\n 11.5 Setoff……………………………………………………..43<\/p>\n 11.6 Defense of Third Party Claims…………………………………43<\/p>\n
11.7 Sole Remedy…………………………………………………44<\/p>\n
11.8 Exercise of Remedies by Indemnitees Other than Purchaser and
\n by Selling Stockholders………………………………………44<\/p>\n
12. Miscellaneous……………………………………………………….45<\/p>\n
12.1 Further Assurances…………………………………………..45<\/p>\n
12.2 Fees and Expenses……………………………………………45<\/p>\n
12.3 Attorneys’Fees………………………………………………45<\/p>\n
12.4 Taxes………………………………………………………45<\/p>\n
12.5 Governing Law……………………………………………….46<\/p>\n
12.6 Successors and Assigns……………………………………….47<\/p>\n
12.7 Entire Agreement…………………………………………….47<\/p>\n
12.8 Separability………………………………………………..47<\/p>\n
12.9 Amendments………………………………………………….47<\/p>\n
12.10 Notices…………………………………………………….47<\/p>\n
12.11 Publicity and Use of Confidential Information…………………..49<\/p>\n
12.12 Counterparts………………………………………………..49<\/p>\n
12.13 Delays or Omissions; Waivers………………………………….49<\/p>\n
12.14 Remedies Cumulative; Specific Performance………………………50<\/p>\n
12.15 Headings……………………………………………………50<\/p>\n
12.16 Construction………………………………………………..50
\n<\/c><\/s><\/c><\/s><\/c><\/s><\/c><\/s><\/caption>\n<\/table>\n
4<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (the “AGREEMENT”) is entered into
\nas of July 26, 1999, by and among XOOM.COM, INC., a Delaware corporation
\n(“PURCHASER”), LIQUIDMARKET, INC., a Delaware corporation (the “COMPANY”),
\nXOOM ACQUISITION SUB II, INC., a Delaware corporation and a wholly-owned
\nsubsidiary of Purchaser (“MERGER SUB”), the Company and Merger Sub sometimes
\nbeing hereinafter collectively referred to as the “CONSTITUENT CORPORATIONS,”
\nand the undersigned individuals and Entities (collectively, the “SELLING
\nSTOCKHOLDERS”), acting through Rajesh Parekh (the “HOLDER REPRESENTATIVE”).
\nCertain capitalized terms in this Agreement are defined in EXHIBIT A.<\/p>\n
RECITALS<\/p>\n
A. The Board of Directors of Purchaser, Merger Sub and the Company each
\n have determined that it is in the best interests of their respective
\n stockholders, as the case may be, for Purchaser to acquire the
\n Company by the merger of Merger Sub with and into the Company upon
\n the terms, and subject to the conditions, set forth herein (the
\n “MERGER”).<\/p>\n
B. For federal income tax purposes, it is intended that the Merger
\n constitute a “reorganization,” within the meaning of Section 368(a)
\n of the Internal Revenue Code of 1986, as amended (the “CODE”), and
\n that each of Purchaser, Merger Sub and the Company be a “party to a
\n reorganization,” within the meaning of Section 368(b) of the Code,
\n in respect of the Merger.<\/p>\n
AGREEMENT<\/p>\n
Purchaser, the Company, Merger Sub and the Selling Stockholders,
\nintending to be legally bound, agree as follows:<\/p>\n
1. THE MERGER; EFFECTIVE TIME.<\/p>\n
1.1 THE MERGER.<\/p>\n
Subject to the terms and conditions of this Agreement, at the
\nEffective Time (as defined in Section 1.2 hereof), Merger Sub shall be merged
\nwith and into the Company, with the Company as the surviving corporation in
\nsuch Merger (the “SURVIVING CORPORATION”), and the separate existence of
\nMerger Sub shall thereupon cease. The Merger shall have the effects set forth
\nin Section 251 of the General Corporation Law of the State of Delaware.
\nWithout limiting the generality of the foregoing, and subject thereto, at the
\nEffective Time all property, rights, powers, privileges and franchises of
\nMerger Sub shall vest in the Company as the Surviving Corporation, and all
\ndebts, liabilities and duties of Merger Sub shall become the debts,
\nliabilities and duties of the Surviving Corporation. Immediately following
\nthe Effective Time, the Surviving Corporation shall be a wholly-owned
\nsubsidiary of Purchaser.<\/p>\n
1<\/p>\n
1.2 EFFECTIVE TIME OF THE MERGER.<\/p>\n
The Merger shall become effective upon the completion of the filing
\nof a properly executed Certificate of Merger (the “CERTIFICATE OF MERGER”)
\nwith the Secretary of State of the State of Delaware, which filing shall be
\nmade as soon as practicable after the Closing (as defined below). When used
\nin this Agreement, the term “EFFECTIVE TIME” with respect to the Merger shall
\nmean the date and time at which such Certificate of Merger has been accepted
\nfor filing by the Secretary of State of Delaware.<\/p>\n
1.3 THE MERGER CONSIDERATION.<\/p>\n
(a) Subject to Section 1.3(b), Purchaser shall acquire all
\nof the outstanding shares of Common Stock and Company Preferred Stock, and
\nassume all of the Company Options, for an aggregate consideration equal to
\n1,061,008 shares of Purchaser Stock (the “MERGER CONSIDERATION”). Each
\nSelling Stockholder shall be allocated the portion of the Merger
\nConsideration set forth next to each such Selling Stockholder’s name on
\nSCHEDULE I attached hereto in exchange for the shares of Common Stock (as
\ndefined below) held by such Selling Stockholder.<\/p>\n
(b) Notwithstanding the provisions of Section 1.3(a):<\/p>\n
(i) if the product of (x) 1,061,008 times (y) the
\nAverage Purchaser Stock Price exceeds $60,000,000, then the aggregate number
\nof shares of Purchaser Stock payable as Merger Consideration shall equal the
\nquotient of $60,000,000 and the Average Purchaser Stock Price;<\/p>\n
(ii) if the product of (x) 1,061,008 times (y) the
\nAverage Purchaser Stock Price is less than $40,000,000, then the aggregate
\nnumber of shares of Purchaser Stock payable as Merger Consideration shall
\nequal the quotient of $40,000,000 and the Average Purchaser Stock Price; and<\/p>\n
(iii) if the Average Purchaser Stock Price is less than
\n$28.57, then Purchaser shall have the right, but not the obligation, to pay
\nthe Merger Consideration calculated in accordance with Section 1.3(b)(ii),
\nbut if Purchaser does not choose to do so, then either:<\/p>\n
(A) the Selling Stockholders shall receive from
\n Purchaser a Merger Consideration consisting of, in the aggregate,
\n 1,400,000 shares of Purchaser Stock; or<\/p>\n
(B) the Company may terminate the Agreement
\n pursuant to the terms of Section 10.<\/p>\n
1.4 ESCROW.<\/p>\n
As a source for the payment of the Selling Stockholders’
\nindemnification obligations set forth herein and in the Escrow Agreement, and
\nas security for the completion of certain product development and other tasks
\nthat are essential to the value of the assets of the Company, Purchaser will
\ndeliver to Escrow Agent under an Escrow Agreement (the “ESCROW AGREEMENT”) <\/p>\n
2<\/p>\n
in substantially the form attached as EXHIBIT B, an amount equal to twenty
\npercent (20%) of the Merger Consideration (the “HOLDBACK AMOUNT”).<\/p>\n
2. PURCHASER AND THE SURVIVING CORPORATION.<\/p>\n
2.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION.<\/p>\n
The Certificate of Incorporation of Merger Sub as in effect at the
\nEffective Time shall be the Certificate of Incorporation of the Surviving
\nCorporation until duly amended in accordance with applicable law.<\/p>\n
2.2 BYLAWS OF THE SURVIVING CORPORATION.<\/p>\n
The Bylaws of Merger Sub as in effect at the Effective Time shall be
\nthe Bylaws of the Surviving Corporation until thereafter amended in
\naccordance with applicable law.<\/p>\n
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.<\/p>\n
(a) The directors of Merger Sub at the Effective Time shall
\nbe the initial directors of the Surviving Corporation and shall hold office
\nfrom the Effective Time until their respective successors are duly elected or
\nappointed and qualified in the manner provided in the Certificate of
\nIncorporation and Bylaws of the Surviving Corporation, or as otherwise
\nprovided by law.<\/p>\n
(b) The officers of the Company at the Effective Time shall
\nbe the initial officers of the Surviving Corporation and shall hold office
\nfrom the Effective Time until removed or until their respective successors
\nare duly elected or appointed and qualified in the manner provided in the
\nCertificate of Incorporation and Bylaws of the Surviving Corporation, or as
\notherwise provided by law.<\/p>\n
3. TREATMENT OF STOCK AND COMPANY OPTIONS.<\/p>\n
3.1 EXCHANGE OF STOCK.<\/p>\n
At the Effective Time, by virtue of the Merger and without any
\nfurther action on the part of the holders thereof:<\/p>\n
(a) The shares of Merger Sub common stock, $.0001 par
\nvalue, which shall be outstanding immediately prior to the Effective Time of
\nthe Merger, shall be converted into the number of shares of common stock of
\nthe Surviving Corporation equal to the number of shares of common stock of
\nMerger Sub then outstanding.<\/p>\n
(b) Each share of common stock of the Company, par value
\n$0.001 per share (the “COMMON STOCK”), and each share of Company Preferred
\nStock outstanding immediately prior to the Effective Time (such outstanding
\nshares hereinafter referred to collectively as the “STOCK”) shall at the
\nEffective Time, by virtue of the Merger and without any action on the part of
\nthe holder thereof, be converted into the right to receive a portion of the
\nMerger Consideration equal to the number of shares of Purchaser Stock derived
\nby obtaining the quotient equal to (i) the Merger Consideration divided by
\n(ii) the sum of (x) the number of shares of Stock and (y) the <\/p>\n
3<\/p>\n
number of shares of Common Stock that may be issued upon the exercise of the
\noutstanding Company Options (including Additional Employee Option Grants)
\n(such quotient, the “EXCHANGE RATIO”).<\/p>\n
(c) At the Effective Time, all Company Options shall be
\nassumed by Purchaser in accordance with provisions described below.<\/p>\n
(i) At the Effective Time, each Company
\nOption, whether vested or unvested, shall be, in connection with the Merger,
\nassumed by Purchaser. Each Company Option so assumed by Purchaser under this
\nAgreement shall continue to have, and be subject to, the same terms and
\nconditions set forth in the Company’s 1998 Stock Incentive Plan (the “OPTION
\nPLAN”), which Purchaser shall also assume, and\/or as provided in the
\nrespective option agreements governing such Company Option immediately prior
\nto the Effective Time, provided that (A) such Company Option shall be
\nexercisable for that number of whole shares of Purchaser Stock equal to the
\nproduct of the number of shares of Common Stock that were issuable upon
\nexercise of such Company Option immediately prior to the Effective Time
\nmultiplied by the Exchange Ratio, rounded down to the nearest whole number of
\nshares of Purchaser Stock and (B) the per share exercise price for the
\nPurchaser Stock issuable upon exercise of such assumed Company Option shall
\nbe equal to the quotient determined by dividing the exercise price per share
\nof Common Stock at which such Company Option was exercisable immediately
\nprior to the Effective Time by the Exchange Ratio, rounded up to the nearest
\nwhole cent.<\/p>\n
(ii) Notwithstanding anything in this
\nAgreement to the contrary, in the event that the parties mutually agree that
\nadditional incentives are necessary to ensure retention of certain Company
\nemployees after the Effective Time, the Company and Purchaser shall, prior to
\nthe Closing Date, make additional grants of Company Options (“ADDITIONAL
\nEMPLOYEE OPTION GRANTS”) to such employees prior to the determination of the
\nExchange Ratio; provided, HOWEVER, that the number of shares subject to
\nAdditional Employee Option Grants granted pursuant to this Section 3.1(c)(ii)
\nshall not exceed two hundred twenty-five thousand (225,000) shares of Common
\nStock.<\/p>\n
(iii) It is the intention of the parties that
\nthe Company Options assumed by Purchaser qualify following the Effective Time
\nas incentive stock options as defined in Section 422 of the Code to the
\nextent the Company Options qualified as incentive stock options immediately
\nprior to the Effective Time.<\/p>\n
(iv) Following the Effective Time, Purchaser
\nwill issue to each holder of an outstanding Company Option a document
\nevidencing the foregoing assumption of such Company Option by Purchaser.<\/p>\n
(d) The Holdback Amount shall be held by the Escrow Agent
\nas provided for in Section 1.4 hereof and in the Escrow Agreement, and each
\nSelling Stockholder shall be paid such Selling Stockholder’s allocable
\nportion of the Merger Consideration less such Selling Stockholder’s pro rata
\nportion of the Holdback Amount upon the surrender of the certificates
\nformerly representing the Stock in accordance with Section 3.2 of this
\nAgreement.<\/p>\n
4<\/p>\n
(e) No fraction of a share of Purchaser Stock shall be
\nissued in the Merger. In lieu of fractional shares, the Selling Stockholders,
\nupon surrender of their Certificates as set forth in Section 3.2, shall be
\npaid an amount in cash, without interest, rounded to the nearest cent,
\ndetermined by multiplying the fractional interest to which such Stockholder
\nwould otherwise be entitled by the Average Purchaser Stock Price.<\/p>\n
(f) The shares of Purchaser Stock issued in connection with
\nthe Transactions will not be registered under the Securities Act. Such shares
\nmay not be transferred or resold thereafter, except in compliance with the
\nterms of this Agreement and the other Transactional Agreements and following
\nregistration under the Securities Act or in reliance on an exemption from
\nregistration under the Securities Act.<\/p>\n
3.2 MECHANICS OF EXCHANGE.<\/p>\n
(a) At the Effective Time, each Selling Stockholder shall
\nbe entitled to surrender the certificate or certificates that immediately
\nprior to the Effective Time represented the Stock (the “CERTIFICATES”), and
\nthat were converted into the right to receive a portion of the Merger
\nConsideration, to Purchaser for cancellation in exchange for such Selling
\nStockholder’s allocable portion of the Merger Consideration as set forth on
\nSCHEDULE I attached hereto. It shall be a condition of payment that the
\nCertificates so surrendered shall be properly endorsed or otherwise in proper
\nform for transfer to Purchaser.<\/p>\n
(b) From and after the Effective Time, there shall be no
\ntransfers on the stock transfer books of the Company of the shares which were
\noutstanding immediately prior to the Effective Time. If, after the Effective
\nTime, Certificates formerly representing the Stock set forth on SCHEDULE I
\nattached hereto are presented to the Surviving Corporation for payment, they
\nshall be cancelled and exchanged for the applicable portion of the Merger
\nConsideration in accordance with the procedures set forth in this Section.<\/p>\n
(c) At or prior to the Effective Time of the Merger,
\nPurchaser shall deliver to the Escrow Agent pursuant to the terms of the
\nEscrow Agreement shares of Purchaser Stock in an aggregate amount equal to
\nthe Holdback Amount.<\/p>\n
(d) In the event that any Certificate shall have been lost,
\nstolen or destroyed, upon the making of an affidavit of that fact by the
\nSelling Stockholder claiming such Certificate to be lost, stolen or
\ndestroyed, Purchaser will issue or cause to be issued in exchange for such
\nlost, stolen or destroyed Certificate the portion of the Merger Consideration
\nfor which the shares of Stock represented by the Certificate are exchanged in
\naccordance with this Section 3. When authorizing such issuance in exchange
\ntherefor, Purchaser may, in its discretion and as a condition precedent to
\nthe issuance thereof, require such Selling Stockholder to give Purchaser a
\nbond in such sum as it may direct as indemnity, or such other form of
\nindemnity, as it shall reasonably direct, against any claim that may be made
\nagainst Purchaser with respect to the Certificate alleged to have been lost,
\nstolen or destroyed.<\/p>\n
(e) Purchaser may, at its option, meet its obligations
\nunder this Section 3.2 through a bank or trust company selected by Purchaser
\nto act as exchange agent in connection with the Transactions.<\/p>\n
5<\/p>\n
(f) If any certificate for Purchaser Stock is to be issued
\nin a name other than that in which the Certificate surrendered in exchange
\ntherefor is registered, it shall be a condition of such exchange that the
\nperson requesting such exchange shall (i) pay to Purchaser any transfer or
\nother taxes required by reason of the issuance of certificates for such
\nsecurities in a name other than that of the registered holder of the
\nCertificate surrendered or (ii) establish to the satisfaction of Purchaser
\nthat such tax has been paid or is not applicable.<\/p>\n
(g) Notwithstanding anything in this Agreement to the
\ncontrary, neither Purchaser nor any other party hereto shall be liable to a
\nholder of shares of Stock for any portion of the Merger Consideration, or
\ndividend on shares of Purchaser Stock issued as part of the Merger
\nConsideration, or in accordance with Section 3.1 the cash payment for any
\nfractional interests, that (i) is delivered to a public official pursuant to
\napplicable escheat laws following the passage of time specified therein or
\n(ii) has not been claimed by the holder pursuant to the procedures set forth
\nin this Section 3.2 by the second anniversary of the Closing Date.<\/p>\n
3.3 NO FURTHER RIGHTS IN STOCK.<\/p>\n
All cash, cash equivalents or securities received by each
\nSelling Stockholder pursuant to this Agreement shall be deemed to have been
\ndelivered and received in full satisfaction of all rights pertaining to such
\nSelling Stockholder’s shares of Stock. At the Effective Time of the Merger,
\nthe Selling Stockholders shall cease to have any rights with respect to
\nshares of Stock, and their sole right shall be to receive the Merger
\nConsideration.<\/p>\n
3.4 CLOSING.<\/p>\n
The closing of the Transactions (the “CLOSING”) shall take place at
\nthe offices of Morrison & FOERSTER LLP, 425 Market Street, San Francisco,
\nCalifornia 94105-2482 at 9:00 a.m., local time, on the later of (x) July 28,
\n1999 or (y) the second business day after the day on which all of the
\nconditions set forth in Sections 4.1 and 4.2 hereof are satisfied or waived,
\nor at such other date, time and place as the parties shall otherwise agree
\n(the date of such Closing, the “CLOSING DATE”).<\/p>\n
3.5 SUPPLEMENTARY ACTION.<\/p>\n
If at any time after the Effective Time, any further assignments or
\nassurances in law or any other things are necessary or desirable to vest or
\nto perfect or confirm of record in the Surviving Corporation the title to any
\nproperty or rights of either Constituent Corporation, or otherwise to carry
\nout the provisions of this Agreement, the officers and directors of the
\nSurviving Corporation are hereby authorized and empowered on behalf of the
\nConstituent Corporations, in the name of and on behalf of either Constituent
\nCorporation as appropriate, to execute and deliver any and all things
\nnecessary or proper to vest or to perfect or confirm title to such property
\nor rights in the Surviving Corporation, and otherwise to carry out the
\npurposes and provisions of this Agreement.<\/p>\n
3.6 DISSENTING SHARES<\/p>\n
(a) If holders of Stock are entitled to dissent from the
\nMerger and demand appraisal of the Stock under applicable law (each person
\nelecting to exercise such rights, a <\/p>\n
6<\/p>\n
“DISSENTING HOLDER”), any shares of Stock held by a Dissenting Holder as to
\nwhich appraisal has been so demanded in accordance with applicable law
\n(“DISSENTING SHARES”) shall not be exchanged as described in Section 3.1, but
\nshall from and after the Effective Time represent only the right to receive
\nsuch consideration as may be determined to be due such Dissenting Holder
\npursuant to applicable law; PROVIDED, that each share of Stock held by a
\nDissenting Holder who shall, after the Effective Time, withdraw its demand
\nfor appraisal or lose its rights of appraisal with respect to such shares of
\nStock, in either case pursuant to applicable law, shall not be deemed a
\nDissenting Share, but shall be deemed to be converted, as of the Effective
\nTime, into the applicable portion of the Merger Consideration.<\/p>\n
(b) The Company shall give Purchaser prompt notice of any
\nwritten demands for appraisal of any shares of Stock, withdrawals of such
\ndemands or failures to perfect appraisal rights resulting in a loss of such
\nrights, and any other instruments received by the Company which relate to any
\nsuch demand for appraisal. The Company shall not voluntarily make any payment
\nwith respect to any demands or potential demands for appraisal of Stock or
\noffer to settle or settle any such demands or potential demands. Purchaser
\nshall be responsible for any settlement of claims with respect to any
\nDissenting Shares, which settlements may be paid in cash, Purchaser Stock or
\nsuch other consideration as Purchaser may determine, except as otherwise
\nrequired under applicable law.<\/p>\n
4. CLOSING CONDITIONS.<\/p>\n
4.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND MERGER
\nSUB.<\/p>\n
Purchaser’s and Merger Sub’s obligations to consummate the Merger
