. 16 and the
Regulations of the SEC. It is understood and agreed that (i) the obligations
of the Company to effect the Merger shall not be subject to the condition set
forth in this Section 8.1(f) to the extent that the Company shall have
breached Section 4.21(a) or Section 7.6(e)(ii) hereof, but only if but for
such breach the condition set forth in this Section 8.1(f) could have been
satisfied (and provided that (A) if such breach is curable the Company shall
have the opportunity, for up to 10 calendar days following satisfaction or
waiver of all other conditions to the Company's obligations to effect the
Merger (and during such period this Section 8.1(f) condition shall remain in
effect as a condition to the Company's obligation to effect the Merger), to
cure such breach and thereby continue this condition in effect as a condition
to the Company's obligation to effect the Merger and (B) if such breach is
not curable, or shall not have been cured at the end of such 10-day period,
this Section 8.1(f) condition shall cease to be in effect as a condition to
the Company's obligation to effect the Merger); and (ii) the obligations of
the Acquiror Companies to effect the Merger hereby shall not be subject to
the condition set forth in this Section 8.1(f) to the extent that either of
the Acquiror Companies shall have breached Section 5.10(a) or Section
7.6(e)(i) hereof, but only if but for such breach the condition set forth in
this Section 8.1(f) could have been satisfied (and provided that (A) if such
breach is curable Acquiror shall have the opportunity, for up to 10 calendar
days following satisfaction or waiver of all other conditions to Acquiror's
obligations to effect the Merger (and during such period this Section 8.1(f)
condition shall remain in effect as a condition to Acquiror's obligation to
effect the Merger), to cure such breach and thereby continue this Section
8.1(f) condition in effect as a condition to Acquiror's obligation to effect
the Merger and (B) if such breach is not curable, or shall not have been
cured at the end of such 10-day period, this Section 8.1(f) condition shall
cease to be in effect as a condition to Acquiror's obligation to effect the
Merger).
Section 8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE ACQUIROR
COMPANIES. The obligations of the Acquiror Companies to effect the Merger
and the other transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, any or all of which may be waived by the Acquiror Companies, in
whole or in part, to the extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES.
(i) Each of the representations and warranties of the
Company contained in this Agreement shall be true and correct as of the date
hereof and at and as of the Closing Date as if made at and as of such time,
except that, to the extent such representations and warranties address
matters only as of a particular date, such representations and warranties
shall, to such extent, be true and correct at and as of such particular date
as if made at and as of such particular date; PROVIDED that if any of such
representations and warranties shall not be true and correct as aforesaid,
then the condition contained in this Section 8.2(a)(i) (but not the condition
contained in Section 8.2(a)(ii)) shall nevertheless be deemed satisfied if
the
44
cumulative effect of all inaccuracies of such representations and breaches of
such warranties shall not be or have a Material Adverse Effect on the
Company. The Acquiror Companies shall have received a certificate of an
executive officer of the Company, dated the date of the Effective Time, to
such effect.
(ii) The representations and warranties of the Company
contained in Section 4.20 shall be true and correct as of the date hereof and
at and as of the Closing Date as if made at and as of such time, except that
to the extent such representations and warranties address matters only as of
a particular date, such representations and warranties shall, to such extent,
be true and correct at and as of such particular date as if made at and as of
such particular date; provided that if any of such representations and
warranties shall not be true and correct as aforesaid, then the condition
contained in this Section 8.2(a)(ii) shall nevertheless be deemed satisfied
if the cumulative effect of all inaccuracies of such representations and
breaches of such warranties shall not be or have a Material Adverse Effect on
any Business Segment.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Closing. The Acquiror Companies shall have received a certificate of an
executive officer of the Company, dated the Closing Date, to such effect.
(c) THIRD PARTY CONSENTS. All Change of Control Consents of third
parties required in order for a Change of Control Effect not to occur under
any contract, note, bond, mortgage, indenture, license, agreement or other
instrument to which the Company or any of its Subsidiaries is a party or by
which it is bound and which is material to any Business Segment shall have
been obtained, except where the failure to obtain such Change of Control
Consents, either individually or in the aggregate, shall not have or be a
Material Adverse Effect on the Company.
