\nARTICLE VII TERMINATION, AMENDMENT AND WAIVER…………………………………………….57
\n 7.1 Termination…………………………………………………………..57
\n 7.2 Notice of Termination; Effect of Termination……………………………..59
\n 7.3 Fees and Expenses……………………………………………………..59
\n 7.4 Amendment…………………………………………………………….60
\n 7.5 Extension; Waiver……………………………………………………..60<\/p>\nARTICLE VIII GENERAL PROVISIONS…………………………………………………………61
\n 8.1 Non-Survival of Representations and Warranties……………………………61
\n 8.2 Notices………………………………………………………………61
\n 8.3 Interpretation; Knowledge………………………………………………62
\n 8.4 Counterparts………………………………………………………….63
\n 8.5 Entire Agreement; Third Party Beneficiaries………………………………63
\n 8.6 Severability………………………………………………………….63
\n 8.7 Other Remedies; Specific Performance…………………………………….63
\n 8.8 Governing Law…………………………………………………………64
\n 8.9 Rules of Construction………………………………………………….64
\n 8.10 Assignment……………………………………………………………64
\n 8.11 WAIVER OF JURY TRIAL…………………………………………………..64
\n<\/c><\/s><\/caption>\n<\/table>\n
5
\n AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
\nof January 19, 1999, among At Home Corporation, a Delaware corporation
\n(“PARENT”), Countdown Acquisition Corp., a Delaware corporation and a
\nwholly-owned subsidiary of Parent (“MERGER SUB”), and Excite, Inc. a Delaware
\ncorporation (the “COMPANY”).<\/p>\n
RECITALS<\/p>\n
A. Upon the terms and subject to the conditions of this Agreement and
\nin accordance with the Delaware General Corporation Law (“DELAWARE LAW”),
\nParent, Merger Sub and the Company intend to enter into a business combination
\ntransaction.<\/p>\n
B. The Board of Directors of the Company (i) has determined that the
\nMerger (as defined in Section 1.1) is fair to, and in the best interests of, the
\nCompany and its stockholders, (ii) has approved this Agreement, the Merger and
\nthe other transactions contemplated by this Agreement and (iii) subject to the
\nterms and conditions of this Agreement, has determined to recommend that the
\nstockholders of the Company adopt and approve this Agreement and approve the
\nMerger.<\/p>\n
C. The Board of Directors of Parent (i) has determined that the Merger
\n(as defined in Section 1.1) is fair to, and in the best interests of, Parent and
\nits stockholders, (ii) has approved this Agreement, the Merger and the other
\ntransactions contemplated by this Agreement and (iii) has determined to
\nrecommend that the stockholders of Parent approve the issuance of shares of
\nParent Common Stock (as defined below) pursuant to the Merger and approve an
\namendment to Parent’s Certificate of Incorporation to increase the authorized
\nnumber of shares of Parent Common Stock so as to permit the transactions
\ncontemplated hereby, subject to and upon consummation of the Merger.<\/p>\n
D. Concurrently with the execution of this Agreement, and as a
\ncondition and inducement to Parent’s and Company’s respective willingness to
\nenter into this Agreement, certain stockholders of Company are entering into
\nVoting Agreements in substantially the form attached hereto as Exhibit A-1 (the
\n“COMPANY VOTING AGREEMENTS”), and certain stockholders of Parent are entering
\ninto Voting Agreements in substantially the form attached hereto as Exhibit A-2
\n(the “PARENT VOTING AGREEMENTS”).<\/p>\n
E. Concurrently with the execution of this Agreement, and as a
\ncondition and inducement to Parent’s willingness to enter into this Agreement,
\nthe Company shall execute and deliver a Stock Option Agreement in favor of
\nParent in substantially the form attached hereto as Exhibit B (the “STOCK OPTION
\nAGREEMENT”) . The Board of Directors of the Company has approved the Stock
\nOption Agreement.<\/p>\n
F. The parties intend, by executing this Agreement, to adopt a plan of
\nreorganization within the meaning of Section 368 of the Internal Revenue Code of
\n1986, as amended (the “CODE”).<\/p>\n
6<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth herein, and for other good and valuable consideration,
\nthe receipt and sufficiency of which are hereby acknowledged, the parties agree
\nas follows:<\/p>\n
ARTICLE I
\n THE MERGER<\/p>\n
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
\nsubject to and upon the terms and conditions of this Agreement and the
\napplicable provisions of Delaware Law, Merger Sub shall be merged with and into
\nthe Company (the “MERGER”), the separate corporate existence of Merger Sub shall
\ncease and the Company shall continue as the surviving corporation. The Company
\nas the surviving corporation after the Merger is hereinafter sometimes referred
\nto as the “SURVIVING CORPORATION”.<\/p>\n
1.2 Effective Time; Closing. Subject to the provisions of this
\nAgreement, the parties hereto shall cause the Merger to be consummated by filing
\na Certificate of Merger with the Secretary of State of the State of Delaware in
\naccordance with the relevant provisions of Delaware Law (the “CERTIFICATE OF
\nMERGER”) (the time of such filing with the Secretary of State of the State of
\nDelaware (or such later time as may be agreed in writing by the Company and
\nParent and specified in the Certificate of Merger) being the “EFFECTIVE TIME”)
\nas soon as practicable on or after the Closing Date (as herein defined). Unless
\nthe context otherwise requires, the term “AGREEMENT” as used herein refers
\ncollectively to this Agreement and Plan of Reorganization and the Certificate of
\nMerger. The closing of the Merger (the “CLOSING”) shall take place at the
\noffices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at a time
\nand date to be specified by the parties, which shall be no later than the second
\nbusiness day after the satisfaction or waiver of the conditions set forth in
\nArticle VI, or at such other time, date and location as the parties hereto agree
\nin writing (the “CLOSING DATE”).<\/p>\n
1.3 Effect of the Merger. At the Effective Time, the effect of the
\nMerger shall be as provided in this Agreement and the applicable provisions of
\nDelaware Law. Without limiting the generality of the foregoing, and subject
\nthereto, at the Effective Time all the property, rights, privileges, powers and
\nfranchises of the Company and Merger Sub shall vest in the Surviving
\nCorporation, and all debts, liabilities and duties of the Company and Merger Sub
\nshall become the debts, liabilities and duties of the Surviving Corporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws.<\/p>\n
(a) At the Effective Time, the Certificate of Incorporation of
\nMerger Sub, as in effect immediately prior to the Effective Time, shall be the
\nCertificate of Incorporation of the Surviving Corporation until thereafter
\namended as provided by law and such Certificate of Incorporation of the
\nSurviving Corporation; provided, however, that at the Effective Time the<\/p>\n
7<\/p>\n
Certificate of Incorporation of the Surviving Corporation shall be amended so
\nthat the name of the Surviving Corporation shall be “Excite, Inc.”.<\/p>\n
(b) The Bylaws of Merger Sub, as in effect immediately prior
\nto the Effective Time, shall be, at the Effective Time, the Bylaws of the
\nSurviving Corporation until thereafter amended.<\/p>\n
1.5 Directors and Officers. The initial directors of the Surviving
\nCorporation shall be the directors of Merger Sub immediately prior to the
\nEffective Time, until their respective successors are duly elected or appointed
\nand qualified. The initial officers of the Surviving Corporation shall be the
\nofficers of Merger Sub immediately prior to the Effective Time, until their
\nrespective successors are duly appointed.<\/p>\n
1.6 Effect on Capital Stock. Subject to the terms and conditions of
\nthis Agreement, at the Effective Time, by virtue of the Merger and without any
\naction on the part of Merger Sub, the Company or the holders of any of the
\nfollowing securities, the following shall occur:<\/p>\n
(a) Conversion of Company Capital Stock.<\/p>\n
(i) Company Common Stock. Each share of Common Stock,
\npar value $0.001 per share, of the Company (including the associated Rights (as
\ndefined in that certain Rights Agreement (the “COMPANY RIGHTS PLAN”) dated as of
\nOctober 15, 1998 between the Company and BankBoston, N.A., as Rights Agent)
\n(“COMPANY COMMON STOCK”) issued and outstanding immediately prior to the
\nEffective Time, other than any shares of the Company Common Stock to be canceled
\npursuant to Section 1.6(b), will be canceled and extinguished and automatically
\nconverted (subject to Section 1.6(e)) into the right to receive 1.041902 shares
\n(the “EXCHANGE RATIO”) of the Series A Common Stock, par value $0.01 per share,
\nof Parent (“PARENT COMMON STOCK”) upon surrender of the certificate representing
\nsuch share of Company Common Stock in the manner provided in Section 1.7 (or in
\nthe case of a lost, stolen or destroyed certificate, upon delivery of an
\naffidavit (and bond, if required) in the manner provided in Section 1.9). If any
\nshares of Company Common Stock outstanding immediately prior to the Effective
\nTime are unvested or are subject to a repurchase option, risk of forfeiture or
\nother condition under any applicable restricted stock purchase agreement or
\nother agreement with the Company, then the shares of Parent Common Stock issued
\nin exchange for such shares of Company Common Stock will also be unvested and
\nsubject to the same repurchase option, risk of forfeiture or other condition,
\nand the certificates representing such shares of Parent Common Stock may
\naccordingly be marked with appropriate legends. The Company shall take all
\naction that may be necessary to ensure that, from and after the Effective Time,
\nParent is entitled to exercise any such repurchase option or other right set
\nforth in any such restricted stock purchase agreement or other agreement.<\/p>\n
(ii) Company Preferred Stock. Each share of Series
\nE-3 Preferred Stock, par value $0.001 per share, of the Company (including the
\nassociated Rights (as defined in the Company Rights Plan), if any) (“COMPANY
\nPREFERRED STOCK” and, together with Company Common <\/p>\n
8<\/p>\n
Stock, “COMPANY CAPITAL STOCK”) issued and outstanding immediately prior to the
\nEffective Time, other than any shares of the Company Preferred Stock to be
\ncanceled pursuant to Section 1.6(b), will be canceled and extinguished and
\nautomatically converted (subject to Section 1.6(e)) into the right to receive a
\nnumber of shares of Parent Common Stock equal to the Exchange Ratio multiplied
\nby the number of shares of Company Common Stock issuable upon conversion of one
\nshare of Company Preferred Stock, upon surrender of the certificate representing
\nsuch share of Company Preferred Stock in the manner provided in Section 1.7 (or
\nin the case of a lost, stolen or destroyed certificate, upon delivery of an
\naffidavit (and bond, if required) in the manner provided in Section 1.9). If any
\nshares of Company Preferred Stock outstanding immediately prior to the Effective
\nTime are unvested or are subject to a repurchase option, risk of forfeiture or
\nother condition under any applicable restricted stock purchase agreement or
\nother agreement with the Company, then the shares of Parent Common Stock issued
\nin exchange for such shares of Company Preferred Stock will also be unvested and
\nsubject to the same repurchase option, risk of forfeiture or other condition,
\nand the certificates representing such shares of Parent Common Stock may
\naccordingly be marked with appropriate legends. The Company shall take all
\naction that may be necessary to ensure that, from and after the Effective Time,
\nParent is entitled to exercise any such repurchase option or other right set
\nforth in any such restricted stock purchase agreement or other agreement.<\/p>\n
(b) Cancellation of Parent-Owned Stock. Each share of Company
\nCapital Stock held by the Company or owned by Merger Sub, Parent or any direct
\nor indirect wholly-owned subsidiary of the Company or of Parent immediately
\nprior to the Effective Time shall be canceled and extinguished without any
\nconversion thereof.<\/p>\n
(c) Stock Options; Employee Stock Purchase Plans. At the
\nEffective Time, all options to purchase Company Common Stock then outstanding
\nunder the Company’s 1995 Equity Incentive Plan, the Company’s 1996 Equity
\nIncentive Plan, as amended, the Company’s 1996 Directors Stock Option Plan, the
\nNetbot, Inc. 1996 Stock Option Plan, the MatchLogic, Inc. 1997 Equity
\nCompensation Plan, the MatchLogic, Inc. 1996 Stock Option Plan, the Throw, Inc.
\n1996 Option Plan and the Classifieds 2000, Inc. 1996 Stock Option Plan
\n(collectively, the “COMPANY STOCK OPTION PLANS”) shall be assumed by Parent in
\naccordance with Section 5.9 hereof. Rights outstanding under the Company’s 1996
\nEmployee Stock Purchase Plan (the “COMPANY PURCHASE PLAN”) shall be treated as
\nset forth in Section 5.9 hereof.<\/p>\n
(d) Capital Stock of Merger Sub. Each share of Common Stock of
\nMerger Sub (the “MERGER SUB COMMON STOCK”) issued and outstanding immediately
\nprior to the Effective Time shall be converted into one validly issued, fully
\npaid and nonassessable share of Common Stock of the Surviving Corporation. Each
\ncertificate evidencing ownership of shares of Merger Sub Common Stock shall
\nevidence ownership of such shares of capital stock of the Surviving Corporation.<\/p>\n
(e) Fractional Shares. No fraction of a share of Parent Common
\nStock will be issued by virtue of the Merger, but in lieu thereof each holder of
\nshares of Company Capital Stock who would otherwise be entitled to a fraction of
\na share of Parent Common Stock (after aggregating all fractional shares of
\nParent Common Stock that otherwise would be received by such holder) shall,<\/p>\n
9<\/p>\n
upon surrender of such holder’s Certificate(s) (as defined in Section 1.7(c)),
\nreceive from Parent an amount of cash (rounded to the nearest whole cent),
\nwithout interest, equal to the product of (i) such fraction, multiplied by (ii)
\nthe average closing price of one share of Parent Common Stock for the ten (10)
\nmost recent days that Parent Common Stock has traded ending on the trading day
\nending one day prior to the Closing Date, as reported on the Nasdaq National
\nMarket System (“NASDAQ”).<\/p>\n
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
\nadjusted to reflect fully the appropriate effect of any stock split, reverse
\nstock split, stock dividend (including any dividend or distribution of
\nsecurities convertible into Parent Common Stock or Company Capital Stock),
\nreorganization, recapitalization, reclassification or other like change with
\nrespect to Parent Common Stock or Company Capital Stock occurring on or after
\nthe date hereof and prior to the Effective Time.<\/p>\n
1.7 Surrender of Certificates.<\/p>\n
(a) Exchange Agent. Parent shall select an institution
\nreasonably satisfactory to the Company to act as the exchange agent (the
\n“EXCHANGE AGENT”) in the Merger.<\/p>\n
(b) Parent to Provide Common Stock. Promptly after the
\nEffective Time, Parent shall make available to the Exchange Agent for exchange
\nin accordance with this Article I, the shares of Parent Common Stock issuable
\npursuant to Section 1.6 in exchange for outstanding shares of Company Capital
\nStock, and cash in an amount sufficient for payment in lieu of fractional shares
\npursuant to Section 1.6(e) and any dividends or distributions which holders of
\nshares of Company Capital Stock may be entitled pursuant to Section 1.7(d).<\/p>\n
(c) Exchange Procedures. Promptly after the Effective Time,
\nParent shall cause the Exchange Agent to mail to each holder of record (as of
\nthe Effective Time) of a certificate or certificates (the “CERTIFICATES”) which
\nimmediately prior to the Effective Time represented outstanding shares of
\nCompany Capital Stock whose shares were converted into the right to receive
\nshares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
\nfractional shares pursuant to Section 1.6(f) and any dividends or other
\ndistributions pursuant to Section 1.7(d), (i) a letter of transmittal (which
\nshall specify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon delivery of the Certificates to the Exchange
\nAgent and shall be in such form and have such other provisions as Parent may
\nreasonably specify) and (ii) instructions for use in effecting the surrender of
\nthe Certificates in exchange for certificates representing shares of Parent
\nCommon Stock, cash in lieu of any fractional shares pursuant to Section 1.6(e)
\nand any dividends or other distributions pursuant to Section 1.7(d). Upon
\nsurrender of Certificates for cancellation to the Exchange Agent or to such
\nother agent or agents as may be appointed by Parent, together with such letter
\nof transmittal, duly completed and validly executed in accordance with the
\ninstructions thereto, the holders of such Certificates shall be entitled to
\nreceive in exchange therefor certificates representing the number of whole
\nshares of Parent Common Stock, payment in lieu of fractional shares which such
\nholders have the right to receive pursuant to Section 1.6(e) and any<\/p>\n
10<\/p>\n
dividends or distributions payable pursuant to Section 1.7(d), and the
\nCertificates so surrendered shall forthwith be canceled. Until so surrendered,
\noutstanding Certificates will be deemed from and after the Effective Time, for
\nall corporate purposes, subject to Section 1.7(d) as to the payment of
\ndividends, to evidence the ownership of the number of full shares of Parent
\nCommon Stock into which such shares of Company Capital Stock shall have been so
\nconverted and the right to receive an amount in cash in lieu of the issuance of
\nany fractional shares in accordance with Section 1.6(e) and any dividends or
\ndistributions payable pursuant to Section 1.7(d).<\/p>\n
(d) Distributions With Respect to Unexchanged Shares. No
\ndividends or other distributions declared or made after the date of this
\nAgreement with respect to Parent Common Stock with a record date after the
\nEffective Time will be paid to the holders of any unsurrendered Certificates
\nwith respect to the shares of Parent Common Stock represented thereby until the
\nholders of record of such Certificates shall surrender such Certificates.