\nand to take the other actions required to be taken by Purchaser and Merger
\nSub at the Closing are subject to the satisfaction, at or prior to the
\nClosing, of each of the following conditions (any of which may be waived by
\nPurchaser, in whole or in part, in accordance with Section 12.13):<\/p>\n
(a) the representations and warranties made by the Holder
\nRepresentative, the Selling Stockholders and the Company in Section 5 hereof
\nor in any other Transactional Agreement shall have been true and accurate in
\nall material respects as of the date of this Agreement and as of the Closing
\nDate as though made on and as of the Closing Date, without giving effect to
\nany Disclosure Schedule update;<\/p>\n
(b) all covenants, agreements and conditions contained in
\nthis Agreement or in any other Transactional Agreement to be observed by the
\nHolder Representative, the Selling Stockholders and\/or the Company on or
\nprior to the Closing shall have been performed or complied with in all
\nmaterial respects;<\/p>\n
(c) the Selling Stockholders, the Holder Representative or
\nthe Company, as the case may be, shall have delivered the following documents
\nto Purchaser:<\/p>\n
(i) the Escrow Agreement, duly executed by
\nthe Holder Representative;<\/p>\n
(ii) a Registration Rights Agreement in the
\nform of EXHIBIT C (the “RIGHTS AGREEMENT”), duly executed by the Holder
\nRepresentative;<\/p>\n
7<\/p>\n
(iii) the Employment and Non-Competition
\nAgreements substantially in the form of EXHIBIT D, duly executed by each of the
\nCritical Employees named therein;<\/p>\n
(iv) one Investment Agreement, in the form of
\nEXHIBIT E hereto (the “INVESTMENT AGREEMENT”) and one Stockholder Questionnaire,
\nin the form of EXHIBIT F hereto (the “STOCKHOLDER QUESTIONNAIRE”), from each
\nrespective Selling Stockholder, duly executed and delivered by such Selling
\nStockholder and the Holder Representative, together with such evidence as is
\nacceptable to Purchaser, in its sole discretion, confirming the status of each
\nSelling Stockholder as an “accredited investor” (as such term is used in the
\nSecurities Act and the rules promulgated thereunder) or, in the case of a
\nSelling Stockholder who does not meet such criteria, the status of each Selling
\nStockholder’s representative or advisor with respect to the investment in
\nPurchaser Stock as a “purchaser representative” (as that term is defined in the
\nSecurities Act and the rules promulgated thereunder);<\/p>\n
(v) one Voting Agreement (the “VOTING
\nAGREEMENT”) from each of the four individuals who beneficially owns the greatest
\nnumber of shares of Stock, in a form to be mutually agreed upon by the parties
\nhereto, pursuant to which each such Selling Stockholder agrees, subject to
\ncertain conditions, to vote such Selling Stockholder’s shares of Purchaser Stock
\nin favor of the NBC Transactions;<\/p>\n
(vi) the legal opinion of Hale and Dorr, LLP,
\ncounsel to the Selling Stockholders and the Company, dated the Closing Date, in
\nsubstantially the form of EXHIBIT G;<\/p>\n
(vii) a certificate (the “SELLING STOCKHOLDERS
\nCLOSING CERTIFICATE” and the “COMPANY CLOSING CERTIFICATE,” respectively)
\nexecuted by the Holder Representative and a senior executive officer of the
\nCompany, respectively, dated as of the Closing, and certifying to the
\nsatisfaction of the conditions specified in Sections 4.1(a) and (b);<\/p>\n
(viii) the written resignations of the members of
\nthe Company Board;<\/p>\n
(ix) written evidence reasonably satisfactory to
\nPurchaser and its counsel of the grant of Company Options (including any
\nAdditional Employee Option Grants) to the employees of the Company as set forth
\non SCHEDULE II attached hereto;<\/p>\n
(x) written evidence reasonably satisfactory to
\nPurchaser and its counsel of the consent of all holders of the Company Preferred
\nStock to a waiver of their rights to any liquidation or other preference to
\nwhich such holders would be entitled as a result of the Merger and an agreement
\nto receive pursuant to the Merger the same Merger Consideration per share as
\nholders of Common Stock;<\/p>\n
(xi) written evidence reasonably satisfactory to
\nPurchaser and its counsel of the agreement by all Company Option holders to be
\nbound by the restrictions on sale of Purchaser Stock contained in Section 3.1 of
\nthe Registration Rights Agreement.<\/p>\n
(xii) written evidence reasonably satisfactory to
\nPurchaser and its counsel of the waiver by all Company Option holders and
\nholders of restricted Common Stock or other similar securities of the Company of
\ntheir right(s), if any, to acceleration of the vesting of their Company Options
\nor restricted Common Stock or other similar securities of the Company, <\/p>\n
8<\/p>\n
as the case may be, as a result of the Transactions or any other event or
\ncircumstance, and the acceptance in consideration of such waiver of (i) a six
\n(6) month acceleration in vesting of the Merger Consideration to be received
\nby such persons and (ii) such additional consideration as the Company and
\nPurchaser shall mutually agree; and<\/p>\n
(xiii) such other documents reasonably satisfactory
\nto Purchaser as Purchaser may request in good faith for the purpose of (A)
\nevidencing the accuracy of any representation or warranty made by the Company or
\nthe Selling Stockholders, (B) evidencing the compliance by the Company or the
\nSelling Stockholders with, or the performance by the Company or the Selling
\nStockholders of, any covenant or obligation set forth in this Agreement or any
\nother Transactional Agreement, (C) evidencing the satisfaction of the conditions
\nset forth in this Section 4.1, or (D) otherwise facilitating the consummation or
\nperformance of any of the Transactions;<\/p>\n
(d) each of the Critical Employees shall have accepted
\nemployment with Purchaser;<\/p>\n
(e) to the satisfaction of Purchaser and its counsel, the
\noffer and sale of the Purchaser Stock pursuant to the terms of this Agreement
\nshall comply with an exemption from registration under the Securities Act and\/or
\nany applicable federal or state securities laws and regulations;<\/p>\n
(f) all corporate and other proceedings required to be taken
\non the part of the Company and the Selling Stockholders in connection with this
\nAgreement, the Transactional Agreements and the Transactions, and all documents
\nincident thereto, shall be reasonably satisfactory in form and in substance to
\nPurchaser and its counsel;<\/p>\n
(g) there shall not be Dissenting Shares constituting more
\nthan one percent (1%) of the capital stock of the Company calculated on a
\nfully-diluted basis;<\/p>\n
(h) Purchaser’s Board of Directors and the Company’s Board of
\nDirectors and stockholders shall have ratified or approved the execution of this
\nAgreement and the other Transactional Agreements by Purchaser and shall have
\napproved the consummation of the Transactions;<\/p>\n
(i) each of the Consents identified or required to be
\nidentified in Part 5.5 of the Disclosure Schedule shall have been obtained and
\nshall be in full force and effect;<\/p>\n
(j) there shall have been no material adverse change in the
\nCompany’s business, condition, assets, liabilities, operations, financial
\nperformance or prospects, or any aspect or portion thereof (any such change or
\nsimilar effect, as the context requires, a “MATERIAL ADVERSE CHANGE” or
\n“MATERIAL ADVERSE EFFECT”) since the date of this Agreement; and<\/p>\n
(k) no Person shall have made or expressly threatened any
\nclaim asserting that such Person (i) may be the holder or the beneficial owner
\nor, or may have the right to acquire or to obtain beneficial ownership of, any
\ncapital stock or other securities of the Company, or (ii) may be entitled to all
\nor any portion of the Merger Consideration.<\/p>\n
9<\/p>\n
4.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE
\nSELLING STOCKHOLDERS.<\/p>\n
The Company’s obligation to take the actions required to be taken by
\nthe Company at the Closing is subject to the satisfaction, at or prior to the
\nClosing, of each of the following conditions (any of which may be waived by the
\nCompany, in whole or in part, in accordance with Section 12.13):<\/p>\n
(a) the representations and warranties made by Purchaser and
\nMerger Sub in Section 6 and in any other Transactional Agreement shall have been
\ntrue and correct in all material respects as of the date of this Agreement and
\nas of the Closing Date as though made on and as of the Closing Date;<\/p>\n
(b) all covenants, agreements and conditions contained in this
\nAgreement or in any other Transactional Agreement to be observed by Purchaser
\nand Merger Sub on or prior to the Closing shall have been performed or complied
\nwith in all material respects;<\/p>\n
(c) Purchaser shall have delivered the following documents to
\nthe Selling Stockholders, the Holder Representative and\/or the Company, as the
\ncase may be, duly executed by Purchaser:<\/p>\n
(i) the Escrow Agreement;<\/p>\n
(ii) the Rights Agreement;<\/p>\n
(iii) the Employment and Non-Competition
\n Agreements;<\/p>\n
(iv) the Investment Agreement;<\/p>\n
(v) the legal opinion of Morrison & Foerster
\nLLP, counsel to Purchaser, dated the Closing Date, in substantially the form of
\nEXHIBIT H; and<\/p>\n
(vi) a certificate (the “PURCHASER CLOSING
\nCERTIFICATE”) executed by a senior executive officer of Purchaser, dated the
\nClosing Date and certifying to the satisfaction of the conditions specified in
\nSections 4.2(a) and (b);<\/p>\n
(d) all corporate and other proceedings required to be taken
\non the part of Purchaser and Merger Sub in connection with the Transactions, and
\nall documents incident thereto, shall be reasonably satisfactory in form and in
\nsubstance to the Company and its counsel;<\/p>\n
(e) there shall have been no change that would have a material
\nadverse effect on the business, condition assets, liabilities, operations,
\nfinancial performance or prospects, or any aspect or portion thereof, of
\nPurchaser and its subsidiaries, taken as a whole (any such change or similar
\neffect, as the context requires, a “PURCHASER MATERIAL ADVERSE CHANGE” or
\n“PURCHASER MATERIAL ADVERSE EFFECT”) since the date of this Agreement; and<\/p>\n
(f) Purchaser’s Board of Directors, Company’s Board of
\nDirectors and the holders of all of the outstanding capital stock of the Company
\nshall have ratified or approved the <\/p>\n
10<\/p>\n
execution of this Agreement and the other Transactional Agreements by the
\nCompany, the Holder Representative and\/or the Selling Stockholders, as the
\ncase may be, and shall have approved the consummation of the Transactions.<\/p>\n
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.<\/p>\n
Except as specifically set forth in the disclosure schedule provided by
\nthe Company and attached hereto as SCHEDULE III (the “COMPANY DISCLOSURE
\nSCHEDULE”), the parts of which are numbered to correspond to the Section numbers
\nof this Agreement, the Company hereby represents and warrants to each Indemnitee
\nas follows:<\/p>\n
5.1 ORGANIZATION, GOOD STANDING, QUALIFICATION.<\/p>\n
(a) The Company is a corporation duly organized, validly
\nexisting and in good standing under the laws of the State of Delaware, is
\nqualified to conduct business and is in both corporate and tax good standing
\nunder the laws of each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties requires such qualification. The Company
\nhas the requisite corporate power and authority to own and operate its
\nproperties and assets, and to carry out the provisions hereof and thereof, and
\nto carry on its business as currently conducted.<\/p>\n
(b) The Company has never approved, or commenced any
\nproceeding, or made any election contemplating, the dissolution or liquidation
\nof the Company or the winding up or cessation of the Company’s business or
\naffairs.<\/p>\n
(c) The Company has no subsidiaries and does not own,
\nbeneficially or otherwise, any shares or other securities of, or any other
\ndirect or any other indirect interest of any nature in, any Entity.<\/p>\n
5.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS.<\/p>\n
(a) The Company has delivered to Purchaser accurate and
\ncomplete copies of:<\/p>\n
(i) the Company’s Certificate of Incorporation
\nand bylaws, including all amendments thereto, as presently in effect;<\/p>\n
(ii) the stock records of the Company; and<\/p>\n
(iii) the minutes and other records of the
\nmeetings and other proceedings (including any actions taken by written consent
\nor otherwise without a meeting) of the stockholders of the Company, the Company
\nBoard and all committees of the Company Board.<\/p>\n
There have been no meetings or other proceedings of the stockholders of the
\nCompany, the Company Board or any committee of the Company Board that are not
\nmemorialized in such minutes or other records.<\/p>\n
11<\/p>\n
(b) The Company has never conducted any business under or
\notherwise used, for any purpose or in any jurisdiction, any fictitious name,
\nassumed name, trade name or other name, other than the names listed on Part 5.2
\nof the Company Disclosure Schedule.<\/p>\n
(c) There has not been any material violation of the
\nCompany’s Certificate of Incorporation or bylaws.<\/p>\n
5.3 CAPITALIZATION.<\/p>\n
(a) The authorized capital stock of the Company consists of
\n20,450,000 shares of capital stock, comprised of 15,000,000 shares of Common
\nStock, of which 3,600,000 shares are issued and outstanding, and 5,450,000
\nshares of Preferred Stock, of which 3,200,000 are designated Series A
\nConvertible Preferred Stock, all of which are issued and outstanding, and
\n2,250,000 shares of Series B Convertible Preferred Stock, all of which are
\nissued and outstanding (collectively, the “COMPANY PREFERRED STOCK”). No other
\nshares of capital stock are issued or outstanding. All issued and outstanding
\nshares of the Company’s capital stock have been duly authorized and validly
\nissued, are fully paid and nonassessable, and have been issued in full
\ncompliance with all applicable securities laws and other applicable legal
\nrequirements. SCHEDULE II accurately sets forth (i) the names of the
\nemployees\/consultants who have been granted Company Options (including
\nAdditional Employee Option Grants); (ii) the number of Company Options held by
\nsuch employees as of the date of this Agreement; and\/or (iii) the number of
\nCompany Options to be granted to such employees\/consultants prior to the
\nClosing.<\/p>\n
(b) Except as set forth on SCHEDULE II or Part 5.3 of the
\nCompany Disclosure Schedule, there is no:<\/p>\n
(i) outstanding subscription, option, call,
\nwarrant or right (whether or not currently exercisable) to acquire any shares of
\nthe capital stock or other securities of the Company;<\/p>\n
(ii) outstanding security, instrument or
\nobligation that is or may become convertible into or exchangeable for any shares
\nof the capital stock or other securities of the Company; or<\/p>\n
(iii) to the knowledge of the Company, condition
\nor circumstance that would reasonably be expected to result in a claim by any
\nPerson to the effect that such Person is entitled to acquire or receive any
\nshares of capital stock or other securities of the Company.<\/p>\n
(c) Except as set forth in Part 5.3 of the Company Disclosure
\nSchedule, the Company has never repurchased, redeemed or otherwise reacquired
\n(or agreed, committed or offered (in writing or otherwise) to repurchase, redeem
\nor otherwise reacquire) any shares of capital stock or other securities, except
\nfrom employees of the Company pursuant to the terms of the Option Plan and the
\nCompany’s forms of option agreement.<\/p>\n
5.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.<\/p>\n
The Company has the corporate power and authority to enter into and to
\nperform its obligations under this Agreement and the other Transactional
\nAgreements to which it is or is <\/p>\n
12<\/p>\n
contemplated to be a party, and the execution, delivery and performance by
\nthe Company of this Agreement and such Transactional Agreements have been
\nduly authorized by all necessary action on the part of the Company Board and
\nits stockholders. This Agreement and the other Transactional Agreements
\nconstitute, or upon execution and delivery will constitute, the legal, valid
\nand binding obligations of the Company, enforceable against the Company in
\naccordance with their respective terms, except to the extent that
\nenforceability may be limited by applicable bankruptcy, reorganization,
\ninsolvency, moratorium or other laws affecting the enforcement of creditor’s
\nrights generally and by general principles of equity regardless of whether
\nsuch enforceability is considered in a proceeding in law or equity.<\/p>\n
5.5 NON-CONTRAVENTION; CONSENTS.<\/p>\n
Subject to the filing of the Certificate of Merger as required by the
\nGeneral Corporation Law of the State of Delaware and compliance by Purchaser
\nwith applicable securities laws in connection with the offer and sale of the
\nPurchaser Stock, the execution and delivery of this Agreement and the other
\nTransactional Agreements, and the consummation of the Transactions, by the
\nCompany will not, directly or indirectly (with or without notice or lapse of
\ntime):<\/p>\n
(a) contravene, conflict with or result in a material
\nviolation of (i) the Company’s Certificate of Incorporation or bylaws, or (ii)
\nany resolution adopted by the Company Board or any committee thereof or the
\nstockholders of the Company;<\/p>\n
(b) contravene, conflict with or result in a material
\nviolation of, or give any Governmental Body or other Person the right to
\nexercise any remedy or obtain any relief (other than statutory dissenters’
\nrights) under, any legal requirement or any Order to which the Company or any
\nmaterial assets owned or used by it are subject;<\/p>\n
(c) cause any material assets owned or used by the Company to
\nbe reassessed or revalued by any taxing authority or other Governmental Body;<\/p>\n
(d) contravene, conflict with or result in a material
\nviolation of any of the terms or requirements of, or give any Governmental Body
\nthe right to revoke, withdraw, suspend, cancel, terminate or modify, any
\nGovernmental Authorization that is held by the Company or any of its employees
\nor that otherwise relates to the Company’s business or to any of the material
\nassets owned or used by the Company;<\/p>\n
(e) contravene, conflict with or result in a material
\nviolation or material breach of, or material default under, any Company
\nContract;<\/p>\n
(f) give any Person the right to any payment by the Company or
\ngive rise to any acceleration or change in the award, grant, vesting or
\ndetermination of options, warrants, rights, severance payments or other
\ncontingent obligations of any nature whatsoever of the Company in favor of any
\nPerson, in any such case as a result of the change in control of the Company or
\notherwise resulting from the Transactions; or<\/p>\n
(g) result in the imposition or creation of any encumbrance
\nupon or with respect to any material asset owned or used by the Company.<\/p>\n
13<\/p>\n
Except as set forth in Part 5.5 of the Company Disclosure Schedule and as
\ncontemplated in this Agreement and the other Transactional Agreements, the
\nCompany will not be required to make any filing with or give any notice to,
\nor obtain any Consent from, any Person in connection with the execution and
\ndelivery of this Agreement and the other Transactional Agreements or the
\nconsummation or performance of any of the Transactions.<\/p>\n
5.6 INTELLECTUAL PROPERTY.<\/p>\n
(a) Part 5.6 of the Company Disclosure Schedule sets forth a
\ncomplete list, in all material respects, of all patents, trademarks, copyrights,
\nregistered maskworks, trade names and service marks, and any applications
\ntherefor in respect of any of the foregoing, included in the Company’s
\nProprietary Assets, and specifies, where applicable, the jurisdictions in which
\neach such Proprietary Assets has been issued or registered or in which an
\napplication for such issuance and registration has been filed, including the
\nrespective registration or application numbers and the names of all registered
\nowners. Part 5.6 also sets forth a complete list of all material licenses,
\nsublicenses and other agreements as to which the Company is a party and pursuant
\nto which the Company or any other Person is currently authorized to use any of
\nthe Company’s Proprietary Assets (excluding object code and end-user licenses
\ngranted to the Company as an end-user in the ordinary course of business that
\npermit use of software products without a right to modify, distribute or
\nsublicense the same (“END-USER LICENSES”)) or other trade secret material to the
\nCompany, and includes the identity of all parties thereto, a description of the
\nnature and subject matter thereof, the applicable royalty and the term thereof.