(d) TAX OPINION. Acquiror shall have received the opinion of its
tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP, dated as of the
Closing Date, to the effect that the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code; provided, however, that if
such firm does not render such opinion, this condition shall nonetheless be
deemed satisfied if such opinion, dated as of the Closing Date, is rendered
to Acquiror by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
tax counsel to the Company. The issuance of such opinion shall be conditioned
on the receipt by such tax counsel rendering such opinion of representation
letters from each of Acquiror, Newco and the Company, in each case, in form
and substance reasonably satisfactory to such tax counsel. The specific
provisions of each such representation letter shall be in form and substance
reasonably satisfactory to such tax counsel rendering such opinion, and each
such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect.
45
(e) AFFILIATE AGREEMENTS. Each of the parties identified by the
Company as being an Affiliate of the Company shall have delivered to Acquiror
an executed Affiliate Agreement, in the form attached hereto as ANNEX C,
which shall be in full force and effect.
(f) RIGHTS PLAN. The provisions of the Company Rights Agreement
and the Rights shall not apply to Acquiror or any of its Affiliates,
individually or taken together, as a result of this Agreement, the Option
Agreement, the Voting Agreement or the transactions contemplated hereby or
thereby, or to the Merger, and all Company Rights issued thereunder shall,
immediately prior to the Effective Time, be canceled, void and of no further
force or effect.
Section 8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions, any or all of which
may be waived by the Company, in whole or in part, to the extent permitted by
applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Acquiror Companies contained in this Agreement shall be
true and correct as of the date hereof and at and as of the Closing Date as
if made at and as of such time, except that to the extent such
representations and warranties address matters only as of a particular date,
such representations and warranties shall, to such extent, be true and
correct as of the date hereof and at and as of such particular date as if
made at and as of such particular date; PROVIDED that if any of such
representations and warranties shall not be true and correct as aforesaid,
then this condition shall nevertheless be deemed satisfied if the cumulative
effect of all inaccuracies of such representations and breaches of such
warranties shall not be or have a Material Adverse Effect on Acquiror. The
Company shall have received a certificate of an executive officer of each of
the Acquiror Companies, dated the date of the Effective Time, to such effect.
(b) AGREEMENTS AND COVENANTS. The Acquiror Companies shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
at or prior to the Closing. The Company shall have received a certificate of
an executive officer of each of the Acquiror Companies, dated the Closing
Date, to such effect.
(c) TAX OPINION. The Company shall have received the opinion of
its tax counsel, Wilson Sonsini Goodrich & Rosati, Professional Corporation,
dated as of the Closing Date, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code; provided,
however, that if such firm does not render such opinion, this condition shall
nonetheless be deemed satisfied if such opinion, dated as of the Closing
Date, is rendered to the Company by Skadden, Arps, Slate, Meagher & Flom LLP,
tax counsel to Acquiror. The issuance of such opinion shall be conditioned
on the receipt by such tax
46
counsel rendering such opinion of representation letters from each of
Acquiror, Newco and the Company, in each case, in form and substance
reasonably satisfactory to such tax counsel. The specific provisions of each
such representation letter shall be in form and substance reasonably
satisfactory to such tax counsel rendering such opinion, and each such
representation letter shall be dated on or before the date of such opinion
and shall not have been withdrawn or modified in any material respect.
ARTICLE IX
TERMINATION, AMENDMENT AND EXPENSES
Section 9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of the Company:
(a) by mutual consent of Acquiror and the Company;
(b) by Acquiror, upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company hereunder shall be or become untrue
or inaccurate, in any case such that the conditions set forth in Section
8.2(a) or Section 8.2(b) would not be satisfied (a "Terminating Company
Breach"); PROVIDED that, if such Terminating Company Breach is curable by the
Company through the exercise of its reasonable efforts, and the Company
continues to exercise such reasonable efforts, Acquiror may not terminate
this Agreement under this Section 9.1(b) if such Terminating Company Breach
has been cured prior to June 30, 1999;
(c) by the Company, upon material breach of any covenant or
agreement on the part of the Acquiror Companies set forth in this Agreement,
or if any representation or warranty of the Acquiror Companies shall be or
become untrue or inaccurate, in any case such that the conditions set forth
in Section 8.3(a) or Section 8.3(b) would not be satisfied (a "Terminating
Acquiror Breach"); PROVIDED that, if such Terminating Acquiror Breach is
curable by the Acquiror Companies through the exercise of their reasonable
efforts, and the Acquiror Companies continue to exercise such reasonable
efforts, the Company may not terminate this Agreement under this Section
9.1(c) if such Terminating Acquiror Breach has been cured prior to June 30,
1999;
(d) by either Acquiror or the Company, if there shall be any Order
of a Court or Governmental Authority having jurisdiction over a party hereto
which is final and nonappealable permanently enjoining, restraining or
prohibiting the consummation of the Merger, unless the party relying on such
Order has not complied with its obligations under Section 7.5;
47
(e) by either Acquiror or the Company, if the Merger shall not
have been consummated before June 30, 1999 (the "Termination Date");
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 9.1(e) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been a cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(f) by either Acquiror or the Company, if this Agreement shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at the Company Stockholders' Meeting;
(g) by Acquiror (i) if the Board of Directors of the Company fails
to recommend approval and adoption of this Agreement and the Merger by the
stockholders of the Company or withdraws or modifies (or publicly announces
an intention to withdraw or modify) in any adverse manner its approval or
recommendation of this Agreement or the Merger; (ii) if the Board of
Directors of the Company makes any public recommendation with respect to any
Acquisition Proposal other than a recommendation to reject such Acquisition
Proposal; (iii) if the Company takes any action prohibited by Section 7.1;
(iv) if the Company breaches in any material respect the Option Agreement; or
(v) if the Board of Directors of the Company resolves to take any of the
actions specified above.