\nSubject to applicable law, following surrender of any such Certificates, the
\nExchange Agent shall deliver to the record holders thereof, without interest,
\ncertificates representing whole shares of Parent Common Stock issued in exchange
\ntherefor along with payment in lieu of fractional shares pursuant to Section
\n1.6(e) hereof and the amount of any such dividends or other distributions with a
\nrecord date after the Effective Time payable with respect to such whole shares
\nof Parent Common Stock.<\/p>\n
(e) Transfers of Ownership. If certificates for shares of
\nParent Common Stock are to be issued in a name other than that in which the
\nCertificates surrendered in exchange therefor are registered, it will be a
\ncondition of the issuance thereof that the Certificates so surrendered will be
\nproperly endorsed and otherwise in proper form for transfer and that the persons
\nrequesting such exchange will have paid to Parent or any agent designated by it
\nany transfer or other taxes required by reason of the issuance of certificates
\nfor shares of Parent Common Stock in any name other than that of the registered
\nholder of the Certificates surrendered, or established to the satisfaction of
\nParent or any agent designated by it that such tax has been paid or is not
\npayable.<\/p>\n
(f) Required Withholding. Each of the Exchange Agent, Parent
\nand the Surviving Corporation shall be entitled to deduct and withhold from any
\nconsideration payable or otherwise deliverable pursuant to this Agreement to any
\nholder or former holder of Company Capital Stock such amounts as may be required
\nto be deducted or withheld therefrom under the Code or under any provision of
\nstate, local or foreign tax law or under any other applicable Legal Requirement
\n(as defined in Section 3.10). To the extent such amounts are so deducted or
\nwithheld, such amounts shall be treated for all purposes under this Agreement as
\nhaving been paid to the person to whom such amounts would otherwise have been
\npaid.<\/p>\n
(g) No Liability. Notwithstanding anything to the contrary in
\nthis Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
\nnor any party hereto shall be liable to a holder of shares of Parent Common
\nStock or Company Capital Stock for any amount properly paid to a public official
\npursuant to any applicable abandoned property, escheat or similar law.<\/p>\n
1.8 No Further Ownership Rights in Company Capital Stock. All shares of
\nParent <\/p>\n
11<\/p>\n
Common Stock issued upon the surrender for exchange of shares of Company Capital
\nStock in accordance with the terms hereof (including any cash paid in respect
\nthereof pursuant to Section 1.6(f) and 1.7(d)) shall be deemed to have been
\nissued in full satisfaction of all rights pertaining to such shares of Company
\nCapital Stock, and there shall be no further registration of transfers on the
\nrecords of the Surviving Corporation of shares of Company Capital Stock which
\nwere outstanding immediately prior to the Effective Time. If after the Effective
\nTime Certificates are presented to the Surviving Corporation for any reason,
\nthey shall be canceled and exchanged as provided in this Article I.<\/p>\n
1.9 Lost, Stolen or Destroyed Certificates. In the event any
\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall
\nissue in exchange for such lost, stolen or destroyed Certificates, upon the
\nmaking of an affidavit of that fact by the holder thereof, such shares of Parent
\nCommon Stock, cash for fractional shares, if any, as may be required pursuant to
\nSection 1.6(e) and any dividends or distributions payable pursuant to Section
\n1.7(d); provided, however, that Parent may, in its discretion and as a condition
\nprecedent to the issuance thereof, require the owner of such lost, stolen or
\ndestroyed Certificates to deliver a bond in such sum as it may reasonably direct
\nas indemnity against any claim that may be made against Parent, the Company or
\nthe Exchange Agent with respect to the Certificates alleged to have been lost,
\nstolen or destroyed.<\/p>\n
1.10 Tax Consequences. It is intended by the parties hereto that the
\nMerger shall constitute a reorganization within the meaning of Section 368 of
\nthe Code. The parties hereto adopt this Agreement as a “plan of reorganization”
\nwithin the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
\nIncome Tax Regulations.<\/p>\n
1.11 Taking of Necessary Action; Further Action. If, at any time after
\nthe Effective Time, any further action is necessary or desirable to carry out
\nthe purposes of this Agreement and to vest the Surviving Corporation with full
\nright, title and possession to all assets, property, rights, privileges, powers
\nand franchises of the Company and Merger Sub, the officers and directors of the
\nCompany and Merger Sub will take all such lawful and necessary action, so long
\nas such action is consistent with this Agreement. Parent shall cause Merger Sub
\nto perform fully all of its obligations relating to this Agreement and the
\ntransactions contemplated hereby.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
As of the date hereof and as of the Closing Date, the Company
\nrepresents and warrants to Parent and Merger Sub, subject to the exceptions
\nspecifically disclosed in writing in the disclosure letter supplied by the
\nCompany to Parent dated as of the date hereof and certified by a duly authorized
\nofficer of the Company (the “COMPANY SCHEDULES”), as follows:<\/p>\n
2.1 Organization of the Company.<\/p>\n
12<\/p>\n
(a) The Company has no subsidiaries, except for the
\ncorporations identified in Part 2.1(a)(i) of the Company Schedules; and neither
\nthe Company nor any of the other corporations identified in Part 2.1(a)(i) of
\nthe Company Schedules owns any capital stock of, or any equity interest of any
\nnature in, any other entity, other than the entities identified in Part
\n2.1(a)(ii) of the Company Schedules, except for passive investments in equity
\ninterests of public companies as part of the cash management program of the
\nCompany. Neither the Company nor any subsidiary thereof has agreed or is
\nobligated to make, or is bound by any written, oral or other agreement,
\ncontract, subcontract, lease, binding understanding, instrument, note, option,
\nwarranty, purchase order, license, sublicense, insurance policy, benefit plan or
\nlegally binding commitment or undertaking of any nature, as in effect as of the
\ndate hereof or as may hereinafter be in effect (“CONTRACT”) under which Contract
\nit may become obligated to make, any future investment in or capital
\ncontribution to any other entity. Neither the Company, nor any subsidiary
\nthereof, has, at any time, been a general partner of any general partnership,
\nlimited partnership or other entity.<\/p>\n
(b) The Company and each of its subsidiaries is a corporation
\nduly organized, validly existing and in good standing under the laws of the
\njurisdiction of its incorporation and has all necessary corporate power and
\nauthority: (i) to conduct its business in the manner in which its business is
\ncurrently being conducted; (ii) to own and use its assets in the manner in which
\nits assets are currently owned and used; and (iii) to perform its obligations
\nunder all Contracts by which it is bound.<\/p>\n
(c) The Company and each of its subsidiaries is qualified to
\ndo business as a foreign corporation, and is in good standing, under the laws of
\nall jurisdictions where the nature of its business requires such qualification
\nand where the failure to so qualify would have a Material Adverse Effect (as
\ndefined in Section 8.3) on the Company.<\/p>\n
(d) The Company has delivered or made available to Parent a
\ntrue and correct copy of the Certificate of Incorporation (including any
\nCertificate of Designations) and Bylaws of the Company and similar governing
\ninstruments of each of its subsidiaries, each as amended to date (collectively,
\nthe “COMPANY CHARTER DOCUMENTS”), and each such instrument is in full force and
\neffect. The Company is not in violation of any of the provisions of the Company
\nCharter Documents. None of the Company’s subsidiaries is in violation of any
\nprovision of its Articles or Certificate of Incorporation or Bylaws or other
\nsimilar governing instruments, except for such violations as are not material to
\nthe Company and its subsidiaries taken as a whole.<\/p>\n
(e) The Company has delivered or made available to Parent all
\nproposed or considered amendments to the Company Charter Documents.<\/p>\n
2.2 Company Capital Structure.<\/p>\n
(a) The authorized capital stock of the Company consists of:
\n(i) 100,000,000 shares of Company Common Stock, of which 52,676,876 shares had
\nbeen issued and were <\/p>\n
13<\/p>\n
outstanding as of the date hereof; and (ii) 4,000,000 shares of preferred stock,
\npar value $0.001 per share, of which (A) no shares are outstanding as of the
\ndate of this Agreement and (B) 350,000 shares of which have been designated as
\nSeries E-3 Preferred Stock and 250,000 shares of which have been designated as
\nSeries F Junior Participating Preferred Stock. As of the date hereof, an
\naggregate of $5.0 million principal amount of convertible promissory notes are
\noutstanding, which are convertible into shares of Company Common Stock based on
\nthe market price of the Company Common Stock. All of the outstanding shares of
\ncapital stock of the Company have been duly authorized and validly issued, and
\nare fully paid and nonassessable. As of the date of this Agreement, there are no
\nshares of Company Common Stock held in treasury by the Company. Upon
\nconsummation of the Merger, (A) the shares of Parent Common Stock issued in
\nexchange for any shares of Company Common Stock that are subject to a Contract
\npursuant to which the Company has the right to repurchase, redeem or otherwise
\nreacquire any shares of Company Common Stock will, without any further act of
\nParent, the Company or any other person, become subject to the restrictions,
\nconditions and other provisions contained in such Contract, and (B) Parent will
\nautomatically succeed to and become entitled to exercise the Company’s rights
\nand remedies under any such Contract.<\/p>\n
(b) As of the date of this Agreement: (i) 10,967,436 shares of
\nCompany Common Stock are subject to issuance pursuant to outstanding options to
\npurchase Company Common Stock under the Company Stock Option Plans(excluding
\noptions granted pursuant to Section 5.9(d) hereof) for an aggregate exercise
\nprice of $224,746,618; and (ii) 680,665 shares of Company Common Stock are
\nreserved for future issuance under the Company Purchase Plan. (Stock options
\ngranted by the Company pursuant to the Company Stock Option Plans are referred
\nto in this Agreement as “COMPANY OPTIONS”). Part 2.2(b) of the Company Schedules
\nsets forth the following information with respect to each Company Option
\noutstanding as of the date of this Agreement: (i) the name of the optionee; (ii)
\nthe particular plan pursuant to which such Company Option was granted; (iii) the
\nnumber of shares of Company Common Stock subject to such Company Option; (iv)
\nthe exercise price of such Company Option; (v) the date on which such Company
\nOption was granted or assumed; (vi) the date on which such Company Option
\nexpires and (vii) whether the exercisability of such option will be accelerated
\nin any way by the transactions contemplated by this Agreement, and indicates the
\nextent of acceleration. The Company has made available to Parent accurate and
\ncomplete copies of all stock option plans pursuant to which the Company has
\ngranted stock options that are currently outstanding, the form of all stock
\noption agreements evidencing such options and the applicable vesting schedule
\nfor each such option. All shares of Company Common Stock subject to issuance as
\naforesaid, upon issuance on the terms and conditions specified in the
\ninstruments pursuant to which they are issuable, would be duly authorized,
\nvalidly issued, fully paid and nonassessable. Except as set forth in Part
\n2.2(b)(i) of the Company Schedules, there are no commitments or agreements of
\nany character to which the Company is bound obligating the Company to accelerate
\nthe vesting of any Company Option as a result of the Merger.<\/p>\n
(c) All outstanding shares of Company Common Stock, all
\noutstanding Company Options, and all outstanding shares of capital stock of each
\nsubsidiary of the Company have been <\/p>\n
14<\/p>\n
issued and granted in compliance with (i) all applicable securities laws and, to
\nthe knowledge of the Company, all other applicable Legal Requirements (as
\ndefined below) and (ii) all material requirements set forth in applicable
\nContracts. For the purposes of this Agreement, “LEGAL REQUIREMENTS” means any
\nfederal, state, local, municipal, foreign or other law, statute, constitution,
\nprinciple of common law, resolution, ordinance, code, edict, decree, rule,
\nregulation, ruling or requirement issued, enacted, adopted, promulgated,
\nimplemented or otherwise put into effect by or under the authority of any
\nGovernmental Entity (as defined below).<\/p>\n
2.3 Obligations With Respect to Capital Stock. Except as set forth in
\nPart 2.3 of the Company Schedules, there are no equity securities, partnership
\ninterests or similar ownership interests of any class of any Company equity
\nsecurity, or any securities exchangeable or convertible into or exercisable for
\nsuch equity securities, partnership interests or similar ownership interests,
\nissued, reserved for issuance or outstanding. Except for securities the Company
\nowns free and clear of all material claims and Encumbrances, directly or
\nindirectly through one or more subsidiaries, and except for shares of capital
\nstock or other similar ownership interests of certain subsidiaries of the
\nCompany that are owned by certain nominee equity holders as required by the
\napplicable law of the jurisdiction of organization of such subsidiaries (which
\nshares or other interests do not materially affect the Company’s control of such
\nsubsidiaries), as of the date of this Agreement, there are no equity securities,
\npartnership interests or similar ownership interests of any class of equity
\nsecurity of any subsidiary of the Company, or any security exchangeable or
\nconvertible into or exercisable for such equity securities, partnership
\ninterests or similar ownership interests, issued, reserved for issuance or
\noutstanding. For the purposes of this Agreement “ENCUMBRANCES” means any lien,
\npledge, hypothecation, charge, mortgage, security interest, encumbrance, claim,
\ninfringement, interference, option, right of first refusal, preemptive right,
\ncommunity property interest or restriction of any nature (including any
\nrestriction on the voting of any security, any restriction on the transfer of
\nany security or other asset, any restriction on the receipt of any income
\nderived from any asset, any restriction on the use of any asset and any
\nrestriction on the possession, exercise or transfer of any other attribute of
\nownership of any asset) but does not include liens imposed by law in respect of
\nobligations not yet due which are owed in respect of taxes or which otherwise
\nare owed to carriers, warehousepersons or laborers. Except as set forth in Part
\n2.3 of the Company Schedules or as set forth in Section 2.2 hereof and except
\nfor the Stock Option Agreement, there are no subscriptions, options, warrants,
\nequity securities, partnership interests or similar ownership interests, calls,
\nrights (including preemptive rights), commitments or agreements of any character
\nto which the Company or any of its subsidiaries is a party or by which it is
\nbound obligating the Company or any of its subsidiaries to issue, deliver or
\nsell, or cause to be issued, delivered or sold, or repurchase, redeem or
\notherwise acquire, or cause the repurchase, redemption or acquisition of, any
\nshares of capital stock, partnership interests or similar ownership interests of
\nthe Company or any of its subsidiaries or obligating the Company or any of its
\nsubsidiaries to grant, extend, accelerate the vesting of or enter into any such
\nsubscription, option, warrant, equity security, call, right, commitment or
\nagreement. As of the date of this Agreement, except as contemplated by this
\nAgreement and except for the Company Rights Plan, there are no registration
\nrights and there is, except for the Company Voting Agreement, no voting trust,
\nproxy, rights plan, antitakeover plan or other agreement or understanding to
\nwhich the Company is a party or by which it is bound with respect to any equity
\nsecurity of any class of the Company or with respect to any equity security,
\npartnership interest or
\n 15
\nsimilar ownership interest of any class of any of its subsidiaries. Stockholders
\nof the Company will not be entitled to dissenters’ or appraisal rights under
\napplicable state law in connection with the Merger.<\/p>\n
2.4 Authority; Non-Contravention.<\/p>\n
(a) The Company has all requisite corporate power and
\nauthority to enter into this Agreement and the Stock Option Agreement and to
\nconsummate the transactions contemplated hereby and thereby. The execution and
\ndelivery of this Agreement and the Stock Option Agreement and the consummation
\nof the transactions contemplated hereby and thereby have been duly authorized by
\nall necessary corporate action on the part of the Company, subject only to the
\napproval and adoption of this Agreement and the approval of the Merger by the
\nCompany’s stockholders and the filing of the Certificate of Merger pursuant to
\nDelaware Law. A vote of the holders of a majority of the outstanding shares of
\nthe Company Common Stock is sufficient for the Company’s stockholders to approve
\nand adopt this Agreement and approve the Merger. This Agreement and the Stock
\nOption Agreement have each been duly executed and delivered by the Company and,
\nassuming due execution and delivery by Parent and Merger Sub, constitute valid
\nand binding obligations of the Company, enforceable against the Company in
\naccordance with their terms, except as enforceability may be limited by
\nbankruptcy and other similar laws and general principles of equity. The
\nexecution and delivery of this Agreement and the Stock Option Agreement by the
\nCompany do not, and the performance of this Agreement and the Stock Option
\nAgreement by the Company will not, (i) conflict with or violate the Company
\nCharter Documents, (ii) subject to obtaining the approval and adoption of this
\nAgreement and the approval of the Merger by the Company’s stockholders as
\ncontemplated in Section 5.2 and compliance with the requirements set forth in
\nSection 2.4(b) below, conflict with or violate any law, rule, regulation, order,
\njudgment or decree applicable to the Company or any of its subsidiaries or by
\nwhich the Company or any of its subsidiaries or any of their respective
\nproperties is bound or affected, or (iii) result in any material breach of or
\nconstitute a material default (or an event that with notice or lapse of time or
\nboth would become a material default) under, or impair the Company’s rights or
\nalter the rights or obligations of any third party under, or give to others any
\nrights of termination, amendment, acceleration or cancellation of, or result in
\nthe creation of a material Encumbrance on any of the material properties or
\nassets of the Company or any of its subsidiaries pursuant to, any material note,
\nbond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise, concession, or other instrument or obligation to which the Company or
\nany of its subsidiaries is a party or by which the Company or any of its
\nsubsidiaries or its or any of their respective assets are bound or affected. The
\nterms of this Agreement, including without limitation, the provisions of Article
\nI and Section 5.9 hereof, do not conflict with or violate the Company Charter
\nDocuments or conflict with or violate or impair the Company’s rights or alter
\nthe rights (other than changes in the securities subject thereto from shares of
\nCompany Capital Stock to shares of Parent Common Stock and corresponding
\nappropriate adjustments to per share conversion or exercise prices thereunder in
\naccordance with the terms of this Agreement) or obligations of any third party
\nunder any instrument or agreement to which the Company is a party or by which it
\nis bound relating to the issuance of any securities of the Company, <\/p>\n
16<\/p>\n
including without limitation, any options, warrants or Company Preferred Stock,
\nand, subject to obtaining the approval and adoption of this Agreement and the
\napproval of the Merger by the Company’s stockholders as aforesaid, the
\neffectuation of the transactions contemplated by Article I and Section 5.9
\nhereof do not require the approval or consent of any holder of securities of the
\nCompany. As of the date hereof, each share of Company Preferred Stock is
\nconvertible into one share of Company Common Stock. Part 2.4(b) of the Company
\nSchedules lists all consents, waivers and approvals under any of the Company’s
\nor any of its subsidiaries’ agreements, contracts, licenses or leases required
\nto be obtained in connection with the consummation of the transactions
\ncontemplated hereby, which, if individually or in the aggregate not obtained,
\nwould result in a material loss of benefits to the Company, Parent or the
\nSurviving Corporation as a result of the Merger.<\/p>\n
(b) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with any court, administrative agency or
\ncommission or other governmental authority or instrumentality, foreign or
\ndomestic (“GOVERNMENTAL ENTITY”), is required to be obtained or made by the
\nCompany in connection with the execution and delivery of this Agreement and the
\nStock Option Agreement or the consummation of the Merger, except for (i) the
\nfiling of the Certificate of Merger with the Secretary of State of the State of
\nDelaware and appropriate documents with the relevant authorities of other states
\nin which the Company is qualified to do business, (ii) the filing of the
\nProspectus\/Proxy Statement (as defined in Section 2.18) and a Schedule 13D with
\nregard to the Parent Voting Agreements with the Securities and Exchange
\nCommission (“SEC”) in accordance with the Securities Exchange Act of 1934, as
\namended (the “EXCHANGE ACT”) and the effectiveness of the Registration Statement
\n(as defined in Section 2.18), (iii) such consents, approvals, orders,
\nauthorizations, registrations, declarations and filings as may be required under
\napplicable federal, foreign and state securities (or related) laws and the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nACT”), and the securities or antitrust laws of any foreign country, and (iv)
\nsuch other consents, authorizations, filings, approvals and registrations which
\nif not obtained or made would not be material to the Company or Parent or have a
\nmaterial adverse effect on the ability of the parties hereto to consummate the
\nMerger.<\/p>\n
2.5 SEC Filings; Company Financial Statements.<\/p>\n
(a) The Company has filed all forms, reports and documents
\nrequired to be filed by the Company with the SEC since January 1, 1997 and has
\nmade available to Parent such forms, reports and documents in the form filed
\nwith the SEC. All such required forms, reports and documents (including those
\nthat the Company may file subsequent to the date hereof), as amended, are
\nreferred to herein as the “COMPANY SEC REPORTS.” As of their respective dates,
\nthe Company SEC Reports (i) were prepared in accordance and complied in all
\nmaterial respects with the requirements of the Securities Act of 1933, as
\namended (the “SECURITIES ACT”), or the Exchange Act, as the case may be, and the
\nrules and regulations of the SEC thereunder applicable to such Company SEC
\nReports and (ii) did not at the time they were filed contain any untrue
\nstatement of a material fact or omit to state a material fact required to be
\nstated therein or necessary in order to make the statements therein, in the
\nlight of the circumstances under which they were made, not misleading,<\/p>\n
17<\/p>\n
except to the extent corrected prior to the date hereof by a subsequently filed
\nCompany SEC Report. None of the Company’s subsidiaries is required to file any
\nforms, reports or other documents with the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including,
\nin each case, any related notes thereto) contained in the Company SEC Reports
\n(the “COMPANY FINANCIALS”), including each Company SEC Report filed after the
\ndate hereof until the Closing, (i) complied as to form in all material respects
\nwith the published rules and regulations of the SEC with respect thereto, (ii)
\nwas prepared in accordance with United States generally accepted accounting
\nprinciples (“GAAP”) applied on a consistent basis throughout the periods
\ninvolved (except as may be indicated in the notes thereto or, in the case of
\nunaudited interim financial statements, as may be permitted by the SEC on Form
\n10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
\npresented in all material respects the consolidated financial position of the
\nCompany and its consolidated subsidiaries as at the respective dates thereof and
\nthe consolidated results of the Company’s operations and cash flows for the
\nperiods indicated, except that the unaudited interim financial statements may
\nnot contain footnotes and were or are subject to normal and recurring year-end
\nadjustments. The balance sheet of the Company contained in the Company SEC
\nReports as of September 30, 1998 is hereinafter referred to as the “COMPANY
\nBALANCE SHEET.” Except as disclosed in the Company Financials, since the date of
\nthe Company Balance Sheet neither the Company nor any of its subsidiaries has
\nany liabilities required under GAAP to be set forth on a consolidated balance
\nsheet (absolute, accrued, contingent or otherwise) which are, individually or in
\nthe aggregate, material to the business, results of operations or financial
\ncondition of the Company and its subsidiaries taken as a whole, except for
\nliabilities incurred since the date of the Company Balance Sheet in the ordinary
\ncourse of business consistent with past practices and liabilities incurred
\npursuant to this Agreement.<\/p>\n
(c) the Company has heretofore furnished to Parent a complete
\nand correct copy of any amendments or modifications, which have not yet been
\nfiled with the SEC but which are required to be filed, to agreements, documents
\nor other instruments which previously had been filed by the Company with the SEC
\npursuant to the Securities Act or the Exchange Act.<\/p>\n
2.6 Absence of Certain Changes or Events. Since the date of the
\nCompany Balance Sheet there has not been: (i) any Material Adverse Effect on the
\nCompany, (ii) any declaration, setting aside or payment of any dividend on, or
\nother distribution (whether in cash, stock or property) in respect of, any of
\nthe Company’s or any of its subsidiaries’ capital stock, or any purchase,
\nredemption or other acquisition by the Company or any of its subsidiaries of any
\nof the Company’s capital stock or any other securities of the Company or its
\nsubsidiaries or any options, warrants, calls or rights to acquire any such
\nshares or other securities except for repurchases from employees following their
\ntermination pursuant to the terms of their pre-existing stock option or purchase
\nagreements, (iii) any split, combination or reclassification of any of the
\nCompany’s or any of its subsidiaries’ capital stock, (iv) any granting by the
\nCompany or any of its subsidiaries of any increase in compensation or fringe
\nbenefits, except for normal increases of cash compensation in the ordinary
\ncourse of business <\/p>\n
18<\/p>\n
consistent with past practice, or any payment by the Company or any of its
\nsubsidiaries of any bonus, except for bonuses made in the ordinary course of
\nbusiness consistent with past practice, or any granting by the Company or any of
\nits subsidiaries of any increase in severance or termination pay or any entry by
\nthe Company or any of its subsidiaries into any currently effective employment,
\nseverance, termination or indemnification agreement or any agreement the
\nbenefits of which are contingent or the terms of which are materially altered
\nupon the occurrence of a transaction involving the Company of the nature
\ncontemplated hereby, (v) entry by the Company or any of its subsidiaries into
\nany licensing or other agreement with regard to the acquisition or disposition
\nof any material Intellectual Property (as defined in Section 2.9) other than
\nlicenses, distribution agreements, advertising agreements, sponsorship
\nagreements or merchant program agreements entered into in the ordinary course of
\nbusiness consistent with past practice (collectively, “ORDINARY COURSE
\nAGREEMENTS”), (vi) any amendment or consent with respect to any licensing
\nagreement filed or required to be filed by the Company with the SEC, (vii) any
\nmaterial change by the Company in its accounting methods, principles or
\npractices, except as required by concurrent changes in GAAP, or (viii) any
\nmaterial revaluation by the Company of any of its assets, including, without
\nlimitation, writing down the value of capitalized inventory or writing off notes
\nor accounts receivable other than in the ordinary course of business.<\/p>\n
2.7 Taxes.<\/p>\n
(a) Definition of Taxes. For the purposes of this Agreement,
\n“TAX” or “TAXES” refers to any and all federal, state, local and foreign taxes,
\nassessments and other governmental charges, duties, impositions and liabilities
\nrelating to taxes, including taxes based upon or measured by gross receipts,
\nincome, profits, sales, use and occupation, and value added, ad valorem,
\ntransfer, franchise, withholding, payroll, recapture, employment, excise and
\nproperty taxes, together with all interest, penalties and additions imposed with
\nrespect to such amounts and any obligations under any agreements or arrangements
\nwith any other person with respect to such amounts and including any liability
\nfor taxes of a predecessor entity.<\/p>\n
(b) Tax Returns and Audits.<\/p>\n
(i) The Company and each of its subsidiaries have
\ntimely filed all federal, state, local and foreign returns, estimates,
\ninformation statements and reports (“RETURNS”) relating to Taxes required to be
\nfiled by the Company and each of its subsidiaries with any Tax authority, except
\nsuch Returns which are not material to the Company. The Company and each of its
\nsubsidiaries have paid all Taxes shown to be due on such Returns.<\/p>\n
(ii) The Company and each of its subsidiaries as of
\nthe Effective Time will have withheld with respect to its employees all federal
\nand state income taxes, Taxes pursuant to the Federal Insurance Contribution Act
\n(“FICA”), Taxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other
\nTaxes required to be withheld, except such Taxes which are not material to the
\nCompany.<\/p>\n
19<\/p>\n
(iii) Neither the Company nor any of its subsidiaries
\nhas been delinquent in the payment of any material Tax nor is there any material
\nTax deficiency outstanding, proposed or assessed against the Company or any of
\nits subsidiaries, nor has the Company or any of its subsidiaries executed any
\nunexpired waiver of any statute of limitations on or extending the period for
\nthe assessment or collection of any Tax.<\/p>\n
(iv) No audit or other examination of any Return of
\nthe Company or any of its subsidiaries by any Tax authority is presently in
\nprogress, nor has the Company or any of its subsidiaries been notified of any
\nrequest for such an audit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by
\nthe Company or any of its subsidiaries has been proposed in writing formally or
\ninformally by any Tax authority to the Company or any of its subsidiaries or any
\nrepresentative thereof.<\/p>\n
(vi) Neither the Company nor any of its subsidiaries
\nhas any liability for any material unpaid Taxes which has not been accrued for
\nor reserved on the Company Balance Sheet in accordance with GAAP, whether
\nasserted or unasserted, contingent or otherwise, which is material to the
\nCompany, other than any liability for unpaid Taxes that may have accrued since
\nthe date of the Company Balance Sheet in connection with the operation of the
\nbusiness of the Company and its subsidiaries in the ordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or
\narrangement to which the Company or any of its subsidiaries is a party as of the
\ndate of this Agreement, including but not limited to the provisions of this
\nAgreement, covering any employee or former employee of the Company or any of its
\nsubsidiaries that, individually or collectively, would reasonably be expected to
\ngive rise to the payment of any amount that would not be deductible pursuant to
\nSections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan
\nor arrangement to which the Company is a party or by which it is bound to
\ncompensate any individual for excise taxes paid pursuant to Section 4999 of the
\nCode.<\/p>\n
(viii) Neither the Company nor any of its
\nsubsidiaries has filed any consent agreement under Section 341(f) of the Code or
\nagreed to have Section 341(f)(2) of the Code apply to any disposition of a
\nsubsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the
\nCompany or any of its subsidiaries.<\/p>\n
(ix) Neither the Company nor any of its subsidiaries
\nis party to or has any obligation under any tax-sharing, tax indemnity or tax
\nallocation agreement or arrangement.<\/p>\n
(x) None of the Company’s or its subsidiaries’ assets
\nare tax exempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
20<\/p>\n
2.8 Title to Properties; Absence of Liens and Encumbrances.<\/p>\n
(a) Part 2.8(a) of the Company Schedules lists the real
\nproperty interests owned by the Company and its subsidiaries as of the date of
\nthis Agreement. Part 2.8(a)(i) of the Company Schedules lists all real property
\nleases to which the Company or any of its subsidiaries is a party as of the date
\nof this Agreement and each amendment thereto that is in effect as of the date of
\nthis Agreement that provide for annual payments in excess of $250,000. All such
\ncurrent leases are in full force and effect, are valid and effective in
\naccordance with their respective terms, and there is not, under any of such
\nleases, any existing default or event of default (or event which with notice or
\nlapse of time, or both, would constitute a default) that would give rise to a
\nmaterial claim. Other than the leaseholds created under the real property leases
\nidentified in Part 2.8(a)(i) of the Company Schedules, the Company and its
\nsubsidiaries own no interest in real property.<\/p>\n
(b) The Company and each of its subsidiaries has good and
\nvalid title to, or, in the case of leased properties and assets, valid leasehold
\ninterests in, all of its tangible properties and assets, real, personal and
\nmixed, used or held for use in its business, free and clear of any liens,
\npledges, charges, claims, security interests or other encumbrances of any sort
\nexcept for liens imposed by law in respect of obligations not yet due which are
\nowed in respect of taxes or which otherwise are owed to carriers,
\nwarehousepersons or laborers (“LIENS”), except as reflected in the Company
\nFinancials and except for such Liens or other imperfections of title and
\nencumbrances, if any, which are not material in character, amount or extent, and
\nwhich do not materially detract from the value, or materially interfere with the
\npresent use, of the property subject thereto or affected thereby.<\/p>\n
2.9 Intellectual Property. For the purposes of this Agreement, the
\nfollowing terms have the following definitions:<\/p>\n
“INTELLECTUAL PROPERTY” shall mean any or all of the following
\n and all rights in, arising out of, or associated therewith:
\n (i) all United States, international and foreign patents and
\n applications therefor and all reissues, divisions, renewals,
\n extensions, provisionals, continuations and
\n continuations-in-part thereof; (ii) all inventions (whether
\n patentable or not), invention disclosures, improvements, trade
\n secrets, proprietary information, know how, technology,
\n technical data and customer lists, and all documentation
\n relating to any of the foregoing; (iii) all copyrights,
\n copyrights registrations and applications therefor, and all
\n other rights corresponding thereto throughout the world; (iv)
\n all industrial designs and any registrations and applications
\n therefor throughout the world; (v) all trade names, logos,
\n URLs, common law trademarks and service marks, trademark and
\n service mark registrations and applications therefor
\n throughout the world (collectively, “TRADEMARKS”); (vi) all
\n databases and data collections and all rights therein
\n throughout the world, including User Data (as defined below);
\n (vii) all moral and economic rights of authors and inventors,
\n however denominated, throughout the world, and (viii) any
\n similar or equivalent rights to any of the foregoing anywhere
\n in the world.<\/p>\n
21<\/p>\n
“COMPANY INTELLECTUAL PROPERTY” shall mean any Intellectual
\n Property that is owned by, or exclusively licensed to, the
\n Company or any of its subsidiaries.<\/p>\n
“REGISTERED INTELLECTUAL PROPERTY” means all United States,
\n international and foreign: (i) patents and patent applications
\n (including provisional applications); (ii) registered
\n trademarks, applications to register trademarks, intent-to-use
\n applications, or other registrations or applications related
\n to trademarks; (iii) registered copyrights and applications
\n for copyright registration; and (iv) any other Intellectual
\n Property that is the subject of an application, certificate,
\n filing, registration or other document issued, filed with, or
\n recorded by any state, government or other public legal
\n authority.<\/p>\n
“COMPANY REGISTERED INTELLECTUAL PROPERTY” means all of the
\n Registered Intellectual Property owned by, or filed in the
\n name of, the Company or any of its subsidiaries.<\/p>\n
“USER DATA” means known, assumed or inferred information or
\n attributes about a user or subscriber.<\/p>\n
(a) No material Company Intellectual Property or product or
\nservice of the Company is subject to any proceeding or outstanding decree,
\norder, judgment, agreement, or stipulation restricting in any manner the use,
\ntransfer, or licensing thereof by the Company, or which may affect the validity,
\nuse or enforceability of such Company Intellectual Property, except for
\nrestrictions on User Data included in published privacy policies of Company or
\nany of its subsidiaries.<\/p>\n
(b) Each material item of Company Registered Intellectual
\nProperty is valid and subsisting, all necessary registration, maintenance and
\nrenewal fees currently due in connection with such Registered Intellectual
\nProperty have been made and all necessary documents, recordations and
\ncertificates in connection with such Registered Intellectual Property have been
\nfiled with the relevant patent, copyright, trademark or other authorities in the
\nUnited States or foreign jurisdictions, as the case may be, for the purposes of
\nmaintaining such Registered Intellectual Property.<\/p>\n
(c) The Company or one of its subsidiaries owns and has good
\nand exclusive title to, or has joint ownership or license (sufficient for the
\nconduct of its business as currently conducted) to, each material item of
\nCompany Intellectual Property free and clear of any material lien or encumbrance
\n(excluding licenses and related restrictions); and the Company is the exclusive
\nowner of all material Trademarks used in connection with the operation or
\nconduct of the business of the Company, including the sale of any products or
\nthe provision of any services by the Company.<\/p>\n
(d) The Company or one of its subsidiaries owns exclusively,
\nand has good title to, all material copyrighted works that are Company products
\nor which the Company or any of its subsidiaries otherwise expressly purports to
\nown.<\/p>\n
22<\/p>\n
(e) To the extent that any material Intellectual Property has
\nbeen developed or created by a third party for the Company or any of its
\nsubsidiaries, the Company or one of its subsidiaries has a written agreement
\nwith such third party with respect thereto and the Company or such subsidiary
\nthereby either (i) has obtained ownership of, and is the exclusive owner of, or
\n(ii) has obtained a license (sufficient for the conduct of its business as
\ncurrently conducted) to all such third party’s Intellectual Property in such
\nwork, material or invention by operation of law or by valid assignment or
\nlicense, to the fullest extent it is legally possible to do so.<\/p>\n
(f) Neither the Company nor any of its subsidiaries has
\ntransferred ownership of, or granted any exclusive license with respect to, any
\nIntellectual Property that is or was material to the Company Intellectual
\nProperty, to any third party.<\/p>\n
(g) The Company Schedules list all material contracts,
\nlicenses and agreements to which the Company or any of its subsidiaries is a
\nparty (i) with respect to Company Intellectual Property licensed or transferred
\nto any third party (other than Ordinary Course Agreements); or (ii) pursuant to
\nwhich a third party has licensed or transferred any material Intellectual
\nProperty to the Company or any of its subsidiaries.<\/p>\n
(h) To the knowledge of the Company, all material contracts,
\nlicenses and agreements relating to the Company Intellectual Property are in
\nfull force and effect. The consummation of the transactions contemplated by this
\nAgreement will neither violate nor result in the breach, modification,
\ncancellation, termination, or suspension of such contracts, licenses and
\nagreements. The Company and each of its subsidiaries is in material compliance
\nwith, and has not materially breached any term of any such contracts, licenses
\nand agreements and, to the knowledge of the Company, all other parties to such
\ncontracts, licenses and agreements are in compliance with, and have not
\nmaterially breached any term of, such contracts, licenses and agreements.
