\n United States Real Property Holdings Corporation……. Section 5.1(l)(ix)
\n Voting Stockholder………………………………. Recitals
\n Voting Stockholders……………………………… Recitals
\n<\/c><\/s><\/table>\n -iii-<\/p>\n
EXHIBITS
\n ——–<\/p>\n
Stockholders Agreement (Company)…………………… Exhibit A-1
\n Stockholders Agreement (Parent)……………………. Exhibit A-2
\n Certificate of Merger…………………………….. Exhibit B
\n Company Affiliate Letter………………………….. Exhibit C<\/p>\n
-i-<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of December 12,
\n1999, by and among WHITTMAN-HART, INC., a Delaware corporation (“Parent”),
\nUNIWHALE, INC., a Delaware corporation and a direct wholly-owned subsidiary of
\nParent (“Merger Sub”); and USWEB CORPORATION, a Delaware corporation (the
\n“Company”). Parent, Merger Sub and the Company are referred to collectively
\nherein as the “Parties”.<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
\nCompany have determined that it is in the best interests of each corporation and
\ntheir respective stockholders that the Company and Parent enter into a strategic
\n“merger of equals” business combination by means of the merger of Merger Sub
\nwith and into the Company (the “Merger”) and, in furtherance thereof, have
\napproved the Merger and declared the Merger advisable;<\/p>\n
WHEREAS, pursuant to the Merger, the outstanding shares of common stock of
\nthe Company shall be converted into shares of common stock of Parent at the rate
\ndetermined herein;<\/p>\n
WHEREAS, for federal income tax purposes, it is intended that the Merger
\nshall qualify as a reorganization within the meaning of Section 368 of the
\nInternal Revenue Code of 1986, as amended (the “Code”);<\/p>\n
WHEREAS, it is intended that the Merger shall be treated for accounting
\npurposes as a purchase;<\/p>\n
WHEREAS, concurrently with the execution hereof, certain holders (each a
\n“Voting Stockholder” and collectively the “Voting Stockholders”) of Company
\nShares and of Parent Shares are entering into a stockholder voting agreement, in
\neach case in the forms attached as Exhibit A-1 and A-2 hereto (each, a
\n ———– —
\n“Stockholders Agreement”).<\/p>\n
NOW, THEREFORE, in consideration of the mutual representations, warranties,
\ncovenants and agreements set forth herein, the Parties hereby agree as follows:<\/p>\n
ARTICLE I<\/p>\n
The Merger; Effective Time; Closing<\/p>\n
1.1 The Merger. Upon the terms and subject to the conditions set forth in
\n ———-
\nthis Agreement, and in accordance with the Delaware General Corporation Law (the
\n“DGCL”), at the Effective Time, Merger Sub shall be merged with and into the
\nCompany, the separate corporate existence of Merger Sub shall thereupon cease
\nand the Company shall be the successor or surviving corporation. The Company, as
\nthe surviving corporation after the consummation of the Merger, is sometimes
\nhereinafter referred to as the “Surviving Corporation.”<\/p>\n
1.2 Effective Time. Subject to the provisions of this Agreement, the
\n ————–
\nParties shall cause the Merger to be consummated by filing the certificate of
\nmerger of Merger Sub and the Company (the “Certificate of Merger”) with the
\nSecretary of State of the State of Delaware in such form as required by, and
\nexecuted in accordance with, the relevant provisions of the DGCL as soon as
\npracticable on or before the Closing Date. The Merger shall become effective
\nupon such filing or at such time thereafter as is provided in the Certificate of
\nMerger (the “Effective Time”). The Certificate of Merger is attached hereto as
\nExhibit B.
\n———<\/p>\n
1.3 Closing. Unless this Agreement shall have been terminated and the
\n ——-
\ntransactions herein contemplated shall have been abandoned pursuant to Article
\nVIII, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m.,
\nlocal time, at the offices of counsel for Parent, on the second business day
\nafter all of the conditions to the obligations of the Parties to consummate the
\nMerger as set forth in Article VII have been satisfied or waived, or such other
\ndate, time or place as is agreed to in writing by the Parties (the “Closing
\nDate”).<\/p>\n
1.4 Effect of the Merger. At the Effective Time, the effect of
\n ——————–
\nthe Merger shall be as provided in this Agreement and the applicable provisions
\nof the DGCL. Without limiting the generality of the foregoing, and subject
\nthereto, at the Effective Time, all the property, rights, privileges, powers and
\nfranchises of the Company and Merger Sub shall vest in the Surviving
\nCorporation, and all debts, liabilities and duties of the Company and Merger Sub
\nshall become the debts, liabilities and duties of the Surviving Corporation.<\/p>\n
ARTICLE II<\/p>\n
Certificate of Incorporation and By-Laws of the Surviving Corporation<\/p>\n
2.1 Certificate of Incorporation; Name. At the Effective Time, the
\n ———————————-
\nCertificate of Incorporation of the Company immediately prior to the Effective
\nTime shall remain the Certificate of Incorporation of the Surviving Corporation,
\nand the name of the Surviving Corporation shall be the Company’s name.<\/p>\n
2.2 By-Laws. At the Effective Time, the by-laws of the Company in effect
\n ——-
\nimmediately prior to the Effective Time shall remain the by-laws of the
\nSurviving Corporation.<\/p>\n
-2-<\/p>\n
ARTICLE III<\/p>\n
Directors and Officers of the Surviving Corporation<\/p>\n
3.1 Directors. The directors of Merger Sub shall be the initial directors
\n ———
\nof the Surviving Corporation, until their respective successors have been duly
\nelected or appointed and qualified or until their earlier death, resignation or
\nremoval in accordance with the Surviving Corporation’s Articles of Incorporation
\nand By-Laws.<\/p>\n
3.2 Officers. The officers of Merger Sub shall be the initial officers
\n ——–
\nof the Surviving Corporation, until their successors have been duly elected or
\nappointed and qualified or until their earlier death, resignation or removal in
\naccordance with the Surviving Corporation’s Articles of Incorporation and By-
\nLaws.<\/p>\n
ARTICLE IV<\/p>\n
Merger Consideration; Conversion or Cancellation of Shares in the Merger<\/p>\n
4.1 Share Consideration for the Merger; Conversion or Cancellation of
\n —————————————————————–
\nShares in the Merger. At the Effective Time, the manner of converting or
\n——————–
\ncanceling shares of the Company and Parent shall be as follows:<\/p>\n
(a) Conversion of Company Stock. Each share of common stock, $0.001
\n —————————
\npar value (“Company Shares”), of the Company issued and outstanding immediately
\nprior to the Effective Time (excluding any Company Shares described in Section
\n4.1(d)), shall, by virtue of the Merger and without any action on the part of
\nthe holder thereof, be converted automatically into the right to receive 0.865
\nshares of common stock, $0.001 par value, of Parent (collectively, “Parent
\nShares”). All Company Shares to be converted into Parent Shares pursuant to this
\nSection 4.1(a) shall, by virtue of the Merger and without any action on the part
\nof the holders thereof, cease to be outstanding, be canceled and cease to exist,
\nand each holder of a certificate representing any such Company Shares shall
\nthereafter cease to have any rights with respect to such Company Shares, except
\nthe right to receive for each of the Company Shares, upon the surrender of such
\ncertificate in accordance with Section 4.2, the number of Parent Shares
\nspecified above and cash in lieu of fractional shares. The ratio of Company
\nShares per share of Parent Shares is sometimes hereinafter referred to as the
\n“Exchange Ratio.”<\/p>\n
(b) Stock of Merger Sub. Each share of common stock, $0.01 par value,
\n ——————-
\nof Merger Sub issued and outstanding immediately prior to the Effective Time,
\nshall, by virtue of the Merger and without any action on the part of the holder
\nthereof, be converted automatically into and exchanged for one (1) validly
\nissued, fully paid and nonassessable share of common stock, $0.001 par value, of
\nthe Surviving Corporation. Each stock certificate representing any shares of
\nMerger Sub shall continue to represent ownership of such shares of capital stock
\nof the Surviving Corporation.<\/p>\n
-3-<\/p>\n
(c) Outstanding Options and Warrants. Each outstanding option or
\n ——————————–
\nwarrant to purchase Company Shares (each, a “Company Option”) shall be assumed
\nby Parent (in accordance with the further provisions contained in Section 6.17)
\nand each such assumed option shall be converted into and represent an option to
\npurchase the number of Parent Shares (a “Substitute Option”) (rounded down to
\nthe nearest full share) determined by multiplying (i) the number of Company
\nShares subject to such Company Option immediately prior to the Effective Time by
\n(ii) the Exchange Ratio, at an exercise price per share of Parent Shares
\n(rounded up to the nearest tenth of a cent) equal to the exercise price per
\nshare of Company Shares immediately prior to the Effective Time divided by the
\nExchange Ratio. It is the intent of the parties that the Company Options assumed
\nby Parent shall qualify following the Effective Time as “incentive stock
\noptions” as defined in Section 422 of the Code to the extent such Company
\nOptions qualified as incentive stock options immediately prior to the Effective
\nTime and the provisions of this Section 4.1(c) shall be applied consistent with
\nsuch intent. Parent will reserve a sufficient number of Parent Shares for
\nissuance under this Section 4.1(c).<\/p>\n
(d) Cancellation of Parent Owned and Treasury Stock. All of the
\n ———————————————–
\nCompany Shares that are owned by Parent, any direct or indirect wholly-owned
\nsubsidiary of Parent or by the Company as treasury stock shall automatically
\ncease to be outstanding, shall be canceled and shall cease to exist and no
\nParent Shares shall be delivered in exchange therefor.<\/p>\n
4.2 Payment for Shares in the Merger. The manner of making payment for
\n ——————————–
\nShares in the Merger shall be as follows:<\/p>\n
(a) Exchange Agent. On or prior to the Closing Date, Parent shall make
\n ————–
\navailable to EquiServe, or other entity mutually agreed upon by the Parties (the
\n“Exchange Agent”), for the benefit of the holders of Company Shares, a
\nsufficient number of certificates representing the Parent Shares required to
\neffect the delivery of the aggregate consideration in Parent Shares and cash for
\nthe Fractional Securities Fund required to be issued pursuant to Section 4.1
\n(collectively, the “Share Consideration” and the certificates representing the
\nParent Shares comprising such aggregate Share Consideration being referred to
\nhereinafter as the “Stock Merger Exchange Fund”). The Exchange Agent shall,
\npursuant to irrevocable instructions, deliver the Share Consideration out of the
\nStock Merger Exchange Fund and the Fractional Securities Fund. The Stock Merger
\nExchange Fund and the Fractional Securities Fund shall not be used for any other
\npurpose than as set forth herein.<\/p>\n
(b) Exchange Procedures. Promptly after the Effective Time, the
\n ——————-
\nExchange Agent shall mail to each holder of record of a certificate or
\ncertificates which immediately prior to the Effective Time represented
\noutstanding Company Shares (the “Certificates”) (i) a form of letter of
\ntransmittal, in a form reasonably satisfactory to the Parties (which shall
\nspecify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon proper delivery of the Certificates to the
\nExchange Agent) and (ii) instructions for use in effecting the surrender of the
\nCertificates for payment therefor. Upon surrender of Certificates for
\ncancellation to the Exchange Agent, together with such letter of transmittal
\nduly executed and any other required documents, the holder of such Certificates
\nshall be entitled to receive for each of the Company Shares represented by such
\nCertificates the Share Consideration, without interest, allocable to such
\nCertificates and the<\/p>\n
-4-<\/p>\n
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
\nsuch Certificates shall represent solely the right to receive the Share
\nConsideration allocable to such Certificates.<\/p>\n
(c) Distributions with respect to Unexchanged Shares. No dividends or
\n ————————————————
\nother distributions that are declared after the Effective Time on Parent Shares
\nand payable to the holders of record thereof after the Effective Time will be
\npaid to Persons entitled by reason of the Merger to receive Parent Shares until
\nsuch Persons surrender their Certificates as provided above. Upon such
\nsurrender, there shall be paid to the Person in whose name the Parent Shares are
\nissued any dividends or other distributions having a record date after the
\nEffective Time and payable with respect to such Parent Shares between the
\nEffective Time and the time of such surrender. After such surrender there shall
\nbe paid to the Person in whose name the Parent Shares are issued any dividends
\nor other distributions on such Parent Shares which shall have a record date
\nafter the Effective Time. In no event shall the Persons entitled to receive such
\ndividends or other distributions be entitled to receive interest on such
\ndividends or other distributions.<\/p>\n
(d) Transfers of Ownership. If any certificate representing Parent
\n ———————-
\nShares is to be issued in a name other than that in which the Certificate
\nsurrendered in exchange therefor is registered, it shall be a condition of such
\nexchange that the Certificate so surrendered shall be properly endorsed and
\notherwise in proper form for transfer and that the Person requesting such
\nexchange shall pay to the Exchange Agent any transfer or other taxes required by
\nreason of the issuance of certificates for such Parent Shares in a name other
\nthan that of the registered holder of the Certificate surrendered, or shall
\nestablish to the satisfaction of the Exchange Agent that such tax has been paid
\nor is not applicable.<\/p>\n
(e) No Liability. Neither the Exchange Agent nor any of the Parties
\n ————
\nshall be liable to a holder of Company Shares for any Parent Shares or dividends
\nthereon, or, in accordance with Section 4.3, cash in lieu of fractional Parent
\nShares, delivered to a public official pursuant to applicable escheat law. The
\nExchange Agent shall not be entitled to vote or exercise any rights of ownership
\nwith respect to the Parent Shares held by it from time to time hereunder, except
\nthat it shall receive and hold all dividends or other distributions paid or
\ndistributed with respect to such Parent Shares for the account of the Persons
\nentitled thereto.<\/p>\n
(f) Termination of Funds. Subject to applicable law, any portion of
\n ——————–
\nthe Stock Merger Exchange Fund and the Fractional Securities Fund which remains
\nunclaimed by the former stockholders of the Company for one (1) year after the
\nEffective Time shall be delivered to Parent, upon demand of Parent, and any
\nformer stockholder of the Company shall thereafter look only to Parent for
\npayment of their applicable claim for the Share Consideration for their Company
\nShares.<\/p>\n
4.3 Cash For Fractional Parent Shares. No fractional Parent Shares shall
\n ———————————
\nbe issued in the Merger. Each holder of Parent Shares shall be entitled to
\nreceive in lieu of any fractional Parent Shares to which such holder otherwise
\nwould have been entitled pursuant to Section 4.2 (after taking into account all
\nParent Shares then held of record by such holder) a cash payment in an amount
\nequal to the product of (i) the fractional interest of a Parent Share to which
\nsuch holder otherwise would have been entitled and (ii) the closing price of a
\nParent Share on the NASDAQ National Market (“NNM”) on the trading day
\nimmediately prior to the Effective Time (the cash comprising such<\/p>\n
-5-<\/p>\n
aggregate payments in lieu of fractional Parent Shares being hereinafter
\nreferred to as the “Fractional Securities Fund”).<\/p>\n
4.4 Transfer of Shares after the Effective Time. No transfers of Company
\n ——————————————–
\nShares shall be made on the stock transfer books of the Company after the close
\nof business on the day prior to the date of the Effective Time.<\/p>\n
ARTICLE V<\/p>\n
Representations and Warranties<\/p>\n
5.1 Representations and Warranties of Parent and Merger Sub. Parent and
\n ——————————————————-
\nMerger Sub hereby represent and warrant to the Company that the statements
\ncontained in this Section 5.1 are true and correct, except to the extent
\nspecifically set forth on the disclosure schedule previously delivered by Parent
\nto the Company (the “Parent Disclosure Schedule”). The Parent Disclosure
\nSchedule shall be arranged in sections and paragraphs corresponding to the
\nletter and numbered paragraphs contained in this Section 5.1, and the disclosure
\nin any paragraph shall qualify only the corresponding paragraph in this Section
\n5.1 or other paragraphs or sections to which it is clearly apparent (from a
\nplain reading of the disclosure) that such disclosure relates.<\/p>\n
(a) Corporate Organization and Qualification. Each of Parent and its
\n —————————————-
\nsubsidiaries is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of incorporation and is qualified
\nand in good standing as a foreign corporation in each jurisdiction where the
\nproperties owned, leased or operated, or the business conducted, by it require
\nsuch qualification, except where failure to so qualify or be in good standing as
\na foreign corporation would not have a Material Adverse Effect on Parent. Each
\nof Parent and its subsidiaries has all requisite power and authority (corporate
\nor otherwise) to own its properties and to carry on its business as it is now
\nbeing conducted. All of the subsidiaries of Parent are set forth in Section
\n5.1(a) of the Parent Disclosure Schedule. Parent has heretofore made available
\nto the Company complete and correct copies of its Certificate of Incorporation
\nand Bylaws and the charter documents of its subsidiaries, each as amended.
\nMerger Sub is a direct, wholly-owned subsidiary of Parent, was formed solely for
\nthe purpose of engaging in the transactions contemplated hereby, has engaged in
\nno other business activities and has conducted its operations only as
\ncontemplated hereby.<\/p>\n
(b) Capitalization. The authorized capital stock of Parent consists of (i)
\n ————–
\n75,000,000 shares of common stock, $0.001 par value per share, of which
\n61,784,097 shares were issued and outstanding on December 9, 1999 and (ii)
\n3,000,000 shares of preferred stock, $0.001 par value per share, none of which
\nare issued or outstanding. All of the outstanding shares of capital stock of
\nParent and its subsidiaries have been duly authorized and validly issued and are
\nfully paid and nonassessable. Parent has no outstanding stock appreciation
\nrights, phantom stock or similar rights. No Parent Shares are owned by any
\nsubsidiary of Parent. All outstanding shares of capital stock or other equity
\ninterests of the subsidiaries of Parent are owned by Parent or a direct or
\nindirect wholly-owned subsidiary of Parent, free and clear of all liens,
\npledges, charges, encumbrances, claims and options of any nature. Except for
\noptions to purchase 16,831,629 Parent Shares as of December 9, 1999 under the
\n1995 Incentive Stock Plan (the “Parent Option Plans”) and rights under<\/p>\n
-6-<\/p>\n
Parent Employee Stock Purchase Plan, there are no outstanding or authorized
\noptions, warrants, calls, rights (including preemptive rights), commitments or
\nany other agreements of any character which Parent or any of its subsidiaries is
\na party to, or may be bound by, requiring it to issue, transfer, grant, sell,
\npurchase, redeem or acquire any shares of capital stock or any securities or
\nrights convertible into, exchangeable for, or evidencing the right to subscribe
\nfor, any shares of capital stock of Parent or any of its subsidiaries. There are
\nnot as of the date hereof and there will not be at the Effective Time any
\nstockholder agreements, voting trusts or other agreements or understandings to
\nwhich Parent is a party or to which it is bound relating to the voting of any
\nshares of the capital stock of Parent.<\/p>\n
(c) Fairness Opinion. The Board of Directors of Parent has received
\n —————-
\nan opinion in writing from Credit Suisse First Boston Corporation to the effect
\nthat as of the date hereof and based upon and subject to the matters stated
\ntherein, the Exchange Ratio is fair to Parent from a financial point of view. As
\nof the date hereof, such opinion has not been withdrawn, revoked or modified.<\/p>\n
(d) Authority Relative to this Agreement. The Board of Directors of
\n ————————————
\nMerger Sub has declared the Merger advisable and Merger Sub has the requisite
\ncorporate power and authority to approve, authorize, execute and deliver this
\nAgreement and to consummate the transactions contemplated hereby. The Board of
\nDirectors of Parent has declared the issuance of Parent Shares advisable and
\nParent has the requisite corporate power and authority to approve, authorize,
\nexecute and deliver this Agreement and, subject to the approval by the
\nstockholders of Parent of the amendment to Parent’s Certificate of Incorporation
\nto increase Parent’s authorized capital stock in order to allow for the issuance
\nof Parent Shares by virtue of the Merger and the approval of the issuance of
\nParent Shares by the stockholders of Parent in accordance with the NNM listing
\nrequirements, to consummate the transactions contemplated hereby. This Agreement
\nand the consummation by Parent of the transactions contemplated hereby have been
\nduly and validly authorized by the Boards of Directors of Parent and Merger Sub
\nand no other corporate proceedings on the part of Parent or Merger Sub
\n(including, in the case of Merger Sub, all stockholder action by Parent as its
\nsole stockholder) are necessary to authorize this Agreement or to consummate the
\ntransactions contemplated hereby (other than the approval by the stockholders of
\nParent of the amendment to Parent’s Certificate of Incorporation to increase
\nParent’s authorized capital stock in order to allow for the issuance of Parent
\nShares by virtue of the Merger and the approval of the issuance of Parent Shares
\nby the stockholders of Parent in accordance with the NNM listing requirements).
\nThis Agreement has been duly and validly executed and delivered by Parent and
\nMerger Sub and, assuming this Agreement constitutes the valid and binding
\nagreement of the Company, constitutes the valid and binding agreement of Parent
\nand Merger Sub, enforceable against Parent and Merger Sub in accordance with its
\nterms, subject, as to enforceability, to bankruptcy, insolvency, reorganization
\nand other laws of general applicability relating to or affecting creditors’
\nrights and to general principles of equity .<\/p>\n
(e) Present Compliance with Obligations and Laws. Neither Parent nor
\n ——————————————–
\nany of its subsidiaries is: (i) in violation of its Certificate of Incorporation
\nor Bylaws or similar documents; (ii) in default in the performance of any
\nobligation, agreement or condition of any debt instrument which (with or without
\nthe passage of time or the giving of notice, or both) affords to any Person the<\/p>\n
-7-<\/p>\n
right to accelerate any indebtedness or terminate any right; (iii) in default
\nunder or breach of (with or without the passage of time or the giving of notice)
\nany other contract to which it is a party or by which it or its assets are
\nbound; or (iv) in violation of any law, regulation, administrative order or
\njudicial order, decree or judgment (domestic or foreign) applicable to it or its
\nbusiness or assets, except where any violation, default or breach under items
\n(ii), (iii), or (iv) would not, individually or in the aggregate, have a
\nMaterial Adverse Effect on Parent.<\/p>\n
(f) Consents and Approvals; No Violation. Neither the execution and
\n ————————————
\ndelivery of this Agreement nor the consummation by Parent of the transactions
\ncontemplated hereby will (i) conflict with or result in any breach of any
\nprovision of the respective Certificate of Incorporation (or other similar
\ndocuments) or Bylaws (or other similar documents) of Parent or any of its
\nsubsidiaries; (ii) require any consent, approval, authorization or permit of, or
\nregistration or filing with or notification to, any governmental or regulatory
\nauthority, except (A) in connection with the applicable requirements, if any, of
\nthe Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nAct”), (B) pursuant to the applicable requirements of the Securities Act of
\n1933, as amended (the “Securities Act”), and the rules and regulations
\npromulgated thereunder, and the Securities Exchange Act of 1934, as amended (the
\n“Exchange Act”), and the rules and regulations promulgated thereunder, (C) the
\nfiling of the Certificate of Merger pursuant to the DGCL and appropriate
\ndocuments with the relevant authorities of other states in which Parent is
\nauthorized to do business, (D) as may be required by any applicable state
\nsecurities laws, (E) the consents, approvals, orders, authorizations,
\nregistrations, declarations and filings required under the antitrust laws of
\nforeign countries, as set forth in Section 5.1(f) of the Parent Disclosure
\nSchedule, or (F) where the failure to obtain such consent, approval,
\nauthorization or permit, or to make such filing or notification, would not in
\nthe aggregate have a Material Adverse Effect on Parent or adversely affect the
\nability of Parent to consummate the transactions contemplated hereby; (iii)
\nresult in a violation or breach of, or constitute (with or without notice or
\nlapse of time or both) a default (or give rise to any right of termination,
\ncancellation or acceleration or lien or other charge or encumbrance) under any
\nof the terms, conditions or provisions of any indenture, note, license, lease,
\nagreement or other instrument or obligation to which Parent or any of its
\nsubsidiaries is a party or by which any of their assets may be bound, except for
\nsuch violations, breaches and defaults (or rights of termination, cancellation
\nor acceleration or lien or other charge or encumbrance) as to which requisite
\nwaivers or consents have been obtained or which, in the aggregate, would not
\nhave a Material Adverse Effect on Parent or adversely affect the ability of
\nParent to consummate the transactions contemplated hereby; (iv) cause the
\nsuspension or revocation of any authorizations, consents, approvals or licenses
\ncurrently in effect which would have a Material Adverse Effect on Parent; or (v)
\nassuming the consents, approvals, authorizations or permits and filings or
\nnotifications referred to in this Section 5.1(f) are duly and timely obtained or
\nmade and the approval by the stockholders of Parent of the amendment to Parent’s
\nCertificate of Incorporation to increase parent’s authorized capital stock in
\norder to allow for the issuance of Parent Shares by virtue of the Merger and
\napproval of the issuance of the Parent Shares by the stockholders of Parent in
\naccordance with the NNM listing requirements have been obtained, violate any
\norder, writ, injunction, decree, statute, rule or regulation applicable to
\nParent or any of its subsidiaries or to any of their respective assets, except
\nfor violations which would not in the aggregate have a Material Adverse Effect
\non Parent or adversely affect the ability of Parent to consummate the
\ntransactions contemplated hereby.<\/p>\n
-8-<\/p>\n
(g) Litigation. There are no actions, suits, claims, investigations
\n ———-
\nor proceedings pending or, to the knowledge of Parent, threatened against Parent
\nor any of its subsidiaries that, alone or in the aggregate would be reasonably
\nlikely to result in obligations or liabilities of Parent or any of its
\nsubsidiaries that, alone or in the aggregate, would have a Material Adverse
\nEffect on Parent or a material adverse effect on the parties’ ability to
\nconsummate the transactions contemplated by this Agreement. Neither Parent nor
\nany of its subsidiaries is subject to any outstanding order, writ, injunction or
\ndecree which (i) has or may have the effect of prohibiting or impairing any
\nbusiness practice of Parent or any of its subsidiaries, any acquisition of
\nproperty (tangible or intangible) by Parent or any of its subsidiaries, the
\nconduct of the business by Parent or any of its subsidiaries, or Parent’s
\nability to perform its obligations under this Agreement or (ii) insofar as can
\nbe reasonably foreseen, individually or in the aggregate, would have a Material
\nAdverse Effect on Parent.<\/p>\n
(h) SEC Reports; Financial Statements.