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.1 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution
of this Agreement.
Section 9.2 EFFECT OF TERMINATION.
(a) Except as provided in this Section 9.2, in the event of the
termination of this Agreement pursuant to Section 9.1, this Agreement will
forthwith become void, and there will be no liability on the part of the
Acquiror Companies or the Company or any of their respective officers or
directors to the other and all rights and obligations of any party hereto
will cease, except that nothing herein will relieve any party from liability
for any breach, prior to termination of this Agreement in accordance with its
terms, of any representation, warranty, covenant or agreement contained in
this Agreement.
(b) If this Agreement is terminated (i) by Acquiror pursuant to
Section 9.1(g) or (ii) by Acquiror or Company pursuant to Section 9.1(f)
hereof because of the failure to obtain the required approval from the
Company stockholders and, in the case of termination pursuant to this clause
(ii), if (A) at or prior to the Company Stockholders' Meeting an Acquisition
Proposal shall have been publicly announced or disclosed (whether or not such
offer, proposal, announcement or agreement shall have been rejected or shall
have been withdrawn prior to the time of such termination or of the Company
Stockholders' Meeting) and
48
(B)(1) a third party or "group" (within the meaning of Rule 13d-5 under the
Exchange Act), directly or indirectly, acquires Company Common Stock which
results in such third party or "group" having beneficial ownership of 35% or
more of the then outstanding Company Common Stock (excluding an underwriter
who acquires such beneficial ownership pursuant to a bona fide underwritten
offering) or (2) a sale, transfer or license (having a similar effect as a
sale or transfer) of 35% or more of the fair market value of the assets of
the Company is consummated with a third party or "group" (within the meaning
of Rule 13d-5 under the Exchange Act), other than in the ordinary course of
business, or (3) a definitive agreement with respect to any transaction
referred to in (1) or (2) is executed by the Company or any of its
Subsidiaries, in the case of (1), (2) or (3), within 6 months following
termination of the Agreement pursuant to this clause (ii), then, in the case
of clause (i), the Company shall pay to Acquiror by wire transfer of same day
funds promptly but not later than two Business Days after the date of such
termination a termination fee of $100 million (the "Termination Fee"), and,
in the case of clause (ii), the Company shall pay the Termination Fee to
Acquiror by wire transfer of same day funds promptly but not later than two
Business Days after satisfaction of all conditions to the payment thereof set
forth in clause (ii).
Section 9.3 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; PROVIDED, HOWEVER, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which would reduce the amount or change the type of consideration
into which each share of Company Common Stock will be converted pursuant to
this Agreement upon consummation of the Merger. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
Section 9.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver will be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. For purposes of
this Section 9.4, Acquiror Companies will be deemed to be one party.
Section 9.5 EXPENSES. Except as set forth in Section 9.2, all
expenses incurred by the parties hereto will be borne solely and entirely by
the party which has incurred such expenses; PROVIDED, HOWEVER, that the
Company and Acquiror shall each pay fifty percent of expenses related to
printing, filing and mailing the Registration Statement and the Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Registration Statement and the Proxy Statement.
49
ARTICLE X
GENERAL PROVISIONS
Section 10.1 INTERPRETATION.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "hereby", "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references
are to the articles, sections, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall include
all genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all Regulations and statutory
instruments issued thereunder or pursuant thereto.