\nFollowing the Closing Date, the Surviving Corporation will be permitted to
\nexercise all of the Company’s rights under such contracts, licenses and
\nagreements to the same extent the Company would have been able to had the
\ntransactions contemplated by this Agreement not occurred and without the payment
\nof any additional amounts or consideration other than ongoing fees, royalties or
\npayments which the Company would otherwise be required to pay.<\/p>\n
(i) The operation of the business of the Company as such
\nbusiness currently is conducted, including the Company’s design, development,
\nmarketing and sale of the products or services of the Company (including with
\nrespect to products currently under development) has not, does not and will not
\ninfringe or misappropriate the Intellectual Property of any third party or
\nconstitute unfair competition or trade practices under the laws of any
\njurisdiction, except with respect to the use, licensing and sale of User Data,
\nwhich use, licensing or sale, to the knowledge of the Company, will not violate
\nthe Intellectual Property rights or any United States privacy or similar United
\nStates right of any third party or constitute unfair competition or trade
\npractices under the laws of any jurisdiction.<\/p>\n
23<\/p>\n
(j) The Company has not received notice from any third party
\nthat the operation of the business of the Company or any act, product or service
\nof the Company, infringes or misappropriates the Intellectual Property of any
\nthird party or constitutes unfair competition or trade practices under the laws
\nof any jurisdiction.<\/p>\n
(k) To the knowledge of the Company, no person has or is
\ninfringing or misappropriating any material Company Intellectual Property.<\/p>\n
(l) The Company has taken reasonable steps to protect the
\nCompany’s rights in the Company’s confidential information and trade secrets
\nthat it wishes to protect or any trade secrets or confidential information of
\nthird parties provided to the Company, and, without limiting the foregoing, the
\nCompany has and enforces a policy requiring each employee and contractor to
\nexecute a proprietary information\/confidentiality agreement substantially in the
\nform provided to Parent and all current and former employees and contractors of
\nthe Company and its subsidiaries have executed such an agreement, except where
\nthe failure to do so is not reasonably expected to be material to the Company.<\/p>\n
2.10 Compliance; Permits; Restrictions.<\/p>\n
(a) Neither the Company nor any of its subsidiaries is, in any
\nmaterial respect, in conflict with, or in default or in violation of (i) to the
\nknowledge of the Company, any law, rule, regulation, order, judgment or decree
\napplicable to the Company or any of its subsidiaries or by which the Company or
\nany of its subsidiaries or any of their respective businesses or properties is,
\nor the Company believes is reasonably likely to be, bound or affected, or (ii)
\nany material note, bond, mortgage, indenture, contract, agreement, lease,
\nlicense, permit, franchise or other instrument or obligation to which the
\nCompany or any of its subsidiaries is a party or by which the Company or any of
\nits subsidiaries or its or any of their respective properties is bound or
\naffected, except for conflicts, violations and defaults that (individually or in
\nthe aggregate) would not cause the Company to lose any material benefit or incur
\nany material liability. No investigation or review by any Governmental Entity is
\npending or, to the Company’s knowledge, has been threatened in a writing
\ndelivered to the Company, against the Company or any of its subsidiaries, nor,
\nto the Company’s knowledge, has any Governmental Entity indicated an intention
\nto conduct an investigation of the Company or any of its subsidiaries. There is
\nno material agreement, judgment, injunction, order or decree binding upon the
\nCompany or any of its subsidiaries which has or could reasonably be expected to
\nhave the effect of prohibiting or materially impairing any business practice of
\nthe Company or any of its subsidiaries, any acquisition of material property by
\nthe Company or any of its subsidiaries or the conduct of business by the Company
\nas currently conducted.<\/p>\n
(b) The Company and its subsidiaries hold, to the extent
\nlegally required, all permits, licenses, variances, exemptions, orders and
\napprovals from Governmental Entities that are material to and required for the
\noperation of the business of the Company as currently conducted (collectively,
\nthe “COMPANY PERMITS”). The Company and its subsidiaries are in compliance in
\nall <\/p>\n
24<\/p>\n
material respects with the terms of the Company Permits, except where the
\nfailure to be in compliance with the terms of the Company Permits would not be
\nmaterial to the Company.<\/p>\n
2.11 Litigation. Except as disclosed in Part 2.11 of the Company
\nSchedules, there are no claims, suits, actions or proceedings pending or, to the
\nknowledge of the Company, threatened against the Company or any of its
\nsubsidiaries, before any court, governmental department, commission, agency,
\ninstrumentality or authority, or any arbitrator that seeks to restrain or enjoin
\nthe consummation of the transactions contemplated by this Agreement or which
\ncould reasonably be expected, either singularly or in the aggregate with all
\nsuch claims, actions or proceedings, to be material to the Company. No
\nGovernmental Entity has at any time challenged or questioned in a writing
\ndelivered to the Company the legal right of the Company to design, manufacture,
\noffer or sell any of its products or services in the present manner or style
\nthereof. As of the date hereof, to the knowledge of the Company, no event has
\noccurred, and no claim, dispute or other condition or circumstance exists, that
\nwill, or that would reasonably be expected to, cause or provide a bona fide
\nbasis for a director or executive officer of the Company to seek indemnification
\nfrom the Company.<\/p>\n
Except as disclosed in Part 2.11 of the Company Schedules, the Company
\nhas never been subject to an audit, compliance review, investigation or like
\ncontract review by the GSA office of the Inspector General or other Governmental
\nEntity or agent thereof in connection with any government contract (a
\n“GOVERNMENT AUDIT”), to the Company’s knowledge no Government Audit is
\nthreatened or reasonably anticipated, and in the event of such Government Audit,
\nto the knowledge of the Company no basis exists for a finding of noncompliance
\nwith any material provision of any government contract or a refund of any
\namounts paid or owed by any Governmental Entity pursuant to such government
\ncontract. For each item disclosed in the Company Schedule pursuant to this
\nSection 2.11 a true and complete copy of all correspondence and documentation
\nwith respect thereto has been provided to Parent.<\/p>\n
2.12 Brokers’ and Finders’ Fees. Except for fees payable to BancBoston
\nRobertson Stephens Inc. pursuant to an engagement letter dated January 8, 1999,
\nthe material terms of which (other than certain terms relating to fees payable
\nupon the consummation of possible transactions between the Company and parties
\nother than Parent, none of which fees are due or payable) are set forth on Part
\n2.12 of the Company Schedules, the Company has not incurred, nor will it incur,
\ndirectly or indirectly, any liability for brokerage or finders’ fees or agents’
\ncommissions or any similar charges in connection with this Agreement or any
\ntransaction contemplated hereby.<\/p>\n
2.13 Transactions with Affiliates. Except as set forth in the Company
\nSEC Reports, since the date of the Company’s last proxy statement filed with the
\nSEC, no event has occurred as of the date of this Agreement that would be
\nrequired to be reported by the Company pursuant to Item 404 of Regulation S-K
\npromulgated by the SEC. Part 2.13 of the Company Schedules identifies each
\nperson who is an “affiliate” (as that term is used in Rule 145 promulgated under
\nthe Securities Act) of the Company as of the date of this Agreement.<\/p>\n
25<\/p>\n
2.14 Employee Benefit Plans.<\/p>\n
(a) Definitions. With the exception of the definition of
\n“Affiliate” set forth in Section 2.14(a)(i) below (which definition shall apply
\nonly to this Section 2.14), for purposes of this Agreement, the following terms
\nshall have the meanings set forth below:<\/p>\n
(i) “AFFILIATE” shall mean any other person or entity
\nunder common control with the Company within the meaning of Section 414(b), (c),
\n(m) or (o) of the Code and the regulations issued thereunder;<\/p>\n
(ii) “COMPANY EMPLOYEE PLAN” shall mean any plan,
\nprogram, policy, practice, contract, agreement or other arrangement providing
\nfor compensation, severance, termination pay, performance awards, stock or
\nstock-related awards, fringe benefits or other employee benefits or remuneration
\nof any kind, whether written or unwritten or otherwise, funded or unfunded,
\nincluding without limitation, each “employee benefit plan,” within the meaning
\nof Section 3(3) of ERISA which is or has been maintained, contributed to, or
\nrequired to be contributed to, by the Company or any Affiliate for the benefit
\nof any Employee<\/p>\n
(iii) “COBRA” shall mean the Consolidated Omnibus
\nBudget Reconciliation Act of 1985, as amended<\/p>\n
(iv) “DOL” shall mean the Department of Labor;<\/p>\n
(v) “EMPLOYEE” shall mean any current, former, or
\nretired employee, officer, or director of the Company or any Affiliate;<\/p>\n
(vi) “EMPLOYEE AGREEMENT” shall mean each management,
\nemployment, severance, consulting, relocation, repatriation, expatriation,
\nvisas, work permit or similar agreement or contract currently in force between
\nthe Company or any Affiliate and any Employee or consultant which pertains to a
\nservice provider who has or will receive payments from the Company in excess of
\n$150,000 in any calendar year;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement
\nIncome Security Act of 1974, as amended;<\/p>\n
(viii) “FMLA” shall mean the Family Medical Leave Act
\nof 1993, as amended;<\/p>\n
(ix) “INTERNATIONAL EMPLOYEE PLAN” shall mean each
\nCompany Employee Plan that has been adopted or maintained by the Company,
\nwhether informally or formally, for the benefit of Employees outside the United
\nStates;<\/p>\n
26<\/p>\n
(x) “IRS” shall mean the Internal Revenue Service;<\/p>\n
(xi) “MULTIEMPLOYER PLAN” shall mean any “Pension
\nPlan” (as defined below) which is a “multiemployer plan,” as defined in Section
\n3(37) of ERISA;<\/p>\n
(xii) “PBGC” shall mean the Pension Benefit Guaranty
\nCorporation; and<\/p>\n
(xiii) “PENSION PLAN” shall mean each Company
\nEmployee Plan which is an “employee pension benefit plan,” within the meaning of
\nSection 3(2) of ERISA.<\/p>\n
(b) Schedule. Part 2.14(b) of the Company Schedules contain an
\naccurate and complete list of each Company Employee Plan and each Employee
\nAgreement. The Company does not have any plan or commitment to establish any new
\nCompany Employee Plan, to modify any Company Employee Plan or Employee Agreement
\n(except to the extent required by law or to conform any such Company Employee
\nPlan or Employee Agreement to the requirements of any applicable law, in each
\ncase as previously disclosed to Parent in writing, or as required by this
\nAgreement), or to enter into any Company Employee Plan or Employee Agreement,
\nnor does it have any intention or commitment to do any of the foregoing.<\/p>\n
(c) Documents. The Company has provided, or will provide as
\nsoon as practicable following the execution of this Agreement, to Parent: (i)
\ncorrect and complete copies of all documents embodying to each Company Employee
\nPlan and each Employee Agreement including all amendments thereto; (ii) the most
\nrecent annual actuarial valuations, if any, prepared for each Company Employee
\nPlan; (iii) the three (3) most recent annual reports (Form Series 5500 and all
\nschedules and financial statements attached thereto), if any, required under
\nERISA or the Code in connection with each Company Employee Plan or related
\ntrust; (iv) if the Company Employee Plan is funded, the most recent annual and
\nperiodic accounting of Company Employee Plan assets; (v) the most recent summary
\nplan description together with the summary of material modifications thereto, if
\nany, required under ERISA with respect to each Company Employee Plan; (vi) all
\nIRS determination, opinion, notification and advisory letters, and rulings
\nrelating to Company Employee Plans and copies of all applications and
\ncorrespondence to or from the IRS or the DOL with respect to an examination,
\naudit or submission under the Voluntary Compliance Resolution Program or Closing
\nAgreement Program of any Company Employee Plan; (vii) all material written
\nagreements and contracts relating to each Company Employee Plan, including, but
\nnot limited to, administrative service agreements, group annuity contracts and
\ngroup insurance contracts; (viii) all communications material to any Employee or
\nEmployees relating to any Company Employee Plan and any proposed Company
\nEmployee Plans, in each case, relating to any amendments, terminations,
\nestablishments, increases or decreases in benefits, acceleration of payments or
\nvesting schedules or other events any of which would result in any material
\nliability to the Company; and (ix) all registration statements and current
\nprospectuses prepared in connection with each Company Employee Plan.<\/p>\n
(d) Employee Plan Compliance. (i) The Company has performed in
\nall material <\/p>\n
27<\/p>\n
respects all obligations required to be performed by it under, is not in default
\nor violation of, and has no knowledge of any default or violation by any other
\nparty to each Company Employee Plan, and each Company Employee Plan has been
\nestablished and maintained in all material respects in accordance with its terms
\nand in compliance with all applicable laws, statutes, orders, rules and
\nregulations, including but not limited to ERISA or the Code; (ii) each Company
\nEmployee Plan intended to qualify under Section 401(a) of the Code and each
\ntrust intended to qualify under Section 501(a) of the Code is set forth on a
\nstandardized prototype plan or has either received a favorable determination
\nletter from the IRS with respect to each such Plan as to its qualified status
\nunder the Code, including all amendments to the Code effected by the Tax Reform
\nAct of 1986 and subsequent legislation, or has remaining a period of time under
\napplicable Treasury regulations or IRS pronouncements in which to apply for such
\na determination letter and make any amendments necessary to obtain a favorable
\ndetermination; (iii) no “prohibited transaction,” within the meaning of Section
\n4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
\nunder Section 408 of ERISA, has occurred with respect to any Company Employee
\nPlan; (iv) there are no actions, suits or claims pending, or, to the knowledge
\nof the Company, threatened or reasonably anticipated (other than routine claims
\nfor benefits) against any Company Employee Plan or against the assets of any
\nCompany Employee Plan; (v) each Company Employee Plan can be amended, terminated
\nor otherwise discontinued after the Effective Time in accordance with its terms,
\nwithout liability to Parent, the Company or any of its Affiliates (other than
\nordinary administration expenses typically incurred in a termination event);
\n(vi) there are no audits, inquiries or proceedings pending or, to the knowledge
\nof the Company or any Affiliates, threatened by the IRS or DOL with respect to
\nany Company Employee Plan; and (vii) neither the Company nor any Affiliate is
\nsubject to any penalty or tax with respect to any Company Employee Plan under
\nSection 402(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
(e) Pension Plans. The Company does not now, nor has it ever,
\nmaintained, established, sponsored, participated in, or contributed to, any
\nPension Plan which is subject to Title IV of ERISA or Section 412 of the Code.<\/p>\n
(f) Multiemployer Plans. At no time has the Company
\ncontributed to or been requested to contribute to any Multiemployer Plan.<\/p>\n
(g) No Post-Employment Obligations. No Company Employee Plan
\nprovides, or has any liability to provide, retiree life insurance, retiree
\nhealth or other retiree employee welfare benefits to any person for any reason,
\nexcept as may be required by COBRA or other applicable statute, and the Company
\nhas never represented, promised or contracted (whether in oral or written form)
\nto any Employee (either individually or to Employees as a group) or any other
\nperson that such Employee(s) or other person would be provided with retiree life
\ninsurance, retiree health or other retiree employee welfare benefit, except to
\nthe extent required by statute.<\/p>\n
(h) Neither the Company nor any Affiliate has, prior to the
\nEffective Time, and in any material respect, violated the health care
\ncontinuation requirements of COBRA, the requirements of FMLA or any similar
\nprovisions of state law applicable to its Employees.<\/p>\n
28<\/p>\n
(i) Effect of Transaction The execution of this Agreement and
\nthe consummation of the transactions contemplated hereby will not (either alone
\nor upon the occurrence of any additional or subsequent events) constitute an
\nevent under any Company Employee Plan, Employee Agreement, trust or loan that
\nwill or may result in any payment (whether of severance pay or other wise),
\nacceleration, forgiveness of indebtedness, vesting, distribution, increase in
\nbenefits or obligation to fund benefits with respect to any Employee.<\/p>\n
(j) Employment Matters. The Company and each of its
\nsubsidiaries: (i) is in compliance in all material respects with all applicable
\nforeign, federal, state and local laws, rules and regulations respecting
\nemployment, employment practices, terms and conditions of employment and wages
\nand hours, in each case, with respect to Employees; (ii) has withheld all
\namounts required by law or by agreement to be withheld from the wages, salaries
\nand other payments to Employees; (iii) to the Company’s knowledge, is not liable
\nfor any arrears of wages or any taxes or any penalty for failure to comply with
\nany of the foregoing; and (iv) is not liable for any material payment to any
\ntrust or other fund or to any governmental or administrative authority, with
\nrespect to unemployment compensation benefits, social security or other benefits
\nor obligations for Employees (other than routine payments to be made in the
\nnormal course of business and consistent with past practice). There are no
\npending or threatened claims or actions against the Company or any of its
\nsubsidiaries under any worker’s compensation policy or long-term disability
\npolicy. To the Company’s knowledge, no employee of the Company has violated in
\nany material respect any employment contract, nondisclosure agreement or
\nnoncompetition agreement by which such employee is bound due to such employee
\nbeing employed by the Company and disclosing to the Company or using trade
\nsecrets or proprietary information of any other person or entity.<\/p>\n
(k) Labor. No general work stoppage or labor strike against
\nthe Company is pending or, to the knowledge of the Company, threatened. To the
\nknowledge of the Company, there are no activities or proceedings of any labor
\nunion to organize any Employees. There are no material actions, suits, claims,
\nlabor disputes or grievances pending, or, to the knowledge of the Company,
\nthreatened or reasonably anticipated relating to any labor, safety or
\ndiscrimination matters involving any Employee, including, without limitation,
\ncharges of unfair labor practices or discrimination complaints, which, if
\nadversely determined, would, individually or in the aggregate, result in any
\nmaterial liability to the Company. To the knowledge of the Company, neither the
\nCompany nor any of its subsidiaries has engaged in any unfair labor practices
\nwithin the meaning of the National Labor Relations Act. The Company and its
\nsubsidiaries are not presently, nor have any of them been in the past, a party
\nto, or bound by, any collective bargaining agreement or union contract with
\nrespect to Employees and no collective bargaining agreement is being negotiated
\nby the Company or any of its subsidiaries.<\/p>\n
(l) International Employee Plan. Each International Employee
\nPlan has been established, maintained and administered in material compliance
\nwith its terms and conditions and with the requirements prescribed by all
\nmaterial statutory or regulatory laws that are applicable to<\/p>\n
29<\/p>\n
such International Employee Plan. Furthermore, no International Employee Plan
\nhas unfunded liabilities, that as of the Effective Time, will not be offset by
\ninsurance or fully accrued. Except as required by law, no condition exists that
\nwould prevent the Company or Parent from terminating or amending any
\nInternational Employee Plan at any time for any reason.<\/p>\n
2.15 Environmental Matters.<\/p>\n
(a) Hazardous Material. Except as would not result in material
\nliability to the Company, no underground storage tanks and no amount of any
\nsubstance that has been designated by any Governmental Entity or by applicable
\nfederal, state or local law to be radioactive, toxic, hazardous or otherwise a
\ndanger to health or the environment, including, without limitation, PCBs,
\nasbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
\nsubstances pursuant to the Comprehensive Environmental Response, Compensation,
\nand Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
\nto the United States Resource Conservation and Recovery Act of 1976, as amended,
\nand the regulations promulgated pursuant to said laws, but excluding office and
\njanitorial supplies, (a “HAZARDOUS MATERIAL”) are present, as a result of the
\nactions of the Company or any of its subsidiaries or any affiliate of the
\nCompany, or, to the Company’s knowledge, as a result of any actions of any third
\nparty or otherwise, in, on or under any property, including the land and the
\nimprovements, ground water and surface water thereof, that the Company or any of
\nits subsidiaries has at any time owned, operated, occupied or leased.<\/p>\n
(b) Hazardous Materials Activities. Except as would not result
\nin a material liability to the Company (in any individual case or in the
\naggregate) (i) neither the Company nor any of its subsidiaries has transported,
\nstored, used, manufactured, disposed of, released or exposed its employees or
\nothers to Hazardous Materials in violation of any law in effect on or before the
\nClosing Date, and (ii) neither the Company nor any of its subsidiaries has
\ndisposed of, transported, sold, used, released, exposed its employees or others
\nto or manufactured any product containing a Hazardous Material (collectively
\n“HAZARDOUS MATERIALS ACTIVITIES”) in violation of any rule, regulation, treaty