\n ——————————— <\/p>\n
(i) Since January 1, 1997, Parent has filed all forms, reports
\nand documents with the Securities and Exchange Commission (the “SEC”) required
\nto be filed by it pursuant to the federal securities laws and the SEC rules and
\nregulations thereunder, all of which complied in all material respects with all
\napplicable requirements of the Securities Act and the Exchange Act and the rules
\nand regulations promulgated thereunder (collectively, the “Parent SEC Reports”).
\nNone of the Parent SEC Reports, including, without limitation, any financial
\nstatements or schedules included therein, at the time filed (or if amended or
\nsuperseded by a filing prior to the date of this Agreement, then on the date of
\nsuch filing) contained any untrue statement of a material fact or omitted to
\nstate a material fact required to be stated therein or necessary in order to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading. None of Parent’s subsidiaries is required to file any
\nforms, reports or other documents with the SEC.<\/p>\n
(ii) The consolidated balance sheets and the related consolidated
\nstatements of income, stockholders’ equity (deficit) and cash flows (including
\nthe related notes thereto) of Parent included in the Parent SEC Reports
\n(collectively, “Parent Financial Statements”) comply as to form in all material
\nrespects with applicable accounting requirements and the published rules and
\nregulations of the SEC with respect thereto, have been prepared in accordance
\nwith generally accepted accounting principles applied on a basis consistent
\nthroughout the periods involved (except as otherwise noted therein or, in the
\ncase of unaudited interim financial statements, as may be permitted by the SEC
\non Form 10-Q under the Exchange Act), and present fairly the consolidated
\nfinancial position of Parent and its consolidated subsidiaries as of their
\nrespective dates, and the consolidated results of their operations and their
\ncash flows for the periods presented therein (subject, in the case of the
\nunaudited interim financial statements, to normal and recurring year-end
\nadjustments). Since January 1, 1999, there has not been any material change, by
\nParent or any of its subsidiaries, in accounting principles, methods or policies
\nfor financial accounting purposes except as required by concurrent changes in
\ngenerally accepted accounting principles.<\/p>\n
(i) No Liabilities; Absence of Certain Changes or Events. Neither
\n —————————————————-
\nParent nor any of its subsidiaries has any material indebtedness, obligations or
\nliabilities of any kind (whether<\/p>\n
-9-<\/p>\n
accrued, absolute, contingent or otherwise, and whether due or to become due or
\nasserted or unasserted), and, to knowledge of Parent, there is no reasonable
\nbasis for the assertion of any material claim or liability of any nature against
\nParent or any of its subsidiaries, except for liabilities (i) which are fully
\nreflected in, reserved against or otherwise described in the Parent Financial
\nStatements for the period ending September 30, 1999, (ii) which have been
\nincurred after September 30, 1999 in the ordinary course of business, consistent
\nwith past practice, or (iii) which are obligations to perform under executory
\ncontracts in the ordinary course of business (none of which is a liability
\nresulting from a breach of contract or warranty, tort, infringement or legal
\naction). Since September 30, 1999, the business of Parent and its subsidiaries
\nhas been carried on only in the ordinary and usual course, and there has not
\nbeen any Material Adverse Effect on Parent and no event has occurred and no fact
\nor set of circumstances has arisen which has resulted in or could reasonably be
\nexpected to result in a Material Adverse Effect on Parent. Since September 30,
\n1999, to the knowledge of Parent, no material customer or supplier of Parent or
\nits subsidiaries has threatened, in writing, to alter materially its
\nrelationship with Parent or its subsidiaries. Since September 30, 1999, neither
\nParent nor any of its subsidiaries has agreed to a waiver or release of any
\nmaterial right or claim (including without limitation to any write off or other
\ncompromise of any material account receivable) outside of the ordinary course of
\nbusiness consistent with past practice.<\/p>\n
(j) Brokers and Finders. Except for the fees and expenses payable to
\n ——————-
\nCredit Suisse First Boston or Launchpad Consulting, LLC, which fees and expenses
\nare reflected in their agreements with Parent, a true and complete copy of which
\n(including all amendments) has been furnished to the Company, neither Parent nor
\nany of its subsidiaries has employed any investment banker, broker, finder,
\nconsultant or intermediary in connection with the transactions contemplated by
\nthis Agreement which would be entitled to any investment banking, brokerage,
\nfinder’s or similar fee or commission in connection with this Agreement or the
\ntransactions contemplated hereby.<\/p>\n
(k) S-4 Registration Statement and Proxy Statement\/Prospectus. None
\n ———————————————————
\nof the information supplied or to be supplied by Parent for inclusion or
\nincorporation by reference in the S-4 Registration Statement or the Joint Proxy
\nStatement will (i) in the case of the S-4 Registration Statement, at the time it
\nbecomes effective or at the Effective Time, contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein not misleading, or (ii) in
\nthe case of the Joint Proxy Statement, at the time of the mailing of the Joint
\nProxy Statement and at the time of the Stockholder Meetings, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they are made, not misleading. If at any time
\nprior to the Effective Time any event with respect to Parent, Merger Sub or any
\nof their respective affiliates, officers and directors or any of its
\nsubsidiaries should occur which is required to be described in an amendment of,
\nor a supplement to, the Joint Proxy Statement or the S-4 Registration Statement,
\nParent should promptly inform the Company, such event shall be so described, and
\nsuch amendment or supplement shall be promptly filed with the SEC and, as
\nrequired by law, disseminated to the stockholders of Parent and the Company. The
\nS-4 Registration Statement will (with respect to Parent and Merger Sub)
\ncomply as to form in all material respects with the requirements of the
\nSecurities Act and the rules and regulations promulgated thereunder. The Joint
\nProxy Statement will (with respect to Parent and Merger Sub)<\/p>\n
-10-<\/p>\n
comply as to form in all material respects with the requirements of the Exchange
\nAct and the rules and regulations promulgated thereunder.<\/p>\n
(l) Taxes.
\n —– <\/p>\n
(i) Parent and each of its subsidiaries has timely filed all federal,
\nstate, local and foreign returns, information statements and reports relating to
\nTaxes (“Returns”) required by applicable Tax law to be filed by Parent and each
\nof its subsidiaries, except for any such failures to file that could not
\nreasonably be expected to have, individually or in the aggregate, a Material
\nAdverse Effect on Parent. All Taxes owed by Parent or any of its subsidiaries to
\na taxing authority, or for which Parent or any of its subsidiaries is liable,
\nwhether to a taxing authority or to other Persons or entities under a
\nSignificant Tax Agreement, as of the date hereof, have been paid and, as of the
\nEffective Time, will have been paid, except for any such failure to pay that
\ncould not reasonably be expected to have, individually or in the aggregate, a
\nMaterial Adverse Effect on Parent. Parent has made accruals for Taxes on the
\nParent Financial Statements which are adequate to cover any Tax liability of
\nParent and each of its subsidiaries determined in accordance with generally
\naccepted accounting principles through the date of the Parent Financial
\nStatements, except where failures to make such accruals or provisions could not
\nreasonably be expected to have, individually or in the aggregate, a Material
\nAdverse Effect on Parent.<\/p>\n
(ii) Except to the extent that any such failure to withhold could not
\nreasonably be expected to have, individually or in the aggregate, a Material
\nAdverse Effect on Parent, Parent and each of its subsidiaries have withheld with
\nrespect to its employees all federal and state income taxes, FICA, FUTA and
\nother Taxes required to be withheld.<\/p>\n
(iii) There is no Tax deficiency outstanding, proposed or assessed
\nagainst Parent or any of its subsidiaries, except any such deficiency that, if
\npaid, could not reasonably be expected to have, individually or in the
\naggregate, a Material Adverse Effect on Parent. Neither Parent nor any of its
\nsubsidiaries executed or requested any waiver of any statute of limitations on
\nor extending the period for the assessment or collection of any federal or
\nmaterial state Tax that is still in effect.<\/p>\n
(iv) No federal or state Tax audit or other examination of Parent or
\nany of its subsidiaries is presently in progress, nor has Parent or any of its
\nsubsidiaries been notified in writing of any request for such federal or
\nmaterial state Tax audit or other examination, except in all cases for Tax
\naudits and other examinations which could not reasonably be expected to have,
\nindividually or in the aggregate, a Material Adverse Effect on Parent.<\/p>\n
(v) Neither Parent nor any of its subsidiaries has filed any consent
\nagreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
\nof the Code apply to any disposition of a subsection (f) asset (as defined in
\nSection 341(f)(4) of the Code) owned by Parent.<\/p>\n
(vi) Neither Parent nor any of its subsidiaries is a party to (A) any
\nagreement with a party other than Parent or any of its subsidiaries providing
\nfor the allocation or<\/p>\n
-11-<\/p>\n
payment of Tax liabilities or payment for Tax benefits with respect to a
\nconsolidated, combined or unitary Return which Return includes or included
\nParent or any subsidiary or (B) any Significant Tax Agreement other than any
\nSignificant Tax Agreement described in (A).<\/p>\n
(vii) Except for the group of which Parent and its subsidiaries are
\nnow presently members, neither Parent nor any of its subsidiaries has ever been
\na member of an affiliated group of corporations within the meaning of Section
\n1504 of the Code.<\/p>\n
(viii) Neither Parent nor any of its subsidiaries has agreed to make
\nnor is it required to make any adjustment under Section 481(a) of the Code by
\nreason of a change in accounting method or otherwise which have not yet been
\ntaken into account.<\/p>\n
(ix) Parent is not, and has not at any time been, a “United States
\nReal Property Holding Corporation” within the meaning of Section 897(c)(2) of
\nthe Code.<\/p>\n
(m) Employee Benefits.
\n —————– <\/p>\n
(i) Section 5.2(m)(i) of the Parent Disclosure Schedule lists each
\n“employee pension benefit plan” (as such term is defined in Section 3(2) of
\nERISA), “employee welfare benefit plan” (as such term is defined in Section 3(1)
\nof ERISA), material personnel or payroll policy (including vacation time,
\nholiday pay, service awards, moving expense reimbursement programs and sick
\nleave) or material fringe benefit, severance agreement or plan or any medical,
\nhospital, dental, life or disability plan, excess benefit plan, bonus, stock
\noption, stock purchase, or other incentive plan (including any equity or equity-
\nbased plan), tuition reimbursement, automobile use, club membership, parental or
\nfamily leave, top hat plan or deferred compensation plan, salary reduction
\nagreement, change-of-control agreement, employment agreement, consulting
\nagreement, collective bargaining agreement, indemnification agreement, or
\nretainer agreement, or any other material benefit plan, policy, program,
\narrangement, agreement or contract, whether or not written or terminated, with
\nrespect to any employee, former employee, director, independent contractor, or
\nany beneficiary or dependent thereof maintained, sponsored, adopted or
\nadministered by Parent or any current or former Plan Affiliate or to which
\nParent or any current or former Plan Affiliate has made contributions to,
\nobligated itself or had any liability with respect to (all such plans, policies,
\nprograms, arrangements, agreements and contracts, whether or not set forth in
\nSection 5.1(m) of the Parent Disclosure Schedule or on the Parent Financial
\nStatements are referred to in this Agreement as “Parent Scheduled Plans”).<\/p>\n
(ii) Parent has delivered or made available to the Company a complete
\nand accurate copy of each written Parent Scheduled Plan, together with, if
\napplicable, a copy of audited financial statements, actuarial reports and Form
\n5500 Annual Reports (including required schedules), if any, for the three (3)
\nmost recent plan years, the most recent IRS determination letter or IRS
\nrecognition of exemption; each other material letter, ruling or notice issued by
\na governmental body with respect to each such plan, a copy of each trust
\nagreement, insurance contract or other funding vehicle, if any, with respect to
\neach such plan, the most recent PBGC Form 1 with respect to each such plan, if
\nany, the current summary plan description and summary of material modifications
\nthereto with respect to each such plan, Form 5310 and any related filings with<\/p>\n
-12-<\/p>\n
the PBGC and with respect to the last six (6) Plan years, for each Plan subject
\nto Title IV of ERISA, general notification to employees of their rights under
\nCode Section 4980B and form of letter(s) distributed upon the occurrence of a
\nqualifying event described in Code Section 4980B, in the case of a Parent
\nScheduled Plan that is a “group health plan” as defined in Code Section 162(i),
\nand a copy or description of each other general explanation or written or oral
\ncommunication which describes a material term of each Parent Scheduled Plan that
\nhas not previously been disclosed to the Company pursuant to this Section.
\nSection 5.1(m) of the Parent Disclosure Schedule contains a description of the
\nmaterial terms of any unwritten Parent Scheduled Plan as comprehended to the
\nClosing Date. Except as set forth in Section 5.1(m) of the Parent Disclosure
\nSchedule, there are no negotiations, demands or proposals which are pending or
\nthreatened which concern matters now covered, or that would be covered, by the
\nforegoing types of unwritten Plans.<\/p>\n
(iii) Except as could not reasonably give rise, whether individually
\nor in the aggregate, to a Material Adverse Effect to Parent or Merger Sub:<\/p>\n
(1) Each Parent Scheduled Plan (A) has been and currently
\ncomplies in form and in operation in all material respects with all applicable
\nrequirements of ERISA and the Code, and any other legal requirements; (B) has
\nbeen and is operated and administered in material compliance with its terms
\n(except as otherwise required by law); (C) has been and is operated in
\ncompliance with applicable legal requirements in such a manner as to qualify,
\nwhere appropriate, for both Federal and state purposes, for income tax
\nexclusions to its participants, tax-exempt income for its funding vehicle, and
\nthe allowance of deductions and credits with respect to contributions thereto;
\nand (D) where appropriate, has received a favorable determination letter or
\nrecognition of exemption from the Internal Revenue Service.<\/p>\n
(2) With respect to each Parent Scheduled Plan, there are no
\nclaims or other proceedings pending or, to the knowledge of Parent, threatened
\nwith respect to the assets thereof (other than routine claims for benefits), and
\nthere are no facts which could reasonably give rise to any material liability,
\nclaim or other proceeding against any Parent Scheduled Plan, any fiduciary or
\nplan administrator or other Person dealing with any Parent Scheduled Plan or the
\nassets of any such Parent Scheduled Plan.<\/p>\n
(3) With respect to each Parent Scheduled Plan, to the knowledge
\nof Parent, no Person: (A) has entered into any “prohibited transaction,” as such
\nterm is defined in ERISA or the Code and the regulations, administrative rulings
\nand case law thereunder that is not otherwise exempt under Code Section 4975 or
\nERISA Section 408 (or any administrative class exemption issued thereunder); (B)
\nhas materially breached a fiduciary obligation or violated Sections 402, 403,
\n405, 503, 510 or 511 of ERISA; (C) has any material liability for any failure to
\nact or comply in connection with the administration or investment of the assets
\nof such plans; or (D) engaged in any transaction or otherwise acted with respect
\nto such plans in such a manner which could subject the Company, or any fiduciary
\nor plan administrator or any other Person dealing with any such plan, to
\nmaterial liability under Section 409 or 502 of ERISA or Sections 4972 or 4976
\nthrough 4980B of the Code.<\/p>\n
-13-<\/p>\n
(4) Each Parent Scheduled Plan (other than any stock option
\nplan) may be amended, terminated, modified or otherwise revised by Parent, on
\nand after the Closing, without further material liability to Parent (other than
\nordinary administrative expenses or routine claims for benefit plans),
\nincluding, but not limited to, any withdrawal liability under ERISA for any
\nmulti-employer plan or any liability under any Parent Scheduled Plan subject to
\nTitle IV of ERISA.<\/p>\n
(5) None of Parent or any current or former Parent Plan
\nAffiliate has at any time participated in, made contributions to or had any
\nother liability with respect to any Parent Scheduled Plan which is a “multi-
\nemployer plan” as defined in Section 4001 of ERISA, a “multi-employer plan”
\nwithin the meaning of Section 3(37) of ERISA, a “multiple employer plan” within
\nthe meaning of Section 413(c) of the Code, a “multiple employer welfare
\narrangement” within the meaning of Section 3(40) of ERISA or a plan that is
\nsubject to Title IV of ERISA.<\/p>\n
(6) No Parent Scheduled Plan provides, or reflects or represents
\nany liability to provide retiree health to any person for any reason, except as
\nmay be required by COBRA or other applicable statute, and neither Parent nor any
\nPlan Affiliate has ever represented, promised or contracted (whether in oral or
\nwritten form) to any current or former employee, consultant or director (either
\nindividually or as a group) or any other person that such current or former
\nemployee(s) or other person would be provided with retiree health, except to the
\nextent required by applicable continuation coverage statute.<\/p>\n
(7) No Parent Scheduled Plan has incurred an “accumulated
\nfunding deficiency” as such term is defined in Section 302 of ERISA or Section
\n412 of the Code, whether or not waived, or has posted or is required to provide
\nsecurity under Code Section 401(a)(29) or Section 307 of ERISA; no event has
\noccurred which has or could result in the imposition of a lien under Code
\nSection 412 or Section 302 of ERISA, nor has any liability to the Pension
\nBenefit Guaranty Corporation (the “PBGC”) (except for payment of premiums) been
\nincurred or reportable event within the meaning of Section 4043 of ERISA
\noccurred with respect to any such plan; and the PBGC has not threatened or taken
\nsteps to institute the termination of any such plan;<\/p>\n
(8) The requirements of COBRA and the Health Insurance
\nPortability and Accountability Act, the requirements of the Family Medical Leave
\nAct of 1993, as amended, the requirements of the Women’s Health and Cancer
\nRights Act, the requirements of the Newborns’ and Mothers’ Health Protection Act
\nof 1996, or any amendment to each such act, or any similar provisions of state
\nlaw applicable to its employees, have, in all material respects, been satisfied
\nwith respect to each Parent Scheduled Plan.<\/p>\n
(9) All contributions, payments, premiums, expenses,
\nreimbursements or accruals for all periods ending prior to or as of the Closing
\nfor each Parent Scheduled Plan (including periods from the first day of the then
\ncurrent plan year to the Closing) shall have been made or accrued on Parent
\nfinancial statements (in accordance with generally applied accounting
\nprinciples, including FAS 87, 88, 106 and 112) and each such plan otherwise does
\nnot have nor could have any unfunded liability (including benefit liabilities as
\ndefined in Section 4001(a)(16) of ERISA) which is not reflected on Parent
\nfinancial statements. Any<\/p>\n
-14-<\/p>\n
contribution made or accrued with respect to any Parent Scheduled Plan has been
\nor, to the knowledge of Parent, will be intended to be, fully deductible by
\nParent.<\/p>\n
(10) Neither Parent nor a Plan Affiliate has any material
\nliability (A) for the termination of any single employer plan under Section 4062
\nof ERISA or any multiple employer plan under Section 4063 of ERISA, (B) for any
\nlien imposed under Section 302(f) of ERISA or Section 412(n) of the Code, (C)
\nfor any interest payments required under Section 302(e) of ERISA or Section
\n412(m) of the Code, (D) for any excise tax imposed by Code Sections 4971, 4972,
\n4977, or 4979, or (E) for any minimum funding contributions under Section
\n302(c)(11) of ERISA or Code Section 412(c)(11).<\/p>\n
(11) All Parent Scheduled Plans to the extent applicable, are in
\ncompliance with Section 1862(b)(1)(A)(i) of the Social Security Act and neither
\nParent nor any Plan Affiliate has any liability for any excise tax imposed by
\nCode Section 5000.<\/p>\n
(12) With respect to any Parent Scheduled Plan which is a
\nwelfare plan as defined in Section 3(1) of ERISA; (A) each such welfare plan
\nwhich is intended to meet the requirements for tax-favored treatment under
\nSubchapter B of Chapter 1 of the Code materially meets such requirements; and
\n(B) there is no disqualified benefit (as such term is defined in Code Section
\n4976(b)) which would subject Parent or any Plan Affiliate to a tax under Code
\nSection 4976(a).<\/p>\n
(13) Each Parent Scheduled Plan that has been adopted or
\nmaintained by Parent or any Plan Affiliate, whether informally or formally, or
\nwith respect to which Parent or any Plan Affiliate will or may have any
\nliability, for the benefit of Parent Employees who perform services outside the
\nUnited States (the “Parent International Employee Plans”) has been established,
\nmaintained and administered in material compliance with its terms and conditions
\nand with the requirements prescribed by any and all statutory or regulatory laws
\nthat are applicable to such Parent International Employee Plan. Furthermore, no
\nParent International Employee Plan has unfunded liabilities, that, as of the
\nEffective Time, will not be offset by insurance or fully accrued. Except as
\nrequired by law, no condition exists that would prevent Parent or any Plan
\nAffiliate from terminating or amending any Parent International Employee Plan at
\nany time for any reason without material liability to Parent or any Plan
\nAffiliate (other than ordinary administration expenses or routine claims for
\nbenefits). To the extent any such Parent International Employee Plan has not
\nbeen disclosed or provided prior to the date of this Agreement, Parent agrees to
\nuse its best efforts to disclose and provide such plan prior to the Effective
\nTime.<\/p>\n
(iv) Other than by reason of actions taken by Parent following the
\nClosing, the consummation of the transactions contemplated by this Agreement
\nwill not (A) entitle any current or former employee of Parent to severance pay,
\nunemployment compensation or any other payment, (B) accelerate the time of
\npayment or vesting of any payment (other than for a terminated or frozen tax-
\nqualified plan, pursuant to a requirement herein to freeze or terminate such
\nplan), cause the forgiveness of any indebtedness, or increase the amount of any
\ncompensation due to any such employee or former employee, (C) result in any
\nprohibited transaction described in Section 406 of ERISA or Section 4975 of the
\nCode for which an exemption is not available, or (D) give rise to the<\/p>\n
-15-<\/p>\n
payment of any amount that would not be deductible pursuant to the terms of
\nSection 280G of the Code.<\/p>\n
(v) As used in this Agreement, with respect to any Person the term
\n“Plan Affiliate” shall mean each other Person with whom such Person constitutes
\nor has constituted all or part of a controlled group, or which would be treated
\nor has been treated with such Person as under common control or whose employees
\nwould be treated or have been treated as employed by such Person, under Section
\n414 of the Code and any regulations, administrative rulings and case law
\ninterpreting the foregoing.<\/p>\n
(n) Parent Intangible Property.
\n ————————– <\/p>\n
(i) Parent and its subsidiaries own, or are licensed or otherwise
\npossess legally enforceable rights to use, all patents, trademarks, trade names,
\nservice marks, copyrights and mask works, all applications for and registrations
\nof such patents, trademarks, trade names, service marks, copyrights and mask
\nworks, and all processes, formulae, methods, schematics, technology, know-how,
\ncomputer software programs or applications and tangible or intangible
\nproprietary information or material that are necessary to conduct the business
\nof Parent and its subsidiaries as currently conducted or planned to be conducted
\n(the “Parent Intellectual Property Rights”). Section 5.1(n) of the Parent
\nDisclosure Schedule sets forth a list of the material software licenses to which
\nParent or its subsidiaries is a party.<\/p>\n
(ii) Neither Parent nor any of its subsidiaries is or will be as a
\nresult of the execution and delivery of this Agreement or the performance of its
\nobligations under this Agreement, in breach in any material respect of any
\nmaterial license, sublicense or other agreement relating to the Parent
\nIntellectual Property Rights or any license, sublicense or other agreement
\npursuant to which Parent or any of its subsidiaries is authorized to use any
\nthird party patents, trademarks or copyrights, including software, which are
\nused in the manufacture of, incorporated in, or form a part of any product of
\nParent or any of its subsidiaries.<\/p>\n
(iii) To Parent’s knowledge, all patents, registered trademarks,
\nservice marks and copyrights held by Parent or any of its subsidiaries which are
\nmaterial to its business are valid and enforceable. Neither Parent nor any of
\nits subsidiaries has been sued in any suit, action or proceeding which involves
\na claim of infringement of any patent, trademark, service mark or copyright or
\nthe violation of any trade secret or other proprietary rights of any third
\nparty, which infringement would be reasonably likely to have a Material Adverse
\nEffect on Parent.<\/p>\n
(iv) Parent and its subsidiaries have taken reasonable security
\nmeasures to safeguard and maintain their property rights in all Parent
\nIntellectual Property Rights owned by Parent or its subsidiaries. Parent and its
\nsubsidiaries maintain and in all material respects abide by a policy that
\nofficers, employees and consultants of Parent or any of its subsidiaries, except
\nfor clerical and other lower level support personnel (e.g. mail room,
\nmessengers, etc.), execute an agreement, in a form or forms previously provided
\nto the Company, regarding (i) the protection of proprietary information, (ii)
\nthe assignment to Parent (or an applicable subsidiary) of all Parent
\nIntellectual Property Rights arising from services performed for Parent or any
\nof its subsidiaries by such<\/p>\n
-16-<\/p>\n
Persons, (iii) the ownership by Parent or one of its subsidiaries of all Parent
\nIntellectual Property Rights arising from the services performed for Parent or
\none of its subsidiaries by such Persons and (iv) limitations on the individual’s
\nability to solicit or hire Parent’s or its subsidiaries’ employees or
\nconsultants.<\/p>\n
(o) Agreements, Contracts and Commitments; Material Contracts. Except
\n ———————————————————
\nas set forth in the Section 5.1(o) of the Parent Disclosure Schedule, as of the
\ndate hereof, neither Parent nor any of its subsidiaries is a party to or is
\nbound by:<\/p>\n
(i) any contract relating to the borrowing of money, the
\nguaranty of another Person’s borrowing of money, or the creation of an
\nencumbrance or lien on the assets of the Parent or any of its subsidiaries and
\nwith outstanding obligations in excess of $1,000,000;<\/p>\n
(ii) any employment or consulting agreement, contract or
\ncommitment with any officer or director level employee or member of Parent’s
\nBoard of Directors or any other employee who is one of the fifty (50) most
\nhighly compensated employees, including base salary and bonuses, (the “Parent
\nKey Employees”), other than those that are terminable by Parent or any of its
\nsubsidiaries on no more than thirty (30) days notice without liability or
\nfinancial obligation or benefits generally available to employees of Parent,
\nexcept to the extent general principles of wrongful termination law may limit
\nParent’s or any of its subsidiaries’ ability to terminate employees at will;<\/p>\n
(iii) any agreement or plan, including, without limitation, any
\nstock option plan, stock appreciation right plan or stock purchase plan, any of
\nthe benefits of which will be increased, or the vesting of benefits of which
\nwill be accelerated, by the occurrence of any of the transactions contemplated
\nby this Agreement or the value of any of the benefits of which will be
\ncalculated on the basis of any of the transactions contemplated by this
\nAgreement;<\/p>\n
(iv) any agreement of indemnification or guaranty by Parent or
\nany of its subsidiaries not entered into in the ordinary course of business
\nother than indemnification agreements between Parent or any of its subsidiaries
\nand any of its officers or directors in standard forms as filed by Parent with
\nthe SEC;<\/p>\n
(v) any agreement, contract or commitment containing any
\ncovenant limiting the freedom of Parent or any of its subsidiaries to engage in
\nany line of business or conduct business in any geographical area, compete with
\nany person or granting any exclusive distribution rights;<\/p>\n
(vi) any joint venture, partnership, and other contract (however
\nnamed) involving a sharing of profits or losses by the Parent or any subsidiary
\nwith any other Person;<\/p>\n
(vii) any contract for capital expenditures in excess of
\n$1,000,000;<\/p>\n
(viii) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition of assets not in the ordinary course
\nof business;<\/p>\n
-17-<\/p>\n
(ix) any agreement, contract or commitment for the purchase of
\nany ownership interest in any corporation, partnership, joint venture or other
\nbusiness enterprise for consideration in excess of $2,500,000, in any case which
\nincludes all escrow and earn-out agreements with outstanding obligations; or<\/p>\n
(x) any material joint marketing, distribution or development
\nagreement or any other material contract of the Parent or any of its
\nsubsidiaries not previously filed with the SEC and not otherwise listed in any
\nother section of the Parent Disclosure Schedule.<\/p>\n
A true and complete copy (including all amendments) of each Parent
\nContract (or if standard forms are used, copies of the applicable forms with an
\nindication of any material differences from the actual listed Parent Contract),
\nor a summary of each oral contract, has been made available to the Company,
\nexcluding those Parent Contracts referenced in clause (vii). Each contract set
\nforth in Section 5.1(o)(i)-(x) of the Parent Disclosure Schedule (a “Parent
\nContract”) and each Parent Material Contract (as defined below) is in full force
\nand effect, and is a legal, valid and binding obligation of Parent or a
\nsubsidiary of Parent and, to the knowledge of Parent, each of the other parties
\nthereto, enforceable in accordance with its terms, except (a) that the
\nenforcement thereof may be limited by (i) bankruptcy, insolvency,
\nreorganization, moratorium or other similar laws now or hereafter in effect
\nrelating to creditors’ rights generally and (ii) general principles of equity
\n(regardless of whether enforceability is considered in a proceeding in equity or
\nat law) and (b) as would not, individually or in the aggregate, be reasonably
\nexpected to result in a Material Adverse Effect on Parent. No condition exists
\nor event has occurred which (whether with or without notice or lapse of time or
\nboth, or the happening or occurrence of any other event) would constitute a
\ndefault by Parent or a subsidiary of Parent or, to the knowledge of Parent, any
\nother party thereto under, or result in a right in termination of, any Parent
\nContract or Parent Material Contract, except as would not, individually or in
\nthe aggregate, be reasonably expected to result in a Material Adverse Effect on
\nParent. The term “Parent Material Contract” shall mean any contract that is
\nmaterial to Parent and its subsidiaries, taken as a whole. Except as provided
\nfor herein, at the Effective Time, no Person will have the right, by contract or
\notherwise, to become, nor does any entity have the right to designate or cause
\nParent to appoint a Person as, a director of Parent or any subsidiary of Parent.<\/p>\n
(p) Unlawful Payments and Contributions. To the knowledge of Parent,
\n ———————————–
\nneither Parent, any subsidiary of Parent nor any of their respective directors,
\nofficers, employees or agents has, with respect to the businesses of Parent or
\nits subsidiaries, (i) used any funds for any unlawful contribution, endorsement,
\ngift, entertainment or other unlawful expense relating to political activity;
\n(ii) made any direct or indirect unlawful payment to any foreign or domestic
\ngovernment official or employee; (iii) violated or is in violation of any
\nprovision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
\nany bribe, rebate, payoff, influence payment, kickback or other unlawful payment
\nto any Person or entity.<\/p>\n
(q) Listings. Parent’s securities are not listed, or quoted, for
\n ——–
\ntrading on any U.S. domestic or foreign securities exchange, other than the NNM.<\/p>\n
(r) Environmental Matters. Except as disclosed in Parent’s SEC
\n ———————
\nReports filed prior to the date hereof, (i) Parent and its subsidiaries and the
\noperations, assets and properties<\/p>\n
-18-<\/p>\n
thereof are in material compliance with all Environmental Laws; (ii) there are
\nno judicial or administrative actions, suits, proceedings or investigations
\npending or, to the knowledge of Parent, threatened against Parent or any
\nsubsidiary of Parent alleging the violation of any Environmental Law and neither
\nParent nor any subsidiary of Parent has received notice from any governmental
\nbody or Person alleging any violation of or liability under any Environmental
\nLaws, in either case which could reasonably be expected to result in material
\nEnvironmental Costs and Liabilities; (iii) to the knowledge of Parent, there are
\nno facts, circumstances or conditions relating to, arising from, associated with
\nor attributable to Parent or its subsidiaries or any real property currently or
\npreviously owned, operated or leased by Parent or its subsidiaries that could
\nreasonably be expected to result in material Environmental Costs and
\nLiabilities; and (iv) to the knowledge of Parent, neither Parent nor any of its
\nsubsidiaries has ever generated, transported, treated, stored, handled or
\ndisposed of any Hazardous Material (as hereinafter defined) at any site,
\nlocation or facility in a manner that could create any material Environmental
\nCosts and Liabilities under any Environmental Law, and no such Hazardous
\nMaterial has been or is currently present on, in, at or under any real property
\nowned or used by Parent or any of its subsidiaries in a manner that could create
\nany Environmental Costs and Liabilities (including without limitation,
\ncontainment by means of any underground or aboveground storage tank). For the
\npurpose of Sections 5.1(s) and 5.2(s), the following terms have the following
\ndefinitions: (X) “Environmental Costs and Liabilities” means any losses,
\nliabilities, obligations, damages, fines, penalties, judgments, actions, claims,
\ncosts and expenses (including, without limitation, fees, disbursements and
\nexpenses of legal counsel, experts, engineers and consultants and the costs of
\ninvestigation and feasibility studies, remedial or removal actions and cleanup
\nactivities) arising from or under any Environmental Law; (Y) “Environmental
\nLaws” means any applicable federal, state, local, or foreign law (including
\ncommon law), statute, code, ordinance, rule, regulation or other requirement
\nrelating to the environment, natural resources, or public or employee health and
\nsafety; and (Z) “Hazardous Material” means any substance, material or waste
\nregulated by federal, state or local government, including, without limitation,
\nany substance, material or waste which is defined as a “hazardous waste,”
\n“hazardous material,” “hazardous substance,” “toxic waste” or “toxic substance”
\nunder any provision of Environmental Law and including but not limited to
\npetroleum and petroleum products.<\/p>\n
(s) Title to Properties; Liens; Condition of Properties.
\n ————————————————— <\/p>\n
(i) Parent and its subsidiaries have good and marketable title to, or
\na valid leasehold interest in, the real and personal property, located on their
\npremises or shown on their most recent balance sheet or acquired after the date
\nthereof. None of the property owned or used by Parent or any of its subsidiaries
\nis subject to any mortgage, pledge, deed of trust, lien (other than for taxes
\nnot yet due and payable), conditional sale agreement, security title,
\nencumbrance, or other adverse claim or interest of any kind. Since September 30,
\n1999, there has not been any sale, lease, or any other disposition or
\ndistribution by Parent or any of its subsidiaries of any of its assets or
\nproperties, material to Parent and its subsidiaries, taken as a whole, except
\ntransactions in the ordinary and regular course of business.<\/p>\n
(ii) Parent has delivered to the Company a schedule of all material
\nleases, subleases, rental agreements, contracts of sale, tenancies or licenses
\nrelated to any of the real<\/p>\n
-19-<\/p>\n
property used by Parent or any of its subsidiaries in their respective
\nbusinesses. All such leases are valid, binding and enforceable in accordance
\nwith their terms against the parties thereto, and each such lease is subsisting
\nand no default exists under any thereof. Neither Parent nor any of its
\nsubsidiaries has received notice that any party to any such lease intends to
\ncancel, terminate or refuse to renew the same or to exercise or decline to
\nexercise any option or any right thereunder.<\/p>\n
(t) Labor and Employee Relations.
\n —————————- <\/p>\n
(i) Neither Parent nor any of its subsidiaries is party to any
\nemployment, consulting, non-competition, severance, golden parachute,
\nindemnification agreement or any other material employment or consulting
\nagreement providing for payments or benefits or the acceleration of payments or
\nbenefits upon the change of control of Parent (including, without limitation,
\nany contract to which Parent is a party involving employees of Parent).<\/p>\n
(ii) Except as required by applicable law in non-U.S. jurisdictions,
\n(A) none of the employees of Parent or any of its subsidiaries is represented in
\nhis or her capacity as an employee of such company by any labor organization;
\n(B) neither Parent nor any of its subsidiaries has recognized any labor
\norganization nor has any labor organization been elected as the collective
\nbargaining agent of any of their employees, nor has Parent or any of its
\nsubsidiaries signed any collective bargaining agreement or union contract
\nrecognizing any labor organization as the bargaining agent of any of their
\nemployees; and (C) to the knowledge of Parent there is no active or current
\nunion organization activity involving the employees of Parent or any of its
\nsubsidiaries, nor has there ever been union representation involving employees
\nof Parent or any of its subsidiaries.<\/p>\n
(iii) Except for complaints which, in the aggregate, do not represent
\nclaims which could reasonably involve liabilities in excess of $2,000,000, there
\nare no complaints against Parent or any of its subsidiaries pending or, to the
\nknowledge of Parent, overtly threatened before the National Labor Relations
\nBoard or any similar foreign, state or local labor agencies, or before the Equal
\nEmployment Opportunity Commission or any similar foreign, state or local agency,
\nor before any other governmental agency or entity by or on behalf of any
\nemployee or former employee of Parent or any of its subsidiaries.<\/p>\n
(iv) Parent has provided to the Company a description of all written
\nemployment policies under which Parent and each subsidiary is operating.<\/p>\n
(v) Parent and each of its subsidiaries is in compliance with all
\nFederal, foreign (as applicable), and state laws regarding employment practices,
\nincluding laws relating to workers’ safety, sexual harassment or discrimination,
\nexcept where the failure to so be in compliance, individually or in the
\naggregate, would not have a Material Adverse Effect on Parent.<\/p>\n
(vi) To the knowledge of Parent, as of the date hereof, no executive,
\nkey employee or group of employees has any plans to terminate his or her
\nemployment with Parent or any of its subsidiaries.<\/p>\n
-20-<\/p>\n
(u) Permits. Parent and each of its subsidiaries hold all licenses,
\n ——-
\npermits, registrations, orders, authorizations, approvals and franchises which
\nare required to permit it to conduct its businesses as presently conducted,
\nexcept where the failure to hold such licenses, permits, registrations, orders,
\nauthorizations, approvals or franchises would not, individually or in the
\naggregate, have a Material Adverse Effect on Parent. All such material licenses,
\npermits, registrations, orders, authorizations, approvals and franchises are
\nnow, and will be after the Closing, valid and in full force and effect, and
\nParent shall have full benefit of the same, except where the failure to be valid
\nand in full force and effect or to have the benefit of any such license, permit,
\nregistration, order, authorization, approval or franchise would not,
\nindividually or in the aggregate, have a Material Adverse Effect on Parent.
\nNeither Parent nor any of its subsidiaries has received any notification of any
\nasserted present failure (or past and unremedied failure) by it to have obtained
\nany such license, permit, registration, order, authorization, approval or
\nfranchise except where such failures would not, in the aggregate, have a
\nMaterial Adverse Effect on Parent.<\/p>\n
(v) Warranty or Other Claims. Parent has provided to the Company a copy of
\n ————————
\nits standard form agreement for services. It is Parent’s practice and policy to
\nadhere to the form terms, except to the extent not commercially practicable.<\/p>\n
(w) Transactions with Affiliates. Except as set forth in the Parent SEC
\n —————————-
\nReports filed prior to the date of this Agreement, since the date of Parent’s
\nlast proxy statement to its stockholders, no event has occurred that would be
\nrequired to be reported by Parent as a Certain Relationship or Related
\nTransaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.<\/p>\n
(x) Computer Software. The occurrence in or use by any material Software
\n —————–
\nused by Parent and its subsidiaries of dates on or after January 1, 2000 will
\nnot result in any Malfunction.<\/p>\n
(y) State Takeover Laws. The Board of Directors of Parent has taken all
\n ——————-
\nnecessary action so that the restrictions contained in Section 203 of the DGCL
\napplicable to a “business combination” (as defined in Section 203) will not
\napply to the execution, delivery or performance of this Agreement or the
\nStockholder Agreements or the consummation of the Merger or the other
\ntransactions contemplated by this Agreement or the Stockholder Agreements. No
\nother state takeover statute or similar statute or regulation is applicable to
\nthis Agreement or the Stockholder Agreements.<\/p>\n
5.2 Representations and Warranties of the Company The Company hereby.
\n ———————————————
\nrepresents and warrants to Parent and Merger Sub that the statements contained
\nin this Section 5.2 are true and correct, except to the extent specifically set
\nforth on the disclosure schedule previously delivered by the Company to Parent
\nand Merger Sub (the “Company Disclosure Schedule”). The Company Disclosure
\nSchedule shall be arranged in sections and paragraphs corresponding to the
\nletter and numbered paragraphs contained in this Section 5.2, and the disclosure
\nin any paragraph shall qualify only the corresponding paragraph in this Section
\n5.2 or other paragraphs or sections to which it is clearly apparent (from a
\nplain reading of the disclosure) that such disclosure relates.<\/p>\n
-21-<\/p>\n
(a) Corporate Organization and Qualification. Each of the Company and its
\n —————————————-
\nsubsidiaries is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of incorporation and is qualified
\nand in good standing as a foreign corporation in each jurisdiction where the
\nproperties owned, leased or operated, or the business conducted, by it require
\nsuch qualification, except where failure to so qualify or be in good standing as
\na foreign corporation would not have a Material Adverse Effect on the Company.
\nEach of the Company and its subsidiaries has all requisite power and authority
\n(corporate or otherwise) to own its properties and to carry on its business as
\nit is now being conducted. All of the subsidiaries of the Company are set forth
\nin Section 5.2(a) of the Company Disclosure Schedule. The Company has heretofore
\nmade available to Parent complete and correct copies of its Certificate of
\nIncorporation and Bylaws and the charter documents of its subsidiaries, each as
\namended.<\/p>\n
(b) Capitalization. The authorized capital stock of the Company consists of
\n ————–
\n(i) 200,000,000 shares of common stock, $0.001 par value per share, of which
\n90,645,130 shares were issued and outstanding on November 30, 1999, and (ii)
\n1,000,000 shares of preferred stock, $0.001 par value per share, none of which
\nis issued or outstanding. All of the outstanding shares of capital stock of the
\nCompany and its subsidiaries have been duly authorized and validly issued and
\nare fully paid and nonassessable. The Company has no outstanding stock
\nappreciation rights, phantom stock or similar rights. All outstanding shares of
\ncapital stock or other equity interests of the subsidiaries of the Company are
\nowned by the Company or a direct or indirect wholly-owned subsidiary of the
\nCompany, free and clear of all liens, pledges, charges, encumbrances, claims and
\noptions of any nature. Except for options to purchase 35,484,796 Company Shares
\n(i) issued pursuant to the 1996 Stock Option Plan, 1996 Equity Compensation
\nPlan, the 1997 Acquisition Stock Option Plan and the 1999 Non-Qualified Stock
\nOption Plan of the Company (the “Company Stock Option Plans”), (ii) existing as
\na result of the Company’s assumption of then outstanding stock options of CKS
\nGroup, Inc. in connection with the merger with CKS Group, Inc. consummated on
\nDecember 17, 1998, and (iii) under the Stock Option Agreement with Robert Shaw
\nand the Company’s Bonus Plan (the plans and agreements referred to in clauses
\n(i), (ii) and (iii), collectively, the “Company Option Plans”) and rights under
\nthe Company ESPPs, as of November 30, 1999, there are no outstanding or
\nauthorized options, warrants, calls, rights (including preemptive rights),
\ncommitments or any other agreements of any character which the Company or any of
\nits subsidiaries is a party to, or may be bound by, requiring it to issue,
\ntransfer, grant, sell, purchase, redeem or acquire any shares of capital stock
\nor any of its securities or rights convertible into, exchangeable for, or
\nevidencing the right to subscribe for, any shares of capital stock of the
\nCompany or any of its subsidiaries. There are not as of the date hereof and
\nthere will not be at the Effective Time any stockholder agreements, voting
\ntrusts or other agreements or understandings to which the Company is a party or
\nto which it is bound relating to the voting of any shares of the capital stock
\nof the Company. No existing rights with respect to the registration of Company
\nShares under the Securities Act, including, but not limited to, demand rights or
\npiggy-back registration rights, shall apply with respect to any Parent Shares
\nissuable in connection with the Merger. The Company has provided to Parent a
\nlist, as of November 30, 1999, of the outstanding options to acquire shares of
\nthe Company’s capital stock, the name of the holder of such option, the exercise
\nprice of such option, the number of shares as to which such option will have
\nvested at such date and whether the exercisability of such option will be
\naccelerated in any way by the transactions contemplated by this<\/p>\n
-22-<\/p>\n
Agreement, and indicates the extent of acceleration, if any. Since November 30,
\n1999 through the date hereof no options have been issued or accelerated or had
\ntheir terms modified.<\/p>\n
(c) Fairness Opinion. The Board of Directors of the Company has received an
\n —————-
\noral opinion from Morgan Stanley Dean Witter to be confirmed in writing and
\naddressed to its Board of Directors, to the effect that, as of the date hereof
\nand based upon and subject to the matters stated therein, the consideration to
\nbe received by the holders of Common Shares in the Merger is fair to such
\nholders from a financial point of view. As of the date hereof, such opinion has
\nnot been withdrawn, revoked or modified.<\/p>\n
(d) Authority Relative to this Agreement. The Board of Directors of the
\n ————————————
\nCompany has declared the Merger advisable and the Company has the requisite
\ncorporate power and authority to approve, authorize, execute and deliver this
\nAgreement and to consummate the transactions contemplated hereby. This Agreement
\nand the consummation by the Company of the transactions contemplated hereby have
\nbeen duly and validly authorized by the Board of Directors of the Company and no
\nother corporate proceedings on the part of the Company are necessary to
\nauthorize this Agreement or to consummate the transactions contemplated hereby
\n(other than the approval of the Merger by the stockholders of the Company in
\naccordance with the DGCL). This Agreement has been duly and validly executed and
\ndelivered by the Company and, assuming this Agreement constitutes the valid and
\nbinding agreement of Parent and Merger Sub, constitutes the valid and binding
\nagreement of the Company, enforceable against the Company in accordance with its
\nterms, subject, as to enforceability, to bankruptcy, insolvency, reorganization
\nand other laws of general applicability relating to or affecting creditors’
\nrights and to general principles of equity.<\/p>\n
(e) Present Compliance with Obligations and Laws. Neither the Company nor
\n ——————————————–
\nany of its subsidiaries is: (i) in violation of its Certificate of Incorporation
\nor Bylaws or similar documents; (ii) in default in the performance of any
\nobligation, agreement or condition of any debt instrument which (with or without
\nthe passage of time or the giving of notice, or both) affords to any Person the
\nright to accelerate any indebtedness or terminate any right; (iii) in default
\nunder or breach of (with or without the passage of time or the giving of notice)
\nany other contract to which it is a party or by which it or its assets are
\nbound; or (iv) in violation of any law, regulation, administrative order or
\njudicial order, decree or judgment (domestic or foreign) applicable to it or its
\nbusiness or assets, except where any violation, default or breach under items
\n(ii), (iii), or (iv) would not, individually or in the aggregate, have a
\nMaterial Adverse Effect on the Company.<\/p>\n
(f) Consents and Approvals; No Violation. Neither the execution and
\n ————————————
\ndelivery of this Agreement by the Company nor the consummation by the Company of
\nthe transactions contemplated hereby will (i) conflict with or result in any
\nbreach of any provision of its Certificate of Incorporation or Bylaws; (ii)
\nrequire any consent, approval, authorization or permit of, or registration or
\nfiling with or notification to, any governmental or regulatory authority, except
\n(A) in connection with the applicable requirements, if any, of the HSR Act, (B)
\npursuant to the applicable requirements of the Securities Act and the Exchange
\nAct, (C) the filing of the Certificate of Merger pursuant to the DGCL and
\nappropriate documents with the relevant authorities of other states in which the
\nCompany is authorized to do business, (D) as may be required by any applicable
\nstate<\/p>\n
-23-<\/p>\n
securities laws, (E) such filings, consents, approvals, orders, authorizations,
\nregistrations, declarations and filings as may be required under the antitrust
\nlaws of any foreign country or, (F) where the failure to obtain such consent,
\napproval, authorization or permit, or to make such filing or notification, would
\nnot in the aggregate have a Material Adverse Effect on the Company or adversely
\naffect the ability of the Company to consummate the transactions contemplated
\nhereby; (iii) result in a violation or breach of, or constitute (with or without
\nnotice or lapse of time or both) a default (or give rise to any right of
\ntermination, cancellation or acceleration or lien or other charge or
\nencumbrance) under any of the terms, conditions or provisions of any indenture,
\nnote, license, lease, agreement or other instrument or obligation to which the
\nCompany or any of its subsidiaries is a party or by which any of their assets
\nmay be bound, except for such violations, breaches and defaults (or rights of
\ntermination, cancellation, or acceleration or lien or other charge or
\nencumbrance) as to which requisite waivers or consents have been obtained or
\nwhich, in the aggregate, would not have a Material Adverse Effect on the Company
\nor adversely affect the ability of the Company to consummate the transactions
\ncontemplated hereby; (iv) cause the suspension or revocation of any
\nauthorizations, consents, approvals or licenses currently in effect which would
\nhave a Material Adverse Effect on the Company; or (v) assuming the consents,
\napprovals, authorizations or permits and filings or notifications referred to in
\nthis Section 5.2(f) are duly and timely obtained or made, violate any order,
\nwrit, injunction, decree, statute, rule or regulation applicable to the Company
\nor any of its subsidiaries or to any of their respective assets, except for
\nviolations which would not in the aggregate have a Material Adverse Effect on
\nthe Company or adversely affect the ability of the Company to consummate the
\ntransactions contemplated hereby.<\/p>\n
(g) Litigation. Except as disclosed in Company SEC Reports filed prior to
\n ———-
\nthe date hereof, there are no actions, suits, claims, investigations or
\nproceedings pending or, to the knowledge of the Company, threatened against the
\nCompany or any of its subsidiaries that, alone or in the aggregate, would be
\nreasonably likely to result in obligations or liabilities of the Company or any
\nof its subsidiaries that would have a Material Adverse Effect on the Company or
\na material adverse effect on the parties’ ability to consummate the transactions
\ncontemplated by this Agreement. Neither the Company nor any of its subsidiaries
\nis subject to any outstanding order, writ, injunction or decree which (i) has or
\nmay have the effect of prohibiting or impairing any business practice of the
\nCompany or any of its subsidiaries, any acquisition of property (tangible or
\nintangible) by the Company or any of its subsidiaries, the conduct of the
\nbusiness by the Company or any of its subsidiaries, or Company’s ability to
\nperform its obligations under this Agreement or (ii), insofar as can be
\nreasonably foreseen, individually or in the aggregate, would have a Material
\nAdverse Effect on the Company.<\/p>\n
(h) SEC Reports; Financial Statements.
\n ——————————— <\/p>\n
(i) Since January 1, 1997, the Company has filed all forms, reports
\nand documents with the SEC required to be filed by it pursuant to the federal
\nsecurities laws and the SEC rules and regulations thereunder, all of which
\ncomplied in all material respects with all applicable requirements of the
\nSecurities Act and the Exchange Act (the “Company SEC Reports”). None of the
\nCompany SEC Reports, including, without limitation, any financial statements or
\nschedules included therein, at the time filed (or if amended or superseded by a
\nfiling prior to the date of this<\/p>\n
-24-<\/p>\n
Agreement, then on the date of such filing) contained any untrue statement of a
\nmaterial fact or omitted to state a material fact required to be stated therein
\nor necessary in order to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading. None of the Company’s
\nsubsidiaries is required to file any forms, reports or other documents with the
\nSEC.<\/p>\n
(ii) The consolidated balance sheets and the related statements of
\nincome, stockholders’ equity and cash flow (including the related notes thereto)
\nof the Company included in the Company SEC Reports (collectively, the “Company
\nFinancial Statements”) comply as to form in all material respects with
\napplicable accounting requirements and the published rules and regulations of
\nthe SEC with respect thereto, have been prepared in accordance with generally
\naccepted accounting principles applied on a basis consistent throughout the
\nperiods involved (except as otherwise noted therein or, in the case of unaudited
\ninterim financial statements, as may be permitted by the SEC on Form 10-Q under
\nthe Exchange Act), and present fairly the consolidated financial position of the
\nCompany and its consolidated subsidiaries as of their respective dates, and the
\nresults of its operations and its cash flow for the periods presented therein
\n(subject, in the case of the unaudited interim financial statements, to normal
\nand recurring year-end adjustments). Since January 1, 1999, there has not been
\nany material change, by the Company or any of its subsidiaries in accounting
\nprinciples, methods or policies for financial accounting purposes except as
\nrequired by concurrent changes in generally accepted accounting principles.<\/p>\n
(i) No Liabilities; Absence of Certain Changes or Events. Neither the
\n —————————————————-
\nCompany nor any of its subsidiaries has any material indebtedness, obligations
\nor liabilities of any kind (whether accrued, absolute, contingent or otherwise,
\nand whether due or to become due or asserted or unasserted), and, to the
\nknowledge of the Company, there is no reasonable basis for the assertion of any
\nmaterial claim or liability of any nature against the Company or any of its
\nsubsidiaries, except for liabilities (i) which are fully reflected in, reserved
\nagainst or otherwise described in the Company Financial Statements for the
\nperiod ending September 30, 1999, (ii) which have been incurred after September
\n30, 1999 in the ordinary course of business, consistent with past practice, or
\n(iii) which are obligations to perform under executory contracts in the ordinary
\ncourse of business (none of which is a liability resulting from a breach of
\ncontract or warranty, tort, infringement or legal action). Since September 30,
\n1999, the business of the Company and its subsidiaries has been carried on only
\nin the ordinary and usual course, and there has not been any Material Adverse
\nEffect on the Company and no event has occurred and no fact or set of
\ncircumstances has arisen which has resulted in or could reasonably be expected
\nto result in a Material Adverse Effect on the Company. Since September 30, 1999,
\nto the knowledge of the Company, no material customer or supplier of the Company
\nor its subsidiaries has threatened, in writing, to alter materially its
\nrelationship with the Company or its subsidiaries. Since September 30, 1999,
\nneither the Company nor any of its subsidiaries has agreed to a waiver or
\nrelease of any material right or claim (including without limitation to any
\nwrite off or other compromise of any material account receivable) outside of the
\nordinary course of business consistent with past practice.<\/p>\n
(j) Brokers and Finders. Except for the fees and expenses payable to Morgan
\n ——————-
\nStanley Dean Witter, which fees and expenses are reflected in its agreement with
\nthe Company, a<\/p>\n
-25-<\/p>\n
true and complete copy of which (including all amendments) has been furnished to
\nthe Company, neither the Company nor any of its subsidiaries has employed any
\ninvestment banker, broker, finder, consultant or intermediary in connection with
\nthe transactions contemplated by this Agreement which would be entitled to any
\ninvestment banking, brokerage, finder’s or similar fee or commission in
\nconnection with this Agreement or the transactions contemplated hereby.<\/p>\n
(k) S-4 Registration Statement and Proxy Statement\/Prospectus. None of the
\n ———————————————————
\ninformation supplied or to be supplied by the Company for inclusion or
\nincorporation by reference in the S-4 Registration Statement or the Joint Proxy
\nStatement will (i) in the case of the S-4 Registration Statement, at the time it
\nbecomes effective or at the Effective Time, contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein not misleading, or (ii) in
\nthe case of the Joint Proxy Statement, at the time of the mailing of the Joint
\nProxy Statement and at the time of the Stockholder Meetings, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they are made, not misleading. If at any time
\nprior to the Effective Time any event with respect to the Company, its officers
\nand directors or any of its subsidiaries should occur which is required to be
\ndescribed in an amendment of, or a supplement to, the Joint Proxy Statement or
\nthe S-4 Registration Statement, the Company shall promptly inform Parent such
\nevent shall be so described, and such amendment or supplement shall be promptly
\nfiled with the SEC and, as required by law, disseminated to the stockholders of
\nthe Company and Parent. The S-4 Registration Statement will (with respect to the
\nCompany) comply as to form in all material respects with the requirements of the
\nSecurities Act and the rules and regulations promulgated thereunder. The Joint
\nProxy Statement will (with respect to the Company) comply as to form in all
\nmaterial respects with the requirements of the Exchange Act and the rules and
\nregulations promulgated thereunder.<\/p>\n
(l) Taxes.
\n —– <\/p>\n
(i) The Company and each of its subsidiaries has timely filed all
\nReturns required by applicable Tax law to be filed by the Company and each of
\nits subsidiaries, except for any such failures to file that could not reasonably
\nbe expected to have, individually or in the aggregate, a Material Adverse Effect
\non the Company. All Taxes owed by the Company or any of its subsidiaries to a
\ntaxing authority, or for which the Company or any of its subsidiaries is liable,
\nwhether to a taxing authority or to other Persons or entities under a
\nSignificant Tax Agreement, as of the date hereof, have been paid and, as of the
\nEffective Time, will have been paid, except for any such failure to pay that
\ncould not reasonably be expected to have, individually or in the aggregate, a
\nMaterial Adverse Effect on the Company. The Company has made accruals for Taxes
\non the Company Financial Statements which are adequate to cover any Tax
\nliability of the Company and each of its subsidiaries determined in accordance
\nwith generally accepted accounting principles through the date of the Company
\nFinancial Statements, except where failures to make such accruals or provisions
\ncould not reasonably be expected to have, individually or in the aggregate, a
\nMaterial Adverse Effect on the Company.<\/p>\n
-26-<\/p>\n
(ii) Except to the extent that any such failure to withhold could not
\nreasonably be expected to have, individually or in the aggregate, a Material
\nAdverse Effect on the Company, the Company and each of its subsidiaries have
\nwithheld with respect to its employees all federal and state income taxes, FICA,
\nFUTA and other Taxes required to be withheld.<\/p>\n
(iii) There is no Tax deficiency outstanding, proposed or assessed
\nagainst the Company or any of its subsidiaries, except any such deficiency that,
\nif paid, could not reasonably be expected to have, individually or in the
\naggregate, a Material Adverse Effect on the Company. Neither the Company nor any
\nof its subsidiaries executed or requested any waiver of any statute of
\nlimitations on or extending the period for the assessment or collection of any
\nfederal or material state Tax that is still in effect.<\/p>\n
(iv) No federal or state Tax audit or other examination of the Company
\nor any of its subsidiaries is presently in progress, nor has the Company or any
\nof its subsidiaries been notified in writing of any request for such federal or
\nmaterial state Tax audit or other examination, except in all cases for Tax
\naudits and other examinations which could not reasonably be expected to have,
\nindividually or in the aggregate, a Material Adverse Effect on the Company.<\/p>\n
(v) Neither the Company nor any of its subsidiaries has filed any
\nconsent agreement under Section 341(f) of the Code or agreed to have Section
\n341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
\ndefined in Section 341(f)(4) of the Code) owned by the Company.<\/p>\n
(vi) Neither the Company nor any of its subsidiaries is a party to (A)
\nany agreement with a party other than the Company or any of its subsidiaries
\nproviding for the allocation or payment of Tax liabilities or payment for Tax
\nbenefits with respect to a consolidated, combined or unitary Return which Return
\nincludes or included the Company or any subsidiary or (B) any Significant Tax
\nAgreement other than any Significant Tax Agreement described in (A).<\/p>\n
(vii) Except for the group of which the Company and its subsidiaries
\nare now presently members, neither the Company nor any of its subsidiaries has
\never been a member of an affiliated group of corporations within the meaning of
\nSection 1504 of the Code.<\/p>\n
(viii) Neither the Company nor any of its subsidiaries has agreed to
\nmake nor is it required to make any adjustment under Section 481(a) of the Code
\nby reason of a change in accounting method or otherwise which have not yet been
\ntaken into account.<\/p>\n
(ix) The Company is not, and has not at any time been, a United States
\nReal Property Holding Corporation.<\/p>\n
(m) Employee Benefits.
\n —————– <\/p>\n
(i) Section 5.2(m)(i) of the Company Disclosure Schedule lists each
\n“employee pension benefit plan” (as such term is defined in Section 3(2) of
\nERISA), “employee welfare benefit plan” (as such term is defined in Section 3(1)
\nof ERISA), material personnel or<\/p>\n
-27-<\/p>\n
payroll policy (including vacation time, holiday pay, service awards, moving
\nexpense reimbursement programs and sick leave) or material fringe benefit,
\nseverance agreement or plan or any medical, hospital, dental, life or disability
\nplan, excess benefit plan, bonus, stock option, stock purchase or other
\nincentive plan (including any equity or equity-based plan), tuition
\nreimbursement, automobile use, club membership, parental or family leave, top
\nhat plan or deferred compensation plan, salary reduction agreement, change-of-
\ncontrol agreement, employment agreement, consulting agreement, or collective
\nbargaining agreement, indemnification agreement, retainer agreement, or any
\nother material benefit plan, policy, program, arrangement, agreement or
\ncontract, whether or not written or terminated, with respect to any employee,
\nformer employee, director, independent contractor, or any beneficiary or
\ndependent thereof maintained, sponsored, adopted or administered by the Company
\nor any current or former Plan Affiliate or to which the Company or any current
\nor former Plan Affiliate has made contributions to, obligated itself or had any
\nliability with respect to (all such plans, policies, programs, arrangements,
\nagreements and contracts, are referred to in this Agreement as “Company
\nScheduled Plans”).<\/p>\n
(ii) The Company has delivered or made available to Parent a complete
\nand accurate copy, as of the Closing, of each written Company Scheduled Plan,
\ntogether with, if applicable, a copy of audited financial statements, actuarial
\nreports and Form 5500 Annual Reports (including required schedules), if any, for
\nthe three (3) most recent plan years, the most recent IRS determination letter
\nor IRS recognition of exemption; each other material letter, ruling or notice
\nissued by a governmental body with respect to each such plan, a copy of each
\ntrust agreement, insurance contract or other funding vehicle, if any, with
\nrespect to each such plan, the most recent PBGC Form 1 with respect to each such
\nplan, if any, the current summary plan description and summary of material
\nmodifications thereto with respect to each such plan, Form 5310 and any related
\nfilings with the PBGC and with respect to the last six (6) Plan years, for each
\nPlan subject to Title IV of ERISA, general notification to employees of their
\nrights under Code Section 4980B and form of letter(s) distributed upon the
\noccurrence of a qualifying event described in Code Section 4980B, in the case of
\na Company Scheduled Plan that is a “group health plan” as defined in Code
\nSection 162(i), and a copy or description of each other general explanation or
\nwritten or oral communication which describes a material term of each Company
\nScheduled Plan that has not previously been disclosed to Parent pursuant to this
\nSection. Section 5.2(m) of the Company Disclosure Schedule contains a
\ndescription of the material terms of any unwritten Company Scheduled Plan as
\ncomprehended to the Closing Date. Except as set forth in Section 5.2(m) of the
\nCompany Disclosure Schedule, there are no negotiations, demands or proposals
\nwhich are pending or threatened which concern matters now covered, or that would
\nbe covered, by the foregoing types of unwritten Plans.<\/p>\n
(iii) Except as could not reasonably give rise, whether individually
\nor in the aggregate, to a Material Adverse Effect to the Company, Parent, or
\nMerger Sub:<\/p>\n
(1) Each Company Scheduled Plan (A) has been and currently
\ncomplies in form and in operation in all material respects with all applicable
\nrequirements of ERISA and the Code, and any other legal requirements; (B) has
\nbeen and is operated and administered in material compliance with its terms
\n(except as otherwise required by law); (C) has been and is<\/p>\n
-28-<\/p>\n
operated in compliance with applicable legal requirements in such a manner as to
\nqualify, where appropriate, for both Federal and state purposes, for income tax
\nexclusions to its participants, tax-exempt income for its funding vehicle, and
\nthe allowance of deductions and credits with respect to contributions thereto;
\nand (D) where appropriate, has received a favorable determination letter or
\nrecognition of exemption from the Internal Revenue Service.<\/p>\n
(2) With respect to each Company Scheduled Plan, there are no
\nclaims or other proceedings pending or, to the knowledge of the Company,
\nthreatened with respect to the assets thereof (other than routine claims for
\nbenefits), and there are no facts which could reasonably give rise to any
\nmaterial liability, claim or other proceeding against any Company Scheduled
\nPlan, any fiduciary or plan administrator or other Person dealing with any
\nCompany Scheduled Plan or the assets of any such Company Scheduled Plan.<\/p>\n
(3) With respect to each Company Scheduled Plan, to the
\nknowledge of the Company, no Person: (A) has entered into any “prohibited
\ntransaction,” as such term is defined in ERISA or the Code and the regulations,
\nadministrative rulings and case law thereunder that is not otherwise exempt
\nunder Code Section 4975 or ERISA Section 408 (or any administrative class
\nexemption issued thereunder); (B) has materially breached a fiduciary obligation
\nor violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (C) has any
\nmaterial liability for any failure to act or comply in connection with the
\nadministration or investment of the assets of such plans; or (D) engaged in any
\ntransaction or otherwise acted with respect to such plans in such a manner which
\ncould subject Parent, or any fiduciary or plan administrator or any other Person
\ndealing with any such plan, to material liability under Section 409 or 502 of
\nERISA or Sections 4972 or 4976 through 4980B of the Code.<\/p>\n
(4) Each Company Scheduled Plan (other than any stock option
\nplan) may be amended, terminated, modified or otherwise revised by the Company
\nor Parent, on and after the Closing, without further material liability to the
\nCompany or Parent (other than ordinary administrative expenses or routine claims
\nfor benefit plans), including, but not limited to, any withdrawal liability
\nunder ERISA for any multi-employer plan or any liability under any Company
\nScheduled Plan subject to Title IV of ERISA.<\/p>\n
(5) None of the Company or any current or former Company Plan
\nAffiliate has at any time participated in, made contributions to or had any
\nother liability with respect to any Company Scheduled Plan which is a “multi-
\nemployer plan” as defined in Section 4001 of ERISA, a “multi-employer plan”
\nwithin the meaning of Section 3(37) of ERISA, a “multiple employer plan” within
\nthe meaning of Section 413(c) of the Code, a “multiple employer welfare
\narrangement” within the meaning of Section 3(40) of ERISA or a plan that is
\nsubject to Title IV of ERISA.<\/p>\n
(6) No Company Scheduled Plan provides, or reflects or
\nrepresents any liability to provide retiree health to any person for any reason,
\nexcept as may be required by COBRA or other applicable statute, and neither the
\nCompany nor any Plan Affiliate has ever represented, promised or contracted
\n(whether in oral or written form) to any current or former employee, consultant
\nor director (either individually or as a group) or any other person that such<\/p>\n
-29-<\/p>\n
current or former employee(s) or other person would be provided with retiree
\nhealth, except to the extent required by applicable continuation coverage
\nstatute.<\/p>\n
(7) No Company Scheduled Plan has incurred an “accumulated
\nfunding deficiency” as such term is defined in Section 302 of ERISA or Section
\n412 of the Code, whether or not waived, or has posted or is required to provide
\nsecurity under Code Section 401(a)(29) or Section 307 of ERISA; no event has
\noccurred which has or could result in the imposition of a lien under Code
\nSection 412 or Section 302 of ERISA, nor has any liability to the PBGC (except
\nfor payment of premiums) been incurred or reportable event within the meaning of
\nSection 4043 of ERISA occurred with respect to any such plan; and the PBGC has
\nnot threatened or taken steps to institute the termination of any such plan;<\/p>\n
(8) The requirements of COBRA and the Health Insurance
\nPortability and Accountability Act, the requirements of the Family Medical Leave
\nAct of 1993, as amended, the requirements of the Women’s Health and Cancer
\nRights Act, the requirements of the Newborns’ and Mothers’ Health Protection Act
\nof 1996, or any amendment to each such act, or any similar provisions of state
\nlaw applicable to its employees, have, in all material respects, been satisfied
\nwith respect to each Company Scheduled Plan.<\/p>\n
(9) All contributions, payments, premiums, expenses,
\nreimbursements or accruals for all periods ending prior to or as of the Closing
\nfor each Company Scheduled Plan (including periods from the first day of the
\nthen current plan year to the Closing) shall have been made or accrued on the
\nCompany financial statements (in accordance with generally applied accounting
\nprinciples, including FAS 87, 88, 106 and 112) and each such plan otherwise does
\nnot have nor could have any unfunded liability (including benefit liabilities as
\ndefined in Section 4001(a)(16) of ERISA) which is not reflected on the Company
\nfinancial statements. Any contribution made or accrued with respect to any
\nCompany Scheduled Plan has been or, to the knowledge of the Company, will be
\nintended to be, fully deductible by the Company.<\/p>\n
(10) Neither the Company nor a Plan Affiliate has any material
\nliability (A) for the termination of any single employer plan under Section 4062
\nof ERISA or any multiple employer plan under Section 4063 of ERISA, (B) for any
\nlien imposed under Section 302(f) of ERISA or Section 412(n) of the Code, (C)
\nfor any interest payments required under Section 302(e) of ERISA or Section
\n412(m) of the Code, (D) for any excise tax imposed by Code Sections 4971, 4972,
\n4977, or 4979, or (E) for any minimum funding contributions under Section
\n302(c)(11) of ERISA or Code Section 412(c)(11).<\/p>\n
(11) All the Company Scheduled Plans to the extent applicable,
\nare in compliance with Section 1862(b)(1)(A)(i) of the Social Security Act and
\nneither the Company nor any Plan Affiliate has any liability for any excise tax
\nimposed by Code Section 5000.<\/p>\n
(12) With respect to any Company Scheduled Plan which is a
\nwelfare plan as defined in Section 3(1) of ERISA; (A) each such welfare plan
\nwhich is intended to meet the requirements for tax-favored treatment under
\nSubchapter B of Chapter 1 of the Code materially meets such requirements; and
\n(B) there is no disqualified benefit (as such term is defined<\/p>\n
-30-<\/p>\n
in Code Section 4976(b)) which would subject the Company or any Plan Affiliate
\nto a tax under Code Section 4976(a).<\/p>\n
(13) Each Company Scheduled Plan that has been adopted or
\nmaintained by the Company or any Plan Affiliate, whether informally or formally,
\nor with respect to which the Company or any Plan Affiliate will or may have any
\nliability, for the benefit of the Company Employees who perform services outside
\nthe United States (the “Company International Employee Plans”) has been
\nestablished, maintained and administered in material compliance with its terms
\nand conditions and with the requirements prescribed by any and all statutory or
\nregulatory laws that are applicable to such Company International Employee Plan.
\nFurthermore, no Company International Employee Plan has unfunded liabilities,
\nthat, as of the Effective Time, will not be offset by insurance or fully
\naccrued. Except as required by law, no condition exists that would prevent the
\nCompany or any Plan Affiliate from terminating or amending any Company
\nInternational Employee Plan at any time for any reason without material
\nliability to the Company or any Plan Affiliate (other than ordinary
\nadministration expenses or routine claims for benefits). To the extent any such
\nCompany International Employee Plan has not been disclosed or provided prior to
\nthe date of this Agreement, the Company agrees to use its best efforts to
\ndisclose and provide such plan prior to the Effective Time.<\/p>\n
(iv) Other than by reason of actions taken by Parent following the
\nClosing, the consummation of the transactions contemplated by this Agreement
\nwill not (A) entitle any current or former employee of the Company to severance
\npay, unemployment compensation or any other payment, (B) accelerate the time of
\npayment or vesting of any payment (other than for a terminated or frozen tax-
\nqualified plan, pursuant to a requirement herein to freeze or terminate such
\nplan), cause the forgiveness of any indebtedness, or increase the amount of any
\ncompensation due to any such employee or former employee, (C) result in any
\nprohibited transaction described in Section 406 of ERISA or Section 4975 of the
\nCode for which an exemption is not available, or (D) give rise to the payment of
\nany amount that would not be deductible pursuant to the terms of Section 280G of
\nthe Code.<\/p>\n
(n) Company Intangible Property.
\n ————————— <\/p>\n
(i) The Company and its subsidiaries own, or are licensed or
\notherwise possess legally enforceable rights to use, all patents, trademarks,
\ntrade names, service marks, copyrights and mask works, all applications for and
\nregistrations of such patents, trademarks, trade names, service marks,
\ncopyrights and mask works, and all processes, formulae, methods, schematics,
\ntechnology, know-how, computer software programs or applications and tangible or
\nintangible proprietary information or material that are necessary to conduct the
\nbusiness of the Company and its subsidiaries as currently conducted or planned
\nto be conducted (the “Company Intellectual Property Rights”). Section 5.2(n) of
\nthe Company Disclosure Schedule sets forth a list of the material software
\nlicenses to which the Company or its subsidiaries is a party.<\/p>\n
(ii) Neither the Company nor any of its subsidiaries is or will be as
\na result of the execution and delivery of this Agreement or the performance of
\nits obligations under this Agreement, in breach in any material respect of any
\nmaterial license, sublicense or other agreement<\/p>\n
-31-<\/p>\n
relating to the Company Intellectual Property Rights or any license, sublicense
\nor other agreement pursuant to which the Company or any of its subsidiaries is
\nauthorized to use any third party patents, trademarks or copyrights, including
\nsoftware, which are used in the manufacture of, incorporated in, or form a part
\nof any product of the Company or any of its subsidiaries.<\/p>\n
(iii) To the Company’s knowledge, all patents, registered trademarks,
\nservice marks and copyrights held by the Company or any of its subsidiaries
\nwhich are material to its business are valid and enforceable. Neither the
\nCompany nor any of its subsidiaries has been sued in any suit, action or
\nproceeding which involves a claim of infringement of any patent, trademark,
\nservice mark or copyright or the violation of any trade secret or other
\nproprietary rights of any third party, which infringement would be reasonably
\nlikely to have a Material Adverse Effect on the Company.<\/p>\n
(iv) The Company and its subsidiaries have taken reasonable security
\nmeasures to safeguard and maintain their property rights in all the Company
\nIntellectual Property Rights owned by the Company or its subsidiaries. The
\nCompany and its subsidiaries maintain and in all material respects abide by a
\npolicy that officers, employees and consultants of the Company or any of its
\nsubsidiaries, except for clerical and other lower level support personnel (e.g.
\nmail room, messengers, etc.), execute an agreement, in a form previously
\nprovided to Parent, regarding (i) the protection of proprietary information,
\n(ii) the assignment to the Company (or an applicable subsidiary) of all the
\nCompany Intellectual Property Rights arising from services performed for the
\nCompany or any of its subsidiaries by such Persons, (iii) the ownership by the
\nCompany or one of its subsidiaries of all the Company Intellectual Property
\nRights arising from the services performed for the Company or one of its
\nsubsidiaries by such Persons and (iv) limitations on the individual’s ability to
\nsolicit or hire Parent’s or its subsidiaries’ employees or consultants.<\/p>\n
(o) Agreements, Contracts and Commitments; Material Contracts. Except as
\n ———————————————————
\nset forth in the Section 5.2(o) of the Company Disclosure Schedule, as of the
\ndate hereof, neither the Company nor any of its subsidiaries is a party to or is
\nbound by:<\/p>\n
(i) any contract relating to the borrowing of money, the guaranty of
\nanother Person’s borrowing of money, or the creation of an encumbrance or lien
\non the assets of the Company or any of its subsidiaries and with outstanding
\nobligations in excess of $1,000,000;<\/p>\n
(ii) any employment or consulting agreement, contract or commitment
\nwith any officer or director level employee or member of the Company’s Board of
\nDirectors or any other employee who is one of the fifty (50) most highly
\ncompensated employees, including base salary and bonuses (the “Company Key
\nEmployees”), other than those that are terminable by the Company or any of its
\nsubsidiaries on no more than thirty (30) days notice without liability or
\nfinancial obligation or benefits generally available to employees of the
\nCompany, except to the extent general principles of wrongful termination law may
\nlimit the Company’s or any of its subsidiaries’ ability to terminate employees
\nat will;<\/p>\n
(iii) any agreement or plan, including, without limitation, any stock
\noption plan, stock appreciation right plan or stock purchase plan, any of the
\nbenefits of which will be<\/p>\n
-32-<\/p>\n
increased, or the vesting of benefits of which will be accelerated, by the
\noccurrence of any of the transactions contemplated by this Agreement or the
\nvalue of any of the benefits of which will be calculated on the basis of any of
\nthe transactions contemplated by this Agreement;<\/p>\n
(iv) any agreement of indemnification or guaranty by the Company or
\nany of its subsidiaries not entered into in the ordinary course of business
\nother than indemnification agreements between the Company or any of its
\nsubsidiaries and any of its officers or directors in standard forms as filed by
\nthe Company with the SEC;<\/p>\n
(v) any agreement, contract or commitment containing any covenant
\nlimiting the freedom of the Company or any of its subsidiaries to engage in any
\nline of business or conduct business in any geographical area, compete with any
\nperson or granting any exclusive distribution rights;<\/p>\n
(vi) any joint venture, partnership, and other Contract (however
\nnamed) involving a sharing of profits or losses by the Company or any subsidiary
\nwith any other Person;<\/p>\n
(vii) any contract for capital expenditures in excess of $1,000,000;<\/p>\n
(viii) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition of assets not in the ordinary course
\nof business;<\/p>\n
(ix) any agreement, contract or commitment for the purchase of any
\nownership interest in any corporation, partnership, joint venture or other
\nbusiness enterprise for consideration in excess of $2,500,000, in any case,
\nwhich includes all escrow and earn-out agreements with outstanding obligations;
\nor<\/p>\n
(x) any material joint marketing, distribution or development
\nagreement or other material contract of the Company or any of its subsidiaries
\nnot previously filed with the SEC and not otherwise listed in any other section
\nof the Company Disclosure Schedule.<\/p>\n
A true and complete copy (including all amendments) of each Company
\nContract (or if standard forms are used, copies of the applicable forms with an
\nindication of any material differences from the actual listed Company Contract),
\nor a summary of each oral contract, has been made available to Parent, excluding
\nthose Company Contracts referenced in clauses (vii). Each contract set forth in
\nSection 5.2(o)(i)-(x) of the Company Disclosure Schedule (a “Company Contract”)
\nand each Company Material Contract (as defined below) is in full force and
\neffect, and is a legal, valid and binding obligation of the Company or a
\nsubsidiary of the Company and, to the knowledge of the Company, each of the
\nother parties thereto, enforceable in accordance with its terms, except (a) that
\nthe enforcement thereof may be limited by (i) bankruptcy, insolvency,
\nreorganization, moratorium or other similar laws now or hereafter in effect
\nrelating to creditors’ rights generally and (ii) general principles of equity
\n(regardless of whether enforceability is considered in a proceeding in equity or
\nat law) and (b) as would not, individually or in the aggregate, be reasonably
\nexpected to result in a Material Adverse Effect with respect to the Company on
\nthe Company. No condition exists or event has occurred which (whether with or
\nwithout notice or lapse<\/p>\n
-33-<\/p>\n
of time or both, or the happening or occurrence of any other event) would
\nconstitute a default by the Company or a subsidiary of the Company or, to the
\nknowledge of the Company, any other party thereto under, or result in a right in
\ntermination of, any Company Contract or Company Material Contract, except as
\nwould not, individually or in the aggregate, be reasonably expected to result in
\na Material Adverse Effect on the Company. The term “Company Material Contract”
\nshall mean any contract that is material to the Company and its subsidiaries,
\ntaken as a whole.<\/p>\n
(p) Unlawful Payments and Contributions. To the knowledge of the Company,
\n ———————————–
\nneither the Company, any subsidiary of the Company nor any of their respective
\ndirectors, officers, employees or agents has, with respect to the businesses of
\nthe Company or its subsidiaries, (i) used any funds for any unlawful
\ncontribution, endorsement, gift, entertainment or other unlawful expense
\nrelating to political activity; (ii) made any direct or indirect unlawful
\npayment to any foreign or domestic government official or employee; (iii)
\nviolated or is in violation of any provision of the Foreign Corrupt Practices
\nAct of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence
\npayment, kickback or other unlawful payment to any Person or entity.<\/p>\n
(q) Listings. The Company’s securities are not listed, or quoted, for
\n ——–
\ntrading on any U.S. domestic or foreign securities exchange, other than the NNM.<\/p>\n
(r) Environmental Matters. Except as disclosed in the Company SEC Reports
\n ———————
\nfiled prior to the date hereof, (i) the Company and its subsidiaries and the
\noperations, assets and properties thereof are in material compliance with all
\nEnvironmental Laws; (ii) there are no judicial or administrative actions, suits,
\nproceedings or investigations pending or, to the knowledge of the Company,
\nthreatened against the Company or any subsidiary of the Company alleging the
\nviolation of any Environmental Law and neither the Company nor any subsidiary of
\nthe Company has received notice from any governmental body or Person alleging
\nany violation of or liability under any Environmental Laws, in either case which
\ncould reasonably be expected to result in material Environmental Costs and
\nLiabilities; (iii) to the knowledge of the Company, there are no facts,
\ncircumstances or conditions relating to, arising from, associated with or
\nattributable to the Company or its subsidiaries or any real property currently
\nor previously owned, operated or leased by the Company or its subsidiaries that
\ncould reasonably be expected to result in material Environmental Costs and
\nLiabilities; and (iv) to the knowledge of the Company, neither the Company nor
\nany of its subsidiaries has ever generated, transported, treated, stored,
\nhandled or disposed of any Hazardous Material at any site, location or facility
\nin a manner that could create any material Environmental Costs and Liabilities
\nunder any Environmental Law, and no such Hazardous Material has been or is
\ncurrently present on, in, at or under any real property owned or used by the
\nCompany or any of its subsidiaries in a manner that could create any
\nEnvironmental Costs and Liabilities (including without limitation, containment
\nby means of any underground or aboveground storage tank).<\/p>\n
(s) Title to Properties; Liens; Condition of Properties.
\n ————————————————— <\/p>\n
(i) The Company and its subsidiaries have good and marketable title
\nto, or a valid leasehold interest in, the real and personal property, located on
\ntheir premises or shown on their most recent balance sheet or acquired after the
\ndate thereof. None of the property owned or used by the Company or any of its
\nsubsidiaries is subject to any mortgage, pledge, deed of trust, lien<\/p>\n
-34-<\/p>\n
(other than for taxes not yet due and payable), conditional sale agreement,
\nsecurity title, encumbrance, or other adverse claim or interest of any kind.
\nSince September 30, 1999, there has not been any sale, lease, or any other
\ndisposition or distribution by the Company or any of its subsidiaries of any of
\nits assets or properties material to the Company and its subsidiaries, taken as
\na whole, except transactions in the ordinary and regular course of business.<\/p>\n
(ii) The Company has delivered to Parent a schedule of all material
\nleases, subleases, rental agreements, contracts of sale, tenancies or licenses
\nrelated to any of the real property used by the Company or any of its
\nsubsidiaries in their respective businesses. All such leases are valid, binding
\nand enforceable in accordance with their terms against the parties thereto, and
\neach such lease is subsisting and no default exists under any thereof. Neither
\nthe Company nor any of its subsidiaries has received notice that any party to
\nany such lease intends to cancel, terminate or refuse to renew the same or to
\nexercise or decline to exercise any option or any right thereunder.<\/p>\n
(t) Labor and Employee Relations.
\n —————————- <\/p>\n
(i) Neither the Company nor any of its subsidiaries is a party to any
\nemployment, consulting, non-competition, severance, golden parachute,
\nindemnification agreement or any other material employment or consulting
\nagreement providing for payments or benefits or the acceleration of payments or
\nbenefits upon the change of control of the Company (including, without
\nlimitation, any contract to which the Company is a party involving employees of
\nthe Company).<\/p>\n
(ii) Except as required by applicable law in non-U.S. jurisdictions,
\n(A) none of the employees of the Company or any of its subsidiaries is
\nrepresented in his or her capacity as an employee of such company by any labor
\norganization; (B) neither the Company nor any of its subsidiaries has recognized
\nany labor organization nor has any labor organization been elected as the
\ncollective bargaining agent of any of their employees, nor has the Company or
\nany of its subsidiaries signed any collective bargaining agreement or union
\ncontract recognizing any labor organization as the bargaining agent of any of
\ntheir employees; and (C) to the knowledge of the Company, there is no active or
\ncurrent union organization activity involving the employees of the Company or
\nany of its subsidiaries, nor has there ever been union representation involving
\nemployees of the Company or any of its subsidiaries.<\/p>\n
(iii) Except for complaints which, in the aggregate, do not represent
\nclaims which could reasonably involve liabilities in excess of $2,000,000, there
\nare no complaints against the Company or any of its subsidiaries pending or, to
\nthe knowledge of the Company, overtly threatened before the National Labor
\nRelations Board or any similar foreign, state or local labor agencies, or before
\nthe Equal Employment Opportunity Commission or any similar foreign, state or
\nlocal agency, or before any other governmental agency or entity by or on behalf
\nof any employee or former employee of the Company or any of its subsidiaries.<\/p>\n
(iv) The Company has provided to Parent a description of all written
\nemployment policies under which the Company and each subsidiary is operating.<\/p>\n
-35-<\/p>\n
(v) The Company and each of its subsidiaries is in compliance with all
\nFederal, foreign (as applicable), and state laws regarding employment practices,
\nincluding laws relating to workers’ safety, sexual harassment or discrimination,
\nexcept where the failure to so be in compliance, individually or in the
\naggregate, would not have a Material Adverse Effect on the Company.<\/p>\n
(vi) To the knowledge of the Company, as of the date hereof, no
\nexecutive, key employee or group of employees has any plans to terminate his or
\nher employment with the Company or any of its subsidiaries.<\/p>\n
(vii) Section 5.2(t) of the Company Disclosure Schedule lists the
\nfollowing information with respect to the Company Key Employees.<\/p>\n
(1) position; and<\/p>\n
(2) any non-compete or non solicitation agreement they are
\n bound by.<\/p>\n
(u) Permits. The Company and each of its subsidiaries hold all licenses,
\n ——-
\npermits, registrations, orders, authorizations, approvals and franchises which
\nare required to permit it to conduct its businesses as presently conducted,
\nexcept where the failure to hold such licenses, permits, registrations, orders,
\nauthorizations, approvals or franchises would not, individually or in the
\naggregate, have a Material Adverse Effect on the Company. All such material
\nlicenses, permits, registrations, orders, authorizations, approvals and
\nfranchises are now, and will be after the Closing, valid and in full force and
\neffect, and Parent shall have full benefit of the same, except where the failure
\nto be valid and in full force and effect or to have the benefit of any such
\nlicense, permit, registration, order, authorization, approval or franchise would
\nnot, individually or in the aggregate, have a Material Adverse Effect on the
\nCompany. Neither the Company nor any of its subsidiaries has received any
\nnotification of any asserted present failure (or past and unremedied failure) by
\nit to have obtained any such license, permit, registration, order,
\nauthorization, approval or franchise, except where such failures would not, in
\nthe aggregate, have a Material Adverse Effect on the Company.<\/p>\n
(v) Warranty or Other Claims. The Company has provided to the Company a
\n ————————
\ncopy of its standard form agreement for services. It is the Company’s practice
\nand policy to adhere to the form terms, except to the extent not commercially
\npracticable.<\/p>\n
(w) Transactions with Affiliates. Except as set forth in the Company SEC
\n —————————-
\nReports filed prior to the date of this Agreement, since the date of Company’s
\nlast proxy statement to its stockholders, no event has occurred that would be
\nrequired to be reported by Company as a Certain Relationship or Related
\nTransaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.<\/p>\n
-36-<\/p>\n
(x) Computer Software. The occurrence in or use by any material Software
\n —————–
\nused by the Company and its subsidiaries of dates on or after January 1, 2000
\nwill not result in any Malfunction.<\/p>\n
(y) State Takeover Laws. The Board of Directors of the Company has taken
\n ——————-
\nall necessary action so that the restrictions contained in Section 203 of the
\nDGCL applicable to a “business combination” (as defined in Section 203) will not
\napply to the execution, delivery or performance of this Agreement or the
\nStockholder Agreements or the consummation of the Merger or the other
\ntransactions contemplated by this Agreement or the Stockholder Agreements. No
\nother state takeover statute or similar statute or regulation is applicable to
\nthis Agreement or the Stockholder Agreements.<\/p>\n
ARTICLE VI<\/p>\n
Additional Covenants and Agreements<\/p>\n
6.1 Conduct of Business
\n ——————-<\/p>\n
(a) Parent and the Company each covenant and agree that, during the period
\nfrom the date of this Agreement to the Effective Time (unless the Parties shall
\notherwise agree in writing and except as otherwise contemplated by this
\nAgreement), Parent and the Company each will, and will cause each of their
\nsubsidiaries to, conduct their operations according to their ordinary and usual
\ncourse of business consistent with past practice and, to the extent consistent
\ntherewith, with no less diligence and effort than would be applied in the
\nabsence of this Agreement, seek to preserve intact their current business
\norganizations, use their reasonable efforts to keep available the service of its
\ncurrent officers and employees and preserve their relationships with customers,
\nsuppliers and others having business dealings with them to the end that goodwill
\nand ongoing businesses shall be unimpaired at the Effective Time.<\/p>\n
(b) Without limiting the generality of the foregoing, and except as
\notherwise permitted in this Agreement, prior to the Effective Time, Parent and
\nthe Company shall not, and each shall cause each of their subsidiaries not to,
\nwithout the prior written consent of the other Parties:<\/p>\n
(i) except as set forth in Section 6.1(b) of the Company Disclosure
\nSchedule, accelerate, amend or change the period of exercisability of any
\noutstanding options or restricted stock, reprice options granted under the
\nCompany Option Plans or Parent Option Plans or authorize cash payments in
\nexchange for any options granted under any of such plans, as the case may be, or
\nauthorize cash payments in exchange for any options granted under any of such
\nplans, except to the extent required under any Company Option Plan or Parent
\nOption Plan, as the case may be, or any individual agreement as in effect on the
\ndate hereof (or, if entered into after the date hereof in compliance with this
\nSection 6.1(b), such agreement which shall be in the standard form thereof as in
\neffect on the date hereof);<\/p>\n
-37-<\/p>\n
(ii) except (v) for issuances of shares of common stock of Merger Sub
\nto Parent, (w) as set forth in Section 6.1(b) of the Parent Disclosure Schedule
\nor the Company Disclosure Schedule, as the case may be, (x) for shares to be
\nissued upon exercise of outstanding options or warrants or options and warrants
\ngranted in compliance with clauses (w) or (y) hereof, and (y) for grants of
\nstock options in the ordinary course consistent with past practice pursuant to
\nthe Parent Option Plans or Company Option Plans, as the case may be, in
\nconnection with new hires or in accordance with regularly scheduled periodic
\ngrants, not to exceed 4,000,000 shares, in all cases, for each of Parent and the
\nCompany, respectively, issue, deliver, sell, dispose of, pledge or otherwise
\nencumber, or authorize or propose the issuance, sale, disposition or pledge or
\nother encumbrance of (A) any additional shares of capital stock of any class, or
\nany securities or rights convertible into, exchangeable for, or evidencing the
\nright to subscribe for any shares of capital stock, or any rights, warrants,
\noptions, calls, commitments or any other agreements of any character to purchase
\nor acquire any shares of capital stock or any securities or rights convertible
\ninto, exchangeable for, or evidencing the right to subscribe for, any shares of
\ncapital stock, or (B) any other securities in respect of, in lieu of, or in
\nsubstitution for, shares outstanding on the date hereof;<\/p>\n
(iii) redeem, purchase or otherwise acquire, or offer to redeem,
\npurchase or otherwise acquire, any of its outstanding securities (including the
\nParent Shares or the Company Shares, as the case may be), other than the
\nrepurchase of securities from service providers upon their termination from
\nservice with Parent or the Company, as the case may be, at the original purchase
\nprice;<\/p>\n
(iv) split, combine, subdivide or reclassify any shares of its capital
\nstock or declare, set aside for payment or pay any dividend, or make any other
\nactual, constructive or deemed distribution in respect of any shares of its
\ncapital stock or otherwise make any payments to stockholders in their capacity
\nas such;<\/p>\n
(v) adopt a plan of complete or partial liquidation, dissolution,
\nmerger, consolidation, restructuring, recapitalization or other reorganization
\n(other than the Merger as provided for herein);<\/p>\n
(vi) adopt any amendments to its Certificate or Articles of
\nIncorporation, as the case may be, or By-Laws or alter through merger,
\nliquidation, reorganization, restructuring or in any other fashion the corporate
\nstructure or ownership of any of its subsidiaries, except to increase the
\nauthorized capital stock or reduce the par value of the capital stock of Merger
\nSub;<\/p>\n
(vii) other than as set forth in Section 6.1(b) of the Parent
\nDisclosure Schedule or the Company Disclosure Schedule, as applicable, make any
\nacquisition, by means of merger, consolidation or otherwise, or dispositions, of
\nassets or securities (except for acquisitions or dispositions in the ordinary
\ncourse of business none of which are acquisitions of businesses);<\/p>\n
(viii) other than in the ordinary course of business consistent with
\npast practice, except as set forth in Section 6.1(b) of the Parent Disclosure
\nSchedule or the Company Disclosure Schedule, incur any indebtedness for borrowed
\nmoney or guarantee any such<\/p>\n
-38-<\/p>\n
indebtedness or make any loans, advances or capital contributions to, or
\ninvestments in, any other Person;<\/p>\n
(ix) make or revoke any material Tax election, settle or compromise
\nany material federal, state, local or foreign Tax liability or change (or make a
\nrequest to any taxing authority to change) any material aspect of its method of
\naccounting for Tax purposes (except for Tax elections which are consistent with
\nprior such elections (in past years);<\/p>\n
(x) incur any material liability for Taxes other than in the ordinary
\ncourse of business;<\/p>\n
(xi) incur or commit to incur any capital expenditures in excess of
\ncurrent budgets for capital expenditures which were provided by the Company or
\nParent to the other party prior to the date hereof;<\/p>\n
(xii) enter into any contract material to Parent or the Company as the
\ncase may be, and its subsidiaries, taken as a whole;<\/p>\n
(xiii) enter into any strategic alliance or joint marketing
\narrangement or agreement other than routine alliances, arrangements or
\nagreements;<\/p>\n
(xiv) pay, discharge, settle or satisfy any material claims,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise) or litigation (whether or not commenced prior to the
\ndate of this Agreement), other than the payment, discharge, settlement or
\nsatisfaction, in the ordinary course of business consistent with past practice
\nor in accordance with its terms, of any liability recognized or disclosed in the
\nmost recent Parent Financial Statements (September 30, 1999) or Company
\nFinancial Statements (September 30, 1999) (or the notes thereto), as applicable,
\nor incurred since the date of such financial statements, or (B) voluntarily
\nwaive the benefits of, or agree to modify in any manner, terminate or release
\nany Person from any non-competition, confidentiality, standstill or similar
\nagreement to which Parent or any of its subsidiaries or the Company or any of
\nits subsidiaries, as applicable, is a party or of which any of them is a
\nbeneficiary;<\/p>\n
(xv) except as required by this Agreement or as required to be held in
\naccordance with a valid stockholder request, call or hold any meeting of
\nstockholders of the Company or Parent other than an annual meeting of
\nshareholders which considers routine matters in the ordinary course of business
\nconsistent with past practices;<\/p>\n
(xvi) transfer or license to any Person or entity or otherwise extend,
\namend or modify any material rights to the Parent Intellectual Property Rights
\nor the Company Intellectual Property Rights, as applicable, other than in the
\nordinary course of business consistent with past practices or on a non-exclusive
\nbasis not materially different from past practices;<\/p>\n
(xvii) make any change to accounting policies or procedures, except as
\nmay be required by generally accepted accounting principles or applicable law;
\nor<\/p>\n
-39-<\/p>\n
(xviii) authorize, recommend, propose or announce an intention to do
\nany of the foregoing, or enter into any contract, agreement, commitment or
\narrangement to do any of the foregoing.<\/p>\n
(c) Between the date hereof and the Effective Time, except as contemplated
\nherein, Parent, the Company and their subsidiaries shall not (without the prior
\nwritten consent of the Parties hereto) (A) except for normal increases in the
\nordinary course of business consistent with past practice that, in the
\naggregate, do not materially increase benefits or compensation expenses of
\nParent and its subsidiaries, or the Company and its subsidiaries, or as
\ncontemplated by the terms of any contract the existence of which does not
\nconstitute a violation of this Agreement, increase the compensation, bonus or
\nother benefits of any director, officer or other employee; (B) pay or agree to
\npay any pension, retirement allowance or other employee benefit not required or
\ncontemplated by any of the existing benefit, severance, pension or employment
\nplans, agreements or arrangements as in effect on the date hereof to any such
\ndirector, officer or employee, whether past or present; (C) enter into any new
\nor amend any existing employment or severance agreement with any such director,
\nofficer or employee; (D) except as may be required to comply with applicable
\nlaw, become obligated under any new pension plan, welfare plan, multi-employer
\nplan, employee benefit plan, severance plan, benefit arrangement, or similar
\nplan or arrangement, which was not in existence on the date hereof, or amend,
\nterminate or change any funding policies or assumptions for any such plan or
\narrangement in existence on the date hereof if such amendment, termination or
\nchange would have the effect of enhancing any benefits thereunder or increasing
\nthe cost thereof to Parent or the Company or (E) increase the total head count
\nof Parent and its subsidiaries, or the Company and its subsidiaries, in an
\namount greater than an increase in the ordinary course of business consistent
\nwith past practice.<\/p>\n
6.2 No Solicitation by the Company.
\n ——————————<\/p>\n
(a) From and after the date of this Agreement until the Effective Time or
\nthe earlier termination of this Agreement in accordance with its terms, the
\nCompany and its subsidiaries will not, and will not permit their respective
\ndirectors, officers, investment bankers, affiliates, representatives and agents
\nto, (i) solicit, initiate, or encourage (including by way of furnishing
\ninformation), or take any other action to facilitate, any inquiries or proposals
\nthat constitute, or could reasonably be expected to lead to, any Company
\nAcquisition Proposal (as defined below), or (ii) engage in, or enter into, any
\nnegotiations or discussions concerning any Company Acquisition Proposal.
\nNotwithstanding the foregoing, in the event that, notwithstanding compliance
\nwith the preceding sentence, the Company receives a Company Superior Proposal
\n(as defined below) the Company may, to the extent that the Board of Directors of
\nthe Company determines in good faith (in consultation with outside counsel) that
\nsuch action would, in the absence of the foregoing proscriptions, be required by
\nits fiduciary duties, participate in discussions regarding any Company Superior
\nProposal in order to be informed with respect thereto in order to make any
\ndetermination permitted pursuant to Section 6.2(b)(i). In such event, the
\nCompany shall, (i) no less than twenty four (24) hours prior to participating in
\nany such discussions, inform Parent of the material terms and conditions of such
\nCompany Superior Proposal, including the identity of the Person making such
\nCompany Superior Proposal and (ii) promptly keep Parent informed of the status
\nincluding any<\/p>\n
-40-<\/p>\n
material change to the terms of any such Company Superior Proposal. As used
\nherein, the term “Company Acquisition Proposal” shall mean any bona fide
\ninquiry, proposal or offer relating to any (i) merger, consolidation, business
\ncombination, or similar transaction involving the Company or any subsidiary of
\nthe Company, (ii) sale, lease or other disposition, directly or indirectly, by
\nmerger, consolidation, share exchange or otherwise, of any assets of the Company
\nor any subsidiary of the Company in one or more transactions, (iii) issuance,
\nsale, or other disposition of (including by way of merger, consolidation, share
\nexchange or any similar transaction) securities (or options, rights or warrants
\nto purchase such securities, or securities convertible into such securities) of
\nthe Company or any subsidiary of the Company, (iv) liquidation, dissolution,
\nrecapitalization or other similar type of transaction with respect to the
\nCompany or any subsidiary of the Company, (v) tender offer or exchange offer for
\nCompany securities; in the case of (i), (ii), (iii), (iv) or (v) above, which
\ntransaction would result in a third party (or its shareholders) acquiring more
\nthan thirty-five percent (35%) of the voting power of the Company or the assets
\nrepresenting more than thirty-five percent (35%) of the net income, net revenue
\nor assets of the Company on a consolidated basis, (vi) transaction which is
\nsimilar in form, substance or purpose to any of the foregoing transactions or
\n(vii) public announcement of an agreement, proposal, plan or intention to do any
\nof the foregoing, provided, however, that the term “Company Acquisition
\n ——– ——-
\nProposal” shall not include the Merger and the transactions contemplated
\nthereby. For purposes of this Agreement, “Company Superior Proposal” means any
\noffer not solicited by the Company, or by other persons in violation of the
\nfirst sentence of this Section 6.2(a), and made by a third party to consummate a
\ntender offer, exchange offer, merger, consolidation or similar transaction which
\nwould result in such third party (or its shareholders) owning, directly or
\nindirectly, more than fifty percent (50%) of the Company Shares then outstanding
\n(or of the surviving entity in a merger) or all or substantially all of the
\nassets of Company and its subsidiaries, taken together, and otherwise on terms
\nwhich the Board of Directors of the Company determines in good faith (based on
\nits consultation with a financial advisor of nationally recognized reputation
\nand other such matters that it deems relevant) would, if consummated, result in
\na transaction more favorable to the Company’s stockholders from a financial
\npoint of view than the Merger and, in the reasonable good faith judgment of the
\nBoard of Directors of the Company after consultation with its financial advisor
\nthe persons or entity making such Company Superior Proposal has the financial
\nmeans to conclude such transaction. The Company will immediately cease any and
\nall existing activities, discussions or negotiations with any parties conducted
\nheretofore with respect to any of the foregoing.<\/p>\n
(b) Neither the Board of Directors of the Company nor any committee thereof
\nshall (i) except as required by their fiduciary duties as determined in good
\nfaith in consultation with outside counsel, withdraw or modify, or propose to
\nwithdraw or modify, in a manner adverse to Parent or Merger Sub, the approval or
\nrecommendation by the Board of Directors of the Company or such committee of
\nthis Agreement or the Merger, (ii) approve, recommend, or otherwise support or
\nendorse any Company Acquisition Proposal, or (iii) cause the Company to enter
\ninto any letter of intent, agreement in principle, acquisition agreement or
\nsimilar agreement (each a “Company Acquisition Agreement”) with respect to any
\nCompany Acquisition Proposal. Nothing contained in this Section 6.2 shall
\nprohibit the Company from taking and disclosing to its stockholders a position
\ncontemplated by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from
\nmaking any disclosure to the Company’s stockholders if, in the good faith
\njudgment of the Board of Directors of<\/p>\n
-41-<\/p>\n
the Company, in consultation with outside counsel, such disclosure is necessary
\nfor the Board of Directors to comply with its fiduciary duties under applicable
\nlaw; provided, however, that, subject to Section 6.2(b)(i), neither the
\n ——– ——-
\nCompany nor its Board of Directors nor any committee thereof shall withdraw or
\nmodify, or propose publicly to withdraw or modify, its position with respect to
\nthis Agreement or the Merger or approve or recommend or propose publicly to
\napprove or recommend, a Company Acquisition Proposal.<\/p>\n
(c) In addition to the obligations of the Company set forth in paragraphs
\n(a) and (b) of this Section 6.2, the Company will promptly (and in any event
\nwithin twenty-four (24) hours) advise Parent, orally and in writing, if any
\nCompany Acquisition Proposal is made or proposed to be made or any information
\nor access to properties, books or records of the Company is requested in
\nconnection with a Company Acquisition Proposal, the principal terms and
\nconditions of any such Company Acquisition Proposal or potential Company
\nAcquisition Proposal or inquiry (and will disclose any written materials
\nreceived by the Company in connection with such Company Acquisition Proposal,
\npotential Company Acquisition Proposal or inquiry) and the identity of the party
\nmaking such Company Acquisition Proposal, potential Company Acquisition Proposal
\nor inquiry. The Company will keep Parent advised of the status and details
\n(including amendments and proposed amendments) of any such request or Company
\nAcquisition Proposal.<\/p>\n
6.3 No Solicitation by Parent.
\n ————————-<\/p>\n
(a) From and after the date of this Agreement until the Effective Time or
\nthe earlier termination of this Agreement in accordance with its terms, Parent
\nand its subsidiaries will not, and will not permit their respective directors,
\nofficers, investment bankers, affiliates, representatives and agents to, (i)
\nsolicit, initiate, or encourage (including by way of furnishing information), or
\ntake any other action to facilitate, any inquiries or proposals that constitute,
\nor could reasonably be expected to lead to, any Parent Acquisition Proposal (as
\ndefined below), or (ii) engage in, or enter into, any negotiations or
\ndiscussions concerning any Parent Acquisition Proposal. Notwithstanding the
\nforegoing, in the event that, notwithstanding compliance with the preceding
\nsentence, Parent receives a Parent Superior Proposal (as defined below) Parent
\nmay, to the extent that the Board of Directors of Parent determines in good
\nfaith (in consultation with outside counsel) that such action would, in the
\nabsence of the foregoing proscriptions, be required by its fiduciary duties,
\nparticipate in discussions regarding any Parent Superior Proposal in order to be
\ninformed with respect thereto in order to make any determination permitted
\npursuant to Section 6.3(b)(i). In such event, Parent shall, (i) no less than
\ntwenty four (24) hours prior to participating in any such discussions, inform
\nthe Company of the material terms and conditions of such Parent Superior
\nProposal, including the identity of the Person making such Parent Superior
\nProposal and (ii) promptly keep the Company informed of the status including any
\nmaterial change to the terms of any such Parent Superior Proposal. As used
\nherein, the term “Parent Acquisition Proposal” shall mean any bona fide inquiry,
\nproposal or offer relating to any (i) merger, consolidation, business
\ncombination, or similar transaction involving Parent or any subsidiary of
\nParent, (ii) sale, lease or other disposition, directly or indirectly, by
\nmerger, consolidation, share exchange or otherwise, of any assets of Parent or
\nany subsidiary of Parent in one or more transactions, (iii) issuance, sale, or
\nother disposition of (including by way of merger, consolidation, share exchange
\nor any similar<\/p>\n
-42-<\/p>\n
transaction) securities (or options, rights or warrants to purchase such
\nsecurities, or securities convertible into such securities) of Parent or any
\nsubsidiary of Parent, (iv) liquidation, dissolution, recapitalization or other
\nsimilar type of transaction with respect to Parent or any subsidiary of Parent,
\n(v) tender offer or exchange offer for Parent securities; in the case of (i),
\n(ii), (iii), (iv) or (v) above, which transaction would result in a third party
\n(or its shareholders) acquiring more than thirty-five percent (35%) of the
\nvoting power of Parent or the assets representing more than thirty-five percent
\n(35%) of the net income, net revenue or assets of Parent on a consolidated
\nbasis, (vi) transaction which is similar in form, substance or purpose to any of
\nthe foregoing transactions or (vii) public announcement of an agreement,
\nproposal, plan or intention to do any of the foregoing, provided, however, that
\n ——– ——-
\nthe term “Parent Acquisition Proposal” shall not include the Merger and the
\ntransactions contemplated thereby. For purposes of this Agreement, “Parent
\nSuperior Proposal” means any offer not solicited by Parent, or by other persons
\nin violation of the first sentence of this Section 6.3(a), and made by a third
\nparty to consummate a tender offer, exchange offer, merger, consolidation or
\nsimilar transaction which would result in such third party (or its shareholders)
\nowning, directly or indirectly, more than fifty percent (50%) of Parent Shares
\nthen outstanding (or of the surviving entity in a merger) or all or
\nsubstantially all of the assets of Parent and its subsidiaries, taken together,
\nand otherwise on terms which the Board of Directors of Parent determines in good
\nfaith (based on its consultation with a financial advisor of nationally
\nrecognized reputation and other such matters that it deems relevant) would, if
\nconsummated, result in a transaction more favorable to Parent’s stockholders
\nfrom a financial point of view than the Merger and, in the reasonable good faith
\njudgment of the Board of Directors of Parent after consultation with its
\nfinancial advisor the persons or entity making such Parent Superior Proposal has
\nthe financial means to conclude such transaction. Parent will immediately cease
\nany and all existing activities, discussions or negotiations with any parties
\nconducted heretofore with respect to any of the foregoing.<\/p>\n
(b) Neither the Board of Directors of Parent nor any committee thereof
\nshall (i) except as required by their fiduciary duties as determined in good
\nfaith in consultation with outside counsel, withdraw or modify, or propose to
\nwithdraw or modify, in a manner adverse to the Company, the approval or
\nrecommendation by the Board of Directors of Parent or such committee of the
\namendment to Parent’s Certificate of Incorporation and the approval of the
\nissuance of Parent Shares, (ii) approve, recommend, or otherwise support or
\nendorse any Parent Acquisition Proposal, or (iii) cause Parent to enter into any
\nletter of intent, agreement in principle, acquisition agreement or similar
\nagreement (each a “Parent Acquisition Agreement”) with respect to any Parent
\nAcquisition Proposal. Nothing contained in this Section 6.3 shall prohibit
\nParent from taking and disclosing to its stockholders a position contemplated by
\nRule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any
\ndisclosure to Parent’s stockholders if, in the good faith judgment of the Board
\nof Directors of Parent, in consultation with outside counsel, such disclosure is
\nnecessary for the Board of Directors to comply with its fiduciary duties under
\napplicable law; provided, however, that, subject to Section 6.3(b)(i), neither
\n ——– ——-
\nParent nor its Board of Directors nor any committee thereof shall withdraw or
\nmodify, or propose publicly to withdraw or modify, its position with respect to
\nthis Agreement or the Merger or approve or recommend or propose publicly to
\napprove or recommend, a Parent Acquisition Proposal.<\/p>\n
-43-<\/p>\n
(c) In addition to the obligations of Parent set forth in paragraphs (a)
\nand (b) of this Section 6.3, Parent will promptly (and in any event within
\ntwenty-four (24) hours) advise the Company, orally and in writing, if any Parent
\nAcquisition Proposal is made or proposed to be made or any information or access
\nto properties, books or records of Parent is requested in connection with a
\nParent Acquisition Proposal, the principal terms and conditions of any such
\nParent Acquisition Proposal or potential Parent Acquisition Proposal or inquiry
\n(and will disclose any written materials received by Parent in connection with
\nsuch Parent Acquisition Proposal, potential Parent Acquisition Proposal or
\ninquiry) and the identity of the party making such Parent Acquisition Proposal,
\npotential Parent Acquisition Proposal or inquiry. Parent will keep the Company
\nadvised of the status and details (including amendments and proposed amendments)
\nof any such request or Parent Acquisition Proposal.<\/p>\n
6.4 Meeting of Stockholders. Parent, on the one hand, and the Company
\n ———————–
\non the other, shall each take all action necessary in accordance with applicable
\nlaw and its Certificate of Incorporation and By-Laws to convene a meeting of its
\nstockholders (the “Stockholder Meetings”) as promptly as practicable to consider
\nand vote upon the approval of the Merger and the issuance of the Parent Shares,
\nas the case may be. Subject to the fiduciary duties of each Party’s Board of
\nDirectors under applicable law in consultation with independent legal counsel
\n(who may be the Party’s regularly engaged independent legal counsel), the Board
\nof Directors of Parent, on the one hand, and the Company, on the other, shall
\nrecommend and each shall declare advisable such approval (the requisite approval
\nby stockholders of the Company as well as by stockholders of Parent is
\nhereinafter referred to collectively as the “Requisite Stockholder Approval”);
\nprovided, however, that the Board of Directors of Parent and the Board of
\nDirectors of the Company shall submit this Agreement to the stockholders of
\nParent and the Company, as the case may be, whether or not the Board of
\nDirectors of Parent or the Board of Directors of the Company, as the case may
\nbe, at any time subsequent to the date hereof determines that this Agreement is
\nno longer advisable or recommends that the stockholders of Parent or the
\nCompany, as the case may be, reject it. Unless the Board of Directors of Parent
\nor the Board of Directors of the Company, as the case may be, has withdrawn its
\nrecommendation of this Agreement in compliance herewith, each of Parent and the
\nCompany shall use reasonable efforts to solicit from its stockholders proxies in
\nfavor of the approval and adoption of this Agreement and the Merger and to
\nsecure the vote or consent of stockholders required by the DGCL and its
\nrespective Certificate of Incorporation and Bylaws to approve and adopt this
\nAgreement and the Merger and the issuance of Parent Shares, as the case may be.<\/p>\n
6.5 Registration Statement. Parent will, as promptly as practicable,
\n ———————-
\nprepare and file with the SEC a registration statement on Form S-4 (the “S-4
\nRegistration Statement”), containing a proxy statement\/prospectus and a form of
\nproxy, in connection with the registration under the Securities Act of the
\nParent Shares issuable upon conversion of the Shares and the other transactions
\ncontemplated hereby. The Company and Parent will, as promptly as practicable,
\nprepare and file with the SEC a proxy statement that will be the same proxy
\nstatement\/prospectus contained in the S-4 Registration Statement and a form of
\nproxy, in connection with the vote of the Company’s and Parent’s stockholders
\nwith respect to the Merger and the issuance of the Parent Shares (such proxy
\nstatement\/prospectus, together with any amendments thereof or supplements
\nthereto, in each case in the form or forms mailed to the Company’s and Parent’s
\nstockholders, is herein called the “Joint<\/p>\n
-44-<\/p>\n
Proxy Statement”). The Company and Parent will, and will cause their
\naccountants and lawyers to, use their reasonable efforts to have or cause the S-
\n4 Registration Statement declared effective as promptly as practicable,
\nincluding, without limitation, causing their accountants to deliver necessary or
\nrequired instruments such as opinions, consents and certificates, and will take
\nany other action required or necessary to be taken under federal or state
\nsecurities laws or otherwise in connection with the registration process, it
\nbeing understood and agreed that Katten Muchin & Zavis, counsel to Parent, and
\nWilson Sonsini Goodrich & Rosati, P.C., counsel to the Company, will each render
\nthe tax opinions referred to in Section 7.1(g) and 7.1(h), respectively, on (i)
\nthe date the preliminary Joint Proxy Statement is filed with the SEC and (ii)
\nthe date the S-4 Registration Statement is filed with the SEC. The Company and
\nParent will each use their reasonable efforts to cause the Joint Proxy Statement
\nto be mailed to their respective stockholders at the earliest practicable date
\nand will coordinate and cooperate with one another with respect to the timing of
\nthe Stockholder Meetings and the Company and Parent shall each use their
\ncommercially reasonable efforts to hold such Stockholder Meetings as soon as
\npracticable after the date hereof. Parent shall also take any action required
\nto be taken under state blue sky or other securities laws in connection with the
\nissuance of Parent Shares in the Merger.<\/p>\n
6.6 Reasonable Efforts. The Parties shall: (i) promptly make
\n ——————
\ntheir respective filings and thereafter make any other required submissions
\nunder all applicable laws with respect to the Merger and the other transactions
\ncontemplated hereby; and (ii) use their reasonable efforts to promptly take, or
\ncause to be taken, all other actions and do, or cause to be done, all other
\nthings necessary, proper or appropriate to consummate and make effective the
\ntransactions contemplated by this Agreement as soon as practicable.<\/p>\n
6.7 Access to Information. Upon reasonable notice, Parent, on the one
\n ———————
\nhand, and the Company, on the other, shall (and shall cause each of their
\nsubsidiaries to) afford to officers, employees, counsel, accountants and other
\nauthorized representatives of the other such party (the “Authorized
\nRepresentatives”) reasonable access, during normal business hours throughout the
\nperiod prior to the Effective Time, to their properties, assets, books and
\nrecords and, during such period, shall (and shall cause each of their
\nsubsidiaries to) furnish promptly to such Authorized Representatives all
\ninformation concerning their business, properties, assets and personnel as may
\nreasonably be requested for purposes of appropriate and necessary due diligence,
\nprovided that no investigation pursuant to this Section 6.7 shall affect or be
\ndeemed to modify any of the representations or warranties made by the Parties.
\nThe Parties each agree to treat (and cause their Authorized Representatives to
\ntreat) any and all information provided pursuant to this Section 6.7 in strict
\ncompliance with the terms of that certain Confidentiality Agreement, entered by
\nand between the Company and Parent, dated November 18, 1999 (the
\n“Confidentiality Agreement”).<\/p>\n
6.8 Publicity. The Parties agree that they will consult with
\n ———
\neach other concerning any proposed press release or public announcement
\npertaining to the Merger in order to agree upon the text of any such press
\nrelease or the making of such public announcement, which agreement shall not be
\nunreasonably withheld, except as may be required by applicable law or by
\nobligations pursuant to any listing agreement with an national securities
\nexchange or national automated quotation system, in which case the party
\nproposing to issue such press release or make such public<\/p>\n
-45-<\/p>\n
announcement shall use reasonable efforts to consult in good faith with the
\nother party before issuing any such press release or making any such public
\nannouncement. Notwithstanding the foregoing, in the event the Board of Directors
\nof Parent or the Company withdraws its recommendation of this Agreement in
\ncompliance herewith, neither party will be required to consult with or obtain
\nthe agreement of the other in connection with any press release or public
\nannouncement.<\/p>\n
6.9 Indemnification of Directors and Officers.
\n —————————————– <\/p>\n
(a) From and after the Effective Time, Parent shall, and in addition
\nshall cause the Surviving Corporation to, indemnify, defend and hold harmless
\nthe present and former officers and directors of the Company and any of their
\nsubsidiaries against all losses, expenses, claims, damages or liabilities
\narising out of actions or omissions occurring on or prior to the Effective Time
\n(including, without limitation, the transactions contemplated by this Agreement)
\nto the full extent (not otherwise covered by insurance) permitted or required
\nunder applicable law (and shall also advance expenses as incurred to the fullest
\nextent permitted under applicable law, provided that the Person to whom expenses
\n ——–
\nare advanced provides an undertaking to repay such advances if it is ultimately
\ndetermined that such Person is not entitled to indemnification); provided,
\n ——–
\nhowever, the indemnification provided hereunder by Parent shall not be greater
\n——-
\nthan the greater of (x) the indemnification actually provided pursuant to the
\nCompany’s Certificate of Incorporation and By-Laws, as in effect as of the date
\nhereof or (y) the indemnification actually provided by the Company as of the
\ndate hereof. Parent agrees that all rights to indemnification, including
\nprovisions relating to advances of expenses incurred in defense of any action or
\nsuit, existing in favor of the present or former directors, officers, employees,
\nfiduciaries and agents of the Company, Parent or any of their subsidiaries
\n(collectively, the “Indemnified Parties”) as provided in, as the case may be,
\nthe Company’s Certificate of Incorporation or By-Laws or pursuant to other
\nagreements, or articles or certificates of incorporation or by-laws or similar
\ndocuments of any of the Company’s or Parent’s subsidiaries, as in effect as of
\nthe date hereof, with respect to matters occurring through the Effective Time,
\nshall survive the Merger.<\/p>\n
(b) Parent shall cause to be maintained in effect for not less than
\nsix (6) years the current policies of directors’ and officers’ liability
\ninsurance and fiduciary liability insurance maintained by the Company, Parent
\nand their subsidiaries with respect to matters occurring prior to the Effective
\nTime to the extent required to cover the types of actions and omissions
\ncurrently covered by such policies; provided, however, that (i) Parent may
\n ——– ——-
\nsubstitute therefor policies of substantially the same coverage containing terms
\nand conditions which are not less advantageous, in any material respect, to the
\nIndemnified Parties and (ii) Parent shall not be required to pay an annual
\npremium for such insurance in excess of two hundred percent (200%) of current
\naggregate policies but in such case shall purchase as much coverage as possible
\nfor such amount.<\/p>\n
(c) In the event that any action, suit, proceeding or investigation
\nrelating hereto or to the transactions contemplated by this Agreement is
\ncommenced, whether before or after the Closing, the parties hereto agree to
\ncooperate and use their respective commercially reasonable efforts to vigorously
\ndefend against and respond thereto.<\/p>\n
-46-<\/p>\n
(d) This Section 6.9 is intended to benefit the Indemnified Parties
\nand shall be binding on all successors and assigns of the Parties.<\/p>\n
6.10 Affiliates of the Company and Parent. The Company has identified to
\n ————————————
\nParent each “affiliate” of the Company for purposes of Rule 145 promulgated
\nunder the Securities Act (each, a “Company Affiliate”) and the Company will use
\nits reasonable efforts to obtain as promptly as practicable from each Company
\nAffiliate written agreements in the form attached hereto as Exhibit C (the
\n ———
\n“Company Affiliate Letter”) that such Company Affiliate will not sell, pledge,
\ntransfer or otherwise dispose of any Parent Shares issued to such Company
\nAffiliate pursuant to the Merger, except in compliance with Rule 145 promulgated
\nunder the Securities Act or an exemption from the registration requirements of
\nthe Securities Act.<\/p>\n
6.11 Maintenance of Insurance. Between the date hereof and through
\n ————————
\nthe Effective Time each of the Company and Parent will maintain in full force
\nand effect all of their and their subsidiaries presently existing policies of
\ninsurance or insurance comparable to the coverage afforded by such policies.<\/p>\n
6.12 Representations and Warranties. Each of the Company and Parent shall
\n ——————————
\ngive prompt notice to the other of any circumstances that would cause any of
\ntheir respective representations and warranties set forth in Section 5.1 or 5.2,
\nas the case may be, not to be true and correct in all material respects at and
\nas of the Effective Time.<\/p>\n
6.13 Filings; Other Action. Subject to the terms and conditions herein
\n ———————
\nprovided, the Parties shall: (a) promptly make their respective filings and
\nthereafter make any other required submissions under the HSR Act, the Securities
\nAct and the Exchange Act with respect to the Merger; (b) cooperate in the
\npreparation of such filings or submissions under the HSR Act; and (c) use
\nreasonable efforts promptly to take, or cause to be taken, all other actions and
\ndo, or cause to be done, all other things necessary, proper or appropriate under
\napplicable laws and regulations to consummate and make effective the
\ntransactions contemplated by this Agreement as soon as practicable.<\/p>\n
6.14 Tax-Free Reorganization Treatment. Prior to the Effective Time, the
\n ———————————
\nParties shall use their best efforts to cause the Merger to be treated as a
\nreorganization within the meaning of Section 368 of the Code and to obtain the
\nopinion of their respective counsels contemplated by Section 7.1 and shall not
\nknowingly take or fail to take any action which action or failure to act would
\njeopardize the qualification of the Merger as a reorganization within Section
\n368 of the Code.<\/p>\n
6.15 Company Options; Company ESPPs.
\n —————————— <\/p>\n
(a) After the Effective Time, except as provided above, each
\nSubstitute Option shall be subject to the same terms and conditions as were
\napplicable under the related Company Option immediately prior to the Effective
\nTime. The Company agrees that it will not grant any stock appreciation rights or
\nlimited stock appreciation rights and will not permit cash payments to holders
\nof Company Options in lieu of the substitution therefor of Substitute Options,
\nas described herein. As soon as practicable after the Effective Time, Parent
\nshall deliver to each holder of a Company<\/p>\n
-47-<\/p>\n
Option an appropriate notice setting forth such holder’s right to acquire Parent
\nShares and Company Option agreements of such holder shall be deemed to be
\nappropriately amended so that such Company Options shall represent rights to
\nacquire Parent Shares on substantially the same terms and conditions as
\ncontained in the outstanding Company Options.<\/p>\n
(b) From and after the date hereof, the Company (i) shall not commence
\nany “offering periods” or “purchase periods” under its 1997 Employee Stock
\nPurchase Plan or the CKS Group, Inc. Employee Stock Purchase Plan (collectively,
\nthe “Company ESPPs”) and shall apply all amounts deducted and withheld
\nthereunder to purchase shares of the Company in accordance with the provisions
\nthereof, (ii) shall not grant any bonuses under its Acquisition Stock Bonus
\nPlan, and (iii) shall terminate the Company ESPPs or the Acquisition Stock
\nPurchase Plan and the Acquisition Stock Purchase Plan as of the Effective Time.
\nParent shall have no obligation or duty in respect of the Company ESPPs or the
\nAcquisition Stock Purchase Plan or the rights granted thereunder.<\/p>\n
(c) Parent shall file and use commercially reasonable efforts to cause
\nthere to be effective within one week of the Effective Time a registration
\nstatement on Form S-8 (or any successor form) or other appropriate forms, with
\nrespect to Parent Shares subject to such Company Options and shall use
\ncommercially reasonable efforts to maintain the effectiveness of such
\nregistration statement or registration statements (and maintain the current
\nstatus of the prospectus or prospectuses contained therein) for so long as such
\nCompany Options remain outstanding.<\/p>\n
6.16 Stockholders Agreements. Concurrently with the execution and
\n ———————–
\ndelivery of this Agreement, each of the Voting Stockholders has executed and
\ndelivered each Stockholders Agreement, as applicable.<\/p>\n
6.17 Board Composition. The Board of Directors of Parent will take
\n —————–
\nall actions within its power to cause the Board of Directors of Parent,
\neffective upon the Effective Time, to consist of nine (9) Persons, four (4) of
\nwhom shall have served on the Board of Directors of Parent (“Parent Directors”)
\nimmediately prior to the Effective Time (including the Chief Executive Officer
\nof Parent as of the date of this Agreement), and four (4) of whom shall have
\nserved on the Board of Directors of the Company (“Company Directors”)
\nimmediately prior to the Effective Time (including the Chief Executive Officer
\nof the Company as of the date of this Agreement), and the “New Director.” The
\n“New Director” shall be a person who is not a current director or employee of
\nParent or the Company, and shall be selected by the Chief Executive Officer of
\nParent, with the consent of the Chief Executive Officer of the Company, which
\nconsent cannot be unreasonably withheld or delayed. The first class of
\ndirectors, with a term expiring at Parent’s 2000 annual meeting of stockholders,
\n(and such persons shall be nominated for election at such meeting for a term
\nexpiring at Parent’s 2003 annual meeting) shall include one (1) Parent Director
\nand one (1) Company Director. The second class of directors, with a term
\nexpiring at Parent’s 2001 annual meeting of stockholders, shall include two (2)
\nParent Directors and two (2) Company Directors, one of whom shall be Robert
\nShaw. The third class of directors, with a term expiring at Parent’s 2002 annual
\nmeeting of stockholders, shall include one (1) Parent Director, one (1) Company
\nDirector and the New Director. If, prior to the Effective Time, any of the
\nParent or the Company designees shall decline or be unable to serve as a
\ndirector of Parent, the Company (if such Person was designated by<\/p>\n
-48-<\/p>\n
the Company) or Parent (if such Person was designated by Parent) shall designate
\nanother Person to serve in such Person’s stead, which Person shall be reasonably
\nacceptable to the other party.<\/p>\n
6.18 Officers of Combined Company. Robert Shaw shall be elected non-
\n —————————-
\nexecutive Chairman of Parent effective as of the Effective Time, and Robert F.
\nBernard shall remain the Chief Executive Officer, with the additional title of
\nPresident, of Parent (reporting directly to the Board of Directors as a whole).
\nAt the Effective Time, the Chief Operating Officer Robert Clarkson, the Chief
\nCreative Officer Thomas Suiter, the Chief Strategist & Information Officer Ian
\nSmall, and the Chief People Officer Richard Evans, of the Company, as of the
\ndate of this Agreement will be offered positions as the Chief Operating Officer,
\nthe Chief Creative Officer, the Chief Strategist Officer and the Chief People
\nOfficer of Parent, respectively. The Chief Executive Officer, Chief Financial
\nOfficer and Executive Vice President of Corporate Development of Parent shall
\nremain in such positions after the Effective Time.<\/p>\n
6.19 Change of Name. Subject to the terms hereof, at Parent’s
\n ————–
\nStockholders’ Meeting, Parent shall propose and recommend that its Certificate
\nof Incorporation be amended at the Effective Time to change its name to a new
\nname to be agreed upon by Parent and the Company.<\/p>\n
6.20 Contemplated Termination of 401(k) Plan(s). Parent and its Plan
\n ——————————————
\nAffiliates and Company and its Plan Affiliates each agree to evaluate whether
\nthe termination of any of their 401(k) plans is reasonable in light of the
\nMerger contemplated herein. To the extent that Parent and Company agree to
\nterminate one (1) or more 401(k) plans prior to the Effective Time, the sponsor
\nof such plan will take any and all actions required under the circumstances to
\neffectuate such termination prior to the Effective Time including, without
\nlimitation, resolutions of that entity’s Board of Directors (the form and
\nsubstance of which resolutions shall be subject to review and approval by the
\nother entity).<\/p>\n
6.21 Crediting Service and Providing Other Benefits. Parent shall either
\n ———————————————-
\n(i) adopt and maintain any or all employee welfare benefit plan, as defined in
\nSection 3(1) of ERISA and as specified in Section 5.2(m) of the Company
\nDisclosure Schedule (the “Scheduled Welfare Plans”), and, accordingly, shall
\nthereby continue in full force and effect each Scheduled Welfare Plan subject to
\nthe terms and conditions thereof, to the extent such Scheduled Welfare Plan is
\noffered as of the Effective Time to each eligible employee of the Company and
\nits participating Affiliates, his or her dependents and each Qualified
\nBeneficiary (as such term is defined in COBRA); or (ii) provide all eligible
\nemployees of the Company and their dependents and all Qualified Beneficiaries
\n(as such term is defined in COBRA) with coverage under one or more of Parent’s
\nemployee welfare benefit plans (as defined in Section 3(1) of ERISA) that
\ncorresponds to a Scheduled Welfare Plan which meets all of the following
\nrequirements as of the Effective Time (the “Successor Welfare Plan”): (A) the
\ncoverage is as favorable as that provided to Parent employees in similar
\ncircumstances, (B) service with the Company or its Affiliates prior to the
\nEffective Time shall be credited against all service and waiting period
\nrequirements under the Successor Welfare Plan(s), (C) Parent shall make its
\ncommercially reasonable best efforts to have the Successor Welfare Plan(s) not
\nprovide any pre-existing condition exclusion(s) to persons who were not excluded
\nunder the Company Scheduled Plans, and (D) the deductibles and co-payments in
\neffect under the Successor Welfare Plan(s) shall<\/p>\n
-49-<\/p>\n
be reduced by any deductibles and\/or co-payments, respectively, paid by such
\nindividuals under the corresponding Scheduled Welfare Plan for the plan year in
\nwhich the Effective Time occurs. In addition, service with the Company shall be
\nrecognized for all purposes under Parent’s compensation and benefit plans,
\nprograms, policies and arrangements, except where crediting such service would
\nresult in a duplication of benefits or is not legally permissible. Without
\nlimiting the generality of the foregoing, Parent shall honor all vacation,
\npersonal and sick days accrued by Continuing Employees under the Company’s
\nplans, policies, programs and arrangements immediately prior to the Effective
\nTime to the same extent required to be honored under the Company’s plan,
\nprograms, policies and arrangements in effect on the date hereof.<\/p>\n
6.22 Earn-Out Shares. The Company shall use its reasonable efforts
\n —————
\nto amend all acquisition agreements to which it or one of its subsidiaries is a
\nparty and that provide for the future issuance of Company Shares or shares of
\ncapital stock of a subsidiary (“Subsidiary Shares”) as deferred consideration,
\npurchase price adjustment or otherwise, to allow for the issuance of Parent
\nShares in lieu of Company Shares or Subsidiary Shares in an amount equal to, (i)
\nwith respect to the Company Shares, the number of Company Shares otherwise
\nissuable, multiplied by the Exchange Ratio, and (ii) with respect to the
\nSubsidiary Shares, the number of Subsidiary Shares otherwise issuable,
\nmultiplied by a factor that appropriately reflects the exchange ratio or other
\nvaluation factor used in the acquisition of the respective subsidiary by the
\nCompany.<\/p>\n
6.23 Exemption from Liability Under Section 16(b).
\n ——————————————– <\/p>\n
(a) Provided that the Company delivers to Parent the Section 16
\nInformation with respect to the Company prior to the Effective Time, the Board
\nof Directors of Parent, or a committee of Non-Employee Directors thereof (as
\nsuch term is defined for purposes of Rule 16b-3(d) under the Exchange Act),
\nshall adopt a resolution in advance of the Effective Time providing that the
\nreceipt by the Company Insiders of Parent Shares in exchange for Company Shares,
\nand of options to purchase Parent Shares in exchange for shares of Company
\nShares, and of options to purchase Parent Shares upon assumption and conversion
\nby Parent of options to purchase Company Shares, in each case pursuant to the
\ntransactions contemplated hereby and to the extent such securities are listed in
\nthe Section 16 Information, are intended to be exempt from liability pursuant to
\nRule 16b-3 under the Exchange Act.<\/p>\n
(b) “Section 16 Information” shall mean information accurate in all
\nrespects regarding the Company Insiders, the number of Company Shares or other
\nCompany equity securities deemed to be beneficially owned by each Company
\nInsider and expected to be exchanged for Parent Shares in connection with the
\nMerger.<\/p>\n
(c) “Company Insiders” shall mean those officers and directors of
\nCompany who are subject to the reporting requirements of Section 16(a) of the
\nExchange Act who are listed in Section 16 Information.<\/p>\n
-50-<\/p>\n
ARTICLE VII<\/p>\n
Conditions<\/p>\n
7.1 Conditions to Each Party’s Obligations. The respective obligations
\n ————————————–
\nof each Party to consummate the Merger are subject to the satisfaction or waiver
\nby each of the Parties of the following conditions:<\/p>\n
(a) this Agreement and the Merger shall have received the Requisite
\nStockholder Approvals;<\/p>\n
(b) the S-4 Registration Statement shall have become effective in
\naccordance with the provisions of the Securities Act, and no stop order
\nsuspending the effectiveness of the Registration Statement shall have been
\nissued by the SEC and remain in effect;<\/p>\n
(c) no judgment, order, decree, statute, law, ordinance, rule or
\nregulation, entered, enacted, promulgated, enforced or issued by any court or
\nother Governmental Entity of competent jurisdiction or other legal restraint or
\nprohibition preventing the consummation of the Merger or making the Merger
\nillegal (collectively, “Restraints”) shall be in effect, and there shall not be
\npending any suit, action or proceeding by any Governmental Entity preventing the
\nconsummation of the Merger; provided, however, that each of the parties shall
\n ——– ——-
\nhave used reasonable efforts to prevent the entry of such Restraints and to
\nappeal as promptly as possible any such Restraints that may be entered;<\/p>\n
(d) the waiting period(s) under the HSR Act and all applicable
\nmaterial foreign merger laws, if any, shall have expired; and each of Parent and
\nthe Company shall have received a written opinion from its respective tax
\ncounsel (Katten Muchin & Zavis and Wilson Sonsini Goodrich & Rosati,
\nProfessional Corporation, respectively), in form and substance reasonably
\nsatisfactory to them, to the effect that the Merger will constitute a tax-free
\nreorganization within the meaning of Section 368(a) of the Code and such
\nopinions shall not have been withdrawn; provided, however, that if the counsel
\n ——– ——-
\nto either Parent or the Company does not render such opinion, this condition
\nshall nonetheless be deemed to be satisfied with respect to such party if
\ncounsel to the other party renders such opinion to such party. The parties to
\nthis Agreement agree to make such reasonable representations as requested by
\nsuch counsel for the purpose of rendering such opinions.<\/p>\n
7.2 Conditions to the Obligations of the Company. The obligations of the
\n ——————————————–
\nCompany to consummate the Merger are subject to the fulfillment at or prior to
\nthe Effective Time of the following conditions, any or all of which may be
\nwaived in whole or in part by the Company to the extent permitted by applicable
\nlaw:<\/p>\n
(a) the representations and warranties of Parent set forth in Section
\n5.1 that are qualified as to materiality or Material Adverse Effect, or in
\nSections 5.1(a), (b) or (d) shall be true and correct (provided, however, that
\nwith respect to the representations and warranties contained in Section 5.1(b),
\nan understatement in Section 5.1(b) of the number of Parent Shares outstanding
\nor of the number of Parent Shares issuable under outstanding options, warrants
\nor other commitments<\/p>\n
-51-<\/p>\n
shall not render such representations and warranties untrue or incorrect unless
\nthe difference between (x) the actual number of Parent Shares outstanding or the
\nactual number of Parent Shares issuable under outstanding options, warrants or
\nother commitments, and (y) the number of Parent Shares outstanding or the number
\nof Parent Shares issuable under outstanding options, warrants or other
\ncommitments set forth in Section 5.1(b) is equal to or greater than one-half
\npercent (0.5%) of the number set forth in Section 5.1(b)), and those that are
\nnot so qualified shall be true and correct in all material respects, in each
\ncase as of the date of this Agreement, and as of the Effective Time with the
\nsame force and effect as if made on and as of the Effective Time (except to the
\nextent expressly made as of an earlier date, in which case as of such date), in
\neach case except as permitted or contemplated by this Agreement (it being
\nunderstood that for purposes of determining the accuracy of such representations
\nand warranties (i) any update or modification to the Parent’s Disclosure
\nSchedule made or purported to have been made without the Company’s written
\nconsent thereto shall be disregarded, (ii) any inaccuracy that results from a
\nMaterial Adverse Effect Exception shall be disregarded, and (iii) with respect
\nto representations and warranties as if made as of the Effective Time, (x) all
\nqualifications as to materiality or Material Adverse Effect shall be
\ndisregarded, and (y) any inaccuracies in such representations and warranties (as
\nso modified) shall be disregarded, if the inaccuracies (considered collectively)
\ndo not constitute and are not reasonably expected to result in a Material
\nAdverse Effect on Parent).<\/p>\n
(b) Parent and its subsidiaries shall have performed or complied in
\nall material respects with its agreements and covenants required to be performed
\nor complied with under this Agreement as of or prior to the Effective Time;<\/p>\n
(c) Parent shall have delivered to the Company a certificate of its
\nChief Executive Officer and Chief Financial Officer to the effect that each of
\nthe conditions specified in Section 7.1 (as it relates to Parent) and clauses
\n(a), (b) and (d) of this Section 7.2 is satisfied in all respects;<\/p>\n
(d) from the date of this Agreement to the Effective Time, there shall
\nnot have been any event or development which has resulted in a Material Adverse
\nEffect (other then any Material Adverse Effect Exception) on Parent nor shall
\nthere have occurred any event or development which could reasonably be likely to
\nresult in the future in a Material Adverse Effect on Parent (other than any
\nMaterial Adverse Effect Exception);<\/p>\n
(e) the Parent Shares to be issued in the Merger to the stockholders
\nof the Company shall have been approved for listing on the NNM.<\/p>\n
7.3 Conditions to the Obligations of Parent. The obligation of Parent to
\n —————————————
\nconsummate the Merger is subject to the fulfillment at or prior to the Effective
\nTime of the following conditions, any or all of which may be waived in whole or
\nin part by Parent to the extent permitted by applicable law:<\/p>\n
(a) the representations and warranties of the Company set forth in
\nSection 5.2 that are qualified as to materiality or Material Adverse Effect, or
\nin Sections 5.2(a), (b) or (d) shall be true and correct (provided, however,
\nthat with respect to the representations and warranties contained in Section
\n5.2(b) an understatement in Section 5.2(b) of the number of Company Shares<\/p>\n
-52-<\/p>\n
outstanding or of the number of Company Shares issuable under outstanding
\noptions, warrants or commitments shall not render such representations and
\nwarranties untrue or incorrect unless the difference between (x) the actual
\nnumber of Company Shares outstanding or the actual number of Company Shares
\nissuable under outstanding options, warrants or other commitments, and (y) the
\nnumber of Company Shares outstanding or the number of Company Shares issuable
\nunder outstanding options, warrants or other commitments set forth in Section
\n5.2(b) is equal to or greater than one-half percent (0.5%) of the number set
\nforth in Section 5.2(b)), and those that are no so qualified shall be true and
\ncorrect in all material respects, in each case as of the date of this Agreement,
\nand as of the Effective Time with the same force and effect as if made on and as
\nof the Effective Time (except to the extent expressly made as of an earlier
\ndate, in which case as of such date), in each case except as permitted or
\ncontemplated by this Agreement (it being understood that for purposes of
\ndetermining the accuracy of such representations or warranties (i) any update or
\nmodifications to the Company’s Disclosure Schedule made or purported to have
\nbeen made without Parent’s written consent thereto shall be disregarded, (ii)
\nany inaccuracy that results from a Material Adverse Effect Exception shall be
\ndisregarded and (iii) with respect to representations and warranties as if made
\nas of the Effective Time, (x) all qualifications as to materiality or Material
\nAdverse Effect shall be disregarded, and (y) any inaccuracies in such
\nrepresentations and warranties (as so modified) shall be disregarded, if the
\ninaccuracies (considered collectively) do not constitute and are not reasonably
\nexpected to result in a Material Adverse Effect on the Company).<\/p>\n
(b) the Company and its subsidiaries shall have performed or complied
\nwith in all material respects its agreements and covenants required to be
\nperformed or complied with under this Agreement as of or prior to the Effective
\nTime;<\/p>\n
(c) the Company shall have delivered to Parent a certificate of its
\nChief Executive Officer and Chief Financial Officer to the effect that each of
\nthe conditions specified in Section 7.1 and clauses (a), (b) and (d) of this
\nSection 7.3 is satisfied in all respects; and<\/p>\n
(d) from the date of this Agreement to the Effective Time, there shall
\nnot have been any event or development which results in a Material Adverse
\nEffect (other than any Material Adverse Effect Exception) on the Company.<\/p>\n
ARTICLE VIII<\/p>\n
Termination<\/p>\n
8.1 Termination by Mutual Consent. This Agreement may be terminated
\n —————————–
\nand the Merger may be abandoned at any time prior to the Effective Time, before
\nor after gaining Requisite Stockholder Approval, by the mutual written consent
\nof the Company and Parent.<\/p>\n
8.2 Termination by either the Company or Parent. This Agreement may be
\n ——————————————-
\nterminated and the Merger may be abandoned by action of the Board of Directors
\nof either the Company or Parent if:<\/p>\n
-53-<\/p>\n
(a) the Merger shall not have been consummated by May 31, 2000 (the
\n“Outside Date”); provided, however, that the right to terminate this Agreement
\n ——– ——-
\nunder this Section 8.2(a) shall not be available to any party whose failure to
\nfulfill any obligation under this Agreement has been the principal cause of or
\nresulted in the failure of the Merger to occur on or before such date and such
\naction or failure to act constitutes a material breach of this Agreement;<\/p>\n
(b) if any Restraint shall be in effect and shall have become final and
\nnonappealable; or<\/p>\n
(c) (i) at the Company’s duly held Stockholders’ Meeting (including any
\nadjournments thereof), the Requisite Stockholder Approval of the Company’s
\nstockholders shall not have been obtained; provided, however, that the right to
\nterminate this Agreement under this Section 8.2(c)(i) shall not be available to
\nany party which has not complied with its obligations under Sections 6.2 or 6.3,
\nas applicable, and 6.4, or<\/p>\n
(ii) at Parent’s duly held Stockholders’ Meeting (including any
\nadjournments thereof), the Requisite Stockholder Approval of Parent’s
\nstockholders shall not have been obtained; provided, however, that the right to
\nterminate this Agreement under this Section 8.2(c)(ii) shall not be available to
\nany party which has not complied with its obligations under Sections 6.2 or 6.3,
\nas applicable, and 6.4.<\/p>\n
8.3 Termination by the Company. This Agreement may be terminated upon
\n ————————–
\nwritten notice to Parent and the Merger may be abandoned at any time prior to
\nthe Effective Time, before or after the approval by holders of the Company
\nShares, by action of the Board of Directors of the Company, if:<\/p>\n
(a) Parent shall have breached or failed to perform any of the
\nrepresentations, warranties, covenants or other agreements contained in this
\nAgreement, or if any representation or warranty shall have become untrue, in
\neither case such that (i) the condition set forth in Section 7.2(a) or (b),
\nwould not be satisfied as of the time of such breach or as of such time as such
\nrepresentation or warranty shall have become untrue and (ii) such breach or
\nfailure to be true has not been or is incapable of being cured within twenty
\n(20) business days following receipt by Parent of notice of such failure to
\ncomply; or<\/p>\n
(b) (i) the Board of Directors of Parent or any committee thereof
\nshall have withdrawn or modified in a manner adverse to the Company its
\nrecommendation of approval of the Agreement and the issuance of Parent Shares
\npursuant to the Merger, (ii) Parent shall have failed to include in the Proxy
\nStatement the recommendation of the Board of Directors of Parent in favor of
\napproval of the Agreement and the issuance of Parent Shares pursuant to the
\nMerger, (iii) in connection with a Rule 14d-9 disclosure, the Board of Directors
\nof Parent shall have taken any action other than a rejection of the Rule 14d-9
\nproposal, (iv) the Board of Directors of Parent or any committee thereof shall
\nhave recommended any Parent Acquisition Proposal, (v) Parent or any of its
\nofficers or directors shall have entered into discussions or negotiations in
\nviolation of Section 6.3, (vi) the Board of Directors of Parent or any committee
\nthereof shall have resolved to do any of the foregoing or (vii) any Parent
\nAcquisition Proposal is consummated.<\/p>\n
-54-<\/p>\n
8.4 Termination by Parent. This Agreement may be terminated upon
\n ———————
\nwritten notice to the Company and the Merger may be abandoned at any time prior
\nto the Effective Time, before or after the approval by holders of Parent Shares,
\nby action of the Board of Directors of Parent, if:<\/p>\n
(a) the Company shall have breached or failed to perform any of the
\nrepresentations, warranties, covenants or other agreements contained in this
\nAgreement, or if any representation or warranty shall have become untrue, in
\neither case such that (i) the condition set forth in Section 7.3(a) or (b),
\nwould not be satisfied as of the time of such breach or as of such time as such
\nrepresentation or warranty shall have become untrue and (ii) such breach or
\nfailure to be true has not been or is incapable of being cured within twenty
\n(20) business days following receipt by the breaching party of notice of such
\nfailure to comply; or<\/p>\n
(b) (i) the Board of Directors of the Company or any committee
\nthereof, shall have withdrawn or modified in a manner adverse to Parent its
\napproval or recommendation of the Merger or this Agreement, (ii) the Company
\nshall have failed to include in the Proxy Statement the recommendation of the
\nBoard of Directors of the Company in favor of approval to the Merger and this
\nAgreement, (iii) in connection with a Rule 14d-9 disclosure, the Board of
\nDirectors of the Company shall have taken any action other than a rejection of a
\nRule 14d-9 proposal, (iv) the Board of Directors of the Company or any committee
\nthereof shall have recommended any Company Acquisition Proposal, (v) the Company
\nor any of its officers or directors shall have entered into discussions or
\nnegotiations in violation of Section 6.2, (vi) the Board of Directors of the
\nCompany or any committee thereof shall have resolved to do any of the foregoing
\nor (vii) any Company Acquisition Proposal is consummated.<\/p>\n
8.5 Effect of Termination; Termination Fee.
\n ————————————–<\/p>\n
(a) Except as set forth in this Section 8.5, in the event of
\ntermination of this Agreement by either Parent or the Company as provided in
\nthis Article VIII, this Agreement shall forthwith become void and there shall be
\nno liability or obligation on the part of the Parties or their respective
\naffiliates, officers, directors or stockholders except (x) with respect to the
\ntreatment of confidential information pursuant to Section 6.6, the payment of
\nexpenses pursuant to Section 9.1, and Article IX generally, (y) to the extent
\nthat such termination results from the willful breach of a Party of any of its
\nrepresentations or warranties, or any of its covenants or agreements or (z)
\nintentional or knowing misrepresentation in connection with this Agreement or
\nthe transactions contemplated hereby.<\/p>\n
(b) In the event that (i) a Company Acquisition Proposal or the
\nintention to make a Company Acquisition Proposal shall have been made directly
\nto the stockholders of the Company generally or otherwise publicly announced by
\nthe Company or the Person making such Company Acquisition Proposal, and such
\n —
\nCompany Acquisition Proposal or intention is not irrevocably and publicly
\nwithdrawn prior to the vote of the Company stockholders at the Company’s duly
\nheld Stockholders’ Meeting, and thereafter this Agreement is terminated by
\n —
\neither the Company or Parent pursuant to Section 8.2(a) [Drop dead date] due to
\nthe Company’s Stockholders’ Meeting not occurring as a result of such Company
\nAcquisition Proposal or (c)(i) [Company stockholder disapproval], or (ii) this
\nAgreement is terminated by Parent pursuant to Section 8.4(b) [Company<\/p>\n
-55-<\/p>\n
Board withdraws recommendation], then the Company shall promptly, but in no
\nevent later than the date of such termination, pay Parent a fee equal to $150
\nmillion (the “Termination Fee”), payable by wire transfer of same day funds;
\nprovided, however, that no Termination Fee shall be payable to Parent pursuant
\n——– ——-
\nto clause (i) of this paragraph (b) unless and until within twelve (12) months
\nof such termination the Company or any of its subsidiaries enters into any
\nCompany Acquisition Agreement with respect to, or consummates, any Company
\nAcquisition Proposal (for the purposes of the foregoing proviso the term
\n“Company Acquisition Proposal” shall have the meaning assigned to such term in
\nSection 6.2 except that references to 35% in the definition of “Company
\nAcquisition Proposal” in Section 6.2 as they relate to net revenues, net income,
\nvoting power or assets of Company shall be deemed to be references to “50%”), in
\nwhich event the Termination Fee shall be payable upon the first to occur of such
\nevents; provided further, if the Company consummates a Company Acquisition
\n ——– ——-
\nProposal during the twelve (12) month period subsequent to such termination
\ncontemplated by clause (i) of this paragraph (b) with the same person or an
\naffiliate of the person that made and withdrew a Company Acquisition Proposal
\nprior to such termination, the Company shall pay Parent the Termination Fee at
\nthe time contemplated by the preceding proviso. The Company acknowledges that
\nthe agreements contained in this Section 8.5(b) are an integral part of the
\ntransactions contemplated by this Agreement, and that, without these agreements,
\nParent would not enter into this Agreement, and accordingly, if the Company
\nfails promptly to pay the amount due pursuant to this Section 8.5(b), and, in
\norder to obtain such payment, Parent commences a suit which results in a
\njudgment against the Company for the fee set forth in this Section 8.5(b), the
\nCompany shall pay to Parent its costs and expenses (including reasonable
\nattorneys’ fees and expenses) in connection with such suit, together with
\ninterest on the amount of the fee at the prime rate of Citibank, N.A. in effect
\non the date such payment was required to be made.<\/p>\n
(c) In the event that (i) a Parent Acquisition Proposal or the intention to
\nmake a Parent Acquisition Proposal shall have been made directly to the
\nstockholders of Parent generally or otherwise publicly announced by Parent or
\nthe Person making such Parent Acquisition Proposal, and such Parent Acquisition
\n —
\nProposal or intention is not irrevocably and publicly withdrawn prior to the
\nvote of Parent stockholders at the duly held Stockholders’ Meeting. and
\n —
\nthereafter this Agreement is terminated by either Parent or the Company pursuant
\nto Section 8.2(a) due to the Parent’s Stockholders’ Meeting not occurring as a
\nresult of such Parent Acquisition Proposal or (c)(ii) [Parent stockholder
\ndisapproval], or (ii) this Agreement is terminated by the Company pursuant to
\nSection 8.3(b) [Parent Directors withdraw recommendation], then Parent shall
\npromptly, but in no event later than the date of such termination, pay the
\nCompany the Termination Fee, payable by wire transfer of same day funds;
\nprovided, however, that no Termination Fee shall be payable to the Company
\n——– ——-
\npursuant to clause (i) of this paragraph (c) unless and until within twelve (12)
\nmonths of such termination Parent or any of its subsidiaries enters into any
\nParent Acquisition Agreement with respect to, or consummates, any Parent
\nAcquisition Proposal (for the purposes of the foregoing proviso the term “Parent
\nAcquisition Proposal” shall have the meaning assigned to such term in Section
\n6.3 except that references to 35% in the definition of “Parent Acquisition
\nProposal” in Section 6.3 as they relate to net revenues, net income, voting
\npower or assets of Parent, shall be deemed to be references to “50%”), in which
\nevent the Termination Fee shall be payable upon the first to occur of such
\nevents; provided further, that if the Parent consummates a Parent Acquisition
\n ——– ——-
\nProposal during the twelve (12) month period subsequent to such termination
\ncontemplated by<\/p>\n
-56-<\/p>\n
clause (i) of this paragraph (c) with the same person or an affiliate of such
\nperson that made and withdrew a Parent Acquisition Proposal prior to such
\ntermination, Parent shall pay the Company the Termination Fee at the time
\ncontemplated by the preceding proviso. Parent acknowledges that the agreements
\ncontained in this Section 8.5(c) are an integral part of the transactions
\ncontemplated by this Agreement, and that, without these agreements, the Company
\nwould not enter into this Agreement; accordingly, if Parent fails promptly to
\npay the amount due pursuant to this Section 8.5(c), and, in order to obtain such
\npayment, the Company commences a suit which results in a judgment against Parent
\nfor the fee set forth in this Section 8.5(c), Parent shall pay to the Company
\nits costs and expenses (including reasonable attorneys’ fees and expenses) in
\nconnection with such suit, together with interest on the amount of the fee at
\nthe prime rate of Citibank, N.A. in effect on the date such payment was required
\nto be made.<\/p>\n
(d) If this Agreement is terminated under circumstances in which a
\nparty is entitled to receive the Termination Fee, the payment of such
\nTermination Fee shall be the sole and exclusive remedy available to such party,
\nexcept in the event of (x) a willful breach by the other party of any provision
\nof this Agreement in any material respect, or (y) the intentional or knowing
\nmisrepresentation in connection with this Agreement or the transactions
\ncontemplated hereby, in which event the non-breaching Party shall have all
\nrights, powers and remedies against the breaching Party which may be available
\nat law or in equity. All rights, powers and remedies provided under this
\nAgreement or otherwise available in respect hereof at law or in equity shall be
\ncumulative and not alternative, and the exercise of any such right, power or
\nremedy by any Party shall not preclude the simultaneous or later exercise of any
\nother such right, power or remedy by such Party.<\/p>\n
ARTICLE IX<\/p>\n
Miscellaneous and General<\/p>\n
9.1 Payment of Expenses. Whether or not the Merger shall be
\n ——————-
\nconsummated, each Party shall pay its own expenses incident to preparing for,
\nentering into and carrying out this Agreement and the consummation of the
\ntransactions contemplated hereby, provided that the Surviving Corporation shall
\npay any and all property or transfer taxes imposed on the Surviving Corporation.
\nThe filing fee and the cost of printing the S-4 Registration Statement and the
\nJoint Proxy Statement and the filing fee for the required filing under the HSR
\nAct shall be borne equally by the Company and Parent.<\/p>\n
9.2 Non-Survival of Representations and Warranties. The representations
\n ———————————————-
\nand warranties made herein shall not survive beyond the Effective Time or a
\ntermination of this Agreement, except to the extent a willful breach of such
\nrepresentation or intentional or knowing misrepresentation formed the basis for
\nsuch termination. This Section 9.2 shall not limit any covenant or agreement of
\nthe Parties which by its terms contemplates performance after the Effective
\nTime.<\/p>\n
9.3 Modification or Amendment. Subject to the applicable provisions
\n ————————-
\nof the DGCL, at any time prior to the Effective Time, the parties hereto, by
\nresolution of their respective Board of Directors, may modify or amend this
\nAgreement, by written agreement executed and delivered by duly authorized
\nofficers of the respective parties; provided, however, that after approval of
\nthe<\/p>\n
-57-<\/p>\n
Merger by the Requisite Stockholder Approval is obtained, no amendment which
\nrequires further stockholder approval shall be made without such approval of
\nstockholders.<\/p>\n
9.4 Waiver of Conditions. The conditions to each of the Parties’
\n ——————–
\nobligations to consummate the Merger are for the sole benefit of such party and
\nmay be waived by such party in whole or in part to the extent permitted by
\napplicable law.<\/p>\n
9.5 Counterparts. For the convenience of the parties hereto,
\n ————
\nthis Agreement may be executed in any number of counterparts, each such
\ncounterpart being deemed to be an original instrument, and all such counterparts
\nshall together constitute the same agreement.<\/p>\n
9.6 Governing Law. This Agreement shall be governed by and construed in
\n ————-
\naccordance with the laws of the State of Delaware, without giving effect to the
\nprinciples of conflicts of law thereof.<\/p>\n
9.7 Notices. Any notice, request, instruction or other document to be
\n ——-
\ngiven hereunder by any party to the other Parties shall be deemed delivered upon
\nactual receipt and shall be in writing and delivered personally or sent by
\nregistered or certified mail, postage prepaid, reputable overnight courier, or
\nby facsimile transmission (with a confirming copy sent by reputable overnight
\ncourier), as follows:<\/p>\n
(a) if to Parent or Merger Sub, to:<\/p>\n
Whittman-Hart, Inc.
\n 311 South Wacker Drive
\n Suite 3500
\n Chicago, Illinois 60606-6618
\n Attention: Chief Executive Officer
\n Facsimile: (312) 913-3020_________<\/p>\n
with a copy to:<\/p>\n
Katten Muchin & Zavis
\n 525 West Monroe Street
\n Suite 1600
\n Chicago, Illinois 60661-3693
\n Attention: Matthew S. Brown, Esq.
\n Facsimile: (312) 902-1061<\/p>\n
-58-<\/p>\n
(b) if to the Company, to:<\/p>\n
USWeb Corporation
\n 410 Townsend Street
\n San Francisco, CA 94107
\n Attention: Chief Executive Officer
\n Facsimile: (415) 369-6713<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati, P.C.
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attention: Mark E. Bonham, Esq.
\n Steve L. Camahort, Esq.
\n Facsimile: (650) 493-6811<\/p>\n
or to such other Persons or addresses as may be designated in writing by the
\nparty to receive such notice.<\/p>\n
9.8 Entire Agreement; Assignment. This Agreement, including the
\n —————————-
\nDisclosure Schedule and Confidentiality Agreement, (i) constitutes the entire
\nagreement among the Parties with respect to the subject matter hereof and
\nsupersedes all other prior agreements and understandings, both written and oral,
\namong the Parties or any of them with respect to the subject matter hereof, and
\n(ii) shall not be assigned by operation of law or otherwise.<\/p>\n
9.9 Parties in Interest. This Agreement shall be binding upon and inure
\n ——————-
\nsolely to the benefit of each party hereto and their respective successors and
\nassigns. Nothing in this Agreement, express or implied, other than the right to
\nreceive the consideration payable in the Merger pursuant to Article IV hereof,
\nis intended to or shall confer upon any other Person any rights, benefits or
\nremedies of any nature whatsoever under or by reason of this Agreement;
\nprovided, however, that (a) the provisions of Section 6.9 shall inure to the
\nbenefit of and be enforceable by the Indemnified Parties; and (b) the provisions
\nof Section 6.19 and 6.20 shall inure to the benefit of and be enforceable by the
\nofficers and directors of the Company and Parent referenced herein.<\/p>\n
9.10 Certain Definitions. As used herein:
\n ——————-<\/p>\n
(a) “ERISA” means the Employment Retirement Income Security Act of
\n1974, as amended.<\/p>\n
(b) “Governmental Entity” means the United States or any state, local
\nor foreign government, or instrumentality, division, subdivision, agency,
\ndepartment or authority of any thereof.<\/p>\n
-59-<\/p>\n
(c) “knowledge” with respect to a party hereto shall mean the actual
\nknowledge of any of the executive officers of such party.<\/p>\n
(d) “Malfunction” means the failure to: (i) accurately recognize dates
\nfalling before, on or after the year 2000; (ii) accurately record, store,
\nretrieve and process data input and date information; (iii) function in a manner
\nwhich does not create any ambiguity as to century; and (iv) accurately manage
\nand manipulate single century and multi-century formulae, including leap year
\ncalculations.<\/p>\n
(e) “Material Adverse Effect” shall mean any adverse change in the
\nbusiness, operations, liabilities (contingent or otherwise), results of
\noperations or financial performance, or condition of Parent or any of its
\nsubsidiaries or the Company or any of its subsidiaries, as the case may be,
\nwhich is material to Parent and its subsidiaries, taken as a whole, or the
\nCompany and its subsidiaries, taken as a whole, as the case may be.<\/p>\n
(f) “Material Adverse Effect Exception” means (i) a change in the
\nmarket price or trading volume of either the Parent Shares or the Company Shares
\nbetween the date hereof and the Effective Time, in and of itself, and not
\notherwise attributable to or resulting from any other effects, changes, events,
\ncircumstances or conditions which by itself would constitute a Material Adverse
\nEffect (ii) effects, changes, events, circumstances and conditions generally
\naffecting the industry in which either Parent and its subsidiaries or the
\nCompany and its subsidiaries operate or from changes in general business or
\neconomic conditions in the region, nation or world, or (iii) any effects,
\nchanges, events, circumstances or conditions resulting from (A) compliance by
\nParent or the Company with the terms of, or the taking of any action expressly
\nrequired by, this Agreement, or (B) the pendency or announcement of this
\nAgreement, or the transactions contemplated hereby, including changes or effects
\nresulting from employee attrition or a delay of, reduction in or a cancellation
\nor change in the terms of customer engagements or relationships with alliance
\npartners or other third parties, each to the extent attributable to the pendency
\nor announcement of this Agreement or the transactions contemplated hereby.<\/p>\n
(g) “Person” means any individual, sole proprietorship, partnership,
\njoint venture, trust, unincorporated association, corporation, entity or
\nGovernmental Entity.<\/p>\n
(h) “Significant Tax Agreement” is any agreement to which any Party or
\nany subsidiary of any Party is a party under which such Party or such subsidiary
\ncould reasonably be expected to be liable to another party under such agreement
\nin an amount in excess of $25,000 in respect of Taxes payable by such other
\nparty to any taxing authority.<\/p>\n
(i) “Software” means all computer software and subsequent versions
\nthereof, including but not limited to, source code, object code, objects,
\ncomments, screens, user interfaces, report formats, templates, menus, buttons
\nand icons, and all files, data, materials manuals, design notes and other items
\nand documentation related thereto or associated therewith.<\/p>\n
-60-<\/p>\n
(j) “Subsidiary” shall mean, when used with reference to any entity,
\nany entity fifty percent (50%) or more of the outstanding voting securities or
\ninterests of which are owned directly or indirectly by such former entity.<\/p>\n
(k) “Tax” or “Taxes” refers to any and all federal, state, local and
\nforeign, taxes, assessments and other governmental charges, duties, impositions
\nand liabilities relating to taxes, including taxes based upon or measured by
\ngross receipts, income, profits, sales, use and occupation, and value added, ad
\nvalorem, transfer, franchise, withholding, payroll, recapture, employment,
\nexcise and property taxes, together with all interest, penalties and additions
\nimposed with respect to such amounts and including any liability for taxes of a
\npredecessor entity.<\/p>\n
9.11 Obligation of the Company. Whenever this Agreement requires the
\n ————————-
\nSurviving Corporation or Merger Sub to take any action, such requirement shall
\nbe deemed to include an undertaking on the part of Parent to cause such party to
\ntake such action.<\/p>\n
9.12 Severability. If any term or other provision of this Agreement is
\n ————
\ninvalid, illegal or unenforceable, all other provisions of this Agreement shall
\nremain in full force and effect so long as the economic or legal substance of
\nthe transactions contemplated hereby is not affected in any manner materially
\nadverse to any party.<\/p>\n
9.13 Specific Performance. The parties hereto acknowledge that irreparable
\n ——————–
\ndamage would result if this Agreement were not specifically enforced, and they
\ntherefore consent that the rights and obligations of the parties under this
\nAgreement may be enforced by a decree of specific performance issued by a court
\nof competent jurisdiction. Such remedy shall, however, not be exclusive and
\nshall be in addition to any other remedies which any party may have under this
\nAgreement or otherwise.<\/p>\n
9.14 Recovery of Attorney’s Fees. In the event of any litigation between the
\n —————————
\nparties relating to this Agreement, the prevailing party shall be entitled to
\nrecover its reasonable attorney’s fees and costs (including court costs) from
\nthe non-prevailing party, provided that if both parties prevail in part, the
\nreasonable attorney’s fees and costs shall be awarded by the court in such
\nmanner as it deems equitable to reflect the relative amounts and merits of the
\nparties’ claims.<\/p>\n
9.15 Captions. The Article, Section and paragraph captions herein are for
\n ——–
\nconvenience of reference only, do not constitute part of this Agreement and
\nshall not be deemed to limit or otherwise affect any of the provisions hereof.<\/p>\n
-61-<\/p>\n
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
\nthe duly authorized officers of the Parties hereto and shall be effective as of
\nthe date first hereinabove written.<\/p>\n
WHITTMAN-HART, INC.<\/p>\n
By: \/s\/ Robert F. Bernard
\n —————————–<\/p>\n
Name: Robert F. Bernard
\n —————————<\/p>\n
Its: Chief Executive Officer
\n anf Chairman of the Board
\n —————————-<\/p>\n
UNIWHALE, INC.<\/p>\n
By: \/s\/ Robert F. Bernard
\n —————————– <\/p>\n
Name: Robert F. Bernard
\n —————————<\/p>\n
Its: President
\n —————————-<\/p>\n
USWEB CORPORATION<\/p>\n
By: \/s\/ Carolyn V. Aver
\n —————————– <\/p>\n
Name: Carolyn V. Aver
\n —————————<\/p>\n
Its: Executive Vice President and
\n Chief Financial Officer
\n —————————-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8126,9202,9332],"corporate_contracts_industries":[9510,9505],"corporate_contracts_types":[9622,9626],"class_list":["post-43147","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-marchfirst-inc","corporate_contracts_companies-usweb-corp","corporate_contracts_companies-whittman-hart-inc","corporate_contracts_industries-technology__programming","corporate_contracts_industries-services__management","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43147"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43147"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43147"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}