\nThe Company is not in material violation of any license, sublicense or agreement
\ndescribed on such list except such violations as do not materially impair the
\nCompany’s rights under such license, sublicense or agreement. Except as set
\nforth in Part 5.6 of the Company Disclosure Schedule, and except for any
\nconsents to transfer required under any Company Contract, the execution and
\ndelivery of this Agreement by the Company, and the consummation of the
\ntransactions contemplated hereby, (i) will not cause the Company to be in
\nviolation or default under any such license, sublicense or agreement, (ii) will
\nnot entitle any other party to any such license, sublicense or agreement to
\nterminate or modify such license, sublicense or agreement or (iii) will not
\nrequire the Company to repay any funds already received by it from a third
\nparty, except where the occurrence of any of (i) through (iii) would not have a
\nMaterial Adverse Effect.<\/p>\n
(b) Except as set forth in Part 5.6 of the Company Disclosure
\nSchedule, the Company has all right, title and interest in and to and is the
\nsole and exclusive owner or licensee of (free and clear of any liens or
\nencumbrances), the Company’s Proprietary Assets, and has sole and exclusive
\nrights (and is not contractually obligated to pay any compensation to any third
\nparty in respect thereof) to the use thereof or the material covered thereby in
\nconnection with the services or products in respect of which the Company’s
\nProprietary Assets are being used.<\/p>\n
(c) Except as set forth in Part 5.6 of the Company Disclosure
\nSchedule, no claims with respect to the Company’s Proprietary Assets have been
\nasserted or, to the knowledge of the Company, are threatened by any person nor
\nare there any valid grounds, to the knowledge of the Company, for any bona fide
\nclaims: (i) to the effect that the manufacture, sale, licensing or use of any of
\nthe products of the Company as now manufactured, sold, licensed or used or
\nproposed in written form for manufacture, sale, licensing or use by the Company
\ninfringes on any third party’s Proprietary Assets; (ii) against the use by the
\nCompany used in the Company’s business <\/p>\n
14<\/p>\n
as currently conducted; or (iii) challenging the ownership by the Company,
\nvalidity or effectiveness of any of the Company’s Proprietary Assets. To the
\nCompany’s knowledge, all registered patents, trademarks, service marks and
\ncopyrights held by the Company, if any, are valid and subsisting.<\/p>\n
(d) To the knowledge of the Company, there is no material
\nunauthorized use, infringement or misappropriation of any of the Company’s
\nProprietary Assets by any third party, including any employee or former employee
\nof the Company.<\/p>\n
(e) None of the Company’s Proprietary Assets or product of the
\nCompany is subject to any outstanding decree, order, judgment, or stipulation
\nrestricting in any manner the licensing thereof by the Company.<\/p>\n
(f) The Company has not entered into any agreement under which
\nthe Company is restricted from selling, licensing or otherwise distributing any
\nof its current or anticipated products to any class of customers, in any
\ngeographic area, during any period of time or in any segment of the market.<\/p>\n
(g) Each of the Company’s current and former employees,
\nconsultants and other agents with access to any of the Company’s Proprietary
\nAssets has executed the Company’s form of proprietary information and invention
\nagreement in substantially the form provided to Purchaser and its counsel.<\/p>\n
5.7 PROCEEDINGS; ORDERS.<\/p>\n
(a) There is no pending Proceeding, and, to the Company’s
\nknowledge, no Person has threatened to commence any Proceeding:<\/p>\n
(i) that names the Company as a party or as
\na result of which the Company or its property or assets are reasonably likely
\nto be bound; or<\/p>\n
(ii) that challenges, or that may have the
\neffect of preventing, delaying, making illegal or otherwise interfering with,
\nany of the Transactions or the Company’s ability to comply with or perform
\nits obligations and covenants under the Transactional Agreements, and, to the
\nknowledge of the Company, no event has occurred, and no claim, dispute or
\nother condition or circumstance exists, that might directly or indirectly
\ngive rise to or serve as a basis for the commencement of any such Proceeding.<\/p>\n
(b) The Company has delivered to Purchaser accurate and
\ncomplete copies of all pleadings, correspondence and other written materials to
\nwhich the Company has access that relate to the Proceedings identified in Part
\n5.7 of the Company Disclosure Schedule, if any.<\/p>\n
(c) There is no Order to which the Company, or any of the
\nassets owned or used by the Company, is subject.<\/p>\n
(d) To the Company’s knowledge, no officer or employee of the
\nCompany is subject to any Order that prohibits such officer or employee from
\nengaging in or continuing any conduct, activity or practice relating to the
\nCompany’s business.<\/p>\n
15<\/p>\n
5.8 FINANCIAL STATEMENTS.<\/p>\n
(a) The Company has delivered to Purchaser the following
\nfinancial statements and notes (collectively, the “FINANCIAL STATEMENTS”), which
\nare attached as EXHIBIT I:<\/p>\n
(i) the audited balance sheet of the Company as
\nof December 31, 1998, and the related audited statement of operations, changes
\nin stockholders’ equity and cash flows of the Company for the period ended
\nDecember 31, 1998, together with the notes thereto; and<\/p>\n
(ii) the unaudited balance sheet of the Company
\nas of June 30, 1999 (the “UNAUDITED INTERIM BALANCE SHEET”), and the related
\nunaudited statement of operations, changes in stockholders’ equity and cash
\nflows of the Company for the three (3) months then ended.<\/p>\n
(b) All the Financial Statements are accurate and complete in
\nall material respects, and the dollar amount of each line item included in the
\nFinancial Statements is accurate in all material respects. The Financial
\nStatements are in accordance with the books and records of the Company and
\npresent fairly the financial position of the Company as of the respective dates
\nthereof and the results of operations, changes in stockholders’ equity and cash
\nflows of the Company for the periods covered thereby. The Financial Statements
\nhave been prepared in accordance with GAAP applied on a consistent basis
\nthroughout the periods covered, subject, in the case of the unaudited financial
\nstatements, to normal recurring year-end adjustments, the effect of which will
\nnot be material, and the absence of notes thereto.<\/p>\n
(c) As of the date of this Agreement, the Company has no
\nLiabilities in excess of $25,000, individually or in the aggregate, except for
\nLiabilities identified as such in the “liabilities” column of the Unaudited
\nInterim Balance Sheet.<\/p>\n
5.9 TITLE TO ASSETS.<\/p>\n
(a) The Company owns all assets purported to be owned by it,
\nfree and clear of any material encumbrances, except liens for current taxes and
\nassessments not delinquent.<\/p>\n
(b) Each of the Company’s assets is free of material defects
\nand deficiencies and in good condition and repair, consistent with its age and
\nintended use (ordinary wear and tear excepted).<\/p>\n
(c) The Company does not own any real property or any interest
\nin real property, except for the leaseholds created under the real property
\nleases identified in Part 5.9(c) of the Company Disclosure Schedule (the “LEASED
\nPREMISES”). Part 5.9(c) of the Company Disclosure Schedule lists the premises
\ncovered by said leases. The Company enjoys peaceful and undisturbed possession
\nof such premises.<\/p>\n
(d) Part 5.9(d) of the Company Disclosure Schedule identifies
\nall tangible assets that are leased to the Company that have a value in excess
\nof $25,000. All leases pursuant to which the Company leases real or personal
\nproperty are valid and in full force and effect in <\/p>\n
16<\/p>\n
accordance with their respective terms and, to the knowledge of the Company,
\nthere exists no default thereunder.<\/p>\n
5.10 CONTRACTS.<\/p>\n
(a) Part 5.10 of the Company Disclosure Schedule identifies
\nand describes each material Company Contract. The Company has delivered to
\nPurchaser accurate and complete copies of all Company Contracts identified in
\nPart 5.10 of the Company Disclosure Schedule, including all amendments thereto.<\/p>\n
(b) Each Company Contract is currently valid and in full force
\nand effect, and is enforceable by the Company in accordance with its terms,
\nexcept to the extent that enforceability may be limited by applicable
\nbankruptcy, reorganization, insolvency, moratorium or other laws affecting the
\nenforcement of creditor’s rights generally and by general principles of equity
\nregardless of whether such enforceability is considered in a proceeding in law
\nor equity.<\/p>\n
(c) The Company is not in material default under any Company
\nContract, and, to the knowledge of the Company, (i) no Person has materially
\nviolated or breached, or declared or committed any material default under, any
\nCompany Contract; and (ii) the Company has not waived any of its rights under
\nany Company Contract.<\/p>\n
(d) (i) The Company has never guaranteed or otherwise agreed
\nto cause, insure or become liable for, and has never pledged any of its assets
\nto secure, the performance or payment of any obligation or other Liability of
\nany other Person; and (ii) the Company has never been a party to or bound by any
\nmaterial joint venture agreement, partnership agreement, profit-sharing
\nagreement, cost-sharing agreement, loss-sharing agreement or similar Contract.<\/p>\n
(e) No Person is renegotiating any amount paid or payable to
\nthe Company under any Company Contract or any other material term or provision
\nof any Company Contract.<\/p>\n
(f) Part 5.10(f) of the Company Disclosure Schedule identifies
\nand provides an accurate and complete description of each proposed Company
\nContract as to which any bid, offer, written proposal, term sheet or similar
\ndocument has been submitted to or received by the Company and is outstanding and
\nwhich would be material to the business or prospects of the Company.<\/p>\n
(g) No party to any Company Contract has notified the Company
\nto the effect that the Company has failed to perform a material obligation
\nthereunder.<\/p>\n
5.11 EMPLOYEES.<\/p>\n
(a) Part 5.11(a) of the Company Disclosure Schedule contains a
\nlist of all employees of the Company as of the date of the Agreement and their
\nrespective titles and annualized compensation.<\/p>\n
(b) Part 5.11(b) of the Company Disclosure Schedule contains a
\nlist of Persons who are currently performing services for the Company business
\nand are classified as <\/p>\n
17<\/p>\n
“consultants” or “independent contractors,” and the respective compensation
\nof each such “consultant” or “independent contractor.”<\/p>\n
(c) The Company has no collective bargaining agreements or
\nunion contracts with any of its employees. To the knowledge of the Company,
\nthere is no labor union organizing activity pending or threatened with respect
\nto the Company. The employment of each of the Company’s employees is terminable
\nby the Company at will; and, except as set forth in Part 5.11(c) of the Company
\nDisclosure Schedule, no employee has any agreement or contract, written or
\nverbal, regarding his or her continued employment.<\/p>\n
(d) To the Company’s knowledge, (i) no employee of the
\nCompany, nor any consultant with whom the Company has contracted, is in material
\nviolation of any term of any employment contract, proprietary information
\nagreement or any other agreement relating to the right of any such individual to
\nbe employed by, or to contract with, the Company because of the nature of the
\nbusiness to be conducted by the Company, and (ii) the continued employment by
\nthe Company of its present employees, and the performance of the Company’s
\ncontracts with its independent contractors, will not result in any such
\nviolation. The Company has not received any notice (written or otherwise)
\nalleging that any such violation has occurred. No employee of the Company has
\nbeen granted the right to continued employment by the Company or to any material
\ncompensation following termination of employment with the Company. To the
\nknowledge of the Company, no officer or key employee, or any group of employees,
\nhas given notice of his, her or their intent to terminate his, her or their
\nemployment with the Company, and no employee of the Company has received an
\noffer to join a business that is or likely would be competitive with the
\nCompany’s business.<\/p>\n
5.12 COMPLIANCE WITH LEGAL REQUIREMENTS.<\/p>\n
(a) The Company is in full compliance with each legal
\nrequirement that is applicable to it or to the conduct of its business or the
\nownership or use of any of its assets, except where any noncompliance would not
\nhave a Material Adverse Effect.<\/p>\n
(b) The Company has not received, at any time, any notice from
\nany Governmental Body or any other Person regarding (i) any actual, alleged,
\npossible or potential violation of, or failure to comply with, any legal
\nrequirement by the Company, or (ii) any actual, alleged, possible or potential
\nobligation on the part of the Company to undertake, or to bear all or any
\nportion of the cost of, any cleanup or any remedial, corrective or response
\naction of any nature relating to Hazardous Materials, except to the extent
\nnoncompliance would not have a Material Adverse Effect.<\/p>\n
5.13 GOVERNMENTAL AUTHORIZATIONS.<\/p>\n
(a) Part 5.13 of the Company Disclosure Schedule identifies
\neach Governmental Authorization held by the Company. The Company has delivered
\nto Purchaser accurate and complete copies of all such Governmental
\nAuthorizations, including all renewals thereof and all amendments thereto. Each
\nGovernmental Authorization identified or required to be identified in Part 5.13
\nof the Company Disclosure Schedule is valid and in full force and effect.<\/p>\n
18<\/p>\n
(b) The Governmental Authorizations identified in Part 5.13 of
\nthe Company Disclosure Schedule constitute all the Governmental Authorizations
\nnecessary (i) to enable the Company to conduct its business in the manner in
\nwhich its business is currently being conducted, and (ii) to permit the Company
\nto own and use its assets in the manner in which they are currently owned and
\nused, except to the extent that any failure to obtain any Governmental
\nAuthorization would not have a Material Adverse Effect.<\/p>\n
5.14 TAX MATTERS.<\/p>\n
(a) Except to the extent set forth in Part 5.14 of the Company
\nDisclosure Schedule, each Tax required to have been paid, or claimed by any
\nGovernmental Body to be payable, by the Company (whether pursuant to any Tax
\nReturn or otherwise) has been duly paid in full on a timely basis. Any Tax
\nrequired to have been withheld or collected by the Company has been duly
\nwithheld and collected, and (to the extent required) each such Tax has been paid
\nto the appropriate Governmental Body. The Company has complied with all
\ninformation reporting and backup withholding requirements, including maintenance
\nof required records with respect thereto, in connection with amounts paid or
\nowing to any employee, creditor, independent contractor, or other third party.<\/p>\n
(b) Part 5.14 of the Company Disclosure Schedule accurately
\nidentifies all Tax Returns required to be filed by or on behalf of the Company
\nwith any Governmental Body with respect to any taxable period ending on or
\nbefore the Closing Date (“COMPANY RETURNS”). All Company Returns (i) have been,
\nor will be, filed when due, and (ii) have been, or will be when filed,
\naccurately and completely prepared pursuant to applicable law. All amounts shown
\non the Company Returns to be due on or before the Closing Date, and all amounts
\notherwise payable in connection with the Company Returns on or before the
\nClosing Date, have been paid on or before the Closing Date. The Company has
\ndelivered to Purchaser copies of all Company Returns filed by or on behalf of
\nthe Company or any other entity acquired by or merged into the Company prior to
\nthe Closing Date.<\/p>\n
(c) The Company’s liability for unpaid Taxes for all periods
\nending on or before the date of the Financial Statements does not, in the
\naggregate, exceed the amount of the current liability accruals for Taxes
\n(excluding reserves for deferred taxes) reported in the Financial Statements.
\nThe Company has established, in the Ordinary Course of Business, reserves
\nadequate for the payment of all Taxes for the period from December 31, 1998
\nthrough the Closing Date, and the Company has disclosed the dollar amount of
\nsuch reserves to Purchaser on or prior to the Closing Date.<\/p>\n
(d) Part 5.14 of the Company Disclosure Schedule identifies
\neach examination or audit of any Company Return that has been conducted by any
\nGovernmental Body. The Company has delivered to Purchaser copies of all audit
\nreports and similar documents (to which the Company has access) relating to
\nCompany Returns. No extension or waiver of the limitation period applicable to
\nany of the Company Returns has been granted (by the Company or any other
\nPerson), and no such extension or waiver has been requested from the Company.<\/p>\n
(e) No claim or other Proceeding is pending or has been
\nthreatened in writing or orally (formally or informally) against or with respect
\nto the Company in respect of any Tax. <\/p>\n
19<\/p>\n
The Company has not entered into or become bound by any agreement or consent
\npursuant to Section 341(f) of the Code. The Company has not been, and will
\nnot be, required to include any adjustment in taxable income for any tax
\nperiod (or portion thereof) pursuant to Section 481 or 263A of the Code or
\nany comparable provision under state or foreign Tax laws as a result of
\ntransactions or events occurring, or accounting methods employed, prior to
\nthe Closing. The Company has never been in a “consolidated group” within the
\nmeaning of Treasury Regulations Section 1.1502-1(h), and is not liable for
\nTaxes incurred by any individual, trust, corporation, partnership or any
\nother Entity either as a transferee, pursuant to Treasury Regulations Section
\n1.1502-6, or pursuant to any other provision of federal, territorial, state,
\nlocal or foreign law or regulations. Except as set forth in Part 5.14 of the
\nCompany Disclosure Schedule, the Company is not a party to any joint venture,
\npartnership or other arrangement or contract which could be treated as a
\npartnership for United States federal income tax purposes. None of the assets
\nof the Company (i) directly or indirectly secures any debt the interest on
\nwhich is tax exempt under Section 103(a) of the Code or (ii) is “tax exempt
\nuse property” within the meaning of Section 168(h) of the Code. The Company
\nhas not participated in an international boycott as defined in Code Section
\n999. The Company does not have a “permanent establishment,” as defined in any
\napplicable Tax treaty or convention of the United States of America, or fixed
\nplace of business in any foreign country. The Company is not, nor has it ever
\nbeen, an “S corporation,” within the meaning of Section 1361(a) of the Code.<\/p>\n
(f) The Company is not party to any agreement, plan,
\narrangement or other Contract covering any employee or independent contractor or
\nformer employee or independent contractor of the Company that, individually or
\ncollectively, could give rise directly or indirectly to the payment of any
\namount that would not be deductible pursuant to Section 280G of the Code. Except
\nas set forth in Part 5.14 of the Company Disclosure Schedule, the Company is
\nnot, and has never been, a party to or bound by any tax indemnity agreement,
\ntax-sharing agreement, tax allocation agreement or similar Contract, and has not
\notherwise assumed the tax liability of any other Person under contract.<\/p>\n
(g) The Company is not a United States real property holding
\ncorporation within the meaning of Section 897(c)(2) of the Code and has not been
\na United States real property holding corporation within the applicable period
\nspecified in Section 897(c)(1)(A)(ii) of the Code.<\/p>\n
(h) The Company has no net operating losses or other tax
\nattributes presently subject to limitation under Code Section 382, 383 or 384.<\/p>\n
(i) All of the Selling Stockholders are “United States
\npersons,” within the meaning of Section 7701(a)(30) of the Code.<\/p>\n
(j) The Company’s final 1999 U.S. income tax return to be
\nprepared pursuant to Section 12.4(b) will contain, in all material respects, an
\naccurate and complete description of the Company’s tax basis in its assets, its
\ncurrent and accumulated earnings and profits, its tax carryovers, and any tax
\nelections.<\/p>\n
(k) The Company has not and will not prior to the Merger
\nredeem or make any extraordinary distribution (within the meaning of Treasury
\nRegulations Section 1.368-<\/p>\n
20<\/p>\n
1T(e)(1)(ii)(A)) with respect to any Company capital stock in connection with
\nthe Merger; no “related person” of the Company (within the meaning of
\nTreasury Regulations Section 1.368-1(e)(3)) has purchased or will purchase
\nprior to the Effective Time any Company capital stock in connection with the
\nMerger.<\/p>\n
(l) After the Merger, the Company will hold at least ninety
\npercent (90%) of the fair market value of its net assets and at least seventy
\npercent (70%) of the fair market value of its gross assets held immediately
\nprior to the Merger. For purposes hereof, amounts paid by the Company to
\ndissenters, amounts paid by the Company to shareholders who receive cash or
\nother property, amounts used by the Company to pay reorganization expenses, and
\nall redemptions and distributions (except for regular, normal dividends) made by
\nthe Company will be included as assets of the Company immediately prior to the
\nMerger.<\/p>\n
(m) The Liabilities of the Company, if any, and the
\nLiabilities to which the assets of the Company are subject, if any, were or will
\nbe incurred by the Company in the Ordinary Course of Business.<\/p>\n
(n) The Company and each of the Selling Stockholders will pay
\nany of their own expenses incurred in connection with the Merger.<\/p>\n
(o) The Company is not under the jurisdiction of a court in a
\n“title 11 or similar case,” within the meaning of Section 368(a)(3)(A) of the
\nCode.<\/p>\n
(p) The Company is not an investment company for purposes of
\nSection 368(a)(2)(F) of the Code.<\/p>\n
(q) The Company’s business conducted immediately before the
\nEffective Time will be its “historic business” and its assets held immediately
\nbefore the Effective Time will be its “historic business assets” for purposes of
\nSection 368 of the Code.<\/p>\n
5.15 SECURITIES LAWS COMPLIANCE; REGISTRATION RIGHTS.<\/p>\n
The Company has complied with all applicable federal and state
\nsecurities laws in connection with all offers and sales of securities issued
\nby the Company prior to the date of this Agreement. Except as set forth in
\nPart 5.15 of the Company Disclosure Schedule, the Company has not heretofore
\ngranted any other purchaser of its securities the right to require the
\nCompany to register any securities under the Securities Act or to qualify for
\nany exemption thereunder.<\/p>\n
5.16 FINDERS AND BROKERS; FEES.<\/p>\n
(a) Neither the Company nor any person acting on behalf of the
\nCompany has engaged any finder, broker, intermediary or any similar person in
\nconnection with the Transactions.<\/p>\n
(b) The Company has not entered into a contract or other
\nagreement that provides that a fee shall be paid to any Person or Entity if the
\nTransactions are consummated.<\/p>\n
21<\/p>\n
5.17 ENVIRONMENTAL COMPLIANCE.<\/p>\n
To the knowledge of the Company, the Company is and has been at all
\ntimes in compliance in all respects with all Environmental Laws, except where
\nthe failure to so comply would not have a Material Adverse Effect.<\/p>\n
5.18 INSURANCE.<\/p>\n
(a) Part 5.18 of the Company Disclosure Schedule sets forth
\neach insurance policy maintained by or at the expense of, or for the benefit of,
\nthe Company:<\/p>\n
(b) The Company has delivered to Purchaser copies of all of
\nthe insurance policies identified in Part 5.18 of the Company Disclosure
\nSchedule (including all renewals thereof and endorsements thereto) and binders
\nrelating thereto.<\/p>\n
(c) Each of the policies identified in Part 5.18 of the
\nCompany Disclosure Schedule is in full force and effect. All of the information
\ncontained in the applications submitted in connection with said policies was (at
\nthe times said applications were submitted) accurate and complete, and all
\npremiums and other amounts owing with respect to said policies have been paid in
\nfull on a timely basis. Each of the policies identified in Part 5.18 of the
\nCompany Disclosure Schedule will continue in full force and effect following the
\nClosing, and the Company has paid all premiums due, and has otherwise performed
\nall of its obligations, under each policy to which it is a party or that
\nprovides coverage to it or any of its directors or officers in connection with
\ntheir performance of services to the Company.<\/p>\n
(d) There is no pending claim under or based upon any of the
\npolicies identified in Part 5.18 of the Company Disclosure Schedule, and, to the
\nCompany’s knowledge, no event has occurred, and no condition or circumstance
\nexists, that might (with or without notice or lapse of time) directly or
\nindirectly give rise to or serve as a basis for any such claim.<\/p>\n
(e) The Company has not received:<\/p>\n
(i) any notice or other communication (in
\nwriting or otherwise) regarding the actual or possible cancellation or
\ninvalidation of any of the policies identified in Part 5.18 of the Company
\nDisclosure Schedule or regarding any actual or possible adjustment in the amount
\nof the premiums payable with respect to any of said policies; or<\/p>\n
(ii) any notice or other communication (in
\nwriting or otherwise) regarding any actual or possible refusal of coverage
\nunder, or any actual or possible rejection of any claim under, any of the
\npolicies identified in Part 5.18 of the Company Disclosure Schedule.<\/p>\n
5.19 RELATED PARTY TRANSACTIONS.<\/p>\n
(a) No Related Party has, and no Related Party has at any time
\nsince December 31, 1998, had, any direct or indirect material interest of any
\nnature in any material asset of the Company or any Company Contract, except in
\nsuch Related Party’s capacity as a director, employee, officer or stockholder of
\nthe Company.<\/p>\n
22<\/p>\n
(b) No Related Party is, or has at any time since December 31,
\n1998, been, indebted to the Company for an amount, individually or in the
\naggregate, in excess of $25,000.<\/p>\n
(c) Since December 31, 1998, no Related Party has entered
\ninto, or has had any direct or indirect material financial interest in, any
\nCompany Contract, transaction or business dealing of any nature involving the
\nCompany, except in such Related Party’s capacity as a director, employee,
\nofficer or stockholder of the Company.<\/p>\n
(d) To the Company’s knowledge, no Related Party is competing,
\nor has at any time since December 31, 1998, competed, directly or indirectly,
\nwith the Company in any market served by the Company.<\/p>\n
5.20 ABSENCE OF CHANGES.<\/p>\n
Since March 31, 1999:<\/p>\n
(a) there has not been any Material Adverse Change, and, to
\nthe knowledge of the Company, no event has occurred that is reasonably likely to
\nhave a Material Adverse Effect;<\/p>\n
(b) the Company has not declared, accrued, set aside or paid
\nany dividend or made any other distribution in respect of any shares of capital
\nstock;<\/p>\n
(c) the Company has not amended its Certificate of
\nIncorporation or Bylaws and has not effected or been a party to any Acquisition
\nTransaction, recapitalization, reclassification of shares, stock split, reverse
\nstock split or similar transaction;<\/p>\n
(d) the Company has not made any individual capital
\nexpenditure in excess of $50,000<\/p>\n
(e) the Company has not pledged or hypothecated any of its
\nmaterial assets or otherwise permitted any of its material assets to become
\nsubject to any encumbrance;<\/p>\n
(f) the Company has not made any loan or advance in excess of
\n$25,000 to any Person;<\/p>\n
(g) the Company has not paid any bonus or made any
\nprofit-sharing or similar payment to, or increased the amount of the wages,
\nsalary, commissions, fringe benefits or other compensation or remuneration
\npayable to, any of its directors, officers or employees in excess of $5,000
\nindividually or $10,000 in the aggregate;<\/p>\n
(h) there has been no resignation or termination of employment
\nof any officer or Critical Employee of the Company;<\/p>\n
(i) there has been no borrowing or agreement to borrow by the
\nCompany or material change in the contingent obligations of the Company by way
\nof guaranty, endorsement, indemnity, warranty or otherwise or grant of a
\nmortgage or security interest in any property of the Company;<\/p>\n
23<\/p>\n
(j) the Company has not discharged any encumbrance or
\ndischarged, paid or forgiven any indebtedness or other Liability in excess of
\n$25,000, individually or in the aggregate, except for accounts payable that (i)
\nare reflected as current liabilities in the “liabilities” column of the
\nUnaudited Interim Balance Sheet or have been incurred by the Company since the
\ndate of the Unaudited Interim Balance Sheet in the Ordinary Course of Business
\nand (ii) have been discharged or paid in the Ordinary Course of Business;<\/p>\n
(k) the Company has not released or waived any material right
\nor claim;<\/p>\n
(l) the Company has not changed any of its methods of
\naccounting or accounting practices in any material respect;<\/p>\n
(m) the Company has not received notice that there has been a
\nloss of, or cancellation of a material order by, any customer of the Company;
\nand<\/p>\n
(n) the Company has not agreed, committed or offered (in
\nwriting or otherwise), and has not attempted, to take any of the actions
\nreferred to in clauses (b) through (m) above.<\/p>\n
5.21 POWERS OF ATTORNEY.<\/p>\n
The Company has not given a power of attorney to any Person.<\/p>\n
5.22 BENEFIT PLANS; ERISA.<\/p>\n
(a) Part 5.22 of the Company Disclosure Schedule lists (i) all
\n“employee benefit plans” within the meaning of Section 3(3) of ERISA, (ii) all
\nmaterial employment agreements, including, but not limited to, any individual
\nbenefit arrangement, policy or practice with respect to any current or former
\nemployee or director of the Company or Member of the Controlled Group, and (iii)
\nall other material employee benefit, bonus or other incentive compensation,
\nstock option, stock purchase, stock appreciation, severance pay, lay-off or
\nreduction in force, change in control, sick pay, vacation pay, salary
\ncontinuation, retainer, leave of absence, educational assistance, service award,
\nemployee discount, fringe benefit plans, arrangements, policies or practices,
\nwhether legally binding or not, which the Company or any Member of the
\nControlled Group maintains, contributes to or has any obligation to or liability
\nfor (collectively, the “PLANS”).<\/p>\n
(b) None of the Plans is a Defined Benefit Plan, and neither
\nthe Company nor any Member of the Controlled Group has ever sponsored,
\nmaintained or contributed to, or ever been obligated to contribute to, a Defined
\nBenefit Plan that could reasonably be expected to result in a material amount of
\nliability under Title IV of ERISA.<\/p>\n
(c) None of the Plans is a Multiemployer Plan, and neither the
\nCompany nor any Member of the Controlled Group has ever contributed to, or ever
\nbeen obligated to contribute to, a Multiemployer Plan that could reasonably be
\nexpected to result in a material amount of liability under Title IV of ERISA.<\/p>\n
(d) The Company does not maintain or contribute to any welfare
\nbenefit plan which provides health benefits to an employee after the employee’s
\ntermination of employment <\/p>\n
24<\/p>\n
or retirement except as required under Section 4980B of the Code and Sections
\n601 through 608 of ERISA, or other applicable law.<\/p>\n
(e) Each Plan that is an “employee benefit plan,” as defined
\nin Section 3(3) of ERISA, complies in all material respects by its terms and in
\noperation with the requirements provided by any and all statutes, orders or
\ngovernmental rules or regulations currently in effect and applicable to the
\nPlan, including but not limited to ERISA and the Code.<\/p>\n
(f) All reports, forms and other documents required to be
\nfiled with any government entity with respect to any Plan (including, without
\nlimitation, summary plan descriptions, Forms 5500 and summary annual reports)
\nhave been timely filed and are accurate.<\/p>\n
(g) Each Plan intended to qualify under Section 401(a) of the
\nCode is the subject of a favorable determination letter issued by the Internal
\nRevenue Service that provides that it so qualifies through the last day of the
\n“TRA 86 Remedial Amendment Period,” as such term is defined in Section 3.02 or
\nRevenue Procedure 96-55. To the Company’s knowledge, nothing has occurred since
\nthe date of the Internal Revenue Service’s favorable determination letter that
\ncould adversely affect the qualification of the Plan and its related trust. The
\nCompany and each Member of the Controlled Group have timely and properly applied
\nfor a written determination by the Internal Revenue Service on the qualification
\nof each such Plan and its related trust under Section 401(a) of the Code, as
\namended by the Tax Reform Act of 1986 and subsequent legislation enacted through
\nthe date hereof, and Section 501 of the Code.<\/p>\n
(h) All contributions owed for all periods ending prior to the
\nClosing Date (including periods from the first day of the current plan year to
\nthe Closing Date) under any Plan have been or will be made prior to the Closing
\nDate by the Company in accordance with past practice and the recommended
\ncontribution in any applicable actuarial report.<\/p>\n
(i) All insurance premiums have been paid in full, subject
\nonly to normal retrospective adjustments in the ordinary course, with regard to
\nthe Plans for plan years ending on or before the Closing Date.<\/p>\n
(j) With respect to each Plan:<\/p>\n
(i) no prohibited transactions (as defined in
\nSection 406 or 407 of ERISA or Section 4975 of the Code) have occurred for which
\nan exemption is not available that could reasonably be expected to result in a
\nmaterial amount of liability to the Company;<\/p>\n
(ii) no actions or claims (other than routine
\nclaims for benefits made in the ordinary course of Plan administration for which
\nPlan administrative review procedures have not been exhausted) are pending,
\nthreatened or, to the knowledge of the Company, imminent against or with respect
\nto the Plan, any employer who is participating (or who has participated) in the
\nPlan or any fiduciary (as defined in Section 3(21) of ERISA) of the Plan that
\ncould reasonably be expected to result in a material amount of liability to the
\nCompany;<\/p>\n
(iii) no facts exist which could give rise to any
\nsuch action or claim; and<\/p>\n
25<\/p>\n
(iv) the Plan provides that it may be amended or
\nterminated at any time and, except for benefits protected under Section 411(d)
\nof the Code, all benefits payable to current, terminated employees or any
\nbeneficiary may be amended or terminated by the Company at any time without a
\nmaterial amount of liability.<\/p>\n
(k) Neither the Company nor any Member of the Controlled Group
\nhas any Plan-related liability or is threatened with any liability (whether
\njoint or several) (i) for any excise tax imposed by Section 4971, 4975, 4976,
\n4977 or 4979 of the Code, or (ii) for a fine under Section 502 of ERISA that
\ncould reasonably be expected to result in a material amount of liability to the
\nCompany.<\/p>\n
(l) All the “group health plans” (as defined in Section 607(1)
\nor 733(a)(1) of ERISA or Section 4980B(g)(2) of the Code) that are part of the
\nPlans listed in the Company Disclosure Schedule are in material compliance with
\nthe continuation of group health coverage provisions contained in Section 4980B
\nof the Code and Sections 601 through 608 of ERISA.<\/p>\n
(m) Copies of all documents creating or evidencing any Plan
\nlisted in the Company Disclosure Schedule, and all reports, forms and other
\ndocuments required to be filed with any governmental entity (including, without
\nlimitation, summary plan descriptions, Forms 5500 and summary annual reports for
\nall plans subject to ERISA), have been delivered or made available to Purchaser.
\nThere are no negotiations, demands or proposals which are pending or have been
\nmade which concern matters now covered, or that would be covered, by any Plan
\nlisted in the Company Disclosure Schedule.<\/p>\n
(n) All expenses and liabilities relating to contributions
\nrequired by law and the terms of the Plans described in the Company Disclosure
\nSchedule have been, and on the Closing Date will be, fully and properly accrued
\non the Company’s books and records and disclosed in accordance with GAAP and in
\nPlan financial statements.<\/p>\n
5.23 HSR ACT MATTERS.<\/p>\n
The Company is its own “ultimate parent entity” as such term is defined
\nin 16 C.F.R. Section 801.1(a)(3). The Company, on a consolidated basis, does not
\nengage in manufacturing within the meaning of 16 C.F.R. Section 801.1(j). The
\nCompany, on a consolidated basis, does not have assets with an aggregate book
\nvalue of $10,000,000 or more based on its most recent regularly prepared balance
\nsheet. This representation is made solely for the purpose of determining the
\napplicability to the transactions contemplated by this Agreement of the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.<\/p>\n
5.24 FULL DISCLOSURE.<\/p>\n
(a) Neither this Agreement (including all Schedules and
\nExhibits hereto), nor any of the Transactional Agreements, contains any untrue
\nstatement of material fact; and none of such documents omits to state any
\nmaterial fact necessary to make any of the representations, warranties or other
\nstatements or information contained therein when read collectively not
\nmisleading.<\/p>\n
26<\/p>\n
(b) There is no fact within the knowledge of the Company
\n(other than publicly known facts relating exclusively to political or economic
\nmatters of general applicability that will adversely affect all comparable
\nEntities) that may (i) have a Material Adverse Effect or (ii) affect the ability
\nof the Selling Stockholders or the Company to comply with or perform any
\ncovenant or obligation under this Agreement or any of the other Transactional
\nAgreements to which it is contemplated to be a party.<\/p>\n
(c) All the information set forth in the Company Disclosure
\nSchedule is accurate and complete in all material respects.<\/p>\n
5.25 DUE DILIGENCE INFORMATION.<\/p>\n
The Company has provided Purchaser and Purchaser’s representatives with
\nfull and complete access to all of the Company’s records and other documents and
\ndata, and has produced all documents and related materials in response to the
\nreasonable requests of Purchaser.<\/p>\n
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB.<\/p>\n
Except as set forth in the disclosure schedule provided by Purchaser
\nattached hereto at SCHEDULE IV (the “PURCHASER DISCLOSURE SCHEDULE”) Purchaser
\nand Merger Sub, jointly and severally, hereby represent and warrant to the
\nSelling Stockholders as follows:<\/p>\n
6.1 ORGANIZATION, GOOD STANDING, AUTHORITY; BINDING NATURE OF
\nAGREEMENT.<\/p>\n
(a) Purchaser is a corporation duly organized, validly
\nexisting and in good standing under the laws of the State of Delaware, is
\nqualified to conduct business and is in both corporate and tax good standing
\nunder the laws of each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties requires such qualification. Purchaser
\nhas the requisite corporate power and authority to own and operate its
\nproperties and assets and to carry on its business as currently conducted.<\/p>\n
(b) Merger Sub is a corporation duly organized, validly
\nexisting and in good standing under the laws of the State of Delaware, is
\nqualified to conduct business and is in both corporate and tax good standing
\nunder the laws of each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties requires such qualification. Merger Sub
\nhas the requisite corporate power and authority to own and operate its
\nproperties and assets and to carry on its business as currently conducted.
\nMerger Sub was created solely to effect the Transactions.<\/p>\n
6.2 INVESTMENT REPRESENTATIONS.<\/p>\n
(a) Purchaser understands that the Stock has not been
\nregistered under the Securities Act. Purchaser also understands that the Stock
\nis being offered and sold pursuant to an exemption from registration contained
\nin the Securities Act based in part upon Purchaser’s representations contained
\nin this Section 6.2.<\/p>\n
(b) Purchaser is entering into the Transactions for
\nPurchaser’s own account for investment only, and not with the current intention
\nof making a public distribution of the Stock.<\/p>\n
27<\/p>\n
(c) Purchaser represents that by reason of its, or of its
\nmanagement’s business or financial experience, Purchaser has the capacity to
\nprotect its own interests in connection with the Transactions contemplated in
\nthis Agreement and the other Transactional Agreements. Purchaser is able to bear
\nthe loss of its entire investment in the Company. Purchaser is not a
\ncorporation, partnership or other entity specifically formed for the purpose of
\nconsummating this transaction.<\/p>\n
(d) Purchaser is an “accredited investor” as that term is
\ndefined in Rule 501(a) of Regulation D promulgated under to the Securities Act.<\/p>\n
6.3 PURCHASER STOCK.<\/p>\n
The Purchaser Stock to be issued to the Selling Stockholders and upon
\nexercise of the Company Options assumed by Purchaser, when issued in connection
\nwith this Agreement and the other Transactional Agreements, will be duly
\nauthorized, validly issued and nonassessable.<\/p>\n
6.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.<\/p>\n
(a) The execution, delivery and performance of this Agreement,
\nthe Transactional Agreements, and all other agreements and instruments
\ncontemplated to be executed and delivered by Purchaser or Merger Sub, as the
\ncase may be, in connection herewith have been duly authorized by all necessary
\naction on the part of Purchaser and Merger Sub and their respective board of
\ndirectors.<\/p>\n
(b) This Agreement, the Transactional Agreements, and all
\nother agreements and instruments contemplated to be executed and delivered by
\nPurchaser and Merger Sub each constitute the legal, valid and binding obligation
\nof Purchaser and Merger Sub, enforceable against Purchaser and Merger Sub in
\naccordance with their terms, except to the extent that enforceability may be
\nlimited by applicable bankruptcy, reorganization, insolvency, moratorium or
\nother laws affecting the enforcement of creditors’ rights generally and by
\ngeneral principles of equity regardless of whether such enforceability is
\nconsidered in a proceeding in law or equity.<\/p>\n
6.5 NON-CONTRAVENTION; CONSENTS.<\/p>\n
The execution and delivery of this Agreement and the other
\nTransactional Agreements, and the consummation of the Transactions, by Purchaser
\nand Merger Sub will not, directly or indirectly (with or without notice or lapse
\nof time):<\/p>\n
(a) contravene, conflict with or result in a material
\nviolation of (i) Purchaser and Merger Sub’s Certificate of Incorporation or
\nbylaws, or (ii) any resolution adopted by Purchaser and Merger Sub Board or any
\ncommittee thereof or the stockholders of Purchaser and Merger Sub;<\/p>\n
(b) contravene, conflict with or result in a material
\nviolation of, or give any Governmental Body the right to challenge any of the
\nTransactions or to exercise any remedy or obtain any relief under, any legal
\nrequirement or any Order to which Purchaser and Merger Sub or any material
\nassets owned or used by it are subject;<\/p>\n
28<\/p>\n
(c) cause any material assets owned or used by Purchaser and
\nMerger Sub to be reassessed or revalued by any taxing authority or other
\nGovernmental Body;<\/p>\n
(d) contravene, conflict with or result in a material
\nviolation of any of the terms or requirements of, or give any Governmental Body
\nthe right to revoke, withdraw, suspend, cancel, terminate or modify, any
\nGovernmental Authorization that is held by Purchaser or Merger Sub or any of
\ntheir respective employees or that otherwise relates to Purchaser and Merger
\nSub’s business or to any of the material assets owned or used by Purchaser and
\nMerger Sub;<\/p>\n
(e) contravene, conflict with or result in a material
\nviolation or material breach of, or material default under, any Purchaser
\nContract;<\/p>\n
(f) give any Person the right to any payment by Purchaser or
\nMerger Sub or give rise to any acceleration or change in the award, grant,
\nvesting or determination of options, warrants, rights, severance payments or
\nother contingent obligations of any nature whatsoever of Purchaser or Merger Sub
\nin favor of any Person, in any such case as a result of the change in control of
\nMerger Sub or otherwise resulting from the Transactions; or<\/p>\n
(g) result in the imposition or creation of any material
\nencumbrance upon or with respect to any material asset owned or used by
\nPurchaser and Merger Sub.<\/p>\n
Except as set forth in Part 6.5 of the Purchaser Disclosure Schedule and as
\ncontemplated in this Agreement and the other Transactional Agreements, Purchaser
\nand Merger Sub will not be required to make any filing with or give any notice
\nto, or obtain any Consent from, any Person in connection with the execution and
\ndelivery of this Agreement and the other Transactional Agreements or the
\nconsummation or performance of any of the Transactions.<\/p>\n
6.6 FINDERS AND BROKERS.<\/p>\n
Purchaser and Merger Sub will indemnify the Selling Stockholders and
\nthe Company and hold them harmless from any liability or expense arising from
\nany claim for brokerage commissions, finder’s fees or other similar compensation
\nbased upon any agreement, arrangement or understanding made by or on behalf of
\nPurchaser or Merger Sub.<\/p>\n
6.7 REPORTS AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.<\/p>\n
(a) Purchaser has filed all reports required to be filed with
\nthe SEC pursuant to the Exchange Act, if any, since its initial public offering
\non December 9, 1998 (all such reports, including those to be filed prior to the
\nClosing Date, collectively, the “PURCHASER SEC REPORTS”), and has previously
\nfurnished or made available to the Company true and complete copies of all the
\nPurchaser SEC Reports filed, if any, with respect to periods ending after
\nDecember 9, 1998 (including any exhibits thereto) and will promptly deliver to
\nthe Company any Purchaser SEC Reports filed between the date hereof and the
\nEffective Time. All of such Purchaser SEC Reports complied at the time they were
\nfiled in all material respects with applicable requirements of the Securities
\nAct and the Exchange Act and the rules and regulations thereunder. None of such
\nPurchaser SEC Reports, as of their respective dates (as amended through the date
\nhereof), contained or, with respect to Purchaser SEC Reports filed after the
\ndate hereof, will contain any untrue statement of a material fact or omitted
\nor, with respect to Purchaser SEC Reports filed <\/p>\n
29<\/p>\n
after the date hereof, will omit to state a material fact required to be
\nstated therein or necessary to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading. The audited
\nfinancial statements of Purchaser included in the Purchaser SEC Reports
\ncomply in all material respects with the published rules and regulations of
\nthe SEC with respect thereto, and such audited financial statements (i) were
\nprepared from the books and records of Purchaser, (ii) were prepared in
\naccordance with GAAP applied on a consistent basis (except as may be
\nindicated therein or in the notes or schedules thereto) and (iii) present
\nfairly the financial position of Purchaser as of the dates thereof and the
\nresults of operations and cash flows for the periods then ended. The
\nunaudited financial statements included in the Purchaser SEC Reports comply
\nin all material respects with the published rules and regulations of the SEC
\nwith respect thereto; and such unaudited financial statements (i) were
\nprepared from the books and records of Purchaser, (ii) were prepared in