(f) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 10.2 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
(a) Except as set forth in Section 10.2(b) of this Agreement, the
representations, warranties and agreements of each party hereto will remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any other party hereto, any Person controlling any such
party or any of their officers, directors, representatives or agents whether
prior to or after the execution of this Agreement.
(b) The representations and warranties in this Agreement will
terminate at the Effective Time; PROVIDED, HOWEVER, this Section 10.2 (b)
shall in no way limit any covenant
50
or agreement of the parties which by its terms contemplates performance after
the Effective Time or after the termination of this Agreement pursuant to
Article IX.
Section 10.3 NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party to another party shall be in
writing and shall be deemed given when delivered personally, upon receipt of
a transmission confirmation (with a confirming copy sent by overnight
courier) if sent by facsimile or like transmission, and on the next Business
Day when sent by Federal Express, United Parcel Service, Express Mail or
other reputable overnight courier, as follows:
(a) If to either of the Acquiror Companies, to:
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
Attention: Stephen M. Case
President & CEO
Facsimile No.: (703) 265-1422
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, Massachusetts 02108-3194
Attention: Louis A. Goodman, Esq.
Facsimile: No.: (617) 573-4822
(b) If to the Company, to:
Netscape Communications Corporation
501 E. Middlefield Road
Mountain View, California 94043
Attention: James L. Barksdale
President and CEO
Facsimile No.: (650) 528-4126
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry Sonsini, Jim Strawbridge
51
and Marty Korman
Facsimile No.: (650) 493-6811
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this section shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including Litigation arising out of or
in connection with this Agreement), which service shall be effected as
required by applicable Law.
Section 10.4 HEADINGS. The headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
Section 10.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
will nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 10.6 ENTIRE AGREEMENT. This Agreement (not including Annexes
A, C, D, E and F, but including the Company's Disclosure Schedule and
Acquiror's Disclosure Schedule) and the Option Agreement constitute the
entire agreement of the parties, and supersede all prior agreements and
undertakings (other than that certain Confidentiality Agreement which will
remain in full force and effect until the Effective Time, at which time it
will terminate), both written and oral, among the parties, with respect to
the subject matter hereof and thereof.
Section 10.7 ASSIGNMENT. This Agreement may not be assigned by
operation of Law or otherwise.
Section 10.8 PARTIES IN INTEREST. This Agreement will be binding upon
and inure solely to the benefit of each party hereto, and, other than
pursuant to Section 7.10, hereof, nothing in this Agreement, express or
implied, is intended to or will confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 10.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, agreement or
covenant herein, nor will any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not
exclusive to, and not exclusive of, any rights or remedies otherwise
available.
52
Section 10.10 GOVERNING LAW. This Agreement and the agreements,
instruments and documents contemplated hereby will be governed by and
construed in accordance with the Laws of the state of Delaware (exclusive of
conflicts of law principles). Courts within the state of Delaware will have
jurisdiction over any and all disputes between the parties hereto, whether in
law or equity, arising out of or relating to this agreement and the
agreements, instruments and documents contemplated hereby. The parties
consent to and agree to submit to the jurisdiction of such Courts. Each of
the parties hereby waives, and agrees not to assert in any such dispute, to
the fullest extent permitted by applicable Law, any claim that (i) such party
is not personally subject to the jurisdiction of such Courts, (ii) such party
and such party's property is immune from any legal process issued by such
Courts or (iii) any Litigation commenced in such Courts is brought in an
inconvenient forum.
Section 10.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed will be deemed to be an original but all of which
taken together will constitute one and the same agreement.
53
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AMERICA ONLINE, INC.
By: /s/ Kenneth J. Novack
------------------------------
Name: Kenneth J. Novack
Title: Vice Chairman
APOLLO ACQUISITION CORP.
By: /s/ Sheila A. Clark
------------------------------
Name: Sheila A. Clark
Title: Vice President and Secrtary
NETSCAPE COMMUNICATIONS CORPORATION
By:
------------------------------
Name:
Title:
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AMERICA ONLINE, INC.
By:
------------------------------
Name:
Title:
APOLLO ACQUISITION CORP.
By:
------------------------------
Name:
Title:
NETSCAPE COMMUNICATIONS CORPORATION
By: /s/ James L. Barksdale
------------------------------
Name: James L. Barksdale
Title: Pres. CEO
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER