ASSET PURCHASE AGREEMENT
BY AND AMONG
OVERTURE SERVICES, INC.,
ALTAVISTA COMPANY,
AURORA I, LLC
(A WHOLLY-OWNED LIMITED LIABILITY COMPANY OF ALTAVISTA)
AND
CMGI, INC.
DATED AS OF
FEBRUARY 18, 2003
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF ACQUIRED ASSETS AND ASSUMPTION OF LIABILITIES.............. 1
Section 1.1 Purchase and Sale of Assets..................................................... 1
Section 1.2 Assumption of Liabilities....................................................... 1
Section 1.3 Purchase Price.................................................................. 2
Section 1.4 Escrow.......................................................................... 2
Section 1.5 Allocation of Purchase Price and Assumed Liabilities............................ 2
ARTICLE II CLOSING......................................................................... 3
Section 2.1 The Closing..................................................................... 3
Section 2.2 Deliveries by the Company....................................................... 3
Section 2.3 Deliveries by Parent............................................................ 3
Section 2.4 Deliveries by Principal Stockholder............................................. 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 4
Section 3.1 Organization.................................................................... 5
Section 3.2 Authorization................................................................... 5
Section 3.3 Execution; Validity of Agreement................................................ 5
Section 3.4 Consents and Approvals; No Violations........................................... 5
Section 3.5 Company Subsidiaries............................................................ 5
Section 3.6 Financial Statements............................................................ 6
Section 3.7 No Undisclosed Liabilities...................................................... 6
Section 3.8 Absence of Certain Changes ..................................................... 6
Section 3.9 Encumbrances ................................................................... 6
Section 3.10 Real Property................................................................... 6
Section 3.11 Leases.......................................................................... 6
Section 3.12 Company Contracts and Commitments............................................... 6
Section 3.13 Litigation...................................................................... 7
Section 3.14 Environmental Matters........................................................... 8
Section 3.15 Compliance with Laws............................................................ 8
Section 3.16 Employee Benefit Plans.......................................................... 8
Section 3.17 Tax Matters..................................................................... 10
Section 3.18 Intellectual Property........................................................... 10
Section 3.19 Labor Matters................................................................... 11
Section 3.20 Affiliate Transactions.......................................................... 14
Section 3.21 Brokers or Finders.............................................................. 15
Section 3.22 Bank Accounts................................................................... 15
Section 3.23 Accounts Receivable and Payable................................................. 15
Section 3.24 Ownership of Assets............................................................. 15
Section 3.25 Investment Intent............................................................... 15
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDER......................... 17
Section 4.1 Organization; Qualification of Principal Stockholder............................ 17
Section 4.2 Authorization................................................................... 17
Section 4.3 Execution; Validity of Agreement................................................ 17
Section 4.4 Consents and Approvals; No Violations........................................... 18
Section 4.5 Litigation...................................................................... 18
Section 4.6 Brokers or Finders.............................................................. 18
Section 4.7 Disclaimer of Other Representations and Warranties.............................. 18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT........................................ 19
Section 5.1 Organization; Qualification of Principal Stockholder............................ 19
Section 5.2 Authorization................................................................... 19
Section 5.3 Execution; Validity of Agreement................................................ 19
Section 5.4 Consents and Approvals; No Violations........................................... 20
Section 5.5 Capitalization.................................................................. 20
Section 5.6 Parent SEC Reports.............................................................. 20
Section 5.7 No Undisclosed Liabilities...................................................... 21
Section 5.8 Absence of Certain Changes...................................................... 21
Section 5.9 Parent Material Contracts....................................................... 21
Section 5.10 Availability of Funds........................................................... 21
Section 5.11 Litigation...................................................................... 22
Section 5.12 Investigation by Parent......................................................... 22
Section 5.13 Brokers or Finders.............................................................. 22
Section 5.14 Form S-3 Eligibility............................................................ 23
ARTICLE VI COVENANTS....................................................................... 23
Section 6.1 Interim Operations.............................................................. 23
Section 6.2 Access to Information; Confidentiality.......................................... 26
Section 6.3 Regulatory Filings; Commercially Reasonable Efforts............................. 27
Section 6.4 State Takeover Laws............................................................. 28
Section 6.5 Third Party Consents............................................................ 28
Section 6.6 Publicity....................................................................... 29
Section 6.7 Ancillary Agreements............................................................ 29
Section 6.8 Subsequent Actions.............................................................. 29
Section 6.9 Waiver of Bulk Sales Requirement................................................ 30
Section 6.10 Audited Financial Statements.................................................... 29
Section 6.11 Notice of Certain Matters....................................................... 30
Section 6.12 Non-Transferable Assets......................................................... 30
Section 6.13 Rule 145........................................................................ 31
Section 6.14 Company Disclosure Schedule Supplement.......................................... 31
ARTICLE VII ADDITIONAL AGREEMENTS........................................................... 31
Section 7.1 No Solicitation................................................................. 31
Section 7.2 Listing of Additional Shares.................................................... 32
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Section 7.3 Blue Sky Laws................................................................... 32
Section 7.4 Employee Matters................................................................ 33
Section 7.5 Form 10-K....................................................................... 34
ARTICLE VIII CONDITIONS 34
Section 8.1 Conditions to Each Party's Obligation to Effect the Closing..................... 34
Section 8.2 Conditions to Obligation of Parent to Effect the Closing........................ 34
Section 8.3 Conditions to Obligation of the Company and Principal Stockholder to
Effect the Closing.............................................................. 36
ARTICLE IX TERMINATION..................................................................... 37
Section 9.1 Termination..................................................................... 37
Section 9.2 Effect of Termination........................................................... 39
ARTICLE X TAX MATTERS..................................................................... 39
Section 10.1 Liability for Taxes............................................................. 39
Section 10.2 Filing Responsibility........................................................... 40
Section 10.3 Cooperation and Exchange of Information......................................... 40
Section 10.4 Tax Sharing Agreements.......................................................... 41
Section 10.5 Transfer Taxes.................................................................. 41
Section 10.6 Section 338 Election............................................................ 42
Section 10.7 Survival........................................................................ 42
Section 10.8 Scope of Remedy................................................................. 42
Section 10.9 Disputes........................................................................ 42
ARTICLE XI ESCROW AND INDEMNIFICATION...................................................... 43
Section 11.1 Escrow Fund..................................................................... 43
Section 11.2 Indemnification................................................................. 43
Section 11.3 Termination..................................................................... 44
Section 11.4 Claims Upon Escrow Fund......................................................... 45
Section 11.5 Objections to Claims............................................................ 45
Section 11.6 Resolution of Conflicts......................................................... 46
Section 11.7 Third-Party Claims.............................................................. 46
Section 11.8 Tax Indemnification............................................................. 46
ARTICLE XII DEFINITIONS AND INTERPRETATION.................................................. 47
Section 12.1 Definitions..................................................................... 47
Section 12.2 Interpretation.................................................................. 56
ARTICLE XIII MISCELLANEOUS................................................................... 57
Section 13.1 Fees and Expenses............................................................... 57
Section 13.2 Amendment and Modification...................................................... 57
Section 13.3 Notices......................................................................... 57
Section 13.4 Counterparts.................................................................... 59
Section 13.5 Entire Agreement; No Third Party Beneficiaries.................................. 59
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Section 13.6 Severability.................................................................... 59
Section 13.7 Governing Law................................................................... 60
Section 13.8 Venue........................................................................... 60
Section 13.9 Extension; Waiver............................................................... 60
Section 13.10 Assignment; Successors.......................................................... 60
Section 13.11 Survival........................................................................ 60
Section 13.12 Waiver of Right to Jury......................................................... 60
ATTACHMENTS
Company Disclosure Schedule
Parent Disclosure Schedule
Schedule 6.1 Interim Operations
Schedule 7.4(b) Benefit Plans
Schedule 8.2(d) Necessary Consents
EXHIBIT A: Written Consent of Stockholders
EXHIBIT B: Escrow Agreement
EXHIBIT D: Bill of Sale
EXHIBIT E: Assignment and Assumption Agreement
EXHIBIT F: Registration Rights Agreement
EXHIBIT G: Voting Agreement
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of February 18, 2003
(this "Agreement"), is entered into by and among Overture Services, Inc.
("Parent"), a Delaware corporation, AltaVista Company, a Delaware corporation
(the "Company"), Aurora I, LLC, a Delaware limited liability company of which
the Company is the sole member ("Aurora"), and CMGI, Inc., a Delaware
corporation ("Principal Stockholder"). Certain capitalized terms used in this
Agreement have the meanings assigned to them in Article XII.
WHEREAS, the Company desires to sell, assign, transfer, convey
and deliver to Parent, and Parent desires to purchase and assume from the
Company, on the terms and subject to the conditions set forth in this Agreement,
the Acquired Assets and Assumed Liabilities, by, among other things, acquiring
all of the equity interests in Aurora pursuant to the terms and conditions
hereof;
WHEREAS, holders of shares of the Company's outstanding
capital stock collectively representing in excess of eighty percent (80%) of the
voting power of the Company have approved this Agreement and the transactions
contemplated hereby (the "Transactions"), upon the terms and subject to the
conditions set forth herein, in accordance with the Delaware General Corporation
Law (the "DGCL") and the Company's Certificate of Incorporation and Bylaws, by
executing the written consent of stockholders in the form attached hereto as
Exhibit A (the "Stockholder Consent"); and
WHEREAS, as a condition and inducement to Parent to enter into
this Agreement and incur the obligations set forth herein, at the Closing,
Parent, the Company and the Escrow Agent named therein shall enter into an
escrow agreement substantially in the form attached hereto as Exhibit B (with
such changes as the Escrow Agent may reasonably request, the "Escrow
Agreement"), pursuant to which the Company shall place a portion of the Purchase
Price in an escrow account to secure certain indemnification obligations to
Parent; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
Section 1.1 Purchase and Sale of Assets. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Company agrees to sell, assign, transfer, and convey to Parent, and Parent
agrees to purchase, all of the Acquired Assets.
Section 1.2 Assumption of Liabilities. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, Parent
shall assume and become
responsible for, and shall pay, perform and discharge when due, and shall
indemnify the Company against and hold harmless from, and the Company shall
assign to Parent, all of the Assumed Liabilities.
Section 1.3 Purchase Price.
(a) Subject to the terms and conditions of the
Agreement, in consideration of the sale, assignment, transfer and conveyance to
Parent of the Acquired Assets, at the Closing, Parent shall:
(i) pay to the Company sixty million dollars
($60,000,000) in cash by wire transfer of immediately available funds
(the "Cash Consideration"); and
(ii) issue to the Company a number of shares
of Parent's common stock, par value $0.0001 per share (the "Parent
Common Stock"), determined by dividing eighty million dollars
($80,000,000) by the average closing price at the end of normal trading
hours (the "Average Closing Price") of a share of Parent Common Stock
on the Nasdaq National Market or such other principal securities
exchange on which the Parent Common Stock shall then be trading for the
twenty (20) consecutive trading days ending at the end of the second
trading day prior to the Closing Date (the "Stock Consideration" and,
together with the Cash Consideration, the "Purchase Price"); provided,
that Parent shall not be required to issue more than 4,274,670 shares
of Parent Common Stock or less than 3,001,364 shares of Parent Common
Stock to the Company pursuant to this Agreement; and
(iii) assume the Assumed Liabilities.
Section 1.4 Escrow. Ten percent (10%) of each of the Cash
Consideration and the Stock Consideration (the "Escrow Amount") shall be
deposited by the Company within one (1) Business Day after the Closing, by wire
transfer of immediately available funds, in the case of the Cash Consideration,
and shares of Parent Common Stock, in the case of the Stock Consideration, into
escrow pursuant to the terms of the Escrow Agreement for the purpose of
satisfying indemnification claims pursuant to Article XI hereof.
Section 1.5 Allocation of Purchase Price and Assumed
Liabilities. The Company shall agree to an allocation of the Purchase Price and
the Assumed Liabilities among the Acquired Assets in accordance with Section
1060 of the Code and the regulations promulgated thereunder (and any similar
provision of state, local or foreign law, as applicable) pursuant to an
independent third party retained by Parent to in good faith prepare and deliver
such allocation to the Company within thirty (30) calendar days of the date of
this Agreement. To the extent that the Company or the Principal Stockholder is
required to pay any Damages, an appropriate adjustments to the allocation of the
Purchase Price, as required by GAAP, shall be made at such time among the
Acquired Assets. Each of Parent and the Company shall: (a) timely file all forms
(including Internal Revenue Service Form 8594) and Tax Returns required to be
filed in connection with the Final Allocation; (b) be bound by such Final
Allocation for
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purposes of determining Taxes; (c) prepare and file, and cause its respective
Affiliates to prepare and file, its Tax Returns on a basis consistent with such
Final Allocation; and (d) take no position, and cause its Affiliates to take no
position, inconsistent with such allocation on any applicable Tax Return, in any
audit or proceeding before any Tax Authority, in any report made for Tax,
financial accounting or any other purposes, or otherwise. In the event that the
Final Allocation is disputed by any Tax Authority, the party receiving notice of
such dispute shall promptly notify the other parties hereto concerning the
existence and resolution of such dispute.
ARTICLE II
CLOSING
Section 2.1 The Closing. The closing of the Transactions (the
"Closing") shall take place at: (a) the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, 525 University Avenue, Suite 1100, Palo Alto, California 94301 at
6:00 a.m., California time, two (2) Business Days following the date on which
all conditions to the Closing set forth in Article VIII shall have been
satisfied or waived in accordance with this Agreement (other than those
conditions that are contemplated to be satisfied prior to the Closing); or (b)
at such other place, time and date as agreed in writing by Parent and the
Company (the "Closing Date").
Section 2.2 Deliveries by the Company. At the Closing, the
Company shall deliver to Parent:
(a) a duly executed bill of sale in the form attached
hereto as Exhibit D (the "Bill of Sale");
(b) executed copies of the Consents, to the extent
obtained, and the Necessary Consents;
(c) the Company Officer's Certificate referred to in
Section 8.2(g) hereof;
(d) the Company Secretary's Certificate referred to
in Section 8.2(h) hereof;
(e) a certification of non-foreign status for the
Company in the form and manner which complies with the requirements of Section
1445 of the Code and the regulations promulgated thereunder;
(f) executed copies of each of the Ancillary
Agreements; and
(g) stock certificates representing all of the
outstanding equity securities of or membership interests in each of the Company
Subsidiaries.
Section 2.3 Deliveries by Parent. At the Closing, Parent
shall deliver to the Company:
(a) the Purchase Price;
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(b) a duly executed assignment and assumption
agreement in the form attached hereto as Exhibit E (the "Assignment and
Assumption Agreement");
(c) the Parent Officer's Certificate referred to in
Section 8.3(d) hereof;
(d) the Parent Secretary's Certificate referred to in
Section 8.3(e) hereof; and
(e) executed copies of each of the Ancillary
Agreements.
Section 2.4 Deliveries by Principal Stockholder. At the
Closing, Principal Stockholder, shall deliver to Parent:
(a) executed copies of the applicable Ancillary
Agreements;
(b) the Principal Stockholder Officer's Certificate
referred to in Section 8.2(i) hereof; and
(c) the Principal Stockholder Assistant Secretary's
Certificate referred to in Section 8.2(j) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule,
prepared and signed by the Company and delivered to Parent simultaneously with
the execution hereof, the Company represents and warrants to Parent that all of
the statements contained in this Article III are true and correct. For purposes
of the representations and warranties of the Company contained herein,
disclosure in any section of the Company Disclosure Schedule of any facts or
circumstances shall be deemed to be disclosure of such facts or circumstances
with respect to such other representations or warranties by the Company calling
for disclosure of such information if such disclosure would reasonably lead
Parent to make further inquiry of such facts and circumstances, and such further
inquiry would reasonably reveal that such disclosure applies to such other
representations and warranties. The inclusion of any information in any section
of the Company Disclosure Schedule or other document delivered by the Company
pursuant to this Agreement shall not be deemed to be an admission or evidence of
the materiality of such item, nor shall it establish a standard of materiality
for any purpose whatsoever.
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Section 3.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.2 Authorization. Each of the Company and Aurora has
all requisite power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement and the consummation of the Transactions by the
Company have been duly authorized by the Board of Directors of the Company and
approved by the holders of the requisite number of voting shares of the
Company's capital stock in accordance with the DGCL and the Company's
Certificate of Incorporation and Bylaws. No other corporate or similar action on
the part of the Company or Aurora is necessary to authorize the execution and
delivery of this Agreement by the Company or Aurora or the consummation by the
Company or Aurora of any of the Transactions.
Section 3.3 Execution; Validity of Agreement. This Agreement
has been duly executed and delivered by the Company and Aurora, and, assuming
due and valid authorization, execution and delivery hereof by Principal
Stockholder and Parent is a valid and binding obligation of the Company and
Aurora, enforceable against them in accordance with its terms except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar Laws of general application affecting
enforcement of creditors' rights generally and (b) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
Section 3.4 Consents and Approvals; No Violations. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, the HSR Act, applicable foreign antitrust Laws, and state securities laws,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof shall: (w) conflict with or result in any
breach of any provision of the Company's Certificate of Incorporation or Bylaws
as presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Company Material
Contract; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company.
Section 3.5 Company Subsidiaries. Section 3.5 of the Company
Disclosure Schedule sets forth the name, jurisdiction of incorporation and
authorized capital of each Company Subsidiary. All the outstanding capital stock
of each Company Subsidiary is owned directly or indirectly by the Company, free
and clear of all Encumbrances, and is validly issued, fully paid and
nonassessable. Each Company Subsidiary: (a) is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction
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of incorporation; (b) has all corporate or other similar power and authority and
all necessary government approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and (c) is duly qualified or licensed to conduct its
business as a foreign entity in good standing in every jurisdiction in which
such qualification or license is required, except, in the case of the foregoing
clauses (a), (b) and (c), where the failure to be so organized, existing and in
good standing, to have such power, authority and governmental approvals, and to
be so qualified or licensed, would not have, individually or in the aggregate, a
Company Material Adverse Effect. There are no shares of capital stock of any
Company Subsidiary issued or outstanding that are not owned directly or
indirectly by the Company and there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, obligating any Company Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock of any Company Subsidiary.
Section 3.6 Financial Statements. True and complete copies of
the Financial Statements are included in Section 3.6 of the Company Disclosure
Schedule. The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved and with each other
within the same period and fairly present the consolidated financial position
and the consolidated results of operations and cash flows of the Company and the
Company Subsidiaries as of the times and for the periods referred to therein;
provided, however, that the Financial Statements are subject to normal recurring
year-end audit adjustments, and do not contain all footnotes required under
GAAP.
Section 3.7 No Undisclosed Liabilities. Except for threatened
or pending litigation set forth on Section 3.13 of, or as otherwise included in,
the Company Disclosure Schedule or this Agreement, liabilities and obligations
reflected in the Balance Sheet or incurred in the ordinary course of business
since the Balance Sheet Date, neither the Company nor any Company Subsidiary has
any liabilities or obligations that are material to the Company and the Company
Subsidiaries, taken as a whole, individually or in the aggregate, and that would
be required to be disclosed in a consolidated balance sheet of the Company
(including the related notes thereto, where appropriate) prepared in accordance
with GAAP.
Section 3.8 Absence of Certain Changes. Except as (a)
disclosed in the Financial Statements, this Agreement or the Company Disclosure
Schedule or (b) expressly required by this Agreement, since the Balance Sheet
Date through the date of this Agreement, no event that would be reasonably
likely to result in a Company Material Adverse Effect has occurred.
Section 3.9 Encumbrances. The Company and each Company
Subsidiary has good title to the Acquired Assets, free and clear of all
Encumbrances.
Section 3.10 Real Property. The Company does not own, and has
never owned, any real property.
Section 3.11 Leases. Section 3.11 of the Company Disclosure
Schedule sets forth a complete and correct list of all Leases, each of which has
been made available to Parent. Each Lease is valid, binding and enforceable in
accordance with its terms and is in full force and
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effect. There is no existing material default by the Company or any Company
Subsidiary under any of the Leases.
Section 3.12 Company Contracts and Commitments.
(a) Section 3.12 of the Company Disclosure Schedule
sets forth a true, complete and correct list of every Contract (other than the
Leases, which are addressed in Section 3.11 and such Licenses as are addressed
in Section 3.18(c)) that is currently in effect as of the date of this Agreement
and: (i) provides for future payments by the Company or any Company Subsidiary,
or to the Company or any Company Subsidiary, of more than $100,000 per annum and
may not be canceled upon sixty (60) days' notice without any liability, penalty
or premium (excluding purchase orders, invoices, leasing transactions and
advertising agreements, in any such case, which were entered into or incurred in
the ordinary course of business); (ii) was entered into by the Company or a
Company Subsidiary with a current stockholder, current executive officer or
current director of the Company or any Company Subsidiary; (iii) is a collective
bargaining or similar agreement; (iv) involves an agreement with respect to any
Indebtedness of the Company or any Company Subsidiary; (v) materially restricts
any conduct of any business in any location by the Company or any Company
Subsidiary; (vi) is an employment agreement with a current executive officer or
current director, or consulting agreement with an individual involving payments
by the Company in excess of $100,000 per annum; (vii) is a material joint
venture agreement or partnership agreement to which the Company or any Company
Subsidiary is a party or is otherwise bound; (viii) is an agreement to which the
Company or any Company Subsidiary is a party or is otherwise bound that contains
explicit terms providing for material benefits (which shall not be interpreted
to include cancellation or termination) to the other party that may be
triggered, increased or accelerated by this Agreement, any of the Ancillary
Agreements or the consummation of the Transactions; or (ix) is an agreement to
which the Company or any Company Subsidiary is a party or is otherwise bound,
entered into other than in the ordinary course of business, that includes terms
or provisions obligating the Company or any Company Subsidiary to provide
indemnification (other than in agreements where such indemnification is provided
in the ordinary course of business) or any other guarantee to any Person.
(b) As of the date hereof, (i) there is not and, to
the Knowledge of the Company, there has not been claimed or alleged by any
Person with respect to any Contract required to be listed in Section 3.12 of the
Company Disclosure Schedule (together with the Leases and such Licenses required
to be listed on Section 3.18(c) of the Company Disclosure Schedule, such
Contracts, the "Company Material Contracts"), any existing default or event
that, with notice or lapse of time or both, would constitute a default or, event
of default on the part of the Company or any Company Subsidiary or, to the
Knowledge of the Company, on the part of any other party thereto, except such
defaults, events of default and other events which are not material, and (ii) no
consent, approval, authorization or waiver from, or notice to, any Governmental
Entity or other Person is required in order to maintain in full force and effect
any of the Company Material Contracts as a result of the Transactions other than
such consents and waivers that have been obtained and are unconditional and in
full force and effect and such notices that have been duly given.
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Section 3.13 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or other Governmental Entity pending or, to the Knowledge of the Company,
threatened against the Company or any Company Subsidiary.
Section 3.14 Environmental Matters. To the Knowledge of the
Company, (a) the Company and each Company Subsidiary are in material compliance
with all applicable Environmental Laws; (b) neither the Company nor any Company
Subsidiary has received any written notice with respect to any property owned or
leased by the Company or any Company Subsidiary from any Governmental Entity or
third party alleging that the Company or any Company Subsidiary is not in
material compliance with any Environmental Law; and (c) there has been no
"release" of a "hazardous substance," as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., in excess of a reportable quantity which release remains
unresolved on any real property owned by the Company or any Company Subsidiary.
Section 3.15 Compliance with Laws. The Company and the
Company Subsidiaries have complied in a timely manner and in all material
respects with all Laws that apply to the properties or assets owned by the
Company or any Company Subsidiary, except for violations that would not
constitute a Company Material Adverse Effect.
Section 3.16 Employee Benefit Plans.
(a) Section 3.16 of the Company Disclosure Schedule
contains a true and complete list of all Benefit Plans. The Company has provided
or made available to Parent: (i) correct and complete copies of all documents
embodying each Benefit Plan including, without limitation, all amendments
thereto and all related trust documents; (ii) the most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto),
if any, required under ERISA or the Code in connection with each Benefit Plan;
(iii) if the Benefit Plan is funded, the most recent annual and periodic
accounting of Benefit Plan assets; (iv) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Benefit Plan; (v) all material written
agreements and contracts relating to each Benefit Plan, including, without
limitation, administrative service agreements and group insurance contracts;
(vi) all communications material to any employee or employees relating to any
Benefit Plan, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any liability to the Company;
(vii) all material correspondence to or from any Governmental Entity relating to
any Benefit Plan; (viii) all discrimination tests for each Benefit Plan for the
most recent plan years; and (ix) the most recent IRS determination or opinion
letter issued with respect to each Benefit Plan, if applicable.
(b) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), the Company and
each Company Subsidiary has performed all obligations required to be performed
by them under, are not in material default or violation of, and to the Knowledge
of the Company and Principal Stockholder, there is no default or violation by
any other party to any such Benefit Plan, and each such Benefit Plan has been
established and maintained in accordance with its terms and in compliance in all
material
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respects with all applicable Laws, including but not limited to ERISA and the
Code. Each such Benefit Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is so
qualified, and has received a favorable determination letter from the IRS with
respect to each such Benefit Plan as to its qualified status under the Code and
no event has occurred which would reasonably be expected to adversely affect the
status of such determination letter or the qualified status of such Benefit
Plan. To the Knowledge of Company no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
such Benefit Plan. There are no actions, suits or claims pending or, to the
Knowledge of the Company or the knowledge of the Principal Stockholder,
threatened (other than routine claims for benefits) against any such Benefit
Plan or against the assets of any such Benefit Plan. There are no audits,
inquiries or proceedings pending or to the Knowledge of the Company threatened
by the IRS, the Department of Labor, or any other Governmental Entity with
respect to any such Benefit Plan. The Company is not subject to any material
penalty or tax with respect to any such Benefit Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code.
(c) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), neither the Company
nor any Company Subsidiary has ever, with respect to an employee, maintained,
established, sponsored, participated in, or contributed to, any: (i) Benefit
Plans subject to Title IV of ERISA or Section 412 of the Code; (ii) "multiple
employer plan" within the meaning of Section (3)(37) of ERISA; (iii) a "multiple
employer plan" as defined in ERISA or the Code; or (iv) a "funded welfare plan"
within the meaning of Section 419 of the Code.
(d) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), no Benefit Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and neither the
Company nor any Company Subsidiary has ever represented, promised or contracted
(whether in oral or written form) to any employee (either individually or to
employees as a group) or any other person that such employee(s) or other person
would be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(e) To the Knowledge of the Company, with respect to
those Benefit Plans being assumed by Parent as set forth on Schedule 7.4(b),
each such Benefit Plan can be terminated or otherwise discontinued after the
Closing Date in accordance with its terms and with applicable foreign, state,
federal or local law, without material liability, to Parent, the Company or any
Company Subsidiary.
(f) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has, prior to the Closing, engaged in a
material violation of any of the health care continuation requirements of COBRA,
the requirements of FMLA, the requirements of the Women's Health and Cancer
Rights Act of 1998, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, or any amendment to each such act, or any similar
provisions of state law applicable to its current and former employees. As soon
as practicable after the date hereof (but in no event longer than ten (10)
calendar days from the date hereof), the
9
Company shall deliver to Parent a disclosure schedule setting sets forth all
current and former employees of the Company and the Company Subsidiaries that
are currently receiving or eligible for health care continuation coverage under
COBRA or any similar provisions of state law.
(g) With respect to those International Employee
Plans being assumed by Parent as set forth on Schedule 7.4(b), to the Knowledge
of the Company, each such International Employee Plan has been adopted,
maintained and administered in material compliance with its terms and conditions
and with the requirements prescribed by any and all statutory or regulatory laws
that are applicable to such International Employee Plan. Furthermore, no such
International Employee Plan has unfunded liabilities, that as of the Effective
Time, will not be offset by insurance or fully accrued. Except as required by
law, to the Knowledge of the Company no condition exists that would prevent the
Company or a Company Subsidiary from terminating or amending any such
International Employee Plan in accordance with its terms and applicable foreign,
state, federal or local law at any time for any reason without material
liability to the Company or any Company Subsidiary.
(h) With respect to those Benefit Plans being assumed
by Parent as set forth on Schedule 7.4(b), the execution of this Agreement and
the consummation of the Transactions will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Benefit Plan, employee agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current (or former) employee,
director or consultant.
Section 3.17 Tax Matters. (a) All material Tax Returns
required to be filed by or with respect to the Company or any Company Subsidiary
have been filed on a timely basis (taking into account all applicable
extensions); (b) other than amounts for any unpaid Taxes of the Company or any
Company Subsidiary that have been adequately accrued or reserved (in accordance
with GAAP) on the Balance Sheet, all material Taxes required to be paid or
withheld by the Company or a Company Subsidiary (whether or not shown in any Tax
Return) have been timely paid in full and/or timely withheld and either have
been duly and timely paid over to the appropriate Tax Authority or been properly
set aside for such purpose and will be duly and timely paid to the appropriate
Tax Authority; (c) all such filed Tax Returns were true, correct and complete in
all material respects; (d) there are no liens for Taxes upon any property or
assets of the Company or any Company Subsidiary, except for Permitted
Encumbrances; (e) no federal, state, local or foreign Audits are presently
pending with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary; (f) neither the Company nor any Company Subsidiary has executed any
waiver of the statute of limitations on or extending the period for the
assessment of collection of any Tax; and (g) neither the Company nor any Company
Subsidiary has any liability for unpaid Taxes that has not been adequately
accrued or reserved (in accordance with GAAP) on the most recent Financial
Statements, and since the date of the most recent Financial Statements, neither
the Company nor any Company Subsidiary has incurred any liability for Taxes
other than in the ordinary course of business.
10
Section 3.18 Intellectual Property.
(a) Section 3.18(a) of the Company Disclosure
Schedule lists all Company Registered Intellectual Property. The Company or one
of the Company Subsidiaries is listed in the records of the appropriate United
States federal or state agency as the sole owner for each item of the Company
Registered Intellectual Property that is the subject of a registration in the
United States. To the Knowledge of the Company, either the Company or one of the
Company Subsidiaries is listed in the records of the appropriate foreign agency
as the sole owner for each item of Company Registered Intellectual Property that
is the subject of a registration outside the United States. To the Knowledge of
the Company, the Intellectual Property included in the Acquired Assets,
including the Company Registered Intellectual Property, includes all
Intellectual Property rights in and to all material inventions, works of
authorship, and know-how created, invented or authored, as the case may be, by
any employee of, or consultant to, the Company or any Company Subsidiary in the
course of such employment or consulting relationship. The preceding sentence is
qualified by the Knowledge of the Company for facts and circumstances prior to
January 2000. The Company and each Company Subsidiary implements and enforces a
policy requiring all employees, contractors and other parties who create
Intellectual Property for, or on behalf of, the Company or a Company Subsidiary
to execute an assignment agreement in substantially the form provided to Parent,
transferring ownership of such Intellectual Property to the Company or the
Company Subsidiary, as the case may be.
(b) Section 3.18(b) of the Company Disclosure
Schedule (i) lists all Computer Software owned or licensed by, or otherwise used
in the business of, the Company or any Company Subsidiary, other than (x) third
party software applications that are generally available and have an individual
acquisition cost of $50,000 or less, or (y) software applications that are used
in general infrastructure and administrative functions that are generally
available and have an individual acquisition cost of $50,000 or less, and (ii)
identifies whether each of the foregoing items of Computer Software are owned,
licensed, or otherwise used, as the case may be.
(c) Section 3.18(c) of the Company Disclosure
Schedule lists all material Licenses, specifying the name of the parties thereto
and whether the License is an inbound license, an outbound license or a
cross-license. To the Knowledge of the Company, each such License is in full
force and effect and is enforceable in accordance with its terms. The Company
and the Company Subsidiaries are in material compliance with, and have not
materially breached any term of any of such Licenses and, to the Knowledge of
the Company, all other parties to such Licenses are in compliance with, and have
not breached any term of, such Licenses.
(d) Section 3.18(d) of the Company Disclosure
Schedule contains a complete and accurate list (by name and version number) of
all material service offerings, Computer Software and other products or services
of the Company or any Company Subsidiary currently sold, licensed, distributed
or otherwise provided by the Company or any Company Subsidiary (all of the
foregoing, collectively, "Company Products").
(e) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has done, or failed to do, any act or thing
which may, after the Closing
11
Date, prejudice the validity or enforceability of any material Company
Registered Intellectual Property in any material respect.
(f) Either the Company or a Company Subsidiary is the
sole and exclusive owner of all material Company Intellectual Property except as
to Intellectual Property that is co-owned by the Company and any Company
Subsidiary; provided, however, that as to any Intellectual Property that is
co-owned by the Company and one or more Company Subsidiaries, the Acquired
Assets will include the ownership rights of the Company and all co-owner Company
Subsidiaries.
(g) To the Knowledge of the Company, either the
Company or a Company Subsidiary owns or otherwise has the right to use all
Intellectual Property necessary to: (i) provide the services currently provided
by the Company to third parties; (ii) use, manufacture, copy, modify, market and
distribute the products currently manufactured, marketed, sold, licensed or
otherwise distributed by the Company; and (iii) operate the internal systems of
the Company that are material to its business or operations, taken as a whole,
including, without limitation, computer hardware systems and software
applications. To the Knowledge of the Company, there are no facts or
circumstances that would reasonably lead it to believe that the Company and the
Company Subsidiaries do not own or otherwise have the right to use all
Intellectual Property necessary to: (i) provide the services currently provided
by the Company to third parties; (ii) use, manufacture, copy, modify, market and
distribute the products currently manufactured, marketed, sold, licensed or
otherwise distributed by the Company; and (iii) operate the internal systems of
the Company that are material to its business or operations, taken as a whole,
including, without limitation, computer hardware systems and software
applications. Each material item of such Intellectual Property shall be owned,
available for use or enforceable, as the case may be, by Parent immediately
following the Closing on substantially identical terms and conditions as it was
available to or enforceable by, as the case may be, the Company immediately
prior to the Closing.
(h) To the Knowledge of the Company, the activities
and the conduct of the business and operations of the Company and any Company
Subsidiary did not prior to Closing, and will not when conducted in the same
manner following the Closing, infringe upon, violate or constitute the
unauthorized use of the Intellectual Property rights of any third party. To the
Knowledge of the Company, there are no facts or circumstances that would
reasonably lead it to believe that the activities or the conduct of the business
or operations of the Company or any Company Subsidiary did prior to Closing, or
will when conducted in the same manner following the Closing, infringe upon,
violate or constitute the unauthorized use of the Intellectual Property rights
of any third party. There is no pending or, to the Knowledge of the Company,
threatened (in writing) claim before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction: (i) involving any item of
Intellectual Property owned or used by the Company; (ii) alleging that the
activities or the conduct of the business of the Company and the Company
Subsidiaries does or will infringe upon, violate or constitute the unauthorized
use of the Intellectual Property rights of any third party; or (iii) challenging
the ownership, use, validity, enforceability or registrability of any
Intellectual Property by the Company. There are no settlements, forbearances to
sue, consents, judgments, or orders or similar obligations (other than license
agreements in the ordinary course of business) which (A) restrict the rights of
the
12
Company to use any material Intellectual Property; (B) restrict the Company's
business in order to accommodate a third party's intellectual property rights;
or (C) permit third parties to use any material Intellectual Property owned by
the Company.
(i) [reserved]
(j) No third party possesses any copy of any source
code to any material Computer Software of the Company, except as permitted under
a License set forth in Section 3.18(c) of the Company Disclosure Schedule.
(k) No Computer Software that is open source, public
source or freeware, or any modification or derivative thereof, including any
version of any Computer Software licensed pursuant to any GNU general public
license or limited general public license was or is used in, incorporated into,
integrated or bundled with any material Company Product.
(l) To the Knowledge of the Company, the Company and
the Company Subsidiaries have taken commercially reasonable actions to protect
each item of material Intellectual Property owned by them, except where the
failure to take such actions was the result of a reasonable business decision by
the Company made in the ordinary course of business. To the Knowledge of the
Company, without limiting the foregoing, the Company and the Company
Subsidiaries have taken commercially reasonable actions to protect their
respective material Trade Secrets and any material Trade Secrets of third
parties provided to the Company or any Company Subsidiary. The Company and each
Company Subsidiary implements and enforces a policy requiring all employees,
contractors and other parties having access to such Trade Secrets to execute a
proprietary information/confidentiality agreement, in substantially the form
provided to Parent, with the Company or one of the Company Subsidiaries, as the
case may be. To the Knowledge of the Company, there has been no disclosure by
the Company or by the Company Subsidiaries of any such Trade Secrets except
pursuant to such proprietary information/confidentiality agreements, and, to the
Knowledge of the Company, no party to any such agreement is in breach thereof.
(m) Neither the Company nor any Company Subsidiary is
in violation of any agreement relating to any Company Intellectual Property or
any third party Intellectual Property, except for such violations as have not
resulted, and could not reasonably be expected to result, individually or in the
aggregate, in a Company Material Adverse Effect. To the Knowledge of the
Company, the consummation of the Transactions will not result in Parent being
bound by any non-compete or other restriction on the operation of any business
of Parent prior to the Closing or the granting by Parent of any rights or
licenses to any Intellectual Property rights of Parent prior to the Closing to a
third party (including but not limited to a covenant not to sue)
(n) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has disclosed the source code for any of the
Computer Software owned by them or other confidential information constituting,
embodied in or pertaining to such Computer Software to any Person, except
pursuant to effective nondisclosure agreements, and the Company has taken
commercially reasonable measures to prevent disclosure of such source code.
13
(o) To the Knowledge of the Company: (i) the Company
and the Company Subsidiaries have at all times complied with all applicable Laws
relating to privacy, data protection and the collection and use of personal
information and user information gathered or accessed in the course of the
operations of the Company or any Company Subsidiary; (ii) the Company and the
Company Subsidiaries have at all times complied in all respects with all rules,
policies and procedures established by the Company or any Company Subsidiary
from time to time with respect to privacy, publicity, data protection or
collection and use of personal information and user information gathered or
accessed in the course of the operations of the Company or any Company
Subsidiary; and (iii) no claims have been asserted or threatened against the
Company or any Company Subsidiary (and to the Knowledge of the Company, no such
claims are likely to be asserted or threatened against the Company or any
Company Subsidiary) by any Person alleging a violation of such Person's privacy,
personal or confidentiality rights under any such rules, policies or procedures.
With respect to all personal and user information described in this Section
3.18(o), the Company and the Company Subsidiaries have at all times taken all
steps reasonably necessary (including, without limitation, implementing and
monitoring compliance with adequate measures with respect to technical and
physical security) to ensure that the information is protected against loss and
against unauthorized access, use, modification, disclosure or other misuse. To
the Knowledge of the Company, there has been no unauthorized access to or other
misuse of that information. To the Knowledge of the Company, the consummation of
the Transactions will not result in any breach or violation of any of the
Company's or any of its subsidiaries procedures, policies or rules governing
privacy or use of any information or data of, or with respect to, any Person or
violate any Law with respect to such data or information.
Section 3.19 Labor Matters.
(a) No work stoppage or labor strike against the
Company or any Company Subsidiary is pending, or to the Knowledge of the
Company, threatened nor has there been any such action since August 31, 1999. To
the Knowledge of the Company, there are no activities or proceedings of any
labor union, works council or other employee collective bargaining group or
association to organize any employees, and, to the Knowledge of the Company, no
union or works council claims to represent any employees. There are no actions,
suits, claims, labor disputes or grievances pending, or to the Knowledge of the
Company, threatened, relating to any labor, safety or discrimination matters
involving any employee, including without limitation, charges of unfair labor
practices or discrimination complaints. To the Knowledge of the Company, neither
the Company nor any Company Subsidiary has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Neither the Company nor
any Company Subsidiary presently has been in the past, a party to, or bound by,
any collective bargaining agreement or union contract with respect to employees
and no collective bargaining agreement is being negotiated on behalf of the
employees.
(b) The Company and each Company Subsidiary: (i) is
in compliance in all material respects with all applicable federal, state and
local laws, rules and regulations respecting employment, employment practices,
terms and conditions of employment, health and safety and wages and hours
(including but not limited to the classification and/or treatment of employees
as exempt or non-exempt), in each case, with respect to employees; (ii) has
withheld
14
all amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to employees; and (iii) is not liable in any
material respect for any arrears of wages or any Taxes or any penalty for
failure to comply with any of the foregoing. There are no pending, or, to the
Knowledge of the Company, threatened or reasonably anticipated claims, charges
or actions pending against the Company before the Equal Employment Opportunity
Commission or similar state, federal or local agency or under any worker's
compensation policy or long-term disability policy.
(c) Since January 1, 2001, (i) neither the Company
nor any Company Subsidiary has effected a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility; (ii) there has not
occurred a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any Company Subsidiary; (iii) neither
the Company nor any Company Subsidiary has engaged in layoffs or employment
terminations sufficient in number to trigger application of any state, local or
foreign law or regulation similar to the WARN Act; and (iv) none of the Company
nor any of the Company Subsidiaries' employees has suffered an "employment loss"
(as defined in the WARN Act) during the ninety (90) day period prior to the date
of this Agreement.
Section 3.20 Affiliate Transactions. No Contracts are in
effect as of the date hereof between the Company or any Company Subsidiary on
the one hand, and Affiliates of the Company, on the other hand.
Section 3.21 Brokers or Finders. The Company has not entered
into any Contract entitling any agent, broker, investment banker, financial
advisor or other firm or Person to any broker's or finder's fee or any other
commission or similar fee in connection with any of the Transactions, other than
US Bancorp Piper Jaffray, a true and correct copy of which has been provided to
Parent.
Section 3.22 Bank Accounts. Section 3.22 of the Company
Disclosure Schedule sets forth the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company or any Company Subsidiary maintains safe deposit boxes,
checking accounts or other accounts of any nature the available balance of which
customarily exceeds $5,000.
Section 3.23 Accounts Receivable and Payable. All accounts
receivable and accounts payable of the Company or any Company Subsidiary have
arisen, and as of the Closing Date shall have arisen, from bona fide
transactions in the ordinary course of business consistent with past practice.
Section 3.24 Ownership of Assets. As between (i) Principal
Stockholder and its Subsidiaries (other than the Company and the Company
Subsidiaries), on the one hand, and (ii) the Company and the Company
Subsidiaries, on the other hand, none of the Principal Stockholder nor its
Subsidiaries (other than the Company and the Company Subsidiaries) own, or have
the right (under Contracts to which the Company or any Company Subsidiary is a
party) to use or otherwise have a license to any of the assets and other rights
(whether tangible or
15
intangible) used to conduct the business, operations and activities of the
Company as presently conducted.
Section 3.25 Investment Intent.
(a) Investment Representations. The Company
understands that the shares of Parent Common Stock it will receive pursuant to
the terms of this Agreement have not been registered under the Securities Act.
The Company also understands that these shares are being offered and sold
pursuant to an exemption from registration under the Securities Act based in
part upon the Company's representations contained in the Agreement. The Company
hereby represents and warrants as follows:
(i) Acquisition for Own Account. The Company
is acquiring the shares of Parent Common Stock for the Company's own
account for investment only, and not with a view towards their
distribution other than pursuant to an effective registration statement
or a valid exemption from registration under the Securities Act.
(ii) The Company Can Protect Its Interest.
The Company represents that by reason of its, or of its management's,
business or financial experience, the Company has the capacity to
protect its own interests in connection with the Transactions.
(iii) Parent Information. The Company has
had an opportunity to discuss Parent's business, management and
financial affairs with directors, officers and management of Parent and
has had the opportunity to review Parent's operations and facilities.
The Company has also had the opportunity to ask questions of and
receive answers from, Parent and its management regarding the terms and
conditions of this investment.
(iv) Legends. To the extent applicable, each
certificate or other document evidencing any of the shares of Parent
Common Stock delivered pursuant to the terms of this Agreement shall be
endorsed with the legends substantially in the form set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
16
(b) Rule 145 Compliance. The Company further
represents, warrants and covenants that, for purposes of, and within the meaning
of, Rule 145 under the Securities Act:
(i) the Company has not submitted this
Agreement or the Transactions for the vote or consent of any of its
stockholders other than the Principal Stockholder;
(ii) the Company has not adopted a plan or
agreement that provides for dissolution of the Company;
(iii) the Company has not adopted a plan or
agreement that provides for a pro rata or similar distribution of
the shares of Parent Common Stock to be delivered pursuant to the
Transactions to the security holders of the Company;
(iv) the Company's Board of Directors has
not adopted resolutions relative to (ii) or (iii) above within one
(1) year after the date hereof; and
(v) the transfer of the Acquired Assets
hereby is not part of a pre-existing plan for the distribution of
the shares of Parent Common Stock to be delivered pursuant to the
Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDER
Principal Stockholder represents and warrants to Parent that all of
the statements contained in this Article IV are true and correct. The inclusion
of any information in any document delivered by Principal Stockholder pursuant
to this Agreement shall not be deemed to be an admission or evidence of the
materiality of such item, nor shall it establish a standard of materiality for
any purpose whatsoever.
Section 4.1 Organization; Qualification of Principal
Stockholder. Principal Stockholder is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.
Section 4.2 Authorization. Principal Stockholder has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions. The execution, delivery and performance by
Principal Stockholder of this Agreement and the consummation of the Transactions
by Principal Stockholder have been duly authorized by the Board of Directors of
Principal Stockholder, and no other corporate action on the part of Principal
Stockholder (including its stockholders) is necessary to authorize the execution
and delivery of this Agreement by Principal Stockholder or the consummation by
Principal Stockholder of any of the Transactions.
Section 4.3 Execution; Validity of Agreement. This Agreement
has been duly
17
executed and delivered by Principal Stockholder, and, assuming due and valid
authorization, execution and delivery hereof by the Company and Parent is a
valid and binding obligation of Principal Stockholder, enforceable against
Principal Stockholder in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar Laws of general application affecting enforcement
of creditors' rights generally and (b) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations. Except for
(a) the filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, applicable foreign antitrust Laws, and state
securities laws and (b) in the case (y) below, except as would not have a
material adverse effect on the ability of Principal Stockholder to consummate
the Transactions, none of the execution, delivery or performance of this
Agreement by Principal Stockholder, the consummation by Principal Stockholder of
the Transactions or compliance by Principal Stockholder with any of the
provisions hereof shall: (w) conflict with or result in any breach of any
provision of Principal Stockholder's Certificate of Incorporation or Bylaws as
presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Company Material
Contract; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Principal Stockholder.
Section 4.5 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or Governmental Entity pending or, to the knowledge of Principal
Stockholder, threatened against or involving Principal Stockholder that: (i) is
expected to have a material adverse effect on the ability of Principal
Stockholder to consummate the Transactions; (ii) questions or challenges the
validity of this Agreement or any action taken or to be taken by Principal
Stockholder pursuant to this Agreement or in connection with the Transactions;
or (iii) is reasonably likely to result in liability to Parent following the
Closing, other than as disclosed in the Company Disclosure Schedule.
Section 4.6 Brokers or Finders. Neither Principal Stockholder
nor any of its Subsidiaries or Affiliates has entered into any Contract
entitling any agent, broker, investment banker, financial advisor or other firm
or Person to any brokers' or finders' fee or any other commission or similar fee
in connection with the Transactions, other than US Bancorp Piper Jaffray, whose
fees and expenses shall be paid by the Company in accordance with the Company's
agreement with such firm, a true and correct copy of which has been provided to
Parent.
Section 4.7 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article IV, Principal
Stockholder makes no representation or warranty, express or implied, at law or
in equity, and any such other representations and warranties are hereby
disclaimed. Without limiting the generality of the foregoing, Principal
Stockholder
18
makes no representation or warranty regarding the Acquired Assets or the Assumed
Liabilities, and none shall be implied at law or in equity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Parent Disclosure Schedule,
prepared and signed by Parent and delivered to the Company and Principal
Stockholder simultaneously with the execution hereof, Parent represents and
warrants to the Company, Aurora and Principal Stockholder that all of the
statements contained in this Article V are true and correct. For purposes of the
representations and warranties of Parent contained herein, disclosure in any
section of the Parent Disclosure Schedule of any facts or circumstances shall be
deemed to be disclosure of such facts or circumstances with respect to such
other representations or warranties by Parent calling for disclosure of such
information, if such disclosure would reasonably lead the Company and Principal
Stockholder to make further inquiry of such facts and circumstances, and such
further inquiry would reasonably reveal that such disclosure applies to such
other representations and warranties. The inclusion of any information in any
section of the Parent Disclosure Schedule or other document delivered by Parent
pursuant to this Agreement shall not be deemed to be an admission or evidence of
the materiality of such item, nor shall it establish a standard of materiality
for any purpose whatsoever.
Section 5.1 Organization; Qualification of Parent. Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate
their properties and to carry on their business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and government approvals would not have, individually
or in the aggregate, a Parent Material Adverse Effect.
Section 5.2 Authorization. Parent has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Parent of this
Agreement and the consummation of the Transactions by Parent have been duly
authorized by Parent's Board of Directors and no other corporate action on the
part of the Parent (including Parent's stockholders) is necessary to authorize
the execution and delivery of this Agreement by Parent or the consummation by
Parent of any of the Transactions.
Section 5.3 Execution; Validity of Agreement. This Agreement
has been duly executed and delivered by Parent and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of Parent, enforceable against each of them in accordance
with its terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar Laws of
general application affecting enforcement of creditors' rights generally and (b)
the availability of the remedy of specific performance or injunctive or other
forms of equitable relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any proceeding therefor may
be brought.
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Section 5.4 Consents and Approvals; No Violations. Except for
(a) the filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, and applicable foreign antitrust Laws and state
securities laws and (b) in the case of (y) below, except as would not have a
Parent Material Adverse Effect, none of the execution, delivery or performance
of this Agreement by Parent, the consummation by Parent of the Transactions or
compliance by Parent with any of the provisions hereof shall: (w) conflict with
or result in any breach of any provision of the Certificate of Incorporation or
Bylaws of Parent, each as presently, in effect; (x) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity; (y)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any material Contract of Parent; or (z) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent.
Section 5.5 Capitalization. As of January 28, 2003, the
authorized capital stock of Parent consists of (a) 200,000,000 shares of Parent
Common Stock, of which 59,275,635 shares are issued and outstanding; and (b)
10,000,000 shares of preferred stock, all of which have been designated Series A
Preferred Stock, none of which are issued and outstanding. No shares are held in
treasury. As of the date hereof, approximately 8,900,000 shares of Parent Common
Stock are reserved for issuance upon the exercise of options outstanding under
Parent's various stock incentive plans. As of the date hereof, no shares of
Parent Common Stock are reserved for issuance upon the exercise of warrants. All
the outstanding shares of Parent Common Stock and Parent preferred stock are
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth above, as of the date hereof, (x) there are no shares of capital stock of
Parent authorized, issued or outstanding, other than shares of Parent Common
Stock issued subsequent to January 28, 2003 pursuant to previously outstanding
options issued pursuant to the Parent's stock option plans and (y) there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of Parent or any of its Subsidiaries
obligating Parent to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock of Parent, other than options to purchase
Parent Common Stock granted in the ordinary course of business subsequent to
January 28, 2003 pursuant to Parent's stock option plans in existence as of that
date.
Section 5.6 Parent SEC Reports. Parent has filed all required
forms, reports, schedules, statements and other documents (including exhibits
and other information incorporated therein) with the SEC since December 31, 2000
through the date hereof (collectively, the "Parent SEC Reports"). As of their
respective dates, or, if amended, as of the date of the last such amendment,
each Parent SEC Report, (a) complied in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder applicable to such Parent SEC Reports and (b) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Parent SEC Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of Parent
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and its Subsidiaries as of its date, and each of the consolidated statements of
operations, stockholders' equity and cash flows included in or incorporated by
reference into the Parent SEC Reports (including any related notes and
schedules) fairly presents in all material respects the financial position,
results of operations and cash flows, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments and the absence of
footnotes), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein. There is no investigation by
the SEC threatened or pending, or, to the knowledge of the Parent, contemplated
with respect to any Parent SEC Report, including, without limitation, revenue
recognition thereunder or any of Parent's officers, directors or principal
stockholders.
Section 5.7 No Undisclosed Liabilities. Except for (a)
liabilities and obligations disclosed in Parent's quarterly report on Form 10-Q
for the quarter ended September 30, 2002 filed with the SEC, incurred in the
ordinary course of business since September 30, 2002, (b) liabilities arising
out of facts or events fully disclosed in a press release issued by Parent
subsequent to that date and prior to the date hereof, and (c) liabilities that
would not reasonably be expected to result in a Parent Material Adverse Effect,
neither Parent nor any of its Subsidiaries, taken as a whole, has any
liabilities or obligations, that would be required to be disclosed in a
consolidated balance sheet of Parent (including the related notes thereto, where
appropriate) prepared in accordance with GAAP.
Section 5.8 Absence of Certain Changes. Except as (a)
disclosed in the Parent SEC Reports, (b) disclosed in Parent's quarterly report
on Form 10-Q for the quarter ended September 30, 2002 filed with the SEC, (c)
fully disclosed in a press release issued by Parent subsequent to that date and
prior to the date hereof, or (d) expressly required by this Agreement, since
September 30, 2002 to the Parent's knowledge, no event that would be reasonably
likely to result in a Parent Material Adverse Effect has occurred.
Section 5.9 Parent Material Contracts. To Parent's knowledge,
Parent has not breached, or received in writing any claim or notice that it has
breached, any of the terms or conditions of (i) any agreement, contract or
commitment required to be filed as an exhibit to the Parent SEC Reports
(including any agreements, contracts or commitments entered into since September
30, 2002 that are required to be filed by Parent with the SEC in any report in
the future), or (ii) any agreement with any of the parties listed on Section 5.9
of the Parent Disclosure Schedule (the "Parent Material Contracts"). Each Parent
Material Contract that has not expired by its terms is in full force and effect
and is the legal, valid and binding obligation of Parent, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), except where the failure of such Parent Material Contract to be in full
force and effect or to be legal, valid, binding or enforceable against Parent
has not had and would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.10 Availability of Funds. Parent currently has
access to sufficient immediately available funds in cash or cash equivalents,
and shall at the Closing have sufficient
21
immediately available funds, in cash, to pay all amounts payable pursuant to
this Agreement and to consummate the Transactions including, but not limited to,
the Cash Consideration.
Section 5.11 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or Governmental Entity pending or, to the knowledge of Parent, overtly
threatened against or involving Parent or any of its Subsidiaries that is
expected to have a Parent Material Adverse Effect or that questions or
challenges the validity of this Agreement or any action taken or to be taken by
Parent or any of its Subsidiaries pursuant to this Agreement or in connection
with the Transactions.
Section 5.12 Investigation by Parent. Parent has conducted
its own independent investigation, review and analysis of the business,
operations, assets, liabilities, results of operations, financial condition,
software, technology and prospects of the Company and the Company Subsidiaries,
which investigation, review and analysis was done by Parent and, to the extent
Parent deemed appropriate, by Parent's representatives. Parent acknowledges that
it and its representatives have been provided adequate access to the personnel,
properties, premises and records of the Company and the Company Subsidiaries for
such purpose. In entering into this Agreement, Parent acknowledges that it has
relied solely upon the aforementioned investigation, review and analysis and,
except and only to the extent expressly set forth in Articles III and IV, not on
any factual representations or opinions of the Company or the Company's
representatives, and, in each case, Parent:
(a) acknowledges that, except and only to the extent
expressly set forth in Articles III and IV, none of the Company, the Company
Subsidiaries, Principal Stockholder or any of their respective directors,
officers, stockholders, employees, Affiliates, controlling persons, agents,
advisors or representatives makes or has made any oral or written representation
or warranty, either express or implied, as to the accuracy or completeness of
any of the information (including in materials furnished in the Company's data
room, in presentations by the Company's management or otherwise) provided or
made available to the Parent or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives;
(b) agrees, to the fullest extent permitted by Law,
that none of the Company, the Company Subsidiaries, Principal Stockholder or any
of their respective directors, officers, employees, shareholders, Affiliates,
controlling persons, agents, advisors or representatives shall have any
liability or responsibility whatsoever to Parent or its directors, officers,
employees, Affiliates, controlling persons, agents or representatives on any
basis (including in contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or statements
made (including in materials furnished in the Company's data room, in
presentations by the Company's management or otherwise), to Parent or its
directors, officers, employees, Affiliates, controlling persons, advisors,
agents or representatives (or any omissions therefrom); and
(c) Parent hereby acknowledges that, except to the
extent specifically set forth in this Article V, Parent is purchasing the
Acquired Assets on an "as-is, where-is" basis.
Section 5.13 Brokers or Finders. Neither Parent, nor any of
its Subsidiaries or its Affiliates has entered into any Contract entitling any
agent, broker, investment banker,
22
financial advisor or other firm or Person to any broker's or finder's fee or any
other commission or similar fee in connection with any of the Transactions.
Section 5.14 Form S-3 Eligibility. Parent meets the
eligibility requirements for use of Form S-3 to provide for the registration and
continuous resale of the Parent Common Stock issued to the Company under this
Agreement pursuant to Rule 415 under the Securities Act.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations. Except as set forth in
Schedule 6.1, during the period from the date hereof and continuing until the
earlier of the termination of this Agreement pursuant to Article IX or the
Closing, except as expressly provided in this Agreement or as may be consented
to in writing by Parent (such consent not to be unreasonably withheld or
delayed):
(a) the Company and each of the Company Subsidiaries
shall: (i) conduct its business in the same manner as heretofore conducted, only
in the ordinary course and in material compliance with all applicable Laws; (ii)
pay its debts, taxes and other liabilities when due and perform other material
obligations when due; and (iii) use commercially reasonable efforts to (A)
preserve intact its present business organization, (B) except as provided in (f)
below keep available the services of its present officers and employees and (C)
preserve its relationships with customers, suppliers, distributors, licensors,
licensees and other Persons with which it has significant business dealings;
(b) no Company Subsidiary shall:
(i) amend its Certificate of Incorporation
or Bylaws or similar organizational documents;
(ii) issue, sell, transfer, pledge, dispose
of or encumber any shares of any class or series of its capital stock,
or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any
shares of any class or series of its capital stock (except for the
issuance of capital stock issuable upon the exercise of options
outstanding as of the date hereof);
(iii) set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to any
shares of any class or series of its capital stock;
(iv) split, combine or reclassify any shares
of any class or series of its stock; or
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(v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its capital
stock, or any instrument or security which consists of or includes a
right to acquire such shares;
(c) neither the Company nor any Company Subsidiary
shall: (i) incur or assume any Indebtedness, modify the terms of any
Indebtedness or other liability; (ii) assume or guarantee the obligations of any
other Person; (iii) enter into any "keep well" or other agreement to maintain
any financial statement condition of any other Person (other than any Company
Subsidiary); or (iv) enter into any arrangement having the economic effect of
any of the foregoing; provided, however, notwithstanding the foregoing, the
Company shall not be restricted from incurring additional Indebtedness pursuant
to the terms of the Convertible Notes;
(d) neither the Company nor any Company Subsidiary
shall make changes in the compensation (including equity compensation, whether
payable in cash or otherwise) or benefits payable or to become payable to any of
their employees, except in the ordinary course of business consistent with past
practice, but in no event which shall in the aggregate exceed $250,000;
(e) neither the Company nor any Company Subsidiary
shall hire any employees other than in the ordinary course of business
consistent with past practice; provided, however, that no Company or Company
Subsidiary shall hire any employee whose annual compensation would exceed
$100,000 without the prior approval of Parent, which such approval shall not be
unreasonably withheld or delayed;
(f) neither the Company nor any Company Subsidiary
shall terminate any of their employees other than in the ordinary course of
business consistent with past practice without the prior approval of Parent,
which such approval shall not be unreasonably withheld; provided, however, that
if the Company or any Company Subsidiary shall terminate any of their employees
prior to the Closing other than as directed by Parent, the Company shall pay all
severance and other costs resulting from or arising out of such termination;
(g) neither the Company nor any Company Subsidiary
shall voluntarily permit any insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated;
(h) neither the Company nor any Company Subsidiary
shall adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization, or
otherwise acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any Person or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business;
(i) neither the Company nor any Company Subsidiary
shall change in any material respect any of the accounting methods used by it
unless required or permitted by GAAP;
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(j) no Company Subsidiary shall make or change any
Tax election, change an annual accounting period, adopt or change any material
Tax accounting method, file any amended Tax Return, enter into any closing
agreement, settle or consent to any Tax claim, surrender any right to claim a
refund of Taxes, or consent to the extension or waiver of the statutory period
of limitations applicable to any material Tax claim;
(k) neither the Company nor any Company Subsidiary
shall voluntarily take, or agree to or commit to take, any action that would
result in any of the conditions to the Closing set forth in Article VIII not
being satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time prior
to, the Closing Date, or that would materially impair the ability of the parties
hereto to consummate the Transactions in accordance with the terms hereof or
materially delay such consummation;
(l) neither the Company nor any Company Subsidiary
shall enter into any material partnership arrangements, material joint software
development agreements, material joint ventures or other material strategic
alliances or material strategic collaborations, except, in any case, as such are
terminable upon not more than thirty (30) days notice without material payment
or penalty of any kind;
(m) neither the Company nor any Company Subsidiary
shall sell, lease, license, mortgage or otherwise encumber or dispose of any
properties or assets which are material, individually or in the aggregate, to
its business, except sales, licenses or other dispositions in the ordinary
course of business consistent with past practice;
(n) neither the Company nor any Company Subsidiary
shall make any loans, advances or capital contributions to, or investments in,
any other Person, other than loans or investments by the Company, or any Company
Subsidiary, to or in the Company or any Company Subsidiary;
(o) neither the Company nor any Company Subsidiary
shall settle any claim, action or proceeding involving money damages, except to
the extent subject to reserves reflected in the Financial Statements;
(p) neither the Company nor any Company Subsidiary
shall subject itself, or the Parent, to any non-compete on any of their
respective businesses;
(q) neither the Company nor any Company Subsidiary
shall enter into any Contract the effect of which would be to grant to a third
party following the Closing Date any actual or potential right of license to any
of its Intellectual Property, except for non-exclusive licenses of Trademarks or
Copyrights in the ordinary course of business consistent with past practice
granted in connection with, or incidental to, the provision of services in the
ordinary course of business consistent with past practice;
(r) neither the Company nor any Company Subsidiary
shall grant any exclusive rights with respect to any of its Intellectual
Property;
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(s) neither the Company nor any Company Subsidiary
shall enter into, modify or amend in a manner adverse in any material respect to
such party any material Contract, terminate any material Contract, or waive,
release or assign any material rights or claims under any material Contract;
provided, however, that neither this covenant nor any other provision in this
Agreement shall restrict the ability of the Company or any Company Subsidiary
from entering into advertising or paid inclusion agreements, Internet search
services agreements or agreements involving payments by the Company of less than
$75,000, in each such case, which are entered into in the ordinary course of
business and consistent with past practice; and
(t) neither the Company nor any Company Subsidiary
shall enter into any Contract to do any of the foregoing.
Section 6.2 Access to Information; Confidentiality.
(a) Access to Information. Prior to the Closing, the
Company and each Company Subsidiary shall: (i) give Parent and its authorized
representatives reasonable access to all of its books, records, senior
personnel, offices and other facilities and properties; (ii) permit Parent to
make such copies and inspections thereof as Parent may reasonably request; and
(iii) cause its officers and other employees to furnish Parent with such
financial and operating data and other information with respect to its business
and properties, as from time to time Parent may reasonably request; provided,
however, that any such access shall be conducted at Parent's expense, at a
reasonable time, under the supervision of personnel of the Company or such
Company Subsidiary, as the case may be, and in such a manner as to maintain the
confidentiality of this Agreement and the Transactions in accordance with the
terms hereof and not to interfere with the normal operation of the business of
the Company or such Company Subsidiary, as the case may be. If and to the extent
that Principal Stockholder shall be in possession or control, at any time prior
to the Closing, of any of the books, records, financial and operating data or
other information of or relating to the business and properties of the Company
or any Company Subsidiary, Principal Stockholder shall give Parent and its
authorized representatives reasonable access to such books, records, financial
and operating data and other information to the same extent as provided above.
Notwithstanding the foregoing, no information or knowledge obtained by Parent
during the course of any investigation conducted by Parent pursuant to this
Section 6.2(a) shall: (a) affect or be deemed to modify in any respect any of
the representations or warranties of the Company or Principal Stockholder set
forth in this Agreement (or in any certificate, instrument or other document
delivered by the Company or Principal Stockholder to Parent in connection with
the Transactions), or the conditions to the obligations of the parties to
consummate the Transactions in accordance with the terms and conditions hereof;
(b) be deemed to amend or supplement the Company Disclosure Schedule, prevent or
cure any misrepresentations, breach of warranty or breach of covenant by the
Company or Principal Stockholder; or (c) otherwise limit or affect any remedies
available to Parent as a result of or arising out of such disclosure. Nothing
herein shall require the Company to disclose any information to Parent if such
disclosure would, in its sole and absolute discretion (A) jeopardize any
attorney-client or other legal privilege or (B) contravene any applicable Law,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement (including any confidentiality agreement to which it or its Affiliates
is a party).
26
(b) Confidentiality. Parent, Principal Stockholder
and the Company acknowledge that they have previously executed a confidentiality
agreement, dated April 16, 2001, as amended (the "Confidentiality Agreement"),
which shall remain in full force and effect in accordance with its terms. All
information contained (i) herein, (ii) in the Company Disclosure Schedule, or
(iii) delivered to Parent, Principal Stockholder, the Company, or any of their
authorized representatives pursuant hereto shall be deemed to be "Proprietary
Information" (as defined and subject to the exceptions contained in the
Confidentiality Agreement) until the Closing Date.
Section 6.3 Regulatory Filings; Commercially Reasonable
Efforts.
(a) Regulatory Filings. Subject to the terms and
conditions herein, the Company, Principal Stockholder and Parent shall
coordinate and cooperate with one another and shall use their respective
commercially reasonable efforts to comply with, and shall refrain from taking
any action that would impede compliance with, all Laws, and as promptly as
practicable after the date hereof, shall make all filings, notices, petitions,
statements, registrations, submissions for information, application or
submission of other documents required by any Governmental Entity in connection
with the Transactions, including, without limitation: (i) Notification and
Report Forms with the Federal Trade Commission and the Antitrust Division of the
Department of Justice as required by the HSR Act; (ii) filings under applicable
foreign antitrust Laws; and (iii) any filings required under the Securities Act,
the Exchange Act and any applicable state securities Laws or any other Laws
relating to the Transactions. The Company, Principal Stockholder and Parent each
shall cause all documents that it is responsible for filing with any
Governmental Entity under this Section 6.3(a) to comply in all material respects
with all applicable Laws.
(b) Exchange of Information. The Company, Principal
Stockholder and Parent each shall promptly supply the other with any information
which may be required in order to effectuate any filing or application pursuant
to Section 6.3(a). Except where prohibited by applicable Laws, and subject to
the Confidentiality Agreement, each of the parties shall consult with the other
prior to taking a position with respect to any such filing, shall permit the
other to review and discuss in advance, and consider in good faith the views of
the other party in connection with any analyses, appearances, presentations,
memoranda, briefs, white papers, arguments, opinions and proposals before making
or submitting any of the foregoing to any Governmental Entity by or on behalf of
any party in connection with any investigations or proceedings in connection
with this Agreement or the Transactions (including under any antitrust,
competition or fair trade Laws), coordinate with the other in preparing and
exchanging such information and promptly provide the other (and its counsel)
with copies of all filings, presentations or submissions (and a summary of any
oral presentations) made by such party with any Governmental Entity in
connection with this Agreement or the Transactions; provided, that with respect
to any such filing, presentation or submission, each of the parties need not
supply the other party (or its counsel) with copies (or, in the case of oral
presentations, a summary) to the extent that any Law applicable to such party
requires such party or its subsidiaries to restrict or prohibit access to any
such properties or information.
(c) Notification. The Company, Principal Stockholder
and Parent each shall notify the other promptly upon its receipt of: (i) any
comments from any officials of any
27
Governmental Entity in connection with any filings made pursuant to this
Agreement; and (ii) any request by any officials of any Governmental Entity for
amendments or supplements to any filings made pursuant to, or information
provided to comply in all material respects with, any Laws. Whenever any event
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 6.3(a), each of the parties, as the case may be,
shall promptly inform the other party of such occurrence and cooperate in filing
with the applicable Governmental Entity such amendment or supplement.
(d) Efforts and Actions to Cause Closing to Occur.
Upon the terms and subject to the conditions set forth in this Agreement, the
Company, Principal Stockholder and Parent each shall use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing all
things necessary, proper or advisable to consummate and make effective, in the
most expeditions manner practicable, the Transactions, including using its
commercially reasonable efforts to accomplish the following: (i) the taking of
all reasonable acts necessary to cause the conditions precedent set forth in
Article VIII to be satisfied; (ii) the obtaining of all necessary actions or
non-actions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity; (iii) the obtaining of all Necessary Consents; (iv) the
resolution of such objections, if any, as may be asserted with respect to the
Transactions under the HSR Act, applicable foreign antitrust Laws or any other
antitrust, competition or fair trade Laws; (v) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transactions, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed; (vi) the
execution or delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement; and (vii)
obtain releases of all Encumbrances reflected in the Company Disclosure
Schedule; provided, however, that notwithstanding the foregoing or anything to
the contrary set forth in this Agreement or in any agreement, certificate,
instrument or other document delivered in connection with the Transactions,
nothing in this Agreement or in any agreement, certificate, instrument or other
document delivered in connection with the Transactions shall be deemed to
require Parent, the Company or Principal Stockholder, or any Subsidiary or
Affiliate thereof, to agree to any divestiture by itself or any of its
Affiliates of shares of capital stock or of any business, assets or property, or
the imposition of any limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
Section 6.4 State Takeover Laws. If any state takeover law
becomes or is deemed applicable to this Agreement or the Transactions, then the
Company, Principal Stockholder and Parent each shall use its commercially
reasonable efforts to assist in any effort by the other party to render such
statute inapplicable to the Transactions.
Section 6.5 Third-Party Consents. As soon as practicable
following the date hereof, the Company shall use commercially reasonable efforts
to obtain the consents, waivers and approvals, and to provide the notices,
required under Section 3.4 and Section 3.12(b)
28
(collectively, the "Consents"); provided, however, that the Company shall not be
required to pay any money, incur any liability or modify any Contract in any
manner whatsoever materially adverse to the Company in connection with obtaining
any Consents. The Company shall keep Parent reasonably informed of its efforts
to obtain such consents, waivers and approvals (including reactions and
responses of third parties thereto).
Section 6.6 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent, Principal Stockholder and the Company. Thereafter, until the Closing, or
the date the Transactions are terminated or abandoned pursuant to Article IX,
neither the Company, Principal Stockholder nor Parent, nor any of their
respective Affiliates, shall issue or cause the publication of any press release
or other external public announcement with respect to this Agreement or the
Transactions without prior consultation with the other parties hereto, except as
may be required by Law or by any listing agreement with a national securities
exchange or trading market; provided, however, that in the event that Parent,
Principal Stockholder and the Company are required by Law or by any listing
agreement with a national securities exchange or trading market to issue any
press release or make any public announcement with respect to this Agreement or
the Transactions, the party required to issue such press release or make such
public announcement shall consult in good faith with the other parties hereto
regarding the terms of such press release or the substance of any such public
announcement.
Section 6.7 Ancillary Agreements. Each of Parent, Principal
Stockholder and the Company shall cause each of the Ancillary Agreements to
which it is intended to be a party to be executed and delivered to the other
party at the Closing in accordance with the terms and subject to the conditions
set forth herein.
Section 6.8 Subsequent Actions.
(a) After the Closing, if Parent shall consider or be
advised that any deeds, bills of sale, instruments of conveyance, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm ownership (of record or otherwise) in Parent, its right,
title or interest in, to or under any or all of the Acquired Assets or otherwise
to carry out this Agreement, then the Company shall execute and deliver all
deeds, bills of sale, instruments of conveyance, powers of attorney, assignments
and assurances and take and do all such other actions and things as may be
requested by Parent in order to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in Parent
or otherwise to carry out this Agreement.
(b) After Closing, if the Company shall consider or
be advised that any instruments of assumption or any other actions or things are
necessary or desirable for the company to assign to Parent, and for Parent to
assume from the Company, any or all of the Assumed Liabilities or to otherwise
carry out this Agreement, then Parent shall execute all documents and take and
do all actions and things as may be requested by the Company in order for the
Company to assign to Parent, and for Parent to assume from the Company, all
Assumed Liabilities or otherwise carry out this Agreement.
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Section 6.9 Waiver of Bulk Sales Requirement. Each of the
parties waives compliance with any applicable bulk sales laws, including,
without limitation, the Uniform Commercial Code Bulk Transfer provisions.
Section 6.10 Audited Financial Statements. As soon as
practicable after the date of this Agreement, but no later than fourteen (14)
calendar days prior to the Closing Date, the Company shall deliver to Parent the
Audited Financial Statements.
Section 6.11 Notice of Certain Matters. The Company and
Principal Stockholder shall give prompt notice to Parent of: (a) the occurrence
or non-occurrence of any event, the occurrence or non-occurrence of which could
reasonably be expected to cause any representation or warranty of the Company or
Principal Stockholder set forth in this Agreement to be untrue or inaccurate at
the Closing or any time prior to the Closing such that any closing condition set
forth in Section 8.2(a) would not be satisfied; and (b) any failure of the
Company or Principal Stockholder to comply with or satisfy any covenant or
agreement to be complied with by the Company or Principal Stockholder under this
Agreement at the Closing or at any time prior to the Closing such that any
closing condition set forth in Section 8.2(b) would not be satisfied; provided,
however, that any disclosure by the Company or Principal Stockholder pursuant to
this Section 6.11 shall not: (x) affect or be deemed to modify in any respect
any of the representations or warranties of the Company or Principal Stockholder
set forth in this Agreement (or in any certificate, instrument or other document
delivered by the Company or Principal Stockholder (or any officer thereof) to
Parent in connection with the Transactions), or the conditions to the
obligations of the parties to consummate the Transactions in accordance with the
terms and conditions hereof; (y) be deemed to amend or supplement the Company
Disclosure Schedule, or prevent or cure any misrepresentations, breach of
warranty or breach of covenant by the Company or Principal Stockholder; or (z)
otherwise limit or affect any remedies available to Parent as a result of or
arising out of such disclosure, including, without limitation, Parent's right to
indemnification under this Agreement.
Section 6.12 Non-Transferable Assets.
(a) Notwithstanding anything to the contrary set forth in
this Agreement or in any of the Ancillary Agreements, nothing contained in this
Agreement or in any of the Ancillary Agreements shall be construed as, or
constitute, an attempt, agreement or other undertaking to transfer or assign to
Parent any asset, property or right that would otherwise constitute an Acquired
Asset, but that by its terms is not transferable or assignable to Parent
pursuant to this Agreement without the consent, waiver, approval, authorization,
qualification or other order or one or more Governmental Authorities or other
Persons and if such consent, waiver, approval, authorization, qualification or
other order is not obtained prior to the Closing (each, a "Non-Transferable
Asset").
(b) From and after the Closing and, with respect to each
such Non-Transferable Asset, until the earlier to occur of (i) such time as such
Non-Transferable Asset shall be properly and lawfully transferred or assigned to
Parent and (ii) such time as the material benefits intended to be transferred or
assigned to Parent have been procured by alternative means pursuant to Section
6.12(c) hereof, (A) the Non-Transferable Assets shall be held by the Company in
trust exclusively for the benefit of Parent, and (ii) each of the Company,
Principal
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Stockholder and Parent shall cooperate in any good faith, reasonable arrangement
designed to provide or cause to be provided for Parent the material benefits
intended to be transferred or assigned to Parent under each of the
Non-Transferable Assets and, in furtherance thereof, to the extent permitted
under the terms of each such Non-Transferable Asset and under applicable Law (A)
Parent shall use commercially reasonable efforts to perform and discharge all of
the liabilities and other obligations of the Company under the terms of all such
Non-Transferable Assets in effect as of the Closing at Parent's expense and (B)
the Company and Principal Stockholder shall use commercially reasonable efforts
to provide or cause to be provided to Parent all of the benefits of the Company
under the terms of such Non-Transferable Assets in effect as of the Closing,
including by promptly paying to Parent any monies received by the Company or
Principal Stockholder from and after the Closing under such Non-Transferable
Assets attributable to the performance of Parent thereunder.
(c) In the event that the Company or Principal
Stockholder is unable to obtain any consent from any Person under any
Non-Transferable Asset after the Closing Date through the use of commercially
reasonable efforts, Parent shall be entitled to procure the material rights and
benefits of the Company under the terms of such Non-Transferable Asset in effect
as of the Closing by alternative means, including, without limitation, by
entering into new Contracts with third Persons or otherwise; provided, however,
that in the event that the Company or Principal Stockholder shall exercise its
rights under this Section 6.12(c) in respect of any Non-Transferable Asset, the
obligations of the Company, Principal Stockholder and Parent under Section
6.12(b) in respect of such Non-Transferable Asset shall thereupon cease and
expire.
Section 6.13 Rule 145. The Company further covenants, for
purposes of and within the meaning of Rule 145 under the Securities Act, that
for one (1) year after the date hereof, the Company's Board of Directors will
not: (a) adopt a plan or agreement that provides for dissolution of the Company;
or (b) adopt a plan or agreement that provides for a pro rata or similar
distribution of the shares of Parent Common Stock to be delivered pursuant to
the Transactions to the security holders of the Company.
Section 6.14 Company Disclosure Schedule Supplement. The
Company shall use commercially reasonable efforts to supplement Section 3.18(a)
of the Company Disclosure Schedule, within 30 days hereof, by adding information
identifying: (a) pending U.S. and foreign patent applications; (b) U.S.
copyright registrations; and (c) additional U.S. and foreign domain name
registrations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 No Solicitation.
(a) The Company and Principal Stockholder shall
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal.
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(b) During the period from the date hereof and
continuing until the earlier to occur of the termination of this Agreement
pursuant to Article IX or the Closing, each of the Company and Principal
Stockholder shall not and shall use its commercially reasonable efforts to cause
each of its current directors, current executive officers and other employees,
affiliates, representatives and other agents (including its financial, legal and
accounting advisors) not to, directly or indirectly: (i) solicit, initiate,
encourage, knowingly facilitate or induce any inquiry with respect to, or the
making, submission or announcement of, any Acquisition Proposal; (ii) furnish to
any Person any nonpublic information or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or could reasonably be
expected to lead to, any Acquisition Proposal; (iii) participate or engage in
discussions or negotiations with any Person with respect to any Acquisition
Proposal, or the making of any proposal that constitutes or could reasonably be
expected to lead to any Acquisition Proposal; (iv) approve, endorse or recommend
any Acquisition Proposal; or (v) enter into any letter of intent or similar
document or any Contract relating to any Acquisition Proposal.
(c) As promptly as practicable after receipt of any
Acquisition Proposal or any request for nonpublic information or inquiry which
it reasonably believes could lead to an Acquisition Proposal, the Company or
Principal Stockholder, as the case may be, shall provide Parent with oral and
written notice of the terms and conditions of such Acquisition Proposal, request
or inquiry, and the identity of the Person or group making any such Acquisition
Proposal, request or inquiry and a copy of all written materials provided in
connection with such Acquisition Proposal, request or inquiry. The Company or
Principal Stockholder, as the case may be, shall provide Parent as promptly as
practicable oral and written notice setting forth all such information as is
reasonably necessary to keep Parent informed of the status and details
(including amendments or proposed amendments) of any such Acquisition Proposal,
request or inquiry and shall promptly provide to Parent a copy of all written
materials subsequently provided in connection with such Acquisition Proposal,
request or inquiry.
(d) Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in this Section 7.1 by any
current executive officer or current director of the Company or Principal
Stockholder or any investment banker, attorney or representative of the Company
or Principal Stockholder shall be deemed to be a breach of this Section 7.1 by
the Company.
Section 7.2 Listing of Additional Shares. Prior to the
Closing Date, Parent shall use all commercially reasonable efforts to cause the
shares of Parent Common Stock issued to the Company pursuant to this Agreement
to be authorized for listing on the Nasdaq National Market (or such other stock
exchange or trading system on which the shares are then primarily trading),
subject to notice of issuance.
Section 7.3 Blue Sky Laws. Parent shall take such steps as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the Parent Common Stock in
connection with the Transactions. The Company shall use commercially reasonable
efforts to assist Parent as may be necessary to comply with the securities and
blue sky laws of all jurisdictions which are applicable in connection with the
issuance of Parent Common Stock in connection with the Transaction.
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Section 7.4 Employee Matters.
(a) Offers of Employment. Parent may offer employment
effective as of the Closing Date to any of the employees of the Company or any
Company Subsidiary on terms and conditions, including provision of salary and
benefits, which are comparable to, in the aggregate, similarly situated
employees of Parent. Notwithstanding the forgoing, Parent may continue one or
more of the Benefit Plans set forth on Schedule 7.4(b) if permissible by the
terms of such Benefit Plans, without the requirement of any payment by Company
or Principal Stockholder, in which case Parent shall have satisfied its
obligations hereunder with respect to the benefits so provided. Parent shall
make its employment offers at least ten (10) Business Days prior to the Closing
Date and shall inform the Company of the employees who accept such offer of
employment (the "Retained Employees"). The Company shall cooperate with Parent's
reasonable requests for access to the employees of the Company and each Company
Subsidiary for purposes of making any employment offers and shall cease to
employ any Retained Employee as of the Closing Date. In this regard, the Company
agrees to provide Parent, as soon as practical after the date hereof, a true and
complete list of all employees of the Company and any Company Subsidiary
together with their names, positions, dates of hire and current salary.
(b) Compensation and Benefits. Effective as of the
Closing Date, the Company shall assign and Parent shall assume sponsorship of
all Benefit Plans set forth on Schedule 7.4(b) hereto and the parties shall
cooperate in obtaining such consent, as may be necessary, to effect such
transfer of sponsorship. With respect to such Benefit Plans and all other
employee benefits provided to the Retained Employees by Parent (i) service
accrued by each Retained Employee during employment with the Company or any
Company Subsidiary prior to the Closing Date shall be recognized for all
purposes of eligibility, vesting and entitlement to benefits (except with
respect to the provision of options or other equity compensation awards or to
the extent necessary to prevent duplication of benefits) and (ii) all
pre-existing condition limitations shall be waived to the same extent waived
under the Benefit Plans or, if more favorable to such Retained Employee, the
applicable plan of Parent. If reasonably requested by Parent, the Company agrees
to provide Parent with sufficient information and otherwise cooperate with
Parent so that it may satisfy its obligations under this Section 7.4(b).
(c) Severance and WARN Obligations. At the Closing,
Parent shall pay to the Company or on the Company's behalf (upon receipt of a
release, except where payment is required under the WARN Act) severance pay and
related benefits to employees of the Company or any Company Subsidiary who are
not offered employment with Parent and who do not become Retained Employees (the
"Non-Retained Employees"), in accordance with (i) applicable law, (ii) any
agreements giving rise to severance payments, and (iii) the Company's severance
policy set forth on Schedule 7.4(b). Parent shall reimburse the Company for all
costs, including wages and benefits, associated with employing the Non-Retained
Employees for the required period after the issuance of notices specified under
the WARN Act or any similar state, local or foreign statute, regulation or, with
respect to foreign employees, common-law requirement, or providing pay in lieu
of any such notice; provided, however, that the Company and any Company
Subsidiaries shall issue all such required notices no later than the Closing.
(d) Non-Solicitation of Employees. At all times
during the period commencing on the Closing Date and ending on the first (1st)
anniversary of the Closing Date,
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Principal Stockholder shall not directly or indirectly solicit, encourage or
take any other action which is intended to induce or encourage, or has the
effect of inducing of encouraging, any Retained Employee to terminate his or her
employment therewith.
Section 7.5 Form 10-K. Parent shall include in its Annual
Report on Form 10-K for the year 2002, the information required to be disclosed
pursuant to Part III thereof without incorporating such information by reference
from the corresponding Proxy Statement pursuant to Section 14(a) of the Exchange
Act or such information shall be included in the registration statement
contemplated by the Registration Rights Agreement attached hereto as Exhibit F
or in a Form 8-K filed prior to the initial filing of the registration
statement.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Closing. The respective obligation of each of Parent, Principal Stockholder
and the Company to effect the Closing shall be subject to the satisfaction or
waiver by Parent, Principal Stockholder and the Company at or prior to the
Closing Date of each of the following conditions:
(a) Statutes; Court Orders. (i) No statute, rule or
regulation shall have been enacted or promulgated by any Governmental Entity
which has the effect of making the Transactions illegal; (ii) there shall be no
order or injunction of a court of competent jurisdiction in effect precluding
the consummation of the Transactions; and (iii) there shall not be pending any
suit, action or proceeding by any Governmental Entity seeking to restrain or
prohibit the consummation of the Transactions.
(b) HSR and Foreign Antitrust Approvals. The
applicable waiting periods under the HSR Act and all applicable material foreign
antitrust approvals, as reasonably agreed upon by the parties hereto, shall have
expired, been terminated or obtained, as applicable.
(c) Securities Law; Compliance. The issuance of
shares of Parent Common Stock in connection with the Transactions shall be
exempt from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) or Regulation D thereof.
Section 8.2 Conditions to Obligations of Parent to Effect the
Closing. The obligations of Parent to consummate the Closing shall be subject to
the satisfaction or waiver by Parent on or prior to the Closing Date of each of
the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company and Principal Stockholder
contained in this Agreement shall have been true and correct on the date hereof
and shall be true and correct as of the Closing Date with the same force and
effect as if made on the Closing Date (except that those representations and
warranties which address matters only as of a particular date shall have been
true and correct only on such date), except in each case, or in the aggregate,
has not had and would not reasonably be expected to have a Company Material
Adverse Effect; provided, however, that for purposes of
34
determining whether such representations and warranties were true and correct as
of the date hereof, or are true and correct as of the Closing Date, all
"materiality" and other similar qualifications, all "knowledge" and other
similar qualifications, and all qualifications based on the phrase "Company
Material Adverse Effect" contained therein shall be disregarded and given no
effect.
(b) Agreements and Covenants. The Company and
Principal Stockholder shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date.
(c) Stockholder Approval. Any and all consents or
approvals of the stockholders of the Company required under the applicable
provisions of the DGCL, and under applicable terms of the Company's Certificate
of Incorporation and Bylaws, in each case to authorize this Agreement and the
consummation of the Transactions shall have been obtained, and shall not have
been rescinded, revoked or otherwise withdrawn in any respect.
(d) Necessary Consents. The Company and Parent shall
have received the consents set forth on Schedule 8.2(d), and any and all
consents of third parties required in connection with the Transactions that were
either (i) entered into after the date hereof, or (ii) not disclosed to Parent
in the Company Disclosure Schedule, in each case to the extent that the failure
to obtain such consents would reasonably be expected to have a Company Material
Adverse Effect (the "Necessary Consents"), and none of such Necessary Consents
shall have been withdrawn or rescinded.
(e) Audited Financial Statements. Parent shall have
received the Audited Financial Statements.
(f) Company Material Adverse Effect. No Company
Material Adverse Effect shall have occurred since the date hereof and be
continuing.
(g) Company Officer's Certificate. The Company shall
have delivered to Parent a certificate of its President or any Vice President
dated as of the Closing Date to the effect that each of the conditions specified
in Sections 8.2(a), (b), and (f), with respect to the Company, are satisfied in
all respects (the "Company Officer's Certificate").
(h) Company Secretary's Certificate. The Company
shall have delivered to Parent a certificate of its Assistant Secretary dated as
of the Closing Date (the "Company Secretary's Certificate"), including: (i) an
incumbency certificate for the officers of the Company executing this Agreement
and other documents to be delivered to Parent pursuant to the terms hereof; (ii)
the Certificate of Incorporation of the Company, as certified by the Secretary
of State of the State of Delaware and by the Assistant Secretary of the Company
as being true and complete as of the Closing Date; (iii) the Company's Bylaws
certified by the Secretary of the Company as being true and complete as of the
Closing Date; and (iv) a copy of the resolutions of the Company's Board of
Directors certified by the Assistant Secretary of the Company as of the Closing
Date authorizing the execution, delivery and performance of this Agreement and
the consummation the Transactions.
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(i) Principal Stockholder Officer's Certificate.
Principal Stockholder shall have delivered to Parent a certificate of its
President or any Vice President dated as of the Closing Date to the effect that
each of the conditions specified in Sections 8.2(a), (b), and (f), with respect
to Principal Stockholder, are satisfied in all respects (the "Principal
Stockholder Officer's Certificate").
(j) Principal Stockholder Assistant Secretary's
Certificate. Principal Stockholder shall have delivered to Parent a certificate
of its Assistant Secretary dated as of the Closing Date (the "Principal
Stockholder Assistant Secretary's Certificate"), including: (i) an incumbency
certificate for the officers of Principal Stockholder executing this Agreement
and other documents to be delivered to Parent pursuant to the terms hereof; (ii)
the Certificate of Incorporation of Principal Stockholder, as certified by the
Secretary of State of the State of Delaware and by the Assistant Secretary of
Principal Stockholder as being true and complete as of the Closing Date; (iii)
Principal Stockholder's Bylaws certified by the Assistant Secretary of Principal
Stockholder as being true and complete as of the Closing Date; and (iv) a copy
of the resolutions of the Principal Stockholder's Board of Directors certified
by the Assistant Secretary of Principal Stockholder as of the Closing Date
authorizing the execution, delivery and performance of this Agreement and the
consummation the Transactions.
(k) Ancillary Agreements. The Company and Principal
Stockholder shall have executed, or caused to be executed, and delivered to
Parent each of the Ancillary Agreements required of it to be executed and
delivered in accordance with the terms hereof.
Section 8.3 Conditions to Obligation of the Company and
Principal Stockholder to Effect the Closing. The obligation of the Company and
Principal Stockholder to consummate the Closing shall be subject to the
satisfaction or waiver by the Company and Principal Stockholder on or prior to
the Closing Date of each of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent contained in this Agreement shall have
been true and correct on the date hereof and shall be as of the Closing Date
with the same force and effect as if made on the Closing Date (except that those
representations and warranties which address matters only as of a particular
date shall have been true and correct only on such date), except, in each case,
or in the aggregate, as has not had and would not reasonably be expected to have
a Parent Material Adverse Effect; provided, however, that for purposes of
determining whether such representations and warranties were true and correct as
of the date hereof, or are true and correct as of the Closing Date, all
"materiality" and other similar qualifications, all "knowledge" and other
similar qualifications, and all qualifications based on the phrase "Parent
Material Adverse Effect" contained therein shall be disregarded and given no
effect.
(b) Agreements and Covenants. Parent shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date.
(c) Parent Material Adverse Effect. No Parent
Material Adverse Effect shall have occurred since the date hereof and be
continuing.
36
(d) Parent Officer's Certificate. Parent shall have
delivered to the Company a certificate of its President or any Vice President
dated as of the Closing Date to the effect that each of the conditions specified
in Sections 8.3(a), (b) and (c), with respect to Parent, are satisfied in all
respects (the "Parent Officer's Certificate").
(e) Parent Secretary's Certificate. Parent shall have
delivered to the Company a certificate of its Secretary dated as of the Closing
Date (the "Parent Secretary's Certificate") including: (i) an incumbency
certificate for Parent's officers executing this Agreement and other documents
to be delivered to the Company pursuant to the terms hereof; (ii) Parent's
Certificate of Incorporation, as certified by the Secretary of State of the
State of Delaware and by Parent's Secretary as being true and complete as of the
Closing Date; (iii) Parent's Bylaws certified by Parent's Secretary as being
true and complete as of the Closing Date; and (iv) a copy of the resolutions of
Parent's Board of Directors certified by Parent's Secretary as of the Closing
Date authorizing the execution, delivery and performance of this Agreement and
the consummation the Transactions.
(f) Ancillary Agreements. Parent shall have executed,
or caused to be executed, and delivered to the Company and Principal Stockholder
each of the Ancillary Agreements required of it to be executed and delivered in
accordance with the terms hereof.
(g) Nasdaq Listing. The Parent Common Stock to be
issued to the Company pursuant to this Agreement at Closing shall have been
listed on the Nasdaq National Market.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated or
the Transactions may be abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of Parent,
Principal Stockholder and the Company; or
(b) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action which permanently restrains,
enjoins or otherwise prohibits the Transactions and such order, decree, ruling
or other action shall have become final and non-appealable; or
(c) if the Transactions shall not have been
consummated by May 1, 2003 (the "End Date"); provided, however, that the right
to terminate this Agreement pursuant to this Section 9.1(c) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Closing to occur on or before such date and
such action or failure to act constitutes a material breach of this Agreement;
or
(d) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Principal
Stockholder set forth in this Agreement or if
37
any representation or warranty of the Company or Principal Stockholder shall
have become untrue, in either case, such that the conditions set forth in
Section 8.2(a) or Section 8.2(b) would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
untrue; provided, that if such inaccuracy in the representations and warranties
of the Company or Principal Stockholder or breach by the Company or Principal
Stockholder is curable by the Company or Principal Stockholder prior to the End
Date through the exercise of its commercially reasonable efforts, then Parent
may not terminate this Agreement under this Section 9.1(d) prior to forty-five
(45) days following receipt of written notice by the Company and Principal
Stockholder from Parent of such breach, so long as the Company and Principal
Stockholder continue to exercise their commercially reasonable efforts to cure
such breach through such forty-five (45) day period (it being understood that
Parent may not terminate this Agreement pursuant to this Section 9.1(d) if it
shall have materially breached this Agreement or if such breach by the Company
or Principal Stockholder is cured within such forty-five (45) day period); or
(e) by the Company or Principal Stockholder, upon a
breach of any representation, warranty, covenant or agreement on the part of
Parent set forth in this Agreement or if any representation or warranty of
Parent shall have become untrue, in either case such that the conditions set
forth in Section 8.3(a) or Section 8.3(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall have
become untrue; provided, that if such inaccuracy in Parent's representations and
warranties or breach by Parent is curable by Parent prior to the End Date
through the exercise of its commercially reasonable efforts, then neither the
Company nor Principal Stockholder may terminate this Agreement under this
Section 9.1(e) prior to forty-five (45) days following Parent's receipt of
written notice from the Company or Principal Stockholder of such breach, so long
as Parent continues to exercise its commercially reasonable efforts to cure such
breach through such forty-five (45) day period (it being understood that neither
the Company nor Principal Stockholder may terminate this Agreement pursuant to
this Section 9.1(e) if it shall have materially breached this Agreement or if
such breach by Parent is cured within such forty-five (45) day period); or
(f) by Parent, if a Company Material Adverse Effect
shall have occurred and be continuing as of the End Date; or
(g) by the Company, if a Parent Material Adverse
Effect shall have occurred and be continuing as of the End Date; or
(h) by Parent, if the Company shall have materially
and intentionally breached the terms of Section 7.1;
provided, however, notwithstanding anything to the contrary set forth herein, in
the event that the subsequent delivery of the Audited Financial Statements
results in or implies a breach of the representations or warranties set forth in
Section 3.6 such that the condition set forth in Section 8.2(a) would not be
satisfied, Parent's sole remedy shall be to either (i) terminate this Agreement
pursuant to Section 9.1(d) above or (ii) irrevocably waive the breach relating
to, and any claim resulting from, a breach of Section 3.6 that Parent may have
for damages, indemnity or otherwise pursuant to Article XI or otherwise under
this Agreement.
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Section 9.2 Effect of Termination. In the event of the
termination of this Agreement or abandonment of the Transactions by either the
Company, Principal Stockholder or Parent pursuant to the terms of this
Agreement, written notice thereof shall forthwith be given to the
non-terminating party or parties specifying the provision hereof pursuant to
which such termination of this Agreement or abandonment of the Transactions is
made, and there shall be no liability or obligation thereafter on the part of
any party hereto except for fraud or for willful breach of this Agreement prior
to such termination of this Agreement or abandonment of the Transactions. Prior
to the Closing Date, termination shall be Parent's sole remedy for breach of any
provision of this Agreement by the Company or the Principal Stockholder, other
than for willful and intentional breaches of this Agreement or breaches arising
out of fraud.
ARTICLE X
TAX MATTERS
Section 10.1 Liability for Taxes.
(a) The Company and Principal Stockholder shall be
responsible for, pay or cause to be paid, and shall indemnify Parent and each of
its Affiliates (including the Company Subsidiaries after the Closing Date)
(collectively, the "Parent Tax Indemnitees") and hold each Parent Tax Indemnitee
harmless from and against any liability for (i) Taxes of the Company for any
Taxable period other than Transfer Taxes for which Parent is responsible under
Section 10.5 of this Agreement, (ii) Taxes of each of the Company Subsidiaries
for any taxable period (or portion thereof, as determined pursuant to Section
10.2(c)) that ends on or prior to the Closing Date (a "Pre-Closing Period")
other than Transfer Taxes for which Parent is responsible under Section 10.5 of
this Agreement and (iii) Taxes imposed on any consolidated, combined or unitary
group of which the Company or any Company Subsidiary has been a member;
provided, however, that the Company and Principal Stockholders shall not
indemnify and hold harmless the Parent Tax Indemnitees from any liability for
Taxes for any Pre-Closing Period to the extent of reserves for Taxes (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) if any, set forth on the Balance Sheet. Principal
Stockholder shall be entitled to any Tax Refunds to the extent that such Tax
Refunds relate to a Tax liability that is the responsibility of the Company or
Principal Stockholder under this Section 10.1(a).
(b) Parent shall, except to the extent that such
Taxes are to be paid by the Company or Principal Stockholder under Section
10.1(a), be responsible for, pay or cause to be paid, and shall indemnify the
Company, Principal Stockholder and each of their Affiliates (other than the
Company Subsidiaries) (collectively, the "Company Tax Indemnitees") and hold
each Company Tax Indemnitee harmless from and against all Taxes of, imposed upon
or relating to the Company Subsidiaries. Parent and the Company Subsidiaries
shall be entitled to any Tax Refunds of Taxes of the Company Subsidiaries except
for Tax Refunds to which Principal Stockholder may be entitled under Section
10.1(a).
(c) The covenants set forth in this Section 10.1 are
intended to be for the benefit of, and shall be enforceable by, each of the
Parent Tax Indemnitees and the Company Tax Indemnitees, as the case may be, and
their respective heirs and successors.
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Section 10.2 Filing Responsibility.
(a) Principal Stockholder shall prepare and file, or
cause to be prepared and filed, when due: (i) all Tax Returns for any Principal
Stockholder Affiliated Group which includes the Company or any Company
Subsidiary; and (ii) any Tax Return of any Company or any Company Subsidiary
that includes a Pre-Closing Period and is due (giving effect to valid extensions
thereto) on or prior to the Closing Date. Such Tax Returns shall be prepared in
accordance with past practices, consistently applied. With respect to any such
Tax Return, Parent shall pay Principal Stockholder any amount for which Parent
is responsible under Section 10.2(c) no later than five (5) Business Days prior
to the date such Tax Return is to be filed.
(b) Parent shall, except to the extent that filing
such Tax Returns are the responsibility of Principal Stockholder under Section
10.2(a), prepare and file, or cause to be prepared and filed, all Tax Returns
with respect to each Company Subsidiary. With respect to any such Tax Return,
Principal Stockholder shall pay Parent any amount for which Principal
Stockholder is responsible under Section 10.2(c) no later than five (5) Business
Days prior to the date such Tax Return is to be filed.
(c) Any Taxes for a taxable period beginning before
and ending after the Closing Date and the portion of any such Taxes allocable to
the portion of such period ending on the Closing Date shall be deemed to equal
(i) in the case of Taxes that (x) are based upon or related to income or
receipts or (y) imposed in connection with any sale or other transfer or
assignment of property, the amount which would be payable if the taxable year
ended with the Closing Date, and (ii) in the case of other Taxes imposed on a
periodic basis (including property Taxes), the amount of such Taxes for the
entire period multiplied by a fraction the numerator of which is the number of
calendar days in the period ending with the Closing Date and the denominator of
which is the number of calendar days in the entire period. For purposes of the
provisions of Section 10.1, each portion of such period shall be deemed to be a
taxable period (whether or not it is in fact a taxable period).
Section 10.3 Cooperation and Exchange of Information.
(a) After the Closing, Principal Stockholder and
Parent shall, and shall cause their respective Affiliates to: (i) assist the
other party in preparing any Tax Returns which such other party is responsible
for preparing and filing in accordance with this Article X; (ii) cooperate fully
in preparing for and participating in any Audits of any Tax Returns relating in
whole or in part to any Pre-Closing Period; and (iii) make available to the
other party as reasonably requested all information, records, documents, copies
of appropriate notices, and forms or other communications received from or sent
to any Tax Authority which relate to the Taxes of the Company or any Company
Subsidiary for any Pre-Closing Period; provided, however, that Principal
Stockholder shall have the sole authority to make all determinations with
respect to any Tax Returns relating to the Principal Stockholder Affiliated
Group, and with respect to other Tax Returns to the extent that determinations
with respect to such other Tax Returns may affect the amount of Taxes for which
the Company or Principal Stockholder is liable, or Tax Refunds to which
Principal Stockholder is entitled, under Section 10.1(a); provided, however,
that with respect to such other Tax Returns, Principal Stockholder shall be
required to obtain the consent of Parent before making any determination that
could reasonably
40
be expected to materially adversely affect Parent or any Company Subsidiary,
which consent should not be unreasonably withheld or delayed.
(b) For a period of time that is to continue until
sixty (60) days after the expiration of all applicable statutes of limitation
(giving effect to valid extensions thereto), Parent shall, and shall cause the
Company Subsidiaries to, retain all Tax Returns, books and records of, or with
respect to the activities of each of the Company Subsidiaries for all
Pre-Closing Periods. Thereafter, Parent shall not, and shall cause each Company
Subsidiary not to, dispose of any such Tax Returns, books or records unless it
first offers such Tax Returns, books and records to Principal Stockholder and
Principal Stockholder fails to accept such offer within ninety (90) days of its
being made.
(c) Parent shall promptly notify Principal
Stockholder upon receipt by Parent or any of its Affiliates of notice of any
claim, assessment or dispute relating to any Tax Proceeding which Principal
Stockholder is entitled to control under this Section 10.3(c) and shall promptly
forward to Principal Stockholder any communications received from or sent to any
Tax Authority in connection with any such Tax Proceeding; provided, however,
that failure to give such notice shall not affect Parent's right to
indemnification under this Article X except to the extent, if any, that but for
such failure, Principal Stockholder would have avoided all or a portion of the
Tax liability that is the subject of the Tax Proceeding. Principal Stockholder
shall have the sole right to control, contest, resolve and defend any Tax
Proceeding (i) with respect to Taxes of any Principal Stockholder Affiliated
Group that includes the Company or any Company Subsidiary or (ii) which may
affect the amount of Taxes for which the Company or Principal Stockholder is
liable or responsible (or refunds or credits to which Principal Stockholder is
entitled) under Section 10.1(a). Notwithstanding any other provision of this
Agreement to the contrary, neither Parent, the Company Subsidiaries nor any of
their respective Affiliates shall be entitled to participate in any Tax
Proceeding with respect to any Tax Return for any Principal Stockholder
Affiliated Group which includes the Company or any Company Subsidiary, nor shall
Parent, the Company Subsidiaries or any of their respective Affiliates be
entitled to any information regarding any such Tax Return, except to the extent
relating solely to any Company Subsidiary.
Section 10.4 Tax Sharing Agreements. Anything in any other
agreement to the contrary notwithstanding, all liabilities and obligations
between Principal Stockholder or any member of the Principal Stockholder
Affiliated Group, on the one hand, and any of the Company Subsidiaries, on the
other hand, under any Tax allocation or Tax sharing agreement in effect prior to
the Closing Date (other than this Agreement) shall cease and terminate as of the
Closing Date.
Section 10.5 Transfer Taxes. Notwithstanding anything in this
Agreement to the contrary, Company shall be responsible for and shall pay the
first $3,000,000 of any documentary, sales, use, registration, value added,
transfer, stamp and similar Taxes, fees and costs (collectively, "Transfer
Taxes") incurred in connection with the Transactions, and Parent and Company
shall each be responsible for and shall pay 50% of any additional Transfer Taxes
above $3,000,0000 incurred in connection with the Transactions.
41
Section 10.6 Section 338 Election. The Company and Parent
agree that an election under Section 338 of the Code (or any similar provision
of state, local or foreign law, as applicable) shall not be made with respect to
the sale of the capital stock of the Company Subsidiaries pursuant to this
Agreement without the consent of the Principal Stockholder.
Section 10.7 Survival. All rights and obligations under this
Article X shall survive the Closing Date and continue until sixty (60) days
after the expiration of all applicable statutes of limitation (giving effect to
valid extensions thereto).
Section 10.8 Scope of Remedy. Any claims for indemnification
relating to Taxes shall be governed by the provisions of this Article X, except
that in addition to the indemnity provided herein (but without duplication),
Parent shall be entitled to make a claim against the Escrow Fund in accordance
with Article XI. For the avoidance of doubt, none of the limitations on
indemnification set forth in Article XI shall apply to any claim for
indemnification relating to Taxes pursuant to Article X.
Section 10.9 Disputes. If a dispute arises as to the
determination of the amount of any liability for Taxes under this Article X and
no agreement regarding the rights of the respective parties can be reached after
good faith negotiation, the dispute shall promptly be resolved in accordance
with the following procedure: each party shall select a nationally recognized
accounting firm. Such two nationally recognized accounting firms shall then in
turn mutually select a separate nationally recognized accounting firm not then
acting as the principal outside accountant for Parent, Principal Stockholder,
the Company, or any of their respective Affiliates who shall then be designated
as the "Accounting Referee." Parent and Principal Stockholder shall direct the
Accounting Referee to promptly review and make its final determination with
respect to the disputed items or amounts. The decision of the Accounting Referee
as to the validity and amount of any claim shall be binding and conclusive upon
Parent and Principal Stockholder. Parent, on the one hand, and Principal
Stockholder, on the other hand, shall each bear its/their own expenses
(including, attorneys' fees and expenses) incurred in connection with any such
dispute resolution. The fees and expenses of the Accounting Referee shall be
borne equally by Parent, on the one hand, and the Company, out of the Escrow
Fund on the other hand.