\nor statute promulgated by any Governmental Entity in effect prior to or as of
\nthe date hereof to prohibit, regulate or control Hazardous Materials or any
\nHazardous Material Activity.<\/p>\n
(c) Permits. The Company and its subsidiaries currently hold
\nall environmental approvals, permits, licenses, clearances and consents (the
\n“COMPANY ENVIRONMENTAL PERMITS”) necessary for the conduct of the Company’s and
\nits subsidiaries’ Hazardous Material Activities and other businesses of the
\nCompany and its subsidiaries as such activities and businesses are currently
\nbeing conducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding,
\nrevocation proceeding, amendment procedure, writ or injunction is pending, and
\nto the Company’s knowledge, no action, proceeding, revocation proceeding,
\namendment procedure, writ or injunction has been threatened by any Governmental
\nEntity against the Company or any of its subsidiaries in a writing delivered to
\nthe Company concerning any Company Environmental Permit, Hazardous Material or
\nany Hazardous <\/p>\n
30<\/p>\n
Materials Activity of the Company or any of its subsidiaries.<\/p>\n
2.16 Agreements, Contracts and Commitments. Except as otherwise set
\nforth in Part 2.16 of the Company Schedules, as of the date hereof neither the
\nCompany nor any of its subsidiaries is a party to or is bound by:<\/p>\n
(a) any employment or consulting agreement, contract or
\ncommitment with any officer or director or higher level employee or member of
\nthe Company’s Board of Directors, other than those that are terminable by the
\nCompany or any of its subsidiaries on no more than thirty days notice without
\nliability or financial obligation, except to the extent general principles of
\nwrongful termination law may limit the Company’s or any of its subsidiaries’
\nability to terminate employees at will;<\/p>\n
(b) any agreement, contract or commitment containing any
\ncovenant materially limiting the right of the Company or any of its subsidiaries
\nto engage in any line of business or to compete with any person or granting any
\nexclusive distribution rights;<\/p>\n
(c) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition by the Company or any of its
\nsubsidiaries after the date of this Agreement of a material amount of assets not
\nin the ordinary course of business or pursuant to which the Company or any of
\nits subsidiaries has any material ownership interest in any corporation,
\npartnership, joint venture or other business enterprise other than the Company’s
\nsubsidiaries that is material to the Company’s business as currently conducted;<\/p>\n
(d) any agreement, contract or commitment currently in force
\nto provide source code to any third party for any product or technology that is
\nmaterial to the Company and its subsidiaries taken as a whole; or<\/p>\n
Neither the Company nor any of its subsidiaries, nor to the Company’s
\nknowledge any other party to a Company Contract (as defined below), is in
\nbreach, violation or default under, and neither the Company nor any of its
\nsubsidiaries has received written notice that it has breached, violated or
\ndefaulted under, any of the material terms or conditions of any of the
\nagreements, contracts or commitments to which the Company or any of its
\nsubsidiaries is a party or by which it is bound that are required to be
\ndisclosed in the Company Schedules pursuant to clauses (a) through (d) above or
\npursuant to Section 2.9 hereof or are required to be filed with any Company SEC
\nReport (any such agreement, contract or commitment, a “COMPANY CONTRACT”) in
\nsuch a manner as would permit any other party to cancel or terminate any such
\nCompany Contract, or would permit any other party to seek material damages or
\nother remedies (for any or all of such breaches, violations or defaults, in the
\naggregate).<\/p>\n
2.17 Change of Control Payments. Part 2.17 of the Company Schedules
\nsets forth each plan or agreement pursuant to which any amounts may become
\npayable (whether currently or in the future) to current or former employees and
\ndirectors of the Company or any of its subsidiaries as a <\/p>\n
31<\/p>\n
result of or in connection with the Merger.<\/p>\n
2.18 Disclosure. None of the information supplied or to be supplied by
\nor on behalf of the Company for inclusion or incorporation by reference in the
\nregistration statement on Form S-4 (or similar successor form) to be filed with
\nthe SEC by Parent in connection with the issuance of Parent Common Stock in the
\nMerger (including amendments or supplements thereto) (the “REGISTRATION
\nSTATEMENT”) will, at the time the Registration Statement becomes effective under
\nthe Securities Act, contain any untrue statement of a material fact or omit to
\nstate any material fact required to be stated therein or necessary in order to
\nmake the statements therein, in the light of the circumstances under which they
\nare made, not misleading, except that no representation or warranty is made by
\nthe Company with respect to statements made or incorporated by reference therein
\nabout Parent or Merger Sub supplied by Parent for inclusion or incorporation by
\nreference in the Registration Statement.. None of the information supplied or to
\nbe supplied by or on behalf of the Company for inclusion or incorporation by
\nreference in the Prospectus\/Proxy Statement to be filed with the SEC as part of
\nthe Registration Statement (the “PROSPECTUS\/PROXY STATEMENT”), will, at the time
\nthe Prospectus\/Proxy Statement is mailed to the stockholders of the Company or
\nParent, at the time of the Company Stockholders’ Meeting or Parent Stockholders’
\nMeeting or as of the Effective Time, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in the light of the
\ncircumstances under which they are made, not misleading. The Prospectus\/Proxy
\nStatement will comply as to form in all material respects with the provisions of
\nthe Exchange Act and the rules and regulations promulgated by the SEC
\nthereunder, except that no representation or warranty is made by the Company
\nwith respect to statements made or incorporated by reference therein about
\nParent or Merger Sub supplied by Parent for inclusion or incorporation by
\nreference in the Prospectus\/Proxy Statement.<\/p>\n
2.19 Board Approval. The Board of Directors of the Company (including
\nany required committee or subgroup of the Board of Directors of the Company)
\nhas, as of the date of this Agreement, determined (i) that the Merger is fair
\nto, and in the best interests of the Company and its stockholders, and (ii) to
\nrecommend that the stockholders of the Company approve and adopt this Agreement
\nand approve the Merger.<\/p>\n
2.20 Fairness Opinion. The Company’s Board of Directors has received a
\nwritten opinion from BankBoston Robertson Stephens Inc., dated as of the date
\nhereof, to the effect that as of the date hereof, the Exchange Ratio is fair to
\nthe Company’s stockholders from a financial point of view and has delivered to
\nParent a copy of such opinion.<\/p>\n
2.21 Section 203 of the Delaware General Corporation Law and Company
\nRights Plan Not Applicable. The Board of Directors of Company has taken all
\nactions so that (a) the restrictions contained in Section 203 of the Delaware
\nGeneral Corporation Law applicable to a “business combination” (as defined in
\nsuch Section 203) will not apply to the execution, delivery or performance of
\nthis Agreement or the Stock Option Agreement or to the consummation of the
\nMerger or the other transactions contemplated by this Agreement and the Stock
\nOption Agreement<\/p>\n
32<\/p>\n
and (b) the execution, delivery and performance of this Agreement and the Option
\nAgreement and the consummation of the Merger will not cause any change, effect
\nor result under the Company Rights Plan which is adverse to the interests of
\nParent. Without limiting the generality of the foregoing, if necessary to
\naccomplish the foregoing, the Company Rights Plan has been amended to (i) render
\nthe Company Rights Plan inapplicable to the Merger and the other transactions
\ncontemplated by this Agreement, (ii) ensure that (x) none of Parent or its
\nsubsidiaries is an Acquiring Person (as defined in the Company Rights Plan)
\npursuant to the Company Rights Plan by virtue of the execution of this Agreement
\nor the Stock Option Agreement or the consummation of the Merger or the other
\ntransactions contemplated hereby and thereby and (y) a Distribution Date or
\nShares Acquisition Date (as such terms are defined in the Company Rights Plan)
\ndoes not occur by reason of the execution of this Agreement or the Stock Option
\nAgreement, the consummation of the Merger, or the consummation of the
\ntransactions contemplated hereby or thereby, and such amendment may not be
\nfurther amended by Company without the prior consent of Parent in its sole
\ndiscretion.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
As of the date hereof and as of the Closing Date, Parent and Merger Sub
\nrepresent and warrant to the Company, subject to the exceptions specifically
\ndisclosed in writing in the disclosure letter supplied by Parent and Merger Sub
\nto the Company dated as of the date hereof and certified by a duly authorized
\nofficer of Parent (the “PARENT SCHEDULES”), as follows:<\/p>\n
3.1 Organization of Parent.<\/p>\n
(a) Except as set forth on Part 3.1(a) of the Parent
\nSchedules, Parent does not own any capital stock of, or any equity interest of
\nany nature in, any other entity, except for passive investments in equity
\ninterests of public companies as part of the cash management program of Parent.
\nNeither Parent nor any of its subsidiaries has agreed or is obligated to make,
\nor is bound by any contract under which contract it may become obligated to
\nmake, any future investment in or capital contribution to any other entity.
\nNeither Parent nor any of its subsidiaries has, at any time, been a general
\npartner of any general partnership, limited partnership or other entity.<\/p>\n
(b) Parent and each of its subsidiaries (including Merger Sub)
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of the jurisdiction of its incorporation and has all necessary corporate
\npower and authority: (i) to conduct its business in the manner in which its
\nbusiness is currently being conducted; (ii) to own and use its assets in the
\nmanner in which its assets are currently owned and used; and (iii) to perform
\nits obligations under all Contracts by which it is bound.<\/p>\n
(c) Parent and each of its subsidiaries (including Merger Sub)
\nis qualified to do business as a foreign corporation, and is in good standing,
\nunder the laws of all jurisdictions where <\/p>\n
33<\/p>\n
the nature of its business requires such qualification and where the failure to
\nso qualify would have a Material Adverse Effect on Parent.<\/p>\n
(d) Parent has delivered or made available to the Company a
\ntrue and correct copy of the Certificate of Incorporation (including any
\nCertificate of Designations) and Bylaws of Parent and similar governing
\ninstruments of each of its subsidiaries (including Merger Sub), each as amended
\nto date (collectively, the “PARENT CHARTER DOCUMENTS”), and each such instrument
\nis in full force and effect. Parent is not in violation of any of the provisions
\nof the Parent Charter Documents. None of Parent’s subsidiaries (including Merger
\nSub) is in violation of any of the provisions of its Articles or Certificate of
\nIncorporation or Bylaws or other similar governing instruments, except for such
\nviolations as are not material to Parent and its subsidiaries taken as a whole.<\/p>\n
(e) Parent has delivered or made available to the Company all
\nproposed or considered amendments to the Parent Charter Documents.<\/p>\n
3.2 Parent Capital Structure.<\/p>\n
(a) The authorized capital stock of Parent consists of: (i)
\n230,277,660 shares of Common Stock, $0.01 par value, of which 200,000,000 shares
\nhave been designated Series A Common Stock, 15,400,000 shares have been
\ndesignated Series B Common Stock and 14,877,660 shares have been designated
\nSeries K Common Stock, of which 105,329,712 shares of Series A Common Stock,
\n15,400,000 shares of Series B Common Stock and 2,609,707 shares of Series K
\nCommon Stock had been issued and were outstanding as of January 15, 1999; and
\n(ii) 9,650,000 shares of Preferred Stock, $0.01 par value per share, of which no
\nshares have been issued and are outstanding as of the date of this Agreement.
\nAll of the outstanding shares of Parent’s Common Stock and Preferred Stock have
\nbeen duly authorized and validly issued, and are fully paid and nonassessable.<\/p>\n
(b) As of January 15, 1999: (i) 9,035,138 shares of Parent
\nCommon Stock were subject to issuance pursuant to outstanding options to
\npurchase Common Stock under Parent’s stock option plans; and (ii) 768,055 shares
\nof Parent Common Stock were reserved for future issuance under Parent’s 1997
\nEmployee Stock Purchase Plan (the “PARENT PURCHASE PLAN”). (Stock options
\ngranted by Parent pursuant to Parent’s stock option plans are referred to in
\nthis Agreement as “PARENT OPTIONS”). Parent has made available to the Company
\naccurate and complete copies of all stock option plans pursuant to which Parent
\nhas granted stock options that are currently outstanding and the form of all
\nstock option agreements evidencing such options. All shares of Parent Common
\nStock subject to issuance as aforesaid, upon issuance on the terms and
\nconditions specified in the instruments pursuant to which they are issuable,
\nwould be duly authorized, validly issued, fully paid and nonassessable.<\/p>\n
(c) All outstanding shares of Parent Common Stock, all
\noutstanding Parent <\/p>\n
34<\/p>\n
Options, and all outstanding shares of capital stock of each subsidiary of
\nParent have been issued and granted in compliance with (i) all applicable
\nsecurities laws and, to Parent’s knowledge, all other applicable Legal
\nRequirements and (ii) all material requirements set forth in applicable
\nContracts.<\/p>\n
(d) The authorized capital stock of Merger Sub consists of
\n1000 shares of Common Stock, $0.001 par value, of which 1000 shares have been
\nissued and are outstanding and held by Parent as of the date of this Agreement.
\nAll of the outstanding shares of Merger Sub’s Common Stock have been duly
\nauthorized and validly issued, and are fully paid and nonassessable. There are
\nno equity securities, partnership interests or similar ownership interests of
\nany class of Merger Sub equity security, or any securities exchangeable or
\nconvertible into or exercisable for such equity securities, partnership
\ninterests or similar ownership interests, issued, reserved for issuance or
\noutstanding.<\/p>\n
3.3 Obligations With Respect to Capital Stock. Except as set forth in
\nPart 3.3 of the Parent Schedules, there are no equity securities, partnership
\ninterests or similar ownership interests of any class of Parent equity security,
\nor any securities exchangeable or convertible into or exercisable for such
\nequity securities, partnership interests or similar ownership interests, issued,
\nreserved for issuance or outstanding. Except for securities Parent owns free and
\nclear of all material claims and Encumbrances, directly or indirectly through
\none or more subsidiaries, and except for shares of capital stock or other
\nsimilar ownership interests of certain subsidiaries of Parent that are owned by
\ncertain nominee equity holders as required by the applicable law of the
\njurisdiction of organization of such subsidiaries (which shares or other
\ninterests do not materially affect Parent’s control of such subsidiaries), as of
\nthe date of this Agreement, there are no equity securities, partnership
\ninterests or similar ownership interests of any class of equity security of any
\nsubsidiary of Parent, or any security exchangeable or convertible into or
\nexercisable for such equity securities, partnership interests or similar
\nownership interests, issued, reserved for issuance or outstanding. Except as set
\nforth in Part 3.3 of the Parent Schedules or Section 3.2 above, there are no
\nsubscriptions, options, warrants, equity securities, partnership interests or
\nsimilar ownership interests, calls, rights (including preemptive rights),
\ncommitments or agreements of any character to which Parent or any of its
\nsubsidiaries is a party or by which it is bound obligating Parent or any of its
\nsubsidiaries to issue, deliver or sell, or cause to be issued, delivered or
\nsold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
\nredemption or acquisition of, any shares of capital stock, partnership interests
\nor similar ownership interests of Parent or any of its subsidiaries or
\nobligating Parent or any of its subsidiaries to grant, extend, accelerate the
\nvesting of or enter into any such subscription, option, warrant, equity
\nsecurity, call, right, commitment or agreement. As of the date of this
\nAgreement, except as contemplated by this Agreement, there are no registration
\nrights and, except for the Parent Voting Agreement, there is no voting trust,
\nproxy, rights plan, antitakeover plan or other agreement or understanding to
\nwhich Parent is a party or by which it is bound with respect to any equity
\nsecurity of any class of Parent or with respect to any equity security,
\npartnership interest or similar ownership interest of any class of any of its
\nsubsidiaries. Stockholders of Parent will not be entitled to dissenters’ or
\nappraisal rights under applicable state law in connection with the Merger.<\/p>\n
35<\/p>\n
3.4 Authority; Non-Contravention.<\/p>\n
(a) Parent has all requisite corporate power and authority to
\nenter into this Agreement and to consummate the transactions contemplated
\nhereby. The execution and delivery of this Agreement and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of Parent and Merger Sub (including, in the case of
\nMerger Sub, all shareholder action by Parent as its sole stockholder), subject
\nonly to the approval of the issuance of the shares of Parent Common Stock
\npursuant to the Merger and approval of an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, subject to and upon
\nconsummation of the Merger, and the filing of the Certificate of Merger pursuant
\nto Delaware Law. The vote in favor of such issuance and an amendment to Parent’s
\nCertificate of Incorporation by TCI Internet Holdings, Inc. (“TCI”) is currently
\nsufficient, and, to the extent TCI shall not have breached the Parent Voting
\nAgreement to which it is a party and to the extent such Parent Voting Agreement
\nshall not have terminated by its terms, will be sufficient at the time of the
\nParent Stockholders Meeting, for Parent’s stockholders to approve such issuance
\nand amendment. This Agreement has been duly executed and delivered by Parent and
\nMerger Sub, and assuming due execution and delivery by the Company, constitute a
\nvalid and binding obligation of Parent and Merger Sub, enforceable against
\nParent and Merger Sub in accordance with their respective terms, except as
\nenforceability may be limited by bankruptcy and other similar laws and general
\nprinciples of equity. The execution and delivery of this Agreement by Parent and
\nMerger Sub do not, and the performance of this Agreement by Parent and Merger
\nSub will not, (i) subject to the approval of an amendment to Parent’s
\nCertificate of Incorporation to appropriately increase the authorized number of
\nshares of Parent Common Stock, conflict with the Parent Charter Documents, (ii)
\nsubject to obtaining the approval by Parent’s stockholders of the issuance of
\nthe shares of Parent Common Stock pursuant to the Merger and an amendment to
\nParent’s Certificate of Incorporation to appropriately increase the authorized
\nnumber of shares of Parent Common Stock as contemplated in Section 5.3 and
\ncompliance with the requirements set forth in Section 3.4(b) below, conflict
\nwith or violate any law, rule, regulation, order, judgment or decree applicable
\nto Parent or any of its subsidiaries or by which Parent or any of its
\nsubsidiaries or any of their respective properties are bound or affected, or
\n(iii) result in any material breach of or constitute a material default (or an
\nevent that with notice or lapse of time or both would become a material default)
\nunder, or impair Parent’s rights or alter the rights or obligations of any third
\nparty under, or give to others any rights of termination, amendment,
\nacceleration or cancellation of, or result in the creation of a material
\nEncumbrance on any of the material properties or assets of Parent or any of its
\nsubsidiaries pursuant to, any material note, bond, mortgage, indenture,
\ncontract, agreement, lease, license, permit, franchise, concession, or other
\ninstrument or obligation to which Parent or any of its subsidiaries is a party
\nor by which Parent or any of its subsidiaries or its or any of their respective
\nassets are bound or affected. Merger Sub was formed for the purpose of
\nconsummating the Merger and has no material assets or liabilities. Part 2.4(a)
\nof the Parent Schedules lists all consents, waivers and approvals under any of
\nthe Company’s or any of its subsidiaries’ agreements, contracts, licenses or
\nleases required to be obtained in connection with the consummation of the
\ntransactions contemplated <\/p>\n
36<\/p>\n
hereby, which, if individually or in the aggregate not obtained, would result in
\na material loss of benefits to Parent as a result of the Merger.<\/p>\n
(b) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with any Governmental Entity, is required to
\nbe obtained or made by Parent or Merger Sub in connection with the execution and
\ndelivery of this Agreement or the consummation of the Merger, except for (i) the
\nfiling of the Certificate of Merger with the Secretary of State of the State of
\nDelaware, (ii) the filing of an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, (iii) the filing of the
\nRegistration Statement and the Prospectus\/Proxy Statement and a Schedule 13D
\nwith regard to the Company Voting Agreements and the Stock Option Agreement in
\naccordance with the Securities Act and the Exchange Act, as the case may be, and
\nthe effectiveness of the Registration Statement, (iv) such consents, approvals,
\norders, authorizations, registrations, declarations and filings as may be
\nrequired under applicable federal, foreign and state securities (or related)
\nlaws and the HSR Act, and the securities or antitrust laws of any foreign
\ncountry, and (v) such other consents, authorizations, filings, approvals and
\nregistrations which if not obtained or made would not be material to Parent or
\nhave a material adverse effect on the ability of the parties hereto to
\nconsummate the Merger.<\/p>\n
3.5 SEC Filings; Parent Financial Statements.<\/p>\n
(a) Parent has filed all forms, reports and documents required
\nto be filed by Parent with the SEC since January 1, 1997 and has made available
\nto the Company such forms, reports and documents in the form filed with the SEC.