\naccordance with GAAP, except as otherwise permitted under the Exchange Act
\nand the rules and regulations thereunder, on a consistent basis (except as
\nmay be indicated therein or in the notes or schedules thereto) and (iii)
\npresent fairly the financial position of Purchaser as of the dates thereof
\nand the results of operations and cash flows (or changes in financial
\ncondition) for the periods then ended, subject to normal year-end adjustments
\nand any other adjustments described therein or in the notes or schedules
\nthereto. The foregoing representations and warranties shall also be deemed to
\nbe made with respect to all filings made with the SEC on or before the
\nEffective Time.<\/p>\n
(b) Except as specifically contemplated by this Agreement or
\nreflected in the Purchaser SEC Reports, since March 31, 1999 there has not been
\n(i) any change or event having a Purchaser Material Adverse Effect, (ii) any
\ndeclaration, setting aside or payment of any dividend or distribution with
\nrespect to the common stock of Purchaser other than consistent with past
\npractices, or (iii) any material change in Purchaser’s accounting principles,
\nprocedures or methods.<\/p>\n
6.8 COMPLIANCE WITH APPLICABLE LAW.<\/p>\n
Except as disclosed in the Purchaser SEC Reports filed prior to the
\ndate of this Agreement, Purchaser holds all licenses, franchises, permits,
\nvariances, exemptions, orders, approvals and authorizations necessary for the
\nlawful conduct of its business under and pursuant to, and the business of
\nPurchaser is not being conducted in violation of, any provision of any federal,
\nstate, local or foreign statute, law, ordinance, rule, regulation, judgment,
\ndecree, order, concession, grant, franchise, permit or license or other
\ngovernmental authorization or approval applicable to Purchaser, except to the
\nextent that the failure or violation would not in the aggregate have a Purchaser
\nMaterial Adverse Effect.<\/p>\n
6.9 COMPLETE COPIES OF REQUESTED REPORTS.<\/p>\n
Purchaser has delivered or made available (through public sources or
\ndirectly) true and complete copies of each document that has been reasonably
\nrequested by the Company or its counsel in connection with their legal and
\naccounting review of Purchaser.<\/p>\n
30<\/p>\n
6.10 CONTRACTS.<\/p>\n
(a) Except as set forth in Part 6.10 of the Purchaser
\nDisclosure Schedule, no Purchaser Contracts have come into existence since March
\n31, 1999, that have not previously been filed with the SEC, that will be
\nrequired to be filed as exhibits to Purchaser’s Quarterly Report on Form 10-Q
\nfor the quarter ended June 30, 1999.<\/p>\n
(b) Purchaser has previously made available for inspection and
\ncopying to the Company complete and correct copies (or, in the case of oral
\ncontracts, a complete and correct description) of each Purchaser Contract (and
\nany amendments or supplements thereto) listed on Part 6.10 of the Purchaser
\nDisclosure Schedule. Except as set forth on Part 6.10 of the Purchaser
\nDisclosure Schedule, (i) each Purchaser Contract (including any Purchaser
\nContract filed with the Purchaser SEC Reports) listed is in full force and
\neffect, (ii) neither Purchaser nor, to its knowledge, any other party is in
\nmaterial default under any such Purchaser Contract, and no event has occurred
\nwhich constitutes, or with the lapse of time or the giving of notice or both
\nwould constitute, a material default, (iii) to the knowledge of Purchaser, there
\nare no material disputes or disagreements between Purchaser and any other party
\nwith respect to any such Purchaser Contract and (iv) each other party to each
\nsuch Purchaser Contract has consented or been given notice (or prior to the
\nClosing Date shall have consented or been given notice), where such consent or
\nthe giving of such notice is necessary, sufficient that such Purchaser Contract
\nshall remain in full force and effect following the consummation of the
\nTransactions, without material modification in the rights or obligations of
\nPurchaser thereunder.<\/p>\n
6.11 TAX MATTERS.<\/p>\n
(a) Except with respect to the NBC Transactions, Purchaser has
\nno plan or intention to cause the Company to issue additional shares of stock
\nafter the Merger, or take any other action, that would result in the Purchaser
\nlosing Control of the Company.<\/p>\n
(b) Purchaser has no plan or intention, following the Merger,
\nto liquidate the Company; to merge the Company with or into any other
\ncorporation; to sell, distribute or otherwise dispose of the capital stock of
\nthe Company; or to cause the Company to sell or otherwise dispose of any of its
\nassets (or of any of the assets acquired from Merger Sub) except for
\ndispositions made in the Ordinary Course of Business or transfers permitted
\nunder Section 368(a)(2)(C) of the Code or prescribed by Treasury Regulations
\nunder Section 368 of the Code.<\/p>\n
(c) Following the Merger, the historic business of the Company
\nwill be continued, or a significant portion of the Company’s historic business
\nassets will be used in a business.<\/p>\n
(d) Neither the Purchaser nor any “related person” with
\nrespect to Purchaser (within the meaning of Treasury Regulations Section
\n1.368-1(e)(3)) owns or has at any time during the past years owned any capital
\nstock of the Company.<\/p>\n
(e) Except for (I) repurchases or redemptions of Purchaser
\nStock that are consistent with past practices and purchase programs that were
\nnot created or modified in connection with the Merger, (II) possible repurchases
\nof unvested shares of employees or consultants in connection with the
\ntermination of their services, and (III) possible reacquisitions <\/p>\n
31<\/p>\n
of Purchaser Stock pursuant to the Escrow Agreement, neither the Purchaser or
\nany “related person” with respect to the Purchaser (within the meaning of
\nTreasury Regulations Section 1.368-1(e)(3)) has any plan or intention to
\nrepurchase or redeem any of the Purchaser Stock to be issued in the Merger in
\nexchange for shares of Company capital stock.<\/p>\n
(f) Purchaser is not an investment company for purposes of
\nSection 368(a)(2)(F) of the Code.<\/p>\n
7. PRE-CLOSING COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.<\/p>\n
7.1 CORPORATE PROCEEDINGS; STOCKHOLDER APPROVAL.<\/p>\n
The Company shall (i) ensure that resolutions (in form satisfactory to
\nPurchaser) of the Company Board approving or adopting, as applicable, all
\nnecessary further action of the Company Board, this Agreement, the other
\nTransactional Agreements and the Transactions and recommending approval by the
\nCompany’s stockholders of the Agreement, the other Transactional Agreements and
\nthe Transactions, are passed as necessary pursuant to applicable law, and (ii)
\nuse Best Efforts to ensure that the stockholders of the Company take all
\nnecessary action to approve or adopt, as applicable, the Merger. In furtherance,
\nand not in limitation of the foregoing:<\/p>\n
(a) the Company, acting through the Company Board, shall, in
\naccordance with all applicable legal requirements and its Certificate of
\nIncorporation and Bylaws (i) promptly and duly call, give notice of, convene and
\nhold as soon as practicable a meeting (or solicit an action by written consent
\nin lieu thereof) of its stockholders for the purpose of voting to approve and
\nadopt the Merger and this Agreement and the other Transactional Agreements to
\nwhich the Company is a party, and (ii) recommend approval and adoption of the
\nMerger and this Agreement and the other Transactional Agreements to which the
\nCompany is a party by the Company’s stockholders and include in the Information
\nStatement such recommendation, and take all lawful action to solicit such
\napproval. The Company shall consult with Purchaser as to the timing and
\nprocedures of such meeting (or consent solicitation); and<\/p>\n
(b) the Company will cooperate fully with respect to all
\nrequests by Purchaser to facilitate the preparation and mailing of the
\nInformation Statement. The Company shall furnish Purchaser with all information
\nconcerning the Company, its capital stock, the Selling Stockholders, the holders
\nof the Company Options and other matters, and shall take all other actions, as
\nPurchaser may reasonably request in connection with the Information Statement.
\nSuch information provided by the Company shall not contain any untrue statement
\nof a material fact or omit to state any material fact required to be stated
\ntherein or necessary to make the statements therein not misleading. Whenever the
\nCompany obtains any knowledge of any event which should be set forth in an
\namendment or a supplement to the Information Statement, the Company will
\npromptly inform Purchaser and will cooperate in mailing to the Selling
\nStockholders such amendment or supplement.<\/p>\n
32<\/p>\n
7.2 ACCESS AND INVESTIGATION.<\/p>\n
The Company shall ensure that, at all times during the Pre-Closing
\nPeriod:<\/p>\n
(a) The Company and its representatives provide Purchaser and
\nits representatives with such copies of existing books, records, Tax Returns,
\nwork papers and other documents and information relating to the Company as
\nPurchaser may reasonably request in good faith; and<\/p>\n
(b) The Company and its representatives compile and provide
\nPurchaser and its representatives with such additional financial, operating and
\nother data and information regarding the Company as Purchaser may reasonably
\nrequest in good faith.<\/p>\n
7.3 OPERATION OF BUSINESS.<\/p>\n
Except as otherwise contemplated by this Agreement and Section 5.3(b)
\nof the Company Disclosure Schedule, the Company shall ensure that, during the
\nPre-Closing Period:<\/p>\n
(a) the Company conducts its operations in the Ordinary Course
\nof Business and in the same manner as such operations have been conducted prior
\nto the date of this Agreement;<\/p>\n
(b) the Company preserves intact its current business
\norganization, keeps available the services of its current officers and employees
\nand maintains its relations and goodwill with all suppliers, customers,
\nlandlords, creditors, licensors, licensees, employees and other Persons having
\nbusiness relationships with the Company;<\/p>\n
(c) the Company keeps in full force all insurance policies
\nidentified in Part 5.18 of the Company Disclosure Schedule;<\/p>\n
(d) the Company’s officers confer regularly with Purchaser
\nconcerning operational matters and otherwise report regularly to Purchaser
\nconcerning the status of the Company’s business, condition, assets, liabilities,
\noperations, financial performance and prospects;<\/p>\n
(e) the Company immediately notifies Purchaser of any inquiry,
\nproposal or offer from any Person relating to any Acquisition Transaction;<\/p>\n
(f) the Company does not declare, accrue, set aside or pay any
\ndividend or make any other distribution in respect of any shares of capital
\nstock, and does not repurchase, redeem or otherwise reacquire any shares of
\ncapital stock or other securities, except for shares for which the Company has a
\nrepurchase right under the Option Plan;<\/p>\n
(g) the Company does not sell or otherwise issue (or grant any
\nwarrants, options or other rights to purchase) any shares of capital stock or
\nany other securities, other than options to purchase up to the number of shares
\nof Common Stock pursuant to the Option Plan set forth on SCHEDULE II attached
\nhereto, or unless approved in advance in writing by Purchaser;<\/p>\n
(h) the Company does not amend its Certificate of
\nIncorporation or Bylaws, and does not effect or become a party to any
\nAcquisition Transaction, recapitalization, <\/p>\n
33<\/p>\n
reclassification of shares, stock split, reverse stock split or similar
\ntransaction, or enter into any transaction or take any other action of the
\ntype referred to in Section 5.20(c) through (n);<\/p>\n
(i) the Company does not form any subsidiary or acquire any
\nequity interest or other interest in any other Entity;<\/p>\n
(j) the Company does not make any capital expenditure, except
\nfor capital expenditures made in the Ordinary Course of Business that, when
\nadded to all other capital expenditures made on behalf of the Company during the
\nPre-Closing Period, do not exceed $25,000, unless approved in advance in writing
\nby Purchaser;<\/p>\n
(k) the Company does not enter into, or permit any of the
\nmaterial assets owned or used by the Company to become bound by, any Contract;<\/p>\n
(l) the Company does not incur, assume or otherwise become
\nsubject to any Liability, except for current liabilities incurred in the
\nOrdinary Course of Business, unless approved in advance in writing by Purchaser;<\/p>\n
(m) the Company does not establish or adopt any Employee
\nBenefit Plan, and does not pay any bonus or make any profit-sharing or similar
\npayment to, or materially increase the amount of the wages, salary, commissions,
\nfringe benefits or other compensation or remuneration payable to, any of its
\ndirectors, officers or employees;<\/p>\n
(n) the Company does not change any of its methods of
\naccounting or accounting practices in any respect;<\/p>\n
(o) the Company does not make any Tax election;<\/p>\n
(p) the Company does not commence any Proceeding without the
\nprior written consent of Purchaser; and<\/p>\n
(q) the Company does not agree, commit or offer (in writing or
\notherwise) or attempt to take any of the actions described in the preceding
\nclauses of this Section 7.3.<\/p>\n
7.4 FILINGS AND CONSENTS.<\/p>\n
The Company and the Holder Representative shall ensure that:<\/p>\n
(a) each filing or notice required to be made or given
\n(pursuant to any applicable legal requirement, Order or Contract, or otherwise)
\nby the Company or the Selling Stockholders in connection with the execution and
\ndelivery of any of the Transactional Agreements or in connection with the
\nconsummation or performance of any of the Transactions (including each of the
\nfilings and notices identified in Part 5.5 of the Company Disclosure Schedule)
\nis made or given as soon as possible after the date of this Agreement;<\/p>\n
(b) each Consent required to be obtained (pursuant to any
\napplicable legal requirement, Order or Contract, or otherwise) by the Company or
\nthe Selling Stockholders in connection with the execution and delivery of any of
\nthe Transactional Agreements or in <\/p>\n
34<\/p>\n
connection with the consummation or performance of any of the Transactions
\n(including each of the Consents identified in Part 5.5 of the Company
\nDisclosure Schedule) is obtained as soon as possible after the date of this
\nAgreement and remains in full force and effect through the Closing Date;<\/p>\n
(c) the Company promptly delivers to Purchaser a copy of each
\nfiling made, each notice given and each Consent obtained by the Company or the
\nSelling Stockholders during the Pre-Closing Period; and<\/p>\n
(d) during the Pre-Closing Period, the Company and its
\nrepresentatives cooperate with Purchaser and with Purchaser’s representatives,
\nand prepare and make available such documents and take such other actions as
\nPurchaser may request in good faith, in connection with any filing, notice or
\nConsent that Purchaser or Merger Sub is required or elects to make, give or
\nobtain.<\/p>\n
7.5 NOTIFICATION; UPDATES TO COMPANY DISCLOSURE SCHEDULE.<\/p>\n
(a) During the Pre-Closing Period, the Company and the Holder
\nRepresentative shall promptly notify Purchaser in writing of:<\/p>\n
(i) the discovery by the Company or the Selling
\nStockholders of any event, condition, fact or circumstance that constitutes a
\nmaterial breach of any representation or warranty made by the Company or the
\nSelling Stockholders in this Agreement or in any of the other Transactional
\nAgreements; and<\/p>\n
(ii) any event, condition, fact or circumstance
\nthat may make the timely satisfaction of any of the conditions set forth in
\nSection 4.1 impossible or unlikely.<\/p>\n
(b) If any event, condition, fact or circumstance that is
\nrequired to be disclosed pursuant to Section 7.5(a) requires any change in the
\nCompany Disclosure Schedule or Information Statement, or if any such event,
\ncondition, fact or circumstance would require such a change assuming the Company
\nDisclosure Schedule were dated as of the date of the occurrence, existence or
\ndiscovery of such event, condition, fact or circumstance, then the Company and
\nthe Selling Stockholders shall promptly deliver to Purchaser an update to the
\nCompany Disclosure Schedule (a “COMPANY DISCLOSURE SCHEDULE UPDATE”) or to the
\nInformation Statement (an “INFORMATION STATEMENT UPDATE”) specifying such
\nchange. Such Company Disclosure Schedule Update or Information Statement Update
\nshall be deemed to supplement or amend the Company Disclosure Schedule or
\nInformation Statement for the purpose of (i) determining the accuracy of any of
\nthe representations and warranties made by the Company or the Selling
\nStockholders in this Agreement or any of the Transactional Agreements as of the
\nClosing or (ii) determining whether the conditions set forth in Section 4.1 have
\nbeen satisfied, unless objected to in writing by Purchaser.<\/p>\n
7.6 NO NEGOTIATION.<\/p>\n
Neither the Company nor the Selling Stockholders nor any of their
\nrespective employees, directors, representatives, affiliates or advisors
\n(including, without limitation, legal, accounting, <\/p>\n
35<\/p>\n
financial and investment banking advisors) will directly or indirectly on
\nbehalf of the Company or the Selling Stockholders:<\/p>\n
(a) enter into any agreement (or grant any option or right) to
\nsell, transfer or otherwise dispose of the shares of capital stock or the assets
\nof the Company or issue any controlling interest in shares of capital stock of
\nthe Company, directly or indirectly, to any person other than Company Options
\nand shares issuable upon exercise of the Company Options in the ordinary course;<\/p>\n
(b) hold any discussion with, or provide any information to,
\nany person concerning the Company in connection therewith or provide any
\ninformation to, any person concerning the Company in connection therewith; or<\/p>\n
(c) respond to any inquiry made by any person concerning a
\nproposed acquisition of any assets or capital stock of the Company, except to
\nadvise such person that the Company has entered into this Agreement. The Company
\nand the Holder Representative, on behalf of the Selling Stockholders, further
\nagree to advise Purchaser immediately upon receiving any inquiry from any such
\nperson. If the Company receives a bona fide offer concerning a proposed
\nacquisition of any assets or capital stock of the Company, the Company shall, in
\naddition to notifying Purchaser of the receipt of such offer, identify the
\nidentity of the proposed buyer.<\/p>\n
7.7 BEST EFFORTS.<\/p>\n
During the Pre-Closing Period, the Company and the Selling Stockholders
\nshall (i) use their Best Efforts to (i) cause the conditions set forth in
\nSection 4.1 to be satisfied on a timely basis and (ii) complete the unaudited
\nbalance sheet of the Company as of June 30, 1999, and the related unaudited
\nstatement of operations, changes in stockholders’ equity and cash flows of the
\nCompany for the three (3) and six (6) months then ended, and shall not take any
\naction or omit to take any action, the taking or omission of which would or
\ncould reasonably be expected to result in any of the representations and
\nwarranties set forth in Section 5 of this Agreement becoming untrue, in any of
\nthe conditions of Closing set forth in Section 4.1 not being satisfied or in the
\nbusiness of the Company becoming materially less valuable.<\/p>\n
8. PRE-CLOSING COVENANTS OF PURCHASER.<\/p>\n
8.1 CORPORATE PROCEEDINGS.<\/p>\n
(a) Purchaser shall ensure that resolutions (in form
\nsatisfactory to Purchaser) of the Purchaser Board approving or adopting, as
\napplicable, all necessary further action of the Purchaser Board, this Agreement,
\nthe other Transactional Agreements and the Transactions and, if required,
\nrecommending approval by Purchaser’s stockholders of the Agreement, the other
\nTransactional Agreements and the Transactions.<\/p>\n
(b) Prior to or after the signing of this Agreement, Purchaser
\nwill prepare an Information Statement (the “INFORMATION STATEMENT”), subject to
\nSection 7.1(b), and use its Best Efforts to cause the Information Statement and
\nany other disclosure documents deemed appropriate by Purchaser to be mailed to
\nSelling Stockholders in connection with obtaining the <\/p>\n
36<\/p>\n
approval of such Selling Stockholders of the Merger and this Agreement and
\nthe other Transactional Agreements to which Purchaser is a party.<\/p>\n
8.2 ACCESS AND INVESTIGATION.<\/p>\n
Purchaser shall ensure that, at all times during the Pre-Closing
\nPeriod:<\/p>\n
(a) Purchaser and its representatives provide the Company and
\nits representatives with free and complete access at reasonable times to
\nPurchaser’s premises and assets and to all existing books, records, Tax Returns,
\nwork papers and other documents and information relating to Purchaser;<\/p>\n
(b) Purchaser and its representatives provide the Company and
\nits representatives with such copies of existing books, records, Tax Returns,
\nwork papers and other documents and information relating to Purchaser as the
\nCompany may request in good faith; and<\/p>\n
(c) Purchaser and its representatives compile and provide the
\nCompany and its representatives with such additional financial, operating and
\nother data and information regarding Purchaser as the Company may request in
\ngood faith.<\/p>\n
8.3 FILINGS AND CONSENTS.<\/p>\n
Purchaser shall ensure that:<\/p>\n
(a) each filing or notice required to be made or given
\n(pursuant to any applicable legal requirement, Order or Contract, or otherwise)
\nby Purchaser or Merger Sub in connection with the execution and delivery of any
\nof the Transactional Agreements or in connection with the consummation or
\nperformance of any of the Transactions is made or given as soon as possible
\nafter the date of this Agreement;<\/p>\n
(b) each Consent required to be obtained (pursuant to any
\napplicable legal requirement, Order or Contract, or otherwise) by Purchaser or
\nMerger Sub in connection with the execution and delivery of any of the
\nTransactional Agreements or in connection with the consummation or performance
\nof any of the Transactions is obtained as soon as possible after the date of
\nthis Agreement and remains in full force and effect through the Closing Date;<\/p>\n
(c) Purchaser promptly delivers to the Company a copy of each
\nfiling made, each material notice given and each material Consent obtained by
\nPurchaser or Merger Sub during the Pre-Closing Period; and<\/p>\n
(d) during the Pre-Closing Period, Purchaser or Merger Sub and
\nthe representatives of either cooperate with the Company and its
\nrepresentatives, and prepare and make available such documents and take such
\nother actions as the Company may request in good faith, in connection with any
\nfiling, notice or Consent that the Company is required or elects to make, give
\nor obtain.<\/p>\n
37<\/p>\n
8.4 NOTIFICATION.<\/p>\n
During the Pre-Closing Period, Purchaser or Merger Sub shall promptly
\nnotify the Company in writing of:<\/p>\n
(a) the discovery by Purchaser of any event, condition, fact
\nor circumstance that constitutes a breach of any representation or warranty made
\nby Purchaser or Merger Sub in this Agreement or in any of the other
\nTransactional Agreements;<\/p>\n
(b) any breach of any covenant or obligation of Purchaser or
\nMerger Sub; and<\/p>\n
(c) any event, condition, fact or circumstance that may make
\nthe timely satisfaction of any of the conditions set forth in Section 4.2,
\nimpossible or unlikely.<\/p>\n
8.5 BEST EFFORTS.<\/p>\n
During the Pre-Closing Period, each of Purchaser or Merger Sub shall
\nuse its Best Efforts to cause the conditions set forth in Section 4.2 to be
\nsatisfied on a timely basis, and shall not take any action or omit to take any
\naction, the taking or omission of which would or could reasonably be expected to
\nresult in any of the representations and warranties set forth in Section 6 of
\nthis Agreement becoming untrue or in any of the conditions of Closing set forth
\nin Section 4.2 not being satisfied.<\/p>\n
9. OTHER AGREEMENTS.<\/p>\n
9.1 REGISTRATION OF COMPANY OPTIONS.<\/p>\n