42
ARTICLE XI
ESCROW AND INDEMNIFICATION
Section 11.1 Escrow Fund. Within one (1) Business Day after
the Closing, the Company shall deposit, or shall cause to be deposited, with an
escrow agent selected by the Company and reasonably acceptable to Parent (the
"Escrow Agent"), the Escrow Amount (together with any interest earned thereon or
dividends, distributions or other consideration paid therefor, the "Escrow
Fund"), which shall be governed by the terms set forth herein and in the Escrow
Agreement. The Escrow Fund shall be available to compensate Parent or other
Parent Indemnified Parties for Damages pursuant to the indemnification
obligations of the Company and Principal Stockholder set forth in this Article
XI.
Section 11.2 Indemnification.
(a) Subject to the limitations set forth in this
Article XI, the Company and the Principal Stockholder shall indemnify and hold
harmless Parent, Parent's officers, directors, agents and employees, and each
person, if any, who controls or may control Parent within the meaning of the
Securities Act (collectively, the "Parent Indemnified Parties") from and against
any and all actual losses, costs, damages, liabilities, payments, obligations,
assessments, and expenses arising from claims, demands, actions, causes of
action and choses in action, including, without limitation, reasonable legal
fees and expenses incurred in connection with defending any claim or actions and
all amounts paid in settlement of any claims or actions to which the Company has
given prior written consent (collectively, "Damages"), which have been paid,
suffered or incurred by such Parent Indemnified Parties as a result of or
arising out of: (i) any breach of, or inaccuracy in, any of the representations,
warranties or covenants made by the Company or Principal Stockholder in this
Agreement, the Company Officer's Certificate or Principal Stockholder Officer's
Certificate or (ii) any of the Excluded Liabilities.
(b) The right to obtain indemnification pursuant to
Section 11.2(a), subject to the limitations of Section 11.4, shall be the Parent
Indemnified Parties' sole and exclusive remedy for any breach by the Company,
Aurora or the Principal Stockholder of the terms of this Agreement, or any other
claim or matter arising out of or relating to the subject matter of this
Agreement, except as otherwise provided in Article X and except for claims
arising from a breach based on fraud; provided, however, that, if the Closing
does not occur, the Parent Indemnified Parties shall have no right to
indemnification pursuant to the provisions of this Section 11.2(a) or otherwise
for the breach by the Company, Aurora or Principal Stockholder of the terms of
this Agreement other for than an intentional and willful breach of this
Agreement, or a breach based on fraud.
(c) No Parent Indemnified Party shall be entitled to
receive indemnification pursuant to the terms of Section 11.2(a)(i) (other than
for an intentional and willful breach of a covenant or a breach of the
representations and warranties in Sections 3.2, 3.25 or 4.2) unless and until
the Damages for which the Parent Indemnified Parties are entitled to
indemnification pursuant to Section 11.2(a) (other than for an intentional and
willful breach of a covenant or a breach of the representations and warranties
in Sections 3.2, 3.25 or 4.2) exceed five hundred thousand dollars ($500,000) in
the aggregate (the "Indemnity Basket"), in which
43
case the Parent Indemnified Parties shall be entitled to recover the full amount
of such Damages, including the Indemnity Basket, up to the aggregate amount of
the Escrow Fund.
(d) The Parent Indemnified Party shall be entitled to
recover the full amount of Damages up to the aggregate amount of the Escrow Fund
either: (i) if the Escrow Fund is comprised solely of cash at the time of
payment, in the form of cash; or (ii) if the Escrow Fund is comprised of both
cash and shares of Parent Common Stock at the time of payment, Damages shall be
paid in cash and by the cancellation of a number of shares of Parent Common
Stock based on the ratio of cash and shares of Parent Common Stock then
comprising the Escrow Fund where the value of the shares shall be determined by
dividing such amount of Damages allocated to the shares by the Average Closing
Price.
(e) The parties agree that there shall not be any
multiple recovery as between the Company and the Principal Stockholder for any
Damages pursuant to the indemnification provisions of Section 11.2.
(f) In calculating the amount of any indemnifiable
Damages for which the Parent Indemnified Parties are entitled to indemnification
pursuant to Section 11.2(a)(i) (other than for an intentional and willful breach
of a covenant or a breach of the representations and warranties in Sections 3.2,
3.25 or 4.2), there shall be deducted the net present value of any actual Tax
benefit which Parent in good faith determines that can actually be realized by
Parent or a member of the Parent Affiliated Group in the taxable year which
includes the date the claim is to be paid, in any prior taxable year, or in the
next succeeding taxable year, net of any associated tax detriment (including tax
detriments associated with the receipt of such indemnification payments received
by Parent or members of the Parent Affiliated Group in respect of such Damages).
Parent's determination shall be made after taking into account all other items
of income and deduction of Parent and all members of Parent's affiliated group.
(g) Unless otherwise required by applicable law or
GAAP, the parties agree that the payment of any Damages will be treated as an
adjustment to the Purchase Price for all Tax purposes.
Section 11.3 Termination. The indemnity obligations of the
Company and the Principal Stockholder set forth in Section 11.2(a)(i) with
respect to a breach of a covenant to be performed prior to Closing or a
representation and warranty of the Company or Principal Stockholder (other than
the representations and warranties set forth in Sections 3.2, 3.25 and 4.2)
shall terminate at 11:59 p.m. California time on the twelve (12) month
anniversary of the Closing Date (the "Termination Date"); provided, however,
that claims for indemnification made against the Escrow Fund or otherwise prior
to the Termination Date shall survive the Termination Date until finally
resolved. Parent and the Company jointly shall deliver to the Escrow Agent a
certificate specifying the Closing Date.
44
Section 11.4 Claims upon Escrow Fund.
(a) Upon receipt by the Escrow Agent on or before the
Termination Date of a certificate signed by any officer of Parent (an "Escrow
Officer's Certificate"):
(i) stating that Damages exist in an
aggregate amount greater than the Indemnity Basket for claims against
the Escrow Fund, and
(ii) specifying in reasonable detail the
individual items included in the amount of Damages in such claim, the
date each such item was paid, properly accrued or arose and the nature
of the misrepresentation, breach of warranty or claim to which such
item is related,
the Escrow Agent shall set aside such number of shares of Parent Common Stock,
such amount of cash, or such combination thereof, as determined pursuant to
Section 11.2(d), having a value equal to the amount of such Damages.
(b) The Escrow Agent shall deliver such number of
shares of Parent Common Stock, such amount of cash, or such combination thereof,
as determined pursuant to Section 11.2(d), having a value equal to the amount of
Damages claimed from the Escrow Fund to Parent as soon as practicable following
the earliest of: (i) receipt of written authorization from the Company to make
such delivery; (ii) receipt of written notice of a final decision or order of a
court of competent jurisdiction of the claim; or (iii) the close of business on
the thirtieth (30th) day following receipt by the Escrow Agent of an Escrow
Officer's Certificate to which the Company has not objected in accordance with
Section 11.5.
(c) The Escrow Fund shall be the sole and exclusive
source of recovery for the indemnity claims of the Parent Indemnified Parties
under Section 11.2(a)(i) (other than for intentional and willful breach of
covenants or a breach of the representations and warranties in Sections 3.2,
3.24 or 4.2), subject to the provisions of Section 11.2(b).
(d) The Parent Indemnified Parties may not assert any
claim directly against the Company (as opposed to through recourse to the Escrow
Fund) or the Principal Stockholder unless and until it has reasonably determined
in good faith that the Escrow Fund shall not satisfy all then-existing and
unsatisfied claims. The Parent Indemnified Parties may not actually recover any
indemnification claims against the Principal Stockholder unless it also has
reasonably determined in good faith that the Escrow Fund and the resources of
the Company shall not satisfy all then-existing and unsatisfied claims.
Section 11.5 Objections to Claims. At the time of delivery of
any Escrow Officer's Certificate to the Escrow Agent, a duplicate copy of such
Escrow Officer's Certificate shall be delivered to each of the Company and
Principal Stockholder, and for a period of thirty (30) days after such delivery
to the Escrow Agent of such Escrow Officer's Certificate, the Escrow Agent shall
not make any payment from the Escrow Fund pursuant to Section 11.4 in respect of
the claims described in such Escrow Officer's Certificate unless the Escrow
Agent shall have received written authorization from the Company to make such
delivery. As soon as practicable after the expiration of such thirty (30) day
period, the Escrow Agent shall deliver
45
such number of shares of Parent Common Stock, such amount of cash or such
combination thereof, as determined pursuant to Section 11.2(d), having a value
equal to the Damages claimed from the Escrow Fund in accordance with Section
11.4; provided, that no such payment or delivery may be made if the Company
shall object in a written statement to the claim made in the Escrow Officer's
Certificate specifying in reasonable detail the nature of such objection and the
basis therefor under the terms of this Agreement, and such statement shall have
been delivered to the Escrow Agent and to Parent prior to the expiration of such
thirty (30) day period (the "Written Escrow Objection").
Section 11.6 Resolution of Conflicts.
(a) In case the Company shall so object in writing to
any claim or claims by Parent made in any Escrow Officer's Certificate pursuant
to Section 11.5, Parent shall have twenty (20) days after receipt by the Escrow
Agent of an objection by the Company to respond in a written statement to the
objection of the Company. If after such twenty (20) day period there remains a
dispute as to any claims, the Company and Parent shall attempt in good faith for
twenty (20) days to agree upon the rights of the respective parties with respect
to each of such claims. If the Company and Parent should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and shall make payments from the Escrow Fund in
accordance with the terms thereof.
(b) If no agreement regarding the rights of the
respective parties can be reached after good faith negotiation, either Parent or
the Company may seek to resolve such dispute or claim in a court of competent
jurisdiction or seek other legal or equitable resolution. Notwithstanding the
foregoing, any Parent Indemnified Party may at any time apply to any court of
competent jurisdiction for injunctive relief in connection with a claim for
indemnification or otherwise to prevent irreparable harm.
Section 11.7 Third-Party Claims. In the event that Parent
becomes aware of a third-party claim which Parent believes may result in a claim
for indemnification, Parent shall promptly notify the Company of such claim, and
the Company shall be entitled, at its expense, to participate in any defense of
such claim. Parent shall have the right in its sole discretion to settle any
claim; provided, however, that Parent may not effect the settlement of any such
claim (i) without the consent of the Company, which consent shall not be
unreasonably withheld or (ii) for which indemnity beyond the Escrow Fund will be
sought. In the event that the Company has consented to any such settlement, the
Company shall have no power or authority to object under Section 11.5 or any
other provision of this Article XI to any claim by Parent against the Escrow
Fund for indemnity in the amount of such settlement.
Section 11.8 Tax Indemnification. Any claims for indemnity
relating to Taxes shall be governed by the provisions of Article X, except that
in addition to the indemnity provided therein (but without duplication), Parent
shall be entitled to make a claim against the Escrow Fund in accordance with
this Article XI. For the avoidance of doubt, none of the limitations on
indemnification pursuant to this Article XI shall apply to any claim for
indemnification relating to Taxes pursuant to Article X.
46
ARTICLE XII
DEFINITIONS AND INTERPRETATION
Section 12.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly requires
otherwise:
"Accounting Referee" has the meaning set forth in Section
10.9.
"Acquired Assets" means all of the right, title, and interest
that the Company possesses and has the right to transfer in and to all of its
assets, including all of its: (a) tangible personal property (such as machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, automobiles, trucks,
tractors, trailers, tools, jigs, and dies); (b) Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions
and rights to past damages for infringement thereof; (c) leases, subleases, and
rights thereunder; (d) agreements, contracts, indentures, mortgages,
instruments, liens, guaranties, other similar arrangements, and rights
thereunder; (e) accounts, notes, and other receivables; (f) securities
(including the capital stock or membership interests in the Company
Subsidiaries); (g) claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set-off, and rights of
recoupment (including any such item relating to the payment of Taxes); (h)
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies; and (i) books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, studies, reports, and other
printed or written materials; provided, however, that the Acquired Assets shall
not include (x) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of the Company as a corporation;
(y) any cash or cash equivalent; or (z) any of the rights of the Company under
this Agreement or any agreement entered into between the Company and Parent in
connection with the Transactions.
"Acquisition Proposal" means any offer or proposal relating to
any transaction or series of related transactions involving: (a) any purchase or
acquisition by any Person or "group" (as defined under Section 13(d) of the
Exchange Act) of any equity interest or other voting securities of the Company
or any Company Subsidiary, whether by tender offer, exchange offer, merger,
consolidation, business combination or similar transaction involving the Company
or any Company Subsidiary; (b) any purchase or acquisition by any Person or
"group" (as defined under Section 13(d) of the Exchange Act), or any sale,
lease, exchange, transfer, license or disposition by the Company or any Company
Subsidiary of, any assets or properties of the Company or any Company
Subsidiary, other than in the ordinary course of business; or (c) any
liquidation or dissolution of the Company or any Company Subsidiary.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
Exchange Act.
47
"Agreement" or "this Agreement" means this Asset Purchase
Agreement, together with the Company Disclosure Schedule, Parent Disclosure
Schedule and the other exhibits and schedules hereto.
"Ancillary Agreements" shall mean, collectively, the
Intellectual Property Assignments, the Escrow Agreement, the Bill of Sale, the
Assignment and Assumption Agreement, and the Registration Rights Agreement.
"Assignment and Assumption Agreement" has the meaning set
forth in Section 2.3(b).
"Assumed Liabilities" means all liabilities and obligations of
the Company (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including: (a) all liabilities
for Taxes for which Parent is liable under Article X; (b) all liabilities and
obligations of the Company under the agreements, contracts, leases, licenses,
and other arrangements referred to in the definition of Acquired Assets; (c) all
liabilities and obligations of or relating to the Company with respect to
environmental matters, including without limitation those arising under
Environmental, Health, and Safety Requirements; (d) all liabilities for Taxes
for which Parent is liable pursuant to Article X; (e) all liabilities and
obligations of or relating to the Company with respect to Benefit Plans listed
on Schedule 7.4(b); and (f) all other liabilities and obligations of the Company
set forth in the Disclosure Schedule; provided, however, that the Assumed
Liabilities shall not include any Excluded Liabilities.
"Audit" means any audit, assessment, or other examination
relating to Taxes by any Tax Authority or any judicial or administrative
proceedings relating to Taxes.
"Audited Financial Statements" means the audited consolidated
financial statements of the Company as of July 31, 2001 and July 31, 2002 and
for the years ended July 31, 2000, July 31, 2001 and July 31, 2002, and the
unaudited financial statements at January 31, 2003 and the six months ended
January 31, 2002 and January 31, 2003, each to be delivered with a SAS 71 report
with respect to the unaudited financial statements.
"Aurora" means Aurora I, LLC, a Delaware limited liability
company of which the Company is the sole member
"Average Closing Price" has the meaning set forth in Section
1.3(a)(ii).
"Balance Sheet" means the most recent unaudited balance sheet
of the Company and its consolidated Company Subsidiaries included in the
Financial Statements.
"Balance Sheet Date" means the date of the Balance Sheet.
"Benefit Plan" means: (a) each deferred compensation, and each
material incentive compensation, stock purchase, stock option and other material
equity compensation plan, program, agreement or arrangement; (b) each severance
or termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the
48
meaning of Section 3(1) of ERISA); (c) each profit-sharing, stock bonus or other
material "pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA); (d) each employment, termination or severance agreement; and (e) and
each other 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 Company Subsidiary, or to which the Company
or any Company Subsidiary is party, whether written or oral, for the benefit of
any director, officer, consultant or employee of the Company or any Company
Subsidiary.
"Bill of Sale" has the meaning set forth in Section 2.2(a).
"Business Day" means a day other than Saturday, Sunday or any
day on which the principal commercial banks located in New York, New York or San
Francisco, California are authorized or obligated to close under the laws of
such state.
"Cash Consideration" has the meaning set forth in Section
1.3(a)(i).
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and as codified in Section 4980B of the
Code and Section 601 et. seq. of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means AltaVista Company, a Delaware corporation.
"Company Disclosure Schedule" means the disclosure schedule of
even date herewith prepared and signed by the Company and delivered to Parent
simultaneously with the execution hereof.
"Company Intellectual Property" means any Intellectual
Property owned by the Company or Company Subsidiary.
"Company Material Adverse Effect" means any change, event,
violation, inaccuracy, circumstance or effect (any such item, an "Effect"),
individually or when taken together with all other Effects that have occurred
prior to the date of determination of the occurrence of the Company Material
Adverse Effect, that is or is reasonably likely to (a) be materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the Company, taken as a whole with the Company
Subsidiaries or (b) materially impede the Company's ability to consummate the
Transactions in accordance with the terms hereof and applicable Laws; provided,
however, that for purposes of clause (a) above, in no event shall any of the
following, alone or in combination, be deemed to constitute, nor shall any of
the following be taken into account in determining whether there has been or
shall be, a Company Material Adverse Effect: (A) any Effect resulting from
compliance with the terms and conditions of this Agreement; (B) any Effect
directly related to the announcement or pendency of the Transactions; (C) any
Effect that results from changes affecting any of the industries in
49
which the Company operates generally or the United States economy generally
which does not have a disproportionate effect on the Company; or (D) any Effect
that results from changes affecting general worldwide economic or capital market
conditions which does not have a disproportionate effect on the Company.
"Company Material Contracts" has the meaning set forth in
Section 3.12(b).
"Company Officer's Certificate" has the meaning set forth in
Section 8.2(g).
"Company Products" has the meaning set forth in Section
3.18(d).
"Company Registered Intellectual Property" means Registered
Intellectual Property owned by the Company or any Company Subsidiary.
"Company Secretary's Certificate" has the meaning set forth in
Section 8.2(h).
"Company Subsidiary" means each Person which is a Subsidiary
of the Company.
"Company Tax Indemnitees" has the meaning set forth in Section
10.1(b).
"Computer Software" means computer software programs
(including in object code and source form), databases and all documentation
related thereto.