\nAll such required forms, reports and documents (including those that Parent may
\nfile subsequent to the date hereof), as amended, together with the offering
\nmemorandum dated December 21, 1998 prepared by Parent in connection with
\nParent’s private placement of convertible subordinated debentures due 2018, are
\nreferred to herein as the “PARENT SEC REPORTS”). As of their respective dates,
\nParent SEC Reports (i) were prepared in accordance and complied in all material
\nrespects with the requirements of the Securities Act, or the Exchange Act, as
\nthe case may be, and the rules and regulations of the SEC thereunder applicable
\nto such Parent SEC Reports and (ii) did not at the time they were filed contain
\nany untrue statement of a material fact or omit to state a material fact
\nrequired to be stated therein or necessary in order to make the statements
\ntherein, in the light of the circumstances under which they were made, not
\nmisleading, except to the extent corrected prior to the date hereof by a
\nsubsequently filed Parent SEC Report. None of Parent’s subsidiaries is required
\nto file any forms, reports or other documents with the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including,
\nin each case, any related notes thereto) contained in the Parent SEC Reports
\n(the “PARENT FINANCIALS”), including each Parent SEC Report filed after the date
\nhereof until the Closing, (i) complied as to form in all material respects with
\nthe published rules and regulations of the SEC with respect thereto, (ii) was
\nprepared in accordance with GAAP applied on a consistent basis throughout the
\nperiods involved (except as may be indicated in the notes thereto or, in the
\ncase of unaudited interim financial statements, as may be<\/p>\n
37<\/p>\n
permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange
\nAct) and (iii) fairly presented in all material respects the consolidated
\nfinancial position of Parent and its consolidated subsidiaries as at the
\nrespective dates thereof and the consolidated results of Parent’s operations and
\ncash flows for the periods indicated, except that the unaudited interim
\nfinancial statements may not contain footnotes and were or are subject to normal
\nand recurring year-end adjustments. The balance sheet of Parent contained in
\nParent SEC Report as of September 30, 1998 is hereinafter referred to as (the
\n“PARENT BALANCE SHEET”). Except as disclosed in the Parent Financials, since the
\ndate of the Parent Balance Sheet neither Parent nor any of its subsidiaries has
\nany liabilities required under GAAP to be set forth on a consolidated balance
\nsheet (absolute, accrued, contingent or otherwise) which are, individually or in
\nthe aggregate, material to the business, results of operations or financial
\ncondition of Parent and its subsidiaries taken as a whole, except for
\nliabilities incurred since the date of the Parent Balance Sheet in the ordinary
\ncourse of business consistent with past practices and liabilities incurred
\npursuant to this Agreement.<\/p>\n
(c) Parent has heretofore furnished to Parent a complete and
\ncorrect copy of any amendments or modifications, which have not yet been filed
\nwith the SEC but which are required to be filed, to agreements, documents or
\nother instruments which previously had been filed by Parent with the SEC
\npursuant to the Securities Act or the Exchange Act.<\/p>\n
3.6 Absence of Certain Changes or Events. Since the date of Parent
\nBalance Sheet there has not been: (i) any Material Adverse Effect on Parent,
\n(ii) any declaration, setting aside or payment of any dividend on, or other
\ndistribution (whether in cash, stock or property) in respect of, any of Parent’s
\nor any of its subsidiaries’ capital stock, or any purchase, redemption or other
\nacquisition by Parent or any of its subsidiaries of any of Parent’s capital
\nstock or any other securities of Parent or its subsidiaries or any options,
\nwarrants, calls or rights to acquire any such shares or other securities except
\nfor repurchases from employees following their termination pursuant to the terms
\nof their pre-existing stock option or purchase agreements, (iii) any split,
\ncombination or reclassification of any of Parent’s or any of its subsidiaries’
\ncapital stock, (iv) any granting by Parent or any of its subsidiaries of any
\nincrease in compensation or fringe benefits, except for normal increases of cash
\ncompensation in the ordinary course of business consistent with past practice,
\nor any payment by Parent or any of its subsidiaries of any bonus, except for
\nbonuses made in the ordinary course of business consistent with past practice,
\nor any granting by Parent or any of its subsidiaries of any increase in
\nseverance or termination pay or any entry by Parent or any of its subsidiaries
\ninto any currently effective employment, severance, termination or
\nindemnification agreement or any agreement the benefits of which are contingent
\nor the terms of which are materially altered upon the occurrence of a
\ntransaction involving Parent of the nature contemplated hereby, (v) entry by
\nParent or any of its subsidiaries into any licensing or other agreement with
\nregard to the acquisition or disposition of any material Intellectual Property
\n(as defined in Section 3.9) other than Ordinary Course Agreements, (vi) any
\namendment or consent with respect to any licensing agreement filed or required
\nto be filed by Parent with the SEC, (vii) any material change by Parent in its
\naccounting methods, principles or practices, except as required by concurrent
\nchanges in GAAP, or (viii) any material revaluation by Parent of any of its
\nassets, including, without limitation, writing down the<\/p>\n
38<\/p>\n
value of capitalized inventory or writing off notes or accounts receivable other
\nthan in the ordinary course of business.<\/p>\n
3.7 Taxes.<\/p>\n
(a) Tax Returns and Audits.<\/p>\n
(i) Parent and each of its subsidiaries have timely
\nfiled all Returns relating to Taxes required to be filed by Parent and each of
\nits subsidiaries with any Tax authority, except such Returns which are not
\nmaterial to Parent, and have paid all Taxes shown to be due on such Returns.<\/p>\n
(ii) Parent and each of its subsidiaries as of the
\nEffective Time will have withheld with respect to its employees all federal and
\nstate income taxes, Taxes pursuant to FICA, Taxes pursuant to the FUTA and other
\nTaxes required to be withheld, except such Taxes which are not material to
\nParent.<\/p>\n
(iii) Neither Parent nor any of its subsidiaries has
\nbeen delinquent in the payment of any material Tax nor is there any material Tax
\ndeficiency outstanding, proposed or assessed against Parent or any of its
\nsubsidiaries, nor has Parent or any of its subsidiaries executed any unexpired
\nwaiver of any statute of limitations on or extending the period for the
\nassessment or collection of any Tax.<\/p>\n
(iv) No audit or other examination of any Return of
\nParent or any of its subsidiaries by any Tax authority is presently in progress,
\nnor has Parent or any of its subsidiaries been notified of any request for such
\nan audit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by
\nParent or any of its subsidiaries has been proposed in writing formally or
\ninformally by any Tax authority to Parent or any of its subsidiaries or any
\nrepresentative thereof.<\/p>\n
(vi) Neither Parent nor any of its subsidiaries has
\nany liability for any material unpaid Taxes which has not been accrued for or
\nreserved on Parent Balance Sheet in accordance with GAAP, whether asserted or
\nunasserted, contingent or otherwise, which is material to Parent, other than any
\nliability for unpaid Taxes that may have accrued since the date of Parent
\nBalance Sheet in connection with the operation of the business of Parent and its
\nsubsidiaries in the ordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or
\narrangement to which Parent or any of its subsidiaries is a party as of the date
\nof this Agreement, including but not limited to the provisions of this
\nAgreement, covering any employee or former employee of Parent or any of its
\nsubsidiaries that, individually or collectively, would reasonably be expected to
\ngive rise to the payment of any amount that would not be deductible pursuant to
\nSections 280G, 404 or 162(m) of <\/p>\n
39<\/p>\n
the Code.<\/p>\n
(viii) Neither Parent nor any of its subsidiaries has
\nfiled any consent agreement under Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as defined in Section 341(f)(4) of the Code) owned by Parent or any of its
\nsubsidiaries.<\/p>\n
(ix) Neither Parent nor any of its subsidiaries is
\nparty to or has any obligation under any tax-sharing, tax indemnity or tax
\nallocation agreement or arrangement.<\/p>\n
(x) None of Parent’s or its subsidiaries’ assets are
\ntax exempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
3.8 Title to Properties; Absence of Liens and Encumbrances.<\/p>\n
(a) All of Parent’s and its subsidiaries’ current leases with
\nrespect to real property are in full force and effect, are valid and effective
\nin accordance with their respective terms, and there is not, under any of such
\nleases, any existing default or event of default (or event which with notice or
\nlapse of time, or both, would constitute a default) that would give rise to a
\nmaterial claim. Other than the leaseholds created under real property leases,
\nParent and its subsidiaries own no interest in real property.<\/p>\n
(b) Parent or its subsidiaries have good and valid title to,
\nor, in the case of leased properties and assets, valid leasehold interests in,
\nall of its tangible properties and assets, real, personal and mixed, used or
\nheld for use in its business, free and clear of any Liens, except as reflected
\nin Parent Financials and except for such Liens or other imperfections of title
\nand encumbrances, if any, which are not material in character, amount or extent,
\nand which do not materially detract from the value, or materially interfere with
\nthe present use, of the property subject thereto or affected thereby.<\/p>\n
3.9 Intellectual Property. For the purposes of this Agreement, the
\nfollowing terms have the following definitions:<\/p>\n
“PARENT INTELLECTUAL PROPERTY” means any Intellectual Property
\n that is owned by, or exclusively licensed to, Parent or any of
\n its subsidiaries.<\/p>\n
“PARENT REGISTERED INTELLECTUAL PROPERTY” means all of the
\n Registered Intellectual Property owned by, or filed in the
\n name of, Parent or any of its subsidiaries.<\/p>\n
(a) No material Parent Intellectual Property or product or
\nservice of Parent is subject to any proceeding or outstanding decree, order,
\njudgment, agreement, or stipulation restricting in any manner the use, transfer,
\nor licensing thereof by Parent, or which may affect the<\/p>\n
40<\/p>\n
validity, use or enforceability of such Parent Intellectual Property, except for
\nrestrictions on User Data included in published privacy policies of Parent or
\nany of its subsidiaries.<\/p>\n
(b) Each material item of Parent Registered Intellectual
\nProperty is valid and subsisting, all necessary registration, maintenance and
\nrenewal fees currently due in connection with such Registered Intellectual
\nProperty have been made and all necessary documents, recordations and
\ncertificates in connection with such Registered Intellectual Property have been
\nfiled with the relevant patent, copyright, trademark or other authorities in the
\nUnited States or foreign jurisdictions, as the case may be, for the purposes of
\nmaintaining such Registered Intellectual Property.<\/p>\n
(c) Parent or one of its subsidiaries owns and has good and
\nexclusive title to, or has joint ownership or license (sufficient for the
\nconduct of its business as currently conducted) to, each material item of Parent
\nIntellectual Property free and clear of any material lien or encumbrance
\n(excluding licenses and related restrictions); and Parent is the exclusive owner
\nof all material Trademarks of Parent used in connection with the operation or
\nconduct of the business of Parent, including the sale of any products or the
\nprovision of any services by Parent.<\/p>\n
(d) Part 3.9(d) of the Parent Schedules contains a complete
\nand accurate list as of the date hereof of all material Contracts with respect
\nto distribution arrangements between Parent and cable companies in North
\nAmerica.<\/p>\n
(e) Part 3.9(e) of the Parent Schedules contains a complete
\nand accurate list as of the date hereof of all material Contracts with respect
\nto Parent’s network.<\/p>\n
(f) Part 3.9(f) of the Parent Schedules contains a complete
\nand accurate list as of the date hereof of all Contracts currently in force
\nrelating to the disposition or acquisition by Parent or any of its subsidiaries
\nafter the date of this Agreement of a material amount of assets not in the
\nordinary course of business.<\/p>\n
(g) To the extent that any material Intellectual Property has
\nbeen developed or created by a third party for Parent or any of its
\nsubsidiaries, Parent or such subsidiary has a written agreement with such third
\nparty with respect thereto and Parent or such subsidiary thereby either (i) has
\nobtained ownership of, and is the exclusive owner of, or (ii) has obtained a
\nlicense (sufficient for the conduct of its business as currently conducted) to
\nall such third party’s Intellectual Property in such work, material or invention
\nby operation of law or by valid assignment or license, to the fullest extent it
\nis legally possible to do so.<\/p>\n
(h) The operation of the business of Parent as such business
\ncurrently is conducted, including Parent’s design, development, marketing and
\nsale of the products or services of Parent (including with respect to products
\ncurrently under development) has not, does not and will not infringe or
\nmisappropriate the Intellectual Property of any third party or constitute unfair
\ncompetition or trade practices under the laws of any jurisdiction, except with
\nrespect to the use, licensing and sale of User Data, which use licensing or
\nsale, to the knowledge of Parent, will not <\/p>\n
41<\/p>\n
violate the Intellectual Property Rights or any United States privacy or similar
\nUnited States right of any third party or constitute unfair competition or trade
\npractices under the laws of any jurisdiction.<\/p>\n
(i) Parent has not received notice from any third party that
\nthe operation of the business of Parent or any act, product or service of
\nParent, infringes or misappropriates the Intellectual Property of any third
\nparty or constitutes unfair competition or trade practices under the laws of any
\njurisdiction.<\/p>\n
(j) To the knowledge of Parent, no person has or is infringing
\nor misappropriating any material Parent Intellectual Property.<\/p>\n
(k) Parent has taken reasonable steps to protect Parent’s
\nrights in Parent’s confidential information and trade secrets that it wishes to
\nprotect or any trade secrets or confidential information of third parties
\nprovided to Parent, and, without limiting the foregoing, Parent has and enforces
\na policy requiring each employee and contractor to execute a proprietary
\ninformation\/confidentiality agreement substantially in the form provided to the
\nCompany and all current and former employees and contractors of Parent and each
\nof its subsidiaries have executed such an agreement, except where the failure to
\ndo so is not reasonably expected to be material to Parent.<\/p>\n
3.10 Compliance; Permits; Restrictions.<\/p>\n
(a) Neither Parent nor any of its subsidiaries is, in any
\nmaterial respect, in conflict with, or in default or in violation of (i) to the
\nknowledge of Parent, any law, rule, regulation, order, judgment or decree
\napplicable to Parent or any of its subsidiaries or by which Parent or any of its
\nsubsidiaries or any of their respective businesses or properties is, or Parent
\nbelieves is reasonably likely to be bound or affected, or (ii) any material
\nnote, bond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise or other instrument or obligation to which Parent or any of its
\nsubsidiaries is a party or by which Parent or any of its subsidiaries or its or
\nany of their respective properties is bound or affected, except for conflicts,
\nviolations and defaults that (individually or in the aggregate) would not cause
\nParent to lose any material benefit or incur any material liability. No
\ninvestigation or review by any Governmental Entity is pending or, to Parent’s
\nknowledge, has been threatened in a writing delivered to Parent against Parent
\nor any of its subsidiaries, nor, to Parent’s knowledge, has any Governmental
\nEntity indicated an intention to conduct an investigation of Parent or any of
\nits subsidiaries. There is no material agreement, judgment, injunction, order or
\ndecree binding upon Parent or any of its subsidiaries which has or could
\nreasonably be expected to have the effect of prohibiting or materially impairing
\nany business practice of Parent or any of its subsidiaries, any acquisition of
\nmaterial property by Parent or any of its subsidiaries or the conduct of
\nbusiness by Parent as currently conducted.<\/p>\n
(b) Parent and its subsidiaries hold, to the extent legally
\nrequired, all permits, licenses, variances, exemptions, orders and approvals
\nfrom Governmental Entities that are material <\/p>\n
42<\/p>\n
to and required for the operation of the business of Parent as currently
\nconducted (collectively, the “PARENT PERMITS”). Parent and its subsidiaries are
\nin compliance in all material respects with the terms of Parent Permits, except
\nwhere the failure to be in compliance with the terms of Parent Permits would not
\nbe material to Parent.<\/p>\n
3.11 Litigation. Except as disclosed in Part 3.11 of the Parent
\nSchedules, there are no claims, suits, actions or proceedings pending or, to the
\nknowledge of Parent, threatened against Parent or any of its subsidiaries,
\nbefore any court, governmental department, commission, agency, instrumentality
\nor authority, or any arbitrator that seeks to restrain or enjoin the
\nconsummation of the transactions contemplated by this Agreement or which could
\nreasonably be expected, either singularly or in the aggregate with all such
\nclaims, actions or proceedings, to be material to Parent. No Governmental Entity
\nhas at any time challenged or questioned in a writing delivered to Parent the
\nlegal right of Parent to design, manufacture, offer or sell any of its products
\nor services in the present manner or style thereof. As of the date hereof, to
\nthe knowledge of Parent, no event has occurred, and no claim, dispute or other
\ncondition or circumstance exists, that will, or that would reasonably be
\nexpected to, cause or provide a bona fide basis for a director or executive
\nofficer of Parent to seek indemnification from Parent.<\/p>\n
3.12 Brokers’ and Finders’ Fees. Except for fees payable to Merrill
\nLynch, Pierce, Fenner & Smith Incorporated, Parent has not incurred, nor will it
\nincur, directly or indirectly, any liability for brokerage or finders’ fees or
\nagents’ commissions or any similar charges in connection with this Agreement or
\nany transaction contemplated hereby.<\/p>\n
3.13 Environmental Matters.<\/p>\n
(a) Hazardous Material. Except as would not result in material
\nliability to Parent, no Hazardous Materials are present, as a result of the
\nactions of Parent or any of its subsidiaries or any affiliate of Parent, or, to
\nParent’s knowledge, as a result of any actions of any third party or otherwise,
\nin, on or under any property, including the land and the improvements, ground
\nwater and surface water thereof, that Parent or any of its subsidiaries has at
\nany time owned, operated, occupied or leased.<\/p>\n
(b) Hazardous Materials Activities. Except as would not result
\nin a material liability to Parent (in any individual case or in the aggregate)
\n(i) neither Parent nor any of its subsidiaries has transported, stored, used,
\nmanufactured, disposed of, released or exposed its employees or others to
\nHazardous Materials in violation of any law in effect on or before the Closing
\nDate, and (ii) neither Parent nor any of its subsidiaries has disposed of,
\ntransported, sold, used, released, exposed its employees or others to or
\nmanufactured any product containing a Hazardous Material in violation of any
\nrule, regulation, treaty or statute promulgated by any Governmental Entity in
\neffect prior to or as of the date hereof to prohibit, regulate or control
\nHazardous Materials or any Hazardous Material Activity.<\/p>\n
43<\/p>\n
(c) Permits. Parent and its subsidiaries currently hold all
\nenvironmental approvals, permits, licenses, clearances and consents (the “PARENT
\nENVIRONMENTAL PERMITS”) necessary for the conduct of Parent’s and its
\nsubsidiaries’ Hazardous Material Activities and other businesses of Parent and
\nits subsidiaries as such activities and businesses are currently being
\nconducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding,
\nrevocation proceeding, amendment procedure, writ or injunction is pending, and
\nto Parent’s knowledge, no action, proceeding, revocation proceeding, amendment
\nprocedure, writ or injunction has been threatened by any Governmental Entity
\nagainst Parent or any of its subsidiaries in a writing delivered to Parent
\nconcerning any Parent Environmental Permit, Hazardous Material or any Hazardous
\nMaterials Activity of Parent or any of its subsidiaries.<\/p>\n
3.14 Agreements, Contracts and Commitments. Neither Parent nor any of
\nits subsidiaries, nor to Parent’s knowledge any other party to a Parent Contract
\n(as defined below), is in breach, violation or default under, and neither Parent
\nnor any of its subsidiaries has received written notice that it has breached,
\nviolated or defaulted under, any of the material terms or conditions of any of
\nthe Contracts to which Parent or any of its subsidiaries is a party or by which
\nit is bound that are required to be disclosed in the Parent Schedules pursuant
\nto clauses (d) through (f) of Section 3.9 hereof or are required to be filed
\nwith any Parent SEC Report or are material to Parent (each, a “PARENT CONTRACT”)
\nin such a manner as would permit any other party to cancel or terminate any such
\nmaterial Contract of Parent, or would permit any other party to seek material
\ndamages or other remedies (for any or all of such breaches, violations or
\ndefaults, in the aggregate). Parent has made available to the Company for its
\ninspection all material Contracts of Parent.<\/p>\n
3.15 Disclosure. None of the information to be supplied by or on behalf
\nof Parent for inclusion in the Registration Statement will, at the Registration
\nStatement becomes effective under the Securities Act, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in the
\nlight of the circumstances under which they are made, not misleading, except
\nthat no representation or warranty is made by Parent with respect to statements
\nmade or incorporated by reference therein about the Company supplied by the
\nCompany for inclusion or incorporation by reference in the Registration
\nStatement. None of the information to be supplied by or on behalf of Parent for
\ninclusion or incorporation by reference in the Prospectus\/Proxy Statement will,
\nat the time the Prospectus\/Proxy Statement is mailed to the stockholders of the
\nCompany or Parent, at the time of the Company or Parent Stockholders’ Meeting or
\nas of the Effective Time, contain any untrue statement of a material fact or
\nomit to state any material fact required to be stated therein or necessary in
\norder to make the statements therein, in the light of the circumstances under
\nwhich they are made, not misleading. The Registration Statement will comply as
\nto form in all material respects with the provisions of the Securities Act and
\nthe rules and regulations promulgated by the SEC thereunder, except that no
\nrepresentation or warranty is made by Parent with respect to statements made or
\nincorporated by reference therein based on information supplied by the Company
\nfor inclusion or incorporation by reference in the Prospectus\/Proxy Statement,
\nexcept that no representation or warranty is made by <\/p>\n
44<\/p>\n
Parent with respect to statements made or incorporated by reference therein
\nabout the Company supplied by the Company for inclusion or incorporation by
\nreference in the Prospectus\/Proxy Statement.<\/p>\n
3.16 Board Approval. The Board of Directors of Parent (including the
\nSeries B Common Stock directors thereon and 75% (rounded up to the nearest whole
\nnumber of directors) of the total number of Series B Common Stock and, if
\nrequired, Series K Common Stock directors on Parent’s Board of Directors, voting
\nseparately from the other Directors of Parent) has, as of the date of this
\nAgreement approved the issuance of shares of Parent Common Stock in connection
\nwith the Merger and approved an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, subject to and upon
\nconsummation of the Merger.<\/p>\n
3.17 Fairness Opinion. Parent’s Board of Directors has received a
\nwritten opinion from Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as
\nof the date hereof, to the effect that as of the date hereof, the Exchange Ratio
\nis fair to the stockholders of Parent from a financial point of view and has
\ndelivered to the Company a copy of such opinion.<\/p>\n
ARTICLE IV
\n CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
4.1 Conduct of Business by the Company. During the period from the date
\nof this Agreement and continuing until the earlier of the termination of this
\nAgreement pursuant to its terms or the Effective Time, the Company and each of
\nits subsidiaries shall, except to the extent that Parent shall otherwise consent
\nin writing, carry on its business, in all material respects, in the usual,
\nregular and ordinary course, in substantially the same manner as heretofore
\nconducted and contemplated to be conducted and in compliance with all applicable
\nlaws and regulations, pay its debts and taxes when due subject to good faith
\ndisputes over such debts or taxes, pay or perform other material obligations
\nwhen due subject to good faith disputes over such obligations, and use its
\ncommercially reasonable efforts consistent with past practices and policies to
\n(i) preserve intact its present business organization, (ii) keep available the
\nservices of its present executive officers and key employees and (iii) preserve
\nits relationships with customers, suppliers, licensors, licensees, and others
\nwith which it has business dealings.<\/p>\n
In addition, except as permitted by the terms of this Agreement, and
\nexcept as provided in Article 4 of the Company Schedules, without the prior
\nwritten consent of Parent, during the period from the date of this Agreement and
\ncontinuing until the earlier of the termination of this Agreement pursuant to
\nits terms or the Effective Time, the Company shall not do any of the following
\nand shall not permit its subsidiaries to do any of the following:<\/p>\n
(a) Waive any stock repurchase rights, accelerate, amend or
\nchange the period of exercisability of options or restricted stock, or reprice
\noptions granted under any employee, <\/p>\n
45<\/p>\n
consultant, director or other stock plans or authorize cash payments in exchange
\nfor any options granted under any of such plans;<\/p>\n
(b) Grant any severance or termination pay to any officer or
\nemployee except pursuant to written agreements outstanding, or policies
\nexisting, on the date hereof and as previously disclosed in writing or made
\navailable to Parent, or adopt any new severance plan;<\/p>\n
(c) Transfer or license to any person or entity or otherwise
\nextend, amend or modify in any material respect any rights to material Company
\nIntellectual Property, or enter into grants to future patent rights, other than
\nOrdinary Course Agreements and other than published privacy policies in the
\nordinary course of business consistent with standard industry practice or
\nconsistent with applicable law affecting privacy rights;<\/p>\n
(d) Declare, set aside or pay any dividends on or make any
\nother distributions (whether in cash, stock, equity securities or property) in
\nrespect of any capital stock or split, combine or reclassify any capital stock
\nor issue or authorize the issuance of any other securities in respect of, in
\nlieu of or in substitution for any capital stock;<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock of the Company or its subsidiaries,
\nexcept repurchases of unvested shares at cost in connection with the termination
\nof the employment relationship with any employee pursuant to stock option or
\npurchase agreements in effect on the date hereof;<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise
\nencumber, any shares of capital stock or any securities convertible into shares
\nof capital stock, or subscriptions, rights, warrants or options to acquire any
\nshares of capital stock or any securities convertible into shares of capital
\nstock, or enter into other agreements or commitments of any character obligating
\nit to issue any such shares or convertible securities, other than (i) stock
\noptions granted pursuant to Section 5.9(d) hereof, (ii) grants of stock options
\nunder the Company’s 1996 Equity Incentive Plan to newly hired employees,
\nconsistent with prior practice and Parent’s option grant practices, (iii)
\nissuance of shares of the Company Common Stock pursuant to the exercise of stock
\noptions therefor outstanding as of the date of this Agreement or granted
\npursuant to the preceding clauses (i) and (ii) or pursuant to warrants
\noutstanding on the date hereof and disclosed on the Company Schedules or upon
\nthe conversion of convertible debt outstanding on the date hereof and disclosed
\non the Company Schedules, and (iv) issuance of shares of the Company Common
\nStock to participants in the Company Purchase Plan pursuant to the terms
\nthereof;<\/p>\n
(g) Cause, permit or propose any amendments to its Certificate
\nof Incorporation, Bylaws or other charter documents (or similar governing
\ninstruments of any of its subsidiaries);<\/p>\n
(h) Acquire or agree to acquire by merging or consolidating