Purchaser agrees that as soon as reasonably practicable after the
\nClosing Date, but in no event later than fifteen (15) days following the Closing
\nDate, it will cause to be filed one or more registration statements on Form S-8
\nunder the Securities Act, or amendments to its existing registration statements
\non Form S-8, in order to register, if necessary, the shares of Common Stock of
\nPurchaser issuable upon exercise of the aforesaid converted Company Options.<\/p>\n
9.2 CONFIDENTIALITY.<\/p>\n
Each of the parties hereto hereby agrees to and reaffirms the terms and
\nprovisions of the Mutual Nondisclosure Agreement by and between Purchaser and
\nthe Company, dated as of June 15, 1999 (the “NONDISCLOSURE AGREEMENT”).<\/p>\n
9.3 PUBLIC DISCLOSURE.<\/p>\n
Unless otherwise required by law (including, without limitation,
\nsecurities laws) or, as to Purchaser, by the rules and regulations of the
\nNational Association of Securities Dealers, Inc., prior to the Effective Time,
\nno disclosure (whether or not in response to an inquiry) of the subject matter
\nof this Agreement or any Transactional Agreement shall be made by any party
\nhereto unless approved by Purchaser and the Company prior to release; PROVIDED,
\nthat such approval shall not be unreasonably withheld, PROVIDED, FURTHER, that
\nthe parties agree and understand that certain disclosures regarding the
\nTransactions may be made to (i) employees of <\/p>\n
38<\/p>\n
Purchaser and the Company, (ii) third parties whose consent or approval may
\nbe required in connection with the Transactions, and (iii) the professional
\nadvisors of Purchaser, the Company and the Selling Stockholders, in each case
\nwithout any prior written consent.<\/p>\n
9.4 VALUATION REPORT.<\/p>\n
The Company shall cooperate with Purchaser to prepare a report relating
\nto the valuation of the Company.<\/p>\n
9.5 NO INCONSISTENT ACTION.<\/p>\n
None of Purchaser, the Company or the Selling Stockholders shall take
\nany action inconsistent with the treatment of the Merger as a reorganization
\nunder Section 368(a) of the Code. Notwithstanding any other provision of this
\nAgreement, the undertaking set forth in this Section 9.5 shall not expire.<\/p>\n
9.6 TERMS OF EMPLOYMENT OF CRITICAL EMPLOYEES.<\/p>\n
Purchaser and the Critical Employees shall agree to the employment
\nterms set forth in the forms of Employment and Non-Competition Agreement
\nattached hereto as EXHIBIT D.<\/p>\n
9.7 PATENT OPINIONS.<\/p>\n
The Company and the Holder Representative shall ensure that: (i) within
\nten (10) days of the Closing Date, a request will have been made to the United
\nStates Patent and Trademark Office for the prosecution history relating to the
\npatents specified in Exhibit A to the Escrow Agreement; and (ii) within thirty
\n(30) days of the Closing Date, the Supplemental Technology Description specified
\nin the same Exhibit A will have been delivered to the Company’s patent counsel.<\/p>\n
9.8 EFFECT OF PRE-CLOSING COVENANTS.<\/p>\n
The pre-closing covenants of the Company, the Selling Stockholders and
\nPurchaser contained in Sections 7 and 8 shall be of no force or effect unless
\nthe date hereof is not the Closing Date.<\/p>\n
10. TERMINATION.<\/p>\n
10.1 TERMINATION EVENTS.<\/p>\n
This Agreement may be terminated prior to Closing:<\/p>\n
(a) by Purchaser if there is a material breach of any covenant
\nor obligation of the Company or the Selling Stockholders under this Agreement or
\nany of the Transactional Agreements and such breach has not been cured within
\nten (10) business days of after written notice of such breach is given to the
\nCompany or the Holder Representative, as appropriate;<\/p>\n
39<\/p>\n
(b) by the Company if there is a material breach of any
\ncovenant or obligation of Purchaser and such breach has not been cured within
\nten (10) business days of after written notice of such breach is given to
\nPurchaser;<\/p>\n
(c) by the Company pursuant to the provisions specified in
\nSection 1.3(b)(iii);<\/p>\n
(d) by either Purchaser or the Company if the Closing has not
\ntaken place on or before July 31, 1999; or<\/p>\n
(e) by the mutual consent of Purchaser and the Company.<\/p>\n
10.2 TERMINATION PROCEDURES.<\/p>\n
If Purchaser wishes to terminate this Agreement pursuant to Section
\n10.1(a) or Section 10.1(d), Purchaser shall deliver to the Selling Stockholders
\na written notice stating that Purchaser is terminating this Agreement and
\nsetting forth a brief description of the basis on which Purchaser is terminating
\nthis Agreement. If the Company wishes to terminate this Agreement pursuant to
\nSection 10.1(b), Section 10.1(c) or Section 10.1(d), the Company shall deliver
\nto Purchaser a written notice stating that the Company is terminating this
\nAgreement and setting forth a brief description of the basis on which the
\nCompany is terminating this Agreement.<\/p>\n
10.3 EFFECT OF TERMINATION.<\/p>\n
If this Agreement is terminated pursuant to Section 10.1, all further
\nobligations of the parties under this Agreement shall terminate; PROVIDED, that
\neach party shall remain liable for any breaches of this Agreement prior to its
\ntermination and PROVIDED, FURTHER, that Sections 9.2, 9.3, 10, 12.2, 12.3 and
\n12.11 shall survive the termination of this Agreement.<\/p>\n
10.4 EXCLUSIVITY OF TERMINATION RIGHTS.<\/p>\n
Except to the extent termination occurs due to the bad faith of the
\nother party, the termination rights and obligations provided in this Section 10
\nshall be deemed to be exclusive. Subject to the provisions of Section 10.3, the
\nparties shall not have any other or further Liabilities to or with respect to
\none another by reason of this Agreement or its termination.<\/p>\n
11. INDEMNIFICATION, ETC.<\/p>\n
11.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.<\/p>\n
(a) The representations, warranties, covenants and obligations
\nof each party (including the Selling Stockholders) set forth in this Agreement,
\nthe Escrow Agreement, the Investment Agreement and the Registration Rights
\nAgreement shall survive the Closing Date, and any subsequent Acquisition
\nTransaction effected by or otherwise involving the Purchaser or the Company, to
\nthe extent provided in this Section 11.1(a). All representations and warranties
\n(as well as covenants and obligations to be performed prior to the Closing Date)
\nof the parties in this Agreement, the Escrow Agreement, the Investment Agreement
\nand the Registration Rights Agreement shall terminate and have no further force
\nor effect on the Indemnification <\/p>\n
40<\/p>\n
Termination Date, unless earlier terminated pursuant to Section 10.1;
\nPROVIDED, HOWEVER, that any representation or warranty made herein or in the
\nEscrow Agreement, the Investment Agreement or the Registration Rights
\nAgreement, (i) the breach of which resulted from the commission of fraud or
\nan intentional misrepresentation or omission by a Selling Stockholder or (ii)
\nwhich a Selling Stockholder knew was false when made (each such Selling
\nStockholder referred to in clause (i) and (ii) above, shall be referred to
\nherein as a “RESPONSIBLE STOCKHOLDER”), shall, solely with respect to such
\nResponsible Stockholder and in connection with such Responsible Stockholder’s
\nindemnification obligations under Section 11 hereof, terminate and have no
\nfurther force or effect on the second anniversary of the Closing Date, and
\nany covenants or obligations under this Agreement or any of the other
\nTransactional Agreements to be performed after the Closing shall survive the
\nClosing as required for the completion of such covenants or obligations.<\/p>\n
(b) The representations, warranties, covenants and obligations
\nof the respective parties, and the rights and remedies that may be exercised by
\nany of them, shall not be limited or otherwise affected by or as a result of any
\ninformation furnished to, or any investigation made by, or the knowledge of, any
\nof the parties or any of their respective representatives.<\/p>\n
(c) For purposes of this Agreement, although each statement or
\nother item of information set forth in the Company Disclosure Schedule qualifies
\nthe specific representation and warranty to which such information refers, all
\nsuch statements and other items of information set forth in the Company
\nDisclosure Schedule shall be deemed to be a representation and warranty made by
\nthe Company in this Agreement.<\/p>\n
(d) The representations, warranties, covenants and obligations
\nof the Company or the Selling Stockholders in this Agreement or any other
\nTransactional Agreement (other than the Employment and Non-Competition
\nAgreements) are made to Purchaser and for the benefit of each Indemnitee (as
\ndefined in Section 11.2(a) below).<\/p>\n
11.2 INDEMNIFICATION BY THE SELLING STOCKHOLDERS.<\/p>\n
(a) Subject to the remainder of this Section 11.2 and Section
\n11.7, and to the extent of each Selling Stockholder’s pro rata share of the
\nIndemnification Portion, the Selling Stockholders covenant and agree to defend,
\nindemnify and hold harmless Purchaser, and each of its officers, directors,
\nemployees, agents and representatives (collectively, the “INDEMNITEES” and
\nindividually each an “INDEMNITEE”) from and against, and shall compensate and
\nreimburse each of the Indemnitees for, any Damages which are suffered or
\nincurred by any of the Indemnitees (regardless of whether or not such Damages
\nrelate to any third party claim) directly or indirectly arising or resulting
\nfrom or connected with any breach of any representation or warranty made by the
\nCompany or the Selling Stockholders in this Agreement, the Escrow Agreement, the
\nInvestment Agreement or the Registration Rights Agreement. Notwithstanding the
\nforegoing, each Responsible Stockholder shall be liable up to such Responsible
\nStockholder’s pro rata share of the Merger Consideration for Damages resulting
\nfrom (i) the commission of fraud or an intentional misrepresentation or omission
\nby such Responsible Stockholder in connection with the representations and
\nwarranties contained in this Agreement, the Escrow Agreement, the Investment
\nAgreement or the Registration Rights Agreement or (ii) the breach of any
\nrepresentation or warranty contained in this Agreement, the Escrow Agreement,
\nthe Investment <\/p>\n
41<\/p>\n
Agreement or the Registration Rights Agreement which such Responsible
\nStockholder knew was false when made.<\/p>\n
(b) From and after the Closing Date, the Selling Stockholders
\nshall protect, defend, indemnify and hold harmless the Indemnitees from any and
\nall Taxes (including without limitation any obligation to contribute to the
\npayment of any Taxes determined on a consolidated, combined or unitary basis
\nwith respect to a group of corporations that includes or included the Company)
\nthat are (i) imposed on Purchaser or any member (other than the Company) of any
\nconsolidated, unitary or combined group that includes or included the Company
\nand (ii) imposed on the Company in respect of its income, business, property or
\noperations or for which the Company may otherwise be liable (A) for any
\nPre-Closing Period, (B) resulting by reason of the several liability of the
\nCompany pursuant to Treasury Regulations Section 1.1502-6 or any analogous
\nstate, local or foreign law or regulation or by reason of the Company having
\nbeen a member of any consolidated, combined or unitary group on or prior to the
\nClosing Date, (C) in respect of any taxable income included by the Company in a
\nPost-Closing Period that is attributable to income that is realized in a
\nPre-Closing Period, including, in each case, the appropriate portion of a
\nStraddle Period, or (D) in respect of any Post-Closing Period, attributable to
\nany mandatory change in accounting method employed by the Company during any of
\nits previous taxable years, or (E) in respect of any Post-Closing Period,
\nattributable to any items of income or gain of a partnership reporting the
\nCompany as a partner, to the extent such items are properly attributable to
\nperiods of the partnership ending on or before the Closing Date; provided,
\nhowever, that the Selling Stockholder’s liability under the foregoing provisions
\nof this paragraph shall be reduced as to any item to the extent that such item
\nwas either (x) specifically reserved for in the Unaudited Interim Balance Sheet
\nor (y) satisfied through an estimated Tax payment by the Company after the date
\nof the Unaudited Interim Balance Sheet, provided that such payment is
\nattributable to a Post-Closing Period and, on or before the Closing, the Company
\nprovides satisfactory evidence of such payment to Purchaser. Notwithstanding
\nanything to the contrary contained in this Agreement, (i) the representations,
\nwarranties and covenants of the Company and the Selling Stockholders set forth
\nin Sections 5.14 and 12.4 hereof shall survive the execution and delivery hereof
\nand the Closing and continue until the expiration of the applicable statute of
\nlimitations date (or any extensions thereof) and (ii) the aggregate liability of
\neach Selling Stockholder under this Section 11.2(b) shall not exceed such
\nSelling Stockholder’s pro rata share of the Merger Consideration.<\/p>\n
(c) After Closing, no Person shall be required to indemnify
\nany Indemnitee with respect to any claim for indemnification pursuant to Section
\n11.2(a) and 11.2(b) unless and until the aggregate amount of indemnifiable
\nDamages suffered by all Indemnitees subject to indemnification pursuant to this
\nAgreement exceeds $100,000 (the “BASKET”), and only to the extent such amount
\nexceeds the Basket. The aggregation of claims must reach the Basket only once,
\nand after such point the Indemnitees may seek indemnification for all claims in
\nexcess of the Basket that may arise under this Section 11.2.<\/p>\n
(d) Claims for indemnification under this Section 11.2 shall
\nbe made first from the Indemnification Portion Escrow Account. The number of
\nshares of Purchaser Stock to be released to Purchaser pursuant to the terms of
\nthe Escrow Agreement shall be calculated by dividing the dollar amount of the
\nDamages incurred by the Indemnitee by the Average Purchaser Stock Price.<\/p>\n
42<\/p>\n
(e) The Selling Stockholders are not required to make any
\nindemnification payment hereunder unless a claim is initiated in the manner set
\nforth in the Escrow Agreement prior to the termination date of such Selling
\nStockholders’ indemnification obligations specified in Section 11.2(a).<\/p>\n
11.3 TAX INDEMNIFICATION BY PURCHASER.<\/p>\n
Purchaser shall indemnify and hold the Selling Stockholders harmless
\nfrom and against the following Taxes with respect to the Company: (a) except as
\ndescribed in Section 11.2(b), any and all Taxes for any taxable period beginning
\nor deemed to begin after the Closing Date, due or payable by the Company or
\nPurchaser (except to the extent such Taxes arise or result from a breach of
\nrepresentations or warranties provided for in Section 5.14 or in Section 3.1 of
\nthe Investment Agreement); or (b) any and all Taxes attributable to acts or
\ntransactions of the Company occurring on the Closing Date but after the Closing
\nand not in the Ordinary Course of Business.<\/p>\n
11.4 NO CONTRIBUTION.<\/p>\n
It is the intention of the parties that after the Closing the remedy
\nfor Purchaser or any Indemnitee seeking indemnification from the Selling
\nStockholders hereunder shall be a remedy solely against the Selling Stockholders
\nand not against the Company; accordingly, the Selling Stockholders agree to
\nwaive any right of contribution or right of indemnity between the Company and
\nsuch Selling Stockholder in connection with any indemnification obligation of
\nsuch Selling Stockholder to any Indemnitee arising under the Transactional
\nAgreements or otherwise in connection with any of the Transactions. The Selling
\nStockholders further acknowledge that the waivers, acknowledgments and
\nagreements of such Selling Stockholders contained in this Section are an
\nessential inducement to Purchaser in entering into this Agreement and agreeing
\nto consummate the Transactions.<\/p>\n
11.5 SETOFF.<\/p>\n
In addition to any rights of setoff or other rights that any Person may
\nhave at common law or otherwise, each Person shall have the right to set off any
\namount that may be owed to it by the other under this Section 11 against any
\namount otherwise specifically payable by such Person by the terms of this
\nAgreement.<\/p>\n
11.6 DEFENSE OF THIRD PARTY CLAIMS.<\/p>\n
In the event of the assertion or commencement by any Person of any
\nclaim or Proceeding (whether against Purchaser, the Company, the Selling
\nStockholders, any other Indemnitee or any other Person) with respect to which a
\nparty hereto may become obligated hereunder to indemnify, hold harmless,
\ncompensate or reimburse any Indemnitee pursuant to this Section 11, the party to
\nbe indemnified (the “INDEMNIFIED PARTY”) shall reasonably promptly, but in any
\nevent within thirty (30) days following the Indemnified Party’s actual knowledge
\nthereof, notify the Person providing the indemnification hereunder (the
\n“INDEMNIFYING PARTY”) of such claim or Proceeding by providing notice to the
\nHolder Representative. In any such event, the Indemnified Party may proceed with
\nthe defense of such claim or Proceeding and the Indemnifying Party shall bear
\nand pay all reasonable costs and expenses (including attorneys fees and costs)
\nin <\/p>\n
43<\/p>\n
connection with the Indemnified Party’s defense of any such claim or
\nProceeding (whether or not incurred by the Indemnified Party); PROVIDED, that
\nall such expenses paid by the Selling Stockholders, combined with any other
\nindemnification, will in no event exceed the respective indemnification
\nlimitations set forth in Section 11.2(a).<\/p>\n
If the Indemnified Party so proceeds with the defense of any such claim
\nor Proceeding:<\/p>\n
(a) all expenses reasonably incurred and relating to the
\ndefense of such claim or Proceeding (whether or not incurred by the Indemnified
\nParty) shall be borne and paid exclusively by the Indemnifying Party;<\/p>\n
(b) the Indemnifying Party shall make available to the
\nIndemnified Party any documents and materials in the possession or control of
\nthe Indemnifying Party that may be necessary to the defense of such claim or
\nProceeding;<\/p>\n
(c) the Indemnified Party shall keep the Holder Representative
\ninformed of all material developments and events relating to such claim or
\nProceeding;<\/p>\n
(d) the Selling Stockholders shall have the right to
\nparticipate in the defense of such claim or Proceeding at their own expense; and<\/p>\n
(e) the Indemnified Party shall not settle, adjust or
\ncompromise such claim or Proceeding without the prior written consent of the
\nSelling Stockholders or the Holder Representative, which consent shall not be
\nunreasonably withheld.<\/p>\n
Notwithstanding the foregoing, the Selling Shareholders shall have the
\nright (but not the obligation), at their own expense, to control, defend,
\nsettle, compromise or prosecute in any manner any audit, examination,
\ninvestigation, hearing or other proceeding with respect to any Company Return
\ninvolving only periods ending on or before the Closing Date; PROVIDED, HOWEVER,
\nthat the Selling Shareholders shall not settle, or compromise any such audit,
\netc. without the Purchaser’s timely and reasonable prior written consent.<\/p>\n
11.7 SOLE REMEDY.<\/p>\n
Other than rights to equitable relief, the sole remedy available to any
\nIndemnitee or other Person for breaches of this Agreement or the other
\nTransactional Agreements shall be limited to the rights set forth in this
\nSection 11. The maximum aggregate amounts payable by the Company or the Selling
\nStockholders, as the case may be, to any and all Indemnitees for any and all
\nDamages arising out of, or in connection with, this Agreement, any Transactional
\nAgreement, any certificate, any other document delivered, or any of the
\nTransactions, are the amounts specified as limitations in Section 11.2(a)
\nhereof. In no event will any other Person except the named Indemnitees have any
\nrights to any payments whatsoever.<\/p>\n
11.8 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER AND
\n BY SELLING STOCKHOLDERS.<\/p>\n
Except with respect to the indemnification rights of the Selling
\nStockholders set forth in Section 11.3, no Person other than an Indemnitee (or
\nany successor or assignee thereof) shall be <\/p>\n
44<\/p>\n
permitted to assert any indemnification claim or exercise any other remedy
\nunder this Agreement unless Purchaser, the Company and the Selling
\nStockholders (or any successor assignee thereof) shall have consented to the
\nassertion of such indemnification claim or the exercising of such other
\nremedy.<\/p>\n
12. MISCELLANEOUS.<\/p>\n
12.1 FURTHER ASSURANCES.<\/p>\n
Each party hereto shall execute and\/or cause to be delivered to each
\nother party hereto such instruments and other documents, and shall take such
\nother actions, as such other party may reasonably request (prior to, at or after
\nthe Closing) for the purpose of carrying out or evidencing any of the
\nTransactions.<\/p>\n
12.2 FEES AND EXPENSES.<\/p>\n
Subject to the provisions of this Agreement (including the
\nindemnification and other obligations of the Selling Stockholders pursuant to
\nSection 11), each party shall bear and pay all fees, costs and expenses that
\nhave been incurred or that are in the future incurred by or on behalf of such
\nparty in connection with the Transactions; PROVIDED, that, the Selling
\nStockholders shall bear and pay all fees, costs and expenses incurred on behalf
\nof the Company in connection with the negotiation of this Agreement and the
\nTransactional Agreements in excess of $160,000, and any such excess shall be
\npaid out of the Indemnification Portion.<\/p>\n
12.3 ATTORNEYS’ FEES.<\/p>\n
If any legal action or other legal proceeding (including arbitration)
\nrelating to the Transactions or the enforcement of any provision of any of the
\nTransactional Agreements is brought against any party hereto, the prevailing
\nparty shall be entitled to recover reasonable attorneys’ fees, costs and
\ndisbursements (in addition to any other relief to which the prevailing party may
\nbe entitled), including any fees incurred with respect to the production of a
\nPatent Opinion.<\/p>\n
12.4 TAXES.<\/p>\n
(a) The Selling Stockholders shall be responsible for sales,
\nuse and transfer taxes, including but not limited to any value added, stock
\ntransfer, gross receipts, stamp duty and real, personal or intangible property
\ntransfer taxes, due by reason of the consummation of the Merger, including but
\nnot limited to any interest or penalties in respect thereof.<\/p>\n
(b) The Selling Stockholders shall cause the Company’s
\naccountants to prepare and the Company to timely file and pay amounts owed with
\nrespect to all Company Returns not already filed for the Company for all tax
\nperiods ended or ending on or before the Closing Date (the “Final Returns”), and
\nshall pay the Company’s accountants for such preparation and filing. The Final
\nReturns shall be prepared in a manner consistent with previously filed Company
\nReturns. The Selling Stockholders (or their authorized representative) shall
\nsend a copy of all Final Returns to Purchaser for its review and comment and, if
\nrequired, appropriate execution, at least fifteen (15) days prior to the filing
\nthereof.<\/p>\n
45<\/p>\n
(c) Purchaser shall prepare and timely file or shall cause to
\nbe prepared and timely filed all other Tax Returns with respect to the Company
\nand any of its businesses, assets, or operations, provided that any Tax Return
\nto be prepared and filed by Purchaser for a Straddle Period shall be prepared on
\na basis consistent with the last previous similar Tax Return (“STRADDLE
\nRETURNS”). Prior to filing any Straddle Return, at the written request of a
\nSelling Stockholder (or its authorized representative), Purchaser shall make the
\nStraddle Return available to a Selling Stockholder for its review and comment at
\nthe offices of Purchaser or such other office designated by Purchaser.<\/p>\n
(d) The parties agree that if the Company is permitted but not
\nrequired under applicable Tax laws to treat the Closing Date as the last day of
\na taxable period, they shall treat such day as the last day of a taxable period.