"Confidentiality Agreement" has the meaning set forth in
Section 6.2(b).
"Consents" has the meaning set forth in Section 6.5.
"Contract" means any agreement, contract, contract right,
license, evidence of Indebtedness, bond, note, mortgage, purchase and sale
order, quotation or other executory commitment, understanding or arrangement,
whether or not in writing, in each case, as amended, supplemented or otherwise
modified.
"Convertible Notes" means: (a) the Convertible Demand Note,
dated August 18, 1999, by the Company to Principal Stockholder; (b) the
Convertible Demand Note, dated November 8, 2001, by the Company to Principal
Stockholder; and (c) Convertible Demand Note, dated February 11, 2002, by the
Company to Principal Stockholder and any other convertible debt issued by the
Company to Principal Stockholder after the date of this Agreement.
"Copyrights" means U.S. and foreign registered and
unregistered copyrights (including those in Computer Software and databases),
rights of publicity and all registrations and applications to register the same.
"Damages" has the meaning set forth in Section 11.2(a).
"DGCL" has the meaning set forth in the recitals.
"Domain Names" means Internet domain name registrations and
Internet domain name registration applications.
50
"Encumbrances" means any and all liens, charges, assessments,
security interests, options, claims, mortgages, pledges, proxies, voting trusts
or agreements, obligations, understandings or arrangements or other restrictions
on title or transfer, except for Permitted Encumbrances.
"End Date" has the meaning set forth in Section 9.1(c).
"Environmental Law" means all foreign, federal, state or local
laws governing pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning set forth in Section 11.1.
"Escrow Agreement" has the meaning set forth in the recitals.
"Escrow Amount" has the meaning set forth in Section 1.4.
"Escrow Fund" has the meaning set forth in Section 11.1.
"Escrow Officer's Certificate" has the meaning set forth in
Section 11.4.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Liabilities" means: (a) any liabilities under or
related to the Convertible Notes; (b) any claims by any stockholders of the
Company (or any Person purporting to be a stockholder of the Company or
otherwise having an equity or other ownership interest in the Company) in
respect of this Agreement or the Transactions, whether made before or after the
Closing; (c) any claims by any stockholders of the Company against the directors
and officers of the Company (or any of them) or against any other stockholders
in respect of this Agreement or the Transaction, whether made before or after
the Closing; (d) any and all liabilities and other obligations of the Company
under its Certificate of Incorporation, Bylaws or any indemnification agreements
with any officer or director, as in effect from time to time prior to the date
hereof and prior to the Closing, to indemnify, advance costs and expenses or
otherwise compensate any Person; (e) any and all liabilities and other
obligations for costs and expenses (including fees and expenses of financial
advisors, investment banks and legal counsel) incurred by the Company or any
Company Subsidiary in connection with this Agreement and the Transactions
(including, without limitation, the fees and expenses payable to U.S. Bancorp
Piper Jaffray and Skadden, Arps, Slate, Meagher & Flom LLP as a result of, or in
connection with, this Agreement and the Transactions), but excluding the fees
and expenses of KPMG in connection with preparing the Audited Financial
Statements; (f) any and all liabilities or obligations in respect of any success
or special bonus payments paid or payable to any employees of the Company or any
Company Subsidiary arising out of, as a result of or in connection with, this
Agreement and the Transactions (or the sale, liquidation, dissolution or other
winding up of any Company Subsidiary, division or other portion of the business
of the Company or any Subsidiary of the Company, whether or not related to this
Agreement or the Transactions); (g) any and all
51
liabilities or obligations to pay the premiums or other costs to procure a
policy of directors' and officers' insurance covering the directors and officers
of the Company or, prior to the Closing, any Company Subsidiary; (h) any and all
liabilities or obligations in respect of any of the Company's various stock
incentive plans and programs; (i) all liabilities for Taxes for which the
Company or Principal Stockholder is liable under Article X; (j) any and all
claims, debts, liabilities, commitments and obligations with respect to any
Benefit Plans not listed on Schedule 7.4(b) of the Company Disclosure Schedule;
and (k) any liability or obligation of the Company under this Agreement or other
agreement between the Company and Parent in connection with the Transactions.
"Financial Statements" means (a) the unaudited consolidated
balance sheet of the Company and the consolidated Company Subsidiaries as of
July 31, 2002, together with consolidated statements of income, shareholders'
equity and cash flows for each of the twelve month periods then ended and (b)
the unaudited consolidated balance sheet of the Company and the consolidated
Company Subsidiaries as of December 31, 2002, together with consolidated
statements of income, stockholders' equity and cash flows for each of the five
(5) month periods then ended.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Entity" means a foreign, federal, state or local
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indebtedness" means (a) all indebtedness for borrowed money
or for the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices); (b) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument; (c) all obligations
under financing leases; (d) all obligations in respect of acceptances issued or
created; (e) all liabilities secured by any Encumbrance on any property; and (f)
all guarantees of obligations of other Persons.
"Indemnity Basket" has the meaning set forth in Section
11.2(c).
"Intellectual Property" means Trademarks, Patents, Copyrights,
Trade Secrets and Domain Names.
"Intellectual Property Assignments" means assignments of the
Registered Intellectual Property on the Company Disclosure Schedule Section
3.18(a), each in a form reasonably acceptable to Parent, sufficient to record
with the relevant authority (including, without limitation, the United States
Patent and Trademark Office), the assignment to Parent or its designee of each
item of such Registered Intellectual Property.
52
"International Employee Plan" shall mean each Company Benefit
Plan or Employment Agreement that has been adopted or maintained by the Company
or any ERISA Affiliate, whether formally or informally or with respect to which
the Company or any ERISA Affiliate will or may have any liability with respect
to Employees who perform services outside the United States.
"IRS" means the Internal Revenue Service.
"Knowledge of the Company" means the actual (and not
constructive or imputed) knowledge of each of the Company's executive officers
with the title of vice-president or above.
"Law" means any constitutional provision, law, statute, rule,
regulation, ordinance, treaty, order, decree, judgment, decision, certificate,
holding, injunction, rule, regulation or ruling enforceable at law or in equity,
along with the interpretation and administration thereof by any Governmental
Entity charged with the interpretation or administration thereof.
"Lease" means any contract pursuant to which the Company or
any Company Subsidiary leases or licenses any (a) real property or (b) personal
property that provides for annual future payments of more than $25,000 per
annum.
"Licenses" means all licenses and agreements pursuant to which
the Company or any Company Subsidiary has acquired rights in or to any
Trademarks, Patents, Copyrights, Trade Secrets or Domain Names, or licenses and
agreements pursuant to which the Company or any Subsidiary has licensed or
transferred the right to use any of the foregoing.
"Necessary Consents" has the meaning set forth in Section
8.2(d).
"Non-Retained Employees" shall have the meaning set forth in
Section 7.4(c).
"Non-Transferred Assets" shall have the meaning set forth in
Section 6.12(a).
"Parent" means Overture Services, Inc., a Delaware
corporation.
"Parent Common Stock" has the meaning set forth in Section
1.3(a)(ii).
"Parent Disclosure Schedule" means the disclosure schedule of
even date herewith prepared and signed by Parent and delivered to the Company
simultaneously with the execution hereof.
"Parent Indemnified Parties" has the meaning set forth in
Section 11.2(a).
"Parent Material Adverse Effect" means any Effect,
individually or when taken together with all other Effects that have occurred
prior to the date of determination of the occurrence of the Parent Material
Adverse Effect, that is or is reasonably likely to (a) be materially adverse to
the business, assets (including intangible assets), capitalization, financial
condition or results of operations of the Parent, taken as a whole with its
Subsidiaries or (b) materially impede the Parent's authority to consummate the
Transactions in accordance with the
53
terms hereof and applicable Laws; provided, however, that for purposes of clause
(a) above, in no event shall any of the following, alone or in combination, be
deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been or shall be, a Parent Material Adverse
Effect: (A) any Effect resulting from compliance with the terms and conditions
of this Agreement; (B) any Effect directly related to the announcement or
pendency of the Transactions; (C) any Effect that results from changes affecting
any of the industries in which Parent operates generally or the United States
economy generally which does not have a disproportionate effect on Parent; or
(D) any Effect that results from changes affecting general worldwide economic or
capital market conditions which does not have a disproportionate effect on
Parent.
"Parent Material Contracts" has the meaning set forth in
Section 5.9.
"Parent Officer's Certificate" has the meaning set forth in
Section 8.3(d).
"Parent SEC Reports" has the meaning set forth in Section 5.6.
"Parent Secretary's Certificate" has the meaning set forth in
Section 8.3(e).
"Parent Tax Indemnitees" has the meaning set forth in Section
10.1(a).
"Patents" means issued U.S. and foreign patents and pending
patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and similar statutory
rights.
"Permitted Encumbrances" means: (a) statutory liens, charges,
assessments, security interests, claims, obligations, understandings or
arrangements for current Taxes or other governmental charges not yet due and
payable or the amount or validity of which is being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which reserves are reflected in the Financial Statements;
(b) mechanic's, carrier's, warehouseman's, landlord's, materialman's, worker's,
repairer's and similar statutory liens, charges, assessments, security
interests, options, claims, mortgages, pledges, obligations, understanding or
arrangements arising or incurred in the ordinary course of business in amounts
which are not reasonably likely, individually or in the aggregate, to have a
Company Material Adverse Effect; (c) zoning, entitlement, subdivision, building
and other land use regulations imposed by Governmental Entities having
jurisdiction over such property which are not violated by the current use and
operation of such property; (d) covenants, conditions, restrictions,
rights-of-way, easements and other similar matters whether or not of record
affecting title to such property which do not materially interfere with the
current use or the marketability of title of such property; (e) pledges or
deposits in connection with, or to secure, workmen's compensation, unemployment
insurance pension or other employee benefits; (f) restrictions on transfer
arising out of or related to securities Laws; and (g) any Encumbrance renewing,
extending or refunding any Encumbrance permitted hereunder.
54
"Person" means a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization.
"Pre-Closing Period" has the meaning set forth in Section
10.1(a).
"Principal Stockholder" means CMGI, Inc., a Delaware
corporation.
"Principal Stockholder Affiliated Group" means any
consolidated, combined or unitary group, for income Tax purposes, of which
Principal Stockholder is a member.
"Purchase Price" has the meaning set forth in Section
1.3(a)(ii).
"Registered Intellectual Property" shall mean all Patents,
registered Copyrights and Copyright applications, registered Trademarks and
Trademark applications, and Domain Names.
"Retained Employees" has the meaning set forth in Section
7.4(a).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Consideration" has the meaning set forth in Section
1.3(a)(ii).
"Stockholder Consent" has the meaning set forth in the
recitals.
"Subsidiary" means, with respect to any Person, (a) any
corporation or other organization, whether incorporated or unincorporated, of
which (i) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (ii) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership) and (b) any limited liability company with respect to which such
Person is the sole member.
"Tax" or "Taxes" means all federal, state, local, and foreign
taxes, and other assessments of a similar nature, including any interest,
additions to tax, or penalties applicable thereto, imposed by any Tax Authority.
"Tax Authority" means any domestic, foreign, national, state,
county or municipal or other local governmental entity, including any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body exercising any Tax authority or any other entity exercising Tax regulatory
authority.
55
"Tax Proceeding" means any Audit, contest, litigation,defense
or other proceeding with or against any Governmental Entity.
"Tax Refunds" means any refund or credit of any Tax or any
amount by which the reserves for Taxes set forth on the Balance Sheet exceed the
Tax liability incurred in respect of such Taxes.
"Tax Returns" means all returns, reports, and information
statements required to be filed in connection with any Taxes.
"Termination Date" has the meaning set forth in Section 11.3.
"Trade Secrets" means all categories of trade secrets as
defined in the Uniform Trade Secrets Act, including business information.
"Trademarks" means U.S. and foreign registered and
unregistered trademarks, trade dress, service marks, logos, trade names,
corporate names and all registrations and applications to register the same.
"Transactions" has the meaning set forth in the recitals.
"Transfer Taxes" has the meaning set forth in Section 10.5.
"Written Escrow Objection" has the meaning set forth in
Section 11.5.
Section 12.2 Interpretation.
(a) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(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," "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 meaning assigned to each term defined herein
shall be equally applicable to both the singular and the plural forms of such
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 party to this Agreement or any
other agreement or document shall include such party's successors and permitted
assigns.
56
(f) A reference to any legislation or to any
provision of any legislation shall include any amendment to, and any
modification or re-enactment thereof, any legislative provision substituted
therefor and all regulations and statutory instruments issued thereunder or
pursuant thereto.
(g) 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.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Fees and Expenses. All costs and expenses
incurred Parent in connection with this Agreement and the consummation of the
Transactions shall be paid by Parent. All costs and expenses incurred by the
Company or Principal Stockholder in connection with this Agreement and the
consummation of the Transactions shall be paid by the Company or Principal
Stockholder, respectively. Notwithstanding the foregoing, Parent shall pay all
costs and expenses payable to the Company's independent accountants arising out
of the production of the Audited Financial Statements.
Section 13.2 Amendment and Modification. This Agreement may
be amended, modified and supplemented in any and all respects, but only by a
written instrument signed by each of the parties expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
Section 13.3 Notices. All notices, demands or requests which
may be given by any party to the other party shall be in writing and shall be
deemed to have been duly given on the date delivered in person, or sent via
telefax, or on the next Business Day if sent by overnight courier, or on the
date of the third (3rd) Business Day after deposit, postage prepaid, in the
United States mail via certified mail return receipt requested, and addressed as
set forth below:
if to Parent, to:
Overture Services, Inc.
74 North Pasadena Avenue, 3rd Floor
Pasadena, CA 91103
Attention: Chief Financial Officer
Telephone No.: (626) 685-5600
Facsimile No.: (626) 685-5607
with a copy to:
57
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Martin W. Korman, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
and to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market, Spear Street Tower
Suite 3300
San Francisco, California 94105
Attention: Michael S. Ringler, Esq.
Telephone No.: (415) 947-2000
Facsimile No.: (415) 947-2099
if to the Company or Aurora I, LLC, to:
AltaVista Company
1070 Arastradero
Palo Alto, CA 94304
Attention: General Counsel
Telephone No.: (650) 320-7700
Facsimile No.: (650) 320-6433
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue
Palo Alto, CA 94301
Attention: Gregory C. Smith, Esq.
Telephone No.: (650) 470-4500
Facsimile No.: (650) 470-4570
if to Principal Stockholder:
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attention: General Counsel
Telephone No.: (978) 684-3600
Facsimile No.: (978) 684-3601
with a copy to:
58
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Mark G. Borden, Esq.
Telephone No.: (617) 526-6000
Facsimile No.: (617) 526-5000
and a copy to:
Browne Rosedale & Lanouette LLP
100 Brickstone Square
First Floor
Andover, MA 01810
Attention: Thomas B. Rosedale, Esq.
Telephone No.: (978) 684-3840
Facsimile No.: (978) 684-3845
The address to which such notices, demands, requests,
elections or other communications are to be given by either party may be changed
by written notice given by such party to the other party pursuant to this
Section 13.3.
Section 13.4 Counterparts. This Agreement may be executed in
any number of counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of the parties and delivered to the other party.
Section 13.5 Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Ancillary Agreements and the Confidentiality Agreement (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (b) are not intended to confer any rights
or remedies upon any Person other than the parties, the Parent Indemnified
Parties pursuant to Section 11.2(a), and the indemnified parties and indemnitees
contemplated by Articles X and XI.
Section 13.6 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
59
Section 13.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 13.8 Venue. Each of the parties: (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of Delaware or any Delaware state court in the event any dispute that the
parties fail to resolve arises out of this Agreement or any of the Transactions;
(b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court; and (c)
agrees that it shall not bring any action relating to this Agreement or any of
the Transactions in any court other than a federal or state court sitting in the
State of Delaware.
Section 13.9 Extension; Waiver. At any time prior to the
Closing Date, either party may: (a) extend the time for the performance of any
of the obligations or other acts of the other party; (b) waive any inaccuracies
in the representations and warranties of the other party contained in this
Agreement or in any document delivered pursuant to this Agreement; or (c) waive
compliance by the other party with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by or
on behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of those rights.
Section 13.10 Assignment; Successors. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties (whether by operation of Law or otherwise) without the prior
written content of the other party. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. If Parent or any of its
successors or assigns (a) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (b) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purpose of this Agreement, Parent (or any of
its successors and assigns) shall make proper provision so that the successors
and assigns of Parent shall succeed to the obligations set forth in this
Agreement and none of the actions described in clauses (a) or (b) shall be taken
until such provision is made.
Section 13.11 Survival. The covenants to be performed prior
to the Closing set forth in this Agreement shall not survive the Closing and
shall terminate, and be of no further force or effect, upon the Closing. The
representations and warranties set forth in this Agreement shall survive the
Closing for the Escrow Period and shall thereafter terminate and be of no
further force or effect.
Section 13.12 WAIVER OF RIGHT TO JURY. EACH OF PARENT, THE
COMPANY AND PRINCIPAL STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF ANY PARTY HERETO IN
60
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF, OR THE
TRANSACTIONS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
61
IN WITNESS WHEREOF, Parent, the Company and Principal
Stockholder each have executed this Agreement as of the date first written
above.
OVERTURE SERVICES, INC.
By: /s/ Todd Tappin
----------------------------------------
Name: Todd Tappin
Title: CFO
ALTAVISTA COMPANY
By: /s/ James J. Barnett
----------------------------------------
Name: James J. Barnett
Title: President and CEO
CMGI, INC.
By: /s/ Peter L. Gray
---------------------------------------------------
Name: Peter L. Gray
Title: Executive Vice President and General Counsel
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
AURORA I, LLC
By: /s/ James J. Barnett
_______________________________________
Name: James J. Barnett
_______________________________________
President and CEO of Alta Vista Company, its sole member
President of Aurora I, LLC.
Title: _________________________________________________________
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
63