\nwith, or by purchasing any equity interest in or a portion of the assets of, or
\nby any other manner, any business <\/p>\n
46<\/p>\n
or any corporation, partnership, association or other business organization or
\ndivision thereof, or otherwise acquire or agree to acquire any assets which are
\nmaterial, individually or in the aggregate, to the business of the Company or
\nenter into any material joint ventures, strategic partnerships or alliances (it
\nbeing understood that the Company acquires immaterial businesses without issuing
\nany equity securities (other than the grant of stock options to new hires in the
\nordinary course of business consistent with past practice) and that the Company
\nmay continue to engage in such acquisitions following prior consultation with
\nParent’s Chief Executive Officer, Chief Financial Officer or General Counsel,
\nprovided that the amount of such acquisitions shall not exceed $7,500,000 in any
\nindividual case or $50 million in the aggregate (it being further understood
\nthat no inference shall be drawn herefrom that any acquisition is immaterial by
\nvirtue of its amount being less than $7,500,000));<\/p>\n
(i) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets which are material, individually or in the aggregate, to
\nthe business of the Company, except in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(j) Incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\noptions, warrants, calls or other rights to acquire any debt securities of the
\nCompany, enter into any “keep well” or other agreement to maintain any financial
\nstatement condition or enter into any arrangement having the economic effect of
\nany of the foregoing other than (i) in connection with the financing of ordinary
\ncourse trade payables consistent with past practice, (ii) pursuant to existing
\ncredit facilities or equipment leasing arrangements in the ordinary course of
\nbusiness or (iii) increases of available borrowings under credit facilities on
\ncustomary and commercially reasonable terms, provided that available borrowings
\nunder all credit facilities of the Company shall not be increased to an amount
\ngreater than $20 million in the aggregate prior to the date six months from the
\ndate hereof, or $30 million in the aggregate thereafter, without the prior
\nwritten consent of Parent;<\/p>\n
(k) Adopt or amend any employee benefit plan or employee stock
\npurchase or employee stock option plan, or enter into any employment contract or
\ncollective bargaining agreement (other than offer letters and letter agreements
\nentered into in the ordinary course of business consistent with past practice
\nwith employees who are terminable “at will”), pay any special bonus or special
\nremuneration to any director or employee, or increase the salaries or wage rates
\nor fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants other than in the ordinary course
\nof business, consistent with past practice, or change in any material respect
\nany management policies or procedures;<\/p>\n
(l) Modify, amend or terminate any Company Contract or other
\nmaterial contract or agreement to which the Company or any subsidiary thereof is
\na party or waive, release or assign any material rights or claims thereunder,
\nother than (i) the modification, amendment or termination of Ordinary Course
\nAgreements in the ordinary course of business, consistent with past practice or
\n(ii) immaterial oral modifications or amendments in the ordinary course of
\nbusiness, consistent with past practice;<\/p>\n
47<\/p>\n
(m) Enter into any licensing, distribution, sponsorship,
\nadvertising, merchant program or similar contracts, agreements, or obligations
\nother than Ordinary Course Agreements;<\/p>\n
(n) Materially revalue any of its material assets or, except
\nas required by GAAP or the SEC, make any material change in accounting methods,
\nprinciples or practices;<\/p>\n
(o) take any action (including any action by its Board of
\nDirectors) to amend the terms of the Company Rights Plan or otherwise to (i)
\ncause any change, effect or result thereunder which would, in the absence of
\nsuch action, otherwise occur as a result of any Acquisition Proposal or
\nAcquisition Transaction (as defined below) or (ii) cause the Company’s
\nrepresentation set forth in Section 2.21 hereof to be untrue in any respect; or<\/p>\n
(p) Agree in writing or otherwise to take any of the actions
\ndescribed in (a) through (o) above.<\/p>\n
4.2 Conduct of Business by Parent. During the period from the date of
\nthis Agreement and continuing until the earlier of the termination of this
\nAgreement pursuant to its terms or the Effective Time, Parent shall, except to
\nthe extent that the Company shall otherwise consent in writing, carry on its
\nbusiness, in all material respects, in the usual, regular and ordinary course,
\nin substantially the same manner as heretofore conducted and contemplated to be
\nconducted and in compliance with all applicable laws and regulations, pay its
\ndebts and taxes when due, subject to good faith disputes over such debts or
\ntaxes, pay or perform other material obligations when due subject to good faith
\ndisputes over such obligations, and use its commercially reasonable efforts
\nconsistent with past practices and policies to (i) preserve intact its present
\nbusiness organization, (ii) keep available the services of its present executive
\nofficers and key employees and (iii) preserve its relationships with customers,
\nsuppliers, licensors, licensees, multiple system operators and others with which
\nit has business dealings.<\/p>\n
In addition, except as permitted by the terms of this Agreement and
\nexcept as provided in Article 4 of the Parent Schedules, without the prior
\nwritten consent of the Company (which consent shall not be unreasonably
\nwithheld), during the period from the date of this Agreement and continuing
\nuntil the earlier of the termination of this Agreement pursuant to its terms or
\nthe Effective Time, Parent shall not do any of the following:<\/p>\n
(a) Declare, set aside or pay any dividends on or make any
\nother distributions (whether in cash, stock, equity securities or property) in
\nrespect of any capital stock or split, combine or reclassify any capital stock
\nor issue or authorize the issuance of any other securities in respect of, in
\nlieu of or in substitution for any capital stock;<\/p>\n
(b) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock of Parent or its subsidiaries, except
\nrepurchases of unvested shares at cost in connection with the termination of the
\nemployment relationship with any employee pursuant to stock option or <\/p>\n
48<\/p>\n
repurchase agreements in effect on the date hereof;<\/p>\n
(c) Issue, deliver, sell, authorize, pledge or otherwise
\nencumber any shares of capital stock or any securities convertible into shares
\nof capital stock, or subscriptions, rights, warrants or options to acquire any
\nshares of capital stock or any securities convertible into shares of capital
\nstock, or enter into other agreements or commitments of any character obligating
\nit to issue any such shares or convertible securities, other than (i) the grant
\nof stock options in the ordinary course of business and consistent with past
\npractice; (ii) the issuance of performance warrants to cable operators; (iii)
\nthe issuance of shares of Parent Common Stock pursuant to the exercise of stock
\noptions or warrants therefor outstanding as of the date of this Agreement or
\ngranted pursuant to the preceding clauses (i) and (ii); (iii) issuance of shares
\nof Parent Common Stock to participants in the Parent Purchase Plan pursuant to
\nthe terms thereof or (iv) issuances of securities in connection with any
\nacquisition;<\/p>\n
(d) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets which are material, individually or in the aggregate, to
\nthe business of Parent, except in the ordinary course of business consistent
\nwith past practice;<\/p>\n
(e) Materially revalue any of its material assets or, except
\nas required by GAAP or the SEC, make any material change in accounting methods,
\nprinciples or practices; and<\/p>\n
(f) Agree in writing or otherwise to take any of the actions
\ndescribed in Section 4.2 (a) through (e) above.<\/p>\n
ARTICLE V
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 Prospectus\/Proxy Statement; Registration Statement; Other Filings.
\nAs promptly as practicable after the execution of this Agreement, the Company
\nand Parent will prepare and file with the SEC, the Prospectus\/Proxy Statement
\nand Parent will prepare and file with the SEC the Registration Statement in
\nwhich the Prospectus\/Proxy Statement will be included as a prospectus. Each of
\nthe Company and Parent will respond to any comments of the SEC, will use its
\nrespective commercially reasonable efforts to have the Registration Statement
\ndeclared effective under the Securities Act as promptly as practicable after
\nsuch filing and each of the Company and Parent will cause the Prospectus\/Proxy
\nStatement to be mailed to its respective stockholders at the earliest
\npracticable time after the Registration Statement is declared effective by the
\nSEC. As promptly as practicable after the date of this Agreement, each of the
\nCompany and Parent will prepare and file (i) with the United States Federal
\nTrade Commission (the “FTC”) and the Antitrust Division of the United States
\nDepartment of Justice (“DOJ”) Notification and Report Forms relating to the
\ntransactions contemplated herein as required by the HSR Act, as well as
\ncomparable pre-merger notification forms required by the merger notification or
\ncontrol laws and regulations of any <\/p>\n
49<\/p>\n
applicable jurisdiction, as agreed to by the parties (the “ANTITRUST FILINGS”)
\nand (ii) any other filings required to be filed by it under the Exchange Act,
\nthe Securities Act or any other Federal, state or foreign laws relating to the
\nMerger and the transactions contemplated by this Agreement (the “OTHER
\nFILINGS”). The Company and Parent each shall promptly supply the other with any
\ninformation which may be required in order to effectuate any filings pursuant to
\nthis Section 5.1. Each of the Company and Parent will notify the other promptly
\nupon the receipt of any comments from the SEC or its staff or any other
\ngovernment officials in connection with any filing made pursuant hereto and of
\nany request by the SEC or its staff or any other government officials for
\namendments or supplements to the Registration Statement, the Prospectus\/Proxy
\nStatement or any Antitrust Filings or Other Filing or for additional information
\nand will supply the other with copies of all correspondence between such party
\nor any of its representatives, on the one hand, and the SEC, or its staff or any
\nother government officials, on the other hand, with respect to the Registration
\nStatement, the Prospectus\/Proxy Statement, the Merger or any Antitrust Filing or
\nOther Filing. Each of the Company and Parent will cause all documents that it is
\nresponsible for filing with the SEC or other regulatory authorities under this
\nSection 5.1 to comply in all material respects with all applicable requirements
\nof law and the rules and regulations promulgated thereunder. Whenever any event
\noccurs which is required to be set forth in an amendment or supplement to the
\nProspectus\/Proxy Statement, the Registration Statement or any Antitrust Filing
\nor Other Filing, the Company or Parent, as the case may be, will promptly inform
\nthe other of such occurrence and cooperate in filing with the SEC or its staff
\nor any other government officials, and\/or mailing to stockholders of the Company
\nand\/or Parent, such amendment or supplement.<\/p>\n
5.2 Meeting of Company Stockholders.<\/p>\n
(a) Promptly after the date hereof, the Company will take all
\naction necessary in accordance with Delaware Law and its Certificate of
\nIncorporation and Bylaws to convene a meeting of the Company’s stockholders to
\nconsider adoption and approval of this Agreement and approval of the Merger (the
\n“COMPANY STOCKHOLDERS’ MEETING”) to be held as promptly as practicable, and in
\nany event (to the extent permissible under applicable law) within 45 days after
\nthe declaration of effectiveness of the Registration Statement. Subject to
\nSection 5.2(c) hereof, the Company will use its commercially reasonable efforts
\nto solicit from its stockholders proxies in favor of the adoption and approval
\nof this Agreement and the approval of the Merger and will take all other action
\nnecessary or advisable to secure the vote or consent of its stockholders
\nrequired by the rules of Nasdaq or Delaware Law to obtain such approvals.
\nNotwithstanding anything to the contrary contained in this Agreement, the
\nCompany may adjourn or postpone the Company Stockholders’ Meeting to the extent
\nnecessary to ensure that any necessary supplement or amendment to the
\nProspectus\/Proxy Statement is provided to the Company’s stockholders in advance
\nof a vote on the Merger and this Agreement or, if as of the time for which the
\nCompany Stockholders’ Meeting is originally scheduled (as set forth in the
\nProspectus\/Proxy Statement) there are insufficient shares of Company Common
\nStock represented (either in person or by proxy) to constitute a quorum
\nnecessary to conduct the business of the Company’s Stockholders’ Meeting. The
\nCompany shall ensure that the Company Stockholders’ Meeting is called, noticed,
\nconvened, held and conducted, <\/p>\n
50<\/p>\n
and that all proxies solicited by the Company in connection with the Company
\nStockholders’ Meeting are solicited, in compliance with the Delaware Law, the
\nCompany’s Certificate of Incorporation and Bylaws, the rules of Nasdaq and all
\nother applicable legal requirements. The Company’s obligation to call, give
\nnotice of, convene and hold the Company Stockholders’ Meeting in accordance with
\nthis Section 5.2(a) shall not be limited to or otherwise affected by the
\ncommencement, disclosure, announcement or submission to the Company of any
\nAcquisition Proposal, or by any withdrawal, amendment or modification of the
\nrecommendation of the Board of Directors of the Company with respect to the
\nMerger and\/or this Agreement.<\/p>\n
(b) Subject to Section 5.2(c): (i) the Board of Directors of
\nthe Company shall unanimously recommend that the Company’s stockholders vote in
\nfavor of and adopt and approve this Agreement and approve the Merger at the
\nCompany Stockholders’ Meeting; (ii) the Prospectus\/Proxy Statement shall include
\na statement to the effect that the Board of Directors of the Company has
\nunanimously recommended that the Company’s stockholders vote in favor of and
\nadopt and approve this Agreement and the Merger at the Company Stockholders’
\nMeeting; and (iii) neither the Board of Directors of the Company nor any
\ncommittee thereof shall withdraw, amend or modify, or propose or resolve to
\nwithdraw, amend or modify in a manner adverse to Parent, the unanimous
\nrecommendation of the Board of Directors of the Company that the Company’s
\nstockholders vote in favor of and adopt and approve this Agreement and the
\nMerger. For purposes of this Agreement, said recommendation of the Board of
\nDirectors shall be deemed to have been modified in a manner adverse to Parent if
\nsaid recommendation shall no longer be unanimous, provided that, for all
\npurposes of this Agreement, an action by any Board of Directors or committee
\nthereof shall be unanimous if each member of such Board of Directors or
\ncommittee has approved such action other than (i) any such member who has
\nappropriately abstained from voting on such matter because of an actual or
\npotential conflict of interest and (ii) any such member who is unable to vote in
\nconnection with such action as a result of death or disability.<\/p>\n
(c) Nothing in this Agreement shall prevent the Board of
\nDirectors of the Company from withholding, withdrawing, amending or modifying
\nits unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
\ndefined below) is made to the Company and is not withdrawn, (ii) the Company
\nshall have provided written notice to Parent (a “NOTICE OF SUPERIOR OFFER”)
\nadvising Parent that the Company has received a Superior Offer, specifying the
\nmaterial terms and conditions of such Superior Offer and identifying the person
\nor entity making such Superior Offer, (iii) Parent shall not have, within five
\n(5) business days of Parent’s receipt of the Notice of Superior Proposal, made
\nan offer that the Company Board by a majority vote determines in its good faith
\njudgment (based on the written advice of its financial adviser) to be at least
\nas favorable to the Company’s stockholders as such Superior Proposal (it being
\nagreed that the Company Board shall convene a meeting to consider any such offer
\nby Parent promptly following the receipt thereof), (iv) the Board of Directors
\nof the Company concludes in good faith, after consultation with its outside
\ncounsel, that, in light of such Superior Offer, the withholding, withdrawal,
\namendment or modification of such recommendation is required in order for the
\nBoard of Directors of the Company to comply with its fiduciary obligations to
\nthe Company’s stockholders under applicable law and (v) the Company shall not
\nhave violated any of the restrictions set forth in <\/p>\n
51<\/p>\n
Section 5.5 or this Section 5.2. The Company shall provide Parent with at least
\nthree business days prior notice (or such lesser prior notice as provided to the
\nmembers of the Company’s Board of Directors but in no event less than
\ntwenty-four hours) of any meeting of the Company’s Board of Directors at which
\nthe Company’s Board of Directors is reasonably expected to consider any
\nAcquisition Transaction (as defined below). Subject to applicable laws, nothing
\ncontained in this Section 5.2 shall limit the Company’s obligation to hold and
\nconvene the Company Stockholders’ Meeting (regardless of whether the unanimous
\nrecommendation of the Board of Directors of the Company shall have been
\nwithdrawn, amended or modified). For purposes of this Agreement “SUPERIOR OFFER”
\nshall mean an unsolicited, bona fide written offer made by a third party to
\nconsummate any of the following transactions: (i) a merger or consolidation
\ninvolving the Company pursuant to which the stockholders of the Company
\nimmediately preceding such transaction hold less than 40% of the equity interest
\nin the surviving or resulting entity of such transaction or (ii) the acquisition
\nby any person or group (including by way of a tender offer or an exchange offer
\nor a two step transaction involving a tender offer followed with reasonable
\npromptness by a cash-out merger involving the Company), directly or indirectly,
\nof ownership of 100% of the then outstanding shares of capital stock of the
\nCompany, on terms that the Board of Directors of the Company determines, in its
\nreasonable judgment (based on the written advice of its financial adviser) to be
\nmore favorable to the Company stockholders than the terms of the Merger;
\nprovided, however, that any such offer shall not be deemed to be a “Superior
\nOffer” if any financing required to consummate the transaction contemplated by
\nsuch offer is not committed and is not likely in the reasonable judgment of the
\nCompany’s Board of Directors (based on the advice of its financial adviser) to
\nbe obtained by such third party on a timely basis.<\/p>\n
(d) Nothing contained in this Agreement shall prohibit the
\nCompany or its Board of Directors from taking and disclosing to its stockholders
\na position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the
\nExchange Act.<\/p>\n
5.3 Meeting of Parent Stockholders.<\/p>\n
(a) Promptly after the date hereof, Parent will take all
\naction necessary in accordance with the Delaware Law and its Certificate of
\nIncorporation and Bylaws to convene a meeting of Parent’s stockholders to
\nconsider the issuance of the shares of Parent Common Stock pursuant to the
\nMerger and an amendment to Parent’s Certificate of Incorporation to increase the
\nauthorized number of shares of Parent Common Stock so as to permit the
\ntransactions contemplated hereby, subject to and upon consummation of the
\nMerger, (the “PARENT STOCKHOLDERS MEETING”) to be held as promptly as
\npracticable, and in any event (to the extent permissible under applicable law)
\nwithin 45 days after the declaration of effectiveness of the Registration
\nStatement. Parent will use its commercially reasonable efforts to solicit from
\nits stockholders proxies in favor of the issuance of the shares of Parent Common
\nStock pursuant to the Merger and an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, subject to and upon
\nconsummation of the Merger, and will take all other action necessary or
\nadvisable to secure the vote or consent of its <\/p>\n
52<\/p>\n
stockholders required by the rules of Nasdaq or Delaware Law to obtain such
\napprovals. Notwithstanding anything to the contrary contained in this Agreement,
\nParent may adjourn or postpone the Parent Stockholders’ Meeting to the extent
\nnecessary to ensure that any necessary supplement or amendment to the
\nProspectus\/Proxy Statement is provided to Parent’s stockholders in advance of a
\nvote on the issuance of the shares of Parent Common Stock pursuant to the Merger
\nor a vote on the approval of an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, subject to and upon
\nconsummation of the Merger, or, if as of the time for which Parent Stockholders’
\nMeeting is originally scheduled (as set forth in the Prospectus\/Proxy Statement)
\nthere are insufficient shares of Parent Common Stock represented (either in
\nperson or by proxy) to constitute a quorum necessary to conduct the business of
\nthe Parent’s Stockholders’ Meeting. Parent shall ensure that the Parent
\nStockholders’ Meeting is called, noticed, convened, held and conducted, that all
\nproxies solicited by the Company in connection with the Parent Stockholders’
\nMeeting are solicited in compliance with the Delaware Law, its Certificate of
\nIncorporation and Bylaws, the rules of Nasdaq and all other applicable legal
\nrequirements.<\/p>\n
(b) The Board of Directors of Parent shall unanimously
\nrecommend that Parent’s stockholders vote in favor of the issuance of the shares
\nof Parent Common Stock pursuant to the Merger and an amendment to Parent’s
\nCertificate of Incorporation to increase the authorized number of shares of
\nParent Common Stock so as to permit the transactions contemplated hereby,
\nsubject to and upon consummation of the Merger. The Prospectus\/Proxy Statement
\nshall include a statement to the effect that the Board of Directors of Parent
\nhas unanimously recommended that Parent’s stockholders vote in favor of such
\nmatters at the Parent Stockholders’ Meeting. Neither the Board of Directors of
\nParent nor any committee thereof shall withdraw, amend or modify, or propose or
\nresolve to withdraw, amend or modify in a manner adverse to the Company, the
\nunanimous recommendation of the Board of Directors of Parent that Parent’s
\nstockholders vote in favor of such matters. For purposes of this Agreement, said
\nrecommendation of the Board of Directors shall be deemed to have been modified
\nin a manner adverse to the Company if said recommendation shall no longer be
\nunanimous.<\/p>\n
(c) Nothing contained in this Agreement shall prohibit Parent
\nor its Board of Directors from taking and disclosing to its stockholders a
\nposition contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
\nAct.<\/p>\n
5.4 Confidentiality; Access to Information.<\/p>\n
(a) The parties acknowledge that the Company and Parent have
\npreviously executed a Confidentiality Agreement dated January 12, 1999 (the
\n“CONFIDENTIALITY AGREEMENT”), which Confidentiality Agreement will continue in
\nfull force and effect in accordance with its terms.<\/p>\n
(b) Access to Information. Each of the Company and Parent will
\nafford the other and the other’s accountants, counsel and other representatives
\nreasonable access during normal <\/p>\n
53<\/p>\n
business hours to its properties, books, records and personnel during the period
\nprior to the Effective Time to obtain all information concerning its business,
\nincluding the status of product development efforts, properties, results of
\noperations and personnel, as such other party may reasonably request. No
\ninformation or knowledge obtained in any investigation pursuant to this Section
\n5.4 will affect or be deemed to modify any representation or warranty contained
\nherein or the conditions to the obligations of the parties to consummate the
\nMerger.<\/p>\n
5.5 No Solicitation.<\/p>\n
(a) From and after the date of this Agreement until the
\nEffective Time or termination of this Agreement pursuant to Article VII, the
\nCompany and its subsidiaries will not, nor will they authorize or permit any of
\ntheir respective officers, directors, affiliates or employees or any investment
\nbanker, attorney or other advisor or representative retained by any of them to,
\ndirectly or indirectly, (i) solicit, initiate, encourage or induce the making,
\nsubmission or announcement of any Acquisition Proposal (as hereinafter defined),
\n(ii) participate in any discussions or negotiations regarding, or furnish to any
\nperson any non-public information with respect to, or take any other action to
\nfacilitate any inquiries or the making of any proposal that constitutes or may
\nreasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
\ndiscussions with any person with respect to any Acquisition Proposal, except as
\nto the existence of these provisions, (iv) approve, endorse or recommend any
\nAcquisition Proposal or (v) enter into any letter of intent or similar document
\nor any contract agreement or commitment contemplating or otherwise relating to
\nany Acquisition Transaction; provided, however, that after receipt of an
\nunsolicited, written, bona fide Acquisition Proposal that the Board of Directors
\nof the Company reasonably concludes may constitute a Superior Offer, the Company
\nmay on one occasion submit to the party making such Acquisition Proposal a
\nwritten list of questions, the sole purpose of which is to elicit clarifications
\nas to the material terms of the Acquisition Proposal so as to enable the Board
\nof Directors of the Company to make a determination whether such Acquisition
\nProposal is in fact a Superior Offer (it being agreed that any correspondence
\nwith such party shall be limited to questions and such questions shall be
\nlimited to the purpose of clarifying the material terms of such Acquisition
\nProposal and shall not solicit or encourage any new Acquisition Proposal or any
\nchange to the Acquisition Proposal, and it being further agreed that the Company
\nshall provide Parent with a copy of any correspondence to be delivered pursuant
\nto this Section 5.5(a) at least 48 hours prior to sending such correspondence to
\nany third party). The Company and its subsidiaries will immediately cease any
\nand all existing activities, discussions or negotiations with any parties
\nconducted heretofore with respect to any Acquisition Proposal. Without limiting
\nthe foregoing, it is understood that any violation of the restrictions set forth
\nin the preceding two sentences by any officer, director or employee of the
\nCompany or any of its subsidiaries or any investment banker, attorney or other
\nadvisor or representative of the Company or any of its subsidiaries shall be
\ndeemed to be a breach of this Section 5.5 by the Company.<\/p>\n
For purposes of this Agreement, “ACQUISITION PROPOSAL” shall mean any
\noffer or proposal (other than an offer or proposal by Parent) relating to any
\nAcquisition Transaction. For purposes of <\/p>\n
54<\/p>\n
this Agreement, “ACQUISITION TRANSACTION” shall mean any transaction or series
\nof related transactions involving: (A) any purchase from the Company or
\nacquisition by any person or “group” (as defined under Section 13(d) of the
\nExchange Act and the rules and regulations thereunder) of more than a 5%
\ninterest in the total outstanding voting securities of the Company or any of its
\nsubsidiaries or any tender offer or exchange offer that if consummated would
\nresult in any person or “group” (as defined under Section 13(d) of the Exchange
\nAct and the rules and regulations thereunder) beneficially owning 5% or more of
\nthe total outstanding voting securities of the Company or any of its
\nsubsidiaries or any merger, consolidation, business combination or similar
\ntransaction involving the Company; (B) any sale, lease (other than in the
\nordinary course of business), exchange, transfer, license (other than in the
\nordinary course of business), acquisition or disposition of more than 5% of the
\nassets of the Company; or (C) any liquidation or dissolution of the Company.<\/p>\n
(b) In addition to the obligations of the Company set forth in
\nparagraph (a) of this Section 5.5, the Company as promptly as practicable shall
\nadvise Parent orally and in writing of any Acquisition Proposal or any request
\nfor non-public information or inquiry which the Company reasonably believes
\nwould lead to an Acquisition Proposal or to any Acquisition Transaction, the
\nmaterial terms and conditions of such Acquisition Proposal, request or inquiry,
\nand the identity of the person or group making any such Acquisition Proposal,
\nrequest or inquiry. The Company will keep Parent informed as promptly as
\npracticable in all material respects of the status and details (including
\nmaterial amendments or proposed material amendments) of any such Acquisition
\nProposal, request or inquiry.<\/p>\n
5.6 Public Disclosure. Without limiting Sections 5.2 or 5.5 hereof or
\nanything else herein, Parent and the Company will attempt to consult with each
\nother, and to the extent practicable, agree, before issuing any press release or
\notherwise making any public statement with respect to the Merger, this Agreement
\nor any Acquisition Proposal and will not issue any such press release or make
\nany such public statement prior to such consultation, except as may be required
\nby law or any listing agreement with a national securities exchange or Nasdaq.
\nThe parties have agreed to the text of the joint press release announcing the
\nsigning of this Agreement.<\/p>\n
5.7 Reasonable Efforts; Notification.<\/p>\n
(a) Upon the terms and subject to the conditions set forth in
\nthis Agreement, each of the parties agrees to use all reasonable efforts to
\ntake, or cause to be taken, all actions, and to do, or cause to be done, and to
\nassist and cooperate with the other parties in doing, all things necessary,
\nproper or advisable to consummate and make effective, in the most expeditious
\nmanner practicable, the Merger and the other transactions contemplated by this
\nAgreement, including using reasonable efforts to accomplish the following: (i)
\nthe taking of all reasonable acts necessary to cause the conditions precedent
\nset forth in Article VI to be satisfied, (ii) the obtaining of all necessary
\nactions or nonactions, waivers, consents, approvals, orders and authorizations
\nfrom Governmental Entities and the making of all necessary registrations,
\ndeclarations and filings (including registrations, declarations and filings with
\nGovernmental Entities, if any) and the taking of all reasonable steps as<\/p>\n
55<\/p>\n
may be necessary to avoid any suit, claim, action, investigation or proceeding
\nby any Governmental Entity, (iii) the obtaining of all necessary consents,
\napprovals or waivers from third parties, (iv) the defending of any suits,
\nclaims, actions, investigations or proceedings, whether judicial or
\nadministrative, challenging this Agreement or the consummation of the
\ntransactions contemplated hereby, including seeking to have any stay or
\ntemporary restraining order entered by any court or other Governmental Entity
\nvacated or reversed and (v) the execution or delivery of any additional
\ninstruments necessary to consummate the transactions contemplated by, and to
\nfully carry out the purposes of, this Agreement. In connection with and without
\nlimiting the foregoing, Parent shall not enter into any acquisition which would
\nbe reasonably likely to have the effect of delaying the filing or effectiveness
\nof the Registration Statement or the filing or mailing of the Prospectus\/Proxy
\nStatement, the holding of either the Company Stockholders’ Meeting or Parent
\nStockholders’ Meeting, or causing the regulatory approvals, consents or
\nexpirations in connection with the Antitrust Filings or Other Filings to be
\nmaterially delayed or not obtained. In connection with and without limiting the
\nforegoing, the Company and its Board of Directors shall, if any state takeover
\nstatute or similar statute or regulation is or becomes applicable to the Merger,
\nthis Agreement or any of the transactions contemplated by this Agreement, use
\nall reasonable efforts to ensure that the Merger and the other transactions
\ncontemplated by this Agreement may be consummated as promptly as practicable on
\nthe terms contemplated by this Agreement and otherwise to minimize the effect of
\nsuch statute or regulation on the Merger, this Agreement and the transactions
\ncontemplated hereby. Notwithstanding anything herein to the contrary, nothing in
\nthis Agreement shall be deemed to require Parent or the Company or any
\nsubsidiary or affiliate thereof to agree to any divestiture by itself or any of
\nits affiliates of shares of capital stock or of any business, assets or
\nproperty, or the imposition of any material limitation on the ability of any of
\nthem to conduct their businesses or to own or exercise control of such assets,
\nproperties and stock.<\/p>\n
(b) The Company shall give prompt notice to Parent of any
\nrepresentation or warranty made by it contained in this Agreement becoming
\nuntrue or inaccurate, or any failure of the Company to comply with or satisfy in
\nany material respect any covenant, condition or agreement to be complied with or
\nsatisfied by it under this Agreement, in each case, such that the conditions set
\nforth in Section 6.3(a) or 6.3(b) would not be satisfied, provided, however,
\nthat no such notification shall affect the representations, warranties,
\ncovenants or agreements of the parties or the conditions to the obligations of
\nthe parties under this Agreement.<\/p>\n
(c) Parent shall give prompt notice to the Company of any
\nrepresentation or warranty made by it or Merger Sub contained in this Agreement
\nbecoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
\nwith or satisfy in any material respect any covenant, condition or agreement to
\nbe complied with or satisfied by it under this Agreement, in each case, such
\nthat the conditions set forth in Section 6.2(a) or 6.2(b) would not be
\nsatisfied, provided, however, that no such notification shall affect the
\nrepresentations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
5.8 Third Party Consents. As soon as practicable following the date
\nhereof, Parent and <\/p>\n
56<\/p>\n
the Company will each use its commercially reasonable efforts to obtain any
\nconsents, waivers and approvals under any of its or its subsidiaries’ respective
\nagreements, contracts, licenses or leases required to be obtained in connection
\nwith the consummation of the transactions contemplated hereby.<\/p>\n
5.9 Stock Options and Employee Benefits; Warrants.<\/p>\n
(a) At the Effective Time, each then outstanding Company
\nOption, whether or not exercisable at the Effective Time and regardless of the
\nrespective exercise prices thereof, will be assumed by Parent. Each Company
\nOption so assumed by Parent under this Agreement will continue to have, and be
\nsubject to, the same terms and conditions set forth in the applicable Company
\nStock Option Plan (and any applicable stock option agreement for such Company
\nOption) immediately prior to the Effective Time (including, without limitation,
\nany repurchase rights or vesting provisions), except that (i) each Company
\nOption will be exercisable (or will become exercisable in accordance with its
\nterms) for that number of whole shares of Parent Common Stock equal to the
\nproduct of the number of shares of Company Common Stock that were issuable upon
\nexercise of such Company Option immediately prior to the Effective Time
\nmultiplied by the Exchange Ratio, rounded to the nearest whole number of shares
\nof Parent Common Stock and (ii) the per share exercise price for the shares of
\nParent Common Stock issuable upon exercise of such assumed Company Option will
\nbe equal to the quotient determined by dividing the exercise price per share of
\nCompany Common Stock at which such Company Option was exercisable immediately
\nprior to the Effective Time by the Exchange Ratio, rounded to the nearest whole
\ncent. Each assumed Company Option shall be vested immediately following the
\nEffective Time as to the same percentage of the total number of shares subject
\nthereto as it was vested as to immediately prior to the Effective Time. As soon
\nas reasonably practicable, but in no event more than 20 days after the Effective
\nTime, Parent will issue to each person who holds an assumed Company Option, a
\ndocument in form and substance reasonably satisfactory to Company evidencing the
\nforegoing assumption of such Company Option by Parent.<\/p>\n
(b) It is intended that Company Options assumed by Parent
\nshall qualify following the Effective Time as incentive stock options as defined
\nin Section 422 of the Code to the extent Company Options qualified as incentive
\nstock options immediately prior to the Effective Time and the provisions of this
\nSection 5.9 shall be applied consistent with such intent.<\/p>\n
(c) At the Effective Time, each outstanding purchase right
\nwith respect to all open Offering Periods under the Company Purchase Plan (each
\nan “ASSUMED PURCHASE RIGHT”) shall be assumed by Parent. Each Assumed Purchase
\nRight shall continue to have, and be subject to, the terms and conditions set
\nforth in the Company Purchase Plan and the documents governing the Assumed
\nPurchase Right, except that the purchase price of such shares of Parent Common
\nStock for each respective Purchase Date under each Assumed Purchase Right shall
\nbe the lower of (i) the quotient determined by dividing eighty-five percent
\n(85%) of the fair market value of the Company Common Stock on the Offering Date
\nof each assumed Offering Period by the Exchange Ratio or (ii)<\/p>\n
57<\/p>\n
eighty-five percent (85%) of the fair market value of the Parent Common Stock on
\neach Purchase Date of each assumed Offering Period occurring after the Effective
\nTime (with the number of shares rounded down to the nearest whole share and the
\npurchase price rounded up to the nearest whole cent). The Assumed Purchase
\nRights shall be exercised at such times following the Effective Time as set
\nforth in the Company Purchase Plan, and each participant shall, accordingly, be
\nissued shares of Parent Common Stock at such times. The Company Purchase Plan
\nshall terminate with the exercise of the last Assumed Purchase Right, and no
\nadditional purchase rights shall be granted under the Company Purchase Plan
\nfollowing the Effective Time. Parent agrees that from and after the Effective
\nTime, employees of the Company may participate in Parent’s employee stock
\npurchase plan, subject to the terms and conditions of such plan. Capitalized
\nterms in this Section 5.9(c) if not otherwise defined in this Agreement, have
\nthe meanings ascribed to them in the Company Purchase Plan.<\/p>\n
(d) Prior to the date hereof, the Company shall have granted
\nstock options pursuant to the Company Stock Option Plans to purchase a number of
\nshares of Company Common Stock equal in the aggregate to 2,000,000 divided by
\nthe Exchange Ratio (as appropriately adjusted for stock splits and the like) to
\nsuch persons and in such amounts as to which Parent shall have agreed, with
\nstrike prices equal to the fair market value of the Company Common Stock at the
\ntime of grant and otherwise with vesting schedules and other terms and
\nconditions consistent with past practice. Such options shall be granted only to
\nemployees of the Company who, in the good faith judgment of the Company’s Board
\nof Directors, have not previously received options from the Company in a
\nreasonable and customary amount sufficient to provide adequate incentive to such
\nemployees in connection with their service on behalf of the Company. In
\naddition, all stock option grants made pursuant to this Section 5.9(d) will
\nconstitute reasonable compensation for personal services to be rendered by the
\nrecipients thereof on or after the Effective Time, and such granted options
\nshall not exceed the amount of options that would be granted to a similarly
\nsituated employee after the Effective Time.<\/p>\n
(e) At the Effective Time, each then outstanding warrant to
\npurchase shares of Company Common Stock or Series E-3 Preferred Stock (each a
\n“COMPANY WARRANT”), whether or not exercisable, will be assumed by Parent. Each
\nCompany Warrant so assumed by Parent under this Agreement will continue to have,
\nand be subject to, the same terms and conditions set forth in the applicable
\nCompany Warrant immediately prior to the Effective Time (including, without
\nlimitation, any vesting, expiration or termination provisions), except that (i)
\neach Company Warrant will be exercisable (or will become exercisable in
\naccordance with its terms) for that number of whole shares of Parent Common
\nStock equal to the product of the number of shares of Company Common Stock or
\nSeries E-3 Preferred Stock that were issuable upon exercise of such Company
\nWarrant immediately prior to the Effective Time multiplied by the Exchange
\nRatio, rounded to the nearest whole number of shares of Parent Common Stock and
\n(ii) the per share exercise price for the shares of Parent Common Stock issuable
\nupon exercise of such assumed Company Warrant will be equal to the quotient
\ndetermined by dividing the exercise price per share of Company Common Stock or
\nSeries E-3 Preferred Stock at which such Company Warrant was exercisable
\nimmediately prior to the Effective Time by the Exchange Ratio, rounded to the
\nnearest whole cent. Parent agrees to reserve <\/p>\n
58<\/p>\n
for issuance a sufficient number of shares of Parent Common Stock in respect of
\nall Company Options and Company Warrants assumed and converted hereunder.<\/p>\n
5.10 Form S-8. Parent agrees to file a registration statement on Form
\nS-8 for the shares of Parent Common Stock issuable with respect to assumed
\nCompany Options as soon as is reasonably practicable after the Effective Time
\nand shall maintain the effectiveness of such registration statement thereafter
\nfor so long as any of such options or other rights remain outstanding.<\/p>\n
5.11 Indemnification.<\/p>\n
(a) From and after the Effective Time, Parent will, and will
\ncause the Surviving Corporation to, fulfill and honor in all respects the
\nobligations of the Company pursuant to any indemnification agreements between
\nthe Company and its directors and officers as of the Effective Time (the
\n“INDEMNIFIED PARTIES”). The Certificate of Incorporation and Bylaws of the
\nSurviving Corporation will contain provisions with respect to exculpation and
\nindemnification that are at least as favorable to the Indemnified Parties as
\nthose contained in the Certificate of Incorporation and Bylaws of the Company as
\nin effect on the date hereof, which provisions will not be amended, repealed or
\notherwise modified for a period of six years from the Effective Time in any
\nmanner that would adversely affect the rights thereunder of individuals who,
\nimmediately prior to the Effective Time, were directors, officers, employees or
\nagents of the Company, unless such modification is required by law.<\/p>\n
(b) For a period of six years after the Effective Time, Parent
\nwill cause the Surviving Corporation to use its commercially reasonable efforts
\nto maintain in effect, if available, directors’ and officers’ liability
\ninsurance covering those persons who are currently covered by the Company’s
\ndirectors’ and officers’ liability insurance policy on terms comparable to those
\napplicable to the current directors and officers of the Company; provided,
\nhowever, that in no event will Parent or the Surviving Corporation be required
\nto expend in excess of 150% of the annual premium currently paid by the Company
\nfor such coverage (or such coverage as is available for such 150% of such annual
\npremium).<\/p>\n
5.12 Board of Directors of Parent. The Board of Directors of Parent
\nwill take all actions necessary such that one member of the Company’s Board of
\nDirectors reasonably acceptable to the Company and Parent shall be appointed to
\nParent’s Board of Directors (but not as a Series B Common Stock director) with a
\nterm expiring at the next annual meeting of Parent’s stockholders and shall
\ninclude such person in the slate of nominees recommended by Parent’s Board of
\nDirectors to the stockholders of Parent at such annual meeting. In addition, for
\na period of one year following the Effective Time, Parent shall give one
\nadditional member of the Company’s Board of Directors reasonably acceptable to
\nthe Company and Parent copies of all notices, minutes, consents and other
\nmaterial that Parent provides to members of its Board of Directors, and shall
\npermit such person to attend each meeting of Parent’s Board of Directors;
\nprovided, however, that (i) Parent reserves the right to exclude such person
\nfrom access to any material or meeting or portion thereof if Parent believes
\nthat such exclusion is reasonably necessary to preserve the attorney-client
\nprivilege, to <\/p>\n
59<\/p>\n
protect highly confidential proprietary information or for other similar reasons
\nand (ii) all obligations of Parent pursuant to this sentence shall be contingent
\nupon such person executing a non-disclosure agreement satisfactory to Parent.<\/p>\n
5.13 Nasdaq Listing. Prior to the Effective Time, Parent agrees to
\nauthorize for listing on Nasdaq the shares of Parent Common Stock issuable, and
\nthose required to be reserved for issuance, in connection with the Merger, upon
\nofficial notice of issuance.<\/p>\n
5.14 Company Affiliates; Restrictive Legend. Parent will give stop
\ntransfer instructions to its transfer agent with respect to any Parent Common
\nStock received pursuant to the Merger by any stockholder of the Company who may
\nreasonably be deemed to be an affiliate of the Company within the meaning of
\nRule 145 promulgated under the Securities Act and there will be placed on the
\ncertificates representing such Parent Common Stock, or any substitutions
\ntherefor, a legend stating in substance:<\/p>\n
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
\n TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
\n 1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY
\n WITH RULE 145(d) UNDER SUCH ACT, (B) IN ACCORDANCE WITH A WRITTEN
\n OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
\n SUBSTANCE THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
\n SECURITIES ACT OF 1933, AS AMENDED.<\/p>\n
5.15 Certain Employee Benefits. As soon as practicable after the
\nexecution of this Agreement, the Company and Parent shall confer and work
\ntogether in good faith to agree upon mutually acceptable employee benefit and
\ncompensation arrangements (and terminate Company Employee Plans immediately
\nprior to the Effective Time if appropriate) so as to provide benefits to Company
\nemployees generally equivalent in the aggregate to those provided to similarly
\nsituated employees of Parent. In addition, the Company agrees that it and its
\nsubsidiaries shall terminate any and all severance, separation, retention and
\nsalary continuation plans, programs or arrangements (other than contractual
\nagreements disclosed on the Company Schedules) prior to the Effective Time.<\/p>\n
ARTICLE VI
\n CONDITIONS TO THE MERGER<\/p>\n
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
\nrespective obligations of each party to this Agreement to effect the Merger
\nshall be subject to the satisfaction at or prior to the Closing Date of the
\nfollowing conditions:<\/p>\n
(a) Company Stockholder Approval. This Agreement shall have
\nbeen approved and adopted, and the Merger shall have been duly approved, by the
\nrequisite vote under applicable law, by the stockholders of the Company.<\/p>\n
60<\/p>\n
(b) Parent Stockholder Approval.<\/p>\n
(i) The issuance of the shares of Parent Common Stock
\npursuant to the Merger shall have been duly approved by the requisite vote of
\nthe stockholders of the Parent under applicable Nasdaq rules; and<\/p>\n
(ii) an amendment to Parent’s Certificate of
\nIncorporation to increase the authorized number of shares of Parent Common Stock
\nso as to permit the transactions contemplated hereby, subject to and upon
\nconsummation of the Merger, shall have been duly approved by the requisite vote
\nof the stockholders of Parent under Delaware Law and Parent’s Certificate of
\nIncorporation and other charter documents.<\/p>\n
(c) Registration Statement Effective; Proxy Statement. The SEC
\nshall have declared the Registration Statement effective. No stop order
\nsuspending the effectiveness of the Registration Statement or any part thereof
\nshall have been issued and no proceeding for that purpose, and no similar
\nproceeding in respect of the Prospectus\/Proxy Statement, shall have been
\ninitiated or threatened in writing by the SEC.<\/p>\n
(d) No Order; HSR Act. No Governmental Entity shall have
\nenacted, issued, promulgated, enforced or entered any statute, rule, regulation,
\nexecutive order, decree, injunction or other order (whether temporary,
\npreliminary or permanent) which is in effect and which has the effect of making
\nthe Merger illegal or otherwise prohibiting consummation of the Merger. All
\nwaiting periods, if any, under the HSR Act relating to the transactions
\ncontemplated hereby will have expired or terminated early and all material
\nforeign antitrust approvals required to be obtained prior to the Merger in
\nconnection with the transactions contemplated hereby shall have been obtained.<\/p>\n
(e) Tax Opinions. Parent and the Company shall each have
\nreceived written opinions from their respective tax counsel (Wilson Sonsini
\nGoodrich & Rosati, Professional Corporation, and Fenwick & West LLP,
\nrespectively), in form and substance reasonably satisfactory to them, to the
\neffect that the Merger will constitute a tax-free reorganization within the
\nmeaning of Section 368(a) of the Code and such opinions shall not have been
\nwithdrawn; provided, however, that if the counsel to either Parent or the
\nCompany does not render such opinion, this condition shall nonetheless be deemed
\nto be satisfied with respect to such party if counsel to the other party renders
\nsuch opinion to such party. The parties to this Agreement agree to make such
\nreasonable representations as requested by such counsel for the purpose of
\nrendering such opinions.<\/p>\n
(f) Nasdaq Listing. The shares of Parent Common Stock to be
\nissued in the Merger shall have been authorized for listing on Nasdaq, subject
\nto notice of issuance.<\/p>\n
(g) Amendment of Parent’s Certificate of Incorporation. An
\namendment to Parent’s Certificate of Incorporation to increase the authorized
\nnumber of shares of Parent Common Stock so as to permit the transactions
\ncontemplated hereby shall have been duly filed with the Delaware Secretary of
\nState.<\/p>\n
61<\/p>\n
6.2 Additional Conditions to Obligations of the Company. The obligation
\nof the Company to consummate and effect the Merger shall be subject to the
\nsatisfaction at or prior to the Closing Date of each of the following
\nconditions, any of which may be waived, in writing, exclusively by the Company:<\/p>\n
(a) Representations and Warranties. Each representation and
\nwarranty of Parent and Merger Sub contained in this Agreement (i) shall have
\nbeen true and correct as of the date of this Agreement and (ii) shall be true
\nand correct on and as of the Closing Date with the same force and effect as if
\nmade on the Closing Date except, (A) in each case, or in the aggregate, as does
\nnot constitute a Material Adverse Effect on Parent or Merger Sub at the Closing
\nDate; provided, however, such Material Adverse Effect qualification shall be
\ninapplicable with respect to the representations and warranties contained in
\nSections 3.2(a) and (b), 3.3, 3.16 and 3.17 (which representations shall be true
\nand correct at the applicable times in all material respects), and (B) for those
\nrepresentations and warranties which address matters only as of a particular
\ndate (which representations shall have been true and correct (subject to the
\nqualifications set forth in the preceding clause (A)) as of such particular
\ndate) (it being understood that, for purposes of determining the accuracy of
\nsuch representations and warranties, any update of or modification to the Parent
\nSchedules made or purported to have been made after the execution of this
\nAgreement shall be disregarded). The Company shall have received a certificate
\nwith respect to the foregoing signed on behalf of Parent by an authorized
\nofficer of Parent.<\/p>\n
(b) Agreements and Covenants. Parent and Merger Sub shall have
\nperformed or complied in all material respects with all agreements and covenants
\nrequired by this Agreement to be performed or complied with by them on or prior
\nto the Closing Date, and the Company shall have received a certificate to such
\neffect signed on behalf of Parent by an authorized officer of Parent.<\/p>\n
(c) Material Adverse Effect. No Material Adverse Effect with
\nrespect to Parent, taken as a whole with its subsidiaries, shall have occurred
\nsince the date of this Agreement and be continuing.<\/p>\n
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
\nThe obligations of Parent and Merger Sub to consummate and effect the Merger
\nshall be subject to the satisfaction at or prior to the Closing Date of each of
\nthe following conditions, any of which may be waived, in writing, exclusively by
\nParent:<\/p>\n
(a) Representations and Warranties. Each representation and