\nAny Taxes for a Straddle Period with respect to the Company shall be apportioned
\nfor purposes of Sections 11.3 and 12.4 between the portion of the period ending
\non the Closing Date and the portion of the period commencing on the day
\nimmediately following the Closing Date based on the actual operations of the
\nCompany during such portions of the periods, and each such portion of such
\nperiod shall be deemed to be a taxable period (whether or not it is in fact a
\ntaxable period).<\/p>\n
12.5 GOVERNING LAW.<\/p>\n
(a) This Agreement is to be construed in accordance with and
\ngoverned by the laws of the State of California (as permitted by Section 1646.5
\nof the California Civil Code or any similar successor provision), without giving
\neffect to any choice of law rule that would cause the application of the laws of
\nany jurisdiction other than the State of California to the rights and duties of
\nthe parties.<\/p>\n
(b) Any legal action or other legal proceeding relating to
\nthis Agreement or any other Transactional Agreement or the enforcement of any
\nprovision of this Agreement or any other Transactional Agreement may be brought
\nor otherwise commenced in any state or federal court located in the County of
\nSan Francisco, California. Each Selling Stockholder and each party to this
\nAgreement:<\/p>\n
(i) expressly and irrevocably consents and
\nsubmits to the jurisdiction of each state and federal court located in the
\nCounty of San Francisco, California (and each appellate court located in the
\nState of California) in connection with any such legal proceeding;<\/p>\n
(ii) agrees that each state and federal court
\nlocated in the County of San Francisco, California shall be deemed to be a
\nconvenient forum; and<\/p>\n
(iii) agrees not to assert (by way of motion, as a
\ndefense or otherwise), in any such legal proceeding commenced in any state or
\nfederal court located in the County of San Francisco, any claim that such party
\nis not subject personally to the jurisdiction of such court, that such legal
\nproceeding has been brought in an inconvenient forum, that the venue of such
\nproceeding is improper or that this Agreement or any other Transactional
\nAgreement or the subject matter of this Agreement or any Transactional Agreement
\nmay not be enforced in or by such court.<\/p>\n
46<\/p>\n
(c) Notwithstanding the foregoing, if any Proceeding is
\ncommenced against any Indemnitee by any Person in or before any court or other
\ntribunal anywhere in the world, then such Indemnitee may proceed against each
\nSelling Stockholder in such court or other tribunal with respect to any
\nindemnification claim or other claim arising directly or indirectly from or
\nrelating directly or indirectly to such Proceeding or any of the matters alleged
\ntherein or any of the circumstances giving rise thereto.<\/p>\n
(d) Nothing contained in Section 12.5(b) or (c) shall be
\ndeemed to limit or otherwise affect the right of any Indemnitee to commence any
\nlegal proceeding or otherwise proceed against the Company or any Selling
\nStockholder in any other forum or jurisdiction.<\/p>\n
12.6 SUCCESSORS AND ASSIGNS.<\/p>\n
Except as otherwise expressly provided herein, the provisions hereof
\nshall inure to the benefit of, and be binding upon, the successors, assigns,
\nheirs, executors and administrators of the parties hereto and the Indemnitees
\nand shall inure to the benefit of and be enforceable by each person who shall be
\na holder of the Stock from time to time. None of the parties hereto may assign
\nany of its or their rights or obligations hereunder to any other party (by
\ncontract, operation of law or otherwise) without the prior written consent of
\nthe other, which consent shall not be unreasonably withheld, and any attempted
\nassignment in violation thereof shall be void and of no effect.<\/p>\n
12.7 ENTIRE AGREEMENT.<\/p>\n
The Transactional Agreements, the Nondisclosure Agreement, the
\nSchedules and the Exhibits thereto and the other documents contemplated
\nexpressly thereby constitute the full and entire understanding and agreement
\namong the parties thereto with regard to the subjects hereof and thereof and
\nsupersede all prior agreements and understandings among or between any of the
\nParties relating to the subject matter hereof and thereof.<\/p>\n
12.8 SEPARABILITY.<\/p>\n
In case any provision of this Agreement shall be invalid, illegal or
\nunenforceable, the validity, legality and enforceability of the remaining
\nprovisions shall not in any way be affected or impaired thereby.<\/p>\n
12.9 AMENDMENTS.<\/p>\n
This Agreement may be amended or modified only upon the mutual written
\nconsent of the Holder Representative, the Company and Purchaser. Any amendment
\nor modification effected pursuant to this Section 12.9 shall be binding upon the
\nSelling Stockholders, the Company, Purchaser and Merger Sub.<\/p>\n
12.10 NOTICES.<\/p>\n
Any notice or other communication required or permitted to be delivered
\nto any party under this Agreement shall be in writing and shall be deemed
\nproperly delivered, given and received when delivered (by hand, by registered
\nmail, by courier or express delivery service or <\/p>\n
47<\/p>\n
by telecopier during business hours) to the address or telecopier number set
\nforth beneath the name of such party below (or to such other address or
\ntelecopier number as such party shall have specified in a written notice
\ngiven to the other parties hereto), with a confirming copy of any notice by
\ntelecopier sent promptly by hand, registered mail, courier or express
\ndelivery service:<\/p>\n
if to the Company:<\/p>\n
LiquidMarket, Inc.
\n 5757 W. Century Boulevard, Suite 465
\n Los Angeles, CA 90045
\n Attention: Gauthier Groult
\n Telecopier: 310-670-4598<\/p>\n
with a copy to:<\/p>\n
Hale & Dorr, LLP
\n 60 State Street
\n Boston, MA 02109
\n Attention: Christopher Umana, Esq.
\n Telecopier: 617-526-5000<\/p>\n
if to the Holder Representative, to its address set forth on the signature page
\nhereof;<\/p>\n
if to Purchaser:<\/p>\n
XOOM.com, Inc.
\n 300 Montgomery Street
\n Third Floor
\n San Francisco, California 94104
\n Attention: Rajesh A. Aji, Esq.
\n Telecopier: 415-445-2526<\/p>\n
with a copy to:<\/p>\n
Morrison & Foerster LLP
\n 425 Market Street
\n San Francisco, California 94105
\n Attention: Bruce Alan Mann, Esq.
\n Telecopier: 415-268-7522<\/p>\n
SNAP! LLC
\n One Beach Street
\n San Francisco, California 94133
\n Attention: Chief Financial Officer
\n Telecopier: 415-392-9088<\/p>\n
48<\/p>\n
National Broadcasting Company, Inc.
\n 30 Rockefeller Plaza
\n New York, NY 10012
\n Attention: Vice President, Corporate Law
\n Telecopier: 212-977-7165<\/p>\n
12.11 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.<\/p>\n
(a) Notwithstanding anything to the contrary contained in any
\nagreement among the parties hereto, Purchaser shall have the right to disclose
\nthe Company’s financial statements and related information, the terms of this
\nAgreement and the identity of the Company to potential investors of Purchaser,
\nthrough the use of printed offering materials or otherwise or as otherwise
\nrequired by applicable legal requirements.<\/p>\n
(b) The Company and the Selling Stockholders, on the one hand,
\nand Purchaser, on the other, shall keep strictly confidential, and shall not
\nuse, or disclose to any other Person, any non-public document or other
\ninformation in the Company’s or the Selling Stockholders’ possession, on the one
\nhand, and in Purchaser’s possession, on the other, that relates directly or
\nindirectly to the business of the Company, Purchaser or any affiliate of
\nPurchaser; PROVIDED, THAT Purchaser or the Selling Stockholders may disclose
\nsuch non-public information as required by any applicable law or rule to which
\nPurchaser or the Selling Stockholders is subject, including the Exchange Act and
\nthe rules of the National Association of Securities Dealers, Inc.<\/p>\n
(c) Neither the Company nor the Selling Stockholders shall
\nissue or disseminate any press release or other publicity concerning any of the
\nTransactions, or permit any press release or other publicity concerning any of
\nthe Transactions to be issued or otherwise disseminated by or on behalf of the
\nCompany or the Selling Stockholders without Purchaser’s prior written consent,
\nand the Company and the Selling Stockholders shall continue to keep the terms of
\nthis Agreement and the other Transactional Agreements strictly confidential.<\/p>\n
12.12 COUNTERPARTS.<\/p>\n
This Agreement may be executed in any number of counterparts, each of
\nwhich shall be an original, but all of which together shall constitute one
\ninstrument.<\/p>\n
12.13 DELAYS OR OMISSIONS; WAIVERS.<\/p>\n
(a) No failure on the part of any Person to exercise any
\npower, right, privilege or remedy under this Agreement, and no delay on the part
\nof any Person in exercising any power, right, privilege or remedy under this
\nAgreement, shall operate as a waiver of such power, right, privilege or remedy;
\nand no single or partial exercise or waiver of any such power, right, privilege
\nor remedy shall preclude any other or further exercise thereof or of any other
\npower, right, privilege or remedy.<\/p>\n
(b) No Person shall be deemed to have waived any claim arising
\nout of this Agreement, or any power, right, privilege or remedy under this
\nAgreement, unless the waiver of such claim, power, right, privilege or remedy is
\nexpressly set forth in a written instrument duly <\/p>\n
49<\/p>\n
executed and delivered on behalf of such Person; and any such waiver shall
\nnot be applicable or have any effect except in the specific instance in which
\nit is given.<\/p>\n
12.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.<\/p>\n
All remedies, either under this Agreement or by law or otherwise
\nafforded to the parties hereto, shall be cumulative and not alternative. Each of
\nthe parties agrees that:<\/p>\n
(a) in the event of any breach or threatened breach by a party
\nof any covenant, obligation or other provision set forth in this Agreement, the
\nother party shall be entitled (in addition to any other remedy that may be
\navailable to it) to (i) a decree or order of specific performance or mandamus to
\nenforce the observance and performance of such covenant, obligation or other
\nprovision, and (ii) an injunction restraining such breach or threatened breach;
\nand<\/p>\n
(b) neither Purchaser nor any other Indemnitee, on the one
\nhand, nor the Selling Stockholders, on the other, shall be required to provide
\nany bond or other security in connection with any such decree, order or
\ninjunction or in connection with any related action or Proceeding.<\/p>\n
12.15 HEADINGS.<\/p>\n
The underlined headings contained in this Agreement are for convenience
\nof reference only, shall not be deemed to be a part of this Agreement and shall
\nnot be referred to in connection with the construction or interpretation of this
\nAgreement.<\/p>\n
12.16 CONSTRUCTION.<\/p>\n
(a) For purposes of this Agreement, whenever the context
\nrequires: the singular number shall include the plural, and vice versa; the
\nmasculine gender shall include the feminine and neuter genders; the feminine
\ngender shall include the masculine and neuter genders; and the neuter gender
\nshall include the masculine and feminine genders.<\/p>\n
(b) The parties hereto agree that any rule of construction to
\nthe effect that ambiguities are to be resolved against the drafting party shall
\nnot be applied in the construction or interpretation of this Agreement.<\/p>\n
(c) As used in this Agreement, the words “include” and
\n“including,” and variations thereof, shall not be deemed to be terms of
\nlimitation, but rather shall be deemed to be followed by the words “without
\nlimitation.”<\/p>\n
(d) Except as otherwise specified, all references in this
\nAgreement to “Sections,” “Exhibits” and “Schedules” are intended to refer to
\nSections of this Agreement and Exhibits and Schedules to this Agreement.<\/p>\n
50<\/p>\n
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT AND
\nPLAN OF MERGER as of the date set forth in the first paragraph hereof.<\/p>\n
COMPANY: LIQUIDMARKET, INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ Gauthier H. Groult
\n ————————————
\n Name: Gauthier H. Groult
\n Title: Chief Executive Officer<\/p>\n
PURCHASER: XOOM.COM, INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ John Harbottle
\n ————————————
\n Name: John Harbottle
\n Title: Chief Financial Officer<\/p>\n
MERGER SUB: XOOM ACQUISITION SUB II, INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ John Harbottle
\n ————————————
\n Name: John Harbottle
\n Title: Chief Financial Officer<\/p>\n
HOLDER REPRESENTATIVE:<\/p>\n
ADDRESS:
\n By: \/s\/ Rajesh Parekh
\n ————————————
\n151 Bridgton Court Rajesh Parekh
\nLos Altos, CA 94022<\/p>\n
51<\/p>\n
\n\n INDEX OF SCHEDULES AND EXHIBITS<\/p>\n
\nSchedule I Schedule of Selling Stockholders<\/p>\nSchedule II Schedule of Company Options<\/p>\n
Schedule III Company Disclosure Schedule<\/p>\n
Schedule IV Purchaser Disclosure Schedule<\/p>\n
Exhibit A Certain Definitions<\/p>\n
Exhibit B Form of Escrow Agreement<\/p>\n
Exhibit C Form of Registration Rights Agreement<\/p>\n
Exhibit D Forms of Employment and Non-Competition Agreement<\/p>\n
Exhibit E Form of Investment Agreement<\/p>\n
Exhibit F Form of Stockholder Questionnaire<\/p>\n
Exhibit G Form of Legal Opinion of Hale and Dorr, LLP, counsel to the
\n Selling Stockholders and the Company<\/p>\n
Exhibit H Form of Legal Opinion of Morrison & Foerster LLP, counsel to
\n Purchaser<\/p>\n
Exhibit I Financial Statements of the Company
\n<\/c><\/s><\/caption>\n<\/table>\n
52<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
SCHEDULE I<\/p>\n
SCHEDULE OF SELLING STOCKHOLDERS<\/p>\n
53<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
SCHEDULE II<\/p>\n
SCHEDULE OF OPTIONS<\/p>\n
54<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
SCHEDULE III<\/p>\n
COMPANY DISCLOSURE SCHEDULE<\/p>\n
55<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
SCHEDULE IV<\/p>\n
PURCHASER DISCLOSURE SCHEDULE<\/p>\n
56<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
EXHIBIT A<\/p>\n
CERTAIN DEFINITIONS<\/p>\n
For purposes of this Agreement:<\/p>\n
ACQUISITION TRANSACTION. “Acquisition Transaction” shall mean any
\ntransaction involving:<\/p>\n
(a) the sale or other disposition of all or any portion of the
\n Company’s business or assets (other than in the Ordinary
\n Course of Business);<\/p>\n
(b) the issuance, sale or other disposition of (i) any capital
\n stock of the Company, (ii) any option, call, warrant or
\n right (whether or not immediately exercisable) to acquire
\n any capital stock of the Company, or (iii) any security,
\n instrument or obligation that is or may become convertible
\n into or exchangeable for any capital stock of the Company; or<\/p>\n
(c) any merger, consolidation, business combination, share
\n exchange, reorganization or similar transaction involving
\n the Company.<\/p>\n
ADDITIONAL EMPLOYEE OPTION GRANTS. “Additional Employee Option
\nGrants” shall have the meaning specified in Section 3.1(c)(ii).<\/p>\n
AGREEMENT. “Agreement” shall mean the Agreement and Plan of Merger
\nto which this EXHIBIT A is attached (including the Disclosure Schedule and
\nall other schedules and exhibits attached thereto), as it may be amended from
\ntime to time.<\/p>\n
AVERAGE PURCHASER STOCK PRICE. “Average Purchaser Stock Price” shall
\nmean (a) $47.125, in the event that the Merger Consideration is calculated in
\naccordance with Section 1.3(a) or (b) the lesser of (i) the average closing
\nprice of Purchaser Stock on the Nasdaq National Stock Market for the
\ntwenty-seven (27) trading days ending on the last trading day prior to the
\nClosing Date or (ii) the average closing price of Purchaser Stock on the
\nNasdaq National Stock Market for the five (5) trading days ending on the last
\ntrading day prior to the Closing Date, for purposes of the calculations in
\nSection 1.3(b)(i) or 1.3(b)(ii), and in the event that, as a result of such
\ncalculations, the Merger Consideration is determined pursuant to Section
\n1.3(b)(i), (ii) or (iii).<\/p>\n
BASKET. “Basket” shall have the meaning specified in Section 11.2(b).<\/p>\n
BEST EFFORTS. “Best Efforts” shall mean the efforts that a prudent
\nPerson desiring to achieve a particular result would use in order to ensure
\nthat such result is achieved as expeditiously as possible.<\/p>\n
CERTIFICATE OF MERGER. “Certificate of Merger” shall have the
\nmeaning specified in Section 1.2.<\/p>\n
57<\/p>\n
CERTIFICATES. “Certificates” shall have the meaning specified in
\nSection 3.2(a).<\/p>\n
CLOSING. “Closing” shall have the meaning specified in Section 3.4.<\/p>\n
CLOSING DATE. “Closing Date” shall have the meaning specified in
\nSection 3.4.<\/p>\n
CODE. “Code” shall mean the Internal Revenue Code of 1986, as
\namended.<\/p>\n
COMMON STOCK. “Common Stock” shall have the meaning specified in
\nSection 3.1(b).<\/p>\n
COMPANY. “Company” shall mean LiquidMarket, Inc., a Delaware
\ncorporation.<\/p>\n
COMPANY BOARD. “Company Board” shall mean the members of the board
\nof directors of the Company.<\/p>\n
COMPANY CLOSING CERTIFICATE. “Company Closing Certificate” shall
\nhave the meaning specified in Section 4.1(c)(vii).<\/p>\n
COMPANY CONTRACT. “Company Contract” shall mean any contract listed
\non the Disclosure Schedule.<\/p>\n
COMPANY DISCLOSURE SCHEDULE. “Company Disclosure Schedule” shall
\nhave the meaning specified in the introductory paragraph to Section 5.<\/p>\n
COMPANY DISCLOSURE SCHEDULE UPDATE. “Company Disclosure Schedule
\nUpdate” shall have the meaning specified in Section 7.5(b).<\/p>\n
COMPANY OPTIONS. “Company Options” shall refer to those options
\ngranted by the Company, or proposed to be granted prior to the Closing Date,
\nto purchase shares of the Common Stock of the Company as set forth on
\nSCHEDULE II attached hereto.<\/p>\n
COMPANY PREFERRED STOCK. “Company Preferred Stock” shall have the
\nmeaning specified in Section 5.3(a).<\/p>\n
COMPANY RETURNS. “Company Returns” shall have the meaning specified
\nin Section 5.14(b).<\/p>\n
CONSENT. “Consent” shall mean any approval, consent, ratification,
\npermission, waiver or authorization (including any Governmental
\nAuthorization).<\/p>\n
CONSTITUENT CORPORATIONS. “Constituent Corporations” shall refer to
\nthe Company and Merger Sub.<\/p>\n
CONTRACT. “Contract” shall mean, with respect to any Person, any
\nwritten or oral or other contract, arrangement or other agreement to which
\nsuch Person is a party or by which its properties or assets may be bound or
\naffected or under which it or its respective business, properties or assets
\nreceive benefits.<\/p>\n
58<\/p>\n
CONTROL. “Control” shall consist of direct ownership of stock
\npossessing at least eighty percent (80%) of the total combined voting power
\nof all classIes of stock entitled to vote and at least eighty percent (80%)
\nof the total number of shares of each other class of stock of the corporation.<\/p>\n
CRITICAL EMPLOYEES. “Critical Employees” shall refer to Gauthier
\nGroult and Francois Rouaix, each of whom are considered by Purchaser to be
\ncritical to success of the Company’s business operations.<\/p>\n
DAMAGES. “Damages” shall include any loss, damage, injury, decline
\nin value, lost opportunity, Liability, settlement, judgment, award, fine,
\npenalty, Tax, fee (including any legal fee resulting from, but not limited
\nto, the defense of third party claims pursuant to Section 11.5 of this
\nAgreement, expert fee, accounting fee or advisory fee), charge, cost
\n(including any cost of investigation) or expense of any nature.<\/p>\n
DEFINED BENEFIT PLAN. “Defined Benefit Plan” shall mean either a
\nplan described in Section 3(35) of ERISA or a plan subject to the minimum
\nfunding standards set forth in Section 302 of ERISA and Section 412 of the
\nCode.<\/p>\n
DISSENTING HOLDER. “Dissenting Holder” shall have the meaning
\nspecified in Section 3.6(a).<\/p>\n
DISSENTING SHARES. “Dissenting Shares” shall have the meaning
\nspecified in Section 3.6(a).<\/p>\n
EFFECTIVE TIME. “Effective Time” shall have the meaning specified in
\nSection 1.2.<\/p>\n
EMPLOYMENT AND NON-COMPETITION AGREEMENT. “Employment and
\nNon-Competition Agreement” shall refer to the employment contract by and
\nbetween Purchaser and each of the Critical Employees substantially in the
\nforms attached at EXHIBIT D.<\/p>\n
END-USER LICENSES. “End-User Licenses” shall have the meaning
\nspecified in Section 5.6.<\/p>\n
ENTITY. “Entity” shall mean any corporation (including any non
\nprofit corporation), general partnership, limited partnership, limited
\nliability partnership, joint venture, estate, trust or company (including any
\nlimited liability company or joint stock company).<\/p>\n
ENVIRONMENTAL LAW. “Environmental Law” shall mean any federal,
\nstate, local or foreign legal requirement relating to pollution or protection
\nof human health or the environment.<\/p>\n
ERISA. “ERISA” shall mean the Employee Retirement Income Security
\nAct of 1974, as amended.<\/p>\n
ESCROW ACCOUNT. “Escrow Account” shall have the mean the account
\ninto which the Holdback Amount is deposited.<\/p>\n
ESCROW AGENT. “Escrow Agent” shall refer to USBank Trust, N.A. <\/p>\n
59<\/p>\n
ESCROW AGREEMENT. “Escrow Agreement” shall have the meaning
\nspecified in Section 1.4.<\/p>\n
EXCHANGE ACT. “Exchange Act” shall mean the Securities Exchange Act
\nof 1934, as amended.<\/p>\n
EXCHANGE RATIO. “Exchange Ratio” shall have the meaning specified in
\nSection 3.1(b).<\/p>\n
FINAL RETURNS. “Final Returns” shall have the meaning specified in
\nSection 12.4(b).<\/p>\n
FINANCIAL STATEMENTS. “Financial Statements” shall have the meaning
\nspecified in Section 5.8(a).<\/p>\n
GAAP. “GAAP” shall mean generally accepted accounting principles.<\/p>\n
GOVERNMENTAL AUTHORIZATION. “Governmental Authorization” shall mean
\nany:<\/p>\n
(a) permit, license, certificate, franchise, approval, consent,
\n permission, clearance, waiver, certification, designation,
\n registration, qualification or authorization issued,
\n granted, given or otherwise made available by or under the
\n authority of any Governmental Body or pursuant to any legal
\n requirement; or<\/p>\n
(b) right under any Contract with any Governmental Body.<\/p>\n
GOVERNMENTAL BODY. “Governmental Body” shall mean any:<\/p>\n
(a) nation, principality, state, province, territory, county,
\n municipality, district or other jurisdiction of any nature;<\/p>\n
(b) federal, state, local, municipal, foreign or other
\n government; or<\/p>\n
(c) individual, Entity or body exercising, or entitled to
\n exercise, any executive, legislative, judicial,
\n administrative, regulatory, police, military or taxing
\n authority or power of any nature.<\/p>\n
HAZARDOUS MATERIALS. “Hazardous Materials” shall mean any substance,
\nchemical, waste or other material which is listed, defined or otherwise
\nidentified as hazardous or toxic, or which is otherwise regulated, under any
\nlegal requirement, as well as any asbestos, polychlorinated biphenyls
\n(“PCBs”), petroleum, petroleum product or by-product, crude oil, natural gas,
\nnatural gas liquids, liquefied natural gas, or synthetic gas useable for
\nfuel, and “source,” “special nuclear,” and “by-product” material as defined
\nin the Atomic Energy Act of 1954, 42 U.S.C. Sections 2011 et seq.<\/p>\n
HOLDBACK AMOUNT. “Holdback Amount” shall have the meaning specified
\nin Section 1.4.<\/p>\n
HOLDER REPRESENTATIVE. “Holder Representative” shall have the
\nmeaning specified in the first paragraph hereof.<\/p>\n
60<\/p>\n
INDEMNIFICATION PORTION. “Indemnification Portion” shall have the
\nmeaning specified in Section 1.1 of the Escrow Agreement.<\/p>\n
INDEMNIFICATION PORTION ESCROW ACCOUNT. “Indemnification Portion
\nEscrow Account” shall have the meaning specified in Section 1.1 of the Escrow
\nAgreement.<\/p>\n
INDEMNIFICATION TERMINATION DATE. “Indemnification Termination Date”
\nshall have the meaning specified in Section 3.2 of the Escrow Agreement.<\/p>\n
INDEMNIFIED PARTY. “Indemnified Party” shall have the meaning
\nspecified in Section 11.6.<\/p>\n
INDEMNIFYING PARTY. “Indemnifying Party” shall have the meaning
\nspecified in Section 11.6.<\/p>\n
INDEMNITEE. “Indemnitee” shall have the meaning specified in Section
\n11.2(a).<\/p>\n
INFORMATION STATEMENT. “Information Statement” shall have the
\nmeaning specified in Section 8.1(b).<\/p>\n
INFORMATION STATEMENT UPDATE. “Information Statement Update” shall
\nhave the meaning specified in Section 7.5(b).<\/p>\n
INVESTMENT AGREEMENT. “Investment Agreement” shall have the meaning
\nspecified in Section 4.1(c)(iv).<\/p>\n
LEASED PREMISES. “Leased Premises” shall mean the premises and
\nfacilities identified in Part 5.9(d) of the Disclosure Schedule.<\/p>\n
LIABILITY. “Liability” shall mean any debt, obligation, duty or
\nliability of any nature (including any contingent or indirect liability),
\nregardless of whether such debt, obligation, duty or liability would be
\nrequired to be disclosed on a balance sheet prepared in accordance with
\ngenerally accepted accounting principles and regardless of whether such debt,
\nobligation, duty or liability is immediately due and payable.<\/p>\n
MATERIAL ADVERSE CHANGE. “Material Adverse Change” shall have the
\nmeaning specified in Section 4.1(j).<\/p>\n
MATERIAL ADVERSE EFFECT. “Material Adverse Effect” shall have the
\nmeaning specified in Section 4.1(j).<\/p>\n
MEMBER OF THE CONTROLLED GROUP. “Member of the Controlled Group”
\nshall mean each trade or business, whether or not incorporated, which would
\nbe treated as a single employer with the Company under Section 4001 of ERISA
\nor Section 414(b), (c), (m) or (o) of the Code.<\/p>\n
MERGER. “Merger” shall have the meaning specified in Recital A.<\/p>\n
61<\/p>\n
MERGER CONSIDERATION. “Merger Consideration” shall have the meaning
\nspecified in Section 1.3.<\/p>\n
MERGER SUB. “Merger Sub” shall refer to XOOM Acquisition Sub II,
\nInc., a Delaware corporation.<\/p>\n
MERGER SUB BOARD. “Merger Sub Board” shall refer to the board of
\ndirectors of Merger Sub.<\/p>\n
MILESTONES. “Milestones” shall have the meaning specified in Section
\n1.1 of the Escrow Agreement.<\/p>\n
MULTIEMPLOYER PLAN. “Multiemployer Plan” shall mean a plan described
\nin Section 3(37) of ERISA.<\/p>\n
NBC. “NBC” shall mean the National Broadcasting Company, Inc.<\/p>\n
NBC AGREEMENTS. “NBC Agreements” shall mean the Agreement and Plan
\nof Contribution and Merger, dated as of May 9, 1999, as amended and restated
\nthrough the date hereof, with the Purchaser and others, and an Agreement and
\nPlan of Contribution, Investment and Merger dated as of May 9, 1999, as
\namended and restated through date hereof, with NBC and others pursuant to
\nwhich the existing businesses of Purchaser and certain assets of NBC and
\nothers will be combined.<\/p>\n
NBC TRANSACTIONS. “NBC Transactions” shall mean those transactions
\ncontemplated by the NBC Agreements.<\/p>\n
NONDISCLOSURE AGREEMENT. “Nondisclosure Agreement” shall have the
\nmeaning specified in Section 9.2.<\/p>\n
OPTION PLAN. “Option Plan” shall have the meaning specified in
\nSection 3.1(c)(i).<\/p>\n
OPTION POOL. “Option Pool” shall mean the number of shares of Common
\nStock reserved for the grant of options (whether or not such options are then
\noutstanding) under the Option Plan as of the Closing Date.<\/p>\n
ORDER. “Order” shall mean any:<\/p>\n
(a) order, judgment, injunction, edict, decree, ruling,
\n subpoena, writ or award that is or has been issued, made,
\n entered, rendered or otherwise put into effect by or under
\n the authority of any court, administrative agency or other
\n Governmental Body or any arbitrator or arbitration panel; or<\/p>\n
(b) Contract with any Governmental Body that is or has been
\n entered into in connection with any Proceeding.<\/p>\n
62<\/p>\n
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of the
\nCompany shall not be deemed to have been taken in the “Ordinary Course of
\nBusiness” unless:<\/p>\n
(a) such action is recurring in nature, is consistent with the
\n Company’s past practices and is taken in the ordinary course
\n of the Company’s normal day to day operations;<\/p>\n
(b) such action is taken in accordance with sound and prudent
\n business practices;<\/p>\n
(c) such action is not required to be authorized by the
\n Company’s stockholders, the Company Board or any committee
\n of the Company Board and does not require any other separate
\n or special authorization of any nature; and<\/p>\n
(d) such action is similar in nature and magnitude to actions
\n customarily taken, without any separate or special
\n authorization, in the ordinary course of the normal day to
\n day operations of other Entities that are engaged in
\n businesses similar to the Company’s business.<\/p>\n
PATENT OPINION. “Patent Opinion” shall have the meaning specified in
\nthe Milestones attached at Exhibit A to the Escrow Agreement.<\/p>\n
PERSON. “Person” shall mean any individual, Entity or Governmental
\nBody.<\/p>\n
PLANS. “Plans” shall have the meaning specified in Section 5.22(a).<\/p>\n
POST-CLOSING PERIOD. “Post-Closing Period” means any taxable period
\n(or portion thereof) beginning after the close of business on the Closing
\nDate.<\/p>\n
PRE-CLOSING PERIOD. “Pre-Closing Period” shall mean the period from
\nthe date of this Agreement until the Closing Date.<\/p>\n
PROCEEDING. “Proceeding” shall mean any action, suit, litigation,
\narbitration, proceeding (including any civil, criminal, administrative,
\ninvestigative or appellate proceeding and any informal proceeding), hearing,
\ninquiry, audit or investigation that is or has been commenced, brought,
\nconducted or heard by or before, or that otherwise has involved or would
\nreasonably be expected to involve, any Governmental Body or any arbitrator or
\narbitration panel.<\/p>\n
PROPRIETARY ASSET. “Proprietary Asset” shall mean any patent, patent
\napplication, trademark (whether registered or unregistered and whether or not
\nrelating to a published work), trademark application, trade name, fictitious
\nbusiness name, service mark (whether registered or unregistered), service
\nmark application, copyright (whether registered or unregistered), copyright
\napplication, maskwork, maskwork application, trade secret, know how,
\nfranchise, system, computer software, invention, design, blueprint,
\nproprietary product, technology, proprietary right or other intellectual
\nproperty right or intangible asset.<\/p>\n
PURCHASER. “Purchaser” shall mean XOOM.com, Inc., a Delaware
\ncorporation.<\/p>\n
PURCHASER BOARD. “Purchaser Board” shall refer to the board of
\ndirectors of Purchaser.<\/p>\n
63<\/p>\n
PURCHASER CLOSING CERTIFICATE. “Purchaser Closing Certificate” hall
\nhave the meaning specified in Section 4.2(c)(v).<\/p>\n
PURCHASER CONTRACT. “Purchaser Contract” shall refer to those
\ncontracts required by Regulation S-K to be filed in connection with the
\nPurchaser SEC Reports.<\/p>\n
PURCHASER DISCLOSURE SCHEDULE. “Purchaser Disclosure Schedule” shall
\nhave the meaning specified in the introductory paragraph to Section 6.<\/p>\n
PURCHASER MATERIAL ADVERSE CHANGE. “Purchaser Material Adverse
\nChange” shall have the meaning specified in Section 4.2(e).<\/p>\n
PURCHASER MATERIAL ADVERSE EFFECT. “Purchaser Material Adverse
\nEffect” shall have the meaning specified in Section 4.2(e).<\/p>\n
PURCHASER OPTIONS. “Purchaser Options” shall refer to those options
\ngranted by Purchaser, or proposed to be granted by Purchaser, to purchase
\nshares of Purchaser Stock under the Purchaser Option Plan.<\/p>\n
PURCHASER OPTION PLAN. “Purchaser Option Plan” shall refer to the
\n1998 Stock Incentive Plan of Purchaser.<\/p>\n
PURCHASER SEC REPORTS. “Purchaser SEC Reports” shall have the
\nmeaning specified in Section 6.7(a).<\/p>\n
PURCHASER STOCK. “Purchaser Stock” shall refer to the Common Stock
\nof Purchaser, par value $.0001 per share, to be issued in connection with the
\nTransactions.<\/p>\n
RELATED PARTY. Each of the following shall be deemed to be a
\n“Related Party”:<\/p>\n
(a) the Selling Stockholders;<\/p>\n
(b) each individual who is, or who has at any time been, an
\n officer of the Selling Stockholders or the Company;<\/p>\n
(c) each member of the family of each of the individuals
\n referred to in clause (b) above; and<\/p>\n
(d) any Entity (other than the Selling Stockholders or the
\n Company) in which any one of the Persons referred to in
\n clause (a), (b) or (c) above holds (or in which more than
\n one of such individuals collectively hold), beneficially or
\n otherwise, a material voting, proprietary or equity interest.<\/p>\n
RESPONSIBLE STOCKHOLDER. “Responsible Stockholder” shall have the
\nmeaning specified in Section 11.1(a).<\/p>\n
64<\/p>\n
RIGHTS AGREEMENT. “Rights Agreement” shall refer to that certain
\nRegistration Rights Agreement by and among Purchaser and the Selling
\nStockholders substantially in the form of EXHIBIT C attached hereto.<\/p>\n
SEC. “SEC” shall mean the Securities and Exchange Commission.<\/p>\n
SECURITIES ACT. “Securities Act” shall mean the Securities Act of
\n1933, as amended.<\/p>\n
SELLING STOCKHOLDERS. “Selling Stockholders” shall refer to those
\nindividuals and Entities listed on SCHEDULE I hereto.<\/p>\n
SELLING STOCKHOLDERS CLOSING CERTIFICATE. “Selling Stockholders
\nClosing Certificate” shall have the meaning specified in Section 4.1(c)(vii).<\/p>\n
STOCKHOLDER QUESTIONNAIRE. “Stockholder Questionnaire” shall have
\nthe meaning specified in Section 4.1(c)(iv).<\/p>\n
STRADDLE PERIOD. “Straddle Period” means any taxable period that
\nincludes (but does not end on) the Closing Date.<\/p>\n
STRADDLE RETURNS. “Straddle Returns” shall have the meaning
\nspecified in Section 12.4(c).<\/p>\n
STOCK. “Stock” shall have the meaning specified in Section 3.1(b).<\/p>\n
SURVIVING CORPORAITION. “Surviving Corporation” shall have the
\nmeaning specified in Section 1.1.<\/p>\n
TAX. “Tax” shall mean any tax (including any income tax, franchise
\ntax, capital gains tax, estimated tax, gross receipts tax, value added tax,
\nsurtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
\ntax, property tax, business tax, occupation tax, inventory tax, occupancy
\ntax, withholding tax or payroll tax), levy, assessment, tariff, impost,
\nimposition, toll, duty (including any customs duty), deficiency or fee, and
\nany related charge or amount (including any fine, penalty or interest), that
\nis, has been or in the future may be (a) imposed, assessed or collected by or
\nunder the authority of any Governmental Body, or (b) payable pursuant to any
\ntax sharing agreement or similar Contract.<\/p>\n
TAX RETURN. “Tax Return” shall mean any return (including any
\ninformation return), report, statement, declaration, estimate, schedule,
\nnotice, notification, form, election, certificate or other document or
\ninformation that is, has been or in the future may be filed with or submitted
\nto, or required to be filed with or submitted to, any Governmental Body in
\nconnection with the determination, assessment, collection or payment of any
\nTax or in connection with the administration, implementation or enforcement
\nof or compliance with any legal requirement relating to any Tax.<\/p>\n
TRANSACTION EXPENSES. “Transaction Expenses” shall mean all fees,
\ncosts and expenses including, without limitation all attorneys’ fees, that
\nhave been incurred or that are in the future <\/p>\n
65<\/p>\n
incurred by or on behalf of the Company or the Selling Stockholders in
\nconnection with the sale of the Stock and the preparation, execution and
\ndelivery of the Transactional Agreements.<\/p>\n
TRANSACTIONAL AGREEMENTS. “Transactional Agreements” shall mean the
\nAgreement, the Rights Agreement, the Employment and Non-Competition
\nAgreement, the Escrow Agreement, the Investment Agreement, the Voting
\nAgreement, the Selling Stockholders and Company Closing Certificates, the
\nPurchaser Closing Certificate, and all other agreements, certificates and
\ninstruments executed or contemplated to be executed by any of the parties
\nhereto in connection with the Transactions.<\/p>\n
TRANSACTIONS. “Transactions” shall mean (a) the execution and
\ndelivery of this Agreement and the other Transactional Agreements and (b) all
\nthe transactions contemplated by this Agreement and the other Transactional
\nAgreements.<\/p>\n
UNAUDITED INTERIM BALANCE SHEET. “Unaudited Interim Balance Sheet”
\nshall have the meaning specified in Section 5.8(a)(ii).<\/p>\n
VOTING AGREEMENT. “Voting Agreement” shall have the meaning
\nspecified in Section 4.1(c)(v).<\/p>\n
66<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9374],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9622,9626],"class_list":["post-43155","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-xoom-inc","corporate_contracts_industries-technology__programming","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\/43155","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=43155"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43155"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43155"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}