\nwarranty of the Company contained in this Agreement (i) shall have been true and
\ncorrect as of the date of this Agreement and (ii) shall be true and correct on
\nand as of the Closing Date with the same force and effect as if made on and as
\nof the Closing Date except (A) in each case, or in the aggregate, as does not
\nconstitute a Material Adverse Effect on the Company at the Closing Date;
\nprovided, however, such Material Adverse Effect qualification shall be
\ninapplicable with respect to the representations and warranties contained in
\nSections 2.2(a) and (b), 2.3, 2.19, 2.20 and 2.21 (which representations shall
\nbe true and correct at the applicable times in all material respects), and (B)
\nfor those <\/p>\n
62<\/p>\n
representations and warranties which address matters only as of a particular
\ndate (which representations shall have been true and correct (subject to the
\nqualifications set forth in the preceding clause (A)) as of such particular
\ndate) (it being understood that, for purposes of determining the accuracy of
\nsuch representations and warranties, any update of or modification to the
\nCompany Schedules made or purported to have been made after the execution of
\nthis Agreement shall be disregarded). Parent shall have received a certificate
\nwith respect to the foregoing signed on behalf of the Company by an authorized
\nofficer of the Company.<\/p>\n
(b) Agreements and Covenants. The Company shall have performed
\nor complied in all material respects with all agreements and covenants required
\nby this Agreement to be performed or complied with by it at or prior to the
\nClosing Date, and Parent shall have received a certificate to such effect signed
\non behalf of the Company by the Chief Executive Officer and the Chief Financial
\nOfficer of the Company.<\/p>\n
(c) Material Adverse Effect. No Material Adverse Effect with
\nrespect to the Company, taken as a whole with its subsidiaries, shall have
\noccurred since the date of this Agreement and be continuing.<\/p>\n
ARTICLE VII
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination. This Agreement may be terminated at any time prior to
\nthe Effective Time, whether before or after the requisite approvals of the
\nstockholders of the Company or Parent:<\/p>\n
(a) by mutual written consent duly authorized by the Boards of
\nDirectors of Parent and the Company;<\/p>\n
(b) by either the Company or Parent if the Merger shall not
\nhave been consummated by September 30, 1999 (the “END DATE”) for any reason;
\nprovided, however, that the right to terminate this Agreement under this Section
\n7.1(b) shall not be available to any party whose action or failure to act has
\nbeen a principal cause of or resulted in the failure of the Merger to occur on
\nor before such date and such action or failure to act constitutes a material
\nbreach of this Agreement;<\/p>\n
(c) by either the Company or Parent if a Governmental Entity
\nshall have issued an order, decree or ruling or taken any other action, in any
\ncase having the effect of permanently restraining, enjoining or otherwise
\nprohibiting the Merger, which order, decree, ruling or other action is final and
\nnonappealable;<\/p>\n
(d) by the Company or Parent if the required approval of the
\nstockholders of Parent contemplated by this Agreement shall not have been
\nobtained by reason of the failure to <\/p>\n
63<\/p>\n
obtain the required vote at a meeting of Parent stockholders duly convened
\ntherefor or at any adjournment thereof; provided, however, that the right to
\nterminate this Agreement under this Section 7.1(d) shall not be available to
\nParent where the failure to obtain Parent stockholder approval shall have been
\ncaused by (i) the action or failure to act of Parent and such action or failure
\nto act constitutes a material breach by Parent of this Agreement or (ii) a
\nbreach by TCI of its Parent Voting Agreement.<\/p>\n
(e) by the Company or Parent if the required approval of the
\nstockholders of the Company contemplated by this Agreement shall not have been
\nobtained by reason of the failure to obtain the required vote at a meeting of
\nthe Company stockholders duly convened therefore or at any adjournment thereof;
\nprovided, however, that the right to terminate this Agreement under this Section
\n7.1(e) shall not be available to the Company where the failure to obtain the
\nCompany stockholder approval shall have been caused by (i) the action or failure
\nto act of the Company and such action or failure to act constitutes a material
\nbreach by the Company of this Agreement or (ii) a breach of any Company Voting
\nAgreement by any party thereto other than Parent.<\/p>\n
(f) by Parent (at any time prior to the adoption and approval
\nof this Agreement and the Merger by the required vote of the stockholders of the
\nCompany) if a Company Triggering Event (as defined below) shall have occurred;<\/p>\n
(g) by the Company, upon a breach of any representation,
\nwarranty, covenant or agreement on the part of Parent set forth in this
\nAgreement, or if any representation or warranty of Parent shall have become
\nuntrue, in either case such that the conditions set forth in Section 6.2(a) or
\nSection 6.2(b) would not be satisfied as of the time of such breach or as of the
\ntime such representation or warranty shall have become untrue, provided that if
\nsuch inaccuracy in Parent’s representations and warranties or breach by Parent
\nis curable by Parent through the exercise of its commercially reasonable
\nefforts, then the Company may not terminate this Agreement under this Section
\n7.1(g) prior to the End Date, provided Parent continues to exercise commercially
\nreasonable efforts to cure such breach (it being understood that the Company may
\nnot terminate this Agreement pursuant to this paragraph (g) if it shall have
\nmaterially breached this Agreement or if such breach by Parent is cured prior to
\nthe End Date);<\/p>\n
(h) by Parent, upon a breach of any representation, warranty,
\ncovenant or agreement on the part of the Company set forth in this Agreement, or
\nif any representation or warranty of the Company shall have become untrue, in
\neither case such that the conditions set forth in Section 6.3(a) or Section
\n6.3(b) would not be satisfied as of the time of such breach or as of the time
\nsuch representation or warranty shall have become untrue, provided, that if such
\ninaccuracy in the Company’s representations and warranties or breach by the
\nCompany is curable by the Company through the exercise of its commercially
\nreasonable efforts, then Parent may not terminate this Agreement under this
\nSection 7.1(h) prior to the End Date, provided the Company continues to exercise
\ncommercially reasonable efforts to cure such breach (it being understood that
\nParent may not terminate this Agreement pursuant to this paragraph (h) if it
\nshall have materially breached this Agreement or if such breach by the Company
\nis cured prior to the End Date).<\/p>\n
64<\/p>\n
For the purposes of this Agreement, a “COMPANY TRIGGERING EVENT” shall
\nbe deemed to have occurred if: (i) the Board of Directors of the Company or any
\ncommittee thereof shall for any reason have withdrawn or shall have amended or
\nmodified in a manner adverse to Parent its unanimous recommendation in favor of,
\nthe adoption and approval of the Agreement or the approval of the Merger; (ii)
\nthe Company shall have failed to include in the Prospectus\/Proxy Statement the
\nunanimous recommendation of the Board of Directors of the Company in favor of
\nthe adoption and approval of the Agreement and the approval of the Merger; (iii)
\nthe Board of Directors of the Company fails to reaffirm its unanimous
\nrecommendation in favor of the adoption and approval of the Agreement and the
\napproval of the Merger within ten (10) days after Parent requests in writing
\nthat such recommendation be reaffirmed; (iv) the Board of Directors of the
\nCompany or any committee thereof shall have approved or recommended any
\nAcquisition Proposal; or (v) a tender or exchange offer relating to securities
\nof the Company shall have been commenced by a Person unaffiliated with Parent
\nand the Company shall not have sent to its securityholders pursuant to Rule
\n14e-2 promulgated under the Securities Act, within ten (10) business days after
\nsuch tender or exchange offer is first published, sent or given, a statement
\ndisclosing that the Company recommends rejection of such tender or exchange
\noffer.<\/p>\n
7.2 Notice of Termination; Effect of Termination. Any termination of
\nthis Agreement under Section 7.1 above will be effective immediately upon the
\ndelivery of a valid written notice of the terminating party to the other parties
\nhereto. In the event of the termination of this Agreement as provided in Section
\n7.1, this Agreement shall be of no further force or effect, except (i) as set
\nforth in Section 5.4(a), this Section 7.2, Section 7.3 and Article 8
\n(miscellaneous), each of which shall survive the termination of this Agreement,
\nand (ii) nothing herein shall relieve any party from liability for any willful
\nbreach of this Agreement. No termination of this Agreement shall affect the
\nobligations of the parties contained in the Confidentiality Agreement, all of
\nwhich obligations shall survive termination of this Agreement in accordance with
\ntheir terms.<\/p>\n
7.3 Fees and Expenses.<\/p>\n
(a) General. Except as set forth in this Section 7.3, all fees
\nand expenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses whether
\nor not the Merger is consummated; provided, however, that Parent and the Company
\nshall share equally all fees and expenses, other than attorneys’ and accountants
\nfees and expenses, incurred in relation to the printing and filing (with the
\nSEC) of the Prospectus\/Proxy Statement (including any preliminary materials
\nrelated thereto) and the Registration Statement (including financial statements
\nand exhibits) and any amendments or supplements thereto.<\/p>\n
(b) Company Payments. In the event that this Agreement is
\nterminated by Parent or the Company, as applicable, pursuant to Sections 7.1(b),
\n(e) or (f), the Company shall promptly, but in no event later than two days
\nafter the date of such termination, pay Parent a fee equal to $200<\/p>\n
65<\/p>\n
million in immediately available funds (the “TERMINATION FEE”); provided, that
\nin the case of termination under Section 7.1(b) or 7.1(e), (i) such payment
\nshall be made only if following the date hereof and prior to the termination of
\nthis Agreement, a third party has publicly announced an Acquisition Proposal and
\nwithin 12 months following the termination of this Agreement a Company
\nAcquisition (as defined below) is consummated or the Company enters into an
\nagreement providing for a Company Acquisition and (ii) such payment shall be
\nmade promptly, but in no event later than two days after the consummation of
\nsuch Company Acquisition or the entry by the Company into such agreement. The
\nCompany acknowledges that the agreements contained in this Section 7.3(b) are an
\nintegral part of the transactions contemplated by this Agreement, and that,
\nwithout these agreements, Parent would not enter into this Agreement;
\naccordingly, if the Company fails to pay in a timely manner the amounts due
\npursuant to this Section 7.3(b) , and, in order to obtain such payment, Parent
\nmakes a claim that results in a judgment against the Company for the amounts set
\nforth in this Section 7.3(b), the Company shall pay to Parent its reasonable
\ncosts and expenses (including reasonable attorneys’ fees and expenses) in
\nconnection with such suit, together with interest on the amounts set forth in
\nthis Section 7.3(b) at the prime rate of The Chase Manhattan Bank in effect on
\nthe date such payment was required to be made. Payment of the fees described in
\nthis Section 7.3(b) shall not be in lieu of damages incurred in the event of
\nbreach of this Agreement. For the purposes of this Agreement “COMPANY
\nACQUISITION” shall mean any of the following transactions (other than the
\ntransactions contemplated by this Agreement); (i) a merger, consolidation,
\nbusiness combination, recapitalization, liquidation, dissolution or similar
\ntransaction involving the Company pursuant to which the stockholders of the
\nCompany immediately preceding such transaction hold less than 50% of the
\naggregate equity interests in the surviving or resulting entity of such
\ntransaction, (ii) a sale or other disposition by the Company of assets
\nrepresenting in excess of 50% of the aggregate fair market value of the
\nCompany’s business immediately prior to such sale or (iii) the acquisition by
\nany person or group (including by way of a tender offer or an exchange offer or
\nissuance by the Company), directly or indirectly, of beneficial ownership or a
\nright to acquire beneficial ownership of shares representing in excess of 50% of
\nthe voting power of the then outstanding shares of capital stock of the Company.<\/p>\n
7.4 Amendment. Subject to applicable law, this Agreement may be amended
\nby the parties hereto at any time by execution of an instrument in writing
\nsigned on behalf of each of Parent and the Company.<\/p>\n
7.5 Extension; Waiver. At any time prior to the Effective Time any
\nparty hereto may, to the extent legally allowed, (i) extend the time for the
\nperformance of any of the obligations or other acts of the other parties hereto,
\n(ii) waive any inaccuracies in the representations and warranties made to such
\nparty contained herein or in any document delivered pursuant hereto and (iii)
\nwaive compliance with any of the agreements or conditions for the benefit of
\nsuch party contained herein. Any agreement on the part of a party hereto to any
\nsuch extension or waiver shall be valid only if set forth in an instrument in
\nwriting signed on behalf of such party. Delay in exercising any right under this
\nAgreement shall not constitute a waiver of such right.<\/p>\n
66<\/p>\n
ARTICLE VIII
\n GENERAL PROVISIONS<\/p>\n
8.1 Non-Survival of Representations and Warranties. The representations
\nand warranties of the Company, Parent and Merger Sub contained in this Agreement
\nshall terminate at the Effective Time, and only the covenants that by their
\nterms survive the Effective Time shall survive the Effective Time.<\/p>\n
8.2 Notices. All notices and other communications hereunder shall be in
\nwriting and shall be deemed given if delivered personally or by commercial
\ndelivery service, or sent via telecopy (receipt confirmed) to the parties at the
\nfollowing addresses or telecopy numbers (or at such other address or telecopy
\nnumbers for a party as shall be specified by like notice):<\/p>\n
(a) if to Parent or Merger Sub, to:<\/p>\n
At Home Corporation
\n 425 Broadway Street
\n Redwood City, California 94063
\n Attention: Chief Executive Officer
\n Telephone No.: (650) 569-5000
\n Telecopy No.: (650) 596-5100<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304-1050
\n Attention: Larry W. Sonsini
\n Marty W. Korman
\n Todd Cleary
\n Telephone No.: (650) 493-9300
\n Telecopy No.: (650) 493-6811<\/p>\n
(b) if to the Company, to:<\/p>\n
Excite, Inc.
\n 555 Broadway
\n Redwood City, California 94063
\n Attention: Chief Executive Officer
\n Telephone No.: (650) 568-6000
\n Telecopy No.: (650) 568-6030<\/p>\n
67<\/p>\n
with a copy to:<\/p>\n
Fenwick & West LLP
\n Two Palo Alto Square
\n Palo Alto, California 94306
\n Attention: Mark C. Stevens
\n Douglas N. Cogen
\n Telephone No.: (650) 494-0600
\n Telecopy No.: (650) 494-1417<\/p>\n
8.3 Interpretation; Knowledge.<\/p>\n
(a) When a reference is made in this Agreement to Exhibits,
\nsuch reference shall be to an Exhibit to this Agreement unless otherwise
\nindicated. When a reference is made in this Agreement to Sections, such
\nreference shall be to a Section of this Agreement unless otherwise indicated the
\nwords “INCLUDE,” “INCLUDES” and “INCLUDING” when used herein shall be deemed in
\neach case to be followed by the words “without limitation.” The table of
\ncontents and headings contained in this Agreement are for reference purposes
\nonly and shall not affect in any way the meaning or interpretation of this
\nAgreement. When reference is made herein to “THE BUSINESS OF” an entity, such
\nreference shall be deemed to include the business of all direct and indirect
\nsubsidiaries of such entity. Reference to the subsidiaries of an entity shall be
\ndeemed to include all direct and indirect subsidiaries of such entity. An
\nexception or disclosure made in the Company Schedules with regard to a
\nrepresentation of the Company, or in the Parent Schedules with regard to a
\nrepresentation of Parent or Merger Sub, shall be deemed made with respect to any
\nother representation by such party to which such exception or disclosure is
\nclearly relevant.<\/p>\n
(b) For purposes of this Agreement the term “KNOWLEDGE” means
\nwith respect to a party hereto, with respect to any matter in question, that any
\nof the Chief Executive Officer, Chief Financial Officer, General Counsel or
\nController of such party, has actual knowledge of such matter.<\/p>\n
(c) For purposes of this Agreement, the term “MATERIAL ADVERSE
\nEFFECT” when used in connection with an entity means any change, event,
\nviolation, inaccuracy, circumstance or effect that is or is reasonably likely to
\nbe materially adverse to the business, assets (including intangible assets),
\ncapitalization, financial condition or results of operations of such entity
\ntaken as a whole with its subsidiaries, except to the extent that any such
\nchange, event, violation, inaccuracy, circumstance or effect directly and
\nprimarily results from (i) the direct effect of the public announcement,
\npendency or consummation of the transactions contemplated hereby on current or
\nprospective advertisers or sponsors of such entity or revenues therefrom
\n(provided that the exception in this clause (i) shall not apply to the use of
\nthe term “Material Adverse Effect” in Sections 6.2(a) and 6.3(a) with respect to
\nthe representations and warranties contained in Sections 2.4, 2.7(vii), the
\nsecond sentence of 2.9(h), 2.12, 2.14(i), 2.17 and 3.4 hereof), (ii) changes in
\ngeneral economic <\/p>\n
68<\/p>\n
conditions or changes affecting the industry generally in which such entity
\noperates (provided that such changes do not affect such entity in a
\ndisproportionate manner), (iii) changes in trading prices for such entity’s
\ncapital stock or (iv) shareholder class action litigation arising from
\nallegations of a breach of fiduciary duty relating to this Agreement.<\/p>\n
(d) For purposes of this Agreement, the term “PERSON” shall
\nmean any individual, corporation (including any non-profit corporation), general
\npartnership, limited partnership, limited liability partnership, joint venture,
\nestate, trust, company (including any limited liability company or joint stock
\ncompany), firm or other enterprise, association, organization, entity or
\nGovernmental Entity.<\/p>\n
8.4 Counterparts. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other party, it being understood that all
\nparties need not sign the same counterpart.<\/p>\n
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
\ndocuments and instruments and other agreements among the parties hereto as
\ncontemplated by or referred to herein, including the Company Schedules and the
\nParent Schedules (a) constitute the entire agreement among the parties with
\nrespect to the subject matter hereof and supersede all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof, it being understood that the Confidentiality Agreement
\nshall continue in full force and effect until the Closing and shall survive any
\ntermination of this Agreement; and (b) are not intended to confer upon any other
\nperson any rights or remedies hereunder, except as specifically provided in
\nSection 5.11.<\/p>\n
8.6 Severability. In the event that any provision of this Agreement or
\nthe application thereof, becomes or is declared by a court of competent
\njurisdiction to be illegal, void or unenforceable, the remainder of this
\nAgreement will continue in full force and effect and the application of such
\nprovision to other persons or circumstances will be interpreted so as reasonably
\nto effect the intent of the parties hereto. The parties further agree to replace
\nsuch void or unenforceable provision of this Agreement with a valid and
\nenforceable provision that will achieve, to the extent possible, the economic,
\nbusiness and other purposes of such void or unenforceable provision.<\/p>\n
8.7 Other Remedies; Specific Performance. Except as otherwise provided
\nherein, any and all remedies herein expressly conferred upon a party will be
\ndeemed cumulative with and not exclusive of any other remedy conferred hereby,
\nor by law or equity upon such party, and the exercise by a party of any one
\nremedy will not preclude the exercise of any other remedy. The parties hereto
\nagree that irreparable damage would occur in the event that any of the
\nprovisions of this Agreement were not performed in accordance with their
\nspecific terms or were otherwise breached. It is accordingly agreed that the
\nparties shall be entitled to seek an injunction or<\/p>\n
69<\/p>\n
injunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions hereof in any court of the United States or any state
\nhaving jurisdiction, this being in addition to any other remedy to which they
\nare entitled at law or in equity.<\/p>\n
8.8 Governing Law. This Agreement shall be governed by and construed in
\naccordance with the laws of the State of Delaware, regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of law thereof.<\/p>\n
8.9 Rules of Construction. The parties hereto agree that they have been
\nrepresented by counsel during the negotiation and execution of this Agreement
\nand, therefore, waive the application of any law, regulation, holding or rule of
\nconstruction providing that ambiguities in an agreement or other document will
\nbe construed against the party drafting such agreement or document.<\/p>\n
8.10 Assignment. No party may assign either this Agreement or any of
\nits rights, interests, or obligations hereunder without the prior written
\napproval of the other parties. Any purported assignment in violation of this
\nSection 8.10 shall be void. Subject to the preceding sentence, this Agreement
\nshall be binding upon and shall inure to the benefit of the parties hereto and
\ntheir respective successors and permitted assigns.<\/p>\n
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, THE COMPANY AND MERGER SUB
\nHEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
\nOR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
\nRELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB
\nIN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.<\/p>\n
*****<\/p>\n
70<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
\nexecuted by their duly authorized respective officers as of the date first
\nwritten above.<\/p>\n
AT HOME CORPORATION<\/p>\n
By: \/s\/ THOMAS A. JERMOLUK
\n ————————————
\n Name: Thomas A. Jermoluk<\/p>\n
Title: Chief Executive Officer<\/p>\n
COUNTDOWN ACQUISITION CORP.<\/p>\n
By: \/s\/ DAVID G. PINE
\n ————————————
\n Name: David G. Pine<\/p>\n
Title: <\/p>\n
EXCITE, INC.<\/p>\n
By: \/s\/ GEORGE BELL
\n ————————————
\n Name: George Bell<\/p>\n
Title: Chief Executive Officer<\/p>\n
**** REORGANIZATION AGREEMENT ****<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6782,7487],"corporate_contracts_industries":[9510,9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43172","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-at-home-corp","corporate_contracts_companies-excite-inc","corporate_contracts_industries-technology__programming","corporate_contracts_industries-technology__software","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\/43172","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=43172"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43172"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43172"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}